What are the Broker/Dealer Requirements for AML Compliance?

Customer-Identification Programs

• Copies of documents provided by customers must be kept if the broker relies on it for identification purposes.
• Methods and results of any additional methods taken by the broker must be recorded.
• Resolutions of any discrepancy must be recorded.
• These records must be retained for five years after the account is closed.

Behavior Detection

• Changes to standing-settlement instructions from a standard to a high-risk location.
• Parking of excess collateral, combining several complex factors, such as having cash move into an account without trade activity.
• Trade parking, where a client delivers securities to another client and buys it back in another transaction on the other side of the accounting period.

Suspicious-Activity Reporting

• Spread over many events, such as buying and selling securities, cash movements.
• Spread across many entities, including accounts, companies and households.
• Almost always spread over the same amount of time.

Source: TowerGroup