Amendments to the NFA’s Anti-Money Laundering rules for Introducing Brokers (“IBs”) and Futures Commission Merchants (“FCMs”) have been approved, and will go into effect on January 3, 2012. These changes were first proposed in October in a rule submission letter to the CFTC. They incorporate language from FinCEN and the Bank Secrecy Act (“BSA”) regarding the handling of suspicious activity reports (“SARs”).
The new amendments make the following adjustments:
- 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”).