Customer Identification Programs for Mutual Funds

customer. These procedures should describe:
(A) When the broker-dealer should not open an account; (B) The terms under which a customer may conduct transactions while the broker-dealer attempts to verify the customer’s identity; (C) When the broker-dealer should close an account after attempts to verify a customer’s identity fail; and (D) When the broker-dealer should file a Suspicious Activity Report in accordance with applicable law and regulation. (3) Recordkeeping. The CIP must include procedures for making and maintaining a record of all information obtained under procedures implementing paragraph (b) of this
section.
(i) Required records. At a minimum, the record must include:
(A) All identifying information about a customer obtained under paragraph (b)(2)(i) of this section, (B) A description of any document that was relied on under paragraph (b)(2)(ii)(A) of this section noting the type of document, any identification number contained in the document, the place of issuance, and if any, the date of issuance and expiration date; (C) A description of the methods and the results of any measures undertaken to verify the identity of a customer under paragraphs (b)(2)(ii)(B) and (C) of this section; and (D) A description of the resolution of each substantive discrepancy discovered when verifying the identifying information obtained. (ii) Retention of records. The broker￾dealer must retain the records made under paragraph (b)(3)(i)(A) of this
section for five years after the account
is closed and the records made under paragraphs (b)(3)(i)(B), (C) and (D) of this section for five years after the record is made. In all other respects, the records must be maintained pursuant to the provisions of 17 CFR 240.17a–4. (4) Comparison with government lists. The CIP must include procedures for determining whether a customer appears on any list of known or suspected terrorists or terrorist organizations issued by any Federal government agency and designated as such by Treasury in consultation with the Federal functional regulators. The procedures must require the broker￾dealer to make such a determination within a reasonable period of time after the account is opened, or earlier if required by another Federal law or regulation or Federal directive issued in connection with the applicable list. The procedures also must require the broker￾dealer to follow all Federal directives issued in connection with such lists. (5)(i) Customer notice. The CIP must include procedures for providing customers with adequate notice that the broker-dealer is requesting information to verify their identities. (ii) Adequate notice. Notice is adequate if the broker-dealer generally describes the identification requirements of this section and provides such notice in a manner reasonably designed to ensure that a customer is able to view the notice, or is otherwise given notice, before opening an account. For example, depending upon the manner in which the account is opened, a broker-dealer may post a notice in the lobby or on its Web site, include the notice on its account applications or use any other form of oral or written notice. (iii) Sample notice. If appropriate, a broker-dealer may use the following sample language to provide notice to its customers:
Important Information About Procedures for Opening a New Account To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. (6) Reliance on another financial institution. The CIP may include procedures specifying when the broker￾dealer will rely on the performance by another financial institution (including an affiliate) of any procedures of the broker-dealer’s CIP, with respect to any customer of the broker-dealer that is opening an account or has established an account or similar business relationship with the other financial institution to provide or engage in services, dealings, or other financial transactions, provided that:
(i) Such reliance is reasonable under the circumstances; (ii) The other financial institution is subject to a rule implementing 31 U.S.C. 5318(h), and regulated by a Federal functional regulator; and (iii) The other financial institution enters into a contract requiring it to certify annually to the broker-dealer that it has implemented its anti-money laundering program, and that it will perform (or its agent will perform) specified requirements of the broker￾dealer’s CIP. (c) Exemptions. The Commission, with the concurrence of the Secretary, may by order or regulation exempt any broker-dealer that registers with the Commission pursuant to 15 U.S.C. 78o or 15 U.S.C. 78o–4 or any type of account from the requirements of this
section. The Secretary, with the
concurrence of the Commission, may exempt any broker-dealer that registers with the Commission pursuant to 15 U.S.C. 78o–5. In issuing such exemptions, the Commission and the Secretary shall consider whether the exemption is consistent with the purposes of the Bank Secrecy Act, and in the public interest, and may consider other necessary and appropriate factors. (d) Other requirements unaffected. Nothing in this section relieves a broker￾dealer of its obligation to comply with any other provision of this part, including provisions concerning information that must be obtained, verified, or maintained in connection with any account or transaction. Dated: April 28, 2003. By the Financial Crimes Enforcement Network. James F. Sloan, Director. Dated: April 29, 2003. In concurrence: By the Securities and Exchange Commission. Margaret H. McFarland, Deputy Secretary. [FR Doc. 03–11017 Filed 5–8–03; 8:45 am] BILLING CODE 4810–02–P; 8010–01–P SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 270 [Release No. IC–26031; File No. S7–26–02] DEPARTMENT OF THE TREASURY 31 CFR Part 103 RIN 1506–AA33 Customer Identification Programs for Mutual Funds AGENCIES: Financial Crimes Enforcement Network, Treasury; Securities and Exchange Commission. ACTION: Joint final rule. SUMMARY: The Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission are jointly adopting a final rule to implement section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (the Act). Section 326 requires the Secretary