National Futures Association Issues AML Warning to FCMs and IBs

NFA requires an independent testing of the adequacy of FCM’s and ‎IB’s ‎compliance program at least once every 12 months‎

The National Futures Association (NFA), a self-‎regulatory organization for ‎the US derivatives industry, ‎today warned registered FCMs and IBs that their non-‎compliance with its AML requirements could lead ‎to disciplinary actions and, in some cases, hefty fines.‎

The Chicago-based regulator requires all FCMs and IB members to maintain an ‎AML program that includes an annual review to ‎be conducted by its personnel or by an independent third party. ‎

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Stricter regulations were introduced recently which now require each futures ‎commission merchant (FCM) and introducing broker (IB) to develop ‎and implement a written anti-money laundering (AML) program. ‎

Additionally, reporting entities have been forced to ramp up compliance measures ‎after being subject to the Bank Secrecy Act, which ‎introduced new criminal offenses of failing to prevent suspected money ‎laundering. They ‎also must tailor their AML programs to fit their business models and allocate adequate resources to their ‎compliance efforts.

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According to the NFA, AML procedures must address a number of areas. The elements of such a program include the appointment of a designated ‎compliance officer to oversee the firm’s AML program. Furthermore, the company should ‎conduct ongoing education and training for mandated persons on “the firm’s ‎AML policies and procedures, the relevant federal laws, and NFA ‎guidance” at least once every 12 months. ‎

Finally, there must be independent testing of the adequacy of each FCM’s and ‎IB’s compliance program at least once every 12 months.‎

‎“Additionally, FCMs and IBs must document these testing results, ‎report results to the firm’s senior management or internal audit ‎committee or department, and ensure that any deficiencies noted are ‎addressed and corrected,” the NFA said.‎

The National Futures Association self-regulates futures trading and is itself supervised by the US Commodity Futures Trading Commission (CFTC).

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