NFA Self-Examination Checklist 2010 | FCMs, IBs, CPOs and CTAs

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Easy Step by Step Guide for NFA Member Firms

NFA Member Firms are all required to complete a yearly self-examination checklist to ensure that the Member Firm is complying with all the NFA Rules (as well as the CFTC Regulations and other applicable laws).  The NFA has provided some resources on their website.  We believe that the resources are good, but they are not easy to use for NFA Member Firms.  Accordingly, Mallon P.C. has reworked the forms into a more easy-to-use format.  Below is a description on how you should proceed with this process along with the various checklists that each Member Firm should print off and complete.

All of the checklists below are based on, and contain the same information, as the NFA checklists which can be found here.

Overview of Process

The whole process should take anywhere from 1 to 3 hours (or more) depending on the exact structure of the NFA Member Firm.  Firm authorized personnel should complete the following steps:

  1. Print off the General Checklist
  2. Print off the Registration Specific Checklist
  3. Print off the Attestation Sheet
  4. Go through the checklists step by step and write notes and initial the appropriate areas.  If a certain area is not applicable, write N/A.
  5. Sign the Attestation Sheet
  6. File the Checklists according to the Firm’s internal compliance procedures

If there are compliance issues which arise during the course of the self-examination process, please record the issue and how the issue has been or will be addressed.  Do not try to cover up the issue – the NFA is more interested in the fact that a firm identifies and appropriately deals with compliance issues than a firm that has a perfect self-exam checklist (through a cover-up).  Do not be afraid to take ample notes in the appropiate places on the checklist – this will show the NFA examiners that the Firm is committed to thinking about the relevant compliance issues.

* Note: there are other yearly compliance procedures that a firm will need to complete in addition to the self-examination checklist.  For more information, please see the Mallon P.C. NFA Compliance Guide or contact your compliance consultant.  Please note that the compliance guide may not cover all compliance requirements.

Checklists

Each Member Firm will need to complete at least two checklists – (1) a general NFA Member Firm checklist and (2) a specific registration category checklist (i.e. FCM, IB, CPO, CPA).

General Checklist

Registration Specific Checklist

Attestation

Each Member Firm will need to complete an attestation sheet which acknowledges that the Firm has completed the annual self-examination checklists.

Appendices

Each of the checklists makes reference to certain appendices.  Below we have created links to those appendices.

Acronyms

Each of the checklists include acronyms.  We have listed them below for your convenience.

  • AML – Anti-Money Laundering
  • AP – Associated Person
  • BASIC – Background Affiliation Status Information Center
  • BSA – Bank Secrecy Act
  • CIP – Customer Identification Program
  • CRD – Central Registration Depository
  • DSRO – Designated Self-Regulatory Organization
  • FATF – Financial Action Task Force
  • FIFO – First-in, First-out
  • FinCEN – Financial Crimes Enforcement Network
  • NAV – Net Asset Value
  • NCCT – Non-Cooperative Countries and Territories
  • OFAC – Office of Foreign Assets Control
  • SAR – Suspicious Activity Report
  • SDN – Specially Designated Nationals
  • SPAN – Standard Portfolio Analysis

Rules & Regulations

Some of the checklists have references to certain CFTC Regulations and NFA Rules.  We have listed them below for your convenience.

  • CFTC Part 4 Regulations
  • CFTC Regulation 160
  • CFTC Interpretation #10
  • NFA Compliance Rule 2-7
  • NFA Compliance Rule 2-29
  • NFA Compliance Rule 2-30
  • NFA Bylaw 1301
  • Securities Exchange Act of 1933 – Sections 9(a), 9(b), 10(b)

Forms

Some of the checklists have references to forms and these are included below.

  • CFTC Form 40
  • CFTC Form 8-T
  • Form U5

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Other related NFA compliance articles include:

Bart Mallon, Esq. of Cole-Frieman & Mallon LLP runs the Hedge Fund Law Blog.  He can be reached directly at 415-868-5345