SEC Sanctions BD and President/CCO for Customer Identification Failures
The SEC has censured a broker-dealer and its President/CCO for failing to conduct applicable customer identification of omnibus sub-account holders using its direct market access software. According to the SEC, the firm offered its direct market access software to its mostly non-US client base. Without any intermediary conducting customer identification, the SEC stated that the Respondent maintained this responsibility under the Bank Secrecy Act and Rule 17a-8. The SEC alleged that, notwithstanding the Respondent’s stated policies and procedures, the firm did not conduct adequate customer identification and often obtained incomplete documents or documents in foreign languages. The SEC also charged the President/CCO because he was “obligated to ensure” compliance with the firm’s anti-money laundering obligations.
OUR TAKE: Although the SEC cites violations of the AML and CIP rules, it appears that the SEC was most concerned about unfiltered direct market access by foreign account holders. Firms should evaluate their CIP programs especially for omnibus accounts.
Posted by Todd Cipperman at 9/2/2010 7:33 AM 
Categories: Compliance and Operations
Tags: customer identification anti-money laundering direct market access
Categories: Compliance and Operations
Tags: customer identification anti-money laundering direct market access
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