CFTC, FinCEN To Coordinate AML Efforts
February 2, 2009
The Financial Crimes Enforcement Network (FinCEN) and Commodity Futures Trading Commission (CFTC) have reached an agreement to "maximize resources" by sharing information and coordinating their anti-money-laundering (AML) efforts.
Under the agreement, the CFTC will provide information about its AML examination and enforcement activities--as well as the activities of the futures industry's self-regulatory organizations (SROs)--to FinCEN, the anti-money-laundering arm of the Treasury Department. FinCEN, in turn, will assist the commission in carrying out its Bank Secrecy Act (BSA) compliance responsibilities.
On Jan. 16, days before he stepped down as acting chairman of the commission, Walter Lukken said that the "information-sharing agreement will enhance the CFTC's ability to effectively implement its anti-money-laundering examination responsibilities, conduct oversight of the futures self-regulatory organizations, and meet its enforcement mission of rooting out fraud, manipulation and wrongdoing."
Commercial banks and thrifts have had to comply with the AML provisions of the BSA since it was passed in 1970, while in 2001 securities firms fell under an amended version of the legislation-Title III of the USA Patriot Act. The Securities and Exchange Commission has been sharing data with FinCEN since December 2006, so why did it take so long to reach a similar arrangement with the CFTC?
"The agreement took longer because of the complexity of the futures industry," said FinCEN spokesperson William Grassano. Futures commission merchants and commodities brokers were not subject to the BSA's recordkeeping and reporting mandates, as well as the requirement to report suspicious transactions to FinCEN, until May 2004.
Though the agreement is now in effect, it is unclear how it will be implemented by the National Futures Association. "We are not parties to that agreement," said Karen Wuertz, spokesperson for the Chicago-based SRO, "but we have rules for our members that are part of our audit program that calls for them to have written procedures, a training component and other key elements." FinCEN will likely cull AML information from the NFA and CME Group, which oversees futures commissions merchants that are members of the Chicago Mercantile Exchange, as well as the other, smaller SROs. CME and the NFA are "the front-line regulators," noted Wertz.
Added FinCEN director James Freis in a statement, "When FinCEN, the CFTC and other financial regulators work together with the financial industry to protect against criminal abuse, we can enhance market integrity and promote legitimate financial activity."
