UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549 

DIVISION OF 

TRADING AND MARKETS 

January 10,2008 

Mr. Alan Sorcher 

Vice President & Associate General Counsel 

Securities Industry and Financial Markets Association 

1101 New York Avenue, NW, 8th Floor 

Washington, DC 20005 

Re: Financial Recordkeeping and Reporting of Currency and.Foreign 

Transactions 1Broker-Dealer Customer Identification Rule 

Dear Mr. Sorcher: 

On February 12,2004, the staff of the Division of Market Regulation 

("'Division"), in consultation with the Financial Crimes Enforcement Network, 

Department of Treasury, issued a letter stating that it would not recommend to the 

Securities and Exchange Commission ("Commission") that enforcement action be taken 

if a broker-dealer treated a registered investment adviser' as if it were subject to an antimoney laundering program rule ("AML Rule") under 3 1 U.S.C. 53 18(h) for the purposes 

of paragraph (b)(6) of the broker-dealer customer identification rule, 3 1 CFR 103.1 22.2 

In the 2004 letter, the Division provided that the letter would be withdrawn without 

fwther notice on the earlier of: (1) the date upon which an anti-money laundering 

program rule for advisers became effective, or (2) February 12,2005. Because a rule for 

advisers did not become effective, the relief in the 2004 letter was extended for an 

additional 18 months on February 10,2005~ and again on July 11,2006.~ This letter 

1 Sections 203 and 203A of the Investment Advisers Act of 1940, and the rules 

promulgated thereunder, govern which investment advisers must register with the 

Commission. 

Letter from Annette L. Nazareth, Director, Division of Market Regulation, 

Commission, to Alan Sorcher, Securities Industry Association, dated February 12, 

2004. 

Letter from Annette L. Nazareth, Director, Division of Market Regulation, 

Commission, to Alan Sorcher, Securities Industry Association, dated February 10, 

2005. This letter extended the relief until the earlier of a rule for advisers 

becoming effective or July 12,2006. 

Letter fiom Robert L.D. Colby, Acting Director, Division of Market Regulation, 

Commission, to Alan Sorcher, Securities Industry Association, dated July 11, 
Mr. Alan Sorcher 

Page 2 

extends the relief granted in the 2004 letter for an additional two year period or until such 

time as advisers become subject to an AML Rule. 

As set forth in the previous letters, and following further consultation with the 

Financial Crimes Enforcement Network staff, the Division staff will not recommend 

enforcement action to the Commission under Rule 17a-8 if a broker-dealer relies on an 

investment adviser, prior to such adviser becoming subject to an AML Rule, provided all 

the other requirements and conditions in paragraph (b)(6) of the CP Rule are met, 

namely that: (1) such reliance is reasonable under the circumstances; (2) the investment 

adviser is regulated by a Federal functional regulator; and (3) the investment adviser 

enters into a contract requiring it to certify annually to the broker-dealer that it has 

implemented an anti-money laundering program, and that it will perform (or its agent will 

perform) specified requirements of the broker-dealer's customer identification program. 

The relief provided in the previous letters and extended by this letter is withdrawn 

without further action on the earlier of: (1) the date upon whch an AML Rule for 

advisers becomes effective, or (2) January 12,2010. 

This is a staff position with respect to enforcement only and does not purport to 

express any legal conclusions. It may be withdrawn or modified if the staff determines 

that such action is necessary to be consistent with the BSA and in the public interest. 

Sincerely, 

Director 

cc: James H. Freis, Jr., Director 

Financial Crimes Enforcement Network 

2006. Ths letter extended the relief until the earlier of a rule for advisers 

becoming effective or January 12,2008.