Finishing Strong: Year-End Compliance Essentials for BDs and IAs

 

As 2024 unwinds and end-of-year holidays quickly approach, it’s important to keep the below compliance requirements in mind to ensure a successful 2024 program and optimal preparation for the upcoming new year. The checklist below may not be comprehensive depending on your firm’s specific business model; however, it’s designed as a guide to help you check the boxes on major regulatory obligations.

FiSolve also has an upcoming webinar on this topic on January 8, 2025 at 9am PT / 12pm ET that you can register for by clicking this link. We encourage you to spend an hour with us to ensure your regulatory compliance obligations are met for 2024.

Below, you’ll find a brief overview of essential areas that broker-dealer firms and investment advisers should address before the end of the year:

• Annual Review: SEC-registered investment advisers should ensure completion of their annual reviews as required under Rule 206(4)-7 under the Investment Advisers Act of 1940. A thorough annual review outline should include itemized testing of all key areas of an adviser’s business.  Additional resources on the annual review are available on our website https://fisolve.com/compliance-reviews-annual-periodic-forensic-testing/
• Annual Compliance Meeting: Schedule and document the meeting with all relevant stakeholders. Make sure to cover key compliance topics and regulatory updates.
• Annual Compliance Attestations: Ensure all employees submit their attestations, confirming adherence to the firm’s policies and procedures and the annual holdings reports required for investment adviser access persons. This is critical for maintaining compliance and protecting the firm.
• Employee Disclosures: Collect and review disclosures related to outside business activities, external trading accounts, and private securities transactions. This helps prevent conflicts of interest and ensures transparency.
• Firm-Element and Regulatory-Element Training: Conduct and document required training sessions to ensure employees are up to date on compliance requirements and industry changes.
• Annual Anti-Money Laundering (AML) Audit: Broker-dealers need to complete the AML audit to identify and mitigate any potential risks related to money laundering. Ensure all findings are addressed and documented.
• CEO Certification & Annual Internal Exam: The CEO’s certification and the completion of an internal compliance exam are critical to meet regulatory expectations for broker-dealers. Ensure this is completed and archived.
• Annual Written Supervisory Procedures (WSP) Review: Broker-dealers need to review and update your WSP to reflect any changes in regulations or firm procedures. Likewise, investment advisers should conduct a review of its compliance policies and procedures as part of its annual review.
• Annual Firm Disclosures to Clients: Review and update all client-facing disclosures to ensure they are accurate and reflect any changes for the upcoming year.
• AML, Data Privacy, and Cybersecurity Program Reviews: Conduct comprehensive reviews of these programs to ensure they meet current regulatory requirements and industry best practices.
• Regulatory Reporting: Advisers need to make applicable regulatory filings, such as 13G, 13F, 13H, Form PF and Form ADV.
• 4th Quarter Website Review: Ensure all online content and disclosures are up to date in anticipation of the new year.

If your firm doesn’t already have a Compliance Checklist, now would be a great idea to create one. Use the checklist to set deadlines to complete each of the tasks prior to December 31^st. Track milestone progress and evidence completion on that same document. Store the 2024 Compliance Checklist in a SEA 17a4 compliant archive to evidence completion and meet recordkeeping requirements.

Need help meeting your end-of-year regulatory obligations? FiSolve’s experienced team of industry experts can quickly onboard and begin adding immediate value. Email us at info@fisolve.com or go to FiSolve’s website, scroll to the bottom of the page and click the “Contact Us, We’re Here to Help” button to let us know how we can best assist you.

Article written by Kimberly Johnson, Senior Vice President, Compliance