PART 1026—RULES FOR FUTURES COMMISSION MERCHANTS AND INTRODUCING BROKERS IN COMMODITIES Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5314 and 5316-5332; title III, sec. 314, Pub. L. 107-56, 115 Stat. 307; sec. 701, Pub. L. 114-74, 129 Stat. 599. Source: 75 FR 65812, Oct. 26, 2010, unless otherwise noted. Subpart A—Definitions § 1026.100 Definitions. Refer to § 1010.100 of this chapter for general definitions not noted herein. To the extent there is a differing definition in § 1010.100 of this chapter, the definition in this section is what applies to part 1026. Unless otherwise indicated, for the purposes of this part: (a) Account. (1) Account (2) Account (i) An account that the futures commission merchant acquires through any acquisition, merger, purchase of assets, or assumption of liabilities; or (ii) An account opened for the purpose of participating in an employee benefit plan established under the Employee Retirement Income Security Act of 1974. (b) Commodity (c) Contract of sale (d) Customer. (1) Customer (i) A person that opens a new account with a futures commission merchant; and (ii) An individual who opens a new account with a futures commission merchant for: (A) An individual who lacks legal capacity; or (B) An entity that is not a legal person. (2) Customer (i) A financial institution regulated by a Federal functional regulator or a bank regulated by a state bank regulator; (ii) A person described in § 1020.315(b)(2) through (4) of this Chapter; or (iii) A person that has an existing account, provided the futures commission merchant or introducing broker has a reasonable belief that it knows the true identity of the person. (3) When an account is introduced to a futures commission merchant by an introducing broker, the person or individual opening the account shall be deemed to be a customer (e) Financial institution (f) Futures commission merchant et seq. (g) Introducing broker et seq. (h) Option Subpart B—Programs § 1026.200 General. Futures commission merchants and introducing brokers in commodities are subject to the program requirements set forth and cross referenced in this subpart. Futures commission merchants and introducing brokers in commodities should also refer to subpart B of part 1010 of this chapter for program requirements contained in that subpart which apply to futures commission merchants and introducing brokers in commodities. § 1026.210 Anti-money laundering program requirements for futures commission merchants and introducing brokers in commodities. A futures commission merchant and an introducing broker in commodities shall be deemed to satisfy the requirements of 31 U.S.C. 5318(h)(1) if the futures commission merchant or introducing broker in commodities implements and maintains a written anti-money laundering program approved by senior management that: (a) Complies with the requirements of §§ 1010.610 and 1010.620 of this chapter and any applicable regulation of its Federal functional regulator governing the establishment and implementation of anti-money laundering programs; (b) Includes, at a minimum: (1) The establishment and implementation of policies, procedures, and internal controls reasonably designed to prevent the financial institution from being used for money laundering or the financing of terrorist activities and to achieve compliance with the applicable provisions of the Bank Secrecy Act and the implementing regulations thereunder; (2) Independent testing for compliance to be conducted by the futures commission merchant or introducing broker in commodities' personnel or by a qualified outside party; (3) Designation of an individual or individuals responsible for implementing and monitoring the operations and internal controls of the program; (4) Ongoing training for appropriate persons; (5) Appropriate risk-based procedures for conducting ongoing customer due diligence, to include, but not be limited to: (i) Understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and (ii) Conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information. For purposes of this paragraph (b)(5)(ii), customer information shall include information regarding the beneficial owners of legal entity customers (as defined in § 1010.230 of this chapter); and (c) Complies with the rules, regulations, or requirements of its self-regulatory organization governing such programs, provided that the rules, regulations, or requirements of the self-regulatory organization governing such programs have been made effective under the Commodity Exchange Act by the appropriate Federal functional regulator in consultation with FinCEN. [81 FR 29458, May 11, 2016] § 1026.220 Customer identification programs for futures commission merchants and introducing brokers. (a) Customer identification program: Minimum requirements In general. (2) Identity verification procedures. (i)(A) Customer information required. ( 1 ( 2 ( 3 ( i ( ii ( iii ( 4 ( i ( ii Note to paragraph ( a i 4 ii When opening an account for a foreign business or enterprise that does not have an identification number, the futures commission merchant or introducing broker must request alternative government-issued documentation certifying the existence of the business or enterprise. (B) Exception for persons applying for a taxpayer identification number. (ii) Customer verification. (A) Verification through documents. ( 1 ( 2 (B) Verification through non-documentary methods. ( 1 ( 2 (C) Additional verification for certain customers. (iii) Lack of verification. (A) When an account should not be opened; (B) The terms under which a customer may conduct transactions while the futures commission merchant or introducing broker attempts to verify the customer's identity; (C) When an account should be closed after attempts to verify a customer's identity have failed; and (D) When the futures commission merchant or introducing broker should file a Suspicious Activity Report in accordance with applicable law and regulation. (3) Recordkeeping. (i) Required records. (A) All identifying information about a customer obtained under paragraph (a)(2)(i) of this section; (B) A description of any document that was relied on under paragraph (a)(2)(ii)(A) of this section noting the type of document, any identification number contained in the document, the place of issuance, and if any, the date of issuance and expiration date; (C) A description of the methods and the results of any measures undertaken to verify the identity of a customer under paragraphs (a)(2)(ii)(B) and (C) of this section; and (D) A description of the resolution of each substantive discrepancy discovered when verifying the identifying information obtained. (ii) Retention of records. (4) Comparison with government lists. (5)(i) Customer notice. (ii) Adequate notice. (iii) Sample notice. Important Information About Procedures for Opening a New Account To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents. (6) Reliance on another financial institution. (i) Such reliance is reasonable under the circumstances; (ii) The other financial institution is subject to a rule implementing 31 U.S.C. 5318(h), and is regulated by a Federal functional regulator; and (iii) The other financial institution enters into a contract requiring it to certify annually to the futures commission merchant or introducing broker that it has implemented its anti-money laundering program, and that it will perform (or its agent will perform) specified requirements of the futures commission merchant's or introducing broker's CIP. (b) Exemptions. (c) Other requirements unaffected. Subpart C—Reports Required To Be Made by Futures Commission Merchants and Introducing Brokers in Commodities § 1026.300 General. Futures commission merchants and introducing brokers in commodities are subject to the reporting requirements set forth and cross referenced in this subpart. Futures commission merchants and introducing brokers in commodities should also refer to subpart C of part 1010 of this chapter for reporting requirements contained in that subpart which apply to futures commission merchants and introducing brokers in commodities. § 1026.310 Reports of transactions in currency. The reports of transactions in currency requirements for futures commission merchants and introducing brokers in commodities are located in subpart C of part 1010 of this chapter and this subpart § 1026.311 Filing obligations. Refer to § 1010.311 of this chapter for reports of transactions in currency filing obligations for futures commission merchants and introducing brokers in commodities. [76 FR 10521, Feb. 25, 2011] § 1026.312 Identification required. Refer to § 1010.312 of this chapter for identification requirements for reports of transactions in currency filed by futures commission merchants and introducing brokers in commodities. [76 FR 10521, Feb. 25, 2011] § 1026.313 Aggregation. Refer to § 1010.313 of this chapter for reports of transactions in currency aggregation requirements for futures commission merchants and introducing brokers in commodities. [76 FR 10521, Feb. 25, 2011] § 1026.314 Structured transactions. Refer to § 1010.314 of this chapter for rules regarding structured transactions for futures commission merchants and introducing brokers in commodities. [76 FR 10521, Feb. 25, 2011] § 1026.315 Exemptions. Refer to § 1010.315 of this chapter for exemptions from the obligation to file reports of transactions in currency for futures commission merchants and introducing brokers in commodities. § 1026.320 Reports by futures commission merchants and introducing brokers in commodities of suspicious transactions. (a) General (2) A transaction requires reporting under the terms of this section if it is conducted or attempted by, at, or through an FCM or IB-C, it involves or aggregates funds or other assets of at least $5,000, and the FCM or IB-C knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part): (i) Involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity (including, without limitation, the ownership, nature, source, location, or control of such funds or assets) as part of a plan to violate or evade any Federal law or regulation or to avoid any transaction reporting requirement under Federal law or regulation; (ii) Is designed, whether through structuring or other means, to evade any requirements of this chapter or of any other regulations promulgated under the Bank Secrecy Act; (iii) Has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the FCM or IB-C knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction; or (iv) Involves use of the FCM or IB-C to facilitate criminal activity. (3) The obligation to identify and properly and timely to report a suspicious transaction rests with each FCM and IB-C involved in the transaction, provided that no more than one report is required to be filed by any of the FCMs or IB-Cs involved in a particular transaction, so long as the report filed contains all relevant facts. (b) Filing procedures What to file. (2) Where to file. (3) When to file. (c) Exceptions. (i) A robbery or burglary committed or attempted of the FCM or IB-C that is reported to appropriate law enforcement authorities; (ii) A violation otherwise required to be reported under the CEA (7 U.S.C. 1 et seq. (2) An FCM or IB-C may be required to demonstrate that it has relied on an exception in paragraph (c)(1) of this section, and must maintain records of its determinations to do so for the period specified in paragraph (d) of this section. To the extent that a Form 8-R, 8-T, U-5, or any other similar form concerning the transaction is filed consistent with CFTC, registered futures association, or registered entity rules, a copy of that form will be a sufficient record for the purposes of this paragraph (c)(2). (d) Retention of records. (e) Confidentiality of SARs. (1) Prohibition on disclosures by futures commission merchants and introducing brokers in commodities General rule. (ii) Rules of Construction. (A) The disclosure by an FCM or IB-C, or any director, officer, employee, or agent of an FCM or IB-C, of: ( 1 ( 2 ( i ( ii (B) The sharing by an FCM or IB-C, or any director, officer, employee, or agent of the FCM or IB-C, of a SAR, or any information that would reveal the existence of a SAR, within the FCM's or IB-C's corporate organizational structure for purposes consistent with Title II of the BSA as determined by regulation or in guidance. (2) Prohibition on disclosures by government authorities. (3) Prohibition on disclosures by Self-Regulatory Organizations. (f) Limitation on liability. (g) Compliance. (h) Applicability date. [75 FR 65812, Oct. 26, 2010, as amended at 76 FR 10521, Feb. 25, 2011; 81 FR 76865, Nov. 4, 2016] Subpart D—Records Required To Be Maintained By Futures Commission Merchants and Introducing Brokers in Commodities § 1026.400 General. Futures commission merchants and introducing brokers in commodities are subject to the recordkeeping requirements set forth and cross referenced in this subpart. Futures commission merchants and introducing brokers in commodities should also refer to subpart D of part 1010 of this chapter for recordkeeping requirements contained in that subpart which apply to futures commission merchants and introducing brokers in commodities. § 1026.410 Recordkeeping. Refer to § 1010.410 of this chapter. Subpart E—Special Information Sharing Procedures To Deter Money Laundering and Terrorist Activity § 1026.500 General. Futures commission merchants and introducing brokers in commodities are subject to the special information sharing procedures to deter money laundering and terrorist activity requirements set forth and cross referenced in this subpart. Futures commission merchants and introducing brokers in commodities should also refer to subpart E of part 1010 of this chapter for special information sharing procedures to deter money laundering and terrorist activity contained in that subpart which apply to futures commission merchants and introducing brokers in commodities. § 1026.520 Special information sharing procedures to deter money laundering and terrorist activity for futures commission merchants and introducing brokers in commodities. (a) Refer to § 1010.520 of this chapter. (b) [Reserved] § 1026.530 [Reserved] § 1026.540 Voluntary information sharing among financial institutions. (a) Refer to § 1010.540 of this chapter. (b) [Reserved] Subpart F—Special Standards of Diligence; Prohibitions; and Special Measures for Futures Commission Merchants and Introducing Brokers in Commodities § 1026.600 General. Futures commission merchants and introducing brokers in commodities are subject to the special standards of diligence; prohibitions; and special measures requirements set forth and cross referenced in this subpart. Futures commission merchants and introducing brokers in commodities should also refer to subpart F of part 1010 of this chapter for special standards of diligence; prohibitions; and special measures contained in that subpart which apply to futures commission merchants and introducing brokers in commodities. § 1026.610 Due diligence programs for correspondent accounts for foreign financial institutions. (a) Refer to § 1010.610 of this chapter. (b) [Reserved] § 1026.620 Due diligence programs for private banking accounts. (a) Refer to § 1010.620 of this chapter. (b) [Reserved] § 1026.630 Prohibition on correspondent accounts for foreign shell banks; records concerning owners of foreign banks and agents for service of legal process. (a) Refer to § 1010.630 of this chapter. (b) [Reserved] § 1026.640 [Reserved] § 1026.670 Summons or subpoena of foreign bank records; termination of correspondent relationship. (a) Refer to § 1010.670 of this chapter. (b) [Reserved]