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SEC Enforces USA PATRIOT Act for First Time, and more

SEC Sanctions Firm Under USA PATRIOT Act, NASD Goes Digital With Compliance Podcasts, Abound Resources to Offer RiskWatch to Community Institutions, AudioTel Goes With Bharosa to Supply Strong Authentication

SEC Orders Crowell, Weedon to Comply With Anti-Money Laundering Law

In its first-ever enforcement action under the USA PATRIOT Act, the Securities and Exchange Commission has sanctioned Los Angeles broker-dealer Crowell, Weedon & Co. for failing properly to document its customer identification program. The USA PATRIOT Act stipulates that broker-dealers must implement and document identity verification procedures for all new accounts, according to a release.

The SEC claims that from October 2003 to at least late April 2004, Crowell, Weedon failed to document its actual customer identity verification procedures in its written customer identification program (CIP). During this period, the firm opened approximately 2,900 new accounts for customers.

"The USA PATRIOT Act's customer identification program requirement is a significant tool for deterring money laundering and other activities that could be used to benefit terrorist groups. Enforcement of this requirement is a significant part of the Commission's overall mission, and the Commission is committed to doing its part to protect our homeland," said Randall Lee, regional director of the SEC's pacific regional office, in a release.

Without admitting or denying any of the findings, Crowell, Weedon consented to the issuance of an order that it cease and desist from committing or causing any current and future violations, said the release.

NASD Introduces Compliance Podcasts

NASD is using a new and popular venue to get important, timely information into the hands—and ears—of compliance personnel: the podcast.

Free online audio recordings that highlight industry news, regulatory updates and hot compliance topics are now available at www.nasd.com/podcasts. Users can listen online or download to a portable digital media player or computer, according to a release.

"We are expanding our use of new media in order to get our messages out to a wider population of industry participants," said NASD Vice Chairman Doug Shulman. "These podcasts join our popular series of video webcasts on important compliance issues. We hope they will be a useful way for registered reps and compliance officers to keep abreast of regulatory issues at their convenience—whenever and wherever they choose." According to NASD, the new podcasts complement a series of free, on-demand video webcasts that deliver brief, focused information on priority compliance topics to brokers and others who work directly with investors. More than 142,000 users have viewed NASD's video webcasts since the series was launched in early 2005.

Abound Resources Offers Community Institutions Risk Analysis Solution

Abound Resources and RiskWatch have reached an agreement to offer RiskWatch for Financial Institutions software to their community financial institution customers to meet the new FFIEC regulatory requirements for risk analysis, according to a release.

RiskWatch recently released a new updated version of RiskWatch for Financial Institutions software, which allows organizations to do a self-assessment against the FFIEC (Federal Financial Institutions Examination Council) guidelines. The FFIEC now requires a full information security risk assessment, including the analysis of the matrix between threats and vulnerabilities, as well as cost benefit analysis and return on investment detail, from every bank in the United States by December 2006.

"RiskWatch is the only software that meets the FFIEC standards for completing an IT risk assessment of their Internet applications and automatically produces reports that comply with the new risk assessment requirements," commented Sharon Sokol, vice president of Abound Resources, in a release.

AudioTel Selects Bharosa to Power Authentication Solution

AudioTel, a provider of software for financial institutions, selected Bharosa to supply the software that will power the company's strong authentication solution for online banking.

According to a release, AudioTel plans to launch the new solution to all of its customers in the third quarter of 2006. This will enable financial institutions to upgrade their online security ahead of the FFIEC deadline.

"It is AudioTel's mission to deliver state-of-the-art technology to our customers," said Brian Leopold, CTO of AudioTel, in a release. "We found in Bharosa a solution that is not only more robust than other available online security products, but also that is better equipped to satisfy the diverse needs of our customer base." The solution will offer strong second- and third-factor online security, available as part of AudioTel's TeleWeb Online Banking platform. AudioTel will integrate Bharosa's Authenticator and Tracker products, which are already licensed to leading financial institutions and more than 10 million users in 64 countries worldwide.

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