RegAlert2006-06-07
Added · Updated
Application of Due Diligence Regulations for Foreign Accounts to Introduced Accounts and Give-Up Arrangements in the Futures Industries
The Financial Crimes Enforcement Network clarifies that futures commission merchants must comply with correspondent account due diligence rules when they execute account agreements directly with introduced foreign financial institutions, establishing a formal relationship. For private banking accounts, a futures commission merchant is subject to due diligence obligations only if it imposes minimum aggregate account requirements on introduced non-U.S. person accounts and assigns a liaison officer. In give-up arrangements, only the carrying broker, which accepts funds and executes account-opening documents, is subject to the correspondent account rule, while the executing broker is not.
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FIN-2006-G011
Issued Date
Guidance Subject
Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to Certain Introduced Accounts and Give-Up Arrangements in the Futures Industries
The Financial Crimes Enforcement Network is issuing this guidance to clarify the obligations of futures commission merchants subject to the final due diligence rules implementing section 312 of the USA PATRIOT Act (the “section 312 rules”).
Specifically, this guidance addresses (1) how accounts introduced by introducing brokers in commodities to futures commission merchants should be treated for the purposes of complying with the due diligence rule for correspondent accounts for foreign financial institutions (the “correspondent account rule”) and the due diligence rule for private banking accounts (the “private banking rule”) and (2) how the correspondent account rule applies to futures commission merchants operating in give-up arrangements.
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Lineage: In force
Source: Financial Crimes Enforcement Network — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works