Compliance review checklist before your firm approves a referral arrangement

Why compliance teams review referral arrangements

A referral reward is outside compensation connected to a client relationship, so most firms treat it as a conflicts question before a revenue question. The request typically lands with the chief compliance officer at a broker-dealer or adviser, the general counsel at a PE firm, the ethics or independence partner at a CPA firm, or a bank's ethics office.

Whoever reviews it will want answers to six questions: what the compensation is, who receives it, what clients are told, what conflicts it creates, whether independence or registration rules apply, and what records the firm keeps. Bring the current program terms and a one-paragraph description of what the partner will actually do. Reviews stall when the reviewer has to guess at either.

What the program facts answer before the review starts

Several questions are answered by SourceX's published program facts. Note the source for each in your review memo.

Rewards are not guaranteed, and nothing beyond the published terms and the signed agreement should be assumed in the review.

The compliance review checklist

Mark each line as cleared, cleared with conditions, or open, and name the person who owns each open item.

Arrangement and role

• Current program terms saved, with the date of the version reviewed
• Written description of the role: introductions and basic fit facts only, no data handling, no negotiating on the company's behalf
• Confirmation that the referred company pays nothing extra because of the referral
• List of client types the firm may and may not introduce

Outside compensation and approvals

• Policy decision: personal outside compensation, or firm revenue paid to a firm entity
• Outside activity disclosure or pre-approval filed where policy requires it
• Registered representatives routed through the broker-dealer's outside activity process; FINRA reported that the SEC approved new FINRA Rule 3290 (Outside Activities) on September 15, 2026, replacing Rules 3270 and 3280, with the effective date to be announced and the current rules applying until then
• Broker-dealer analysis documented without relying on any finder exemption: the SEC proposed a finder exemption in 2020 but did not finalize it, and the statutory M&A broker exemption in Exchange Act section 15(b)(13) concerns transfers of ownership of eligible privately held companies, not data-licensing introductions

Payee and tax

• Payee named, individual or entity, with sign-off that it matches policy
• US payees provide Form W-9 so payments can be reported; non-US individuals use Form W-8BEN, and non-US entities use Form W-8BEN-E
• Reporting thresholds and any withholding confirmed with a tax adviser for the year of payment, since thresholds have changed recently

Conflicts and client disclosure

• Written disclosure to the client before any introduction
• Public recommendations disclose the connection: the FTC's Endorsement Guides FAQ says a connection that would affect how people weigh an endorsement should be disclosed clearly and conspicuously, close to the recommendation
• Clients in active mandates, such as a sale process or restructuring, reviewed case by case
• Confirmation the reward does not change any advice the firm owes the client on alternatives

Independence and professional rules

• CPA firms: under the AICPA Code's Commissions and Referral Fees Rule (ET 1.520), a member in public practice may not accept a commission for recommending a product or service to a client when the firm performs an audit, review, certain compilations or an examination of prospective financial information for that client, and permitted commissions and referral fees must be disclosed; state boards can be stricter
• Firms auditing SEC registrants: SEC auditor-independence rules form a separate regime to check alongside the AICPA Code
• Law firms: the state versions of ABA Model Rules 1.5, 1.8, 5.4 and 7.2 reviewed by the firm's ethics counsel
• Banks: code of conduct and policy on accepting anything of value connected to customer business
• Court-appointed fiduciaries: estate counsel consulted on court disclosure; the receivership asset inventory checklist covers the estate side

Confidentiality and records

• Rule that only basic fit facts are shared, and only with the client's consent
• Approval memo, terms version, disclosure letters, introduction emails and reward statements kept under the firm's retention schedule

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Turning the review into a decision

Red flags a reviewer should stop on

• Any expectation that the partner sends, uploads or describes client records
• Pressure to quote reward amounts or promise outcomes to clients
• A CPA firm introducing a client for which it performs attest services
• Rewards routed to someone other than the approved payee
• A memo that leans on an unadopted or inapplicable exemption
• A client who has not been told about the reward

For the contract itself, pair this review with the referral partner agreement checklist, and use the referral fee disclosure letter template for the client notice. The securities question is covered in more depth in is a finder's fee legal.

Next step

Send your compliance team this checklist with the current program terms. Once approval is on file, register as a partner under the payee your firm approved.