SEC and FinCEN Propose New Rule for Customer Identification Program
SEC RELEASES
Introduction
On May 13th, the SEC and FinCEN issued a joint proposal for customer identification program obligations to apply to certain investment advisers. This rule proposal would affect Registered Investment Advisers (“RIAs”) and Exempt Reporting Advisers (“ERAs”).
Key Takeaways from the Proposed Rule
- RIAs and ERAs would be required to implement a program for customer identification that includes procedures to:
- Verify the identity of each customer to the extent reasonable and practical.
- Maintain records of information used to verify identity.
- The goal is to increase the difficulty for criminal and illicit actors to use RIAs as an entry point into the U.S. financial system.
- The rules should align with the requirements of other financial institutions such as Broker Dealer and Mutual Funds.
- This proposal is part of FinCENs goal to have RIAs and ERAs labeled as financial institutions to subject them to AML/CFT program requirements and require suspicious activity report filings.
Vigilant’s Conclusion
This rule has now been published on the SEC website, with an open comment period of 60 days.
The new proposed requirement for RIAs would hopefully cause few additional burdens, as Firms should already have procedures in place to verify the identities of their clients.
If this rule is adopted, training would be required of current staff to ensure they are aware of the AML rules under FinCEN.
As always, Vigilant is prepared to provide a gap analysis of your compliance program and efficiently provide any training your staff may need. Reach out to us today with any questions or concerns you may have.