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URGENT/ACTION REQUESTED
[19630]
January 25, 2006
TO: AML COMPLIANCE WORKING GROUP No. 2-06
TRANSFER AGENT ADVISORY COMMITTEE No. 6-06
RE: DRAFT ICI LETTER ON THE AML RULE FOR CORRESPONDENT ACCOUNTS
As you may know, the Financial Crimes Enforcement Network (“FinCEN”) adopted a
rule earlier this month relating to correspondent accounts for foreign financial institutions.1 The
new rule requires every mutual fund, by April 4th, to establish a due diligence program
reasonably designed to enable it to detect and report money laundering activity involving
correspondent accounts established, maintained, administered, or managed for foreign financial
institutions.
Attached is a draft letter to Treasury asking for concurrence in our interpretation of the
new rule with respect to sub-accounts opened by mutual funds for the purpose of effecting
transactions of fund shares that are cleared and settled through the National Securities Clearing
Corporation’s Fund/SERV system (“Fund/SERV accounts”). In the letter, we express our belief
that the rule does not apply to a Fund/SERV account established, maintained, administered, or
managed for an NSCC member firm that is a U.S. financial institution, even if the firm’s
customer is a foreign financial institution.
Given the April 4th implementation deadline for new accounts and the fundamental
importance of Fund/SERV to the processing of purchases, redemptions, and exchanges of
mutual fund shares, we are seeking to file the request with Treasury as soon as possible.
Accordingly, please provide any comments on the draft letter by Wednesday, February 1st.
Comments may be made by phone (202-371-5430), fax (202-326-5841), or e-mail (rcg@ici.org).
Robert C. Grohowski
Senior Counsel - International Affairs
Attachment (in .pdf format)
1 31 C.F.R. 103.176. See also 71 Fed. Reg. 496 (January 4, 2006).