The National Futures Association (NFA) has announced it ordered FXDirectDealer LLC (FXDD), an NFA Member and previously registered CFTC retail foreign exchange dealer located in New York City, to pay a $500,000 fine and operate solely as an introducing broker (IB).
The decision, issued by the NFA's Business Conduct Committee, is based on a complaint and settlement offer submitted by FXDD. The firm has already been the subject of two previous NFA disciplinary actions resulting in fines totaling more than $1 million.
The regulator alleged this time that FXDD's Anti-Money Laundering (AML) ) program was inadequate for numerous reasons, including a failure to investigate potentially suspicious or questionable activity, and a failure to follow its procedures for customers who reside in countries identified by the Financial Action Task Force. The FATF blacklists countries such as Iran and North Korea from participating in the American financial markets.
Additionally, it was alleged that FXDD failed to adequately supervise the firm's operations and employees. The NFA further alleged that it identified repeat deficiencies related to the firm's AML program and supervision, which evidenced an overall lack of internal controls and inadequate supervision of the firm's operations.
FXDD issued this statement to Forex Magnates: "We are pleased to announce that we have reached a settlement agreement with the National Futures Association (NFA) regarding our regulatory status in the U.S.
"Effective December 9, 2014, we have voluntarily withdrawn our licenses and are officially no longer operating as a Futures Commission Merchant (FCM), Forex Dealer Member (FDM) or Swap Dealer in the U.S. We will retain our registration as an introducing broker (IB) and will be regulated by the NFA as an IB only.
"This settlement has no effect on our international business. We remain committed to our international expansion plans and serving the needs of self directed and institutional traders outside the U.S. Our global headquarters remains in New York City at 7 World Trade Center. We reached this agreement in cooperation with the NFA and value their partnership in this effort."
