Category Archives: MSB – Money Services Business

FinCEN Assesses Civil Money Penalty Against Maine-Based Money Transmitter

FinCEN has levied a civil money penalty against Sarith Meas for violation of the registration and anti-money laundering requirements of the Bank Secrecy Act (BSA) and associated regulations issued pursuant to the BSA. Meas was fined $12,500 for the violations.

Full Settlement Agreement. Excerpts and summary below:

Meas acted as an independent money transmitter located in Maine operating out of Meas’s residence. Meas executed funds transfers for customers located in the United Stated. In a typical transaction, a customer provided Meas with cash, checks, or money orders, along with instructions to transmit funds to a specified beneficiary, and Meas deposited those funds into her U.S. deposit accounts. Once the funds cleared, Meas instructed U.S. financial institutions to wire transfer funds to designated financial institutions in Cambodia (a jurisdiction classified by the United States Department of State as suffering from money laundering deficiencies), where the funds were retrieved by Meas’ affiliate(s) and made physically available to beneficiaries in the designated currency.

Meas operated as an independent money transmitter by engaging as a business in the transfer of funds. She was required under the BSA to register as an MSB with FinCEN and implement a written anti-money laundering program. FinCEN determined that Meas was an unregistered money transmitter from January 2006 through October 2010, in violation of BSA registration requirements for money transmitters.

After considering the seriousness of the violations and the financial resources available to Meas, FinCEN has determined that the appropriate penalty in this matter is $12,500.

FinCEN Launches new MSB Registration Website

FinCEN has launched a new Money Services Business (MSB) registration website. The website is intended to help improve the availability of MSB registration information. The website will replace the MSB Registration lists that were previously available.
As part of FinCEN’s paperless efforts, FinCEN will no longer send acknowledgement letters to MSBs. MSB registration information will be available approximately two weeks after the MSB electronically files Form 107. If the MSB files the paper form, it will take 60 days before the registration is processed and posted on the MSB Registration Website.

FinCEN Assesses Civil Money Penalty Against Tribal Casino

Click Here For Full News Release.

FinCEN assessed a $250,000 civil penalty against Jackpot Junction Casino Hotel of Morton, Minnesota. The casino violated Bank Secrecy Act (BSA) requirements for casinos when it failed to implement internal controls for gathering and recording information required by the BSA as well as failed to implement adequate training for employees.

The Casino also failed to develop and implement effective procedures for the preparation, review and filing of BSA reports, resulting in multiple failures to timely and accurately file Currency Transaction Report by Casino forms (CTRCs) and Suspicious Activity Report by Casino forms (SARCs).

FinCEN Assesses Civil Money Penalty Against Unregistered Money Transmitter

Full News Release

The Financial Crimes Enforcement Network (FinCEN) assessed civil penalties totaling $40,000 against two brothers for non-compliance with Bank Secrecy Act (BSA) money transmitter registration requirements. The brothers, doing business as Halal Depot of Wyoming, Michigan operated a money transmission business at their grocery store by sending funds on behalf of their customers to beneficiaries in Yemen, Somalia, Sudan, Kenya, Saudi Arabia, Uganda, Ethiopia, Qatar, Europe and the United Arab Emirates. At no time did the Sufi brothers register with FinCEN as a money services business (MSB) as required by the BSA.

FinCEN Assesses Civil Money Penalty Against Oregon-Based Unregistered Money Transmitter

Full Announcement.

The Financial Crimes Enforcement Network (FinCEN) today announced assessment of a $25,000 civil money penalty against Victor Kaganov of Tigard, Oregon, for violating Bank Secrecy Act (BSA) requirements for money transmitters. FinCEN determined that Kaganov violated BSA registration, anti-money laundering program, and suspicious activity reporting requirements while conducting an independent money transmitter business from his residence.

From July 2002 through March 2009, Kaganov conducted more than 4,200 funds transfers in the United States, involving total dollars amounting to more than $172 million, to and from a number of locations in Europe and Asia.

See also:
Department of Justice Press Release
FBI News Story March 7, 2011

FinCEN Advisory Warns of Elder Abuse and Financial Exploitation

The Financial Crimes Enforcement Network has released an advisory to financial institutions regarding spotting and reporting on activities involving elder financial exploitation. FinCEN released the advisory because financial institutions may be uniquely positioned to observe such exploitation.

The following examples are “red flags” that may necessitate the filing of SAR reports:

Erratic or unusual banking transactions, or changes in banking patterns:

  • Frequent large withdrawals, including daily maximum currency withdrawals from an ATM;
  • Sudden Non-Sufficient Fund activity;
  • Uncharacteristic nonpayment for services, which may indicate a loss of funds or access to funds;
  • Debit transactions that are inconsistent for the elder;
  • Uncharacteristic attempts to wire large sums of money;
  • Closing of CDs or accounts without regard to penalties.

Interactions with customers or caregivers:

  • A caregiver or other individual shows excessive interest in the elder’s finances or assets, does not allow the elder to speak for himself, or is reluctant to leave the elder’s side during conversations;
  • The elder shows an unusual degree of fear or submissiveness toward a caregiver, or expresses a fear of eviction or nursing home placement if money is not given to a caretaker;
  • The financial institution is unable to speak directly with the elder, despite repeated attempts to contact him or her;
  • A new caretaker, relative, or friend suddenly begins conducting financial transactions on behalf of the elder without proper documentation;
  • The customer moves away from existing relationships and toward new associations with other “friends” or strangers;
  • The elderly individual’s financial management changes suddenly, such as through a change of power of attorney to a different family member or a new individual;
  • The elderly customer lacks knowledge about his or her financial status, or shows a sudden reluctance to discuss financial matters.

A SAR (Suspicious Activity Report) must be filed if a financial institution knows, suspects, or has reason to suspect that a transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the financial institution knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction, the financial institution should then file a Suspicious Activity Report.  See, e.g., 31 CFR § 103.18(a) (future 31 CFR § 1020.320(a))

AML: U.S. Treasury Sanctions – Sigue Corp.

Sigue Corp. and Sigue, LLC of California to Pay $15 Million to U.S. Government for Anti-Money Laundering Program Deficiencies
FinCEN Announcment

The Financial Crimes Enforcement Network (FinCEN) announced the assessment of a civil money penalty in the amount of $12 million against Sigue Corporation and Sigue, LLC, a money services business headquartered in San Fernando, California, for violations of the Bank Secrecy Act (BSA). Sigue, without admitting or denying the allegations, consented to the civil money penalty. Concurrently, the Department of Justice announced today that Sigue has also entered into a deferred prosecution agreement on charges of failing to maintain an effective anti-money laundering program and will forfeit $15 million to the U.S. government. FinCEN’s penalty will be deemed satisfied by a portion of the $15 million payment to the Department of Justice.

Sigue has more than 7,000 agent businesses or “authorized delegates” located throughout the United States, providing money transmission services from the United States to Mexico and Latin America. The authorized delegates, which are typically small businesses, and Sigue each earn a small fee for the transactions conducted through these agents.

FinCEN determined that Sigue failed to establish and implement an anti-money laundering program reasonably designed to ensure compliance with the Bank Secrecy Act which led, in turn, to a failure by management at Sigue to implement measures to respond to continued patterns of suspicious activity, with repeated common characteristics, at certain agent locations. Specifically, on multiple occasions over an extended period of time, 47 agents assisted customers in the structuring of transactions represented to be drug trafficking proceeds to avoid the currency transaction reporting requirements of the Bank Secrecy Act. Sigue’s failure to implement effective internal controls, training or independent testing to manage the risk of money laundering was serious, longstanding and systemic.

“Today’s enforcement action reinforces our message on the importance of compliance by all the diverse sizes and types of financial institutions subject to the Bank Secrecy Act,” said James H. Freis, Jr., Director of the Financial Crimes Enforcement Network. “Principals of money services businesses must exercise effective oversight and control over the authorization, transactional activity and operations of their agents to ensure compliance with the BSA and prevent money laundering. Operations with sound programs minimize the risk of being misused by criminals and unscrupulous or non-compliant agents.”

In particular, FinCEN found that Sigue’s transaction monitoring system was not commensurate with the volume, dollar amounts and geographical reach of transactions processed by the money services business, resulting in the filing of incomplete and/or inaccurate suspicious activity reports. This occurred despite the repeated patterns of suspicious activity by identical or similar customers, beneficiaries and agents.

AML: U.S. Treasury Sanctions

From the Department of Treasury:

“The U.S. Department of the Treasury today finalized its rule against Banco Delta Asia SARL (BDA) under Section 311 of the USA PATRIOT Act. When the final rule takes effect in 30 days, U.S. financial institutions will be prohibited from opening or maintaining correspondent accounts for or on behalf of BDA. This action bars BDA from accessing the U.S. financial system, either directly or indirectly.

“Our investigation of BDA confirmed the bank’s willingness to turn a blind eye to illicit activity, notably by its North Korean-related clients,” said Stuart Levey, Treasury’s Under Secretary for Terrorism and Financial Intelligence (TFI). “In fact, in exchange for a fee, the bank provided its North Korean clients access to the banking system with little oversight or control.”

The Treasury’s Financial Crimes Enforcement Network (FinCEN) in September 2005 found BDA to be of “primary money laundering concern” under Section 311 and issued its proposed rule, citing the bank’s systemic failures to safeguard against money laundering and other financial crimes.

The U.S. Treasury has since been engaged in an ongoing investigation of BDA with the cooperation of Macanese authorities. The information derived from that investigation and the failure of the bank to address adequately the full scope of concerns described in the proposed rule has laid the groundwork for today’s action.

Over the past 18 months, the Macanese authorities have taken substantial steps to strengthen Macau’s anti-money laundering and counter-terrorist financing regime, notably by passing a new law to strengthen these controls and standing up the jurisdiction’s first-ever Financial Intelligence Unit (FIU). Today’s regulatory action is targeted at BDA as an institution, not Macau as a jurisdiction.

“We are pleased that Macau has made important progress in strengthening its anti-money laundering controls and safeguarding the Macanese financial system. However, Banco Delta Asia’s grossly inadequate due diligence and systematic facilitation of deceptive financial practices have run too deep for the bank to be allowed access to the U.S. financial system,” said Levey.

* * *

Abuses at the bank included the facilitation of financial transactions related to illicit activities, including North Korea’s trade in counterfeit U.S. currency, counterfeit cigarettes, and narcotics. In addition, several front companies may have laundered hundreds of millions of dollars in cash through the bank. The final rule highlights the bank’s grossly inadequate due diligence, which facilitated deceptive financial practices by these clients including:

  • Suppressing the identity and location of originators of transactions and arranging for funds transfers via third parties;
  • Repeated bank transfers of large, round-figure sums both to and from accounts held at other banks that have no apparent licit purpose; and
  • The routine use of cash couriers to move large amounts of currency, usually U.S. dollars, in the absence of any credible explanation of the origin or purpose for the cash transactions. “