Before entering into a covered transaction with a participant at the next lower tier, you must require that participant to:

1. (a) Comply with this subpart as a condition of participating in the transaction. You may do so using any method(s) unless the regulation of the Federal agency responsible for the transaction requires you to use specific methods.
2. (b) Pass the requirement to comply with this subpart to each person the participant enters into a covered transaction at the next lower tier.