Futures Commission Merchants ("FCM"), Retail Foreign Exchange Dealers ("RFED") and Introducing Brokers ("IBs") have their own unique rules and requirements. This section identifies areas Members often have questions about and where NFA find deficiencies during our audits.
An anti-money laundering (AML) program is only required for IBs, both guaranteed and independent, FCMs, RFEDs regardless of size or business operations, even if you do not hold customer funds. Currently, CPOs and CTAs are not required to maintain such a program.
An AML program is a set of procedures designed to guard against someone using your firm to facilitate money laundering or terrorist financing. The main components that must be included are:
Your firm's AML procedures should be something your firm can follow. Many IBIs think it is easier to adopt their FCM's procedures. While this helps create a template for you to follow, it will not give you adequate procedures; your AML program should be tailored to your firm's operations!
NFA provides a webinar regarding the topic of AML. The webinar covers the history and some of the main components of an AML Program in more detail. We also offer a program that will help assist you in developing your written procedures (see the AML Procedures System).
One of the more common deficiencies that NFA finds involves AML training. AML training must be provided at least annually to employees who work in or oversee areas that are susceptible to money laundering. By annual, we mean every 12 months – not just within the calendar year. The most common deficiency we found is that firms fail to conduct any training or conduct the training outside of the annual requirements. It may be helpful to pick a certain time of the year and ensure that the training will be conducted.
Another area we typically find deficiencies is in regards to the independent AML audit. NFA's rules require AML procedures be audited every 12 months. The annual audit is important as it is used to evaluate your overall program, to find weaknesses, and to provide for opportunities for improvement. It also helps to determine whether your AML program is functioning as it is intended to. Firms that are required to maintain an AML program must ensure that their program is independently tested on at least an annual basis. We typically find that new IBs don't understand that they need to have an annual AML audit conducted and therefore fail to do so. An adequate AML Program is required by all IBs, FCMs and RFEDs.
Click here for more information on annual FCM and RFED requirements
Click here for more information on annual IB requirements.
Tip: If an FCM, RFED or IB believes its firm will not be able to meet their Minimum Net Capital, they should notify NFA before this happens, explain why, and explain how you intend to raise more capital. Advance notice and full disclosure will always help!