10. Customer Account Opening and Maintenance Procedures Flashcards
This law sets forth wireless transfer limits and disclosure rules on monetary instruments log for cash and crypto currencies
Bank Secrecy Act
At what amount must BDs keep records of fund transfers (eg wire transfers)?
$3k or more
What kind of information must be retained in connection with sufficiently large fund transfers?
Information such as:
1) name / address of the originator
2) amount and date of the payment order
3) any payment instructions
4) identity of the beneficiary institution
5) beneficiary information such as - name / address; account number; any other specific identifiers
BDs may not conduct business or engage in transactions with anyone on this list
SDN (Specially Designated Nationals and Blocked Persons)
This is under the Bank Secrecy Act
With _______, cash must be given to the seller upon delivery of a good or service
cash on delivery (COD)
True / False: BDs must complete and file CTRs and SARs with the US Treasury (FinCEN) when appropriate even if a customer requests they not be completed
true
If a client makes multiple deposits on consecutive days of just under $10k the BD would likely notify the Treasury Dept (not FINRA) by filing a _________
Suspicious Activity Report (SAR)
True / false: CTRs and SARs are filed with both the Treasury Department as well as FINRA
false - treasury only (FinCEN)
A requirement to file a _______ with ______ is triggered by cash deposits of $10k or more per day
CTR
FinCEN / Treasury
A CMIR (Report of International Transportation of Currency or Monetary Instruments (CMIR) must be filled out by a person if they receive FOREIGN funds exceeding $_____
$10k
True / false: a BD’s AML officer needs to have a FINRA license
false - not required
Bank secrecy act rule vs. FINRA
Under the Bank Secrecy Act, what are the requirements of an AML program (4 things)?
1) AML program must be approved, IN WRITING, by a senior member of mgmt
2) the AML program must include an ANNUAL INDEPENDENT testing (on calendar year basis) by a member of personnel (does not need to be a FINRA licensee) or by a qualified outside party
3) Notify FINRA of the designated AML compliance persons responsible for implementing / monitoring the day-to-day operations and internal controls of the AML program (note - need to PROMPTLY notify FINRA in case of change in such responsibilities
4) Provide ONGOING training for relevant personnel on AML matters
NOTE - an AML program overseer who shifts roles within the BD may no longer directly oversee it but could retain some prior AML duties
This regulation requires firms to provide a reasonable manner for customers to opt out from firms disclosing their personal data with others
Regulation S-P (Security - Privacy)
Unreasonable means =
1) only means of opting out is for the consumer to write his own letter to exercise the opt out right
2) the only means of opting out as described in any notice subsequent to the initial notice is to use a check-off box that you provided with the initial notice but did not include with subsequent notice
Under which two circumstances under Reg SP is a BD not required to provide an annul notice?
to former customers; such as:
1) close their brokerage account; or
2) terminate their investment advisory contract
True / false: under Reg SP, confidential client information may be released to regulators for purposes of an investigation, if requested by such regulators for this purpose
true
Under the ACAT rule, if a customer requests that shares of a non-transferable asset (eg mutual funds without a contract w new BD) be liquidated, the carrying BD must remit proceeds of the liquidation within _____ business days
5 business days
Alternatively the customer can keep the assets at the old firm
True / false: a BD can refuse to transfer (via ACAT) an account if there is an outstanding lien on the account
true
True / false: a client may use the ACAT process to transfer an account to another firm EVEN IF the RR on the account is under investigation or has committed violations in connection with the account
True
Same is true if the RR is suspended
FINRA approval is not required
True / false: A BD can protest an ACAT request if the RR who wants to take clients has a non-compete clause
false
true / false: a firm may place a temporary hold on disbursements and trades in the account of a SPECIFIED ADULT if the firm reasonably suspects financial exploitation
True
As defined by FINRA, what is an individual who requires the custodial care of another individual because of an inability to care for themselves without assistances (disability or aged 65+)
Specified Adult
When opening an account, firms must make reasonable efforts to include the name and information of a ______________.
Trusted contact person
Especially for Specified Adults
But a TCP is not necessary to open up an account w a BD
True / false: after placing a temporary hold, a BD must contact all authorized parties on the account and trusted contact person
true
How can BDs protect vulnerable investors (i.e., Specified Adults)?
Firms may place a temporary hold on transactions AND distributions if there is a reasonable belief of financial exploitation
NOTE -
1) firms should NOT place a blanket hold on the entire accounts
2) each transaction or disbursement request should be analyzed SEPARATELY (e.g. should continue to process regular bill payments)
