On June 15, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission proposed amendments to NFA Compliance Rule 2-9(c) and the NFA Interpretive Notice entitled Compliance Rule 2-9: FCM and IB Anti-Money Laundering (AML) Program (collectively, the Amendments). Rule 2-9(c) requires futures commission merchants (FCMs) and introducing brokers (IBs) to develop and implement anti-money laundering programs designed to achieve compliance with the requirements of the Bank Secrecy Act.
NFA proposed the Amendments in response to the Financial Crimes Enforcement Network’s (FinCEN) new regulations that (1) require financial institutions to identify and verify the identity of beneficial owners of legal entity customers and (2) amend the AML program requirements to require appropriate risk-based procedures to conduct ongoing customer due diligence. FCMs and IBs were required to comply with FinCEN’s new regulations prior to May 11.
The Amendments add a new clause 5 to Rule 2-9(c) requiring FCMs and IBs to establish appropriate risk-based procedures for conducting ongoing customer due diligence. Further, the Amendments amend the Interpretive Notice to:
- add a section on identifying and verifying beneficial owners pursuant to FinCEN’s requirements;
- add requirements that FCMs and IBs develop risk-based ongoing customer due diligence procedures in accordance with FinCEN’s requirements; and
- clarify that FCMs and IBs should use the beneficial ownership information to help ensure that they are in compliance with the Office of Foreign Assets Control regulations.
NFA invoked the “ten-day” provision of Section 17(j) of the Commodity Exchange Act and, subject to possible CFTC review for approval, plans to make the Amendments effective 10 days after the CFTC’s receipt of the proposed amendments.
NFA proposed amendments are available here.