AML-CIP Requirements for Private Placement Transactions

The world of private placement transactions is one that is highly scrutinized by both FINRA and the SEC. It seems that with all of the Ponzi schemes and actions for misappropriation of investor monies, private placement transactions are always on the regulators’ exam priorities lists. With that in mind, it is imperative that firms participating in such offerings ensure that their compliance programs are kept current and up-to-date. However, an area that is often overlooked in such compliance preparation is the Anti-Money Laundering (“AML”) / Customer Identification Program (“CIP”) process.

As with other products sold by a firm, AML and CIP considerations must be taken into account when dealing with Read More…

Customer Identification Program (CIP)-Part 2

Part 2 The CIP rule defines an account as a formal relationship with a broker-dealer established to effect transactions in securities. These transactions may include, but are not limited to: purchasing or selling securities; loaning and borrowing securities; and holding securities (or other assets) as safekeeping or collateral. This definition does have two exclusions, though.[…]

Customer Identification Program (CIP)-Part 1

Part 1

A broker-dealer must establish, document, and maintain a written Customer Identification Program (CIP) as a part of the broker-dealer’s AML compliance program (31 CFR 1023.220). The CIP must be appropriate for the broker-dealer’s size and business, and it must outline the following procedures: identity verification procedures; recordkeeping procedures; procedures for determining whether a customer appears on any government lists for suspicious activities; and procedures for notifying customers of information requests related to identity verification. These CIP requirements apply to all customers opening a new account (as defined in the BSA), including Delivery Versus Payment (DVP) accounts. Depending on the Read More…