Regulatory Alerts2008-06-03
Added
Bank Secrecy Act Obligations of a U.S. Clearing Broker-Dealer Establishing a Fully Disclosed Clearing Relationship with a Foreign Financial Institution
FinCEN rules that a fully disclosed clearing agreement between a U.S. clearing firm and a foreign introducing firm constitutes a correspondent account and a customer account under U.S. regulations. This classification obligates the clearing firm to implement a due diligence program for the foreign introducing firm and to verify its identity under the Customer Identification Program rule. The clearing firm is not required to look through the relationship to perform due diligence on the introduced customers, nor is it required to obligate the foreign introducing firm to comply with U.S. anti-money laundering regulations for those accounts. Instead, the clearing firm must apply risk-based policies and monitor transactions conducted for introduced customers.