Finra proposes a ten-day pause on suspicious account moves

Finra proposed a rule this week that would let brokerage firms freeze any transaction or disbursement for up to ten days when they reasonably suspect fraud. The 'speed bump,' filed with the SEC and reported by AdvisorHub, would apply to all customer accounts, whatever the client's age or capacity.

For clients 65 and older, or those a firm believes are mentally or physically impaired, the proposal sets a longer hold. It would run 145 business days. That is about seven months. Finra's current limit for that group is 55 business days.

Finra's rationale is direct. Technology and artificial intelligence have made scams harder for firms and investors to identify, and the schemes now target people without regard to age, capacity, or sophistication. Fraud is an account-level risk, not a demographic one.

Benjamin Schiffrin, director of securities policy at Better Markets and a former SEC attorney, told AdvisorHub the proposal reflects a real escalation. AI makes it easier to dupe people, he said. Brokers, as the financial experts, should help catch scams before the money is gone.

The proposed rule governs broker-dealers, not RIAs. But the client calls the advisor when the custodian freezes a wire. A custodian's hold lands on the advisor's desk as a worried client, and the advisor has to make it read as protection rather than suspicion.

For advisors, the ten-day hold is a concrete anti-fraud tool: a defined window to investigate a request that feels wrong. What needs preparing is the procedure. Account-opening documents can note that a suspected fraud hold may delay disbursement for up to ten days. The annual security conversation can cover the pause in plain language. A client who has heard the explanation once will not read the pause as an accusation when it arrives.

The job during a hold is triage. Did the client actually make this request? Does the voice on the phone sound like the client? Is there a family member who should know? The ten-day window makes those questions answerable without burning the relationship. The alternative, a same-day wire that turns out to be an AI-facilitated scam, ends with an empty account and a client who asks why nobody stopped it.

Advisors should also decide how this shows up in their client service. Some firms will adopt a policy of never executing a first-time wire without verbal confirmation; others will pass the custodian's hold straight through. The proposal turns 'your account has a fraud pause' from an evasive excuse into a plain explanation. The policy choice becomes visible in the first stressful situation, which is when trust is actually built.

The senior extension raises the stakes. A 145-business-day hold on a legitimate distribution would wreck a client's plans; a hold of that length on a fraudster's wire can preserve a life's savings. Advisors serving older clients should ask custodians how an extended hold is triggered, who gets notified, and what documentation the firm will provide when a family member questions a freeze.

The proposal has two parts. Anyone can get a ten-day pause. Seniors and the impaired can get a 145-business-day hold. The gap is a policy statement: everyone gets protection, but the most exposed get more time.

The pause cannot identify a scam on its own. It buys time. The human work — calling the client, checking the story, reaching a family member — still belongs to the advisor. Rehearse that conversation before the first freeze. The rule still needs SEC approval, and custodians will decide its value in the systems they build around it. Ten days should be a conversation, not a silent freeze. Advisors who prepare for it will have an easier time when the first account hits the pause.