The CME Group is adding one new rule and amending two others to minimize the likelihood that its exchanges might be used for illicit money laundering. The changes will impose new obligations on clearing members. CME Group currently requires clearing members to have a written program to ensure they do not conduct business with persons named or from countries subject to economic sanctions (collectively “Sanctioned Parties”) by the US government. (Click here to access CME Group rule 981.) Under CME Group’s new provisions, clearing members (1) who become aware they are carrying an account or positions for a Sanctioned Party must "immediately" take steps to cancel all direct or indirect access of the Sanctioned Party to CME Group markets and notify CME Group of such cancellation (or work with CME Group to coordinate the cancellation of such access); (2) are prohibited from accepting debt or equity issued by a Sanctioned Party as performance bonds; and (3) may only carry omnibus accounts for other futures brokers who have received a notice saying they are prohibited from dealing themselves with Sanctioned Parties, and who provide such notice themselves to their own omnibus accounts. CME Group’s new provisions will be effective February 29, 2016, absent objection by the Commodity Futures Trading Commission.
Compliance Weeds: The beginning of the year—before it gets too busy—provides an excellent opportunity for firms to review all control-group manuals, including compliance and anti-money laundering policies and procedures. Commodity Futures Trading Commission and Securities and Exchange Commission overseen brokerage-type entities are subject to express AML requirements. Included below is a listing of resources published by the CFTC, SEC, the National Futures Association and the Financial Industry Regulatory Authority to assist such firms double check their AML requirements, as well as a link to resources for mutual funds and a recent Financial Crimes Enforcement Network rule proposal to require registered investment advisers to maintain a formal AML program. However, in addition to checking to ensure that applicable policies and procedures comply with relevant requirements, it is critical to ensure that (1) requirements of such policies and procedures are being followed as written, and (2) the responsibility for tasks is assigned to appropriate supervisors. For example, compliance officers might be required by a procedure to assist in helping business line supervisors comply with applicable laws, but they should not be responsible to ensure a firm complies with applicable laws. Moreover, the new year presents an excellent opportunity to test whether control-group software is accurately capturing data from all relevant sources and is utilizing or analyzing such data as expected.
SEC (for broker-dealers):
SEC: (for mutual funds):
FINCEN (re: investment advisers):