FINRA Risk Monitoring in 2025: How Firms Can Strengthen CAT & CAIS Compliance with RSMS and CAIS-Con

 

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In 2025, regulatory expectations for broker-dealers have evolved faster than ever. With increasing scrutiny from FINRA and the SEC, firms are expected to maintain airtight compliance programs, especially around risk monitoring, cybersecurity, data governance, and trade reporting accuracy. The latest FINRA 2025 Annual Regulatory Oversight Report (AROR) makes it clear: risk monitoring is now the foundation of regulatory compliance.

To remain compliant and avoid costly penalties, firms must reinforce their programs for:

  • Consolidated Audit Trail (CAT) Compliance

  • Customer Account Information System (CAIS) reporting

  • Anti-money laundering and market manipulation surveillance

  • Cybersecurity and third-party risk governance

  • Extended-hours and manipulative trading oversight

This blog breaks down FINRA’s risk-monitoring expectations and shows how advanced RegTech solutions like RSMS and CAIS-Connect help firms automate compliance, reduce reporting errors, and stay audit-ready.

📌 Why Risk Monitoring Matters More Than Ever

FINRA stresses that firms must maintain a proactive approach when it comes to identifying, measuring, and mitigating risks that impact investors and market integrity. Gaps in surveillance or trade reporting systems—especially CAT and CAIS—can now result in:

  • Regulatory penalties

  • Reconciliation backlogs

  • Audit failures

  • Customer impact

  • Reputational risk

To avoid these outcomes, firms must upgrade outdated, manual, or spreadsheet-driven compliance processes.

📌 Cybersecurity & Fraud: A Top FINRA Priority

FINRA’s AROR highlights a surge in:

  • Phishing and cyber-enabled fraud

  • Ransomware targeting financial data

  • Vendor system vulnerabilities

Firms must adopt multi-layer monitoring systems and closely evaluate their third-party vendors’ controls. A single cyber gap at a vendor can still trigger Regulation S-P violations.

📌 Market Integrity, Manipulative Trading & Extended-Hours Risk

Firms must enhance surveillance protocols, particularly for:

  • Spoofing and layering

  • Best execution oversight

  • Thin-liquidity trading periods

  • CAT reporting accuracy and timelines

CAT data inaccuracies continue to be one of FINRA’s

 most common exam findings—which is why CAT automation tools are now considered essential.

📌 CAT and CAIS: At the Core of FINRA’s 2025 Expectations

Consolidated Audit Trail (CAT) Compliance requires firms to submit accurate lifecycle reporting for every order.

Customer Account Information System (CAIS) requires firms to maintain correct account-holder and relationship data.

FINRA is now laser-focused on:

  • Data accuracy

  • Entity association matching

  • Error management and remediation

  • Timely submissions

  • Ongoing reconciliation

Even small mismatches (like name, DOB, LEI or account link errors) trigger CAIS exceptions—which, if unresolved, expose firms to enforcement risk.

📌 Technology’s Role: Why RSMS and CAIS-Connect Are Game-Changers

To keep pace with the 2025 regulatory landscape, firms are turning to RegTech. The most impactful solutions are those designed specifically for FINRA risk monitoring—like:

ToolPurpose
Regulatory Surveillance and Management System (RSMS)Automates risk monitoring, CAT/CAIS oversight, and regulatory surveillance
CAIS-ConnectSpecialized automation for Customer Account Information System (CAIS) compliance
FINRA CAT ModulesEnsures complete and accurate CAT submissions, validation, and reconciliation

RSMS by Capital Market Solutions enables firms to:

  • Monitor risk across surveillance, AML, CAT, and CAIS from one platform

  • Detect reporting errors instantly

  • Perform automated reconciliations

  • Receive real-time alerts for exceptions

  • Stay audit-ready with a full compliance trail

CAIS-Connect, on the other hand, simplifies:

  • Entity and relationship reconciliation

  • Name-matching and attribute validation

  • CAIS submission accuracy

  • Ongoing regulatory change management

📌 Third-Party Risk: FINRA’s Newest Hot Zone

FINRA now expects:

  • Strict vendor oversight

  • Documented risk assessments

  • Cyber and data-security controls

  • Awareness of fourth-party risks too (vendor’s vendor)

Platforms like RSMS offer centralized vendor oversight dashboards, making it easier to meet this new expectation.

✅ Conclusion: Compliance Leaders Will Be Technology Leaders

FINRA is raising the bar in 2025—and firms that continue relying on spreadsheets, manual reviews, or siloed systems will struggle.

Modern compliance requires:

  • Automation

  • Centralized surveillance

  • CAT & CAIS reporting accuracy

  • Real-time risk visibility

With RSMS and CAIS-Connect, firms can eliminate manual effort, reduce error exposure, protect investors, and meet evolving FINRA CAT and FINRA CAIS obligations with confidence.

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