SEC Sets Comment Deadline for NFA Amendments on SAR Confidentiality

The SEC set a comment deadline on amendments to NFA Compliance Rule 2-9 ("Supervision") and an Interpretive Notice on AML suspicious activity report ("SAR") confidentiality. The proposal became effective upon its publication in the Federal Register and comments must be submitted by June 1, 2023.

The filing amends Compliance Rule 2-9(c), which requires futures commission merchants ("FCMs") and introducing brokers ("IBs") to implement AML programs in compliance with the BSA, to include previous FinCEN amendments to the BSA requiring that (i) financial institutions verify the identity of beneficial owners of legal entity customers and (ii) FCMs and IBs use appropriate risk-based procedures to conduct ongoing customer due diligence. The NFA amendments to Interpretive Notice on Compliance Rule 2-9 focus on (i) the timing of SAR filings, (ii) record retention requirements (iii) the frequency of employee training and independent audit requirements.

In addition, the NFA clarified Customer Identification Program ("CIP") obligations under the Interpretive Notice by highlighting that (i) FCMs should treat the intermediary holder of omnibus accounts as the customer and (ii) CIP requirements need not apply to the underlying beneficiary.