Proposed Rule Change to Adopt New Rule G-41, on Anti-Money Laundering Compliance
On May 22, 2003, the Municipal Securities Rulemaking Board (“Board” or “MSRB”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to adopt new Rule G-41, on anti-money laundering compliance. Section 352 of the USA PATRIOT Act[1] required financial institutions, including broker/dealers, to establish and implement anti-money laundering compliance programs designed to ensure ongoing compliance with the requirements of the Bank Secrecy Act[2] and the regulations promulgated thereunder by April 24, 2002. The provisions of the USA PATRIOT Act are provisions of federal law and consequently all MSRB members should already be in compliance with Section 352. The MSRB has proposed new Rule G-41 to ensure that all brokers, dealers and municipal securities dealers (“dealers”)[3] that effect transactions in municipal securities, and in particular those that only effect transactions in municipal securities (“sole municipal dealers”), are aware of, and in compliance with, anti-money laundering compliance program requirements. Thus, proposed Rule G-41 requires that all dealers establish and implement anti-money laundering programs that are in compliance with the rules and regulations of either its registered securities association (i.e., NASD) or its appropriate banking regulator governing the establishment and maintenance of anti-money laundering programs.
The adoption of MSRB Rule G-41 will provide clarity to dealers and examiners concerning the rules and regulations that dealers who effect transactions in municipal securities must comply with concerning the development of anti-money laundering compliance programs, it will not impose any new or different obligations upon such dealers. Below is the text of the proposed rule change. Proposed new language is underlined.
May 22, 2003
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Rule G-41: Anti-Money Laundering Compliance Program
No broker, dealer or municipal securities dealer shall be qualified for purposes of Rule G-2 unless such broker, dealer or municipal securities dealer has met the anti-money laundering compliance program rules set forth by either the registered securities association of which the dealer is a member (e.g., NASD Rule 3011), or the rules set forth by the appropriate regulatory agency as defined in Section 3(a)(34) of the Act with respect to any other broker, dealer or municipal securities dealer (e.g., 12 C.F.R. 21.21 (OCC); 12 C.F.R. 208.63 (FRB); 12 C.F.R. 326.8 (FDIC); and 12 C.F.R. 563.177 (OTS)), to the same extent as if such rules were applicable to such broker, dealer or municipal securities dealer.
[1] Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).
[2] 31 U.S.C. 5311, et seq.
[3] The term “dealer” is used herein as shorthand for “broker,” “dealer” or “municipal securities dealer,” as those terms are defined in the Securities Exchange Act of 1934. The use of the term does not imply that the entity is necessarily taking a principal position in a municipal security.
