FLC Forensic Testing of Compliance Functions

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Several regulations require annual testing and/or certification of compliance functions. FLC provides your firm with an independent analysis of your policies and procedures to help you determine if your compliance and supervisory systems are reasonably designed to review and monitor compliance and to detect and prevent violations.

FINRA Rule 3012 requires that an annual report be submitted to the firm’s senior management that details the firm’s system of supervisory controls, a summary of testing results and significant identified exceptions, and any additional or amended supervisory procedures created in response to the test results. Recent Rule 3012 deficiencies cited by regulators include: procedures not covering planned business activities; procedures not covering which specific areas to be tested; manner of supervision of producing managers; and methodology for heightened supervision of particular representatives.

NASD Rule 3011 (Anti-Money Laundering Rule) requires independent testing for compliance with the Rule either annually or every two years, depending on the nature of the firm. Although there is an exemption from the independence requirement built into the Rule, many firms do not qualify for the exemption.

FLC is a qualified independent third party, providing forensic testing of specific firm functions to ensure compliance with applicable rules and regulations.

Our testing and certification process follows the exact requirements of the rules as well as determining if your firm qualifies for any exemptions under the rules.

FINRA Rule 3013 requires annual certification of compliance policies and procedures by a firm’s CEO. The SEC has a similar rule for investment advisers. FLC’s compliance testing and certification service is designed to make CEOs comfortable with these new rules.

At the completion of the testing process, the CEO will be given a concise report, in an easy to read format, outlining your compliance and business structure, supervisory system, and how your firm has complied with Rule 3013 throughout the year.