# FinCEN Guidance FIN-2006-G011: Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to Certain Introduced Accounts and Give-Up Arrangements in the Futures Industries > Federal · Agency guidance · In force URL: https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G011 ## Section - **Citation:** FinCEN Guidance FIN-2006-G011 - **Heading:** Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to Certain Introduced Accounts and Give-Up Arrangements in the Futures Industries - **Jurisdiction:** Federal - **Kind:** Agency guidance - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** FinCEN Guidance (alerts, advisories, notices, bulletins, fact sheets) / Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to Certain Introduced Accounts and Give-Up Arrangements in the Futures Industries ## Text The Financial Crimes Enforcement Network is issuing this guidance to clarify the obligations of futures commission merchants subject to the final due diligence rules implementing section 312 of the USA PATRIOT Act (the “section 312 rules”). 1 Specifically, this guidance addresses (1) how accounts introduced by introducing brokers in commodities to futures commission merchants should be treated for the purposes of complying with the due diligence rule for correspondent accounts for foreign financial institutions 2 (the “correspondent account rule”) and the due diligence rule for private banking accounts 3 (the “private banking rule”) and (2) how the correspondent account rule applies to futures commission merchants operating in give-up arrangements. 1. Application of the Section 312 Rules to Certain Introduced Accounts An introducing broker in commodities (“introducing broker”) solicits or accepts orders from the public for the purchase or sale of commodity futures contracts. 4 However, an introducing broker may not accept money, securities, or other property for the purpose of margining, guaranteeing, or securing solicited or accepted trades or contracts. 5 To conduct its business, an introducing broker will enter into an agreement with a futures commission merchant, 6 under which the introducing broker will introduce customers to the futures commission merchant. 7 The introduced customer will establish an account directly with the futures commission merchant, in which the futures commission merchant will clear and carry the introduced customer’s commodity futures trades until they are offset or settled. We have been asked to clarify the obligations of the futures commission merchant under the section 312 rules. stomers to the futures commission merchant. 7 The introduced customer will establish an account directly with the futures commission merchant, in which the futures commission merchant will clear and carry the introduced customer’s commodity futures trades until they are offset or settled. We have been asked to clarify the obligations of the futures commission merchant under the section 312 rules. A. The Correspondent Account Rule Typically, an introducing broker – and not a futures commission merchant – will solicit orders from an introduced account. 8 However, a futures commission merchant will execute an account agreement directly with an introduced foreign financial institution so that it can accept money, securities, or other property to margin, guarantee, or secure trades or contracts cleared and carried for the foreign financial institution. The execution of the account agreement by a futures commission merchant establishes a “formal relationship” with the introduced foreign financial institution, subjecting the futures commission merchant to compliance with the due diligence provisions of the correspondent account rule. 9 An introducing broker may not accept money, securities, or other property for the purpose of margining, guaranteeing, or securing solicited or accepted trades or contracts, 10 and we do not view the solicitation or acceptance of orders for the purchase or sale of commodity futures contracts alone as constituting the establishment, maintenance, administration, or management of a correspondent account for a foreign financial institution that would subject an introducing broker to compliance with the due diligence provisions of the correspondent account rule contracts, 10 and we do not view the solicitation or acceptance of orders for the purchase or sale of commodity futures contracts alone as constituting the establishment, maintenance, administration, or management of a correspondent account for a foreign financial institution that would subject an introducing broker to compliance with the due diligence provisions of the correspondent account rule. 11 However, an introducing broker may administer or manage a correspondent account for a foreign financial institution by offering and performing services for the foreign financial institution beyond the solicitation or acceptance of orders, which would subject the introducing broker to the due diligence provisions of the correspondent account rule. We caution that this clarification should not be interpreted as limiting the anti-money laundering obligations of an introducing broker under our rules. An introducing broker’s anti-money laundering program should contain risk-based policies, procedures, and controls for assessing the money laundering risk posed by customers, including foreign financial institutions; for monitoring and mitigating that risk; and for detecting and reporting suspicious activity attempted or conducted through the introducing broker. 12 B. The Private Banking Rule In the preamble to the section 312 rules, we described how introducing and clearing firms in the securities and futures industries may apportion due diligence functions for the purposes of complying with the private banking rule. 13 We have been asked to clarify whether we meant to require futures commission merchants to perform due diligence on introduced private banking accounts pursuant to the private banking rule. 14 We did not intend such a requirement in all instances. When a futures commission merchant imposes minimum aggregate account requirements on an introduced account for a non-U.S h the private banking rule. 13 We have been asked to clarify whether we meant to require futures commission merchants to perform due diligence on introduced private banking accounts pursuant to the private banking rule. 14 We did not intend such a requirement in all instances. When a futures commission merchant imposes minimum aggregate account requirements on an introduced account for a non-U.S. person and additionally assigns an officer, employee, or agent to act as a liaison between the futures commission merchant and the beneficial owner or owners of the introduced account, 15 then the introduced account will be considered a private banking account of the futures commission merchant, subjecting the futures commission merchant to compliance with the due diligence provisions of the private banking rule. 16 The imposition of minimum aggregate account requirements on an introduced account by a guaranteed introducing broker, 17 and the assignment of a liaison to the introduced account, will subject both the guaranteed introducing broker and the futures commission merchant to the due diligence provisions of the private banking rule. A similar conclusion may be reached with respect to independent introducing brokers, depending on the nature of the relationship between the introducing broker and the futures commission merchant. 2. Application of the Correspondent Account Rule to Futures Commission Merchants in Give-up Arrangements A give-up arrangement occurs when a futures market participant uses one entity, a futures commission merchant, as its “carrying broker” and uses one or more other entities, frequently a futures commission merchant, as its “executing broker.” 18 An executing broker will direct any trades it executes on order of a futures market participant to the account the market participant has established with its carrying broker, pursuant to the give-up arrangement ipant uses one entity, a futures commission merchant, as its “carrying broker” and uses one or more other entities, frequently a futures commission merchant, as its “executing broker.” 18 An executing broker will direct any trades it executes on order of a futures market participant to the account the market participant has established with its carrying broker, pursuant to the give-up arrangement. We have been asked to clarify how the correspondent account rule applies to futures commission merchants acting as carrying brokers and executing brokers in give-up arrangements. Although an executing broker in a give-up arrangement will facilitate trades for a market participant, and the give-up arrangement may be formalized by a written agreement, 19 the give-up arrangement essentially serves as an order acceptance, trade routing, and compensation protocol among the executing broker, the market participant, and its carrying broker. 20 Indeed, only the carrying broker accepts money, securities, or other property from the market participant for the purpose of margining, guaranteeing, or securing its trades, and only the carrying broker executes account-opening documents with the market participant to clear and carry its executed trades until they are offset or settled. 21 Accordingly, a futures commission merchant operating as the carrying broker in a give-up arrangement – and not a futures commission merchant operating as an executing broker – is subject to compliance with the due diligence provisions of the correspondent account rule. 22 ount-opening documents with the market participant to clear and carry its executed trades until they are offset or settled. 21 Accordingly, a futures commission merchant operating as the carrying broker in a give-up arrangement – and not a futures commission merchant operating as an executing broker – is subject to compliance with the due diligence provisions of the correspondent account rule. 22 We caution that this interpretation should not be construed as limiting the anti-money laundering obligations of futures commission merchants under our rules. The anti-money laundering program of a futures commission merchant should contain risk-based policies, procedures, and controls for assessing the money laundering risk posed by its operations, including the executing brokerage activities of the futures commission merchant; for monitoring and mitigating that risk; and for detecting and reporting suspicious activity attempted or conducted through the futures commission merchant. 23 ## Nearby sections - [FinCEN Guidance FIN-2006-G002 Guidance to Financial Institutions on the Provision of Financial Services to Belarusian Senior Regime Elements Engaged in Illicit Activities](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G002.md) - [FinCEN Guidance FIN-2006-G003 Frequently Asked Questions Foreign Bank Recertifications under 31 C.F.R. § 103.177](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G003.md) - [FinCEN Guidance FIN-2006-G004 Frequently Asked Question regarding Customer Identification Programs for Futures Commission Merchants and Introducing Brokers (31 CFR 103.123)](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G004.md) - [FinCEN Guidance FIN-2006-G005 Frequently Asked Questions Businesses Cashing Their Own Checks](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G005.md) - [FinCEN Guidance FIN-2006-G006 Registration and De-Registration of Money Services Businesses](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G006.md) - [FinCEN Guidance FIN-2006-G007 Frequently Asked Question Customer Identification Program Responsibilities under the Agency Lending Disclosure Initiative](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G007.md) - [FinCEN Guidance FIN-2006-G008 Application of the Regulations regarding Special Due Diligence Programs for Certain Foreign Accounts to NSCC Fund/SERV Accounts](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G008.md) - [FinCEN Guidance FIN-2006-G009 Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to the Securities and Futures Industries](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G009.md) - [FinCEN Guidance FIN-2006-G010 Frequently Asked Questions Anti-Money Laundering Program and Suspicious Activity Reporting Requirements for Insurance Companies](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G010.md) - [FinCEN Guidance FIN-2006-G011 Application of the Regulations Requiring Special Due Diligence Programs for Certain Foreign Accounts to Certain Introduced Accounts and Give-Up Arrangements in the Futures Industries](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G011.md) - [FinCEN Guidance FIN-2006-G012 Frequently Asked Questions Conducting Independent Reviews of Money Services Business Anti-Money Laundering Programs](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G012.md) - [FinCEN Guidance FIN-2006-G013 Frequently Asked Questions Suspicious Activity Reporting Requirements for Mutual Funds](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G013.md) - [FinCEN Guidance FIN-2006-G014 Potential Money Laundering Risks Related to Shell Companies](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G014.md) - [FinCEN Guidance FIN-2006-G015 Frequently Asked Question Customer Identification Programs and Banks Serving as Insurance Agents](https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G015.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FINCEN_FIN2006G011. 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