ARTICLE
25 August 2020

NFA OKs FinCEN CDD FAQ

CW
Cadwalader, Wickersham & Taft LLP

Contributor

Cadwalader, established in 1792, serves a diverse client base, including many of the world's leading financial institutions, funds and corporations. With offices in the United States and Europe, Cadwalader offers legal representation in antitrust, banking, corporate finance, corporate governance, executive compensation, financial restructuring, intellectual property, litigation, mergers and acquisitions, private equity, private wealth, real estate, regulation, securitization, structured finance, tax and white collar defense.
More enforcement actions may well be on the way for firms that have not effectively implemented an adequate AML program.
United States Finance and Banking

NFA recommended that its member futures commission merchants and introducing brokers ("FCMs and IBs") review FinCEN's recently issued FAQ concerning customer due diligence ("CDD") in order to ensure that their AML programs meet CDD-related regulatory obligations. As previously covered, FinCEN's recent guidance addressed the (i) collection of customer information, (ii) creation of customer risk profiles, and (iii) requirements to perform ongoing monitoring of customer relationships.

Commentary

Notwithstanding this article's fun string of acronyms, FCMs and IBs would do well to note that this NFA guidance comes on the heels of the CFTC's first-ever enforcement action under its AML rules. More enforcement actions may well be on the way for firms that have not effectively implemented an adequate AML program.

Primary Sources

  1. NFA Notice I-20-31: FinCEN issues additional FAQs to address questions regarding customer due diligence requirements for covered financial institutions

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.

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