Monthly Regulatory Summary (February 2025)
As the regulatory landscape is constantly evolving, Compliance Risk Concepts (“CRC”) is issuing its monthly review and summary of various FINRA, SEC, NFA, and FinCEN publications to assist our clients in keeping abreast of notable regulatory developments and deadlines in an effort to strengthen their compliance and regulatory initiatives.
Regulatory Notices
There were no Regulatory Notices in February.
Final Rules
Per Release No. 34-102487, the SEC is adopting rules under the Securities Exchange Act of 1934 (“Exchange Act”) to amend the standards applicable to covered clearing agencies for U.S. Treasury securities to require that such covered clearing agencies have written policies and procedures reasonably designed to require that every direct participant of the covered clearing agency submit for clearance and settlement all eligible secondary market transactions in U.S. Treasury securities to which it is a counterparty. In addition, the SEC is adopting additional amendments to the Covered Clearing Agency Standards with respect to risk management. These requirements are designed to protect investors, reduce risk, and increase operational efficiency. Finally, the SEC is amending the broker-dealer customer protection rule to permit margin required and on deposit with covered clearing agencies for U.S. Treasury securities to be included as a debit in the reserve formulas for accounts of customers and proprietary accounts of broker dealers (“PAB”), subject to certain conditions.
Proposed Rules
There were no proposed rules in February.
Interim Final Rules
There were no interim final rules in February.
Interpretive Releases
There were no interpretive releases in February.
There were no policy statements in February.
Notices to Members
Notice I-25-05
February 11, 2025
Educational resources, common deficiencies and other important regulatory information for FCM, FDM and IB Members
NFA is committed to providing its Members with the resources they need to meet their regulatory obligations as efficiently as possible. This Notice covers educational resources, common deficiencies and links to Notices to Members regarding recent amendments to NFA Rules and Interpretive Notices.
Members Section of NFA's Website
From the Members section of NFA's website, Members can access information detailing their regulatory obligations including the following:
Futures Commission Merchants (FCM)
Forex Dealer Members (FDM)
Introducing Brokers (IB)
Regulatory Obligations Related to Common Deficiencies
The following section describes several regulatory obligations related to common deficiencies noted during NFA examinations of Member FCMs for which NFA is the DSRO, FDMs and IBs.
Member Questionnaire
On an ongoing basis, each NFA Member is required to update its Member Questionnaire in the event of a material change to its operations. For example, if a Member begins doing business or begins soliciting for digital asset or micro contract products, the Member must immediately update its Member Questionnaire. Further, updates to the Member Questionnaire must be submitted by an individual that is an Associated Person and Principal of the Member. Firms should carefully review the Member Questionnaire to ensure it accurately reflects business operations. This will ensure that NFA's BASIC system displays correct information about the firm's business activities and that the firm receives all applicable notices relating to its reporting requirements in a timely manner. Members should review the Member Questionnaire Templates which include all possible and available questions in the filing.
Self-Examination Questionnaire: NFA Members must annually review their operations using NFA's Self-Examination Questionnaire. This questionnaire is designed to aid Members in recognizing potential problem areas and to alert them to procedures that need to be revised or strengthened. Common deficiencies in this area include failing to review the Questionnaire on an annual basis and failing to maintain evidence that a review was conducted. NFA also encounters firms with deficient policies and procedures, indicating an inadequate review of the Self-Examination Questionnaire. Thorough questionnaire completion and review ensures firms are alerted to deficient policies and procedures that should be updated to comply with NFA Rules.
Supervision: FCM, FDM and IB Members must have written supervisory policies and procedures to address the manner, frequency and results of monitoring written and oral communications. Such supervision includes, when required1, maintaining a record of all oral and written communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading and prices that lead to the execution of a transaction in a commodity interest and related cash or forward transaction, whether communicated by telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, mobile device or other digital or electronic media. Common deficiencies in this area include firms not maintaining all required communications, failing to identify brokers using unapproved and unrecorded communication methods and permitting unregistered individuals to act as associated persons.
Digital Assets: Members engaging in activities related to digital assets or digital asset derivatives must comply with the customer disclosure requirements established in Interpretive Notice 9073.
Third Party Service Providers: Members that outsource regulatory functions must adopt and implement a written supervisory framework over outsourced functions to mitigate outsourcing-related risks pursuant to Interpretive Notice 9079. The supervisory framework must address activities the firm will undertake with respect to initial risk assessment, onboarding due diligence, ongoing monitoring, termination and recordkeeping. Appendix E of the Self-Examination Questionnaire includes several questions to help Members understand these requirements. Firms must also maintain records demonstrating that they have addressed the items outlined in the Interpretive Notice and are following their procedures.
Cybersecurity: FCM, FDM and IB Members must adopt a written information systems security program (ISSP) pursuant to Interpretive Notice 9070 to address the risk of unauthorized access to or attack of their information technology systems and to respond appropriately should unauthorized attacks occur. Members are also required to notify NFA of certain cybersecurity incidents related to their commodity interest activities via NFA's Cyber Notice Filing System. One common deficiency in this area is failure to provide cybersecurity training to employees upon hiring and annually thereafter.
Members that fail to establish and implement an ISSP may be subject to disciplinary action.
Financial Reporting: FCM, FDM and IB Members must periodically file financial reports. Each financial report filed late will be subject to a fee of $1,000 for each business day it is late. Firms that fail to file financial reports in a timely manner may be subject to disciplinary action.
Changes in Certified Public Accountant (CPA): In the event that a FCM, FDM or IB changes the independent CPA engaged to audit the firm's financial statements, the firm must file notice with NFA via EasyFile or WinJammer pursuant to CFTC Regulation 1.16(g) no more than 15 days after the CPA's resignation or dismissal by the firm.
Extension Requests: If an FCM, FDM or IB requests an extension to file its annual certified statement, the extension must be filed with NFA via EasyFile or WinJammerTM.
Subordinated Loan Agreements (SLAs): FCMs and IBs that are also SEC registered broker-dealers are required to submit SLAs and any corresponding amendments to NFA when they are submitted to the firm's designated examining authority (i.e., FINRA), pursuant to CFTC Regulation 1.17.
Eligibility for Membership: If a Member fails to have at least one principal that is registered as an associated person, NFA shall deem that Member's failure to be a request to withdraw from NFA Membership in accordance with NFA Bylaw 301.
Recent Amendments and Reminders
The following links contain Notices to Members regarding reminders and recent amendments to NFA Rules and Interpretive Notices.
Notice I-24-12: Effective date for amendments to NFA's disciplinary process procedures
Notice I-25-04
February 12, 2025
Educational resources, common deficiencies and other important regulatory information for CPO and CTA Members
NFA is committed to providing its Members with the resources they need to meet their regulatory obligations as efficiently as possible. This Notice covers educational resources, common deficiencies and links to Notices to Members regarding recent amendments to NFA Rules and Interpretive Notices.
Members Section of NFA's Website
From the Members section of NFA's website, Members can access information detailing their regulatory obligations including the following:
Commodity Pool Operators (CPO)
Commodity Trading Advisors (CTA)
Regulatory Obligations Related to Common Deficiencies
The following section describes a number of regulatory obligations related to common deficiencies noted during NFA examinations of CPO and CTA Members.
Member Questionnaire
On an ongoing basis, each NFA Member is required to update its Member Questionnaire in the event of a material change to its operations. For example, if a Member begins doing business or begins soliciting for digital asset or micro contract products, the Member must immediately update its Member Questionnaire. Further, updates to the Member Questionnaire must be submitted by an individual that is an Associated Person and Principal of the Member. Firms should carefully review the Member Questionnaire to ensure it accurately reflects business operations, this will ensure that NFA's BASIC system displays correct information about the firm's business activities and that the firm receives all applicable notices relating to its reporting requirements in a timely manner. Members should review the Member Questionnaire templates which includes all possible and available questions in the filing.
Self-Examination Questionnaire: NFA Members must annually review their operations using NFA's Self-Examination Questionnaire. This questionnaire is designed to aid Members in recognizing potential problem areas and to alert them to procedures that need to be revised or strengthened. Common deficiencies in this area include failing to review the questionnaire on an annual basis and failing to maintain evidence that a review was conducted. NFA also encounters firms with deficient policies and procedures, indicating an inadequate review of the Self-Examination Questionnaire. Thorough questionnaire completion and review ensures firms are alerted to deficient policies and procedures that should be updated to comply with NFA Rules.
Digital Assets: Members engaging in activities related to digital assets or digital asset derivatives must comply with the customer disclosure requirements established in NFA's Interpretive Notice 9073.
Third-Party Service Providers: Members that outsource regulatory functions must adopt and implement a written supervisory framework over outsourced functions to mitigate outsourcing-related risks pursuant to Interpretive Notice 9079. The supervisory framework must address activities the firm will undertake with respect to initial risk assessment, onboarding due diligence, ongoing monitoring, termination and recordkeeping. Appendix E of the Self-Examination Questionnaire includes several questions intended to help Members understand these requirements. Firms must also maintain records demonstrating that they have addressed the items outlined in the Interpretive Notice and are following their procedures.
Cybersecurity: CPO and CTA Members must adopt a written information systems security program (ISSP) pursuant to Interpretive Notice 9070 to address the risk of unauthorized access to or attack of their information technology systems and to respond appropriately should unauthorized attacks occur. Members are also required to notify NFA of certain cybersecurity incidents related to their commodity interest activities via NFA's Cyber Notice Filing System. One common deficiency in this area is failure to provide cybersecurity training to employees upon hiring and annually thereafter.
4.7 Exemption: CPO Members who operate pools pursuant to CFTC Regulation 4.7 must file notice of claim for exemption with NFA prior to the offer or sale of participation in the exempt pool, if the claimed relief includes that provided under 4.7(b)(1). If the relief claimed is limited to that provided under 4.7(b)(2), (3) and (4), however, the notice of claim for relief must be submitted to NFA before the pool first enters into a commodity interest transaction.
CTA Members who want to avail themselves of the relief available in CFTC Regulation 4.7, with respect to qualified eligible persons, must file the notice of claim for exemption before the Member enters into an agreement to direct or guide the customer's commodity interest account.
Updates to CFTC Regulation 4.7 became effective in November 2024. CPOs of 4.7 exempt Fund of Funds may choose to prepare and distribute monthly participant statements within 45 days of month-end. CPOs and CTAs must comply with the increased portfolio requirement thresholds in CFTC Regulation 4.7(a) by March 26, 2025.
Eligibility for Membership: If a Member fails to have at least one principal that is registered as an associated person, NFA shall deem that Member's failure to be a request to withdraw from NFA membership pursuant to NFA Bylaw 301.
Pool Financial Reporting— Notification Requirements
Notice Filing Requirements: CPOs are required to file notice with NFA when a market or other event affects a commodity pool's ability to fulfill its participant obligations. Notice must be filed by 5:00 p.m. CT the next business day following one of the events outlined in Compliance Rule 2-50 and Interpretive Notice 9080.
Changes in Fiscal Year End: If a CPO elects a fiscal year end other than the calendar year end for a pool, it must give written notice of the election to all participants and file the notice with NFA via EasyFile pursuant to CFTC Regulation 4.22(g) within 90 calendar days after the pool's formation. If this notice is not given, the CPO will be deemed to have elected the calendar year end as the pool's fiscal year end. The CPO must continue to use the elected fiscal year end for the pool unless it provides written notice of any proposed change to all participants and files such notice with NFA via EasyFile at least 90 days before the change.
Changes in Certified Public Accountant (CPA): In the event that a CPO changes the independent CPA engaged to audit a pool's financial statements, the CPO must file notice with NFA via EasyFile pursuant to CFTC Regulation 1.16(g) no more than 15 days after the CPA's resignation or dismissal by the CPO.
Extension Requests: If a CPO requests an extension to file an annual pool financial statement, the extension must be filed with NFA via EasyFile prior to the due date of the filing.
Cessation of Trading: When a pool ceases trading, the CPO must promptly update the Member Questionnaire. With few exceptions, a CPO must also distribute to participants a final Annual Report and file the Annual Report with NFA. This Annual Report is due within 90 days after the pool ceases trading, absent an extension.
Calculation of Financial Ratios
CPO and CTA Members must compute financial ratios using the accrual method of accounting and in accordance with U.S. generally accepted accounting principles or another internationally recognized accounting standard as outlined in Interpretive Notice 9071. Members should consult Notice I-18-20 for additional guidance on calculating these ratios.
Financial Reporting: With few exceptions, each CPO Member must distribute an Annual Report, certified by an independent public accountant, to pool participants within 90 days of the pool's fiscal year end or the permanent cessation of trading, whichever is earlier. Each CPO must also report to NFA on a quarterly basis specific information about the firm and the pools it operates. These pool quarterly reports (PQRs) are due within 60 days of each calendar quarter end. Each PQR filed after its due date will be subject to a late filing fee of $200 for each business day it is late.
CTA Members that direct trading of commodity interests are required to file a quarterly CTA Form PR report within 45 days of the quarter end. Each Form PR report filed after its due date will be subject to a late filing fee of $200 for each business day it is late. CTAs that commence trading client accounts during a quarter must update the Member Questionnaire immediately to receive timely reporting notifications.
As a reminder, NFA views late filings as a serious rule violation, and we have taken disciplinary action against Member firms in the past for filing reports after the due date.
Pool Relationships: A CPO Member who operates an umbrella-series structure (i.e., a single legal entity that has several distinct sub-funds which, in effect, are traded as individual funds) needs to list the umbrella entity with NFA through the Member Questionnaire and mark it as such. CPOs may also identify the series funds that are tied to that umbrella through the questionnaire. Exemptions must be claimed at the umbrella level and must apply to the structure as a whole.
CPOs should take special care when establishing relationships in the Member Questionnaire between master funds and feeder funds, umbrella funds and series, registered investment companies (RIC) and controlled foreign corporations (CFC), and parent pools and trading subsidiaries. See the Member Questionnaire User Guide for assistance.
Pool Account Statements: With few exceptions, CPO Members must distribute monthly or quarterly account statements to pool participants within 30 days of month or quarter-end. See CPO Reporting Requirements for details.
Recent Amendments and Reminders
The following links contain Notices to Members regarding reminders and recent amendments to NFA Rules and Interpretive Notices.
Notice I-24-10: Effective date for NFA rule modifying Member Questionnaire requirements and new prominent inactive status banner in NFA's BASIC system
Notice I-25-06
February 12, 2025
Educational resources, common deficiencies and other important regulatory information for SD Members
NFA is committed to providing its Members with the resources they need to meet their regulatory obligations as efficiently as possible. This Notice covers educational resources, common deficiencies and links to Notices to Members regarding recent amendments to NFA Rules and Interpretive Notices.
Members Section of NFA's Website
From the Members section of NFA's website, swap dealer (SD) Members can access information detailing their regulatory obligations including the following:
Regulatory Obligations and Common Deficiencies
The following section describes several regulatory obligations including several related to common deficiencies noted during NFA examinations.
Member Questionnaire: NFA recently updated its annual questionnaire requirements. Specifically, NFA Compliance Rule 2-52 will require NFA Members to submit the Member Questionnaire at least annually and to promptly update the Member Questionnaire whenever there are material changes to their business operations that render information previously provided inaccurate or incomplete. The Member Questionnaire's information serves as a continuous source of data for NFA's risk monitoring systems and is the first and the central resource for staff when reviewing or performing our Member oversight responsibilities.
Required Records: SD Members are required to make and keep records of all its swaps activity, including daily trading records for all swaps executed, as well as other transaction, position and business records, pursuant to CFTC Regulation 23.201 and CFTC Regulation 23.202. SD Members should ensure required records are both complete and accurate. Additionally, SD Members should consider taking preventative measures against the use of unauthorized or unrecorded channels for pre-execution trade communications.
Marketing Materials: Compliance Rule 2-9(d) places a continuing responsibility on each SD Member to diligently supervise its swap activities including written policies and procedures (supervisory program) governing the use of marketing materials if they provide marketing materials to counterparties and potential counterparties. Interpretive Notice 9077 defines Marketing materials to include standardized documents in the form of pitch books, reports, letters, circulars, memoranda, presentations, publications, or brochures or other similar standardized documents used for the purpose of soliciting a counterparty to enter into swap transaction(s) with the SD. The Notice further requires SD Members to implement a supervisory program that is designed to reasonably ensure that marketing materials comply with all applicable NFA and CFTC requirements. Common deficiencies in this area include:
Market Practice: SD Members are required to have a supervisory program to diligently supervise all activities relating to their business pursuant to CFTC Regulation 23.602 and must implement policies and procedures designed to prevent fraud, manipulation and other abusive practices prohibited by CFTC Regulations 23.402 and 23.410. Additionally, SD Members are required to communicate with counterparties in a fair and balanced manner as detailed in CFTC Regulation 23.433. Common deficiencies in this area include:
Swap Data Reporting: SD Members must report swap transaction data to swap data repositories pursuant to CFTC Regulation 23.204 and CFTC Regulation 23.205. To ensure the accuracy and completeness of reporting, once every 30 calendar days, SD Members must reconcile all open swap positions in its internal records to that maintained by the relevant swap data repository. Errors should be corrected within seven business days after discovery. If an error is not timely corrected, the SD Member must notify the CFTC Division of Market Oversight. Common deficiencies in this area include:
Calculation of Initial Margin Using Risk-based Models: SD Members using NFA-approved risk-based models to calculate initial margin (IM) must conform to the model requirements pursuant to CFTC Regulation 23.154, and NFA requirements detailed in the IM Model Approval Letter and the IM Model Oversight program. As part of these requirements, each SD must monitor its model performance by employing, at a minimum, all of the tests required by CFTC Regulation 23.154 and NFA. Test results must be assessed with clearly established and justified thresholds for acceptable model performance and remediation procedures for each type of testing. SDs must have controls in place to ensure that the information submitted to NFA on a quarterly and annual basis as part of the IM Model Oversight program is accurate, complete, and consistent across various regulatory filings. For example, firms have failed to report model performance issues in the annual questionnaires (AMMF), while observing large shortfalls submitted via the quarterly monitoring filings (QMMF).
SD Members must re-validate the IM model on a periodic basis, and at least annually. The pricing and feeder models to the IM model must be subject to established model governance policies and procedures and be re-validated on a periodic basis. SD Members must adopt processes and procedures enabling them to implement each new version of the IM model in production on a semi-annual or ad-hoc basis. Each new version of the IM model must be opined on by the internal MRM function prior to its release into production. MRM's review should, at a minimum, be commensurate to the scope of the IM model changes.
Finally, SD Members must notify the CFTC and NFA of certain events related to an NFA-approved IM model. Common deficiencies in this area include:
Capital Requirements: SD Members subject to CFTC minimum capital requirements in CFTC Regulation 23.101(a)(1) must maintain regulatory capital as defined under the bank holding company regulations in 12 CFR Part 217 as if the SD itself were a bank holding company or as defined in SEC Regulation 240.18a-1 as if the SD were a security-based SD registered with the SEC. Certain SD Members that are predominately engaged in non-financial activities may instead choose to maintain tangible net worth in an amount equal to or in excess of minimum capital requirements as set forth in CFTC Regulation 23.101(a)(2). Regulatory capital, tangible net worth and minimum capital requirements are determined at the legal entity level.
Additionally, when NFA-approved internal models are used to determine regulatory capital or minimum capital requirements, the SD must conform to NFA requirements detailed in the Capital Model Approval Letters and internal model oversight processes. As part of these requirements, each SD must conduct periodic independent model validation, ongoing performance monitoring and audit of the SD's own use of the internal models at the legal entity level. SD Members using other models in its framework to comply with minimum capital requirements that are not required to be approved by NFA (e.g. internal models to determine the risk margin amount), should include these models in the SD's independent model validation, ongoing performance monitoring and audit processes.
Ongoing monitoring of the model performance must include, at a minimum, all the tests required by CFTC Regulation and NFA. Test results must be assessed with clearly established and justified thresholds for acceptable model performance and remediation procedures for each type of testing. Each SD's MRM team must review, assess, and opine on the ongoing monitoring testing results and reports before submitting required quarterly model performance reports to NFA, as applicable. Submissions must be consistent across various regulatory filings. For example, firms have failed to report the same number of backtesting exceptions in reports submitted in accordance with CFTC Regulation 23.105(k) and other internal monitoring reports required by NFA for the same time period.
Common deficiencies in this area related to capital models include:
Risk Management Programs: SD Members subject to requirements in CFTC Regulation 23.600 are required to establish and maintain a risk management unit (RMU) with sufficient authority, qualified personnel, operational, and other resources to carry out the Risk Management Program (RMP). The RMU is required to report directly to senior management and shall be independent from the business trading unit (BTU).
RMPs shall also be reviewed and tested on at least an annual basis. The annual reviews shall include an analysis of adherence to, and the effectiveness of, the risk management policies and procedures, and any recommendations for modifications to the RMP. While the scope of each review is at the discretion of the firm, the firm must have a reasonable basis to conclude its reviews are effective and adequately cover all elements of its RMP over time.
Risk Data Filings: Notice I-17-10 established monthly risk data reporting requirements for all NFA SD Members pursuant to NFA Financial Requirement Section 17. This is a reminder that NFA expects each SD to implement controls to ensure the completeness and accuracy of each risk metric submitted to NFA as part of its monthly risk data reporting requirement. Appropriate controls to consider include, but are not limited to, validation activities, back testing, reconciliations, price verification testing and other ongoing monitoring activities.
Swap Valuation Disputes: NFA Interpretive Notice 9072 to NFA Compliance Rule 2-49 requires, among other things, SD Members to report to NFA certain swap valuation disputes. This is a reminder that all SDs, must submit to NFA the required filings for all in-scope disputes as set forth in the Interpretive Notice.
This reporting requirement applies to all in-scope disputes of all SD Members, regardless of any CFTC determination regarding the cross-border application of CFTC Regulation 23.502(c).
Recent Notices to Members
Notice I-24-22: SD holiday filing requirements
Notice I-25-07
February 27, 2025
NFA's Board of Directors re-elects Gerald F. Corcoran to serve as Chair
At its February meeting, NFA's Board of Directors re-elected Gerald F. Corcoran, Chairman and Chief Executive Officer of R.J. O'Brien & Associates LLC, to serve a one-year term as Chair.
Public Directors
Additionally at its February meeting, the Board elected the following individuals to serve as Public Directors for two-year terms:
Executive Committee
The Board also appointed the following individuals to serve one-year terms on NFA's Executive Committee:
NFA's Permanent Special Advisor Leo Melamed and NFA's President also serve as non-voting members on the Executive Committee.
During its meeting, the Board, pursuant to Article VII, Section 3, elected the following nominees to the Board and Nominating Committee:
Board of Directors
FCM Category:
IB Category:
CPO/CTA Category:
SD/MSP/RFED Category:
2025 NFA Member Category Nominating Committee
FCM Category:
IB Category:
CPO/CTA Category:
SD/MSP/RFED Category:
The terms of NFA's Board of Directors and Member Category Nominating Committee began on February 20, 2025. NFA Board Directors serve two-year terms.
Member Category Nominating Committee members serve three-year terms.
A complete list of NFA's Board of Directors, Executive Committee, and Member Category Nominating Committee can be found on NFA's website.
NFA News Releases
February 5, 2025
NFA orders Jersey City, NJ futures commission merchant Futu Futures Inc. to pay a $100,000 fine
February 5, 2025—NFA has ordered Futu Futures Inc. (Futu) to pay a $100,000 fine. Futu is an NFA Member futures commission merchant located in Jersey City, New Jersey.
The Decision, issued by NFA's Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by Futu, in which the firm neither admitted nor denied the allegations of the Complaint. The BCC found that Futu failed to file various required financial reports and notifications timely with NFA, in violation of NFA Financial Requirements Sections 1(d) and 1(e), and failed to supervise, in violation of NFA Compliance Rule 2-9(a).
The BCC further ordered Futu to cease and desist from violating NFA Financial Requirements Sections 1(d) and 1(e) and NFA Compliance Rule 2-9(a).
The complete text of the Complaint and Decision can be viewed on NFA's website.
FinCEN News Releases
FinCEN Announces $37,000,000 Civil Money Penalty Against Brink’s Global Services USA, Inc. for Violations of the Bank Secrecy Act
February 06, 2025
The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) assessed a $37,000,000 civil money penalty against Brink’s Global Services USA, Inc. (Brink’s) for willful violations of the Bank Secrecy Act (BSA), the primary U.S. anti-money laundering (AML) law that safeguards the financial system from illicit use, and its implementing regulations. As a result of Brink’s failures, hundreds of millions of dollars in bulk currency shipments were transmitted across the Southwest Border on behalf of high-risk entities—including a Mexican currency exchanger that later pleaded guilty to violating the BSA. This is FinCEN’s first enforcement action against an armored car company.
“For years, Brink’s moved large sums domestically and across the Southwest Border without required AML controls, exposing the U.S. financial system to a heightened risk of money laundering, including from narcotics trafficking and other illicit activity,” said FinCEN’s Director Andrea Gacki. “This enforcement action is an important reminder that FinCEN will take action against those who fail to do their part to safeguard our nation’s financial system.”
As set forth in its resolution with FinCEN, Brink’s willfully violated the BSA, including failing to: (i) register with FinCEN as a money services business; (ii) develop, implement, and maintain an effective AML program; and (iii) file suspicious activity reports. In addition to the civil money penalty, Brink’s will also be subject to an AML program review.
FinCEN appreciates the close collaboration with its partners from the U.S. Attorney’s Office for the Southern District of California on this matter.
FinCEN’s Enforcement and Compliance Division is responsible for investigating serious violations of the BSA. For additional information regarding the facts and circumstances associated with this enforcement action, including the specific BSA violations and their underlying causes, please see the Consent Order between FinCEN and Brink’s.
FinCEN Reminds Financial Institutions to Remain Vigilant Regarding Potential Relationship Investment Scams
February 26, 2025
In support of the multiagency #DatingOrDefrauding Campaign, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is reminding financial institutions to remain vigilant regarding suspicious activity that may be indicative of relationship investment scams.
The Commodity Futures Trading Commission launched the #DatingOrDefrauding national awareness effort to alert the public to relationship investment scams targeting Americans through wrong-numbered texts, dating apps, and social media. Losses from romance and confidence scams reported to the Federal Bureau of Investigation exceeded $650 million in 2023.
FinCEN has previously published several resources to help stakeholders identify and report illicit financial activity that may be indicative of relationship investment scams and other types of romance and confidence scams:
FinCEN reminds financial institutions to use the specific Suspicious Activity Report (SAR) filing instructions and key terms noted in its alerts and advisory products. SAR filings, along with effective BSA compliance, are crucial to helping law enforcement detect, investigate, and prosecute cases involving relationship investment scams.
Financial Action Task Force Identifies Jurisdictions with Anti-Money Laundering, Combating the Financing of Terrorism, and Counter-Proliferation Finance Deficiencies
February 26, 2025
WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) is informing U.S. financial institutions that the Financial Action Task Force (FATF), an intergovernmental body that establishes international standards for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF), updated its lists of jurisdictions with strategic AML/CFT/CPF deficiencies at the conclusion of its plenary meeting this month. U.S. financial institutions should consider the FATF’s stance toward these jurisdictions when reviewing their obligations and risk-based policies, procedures, and practices.
On February 21, 2025, the FATF added Laos and Nepal to its list of Jurisdictions Under Increased Monitoring and removed the Philippines from that list.
The FATF’s list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with Iran, the Democratic People’s Republic of Korea (DPRK), and Burma subject to calls for action. Specifically, the FATF continues to call on jurisdictions to apply countermeasures on Iran and DPRK. Burma remains subject to the application of enhanced due diligence, but not countermeasures.
As part of the FATF’s listing and monitoring process to ensure compliance with its international standards, the FATF issued two statements: (1) Jurisdictions Under Increased Monitoring, which publicly identifies jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed upon timeline; and (2) High-Risk Jurisdictions Subject to a Call for Action, which publicly identifies jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes and calls on all FATF members to apply enhanced due diligence and, in the most serious cases, apply countermeasures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing risks emanating from the identified countries.
Jurisdictions Under Increased Monitoring
With respect to the FATF-identified Jurisdictions Under Increased Monitoring, covered financial institutions are reminded of their obligations to comply with the due diligence obligations for foreign financial institutions (FFIs) under 31 CFR § 1010.610(a) in addition to their general obligations under 31 U.S.C. § 5318(h) and its implementing regulations. As required under 31 CFR § 1010.610(a), covered financial institutions should ensure that their due diligence programs, which address correspondent accounts maintained for FFIs, include appropriate, specific, risk-based, and, where necessary, enhanced policies, procedures, and controls that are reasonably designed to enable the covered financial institution to detect and report, on an ongoing basis, any known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered, or managed in the United States for an FFI. Furthermore, money services businesses (MSBs) have parallel requirements with respect to foreign agents or foreign counterparties, as described in FinCEN Interpretive Release 2004-1, which clarifies that the AML program regulation requires MSBs to establish adequate and appropriate policies, procedures, and controls commensurate with the risk of money laundering and the financing of terrorism posed by their relationship with foreign agents or foreign counterparties. Additional information on these parallel requirements (covering both domestic and foreign agents and foreign counterparts) may be found in FinCEN’s Guidance on Existing AML Program Rule Compliance Obligations for MSB Principals with Respect to Agent Monitoring. Such reasonable steps should not, however, put into question a financial institution’s ability to maintain or otherwise continue appropriate relationships with customers or other financial institutions, and should not be used as the basis to engage in wholesale or indiscriminate de-risking of any class of customers or financial institutions. Financial institutions should also refer to previous interagency guidance on providing services to foreign embassies, consulates, and missions.
The United Nations (UN) continues to adopt several resolutions implementing economic and financial sanctions. Member States are bound by the provisions of these UN Security Council Resolutions (UNSCRs), and certain provisions of these resolutions are especially relevant to financial institutions. Financial institutions should be familiar with the requirements and prohibitions contained in relevant UNSCRs. In addition to UN sanctions, the U.S. Government maintains several sanctions programs. For a description of current Office of Foreign Assets Control (OFAC) sanctions programs, please consult OFAC’s Sanctions Programs and Country Information.
High-Risk Jurisdictions Subject to a Call for Action
With respect to the FATF-identified High-Risk Jurisdictions Subject to a Call for Action, Burma remains in this category, and the FATF urges jurisdictions to apply enhanced due diligence proportionate to the risks. As a general matter, FinCEN advises U.S. financial institutions to apply enhanced due diligence when maintaining correspondent accounts for foreign banks operating under a banking license issued by a country designated as noncooperative with international AML principles or procedures by an intergovernmental group or organization of which the United States is a member, and with which designation the U.S. representative to the group or organization concurs. U.S. financial institutions should continue to consult existing FinCEN and OFAC guidance on engaging in financial transactions with Burma.
With respect to the FATF-identified High-Risk Jurisdictions Subject to a Call for Action—specifically, countermeasures in the case of DPRK and Iran—U.S. financial institutions must comply with the extensive U.S. restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, for North Korean or Iranian financial institutions. Existing U.S. sanctions and FinCEN regulations prohibit any such correspondent account relationships.
Because Iran’s behavior threatens the national interest of the United States, the President issued National Security Presidential Memorandum (NSPM)-2 on February 4, 2025, finding that it is in the national interest to impose maximum pressure on the Iranian regime to end its nuclear threat, curtail its ballistic missile program, and stop its support for terrorist groups. The Government of Iran and Iranian financial institutions remain persons whose property and interests in property are blocked under Executive Order 13599 and section 560.211 of the Iranian Transactions and Sanctions Regulations (ITSR), 31 CFR Part 560. U.S. financial institutions and other U.S. persons continue to be broadly prohibited under the ITSR from engaging in transactions or dealings with Iran, the Government of Iran, and Iranian financial institutions, including opening or maintaining correspondent accounts for Iranian financial institutions. These sanctions impose obligations on U.S. persons that go beyond the relevant FATF recommendations. In addition to OFAC-administered sanctions, on October 25, 2019, FinCEN found Iran to be a Jurisdiction of Primary Money Laundering Concern and issued a final rule, pursuant to Section 311 of the USA PATRIOT Act, imposing the fifth special measure available under Section 311. This rule prohibits U.S. financial institutions from opening or maintaining correspondent accounts for, or on behalf of, an Iranian financial institution, and the use of FFIs’ correspondent accounts at covered United States financial institutions to process transactions involving Iranian financial institutions (31 CFR § 1010.661).
For jurisdictions removed from the FATF listing and monitoring process, U.S. financial institutions should take the FATF’s decisions and the reasons behind the delisting into consideration when assessing risk, consistent with financial institutions’ obligations under 31 CFR § 1010.610(a) and 31 CFR § 1010.210.
If a financial institution knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activity or that a customer has otherwise engaged in activities indicative of money laundering, terrorist financing, or other violation of federal law or regulation, the financial institution must file a Suspicious Activity Report.
FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines
February 27, 2025
WASHINGTON––Today, FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed. This announcement continues Treasury’s commitment to reducing regulatory burden on businesses, as well as prioritizing under the Corporate Transparency Act reporting of BOI for those entities that pose the most significant law enforcement and national security risks.
No later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.
FinCEN also intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities, as well to determine what, if any, modifications to the deadlines referenced here should be considered.
The SEC adopted rule and form amendments referred to as EDGAR Next in September 2024 to improve the ability of filers to securely manage and maintain access to their EDGAR accounts while simplifying the procedures for them to access EDGAR. On March 24, a new EDGAR Filer Management dashboard will open where filers may enroll in EDGAR Next and where individuals or entities requiring access to file on EDGAR may submit the Form ID access application. Enrollment in EDGAR Next will remain open until Dec. 19, 2025. However, filers should enroll no later than Sept. 12, 2025, to avoid interruption in the ability to file.
More information about enrollment is available on the EDGAR Next webpage.
Regulators continue to demonstrate their commitment to protecting investors by aggressively pursuing bad actors and reviewing and updating regulations to guard investors against constantly evolving threats.
The best approach to regulatory compliance is a proactive one. Staying ahead of the curve by taking note of statements and guidance released by regulators and using them as a barometer to assess the current regulatory climate can help ensure that a firm is prepared for a regulatory exam. Rather than scrambling to rectify issues or meet deadlines, a thorough, active compliance program that considers and incorporates regulatory developments is in a better position to satisfy regulators and preserve operations so they can best serve their clients.
For more information, please contact:
Mitch Avnet
p. (646) 346-2468
David Amster
p. (917) 568-6470
Sources:
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