Regulatory Alerts2002-07-15
Added
Customer Identification Programs for Broker-Dealers
The Department of the Treasury and the Securities and Exchange Commission propose regulations to implement Section 326 of the USA PATRIOT Act, requiring broker-dealers to establish customer identification programs. These programs must include reasonable procedures to verify the identity of any person seeking to open an account or being granted trading authority, maintain records of the verification information, and determine whether the person appears on government lists of known or suspected terrorists. The proposed rule defines specific categories such as customers, U.S. persons, and non-U.S. persons, and mandates the collection of minimum identifying information including name, date of birth, addresses, and taxpayer identification numbers or other government-issued identifiers. Broker-dealers must integrate these customer identification procedures into their overall anti-money laundering programs and consider risk factors such as firm size, location, and account types when designing their verification methods.