FRAUDBASICS

USA PATRIOT Act and Money Laundering, Part One

 


The USA PATRIOT Act, signed into law after 9/11, strongly targets suspected money laundering activities and creates new requirements for financial institutions.

Following the tragedies of 9/11, President George W. Bush signed into law just six weeks later the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the USA PATRIOT Act). The act reflected U.S. Congressional concern with the money
laundering activities of the terrorists who committed the attacks.

Excerpted from 1.607 – 1.1612 of the NEW Fraud Examiners Manual, 2003 U.S. Edition, ©2003 Association of Certified Fraud Examiners, Austin, Texas 

Title III of the act, the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, creates significant new requirements for financial institutions aimed at curtailing money laundering, including the following:

  • Financial institutions are required to establish anti-money laundering programs. (See below in “Anti-money Laundering Programs” for the definition of “financial institution.”)
  • Financial institutions are required to establish programs for identifying customers.
  • U.S. banks are prohibited from maintaining correspondent accounts with non-U.S. shell banks. Securities broker-dealers are required to file suspicious activity reports.
  • Financial institutions are required to adopt special due diligence procedures for non-U.S. correspondent accounts and private banking accounts.
  • Non-financial businesses are required to file currency transaction reports.
  • Financial institutions have increased authority to share customer information relating to money laundering.
  • The government has greater power to obtain information from financial institutions.

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