The Commodity Futures Trading Commission fined CHS Hedging of Inver Grove Heights, Minnesota, $6.5 million for anti-money laundering, risk management, recordkeeping, and supervision violations.
The company also has to undertake certain remedial measures relating to the violations. CHS reportedly accepted millions of dollars in margin payments from a rancher in Washington without adequately investigating the customer’s source of funds or reporting suspicious activity. The scheme ran from 2017 through 2020. The Washington rancher involved in the case pled guilty to criminal fraud charges and was sentenced to 11 years in prison.
A CFTC report says the violations are primarily the result of failing to implement an adequate anti-money laundering program, particularly as it applied to the futures and options trading account controlled by the Washington rancher.
“The Commodity Exchange Act requires companies like CHS Hedging to have and actually implement adequate money laundering and risk management procedures,” says Acting Enforcement Director Gretchen Lowe.