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NY Regional Office Exam - Second Meeting: Control Book, OFAC, and Certificate Procedures

  • 2 legacy investors not through AML.

    • Most put security holders through OFAC periodically.
    • Bank and nonbank TAs / BDs have same screening requirements.
    • "Never know when something is going to change."

  • Certificate detail is cancel date for evac.

    • Want to document and cancel.

    • NEED TO: Get this in for scalable records.

      • Want document if people refuse to open account.
      • Must keep cancel detail.

  • Control book auth and outstanding.

    • MSF adds up BY ISSUE.

  • No guidance (yet) on on-chain burning/destruction.

  • Reporting

    • Small TA posting all instructions onto the outstanding as 30 days.
    • Was a reference to legacy from misclassifications, but I just double-checked and see no error.
      • Tighter interweave of the incoming onboard data using STA standards (not mentioned but ideal).
    • See if we have written comms that say we need info/address to issue shares.
      • We didn't at first; only by 16 Apr 2024 were we hounding for the mailing address (at least third communication, where a guardian contact was provided in a phone call thereabouts).
    • Need to substantiate understatement by $100K.
      • Was a bona fide error without justification.

  • Give specifics on PITR recovery month timeframe.

  • Want us to capture cancel operations.

    • Pull date of cancels.
    • I really wasn't thinking this would be a common thing, [but I better understand now the requisite of carrying out issuer intentions as agent no matter our legal interpretation. I still want guardrails, but I see what they're getting at here.

  • Control book.

    • Auth. (local)

    • Issued. (on chain, not generally covered even though I mentioned the data locale differences without a validator explicitly)

      • Changes date.
        • They hint at perhaps caching internally the issuer-linked txns.
      • Common to see Journal format.
      • (for the issuances, okay - but I'd like a more thoughtful approach)

  • TA1 as my address.

    • For physical only, not mailing.
    • I would like to rethink link.

  • Says to talk about sending certificates as proper safeguarding.

    • Need procedures for how certificates are cancelled and destroyed.

  • Says agreement instructions are bad.

    • Sending certificate to a place that's not the fingerprinted TA.
    • Agents commonly stamping it "cancelled", perforating, and shredding.
    • Cannot have them (someone not through TA FBI process) blindly open certificates.
      • AD12 as relevant basis for ensuring a "safeguarding" of investor information.
      • Largely, I think they take certs much more seriously than myself, and I need to address.
        • Emphasize cancellation beforehand for removal in XD17 program.
      • *Look over destruction and cancellation as a doc.

  • They just do the exam around TA rules.

  • Examiners can interpret individually how to do policy.