1. ANTI-MONEY LAUNDERING COMPLIANCE PROGRAM FCM TRAINING

2. Stages of Money Laundering
Placement
Layering
Integration

3. Anti-Money Laundering Program Rule 2-9(c)
Policies, Procedures and Internal Controls
Designated Compliance Officer
Ongoing Training
Independent Audit Function

4. Policy Statement Committed to following all laws and regulations
Committed to not being used as part of money laundering scheme

5. Identification and Verification
Verify the identity of the customer
Learn the nature of customer’s business
Learn intended purpose of customer’s transactions

6. Required Minimum Information
Name and Address (or business location)
U.S Persons:
SSN or TIN
Non-U.S. Persons:
Passport number

7. Verifying Documents Driver’s license State I.D. Card Utility bills
Business incorporation records
Business license
Partnership agreements

8. 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

9. 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

10. 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

11. 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?

12. 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

13. Definition: Suspicious Transaction
A transaction that has no business or apparent lawful purpose, is unusual for the customer, or lacks any reasonable explanation.

14. Red Flags Structuring Evasiveness about identity
Trading with little or no risk
Wire transfers to or from high risk countries

15. Reporting
DSRO
FinCEN

16. Qualified Staff Must be trained May want to do background checks
Make sure logical division of duties

17. Recordkeeping
Types of records
Location or records
Period of retention

18. 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

19. 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

20. Compliance Officer Responsibilities
Gather relevant information to analyze and investigate
Determine whether there is any further reporting obligation
Ensure recordkeeping procedures are adequate

21. 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

22. Content Of Training Highlight red flags Monitoring for red flags
How to handle suspicious activity
Review of any firm experiences
Recordkeeping policies

23. Training Methods Firm Manual Video Presentation
Seminar with hypothetical situations
Periodic written updates

24. 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

25. Independent Audit Function
Must be conducted at least annually
Results must be documented and reported

26. Hypotheticals

27. 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

28. Suspicious Activity Reports
Currently, FCMs can file these reports voluntarily
FCM is protected from liability for disclosures reported on SAR

29. 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

30. Information Sharing Among Financial Institutions
Currently does not include FCMs in the definition
FCMs would not be covered by the safe harbor

31. NFA’s Focus on Members’ Anti-Money Laundering Program
Proper procedures
Adequate internal controls
Adhering to procedures

32. Anti-Money Laundry Procedures and Policy Statement
Written procedures and policy statement
Procedures
Detecting
Handling
Reporting
Policy Statement
Consequences

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

34. Separation of Duties Annual audit of anti-money laundering program
Receives audit report
Monitor customer accounts
Investigating suspicious activity
Senior management

35. 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

36. High Risk Accounts How are accounts identified
What lists are used to identify

37. Suspicious Activity Review Investigate Reporting Firm management
DSRO or FinCen

38. Training Material
Outline
Videos
Written

39. Supervision of IBs Written agreement Allocation of responsibilities
Due diligence by FCM

40. Questions?