NFA reminded members of the April 1, 2019 effective date for an Interpretive Notice relating to CPO internal control systems. The Interpretive Notice mandates that CPOs implement an internal control framework designed to protect customer funds and ensure the accuracy of books and records.
As previously covered, the Interpretive Notice requires that CPOs have written internal control policies that:
- comply with applicable NFA and CFTC requirements;
- explain the firms' internal controls;
- subject all personnel, including senior management, to internal control procedures;
- include escalation procedures for reporting individuals seeking to circumvent internal control procedures;
- include procedures describing the circumstances in which matters should be reported to regulators;
- include procedures designed to prevent individuals from concealing errors or fraud; and
- include a risk assessment tool to identify CPOs' most significant risks, with corresponding controls that address those risks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.