Broker-dealers can continue to rely on investment advisers for customer KYC requirements

In a December 12, 2018, letter to a US trade association with members that include broker-dealers in securities (“broker-dealers”), the US Securities and Exchange Commission (“SEC”) extended its no-action relief to broker-dealers who wish to rely on investment advisers to perform the broker-dealer’s obligations under US federal anti-money laundering (“AML”) customer identification program and beneficial owner identification regulations. First provided in 2004 regarding customer identification programs, this no-action relief has been renewed several times since then. Broker-dealers, banks, mutual funds and futures commission merchants and introducing brokers (“covered companies”) must establish and maintain risk-based customer identification programs (“CIP”) that include procedures that will enable the covered company “to form a reasonable belief that it knows the true identity of each customer.” The…

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