The U.S. PATRIOT Act and
Anti-Money Laundering Programs

Q.  What does the PATRIOT Act require my company to do?

A.  The PATRIOT Act requires companies designated by the government as "financial institutions" (which is often interpreted to include industries such as the real estate business and insurance companies) to implement anti-money laundering (AML) programs and systems.

The PATRIOT Act requires that names of terrorists and other entities of concern are contained in the OFAC list.  Because of this, many companies implement verification of customer data against the OFAC (and other) watch lists.

Q.  How does Executive Order 13224 affect my company?

A.  Executive Order 13224, which was issued by President Bush shortly after 9/11, is designed to hinder terrorists by blocking the assets of individuals or companies that provide support, services, or assistance to, or otherwise associate with, terrorists and terrorist organizations designated under the Order, as well as their subsidiaries, front organizations, agents, and associates.

Note that it doesn't matter if the company, individual or organization that provides assistance, support, or services are unaware that they are dealing with a terrorist.  Companies should protect themselves by checking specified government watch lists to verify their customers.

Q.  Which businesses need to pay attention to these lists?

A.  The PATRIOT Act anti-money laundering rules specifically mention "financial institutions".  Most interpretations include banks, savings and loans, financial advisors, and "persons involved in real estate closings and settlements."

However, given that the PATRIOT Act is designed to hinder terrorists and drug kingpins from engaging in business with US firms, many other types of companies find it wise to comply with these regulations.

Q.  How much can fines for sanctions violations be?

A.  Fines for violations of various government watch lists can be substantial.  Depending on the program, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations.  Depending on the program, civil penalties range from $11,000 to $1,000,000 for each violation.

As an example, in August of 2007, the government announced that had paid a settlement of $182,750 for a sanction violation.  A number of other companies have been fined over $200,000 in 2007 alone.

Q.  How come I haven't heard of this before?

A.  Government sanctions have existed for many years, but since the terrorist attacks of September 11, 2001 the Federal government has dramatically increased its use of watch lists.  The government considers watch lists like OFAC to be a valuable weapon against terrorist and criminal organizations.

Q.  How can I ensure that my business stays in compliance?

A.  Verifilter continually monitors the relevant government watch lists, collecting them into a single, easy-to-search master list.  Subscribe to our service and you'll get instant access to our search facilities, including web-based checking and easy integration into your own web site.

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