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Industry Spotlight > Broker Dealers

SEC Officials Money Laundering Talk Raises Eyebrows

By Linda Koco

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Washington, D.C.

“Money laundering” isnt exactly at topic you expect to hear bandied about at a conference on variable annuities.

But it was definitely the buzz in hallways, table conversations, even a few asides at the podium here at the annual Regulatory Affairs Conference of National Association for Variable Annuities, Reston, Va.

Why the interest?

On May 8, 2001, Lori A. Richards, the director of the Office of Compliance Inspections and Examinations at the U.S. Securities & Exchange Commission, gave an address to a conference of the Broker-Dealers Securities Industry Association, voicing personal views on that very topic.

In that address, the federal regulator did not directly identify money laundering as an issue for the VA industry. But she did say money laundering should be “a key part” of the compliance efforts of the broker-dealer industry.

Her extensive remarks expanded on that position, labeling money laundering “a crime that deserves serious attention by securities firms.”

Since variable insurance products are sold through securities firms and broker-dealers, many people at the June NAVA conferenceincluding numerous insurance company compliance officersspent a lot of time debating the import of Richards remarks and what they might signify for their own organizations.

Early in her May address, Richards noted that all firms in the securities industry are not yet required to report suspicious activity relating to potential money laundering. But “all securities firms are subject to significant compliance obligations under the Bank Secrecy Act and to criminal money laundering provisions,” she said.

Therefore, she said, “securities firms need to be aware–if they are not alreadyof the grave risks firms face if they allow others to launder money through their firms.”

The speech spells out various reporting requirements that are now in force, what firms can expect in event of an SEC “money-laundering exam,” various “risk indicators” for money laundering activity, and related matters. See full text at http://www.sec.gov/news/speech/spch486.htm.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 13, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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