ANTI-MONEY LAUNDERING PROGRAM
ANTI-MONEY LAUNDERING/USA PATRIOT ACT
Introduction
The USA PATRIOT Act (PATRIOT Act) is designed to thwart international money laundering and
terrorist financing. The Act significantly strengthens previous anti-money laundering laws,
including the original Bank Secrecy Act, which imposes record-keeping and reporting requirements
on certain financial institutions, including broker/dealers, such as the need to keep records and file
reports on currency transactions and foreign bank accounts.
In today's globalized economy, criminal organizations generate huge sums of money by drug
trafficking, arms smuggling and financial crime. "Dirty money", however, is of little use to organized
crime because it raises the suspicions of law enforcement and leaves a trail of incriminating
evidence. Criminals who wish to benefit from the proceeds of large-scale crime have to disguise
their illegal profits without compromising themselves. This process is known as money laundering.
ACG prohibits money laundering and any activity, which facilitates money laundering or the
funding of terrorist or criminal activities, in conjunction with the provisions of the various
sanctions programs administered by the Office of Foreign Assets.
Definition of Money Laundering
The Financial Action Task Force (FATF), the Paris-based multinational group formed in
1989 by the Group of Seven industrialized nations to foster international action against
money laundering, has agreed to this "working definition" of money laundering:
1. The conversion or transfer of property, knowing it is derived from a criminal offense, for the
purpose of concealing or disguising its illicit origin or of assisting any person who is
involved in the commission of the crime to evade the legal consequences of his actions,
2. The concealment or disguising of the true nature, source, location, disposition, movement,
rights with respect to, or ownership of property knowing that it is derived from a criminal
offense,
3. The acquisition, possession or use of property, knowing at the time of its receipt that it was
derived from a criminal offense or from participation in a crime.
In general, the U.S. money laundering laws apply to:
1. Any financial transaction, or anyone who transports, transfers, transmits a monetary
instrument or funds from a place in the United States to or through a place outside the
United States, or from a place outside the United States to or through a place in the United
States, or attempts to do so,
2. Any activity involving the proceeds of "specified unlawful activity"
3. Any person or entity who has knowledge of funds that have come from some form of
unlawful activity,
4. Any person or entity with the intent to promote an unlawful activity, or evade U.S. taxes, or
conceal the ownership of the money or assets, or to cause a report required to be made
under federal or state law.
Money Laundering Process
Money laundering is the process that disguises illegal profits without compromising the criminals
who wish to benefit from the proceeds. There are two reasons why criminals, whether drug
traffickers, corporate embezzlers or corrupt public officials, have to launder money, (1) the money
trail is evidence of their crime and (2) the money itself is vulnerable to seizure and has to be
protected. Regardless of who uses the apparatus of money laundering, the operational principles
are essentially the same. Money laundering is a dynamic three-stage process. These three stages
are usually referred to as Placement, Layering, and Integration.
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Placement, moving the funds from direct association with the crime;
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Layering, disguising the trail to foil pursuit; and,
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Integration, making the money available to the criminal once again with its occupational
and geographic origins hidden from view.
General Policy
It is strictly prohibited for any person associated with ACG to engage in the laundering of money or
any activity associated with the funding of terrorist or other illegal activities; it is the policy of ACG
to actively prevent such activities. ACG and its management are firmly committed to reporting and
prosecuting any and all personnel who participate, or have any knowledge whatsoever, of any
money laundering or terrorist funding activities. It is the responsibility of every person associated
with this Firm to IMMEDIATELY report any suspicious activity in a customer account or suspicious
activity of any registered, non-registered or affiliated person of this Firm to the designated AntiMoney Laundering Compliance Officer (AMLCO) or a registered principal. If reported to a
registered principal (other than the AMLCO), the principal is responsible for reporting the
information to the AMLCO.
It is the Firm’s policy that all associated persons have the ability to report any information
regarding money laundering or other suspicious activity directly to a CCO or a member of senior
management in person or via phone, letter, e-mail or fax. It is strictly prohibited for any person
associated with ACG to prevent, obstruct or retaliate against any person who reports suspicious
activity to a registered principal or a member of senior management.
In addition to any training provided by ACG pursuant to the procedures listed herein, a copy of this
general policy along with the name of the AMLCO, the definition of money laundering, and a
description of the money laundering process should be given to each associated person.
Anti-Money Laundering Compliance Officer
ACG has designated the Anti-Money Laundering Compliance Officer (AMLCO) as listed at the
beginning of this manual (unless otherwise indicated, references herein to the “CCO” refer to the
AMLCO).
The responsibilities of the Anti-Money Laundering Compliance Officer (AMLCO) include the
following:
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Continuously monitoring the Firm’s compliance with AML obligations (under the PATRIOT
Act, FINRA Rule 3011, and other rules/regulations);
Filing all required money laundering and currency reports to the appropriate regulatory
agencies;
Overseeing training for associated persons;
Overseeing communication of the Firm’s anti-money laundering policies and procedures to
associated persons;
Overseeing the preservation and maintenance of records related to the Firm’s anti-money
laundering compliance program;
Updating the Firm’s written supervisory procedures relating to money laundering
(PATRIOT Act and FINRA Rule 3011), cash and currency transactions as needed but at least
annually;
Monitoring and overseeing the Firm’s and its associated person’s compliance with the
policies and procedures outlined below;
Cooperating with all regulatory money laundering investigations and providing all
documentation and information requested by state, federal, and self-regulatory
organizations.
Pursuant to FINRA Rule 3011, ACG will provide FINRA with contact information for the AMLCO,
including the following:
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Name;
Title;
Mailing address;
E-mail address;
Telephone number; and
Facsimile number.
ACG will promptly notify the FINRA of any change to this information.
Review and Approval of the Anti-Money Laundering Compliance Program
The president or a senior officer at ACG shall review and approve the Firm’s Anti-Money
Laundering Compliance Program (AMLCP) and any changes thereto as needed to ensure that the
Firm’s program conforms to the current rules and regulations. The designated officer will evidence
his/her review and approval of the program in writing.
FinCEN Requests – Section 314 of the PATRIOT Act
Pursuant to the Treasury’s final regulations, ACG will respond to a Financial Crimes
Enforcement Network (FinCEN) request about accounts or transactions by immediately searching
its records to determine whether it maintains or has maintained any account for, or has engaged in
any transaction with, each individual, entity, or organization named in FinCEN's request. For
information requests received, the AMLCO or his/her designee will be the point of contact
regarding the request and will be the person to receive similar requests in the future.
Unless otherwise stated in FinCEN's request, ACG is required to search current accounts, accounts
maintained by a named suspect during the preceding 12 months, and transactions conducted by or
on behalf of or with a named subject during the preceding six months. If the search parameters
differ from those mentioned above (for example, if FinCEN requests longer periods of time or limits
the search to a geographic location), ACG will adjust its search accordingly. If ACG finds a match, it
will report it to FinCEN by completing FinCEN’s subject information form. This form can be sent to
FinCEN by electronic mail at [email protected],or by facsimile transmission to 703-9053660 (when e-mail is unavailable). If the search does not result in any matches, then a reply to the
314(a) request is not necessary.
ACG will not disclose the fact that FinCEN has requested or obtained information from us, except to
the extent necessary to comply with the information request. ACG will maintain procedures to
protect the security and confidentiality of requests from FinCEN, such as those established to
satisfy the requirements of Section 501 of the Gramm-Leach-Bliley Act. Any questions regarding
the request should be directed to the requesting Federal law enforcement agency as designated in
the 314(a) request.
Unless otherwise stated in the information request, ACG is not required to treat the information
request as continuing in nature, and it is not required to treat the request as a list for purposes of
the customer identification and verification requirements. Furthermore, ACG will not use
information provided to FinCEN for any purpose other than:
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to report to FinCEN as required under Section 314 of the PATRIOT Act;
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to determine whether to establish or maintain an account, or to engage in a
transaction;
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to assist ACG in complying with any requirement of Section 314 of the PATRIOT Act.
Sharing Information With Other Financial Institutions
ACG will share information about those suspected of terrorist financing and money laundering with
other financial institutions for the purposes of identifying and reporting activities that possibly
involve terrorist acts or money laundering activities and to determine whether to establish or
maintain an account or engage in a transaction. The Firm’s AMLCO is responsible for filing with
FinCEN an initial notice before any sharing occurs and annual notices afterwards (using the notice
form found at www.fincen.gov). Before ACG shares information with another financial institution,
it will take reasonable steps to verify that the other financial institution has submitted the requisite
notice to FinCEN, either by obtaining confirmation from the financial institution or by consulting a
list of such financial institutions that FinCEN will make available. ACG understands that this
requirement applies even with respect to financial institutions with whom it is affiliated, and so it
will obtain the requisite notices from affiliates and follow all required procedures.
ACG will employ strict procedures both to ensure that only relevant information is shared and to
protect the security and confidentiality of this information, including segregating it from the Firm’s
other books and records.
In addition to sharing information with other financial institutions about possible terrorist
financing and money laundering, ACG will also share information about particular suspicious
transactions with our clearing broker for purposes of determining whether one of us will file a SARSF. In cases in which ACG files a SAR-SF for a transaction that has been handled both by ACG and its
clearing broker, ACG may share with the clearing broker a copy of the filed SAR-SF, unless it would
be inappropriate to do so under the circumstances, such as where the filed SAR-SF concerns the
clearing broker or one of its employees.
Clearing/Introducing Firm Relationships
ACG will work closely with its clearing broker to detect money laundering. To this end, ACG will
exchange information, records, data and exception reports as necessary to comply with AML laws.
Both ACG and its clearing broker have filed (and kept undated) the necessary annual certifications
for such information sharing, which can be found at http://www.fincen.gov/fi_infoappb.html. As a
general matter, ACG has agreed that its clearing broker will monitor customer activity on the Firm’s
behalf and ACG will provide the clearing broker with proper customer identification information as
required to successfully monitor customer transactions. ACG has set out these responsibilities in its
clearing agreement under FINRA Rule 4311. The agreement will not relieve ACG or its clearing
broker from their independent obligations to comply with AML laws.
Independent Audit and Testing of the Firm’s AML Compliance Program
The PATRIOT Act requires financial institutions to establish an independent audit system to ensure
that the Firm’s internal anti-money laundering systems are adequate and to ensure that the Firm’s
associated persons, including its compliance officers, are receiving the requisite training and
information. This independent review should not only verify that the Firm’s policies and
procedures are adequate, but also ensure that the established policies and procedures are being
followed properly. Additionally, this review should assess the adequacy of and level of compliance
with the Firm's anti-money laundering compliance program. Either member personnel or a
qualified outside party may perform the testing function, depending in part on the Firm's size and
resources. The testing of the Firm’s AMLCP will be performed on an annual basis by a qualified and
independent employee or by a qualified independent third party.
“Independent” means a person who has a sufficient amount of separation from the Anti-Money
Laundering reviews and functions and does not work under or in a position to be unduly influenced
by or subject to the control of senior management.
The independent testing should be performed annually. After a test is complete, the internal testing
personnel or qualified outside party should report its findings to senior management as
appropriate, who will address each of the resulting recommendations.
Customer Identification Program
Introduction
This Customer Identification Program (CIP) has been developed by ACG in order to comply with 31
C.F.R. 103.122, which was issued to implement Section 326 of the PATRIOT ACT. The CIP is to be
considered a part of the Firm’s anti-money laundering compliance program required by the
PATRIOT ACT and FINRA Rule 3011.
ACG developed the following CIP procedures based on its assessment of the relevant risks. The
objective of the procedures is to enable ACG to form a reasonable belief that it knows the true
identity of each customer. The collection and verification requirements of the CIP is in addition to
the information ACG must collect under other rules, such as the following:
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FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade)
FINRA Rule 2111 (Recommendations to Customers – Suitability)
FINRA Rule 3110 (Books and Records)
SEC Rule 17a-3(a)(9) (Beneficial Ownership regarding Cash and Margin Accounts)
SEC Rule 17a-3(a)(17) (Customer Accounts)
All associated persons of ACG must comply with the Firm’s CIP .
The minimum identifying information that must be obtained from each customer prior to opening
an account is:
* A name;
* A date of birth, for an individual;
* An address, which will be: * For an individual, a residential or business street address; *
For an individual who does not have a residential or business street address, an Army Post
Office (APO) or Fleet Post Office (FPO) box number, or the residential or business street
address of a next of kin or another contact individual; or * For a person other than an
individual (such as a corporation, partnership, or trust), a principal place of business, local
office, or other physical location; and
* An identification number, which will be: * For a U.S. person, a taxpayer identification
number; or * For a non-U.S. person, one or more of the following: * a taxpayer identification
number; * a passport number and country of issuance; * an alien identification card
number; or * the number and country of issuance of any other government-issued
document evidencing nationality or residence and bearing a photograph or similar
safeguard.
For individuals resident in the United States, ACG uses documentary methods to verify customer
identity. ACG uses non-documentary methods such as OFAC to verify the customer's identity. The
clearing firm also runs a unique OFAC search and utilizes a ‘third party vendor’ to check customer
information with.
For retail accounts not domiciled in the U.S. ACG uses documentary methods to verify customer
identity. Individuals must provide a passport photo or other official document photo at account
opening, and corporate retail accounts must provide a certificate of good standing.
An account may be opened for a customer whose identity has not yet been verified. Customers may
then conduct transactions until their identity has been verified, which is usually the next business
day. If the customer’s identify cannot be verified within five business days after account opening,
the account should be closed.
ACG determines whether a customer appears on any list of known or suspected terrorists or
terrorist organizations issued by any Federal government agency and designated as such by
Treasury in consultation with the Federal functional regulators. In the event that a customer of ACG
does not have an account carried by the clearing firm, the Treasury's Office of Foreign Assets
Control (OFAC) Web Site: www.treas.gov/ofac can be used to determine whether a customer
appears on any list of known or suspected terrorists or terrorist organizations
ACG also relies on its clearing firm to provide customers with adequate notice that the
broker/dealer is requesting information to verify their identities, which is provided on the New
Account Form provided by the clearing firm.
In order to rely on the performance by another financial institution for any procedures of the
broker/dealers CIP, the other financial institution must enter into a contract requiring it to certify
annually to the broker/dealer that it has implemented its anti-money laundering program, and that
it will perform (or its agent will perform) specified requirements of the broker/dealers CIP.
Customer Identification Program – USA Patriot Act
Responsibility
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Chief Compliance Officer
Resources
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New Account Documents
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Approved ID Cards
Frequency
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Weekly
Action
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Review account documentation
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Run new retail accounts through OFAC
Request documentary evidence of identity from non-US
accounts
Freeze accounts and prohibit transactions with persons who
are suspected of terrorist activities
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Customer Notice
During the account opening process, ACG will provide the customer with adequate notice that ACG
is requesting information to verify the customer’s identity. The notice shall be in a format approved
by the AMLCO and shall include the following language:
“Important Information About Procedures for Opening a New Account
To help the government fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify, and record information that identifies each
person who opens an account.
What this means for you: When you open an account, we will ask for your name, address, date of
birth and other information that will allow us to identify you. We may also ask to see your driver’s
license or other identifying documents.”
Definitions
The term “accountholder” refers to the person named in the account registration.
The term “customer” refers to a person who opens a new account, including an individual who
opens a new account for an individual who lacks legal capacity (e.g., a minor) or for an entity that is
not a legal person (e.g., a civic club). Certain entities are excluded from the definition of “customer.”
Note: The term “customer” generally does not refer to a person who fills out the account
opening paperwork or who provides information necessary to set up an account, if the person
is not the accountholder.
The term “U.S. Person” refers to a person that is a U.S. citizen, or a person other than an individual
that is established or organized under the laws of a State or the United States (e.g. a corporation,
partnership, or trust).
The term “Non-U.S. Person” refers to a person that is not a U.S. Person.
Collection of Identifying Information
The CCO shall not approve an account that is missing any of the required information noted below.
For such accounts, the principal should request that the representative obtain the missing
information from the customer. If the principal notices a continuing pattern by the representative
of submitting incomplete paperwork, the matter must be reported to the AMLCO.
For purposes of the Firm’s CIP, the identifying information collected must be maintained for a
period of five (5) years after the account is closed.
U.S. Persons:
For each customer who is a U.S. Person, the following identifying information regarding the
accountholder(s) must be obtained prior to the account being opened:
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Name of individual or entity
Date of birth (for individuals)
Citizenship (individuals) or state/country of organization (non-individuals).
Full address (no P.O. boxes; include apartment and suite numbers):
o
For individuals – primary residence or business address (whichever is to be used for the
account registration)
o
Note: If the individual does not have a residence or business address, then an Army
Post Office (APO) or Fleet Post Office (FPO) may be used (if applicable).
For non-individuals – principal place of business or local office (whichever is to be used
for the account registration)
Phone number for the address listed (for both), and the name and title of a contact person
(for non-individuals).
Taxpayer identification number
o
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Note: Concerning omnibus accounts for purposes of the Firm’s CIP, ACGis not required
to look through the intermediary to the underlying beneficial owners, if the
intermediary is identified as the accountholder.
Non-U.S. Persons:
For each customer who is a Non-U.S. Person, the following identifying information regarding the
accountholder(s) must be obtained prior to the account being opened:
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Name
Date of birth (for individuals)
Citizenship or country of organization
Full address (no P.O. boxes; include apartment and suite numbers):
o For individuals – primary residence or business address (whichever is to be used for the
account registration)
o For non-individuals – address of principal place of business and or local office
(whichever is to be used for the account registration)
Phone number for the address listed (for both), and the name and title of a contact person
(for non-individuals).
One the following identification numbers:
o Taxpayer identification number; or
o If a taxpayer identification number is not available, then either a passport number and
country of issuance, or an alien identification card number; or
o If none of the above listed forms of identification numbers are available, then the
number and country of issuance of any other government-issued document evidencing
nationality or residence and bearing a photograph or similar safeguard. This would
include but is not limited to business licenses, certificates of incorporation or any other
document reasonable in order to comply with 31CFR 103.122
In the event that a customer has applied for, but has not received, a taxpayer identification number,
ACG will confirm that the application was filed by obtaining a copy of the customer’s application for
a taxpayer identification number prior to opening the account. In addition, ACG will obtain the
taxpayer identification number within a reasonable period of time after the account is opened.
If a potential or existing customer either refuses to provide the information described above when
requested, or appears to have intentionally provided misleading information, ACG will not open a
new account and, after considering the risks involved, will consider closing any existing account. In
either case, the AMLCO will be notified to determine whether ACG should report the situation to
FinCEN (i.e., file a Form SAR-SF).
Verification Process
Based on the risk, and to the extent reasonable and practicable, ACG will ensure that it has a
reasonable belief that it knows the true identity of its customers by using risk-based procedures to
verify and document the accuracy of the information it gets about its customers. In verifying
customer identity, ACG will analyze any logical inconsistencies in the information obtained. ACG
will verify the customer’s identity through the use of documentary methods, non-documentary
methods, or both (where appropriate). In analyzing the verification information, ACG will consider
whether there is a logical consistency among the identifying information provided, such as the
customer’s name, street address, zip code, telephone number (if provided), date of birth, and social
security number.
Verification of the customer’s identity should take place at the time the identifying information is
collected but must take place within a reasonable period of time after the account is opened
(generally, within five business days after the account is opened). However, the identity of a
customer who is a Non-U.S. Person must be verified prior to the account being opened. Depending
on the nature of the account and requested transactions, ACG may refuse to complete a transaction
before it has verified the information, or in some instances when ACG needs more time, it may,
pending verification, restrict the types of transactions or dollar amount of transactions. If ACG finds
suspicious information that indicates possible money laundering or terrorist financing activity, it
will, after consultation with the AMLCO, file a SAR-SF in accordance with applicable law and
regulation.
A description of the methods and the results of any measures undertaken to verify the identity of an
accountholder must be recorded in the client file. When documentary methods are used, the file
should indicate the type of document, identification number (if any), place of issuance, and (if any)
date of issuance and expiration date. For purposes of the Firm’s CIP, the records made during the
verification process must be maintained for a period of five (5) years after the record is made.
When ACG cannot form a reasonable belief that it knows the true identity of a customer, ACG will do
the following:
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Not open an account;
Where appropriate, impose terms under which a customer may conduct transactions while
we attempt to verify the customer’s identity;
Close an account after attempts to verify customer’s identity fail; and
File a SAR-SF in accordance with applicable law and regulation.
Methods of Verification:
ACG will attempt to use documentary methods to verify the customer’s identity. However, ACG will
also use non-documentary methods of verification in the following situations:
 When the customer is unable to present an unexpired government-issued identification
with a photograph or other similar safeguard;
 When ACG is unfamiliar with the documents the customer presents for identification
verification;
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When the customer and Firm do not have face-to-face contact; and
When there are other circumstances that increase the risk that ACGwill be unable to verify
the true identity of the customer through documentary means.
ACG will use the following non-documentary methods of verifying identity:
 Contacting the customer;
 Independently verifying the customer’s identity through the comparison of information
provided by the customer with information obtained from a consumer reporting agency,
public database, or other source;
 Checking references with other financial institutions;
 Obtaining a copy of the customer’s utility bill(s) for the past two months;
 Obtaining a financial statement.
ACG will use the following documentary methods of verifying identity:
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For individuals:
Unexpired government-issued driver’s license bearing a photograph; or
Unexpired government-issued passport bearing a photograph; or
If neither a driver’s license or a passport is available, then an unexpired governmentissued identification card showing an identification number, evidencing the person’s
nationality or residence, and bearing a photograph or similar safeguard.
For a person other than an individual (e.g. a corporation, partnership, or trust): Documents
showing the existence of the entity, including:
o Articles of incorporation;
o Unexpired government-issued business license;
o Trust instrument;
o Partnership agreement;
o
o
o
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Additional Action Required:
Additional verification steps must be taken whenever any of the following apply:
 The customer opens the account without appearing in person at ACG(e.g., over the
telephone or online); or
 There is a substantive discrepancy between the information collected and the
documentation provided; or
 The customer is unwilling or unable to provide the requested documentation; or
 The customer appears to have provided misleading information or documentation; or
 The customer is a not a U.S. Person; or
 ACG is not familiar with the documents presented.
Any additional actions taken by ACG to verify the customer’s identity must be recorded in the client
file.
Customer Does not Appear in Person to Open the Account (i.e., no face-to-face contact between the
customer and the Firm):
If the customer opens the account without appearing in person at the Firm, ACG will take the
following additional steps to verify the customer’s identity:
 Obtaining a copy of the customer’s identification documents;
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Using one or more of the non-documentary methods of verification.
Customer is a Non-U.S. Person:
If the customer is a Non-U.S. Person, ACG will take the following additional steps to verify the
customer’s identity:
Obtaining certified copies from the issuer of any documentation provided;
Obtaining certified copies of unexpired government-issued identification bearing a
photograph of the customer or, if an entity, the owners and/or directors and/or officers
and/or authorized persons of the customer;
Using one or more of the non-documentary methods of verification;
 Reviewing information available on the Internet (for entities);
 Obtaining a list of beneficial owners of the entity or, if the customer is a publicly held
company traded over a recognized stock exchange, a list of the officers and directors of the
company;
 Obtaining a list of any other persons who are authorized to initiate transactions for the
account;
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In addition, the AMLCO may
information/documentation provided.
contact
the
customer
directly
to
discuss
the
Customer is Unwilling or Unable to Provide the Documentation:
If the customer is unwilling or unable to provide such documentation, the AMLCO will contact the
customer to discuss the matter and to determine if there is any other acceptable documentation
available that the AMLCO can use to verify the customer’s identity. If the customer refuses to
provide any documentation or if the AMLCO is unable to verify the customer’s identity, then ACG
will not open the account and, after considering the risks involved, will consider closing any
existing account. The AMLCO will also review the matter to determine whether additional steps are
necessary, such as filing a SAR-SF.
There is a Substantive Discrepancy:
If there is a substantive discrepancy between the information collected and the documentation
provided, the AMLCO must be notified. The AMLCO will compare the information/documentation
provided by the customer and obtained elsewhere. Additionally, the AMLCO may contact the
customer directly to discuss the information/documentation provided. The AMLCO must record in
the client file a description of the resolution of each substantive discrepancy discovered when
verifying the identifying information obtained. If the AMLCO is unable to verify the customer’s
identity or resolve the discrepancy, then ACG will not open the account and, after considering the
risks involved, will consider closing any existing account. The AMLCO will also review the matter to
determine whether additional steps are necessary, such as filing a SAR.
ACG is Not Familiar with the Documents Presented:
If ACG is not familiar with the documents presented, the AMLCO will contact the customer directly
to discuss the information/documents submitted and to determine whether other documents are
available, which can be used to verify the customer’s identity. If the AMLCO is unable to verify the
customer’s identity, then ACG will not open the account and, after considering the risks involved,
will consider closing any existing account. The AMLCO will also review the matter to determine
whether additional steps are necessary, such as filing a SAR.
Comparison with Government Lists:
ACG will check during the account opening whether the customer (and where applicable, the
owners and/or directors and/or officers and/or authorized parties of the customer) appears on
any list of known or suspected terrorists or terrorist organizations issued by the federal
government and designated as such by the U.S. Department of Treasury and the Federal functional
regulators (when available), or on any other government list that ACG is obligated to screen
customers against.
Also, ACG will continue to comply with Treasury’s Office of Foreign Asset Control rules prohibiting
transactions with certain foreign countries or their nationals.
The person performing the check must evidence that such checks were performed by initialing and
dating the appropriate account documents. The AMCLO is responsible for reviewing the client files
to ensure that the appropriate checks are being made and documented.
Reliance on Other Financial Institutions
Under certain circumstances ACG may rely on the performance by another “financial institution” of
any procedures of the Firm’s CIP. However, no such reliance will be made unless first approved by
the Firm’s AMLCO.
Note: The term “financial institution” is defined at 31 U.S.C. 5312(a)(2) and (c)(1). As of the
date of this document, the term “financial institution” does not include registered investment
advisers.
The AMLCO will not approve the reliance on the performance of any other “financial institution”
unless the following conditions are first satisfied:


The other financial institution is subject to a rule implementing 31 U.S.C. 5318(h), and
regulated by a Federal functional regulator; and
The other financial institution enters into a contract requiring it to certify annually to ACG
that it has implemented its AML program, and that it will perform specified requirements of
the Firm’s CIP.
Persons/Accounts Excluded From the CIP
The exclusion of certain customers or persons from the CIP, where permitted, does not negate the
Firm’s or any registered representative’s obligation to collect and record information about a
customer pursuant to other state, federal and SRO rules (e.g., FINRA Rules 2111 and 3110).
Types of Persons Excluded
The following persons are excluded from the definition of “customer” for purposes of the Firm’s
CIP:

A “financial institution” regulated by the SEC, CFTC, Board of Governors of the Federal
Reserve System, Office of the Comptroller of the Currency, the Board of Directors of the
FDIC, the Office of Thrift Supervision, and the National Credit Union Administration.
Note: The term “financial institution” is defined at 31 U.S.C. 5312(a)(2) and (c)(1). As of the
date of this document, the term “financial institution” does not include registered investment
advisers.



A bank regulated by a state bank regulator.
A department or agency of the U.S., of any State, or any political subdivision of any State.
A public company listed on the NYSE, AMEX, or NASDAQ Stock Market (except those listed
under “NASDAQ Small-Cap Issues”), however, only to the extent of its domestic operations.
Types of Accounts Excluded
An account opened for the purpose of participating in an employee benefit plan established under
the Employee Retirement Income Security Act of 1974 (ERISA) is excluded from the Firm’s CIP.
Checking the Office of Foreign Assets Control (OFAC) List
Before opening an account ACG will check to ensure that a customer does not appear on Treasury’s
OFAC “Specifically Designated Nationals and Blocked Persons” List (SDN List) (See the OFAC Web
Site at www.treas.gov/ofac, or engaging in transactions with people or entities from, embargoed
countries and regions listed on the OFAC Web Site. Because the OFAC Web Site is updated
frequently, ACG will consult the list on a regular basis and subscribe to receive updates when they
occur. ACG may access these lists through various software programs to ensure speed and
accuracy. ACG will also review existing accounts against these lists when they are updated and will
document the review.
In the event that ACG determines that a customer, or someone with or for whom the customer is
transacting, is on the SDN List or is from or engaging in transactions with a person or entity located
in an embargoed country or region, ACG will reject the transaction and/or block the customer's
assets and file a blocked assets and/or rejected transaction form with OFAC. ACG will also call the
OFAC Hotline at 1-800-540-63ux1. The CCO will ensure that such account(s) and/or transaction(s)
are immediately suspended and will prohibit any further activity until a complete and thorough
investigation has taken place. The CCO will notify the supervisor(s) and the registered
representative(s) associated with the account and/or transaction that any additional requests to
effect transactions, transfer funds/securities or open additional accounts shall be referred to him or
another designated individual.
Foreign Banks and Correspondent Accounts
Broker/dealers are prohibited from establishing, maintaining, administering, or managing a
"correspondent account" in the United States for an unregulated foreign “shell bank.”
A “correspondent" bank account is defined as:
An account established to receive deposits from, make payments on behalf of, or handle
other financial transactions for a foreign bank
A “shell bank” is defined as:
A foreign bank with no physical presence in any country
The designated supervisor or the appointed delegate will immediately terminate any such accounts
upon discovery. All associated persons are required to notify a registered principal upon discovery
or suspicion that ACG may be maintaining or establishing a "correspondent account" for an
unregulated foreign shell bank. ACG will also terminate any correspondent account that it has
determined is not maintained by an unregulated foreign shell bank but is being used to provide
services to such a shell bank. ACG will exercise caution regarding liquidating positions in such
accounts and take reasonable steps to ensure that no new positions are established in these
accounts during the termination period. ACG will terminate any correspondent account for which it
has not obtained the information described in Appendix A of the regulations regarding shell banks
within the time periods specified in those regulations.
Certifications
ACG currently does not allow foreign banks to open accounts. Should this change in the
future, ACG will require that foreign bank account holders complete certification forms
issued by the U.S. Treasury, which ACG will send to foreign bank account holders for
completion. The certification forms require the foreign bank account holders to certify that
they are not “shell banks” and to provide the necessary ownership and agent information.
ACG will re-certify when it believes that the information is no longer accurate and at least
every two years. The designated supervisor or the appointed delegate is responsible for
ensuring that the initial and updated certification forms are obtained.
In addition to obtaining certification forms, the designated supervisor or the appointed
delegate will ensure that ACG takes steps to ensure that the ownership of the bank is
identified, the account is thoroughly reviewed to detect suspicious activity, and for making a
determination as to whether or not the customer maintains “correspondent accounts” for
any other banks. Should the customer maintain “correspondent accounts” ACG will conduct
due diligence to determine the identity of those accounts.
Should ACG open an account for a foreign bank, the designated supervisor or the appointed
delegate will carefully review all foreign bank account activity for any indications of
inappropriate activity. If inappropriate activity is detected The designated supervisor or
the appointed delegate will be required to file all appropriate reports to FINRA, SEC and
other government agencies.
Recordkeeping for Foreign Correspondent Accounts
Should ACG open an account for a foreign bank, ACG will maintain records identifying the
owners of foreign banks with U.S. correspondent accounts and the name and address of the
U.S. agent for service of legal process for those banks.
Prohibition of the Direct Use of Correspondent Accounts by the Specified
Banks
Pursuant to U.S. regulations issued under section 311 of the USA PATRIOT Act, 31 CFR
103.192, ACG is prohibited from opening or maintaining a correspondent account in the
United States for, or on behalf of, the Latvian bank VEF Banka, its subsidiaries, including
Veiksmes Lizings, and Commercial Bank of Syria, its subsidiaries, including Syrian Lebanese
Commercial Bank (the “Specified Banks”). This prohibition requires ACG to review their
account records to ensure that they maintain no accounts directly for, or on behalf of, the
Specified Banks.
Due Diligence to Prevent Indirect Use
As a corollary to the prohibition on the opening or maintaining of correspondent accounts
directly for the Specified Banks, ACG is required to apply due diligence to its correspondent
accounts that is reasonably designed to guard against their indirect use by the Specified
Banks. At a minimum, such due diligence must include two elements:
1) Notification to Correspondent Accountholders
ACG must notify its correspondent accountholders that the account may not be used to
provide the Specified Banks with access to the covered financial institution. The purpose of
the notice requirement is to help ensure that the Specified Banks are denied access to the
United States financial system, as well as to increase awareness within the international
financial community of the risks and deficiencies of the Specified Banks. However, the final
rules emphasize that FinCEN is not requiring or expecting financial institutions to obtain a
certification from their correspondent accountholders that indirect use will not be
provided.
ACG sends the below notice to all of its account holders:
Pursuant to US regulations issued under section 311 of the USA PATRIOT Act, 31 CFR
103.192, we are prohibited from opening or maintaining a correspondent account for, or on
behalf of, the Latvian bank VEF Banka, its subsidiaries, including Veiksmes Lizings, and
Commercial Bank of Syria, its subsidiaries, including Syrian Lebanese Commercial Bank (the
“Specified Banks”). The regulations also require us to notify you that your correspondent
account with our financial institution may not be used to provide the Specified Banks with
access to our financial institution. If we become aware that the Specified Banks are
indirectly using the correspondent account you hold at our financial institution, we will be
required to take appropriate steps to prevent such access, including terminating your
account.
2) Identification of Indirect Use
ACG takes steps to identify any indirect use of its correspondent accounts by the Specified
Banks, to the extent that such indirect use can be determined from transactional records
maintained by ACG in the normal course of business. ACG takes a risk-based approach when
deciding what, if any, additional due diligence measures it should adopt to guard against the
indirect use of correspondent accounts by the Specified Banks, based on risk factors such as
the type of services offered by, and geographic locations of, its correspondents.
Summons or Subpoena of Foreign Bank Records & Termination of
Correspondent Relationships
ACG is required to produce account information relating to foreign bank accounts within
seven days in response to requests from federal law enforcement, should ACG open an
account for a foreign bank.
Should ACG open an account for a foreign bank, the designated supervisor or the appointed
delegate will ensure that ACG closes any correspondent relationship with a foreign bank
within 10 business days after receipt of written notice from the Secretary of the Treasury or
the U.S. Attorney General, that the foreign bank has failed:

To comply with a summons or subpoena issued under Section 319 of the
PATRIOT Act; or

To initiate proceedings in a U.S. court contesting such summons or subpoena.
The designated supervisor or the appointed delegate will promptly notify all firm personnel
who have access to or work with the correspondent relationship in question, of the
notification and subsequent termination of the relationship. The designated supervisor or
the appointed delegate shall make such notifications by e-mail, inter-office memorandum or
any other means that will properly advise the required firm personnel. The principal will
scrutinize any account activity during that 10-day period to ensure that any suspicious
activity is appropriately reported and to ensure that no new positions are established in
these accounts. The AMLCO may deem it necessary to contact outside counsel for additional
guidance.
Executive Order #13224 Freezing of Accounts
Should any account be flagged during an OFAC check, the AMLCO must be notified immediately and
the account must be frozen as required by Executive Order #13224. The AMLCO will immediately
contact the local SEC office as well as their local FINRA office and apprise them of the circumstances
surrounding the account. The AMLCO will document all conversations with the customer, the
regulators and the registered representative on record for the account. The AMLCO will work
directly with the authorities to assist in the investigation into the account.
Private Banking Accounts
The Money Laundering Abatement Act requires broker/dealers, at a minimum, to take all possible
steps to determine the identity of the nominal and beneficial account holders of, and the source of
funds deposited into, a private banking account maintained by or on behalf of a non-U.S. citizen.
Additionally, financial institutions are required to conduct enhanced scrutiny of accounts requested
or maintained by, or on behalf of, a senior foreign political figure, or any immediate family member
or close associate of a senior foreign political figure.
A “private banking” account is an account (or combination of accounts) that requires an aggregate
deposit of funds or other assets of more than $1,000,000 established on behalf of one or more
individuals who have a direct or beneficial ownership interest in the account, and is assigned to, or
administered by, in whole or in part, an officer, employee, or agent of a financial institution acting
as a liaison between the institution and the direct or beneficial owner of the account.
A "senior foreign political figure" includes a current or former senior official in the executive,
legislative, administrative, military or judicial branches of a foreign government (whether elected
or not), a senior official of a major foreign political party, or a senior executive of a foreign
government-owned commercial enterprise; a corporation, business, or other entity formed by or
for the benefit of any such individual; an immediate family member of such an individual; or any
individual publicly known (or actually known by the Firm) to be a close personal or professional
associate of such an individual.
ACG does not currently allow private banking accounts or accounts for senior foreign political
figures.
Should ACG open a private banking account, the CCO will establish and enforce enhanced
monitoring or scrutiny of the account that will be reasonably designed to detect and report
transactions that may involve the proceeds of foreign official corruption.
Should ACG open a private bank account, the CCO will monitor future pronouncements from the
U.S. Treasury Department and ensure that the anti-money laundering compliance program includes
enhanced monitoring and scrutiny of accounts requested or held on behalf of foreign officials who
may be involved in corrupt activities.
ACG will review its accounts to determine whether it offers any "private banking" accounts and will
conduct due diligence on such accounts. This due diligence will include, at least, the following:




Ascertaining the identity of all nominal holders and holders of any beneficial ownership
interest in the account (including information on those holders' lines of business and
sources of wealth);
Ascertaining the source of funds deposited into the account;
Ascertaining whether any such holder may be a senior foreign political figure; and
Detecting and reporting, in accordance with applicable law and regulation, any known
or suspected money laundering and/or use of the proceeds of foreign corruption.
In addition, ACG will review public information, including information available in Internet
databases, to determine whether any "private banking" account holders are "senior foreign political
figures." If ACG discovers information indicating that a particular "private banking" account holder
may be a "senior foreign political figure," and upon taking additional steps to confirm this
information, ACG determines that the individual is, in fact, a "senior foreign political figure," ACG
will conduct additional enhanced due diligence to detect and report transactions that may involve
money laundering or the proceeds of foreign corruption.
In so doing, ACG will consider the risks that the funds in the account may be the proceeds of foreign
corruption, including the purpose and use of the private banking account, location of the account
holder(s), source of funds in the account, type of transactions conducted through the account, and
jurisdictions involved in such transactions. The degree of scrutiny ACG will apply will depend on
various risk factors, including, but not limited to, whether the jurisdiction the "senior foreign
political figure" is from is one in which current or former political figures have been implicated in
corruption and the length of time that a former political figure was in office. The Firm’s enhanced
due diligence might include, depending on the risk factors, probing the account holder's
employment history, scrutinizing the account holder's sources of funds, and monitoring
transactions to the extent necessary to detect and report proceeds of foreign corruption, and
reviewing monies coming from government, government controlled, or government enterprise
accounts (beyond salary amounts).
If ACG does not find information indicating that a "private banking" account holder is a "senior
foreign political figure," and the account holder states that he or she is not a "senior foreign political
figure," then additional enhanced due diligence is not required.
In either case, if due diligence (or the required enhanced due diligence, if the account holder is a
"senior foreign political figure") cannot be performed adequately, ACG will, after consultation with
its AMLCO and as appropriate, not open the account, suspend the transaction activity, file a SAR-SF,
or close the account.
Monitoring Accounts For Suspicious Activity
ACG will manually monitor a sufficient amount of account activity to permit identification of
patterns of unusual size, volume, pattern or type of transactions, geographic factors such as
whether jurisdictions designated as “non-cooperative” are involved, or any of the “red flags”
identified below. ACG will look at transactions, including trading and wire transfers, in the context
of other account activity to determine if a transaction lacks financial sense or is suspicious because
it is an unusual transaction or strategy for that customer. The AMLCO or his or her designee will be
responsible for this monitoring, will document when and how it is carried out, and will report
suspicious activities to the appropriate authorities. As part of this process, the AMLCO will review
the Firm’s trade blotters, account statements, exception reports and other reports and
documentation that may indicate suspicious activity. Among the information ACG will use to
determine whether to file a Form SAR-SF are exception reports that include transaction size,
location, type, number, and nature of the activity. ACG will create guidelines with examples of
suspicious money laundering activity and lists of high-risk clients whose accounts may warrant
further scrutiny. Our AMLCO will conduct an appropriate investigation before a SAR-SF is filed.
Emergency Notification to the Government by Telephone
When conducting due diligence or opening an account, ACG will immediately call Federal law
enforcement when necessary, and especially in these emergencies:
A legal or beneficial account holder or person with whom the account holder is engaged in a
transaction is listed on or located in a country or region listed on the OFAC list,
An account is held by an entity that is owned or controlled by a person or entity listed on the OFAC
list,
A customer tries to use bribery, coercion, or similar means to open an account or carry out a
suspicious activity,
ACG has reason to believe the customer is trying to move illicit cash out of the government’s reach,
or
ACG has reason to believe the customer is about to use the funds to further an act of terrorism.
ACG will first call the OFAC Hotline at 1-800-540-6322. The other contact numbers to be used are
the Financial Institutions Hotline 1-866-556-3974, local U.S. Attorney’s Office 619-557-5610, local
FBI Office 858-565-1255, and local SEC Office 323-965-3998.
Money Laundering "Red Flags"
The CCO, as well as, all other associated persons should be aware of “red flags” that may indicate
suspicious activity. If a broker/dealer detects "red flags," it should perform additional due diligence
before proceeding with any transactions. Examples of "red flags" can include but are not limited to
the following:
1. The customer exhibits unusual concern regarding the Firm's compliance with government
reporting requirements and the Firm's AML policies, particularly with respect to his or her
identity, type of business and assets, or is reluctant or refuses to reveal any information
concerning business activities, or furnishes unusual or suspect identification or business
documents.
2. The customer wishes to engage in transactions that lack business sense or apparent
investment strategy, or are inconsistent with the customer's stated business strategy.
3. The information provided by the customer that identifies a legitimate source for funds is
false, misleading or substantially incorrect.
4. Upon request, the customer refuses to identify or fails to indicate any legitimate source for
his or her funds and other assets.
5. The customer (or a person publicly associated with the customer) has a questionable
background or is the subject of news reports indicating possible criminal, civil, or
regulatory violations.
6. The customer exhibits a lack of concern regarding risks, commissions, or other transaction
costs.
7. The customer appears to be acting as an agent for an undisclosed principal, but declines or
is reluctant, without legitimate commercial reasons, to provide information or is otherwise
evasive regarding that person or entity.
8. The customer has difficulty describing the nature of his or her business or lacks general
knowledge of his or her industry.
9. The customer attempts to make frequent of large deposits of currency, insists on dealing
only in cash equivalents or asks for exemptions from the Firm’s policies relating to the
deposit of cash and cash equivalents.
10. The customer engages in transactions involving cash or cash equivalents or other monetary
instruments that appear to be structured to avoid the$10,000 government reporting
requirements, especially if the cash or monetary instruments are in an amount just below
reporting or recording thresholds.
11. For no apparent reason, the customer has multiple accounts under a single name or
multiple names, with a large number of inter-account or third party transfers.
12. The customer is from, or has accounts in, a country identified as a non-cooperative country
or territory by the Financial Action Task Force (FATF).
13. The customer’s account has unexplained or sudden extensive wire activity, especially in
accounts that had little or no previous activity.
14. The customer’s account shows numerous currency or cashier’s check transactions
aggregating to significant sums.
15. The customer’s account has a large number of wire transfers to unrelated third parties
inconsistent with the customer’s legitimate business purpose.
16. The customer’s account has wire transfers that have no apparent business purpose to or
from a country identified as a money laundering risk or a bank secrecy haven.
17. The customer’s account indicates large or frequent wire transfers, immediately withdrawn
by check or debit card without any apparent business purpose.
18. The customer deposits funds followed by an immediate request that the money be wired
out or transferred to a third party, or to another Firm, without any apparent business
purpose.
19. The customer makes a funds deposit for the purpose of purchasing a long-term investment
followed shortly thereafter by a request to liquidate the position and transfer of the
proceeds out of the account.
20. The customer engages in excessive journal entries between unrelated accounts without any
apparent business purpose.
21. The customer requests that a transaction be processed in such a manner to avoid the Firm’s
normal documentation requirements.
22. The customer, for no apparent reason or in conjunction with other “red flags”, engages in
transactions involving certain types of securities, such as penny stocks, Regulation “S”
stocks, and bearer bonds, which although legitimate, have been used in connection with
fraudulent schemes and money laundering activity. (Such transactions may warrant further
due diligence to ensure the legitimacy of the customer’s activity).
23. The customer’s account shows an unexplained high level of account activity with very low
levels of securities transactions.
24. The customer maintains multiple accounts, or maintains accounts in the names of family
members or corporate entities, for no apparent business purpose.
25. The customer’s account has inflows of funds or other assets well beyond the known income
or resources of the customer.
When an associated person of ACG detects any red flag, he/she must immediately notify the
AMLCO. The AMLCO, with the assistance of the associated person, will then investigate the
matter further, which investigation may include gathering additional information internally
or from third-party sources, contacting the government, freezing the account, or filing a
Form-SAR-SF.
Training Program
The PATRIOT Act requires financial institutions to implement ongoing training programs relating
to money laundering. The AMLCO will be responsible for overseeing the Firm’s training program.
The training program will be based on the Firm’s size, its customer base, and its resources.
The will training include at a minimum, the following:






How to identify "red flags" and possible signs of money laundering that could arise during
the course of their duties;
What to do once the risk is identified;
What associated person’s roles are in the Firm's compliance efforts;
How associated persons are to perform their roles;
The Firm's record retention policy; and
Disciplinary consequences, including civil and criminal penalties, for non-compliance with
the PATRIOT Act.
The CCO will be responsible for ensuring that ACG conducts anti-money laundering training on an
annual basis. Additionally the CCO will maintain records to show the persons trained, the dates of
the training, and the subject matter of the training (including copies of any materials used during
the training). These records will be maintained in accordance with SEC Rule 17a-3 and 17a-4.
The principal will review the Firm’s its operations to determine if there are certain associated
persons who may need additional or specialized training due to their duties and responsibilities.
For example, associated persons in Compliance, Margin, and Corporate Security may need more
comprehensive training.
The CCO will also be responsible for conducting periodic evaluation of the anti-money laundering
training program to ensure that associated persons are informed about any new developments with
money laundering rules and regulations. The CCO should update the training materials, as
necessary, to reflect new developments in the law. The Anti-Money Laundering Program, along with
the ACG Procedures Manual, Customer Identification Program and various miscellaneous bits of
information and updates can be found on the ACG Data Server on the “F://” Drive for easy access.
Blue Note compliance e-mails are sent out to the entire staff with notifications of updates and
location of relevant files. Incorporation of money laundering compliance training into continuing
education programs is recommended for both registered representatives and supervisors.
Reporting Requirements
All broker/dealers are subject to existing Bank Secrecy Act (“BSA”) reporting and record keeping
requirements. Almost 50% of the depository institution Suspicious Activity Reports filed to date
lists Bank Secrecy Act/Structuring/Money Laundering as the suspected violation. In most cases,
cash deposits or exchanges represent the Placement phase. Some of the more typical activities
found in the Placement phase include:
Deposits or less than $10,000 begin immediately after the accounts are established and are made
frequently, often daily; deposits of less than $10,000 begin suddenly after limited or no account
activity; multiple deposits of less than $10,000 are made on a single banking day at different
branches; deposits are immediately followed by wire transfers out of the account; or deposits are
immediately followed by withdrawals and/or checks or other monetary instruments drawn against
the account for the same or similar amounts.
Deposits or withdrawals at dollar values of $10,000 or less or at multiple branches on a single
banking day into a single account may be indicative of structuring transactions.
Other issues that could cause suspicion at the Placement phase include:
Cash that are inconsistent with the nature of the business; customer refuses to explain the source of
funds, or cancels the transaction when questioned about it; a business with a pattern of frequently
opening and closing accounts, which receives high-levels of deposits that are immediately wire
transferred out of the accounts; or cash purchases of cashier’s checks or other monetary
instruments such as money orders in amounts under $3,000.
It will be the responsibility of the CCO to review all wire transfer logs for all proprietary and
customer accounts. Additionally, the CCO will review a monthly list of accounts that were opened
and closed in the same month to determine if there are any patterns of suspicious activity as
described above. To evidence this monthly review, the CCO or designated principal will be required
to initial and date the documents reviewed and maintain them in a centralized file. Any suspicious
activity will be reported to the AMLCO, CCO and the Firm’s President.
The CCO will maintain the responsibility to file all of the required reports summarized below:
Currency Transaction Report (CTR):
Broker/Dealers are required to file CTRs for transactions involving currency that exceed $10,000.
Because structuring is prohibited, multiple transactions are treated as a single transaction if they
total more than $10,000 during any one-business day. CTRs are filed with the Financial Crimes
Enforcement Network (FinCEN), a bureau of the US Treasury Department.
ACG prohibits the receipt of currency. If ACG discovers that currency has been received, ACG will
file with FinCEN CTRs for qualifying transactions using the CTR form at
http://www.fincen.gov/reg_bsaforms.html#4789.
Currency and Monetary Instrument Transportation Report (CMIR):
Any person who physically transports, mails, or ships currency or other monetary instruments into
or out of the United States, in aggregated amounts exceeding $10,000 at one time (on one calendar
day or, if for the purposed of evading the reporting requirements, on one or more days), must
report the event on a CMIR. Any person who receives any transport, mail, or shipment of currency,
or other monetary instrument from outside the United States in an aggregate amount exceeding
$10,000 at one time also must report the receipt. CMIRs are filed with the Commissioner of
Customs. ACG prohibits the receipt of currency and has the procedures described in the previous
subsection to prevent its receipt. If ACG discovers that currency has been received, it will file with
the Commissioner of Customs a CMIR where required. ACG will file a CMIR for all such shipments
or receipts of monetary instruments, except for currency or monetary instruments shipped or
mailed through the postal service or by common carrier. ACG will, however, file a CMIR for such
receipts of currency and monetary instruments and for shipments and deliveries made by ACG by
means other than the postal service or common carrier, even when such shipment or transport is
made by ACG to an office of ACG located outside the U.S. ACG will use the CMIR Form at
http://www.fincen.gov/reg_bsaforms.html#4790.
Report of Foreign Bank and Financial Accounts (FBAR):
Any person having a financial interest in, or signature or other authority over, financial accounts in
a foreign country is required to report the relationship if the aggregate value of the accounts
exceeds $10,000. FBARs are filed with FinCEN. ACG will file with FinCEN an FBAR for any financial
accounts that meet the forgoing by using the FBAR Form at http://www.fincen.gov/f9022-1.pdf.
Funds Transfers and Transmittals:
Broker/Dealers effecting transmittals or transfers of funds, including wire fund transfers, of $3,000
or more must collect, retain and record on the transmittal order certain information regarding the
transfer, including the name and address of the transmitter and recipient, the amount of the
transmittal order, the identity of the recipient's financial institution, and the account number of the
recipient. Broker/Dealers also must verify the identity of transmitters and recipients that are not
established customers (i.e., customers of ACG who have not previously maintained an account with
us or for whom we have not obtained and maintained a file with the customer's name, address,
taxpayer identification number, or, if none, alien identification number or passport number and
country of issuance). ACG will collect such information and verify the identities for qualifying
transfers.
Suspicious Activity Reports (“SARs”)
As announced in FINRA NTM 02-47, pursuant federal regulation 31 CFR 103.19(a)(2),
broker/dealers (including broker/dealers that are affiliates or subsidiaries of banks or bank
holding companies) must report a transaction on Form SAR-SF (FinCEN Form 101) if (a) the
transaction is conducted or attempted by, at, or through a broker/dealer, (b) it involves (or in the
aggregate) funds or other assets of at least $5,000, and (c) the broker/dealer knows, suspects, or
has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a
part):
(1) Involves funds derived from illegal activity or is intended or conducted to hide or disguise
funds or assets derived from illegal activity;
(2) Is designed, whether through structuring or other means, to evade the requirements of the
BSA;
(3) Appears to serve no business or apparent lawful purpose or is not the sort of transactions in
which the particular customer would be expected to engage and for which the
broker/dealer knows of no reasonable explanation after examining the available facts; or
(4) Involves use of the broker/dealer to facilitate criminal activity.
The requirement is not limited only to individual transactions, but extends to patters of
transactions. Each broker/dealer involved in a transaction has an independent obligation to
monitor for, identify and report suspicious activities. The filing of a Form SAR-SF must remain
confidential. If subpoenaed, ACG MUST REFUSE to provide the information and notify FinCEN of
the request, unless the disclosure is required by FinCEN, the SEC, an SRO or other law enforcement
authority.
Also, if the SAR-SF relates to another broker/dealer, then the broker/dealer making the filing is
prohibited from notifying the other broker/dealer that a Form SAR-SF has been filed.
There are certain exceptions from reporting violations otherwise reported to various law
enforcement authorities. When determining whether an SAR-SF is required, the CCO should review
the FinCEN rule for any applicable exceptions to reporting. The FINRA has previously advised
member Firms that the failure to submit a required report could be construed as aiding and
abetting money laundering violations, subjecting the member to civil and criminal liability.
Broker/dealers must file Form SAR-SF within 30 days of becoming aware of the suspicious
transaction. If the broker/dealer is unable to identify a suspect, the rule provides an extra 30 days.
However, the Form SAR-SF must be filed within 60 calendar days of the initial detection, whether or
not the broker/dealer can identify the suspect. Also, broker/dealers must immediately notify, by
telephone, an appropriate law enforcement authority in situations that require immediate
attention.
Broker/dealers must maintain copies of filed Form SAR-SFs and the original related documentation
for five years from the date of the filing, and make records available to FinCEN as well as to other
appropriate law enforcement agencies, federal or state securities regulators, and SROs registered
with the SEC.
ACG will prepare to establish and implement procedures to detect and report suspicious
transactions by means of SAR-SFs. ACG should implement systems, preferably automated ones that
would allow them to monitor trading, wire transfers, and other account activity, which allow ACG to
determine when suspicious activity is occurring. If ACG decides to monitor customer accounts
manually, it must review a sufficient amount of account activity to ensure the detection of
suspicious activity by allowing compliance personnel to identify patterns of activity and more
importantly, new patterns or patterns that are inconsistent with the customer's financial status or
make economic sense.
Exception reports should consider the transaction size, location, type, number, and the nature of the
activity. Firms should create guidelines for associated persons that identify examples of suspicious
activity that may involve money laundering and form lists of high-risk clients whose activities may
warrant further scrutiny. Firms should develop procedures for following-up on transactions that
have been identified as suspicious or high-risk.
ACG has developed administrative procedures concerning SAR-SFs. The procedures will address
the process for filing SAR-SFs and reviewing SAR-SF filings and the frequency of filings for
continuous suspicious activity. In addition, ACG will consider requiring that all of its SAR-SF filings
be reported quarterly to its Board of Directors and/or to senior management. In the event of a highrisk situation, ACG will require that a report be made immediately to the Board of Directors and/or
senior management.
Should ACG decide to file a SAR-SF, it will be the Firm’s strict policy that it is prohibited to notify
any person involved in a reported transaction that the transaction has been reported on a SAR-SF.
In addition, it is prohibited for any associated person to disclose any information relating to a SARSF or the fact that a SAR-SF was filed, to any party other than to law enforcement agencies or
securities regulators. All subpoena requests for information relating to a SAR-SF will be forwarded
to the CCO and the Firm’s legal counsel.

The process for filing SAR-SFs
o After a proper investigation of a suspicious activity, which may include
guidance from outside counsel, the AMLCO will make the decision to file a
form SAR-SF. Senior management will be briefed on the issues prior to filing
a SAR-SF. A minimum of two copies will be kept in the compliance
department in a secure area, one being the working file belonging to the
issue at hand and the other in a separate SAR-SF file chronologically
(represented by year i.e. 2007; 2008, etc.). There will be a log inside each
year’s file delineating the list of contents. The data collected, including but
not limited to all correspondence, notes, e-mails, all forms and documents
pertaining to the issue will be kept on file in accordance with the SEC Books
and Records Retention ACG will maintain these data for at least five years.
ACG will keep other documents according to existing BSA and other record
keeping requirements, including certain SEC rules that require six-year
retention. Such documents are maintained and preserved even if the
documentation has passed the mandatory preservation period.

The frequency of filings for continuous suspicious activity.
o ACG is a small broker-dealer and the frequency of filings may vary
accordingly.
It will be the CCO’s responsibility to review all reported suspicious activity to make a determination
as to whether a SAR-SF report should be filed. If a SAR-SF is required to be filed, it will be the CCO’s
responsibility to ensure that ACG files the report within the required time frame. Should ACG
decide to report such an event, then the CCO will ensure that all copies of the reports filed are
maintained for a period of no less than five years. All SAR-SFs will be quarterly reported to the
Board of Directors and senior management, with a clear reminder of the need to maintain the
confidentiality of the SAR-SF.
State Reporting Requirements
In addition to the federal requirements for currency and money laundering reporting, ACG may be
required to report information to individual states as well depending on the circumstances. The
CCO will maintain the responsibility to comply with all state currency and money laundering
requirements as well as all federal requirements.
Associated Person Accounts
The Firm’s compliance obligations relating to surveillance for money laundering not only applies to
customer activity but to the activity of ACG and its associated persons. The CCO will maintain the
responsibility to review the activity of ACG and its proprietary securities and cash accounts as well
as the activity of associated person accounts maintained with ACG and at other broker/dealers.
Pursuant to the Firm’s policies and procedures relating to the review of proprietary accounts and
outside securities accounts, the CCO will maintain the responsibility to review these accounts for
indications of money laundering or other inappropriate activity.
Subject associated person accounts will be reviewed according to the same AML procedures as
customer accounts, under the supervision of the AMLCO. We will also review the AML performance
of supervisors, as part of their annual performance review. The AMLCO’s accounts will be reviewed
by the President of the Firm.
Record Keeping Requirements
The CCO shall ensure that all records, forms, and other documentation associated with the Firm’s
Anti-Money Laundering Compliance Program (AMLCP) is properly preserved and maintained. As
part of the AMLCP, ACG will create and maintain SAR-SFs, CTRs, CMIRs, FBARs, and relevant
documentation on customer identity and verification (See Section 5 above) and funds transfers and
transmittals as well as any records related to customers listed on the OFAC list. ACG will maintain
SAR-SFs and their accompanying documentation for at least five years. We will keep other
documents according to existing BSA and other record keeping requirements, including certain SEC
rules that require six-year retention.
Should any regulatory, state or federal government agency have an investigation in progress or
consider opening an investigation which may involve AMLCP documentation held by the Firm, the
CCO will ensure that such documents are maintained and preserved even if the documentation has
passed the mandatory preservation period.
ACG will hold SAR-SFs and any supporting documentation confidential. ACG will not inform anyone
outside of a law enforcement or regulatory agency or securities regulator about a SAR-SF. ACG will
refuse any subpoena requests for SAR-SFs or SAR-SF information and immediately tell FinCEN of
any such subpoena we receive. ACG will segregate SAR-SF filings and copies of supporting
documentation from other Firm books and records to avoid disclosing SAR-SF filings. The AMLCO
will handle all subpoenas or other requests for SAR-SFs.
Confidential Reporting of AML Non-Compliance
Associated persons will report any violations of the Firm’s AML compliance program to the AMLCO,
unless the violations implicate the AMLCO, in which case the associated person shall report to the
President of the Firm. Such reports will be confidential, and the associated person will suffer no
retaliation for making them.
Additional Areas of Risk
ACG has reviewed all areas of its business to identify potential money laundering risks that may not
be covered in the procedures described above. There are no major areas of risk.
Special Measures Taken by the Secretary of the Treasury
Pursuant to Section 311 of the Patriot Act, the Secretary of the Treasury may require domestic
financial institutions and domestic financial agencies to take one or more special measures if the
Secretary finds that reasonable grounds exist for concluding that a jurisdiction outside of the United
States, one or more financial institutions operating outside the U.S., one or more classes of
transactions within, or involving, a jurisdiction outside the U.S., or one or more types of accounts is
of primary money laundering concern.
Under Section 311, the special measures that the Secretary may require of any domestic financial
institution are:

Recordkeeping and reporting of certain financial transactions
Such records and reports may include the identity and address of the participants in
a transaction or relationship, including the originator of any funds transfer; the legal
capacity in which a participant in any transaction is acting; the identity of the
beneficial owner of the funds involved in any transaction; and a description of any
transaction.
Information relating to beneficial ownership
o Obtain and retain information concerning beneficial ownership of any account
opened or maintained in the U.S. by a foreign person (other than a foreign entity
whose shares are subject to public reporting requirements or are listed and traded
on a regulated exchange or trading market), or a representative of such foreign
person.
Information relating to certain payable-through accounts
o Identify each customer (and representative of such customer) who is permitted to
use such payable-through account.
o Obtain information that is substantially comparable to that which the depository
institution obtains in the ordinary course of business with respect to its customers
residing in the U.S.
Information relating to certain correspondent accounts
o Identify each customer (and representative of such customer) who is permitted to
use, or whose transactions are routed through, such correspondent account.
o Obtain information that is substantially comparable to that which the depository
institution obtains in the ordinary course of business with respect to its customers
residing in the U.S.
Prohibitions or conditions on opening or maintaining certain correspondent or payablethrough accounts
o The Secretary may prohibit, or impose conditions upon, the opening or maintaining
in the U.S. of a correspondent or payable-through account.
o
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Note: Section 311 of the PATRIOT Act defines a payable-through account as an
account, including a transaction account, opened at a depository institution by a
foreign financial institution by means of which the foreign financial institution
permits its customers to engage, either directly or through a subaccount, in banking
activities usual in connection with the business of banking in the U.S.
Any special measures required by the Secretary, particularly the special measure itemized above,
rely on the integrity of the domestic financial institution’s books and records relating to its
transactions, accounts, and business activities. In that regard, each domestic financial institution
must ensure that its books and records, it compliance program, and the supervision of its
operational and compliance processes be in compliance with all applicable rules and regulations of
the FINRA, SEC, and other regulatory organizations.
To meet the requirements of Section 311 of the PATRIOT Act, the CCO will include this section of its
AML procedures in its Continuing Education Program, its annual compliance meeting, and any
other appropriate forums for reinforcing compliance practices. In addition, the CCO will ensure
that this section of its AML procedures are considered in any changes or enhancements to its
systems or operations that support the maintenance of the information that could fall under special
measures taken by the Secretary of the Treasury.
Section 311 of USA PATRIOT Act – NTM 06-41
ACG is prohibited from engaging in any business directly for or with any customers who have any
contact with or are associated with the Latvian Bank, VEF Banka and its subsidiaries, including
Veiksmesl Zings, Commercial Bank of Syria and its subsidiaries, including Syrian Lebanese
Commercial Bank.
The special measures have been required by the Financial Crimes Enforcement Network (FinCEN)
in response to findings that these entities and their subsidiaries (the “Specified Banks”) are
financial institutions of primary money laundering concern. Under the special measures, covered
financial institutions, which include broker-dealers, are subject to the following two primary
requirements with respect to the Specified Banks:
1) Prohibition of the Direct Use of Correspondent Accounts by the Specified Banks
Covered financial institutions are prohibited from opening or maintaining a correspondent account
in the United States for, or on behalf of, the Specified Banks. This prohibition requires all covered
financial institutions to review their account records to ensure that they maintain no accounts
directly for, or on behalf of, the Specified Banks.
When opening a new account, the principal approving the account will ensure that these accounts
are not with any Specified Bank by checking the client’s name to the OFAC list. It is important to
note that ACG generally does not do business with foreign banks. Should ACG engages in business
with a foreign bank, a secondary principal will be required to sign the new account form.
2) Due Diligence to Prevent Indirect Use
As a corollary to the prohibition on the opening or maintaining of correspondent accounts directly
for the Specified Banks, ACG is required to apply due diligence to its correspondent accounts that is
reasonably designed to guard against their indirect use by the Specified Banks. At a minimum, such
due diligence must include two elements:
1) Notification to Correspondent Accountholders
If ACG opens a correspondent account, it must notify its correspondent accountholders that
the account may not be used to provide the Specified Banks with access to the covered
financial institution. The purpose of the notice requirement is to help ensure that the
Specified Banks are denied access to the United States financial system, as well as to
increase awareness within the international financial community of the risks and
deficiencies of the Specified Banks. However, the final rules emphasize that FinCEN is not
requiring or expecting financial institutions to obtain a certification from their
correspondent accountholders that indirect use will not be provided.
Although FinCEN makes clear that covered financial institutions have flexibility in choosing
their method of notification, sample notification language which may be used for this
purpose is provided, as follows:
“Notice: Pursuant to U.S. regulations issued under section 311 of the USA PATRIOT Act,
31CFR 103.192, we are prohibited from opening or maintaining a correspondent account
for, or on behalf of, [the Specified Banks]. The regulations also require us to notify you that
your correspondent account with our financial institution may not be used to provide [the
Specified Banks] with access to our financial institution. If we become aware that [the
Specified Banks] are indirectly using the correspondent account you hold at our financial
institution, we will be required to take appropriate steps to prevent such access, including
terminating your account.” Methods of compliance with the notice requirement could
include, for example, transmitting a one-time notice by mail, fax, or e-mail, or including such
information in the next regularly occurring transmittal from the covered financial
institution to its correspondent accountholders. Each covered financial institution must
document its compliance with the requirement that it notify its correspondent
accountholders that the accounts may not be used to provide the Specified Banks with
access to the covered financial institution.
2) Identification of Indirect Use
A covered financial institution must take steps in order to identify any indirect use of its
correspondent accounts by the Specified Banks, to the extent that such indirect use can be
determined from transactional records maintained by the covered financial institution in
the normal course of business. A covered financial institution must take a risk-based
approach when deciding what, if any, additional due diligence measures it should adopt to
guard against the indirect use of correspondent accounts by the Specified Banks, based on
risk factors such as the type of services offered by, and geographic locations of, its
correspondents. Unlike the duties imposed under the one-time notification requirement,
covered financial institutions have an ongoing obligation to take steps to identify all
correspondent account services they may directly or indirectly provide to the Specified
Banks.
Anti-Money Laundering Program
Responsibility

Chief Compliance Officer
Resources

AML Program: Compliance and Supervisory Procedures
Frequency

Annual and as needed
Action

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Approve AML Policy and attest by signature
Supervise enforcement of AML Policy
Ensure that AML procedures are tested and verified annually
as part of the PRESIDENT certification and supervisory
controls process. Testing can only be done by a person that
has separate functions from the AML Officer.

Retain AML Records for five (5) years
Bank Secrecy Act
Under the Bank Secrecy Act and the Currency and Foreign Transactions Reporting Act of 1997 as
enforced by the SEC, our clearing firm is required to comply with the reporting, recordkeeping, and
record retention requirements for currency and foreign transactions.
The requirements govern the payment, receipt, or transfer of currency into and out of the U.S. and
certain foreign financial transactions and accounts. Patterns of currency transactions that are less
than the reporting requirement but in aggregate exceeds it may also be subject to filing
requirements. The requirements are extensive and there are specific definitions for currency and
monetary instruments.
Bank Secrecy Act
Responsibility

Chief Compliance Officer
Resources



Wire Transfers
Records of cash deposits
OFAC sanctions information
Frequency

As needed, but not less than annually
Action


Supply information to clearing firm as needed
Assist the clearing firm with the filing of currency
transaction reports as needed
Do not accept cash or currency from customers

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Escalate to Chief Compliance Officer if cash is received
Supply required information for wire transfers of $3,000 or
more, including verification of identity of the transmitter and
recipient for non pre-established customers
Provide country code for foreign new accounts
Review e-mails received from FinCEN
Ensure that foreign shell banks or private banking accounts
do not open an account
Ensure that foreign political officials do not open an account
Assist the clearing firm with the filing of SAR-SF, CTR, CMIR
and FBAR forms