FINRA's 2024 Oversight Report Prioritizes Cybersecurity, Crypto, and Communications

<p>The Financial Industry Regulatory Authority (FINRA)
has released its annual regulatory oversight report for 2024, reflecting
FINRA's commitment to enhancing transparency. This report encompasses findings
from the regulatory supervision, market regulations, and enforcement programs. </p><p>FINRA's 2024 report marks a shift by introducing
updated content focused on emerging areas like crypto assets, AI's impact on
regulatory obligations, and off-channel communications' supervision and
retention guidance. Additionally, it highlights rules, compliance
considerations, noteworthy findings, and effective practices within various
topical areas.</p><p>The report emphasizes the criticality of
cybersecurity compliance, referencing the SEC and FINRA's rules for
safeguarding customer information, business continuity, and incident reporting.</p><p> Cybersecurity, AML Practices, and Compliance</p><p>Recent rules released by the SEC demand that public
companies disclose material cybersecurity incidents and annual cybersecurity
risk management details. The proposed rule intends to mandate <a href="https://www.financemagnates.com/terms/c/cybersecurity/">cybersecurity</a>
risk management across market participants, emphasizing incident reporting and
risk-focused policies.</p><p>The report provides a comprehensive checklist
covering technology management, vendor oversight, change management, system
availability, data protection, and cybersecurity events. It urges firms to
implement robust supervisory controls, address system disruptions, and conduct
thorough identity verifications.</p><p>Detailed guidelines within the report underscore AML
program requirements, customer onboarding, suspicious activity reporting, and
independent testing. It highlights the importance of aligning AML programs with
evolving business models and consistently assessing transaction risks.</p><p>FINRA has enumerated common shortcomings in
compliance, emphasizing inadequate verification of customer identities,
responses to red flags, due diligence, monitoring, and handling of FinCEN
information requests. It additionally offers effective practices for risk assessment
and customer identity verification.</p><p>FINRA's 2024 report emphasizes
cybersecurity, AML practices, and compliance nuances, underscoring the evolving
nature of regulatory requirements and urging firms to prioritize robust
frameworks to ensure <a href="https://www.financemagnates.com/terms/c/compliance/">compliance</a> and mitigate risks.</p><p>Communication Guidelines</p><p>The 2024 FINRA Annual Regulatory Oversight Report is
centered on communications between financial firms and the public, outlining
stringent regulatory obligations and nuanced considerations. These regulations
classify communications and enforce content standards adaptable to
evolving communication technology and practices.</p><p>They emphasize the necessity of fair, balanced, and
transparent communications, free from misleading statements and the inclusion
of necessary material information.</p><p>A spotlight is cast on mobile app communication,
urging firms to include risk disclosures, distinguish between services,
establish robust supervisory systems, and ensure accuracy in the information
displayed. </p><p>Specific attention is drawn to retail communications
regarding crypto assets, municipal securities, income-sharing programs, and ESG
factors, emphasizing the need for fair and balanced presentations and clear
disclosure of terms and conditions.</p>

This article was written by Jared Kirui at www.financemagnates.com.