Testing (Assurance)

Broker-Dealer Testing

Establishing, testing and documenting your controls is an ongoing process. Your firm’s controls need to be regularly reviewed: Are your  parameters properly set? Are you controlling the right processes? Are the controls are working as designed? Oyster’s team of CCOs, former regulators and compliance experts provide the independent perspective you need to ensure your Supervisory, Anti-Money Laundering (AML), Market Access and Email Retention System controls are tested regularly and that the proper design and function of those controls is correct.

Branch exams are also a critical part of every Broker-Dealer’s system of compliance and controls. Oyster provides both on-site branch office examinations, outsourcing and program development assistance to improve your control environment. 

Regulatory Background

Three FINRA Rules address Supervisory Testing: 3110, 3120 and 3130. These rules require firms to maintain a system to supervise the activities of its associated persons, have supervisory control policies and procedures (SCPs) that test and verify a firm’s supervisory procedures, to identify to FINRA principal(s) to serve as a CCO, and to have the firm’s CEO(s) certify annually that these items are in place, reasonably designed to achieve compliance with applicable securities laws and regulations and FINRA rules.

FINRA Rule 3310 also requires firms to develop and implement a written AML compliance program, including designating an AML Compliance Officer to FINRA, providing ongoing training to employees, and conducting independent testing. There are no exemptions or exceptions to the requirement to have an AML program. The Bank Secrecy Act requires firms to establish a Customer Identification Program, as well as procedures for identifying and reporting suspicious activity.

SEC Rule 206(4)-7 requires Registered Investment Advisors, at least annually, to review their compliance policies and procedures and assess their effectiveness.