Attention FCMs and IBs: is your anti-money laundering policy up-to-date?
In a Notice dated May 22, 2018, the National Futures Association (NFA) asserted its intention to seek disciplinary action against futures commission merchants (FCMs) and introducing brokers (IBs) who do not have a written anti-money laundering (AML) program in place. This program must comply with the regulatory requirements of the Bank Secrecy Act. Two AML components the NFA referenced in its announcement are annual training for employees (with records to match) and annual independent testing with specific documentation requirements. The NFA made it clear that this is not something it will let slide, as evidenced by a $15,000 fine to an IB who failed to implement its AML Policy.
Minimum Requirements for Current AML Policies
Section C of NFA Rule 2-9 lists the four minimum requirements of an NFA-approved AML. NFA members (“Members”) need to “Establish and implement policies, procedures, and internal controls reasonably designed to assure compliance with the applicable provisions of the Bank Secrecy Act and the implementing regulations thereunder.” The NFA also specifies that an individual or individuals must be assigned the task of “monitoring the day-to-day operations and internal controls of the program.” The aforementioned employee training and independent testing make up the last two provisions.
Although the NFA acknowledges that many of the requirements discussed in this Notice are procedures Members may already abide by in day-to-day business, it emphasizes the importance of keeping AML programs up-to-date in today’s constantly evolving legal atmosphere. Routine review and maintenance is the best way to remain compliant and avoid disciplinary action by the NFA.
As the saying goes, it’s better to be safe than sorry. Ziliak Law is happy to review and recommend changes to prepare your firm or entity for an NFA audit.