Category: Anti-Money Laundering

Real Money Laundering

The October 2008 edition (.pdf) of The SAR Activity Review, Trends, Tips and Issues published by the Financial Crimes Enforcement Network, has a great story on page 29 about a marijuana smuggling and money laundering operation.

The organization was concerned that the cash smelled like marijuana. The benk tellers even noticed the smell of marijuana on the money. The organization ended up washing and ironing the cash to remove the smell.

Too late. The teller filed a Suspicious Activity Report on the marijuana money which then focused law enforcement on subsequent deposits. Law enforcement had previously been keeping an eye on individuals in the organization.  Over the course of the investigation, they tracked more than 1,000 kilograms of marijuana that the organization distributed into the local market.

Dirty money lead to 30 jail sentence for the leader of the organization.

FinCEN Proposes Regulatory Simplification

In a news release, the Financial Crimes Enforcement Network (FinCEN) announced the publication of a proposal to simplify its rules and regulations by centralizing them in its own new chapter of the Code of Federal Regulations.

The current organizational structure of FinCEN regulations developed over many years, during which Congress expanded FinCEN’s authority . As a result, the regulations are somewhat difficult to navigate. FinCEN’s regulations are currently included in the CFR as Part 103 in Chapter I under “Title 31, Money and Finance: Treasury.” FinCEN is proposing to reorganize and renumber its regulations into a new tenth chapter of Title 31 which would appear as “Title 31 Chapter X – Financial Crimes Enforcement Network.”

The proposal includes two structural changes to the organization of the BSA regulations. FinCEN regulations would be reorganized into a “General Provisions” part and then separate parts for each type of financial institution that has a BSA obligation. Therefore, under this simplified proposal, a compliance official for a Money Services Business, for example, would need only to look under “General Provisions” and then under “Rules for Money Services Businesses” to find pertinent FinCEN regulations. Additionally, FinCEN is proposing a numbering logic to its regulations. By having a uniform numbering system, specific FinCEN regulations will be easier to identify. For example, regulatory requirements for reports of suspicious transactions are proposed to be reorganized as 1010.320. The citation .320 will be universal in the part for each type of financial institution as well. The requirement for reports of suspicious transactions for banks will be 1020.320, for casinos and card clubs will be 1021.320, brokers or dealers in securities 1023.320, etc.

The Notice of Proposed Rulemaking is on the FinCEN website.

James H. Fries, Jr. on The Objectives and Conduct of Bank Secrecy Act Enforcement

James H. Fries, Jr., the Director of Financial Crimes Enforcement Network at the U.S. Department of Treasury spoke about The Objectives and Conduct of Bank Secrecy Act Enforcement at the ABA/ABA Money Laundering Enforcement Conference in Washington D.C. on October 20, 2008.

“An essential principle of FinCEN’s enforcement program is to uphold the public policy choice made by the Congress when it enacted the BSA in 1970, and expanded it with the passage of Annunzio-Wylie Anti-Money Laundering Act of 1992, The Money Laundering Suppression Act of 1994, and the USA PATRIOT Act of 2001.”

The Specially Designated Nationals List (SDN)

The Office of Foreign Assets Control in the Treasury Department keeps the Specially Designated Nationals List (SDN).  The Specially Designated Nationals List is a publication of OFAC which lists individuals and organizations with whom United States citizens and permanent residents are prohibited from doing business.

A Money Services Business Guide to Money Laundering Prevention

The Financial Crimes Enforcement Network published the Money Services Business Guide to Money Laundering Prevention (pdf).

The manual starts with the definition of a “Money Service Business.”

Your business may be an MSB (Money Services Business) if…
The business offers one or more of the following services:
■ money orders
■ traveler’s checks
■ check cashing
■ currency dealing or exchange
■ stored value
-AND

The business:
■ Conducts more than $1,000 in money services business activity with the same person (in one
type of activity) on the same day.
-OR

The business:
■ Provides money transfer services in any amount.