FINRA CAT Alert 2025-1: Immediate Steps for CAIS Compliance

Understanding CAT Alert 2025-1 and the SEC Exemption Order

In February 2025, FINRA CAT released CAT Alert 2025-1 alongside the SEC’s Exemption Order regarding Customer Account and Information System (CAIS) reporting, significantly impacting industry members’ reporting obligations. The exemption allows firms to omit specific personal information—such as names, addresses, and birth years—for individuals whose Social Security Numbers (SSNs) or Individual Taxpayer Identification Numbers (ITINs) have been transformed for CAIS reporting. While this relief reduces certain data reporting requirements, it also necessitates careful review and strategic adjustments to reporting processes. Firms must take immediate action to understand the exemption’s scope, assess internal processes, and prepare for forthcoming technical updates from FINRA CAT.

Immediate Actions for Industry Members

Review the SEC Exemption Order

Industry members and reporting agents need to understand the scope of relief granted, particularly regarding the omission of names, addresses, and years of birth for natural persons whose Social Security Numbers (SSNs) or Individual Taxpayer Identification Numbers (ITINs) have been transformed for CAIS reporting.

Monitor FINRA CAT Alerts

CAT LLC and the Plan Processor are evaluating the impact of the exemption and will provide additional technical specifications and implementation guidance in forthcoming CAT Alerts.

Assess Internal Reporting Processes

Identify whether your firm’s reporting systems and procedures and/or the reporting systems of your CAT Reporting Agents include the personal information now exempted. Work with internal IT teams and reporting agents to determine what modifications are required. It is particularly important to understand timelines related to these changes.

Pause Reporting of Exempted Data

When feasible, refrain from reporting names, addresses, and years of birth of natural persons for transformed identifiers while awaiting further instructions from the Plan Processor.

Next Steps for Compliance and Implementation

Await Technical Adjustments

The Plan Processor will likely release updated specifications and schema changes to accommodate the exemption. Be prepared to update reporting logic accordingly.

Engage with Compliance Teams

Work with Compliance and Legal teams to confirm that your reporting aligns with the new exemption and that there are no inadvertent gaps in other CAIS reporting obligations. Compliance and Legal teams should be aware of the risks associated with continuing to report the exemptive data to CAIS.

Prepare for Testing and Implementation

Once the technical adjustments are provided, industry members may need to conduct internal testing or participate in a CAT testing environment to validate the new reporting approach. This is also a great opportunity to engage with a third-party provider to perform the necessary due diligence on your CAT and CAIS reporting to further ensure compliance.

Contact the CAT Help Desk if Needed

 If there are uncertainties or system limitations, reach out to the FINRA CAT Help Desk for further clarification.

Key Takeaways

• The exemption is effective immediately, but technical changes are forthcoming that will be required to adjust current validation processes in place at FINRA CAT, LLC.  Immediate omission of the scoped data of the release would likely result in errors based on the current technical specifications.
• Firms should monitor updates from FINRA CAT, LLC. and pause reporting any of the exempted data where applicable that would not lead to errors.
• System updates will likely be required, so coordination with technology and compliance teams is crucial. Future CAT Alerts will provide further implementation details, which firms must incorporate into their CAIS reporting processes.

The SEC’s Exemption Order introduces important modifications to CAIS reporting, requiring industry members to stay vigilant as FINRA CAT refines its technical specifications. Firms should proactively evaluate their internal systems, collaborate with compliance and technology teams, and remain engaged with FINRA CAT alerts to ensure proper implementation. While the exemption offers relief from reporting certain personal data, firms must navigate these changes carefully to avoid errors or compliance gaps. Staying informed and prepared will be key to maintaining accuracy and adherence to CAIS reporting regulatory obligations.

Your Partner in Achieving CAT CAIS Compliance

Oyster Consulting’s CAT experts help your firm meet CAT reporting requirements and get the most out of CAT reporting investments. With our support, you can reduce costs, save time, and focus on growing your business while maintaining compliance.

Software to Manage CAT and CAIS Reporting

Our proprietary Oyster Solutions CAT reporting application consolidates all CAT reporting events, error analysis, and validation data into one central program. This powerful application helps identify errors, connections, and missing information in vendor data and CAT-reported data, making the reporting process easier and more efficient for you.

The  Oyster Solutions CAIS Module lets you see CAIS reports and source data on one platform. You can use it with or without the CAT Application. Companies can achieve Full CAIS reporting with the help of a web-based tool. This tool helps them identify and correct errors in their data.