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 Treasury Proposes Suspicious Activity Reporting for Mutual Funds




The Department of the Treasury today issued a Notice of Proposed Rulemaking that would require mutual funds to report suspicious activities to Treasury�s Financial Crimes Enforcement Network (FinCEN). 

Existing Treasury regulations impose suspicious activity reporting requirements on banks and other depository institutions, securities brokerage firms and certain other financial institutions. This proposal is consistent with these previously issued regulations.  Written comments on the proposed rule may be submitted within 60 days of its publication in the Federal Register, which is expected to occur later this week.

The proposed rule is part of Treasury�s efforts to further enhance anti-money laundering controls in the securities industry and in the financial services sector generally.  Since passage of the USA PATRIOT Act, Treasury has issued various regulations applicable to the mutual fund industry.  In April of 2002, Treasury issued a regulation requiring mutual funds to establish an anti-money laundering program.  In July of 2002, Treasury and the Securities and Exchange Commission (SEC) jointly issued a proposed rule that would require mutual funds to establish customer identification and verification procedures. 

As with the previous regulations, Treasury has worked closely with the SEC in developing this proposed rule.  Additionally, the mutual fund industry itself has continued to provide valuable assistance and insight in the development of anti-money laundering rules applicable to the industry. 

The proposed rule issued today was recommended by the joint report submitted by Treasury, the SEC, and the Board of Governors of the Federal Reserve System to the Congress on December 31, 2002, pursuant to section 356 of the USA PATRIOT Act.

A copy of the proposed rule is attached.


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