Red-Flag Recognition, Investigation, and Escalation

What this video covers

• The mandatory supervisory three-step sequence: recognize, investigate, escalate, and why each missed step is its own discrete violation
• Four categories of red flags: quantitative suitability, customer-specific suitability, disclosure, and anti-money laundering or AML and fraud
• Why escalation does not mean "report and stop," and the exam trap that documentation of the investigation and conclusion is always required
• The trusted contact person or TCP under the customer-account-information rule: age 18 threshold, reasonable-efforts standard, and purely informational role versus power of attorney
• Suspicious activity report or SAR basics: principal refers to the AML officer, filing with the Financial Crimes Enforcement Network or FinCEN under the Bank Secrecy Act, and the federal crime of tipping off
• Why failure to document the supervisory response is an independent violation of the supervisory-system requirement, separate from the underlying conduct
• How proactive firm supervision connects across Know Your Customer, Regulation Best Interest or RegBI, the discretion rule, breakpoint sales, and over-the-counter or OTC equity recommendations