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Section 312 of the USA PATRIOT Act requires U.S.
financial institutions, including broker dealers, to establish due
diligence policies, procedures, and controls reasonably designed to
detect and report money laundering through correspondent accounts
and private banking accounts that U.S. financial institutions
establish or maintain for non-U.S. persons. Correspondent accounts,
in this context, include any account established for a foreign
financial institution to receive deposits from, or to make payments
or other disbursements on behalf of, the foreign financial
institution, or to handle other financial transactions related to
such foreign financial institution.
On December 21, 2005 the U.S. Treasury Department and
the Financial Crimes Enforcement Network (“FinCEN”) issued a “final
rule” regarding section 312 which sets forth the requirements
regarding the due diligence and special due diligence programs for
private banking accounts, and due diligence for correspondent
accounts for non-U.S. persons.
As
a reminder to all member organizations, these provisions become
effective July 5, 2006 with respect to all “new accounts”
established after that date. The provisions become effective October
2, 2006 with respect to all “existing accounts” opened prior to July
5, 2006.
Information regarding
section 312, including the final rule release and a section 312 Fact
Sheet, can be found at http://www.fincen.gov/section312.pdf.
Questions regarding this
Information Memo may be directed to Stephen Kasprzak at (212)
656-5226.
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Grace
B. Vogel
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Executive
Vice President
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Member
Firm Regulation
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