A couple of questions related to Broker-Dealers and Financial Institutions:

(1) We have a third party marketing arrangement with a broker-dealer. The employees are dual employees of the Bank and the Broker-Dealer. Is it the Bank's responsibilities to include the reporting of Suspicious Activity in their policies or the responsibility of the Broker-Dealer?

In my opinion, the information issued on July 1, 2002 in the Federal Register isn't clear. All it says is "Certain broker-dealers have been subject to suspicious transaction reporting since 1996. In particular, borker-dealers that are affiliates or subsidiaries of banks or bank holding companies have been required to report suspicious activity by virture of the application to them of rules issued by the federal banking supervisory agencies".

(2) Can my BSA/OFAC/AML Officer reside over both (the bank and the broker dealer) or does our broker-dealer need to name a separate AML officer to reside of that part of the business?

(3) If the bank's AML Officer cannot reside over both, who then is responsible for completing the SAR-BD? (I know, the answer should be obvious based on the response received, but hey, I'm human and like clarity.)

(4) We also own an operate a Check Cashing Service (that also operates as a limited service branch). I'm under the impression this is considered a Money Services Business (correct me if I'm wrong). Hence, can my AML policies and procedures apply to my Check Cashing store, along with my BSA/OFAC/ALM officer or do I need separate procedures for the Check Cashing store?

Thanks for your help.

RJM

Your loaded with some good questions. I do not believe I can answer them all, but on the broker-dealer issue. You do not own the broker-dealer you only contract the employee, yes? If so, they must appoint an AML officer. They of coarse will come to you for guidance, which may be to your benefit.

Thanks for acknowledging the questions as being good. However, the employees of the Broker-Dealer are dual employees paid by the bank. Would that make any difference. There is a third party marketing agreement between the Bank and the Broker Dealer.

If I'm understanding your response correctly, the Broker-Dealer would need to have their own AML Officer. Is that what you meant?

Would you clarify the relationship between the broker/dealer and the bank? Is there an affiliation? Are all employees of the b/d dual employees? If it helps, we have an affiliated broker dealer and we have separate AML/BSA Officers for each.

Ron:

The best I can respond to your follow-up question is that the people who sell securities, annuities, and other non-deposit investment products, are dual employees of the Bank and the Broker-Dealer. They receive a pay check from the Bank. The Bank has a third party marketing agreement with the broker dealer, for example, to rent space in our community banking offices.

That's about as clear as I can be.

Without knowing how the broker/dealer and bank are related it is hard for me to give specific answers, so I will give some general responses.
(1) The b/d is responsible for establishing it's own policies and procedures regarding BSA and AML. That being said, I see no reason why this could not be done at a holding company level if the institutions are affiliated under such.
(2) I have seen nothing to prevent this if the companies are affiliated.
(3) The b/d (more specifically the BSA or AML Officer) would be responsible for completing its SARs.
(4) I'll pass. Not my area of expertise.

Hope this helps.

If you are a member of FiSCA (the trade organization for check cashing businesses), their counsel developed a fairly comprehensive BSA program for these businesses. Note that the SAR form will be changing for MSB's in the near future (as soon as OMB clears the new form).

SAR Filing Tips for MSBs are found in a recent FinCen SAR Activity Review published at http://www.treas.gov/fincen/sarreview082002.pdf