Experts stress that advisors' obligations under AML policies vary from firm to firm.Each company's policy must be tailored to the nature of the practice, accounting for the risks associated with clients, geographic footprint and business model.
Advisors have a fair amount of discretion in how they handle dubious activity, although experts note that some flags are redder than others. "If they are asked to facilitate sending a wire out of the account to an Iranian bank, that's clearly some suspicious activity," says Byron Bowman, general counsel at consulting firm fi360.
That's not to say that there aren't false positives. What if a customer puts in an order to liquidate all of his or her assets and arrange for a wire transfer to Costa Rica? Although this might appear to be an unusual transaction, it's not necessarily one to send the advisor running to the Feds. Often, the first call will be to compliance.
If an advisor can't obtain a reasonable explanation and concludes that the matter should be escalated—often a wrenching decision when a longstanding client is involved—the next stop will be back at the compliance department. At that point, compliance would determine whether the case warrants the firm filing a suspicious activity report with the Treasury Department's Financial Crimes Enforcement Network.
Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney also http://moneylaunderingworld.blogspot.com/ and http://launderingmoney.com/