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April 08, 2005 at 08:00 PM
WASHINGTON (HedgeWorld.com) – The division of clearing and intermediary oversight of the Commodity Futures Trading Commission issued a no-action letter that will permit futures commission merchants and introducing brokers to rely on the customer identification procedures of certain commodity trading advisers with respect to shared customers.
The letter is in response to a request from Barbara B. Wierzynski, executive vice president and general counsel of the Futures Industry Association, Washington.
Ms Wierzynski wrote the CFTC on this point May 5, 2004. James L. Carley, director of the division of clearing, replied March 14, 2005.
The issue arose because on April 29, 2003, the CFTC, in conjunction with the Financial Crimes Enforcement Network of the Treasury Department, issued its customer identification procedures rule, requiring futures commission merchants and introducing brokers to establish procedures that contain the following elements: (1) procedures for verifying the identities of customers; (2) procedures for making and maintaining records of the verification process; (3) procedures for checking customer names against lists of known or suspected terrorists or terrorist organizations; and (4) procedures for providing customers with notice that information is being collected to verify their identities.
The customer identification rule allowed futures commission merchants and introducing brokers to rely on certain financial institutions to perform procedures within that list with respect to shared customers when three conditions are met: (1) it is reasonable under the circumstances; (2) the relied-upon financial institution is itself subject to an anti-money laundering procedures rule; and (3) the relied-upon institution enters into a contract requiring it to certify annually to the futures commission merchant or introducing broker that it has implemented an anti-money-laundering procedure.
