USA Patriot Act and Anti-Money Laundering
Part of the Patriot Act was dedicated to stopping money laundering. The patriot act asked banks and investors to pay attention to and flag as suspicious the following things: A sudden wiring of large sums of money; Excessive transfers of money between several accounts under the same name; An individual making several large cash deposits; Individuals making several sub-$10,000 transactions; Wire transfers to countries that are not compliant with the Financial Action Task Force; A company transferring deposits into non-business accounts for no clear reason; An individual setting up a long-term investment, then immediately liquidating their investments; An individual immediately disbursing their bearer bonds; as well as people who showed a lack of concern for the risks or costs associated with investing.
When the Patriot Act went into enforcement, when it was created, it led to a lot of changes for securities firms and financial institutions. They were required to start monitoring their accounts for certain behaviors that might indicate money laundering schemes specifically aimed at funding terrorist activities. Among those types of activities that they had to start monitoring for I have several listed on the board behind me.
The Patriot Act, when it came into force, required those overseeing accounts to monitor those accounts for these activities as they might be an indication of money laundering taking place. The type of behaviors they had to monitor their accounts for included the sudden wiring activity of wiring money suddenly and rapidly and not in any sort of normal scheme of things. The sudden wiring of money was something that they were to flag and notice.
Also, if someone had multiple accounts in only one name, but there was excessive transfer of money between those multiple accounts. They would have flagged that kind of behavior as well. They were to look for attempts to make a large cash deposits on a regular basis. They were also to monitor and notice when there were frequent transactions of just under ten thousand dollars, which is the limit for reporting to the IRS.
If there were many different deposits all just under ten thousand dollars they would flag that activity as perhaps money laundering schemes. Then, they were to look for wire transfers to non-FATF countries. These are countries that the Financial Action Task Force noticed as being in noncompliance. They did not look for this kind of money laundering activity. They didn’t try to limit money laundering activity.
They themselves took no part in trying to end the funding of terrorist activities. If the Financial Action Task Force noticed that a country was not friendly in trying to stop money laundering nor prevent the funding of terrorism, they flagged them. If there were frequent transfers or wire transfers to these types of countries, then those monitoring the accounts were to flag them and say, “This may be a money laundering scheme, because it’s going to one of these countries that doesn’t participate.”
They would also notice if there were transfer deposits into non-business accounts for no reason. Someone has a business account and they have a non-business account, or perhaps multiple non-business accounts, and money was constantly going from the business account into the non-business account with no real discernible reason for why it should be transferred into those non-business accounts.
They would also look for people obtaining a long-term position and then quickly liquidating that position. They asked the person managing the account “I want to go into long term investment here,” and they quickly liquidated it afterwards. They were to look for accounts that looked for immediate funds disbursement of bearer bonds. They didn’t want to hold onto it and wait to get the full return.
They wanted it immediately, the money brought out of it. When spoken to, they had a complete lack of concern for risk involved in the investment or for the transaction or management costs associated with the account. These are some of the things that the Patriot Act brought about as changes for anti-money laundering oversight for the securities firms and financial institutions. These behaviors needed to be flagged, looked into, and perhaps reported.