How should a financial institution perform due diligence with respect to an institutional intermediary?
For the purposes of these FAQs, the term “institutional intermediary” refers to financial institutions such as banks, broker-dealers, investment advisers and other institutional entities that, when they transact with the Financial Institution, act on behalf of their customers.(5) Many investment and commercial banking customers are institutional intermediaries. A Financial Institution should determine the circumstances in which it may be reasonable to assume that an institutional counterparty, in its relationship with the Financial Institution, is acting as an institutional intermediary. “Knowing” an institutional intermediary entails consideration of a number of factors that would not generally be relevant in the context of operating company customers, including the following:(6) • Whether the institutional intermediary, based on the level of regulatory supervision to which it is subject and the jurisdiction in which it is based, is subjected to adequate AML regulation in the context
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