Frequently Asked Questions about Remote Inspections Pilot Program

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Temporary Remote Inspections Under Rule 3110.17

Q1: When does the temporary relief to conduct remote inspections of offices under Rule 3110.17 end?

A1: As announced in Regulatory Notice 24-02 and consistent with Rule 3110.18(m), the temporary relief to conduct remote inspections of offices will sunset on June 30, 2024. After that date, a member firm can no longer fulfill its inspection obligations under Rule 3110(c)(1) remotely unless the firm affirmatively elects to participate in FINRA’s Remote Inspections Pilot Program in accordance with Rule 3110.18 (Pilot Program).

Q2: My firm understands that participating in the Pilot Program is voluntary so my firm does not plan to participate. Once Rule 3110.17 ends on June 30, 2024, does that mean my firm will be required to fulfill its Rule 3110(c)(1) inspection obligations solely through physical, on-site visits to its offices and locations?

A2: Yes. Starting July 1, 2024, a firm that does not elect to affirmatively participate in the Pilot Program will be required to conduct inspections of all office and locations subject to Rule 3110(c) in an on-site manner as stated in Regulatory Notice 11-54.

Remote Inspections Under Rule 3110.18

Q3: What is the Pilot Program?

A3: Rule 3110.18 establishes a voluntary, three-year Pilot Program to allow eligible firms the option of fulfilling their obligation under Rule 3110(c)(1) by conducting inspections of some or all branch offices, including offices of supervisory jurisdiction (OSJs), and non-branch locations (i.e., unregistered offices or non-registered locations) remotely without an on-site visit to such office or location subject to the terms of the Pilot Program.

Q4: If an eligible firm elects to participate in the Pilot Program, is the firm obligated to conduct all of its inspections remotely?

A4: No. The Pilot Program provides an eligible firm the flexibility to fulfill its Rule 3110(c)(1) obligations by conducting inspections remotely or on-site, on a location-by-location basis, in accordance with Rule 3110.18.

Q5: Does the Pilot Program change the inspection schedules set forth under Rule 3110(c)(1) or the requirement to prepare an inspection report under Rule 3110(c)(2)?

A5: No. The Pilot Program does not change the inspection cycles or other requirements of Rule 3110(c). Under Rule 3110(c)(1), every OSJ and any branch office that supervises one or more non-branch locations must be inspected at least annually (on a calendar-year basis); every branch office that does not supervise one or more non-branch locations must be inspected at least every three years; and every non-branch location must be inspected on a regular periodic schedule that is presumed to be at least every three years. Further, Rule 3110(c)(2) will continue to require firms to reduce the inspection of each office or location to a written report that must be kept on file by the member for a minimum of three years, unless the inspection is being conducted pursuant to paragraph (c)(1)(C) and the regular periodic schedule is longer than a three-year cycle, in which case the report must be kept on file at least until the next inspection report has been written.

Enrollment and Withdrawal (Opting In and Opting Out)

Q6: If an eligible firm wants to participate in the Pilot Program, how does it submit an “opt-in notice”?

A6: FINRA is currently developing functionality in FINRA Gateway to allow firms to provide an “opt-in notice” to FINRA. FINRA expects the functionality to be available by June 1, 2024. Firms may view the current concept under development here.* 

* Draft Concept of Functionality

Q7: If a firm does not want to participate in Year 1 of the Pilot Program, must it submit an “opt-out notice”?

A7: A firm that does not want to participate the Pilot Program is not required to take any action to notify FINRA. However, a firm that does affirmatively opt in for Pilot Year 1, which starts on July 1, 2024 and ends on December 31, 2024, will be automatically deemed to have elected and agreed to participate in the Pilot Program for subsequent Pilot Years until the Pilot Program expires, subject to the terms and conditions of Rule 3110.18. If such participating firm does not want to participate in any subsequent year of the Pilot Program, the firm must withdraw by submitting an “opt-out notice” through FINRA Gateway within the timeframes provided.

Q8: As part of the functionality that FINRA is developing for the “opt-in” process, will such system notify a firm if it is ineligible to participate in the Pilot Program?

A8: FINRA is developing functionality that is intended to preclude a firm that meets certain of the ineligibility criteria from participating in the Pilot Program. For example, a firm whose FINRA’s membership became effective within the prior 12 months; is currently a Rule 4111 “Restricted Firm;” or is a Rule 3170 “Taping Firm” would not be able to participate in the Pilot Program until those ineligibility criteria no longer apply. However, a firm is ultimately responsible for determining its eligibility at the outset and throughout the Pilot Program, as well as determining office and location eligibility in accordance with Rule 3110.18.

Q9: Can an eligible firm affirmatively elect to participate in the Pilot Program starting in Year 2 or any subsequent year?

A9: Yes. An eligible firm can affirmatively opt-in starting Year 2 or any subsequent Pilot Year. An eligible firm that does not elect to participate in Pilot Year 1 between June 1, 2024, through June 26, 2024, may elect to participate in the Pilot Program in accordance with the requirements of Rule 3110.18(i) for a subsequent Pilot Year on or before these dates: 

  • December 27, 2024, to join Pilot Year 2 (January 1, 2025, to December 31, 2025); 
  • December 27, 2025, to join Pilot Year 3 (January 1, 2026, to December 31, 2026); and 
  • December 27, 2026, to join Pilot Year 4 (January 1, 2027, to June 30, 2027).

A firm that opts-in for any given Pilot Year is required to participate in the Pilot Program for the duration of such Pilot Year and to comply with the requirements of Rule 3110.18.

Q10: If a firm no longer wants to continue participating in the Pilot Program, can the firm simply stop reporting its data and information required under Rule 3110.18(h)?

A10: No. A firm that elects to participate in a Pilot Year is committed to adhering to the terms of the Pilot Program for the full Pilot Year. For example, if a firm enrolls in Pilot Year 2, which runs from January 1, 2025 through December 31, 2025, then provides FINRA an “opt-out notice” on July 31, 2025, the firm would still need to provide FINRA with the required data and information covering the remainder of Pilot Year 2. The firm’s opt-out notice, dated July 25, 2025, means that the firm has withdrawn from the Pilot Program and will not participate in Pilot Years 3 and 4. A firm that wants to withdraw from the Pilot Program must affirmatively do so by providing FINRA with an “opt-out notice” in accordance with Rule 3110.18(i), which requires a firm to provide such notice at least five calendar days before the end of the current Pilot Year. Regulatory Notice 24-02 sets forth the specific dates.

Data and Information

Q11: What does FINRA plan to do with the data and information it receives for the Pilot Program?

A11: A core use of the data and information is to assess the effectiveness of remote inspections relative to on-site inspection to help shape any amendments to Rule 3110(c) that would help to modernize an inspection program in the evolving workplace environment.

Q12: What data and information will FINRA be collecting as part of the Pilot Program?

A12: A firm that elects to participate in the Pilot Program will be required to provide the following data and information to FINRA in the form and manner determined by FINRA: 

  • quarterly data for each Pilot Year in which they are participating, as specified in Rule 3110.18(h)(1)(A) – (F); 
  • supplemental written supervisory procedures for conducting remote inspections in compliance with Rule 3110.18(h)(1)(G), and if applicable, any subsequently amended procedures; 
  • for a firm participating in Pilot Year 1, additional data and information covering January 1, 2024, through June 30, 2024, the period preceding the effective date of Rule 3110.18, as set forth under Rule 3110.18(h)(2); and 
  • acting in good faith using best efforts, calendar year 2019 inspection data and information as specified under Rule 3110.18(h)(3). 

FINRA notes that the data and information required to be provided under the Pilot Program are aggregated, and not specific to a particular office or location. An overview of the data and information requirements are available here:

Q13: How will firms submit this data to FINRA?

A13: FINRA is currently developing a functionality in FINRA Gateway to allow firms to provide the required data to FINRA, which FINRA expects to have available by October 1, 2024. FINRA will provide further details about the process in subsequent guidance.