To All Depository Institutions and Others Concerned in the Second Federal Reserve District:
In a press release, the Department of Treasury, the Financial Crimes Enforcement Network and seven federal financial regulators, including the Federal Reserve Board announced the final rules that require certain financial institutions to establish procedures to verify the identity of new accountholders.
These regulations are a part of the continuing work to implement the USA Patriot Act and prevent money laundering, terrorist financing, identity theft and other forms of fraud while also providing financial institutions the flexibility they need to effectively implement the rules.
These final regulations implement section 326 of the USA PATRIOT Act, which directs that regulations be issued requiring that financial institutions implement reasonable procedures to:
1. verify the identity of any person opening an account;
2. maintain records of the information used to verify the person's identity; and
3. determine whether the person appears on any list of known or suspected terrorists or terrorist organizations.
The regulations apply to banks and trust companies, savings associations, credit unions, securities brokers and dealers, mutual funds, futures commission merchants, and futures introducing brokers. Financial institutions will have until October 1, 2003, to come into full compliance. Publication of the final rules in the Federal Register is expected shortly.
The final rules are attached.
Questions on this matter may be directed at this Bank to Robert A. Otero, Examining Officer, Legal and Compliance Risk Department.