For those of you who bank Private Equity Firms, can you share the customer due diligence and monitoring performed for this type of customer? Are they required to develop an AML program, comply with the reporting and recordkeeping requirements of the BSA, and report suspicious activity? I know there was a proposed rule issued by FinCEN back in 2002 that was later withdrawn, yet I would venture to guess that the withdrawal of the proposed rule did not end the need for advisers and private funds to consider money laundering risks and, in appropriate cases, adopt AML programs. I also read in an article dating back to 2008 that FinCEN would consider proposing new rules to require advisers and private funds to adopt AML programs - has anything transpired since? My research reveals nothing further but I wan't to make sure i didn't miss something.

I see a number of different entities in my neck of the woods claiming to be "private equity firms." Could clarify exactly what the entity does and how it is funded?

My apolgies as I described the firm in a prior thread (#2029405) when trying to determine if they would be considered as a RMLO. As communicated to me by the business line....A business prospect is classified as a private investment fund company dedicated to special situation investments and other alternative credit opportunities in the lower middle market. They primarily provide capital to distressed companies they are confident in for turnaround situations. They also handle investments involving complex financial transactions, restructurings, opportunistic acquisitions, and other alternative special situational financings. They get paid a management & performance fee and only get paid the performance fee upon realization of an investment. They don’t originate all loans (but can) but rather mainly participate with a group of banks/funds to provide financing to distressed companies. Often they take a percentage of ownership in the companies they invest in. They are required to perform KYC for their investors and there is a subscription document for each investor. They are technically under SEC oversight but don’t require SEC registration unless they are a $150MM fund or larger (which they choose to stay below). They are not required to file an ADV. They don’t do residential mortgages currently but are looking into that business for a future fund.