Regulatory Alerts2006-06-07
Added
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.