Aufhauser Securities, Inc.

Anti-Money Laundering (AML) Program: 

Compliance and Supervisory Procedures

Rev 12-29-2016


1.                             Firm Policy

It is the policy of the firm to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities.  Money laundering is generally defined as engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the unlawful proceeds appear to have derived from legitimate origins or constitute legitimate assets.  Generally, money laundering occurs in three stages.  Cash first enters the financial system at the "placement" stage, where the cash generated from criminal activities is converted into monetary instruments, such as money orders or traveler's checks, or deposited into accounts at financial institutions.  At the "layering" stage, the funds are transferred or moved into other accounts or other financial institutions to further separate the money from its criminal origin.  At the "integration" stage, the funds are reintroduced into the economy and used to purchase legitimate assets or to fund other criminal activities or legitimate businesses.  Terrorist financing may not involve the proceeds of criminal conduct, but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes. 


2.       AML Compliance Officer Designation and Duties

The firm designates R. Keith Aufhauser (RKA) as its Anti-Money Laundering Program Compliance Officer, with full responsibility for the firm’s AML program.   RKA is qualified by experience, knowledge and training by virtue of his professional training and his experience in the securities and other businesses.   The duties of the AML Compliance Officer will include monitoring the firm’s AML compliance, overseeing communication and training for employees. The AML Compliance Officer will also ensure that proper AML records are kept.  When warranted, the AML Compliance Officer will ensure Suspicious Activity Reports (SARs) are filed


3.       Giving AML Information to Federal Law Enforcement Agencies and Other Financial Institutions

1.      a.      FinCEN Requests Under PATRIOT Act Section 314

Under Treasury’s proposed regulations (published in the Federal Register on March 4, 2002), we will respond to a Financial Crimes Enforcement Network (FinCEN) request about accounts or transactions by reporting to FinCEN the identity of the specified individual or organization, the account number, all identifying information provided by the account holder when the account was established, and the date and type of transaction.  We will report to FinCEN as soon as possible either by e-mail to, by calling the Financial Institutions Hotline (1-866-556-3974), or by any other means that FinCEN specifies. 


2.      b.      Sharing Information With Other Financial Institutions

We will share information about those suspected of terrorism and money laundering with other financial institutions for the purposes of identifying and reporting activities that may involve terrorist acts or money laundering activities. We will file with FinCEN an initial certification before any sharing occurs and annual certifications afterwards.  We will use the certification form found at  We will employ strict procedures both to ensure that only relevant information is shared and to protect the security and confidentiality of this information, including segregating it from the firm’s other books and records.


In addition to sharing information with other financial institutions about possible terrorist financing and money laundering, we will also share information about particular suspicious transactions with our clearing broker for purposes of determining whether one of us will file a SAR.  In cases in which we file a SAR for a transaction that has been handled both by us and by the clearing broker, we may share with the clearing broker a copy of the filed SAR, unless it would be inappropriate to do so under the circumstances, such as where we filed a SAR concerning the clearing broker or one of its employees.


4.       Customer Identification and Verification

In addition to the information we must collect under NASD Rules 2110 (Standards of Commercial Honor and Principles of Trade), 2310 (Recommendations to Customers - Suitability), and 3110 (Books and Records), and SEC Rule 17a-3(a)(9) (Beneficial Ownership regarding Cash and Margin Accounts), we will, at a minimum:  verify, to the extent reasonable and practicable, the identity of any customer seeking to open an account; maintain records of information used to verify a customer's identity; and check that a customer does not appear on government terrorist lists, such as the list on Treasury's Office of Foreign Assets Control (OFAC) Web Site.  (See Section 4.b. below for an explanation of the OFAC list.)  The kinds of information that we will collect before opening different types of accounts are listed below.  We will make any necessary modifications to these procedures when the final Treasury/SEC regulations on verification of customer identification are issued. 


3.      a.      Risk-Based Information On Various Account Types

We will collect the following information for all accounts, if applicable, for any person, entity or organization who is opening a new account (or is being granted trading authority over a new or existing account) and whose name is on the account or has authority over the account: the name and mailing and residential (or principal place of business) street address of the customer; the customer’s date of birth; and, for U.S. persons, the customer’s Social Security number or taxpayer identification number (including U.S. tax forms), or, for non-U.S. persons without a taxpayer identification number, an alien identification card number or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or other biometric safeguard.  Recognizing that different types of accounts pose different risks and trigger different requirements under the rules, we will gather the additional information specified below for each of the following categories of accounts we provide:


(1)        Individual Accounts –We will make reasonable efforts to obtain the customer’s net worth, annual income, occupation and employment data, such as the employer’s address, and the customer’s investment experience and objectives.


(2)        Non-U.S. Person Accounts – We may inquire more fully depending on a number of factors, such as the country of origin of the account holder or persons authorized to trade.  If we transfer funds, we must record a current passport number or other valid government identification number for transfers or transmittals of $3,000 or more.


(3)        Domestic Operating or Commercial Entities – We will collect information sufficient to determine the corporate or business entity’s identity, and the authority of its business representative to act on its behalf. 


 (4)       Domestic Trusts – We will identify the trustee, the activity the trust authorizes, and the authority of the trust’s representative to act on its behalf.


(5)        Foreign and Offshore Entities – We will identify the account holder and other persons or entities authorized to trade for the account and we will consider the entity’s country of incorporation, location and other factors to determine what additional identifying information is necessary and available.  (See Sections 5 and 6 below for special procedures governing correspondent accounts for foreign shell banks and other foreign financial institutions and foreign private banking accounts.)


(6)        Institutional Accounts, Hedge Funds, Investment Funds and Other Intermediary Relationships – While our AML procedures cover institutional clients, we recognize that certain types of institutional accounts are different from retail accounts.  Institutional accounts often are opened for financially sophisticated customers who trade frequently, in volume, and usually through an intermediary, some of whose AML policies and procedures are sufficient and verifiable.  When dealing with an institutional client, we will consider whether it has an AML program and the quality of that program, the length and nature of our experience with the institution, and the history of the institution.  In addition, in determining whether it is necessary to identify the investors of non-U.S. institutions, we will consider the regulation of the institution by its home country and whether the institution is located in a bank secrecy haven or a non-cooperative country. (See Sections 5 and 6 below for special procedures governing correspondent accounts for foreign shell banks and other foreign financial institutions and foreign private banking accounts.)


(7)        High Risk and Non-Cooperative JurisdictionsWe will especially scrutinize accounts that are located in problematic countries.  We will check the lists and accompanying narrative information of the Financial Action Task Force (FATF), FinCEN , and the “Major Money Laundering Countries” section of the “Money Laundering and Financial Crimes” part of the U.S. Department of State’s annual International Narcotics Control Strategy Report to determine problematic countries and will factor this information into our decisions on whether to open or maintain accounts that are based in these jurisdictions. 


(8)        Senior Foreign Government/Public Officials – Firms must conduct enhanced scrutiny of accounts requested or maintained by or on behalf of senior foreign political figures (including their family members and close associates).  This is addressed in greater detail below in Section 6 “Private Banking Accounts/Foreign Officials.”  We will conduct enhanced due diligence of accounts of "senior foreign political figures," as well as their families and business associates, to detect and report transactions that involve the proceeds of foreign corruption. 


(9)        Transferred Accounts – Although we are not required to verify the identity of a customer whose account is transferred to our firm if the customer does not initiate the transfer, we will still consider the scenarios above in deciding if the risks of a particular transferred account require our obtaining and verifying information from the transferred customer.


4.      b.      Customers Who Refuse To Provide Information 

If a potential or existing customer either refuses to provide the information described above when requested, or appears to have intentionally provided misleading information, our firm will not open a new account and, after considering the risks involved, consider closing any existing account.  In either case, our AML Compliance Officer will be notified so that we can determine whether we should report the situation to FinCEN. 


5.      c.       Verifying Information

Based on the risk, and to the extent reasonable and practicable, we will ensure that we have a reasonable belief that we know the true identity of our customers by using risk-based procedures to verify and document the accuracy of the information we get about our customers.  In verifying customer identity, we will analyze any logical inconsistencies in the information we obtain


We will verify customer identity through documentary evidence, non-documentary evidence, or both.  We will use documents to verify customer identity when appropriate documents are available.  In light of the increased instances of identity fraud, we will supplement the use of documentary evidence by using the non-documentary means described below whenever possible.  We may also use such non-documentary means, after using documentary evidence, if we are still uncertain about whether we know the true identity of the customer.


Appropriate documents for verifying the identity of natural persons include the following:



The following documents are appropriate for verifying the identity of businesses:



Verification of customer identity through the use of non-documentary evidence is mandatory in the following situations: (1) when the customer is unable to present an unexpired identification card with a photograph or other biometric safeguard; (2) when the documents the customer presents for identification verification are unfamiliar to the firm; (3) when the customer and firm do not have face-to-face contact; and (4) when there are other circumstances that increase the risk that the firm will be unable to verify the true identity of the customer through documentary means.  Under these circumstances, we will use the following non-documentary methods of verifying identity:




We will verify the information at the time new accounts are opened, if possible, but in most situations no later than five business days after opening.  However, we recognize that there may be situations where even a five-day delay will be too long.  Depending on the nature of the account and requested transactions, we may refuse to complete a transaction before we have verified the information, or in some instances when we need more time, we may restrict the types of transactions or dollar amount of transactions pending verification. We will document our verification, including all identifying information provided by a customer, the methods used and results of verification, and the resolution of any discrepancy in the identifying information.  We will maintain those records for five years after the account has been closed or the customer's trading authority over the account has ended. 


As required under the BSA, we will record a current passport number or other valid government identification number for transfers or transmittals of $3,000 or more by or for non-resident alien accounts.


6.      d.      Using Government Provided Lists of Terrorists and Other Criminals.

Before opening an account, and on an ongoing basis, we will check to ensure that a customer does not appear on a list provided to us by the government, like Treasury’s OFAC “Specifically Designated Nationals and Blocked Persons” List (SDN List) (See the OFAC Web Site at , which is also available through an automated search tool on, and is not from or engaging in transactions with people or entities from embargoed countries and regions listed on the OFAC Web Site.  Because the OFAC Web Site is updated frequently, we will consult the list on a regular basis and subscribe to be sent updates when they occur.  We may access these lists through various software programs to ensure speed and accuracy.  We will also review existing accounts against these lists when they are updated and we will document our review.


In the event that we determine a customer, or someone with or for whom the customer is transacting, is on the SDN List or is from or engaging in transactions with a person or entity located in an embargoed country or region, we will reject the transaction and/or block the customer's assets and file a blocked assets and/or rejected transaction form with OFAC. We will also call the OFAC Hotline at (800) 540-6322.


7.      e.       Notice to Customers

8.                  The firm will provide notice to customers that it is requesting information from them to verify their identities, as required by Federal law.  The firm will use the following method to provide notice to customers: telephone- read them this paragraph;  walk-in – show them this paragraph; all others - this web posting.

9.      f.        Additional Inquiries 

We recognize our obligations under suitability and fair dealing requirements to collect customer identification information.  Depending on the nature of the account, we will take the following additional steps, to the extent reasonable and practicable, when we open the account: 




5.       Foreign Correspondent Accounts and Foreign Shell Banks


10.  a.      Detecting and Closing Correspondent Accounts of Unregulated Foreign Shell Banks

We will detect correspondent accounts (any account that permits the foreign financial institution to engage in securities or futures transactions, funds transfers, or other types of financial transactions) for unregulated foreign shell banks by examining every customer folder and address (Keith Aufhauser, before Aug 2, 2002).  Upon finding or suspecting such accounts, firm employees will notify the AML Compliance Officer, who will terminate any verified correspondent account in the United States for an unregulated foreign shell bank.  We will also terminate any correspondent account that we have determined is not maintained by an unregulated foreign shell bank but is being used to provide services to such a shell bank.  We will exercise caution regarding liquidating positions in such accounts and take reasonable steps to ensure that no new positions are established in these accounts during the termination period.  We will terminate any correspondent account for which we have not obtained the information described in Appendix A of the proposed regulations regarding shell banks within the time periods specified in those regulations. 


11.  b.      Mandatory Enhanced Due Diligence

We will determine whether any foreign correspondent account is maintained for a foreign bank that operates under offshore banking licenses or under a banking license issued by certain jurisdictions specified in 31 C.F.R. §103.176 (c).  For such correspondent accounts, we will apply the enhanced due diligence requirements of 31 C.F.R. §103.176 (b) , which include enhanced scrutiny, a determination whether the foreign bank maintains its own correspondent accounts for other foreign banks, and identification of certain owners of the foreign bank.  This enhanced scrutiny will include obtaining and reviewing documentation from the foreign bank about its own AML program, and evaluating the effectiveness of this AML program at detecting and preventing money laundering.  In appropriate circumstances, the enhanced scrutiny will also include closer monitoring of account activity, obtaining information about sources and beneficial ownership of funds, [and] identifying persons with trading authority. 


If we cannot perform due diligence adequately, we will, after consultation with our AML Compliance Officer and as appropriate, do one or more of the following: not open the account, suspend the transaction activity, file a SAR, and close the account.


12.  c.       Exception for Federal Reserve Designated Jurisdictions

We will not automatically apply these enhanced due diligence procedures for foreign banks operating under offshore branch licenses if the bank is located or chartered in a jurisdiction that has been found by the Federal Reserve to be subject to comprehensive supervision or regulation on a consolidated basis by relevant supervisors in that jurisdiction , provided that the jurisdiction is not on the FATF list or Treasury’s list of jurisdictions requiring special measures .  Instead, we will follow the risk-based assessment specified below for whether any enhanced scrutiny is appropriate.


13.  d.      Enhanced Due Diligence Resulting From Risk-Based Assessments

We will make a risk-based assessment as to whether any foreign correspondent account poses a significant risk of money laundering activity, considering the foreign financial institution’s lines of business, size, customer base, location, products and services offered, nature of the correspondent account, and the type of transactions for which it will be used.  In making this risk assessment, we will consider any publicly available information from U.S. governmental agencies and multinational organizations on regulation and supervision, if any, applicable to the foreign financial institution, as well as public information about jurisdictions in which our foreign financial institution customers are organized or licensed.  We will also consider any guidance issued by the U.S. Treasury, the SEC, any other government agency, or FINRA regarding money laundering risks associated with particular foreign financial institutions and types of correspondent accounts, as well as any public information on whether our customers have been the subject of any criminal action of any kind, or any regulatory action relating to money laundering.


If we determine that an account poses a significant risk of money laundering activity, we will respond in one or more of the following ways, as circumstances may dictate:  including additional scrutiny, obtaining information about sources and beneficial ownership of funds, demands for additional information from the customer, investigation through third parties or publicly available information, limitations on account activities, account freezes/closings, SAR filings, emergency calls to the government, etc.


14.  e.      Record-keeping for Foreign Correspondent Accounts

We will require our foreign bank account holders to complete model certifications issued by the Treasury. ( We will send the certification forms to our foreign bank account holders for completion, which includes certification that they are not shell banks as well as providing ownership and agent information.  We will re-certify when we believe that the information is no longer accurate and at least every two years.  We will close within 10 days any such account for a bank that we learn from Treasury or the Department of Justice has failed to comply with a summons or has contested a summons.  We will scrutinize any account activity during that 10-day period to ensure that any suspicious activity is appropriately reported and to ensure that no new positions are established in these accounts.



6.       Private Banking Accounts/Foreign Officials

We will review our accounts to determine whether we offer any "private banking" accounts and we will conduct due diligence on such accounts.   This due diligence will include, at least, (1) ascertaining the identity of all nominal holders and holders of any beneficial ownership interest in the account (including information on those holders' lines of business and sources of wealth); (2) ascertaining the source of funds deposited into the account; (3) ascertaining whether any such holder may be a senior foreign political figure; and (4) reporting, in accordance with applicable law and regulation, any known or suspected violation of law conducted through or involving the account. 


We will review public information, including information available in Internet databases, to determine whether any "private banking" account holders are "senior foreign political figures."  If we do not find information indicating that a "private banking" account holder is a "senior foreign political figure," and the account holder states that he or she is not a "senior foreign political figure," then additional enhanced due diligence is not required.


If, however, we discover information indicating that a particular "private banking" account holder may be a "senior foreign political figure," and upon taking additional reasonable steps to confirm this information, we determine that the individual is, in fact, a "senior foreign political figure," we will conduct additional enhanced due diligence to detect and report transactions that may involve the proceeds of foreign corruption. 


In so doing, we will consider the risks that the funds in the account may be the proceeds of foreign corruption, including the purpose and use of the private banking account, location of the account holder(s), source of funds in the account, type of transactions engaged in through the account, and jurisdictions involved in such transactions.  The degree of scrutiny we will apply will depend on various risk factors, including, but not limited to, whether the jurisdiction the "senior foreign political figure" is from is one in which current or former political figures have been implicated in corruption and the length of time that a former political figure has been in office.  Our enhanced due diligence might include, depending on the risk factors, probing the account holder's employment history, scrutinizing the account holder's sources of funds, and monitoring transactions to the extent necessary to detect and report proceeds of foreign corruption, and reviewing monies coming from government, government controlled, or government enterprise accounts (beyond salary amounts).


If due diligence cannot be performed adequately, we will, after consultation with the firm's AML compliance officer and as appropriate, not open the account, suspend the transaction activity, file a SAR, or close the account.


7.       Supervisory Procedures for Opening Accounts

Our new account opening procedure is designed to collect and use information on the account holder’s wealth, net worth, anticipated transaction activity, and sources of income to detect and deter possible money laundering and terrorist financing.  The sales supervisor’s review will be documented and reviewed.  This review will include checking against a list of the types of information required for each type of account and documenting why any account is opened absent that information. 


8.       Monitoring Accounts For Suspicious Activity

No wire transfers may occur without the supervision of Fred Wu and Keith Aufhauser. Such wires will only under extraordinary circumstances be permitted to an account that is not titled the same as the Aufhauser account and only when the special documentation we require has been submitted to us in a form deemed satisfactory to our AML compliance team. No third party checks may be issued from any account unless we have complete and thorough documentation regarding the nature of the transaction, the relationship between the parties, and the clear, common sense business purpose. Similarly, no asset movements among Aufhauser accounts will be permitted without complete and thorough documentation that we may require regarding the purpose, the common sense of the transaction, and the relationship between the parties involved. Daily checking activity will be monitored thru Pershing's "PDA" function by Keith Aufhauser and or Fred Wu. We will manually monitor a sufficient amount of account activity to permit identification of patterns of unusual size, volume, pattern or type of transactions, geographic factors such as whether jurisdictions designated as “non cooperative” are involved, or any of the “red flags” identified in Section 8. b. below.  We will look at transactions, including trading and wire transfers, in the context of other account activity to determine if a transaction lacks financial sense or is suspicious because it is an unusual strategy for that customer.  The AML Compliance Officer or his or her designee  will be responsible for this monitoring, will document when and how it is carried out, and will report suspicious activities to the appropriate authorities.  Among the information we will use to determine whether to file a SAR are exception reports that include transaction size, location, type, number, and nature of the activity.  We will create employee guidelines with examples of suspicious money laundering activity and lists of high-risk clients whose accounts may warrant further scrutiny.  Our AML Compliance Officer will conduct an appropriate investigation before a SAR is filed.  Our monitoring of specific transactions includes: wire transfer, check writing, third party check instructions.


15.  a.      Emergency Notification to the Government by Telephone 

When conducting due diligence or opening an account, we will immediately call Federal law enforcement when necessary, and especially in these emergencies: a legal or beneficial account holder or person with whom the account holder is engaged in a transaction is listed on or located in a country or region listed on the OFAC list, an account is held by an entity that is owned or controlled by a person or entity listed on the OFAC list, a customer tries to use bribery, coercion, or similar means to open an account or carry out a suspicious activity, we have reason to believe the customer is trying to move illicit cash out of the government’s reach, or we have reason to believe the customer is about to use the funds to further an act of terrorism.  The contact numbers we will use are:  Financial Institutions Hotline (1-866-556-3974).


16.  b.      b. Red Flags

Red flags that signal possible money laundering or terrorist financing include, but are not limited to:



























17.  c.       Responding to Red Flags and Suspicious Activity

When a member of the firm detects any red flag he or she will investigate further under the direction of the AML Compliance Officer. This may include gathering additional information internally or from third party sources, contacting the government, freezing the account, and filing a SAR.



9.       Suspicious Transactions and BSA Reporting 

18.  a.      Filing a SAR

We will file SARs for any account activity (including deposits and transfers) conducted or attempted through our firm involving $5,000 or more where we know, suspect, or have reason to suspect: 1) the transaction involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity as part of a plan to violate or evade federal law or regulation, 2) the transaction is designed to evade the any requirements of the BSA regulations, 3) the transaction has no business or apparent lawful purpose or is not the sort in which the customer would normally be expected to engage, and we know, after examining the background, possible purpose of the transaction and other facts, of no reasonable explanation for the transaction, or 4) the transaction involves the use of the firm to facilitate criminal activity. 


We will not base our decision on whether to file a SAR solely on whether the transaction falls above a set threshold.  We will file a SAR and notify law enforcement of all transactions that raise an identifiable suspicion of criminal, terrorist, or corrupt activities.  In high-risk situations, we will notify the government immediately (See Section 8 for contact numbers) and will file a SAR with FinCEN.  Securities law violations that are reported to the SEC or an SRO may also be reported promptly to the local U.S. Attorney as appropriate.


We will not file SARs to report violations of Federal securities laws or Self Regulatory Organization rules by our employees or registered representatives that do not involve money laundering or terrorism, but we will report them to the SEC or SRO.


We will not wait until the Treasury's final SAR regulations go into effect on December 30, 2002, but will file SARs voluntarily before then.


All SARs will be periodically reported to the Board of Directors and senior management, with a clear reminder of the need to maintain the confidentially of the SAR. 



19.  b.      Currency Transaction Reports (CTR)

Our firm prohibits the receipt of currency and has the following procedures to prevent its receipt:  we say no, and will refuse to accept currency. If we discover currency has been received, we will file with FinCEN CTRs for transactions involving currency that exceed $10,000.  Multiple transactions will be treated as a single transaction if they total more than $10,000 during any one business day.  We will use the CTR form at .



20.  c.       Currency and Monetary Instrument Transportation Reports (CMIR)

Our firm prohibits the receipt of currency, travelers checks, money orders. We therefore will not be obliged to file CMIR forms.


21.  d.      Foreign Bank and Financial Accounts Reports (FBAR)

We will file with FinCEN an FBAR for any financial accounts that we hold, or for which we have signature or other authority over, in a foreign country of more than $10,000.  We will use the FBAR Form at

22.  e.      Transfers of $3,000 or More Under the Joint and Travel Rule

When we transfer funds of $3,000 or more, we will record on the transmittal order at least the following information:  the name and address of the transmitter and recipient, the amount of the transmittal order, the identity of the recipient’s financial institution, and the account number of the recipient.  We will also verify the identity of transmitters and recipients who are not established customers of the firm (i.e., customers of the firm who have not previously maintained an account with us or for whom we have not obtained and maintained a file with the customer's name, address, taxpayer identification number, or, if none, alien identification number or passport number and country of issuance).


10.     AML Record Keeping

23.  a.      SAR Maintenance and Confidentiality

We will hold SARs and any supporting documentation confidential. We will not inform anyone outside of a law enforcement or regulatory agency or securities regulator about a SAR.  We will deny any subpoena requests for SARs or SAR information and immediately tell FinCEN of any such subpoena we receive.  We will segregate SAR filings and copies of supporting documentation from other firm books and records to avoid disclosing SAR filings.  Our AML Compliance Officer will handle all subpoenas or other requests for SARs.  We will share information with our clearing broker about suspicious transactions for determining when a SAR should be filed.  As mentioned earlier, we may share with the clearing broker a copy of the filed SAR – unless it would be inappropriate to do so under the circumstances, such as where we file a SAR concerning the clearing broker or its employees.


24.  a.      Responsibility for AML Records and SAR Filing

Our AML Compliance Officer and his or her designee will be responsible to ensure that AML records are maintained properly and that SARs are filed as required.


25.  b.      Records Required

As part of our AML program, our firm will create and maintain SARs, CTRs, CMIRs, FBARs, and relevant documentation on customer identity and verification (See Section 4.c. above), and funds transfers and transmittals as well as any records related to customers listed on the OFAC list.  We will maintain SARs and their accompanying documentation for at least five years.  Other documents will be kept according to existing BSA and other record keeping requirements, including certain SEC rules that require six-year retention.


11.     Clearing/Introducing Firm Relationships

We will work closely with our clearing firm to detect money laundering.  We will exchange information, records, data and exception reports as necessary to comply with AML laws.  Both our firm and our clearing firm have filed (and kept undated) the necessary annual certifications for such information sharing, which can be found at  As a general matter, we have agreed that our clearing firm will monitor customer activity on our behalf, and we will provide our clearing firm with proper customer identification information as required to successfully monitor customer transactions.  We have set out these responsibilities in our clearing agreement under NASD Rule 3230.  We understand that the agreement will not relieve either of us from our independent obligation to comply with AML laws.


12.     Training Programs

We will develop ongoing employee training under the leadership of the AML Compliance Officer and senior management.  Our training will occur on at least an annual basis.  It will be based on our firm’s size, its customer base, and its resources.


Our training will include, at a minimum:  how to identify red flags and signs of money laundering that arise during the course of the employees’ duties; what to do once the risk is identified; what employees' roles are in the firm's compliance efforts and how to perform them; the firm's record retention policy; and the disciplinary consequences (including civil and criminal penalties) for non-compliance with the PATRIOT Act.


We will develop training in our firm, or contract for it.  Delivery of the training may include educational pamphlets, videos, intranet systems, in-person lectures, and explanatory memos.  Currently our training program is for RR’s to read and to pass a short quiz on these rules and supervisory procedures. We will maintain records to show the persons trained, the dates, and the subject matter of their training.


We will review our operations to see if certain employees, such as those in compliance, margin, and corporate security, require specialized additional training.  Our written procedures will be updated to reflect any such changes.


13.     Program to Test AML Program

26.  a.      Staffing

The testing of our AML program will be performed by an outside consultant familiar with the AML rules and procedures.


27.  b.      Evaluation and Reporting

AML testing  will be completed at least annually.  After we have completed the testing,  the outside consultant will report its findings to Keith Aufhauser.  We will address each of the resulting recommendations. 


14.     Monitoring Employee Conduct and Accounts

We will subject employee accounts to the same AML procedures as customer accounts, under the supervision of the AML Compliance Officer.  We will also review the AML performance of supervisors, as part of their annual performance review. The AML Compliance Officer’s accounts will be reviewed by Fred Wu.


15.     Confidential Reporting of AML Non-Compliance

Employees will report any violations of the firm’s AML compliance program to the AML Compliance Officer, unless the violations implicate the Compliance Officer, in which case the employee shall report to Keith Aufhauser.  Such reports will be confidential, and the employee will suffer no retaliation for making them.

16.     Additional Areas of Risk

The firm has reviewed all areas of its business to identify potential money laundering risks that may not be covered in the procedures described above. AS of this writing, all risks are properly covered by the above procedures.


17.     Senior Manager Approval 

I have approved this AML program as reasonably designed to achieve and monitor our firm’s ongoing compliance with the requirements of the BSA and the implementing regulations under it. 




Signed: R. Keith Aufhauser


Title: President


Date:  December 29, 2016.