According to Andrew Ceresney, director of the SEC Division of Enforcement, the SEC is considering enforcement cases against brokerages that fail to report suspicious activity.
According to the SEC, many U.S. brokerages are simply failing to report possible money laundering.
Citing statistics of that put the average number of reports at just 5 reports on average per brokerage firm per year, it would seem the SEC has a point.
Indeed, it is hard to believe that with billions of individual securities transactions conducted amongst millions of counter-parties across the 4,800 registered brokerages in the United States, that just 18,000 to 25,000 total suspicious activity reports would be filed per year.
Ceresney confirms that the SEC is still trying to figure out why the firms are not filing SARs. Could it be that their KYC/AML tools are not up to the task? Or perhaps they simply don’t want to be bothered with the time and effort required to interact with the regulator in filing them… either way, when the SEC comes knocking, Ceresney made it clear that the action “will send a strong and clear message”.