USA Patriot Act
How does the USA PATRIOT Act change how Schwab does business?
Charles Schwab & Co., Inc. and its affiliates are subject to the USA PATRIOT Act (the "Act"), which was passed as a result of the September 11, 2001, terrorist attacks. U.S. financial institutions now must, among other things, verify the identity of all new clients, with exceptions for certain types of accounts, as defined in the Act. Verifying identity requires more than simply asking for information from a prospective client. Institutions must ask for certain information, and must also verify the information provided through the use of available data and/or documents. The law also requires firms to monitor and report to the government suspicious activity in clients' accounts. The Act amends the Bank Secrecy Act, to which Schwab, as a bank holding company, was already subject.
Although we are implementing new processes, we are not altering Schwab's privacy agreement with clients. Our clients' information remains secure with Schwab. We do not share client information with third parties, other than to process transactions and service accounts, and as otherwise set forth in Schwab's Privacy Pledge.
While we take great care in attempting to know our clients' individual investment goals and objectives today, this new law requires us to take additional steps to verify the identity of persons opening new accounts, including:
- Verifying the identity of prospective clients.
- Consulting applicable government agency lists of known or suspected criminals, terrorists and terrorist organizations to check if someone trying to open or maintain an account is on any such list.
- Conducting, in certain circumstances, additional due diligence when accounts are opened, including requesting information about the source of funds deposited into such accounts.
All of us at Charles Schwab hope you understand and support this new federal regulation.