US: FinCEN further weakens US due diligence

The letter further weakens the due diligence system in relation to so-called broker/dealers. It is not the first such move - in 2005, a no action letter permitted broker / dealers to accept business from introducers with a certificate that due diligence had been done.

The latest ruling confirms that - but in some respects improves the position because now, in order to accept those certificates, the broker/dealer must satisfy itself as to the due diligence systems in place at the introducer.

However, the system does nothing to protect the broker / dealer against the risk of concerted action by a money launderer and an introducer. In fact, what it says is that if that risk arises, the broker/dealer will be insulated from the regulatory consequences. He will not, however, be insulated from charges that money laundering in fact took place.

The full notice is available in World Money Laundering Report Online: Resources.