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Notice I-18-12

July 30, 2018

Effective date of amendments to NFA Compliance Rule 2-9(c) and the related Interpretive Notice entitled FCM and IB Anti-Money Laundering Program

NFA recently amended NFA Compliance Rule 2-9(c) and its related Interpretive Notice entitled FCM and IB Anti-Money Laundering Program (Interpretive Notice) to incorporate the Financial Crimes Enforcement Network's (FinCEN) Customer Due Diligence Requirements, which became effective on May 11, 2018. NFA's amendments are effective immediately.

In August 2016, NFA notified futures commission merchant (FCM) and introducing broker (IB) Members that FinCEN had issued its Customer Due Diligence Requirements in NFA Notice to Members I-16-17. The requirements obligate FCM and IB Members to identify and verify the identity of beneficial owners of legal entity customers and amend the AML program requirements to require appropriate risk-based procedures to conduct ongoing customer due diligence. NFA's recent amendments incorporate FinCEN's requirements and provide additional guidance to help FCM and IB Members in complying with them. In summary, NFA has made the following substantive changes to NFA Compliance Rule 2-9(c) and the related Interpretive Notice:

  • Amended Compliance Rule 2-9(c) to modify the language in prong (1) of the AML Compliance Program Requirements and added prong (5) to specifically require appropriate risk based procedures for conducting ongoing customer due diligence;

  • Amended the Interpretive Notice to add a separate section on Identifying and Verifying Beneficial Owners;

  • Amended the Suspicious Activity Reporting section of the Interpretive Notice to add a requirement that FCMs and IBs develop risk-based ongoing CDD procedures in accordance with FinCEN's requirements; and

  • Amended the Ongoing Compliance Responsibilities - Office of Foreign Asset Control section of the Interpretive Notice to clarify that FCMs and IBs should use the beneficial ownership information to help ensure that they are in compliance with OFAC regulations.

NFA has also updated its Self-Examination Questionnaire and its web-based AML Procedures System to reflect these rule amendments.

More information regarding NFA's amendments can be found in NFA's June 15, 2018 submission letter to the CFTC. The text of FinCEN's final rule may be accessed on the U.S. Government Publishing Office's website. Additionally, FinCEN issued guidance on the CDD rule in the form of FAQs in July 2016 and April 2018. Questions concerning these amendments should be directed to Kolade Agbaje-Williams, Manager, Compliance (kagbaje-williams@nfa.futures.org or 312-781-1484) or Valerie O'Malley, Director, Compliance (vomalley@nfa.futures.org or 312-781-1290).

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