The holidays bring an uptick in generosity – festive gatherings, year-end celebrations, and of course, the tradition of gift giving. But for financial services firms, this season of goodwill can also usher in heightened compliance risk. A single misstep in gifts and gratuities could push firms from “one gift away” to violating FINRA Rule 3220.
Fortunately, this risk is entirely preventable. By pairing modern compliance technology with clear policies and strong governance, firms can confidently navigate year-end gifting without fear of financial penalties, sanctions, or damage to client trust.
Complying with FINRA Rule 3220 is challenging in the best of times – and even more so during a season marked by increased exchanges of gifts and acknowledgments. Large broker-dealers or those with high transaction volumes face especially complex oversight, often managing requests across hundreds or even tens of thousands of employees. Tracking gifts, gratuities, and contributions requires a systematic, scalable, and consistent process for submission, approval, monitoring, and recordkeeping.
And herein lies the hidden holiday hazard: while one gift may fall comfortably within internal thresholds, multiple gestures of appreciation to the same client over the course of a year can unintentionally cross policy limits – or worse, create a compliance breach. With regulators placing increasing focus on conflicts of interest, even seemingly small oversights can result in fines, penalties, or reputational harm.
Firms often struggle to comply due to the lack of an effective process and supporting technology. For example:
- Tracking and reporting on the status of gifts and gratuities typically requires cumbersome data manipulation, often across multiple technology solutions (both internal and external).
- Supervising and tracking multiple contributions for the same event often requires repetitive data entry and is subject to errors.
- Determining and enforcing firm policy and threshold levels requires significant effort to ensure accuracy and efficiency.
- Identifying threshold violations of gifts to a single person during a time period and from multiple representatives is difficult without technology solutions.
- Relying on manual spreadsheets is inefficient, and can result in tracking errors and difficulty in reporting and analysis.
- Reviewers are unable to quickly view threshold status levels or identify potential violations efficiently without a system of automated alerts and visual indicators.
- Manual processes and forms can make the process difficult and cumbersome for financial professionals, preventing them from focusing on their core business-building objectives.
- Reconciling business entertainment data with data from expense management systems can be difficult and subject to errors and double entry.
Supervision and Compliance Obligations
To comply, firms must implement procedures that ensure:
- Accurate tracking and reporting of gifts
- Ability to demonstrate compliance through proper documentation and review processes
- Maintenance of records to support compliance
To ensure compliance, firms benefit from leveraging organization-wide procedures and technology to enable the efficient review, approval, management, and monitoring of gifts and gratuities submission requests against firm-defined thresholds, so that all submissions, regardless of the amount or point of origin, are tracked accurately.
A technology solution that automates the tracking of gifts and gratuities given or received at the individual or firm level, such as RegEd’s Gifts, Gratuities and Contributions solution, can be particularly efficient and effective for reducing the risk of non-compliance for firms.
How does RegEd’s Gifts, Gratuities and Contributions solution help firms comply with FINRA Rule 3220?
RegEd’s Gifts, Gratuities and Contributions solution streamlines the end-to-end compliance process for registered reps and other persons who are subject to either regulatory or company policy.
In automatically aggregating totals for individuals and companies, Gifts, Gratuities and Contributions:
- Reduces review time and speeds decisions by enabling management by exception.
- Eliminates the need to track gifts and gratuities with spreadsheets, thereby improving efficiency and reducing the risk of errors.
- Relieves the financial professional of the burden of tracking their limits or what they have given and received.
- Allows reviewers to define policies for a period of time and manage risk proactively with a unified, enterprise solution that provides easy access to the information they require.
- Enables compliance managers and other stakeholders to holistically monitor the exchange of gifts, gratuities, contributions, and other non-cash compensation, track the pre-clearance approval process, supervise in compliance with firm policy, and identify limit violations.
- Comprehensive monitoring and workflow-directed task management through customized questionnaires aligned with FINRA rules and your firm’s policies and procedures.
- Real-time alerts for exceptions, enabling quick responses to potential compliance issues.
- Sophisticated hierarchy management, helping firms efficiently manage compliance across all levels.
- Capture expenses or gifts from any expense or internal system to eliminate duplicate entries while ensuring proper reporting.
- Threshold management to set and define threshold policies, limits and aggregations of contacts for different categories of gifts, gratuities and business entertainment disclosures. Firms can easily adjust thresholds for any future changes to Rule 3220 or the firm’s policies.
- Contact directory allows firms to create, merge, and manage contact lists for gift, gratuity and contribution submissions.
- Comprehensive reporting and audit trails.
How RegEd Can Help
RegEd’s Gifts, Gratuities, and Contributions solution provides centralized tracking, approval workflows, and robust reporting capabilities to help ensure full compliance with the new gift-giving regulations. Firms can effectively manage the end-to-end process of tracking gifts and entertainment, maintain audit trails, and satisfy internal and regulatory documentation requirements.
Schedule a consultation to explore how our solution can enhance your supervision program to help your firm stay compliant, efficient, and audit-ready.
About RegEd
RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients that represent more than 35 of the top 50 insurance companies.
Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.
Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please visit www.reged.com.