These changes have created the need for new regulations and risk mitigation efforts by institutions and organizations subject to AML. For example, the use of international ACH transfers, remote deposit capture, mobile phone payments and the changing payments landscape, along with other technology innovations, present potential risks that require careful and thoughtful consideration.
If you conduct business using advanced payment systems, for example, be sure these processes are reflected in your risk assessment and that the controls to mitigate such risk are among your AML compliance policies.
Regulatory changes and modification of existing rules – whether from FinCEN, OFAC or others – require close attention and the fine tuning of systems, training personnel and other compliance program elements. FinCEN's guidance indicates there many institutions subject to AML compliance programs who are not maintaining adequate AML programs and are subsequently facing sanctions by regulators.
The IRS is the examining authority for AML compliance programs for dealers. The IRS will notify a dealer that it plans to examine the business, a process commonly known as the Title 31 exam. Examiners will visit for a period commensurate with the size of the institution.
Examiners will request documentation supporting your program including but not limited to:
Of particular interest will be reporting of large cash/cash equivalent transactions – those over $10,000. The IRS reviews receipts of cash payments that require the filing of the Form 8300 form. They review books and records, including bank statements, to make this determination. Failure to file the 8300 can result in fines, penalties and, in extreme cases, criminal prosecutions.
When all is said and done, the IRS will submit a report of its findings and the dealer must resolve any outstanding matters while tracking any corrective actions until complete.
It stands to reason that dealers doing business with other dealers are low risk. Why? Because each dealer, required by law, is required to have a reasonably designed AML compliance program. As long as each has an AML program in place, each dealer can be confident that internal controls are in place to identify and mitigate any potential money laundering risk.
Before conducting business with any dealer, be sure to request an AML Certification Letter, one that states the dealer is in full compliance with the regulatory requirements under the law requiring the AML compliance program.