U.S.A. PATRIOT ACT
Compliance Issues
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Uniting and
Strengthening
America by
Providing
Appropriate
Tools
Required to
Intercept and
Obstruct
Terrorism Act of 2001
Public Law 107-56
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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.
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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.
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THE SIGNING OF THE USA PATRIOT ACT (THE “ACT”) ON
OCTOBER 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.
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PURPOSES OF THE ACT
To increase the strength of proper authorities, and that
U.S. measures to prevent, jurisdictional disputes do not
detect,and prosecute hinder examination of
international money compliance by financial
laundering and the financing institutions with relevant
of terrorism. reporting requirements.
To provide guidance to
domestic financial institutions To strengthen the ability of
on particular transactions that financial institutions to
are of primary money maintain the integrity of their
laundering concern to the U.S. employee population; and to
Government. strengthen measures to
To ensure that all appropriate prevent the use of the U.S.
elements of the financial financial system for personal
services industry are subject gain by corrupt foreign officials
to appropriate requirements to and to facilitate the
report potential money repatriation of any stolen
laundering transactions to assets to the citizens of
countries to whom such
assets belong.
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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.
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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.
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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.
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REPORTING OF
SUSPICIOUS 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.
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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
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CONSULT LISTS
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.
Consult the Treasury Department’s Office of Foreign
Assets Control (OFAC) database which contains
published 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.
Individuals on these lists are prohibited from making
transactions with U.S. institutions.
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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
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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
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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
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PENALTIES FOR
FAILURE 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.
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Summary
IDENTIFY CUSTOMER
REPORT SUSPICIOUS ACTIVITY
REPORT CURRENCY
TRANSACTIONS and KEEP LOG
CHECK LIST
INSTITUTE PROGRAM
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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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