AML, CIP and Private Offering Account Controls
This topic covers customer identification, beneficial ownership, suspicious activity, OFAC, source of funds, trusted contacts, privacy, account restrictions, and customer red flags.
How to study for Series 82
Treat each Series 82 item as a private offering workflow: identify the communication, investor eligibility, account fact, recommendation basis, or transaction document required.
Core concepts
Concept 1
AML, CIP and Private Offering Account Controls questions test whether a private securities offerings representative can match offering facts, customer facts, and regulatory limits to the correct action.
Exam cue: Identify the function: seeks business, opens accounts, recommends or maintains records, or processes the private offering transaction.
Concept 2
The best Series 82 answer usually protects investors through fair communication, investor qualification, due diligence, suitability, recordkeeping, and proper transaction processing.
Exam cue: Match the action to the offering: public communication review, exemption, accredited investor status, QIB status, due diligence, suitability, or agreement verification.
Concept 3
Eliminate answers that market private placements like public offerings, skip investor eligibility, ignore resale limits, or treat indications of interest as completed purchases.
Exam cue: Prefer fair and balanced disclosure, verified customer profile, documented recommendation basis, and completed transaction records.
Risk pitfalls and guardrails
Promising liquidity or performance in a private placement when resale limits and business risks remain.
Guardrail: Avoid answers that promise liquidity, skip investor eligibility, ignore risk disclosure, treat interest as commitment, or process incomplete subscriptions.
Treating investor sophistication as a substitute for required account information and suitability analysis.
Guardrail: Avoid answers that promise liquidity, skip investor eligibility, ignore risk disclosure, treat interest as commitment, or process incomplete subscriptions.
Processing purchase instructions before verifying agreements, funding, eligibility, and required documentation.
Guardrail: Avoid answers that promise liquidity, skip investor eligibility, ignore risk disclosure, treat interest as commitment, or process incomplete subscriptions.
Memory anchors
CIP
A customer identification program verifies customer identity under risk-based procedures.
Beneficial Owner
Beneficial owner information identifies individuals who own or control certain legal entity customers.
AML Red Flag
AML red flags are patterns or facts that require inquiry, escalation, or possible reporting.
Source of Funds
Source of funds analysis helps evaluate legitimacy of money used to invest.
OFAC Screening
OFAC screening helps prevent prohibited transactions with sanctioned parties or jurisdictions.
SAR Escalation
Suspicious activity should be escalated to AML personnel for review and potential SAR filing.
Trusted Contact
A trusted contact can help address suspected exploitation or diminished capacity concerns.
Privacy
Privacy rules govern sharing and safeguarding of customer nonpublic personal information.
Account Restriction
Account restrictions may be used when documentation, authority, or risk concerns are unresolved.
Customer Red Flag
Customer red flags require documented review before opening or continuing activity.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
What is the basic purpose of a broker-dealer's customer identification program?
For a U.S. individual opening an account, which information must a broker-dealer's CIP generally collect before account opening?
Answer all questions to submit.
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Move forward only after this module is stable.
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