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FINRA Highlights Compliance Priorities for 2025

Posted on February 19th, 2025 at 4:28 PM
FINRA Highlights Compliance Priorities for 2025

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï

The Financial Industry Regulatory Authority (FINRA) has released its annual regulatory oversight report, emphasizing key compliance concerns for broker-dealers. According to AdvisorHub, this year’s focus areas include cybersecurity risks, anti-money laundering (AML) controls, and third-party vendor oversight. The report aims to inform firms of common compliance gaps and emerging risks identified during FINRA’s examinations.

For the first time, FINRA has highlighted third-party vendor management as a critical area of concern. The report aligns with the Securities and Exchange Commission’s (SEC) increased scrutiny of outsourcing risks in the financial sector. Given the industry's reliance on external vendors for critical systems and services, FINRA warns that a cyberattack or operational failure at a vendor could have widespread consequences. As reported by AdvisorHub, the regulator urges firms to implement robust vendor risk management policies, including due diligence, data protection controls, and comprehensive vendor inventories.

AML compliance remains a top enforcement priority. FINRA continues to bring significant cases involving violations of customer identification rules and customer due diligence failures. AdvisorHub reports that, the SEC has also intensified its AML enforcement efforts, recently fining LPL Financial $18 million for deficiencies that allowed thousands of accounts to evade compliance measures.

Another focus is on manipulative trading cases. Manipulative trading distorts market transparency and integrity by misrepresenting supply and demand according to FINRA, which is committed to identifying and penalizing such practices.

The report also highlights concerns surrounding the sale of Registered Index-Linked Annuities (RILAs). With RILA sales surpassing those of variable annuities, FINRA will examine firms' marketing practices and ensure compliance with Regulation Best Interest (Reg BI).

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

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