6/20/2006 FinCEN Release Describes Due Diligence Apportionment Between Introducing Brokers and FCMs
When multiple financial institutions maintain an account for a customer, one or more may be responsible for correspondent and private banking account due diligence requirements. FinCEN guidance released in June reviews a number of situations where introducing brokers, futures commission merchants, and executing brokers (the latter either FCMs or floor brokers) are involved in transactions for a single customer. Generally executing brokers will have the least responsibility for the due diligence requirements, but FinCEN notes that an executing broker FCM that is not a market participant’s carrying broker will come under the correspondent account rule if it executes account-opening documents with the market participant. The situations described in the recent guidance will be analyzed in the August issue of the Monitor.
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