OSJ’s and branch offices that also supervise at least one other office must be
inspected annually.150 Individual branch offices with no other supervisory
responsibilities must be inspected every three years.151 Non-branch locations
are also expected to be inspected periodically.152 Documentation of these
inspections must be kept for a minimum of three years or until the next
inspection; whichever is longer.153
Procedures must be in place for a registered principal to review all
transactions.154 The procedures must also include the review of all incoming
and outgoing correspondence between registered representatives and
clients.155 Reasonable supervision is expected from each member and should
be well documented.156 Based on the size of the business, adequate
procedures need to be enacted to review correspondence in light of customer
complaints.157 Training and education must be provided to ensure proper
policy follow-through.158 All correspondence must be kept based on this rule,
can be requested by FINRA, and needs to be made readily available.159
F. Money Laundering and Control Act
Section 1956160 of the Money Laundering and Control Act,161 a federal
criminal law, covers the “[l]aundering of monetary instruments.”162 Any
person who knows that the financial instrument in question was procured
through illegal means with the intent to promote the activity, with the intent
to violate Internal Revenue Service163 statutes, or with the knowledge that the
monetary transaction was designed to conceal or avoid reporting
requirements will be punished.164 The punishment is a large fine of the
greater amount of $500,000 or twice the amount the value of the transaction
153. Fin. Indus. Reg. Auth., FINRA Manual § 3110(c)( 2).
154. Fin. Indus. Reg. Auth., FINRA Manual §§ 3110(d)( 1).
157. Fin. Indus. Reg. Auth., FINRA Manual §§ 3110(d)( 2).
159. Fin. Indus. Reg. Auth., FINRA Manual §§ 3110(d)( 3).
160. Money Laundering and Control Act, 18 U.S.C. § 1956.
161. Money Laundering and Control Act, 18 U.S.C. §§ 1956–57.
162. Id. § 1956.
163. IRS, https://www.irs.gov/ (last visited Sept. 21, 2017).