FINANCIAL SERVICES…BONDS & CASH
ASA offers a full array of financial products and services in every category from A to Z.
“ANSWERS…SOLUTIONS…APPLICATIONS”
Program & Service Information Guide
STRICTLY CONFIDENTIAL
The information contained in this document is provided solely and exclusively for informational purposes only. This is not intended to be, and must not be construed to be, a solicitation of investment funds or securities offering. Please read and sign off that you have read and understand the information in this guide.
Code: ASA-AD-Programs
1. BONDS or CASH
We will consider any type bond if on EUROCLEAR and/or DTC with Free Delivery or that comes with a MT760. The bond should be “A” or better rated by S&P, Moody’s, Finch etc. with ISIN/CUSIP numbers.
Venezuela Bonds are accepted without being on DTC, EC or having a MT760. We can work with CMO that are on DTC or EUROCLEAR. Mexican Bonds need to be on DTC or EUROCLEAR. If any paper comes with a MT760 we can work with it.
The bonds must be delivered on or DTC or EUROCLEAR to Citibank, NY with T-3 Settlement only.
Please submit Pages 1-4 + Page 14 from EUROCLEAR screens. Also need CIS and Passport.
Settling Securities Transactions using T+ 3
Investors must complete or “settle” their security transactions within three business days. This settlement cycle is known as “T+3,” shorthand for “trade date plus three days.”
T+3 means that when you buy a security, your payment must be received by your seller/brokerage firm no later than three business days after the trade is executed. When you sell a security, you must deliver to your brokerage firm your securities certificate no later than three business days after the sale.
The three-day settlement date applies to most security transactions, including stocks, bonds, municipal securities, mutual funds traded through a brokerage firm, and limited partnerships that trade on an exchange. Government securities and stock options settle on the next business day following the trade.
OPTIONS:
Option 1: TRADE: BONDS or *CASH (*MT799 ADMIN HOLD and MT760)
– 72 hours after delivery, client is paid 5%
– +7 additional banking days, client is paid 200%
– Instrument is blocked for 90 days then returned to client unencumbered
Need: CIS, Front and Back Copy of Bond, EUROCLEAR and DTC information.
Option 2: SELL
– Buyer is currently purchasing bonds for $0.30 to $0.50 on the dollar ($1).
Need: CIS, Front and Back Copy of Bond, EUROCLEAR and DTC information.
Option 3: LOAN
– Loan is 30% LTV @ 2 Points over LIBOR
-3 days to monetize instrument; instrument returned when loan is paid back
Need: CIS, Front and Back Copy of Bond, EUROCLEAR and DTC information.
We can take all or a portion of the sell profit and loan into our managed buy sell to create an additional weekly profit or to repay the loan.
2. U.S. Banks only: 5M Minimum Wells Fargo Program
Must be delivered by client’s bank via MT542 block in the U.S. for CD, Cash, SBLC, or MTN; or free delivery on DTC to Wells Fargo
-Within 24- 48 hours, 85-90% payout; hold the asset for 30 days.
-$5M –minimum with no limit
-Brokers paid 5%
3. U.S. Banks/European Banks
Must be delivered on EC to Citibank NY with T-3 Settlement
– 72 hours after delivery, client is paid 5%
– +7 additional banking days, client is paid 200%
– Instrument is blocked for 45- 90 days then returned to client unencumbered
– Minimum $100M
4.Bonds
We have a Bonds Purchase Program in Wells Fargo and JP Morgan Chase. All that is needed is a CIS, Passport and a Bank Account Statement. They have to be in the banking system to qualify. The buyer will pay 82% of the face value.
5. Leased Instruments: (we can help you lease and trade an instrument)
-Leased Instrument Program
-Bank: UBS
-CIS
-Passport
-MT799 does not require hard copy
-25% weekly return
End of the Code: ASA-AD-Programs!
Please Note: How to have success with bonds/collateral paper of all type?
This is easy there is one rule. If bonds are on DTC or EUROCLEAR Free Delivery or if they come with a MT760 from the holding bank we have providers who will trade them, loan against them or buyers that will buy them at a certain percentage of the face value. Paper that does not fall into one of these 3 categories is a waste of time for the asset holder and the intermediary. The only other option is if the asset holder has the paper in either Wells Fargo or JP Morgan Chase in an account that shows the value the paper. We need a CIS, Passport and Account Statement and then the buyer will pay 82% of the face value to purchase the paper.
Code: ASA-PCC-Program
Monetizing BG and CD
Then trading the LTV value in a manage buy sell program
–The better the issuing bank rating the BG or CD originates out of, the higher the LTV. This and the text front and back of the instrument will predicate the final LTV of the instrument.
-LTV is up to 90%
-Minimum LTV trade value is $300 million EURO
-Weekly ROI is historically 100%
-Licensed Trader and Banker manages the trade and monetization
-Program comes with a PCC structure to decrease tax liability and manage investments and profits for the trade and from the trade
–PCC includes offshore banking and offshore personal/company domicile
What is a PCC and which are its uses? How does it work?
In simple terms, the PCC is a corporation structured with different patrimonies, all segregated through “cells”, which are independent and separate from each other and from a “core” patrimony of the entity. The segregation of patrimonies helps avoid commingling of funds and assets of the different sponsoring participants, ensuring thus that no claim against one participant-beneficiary of the captive-insurance entity would be covered by funds or assets furnished by another participating/sponsoring enterprise. Based on the aforementioned, a PCC may be defined thus as:
A corporation whose patrimony is composed of assets contained in structurally separate parts named “cells” [cellular assets], which are legally and functionally separate, distinct and independent among each other, and of assets not constituting “cells” [non-cellular assets], also structurally and legally independent, that has as main legal characteristic the fact that the portion of capital designated to a specific cell is neither liable for the general obligations, commitments or liabilities of the corporation nor for the specific liabilities of the other cells.
It is possible to extract the main characteristics of these entities from the above, as follows:
a) Legal Entity: the PCC has its own juridical personality, thus is capable of owning rights and assuming obligations on its own. The “cells”, although being separate individual patrimonies, do not constitute separate entities themselves;
b) “Cellular” Patrimonies: the patrimony of the entity is divided in different “protected cells”, which allows segregation of funds, thus enabling ring-fencing among the distinct cells and the core patrimony;
c) “Core” Patrimony: a portion of the PCC’s patrimony is composed of general assets (“non-cellular” assets), which are separate and distinct from each of the assets composing the protected cells, creating what is commonly known as the “core cell”;
d) Segregation of Assets and Liabilities: the assets allocated to each specific cell may only be liable for liabilities incurred by such cell and thus should not be attached by creditors of the other company’s cells. The liabilities unrelated to a specific cell are covered by the non-cellular assets or the core cell. The core assets respond -on subsidiary grounds- once the specific cellular assets are depleted.
In summary, a PCC -structurally speaking- involves a core capital, cellular capital, cellular assets and liabilities, and core assets and liabilities. The ring-fencing rules are also applicable to any liquidator or receiver of the entity. Thus the insolvency of a cell should not affect the business of the whole entity or the performance of the other cells.
For each business, activity or agreement contracted, the PCC must disclose which cell is contracting or if the entity is committing its core assets or both, core and specific cell
End of Code: ASA-PCC-Program!
Code: ASA-FY-Programs
Product Portfolio
The following products are from a dear friend and associate that has been in business in the financial world of collateral paper, asset placement and managed buy sell program, etc. market since 1980. I am a direct representative for them and have the authority to offer the following programs to qualified clients. I Bill Smith will qualify all potential clients and have been mandated with the authority to do so by the provider. All deals are considered on a case by case basis. All submitted documents go to the Compliance Intake Officer. That name will be given out if the deal moves forward. Potential clients and intermediary must follow procedures as written below. They offer many products and services as follows.
1. Managed Buy Sell Program
-Cash minimum investment allowed is $100 million USD or EURO
-POF…*tear sheet/bank statement (*Internet) or BNCL signed by two bank officers where the funds are lodged
-Minimum Term Timeframe: 1year 1 day with R&E…spot trades are available also but cash only
-Administrative Hold/MT799 will be used to block the funds from US banks and MT760 used for banks outside the US…but banks that do not have the MT760 or MT799 capability will be considered on a case by case basis
-Client may move their funds to the trader’s bank and the trader/bank will issue a 107 financial guarantee protection on the funds to assure the client funds are safe
-Compliance documents needed are a CIS, Passport, POF, CR (if applicable), ATV, Non-Solicitation, where the bank is located (city and country)
-The ROI is industry standard/average or best effort as it applies to a managed buy sell program
-Client ROI is paid weekly by the trader’s bank …intermediary income is paid weekly by a common paymaster
-Other assets…collateral paper, precious stone and metals, other in or out of ground assets, etc…if a potential client has any type of asset that a MT760 (and in some cases on DTC) can be delivered to the trader along with a standard compliance package the trader has the credit facility to monetize the asset and trade the LTV…asset LTV will be case by case basis
-Provider’s Affiliated Banks: Laiki Bank…BNP Parribas…RABO Bank, Credit Suisse…Deutsche Bank…Dressner Bank…ABN Amro…Barclays
2. MTN and BG
-MTN: Slightly Seasoned (on occasion seasoned) dollar volume dictates price
-Need to know if buyer wants EURO or USD MTN…EURO is more available…need to know what minimum term and coupon rate is acceptable
-Compliance documents needed are a CIS, Passport, POF, CR (if applicable), ATV, Non-Solicitation, where the bank is located (city and country)
-POF…tear sheet (Internet) or BCL singed by two bank officers
-Bank to Bank procedures…No Euroclear procedures/closing will be used because of the liability and fraud involved in using Euroclear
-Commission: 1% (sometimes 2%) is split 50-50 between sell side and buy side. Sell side is closed and I start the buy side first box (closed) as seller representative
3. Mexican Bonds (all type) Hacienda Approved
-Buy or Trade but must be on Euroclear or DTC…will need the complete Euroclear or DTC paperwork package…if in a bank with MT760 that will work also
– Compliance documents needed are a CIS, Passport, POP front and back copy of one bond series then the serial number of the remaining bonds…please do this for each series, CR (if applicable), ATV, Non-Solicitation, bank lodged in, Attestation Letter from Lawyer or equal counterpart
-Close and payout in less than a week if all works perfectly between client and buyer/trader
– Commission: There is no set rate for commission split between sell and buy side but that will be set by the seller and buyer
4. Heritage Funds (HF)
The HF can be traded if the HF is in a top bank outside of mainland China. Hong Kong is acceptable. We can not accept HF in the Bank of China (BOC). The signatory must produce a CIS, Passport, POF (tear sheet or *BCL signed by *two bank officers), CR (if applicable), ATV, Non-Solicitation, Exclusivity. ROI is discussed between parties. Commissions for intermediary are decided between the parties.
Program is subject to close and change without notice – – others programs may be available depending on when submission is made. THIS IS WITH A TRADER IN GERMANY.
5. Sovereign Guarantee Summary (SG)
We have a large group of people that are willing to set up lines of credit that generate a huge amount of revenue to help fund humanitarian and economic projects to help nations around the world. The SG provides a security for those lines of credit even if a country has zero funds in the bank.
Projects must be approved by the government and must be of economic development or humanitarian purposes. The approval of the projects and the SG give the people putting up lines of credit the comfort of knowing the government is aware of the funds coming into their country and they are actually being used for these projects. It is important for you to know that we were invited to participate because of our focus to serve the nations and advance the gospel and purpose of His kingdom. We feel very fortunate to be able to be used by God in this nature.
It is also important to note that the SG is released after 12 months and all debt for the projects is forgiven. Should your entity desire to participate with helping additional projects you will have the invitation to do so. We also have another program that interest your company that I believe you would qualify. It would provide substantial return on your money. If it is of interest I can submit for approval.
On a personal note – I have working on this type of funding processes for ten years. It has been my vision and dream to be a rainmaker for those people and organizations that are serious about advancing the purposes of Christ on the earth. So, I am grateful to have the opportunity to serve you, your family and the people of your country through funding your projects.
It is understandable that knowledge of this type of funding is limited but to be direct to the point, please understand that what we do is PRIVATE PLACEMENT, not public. We do not discuss former clients. We do not send people to make presentations. Clients are “invited” to participate in these programs so it is your responsibility to show us that you have the capability to have a Sovereign Guarantee issued by the country you represent.
It would take 100M SG (in Euros, preferred or USD) to generate the billion dollars for the project. The SG will be returned at the end of one year and one month after it is issued.
If the project(s) to be done are approved by us then we are willing to move forward assuming that the country is willing to issue the SG.
The SG would be issued in the name of the company doing the project. It would then be pledged to the trading company for the credit line. We “trade” the credit line.
I / we are glad to provide you with supporting documents and counsel to get funds for your projects. Please be aware that for us this is the hardest client to handle for the least profit for us. We do it to be of service to developing countries but we can not go against the basic premises for Private Placement.
As was stated at the beginning of these discussions it is essential that the proposed country is capable of issuing such a guarantee. At your request I forwarded to you a copy of a sample SG to be issued. We need to know if a proposed country can issue the SG and then we need to approach the credit line people to get approval on that country. Everything outside of a country being able to issue an SG and being approved by the Credit Line people is secondary.
Sovereign Guarantee Wording
Sovereign Guarantee No.:
Currency: United States Dollars (or Euros)
Amount:
Date of Issue:
Maturity Date:
Beneficiary:
For value received, we the undersigned (bank name** and address), …………….full address …………., hereby issue our irrevocable, unconditional and transferable Sovereign Guarantee, and without protest or notification, undertake to pay against this Sovereign Guarantee to the order of (beneficiary name and address), the bearer or holder thereof, at maturity of one year and one day from the date of issuance, the sum of USD. ……………… (…………………………United States Dollars) in the lawful currency of the United States of America, upon presentation and surrender of this Sovereign Guarantee by SWIFT.
Such payment shall be made without set-off and free and clear of any deductions, charges fees, or withholding of any nature presently or in the future imposed, levied, collected, withheld or assessed by the Government of ……………..or any political subdivision or authority, therein and thereof.
This Sovereign Guarantee is assignable and transferable without presentation of such to us and without the payment of extra transfer fees or charges.
This Sovereign Guarantee is governed by the uniform customs and practice for Bank Guarantee as set forth by the International Chamber of Commerce, Paris, France, and latest revision of Publication 458.
This Sovereign Guarantee shall be governed by and construed in accordance with (Country Name Here) Law.
Bank officer Bank officer
MANAGED BUY SELL PROGRAM GUIDE
The platforms that we work with have excellent Managed Buy Sell programs available. We can leverage funds on a Managed Buy Sell program. Here is a sample of our trade program:
- $100 to $500 Million program.
- Funds are blocked in client’s own account.
- Profits are paid weekly.
- 100% paid per week on average.
- No Projects are required.
- Funds must be from a Top 25 bank.
- Trade time 40 weeks.
- MT 799 for cash accounts or MT 760 is needed for all other accounts.
- Up to date bank tear sheet.
- Administrative hold on the account for the duration of the trade.
We only endorse trades that allow the investors funds to stay in their own account. Clients will work direct with the platform manager once all paperwork is submitted. Please note: Trades may close at any time. Please check for current programs.
This service is only provided to Owned funds, leased funds are not allowed. The owner of the funds will need to submit a CIS with passport. If the funds belong to a corporation then a corporate resolution will be needed.
We facilitate secured Managed Buy Sell Programs in direct cooperation with program providers. Contracts are provided to high net worth clients. Your funds remain under your control, guaranteed and safeguarded during the contract period.
If you want to place funds into a Managed Buy Sell Program we can help you. Although you must be invited to join, these lucrative programs offer a safe and secure means of multiplying your wealth. Begin in a short time, typically just 72 hours after verification of received documents and due diligence process.
This opportunity has the potential for wealth creation and life quality enhancement. You can soon be enjoying the benefit and profit from these yielding investments and by saying that we are not providing financial or securities advice of any type. Applicants are expected to be experienced investors who are familiar with how these investments are done.
The Managed Buy Sell opportunity is available to legitimate investors meeting the basic criteria as listed.
Procedures
1. The client is invited to the platform to participate in a managed by sell program.
2. The client is sent a CIS document to be filled out and notarized by client’s council.
3. The client fills out the CIS with passport and current tear sheet from the bank.
4. The client’s documents are then sent from the client directly to the compliance officer.
5. The compliance officer will then process the client and the client’s funds. This process will take on average 48 hours.
6. The client will then be contacted by the trader once the compliance is finished.
7. The client will receive a contract from the trade platform via email.
8. The client will then sign the contract and send it back to the platform.
9. The client will then instruct his bank to place an Administrative hold to block the funds in favor of the platform through an MT 799 that’s sent to the trade bank.
10. The trade bank receives the MT 799 swift verification of the funds and the hold.
11. The platform will then use the MT 799 to secure a trading credit line.
12. The trade will begin within 72 hours of the receipt of the MT 799 swift.
13. The client’s returns are going to be industry standard/average or best effort.
14. The trade bank will then pay the clients bank directly.
15. The trade profits are paid weekly for a period of 40 weeks.
16. Trader’s Affiliated Banks Are: Laiki Bank, BNP Paribas, RABO Bank, Credit Suisse, Deutsche Bank, Dressner Bank, ABN Amro, Barclays, HSBC, and Standard Chartered.
Once all documentation is delivered to the program manager the compliance process begins. At that point any and all due diligence must be completed for every applicant. Within 72 hours of the successful verification funds and other associated due diligence procedures client will be in trade. Profits are paid weekly via wire transfers into your instructed Bank account.
How a Managed Buy Sell Works
These “Buy-Sell” Program opportunities are typically referred to as “controlled” or “managed” (or “closed-end”) “buy-sell” operations because the supply side of the financial instruments and the exit buyer for the financial instruments have already been pre-arranged and the price of the instruments already contracted for; hence, each and every completed “buy-sell” tranche will result in a net gain (and never a net loss) to the client.
As part of the same transaction, the Provider will also arrange for the client to contract with an exit buyer to purchase out the financial instruments at a higher fixed price – with the spread between the “buy price” and the “sell price” a targeted 30 points per tranche. Once the transaction commences, the client’s funds will be verified by the Provider prior to each scheduled tranche (for the reasons explained above); then, as part of the pre-contracted for “buy-sell” transaction, the financial instruments will be sold on to the stipulated exit buyer at the pre-agreed higher price – contractually guaranteeing a net profit to the client, and never a net loss.
The Provider anticipates four “buy-sell” tranches a week, Monday through Thursday, with settlements on Friday. The spread between the “buy price” and the “sell price” – a targeted 30 points per tranche with 20 points remitted, in full, by the Provider to the client at the end of each week. For your information, the Provider’s exit buyers are typically major, experienced buyers, in many cases, with assets in the billions, who, in turn, normally exit the paper to major pension funds and trusts around the world.
Please keep in mind that actual yield amounts may vary, depending on market conditions, regulations and pricing of financial instruments at the time of contract. All pricing, terms and conditions, however, will be set forth in the Master “Buy-Sell” Contract and agreed to by the client prior to any transaction taking place. And, of course, once agreements have been executed, the profit yield is contractually “locked in” for the term of the managed “buy-sell” transaction
End of Code: ASA-FY-Programs
Code: ASA-Zero-Out-Program
“ZERO OUT” Project Funding Program
What is “ZERO OUT”?
ASA is direct to a funding program that allows investors to take a minimum of $2 million dollars and invest it in the “Zero-Out” Project Funding Program. The program produces enough funding to support the financial needs and goals upfront to fund a project that is $52 million and under in cost. The financial goal that investors need to reach will be based on a designated initial collateral deposit and first cycle amount of $2 million USD. ZERO OUT leverages your initial collateral amount 7 times in the first cycle. Two additional cycles generate the rest of the funding using a 5 to 1 leverage on each cycle. The maximum benefit allowed is $52 million per project not per person. So you can have multiple projects under different titles or names. Example: *SAFEHANEN, Houston…*SAFEHAVEN, Atlanta…*SAFEHAVEN, New York and so on.
How Does It Work?
The $2 million initial collateral deposit will used to generate the needed funding for the project and the following is an example of how it works based on a $52 million dollar project.
EXAMPLE:
Cycle 1: $2 million x 7 = $14 million minus the initial $2 million deposit going back to the investor leaving $12 million to the client. The investor releases the $ 2million SBLC back to the funder. $5 million of the $12 million goes to cycle 2 leaving a net of $7 million. The $7 million can be used immediately towards the project. The investor has ZERO investment in the project hence the name “ZERO OUT” for the program name/title.
Cycle 2: $5 million x 5 = $25 million. $5 million of this cycle goes to cycle 3 thus netting $20 million to the client.
Cycle 3: $5 million x 5 = $25 million
Cycle 1 Total: $7 million + Cycle 2 Total: $20 Million + Cycle 3 Total: $25 Million = $52 Million Total (7+20+25=52)
Q: How Is My Deposit Protected? A: Through A Stand By Letter of Credit (SBLC)!
If all parties agree to move forward at the time of contract signing when the investor places the $2 million deposit in the escrow account that deposit will trigger the funder to issue a bank SBLC in the investor’s name as a full financial guarantee against any loss or depletion of the $2 million deposit. This makes the investment 100% safe for the investor. Once the first cycle produces the $14 million funds the investor’s $2 million is returned to the investor out of the $14 million and the SBLC is released back to the custody of the funder/issuer. At this point you have no investment in the program and own 75% equity of the project. Is this a win…win deal or what?
How Do I Qualify?
After a compliance package is submitted to ASA then ASA will submit the package to the funder. Then investor and the funder will talk about the opportunity. If they agree to go forward a contract will be executed and the investor deposits the $2 million dollar into Commercial Escrow Services (CES) escrow account in their name. CES has a $20 million insurance policy/bond protecting the client’s funds.
The funder also requires that the investor has an exist strategy that shows them being good stewards of the profits by funding humanitarian and economic projects here in the US or offshore in acceptable countries. So an Executive Summary of the project no longer than five (5) pages needs to be submitted along with Letter of Intent/Customer Information Sheet (CIS) and copy of the investor’s Passport. The package will be reviewed and either approved or rejected.
Funder’s Equity Position and Payback!
The Funder takes a 25% equity position in the project and will receive 25% of the net profits until the funding amount has been repaid. The funder will offer a deferred payment condition of up to 12 months before any payments are required. When the payments pay back the loan in full the 25% equity is transferred to the investor so they have 100% ownership of the project at that point in time.
If the project is sold then the investor will receive 25% of the fair market price. Example: If the project is sold for $200 million then the funder receives $52 million (25%) and the investor receives $148 million (75%). There is no penalty if the fair market price does no equal the pay back of the $52 million loan figure. Example: If the project is sold for $100 million the investor receives $75 Million (75%) and the funder $25 million (25%). The $27 million shortfall does not have to be paid back to the funder.
Taxes, Fees and Penalty!
Since this program is classified as a loan you do not pay taxes on loan income, at least not yet. Remember the funder receive 25% of the net income until the funds are paid back making it a loan. Please consult a CPA for tax consequences you may encounter if the project is sold.
There is no early payoff penalty. There is no interest charged. There is no collateral needed. There is not down payment required. There is no credit check or history needed as in a conventional loan. No shortfall penalty as described in the previous section.
Outside Investors!
ASA is also seeking outside investors who may want to invest funds into a project where the project holder needs the $2 million seed capital to invest into the Zero Out program. The outside investor and project holder determine equity position and revenue sharing between themselves. These are determined on a case by case basis. The SBLC will be issued to the outside investor to secure their $2 million investment.
In Conclusion!
In a few cycles you can meet your financial goal. If this is construction project you have it paid for before you put the first shovel in the ground. A novel concept that allows you to control, protect and grow your investment while eliminating any cost and/or future debt. This is a very simple, easy and inexpensive way to fund your project.
Again you need an acceptable project to fund to be eligible. We want projects that provide humanitarian and economic benefit to society in general. Projects are eligible in all countries that are friendly to the United States.
What ASA Group’s Role!
ASA is an official intake manager of your compliance package. ASA manages the intake and submission of the compliance submission package to the provider. All packages come to Joe Tufo at (joe@joetufo.com). ASA will take an equity position in the project and may charge a fee for service rendered.
End of Code: ASA-Zero-Out-Program
COMPLIANCE FACTS and TRUTHS
The following article and document shows what the provider is mandated by law to do when it comes to compliance before a transaction can take place. Compliance mandates that the client submits a CIS, Passport, POF and History of Funds/Assets to the Provider. The truth and the fact is that the provider has to perform a compliance check on the client and his assets and they both must pass compliance before any transaction can take place. There’s no way around compliance or the deal does not happen period. Do not be fooled by anyone who says different. Read below and it shares the facts about compliance.
Know Your Customer: It’s Not Just a Good Idea, It’s the Law!
By Cynthia L. Course, CPA, Sr. Financial Specialist
In response to the events of September 11, 2001, President George W. Bush signed into law on October 26, 2001 H.R. 3162, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. As we all know now, the short name of this legislation is the USA PATRIOT Act (the Act). The PATRIOT Act established new and enhanced measures to prevent, detect, and prosecute money laundering and terrorism. One of the more important measures for financial institutions was addressed in section 326—Verification of Identification—more commonly referred to as “Know Your Customer.”
On April 30, 2003, the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration (collectively, the Agencies) issued final regulations implementing section 326, and compliance became mandatory on October 1, 2003.1 The Federal Reserve System modified both Regulation H, Membership of State Banking Institutions in the Federal Reserve System, and Regulation K, International Banking Operations, to reflect the new requirements.
Section 326 of the PATRIOT Act requires each financial institution-including banks, savings associations, and credit unions-to have a Customer Identification Program (CIP) that describes processes the financial institution will follow to (i) verify the identity of new accountholders, (ii) ensure that the institution has a reasonable belief that it knows each customer’s identity, and (iii) compare the names of new customers against government lists of known or suspected terrorists or terrorist organizations. In general, when a customer opens a new account, the CIP should require the actions listed in Exhibit 1.
| Exhibit 1.
New Account Activities for Other Than Existing Customers Provide a disclosure of the identification requirements for opening a new account Obtain customer identification, including:
Verify identity, using documentary or non-documentary sources Check a government list for customer’s name
Retain records of the process while the account is open and for five years after the account is closed ——————- *As if the date of this writing, the OFAC list had not been designated for the CIP rule. However, banks are obligated to check this list in accordance with OFAC regulations. |
Section 326 Compliance in the Third District
Judging by the findings of Federal Reserve Bank of Philadelphia examiners who are testing for Bank Secrecy Act/Anti-Money Laundering compliance, banks in the Third District are generally adequate in complying with the provisions of section 326. This is because “knowing your customer” is a sound business practice and most financial institutions already had sound processes in place to ensure that they knew their customers. However, as with any new law, examiners are receiving questions about specific application of some of the CIP requirements. For example, some bankers have questioned how the rules relate to bank products such as prepaid funeral accounts, Christmas clubs, and vacation clubs. Others have questioned when it is appropriate to use non-documentary identification verification methods.
Prepaid Accounts and “Clubs:” The definition of an account for purposes of section 326 includes “… a formal banking relationship established to provide or engage in services, dealings, or other financial transactions including a deposit account, a transaction or asset account, a credit account, or other extension of credit. Account also includes a relationship established to provide a safety deposit box or other safekeeping services, or cash management, custodian, and trust services.”2 Prepaid funeral accounts, Christmas clubs, and vacation clubs clearly fall within this definition. However, if a customer has an existing account with the bank and the bank has a reasonable belief that it knows the true identity of the person, then the prepaid or club account opening is not subject to the customer identification provisions of the regulation.
Non-documentary Identification: When it is not possible to obtain sufficient documentary identification, the bank must satisfy itself of the customer’s identity using non-documentary means. This might occur when (i) an individual is unable to present an unexpired government-issued identification document that bears a photograph or similar safeguard; (ii) the bank is not familiar with the documents presented (i.e., an out-of-state driver’s license); (iii) the customer opens the account without appearing in person at the bank; or (iv) other circumstances increase the risk that the bank will be unable to verify the true identity of a customer through documents.
The CIP regulation is not as prescriptive as some institutions might have desired, and provides flexibility for each institution to customize a CIP appropriate for its specific operations. The use of non-documentary evidence is one area where this flexibility comes into play.
The bank’s CIP must contain procedures that describe the non-documentary processes that the bank will use to verify a customer’s identity. This could include (i) comparing information provided by the customer with information obtained from a consumer reporting agency, public database, or other source; (ii) checking references with other financial institutions; (iii) obtaining a financial statement or tax return; (iv) personally visiting the customer’s business; (v) a follow-up phone call after the account has been opened; (vi) analyzing consistency between and among the identifying information provided; or (vii) other means that the institution deems appropriate.
The bank’s CIP should also include procedures for responding to circumstances in which the bank cannot form a reasonable belief that it knows the true identity of a customer.
Ultimately, it is up to each institution to implement processes and require appropriate identification to ensure the identity of each customer.
Reference Sources
To assist banks in complying with the provisions of section 326, the Agencies issued Frequently Asked Questions Relating to Customer Identification Program Rules Issued Pursuant to the USA PATRIOT Act in January 2004.3 This document includes guidance on the definitions of account, bank, and customer; information requirements; customer verification; required records; retention of records; the section 326 list of terrorists; customer notices; and reliance on other financial institutions.
The final rule issued in April 2003 also provides a significant amount of guidance in many of these areas.4 The Agencies explain the rationale for many of their decisions in the section-by-section analysis that starts on page 11 of the final rule.
If you have any questions on the application of section 326 at your institution, please contact your primary banking regulator. If you are supervised by the Federal Reserve Bank of Philadelphia, please contact your institution’s central point of contact or assigned manager at the Reserve Bank. You may also contact Senior Examiner William J. Brown in the Enforcement Unit at the Federal Reserve Bank of Philadelphia at (215) 574-7291.
ORIGIN AND HISTORY OF FUNDS/ASSET
The undersigned, having been duly sworn and with full authority and responsibility for this Affidavit of Origin / History of Funds on behalf of __________________ and affirms all responses as follows as being accurate:
Current Location of Funds
Bank Name / Address:
Account Holder’s Name:
Account Number:
History of Fund: Funds have been on deposit at ____________________________ for the past minimum of _____ (___) years.. Note: If the subject funds were not on deposit for a minimum of three (3) years, applicant must state below the previous location of where the funds were held on deposit
Previous Location of Funds:
Bank Name / Address:
Account Holder’s Name:
Account Number:
Origin of Funds (Describe how funds were earned or obtained):Certification:
1) Funds and/or asset(s) are legally earned, beneficially owned, taxed, and which includes no independent third-party management situation and/or any governing restrictions whatsoever.
2) All information supplied in the documentation submitted and the cash involved, are not in violation of the Patriot Act of October 26, 2001, and amendments thereto, with its related financial crimes counterparts, however interpreted, defined and enacted, whether within the United States its host jurisdiction of this statement or internationally.
3) Subject funds and/or assets have no liens, commercial obligations, or encumbrances of any kind pertaining to said cash and/or asset, and is beneficially owned with free availability for credit line purposes.
4) Funds owner is not a party to a law suit or pending adverse legal action, further, there are no pending contracts existing, or about to exist, that could affect said cash assets.
Signature:
<Name of Investor>
Passport Number & Country: _________________
Notary acknowledgment: I do hereby certify that ______________________________, known to be the individual described herein, personally appeared before me as to the above date and presented the documents indicated. Subscribed to and sworn to before me this ______ day of________________, 2008.
Notary Signature & Seal ______________________________
What are EUROCLEAR and/or DTCC Free Delivery?
The best way to explain it is that it is a simultaneous on screen (EUROCLEAR) or in some cases of US instruments – DTCC) transaction wherein their banker or security house officer follows their instruction and orders the EUROCLEAR Free Delivery to the benefit of London law firm account in Prime Bank. Tier 3 officer at the same time orders the transfer of the first cash payment to them.
It is a block and deliver that satisfies international regulation that this collateral is reserved, blocked and delivered in the form of temporary beneficiary change… and via free delivery… It cannot be used for other purposes at the same time (otherwise triggers wall street kind of meltdown… using the same asset multiple times) This free delivery allows Tier 3 to use their pre existing credit line based on this delivered collateral. The applicant is always in full control…they order the block and deliver and can remove it at any time… (if they remove it… the payout stops of course). The free delivery does not change title, bond power or ownership … which stays with the owner.
TERMINOLOGY
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Joseph P. Tufo, President
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