CFTC No-Action Letter: Temporary Fingerprint Card Relief for Principals and Associated Persons

April 30, 2020 by ACA Compliance Group


Due to the ongoing COVID-19 pandemic, the National Futures Association (“NFA”) has suspended its applicant fingerprinting service for its registrants and their principals and associated persons (“APs”). The social distancing requirements have made it difficult to comply with the requirements set forth in CFTC Regulation 3.10 and 3.12.

Background

CFTC Regulation 3.10(a)(2) requires each applicant from a Commidity Futures Trading Commission ("CFTC") registered entity to provide a Form 8-R for each natural person listed as a principal, along with fingerprints on a fingerprint card of the natural person to the NFA. Further CFTC Regulation 3.12(c)(3) requires each applicant from a CFTC registered entity to provide a Form 8-R for each natural person listed as an AP, along with fingerprints on a fingerprint card of the natural person to the NFA. These fingerprint cards are submitted to the Federal Bureau of Investigation to determine if the individual has a criminal background. The individual’s principal listing or AP registration is not granted until the fingerprint card is submitted and processed.

CFTC No-Action Letter

The CFTC released a No-Action letter on April 24, 2020 that will be in effect for a period of ninety days from the date of the letter, or earlier if the NFA announces that they have resumed fingerprint processing. The Division of Swap Dealer and Intermediary Oversight (“DSIO”) of the CFTC, will not recommend any enforcement action against a registrant listing a principal or against an AP registration, based on the failure to submit with the Form 8-R a fingerprint card, as long as the following conditions are met:

  1. The registrant or applicant for registration listing such principal, or sponsoring such applicant for AP registration, conducts a criminal history background check of such principal or applicant for AP registration;
  2. The criminal history background check would reveal all matters listed under Sections 8a(2)(D) or 8a(3)(D), (E), or (H) of the Act, and it does not reveal any matters that constitute a disqualification under Sections 8a(2) or 8a(3) of the Act, other than those disclosed to NFA;
  3. A person with authority to bind the registrant or applicant for registration listing such principal, or sponsoring such applicant for AP registration, signs and submits a certification that the background check was completed and that it did not disclose any matters that constitute a disqualification under Sections 8a(2) or 8a(3) of the Act;
  4. The registrant or applicant for registration listing of such principal, or sponsoring such applicant for AP registration, maintains records documenting the completion and the results of the criminal history background check in accordance with CFTC Regulation 1.31.

Further, Principals and APs relying upon this relief must submit their fingerprints to the NFA with thirty days of the NFA publicly announcing that it is resuming fingerprint processing operations.

How ACA Can Help

ACA provides CFTC registration and NFA membership support to fund managers, trading advisors, and brokerage firms across the globe. Our team includes former NFA examiners who can guide you through the registration process and assist with the development and implementation of your commodity interest-related compliance program.

For More Information

If you have any questions or would like to discuss this relief further, please contact your ACA Consultant or contact us below.

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