Since April 24, 2002, NFA Compliance Rule 2-9(c) has required all NFA Member FCMs and IBs to have an anti-money laundering (AML) compliance program in place. At a minimum, the AML program must establish and implement policies, procedures, and internal controls reasonably designed to assure compliance with the applicable provisions of the Bank Secrecy Act, designate an individual or individuals responsible for implementing and monitoring the day-to-day operations and internal controls of the program, provide for independent testing for compliance to be conducted by Member personnel or by a qualified outside party, and provide ongoing training for appropriate personnel.
NFA Compliance Rule 2-9(c) and the related interpretive notice set forth the minimum standards and provide Members with additional guidance to create and implement an adequate program. In 2010, NFA launched an online system designed to help FCMs and IBs develop AML programs that meet the requirements of the BSA and NFA Compliance Rule. The online system provides guidance, information and examples on suggested language for written AML compliance programs. Although this system provides an IB with assistance in developing its program, IBs must ensure that the final program adopted addresses the money laundering risks associated with the IB's business. Using the system does not guarantee that an IB's program will satisfy the AML program requirements, nor does it provide a safe harbor from violations of the program requirements.
Since IBs share customer relationships with one or more FCMs, it may be appropriate for them to share or allocate AML responsibilities with respect to their shared customers. For example, both FCMs and IBs are required to have a customer identification program (CIP) that is applied to all new customers opening an account. Since the customers the IB introduces to the FCM are considered customers of both the FCM and IB, both are responsible for ensuring that the CIP obligations are met. In this situation, however, it may be appropriate for the IB and FCM to share these responsibilities. If an IB intends to rely upon an FCM's procedures, such as the verification procedures, the reliance must be reasonable under the circumstances, the FCM must be subject to an AML compliance program requirement and the FCM must enter into an agreement with the IB indicating that the FCM will certify annually that it has implemented an AML program and it will perform the specified requirements of its own CIP. If these requirements are met, the IB is afforded safe harbor and will not be held responsible if the FCM fails to adequately fulfill its CIP obligations.
An IB may also delegate some of its CIP responsibilities to an FCM, a third party service provider or an agent. In this scenario, the IB should have a written agreement with the other entity that outlines each entity's responsibilities. However, IBs should be advised that under these circumstances, safe harbor is not afforded and the IB remains solely responsible for CIP obligations and liable for the failure of the other entity to perform the responsibilities outlined in the written agreement.
Finally, an IB may allocate other elements of its AML compliance program to an FCM through a written allocation agreement between the parties. The agreement must clearly set forth the elements being allocated. Any IB that allocates any of its AML compliance program responsibilities to an FCM must have a reasonable basis for believing that the FCM is properly performing the required functions. As with the delegation of CIP responsibilities, allocating the responsibilities to the FCM does not relieve the IB of its obligation to comply with the AML requirements.
Regardless of whether an IB chooses to comply with AML requirements itself or whether it enters into an allocation, delegation or reliance agreement, an IB must periodically review its AML program to ensure the firm is following its procedures and that the program includes all necessary requirements to satisfy obligations under NFA Compliance Rule 2-9(c) and the related interpretive notice.
Valerie O'Malley, Associate Director, Compliance, NFA
IBs requiring additional information or guidance regarding their AML requirements should contact NFA's Information Center at (312)-781-1410 or (800) 621-3570. They can also email NFA at information@nfa.futures.org.
