RegAlert2008-03-04
Added · Updated
Customer Identification Program Rule No-Action Position Respecting Broker-Dealers Operating Under Fully Disclosed Clearing Agreements According to Certain Functional Allocations
FinCEN will take no action against a clearing firm for failing to comply with the Customer Identification Program rule regarding introduced customers when the introducing firm exclusively retains the functions of opening and approving customer accounts and directly receiving and accepting orders. This no-action position also extends to piggybacking arrangements where the piggybacking firm retains these specific functions through an introducing firm. Despite this relief from CIP rule obligations, clearing and introducing firms must maintain risk-based anti-money laundering policies and controls to assess, monitor, and mitigate money laundering risks associated with these arrangements.
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FIN-2008-G002
Issued Date
Guidance Subject
Customer Identification Program Rule No-Action Position Respecting Broker-Dealers Operating Under Fully Disclosed Clearing Agreements According to Certain Functional Allocations
In the securities brokerage industry, certain broker-dealers ("introducing firms") enter into clearing agreements with other broker-dealers ("clearing firms") according to the provisions of the rules of a broker-dealer self-regulatory organization, which permit the introducing firm and clearing firm to specify the respective functions and responsibilities of each firm. At a minimum, the agreements must specify the responsibility for, among other things, opening and approving customer accounts, extending credit, maintaining books and records, confirmations and statements, acceptance of orders, and execution of transactions.
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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
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