anti-money laundering compliance program fcm training
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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. - PowerPoint PPT PresentationTRANSCRIPT
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?