ANTI-MONEY LAUNDERING COMPLIANCE PROGRAM FCM TRAINING

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ANTI-MONEY LAUNDERING COMPLIANCE PROGRAM FCM TRAINING Powered By Docstoc
					 ANTI-MONEY
LAUNDERING
COMPLIANCE
   PROGRAM

FCM TRAINING
Stages of Money Laundering

 • Placement
 • Layering
 • Integration
Anti-Money Laundering Program
          Rule 2-9(c)

• Policies, Procedures and Internal Controls
• Designated Compliance Officer
• Ongoing Training
• Independent Audit Function
          Policy Statement

• Committed to following all laws and
  regulations
• Committed to not being used as part of
  money laundering scheme
 Identification and Verification

• Verify the identity of the customer
• Learn the nature of customer’s business
• Learn intended purpose of customer’s
  transactions
Required Minimum Information

• Name and Address (or business location)
• U.S Persons:
  – SSN or TIN

• Non-U.S. Persons:
  – Passport number
         Verifying Documents

• Driver’s license
• State I.D. Card
• Utility bills
• Business incorporation records
• Business license
• Partnership agreements
              OFAC’s Lists

• Sanctioned Countries:
  – Need to check if you can do business

• Specially Designated Nationals and
  Blocked Persons
  – May not do business and must report immediately
          FCM/IB Allocation

• Allocation must be in writing
• Identify who is doing what
• Must have reasonable basis to believe
  other entity is fulfilling its function
     Omnibus/Pool Accounts

• If there is no relationship with underlying
  customer, FCM must conduct risk-based
  due diligence on the intermediary
• FCM generally not required to do due
  diligence on underlying customer/
  participant
         Regulated Foreign
          Intermediaries

• Is the intermediary located in a FATF
  member country?
• What is your past experience with the
  intermediary?
• What is the intermediary’s business
  reputation?
    Verification Requirements

• Effective October 26, 2002
• Verify identity to extent reasonable and
  practicable
• Maintain records used to verify identity
• Consult lists of known or suspected
  terrorists or terrorist organizations
           Definition:
     Suspicious Transaction

• A transaction that has no business or
  apparent lawful purpose, is unusual for the
  customer, or lacks any reasonable
  explanation.
                 Red Flags

• Structuring
• Evasiveness about identity
• Trading with little or no risk
• Wire transfers to or from high risk countries
         Reporting

• DSRO
• FinCEN
            Qualified Staff

• Must be trained
• May want to do background checks
• Make sure logical division of duties
         Recordkeeping

• Types of records
• Location or records
• Period of retention
Designated Compliance Officer

• Can be a specific person or a department
• Can also be responsible for other
  compliance functions
• No need to be a principal or Associate
  Member
• Must be independent of areas overseen
         Compliance Officer
          Responsibilities

• Ensure firm has adequate customer
  identification and verification procedures
• Ensure firm has adequate guidelines for
  monitoring and reporting suspicious
  activities
• Receive reports of suspicious activities
        Compliance Officer
         Responsibilities

• Gather relevant information to analyze and
  investigate
• Determine whether there is any further
  reporting obligation
• Ensure recordkeeping procedures are
  adequate
                Training

• Formalized program is not required
• Goal is to provide appropriate personnel
  with information to carry out AML program
• Must be provided to appropriate personnel
  at least annually
         Content Of Training

• Highlight red flags
• Monitoring for red flags
• How to handle suspicious activity
• Review of any firm experiences
• Recordkeeping policies
          Training Methods

• Firm Manual
• Video Presentation
• Seminar with hypothetical situations
• Periodic written updates
  Independent Audit Function

• Can be done by internal employees or
  outside party
• Internal employees should be independent
  of the functional areas
• Outside party should have experience
  Independent Audit Function

• Must be conducted at least annually
• Results must be documented and reported
Hypotheticals
   Suspicious Activity Reports

• Not currently required of FCMs, but
  Treasury is expected to require from FCMs
• Implementing regulations will probably
  require that these reports be filed under
  certain circumstances
   Suspicious Activity Reports

• Currently, FCMs can file these reports
  voluntarily
• FCM is protected from liability for
  disclosures reported on SAR
 Information Sharing with Law
     Enforcement Agencies

• Sharing with law enforcement agencies
  includes FCMs
• Practically, FCMs will probably not be
  effected by this until they are required to
  file SARs
• Provides immunity for liability under the
  FRPA
  Information Sharing Among
      Financial Institutions

• Currently does not include FCMs in the
  definition
• FCMs would not be covered by the safe
  harbor
   NFA’s Focus on Members’
Anti-Money Laundering Program

• Proper procedures
• Adequate internal controls
• Adhering to procedures
Anti-Money Laundry Procedures
     and Policy Statement

• Written procedures and policy statement
• Procedures
  – Detecting
  – Handling
  – Reporting

• Policy Statement
  – Consequences
       Separation of Duties

• New accounts
• Customer funds
• Review and approve anti-money laundering
  procedures
• Compliance with anti-money laundering
  procedures
        Separation of Duties

• Annual audit of anti-money laundering
  program
• Receives audit report
• Monitor customer accounts
• Investigating suspicious activity
• Senior management
         Customer Account
          Documentation

• SSN or taxpayer ID
• Passport or other valid ID
• Principal place of business
• Nature of business
• Intended purpose of trading
• Documents used to verify
         High Risk Accounts

• How are accounts identified
• What lists are used to identify
         Suspicious Activity

• Review
• Investigate
• Reporting
• Firm management
• DSRO or FinCen
       Training Material

• Outline
• Videos
• Written
          Supervision of IBs

• Written agreement
• Allocation of responsibilities
• Due diligence by FCM
Questions?

				
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