Financial Crimes Enforcement Network
Advisory on FATF List of Jurisdiction with AML/CFT Deficiencies
On January 19, 2017, the Financial Crimes Enforcement Network (“FinCEN”) issued an advisory announcing that the Financial Action Task Force (“FATF”) updated its lists of identified jurisdictions with strategic deficiencies in their frameworks to combat money laundering and the financing of terrorism and proliferation. The purposes of FATF’s lists are to track and monitor compliance with the international Anti-Money Laundering and Countering the Financing of Terrorism (“AML/CFT”) standards. The changes to FATF’s lists may affect US financial institutions’ obligation and risk-based approaches with respect to relevant jurisdictions. Updates to the FATF lists are outlined in FinCEN Advisory FIN-2017-A001.
New Due Date for FBARs
FinCEN has changed the due date for filing Reports of Foreign Bank and Financial Accounts (“FBAR”) to coincide with the federal income tax due dates. The new annual due date for filing an FBAR is April 15th. An automatic six (6) month extension will be granted in an effort minimize the burden on filers and FinCEN. Further information regarding the FBAR due date can be found in FinCEN’s press release.
NATIONAL FUTURES ASSOCIATION
Additional Ratios Required for NFA Forms PQR and PR
The Commodity Futures Trading Commission (“CFTC”) approved the National Futures Association’s (“NFA”) amendment to Rule 2-46 and Interpretive Notice regarding Rule 2-46. With this approval, commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) will now have to report two (2) new financial ratios on quarterly Forms PQR and PR. This requirement begins as of the quarter ending June 30, 2017. The inclusion of these two (2) financial ratios is an attempt to help identify financial issues in CPOs and CTAs that may cause detriment to their clients.
Using the accrual method of accounting, a Current Assets/Current Liabilities (“CA/CL”) Ratio and a Total Revenue/Total Expenses (“TR/TE”) Ratio will now be reported in the appropriate fields on NFA Forms PQR and PR. The Interpretive Notice entitled NFA Compliance Rule 2-46: Reporting Financial Information on NFA Forms PQR and PR includes definitions of the terms involved in CA/CL and TR/TE Ratio calculations as well as instructions on calculating each ratio.
Additional details regarding the amendment and interpretive notice to NFA Rule 2-46, as well as information on seeking assistance with the new calculations, are available on the Ruddy Gregory website.
Amendment to NFA Compliance Rule 2-36 – Forex Transactions Requirements
The CFTC approved NFA’s amendment to NFA Compliance Rule 2-36. The amendment requires forex dealer members (“FDMs”) to provide customers with certain transaction execution data. The FDM must provide the customer with the required transaction data within thirty (30) minutes of the customer’s request. A copy of the request and response must be submitted to the NFA. The amendment will be effective as of March 31, 2017.
Review NFA Notice I-17-01 for additional information regarding the amendment to Rule 2-36.
Chief Compliance Officer Annual Report
On January 18th, the NFA announced that the CFTC amended CFTC Regulation 3.3 thus extending the due date for filing of the Chief Compliance Officer (“CCO”) annual report. As per the amendment, futures commission merchants (“FCMs”) and swap dealers (“SDs”) have up to ninety (90) days after their fiscal year end to file their CCO annual report. NFA Notice I-17-03 provides additional information about the report and CFTC Regulation 3.3.
Member Obligations in Order to Avoid Violation of NFA Bylaw 1101 and Compliance Rule 2-36(d) when Conducting Business with CPOs/CTAs Exempt from Registration
Given that formerly exempt CPOs and CTAs have until March 1, 2017 to submit their annual affirmation of continued exemptions, Members who engage in reasonable steps to ascertain if a formerly exempt individual or entity will continue to be exempt for the 2017 calendar year will not be in violation of NFA Bylaw 1101 or Compliance Rule 2-36(d) if they participate in business with a previously exempt individual between January 2, 2017 and March 1, 2017.
In order to not be in violation of this bylaw and rule, a Member must take adequate steps to determine that (i) the previously exempt individual was, in fact, exempt, and (ii) receive confirmation from the previously exempt individual that they intend to file a notice affirming exemption by March 1, 2017.
Additional details regarding Member compliance in business transactions with CPOs/CTAs exempt from registration and details for adhering to NFA standards in determining that status of a previously exempt individual can be found on the Ruddy Gregory website.
NFA’s 2016 Annual Review Now Available
The NFA’s 2016 Annual Review is now available and may be viewed here.
For further information about any of the topics covered, please feel free to contact Ruddy Gregory, PLLC (www.ruddylaw.com) or 202-797-0762.
