Tuesday, October 21, 2003 |
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In response to the increased interest and confusion about anti-money laundering requirements under the USA PATRIOT Act and the Presidential Order blocking transactions with terrorists, NMMA has prepared this fact sheet for our members.
What Are the Anti-Money Laundering Requirements?
In 2001, Congress strengthened the existing anti-money laundering laws in the USA PATRIOT Act to expand which “financial institutions” are required to establish anti-money laundering compliance and customer identification programs. A “financial institution” is defined broadly and under the new law the U.S. Treasury Department can require a business engaged in vehicle sales, including boat sales, to establish an anti-money laundering program.
On February 24, 2003, Treasury published an advance notice of proposed rulemaking on whether to require vehicle sellers (including boat sellers) to have an anti-money laundering program. NMMA submitted detailed comments on behalf of NMMA’s members. These proposed regulations have not been finalized by the Treasury Department and so the proposed requirements are not in effect for vehicle sellers. The Treasury Financial Crimes Enforcement Network (FinCEN) has informed NMMA that the agency has not yet decided whether to require vehicle sellers to have an anti-money laundering program. Due to other priorities, a proposed rule will not be published by the agency until 2004. However, there are currently anti-money laundering regulations in effect for banks, saving associations and credit unions.
What About Transactions with Terrorists or Other “Specially Designated Parties?”
On September 24, 2001, President Bush issued an Executive Order that created a list of persons and entities believed to be connected with terrorism (E.O. 13224). The Order banned anyone in the U.S. from conducting business with any person, entity, or group on the list. In order to comply with this requirement and other sanctions programs, NMMA urges members to check the identities of clients, customers, vendors, employees and agents against the “OFAC List.” The Treasury Department’s Office of Foreign Assets Control (OFAC) maintains a list of “Specially Designated Nationals and Blocked Persons” on its website (http://www.treas.gov/offices/eotffc/ofac/sdn/index.html). The list largely contains the names of foreign persons, companies and foreign government controlled entities. This list is searchable, downloadable, and updated frequently. Checking OFAC’s List is particularly important when establishing new business relationships with people unknown to you and when conducting large financial transactions, especially known or suspected foreign transactions. If you find a match for a person on the list, call OFAC’s compliance hotline at 800-540-6322 for confirmation and further instructions.
OFAC’s List of Specially Designated Parties also includes parties designated under the other sanctions programs. Sanctions programs in addition to the terrorist program are in effect for:
· Balkans
· Burma (Myanmar)
· Cuba
· Diamond trading
· Iran
· Iraq
· Liberia
· Libya
· Narcotics trafficking
· Nonproliferation
· North Korea
· Sudan
· Zimbabwe
NMMA members should be aware of these programs before entering into a business relationship with foreign government entity or a company or person from one of these countries. U.S. sanctions violators can be subject to potential civil and criminal penalties, as well as negative publicity. More information on each of these programs can be found at: http://www.treas.gov/offices/enforcement/ofac/sanctions.
OFAC has also made available on its website the Department of Defense National Imagery and Mapping Agency’s, Notice to Mariners No. 1: U.S. Economic Sanctions: Concerns for Mariners (January 4, 2003) available at http://www.treas.gov/offices/eotffc/ofac/articles/index.html. This Notice outlines the general prohibitions for mariners and summarizes the general trade restrictions by country.
Do Marine Manufacturers Have to Worry About These Issues or Not?
Yes and no. Yes, boat sellers must confirm that none of their customers or companies with which they do business are on the list of “Specially Designated Nationals and Blocked Persons.” No, in that boat sellers, as of now, do not have to have an anti-money laundering compliance and customer identification program since no final rules have been promulgated.
For more information please contact NMMA’s Regulatory Counsel, Cindy Squires, at 202-721-1617 or csquires@nmma.org. Questions about the OFAC List can also be directed to OFAC’s compliance hotline at 1-800-540-6322.
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