Financial Regulation

The order audit trail system (OATS) is a computerized regulatory mechanism that maintains detailed records of securities transactions. OATS requires member firms of FINRA to automatically record and report orders to FINRA. What does the order audit trail system track? FINRA has established the Order Audit Trail System (OATS), as…

KYC means Know Your Customer and sometimes Know Your Client. KYC or KYC check is the mandatory process of identifying and verifying the client’s identity when opening an account and periodically over time. What are the three 3 components of KYC? The 3 steps of a KYC compliance framework Customer…

The Form U4 (Uniform Application for Securities Industry Registration or Transfer) is used to establish that registration. FINRA, other self-regulatory organizations (SROs) and jurisdictions use the Form U4 to elicit employment history, disciplinary and other information about individuals to register them. What is a U5 record? Amendment Form: An amendment…

The Patriot Act increases the governments surveillance powers in four areas: Records searches. It expands the government’s ability to look at records on an individual’s activity being held by a third parties. … Secret searches. … Intelligence searches. … “Trap and trace” searches. What are the main components of the…

The penalties are: Domestic money laundering (18 USC section 1956(a)(1)) and international money laundering offenses (section 1956(a)(2)): Incarceration up to 20 years and a fine of up to $500,000, or twice the value of the proceeds involved in the violation.  How much can you be fined under the Proceeds of…

Can You Negotiate A Short Sale? It is entirely possible to negotiate a short sale, but doing so can be a time-consuming process. Instead of negotiating with the seller alone, as is the case with most traditional sales, short sale negotiations must be approved by the lender, too. What’s a…

A registration statement is a filing with the SEC making required disclosures in connection with the registration of a security, a securities offering or an investment company under federal securities laws. What does it mean to be registered with SEC? Registration is the process by which a company files required…

What does Regulation S mean? What is the Regulation S registration exemption? “Reg S,” which refers to Regulation S, is a series of rules that clarify the position of the U.S. Securities and Exchange Commission (SEC) that securities offered and sold outside the U.S. don’t need to be registered with…

SOX Section 302 requirements SOX 302 requires that the principal executive and financial officers of a company, typically the CEO and CFO, personally attest that financial information is accurate and reliable. They must make these attestations within the quarterly 10-Q and annual 10-K reports filed with the SEC.  What is…

The primary purpose of CALEA is to improve the delivery of public safety services by maintaining a comprehensive body of law enforcement standards, establishing and administering an accreditation process, and recognizing professional excellence. What is the function of CALEA? CALEA accreditation functions the same way for law enforcement: It ensures…

The elements of open disclosure are an apology or expression of regret (including the word ‘sorry’), a factual explanation of what happened, an opportunity for the patient to relate their experience, and an explanation of the steps being taken to manage the event and prevent recurrence. What is the open…

Form 104Form 104 on each single or multiple deposit, withdrawal, exchange of currency or other payment or transfer which involves currency of more than $10,000.  What is a FinCEN Form 112? FinCEN CTR (Form 112) Reporting of Certain Currency Transactions for Sole Proprietorships and Legal Entities Operating Under a “Doing…

What is suspicious in money laundering? (b) The Suspicious Transaction Report (STR) should be furnished within 7 days of arriving at a conclusion that any transaction, whether cash or non-cash, or a series of transactions integrally connected are of suspicious nature. What are examples of suspicious activity money laundering? A…

The Act enabled investigators to gather information when looking into the full range of terrorism-related crimes, including: chemical-weapons offenses, the use of weapons of mass destruction, killing Americans abroad, and terrorism financing. What was the provision of the USA Patriot Act quizlet? What did the U.S.A Patriot act do? This…

§ 233.5 Policies and procedures required. (a) All non-exempt participants in designated payment systems shall establish and implement written policies and procedures reasonably designed to identify and block or otherwise prevent or prohibit restricted transactions. What is Regulation W? Regulation W is a U.S. Federal Reserve System (FRS) regulation that…

In its simplest definition, trade-based money laundering is the process of disguising the proceeds of crime and moving value (i.e., movement of money) using trade transactions to legitimize their illicit origins.  What is trade-based money laundering process? For the purpose of this study, trade-based money laundering is defined as the…

Regulation S is a registration exemption which allows securities only to be sold to non-US investors (accredited or unaccredited) exclusively outside of the United States. What is Regulation S vs Regulation D? Regulation S is similar to Regulation D in that it provides exemption from registering private securities with the…

Short sale offer: Once a seller accepts an offer from a potential buyer, the listing agent sends the lender the listing agreement, an executed purchase offer, the buyer’s pre-approval letter, a copy of the earnest money check, and the seller’s short-sale package. What happens after a short sale is approved…

You’ll likely have a minimum waiting period before you can qualify for another loan, and you might also need to improve your credit score and save for a down payment to qualify for a mortgage after a short sale. For instance, there’s a waiting period of up to four years…

SOX Compliance Requirements SOX requires that all financial reports include an Internal Controls Report. This report should show that the company’s financial data is accurate (a 5% variance is permitted) and that appropriate and adequate controls are in place to ensure that the data is secure.  What does SOX compliance…