| http://www.sierratimes.com/02/05/27/arwh052702.htm Who’s Minding your Money? By Wayne Hicks Published 05. 27. 02 at 8:24 Sierra Time Americans who send and receive money, even as part of day to day business procedures, are subject to far more scrutiny by the Federal Government than ever before, under the USA PATRIOT Act, the Bank Secrecy Act, and other so-called “anti-money-laundering” laws. Money laundering is the attempt to conceal or disguise the nature, location, source, ownership, or control of illegally obtained money. Unfortunately, an accusation of money laundering is not an easy one to defend against, no matter how innocent you may be… and a number of innocent Americans have already been placed under surveillance or arrest, simply because money they send or receive appeared “suspicious” to a clerk at a store or bank, without any evidence to support that suspicion. This is because Money Service Businesses (MSB’s), as well as Banks and other financial institutions, are now required by law to make such reports anytime you use cash to send money, or exceed certain limits on the amounts you send or receive. The fines and penalties these businesses are threatened for non-compliance are so severe that most of them admit that they prefer to err on the side of caution, filing such reports on most, if not all, of the transactions they are involved in. In other words, they don’t care how innocent you are… it’s safer for them to finger you as a possible criminal and let Federal Authorities investigate (read: threaten, intimidate, harass, arrest, possibly shoot) you, than to take a chance that you might have been exactly what you appeared to be: somebody sending some money to help out a friend or relative. Let’s examine the laws and see just how they might affect you. The USA Patriot Act requires that all MSBs adopt an anti-money laundering program in order to guard against money laundering. Accordingly, they must establish an anti-money laundering program that includes, at a minimum, the following: A. Internal policies, procedures and controls; B. The designation of a compliance officer; C. An ongoing employee training program; and D. An independent audit function to test the program Item D gives away the key to why this is posing such a problem for Americans, since the testing program must necessarily be a secret from the employees of the business. Since they don’t know which customer might really be a company or government decoy, they tend to report every customer that fits within the minimum guidelines for possible criminal activity, and as we’ll see in a moment, that means most such customers! Money Orders: Whenever a customer purchases money orders, or checks, with cash in the amount of $3,000 to $10,000, whether in a single transaction, or in several transactions on the same day, certain information must be obtained and retained. (Purchases of more than $10,000 require filing a Currency Transaction Report (CTR.) The information is to be recorded on a Monetary Instrument Log (“Log”). If you send more than $3,000, your information will be recorded and provided to Federal Authorities! Note that only cash purchases are covered by this requirement – purchases by check or credit card are not, regardless of the amount. Before completing a transaction that requires a Log entry, the clerk must verify the name and address of the individual buying the money orders by looking at a valid identification document, such as a driver’s license, passport or alien identification card that contains the customer’s name and address. The regulations require them to record: 1. Customer’s name; 2. Customer’s address; 3. Customer’s Social Security number or alien identification number; 4. Customer’s date of birth; 5. Date of purchase of the money order(s); 6. The serial number of each money order(s) purchased; 7. The dollar amount of each money order(s) purchased; 8. The location where the money order(s) was purchased; 9. The total amount purchased with cash; 10.They are also required to record specific information on the identification used to verify the purchaser’s identity (e.g., driver’s license number and state of issuance). 11. If the clerk knows or suspects that the money orders being purchased are for a third party (someone other than the purchaser), then the following information also needs to be recorded in the Log: the third party’s name, the third party’s address and the third party’s Social Security number, alien identification number or tax identification number. They must obtain all of this information before completing the transaction. Cash transactions involving more than $10,000, whether in one lump sum, or scattered throughout the day, require even more ominous paperwork to be filed, called a Cash Transaction Report (CTR). This report must be filed with the Internal Revenue Service (IRS) on a Currency Transaction Report Form 4789, which can be obtained from your local IRS office or from www.treas.gov/fincen. The regulations require that the clerk record the customer’s name, address and Social Security number (or taxpayer identification number or other identifying number) on the CTR. The CTR form also asks for occupation, date of birth, and other information. If two or more people are doing the transaction, or if the transaction is on behalf of a third person other than the individual performing the transaction, then they must obtain similar information for all parties before completing the transaction. Structuring: Under these laws, it is illegal to structure transactions in order to avoid the record-keeping or reporting requirements. For example, if a customer buys $2,000 of money orders in the morning and $2,000 of money orders at the end of the day, they may be structuring their purchases in order to avoid the record-keeping “Log”. “Structuring” involves breaking up a larger transaction that would have to be recorded or reported into smaller transactions in order to avoid the reporting and record-keeping requirements. Even it it’s done for a legitimate reason, the fact that the transaction is broken up to avoid the reporting and record-keeping requirements is still considered “structuring.” In other words, there is no innocent excuse for “structuring.” SUSPICIOUS ACTIVITY REPORTING: Among the most ominous portions of the anti-money-laundering laws is the Suspicious Activity Report Requirement. The clerk must file a Suspicious Activity Report by Money Services Business (“SAR-MSB”) whenever any activity is attempted or occurs that involves at least $2,000 in one or more transactions and they “suspect or have reason to suspect” that: 1. The transaction involves funds derived from illegal activity or is intended to hide funds derived from illegal activity; 2. The transaction is structured to avoid record-keeping or reporting requirements; or 3. The transaction has no business or apparent lawful purpose. (this clause is easily defined: If you choose not to reveal, voluntarily and without being asked, the reason why you are sending money, then the transaction fits this criterion and requires the clerk to file a Suspicious Activity Report!) EXAMPLES OF SUSPICIOUS ACTIVITY 1. A customer appears to be structuring transactions in an attempt to avoid a BSA record-keeping or reporting requirement; 2. An individual provides phony or expired identification (note: if the clerk is not “certain that the identification is valid”, then a SAR-MSB must be filed!); 3. Two or more individuals, who are obviously together, split up to conduct separate transactions for under $3,000, but which together add up to over $3,000; 4. An individual refuses to proceed with a transaction once he/she is informed a CTR will have to be filed; 5. A customer asks an employee how to avoid reporting or record-keeping requirements; 6. An individual attempts to threaten, or bribe an employee; 7. Several customers complete money transfers to the same recipient in a single day, and there is no apparent business reason for such transfers; 8. The same person buys one or more money orders several times a day, but never buys money orders totaling more than $3,000 during any single visit (this clause requires a SAR-MSB to be filed, regardless of the amounts of the Money Orders… in this way, the “minimum” of $2,000 is dropped to almost zero, and any Money Orders for any amount become “Suspicious Activity”. Again, clerks know that to fail to file such a report can bring severe criminal or civil penalties down on them, and will reason that if you are innocent, then you have nothing to worry about, so it’s better to let you deal with the repercussions of the report than take a chance that you might be innocent and fail to file it.); 9. Multiple money orders are purchased by the same person in even hundred dollar denominations or in unusual quantities. Suppose such a report is filed when you send money to your children in college, and the resulting investigation causes you harm. Do you have any recourse against the clerk or his employer? No! Federal law provides protection from civil liability for all reports of suspicious transactions made to appropriate authorities, including supporting documentation. This means that the clerk cannot be prosecuted or sued, even if they falsify or manufacture evidence to support the report! In addition, the clerk cannot even tell you that a report is to be filed! Federal law makes it illegal to disclose to you that the money order you just purchased will result in a Suspicious Activity Report! Implicit in that last paragraph, and in the sections on “structuring” are a hidden potential for disaster: since you now know that certain transactions will result in your financial business, and possibly your entire life, being placed under scrutiny by the Federal Government, you are automatically suspect… if you use conventional MSB’s for sending and receiving money, but never send or receive any amount designed to trigger such a report, then you may be subject to having a SAR-MSB filed simply because your activity is not suspicious enough! For this reason, many MSB’s are opting out of the programs that could require such a filing. This is possible because the requirements under which an MSB must comply have a single loophole, designed to limit your ability to use their services. The Bank Secrecy Act and USAPATRIOT Act define MSB’s as: A. A money transmitter; B. A seller of money orders, or stored value (other than a person who does not ever sell such checks or money orders or stored value in an amount greater than $1,000 to any person on any day in one or more transactions); C. A person engaged in the business of a check casher (other than a person who does not ever cash checks in an amount greater than $1,000 for any person on any day in one or more transactions). By limiting your transactions to no more than $1000 in a single day… regardless of any other factor… they can avoid reporting legally. This is why many Internet Based MSB’s, such as PayPal and ALFI, set such limits on their customers and members. Unfortunately, there is no way to lawfully avoid these intrusions into your financial, business and personal privacy other than accepting limitations such as these, and today, even carrying cash in large amounts is sufficient to cause you to be arrested and have your money or property confiscated without due process of law, on the theory that the mere possession of cash must be evidence of criminal wrongdoing. You can learn more about these laws and the impact they are having on most Americans at the following websites: www.treas.gov/fincen www.treas.gov/ofac www.msb.gov |
