Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich October 14, 2011

The NFA has sent a Rule Submission letter to the CFTC proposing several amendments to Interpretive Notice to NFA Compliance Rule 2-9: FCM and IB Anti-Money Laundering (“AML”) Program. The proposed insertions and deletions incorporate changes made to the Bank Secrecy Act (“BSA”) by the Financial Crimes Enforcement Network (“FinCEN”). Since the NFA is invoking the “ten day” provision, and the amendments will take effect in ten days unless the CFTC asks to review the changes.

In the letter, the NFA proposes to:

  • Clarify BSA Confidentiality Provisions. The new language explains that FCMs and IBs are prohibited from sharing any information that might reveal the existence of a suspicious activity report (“SAR”) against a client, not even to a person involved in a transaction. Even within the FCM or IB, information about SARs should only be given out on a need-to-know basis.
  • Add FinCEN Affiliate Rules. FinCEN allows FCMs and IBs to share SARs or information that would reveal a SAR with an affiliate, provided that affiliate is also bound by FinCEN confidentiality regulations and the FCM or IB has protocols in place to ensure the information stays confidential. However, the affiliate may not share that information with its affiliate, even if the second affiliate is properly regulated.
  • Specify Documentation and Timing Requirements. The letter clarifies a number of record-keeping and training requirements. For example, AML training must be conducted at least every 12-months, instead of the more ambiguous “annually.” If FCMs or IBs suspect suspicious activities, they must file a report within 30 days, and keep that report for five years. Any SAR request from federal, state, or local law enforcement must be written, may not exceed six months initially, and must be kept for five years.
  • Conform to International BSA Requirements. Under BSA regulations, FCMs and IBs must disclose foreign financial accounts over $10,000 and report international physical transportation of currency or other financial instruments (“CMIR”).

Creative Commons License photo credit: Tim Morgan

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