TREASURY SUBMITS REPORT TO CONGRESS ON THE IDENTIFICATION AND VERIFICATION OF FOREIGN CUSTOMERS

[15305] TO: BROKER/DEAL COMPLIANCE MONEY LAUN SEC RULES ME SMALL FUNDS TRANSFER AGE RE: TREASURY SUB VERIFICATION On October 22, 2 addressing issues relate foreign nationals who o by Section 326(b) of the In the report, Tr financial institutions’ ab a result, the report state acceptable or unaccepta approach taken by the p pursuant to which finan existing and available id The report also c unique SSN-like identif financial institution. Fo recommends that the ap 1 The report also can be found 2 See Memorandum to Money No. 59-02, dated July 18, 2002 Advisory Committee No. 52- 2002. See also Memorandum 88-02, Money Laundering Ru Members No. 42-02, dated O dated October 17, 2002. October 28, 2002 ER ADVISORY COMMITTEE No. 43-02 ADVISORY COMMITTEE No. 94-02 DERING RULES WORKING GROUP No. 61-02 MBERS No. 94-02 MEMBERS No. 46-02 NT ADVISORY COMMITTEE No. 93-02 MITS REPORT TO CONGRESS ON THE IDENTIFICATION AND OF FOREIGN CUSTOMERS 002, the Department of the Treasury sent a report to Congress d to domestic financial institutions’ ability to verify the identity of pen an account. This report, a copy of which is attached, was required USA PATRIOT Act.1 easury finds that there are “significant impediments to domestic ility to identify, much less verify the identity of, foreign nationals.” As s that “it might not be practicable for Treasury to prescribe rigid rules of ble forms of identification.” Instead, it recommends the flexible roposed rule relating to customer identification programs (CIPs),2 cial institutions would make reasonable efforts to verify identity using entifying information and documents. onsiders whether Treasury should require foreign nationals to obtain a ication number, such as an ITIN, prior to opening an account with a r several reasons, the report rejects this idea. However, the report propriate parties, including the Department of Homeland Security at http://www.treas.gov/press/releases/reports/sec326breport.final.pdf. Laundering Rules Working Group No. 38-02 and Transfer Agent Advisory Committee , and Memorandum to Broker/Dealer Advisory Committee No. 22-02, Compliance 02, SEC Rules Committee No. 53-02 and Small Funds Members No. 22-02, dated July 23, to Broker/Dealer Advisory Committee No. 42-02, Compliance Advisory Committee No. les Working Group No. 58-02, SEC Rules Committee No. 88-02 and Small Funds ctober 15, 2002 and Memorandum to Transfer Agent Advisory Committee No. 90-02, 2 (when established), study this issue further within that framework to determine whether such a system is feasible and appropriate. Finally, the report recommends that financial institutions not be required to consult government databases to verify identity until such databases are complete and made available to them, preferably in one location. The report notes that the government does not maintain any such comprehensive database at the present time. Robert C. Grohowski Associate Counsel Attachment (in .pdf format) Note: Not all recipients receive the attachment. To obtain a copy of the attachment, please visit our members website (http://members.ici.org) and search for memo 15305, or call the ICI Library at (202) 326-8304 and request the attachment for memo 15305.