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Update on Anti-Money Laundering Requirements for FCMs and IBs

The Department of Treasury has issued a final rule requiring FCMs and IBs to report suspicious financial transactions to the Financial Crimes Enforcement Network (FinCEN) by filing a suspicious activity report, known as a form SAR-SF. The final rule became effective on December 22, 2003 and applies to transactions occurring after May 18, 2004.

All FCMs and IBs, except broker-dealers that are notice registered with the CFTC solely to conduct security futures products transactions, are subject to the new rule. Firms that are otherwise dually registered can rely on this rule or the Broker Dealer SAR rule. However, FCMs and IBs that are an affiliate or a subsidiary of a bank or a bank holding company are subject to this rule.

The rule outlines the conditions under which FCMs and IBs are required to report suspicious transactions. It also, however, contains two exceptions to the reporting requirement.

The report must be filed with FinCEN at a central location that is noted on the filing instructions within 30 days after the FCM/IB becomes aware of a suspicious transaction. However, if the FCM/IB is not able to identify a suspect, the filing date may be extended an additional 30 days in order to attempt to identify the suspect.

The new rule also addresses issues such as confidentiality and providing a "safe harbor".

The full text of the rule can be found at:
www.fincen.gov/fedregister_fcmfinalrule.pdf.

A copy of the SAR-SF form can be found at:
www.fincen.gov/fin101_formandinstructions.pdf.

NFA issued a Notice to Members regarding the new rule on January 22. The full text of the Notice can be found at NFA's Web site:
(www.nfa.futures.org).

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