Quickdinero Compliance Training Module 4

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Quickdinero Compliance Training Module 4

  1. 1. Module IV Legislation
  2. 2. <ul><li>The purpose of these laws is to </li></ul><ul><ul><li>combat money laundering and other financial crimes such as theft, bribery, embezzlement, tax evasion, etc. </li></ul></ul><ul><ul><li>require businesses that deal in large sums of cash help the government track suspicious currency transactions. </li></ul></ul><ul><ul><li>Hold the criminal, the financial institution, and the employee responsible for willful violation of the law. </li></ul></ul>
  3. 3. <ul><li>Congress has passed many laws, over time, to combat money laundering including the following: </li></ul><ul><ul><li>Bank Secrecy Act of 1970 (P.L. 91-508) </li></ul></ul><ul><ul><ul><li>Prevent tax evasion and provide tools to fight organized crime. </li></ul></ul></ul><ul><ul><ul><li>Verify the identity of customers and keep certain basic records of customer transactions, including cancelled checks and debits, signature cards, and statements of account. </li></ul></ul></ul><ul><ul><ul><li>Impose civil and criminal penalties for noncompliance with its reporting requirements. </li></ul></ul></ul><ul><ul><ul><li>Improve detection and investigation of criminal, tax, and regulatory violations </li></ul></ul></ul><ul><ul><ul><li>The BSA is enforced by the US Treasury Department, FinCEN </li></ul></ul></ul>
  4. 4. <ul><li>Money Laundering Control Act of 1986 (P.L. 99-570) </li></ul><ul><ul><li>made money laundering a federal crime, creating three new criminal offenses for money laundering activities by, through, or to a financial institution. This includes: </li></ul></ul><ul><ul><ul><li>Knowingly helping launder money derived from criminal activity. </li></ul></ul></ul><ul><ul><ul><li>Knowingly (including being willfully blind) engaging in a transaction of more than $10,000 that involves property or funds derived from criminal activity. </li></ul></ul></ul><ul><ul><ul><li>Structuring transactions to evade BSA reporting requirements. </li></ul></ul></ul>
  5. 5. <ul><li>Anti-Drug Abuse Act of 1988 (P.L. 100- 690)-reinforced anti-money laundering efforts in several ways </li></ul><ul><ul><li>Significantly increases in civil and criminal penalties for money laundering and other BSA violations </li></ul></ul><ul><ul><li>Requires strict identification and recording of cash purchases of certain monetary instruments </li></ul></ul><ul><ul><li>Permits the Department of the Treasury to require certain financial institutions in specific geographic or &quot;target&quot; areas to file additional BSA reports of currency transactions in amounts less than $10,000 by use of &quot;Geographic Targeting Orders.” </li></ul></ul><ul><ul><li>Directs the Department of the Treasury to negotiate bilateral international agreements covering the recording of large U.S. currency transactions and the sharing of such information. </li></ul></ul>
  6. 6. <ul><li>1988 Money Laundering Prosecution Act </li></ul><ul><ul><li>Expanded the definition of monetary institution to include car dealers and others. </li></ul></ul><ul><ul><li>Required the verification of the identity of purchasers of monetary instruments over $3,000. </li></ul></ul>
  7. 7. <ul><li>Annunzio-Wylie Anti-Money Laundering Act of 1992 (P.L. 102-550) </li></ul><ul><ul><li>strengthened penalties for financial institutions found guilty of money laundering by giving the US Treasury the power to require financial institutions to report suspicious activities </li></ul></ul>
  8. 8. <ul><li>Money Laundering Suppression Act (MLSA) of 1994 (P.L. 103-325) </li></ul><ul><ul><li>Requires each MSB to be registered by an owner or controlling person of the MSB. </li></ul></ul><ul><ul><li>Requires every MSB to maintain a list of businesses authorized to act as agents in connection with the financial services offered by the MSB. </li></ul></ul><ul><ul><li>Makes operating an unregistered MSB a federal crime. </li></ul></ul><ul><ul><li>Recommended that states adopt uniform laws applicable to MSBs. </li></ul></ul>
  9. 9. <ul><li>Money Laundering and Financial Crimes Strategy Act of 1998 (P.L. 105-310) </li></ul><ul><ul><li>Requires the President to develop a national strategy for combating money laundering and related financial crimes and to submit such strategy each February 1st to Congress. </li></ul></ul><ul><ul><li>Requires the Secretary of the Treasury to designate certain areas—by geographical area, industry, sector or institution—as being vulnerable to money laundering and related financial crimes. </li></ul></ul>
  10. 10. <ul><li>USA PATRIOT Act of 2001 (P.L. 107-56)-United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 </li></ul><ul><li>This requires </li></ul><ul><ul><li>Establishment of anti-money laundering compliance programs by all financial institutions. </li></ul></ul><ul><ul><li>Establishment of a confidential communication system between government and the financial services industry. </li></ul></ul><ul><ul><li>Implementation of customer identification procedures for new accounts. </li></ul></ul><ul><ul><li>Enhanced due diligence for correspondent and private banking accounts maintained for non-U.S. persons </li></ul></ul><ul><ul><li>Establishment of a highly secure network by FinCEN for electronic filing of BSA reports. </li></ul></ul>
  11. 11. <ul><li>Civil Penalties </li></ul><ul><ul><li>Range from the amount of the transaction up to $100,000 or $25,000 for willful violations by any ….. </li></ul></ul><ul><ul><ul><li>Partner </li></ul></ul></ul><ul><ul><ul><li>Director </li></ul></ul></ul><ul><ul><ul><li>Employee </li></ul></ul></ul><ul><ul><li>Penalties can be up to $1,000 for each record keeping violation (records must be kept for 5 years). </li></ul></ul><ul><li>These are maximum penalties for willful failure to comply. </li></ul><ul><li>Criminal Penalties </li></ul><ul><ul><li>Record keeping violations </li></ul></ul><ul><ul><ul><li>Up to $10,000 fine and / or five years imprisonment. </li></ul></ul></ul><ul><ul><li>Willful violation of the BSA </li></ul></ul><ul><ul><ul><li>Up to $500,000 and / or up to ten years imprisonment . </li></ul></ul></ul>
  12. 12. <ul><li>OFAC is the law enforcement agency that administers economic and trade sanctions against targeted countries, terrorists, international drug traffickers, and those engaged in the proliferation of weapons of mass destruction. </li></ul><ul><li>OFAC publishes: </li></ul><ul><ul><li>A list of countries that American firms are prohibited from conducting business with. </li></ul></ul><ul><ul><li>A list of persons and entities whom are prohibited from transacting any business in America through American firms, or with American citizens. </li></ul></ul><ul><li>Penalties for non-compliance have ranged from $11,000 all the way up to $1 million per transaction, and include possible criminal prosecution. </li></ul>
  13. 13. <ul><li>The US Treasury imposed sanctions against England in 1812 for the harassment of American sailors. </li></ul><ul><li>During the Civil War, sanctions were imposed on the Confederate states. </li></ul><ul><li>Nazi Germany’s assets were frozen during WWII as well as the countries they invaded. </li></ul><ul><li>Chinese and North Korean assets were blocked in 1950. </li></ul><ul><li>Cuba in 1962. </li></ul><ul><li>Drug Cartels in the 1970’s to the present. </li></ul><ul><li>Terrorists in 1990’s and post 9/11/2001. </li></ul><ul><li>Violators of human rights. </li></ul>
  14. 14. <ul><li>If the system your firm uses to check the OFAC list alerts you to a potential OFAC “hit”, </li></ul><ul><ul><li>STOP THE TRANSACTION IMMEDIATELY!! </li></ul></ul><ul><ul><li>And advise the customer that the transaction cannot be completed. </li></ul></ul><ul><ul><li>Alert your supervisor and compliance officer. </li></ul></ul><ul><ul><li>The compliance officer will further qualify the alert, check the FAQs on FinCEN’s website and if necessary, call the OFAC Hotline (800-540-6322). </li></ul></ul>

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