Chapter 6 - General Supervision Flashcards
Member forms inspect Branch Offices every _ years
3 years
Member firms inspect everyone annually by going to the ____
OSJ
An office where Security sales and business do not take place
Non branch office
A non-branch is limited to _ number of securities transactions per year
25
And office of convenience, a satellite office, a back up office, or used exclusively for business continuity plans would be classified as this.
Non branch office
If a broker dealer has a supervisory branch, the broker dealer must inspect the supervisory branch _____
Annually
A CTR is also known as form ___
Form 4789
I see TR must be filled for any currency receipt of $10,000 or more from any one customer in a single day within _ days of receipt of the currency
15 days
Is a rep allowed to work out of her vacation home?
Yes, they have 30 days to report to a branch or supervision. Someone has to be responsible for the reps activities while at the second home.
If they registered rep is working on their yacht and they decide to move marinas, how often must they notify FINRA?
30 days
How often should non-supervising branches be directly reviewed?
Every 3 years
How often should written supervisory procedures be updated and kept?
Updates Must be made within 30 days, all previous versions must be kept for three years, and a copy must be kept in every OSJ
A principle must be a sign to supervise and every person working for the broker dealer is assigned to a principal for supervision. The organizational chart is in what document?
Written supervisory procedures
When should customers of a firm be advised of the business continuity plan?
At the time the account is open and in writing upon request. It must also be posted on the firms website.
Executive representative and CCO
Identified to Finra as main contact, must be reviewed quarterly within 17 business days, CCO identified to FINRA, annual certification by CEO by April 1
How long should SARs be maintained by the firm?
5 years
Who approves anti-money laundering programs?
Senior management teams
Business continuity plans provide
Alternative communication between firm and employees, clients and firm, a way for clients to access funds, and back up plans for each line of business
Who is subject to the patriot act?
All customers who open an account with the firm, as well as individuals with trading authority
Business continuity plan disclosures
Should be posted on firms website, must contain a go out of business clause, if a single office firm contact for clearing firm is required, should be provided to client at time account is open and annually thereafter
According to the patriot act, every member must obtain the following from US customers
Social Security number or documentation number, date of birth, address, place of business
Producing managers who generate blank percent or more of office production may be subject to daily supervision, or heightened supervision
20%
All non-US customers must provide at least one of the following
Passport number and country of issuance, alien ID number, US tax ID number, or a number from another form of government issued ID and the name of the issue in country
Key red flag for producing managers
Cancels and re-bills. May mean that they are favoring their customers over other registered reps
Who requires banks in broker-dealers to establish and maintain written identity theft prevention programs?
The federal trade commission (FTC)
How many days does a disciplinary firm have to implement tape recording of employees if required?
60 Days to implement tape recording of all employees, not just the reps from disciplinary firms
Berms have an opportunity one time to reduce staff if they choose not to adhere to tape recording employees. How long must I wait to rehire terminated employees?
They may not rehire for 180 days, They also cannot hire more reps to dilute the number
Customer complaints received in written form, or from someone representing the customer, which includes text, instant message, letter, email, require
Firms required to report electronically to federal quarterly within 15 days, must be promptly forwarded to principal, must be maintained in a central file with the OSJ, theft or forgery must be reported immediately to federal within 10 business days, if the rep is terminated, the complaint is still filed with FINRA but need not be sent to the rep
What is the penalty for reps who aid and laundering of money?
Prosecution and face up to 20 years in prison and a $500,000 fine per transaction
What is FinCEN?
A bureau of the US Department of treasury, with a mission to safeguard the financial system, guard against money laundering, and promote national security. They emailed a list of individuals and entities to a designated principal every few weeks. The principal is required to check the list against the firms customers. If a match is found, the firm must notify FinCEN within 14 calendar days
FINRA Has an acted rules designated to protect the financial interests of seniors who are what age?
Age 65 or older, registered reps should be particularly concerned with any request to withdraw money from an account that is outside the normal actions of the client
What should broker dealers or registered representative obtain for senior clients?
A trusted contact in which the firm is able to inquire about request to withdraw money when financial exploitation is a suspected. They may also contact the trusted contact to inquire on the welfare of the client and the identity of any individual who may hold power of attorney for who may be named as executor of the clients will.
True or false, federal allows broker dealers to withhold distributions to senior and other specified clients who may have mental impairment for 15 business days in cases of suspected financial exploitation
True
How many principles are required to supervise a firms activities?
At least two principles must supervise the firms activities. At a minimum, one must be a principal to supervise employees, and the other must be a FINOP to supervise the financial and operational activities
What are the responsibilities of a principal?
To review and approve new accounts, retail communication including advertising and sales literature, and transactions.
A branch office may not
Approve new accounts or execute customer orders on a wire basis. It can however, advertise in the phonebook and conduct the members business with the public
And 0SJ may conduct the following activities
Final approval of retail communication, execution of customer orders, structuring of investment banking, and review of branch offices
A firms business continuity plan must provide
Secondary communication facilities, and contact information for two emergency contacts, One of whom must be a registered principal
What is a satellite office?
A smaller office that does not meet the definition of a branch. It may not have any signs or advertising, but could be the home of a rep. An agent who works out of a home office may not meet with clients or handle customer checks or securities at home, and any orders entered by the agent must be entered over a system that can be monitored by the branch office to which the agent is assigned.A satellite office may conduct business with the public.
True or false, all branch offices are required to be supervised by an OSJ,?
True
Is a registered representative allowed to act as the manager of the branch?
Yes
Within how many days must a Complaint be reported to FINRA?
Within 10 days
Where are complaints maintained?
At a supervising OSJ
How long must customer complaint records be maintained by the firm?
4 years
What is the required time frame to respond or take action on customer complaints?
The principal is required to review all written customer complaints, but there is no required time frame to respond or take action.
How often must broker dealers send their customer information detailing FINRAS broker check public disclosure programs?
Once per calendar year
True or false, all 0Sj must be directly inspected by the member?
True
True or false all branch offices do not need to be directly inspected by the member?
True
True or false, I’ll branch offices must be directly inspected by the member
Boss, I’ll branch offices are directly inspected by the OSJ. By inspecting the OSJ, the firm is inspecting the branch as well. All branch offices are not required to be directly inspected by the firm.
General securities firm caring customer accounts must perform:
Advise customers up FINRAS public disclosure program, give investors the 800 number for the public disclosure program, provide customers with the address for FINRAS website, and provide all of these items listed in writing once per year
And SAR must be filed for questionable transactions over what threshold?
$5,000
How long must an SAR be maintained by the firm?
Five years
What are the steps of the money laundering process
Step number one is placement. This is when the money is deposited in an account with the broker dealer. Step number two is layering. This consists of multiple deposits and amounts less than $10,000. Step number three is structuring, this is when funds will be drawn from different financial institutions. The fourth step is in a Gratian. This is when the proceeds are put back into the banking system.
Who maintains a list of customers that are suspected terrorist, criminals, and members of pariah nations.
The treasury department office of foreign assets control. Conducting business with anyone on this list is strictly prohibited.
Who approves a firms anti-money laundering program?
It must always be approved by senior management, sometimes called the senior compliance official only.
