Compliance issues in the wake of the USA PATRIOT Act
| Date | 01 October 2003 |
| Published date | 01 October 2003 |
| DOI | https://doi.org/10.1108/13590790310808952 |
| Pages | 392-399 |
| Author | Harvey M. Silets,Carol R. Van Cleef |
| Subject Matter | Accounting & finance |
Journal of Financial Crime Ð Vol. 10 No. 4
Compliance Issues in the Wake of the
USA PATRIOT Act
Harvey M. Silets and Carol R. Van Cleef
Financial services companies and other businesses are
beginning to confront the realities of a new regu-
latory regime that will challenge conventional
methods of conducting business, alter traditional cus-
tomer expectations about their ®nancial transactions,
require investment in new technology and involve
substantially greater compliance costs. This new
regime was created in large part by the eorts of
US policy makers to develop and enhance tools for
®ghting terrorism and more traditional forms of
money laundering. The ®rst step was taken on 23rd
September, 2001, when President Bush signed Execu-
tive Order 13224 to freeze the assets of, and prohibit
transactions with, terrorists. Eorts intensi®ed with
the enactment of the Uniting and Strengthening
America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001
(`USA PATRIOT Act') in October 2001.
Since October 2001, various US governmental
entities have been working tirelessly to implement
the numerous provisions of the USA PATRIOT
Act that impose new recordkeeping and reporting
requirements on a wide range of companies. These
regulatory initiatives have potential rami®cations
not only for domestic (ie US-based) transactions
involving US persons, but also international transac-
tions, involving anyone living or doing business in
the USA or through US companies, their foreign
branches or subsidiaries.
Federally regulated depository institutions must
enhance existing anti-money laundering compliance
programmes, while other types of ®nancial services
and certain non-®nancial services companies now
face new legal requirements to develop such compli-
ance programmes. In view of substantial civil and
criminal monetary and other penalties for anti-
money laundering violations, other non-®nancial
services companies also should consider adopting
policies and procedures for identifying their custo-
mers, business partners and vendors, handling
cash transactions and ensuring against the use of
company resources in money laundering or terrorist
activities by wayward employees.
This paper reviews the scope of money laundering
crimes, the new requirements for anti-money laun-
dering compliance programmes, and the Oce of
Foreign Assets Control requirements. It also discusses
certain steps that should be considered for ensuring
appropriate compliance.
MONEY LAUNDERING CRIMES
US anti-money laundering laws prohibit any person,
individual, corporation or other entity from know-
ingly conducting or attempting to conduct a ®nancial
transaction that involves funds that are the proceeds
of over 100 types of illegal activities. Terrorism and
a number of other new predicate oences were
added by the USA PATRIOT Act to the list of
money laundering violations, which can result in sub-
stantial monetary ®nes, criminal penalties and asset
forfeitures.
1
The provision of any type of monetary
instrument to support terrorism is also a criminal
oence.
2
The USA PATRIOT Act signi®cantly
broadened the authority of law enforcement ocials
to pursue asset forfeitures for money laundering
violations.
ANTI-MONEY LAUNDERING
COMPLIANCE PROGRAMMES
The USA PATRIOT Act amended a number of
provisions in the federal Bank Secrecy Act (BSA), a
recordkeeping and reporting statute, to impose new
and/or enhanced requirements on all `®nancial insti-
tutions' subject to the BSA. One of the most signi®-
cant provisions required all such ®nancial institutions
to implement anti-money laundering (AML)
compliance programmes by 24th April, 2002, unless
speci®cally exempted by the US Treasury Depart-
ment. Certain ®nancial institutions were granted
`temporary exemptions' until late October 2002.
Such AML compliance programmes at a minimum
must include internal AML policies, procedures and
controls, a designated AML compliance ocer, an
ongoing employee-training programme and an
independent audit function. Policies and procedures
designed to implement other requirements of the
Page 392
Journal of Financial Crime
Vol.10,No. 4, 2003,pp.392 ±399
#HenryStewart Publications
ISSN 1359-0790
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