Alert June 25, 2013

CFTC Provides No-Action Relief from Fingerprinting Requirement for Certain Non-U.S. Associated Persons

The CFTC’s Division of Swap Dealer and Intermediary Oversight (the “Division”) issued a no-action letter providing relief from the general requirement that each natural person that is associated with a registered entity (a “sponsoring registrant”) submit fingerprints that are used to conduct a background fitness check for that associated person.  Specifically, the relief applies with respect to those associated persons who have not resided in the United States since reaching 18 years of age (“Non-U.S. Associated Persons”).  The relief letter notes that the National Futures Association (“NFA”), which receives the fingerprint cards, submits them only to the FBI.  The letter also acknowledges that the fingerprint requirement may violate the privacy laws of certain non-U.S. jurisdictions.

The relief provides that a sponsoring registrant may submit, for non-U.S. Associated Persons, either (i) a fingerprint card or (ii) a certification, signed by a person duly authorized to bind the sponsoring registrant, certifying that (1) a reasonable criminal history background check using a reputable commercial service was conducted, (2) such criminal history background check did not reveal any matters that constitute a disqualification under Sections 8a(2) or 8a(3) of the Commodity Exchange Act, other than those disclosed; and (3) such sponsoring registrant shall maintain records documenting that such criminal history background check was performed and the results thereof.

Sponsoring registrants that wish to avail themselves of the relief must submit a Form 8-R for each Non-U.S. Associated Person along with the certification, and notify the NFA within 30 days after the filing of the Form 8-R that it has not submitted a fingerprint card.  The no-action letter notes that the Division will continue to explore alternatives to the fingerprint requirement in the context of Non-U.S. Associated Persons, and may revisit the guidance set forth in the letter at a future date, but without prejudice to those who have already relied on the letter.

The letter is similar to, and based on, similar relief provided in a previous no-action letter with respect to the submission of fingerprints for principals of CFTC registrants that have not resided in the United States since reaching 18 years of age (discussed in the December 18, 2012 Financial Services Alert).