JMLSG has published proposed revisions to the chapters on credit unions and brokerage services to funds, in part 2 of its guidance. The updates aim to describe in more current terms what risks the sectors face and how to identify who customers are.
The changes to the credit union chapter explains the lower risk nature of the sector, but nevertheless highlights the need to be aware of PEP risks.
The changes to the brokerage services to funds chapter (chapter 20) has been significantly revised and rewritten. The chapter is aimed at prime brokers, executing and clearing brokers providing services to funds which may be based anywhere, and to firms that provide similar services to investment managers in relation to underlying fund clients. It stresses the complex structures of funds and the difficulties in establishing whether or not a fund has an ultimate controller. It also looks at the other key players in the funds marketplace and assesses the services firms may provde to any of these. The chapter moves on to look at the risks, and the factors that will determine who a firm should treat as its customer and the consequent range of CDD that may be appropriate. The chapter also appends a template “assurance letter” for firms to use when relying on another’s due diligence.
JMLSG asks for comments on the proposals by 18 April.