CFTC

CFTC Staff, in Conjunction with the Financial Crimes Enforcement Network, Clarifies the Customer Identification Program and Beneficial Ownership Obligations of Certain Introducing Brokers

CFTC Beneficial OwnershipWashington, DC – The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO), in conjunction with the Financial Crimes Enforcement Network (FinCEN), today issued interpretive guidance to introducing brokers in commodities (IBs) that do not “introduce” customers to a futures commission merchant (FCM) that carries their customers’ accounts.  The guidance clarifies the customer identification program (CIP) and beneficial ownership (BO) requirements applicable to such IBs under the Bank Secrecy Act.

Chairman Heath Tarbert said, “This action reflects a balanced approach which ensures that regulated entities with pertinent information will continue to perform the due diligence necessary to prevent money laundering and terrorist financing.  The CFTC’s continued work with FinCEN is an important priority.”

Matthew Kulkin

“Today’s interpretive guidance will provide regulatory clarity to certain introducing brokers who lack access to the information needed to comply with customer identification program and beneficial ownership obligations,” said DSIO Director Matthew Kulkin.  “This guidance eliminates duplicative efforts without impacting money laundering or terrorist financing risk, as the customer due diligence obligations will continue to be performed by the FCM that carries the customer account.” Chairman Tarbert congratulated Kulkin for his efforts, saying, “Matt has done an excellent job on this critically important issue.”

The particular IBs covered by today’s guidance do not introduce their customers’ accounts to FCMs.  The IBs do not receive or have access to the customer identification and financial information obtained by FCMs or the monthly account information issued by FCMs.  The guidance clarifies that these IBs are not required to perform CIP measures or comply with BO requirements.