Evolving AML Expectations for Broker Dealers: Independent Testing and FinCEN’s Proposed Reform

Overview of AML Compliance for Broker-Dealers Under FINRA Rule 3310

Anti-Money Laundering (AML) compliance remains a core obligation for broker-dealers under FINRA Rule 3310. The rule establishes minimum standards to ensure compliance with the Bank Secrecy Act and requires FINRA member firms to implement appropriate AML policies, procedures, and internal controls. Under Rule 3310, firms must establish written programs reasonably designed to detect and report suspicious activity. These programs must be supported by continuous training, oversight, and independent testing of the AML program.

FinCEN’s Proposed Reform and Focus on AML Program Effectiveness

In 2026, AML compliance continues to be a point of emphasis for regulators, examiners, and broker-dealer firms of all sizes. Although many firms maintain established AML programs, regulatory focus has increasingly shifted beyond the existence of written policies to how well those programs function in practice. Independent testing, risk-based program design, and documentation all play key roles in demonstrating AML program strength and effectiveness.

On April 7, 2026, the Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking titled Anti‑Money Laundering and Countering the Financing of Terrorism (AML/CFT) Program Rule, applicable to AML programs for financial institutions, including broker-dealers. The proposed rule establishes several reforms to the AML program requirements, including:

• A refocus of compliance obligations and expectations on program effectiveness, including a distinction between deficiencies in program design and those related to program implementation.
• Enhanced FinCEN involvement in AML supervision
• Increased flexibility for financial institutions subject to design and maintain risk‑based AML programs tailored to their specific risk profiles.
• Technical and clarifying revisions to existing AML program requirements, with the purpose of improved consistency across different financial institution types.

Collectively, these reforms are intended to strengthen existing programs and modernize existing regulatory framework while maintaining consistent and effective controls. For broker-dealers, the proposed rule reflects a shift away from technical, administrative compliance and toward demonstrating the effectiveness of AML programs – specifically how well those programs meaningfully identify and address risks unique to each firm.

The Role of Independent Testing in Broker-Dealer AML Programs

As AML expectations continue to evolve, independent testing remains a critical component of broker-dealer compliance programs. As a part of FINRA Rule 3310, broker‑dealers are required to conduct independent testing of their AML programs annually, or once every two years for qualifying non‑custodial broker‑dealers. Testing may be conducted by qualified internal personnel or independent external parties. When conducted internally, the designated individual performing the testing must be independent of the functions being tested, may not serve as the designated AML compliance individual, and may not report to either of those roles. The purpose of routine independent testing is to ensure programs are consistent and appropriate in regard to FINRA regulations.

Evolving Expectations for AML Independent Testing

Under FinCEN’s proposed reforms, regulators have placed a heightened emphasis on testing that goes beyond confirming the existence of polices and instead evaluates program effectiveness. Broker-dealer member firms should tailor their AML programs to their specific risk profiles, and independent testing should similarly assess whether a firm’s controls effectively address those risks. For broker-dealers, this includes assessing how well AML controls operate in practice, the documentation of identified risks, and the remediation of any identified issues. The goal of this independent testing is to provide management with a meaningful assessment of the AML program in place in order to provide program enhancements. Under the FinCEN reform proposed, independent testing is expected to remain a key component of broker-dealer AML programs.

Key Takeaways for Broker Dealers

As regulators continue to assess the AML programs and related regulatory requirements, broker-dealers may benefit from evaluating their existing programs. In particular, firms should consider whether their AML programs remain operationally effective and appropriately aligned with firm-specific risks. Through independent testing, firms can assess their programs to ensure their controls are evolving in line with regulatory expectations and can reinforce a focus on functionality and effectiveness over technical, “check the box” compliance.

Although FinCEN’s proposed rule has not yet been finalized, independent AML testing will remain a core component of anti-money laundering compliance for broker-dealers of all sizes. As regulatory expectations continue to evolve and modernize, broker-dealers should remain mindful of how their AML programs – and the testing that supports them- align with firm risks and applicable regulatory standards.

If you would like to evaluate your AML program or independent testing approach, contact your Keiter Opportunity Advisor | Email | Call: 804.747.0000.

Sources:

• FinCEN Proposes Rule to Fundamentally Reform Financial Institution Programs Designed to Fight Illicit Finance 
• Key Changes in FinCEN’s Proposed Rule to Refocus AML/CFT Programs on Higher-Risk Activity While Reducing Unnecessary Burden 
• Finra 3310. Anti-Money Laundering Compliance Program 
• Fact Sheet: Proposed Rule to Fundamentally Reform Financial Institution AML/CFT Programs