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 Treasury Department Issues Additional USA PATRIOT Act Regulations



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The Department of the Treasury and the Financial Crimes Enforcement Network (FinCEN) today issued a proposed rule and two advance notices of proposed rulemaking concerning a requirement that additional categories of financial institutions establish an anti-money laundering program. 

These regulations form part of Treasury�s work to implement section 352 of the USA PATRIOT Act, a provision that requires all financial institutions to establish anti-money laundering programs.  Treasury wishes to specifically commend those within these industries for helping Treasury and FinCEN to understand various aspects of these industries. 

In a proposed rule, Treasury and FinCEN propose to require certain dealers in precious metals, precious stones, and jewels to establish an anti-money laundering program designed to detect and prevent money laundering and the financing of terrorism.  The proposed rule covers a broad range of industry segments including those trading in precious metals, including refiners; those trading in loose gemstones; large and small scale manufacturers of jewelry; and retail stores that function as a dealer in such items. 

The proposed rule is limited, however, to dealers�those businesses that both buy and sell the items�thereby excluding pure retail outlets.  Additionally, the rule proposes to exclude businesses that purchase or sell less than $50,000 worth of the material each year.  Written comments on the proposed rule may be submitted within 60 days of its publication in the Federal Register, which is expected to occur later this week.

In addition, Treasury and FinCEN issued two advance notices of proposed rulemaking seeking public comment on imposing an anti-money laundering program requirement on vehicle sellers and travel agents.  Section 352 requires Treasury to issue regulations requiring financial institutions to establish an anti-money laundering program that is commensurate with the financial institutions� size, location and activities. 

After researching these two industry sectors, Treasury and FinCEN determined that additional public comment on various aspects, including the money laundering risks that could be addressed through additional regulation, is necessary.  An advance notice of proposed rulemaking provides Treasury and FinCEN with an opportunity to discuss the various risks and regulatory issues while soliciting public comment prior to issuing a formal proposed rule.

The notices highlight important issues under consideration.  For example, because the category of vehicle sellers is quite inclusive, comments on the scope of the definition, the money laundering risks associated with the various types of vehicles and distribution mechanisms, and the structure of an appropriate anti-money laundering program are sought. 

With respect to travel agents, comments are specifically sought on whether minimum business thresholds are necessary as well as the money laundering risks that may be posed by these businesses.  Both vehicle sellers and travel agents, like most other businesses, are already under the existing regulatory obligation to report the receipt of cash or monetary instruments in excess of $10,000. 

Written comments on the advance notices of proposed rules may be submitted within 45 days of its publication in the Federal Register, which is expected to occur later this week.

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