Auto, Boat and Aircraft Dealers Must Have Anti-Money Laundering Programs
In response to the September 11 terrorist attack on our nation, Congress passed the USA PATRIOT Act. This law is designed to deter terrorist financing and money laundering, and requires that all businesses designated by Congress as “financial institutions” do at least two things: (1) implement formal, written Anti-Money Laundering Programs; and (2) check the government’s Terrorist Lists to make sure they are not doing business with terrorists.
There are thousands of businesses that had never been required to meet these obligations. Among those businesses are automobile, boat and aircraft dealers, all of whom have been generally designated as “financial institutions” under federal law. The two requirements are quite serious – failure to comply with them can be punished civilly by a fine of $25,000 to $100,000 or criminally by a fine of up to $500,000 and 10 years in jail for a person, or a fine of up to $1 million for a business.
On February 24, 2003, the U.S. Department of the Treasury issued a notice of proposed rule making for automobile, boat and aircraft dealers. In this notice, Treasury announced its intention to issue rules in the near future that will formalize these two requirements for automobile, boat and aircraft dealers. Before issuing any new rules, though, Treasury has requested that automobile, boat and aircraft dealers comment on the following questions. The responses they receive will very likely determine the scope of any new anti-money laundering and terrorist list checking requirements. The specific questions Treasury is asking are:
1. What is the potential money laundering risk posed by automobile, boat and aircraft dealers? Do money laundering risks vary by (1) vehicle type; (2) market (wholesale vs. retail); or (3) business line (international sales, sales to governments)?
2. Should these dealers be exempt from these two requirements?
3. If these dealers, or some subset of their industries, should be subject to having Anti-Money Laundering Programs, how should such Programs be structured?
4. How should these dealers be defined? Should there be a minimum threshold value in the definition? Should it include wholesale and retail sellers? Should sellers of used vehicles be included?
Treasury wants comments to be submitted in writing by April 10, 2003. If you are an automobile, boat or aircraft dealer or industry group, you should take this opportunity to comment. Holland & Knight is in a unique position to assist in preparing and submitting comments, in light of our extensive anti-money laundering experience and expertise.
For more information, contact Gregory Baldwin, Louise Cobbs or Chris Myers toll free, at 1.888.688.8500.