The National Futures Association proposed amending its anti-money laundering ("AML") program requirements for futures commission merchants ("FCMs") and introducing brokers ("IBs") to include risk-based procedures for conducting customer due diligence. The amended NFA Compliance Rule 2-9(c) and Interpretive Notice " Compliance Rule 2-9: FCM and IB Anti-Money Laundering Program" would conform to the Customer Due Diligence Rule ("CDD Rule") implemented by the Financial Crimes Enforcement Network ("FinCEN") that went into effect on May 11, 2018. The amendments will become effective ten days following receipt of the submission by the CFTC, unless otherwise determined.

Once effective, the amendments will require FCMs' and IBs' written AML programs to include procedures to (i) verify the identity of the beneficial owners of legal entity customers for which new accounts are opened on or after May 11, 2018, (ii) understand the nature and purpose of customer relationships in developing a customer risk profile, and (iii) conduct ongoing monitoring to identify and report suspicious transactions and maintain and update customer information. An individual is considered a beneficial owner if the individual meets the ownership prong test (i.e., directly or indirectly owning 25% or more of the equity interests of a legal entity customer) and/or the control prong test (i.e., having significant authority to control, manage or direct the legal entity customer).

Earlier this year, FINRA amended its AML policy to require broker-dealers to incorporate the CDD Rule in their AML compliance programs.

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