The USA PATRIOT Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism) was enacted in 2001 following 9/11. Title III strengthened the Bank Secrecy Act's anti-money laundering provisions.
Key securities industry requirements:
Customer Identification Program (CIP): Broker-dealers must verify the identity of every new customer before opening an account. Required information: - Name - Date of birth (for individuals) - Address - Identification number (SSN for U.S. persons; passport/taxpayer ID for foreign persons)
OFAC screening: Firms must screen customers against the Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list before doing business.
Information sharing: Section 314(a) allows FinCEN to require financial institutions to search records for suspected terrorists/money launderers. Section 314(b) allows voluntary information sharing between institutions.
Correspondent account rules: Strengthened due diligence for correspondent accounts with foreign shell banks.
> Exam tip: CIP is frequently tested on the SIE. You must collect all four data points (name, DOB, address, ID number) before the account is opened (or under limited circumstances, within a reasonable time after). OFAC violations can result in severe civil and criminal penalties.