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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

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