NFA Alerts FCMs and IBs to Suspicious Account Openings in New Customer Onboarding

The U.S. National Futures Association (NFA) has issued an alert to Futures Commission Merchants (FCMs) and Introducing Brokers (IBs) regarding suspicious account openings, warning of risks in onboarding new customers.

According to the NFA’s June 12 notice, several recent incidents involved individuals using falsified customer identification documents and misrepresenting nonexistent entities and individuals to open trading accounts. These accounts have customers engaged in trading activity that resulted in large swings in profit or loss, followed by immediate withdrawal requests or failure to meet margin calls.

The alert follows an advisory issued by ICE Futures U.S. Market Regulation Department on May 22, urging IBs and FCMs to exercise greater caution when onboarding clients. The department identified multiple red flags associated with suspicious new accounts, including:

• use of falsified documents, such as falsified passports and account/bank statements;
• submission of false information and/or attestations;
• representation of entities and individuals that do not exist;
• trading in a manner that results in large swings in profit or losses to an account;
• immediate or prompt requests for fund withdrawals via wire transfer;
• client not communicating with the FCM/IB when asked questions;
• failures to meet margin calls;
• failures to comply with a request for testimony from the Department; and
• impersonation of an individual during an interview with the Department.

The NFA and ICE Futures U.S. encourage IBs and FCMs to strengthen due diligence measures by verifying client documentation, conducting deeper background checks, and monitoring account activities, particularly for accounts engaging in exotic trading strategies or transferring positions soon after opening.