The SEC, in conjunction with the Financial Crimes Enforcement Network and other federal agencies, released the Policy Statement on Obtaining and Retaining Beneficial Ownership Information for Anti-Money Laundering Purposes (Statement) on March 5, 2010. The Statement is intended to provide guidance to registered investment companies and broker-dealers, among other registrants, that are subject to the USA Patriot Actís requirements to adopt and implement a Customer Identification Program as part of their Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) compliance program.
According to the Statement, registrants (including registered investment companies and broker-dealers but generally excluding advisers and private funds) should include policies within their AML programs to identify beneficial owners of accounts because, in the agenciesí view, certain entities may conceal the true identity of the owner of assets that may be derived from illegal means. Such entities may include trusts, business entities or private investment companies. If a firm identifies an account that may pose a higher risk of AML activity, it should perform heightened due diligence to verify the beneficial owner and source of the assets in the account.
On its surface, the Statementís guidance is meant to enhance firmsí AML programs. However, there are critics who believe in effect the agencies expanded the existing Customer Identification Program requirements required by the USA Patriot Act. Regardless, as the guidance was issued on 3/5/10, firms should evaluate their AML programs for compliance with SECís expectations.