Treasury Extends Deadline for Customer Identification Program Requirements

Washington, DC, October 15, 2002 - The Treasury Department has issued a press release advising financial institutions that they will not be required to comply with Section 326 of the USA PATRIOT Act or with the rules proposed jointly by the SEC and the Treasury in July until final implementing regulations are issued and become effective.

In a September comment letter, the Institute expressed strong support for effective rules to combat potential money laundering activity, such as the proposed rules requiring mutual funds to adopt and implement customer identification programs, but urged Treasury and the SEC to consider appropriate implementation and transition periods for the rule, in order to accommodate the significant systems and other changes that will have to be made to comply with its requirements.

Section 326 directs the Treasury and other regulators to jointly issue regulations requiring financial institutions to establish minimum procedures for the identification and verification of customers who open new accounts. Section 326 provides that final regulations shall take effect “before the end of the 1-year period beginning on the date of enactment” of the Act, which was October 26, 2001.

The release indicates that final rules will provide financial institutions with a reasonable amount of time in which to come into compliance. It also reminds financial institutions that they must continue to comply with any existing obligation to guard against money laundering and the financing of terrorism through adequate customer identification procedures. Further, it states that financial institutions should already be taking basic steps to ensure appropriate customer identification.