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  • Federal Register, Volume 79 Issue 9 (Tuesday, January 14, 2014)[Federal Register Volume 79, Number 9 (Tuesday, January 14, 2014)]

    [Rules and Regulations]

    [Pages 2370-2371]

    From the Federal Register Online via the Government Printing Office []

    [FR Doc No: 2014-00406]




    17 CFR Part 42

    RIN 3038-AB90

    Updates to Cross-References to Bank Secrecy Act Regulations

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Final rule; technical amendments.


    SUMMARY: The Commodity Futures Trading Commission (``Commission'') is

    adopting technical amendments to the Commission's regulations that

    correct cross-references to regulations administered by the Financial

    Crimes Enforcement Network (``FinCEN''), a bureau of the U.S.

    Department of Treasury, under the Bank Secrecy Act (``BSA''). FinCEN's

    regulations have been reorganized and transferred to a new chapter in

    the Code of Federal Regulations. The amendments update the cross-

    references to FinCEN regulations and are to be made effective upon

    publication of this rulemaking.

    DATES: Effective January 14, 2014.

    FOR FURTHER INFORMATION CONTACT: Helene D. Schroeder, Special Counsel,

    (202) 418-5424,, Commodity Futures Trading

    Commission, Division of Swap Dealer and Intermediary Oversight, Three

    Lafayette Centre, 1155 21st Street NW., Washington DC 2058.


    I. Background

    The BSA \1\ authorizes the Secretary of the Treasury (the

    ``Secretary'') to issue regulations requiring financial institutions to

    keep records and file reports that the Secretary determines have a high

    degree of usefulness in criminal, tax, or regulatory investigations or

    proceedings, or in the conduct of intelligence or counterintelligence

    activities, including analysis, to protect against international

    terrorism.\2\ The authority of the Secretary to administer the BSA has

    been delegated to the Director of FinCEN.\3\


    \1\ The BSA is codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959

    and 31 U.S.C. 5311-5314; 5316-5332.

    \2\ 31 U.S.C. 5311.

    \3\ See Treasury Order 180-01 (Sept. 26, 2002).


    Section 5318(h) of the BSA requires ``financial institutions'' to

    establish anti-money laundering (``AML'') programs and specifies that

    these programs must contain certain minimum requirements.\4\ Section

    1010.100 of FinCEN's regulations defines futures commission merchants

    (``FCMs'') and introducing brokers (``IBs'') as financial

    institutions.\5\ As such, FCMs and IBs are required to establish AML

    programs under section 5318(h) of the BSA. FinCEN regulations also

    require FCMs and IBs to establish customer identification programs,\6\

    establish special due diligence programs for certain foreign

    accounts,\7\ detect and report suspicious activity on suspicious

    activity reports,\8\ and file currency transaction reports on certain

    cash transactions,\9\ among other obligations. Section 42.2 of the

    Commissions regulations implements the authority FinCEN delegated to

    the Commission to examine FCMs and IBs and ensure that they comply with

    the BSA regulations to which they are subject,\10\ and specifically

    requires every FCM and IB to comply with the applicable provisions of

    the BSA, the FinCEN regulations promulgated thereunder, the

    requirements of 31 U.S.C. 5318(l) and 31 CFR 103.123, which require

    that a customer identification program be adopted as part of the firm's

    BSA compliance program.\11\


    \4\ Section 5318(h)(1) identifies these minimum requirements as

    follows: In order to guard against money laundering through

    financial institutions, each financial institution shall establish

    anti-money laundering programs, including, at a minimum--(A) the

    development of internal policies, procedures, and controls; (B) the

    designation of a compliance officer; (C) an ongoing employee

    training program; and (D) an independent audit function to test


    \5\ 31 CFR 1010.100(t)(8) and (9).

    \6\ 31 CFR 1026.220.

    \7\ 31 CFR 1026.610 and 1026.620.

    \8\ 31 CFR 1026.320.

    \9\ 31 CFR 1026.300.

    \10\ See 31 U.S.C. 5318(a)(1) (permitting the Secretary of the

    Treasury to delegate BSA duties and powers to an appropriate

    supervising agency) and 31 CFR 1010.810(b)(9) (delegating BSA

    examination authority to the Commission).

    \11\ 17 CFR 42.2.


    II. Amending Sec. 42.2 of the Commission's Regulations

    Until March 1, 2011, FinCEN regulations implementing the BSA

    appeared at 31 CFR part 103. Section 42.2 of the Commission's

    regulations currently references these part 103 regulations. Effective

    March 1, 2011, FinCEN's regulations were re-organized, re-numbered and

    transferred to a new chapter, chapter X, within title 31. The re-

    numbered and re-organized regulations appear within parts 1000 through

    1099 of chapter X and are now generally organized by financial

    industry. Thus, part 1026 of chapter X, for example, sets forth the

    regulations applicable to FCMs and IBs. Based on the reorganization and

    transfer of

    [[Page 2371]]

    FinCEN regulations, the Commission is adopting technical amendments to

    part 42 of its regulations to replace outdated references to part 103

    with the appropriate references to chapter X.

    III. Related Matters

    A. Administrative Procedure Act

    Notice of proposed rulemaking is not required under section

    553(b)(3)(B) of the Administrative Procedure Act (``APA'') when an

    agency, for good cause, finds ``that notice and public procedure

    thereon are impracticable, unnecessary, or contrary to the public

    interest.'' \12\ The amendments described herein are technical changes

    that are required to correct inaccurate cross- references in the

    relevant regulation and will not impose any new substantive regulatory

    requirements on any person. For these reasons, the Commission finds

    that it is unnecessary to publish notice of these amendments under

    section 553(b)(3)(B) of the APA.


    \12\ 5 U.S.C. 553(b)(3)(B).


    The Commission also finds good cause to dispense with the 30-day

    delayed effective date requirement under section 553(d)(3) of the

    APA.\13\ The technical amendments update inaccurate cross references.

    Accordingly, the amendments will be effective on the date of

    publication of this action, January 14, 2014.


    \13\ 5 U.S.C. 553(d)(3).


    B. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (``RFA'') requires the Commission to

    consider whether a rule it proposes will have a significant economic

    impact on a substantial number of small entities and either provide a

    regulatory flexibility analysis respecting the significant impact or

    certify that the rule will not have such an impact.\14\ The RFA is

    applicable only to a rule for which the Commission publishes a general

    notice of proposed rulemaking pursuant to 5 U.S.C. 553(b).\15\ The

    Commission has determined that it is unnecessary to publish a general

    notice of proposed rulemaking for the amendments to part 42 of the

    Commission regulations that are being adopted by this notice, as the

    amendments are only technical in nature and do not subject any party to

    any new substantive regulatory requirements. Therefore, neither a

    regulatory flexibility analysis nor a certification is required for

    this rulemaking action.


    \14\ 5 U.S.C. 601 et seq.

    \15\ 5 U.S.C. 601(2).


    C. Paperwork Reduction Act

    An agency may not conduct or sponsor, and a person is not required

    to respond to, a collection of information unless it is approved by the

    Office of Management and Budget as required by the Paperwork Reduction

    Act.\16\ This final rulemaking will not impose any new recordkeeping or

    information collection requirements, or other collections of



    \16\ 44 U.S.C. 3501 et seq.


    D. Cost-Benefit Analysis

    Section 15(a) of the Commodity Exchange Act (``CEA'') \17\ requires

    the Commission to consider the costs and benefits of its actions before

    promulgating a regulation under the CEA. Section 15(a) specifies that

    the costs and benefits shall be considered against five broad areas of

    market and public concern: (1) Protection of market participants and

    the public; (2) efficiency, competitiveness and financial integrity of

    futures markets; (3) price discovery; (4) sound risk management

    practices; and (5) other public interest considerations. The Commission

    may give greater weight to one or more of the five enumerated

    considerations to determine, in its discretion, that a particular rule

    is necessary or appropriate to protect the public interest or to

    effectuate any of the provisions or accomplish any of the purposes of

    the CEA.


    \17\ 7 U.S.C. 19(a).


    This final rule does not impose any substantive regulatory

    obligations on any person. Rather, the Commission solely is adopting

    technical amendments to Sec. 42.2 of its regulations to ensure that

    its regulations implementing its BSA examination authority accurately

    refer to the BSA regulations administered by FinCEN. Accordingly, there

    are no quantifiable costs associated with this rulemaking. The sole

    qualitative benefit associated with this rulemaking is accuracy.

    List of Subjects in 17 CFR Part 42

    Anti-money laundering, Brokers, Reporting and recordkeeping

    requirements, Terrorist financing.

    Authority and Issuance

    For the reasons stated in the preamble, the Commodity Futures

    Trading Commission is amending part 42 of title 17 of the Code of

    Federal Regulations as set forth below:



    1. The authority citation for part 42 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 5, 6, 6b, 6d, 6f, 6g, 7, 7a, 7a-1,

    7a-2, 7b, 7b-1, 7b-2, 9, 12, 12a, 12c, 13a, 13a-1, 13c, 16 and 21;

    12 U.S.C. 1786(q), 1818, 1829b and 1951-1959; 31 U.S.C. 5311-5314

    and 5316-5332; title III, secs. 312-314, 319, 321, 326, 352, Pub. L.

    107-56, 115 Stat. 307.


    2. Section 42.2 is revised to read as follows:

    Sec. 42.2 Compliance with Bank Secrecy Act.

    Every futures commission merchant and introducing broker shall

    comply with the applicable provisions of the Bank Secrecy Act and the

    regulations promulgated by the Department of the Treasury under that

    Act at 31 CFR chapter X, and with the requirements of 31 U.S.C. 5318(l)

    and the implementing regulation jointly promulgated by the Commission

    and the Department of the Treasury at 31 CFR 1026.220, which require

    that a customer identification program be adopted as part of the firm's

    Bank Secrecy Act compliance program.

    Issued in Washington, DC, on January 8, 2014, by the Commission.

    Melissa D. Jurgens,

    Secretary of the Commission

    Appendix to Technical Amendments Updating Cross-References to Bank

    Secrecy Act Regulations

    Note: The following appendix will not appear in the Code of

    Federal Regulations.

    Appendix 1--Commission Voting Summary

    On this matter, Acting Chairman Wetjen and Commissioners Chilton

    and O'Malia voted in the affirmative.

    [FR Doc. 2014-00406 Filed 1-13-14; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: January 14, 2014