Max Wachtel wrote:
> received this today BD, please advise

The Patriot Act requires that financial institutions must establish
appropriate, and where necessary, enhanced due diligence policies,
procedures, and controls that are reasonably designed to detect and
report instances of money laundering through foreign private banking and
correspondent accounts.

A final rule (as amended in 2006 and 2007) issued by Treasury requires
covered financial institutions, including FCMs and IBs, to establish due
diligence programs that include appropriate, specific, risk-based, and
where necessary, enhanced policies, procedures and controls that are
reasonably designed to detect and report, on an ongoing basis, any known
or suspected money laundering activity conducted through or involving
any correspondent account established, maintained, administered, or
managed by such covered financial institution in the United States for a
foreign financial institution.

The same rule also requires covered financial institutions, including
FCMs and IBs, to maintain due diligence programs that are reasonably
designed to detect and report known or suspected money laundering or
suspicious activity conducted through or involving any private banking
account that is established, maintained, administered, or managed in the
United States by such financial institution for a non-U.S. person. The
due diligence program must ensure, at a minimum, that the financial
institution takes reasonable steps to ascertain the identity of the
nominal and beneficial owners of the private account, whether any such
person is a senior foreign political figure, the sources of funds
deposited into the private banking account and the purpose and expected
use of the account. The program also must ensure that the financial
institution reviews the activity in the private banking account to
ensure it is consistent with the information obtained about the client
and reports known or suspected money laundering or suspicious activity
conducted to, from or through the private banking account. Where a
senior foreign political figure is the nominal or beneficial owner of a
private banking account, the program must include enhanced scrutiny of
the account that is reasonably designed to detect and report
transactions that may involve the proceeds of foreign corruption.

Notwithstanding the final rule for correspondent accounts, Treasury has
issued guidance confirming that an IB is not subject to the
correspondent account due diligence requirements where it merely
solicits and accepts orders for transactions in commodity futures and
options.

Treasury has issued guidance for FCMs and IBs that addresses: (1)
whether all five of the risk factors enumerated in the final due
diligence rule for correspondent accounts must be applied in every
instance; (2) how certain intermediated relationships should be treated
for purposes of the correspondent account rule; (3) how the due
diligence rule for private banking accounts applies to clearing firms;
(4) how firms should determine whether a foreign entity is a "foreign
financial institution;" and (5) how futures firms should evaluate the
purpose and anticipated activity of a correspondent account.

Treasury also has issued a proposed rule that will require a covered
financial institution, including an FCM or IB, to ensure that its due
diligence program provides for enhanced due diligence for correspondent
accounts that have been established, maintained, administered, or
managed for certain foreign banks.

**

Educate yourself here: http://www.fincen.gov/statutes_regs/files/hr3162.pdf

HTH
HAND
--
Dave