National Futures Association Issues AML Warning to FCMs and IBs

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. ‎

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) Anti-Money Laundering (AML) Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification Read this Term) 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.

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).