[Federal Register: October 17, 2003 (Volume 68, Number 201)]
[Notices]
[Page 59828-59829]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17oc03-89]
[[Page 59828]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48622; File No. SR-BSE-2003-18]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change and Amendment
Nos. 1 and 2 Thereto by the Boston Stock Exchange, Inc. To Adopt an
Anti-Money Laundering Compliance Program
October 10, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on September 24, 2003, the Boston Stock Exchange,
Inc. (``BSE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Exchange amended the proposal on October 3, 2003 and October 9,
2003. The Commission is publishing this notice to solicit comments on
the proposed rule change, as amended, from interested persons and to
grant accelerated approval to the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt a new section entitled ``Anti-Money
Laundering Compliance Program'' to its Rules under Chapter II, Dealings
on the Exchange. The text of the proposed rule change follows.
Additions are in italics.
* * * * *
Chapter II
Dealings on the Exchange
Secs. 1-41, no change
Anti-Money Laundering Compliance Program
Sec. 42. Each member organization and each member not associated
with a member organization shall develop and implement a written anti-
money laundering program reasonably designed to achieve and monitor
compliance with the requirements of the Bank Secrecy Act (31 U.S.C.
5311, et seq.), and the implementing regulations promulgated thereunder
by the Department of the Treasury. Each member organization's anti-
money laundering program must be approved, in writing, by a member of
senior management.
The anti-money laundering programs required by this Section shall,
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:
(2) Establish and implement policies 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 Participant personnel or by a qualified outside party;
(4) Designate, and identify to the Exchange (by name, title,
mailing address, e-mail address, telephone number, and facsimile
number) a person or persons responsible for implementing and monitoring
the day-to-day operations and internal controls of the program and
provide prompt notification to the Exchange regarding any change in
such designation(s); and
(5) Provide ongoing training for appropriate persons.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In response to the events of September 11, 2001, President Bush
signed into law on October 26, 2001 the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the ``Patriot Act'') \3\ to address
terrorist threats through enhanced domestic security measures, expanded
surveillance powers, increased information sharing and broadened anti-
money laundering requirements. The Patriot Act amends, among other
laws, the Bank Secrecy Act, as set forth in Title 31 of the United
States Code.\4\ Certain provisions of Title III of the Patriot Act,
also known as the International Money Laundering Abatement and Anti-
Terrorist Financing Act of 2001 (``MLAA''), impose affirmative
obligations on a broad range of financial institutions, including
broker-dealers, specifically requiring the establishment of anti-money
laundering monitoring and supervisory programs.
---------------------------------------------------------------------------
\3\ Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. 107-56, 115 Stat. 272 (2001).
\4\ 31 U.S.C. 5311, et seq.
---------------------------------------------------------------------------
MLAA Section 352 required all financial institutions (including
broker-dealers) to establish anti-money laundering programs that
include, at a minimum: (i) Internal policies, procedures and controls;
(ii) the specific designation of an anti-money laundering compliance
officer; (iii) an ongoing employee training programs; and (iv) an
independent audit function to test the anti-money laundering program.
The Commission has approved NASD's and several other exchanges'
proposals to adopt rules requiring their members and member
organizations to establish anti-money laundering compliance programs
with the minimum standards described above.\5\ Proposed BSE Section 42,
entitled ``Anti-Money Laundering Compliance Program'' of Chapter II,
Dealings on the Exchange, of the Rules of the Board of Governors of the
Boston Stock Exchange, Inc. involves similar requirements. Adoption of
the proposed rule would establish a regulatory framework for members
and member organizations to comply with the requirements of the Patriot
Act in this area.
---------------------------------------------------------------------------
\5\ See, e.g., Securities Exchange Act Release No. 45798 (April
22, 2002), 67 FR 20854 (April 26, 2002) (Order approving SR-NASD-
2002-24 and SR-NYSE-2002-10).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the statutory basis for the proposed
rule change is section 6(b)(5) of the Act, \6\ in that it is designed
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating
securities transactions, to remove impediments to and perfect the
mechanism of a free and open market and a national market system and,
in general, to protect investors and the public interest, and is not
designed to permit unfair
[[Page 59829]]
discrimination between customers, issuers, brokers or dealers.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, and amended, is consistent with the Act. Persons making written
submissions should file six copies thereof with the Secretary,
Securities and Exchange Commission, 450 Fifth Street, NW., Washington,
DC 20549-0609. Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying at the Commission's Public Reference Room. Copies of such
filing will also be available for inspection and copying at the
principal office of the Exchange. All submissions should refer to File
No. SR-BSE-2003-18 and should be submitted by November 7, 2003.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange. In
particular, the Commission believes that the proposed rule change is
consistent with section 6(b)(5) of the Act,\7\ which, among other
things, requires that the Exchange's rules be designed to prevent
fraudulent and manipulative acts and practices, and, in general,
protect investors and the public interest.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b)(5). In approving this rule, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------
The Commission believes that the Exchange's proposal to adopt an
Anti-Money Laundering Compliance Program accurately, reasonably, and
efficiently implements the requirements of the Patriot Act as it
applies to their members. The Commission also recognizes that anti-
money laundering compliance programs will evolve over time, and that
improvements to these programs are inevitable as members find new ways
to combat money laundering and to detect suspicious activities.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice of filing thereof in the Federal Register. The Commission notes
that the Rule is substantially similar to anti-money laundering
compliance program rules that the Commission has previously approved
for other self-regulatory organizations.\8\ Accordingly, the Commission
believes that there is good cause, consistent with Section 19(b) of the
Act,\9\ to approve the proposed rule change on an accelerated basis.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release Nos. 45798 (April 22,
2002), 67 FR 20854 (April 26, 2002) (Order approving SR-NASD-2002-24
and SR-NYSE-2002-10); 46041 (June 6, 2002), 67 FR 40366 (June 12,
2002) (Order Approving SR-Phlx-2002-29); 46258 (July 25, 2002), 67
FR 49715 (July 31, 2002) (Order Approving SR-Amex-2002-52); 446462
(September 5, 2002), 67 FR 58665 (September 17, 2002) (Notice of
Filing and Order Granting Accelerated Approval of SR-CBOE-2002-45);
46468 (September 6, 2002), 67 FR 58095 (September 13, 2002) (Notice
of Filing and Immediate Effectiveness of SR-PCX-2002-44); and 46739
(October 29, 2002), 67 FR 67432 (November 5, 2002) (Notice of Filing
and Immediate Effectiveness of SR-NASD-2002-146).
\9\ 15 U.S.C. 78f(b)(5) and 78s(b).
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the Act,
\10\ that the proposed rule change, as amended, is hereby approved.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-26286 Filed 10-16-03; 8:45 am]
BILLING CODE 8010-01-P