Amendment to Rule G-41, on Anti-Money Laundering Compliance

On March 4, 2005, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) for immediate effectiveness an amendment to Rule G-41, on anti-money laundering compliance programs.[1]  Rule G-41 seeks to ensure that all brokers, dealers and municipal securities dealers (“dealers”) that effect transactions in municipal securities, and in particular those that only effect transactions in municipal securities, are aware of, and in compliance with, anti-money laundering compliance program requirements.  Representatives of the NASD and SEC recently have asked the MSRB to revise certain language in Rule G-41 to assist in enforcement of the rule.  The basic requirements of the rule remain unchanged; 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 proposed amendment is set forth below, with brackets indicating deletions and underlining indicating new language.

Questions about the amendment should be directed to Carolyn Walsh, Senior Associate General Counsel.

March 4, 2005

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Rule G-41: Anti-Money Laundering Compliance Program

[No] Every broker, dealer or municipal securities dealer shall establish and implement an [be qualified for purposes of Rule G-2 unless such broker, dealer or municipal securities dealer has met the] anti-money laundering compliance program designed to achieve and monitor ongoing compliance with the requirements of the Bank Secrecy Act, 31 U.S.C. 5311, et seq. (“BSA”), and the regulations thereunder. A broker, dealer or municipal securities dealer that establishes and implements an anti-money laundering compliance program that is in compliance with the rules, regulations or requirements of either its [rules set forth by either the] registered securities association (i.e., the NASD) or its [of which the dealer is a member (e.g., NASD Rule 3011), or the rules set forth by the] appropriate banking regulator governing the establishment and maintenance of anti-money laundering programs will be deemed to be in compliance with Section 5318(h)(1) of the BSA and the regulations promulgated thereunder for purposes of this Rule. [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.]