FinCEN Targets 700 Miami Exporters in AML Crackdown

In an effort to shed light on cash transactions that may be tied to trade-based money laundering schemes, FinCEN issued a Geographic Targeting Order (GTO) imposing stricter transaction reporting requirements on 700 businesses in Miami-Dade County. Businesses that don’t comply could face civil and/or criminal penalties.

Who is affected?

The GTO affects trades or businesses (as well as their agents, subsidiaries, and franchisees) that export electronics, including cell phones, and are based in the Covered Geographic Area. That area includes zip codes 33172, 33178, 33166, 33122 and 33126 (Doral, Medley, Miami Springs and Virginia Gardens).
Businesses that are covered by the GTO have been notified directly.

“Law enforcement investigations reveal that many of these businesses are exploited as part of sophisticated trade-based money laundering schemes in which drug proceeds in the United States are converted into goods that are shipped to South America and sold for local currency, which is ultimately transferred to drug cartels,” according to the GTO.

The GTO also has implications for the banks that service these businesses. Banks will be paying close attention to the businesses that are subject to this GTO.  Banks are likely to identify their customers that may be subject to the GTO and revisit the information they have on these customers, review transactions, and review the controls in place to address the heightened risks associated with these businesses and the GTO.

What are the requirements?

Businesses covered under the GTO are required to report to FinCEN all transactions involving more than $3,000 in currency (in one or more related transactions). Typically, FinCEN requires a filing for transactions over $10,000. Currency includes: U.S. and foreign coins and currency, cashier’s checks, bank drafts, travellers checks, and money orders.

The transactions must be reported to FinCEN using Form 8300 within 15 days of receiving the currency. Additionally, the transactions must be filed through the Bank Secrecy Act e-filing system.

According to the GTO, targeted businesses that engage in these types of transactions must also obtain (and retain for five years) from the customer, not only identifying information about the customer, but also identifying information about any third parties who are involved in the transaction.

Additional information to be reported with the Form 8300 includes:

• Description of the goods involved in the transaction
• Name and phone number of the person receiving such goods
• Address to which the goods are being shipped

Businesses covered by the GTO must begin complying on April 28, 2015, and it will be in effect for 180 days.

What are the penalties for non-compliance?

Failure to comply with the GTO exposes the business and any of its officers, directors, employees, or agents to liability, without limitation, for civil and/or criminal penalties.

This order is similar to a Geographic Targeting Order issued in October 2014 covering the Los Angeles Fashion District. In that GTO, over 1,000 federal, state and local law enforcement officials executed dozens of search warrants and arrest warrants linked to businesses suspected to be engaged in money laundering schemes that led to the seizure of over $90 million in currency.

“When we issued a similar GTO in the Los Angeles area last year, many speculated about whether we’d be doing the same in other parts of the country,” said FinCEN Director Jennifer Shasky Calvery. “We are committed to shedding light on shady financial activity wherever we find it. We will continue issuing GTOs, as necessary, as well as exercising FinCEN’s other unique anti-money laundering authorities, to ensure a transparent financial system that impedes money launderers and other criminals from masking their identity and illicit activity.”

How can I learn more?

If you have questions or concerns about FinCEN’s Geographic Targeting Order and how it may affect your business or bank, contact me or another member of Kaufman Rossin’s risk advisory services team.