Breaking News: FinCEN Seeks Comments on Strengthening and Clarifying Customer Due Diligence Requirements

What are some of the comments you would raise with FinCEN as they pertain to this proposed rulemaking?  

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FOR IMMEDIATE RELEASE
February 29, 2012  

http://www.fincen.gov/news_room/nr/html/20120229.html

FinCEN Seeks Comments on Strengthening and Clarifying Customer Due Diligence Requirements 

 

VIENNA, Va. – The Financial Crimes Enforcement Network (FinCEN) today issued an advance notice of proposed rulemaking (ANPRM) to solicit public comment on a wide range of questions pertaining to the possible application of an explicit customer due diligence (CDD) obligation on financial institutions, including a requirement for financial institutions to identify beneficial ownership of their accountholders. 

"The explicit requirement that a financial institution know its customers, and the risks presented by its customers, is basic and fundamental to both serving those customers and implementing a program that protects a financial institution from abuse by illicit actors," said FinCEN Director James H. Freis, Jr. “The comments we receive will help us balance the information needs of law enforcement with the responsibilities placed on the financial industry.”

Over the past ten years, FinCEN and the broader Treasury Department have continued to engage the federal financial regulatory agencies, financial institutions, and Congress to combat various risks associated with the criminal abuse of legal entities, such as shell companies, and the associated exploitation of the financial system to facilitate financial crime, including money laundering, financing of terrorism and proliferation, and tax evasion. Despite efforts to highlight and clarify CDD and beneficial ownership expectations over this time, FinCEN is concerned that there is a lack of uniformity and consistency in the way financial institutions address these implicit CDD obligations and collect beneficial ownership information within and across industries.

An express CDD program rule is one key element of a broader U.S. Department of the Treasury strategy to enhance financial transparency in order to strengthen efforts to combat financial crime. Enhancing financial transparency to address such ongoing abuse of legal entities requires a broad approach. Other key elements of this strategy include: (i) improving the availability of beneficial ownership information of legal entities created in the United States; and (ii) facilitating global implementation of international standards regarding CDD and beneficial ownership of legal entities.

"Broad public input through this ANPRM will assist FinCEN in considering a CDD obligation that would bring consistency and uniformity both within and across financial institution sectors," noted Freis. "With this consistency, FinCEN seeks to disrupt the ability of criminals to hide their assets behind the shroud of anonymity."

This ANPRM considers codifying, clarifying, consolidating, and strengthening existing CDD regulatory requirements and supervisory expectations, and establishing a categorical requirement for financial institutions to identify beneficial ownership of their accountholders. Comments on the ANPRM will be accepted for 60 days from the date of publication in the Federal Register.

BCCP A-Teamer Tom Nollner in the News: U.S. Department of Treasury Hosts AML Training Sessions in Guyana

A-Teamer Tom Noller, BCCP Executive Consultant & BCI Faculty Member, was mentioned in the Guyana Observer News in connection with his participation in the Department of Treasury’s Office of Technical Assistance (OTA) hosting of AML training sessions that took place in Georgetown, Guyana in February 2012.  Tom's OTA colleagues Howard Allen and Gerard Dupczak also participated in the AML training and were also mentioned in the article below.

Way to go, guyz!  Great job!

Please click on this link for further information and photos:
http://www.guyanaobservernews.org/content/view/6745/1/

GUYANA OBSERVER NEWS

Tuesday, 21 February 2012

U.S. Department of Treasury Hosts Training

 in Anti-Money Laundering Operations 

 GEORGETOWN – As part of the Caribbean Basin Security Initiative (CBSI) program, the U.S. Department of Treasury’s Office of Technical Assistance (OTA) hosted training sessions on implementing effective anti-money laundering programs from February 13 to 16 in Georgetown.  OTA’s Economic Crimes Senior Advisor Howard Allen and Economic Crimes Latin America and Caribbean Regional Advisors Gerard Dupczak and Thomas Nollner met with Guyanese authorities to discuss best practices in further implementing Guyana’s 2009 Anti-Money Laundering and Countering of Terrorism Act. 

Governmental and non-governmental officials focused on how best to coordinate efforts among various stakeholders to ensure efficient investigation and prosecution of persons involved in financial crimes.  The training is meant to strengthen capacity for prosecuting illegal money laundering operations and to put in place a framework of U.S. – Guyanese cooperation on matters of training, technical assistance, and communication.

Training participants included representatives from the U.S. Embassy, the Bank of Guyana, the Financial Intelligence Unit of the Ministry of Finance, Office of the Director of Public Prosecution, Guyana Revenue Authority, Customs Anti-Narcotics Unit, and the Institute of Internal Auditors Guyana Chapter.  After the sessions, the OTA team had an outbrief session with U.S. Ambassador D. Brent Hardt and Deputy Chief of Mission Thomas Pierce to discuss the week’s developments.

CBSI is the latest pillar of a U.S. security strategy focused on citizen safety throughout the hemisphere.  CBSI seeks to bring all members of CARICOM and the Dominican Republic together to jointly collaborate on regional security with the United States as a partner.

Hot off the Press: SEC Issues Alerts on Social Media Risks for Investors and Firms

Hey, A-Team & Friends!  THIS JUST IN: 
SEC Charges Illinois-Based Adviser in Social Media Scam
Please check out the SEC Press Release below and the hyperlinks to Additional Materials.  Of particular importance to investment advisers is the following SEC Alert: 

Agency Issues Alerts on Social Media Risks for Investors and Firms

One of the alerts issued today – a National Examination Risk Alert titled “Investment Adviser Use of Social Media” – provides staff observations based on a review of investment advisers of varying sizes and strategies that use social media. In growing numbers, registered investment adviser firms are using social media to communicate with existing and potential clients, promote services, educate investors, and recruit new employees. 

Below is the full text of the Press Release:

SEC Charges Illinois-Based Adviser in Social Media Scam

FOR IMMEDIATE RELEASE
2012-3

Washington, D.C., Jan. 4, 2012 — The Securities and Exchange Commission today charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn and issued two alerts in an agency-wide effort to highlight the risks investors and advisory firms face when using social media.

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Additional Materials

• Administrative Proceeding — Anthony Fields, CPA D/B/A Anthony Fields & Associates and D/B/A Platinum Securities Brokers
• Risk Alert: “Investment Adviser Use of Social Media”
• Investor Alert: “Social Media and Investing: Avoiding Fraud”
• Investor Bulletin: “Social Media and Investing – Understanding Your Accounts”

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The SEC’s Division of Enforcement alleges that Anthony Fields of Lyons, Ill. offered more than $500 billion in fictitious securities through various social media websites. For example, he used LinkedIn discussions to promote fictitious “bank guarantees” and “medium-term notes.” The postings resulted in interest from multiple purported potential buyers.

“Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes,” said Robert B. Kaplan, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Social media is no exception, and today’s enforcement action reflects our determination to pursue fraudulent activity on new and evolving platforms.”

According to the SEC’s order instituting administrative proceedings against Fields, he made multiple fraudulent offers through his two sole proprietorships – Anthony Fields & Associates (AFA) and Platinum Securities Brokers. Fields provided false and misleading information concerning AFA’s assets under management, clients, and operational history to the public through its website and in SEC filings. Fields also failed to maintain required books and records, did not implement adequate compliance policies and procedures, and held himself out to be a broker-dealer while he was not registered with the SEC.

One of the alerts issued today – a National Examination Risk Alert titled “Investment Adviser Use of Social Media” – provides staff observations based on a review of investment advisers of varying sizes and strategies that use social media. In growing numbers, registered investment adviser firms are using social media to communicate with existing and potential clients, promote services, educate investors, and recruit new employees.

“As investment advisers increasingly utilize social media to communicate with clients and potential clients, firms need to be mindful of the applicable standards governing those communications,” said Carlo di Florio, Director of the Office of Compliance Inspections and Examinations (OCIE).
The alert reviews concerns that may arise from use of social media by firms and their associated persons, and offers suggestions for complying with the antifraud, compliance, and recordkeeping provisions of the federal securities laws. The alert notes that firms should consider how to implement new compliance programs or revisit their existing programs in the face of rapidly changing technology.

The SEC also issued an Investor Alert titled “Social Media and Investing: Avoiding Fraud” prepared by the Office of Investor Education and Advocacy. The alert aims to help investors be better aware of fraudulent investment schemes that use social media, and provides tips for checking the backgrounds of advisers and brokers. A new Investor Bulletin titled “Social Media and Investing: Understanding Your Accounts” contains best practices including privacy settings, security tips, and password selection aimed to help social media users protect their personal information and avoid fraud.
“More and more, investors are using social media to help them with investment decisions. While social media can provide many benefits for investors, it also makes an attractive target for fraudsters. The Investor Alert provides some useful tips to help investors look out for securities fraud online,” said Lori J. Schock, Director of the Office of Investor Education and Advocacy.

For additional information on avoiding securities fraud, visit the SEC’s website for individual investors: www.investor.gov.

The SEC’s investigation of Anthony Fields was conducted by Donna K. Norman and Julie M. Riewe. The SEC’s litigation effort will be led by Duane K. Thompson. The National Examination Risk Alert was prepared by Mavis Kelly and George Kramer of OCIE in consultation with other Commission staff, notably Catherine A. Courtney and Natasha Vij Greiner. The Investor Alert was prepared by M. Owen Donley III and Rahman Harrison.

# # #

For more information about the enforcement action, contact:
Robert B. Kaplan (202) 551-4969 and Bruce Karpati (212) 336-0104
Co-Chiefs of the SEC’s Asset Management Unit
Julie M. Riewe
Assistant Director, Asset Management Unit
(202) 551-4546
 
http://www.sec.gov/news/press/2012/2012-3.htm