WHAT BANKS NEED TO KNOW ABOUT THE
PATRIOT ACT
BENJAMIN MOJUYÉ
The author discusses the Patriot Act’s reporting requirements as well as its due
diligence and compliance obligations.
S
ince October 2001, financial institutions have been operating under
stricter scrutiny and stiffer oversight.
In May 2004, the United States Federal Reserve Board of Governors
(the “Federal Reserve”) assessed a civil money penalty of $100 million
against the Union Bank of Switzerland (“UBS”) for illegally transferring
funds to countries on the United States’ sanctions lists (including, Iran,
Cuba, Libya, and the Republics of Serbia and Montenegro).
A few days later, Riggs Bank, a bank headquartered in Washington
D.C., was fined $25 million by the Department of Treasury’s Office of the
Comptroller of the Currency (OCC) for failing to comply with its due diligence and reporting obligations under the anti-money laundering laws and
regulations. Riggs Bank had failed to monitor and report suspicious activities in connection to accounts it held, which were revealingly owned by some
diplomats and unorthodox leaders from Africa, the Middle East, and Latin
America.
More recently, in November 2005, the New York-based securities bro-
Benjamin Mojuyé is a finance associate in the project finance practice in the
Washington, D.C., office of Chadbourne & Parke LLP. He can be reached at [email protected].
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ker-dealer Oppenheimer was assessed a $2.8 million civil penalty for violations of the Bank Secrecy Act. Oppenheimer had failed to establish and
implement an adequate anti-money laundering program and to properly
identify and report transactions that were suspicious pursuant to the Bank
Secrecy Act, as amended.
These cases reflect the burgeoning law enforcement climate initiated by
the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (the “USA Patriot Act,” or
the “Patriot Act”). This legislation has subjected banks and other covered
financial institutions to stringent new compliance, due diligence and
reporting obligations and afforded extensive powers to federal authorities to
enforce them.
In addition, the Patriot Act has exposed financial institutions as well as
their institutional and individual customers to considerable risk of stiff criminal and civil penalties. Since October 2001, enforcement actions have been
launched against AmSouth, Banco de Chile, Arab Bank PLC, City National,
and many other institutions. The principal risks for a financial institution is
to fail to track the movements of funds in the accounts it holds for its customers or to omit to conduct proper background checks of its customers.
The Patriot Act, which President Georges Bush signed into law on
October 26, 2001, in the wake of the September 11, 2001 terrorist attacks
against the United States, contains strong measures designed to deter, detect,
and prosecute acts of terrorism and money laundering activities. Title III of
the legislation (“Title III”), the International Money Laundering Abatement
and Anti-Terrorist Financing Act of 2001, makes extensive amendments to
the Bank Secrecy Act (“BSA”) of 1970 and the Money Laundering Control
Act (“MLCA”) of 1986. The main purposes of Title III, which are the focus
of this article, are to combat international money laundering as well as block
terrorist access to the U.S. financial system.
Thus, Title III targets essentially financial institutions (e.g., banks). The
term “financial institutions” is very broadly defined and is susceptible to
extend the reach of the act to basically all financial institutions and activities,
whether foreign or domestic.1 A non-financial institution is simply any
institution that does not fall under the financial institution category (“nonfinancial institution”).
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The Patriot Act introduces measures with far reaching consequences for
financial institutions and non-financial institutions alike.
First, the Act spells out strict reporting requirements by which financial
institutions and non-financial institutions must abide. Second, financial
institutions in particular, including banks, are subject to enhanced due diligence and compliance obligations. Essentially, these institutions are
required to implement programs designed to identify instances of money
laundering, terrorist financing and other illicit financing activities. To limit
money laundering and terrorist activities, the Act imposes significant restrictions on the activities of financial institutions. Failure to comply with the
statutory prescriptions will trigger a battery of enforcement actions.
REPORTING OBLIGATIONS
The Patriot Act amends the BSA by requiring financial institutions as
well as all non-financial institutions involved in “a trade or business” to file
a Currency Transaction Report (“CTR”) on transactions of more than
$10,000 in coins or currency or equivalent monetary instruments (e.g., travelers’ checks) occurring within the United States with the Department of
Treasury’s Financial Crimes Enforcement Network (“FinCEN”) (§365).
The CTR must contain the name and address (a box office number is not
acceptable), the social security number or the tax identification number (for
non-U.S. residents) and the date of birth of the individual from whom
and/or on whose behalf the coins or currency were received; the amount of
coins or currency received and the date and nature of the transaction. As it
appears, the CTR is designed to track the source, volume, and movement(s)
of the underlying currency and monetary instruments within and/or outside
the United States or U.S. financial institutions. Therefore, it enables law
enforcement authorities and regulatory agencies to carry on investigations of
criminal, tax, and regulatory violations. Financial institutions are, however,
allowed to exempt certain customers from the CTR reporting requirement.
Such customers include banks, U.S. government departments and agencies,
corporations listed on a major U.S. stock exchange, and any commercial
enterprise incorporated in the U.S. (only with respect to its non-excluded
domestic activities) that has maintained an account with the institution for
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at least 12 months and regularly engages in cash transactions over $10,000.
The Act makes it a crime for any entity or individual to “structure” the
payment or receipt of coins or currencies to escape the $10,000 reporting
requirement. Once it is received by the relevant financial institution, the
CTR is maintained in a BSA reporting database (Currency Banking
Retrieval System), which is made available to various federal regulators of
financial institutions and law enforcement agencies. A completed CTR
must be filed with FinCEN within 15 days after the date the transaction was
completed (25 days if filed magnetically or electronically). The financial
institution must keep a copy of the CTR for five years from the date of the
report. It should be stressed that financial institutions, like all other tax payers, are required to file IRS Form 8300 for transactions of over $10,000 in
cash or equivalent monetary instruments (Internal Revenue Code, USC
26§60501). This filing requirement was not repealed by the Patriot Act and
is separate from the BSA reporting obligation.
Section 356 of the Patriot Act mandates the Department of Treasury, in
consultation with the Securities Exchange Commission (“SEC”) to issue regulations requiring brokers and dealers registered under the Securities
Exchange Act of 1934 to report any suspicious activities by filing a
Suspicious Activity Report (“SAR”) with FinCEN. The Department of
Treasury is required to issue similar regulations, in consultation with the
Commodities Futures Commission (“CFTC”) at the direction of futures
commission merchants, commodity trading advisors, and commodity pool
operators registered under the Commodity Exchange Act.
In addition, the Department of Treasury, the Board of Governors of the
Federal Reserve System, and the Securities and Exchange Commission shall
jointly submit a report to Congress on recommendations for effective regulations to apply the requirements of subchapter II of Chapter 53 of Title 31,
United States Code, to investment companies pursuant to Section
5312(a)(2)(I) of Title 31, United States Code.
On July 1, 2002, FinCEN published the Final Rule requiring a brokerdealer in securities to report any suspicious transactions of at least $5,000
(the broker-dealer is free to report suspicious transactions under $5,000) relevant to a possible violation of law or regulation to FinCEN on a Suspicious
Activity Report — Brokers or Dealers in Securities (“SAR-BD”) within 30
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days after such broker-dealer initially detects the suspicious transaction. Are
reportable, transactions:
•
involving funds derived from illegal activities or intended or conducted
to hide or disguise funds or assets derived from illegal activity;
•
designed, whether through structuring or other means, to evade the
requirements of the BSA and regulations thereunder;
•
that have no business or apparent lawful purpose or that are not the sort
of transactions in which the relevant customer would be expected to
engage, and for which the broker-dealer knows of no reasonable explanation; or
•
that use the broker-dealer to facilitate criminal activity.
Some transactions, however, are exempted from the foregoing reporting
requirement, in particular because they have already been reported to the
appropriate authorities. Such transactions include: (1) a robbery or burglary
that the broker-dealer reports to an appropriate law enforcement authority;
or (2) lost, missing, counterfeit or stolen securities that the broker-dealer
reports in accordance with SEC rules. However, if such violations are
exempt from securities laws, they must be reported on a SAR-BD. It is
important to note that the broker-dealer shall inform nobody about disclosures made in the SAR-BD. Finally, a broker-dealer is protected or immune
from liability for a disclosure made in the SAR-BD.
Similarly, on November 30, 2003, the Treasury Department issued a
final rule requiring futures commission merchants and introducing brokers
to file reports with the FinCEN when they detect suspicious activity. These
reporting requirements apply to transactions in funds or assets of at least
$5,000 and are very similar to those applicable to brokers-dealers. The effective date of the rule was Dec. 22, 2003 and the applicability date was May
18, 2004. Where a person is a broker-dealer as well as a futures commission
merchant (or a “FCM/BD”), under the final rule, such FCM/BD can file a
single SAR report with either the SEC, the CFTC, or the Futures Industry
Association or the National Association of Securities Dealers (“NASD”) or
any relevant regulated exchange. To address the case where two FCMs are
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involved in a transaction with the same customer, Treasury will be issuing
guidance in the future on how financial institutions can file joint SARs in
the appropriate circumstances.
On the other hand, the Department of the Treasury’s final rule dated
April 27, 2006, effective on June 5, 2006, and applicable to transactions
occurring after October 31, 2006, subjects open-end investment companies
(generally called “mutual funds”) registered with the SEC to report suspicious transactions to FinCEN. Like in the case of brokers-dealers or futures
commission merchants, a reportable transaction must at least be $5,000.
Such transaction must be reported to FinCEN on Form SAR-SF if a mutual fund knows, suspects or has reason to suspect it is designed to evade the
Bank Secrecy Act, involves funds derived from illegal activities, has no apparent business or lawful purpose or involves the use of the mutual fund to facilitate criminal activities. Like brokers-dealers and futures commission merchants, in determining whether to file a SAR-SF, a mutual fund should consider all of the facts and circumstances relating to the transaction and the
customer in question.
While financial institutions are required to keep confidential information regarding institutions or individuals engaged in or suspected of terrorist acts or money laundering activities, Section 314(b) of the Patriot Act
allows them, however, to share those information among themselves (or with
any association of financial institutions), provided they first notify the
Department of Treasury. Such sharing of information will not violate the
privacy provisions of the Gramm-Leach-Bliley Act. A 2002 FinCEN rule
requires that financial institutions provide the required statutory notice by
filing a certification form. Once the certification form is filed, the filing
institution may share information regarding individuals, entities, organizations, and countries for one year, beginning on the execution date of the certification form. To continue to share information after the expiration of the
one-year period, a financial institution must submit a new certification
form. The information acquired through sharing can be used for no other
purpose than to identify and report on activities relating to terrorism or
money laundering. Under the above-mentioned FinCEN’s rule, a financial
institution receiving information can only use the said information in connection with a decision to close or maintain an account or to engage in a
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transaction. Section 314(b) of the USA Patriot Act provides a safe harbor
from liability for information sharing undertaken in accordance with the
provisions of FinCEN’s rule. FinCEN’s rule requires that all financial institutions sharing information under Section 314(b) of the USA Patriot Act
have procedures in place to protect the security and confidentiality of shared
information and to ensure that the information is used only for authorized
purposes.
To help financial institutions detect any suspicious activities, the Patriot
Act also requires them to put in place comprehensive security programs to
track terrorist or illegal funds.
COMPLIANCE AND DUE DILIGENCE OBLIGATIONS
Compliance Obligations
Section 352(a) of the Patriot Act, which amended Section 5318(h) of
the BSA requires financial institutions to establish anti-money laundering
compliance (AML) programs. Such programs must include, 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.
The Patriot Act permits the Department of the Treasury, after consultation with the appropriate Federal regulatory agency, to prescribe minimum
standards for such AML programs. Most notably, as required by the Patriot
Act, FinCEN issued an anti-money laundering compliance program requirement for money services businesses (currency dealers or exchanges, check
cashers, issuers, sellers and redeemers of travelers’ checks, money orders or
stored value and money transmitters) that became effective on July 24, 2002.
One requirement is that the AML program be in writing and reasonably calculated to prevent the money services business from being used to facilitate
money laundering and the financing of terrorism. At a minimum, the pro-
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gram must incorporate policies, procedures and internal controls reasonably
designed to assure compliance with the Bank Secrecy Act including: verifying customer identification, filing reports, detecting suspicious activity, creating and retaining records; and responding to law enforcement requests;
designate a compliance officer to assure day-to-day compliance with the program; provide for ongoing training of appropriate personnel concerning
their responsibilities under the program, including training in the detection
of suspicious transactions; provide for an independent review to monitor
and maintain an adequate program. In any event, compliance programs
should be commensurate with the risks posed by the location and size of,
and the nature and volume of financial services provided by, the money services business. Several agencies and self-regulatory organizations, such as the
NASD, have also issued guidance to their members on anti-money laundering compliance programs.
Section 326 of the Patriot Act requires the Treasury Department to issue
regulations setting forth customer identification requirements on financial
institutions when opening a new account for a customer. Final rules implementing Section 326 applicable to depository institutions were promulgated on an interagency basis in April 2003 and became effective on October
1, 2003. Regulations impacting banks were released at the same time as for
brokers-dealers, mutual funds, futures commission merchants and introducing brokers. In general, they require concerned financial institutions to
implement reasonable procedures for:
•
verifying the identity of any person seeking to open an account, to the
extent reasonable and practicable;
•
maintaining records of the information used to verify the person’s identity;
•
providing customers with adequate notice; and
•
determining whether the person appears on any list of known or suspected terrorists or terrorist organizations.
This identifying information is essentially the same information ordinarily obtained by most financial institutions and for individual customers
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generally, including the customer’s name, address, date of birth and an identification number (for U.S. persons, a social security number and for nonU.S. persons, a similar number from a government-issued document).
Customers with signature authority over business accounts would furnish
substantially similar information. The customer identification program shall
be tailored to the institution’s procedures as appropriate, taking into consideration and its size, location, and type of business. The depository institution may rely on another financial institution to conduct the customer identification program on its behalf. Finally, any relevant federal financial services regulators, with Treasury’s concurrence, may exempt any bank or any
type of account.
Due Diligence Obligations
Essentially, Section 312 of the Patriot Act prescribes minimum due diligence standards, and in some cases, enhanced due diligence standards with
regard to correspondent accounts established or maintained for foreign
financial institutions and private banking accounts established or maintained for non-U.S. persons. A private banking account is an account with
a minimum aggregate deposit of funds or other assets of at least $1,000,000.
A correspondent account is generally established by a foreign financial institution to receive deposits from it, make payments on its behalf, or handle
other financial transactions related to it. Covered financial institutions
include:
•
banking institutions;
•
securities broker-dealers;
•
futures commission merchants and introducing brokers in commodities;
and
•
mutual funds.
These institutions must establish a due diligence program, consisting of
policies, procedures, and controls reasonably designed to detect any terrorist
acts or money laundering activities. Under FinCEN’s final rule, promulgat-
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ed on December 31, 2006, such a program should enable the relevant financial institution to:
•
determine the identity of all nominal and beneficial owners of the private banking account;
•
determine whether any such owner is a senior foreign political official
and, thus, is subject to enhanced scrutiny (described below);
•
determine the source(s) of funds deposited into the private banking
account and the purpose and expected use of the account; and
•
review the activity of the account to ensure that the activity is consistent
with the information obtained about the source of funds, the stated purpose and the expected use of the account, as needed to guard against
money laundering, and to report any suspicious activity.
Private banking accounts maintained by foreign political figures are subject to enhanced scrutiny, designed to detect transactions that may involve
the proceeds of foreign corruption. The final rule defines “proceeds of foreign corruption” to include any asset acquired by, through, or on behalf of a
senior foreign political figure through misappropriation, theft, or embezzlement of public funds, the unlawful conversion of property of a foreign government, or through acts of bribery or extortion, and include any other
property into which any such assets have been transformed or converted.
Under the final rule, a “Senior Foreign Political Figure” is a current or former senior official in the executive, legislative, administrative, military, or
judicial branches of a foreign government, whether or not they are or were
elected officials; a senior official of a major foreign political party; and a
senior executive of a foreign government-owned commercial enterprise. This
definition also includes a corporation, business, or other entity formed by or
for the benefit of such an individual. Senior executives are individuals with
substantial authority over policy, operations, or the use of governmentowned resources. Immediate family members of such individuals and those
who are widely and publicly known (or actually known) close associates of a
senior foreign political figure are also deemed Senior Foreign Political
Figures.
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Similarly, the financial institutions described above must establish a due
diligence program which, at a minimum, must enable them to: (1) determine whether the account is subject to enhanced scrutiny; (2) assess the
money laundering risk posed, based on a consideration of relevant risk factors; and (3) apply risk-based policies, procedures, and controls to each such
correspondent account reasonably designed to detect and report known or
suspected money laundering activity, including a periodic review of the correspondent account activity.
Section 312 contains a provision requiring U.S. financial institutions to
apply enhanced due diligence when establishing or maintaining a correspondent account for a foreign bank that is operating: (1) under an offshore
license; (2) in a jurisdiction found to be non-cooperative with international
anti-money laundering principles; or (3) in a jurisdiction found to be of primary money laundering concern.
With regard to correspondent accounts for such banks, the statute
requires U.S. financial institutions to take reasonable steps to: (1) conduct
appropriate enhanced scrutiny; (2) determine whether the foreign bank itself
offers correspondent accounts to other foreign banks (i.e., nested accounts)
and, as appropriate, identify such foreign bank customers and conduct additional due diligence on them; and (3) identify the owners of such foreign
bank, if its shares are not publicly traded.
In addition, upon finding (in consultation with the Secretary of State
and the U.S. Attorney General) that a foreign institution, jurisdiction, class
of transactions, or type of account is of “primary money laundering concern,” the Department of the Treasury has broad authority to require domestic financial institutions and financial agencies of foreign banking institutions to take “special measures” to address such primary money laundering
concern. The special measures may include keeping additional records and
filing reports of information regarding transactions, participants in transactions and beneficial owners of funds involved in transactions, and performing due diligence of ownership of payable-through accounts or customers
with access to correspondent accounts.
In some cases, there are accounts financial institutions are not allowed
to offer their customers.
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RESTRICTIONS ON BANKING ACTIVITIES
The Treasury Department may prohibit, or impose conditions upon, the
opening or maintaining in the United States of a correspondent account or
payable-through account by any domestic financial institution or domestic
financial agency for or on behalf of a foreign banking institution, if such correspondent account or payable-through account involves a jurisdiction,
institution, or transaction of primary money laundering concern. The special measures taken must expire within 120 days (four months) except if they
were adopted by regulation before the end of the 120-day period.
In addition, the Patriot Act prohibits financial institutions from establishing, maintaining, administering, or managing a correspondent account
in the United States for, or on behalf of, a foreign bank that does not have a
physical presence in any country (i.e., a shell bank). Likewise, a financial
institution shall ensure that any correspondent account established, maintained, administered, or managed by such financial institution in the United
States for a foreign bank is not being used by that foreign bank to indirectly provide banking services to another foreign bank that does not have a
physical presence in any country.
A foreign bank has a physical presence in a country where it has a fixed
address (other than solely an electronic address) and in which it is authorized
to conduct banking activities; at such location, the foreign bank must (1)
employ one or more individuals on a full-time basis; and (2) maintain operating records related to its banking activities; and (3) and be subject to
inspection by the banking authority which licensed the foreign bank to conduct banking activities. Any foreign bank that maintains a correspondent
account with a U.S. financial institution must certify that they do not offer
banking services to a shell bank.
There is one exception to the shell bank prohibition: a U.S. financial
institution may provide a correspondent account to a foreign shell bank, if
such a shell bank (1) is an affiliate of a domestic or foreign banking institution that maintains a physical presence in the United States or a foreign
country, as applicable; and (2) is subject to supervision by the affiliate banking institution’s regulator.
Moreover, under the Illegal Money Transmitting Business Act of 1992
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as amended,2 it is a crime to conduct, control, manage, supervise, direct, “or
own all or part of a business, knowing the business is an illegal money transmitting business.” The term “illegal money transmitting business” is broadly defined to mean a money transmitting business that affects interstate commerce in any manner and fails to comply with either state law or the registration requirements for such a business. The term “money transmitting”
includes “but is not limited to transferring funds on behalf of the public by
any and all means including but not limited to transfers within this country
or to locations abroad by wire, check, draft, facsimile, or courier.”
Another restriction relates to concentration accounts. Financial institutions internally establish concentration accounts to facilitate the processing
and settlement of multiple or individual customer transactions by commingling funds. To commingle such funds, a financial institution may need to
separate the customer-identifying information, such as name, transaction
amount, and account number, from the underlying financial transaction. If
such separation occurs, the audit trail is lost. It is in this way that concentration accounts may be used to facilitate money laundering.
To reduce such a risk, Section 325 of the Patriot Act prohibits financial
institutions from allowing clients to specifically direct transactions that move
their funds into, out of, or through an internal financial institution’s concentration account. Also, a financial institution or its employees shall not
inform its customers about the existence of such accounts or disclose to them
any information that may enable them to identify such internal accounts.
Financial institutions are required to document and follow methods of identifying where the funds are for each customer in a concentration account
that comingles funds belonging to one or more customers.
Violation of any of the reporting, due diligence and restrictions outlined
above may trigger stiff enforcement actions.
LAW ENFORCEMENT ACTIONS
Not complying with a subpoena can be costly. Pursuant to Section 319
of the Patriot Act, the Treasury or the U.S. Attorney General may, by written notice, order a financial institution to terminate its relationship with a
foreign correspondent bank that has failed to comply with a subpoena or
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summons or has failed to initiate proceedings to contest a subpoena or summons. If the financial institution fails to terminate the correspondent relationship within 10 days of receipt of notice, it could be subject to a civil
monetary penalty of up to $10,000 per day. Where the violation is found
to be serious, FinCEN may assess a civil monetary penalty of up to $10,000
per day of violation.
In addition, in certain bank merger and holding company applications,
the relevant agency is required to take into consideration the effectiveness of
policies and practices of any insured depository institution involved in the
proposed merger transaction in combating money laundering activities,
including in overseas branches.
Moreover, pursuant to Section 319 of the Patriot Act, a financial institution must respond to a request for information from a Federal banking
agency within 120 hours (five days) of receipt of such request. Financial
institutions must thus provide documentation for any account opened,
maintained, administered, or managed by the institution in the U.S. that
may relate to any money laundering activities.
To enforce anti-money laundering laws and anti-terrorism laws, U.S.
authorities have been given a broader jurisdictional reach to forfeit or confiscate illegal funds. Notably, where funds are deposited into an account at
a foreign bank, and that foreign bank has an interbank account in the
United States with a financial institution, the funds are deemed to have been
deposited into the interbank account in the United States. As a result, any
restraining order, seizure warrant, or arrest warrant in rem regarding such
funds may be served on the covered financial institution. Such amount in
the interbank account, up to the value of the funds deposited into the
account at the foreign bank, may be restrained, seized, or arrested. The
Attorney General may, however, suspend or stop such forfeiture if he determines that a conflict of law exists between the laws of the foreign country in
which the foreign bank resides with the laws of the U.S. The Attorney
General must also decide whether halting such forfeiture would be in the
interest of justice and that it would not harm the national interests of the
U.S. The funds that are forfeited in the interbank account may be contested by the foreign bank under the general rules of civil forfeiture proceedings.
The outcome of such a challenge, however, is at best uncertain. The U.S.
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government has ample powers to forfeit funds of a foreign bank without
showing that the funds being forfeited are directly traceable to the funds
deposited at the foreign bank. U.S. courts may order a convicted criminal
to return property that is located abroad. If that property cannot be located,
has been transferred or sold, is placed beyond the jurisdiction of the court,
is substantially reduced in value, or has been commingled with any other
property in such a way that it cannot be divided without difficulty, then the
court may order that property be forfeited in substitution of the property
that must be returned. U.S. courts can also order any property beyond their
jurisdiction to be returned back into their jurisdiction.
CONCLUSION
In an era of increased insecurity and terrorism, the requirements set
forth in the Patriot Act should compel all covered financial institutions, in
particular depository institutions such as banks, to adopt and implement
anti-money laundering programs that meet the statutory minimum standards. Adequate internal controls shall enable such institutions to properly
monitor customer activity. These institutions must also ensure that they
have proper policies and procedures in place to monitor the use of concentration, payable-through, private banking accounts, and correspondent
accounts. They should also be more vigilant about and prompt to report
private banking accounts held by foreign leaders and members of their families and inner circles.
A safe approach might be to report on any large deposit (for example,
more than $10,000) in a customer account so that proper law enforcement
authorities may conduct adequate background checks and take appropriate
measures. Failure to comply with the statutory due diligence, compliance
and reporting requirements may cost the contravening financial institution
millions of dollars and most likely, serious reputational damage, given the
widespread media publicity that has generally accompanied each incident of
violation of the anti-money laundering standards and the anti-terrorism
requirements formulated in the Patriot Act.
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NOTES
The term “Financial Institution” includes an insured bank; a commercial bank or
a trust company; private bankers; an agency or branch of a foreign bank in the
United States; any credit union; a thrift institution; a broker or dealer registered with
the SEC under the Securities Exchange Act of 1934; a broker or dealer in securities
or commodities (whether registered with the SEC or not); an investment banker or
investment company; a currency exchange; an issuer, redeemer, or cashier of traveler’s checks, checks, money orders, or similar instruments; an operator of a credit card
system; an insurance company; a dealer in precious metals, stones, or jewels; a pawnbroker; a loan or finance company; a travel agency; a licensed sender of money or
any other person who engages as a business in the transmission of funds, formally
or informally; a telegraph company; a business engaged in vehicle sales, including
automobile, airplane and boat sales; persons involved in real state closings and settlements; the United States Postal Service; an agency of the federal or any state or
local government carrying out a duty or power of a business described in the definition of a “financial institution”; a state-licensed or Indian casino with annual gaming revenue of more than $1,000,000; and certain other businesses designated by
Treasury Department whose “cash [or commodity] transactions have a high degree
of usefulness in criminal, tax or regulatory matters” (collectively “financial institutions”). See § 313(a); 31 USC 5312.
2
18 U.S.C. 1960.
1
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