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 [www.gpo.gov]

[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, [email protected], 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]



Last Updated: January 14, 2014