Trans-Fast Remittance LLC. AML Compliance Training for Agents

Transcription

1 Trans-Fast Remittance LLC AML Compliance Training for Agents 2016

2 Trans-Fast expects all of its agents to adhere to the following: terms of agent agreement; establish AML Program as per Section 352 of USA Patriot Act; comply with company s AML Policies and Procedures when processing a transaction through our company s systems; comply with any other company mandated requirement (i.e. comply with banking partner requirements when depositing into company s bank account). Trans-Fast and Agent Relationship In the U.S. the company is licensed and regulated by the 37 state banking departments. As required the company is registered with FINCEN in the US and with FINTRAC for its Canadian operations. Trans-Fast Remittance recognizes its obligation to join with governments, regulators, international organizations and other financial services organizations to close off the financial channels that money launderers and terrorist organizations use for illicit purposes. We expect agents to adhere to these same standards. Due to the importance agents play in the implementation of the company s compliance program, the company has created an AML Manual specifically for its authorized agents. We encourage our agents to utilize this AML Manual to train its employees. A requirement for all agents is for the AML Manual to be maintained and available to all personnel on the Agent s premises.

3 Money Laundering and Terrorist Financing What is Money Laundering? Money laundering can be generally defined as the process of concealing the existence, illegal source, or application of income derived from criminal activity (Specified Unlawful Activity), and the subsequent disguising of the source of that income to make it appear legitimate. Deception is at the heart of money laundering. Terrorist Financing: Whereas funds destined for money laundering are typically derived from criminal activity such as drug trafficking, fraud, arms smuggling or other crimes, terrorist funding is often a different breed. These funds are used for a purpose rather than to conceal the profits of crime. However, terrorists also covet secrecy of transactions and access to funds. Also, both terrorists and money launderers use the same methods to move their money, such as structuring payments to avoid reports and using the underground banking system.

4 Money Laundering Stages 1-Placement: During this initial phase, the money launderer introduces his illegal proceeds into the financial system. Often, this is accomplished by placing funds into circulation through financial institutions or nonbank financial institutions like MSBs. 2-Layering: Layering involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail, source, and ownership of funds. 3-Integration: The third and final stage in the money laundering process entails placing the laundered proceeds back into the economy to create the perception of legitimacy. By the integration stage, it is exceedingly difficult to distinguish legal and illegal wealth. An important factor connecting the three stages of this process is the "paper trail" generated by financial transactions. Criminals try to avoid leaving this paper trail by avoiding reporting and recordkeeping requirements.

5 Bank Secrecy Act (BSA) The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, administers and issues regulations pursuant to the Bank Secrecy Act (BSA). Through certain BSA reporting and recordkeeping requirements, paper trails of transactions are created that law enforcement and others can use in criminal, tax and regulatory investigations. The reporting and recordkeeping provisions of the BSA apply to banks, savings and loans, credit unions and other depository institutions (collectively referred to as "banks") and to other businesses defined as financial institutions, including casinos, brokers and dealers in securities, and money services businesses (collectively referred to as "nonbanks").

6 Money Service Businesses (MSBs) Your business may be an MSB (Money Services Business) if you offer one or more of the following services: Money orders Traveler s checks Check cashing Currency dealing or exchange Stored value Money transfers Agents are defined as MSBs under law and must comply with established reporting and record-keeping requirements with only few exceptions. BSA regulations require certain Money Services Businesses (MSBs) to register with FinCEN and prepare and maintain a list of agents, if any. Moreover, most states regulate MSBs and require them to obtain a license, provide reports and be audited at least on an annual basis.

7 Summary of MSB BSA Requirements FinCEN Registration Certain MSBs must register and maintain a list of agents, if any. Those agents who only serve as an agent of a registered and licensed MSB are not required to register with FinCEN. Anti-Money Laundering (AML) compliance program All MSBs (including agents) are required to develop and implement an AML compliance program. If an MSB knows, suspects, or has reason to suspect that any transaction or activity is suspicious and it involves or aggregates funds or other assets of $2,000 or more, ($5,000 or more if identified by issuers from a review of clearance records), it must file a Suspicious Activity Report. If an MSB provides either cash-in or cash-out transactions of more than $10,000 with the same customer in a day, it must file a CTR.

8 AML Program Requirement-Section 352 of USA PATRIOT ACT Section 352 of the USA Patriot Act requires an MSB (including Agents) to establish an AML Program that contains the following four elements: 1. Incorporate written policies, procedures and internal controls reasonably designed to assure compliance with the BSA, including reporting and recordkeeping requirements. 2. Designate a compliance officer responsible for day-to-day compliance with the BSA and the overall compliance program. 3. Provide education and/or training to appropriate personnel including maintaining the AML Manual at the Agent location and available to all employees. 4. Provide for an independent review to monitor and maintain an adequate AML program. Note: MSB agents are subject to Title 31 audits by the IRS who verify whether agent has established an appropriate AML Program that incorporates the above requirements. Our company requires that agents share the results of these audits with the company.

9 Suspicious Activity Reporting (SARs) Certain money services businesses those that provide money transfers or currency dealing or exchange; or businesses that issue, sell, or redeem money orders or traveler s checks must report suspicious activity involving any transaction or pattern of transactions at or above $2,000 or more. You have 30 calendar days to file a SAR after becoming aware of any suspicious transaction that is required to be reported. Record relevant information on a Suspicious Activity Report by MSB (SAR- MSB), form available at : or call to Forms Distribution Center: Copy of the SAR and supporting documentation must be kept for 5 years.

10 Suspicious Activity Detection Suspicious activity is any conducted or attempted transaction or pattern of transactions that you know, suspect or have reason to suspect meets any of the following conditions: Involves money from criminal activity. Is designed to evade Bank Secrecy Act requirements, whether through structuring or other means. Appears to serve no business or other legal purpose and for which available facts provide no reasonable explanation. Involves use of the money services business to facilitate criminal activity. Designing a transaction to evade triggering a reporting or recordkeeping requirement is called structuring. Structuring is a federal crime, and must be reported by filing a Suspicious Activity Report (SAR). For example, A customer breaks a large transaction into two or more smaller transactions. A large transaction is broken into two or more smaller transactions conducted by two or more people. Willful Blindness occurs when suspicions arise or should arise about the legality of the source or ultimate use of the money the agent is transmitting, regardless of the amount, and one fails to investigate further.

11 Suspicious Activity Red Flags Customer ID or Information: Customer uses false ID; Two or more customers use similar IDs; Customer alters transaction upon learning that he/she must show ID; Customer alters transaction upon learning that he/she must show ID; Customer alters spelling or order of his/her full name. Transactions Below Reporting or Recordkeeping Thresholds. For example, transaction just under $2, or $7, to evade the company s ID or source funds requirements. A customer or group of customers who attempt to hide the size of a large cash transaction by breaking it into multiple, smaller transactions. Overt Illegal Customer Conduct: Customer offers bribes or tips; Customer admits to criminal conduct. A customer or group of customers who conduct several similar transactions over several days, staying just under reporting or recordkeeping limits each time. A customer who is reluctant to provide information needed for a reporting or recordkeeping requirement, whether required by law or by company policy. An individual customer conducts MSB transactions in large amounts inconsistent with the income generated by the individual s stated occupation. A customer sends and receives money transfers in equal amounts at or about the same time.

12 Currency Transaction Reports (CTRs) MSBs must file a Currency Transaction Report (CTR) within 15 days of the transaction when a transaction or series of transactions: Involves more than $10,000 in either cash-in or cash-out, and Is conducted by, or on behalf of, the same person, and Is conducted on the same business day. Multiple cash transactions are considered to be one transaction on which a CTR must be filed if the MSB has knowledge that: They are by or on behalf of the same customer during one business day & Conducted at one or more branches or agents of the same MSB & They total more than $10,000 in either cash-in or cash-out. Copy of the CTR must be kept for 5 years. Record relevant information on a Suspicious Activity Report by MSB (CTR-MSB), form available at : Transfast will file CTR for applicable transactions processed through our company.

13 Office of Foreign Asset Control (OFAC) The U.S. Department of the Treasury s Office of Foreign Assets Control (OFAC) issues the Specially Designated Nationals and Blocked Entities List (SDN List). OFAC regulations require businesses to identify and freeze the assets of targeted countries, terrorists, drug cartels and other specially designated persons. OFAC maintains a list of persons, entities, companies, and countries with whom the United States forbids any citizen or company to conduct any business. If a MSB discovers any transaction originated by or payable to a listed entity, the MSB has to block or reject the transaction, retain the funds and within 10 days call the OFAC hotline and place the retained funds in a separate escrow-type account. Three reports must be filed with OFAC as follows: 1)Any transaction that has been blocked must be reported to OFAC within ten business days of the date the property became blocked. 2) Any transaction that has been rejected must be reported to OFAC within ten business days of the date the property became rejected. 3) An annual report of all property blocked as of June 30 is due by September 30 of each year.

14 Know Your Customer-10 Key Elements of Sound Program Full identification and verification of customer and business entities, source of funds and wealth. Development of transaction and activity profiles of the customer's anticipated activity. Definition and acceptance of customer in context of institution's products and services. Assessment and grading of risks that the customer or the account present. Account and transaction monitoring based on the risks presented. Investigation and examination of unusual customer or account activity. Documentation of findings. Appropriate internal and external reporting. Auditing the KYC system. Adequate and continual training of employees

15 Civil and Criminal Penalties Civil and criminal penalties can be imposed for violations of anti-money laundering laws and regulations. Penalties can result in substantial fines and in prison terms. Any MSB that fails to comply with BSA reporting and record keeping requirements faces possible civil penalties of up to $500 for negligent violations and the greater of the following two amounts for willful violations: the amount involved in the transaction (up to $100,000) or $25,000. Under certain circumstances, businesses can also be held criminally liable for the acts of their employees. The maximum criminal penalty for violating a BSA requirement is a fine of up to $500,000 or a term of imprisonment of up to 10 years, or both. It is therefore important that employees are thoroughly trained on how to comply with BSA regulations and that a system is in place to ensure that employees are following all anti-money laundering laws and regulations.

16 Trans-Fast Overall Identification Requirements For all transactions the complete name, address and telephone number for both senders and beneficiaries is required. Date of Birth is required for senders for OFAC Verification. For orders of $2, USD (including fees) within 1 (one) day, single or multiple transactions: the Complete Compliance form and provide a copy of effective identification of Sender. For orders of $3, to $7, USD (including fees) within 10 (ten) days, single or multiple transaction: Complete Compliance form and provide a copy of effective identification of Sender. For orders of $7, USD and above (including fees) within 10 (ten) days single or multiple transaction: Complete compliance form including employment information; 2 forms of identification; copy recent source of funds.

17 Trans-Fast Identification Requirements Continued For orders of $3, USD and above (including fees) when a USA document is presented the social security number is required. For orders of $8, USD and above (including fees) prior authorization from the compliance department should is required. Source of funds and declaration is required for orders of $7, USD and above (including fees) within 10 (ten) days single or multiple transaction. Acceptable ID Types: Driver s license with a photograph; State Issued Identification; U.S. or Foreign Passport; Alien registration card; Military ID Card; Foreign Cititizenship Card (Cedula card); Matricula Card (The U.S. Treasury Department has stated that a matricula card issued by the Mexican consulate or other consulate in the U.S. is acceptable as valid identification) Please note that in some instances the Compliance Department may require identification if possible structuring patterns are noted during monitoring. For additional information on our Identification Requirements please refer to our Agent AML Manual available at our Trans-Fast system under the menu option Reports-Form and Notices-Compliance.

18 Questions