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Regulation in Bits and Pieces

March 14, 2012 | Comments: 0 | Views: 134

Since mid 2011 FinCEN had issued the change in regulations for these businesses, and in their pursuit to extend their jurisdiction to foreign companies that had commercial relationships with MSBs in the United States, FinCEN published regulation before the infrastructure to accommodate for when the changes were in place.

This has become a pattern: issuing laws and regulations and scrambling to modify them as they meet obstacles. This time is definitely not the exception.

It took FinCEN more than six months to change their systems to accommodate for this offshore entities. FinCEN Form 107 includes a field to properly identify foreign companies that do not have a U.S.-based Tax Identification Number. The law requiring registration was already enacted, yet the mandatory e-filing system was unable to process requests with foreign tax identification numbers.

Here is where improvisation becomes evident: in order to create an account on FinCEN's e-Filing, the entity must provide its Federal Employer Identification Number (EIN). It is obvious that foreign companies do not have a U.S.-based EIN. The ending result is the same: it took over six months for FinCEN to make minor changes to a form, and to adjust their platform to accept this new form. Is it going to take another six months for FinCEN to modify its platform to allow the creation of accounts using non-U.S. tax identification numbers?

And this brings yet another question, how about the other BSA mandatory reports such as Currency Transaction Reports (to track large cash transactions) or Suspicious Activity Reports (to report suspicious activities)?

Foreign companies that conduct MSB-related activities in the United States, and which are now subject to following U.S. laws related to financial operations, such as those involving the Bank Secrecy Act, are already facing a burden, which starts with potential language barriers, all the way to conflicting laws between their original jurisdictions and U.S. federal regulations. The lack of adequate infrastructure support to be able to process reports incorporating the foreign company tax identification numbers adds yet an extra level of complexity to a relatively simple matter.

Unless there is serious accountability and adequate project management in this important regulator, delays will keep pushing proper implementation of regulations, and money launderers and other criminals will continue moving ahead on their criminal enterprise taking advantage of a system that literally takes years to implement small but relevant changes. It is certainly not a good idea to implement regulation in bits and pieces.

Juan C. Villa Certified Anti-Money Laundering Specialist

AML Compliance Solutions, Inc. Bank Secrecy Act, Anti-Money Laundering Compliance Consultants

5201 Blue Lagoon Dr. Suite 964 Miami, FL 33126 Toll Free 855-AML-TEAM Fax 888-538-1199

Source: EzineArticles
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Money Laundering


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1022 380


Form 107



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