USA Patriot Act
The Financial Crimes Enforcement Network (FinCEN) has issued a final rule
that requires automobile dealers and other financial institutions to respond
to requests for information from FinCEN on behalf of federal law enforcement
agencies that are investigating money laundering or terrorist activity.
FinCEN, a bureau within the Department of the Treasury, issued the
regulation to implement the USA PATRIOT Act, a post-9/11 law designed to
strengthen law enforcement’s ability to investigate and penalize money
laundering and disrupt terrorist financial networks. The regulation took
effect September 26, 2002.
The regulation is primarily a reporting requirement. It does not require
dealers to take (or decline to take) any action on accounts or transactions
that are the subject of a FinCEN request. Dealers are advised, however, that
the International Emergency Economic Powers Act (IEEPA) and Executive Order
13224 prohibit "any transaction or dealing" with named individuals or
entities who have been linked to terrorism. An alphabetical master list of
those named individuals and entities (also known as "blocked persons") is
maintained by the Office of Foreign Asset Control (OFAC) at
http://www.treas.gov/ofac/t11sdn.pdf.
Dealers are prohibited from entering into transactions with, and must freeze
the existing accounts of, any "blocked person" identified on the OFAC list.
New Requirements. The regulation imposes the following requirements
on automobile dealers:
- If requested by FinCEN, a dealer must expeditiously search its records to determine whether the dealer has maintained (or currently maintains) an account for or has engaged in a transaction with any individual, entity or organization identified by FinCEN.
- If the dealer identifies such an account or transaction, the dealer must send a report to FinCEN in the manner and time frame specified in the FinCEN request. Unless otherwise indicated in the request, the search requirement is retrospective and does not require dealers to report on future account opening activity or transactions.
- The report must contain the following information:
- The name of the individual, entity or organization
- The number of each such account, or in the case of a transaction, the date and type of each such transaction
- Any social security number, taxpayer identification number, passport number, date of birth, address, or other similar identifying information provided by the individual, entity or organization when each such account was opened or each such transaction was conducted. - If a dealer receives an information request, it must designate one person at the dealership to be the point of contact regarding the request and any future requests that the dealership receives from FinCEN. If requested by FinCEN, a dealer must provide FinCEN with the person’s name, title, mailing address, e-mail address, telephone number and facsimile number in the manner specified by FinCEN. Dealers who have provided FinCEN with contact information must promptly notify FinCEN of any changes to that information.
- Dealers are prohibited from using information provided by FinCEN for any purpose other than providing FinCEN with the required report.
- Dealers also are prohibited from disclosing to any person, other than FinCEN or the federal law enforcement agency for whom FinCEN is requesting information, the fact that FinCEN has requested or obtained such information (except as necessary to process the request).
- Dealers must maintain adequate procedures to protect the security and confidentiality of requests from FinCEN for such information. This requirement is deemed satisfied if a dealer applies to this information the same procedures it has established to comply with section 501 of the Gramm Leach Bliley Act (15 U.S.C. § 6801) and the Federal Trade Commission’s implementing regulation (16 CFR Part 314) pertaining to the protection of customers’ nonpublic personal information.
The final
regulation may be obtained at:
http://www.treas.gov/press/releases/docs/314finalrule.pdf.
The foregoing summary of the new
information sharing requirements under section 314(a) of the USA PATRIOT Act
is not intended as legal advice. Dealers should consult their counsel
concerning the most appropriate means of instituting and complying with
these requirements at their dealership.
Treasury Department Extends USA Patriot Act for Auto Dealers.
The provisions of the USA Patriot Act which required financial institutions,
including auto dealers, to establish an anti-money laundering program,
designate a compliance officer, and maintain ongoing employee training
programs, was originally extended to October 24, 2002. On October 25, 2002,
the Treasury Department again extended the effective date of this section of
the USA Patriot Act. The Treasury Department is in the process of drafting
regulations specific to each type of financial institution, including auto
dealers, which are scheduled to be released within the next six months.