The Treasury Department's Financial Crimes Enforcement Network (FinCEN), recently issued proposed rules under the Bank Secrecy Act to clarify and strengthen customer due diligence requirements — including anti-money laundering rules — for banks, brokers or dealers in securities, mutual funds, and futures commission merchants as well as introducing brokers in commodities.
FinCEN spokeswoman Candice Basso told ThinkAdvisor Wednesday that FinCEN continues to work with the Securities and Exchange Commission to draft a regulatory proposal on AML programs and suspicious activity reporting for investment advisors. Basso did not have a timeline for when such a proposal would be released.
FinCEN director James Freis had said in late 2011 that FinCEN would work with the SEC as well as state regulators as it "revisited" the topic of advisors having anti-money laundering plans. He said the advisor AML rules would build "on the changes to that industry pursuant to the Dodd-Frank Act, the SEC rules implementing Dodd-Frank and other changes."
FinCEN's proposed amendments to the Bank Secrecy Act for broker-dealers, banks and mutual funds would add a new requirement that these entities "know and verify the identities of the real people (also known as beneficial owners) who own, control, and profit from the companies they service."
Comments on that proposal are due Oct. 3.
As David Cohen, undersecretary for terrorism and financial intelligence at Treasury, explained in an August commentary, the proposed rule takes "an important step" to close a loophole that still exists in financial security: "Banks and brokerages often do not know the identity of the people behind the businesses that open accounts."
The proposed new regulation would require, when an account is opened, that banks and other financial institutions identify and verify the identity of the "real people behind the businesses who are their customers," Cohen said. "While this may sound rather technical, it nonetheless is a critically important step forward in the fight against dirty money."
