Regulatory Alerts2007-09-05
Added
Application of the Correspondent Account Rule to Executing Dealers Operating in Over-The-Counter Foreign Exchange and Derivatives Markets Pursuant to Prime Brokerage Arrangements
Executing dealers in over-the-counter foreign exchange and derivatives markets are not required to comply with the correspondent account rule due diligence provisions for prime brokerage clients. The guidance clarifies that transactions conducted pursuant to prime brokerage arrangements do not constitute the establishment, maintenance, administration, or management of a correspondent account because the prime broker, rather than the client, becomes the counterparty to the executing dealer. Consequently, the interaction between an executing dealer and a prime brokerage client is limited to the initiation of trade-by-trade transactions and does not trigger the specific obligations under section 312 of the USA PATRIOT Act.
Topics
aml
fx
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