[14487]
February 28, 2002
TO: BROKER/DEALER ADVISORY COMMITTEE No. 3-02
CLOSED-END INVESTMENT COMPANY MEMBERS No. 7-02
COMPLIANCE ADVISORY COMMITTEE No. 17-02
SEC RULES MEMBERS No. 12-02
SMALL FUNDS MEMBERS No. 5-02
TRANSFER AGENT ADVISORY COMMITTEE No. 15-02
UNIT INVESTMENT TRUST MEMBERS No. 6-02
RE: NASD PROPOSED RULE ON ANTI-MONEY LAUNDERING COMPLIANCE
PROGRAMS
The USA PATRIOT Act requires financial institutions, including broker-dealers and
investment companies, to establish anti-money laundering compliance programs by April 24,
2002.1 The Securities and Exchange Commission has published for comment proposed NASD
Rule 3011, which would prescribe minimum standards for anti-money laundering compliance
programs established by NASD members. A copy of the proposal is attached2 and it is
summarized below.
Proposed Rule 3011 would require each NASD member, on or before April 24, 2002, to
develop and implement a written anti-money laundering program reasonably designed to
achieve and monitor the member’s compliance with the requirements of the Bank Secrecy Act
and regulations thereunder. Under the proposed rule, the program would have to be approved
in writing by a member of senior management. The rule would require NASD member
programs to, at a minimum:
(1) establish and implement policies and procedures that can be reasonably expected to
detect and cause the reporting of transactions required under 31 U.S.C. 5318(g) and the
implementing regulations thereunder;
1 Section 352 of the USA PATRIOT Act provides that such programs must include, at a minimum: (1) the
development of internal policies, procedures, and controls; (2) the designation of a compliance officer; (3) an ongoing
employee training program; and (4) an independent audit function to test programs.
2 SEC Release No. 34-45457 (February 19, 2002), 67 Fed. Reg. 8565 (February 25, 2002) (“Proposing Release”).
2
(2) establish and implement policies, procedures and internal controls reasonably
designed to achieve compliance with the Bank Secrecy Act and the implementing regulations
thereunder:
(3) provide for independent testing for compliance to be conducted by member
personnel or by a qualified outside party;
(4) designate an individual or individuals responsible for implementing and monitoring
the day-to-day operations and internal controls of the program; and
(5) provide ongoing training for appropriate personnel.
The Proposing Release states that, prior to implementation of the proposed rule change,
NASD Regulation, Inc. anticipates providing guidance to members in a Notice to Members “to
assist member firms in developing an anti-money laundering program that fits their business
model and needs.”
Comments on the proposal must be filed with the SEC by March 18th.
Frances M. Stadler
Deputy Senior Counsel
Attachment
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attachment for memo 14487.
Attachment (in .pdf format)