On Dec. 12, 2016, the U.S. Securities and Exchange Commission issued a letter to the Securities Industry and Financial Markets Association reconfirming a safe harbor that allows broker-dealers to rely on registered investment advisers to perform certain functions of their Customer Identification Programs (CIPs) for shared customers, provided that specific conditions are met.
The letter also, for the first time, extends this safe harbor to a new rule requiring broker-dealers to identify beneficial owners. This is useful, but financial institutions still need to exercise care when making use of this arrangement.
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