Following the attacks on 11 September 2001, the U.S. government
enacted the USA PATRIOT Act, which is designed to prevent the use of
the U.S. financial system to help fund terrorism and other crimes. The
Act, which is similar to regulations in other countries in which we do
business, imposes a series of new anti-money-laundering requirements
on brokerage firms and other financial institutions. Merrill Lynch has
had a vigorous money-laundering prevention program in place for years.
In accordance with the Act, we have undertaken efforts to further
enhance these existing policies and procedures.
We believe that compliance with the new regulations is of the utmost importance, and have dedicated significant resources to ensure that Merrill Lynch helps set the standard for best practices in this area. We are also involved with the Securities Industry Association in the continuing enhancement and standardization of industry practices.
We have dedicated ourselves to enhancing our existing efforts in the fight against money laundering around the globe. As a firm with businesses around the world, we have been working closely with all our business partners to ensure that we comply with all anti-money-laundering efforts wherever we operate.
Under the USA PATRIOT Act and other regulations, financial services firms must establish a compliance program, which includes policies and procedures to detect and report suspicious transactions to the government, as well as ensure compliance with the new laws. Firms must also implement specialized employee training programs, designate a special compliance officer and conduct independent audits of the effectiveness of the compliance program.
Merrill Lynch has named a global anti-money-laundering officer to lead our program and has appointed business and regional anti-money-laundering officers to support this effort. We are implementing an enterprise-wide suspicious activity reporting system that will enable us to better report suspicious activity to the government. All of our employees are being trained in anti-money-laundering practices and procedures, as well as the details of the firm's policies.
The regulations also impose new requirements regarding client information and verification of that information. Financial services firms are required to verify the identity of the clients with whom they do business, determine the source of funds in a client's account and obtain the information about a client's wealth.
At Merrill Lynch, we have always stressed the importance of knowing our clients. This tradition has developed not only from regulatory requirements but also from the belief that the better we know our clients, the better we can serve their financial needs.
As part of our compliance with the new Act and in support of the fight against money laundering around the world, we may ask clients for additional information and documentation about certain accounts and transactions. This information may be used to verify client identity.
Merrill Lynch has been a leader in anti-money-laundering efforts since the mid-1990s. With the advent of the USA PATRIOT Act and our enhanced compliance, Merrill Lynch clients can take even greater comfort in doing business with us.
Money laundering is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities. Money laundering occurs in connection with a wide variety of crimes, including terrorism, illegal arms sales, drug trafficking and public-official corruption.