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Broker-Dealers to Report Suspicious Transactions
Washington, DC, July 2, 2002 - The Treasury Department has adopted a rule that will require broker-dealers to file suspicious activity reports (SARs) with the Financial Crimes Enforcement Network (FinCEN). The rule was proposed earlier this year in order to implement the anti-terrorism and anti-money laundering provisions of the “USA PATRIOT Act of 2001,” and it requires every broker or dealer in securities, including mutual fund principal underwriters, to report any suspicious transaction occurring after December 30, 2002 to FinCEN. The rule introduces Form SAR-BD, to be used by broker-dealers to report suspicious transactions, which are defined as any transaction that:
- is conducted or attempted by, at, or through a broker-dealer;
- involves or aggregates funds or other assets of at least $5,000;
- the broker-dealer knows, suspects, or has reason to suspect involves funds derived from illegal activity or is designed to evade the requirements of the Bank Secrecy Act;
- has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage; or
- involves use of the broker-dealer to facilitate criminal activity.
The Institute had filed a comment letter on the proposal in March.