The Securities Industry Association
, Investment Counsel Association of America
and Financial Planning Association
issued a joint statement
yesterday to clarify a customer identification rule under the USA Patriot Act
In 2003, the SEC
and Treasury Department
issued a rule under the Act requiring broker-dealers to adopt a written Customer Identification Program
(CIP) with procedures for verifying and documenting customer identity, providing customers with notice that this is happening and determining if customers appear on designated terrorist lists.
The rule allowed broker-dealers to rely on other financial institutions to perform the CIP tasks, as long as those institutions were subject to certain anti-money laundering regulations. Since investment advisors were not subject to the specified rules, broker-dealers werenít allowed to rely on advisers for CIP verification.
This is no longer the case. The SEC issued a No Action letter on February 12, 2004 allowing broker-dealers to rely on investment advisers for CIP verification until the rules governing advisers are finalized.
"Because investment advisers and broker-dealers often work together in providing services to the investing public, coordination of broker-dealers and investment advisers is helpful in broker-dealersí effective implementation of the customer identification rule," the industry groupsí statement said.
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