Anti-Money Laundering (AML) Source Tool for Mutual Funds

Date: 8/07/08

This research guide, or “source tool,” is a compilation of key AML laws, rules, and guidance applicable to “mutual funds” (i.e., open end investment companies as defined in Section 5 (a)(1) of the Investment Company Act of 1940). Several statutory and regulatory provisions impose AML obligations on mutual funds. There is also a wealth of related AML guidance materials. To aid research efforts into AML requirements and to assist mutual fund compliance efforts, this source tool organizes key AML compliance materials and provides related source information.

When using this research “tool” or guide, you should keep the following in mind:

First, mutual funds are responsible for complying with all applicable AML requirements. Although this research guide summarizes some of the key fund AML obligations, it is not comprehensive. You should not rely on the summary information provided, but should refer to the actual statutes, rules, orders, and interpretations.

Second, AML rules, regulations, and orders are subject to change and may change quickly. The information summarized in this guide is current as of August 1, 2008.

Finally, you will find a list of telephone numbers and useful websites at the end of this guide. If you have questions concerning the meaning, application, or status of a particular law, rule, order, or interpretation, you should consult with an attorney experienced in the areas covered by this guide.

This compilation was prepared by staff in the Office of Compliance Inspections and Examinations (OCIE), Securities and Exchange Commission. The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed in this document are those of the staff and do not necessarily represent the views of the Commission, or other Commission staff. ¹

TABLE OF CONTENTS

The following topics are addressed in this guide:

1. The Bank Secrecy Act
    
2. The USA PATRIOT Act
    
3. AML Compliance Programs
    
4. Customer Identification Programs
    
5. Due Diligence Programs for Correspondent Accounts
    
6. Due Diligence Programs for Private Banking Accounts
    
7. Suspicious Activity Monitoring and Reporting
    
8. Other Reporting Requirements
    
9. Information Sharing With Law Enforcement and Financial Institutions
    
10. Special Measures Imposed by the Secretary of the Treasury
     
11. Office of Foreign Asset Control (OFAC) Sanctions Programs and Other Lists
     
12. Sudan Accountability and Divestment Act of 2007
     
13. Selected Additional AML Resources
     
14. Useful Contact Information

1. The Bank Secrecy Act

The Bank Secrecy Act (BSA), initially adopted in 1970, established the basic framework for anti-money laundering obligations imposed on financial institutions. Among other things, it authorizes the Secretary of the Treasury (Treasury) to issue regulations requiring financial institutions to keep records and file reports on financial transactions that may be useful in investigations and prosecuting money laundering and other financial crimes. Treasury has determined that mutual funds should be considered “financial institutions” for certain purposes and thus specified BSA rules are applicable to mutual funds. The Financial Crimes Enforcement Network (FinCEN), a bureau within Treasury, is the administrator of the BSA.

Source Documents:

1. Bank Secrecy Act: The Bank Secrecy Act is codified at 31 U.S.C. §§ 5311 et seq. and is available at:
    
   http://www4.law.cornell.edu/uscode/html/uscode31/
   usc_sup_01_31_08_IV_10_53.html
    
2. Bank Secrecy Act Rules: The rules adopted by Treasury implementing the BSA are located at 31 C.F.R. Part 103 and are available at:
    
   http://www.access.gpo.gov/nara/cfr/waisidx_06/31cfr103_06.html

2. The USA PATRIOT Act

The official title of the USA PATRIOT Act is “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of 2001.” The USA PATRIOT Act, enacted by Congress in 2001 in response to the September 11, 2001 terrorist attacks, (among other things) amended and strengthened the BSA. One provision of the USA PATRIOT Act mandated a study that ultimately contained recommendations for extending certain AML obligations to investment companies. Currently, as a result of the USA PATRIOT Act and its implementing rules, there are a number of BSA/AML obligations that are applicable to mutual funds, including:

• AML compliance programs;
   
• customer identification programs;
   
• monitoring, detecting, and filing reports of suspicious activity;
   
• due diligence on foreign correspondent accounts;
   
• due diligence on private banking accounts; and
   
• compliance with “special measures” imposed by the Secretary of the Treasury to address particular AML concerns.

Source Document:

• USA PATRIOT Act: Title 3 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 296 (2001). The text is available at:
   
  http://www.treas.gov/offices/domestic-finance/financial-institution/cip/pl107-56.pdf
   
  
• Report to Congress under the USA Patriot Act containing recommendations for applying anti-money laundering controls to investment companies: Joint Report of the SEC, U.S. Treasury and the Board of Governors of the Federal Reserve System, December 31, 2002.

3. AML Compliance Programs

Section 352 of the USA PATRIOT Act amended the BSA to require financial institutions to implement anti-money laundering compliance programs. Towards that end, Treasury has implemented a rule that requires mutual funds to establish AML compliance programs. According to FinCEN, a mutual fund should develop a risk assessment of its business, taking into account its products, customers, entities, transactions, and geographic location. A mutual fund's AML compliance program must be risk-based, and should provide the controls necessary to mitigate its risks.

A mutual fund’s AML compliance program must be in writing, be approved by the mutual fund’s board of directors, and include at a minimum:

• policies, procedures, and internal controls reasonably designed to prevent the mutual fund from being used for money laundering or the financing of terrorist activities and to achieve compliance with the BSA and its implementing rules;
   
• the designation of a person or persons responsible for implementing and monitoring the operations and internal controls of the AML program (AML Officer);
   
• ongoing AML training for appropriate persons; and
   
• an independent test of the mutual fund’s AML program conducted by the mutual fund's personnel or by a qualified outside party.

Because mutual funds do not have direct employees, they may delegate certain aspects of their AML compliance programs to their service providers; however, mutual funds remain responsible for assuring compliance with the rule and overseeing the performance of any delegated responsibilities. In addition, if a mutual fund delegates responsibility for its AML program to a service provider, the mutual fund must obtain a written consent that will ensure the ability of federal regulators to obtain information and records relating to the AML program and to inspect the third party for purposes of the program.

In addition, Rule 38a-1 under the Investment Company Act of 1940 requires investment companies, including mutual funds, to establish and implement compliance programs that include provisions for compliance with anti-money laundering regulations. Under Rule 38a-1, fund compliance programs include oversight over the compliance efforts of service providers through which the fund conducts its business (e.g., the fund’s investment adviser, principal underwriter, administrator and transfer agent of the fund).

Source Documents:

• Treasury AML Compliance Rule
   
  
  • Mutual Fund AML Program Rule: 31 C.F.R. 103.130
     
  • Mutual Fund AML Compliance Program Rule Release: 67 Fed. Reg. 21117 (April 29, 2002).
     
• SEC Investment Company Compliance Program Rule
   
  
  • Investment Company Compliance Program Rule: 17 C.F.R. 270.38a-1
     
  • SEC Final Rule Release: 68 Fed. Reg. 74714 (December 24, 2003).
     

4. Customer Identification Programs

Section 326 of the USA PATRIOT Act amended the BSA to require financial institutions to establish written customer identification programs (CIP). A joint SEC/Treasury implementing rule imposes CIP obligations on mutual funds. The implementing rule requires mutual funds to establish, document, and maintain a written CIP that includes procedures for:

• obtaining customer identifying information from each customer prior to account opening;
   
• verifying the identity of each customer, to the extent reasonable and practicable, within a reasonable time before or after account opening;
   
• making and maintaining a record of all information obtained relating to customer identity and verification;
   
• determining within a reasonable time after account opening or earlier whether a customer appears on any list of known or suspected terrorists or terrorist organizations issued by any federal government agency and designated as such by Treasury;² and
   
• providing each customer with adequate notice, prior to opening an account, that information is being requested to verify the customer’s identity.

The CIP rule provides that a mutual fund may delegate responsibility to a service provider, but in order to rely on a service provider, a mutual fund must demonstrate reasonable reliance in accordance with the requirements of the rule.

Source Documents:

• Customer Identification Program Rule: 31 C.F.R. § 103.131 (See also 17 C.F.R. 270.0-11)
   
• Final Rule Release: 68 Fed. Reg. 25131 (May 9, 2003).
   
• Treasury and SEC Staff Guidance:
   
  
  • Staff Q&A Regarding the Mutual Fund Customer Identification Program Rule (August 11, 2003).
     
• Other Related SEC Staff Guidance:
   
  
  • No-Action Letters to the Securities Industry Association (“SIA”) (February 12, 2004; February 10, 2005; July 11, 2006, and January 10, 2008). (The letters provide staff guidance regarding the extent to which a broker-dealer may rely on an investment adviser to conduct the required elements of the CIP rule, prior to such adviser being subject to an AML rule.)

5. Due Diligence Programs for Foreign Correspondent Accounts

Section 312 of the USA PATRIOT Act amended the BSA to require financial institutions to provide for due diligence of foreign “correspondent accounts.” Under Treasury’s implementing rule, a mutual fund is required to establish a risk-based due diligence program (that is part of its AML compliance program) for any “correspondent accounts” maintained for foreign financial institutions.

A “correspondent account” is defined as: “any formal relationship established for a foreign financial institution to provide regular services to effect transactions in securities.”

A “foreign financial institution” includes: (i) a foreign bank (including a foreign branch or office of a U.S. bank); (ii) a foreign branch or office of a securities broker-dealer, futures commission merchant, introducing broker in commodities, or mutual fund; (iii) a business organized under foreign law (other than a branch or office of such business in the U.S.) that if it were located in the U.S. would be a securities broker-dealer, futures commission merchant, introducing broker in commodities, or a mutual fund; and (iv) a money transmitter or currency exchange organized under foreign law (other than a branch or office of such entity in the U.S.).

The due diligence program, which is required to be a part of the mutual fund’s overall AML compliance program, must include appropriate, specific, risk-based policies, procedures, and controls reasonably designed to enable the fund to detect and report, on an ongoing basis, any known or suspected money laundering conducted through or involving any foreign correspondent account.

Source Documents:

• Correspondent Account Due Diligence Rule: 31 C.F.R. § 103.176. See also 31 C.F.R. § 103.175 (definitions).
   
• Final Rule Release: 71 Fed. Reg. 496 (January 4, 2006).
   
  
  • Extension of Applicability Date: 71 Fed. Reg. 16040 (March 30, 2006).
     
  • Enhanced Due Diligence Final Rule: 72 Fed. Reg. 44768 (August 9, 2007).
     
• FinCEN Guidance:
   
  
  • Fact Sheet: Section 312 of the USA PATRIOT Act (December 2005).
     
  • FIN-2006-G008: Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to NSCC/Fund/SERV (May 3, 2006).

6. Due Diligence Programs for Private Banking Accounts

Section 312 of the USA PATRIOT Act amended the BSA to require financial institutions to establish and maintain a risk-based due diligence program for accounts defined as “private banking accounts,” and to provide enhanced scrutiny to any such accounts provided to “senior foreign political figures.” Treasury adopted a final rule implementing this requirement for mutual funds in 2006, although it acknowledged that mutual funds may not currently offer accounts that would fall within the definition of “private banking account.”

As defined in the rule, a “private banking account” is defined as an account that: (a) requires a minimum deposit of assets of at least $1,000,000; (b) is established or maintained on behalf of one or more non-U.S. persons who are direct or beneficial owners of the account; and (c) has an employee assigned to the account who is a liaison between the mutual fund and the non-U.S. person.

The definition of “senior foreign political figure” extends to any member of the political figure’s immediate family, and any person widely and publicly known to be a close associate of the foreign political figure as well as any entities formed for the benefit of such persons (such persons are commonly referred to as PEPs, or Politically Exposed Persons).

Mutual funds providing private banking accounts must take reasonable steps to:

• determine the identity of all nominal and beneficial owners of the private banking accounts;
   
• determine whether any such owner is a “senior foreign political figure” and therefore subject to enhanced scrutiny that is reasonably designed to detect transactions that may involve the proceeds of foreign corruption;
   
• determine the source of funds deposited into the private banking account and the purpose and use of such account;
   
• review the activity of the account as needed to guard against money laundering; and
   
• report any suspicious activity, including transactions involving senior foreign political figures that may involve proceeds of foreign corruption.

Source Documents:

• Private Banking Due Diligence Rule: 31 C.F.R. § 103.178. See also: 31 C.F.R. § 103.175 (definitions).
   
• Final Rule Release: 71 Fed. Reg. 496 (January 4, 2006).
   
  
  • Extension of Applicability Date: 71 Fed. Reg. 16040 (March 30, 2006).
     
• FinCEN Guidance:
   
  
  • Fact Sheet: Section 312 of the USA PATRIOT Act (December 2005).

7. Suspicious Activity Monitoring and Reporting

Section 356 of the USA PATRIOT Act amended the BSA to require financial institutions to monitor for, and report, suspicious activity (so-called SAR reporting).

Under Treasury’s SAR rule, a mutual fund is required to file a suspicious activity report if: (i) a transaction is conducted or attempted to be conducted by, at, or through a mutual fund; (ii) the transaction involves at least $5000; and (iii) the mutual fund knows, suspects, or has reason to suspect that the transaction involves funds from an illegal activity, is designed to evade requirements of the BSA, has no business or apparent lawful purpose, and the mutual fund knows of no reasonable explanation for the transaction after examining the available facts, or involves the use of the mutual fund to facilitate criminal activity.

Mutual funds must report the suspicious activity using a form Treasury has issued for the securities and futures industry, the SAR-SF (also referred to as FinCEN Form 101). The form, which is confidential, includes instructions.

The rule recognizes that the activity of a particular mutual fund shareholder may involve more than one mutual fund in a mutual fund complex, and thus the final rule permits all the mutual funds involved in a particular suspicious transaction to file a single joint report. As with other AML requirements applicable to mutual funds, the adopting release acknowledges that a mutual fund may contract with a service provider to perform the reporting obligation as the mutual fund’s agent, and thus the service provider will be aware of the circumstances surrounding the filing of the SAR. Nevertheless, the mutual fund remains responsible for assuring compliance with the rule and thus must maintain an active working relationship with the service provider’s compliance personnel to oversee the performance of its reporting obligations.

Finally, FinCEN advises that if a mutual fund knows, suspects, or has reason to suspect that a customer may be linked to terrorist activity against the United States, the firm should immediately call FinCEN’s Hotline at 1-866-556-3974.

Source Documents:

• Fund SAR Rule: 31 C.F.R. § 103.15.
   
  
  • Final Rule Release: 71 Fed. Reg. 26213 (May 4, 2006).
     
  • SAR-SF: FinCEN Form 101.
     
    http://www.fincen.gov/forms/fin101_sar-sf.pdf
     
    
    • FinCEN has delayed implementation of their new revised version of this form:
       
      FinCEN Delays Implementation of Revised Suspicious Activity Report (SAR) Forms (April 26, 2007)
       
• FinCEN Guidance:
   
  
  • SAR Narrative Guidance Package: This three-part package includes guidance on preparing Suspicious Activity Reports and is available on FinCEN’s website at:
     
    www.fincen.gov
     
  • SAR Activity Reviews: These are available on FinCEN’s website at:
     
    www.fincen.gov³
     
  • FIN-2006-G013: Frequently Asked Questions: Suspicious Activity Reporting Requirements for Mutual Funds (October 4, 2006)
     
  • FIN-2007-G002: Requests by Law Enforcement for Financial Institutions to Maintain Accounts (June 13, 2007).
     
  • FIN-2007-G003: Suspicious Activity Report Supporting Documentation (June 13, 2007).
     
  • Suggestions for Addressing Common Errors Noted in Suspicious Activity Reporting (October 10, 2007).

8. Other Reports

Mutual funds have obligations to file cash transaction reports. These obligations pre-date the amendments made to the BSA by the USA PATRIOT Act in 2001.

Mutual funds are required to report certain types of cash-based transactions. Specifically, funds must report the receipt of: (i) cash payments (including U.S. and foreign coin and currency ) exceeding $10,000 in one or more related transactions over a 12 month period; and/or (ii) cash equivalents (such as a cashier’s check, bank draft, traveler’s check, or money order) with a face value of $10,000 (or less, if when added to all other cash or cash equivalents over a 12-month period, exceed $10,000), when the recipient knows the cash equivalent is being used to try to avoid the reporting requirements.

Cash transaction reports are filed on IRS Form 8300.

Source Documents:

• Cash Transaction Report: 31 C.F.R. 103.30.
   
• Internal Revenue Service Form 8300: http://www.irs.gov/pub/irs-pdf/f8300.pdf.

9. Information Sharing with Law Enforcement and Financial Institutions

Two provisions relating to information sharing were added to the BSA by the USA PATRIOT Act. One provision requires financial institutions, including funds, to respond to mandatory requests for information made by FinCEN on behalf of federal law enforcement agencies. The other provides a safe harbor to permit and facilitate voluntary information sharing among financial institutions.

Mandatory Information Sharing: Section 314(a) Requests: Mutual funds are required to respond to requests for information made by federal law enforcement agencies. FinCEN, on behalf of a requesting federal law enforcement agency, may require funds to search their records to determine whether they have accounts for, or have engaged in transactions with, any specified individual, entity, or organization. Mutual funds must report to FinCEN if they have any account or transaction matching the information listed on the information request. These requests are often referred to as “Section 314(a) information requests.”

Some mutual funds register directly with FinCEN to receive Section 314(a) notices, others rely on their affiliated bank or broker-dealer intermediaries to register and conduct such searches. If mutual funds receive copies of such requests either directly or indirectly (for example, forwarded by an affiliated bank or broker-dealer), they should comply. Moreover, mutual funds should maintain the confidentiality of any request and any responsive reports to FinCEN. Mutual funds with questions concerning Section 314(a) requests should contact FinCEN.

Source Documents:

• Section 314(a) Rule: 31 C.F.R. § 103.100. See also 31 C.F.R. § 103.90 (definitions).
   
• Rule Release: 67 Fed. Reg. 60579 (September 26, 2002).
   
• FinCEN Guidance:
   
  
  • Treasury Issues Moratorium on Section 314(a) Information Requests (November 26, 2002).
     
  • FinCEN to Reinstate USA PATRIOT Act Section 314(a) Information Requests (February 6, 2003).
     
  • Implementation of Web-based 314(a) Secure Communication System (February 4, 2005).
     
  • Changing your Point-of-Contact for 314(a) (October 17, 2006).
     
  • FinCEN 314(a) Fact Sheet (July 15, 2008).
     

Voluntary Information Sharing: A separate safe harbor provision encourages and facilitates voluntary information sharing among financial institutions. The safe harbor provision, added to the BSA by Section 314(b) of the USA PATRIOT Act, protects specified financial institutions, including mutual funds, from certain civil liabilities in connection with the information sharing. To qualify, a mutual fund must file an annual notice with FinCEN, maintain procedures to protect the security and confidentiality of the information, and take reasonable steps to verify that the other financial institution with which it intends to share information has filed a notice with FinCEN. A notification form and instructions for submitting a notification form (initial or renewal) are available on FinCEN’s website.

Source Documents:

• Section 314(b) Rule: 31 C.F.R. § 103.110. See also 31 C.F.R. § 103.90 (definitions).
   
• Final Rule Release: 67 Fed. Reg. 60579 (September 26, 2002).
   
• 314(b) Notice Form: (http://www.fincen.gov/314b.pdf).

10. Special Measures Imposed by the Secretary of the Treasury

Section 311 of the USA PATRIOT Act amended the BSA to authorize the Secretary of the Treasury to require financial institutions, including mutual funds, to take “special measures” intended to address particular money laundering concerns. The Secretary of the Treasury may impose special measures on foreign jurisdictions, financial institutions, or transactions or types of accounts found to be of “primary money laundering concern.” There are five “special measures” including prohibiting U.S. financial institutions from opening or maintaining certain correspondent accounts. As of January 1, 2008, there were final rules instituting special measures against (i) Burma, (ii) Myanmar Mayflower Bank and Asia Wealth Bank, (iii) Commercial Bank of Syria, (iv) VEF Banka; and (v) Banco Delta Asia.

Source Documents:

• Section 311 Information: Information about Section 311 is generally available at:
   
  www.fincen.gov.

11. OFAC Sanctions Programs and Other Lists

OFAC is an office within Treasury that administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries, terrorism sponsoring organizations, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction. OFAC acts under Presidential wartime and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze foreign assets under U.S. jurisdiction.

OFAC’s sanctions programs are separate and distinct from, and in addition to, the AML requirements imposed on mutual funds under the BSA.

As a tool in administering sanctions, OFAC publishes a list of Specially Designated Nationals and Blocked Persons (SDNs). These are individuals and entities from all over the world whose property is subject to blocking and with whom U.S. persons cannot conduct business. This list is continually being updated.

OFAC also administers country-based sanctions that are broader in scope than the “list-based” programs.

In general, OFAC regulations require funds to:

• block accounts and other property or property interests of entities and individuals that appear on the SDN list;
   
• block accounts and other property or property interests of entities and individuals subject to blocking under OFAC country-based programs; and
   
• block or reject unlicensed trade and financial transactions with OFAC-specified countries, entities, and individuals.

Funds must report all blockings and rejections of prohibited transactions to OFAC within 10 days of being identified and annually. Under the International Emergency Economic Powers Enhancement Act ("IEEPA"), which became effective on October 16, 2007, OFAC has the authority to impose civil penalties of up to $250,000 per violation, or twice the value of the transaction that serves as the basis of the violation, whichever is greater; the maximum criminal penalties under IEEPA also were increased from $50,000 to $1,000,000. To guard against engaging in OFAC prohibited transactions, it is advisable that funds or their service providers "screen against the OFAC list." U.S. investment companies and their investment managers also should conduct the necessary due diligence to ensure that their investment decisions do not violate U.S. sanctions. OFAC has stated that it will take into account the adequacy of a firm's OFAC compliance program when it evaluates whether to impose a penalty if an OFAC violation has occurred. Funds also should be aware of other lists, such as the Financial Action Task Force ("FATF") list of non-compliant countries (the "NCCT list"). If transactions originate from or are routed to any FATF-identified countries, it might be an indication of suspicious activity.⁴

Source Documents:

• OFAC Guidance:
   
• Program information, including the SDN list and countries subject to OFAC sanctions, is available on the OFAC website at:
   
  www.treas.gov/ofac
   
• Foreign Assets Control Regulations for the Securities Industry (April 29, 2004).
   
• OFAC Frequently Asked Questions, available on the OFAC website at:
   
  www.treas.gov/ofac
   
• Publication of Economic Sanctions Enforcement Guidelines, 68 Fed. Reg. 4422 (January 29, 2003).⁵
   
• FinCEN Guidance:
   
• Interpretive Release No. 2004-02-Unitary Filing of Suspicious Activity and Blocking Reports. See also 69 Fed. Reg. 76847 (December 23, 2004).
   
• OFAC Search Tool:
   
  The Financial Industry Regulatory Authority (FINRA), the self-regulatory organization for broker-dealers, has developed a tool to search the OFAC list. FINRA's OFAC Search Tool is available at:
   
  http://apps.finra.org/RulesRegulation/OFAC/1/Default.aspx
   
• Other Lists:
   
  Other lists of countries supporting international terrorism may be available at:
   
  
  • U.S. State Dept.: www.state.gov/s/ct
     
  • FATF: www.fatf-gafi.org.
     
  • FinCEN High Intensity Financial Crimes Areas Designation is at: http://www.fincen.gov/le_hifcadesign.html.

12. Sudan Accountability and Divestment Act of 2007

While not necessarily implicating Bank Secrecy Act or OFAC obligations, mutual funds should be aware that the Securities and Exchange Commission has adopted a rule requiring disclosure by a registered investment company that divests, in accordance with the Sudan Accountability and Divestment Act of 2007, from securities of issuers that the investment company determines, using credible information that is available to the public, conduct or have direct investments in certain business operations in Sudan.  The Sudan Accountability and Divestment Act provides that no person may bring any civil, criminal, or administrative action against any registered investment company, or any employee, officer, director, or investment adviser of the investment company, based solely upon the investment company divesting from, or avoiding investing in, securities issued by persons that the investment company determines, using credible information that is available to the public, conduct or have direct investments in certain business operations in Sudan.  This limitation on actions does not apply unless an investment company makes disclosures in accordance with regulations prescribed by the Securities and Exchange Commission.  The Commission’s rule requires registered investment companies to disclose divestments of securities in accordance with the Sudan Accountability and Divestment Act on Form N-CSR or Form N-SAR.

Source Documents:

• Sudan Accountability and Divestment Act of 2007: Pub. L. 110-174, 121 Stat. 2516 (2007).
   
• Final Rule Release: 73 Fed. Reg. 23328 (April 30, 2008).
   
• Form N-CSR: http://www.sec.gov/about/forms/formn-csr.pdf.
   
• Form N-SAR: http://www.sec.gov/about/forms/formn-sar.pdf.

13. Selected Additional AML Resources

• SEC Staff Materials:
   
  
  • Richards, Lori, “Money Laundering; It’s on the SEC’s Radar Screen,” Remarks before the Securities Industry Association Conference on Anti-Money Laundering Compliance (May 8, 2001).
     
  • Richards, Lori, “Life After the Patriot Act,” Remarks before the Securities Industry Association Conference on Anti-Money Laundering Compliance (May 2, 2002).
     
  • Richards, Lori, “The Next Phase: Implementing the Patriot Act,” Remarks before the Securities Industry Association Conference on Anti-Money Laundering Compliance (March 27, 2003).
     
  • Richards, Lori, “Anti-Money Laundering in 2006: It’s the Total Mix,” Remarks before the Securities Industry Association Conference on Anti-Money Laundering Compliance (March 29, 2006).
     
• Additional FinCEN Materials:
   
  
  • Remarks of James H. Freis, Jr., Director, FinCEN, before the SIFMA Anti-Money Laundering Compliance Conference (March 5, 2008).
     
• Selected AML Enforcement Cases:
   
  
  • In the Matter of Hartsfield Capital Securities, Inc., United States of America Department of the Treasury Financial Crimes Enforcement Network No. 2003-05 (November 24, 2003).
     
  • In the Matter of Crowell, Weedon & Co., Exchange Act Release No. 53847 (May 22, 2006).
     
  • In the Matter of Park Financial Group, Inc. and Gordon C. Cantley, Exchange Act Release No. 55614 (April 11, 2007) and Exchange Act Release No. 56902. (December 5, 2007).
     
  • In the Matter of E*Trade Clearing LLC and E*Trade Securities LLC, Exchange Act Release No. 58250 (July 30, 2008).
     
• FFIEC AML Examination Manual — June 2007,⁶ available at:
   
  http://www.ffiec.gov/bsa_aml_infobase/pages_manual/manual_online.htm

14. Useful Contact Information

¹ The following OCIE staff contributed significantly to this compilation: Amanda Machen, Catherine Black, Karen Buck Burgess, and legal intern David Freese. Contributions also were made by the following staff in the Division of Investment Management: David Blass and Adam Glazer. OCIE staff also would like to acknowledge the contributions made to this project by Sandra Sojka (FinCEN) and Shaswat Das (OFAC).

² As of the publication date of this guide, there are no designated government lists to verify specifically for CIP purposes. Customer comparisons to lists issued by OFAC involve separate and distinct requirements.

³ SAR Activity Reviews include two separate publications: SAR Activity Review Trends, Tips & Issues and SAR Activity Review By the Numbers. They are published on a regular basis under the auspices of the Bank Secrecy Act Advisory Group. These publications include: statistics regarding SAR filings and trends; an industry forum highlighting compliance issues and practices prepared by private sector members of the Advisory Group; and guidance regarding practical issues relevant to SAR filing and reporting. Guidance contained in these publications may be of interest and useful to funds. For example, see the following discussions contained in issues of The SAR Activity Review — Trends, Tips, and Issues: (i) “National Security Letters and Suspicious Activity Reporting,” Issue 8 (April 2005); (ii) “Providing SARs to Appropriate Law Enforcement,” Issue 9 (October 2005); (iii) “Should a Financial Institution Document its Decision Not to File a Suspicious Activity Report ” Issue 10 (May 2006); and (iv) “When Does the 30 Day Time Period in which to File a Suspicious Activity Report Begin?” Issue 10 (May 2006).

⁴ As of the publication date of this guide, there are no countries listed on the NCCT list.

⁵ Guidance issued by Treasury relating to banking institutions and their OFAC obligations also may be of interest to securities firms. See Economic Sanctions Enforcement Procedures for Banking Institutions, 71 Fed. Reg. (January 12, 2006).

⁶ This examination manual, issued by the federal banking regulators regarding the AML requirements applicable to banks, contains guidance that may be of interest to mutual funds and their service providers.

⁷ Mutual funds may also, but are not required to, contact the SEC to report situations that may require immediate attention by the SEC. The SEC SAR Alert Message Line number should only be used in cases where a mutual fund has filed a SAR that may require immediate attention by the SEC and wants to alert the SEC about the filing. Calling the SEC SAR Alert Message Line does not alleviate the mutual fund's obligation to file a SAR or notify an appropriate law enforcement authority.

http://www.sec.gov/about/offices/ocie/amlmfsourcetool.htm