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June 9, 2003
TO: 529 PLAN ADVISORY COMMITTEE No. 34-03
MONEY LAUNDERING RULES WORKING GROUP No. 38-03
TRANSFER AGENT ADVISORY COMMITTEE No. 58-03
RE: MSRB PROPOSES AML PROGRAM RULE FOR MUNICIPAL SECURITIES DEALERS
The Municipal Securities Rulemaking Board proposed a rule that would require all
brokers, dealers and municipal securities dealers (collectively, “dealers”) that effect transactions
in municipal securities to adopt anti-money laundering programs.1 The proposed rule was
published in the Federal Register today with an extremely short comment period. Comments
must be submitted to the SEC by June 30, 2003.
The new rule, MSRB Rule G-41, would require all dealers to comply with the AML
program rules set forth by the applicable regulator or self-regulatory organization to the same
extent as if such rules were directly applicable to the dealer. For dealers that are broker-dealers,
this will require compliance with NASD Rule 3011; for other dealers, this will require
compliance with the applicable bank rule (OCC, FRB, FDIC or OTS).
The proposing release states that the rule is intended to provide clarity to dealers and
examiners concerning the application of AML rules to dealers who affect transactions in
municipal securities, and that it will not impose any new or different obligations upon such
dealers. However, the adoption of this rule would clarify that the sale of 529 plan interests
would be subject to the dealer’s AML program.
We have a previously scheduled a conference call with the Money Laundering Rules
Working Group, Transfer Agent Advisory Committee and Broker-Dealer Advisory Committee
to discuss other AML issues on Friday, June 13th at 3:00 p.m. Eastern time. In lieu of a separate
conference call to discuss this proposal, we will add this to the agenda for that call. Members of
the 529 Plan Advisory Committee will receive a separate memorandum with information on
how to joint that conference call.
Robert C. Grohowski
Associate Counsel
Attachment (in .pdf format)
1 See Securities and Exchange Commission, Self-Regulatory Organizations, “Notice of Filing of Proposed Rule Change
by the Municipal Securities Rulemaking Board to Require Dealers to Establish Anti-Money Laundering Compliance
Programs,” 68 Fed. Reg. 34450 (June 9, 2003).