The CFTC Division of Swap Dealer and Intermediary Oversight (the "DSIO") reminded futures commission merchants ("FCMs") and introducing brokers ("IBs") of their obligations to: (i) report suspicious activities required by the regulations issued by the Financial Crimes Enforcement Network ("FinCEN") under the Bank Secrecy Act ("BSA"); and (ii) comply with the economic sanctions programs imposed against certain countries and groups of individuals administered by the Office of Foreign Assets Control ("OFAC").

The DSIO specified that suspicious activity reporting ("SAR") regulation requires CFTC-registered FCMs and IBs to report a transaction that: (i) is conducted or attempted by, at, or through a FCM or IB; (ii) involves or aggregates funds or other assets of at least $5,000; and (iii) is known or suspected by the FCM and IB to:

  • involve funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity;
  • be designed to evade the BSA or its implementing regulations;
  • have no business or apparent lawful purpose, or is not the sort in which the particular customer would normally be expected to engage;
  • have no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or
  • involve use of the FCM or IB to facilitate criminal activity.

In addition, the DSIO reminded FCMs, IBs and all other CFTC registrants of their obligations to regularly review the OFAC economic sanctions programs and updates to the Specially Designated Nationals and Blocked Persons ("SDN") list. The DSIO stated that, although each sanctions program is unique, each may require U.S. persons to block (i.e., freeze) the property of: (i) any person that is on the SDN list; and (ii) any entity that is 50 percent or more owned, directly or indirectly, by such person.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.