Document ID: SEC-2008-0569-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; National Futures Association: Filing and Immediate Effectiveness of Proposed Amendments; Interpretive Notice Regarding Compliance Rule 2-9: FCM and IB Anti-Money Laundering Program
Posted Date: 2008-04-15T04:00Z

[Federal Register: April 15, 2008 (Volume 73, Number 73)]
[Notices]               
[Page 20341-20342]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ap08-134]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57640; File No. SR-NFA-2008-01]

 
Self-Regulatory Organizations; National Futures Association; 
Notice of Filing and Immediate Effectiveness of Proposed Amendments to 
the Interpretive Notice Regarding Compliance Rule 2-9: FCM and IB Anti-
Money Laundering Program

April 9, 2008.
    Pursuant to section 19(b)(7) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\, and Rule 19b-7 under the Exchange Act,\2\ 
notice is hereby given that on March 17, 2008, National Futures 
Association (``NFA'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change described in Items 
I, II, and III below, which Items have been substantially prepared by 
NFA. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons. NFA also has filed 
the proposed rule change with the Commodity Futures Trading Commission 
(``CFTC'').
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 17 CFR 240.19b-7.
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    NFA, on December 5, 2007, submitted proposed rule changes to the 
CFTC for approval. The CFTC approved the proposed rule changes on 
January 15, 2008. On March 17, 2008, NFA requested that the CFTC make a 
determination that review of a technical amendment to the approved rule 
changes (correcting a Federal Register notice citation) is not 
necessary. On March 28, 2008, the CFTC notified the NFA that the CFTC 
has determined not to review the technical amendment for approval.\3\
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    \3\ See letter from Barbara S. Gold, Acxting Deputy Director, 
CFTC to Thomas W. Sexton, III, Esq., General Counsel, NFA dated 
March 28, 2008..
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    The proposed rule changes approved by the CFTC on January 15, 2008, 
were previously filed with the SEC in File No. SR-NFA-2007-06. That 
filing is being withdrawn by NFA and this filing, which includes both 
the rule changes approved by the CFTC and the technical amendment, is 
being filed in its place.

I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    Over the last several months, the Financial Crimes Enforcement 
Network (``FinCEN'') has taken a number of actions that impact the 
content of NFA's AML Interpretive Notice. These actions include:
     Adopting a final rule under the Bank Secrecy Act (``BSA'') 
as amended by Section 312 of the USA Patriot Act to require Futures 
Commission Merchants (``FCMs'') and Introducing Brokers (``IBs'') \4\ 
to apply enhanced due diligence measures to correspondent accounts 
maintained for certain foreign banks. This rule will become effective 
in two parts. Beginning on February 5, 2008, the rule applies to 
accounts established from that date forward. On May 5, 2008, the rule 
will apply to all existing accounts established prior to February 5, 
2008.\5\
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    \4\ An IB that limits its activities to soliciting and accepting 
orders for the purchase or sale of commodity futures contracts is 
not required to comply with the due diligence provisions of the 
correspondent account rule.
    \5\ 17 CFR 103.175. See also Special Due Diligence Programs for 
Certain Foreign Accounts, 72 FR 44768 (Aug. 9, 2007).
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     Issuing guidance clarifying that in a give-up arrangement 
the clearing FCM, and not the executing FCM, is required to apply its 
CIP to the customer.\6\
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    \6\ FinCEN Guidance on Application of the Customer 
Identification Program Rule to Future Commission Merchants Operating 
as Executing and Clearing Brokers in Give-Up Arrangements, FIN-2007-
G001 (Apr. 20, 2007), available at http://www.fincen.gov/cftc_
fincen_guidance.html.
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     Issuing guidance clarifying that, upon request, FCMs and 
IBs are required to provide appropriate law enforcement and regulatory 
agencies with any supporting documentation related to a Suspicious 
Activity Report filed with FinCEN.\7\
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    \7\ FinCEN Guidance on Suspicious Activity Report Supporting 
Documentation, FIN-2007-G003 (June 13, 2007), available at http://
www.fincen.gov/Supporting_Documentation_Guidance.html.
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    The amendments to NFA's AML Interpretive Notice incorporate the 
requirements of FinCEN's final rule under the BSA as amended by Section 
312 of the USA Patriot Act and the additional guidance issued by 
FinCEN.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    NFA has prepared statements concerning the purpose of, and basis 
for, the proposed rule change, burdens on competition, and comments 
received from members, participants, and others. The text of these 
statements may be examined at the places specified in Item IV below. 
These statements are set forth in sections A, B, and C below.

[[Page 20342]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Section 15A(k) of the Exchange Act \8\ makes NFA a national 
securities association for the limited purpose of regulating the 
activities of NFA members (``Members'') who are registered as brokers 
or dealers in security futures products under section 15(b)(11) of the 
Exchange Act.\9\ The amendments to the interpretive notice apply to all 
Members, including those who are registered as security futures brokers 
or dealers under section 15(b)(11).
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    \8\ 15 U.S.C. 78o-3(k).
    \9\ 15 U.S.C. 78o(b)(11).
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    The amendments to NFA's AML Interpretive Notice incorporate the 
requirements that are imposed by FinCEN's final rule under the BSA as 
amended by section 312 of the USA Patriot Act and the additional 
guidance issued by FinCEN.
2. Statutory Basis
    The rule change is authorized by, and consistent with, section 
15A(k) of the Exchange Act. This Section requires NFA to have rules 
that are designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest in connection 
with security futures products. The proposed rule change accomplishes 
this by requiring that Members comply with applicable AML requirements 
and providing guidance on how to achieve such compliance.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The rule change will not impose any burden on competition that is 
not necessary or appropriate in furtherance of the purposes of the 
Exchange Act and the CEA. Any burdens imposed by the rule change are 
already required under Federal laws or regulations.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    NFA did not publish the rule change to the membership for comment. 
NFA did not receive comment letters concerning the rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    NFA, on December 5, 2007, submitted the proposed Interpretive 
Notice entitled ``NFA Compliance Rule 2-9: FCM and IB Anti-Money 
Laundering Program'' to the CFTC for approval. The CFTC approved the 
rule change on January 15, 2008. On March 17, 2008, NFA submitted a 
technical amendment to Footnote 22 of the Interpretive Notice entitled 
``NFA Compliance Rule 2-9: ``FCM and IB Anti-Money Laundering Program'' 
(correcting a Federal Register notice citation) to the CFTC requesting 
that the CFTC make a determination that review of the technical 
amendment is not necessary. The CFTC notified the NFA that it has 
determined not to review the technical amendment for approval.\10\
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    \10\ See letter from Barbara S. Gold, Acting Deputy Director, 
CFTC to Thomas W. Sexton, III, Esq., General Counsel, NFA dated 
March 28, 2008.
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    Within 60 days of the date of effectiveness of the proposed rule 
change, the Commission, after consultation with the CFTC, may summarily 
abrogate the proposed rule change and require that the proposed rule 
change be refiled in accordance with the provisions of section 19(b)(1) 
of the Exchange Act.\11\
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    \11\15 U.S.C. 78s(b)(1).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change conflicts with the Exchange Act. Comments may be submitted by 
any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NFA-2008-01 on the subject line.

Paper Comments

     Send nine copies of paper comments to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NFA-2008-01. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Section, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of the NFA. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.
    All submissions should refer to File Number SR-NFA-2008-01 and 
should be submitted on or before May 6, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\17 CFR 200.30-3(a)(73).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-7959 Filed 4-14-08; 8:45 am]

BILLING CODE 8010-01-P