Article comes from Cash & Advances Blog

Finally, after roughly two years of discussions, FinCEN, the section of the Department of the Treasury traffic with financial crimes, in its organizational function over the Bank Secrecy Act, enacted a new law that extends its coverage outward of the borders of the United States. (31 CFR 1022.380)

On July 21st, FinCEN published in their Official Newsletter the new law called “Definitions and other regulations connected to allowance service businesses” (MSBs).

This new law is widely separated in to a few parts. The initial focuses on the clarification of MSBs, that is formed on actions formerly determined by FinCEN and concludes that this clarification should moreover request for unfamiliar businesses that perform the same actions in any case of where they are located or how frequently they conduct business.

Another situation is connected to the way to expand its authority to unfamiliar companies. For this it states that businesses that drop beneath the clarification of MSBs that do business with the United States in any way (substantial or completely) will have to accede with a few requirements:

1. Register as an MSB with FinCEN. For this purpose, and to be able to make easy this registration, the online stating module that has been used for cash contract reports together with for questionable actions is right away lengthened to these businesses to full the registration.

2. As an entire segment of induction with FinCEN, the firm should record agents as well.

3. Designate an representative who resides in the United States to offer as a meeting between FinCEN and the MSB. This person will agree to authorised notices and other papers connected to the Bank Secrecy Act. This representative should supply an residence to take these notices and keep correct records.

4. Upon induction as an MSB in the United States, the MSB automatically has the responsibility of substantiating policies and procedures that not usually accede with the mandate determined by their own nation but that moreover accede with the mandate determined for MSBs in the United States.

5. Within these special procedures is the stating of cash exchange of more than 10 thousand American dollars (US $10,000). In the same way, they should inform questionable actions as tangible by the laws of the United States.

6. Another critical reason that relates to unfamiliar MSBs is that they are theme to audits beneath Title 31 carried out by FinCEN, who has certified the Internal Revenue Service (IRS) to conduct inspections on the doing of anti-money laundering programs (AML) by the MSBs.

Other points have to do with various types of allowance businesses. One growth is that there is no more speak of banking exchange businesses, but they have eliminated the tenure “currency” to make the wake up more general. It does not add usually actions involving exchanging earthy allowance but moreover the exchange of allowance by other instruments that have a financial description that aren’t always tangible, primarily right away with all of the instruments in stores each day that have financial worth without indispensably being money.

Clarifications have at last been done about each of the types of operations probable for MSBs: Foreign banking exchange companies, examine cashing companies, and companies that situation or sell allowance orders.

FinCEN moreover mentions “stored value”, instruments of stored worth (like prepaid cards, etc) and assigns them a difficulty eccentric of other financial instruments similar to traveler’s checks and allowance orders.

They have moreover elaborated on the clarification of allowance give businesses, and stretched it to add businesses that give not usually allowance but moreover supports or any other component of worth that can replacement money.

This new law of course turns out to be really vague and, at initial glance, it generates a array of doubts about its functional application. While it is loyal that is to supervision of the United States the free-for-all against allowance laundering is important, and in many cases allowance service businesses have served as instruments to this effect, perplexing to systematize financial operations worldwide by MSBs will be complicated.

The United States is a multicultural nation and has business family with more than 150 countries of the 196 in the world. United States largest allowance give firm (WU) reports allowance transfers to more than 200 countries in the world (there are obviously a number of countries that go to other countries but they are normally seen as eccentric countries) that implies that the MSBs of 200 countries, if they have any connection with the United States (permanent or transient), will have to accede with this regulation. This is extraordinary primarily deliberation that in many countries there is not a local law for these activities.

Another critical aspect to consider is if FinCEN, who has substituted authority to the IRS to conduct reviews of these businesses, is ready to reply to all of the reviews that would advance if this law was wholly accepted. In use it is coherent that the staff that is existing to bring out the reviews of allowance service businesses outward of the United States is deficient and could frequency affirm to expand its ability outward the borders.

The range and coverage of this law in use moreover generates doubts about its real coverage. Are these companies thankful to inform FinCEN about all of their inner operations that aren’t connected to business with the United States? Are IRS officials aware with the financial enlightenment of countries that barely be present on the map? In use it is normal for us as consultants to lay down and notify to them because specific types of actions that in the United States constitutes a questionable activity, in other countries are normal practices. This implies that you should emanate a singular universal idea about questionable activities.

But let’s pierce on from the idea that every nation will accede with this law and instead consider a functional surroundings where a allowance give business in Beijing that sells some allowance to a firm in California detects a questionable wake up and presents their questionable wake up inform in Mandarin.

Does this meant that we’re right away confronting a multilingual organization? Or can you finish that other of the mandate for this law is that English is mandatory?

Not to speak of either you are ready to take and investigate questionable wake up reports, given in 2010 they received more than 700,000 questionable wake up reports and roughly half corresponded with allowance service businesses. If you recollect the inlet of this report, that is being able to discover and stop crook actions that could consecrate terrorism, allowance laundering or any other form of crime, it is unfit to think that they are obviously capable of analyzing 300,000 questionable wake up reports from the United States, and even more unfit that they can investigate all the reports that advance from abroad. Not to speak of the surroundings of sanctions when a business in the Congo, for example, fails to present their cash contract reports. Will FinCEN put together the analogous fine? And if not, doesn’t that consecrate a use uneven from an American business that commits the same offense and is fined?

In conclusion, it contingency be stressed that the role of this law is good, but the means are of course not the best. FinCEN owes many answers that should have been complicated and reviewed before edition this regulation. The outcome of these types of vague regulations is always the same, the focus is theme to the understand of each particular representative on shift, that might not be the most appropriate interpretation.

Juan C. Villa
Certified Anti-Money Laundering Specialist

AML Compliance Solutions, Inc.
Bank Secrecy Act, Anti-Money Laundering Compliance Consultants

5201 Blue Lagoon Dr. Suite 964
Miami, FL 33126
Toll Free 855-AML-TEAM Fax 888-538-1199

Submitted On Aug 14, 2011


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