On May 6, FINRA published Regulatory Notice 19-18 which outlines an updated list of red flags related to customer due diligence and transaction monitoring. Of note, the new list provided to broker-dealers appears to be focused on addressing transparency and unusual activity by outlining risk characteristics of:

  • Shell companies
  • Intermediaries
  • Foreign financial institutions
  • Incomplete or out-of-date filings
  • Inconsistent documentation
  • "Seemingly" unrelated accounts with similar characteristics
  • Irregular orders or money movements

For assistance in interpreting or implementing this updated guidance into your CIP or transaction monitoring program, contact us for a discussion.