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U.S.A. PATRIOT ACT Compliance Issues

U.S.A. PATRIOT ACT Compliance Issues. U niting and S trengthening A merica by P roviding A ppropriate T ools R equired to I ntercept and O bstruct T errorism Act of 2001 Public Law 107-56.

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U.S.A. PATRIOT ACT Compliance Issues

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  1. U.S.A.PATRIOT ACTCompliance Issues

  2. Uniting andStrengtheningAmerica byProvidingAppropriateToolsRequired toIntercept andObstructTerrorismAct of 2001Public Law 107-56

  3. The presentation is being provided to you for informational purposes only.By supplying this information to you, I.P.A. is not providing you with legal advice and the statements set forth in this presentation shall not be considered legal advice. If you have any questions about the Act, and your compliance therewith, it is suggested that you seek the advice of legal counsel.

  4. Introduction • The USA Patriot Act's sweeping impact on the pawn industry is just now being fully realized. • The I.P.A. has created a set of tools that function as a turnkey solution for members needing to comply with the Act as quickly and efficiently as possible.

  5. THE SIGNING OF THE USA PATRIOT ACT (THE “ACT”) ONOCTOBER 26, 2001 PLACED NEW GUIDELINES ON PAWNBROKERS WHICH EXPANDED UPON PREVIOUSLY ENACTED LEGISLATION AND IS DESIGNED TO PREVENT THE FINANCING OF TERRORIST ACTIVITY AND MONEY LAUNDERING BY DOMESTIC AND FOREIGN CRIMINALS.

  6. To increase the strength of U.S. measures to prevent, detect,and prosecute international money laundering and the financing of terrorism. To provide guidance to domestic financial institutions on particular transactions that are of primary money laundering concern to the U.S. Government. To ensure that all appropriate elements of the financial services industry are subject to appropriate requirements to report potential money laundering transactions to proper authorities, and that jurisdictional disputes do not hinder examination of compliance by financial institutions with relevant reporting requirements. To strengthen the ability of financial institutions to maintain the integrity of their employee population; and to strengthen measures to prevent the use of the U.S. financial system for personal gain by corrupt foreign officials and to facilitate the repatriation of any stolen assets to the citizens of countries to whom such assets belong. PURPOSES OF THE ACT

  7. The Mandate • The Secretary of the Treasury may require any domestic financial institution to maintain records, file reports, or both, concerning the aggregate amount of transactions, or concerning each transaction, if the Secretary finds any such institution, or class of transactions to be of primary money laundering concern. • Such records and reports shall include such information as the Secretary may determine, including - the identity and address of the participants in a transaction.

  8. What it Means to You • Verify the identity of the customer. • Identify customer “risk indicators”, that would trigger additional scrutiny and report suspicious activities. • Report large currency transactions and keep logs. • Consult lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency to determine whether a person seeking to open an account appears on any such list. • Every financial institution is required to have adopted policies, procedures and controls to detect and prevent money laundering.

  9. CUSTOMER IDENTITY • This is not an issue since current industry regulations require identity scrutiny of all of our customers. • However, there is a pending requirement that all forms of identification be photocopied and filed for a period of five years.

  10. REPORTING OFSUSPICIOUS ACTIVITIES TREASURY FORM TD F 90-22.56 SUSPICIOUS ACTIVITY REPORT BY MONEY SERVICE BUSINESS If a financial institution or any director, officer, employee, or agent of any financial institution, voluntarily or pursuant to this section or any other authority, reports a suspicious transaction to a government agency: • the financial institution, director, officer, employee, or agent may not notify any person involved in the transaction that the transaction has been reported; and • no officer or employee of the Federal Government or of any state, local, tribal, or territorial government within the United States, who has any knowledge that such report was made may disclose to any person involved in the transaction that the transaction has been reported, other than as necessary to fulfill the official duties of such officer or employee.

  11. REPORTING OF CURRENCY TRANSACTIONS IRS Form 4789 Currency Transactions $10,000 and over FOR MONEY LENT OR PAYMENTS RECEIVED IRS Form 8300 Cash from sales of merchandise $10,000 and over ONLY FOR MONEY COMING IN In House Log ALL $3,000 daily aggregate transactions from the same customer must be kept in a log on the premises for five years

  12. CONSULT LISTS Consult the Treasury Department’s Office of ForeignAssets Control (OFAC) database which containspublished lists of the names of individuals, businesses and governments designated by the Treasury Department as designated Nationals and Terrorists, Designated Narcotics Traffickers and Blocked Persons. Consult lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency to determine whether a person seeking to open an account appears on any such list. Individuals on these lists are prohibited from making transactions with U.S. institutions.

  13. WAYS TO CHECK THE OFAC LIST • Some Pawn Software and other software may allow you to upload your customer database to L.E.A.D.S. on LINE, which will check for hits against the OFAC list of blocked individuals. • You may also print the OFAC list and updates and manually check, or • You may manually check on-line at the N.P.A. Website THERE IS NO CHARGE FOR THESE SERVICES

  14. ANTI-MONEY LAUNDERING PROGRAMS In order to guard against money laundering through financial institutions, each financial institution shall establish anti-money laundering programs, including, at a minimum: • the development of internal policies, procedures, and controls • the designation of a compliance officer • an ongoing employee training program; and • an independent audit function to test programs

  15. What It Means to You • Policies and procedures must be written and communicated internally and externally. • Training programs must be developed and presented. • An independent auditing firm must be selected to conduct impartial assessments of the policies and procedures

  16. PENALTIES FORFAILURE TO COMPLY • Civil Penalties - The Secretary may impose a civil money penalty in an amount equal to not less than two times the amount of the transaction, but not more than $1,000,000, on any financial institution or agency. • Criminal Penalties - A financial institution or agency that violates any provision shall be fined in an amount equal to not less than 2 times the amount of the transaction, but not more than $1,000,000.

  17. Summary • IDENTIFY CUSTOMER • REPORT SUSPICIOUS ACTIVITY • REPORT CURRENCY TRANSACTIONS and KEEP LOG • CHECK LIST • INSTITUTE PROGRAM

  18. Where to Get More Information • INTERNAL REVENUE SERVICE http://www.irs.gov/ • US TREASURY OFFICE FOR TERRORIST FINANCING and FINANCIAL CRIME http://treasury.gov/offices/eotffc/Treasury.gov • US TREASURY OFFICE OF FOREIGN ASSETS CONTROL http://www.treas.gov/offices/eotffc/ofac/sdn/index.html • L.E.A.D.S. on LINE SDN MATCH https://www.leadsonline.us/sdnlookup/

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