Banking & Financial Services

On March 2, 2011, the Financial Crimes Enforcement Network (“FinCEN”) announced an assessment of Civil Money Penalties totaling $40,000 against brothers Omar Abukar Sufi and Mohamed Abukar Sufi (the “Sufi Brothers”), for non-compliance with the Bank Secrecy Act (“BSA”) money transmitter registration requirements (the “Announcement”).

The Sufi Brothers, doing business as Halal Depot of Wyoming, Michigan operated a money transmission business at their grocery store by sending funds on behalf of their customers to beneficiaries in Yemen, Somalia, Sudan, Kenya, Saudi Arabia, Uganda, Ethiopia, Qatar, Europe and the United Arab Emirates.  The Sufi Brothers did not register with FinCEN as a money services business (MSB) as required by the BSA.

The Sufi Brothers facilitated the transfer of tens of thousands of dollars over the course of many years.  They accepted cash and other instruments, such as food stamp proceeds and charged fees of six (6) to seven (7) percent per transaction to facilitate these transfers.  The Sufi Brothers recently plead guilty in the United States District Court for the Western District of Michigan to federal criminal charges of food stamp fraud and operating an unlicensed money transmitting business, the latt being a violation of 18 U.S.C. § 1960.  The Sufi Brothers were sentenced to five (5) years in prison and required to pay restitution to the U.S. Department of Agriculture which funds the food stamp program.

Similarly, on December 16, 2010, FinCEN announced the assessment of a $12,000 civil money penalty against Baltic Financial Services, Inc. of Montclair, New Jersey (“Baltic”), for non-compliance with BSA registration requirements applicable to money transmitters (the “Baltic Announcement”) (the Announcement and the Baltic Announcement collectively, the “Announcements”).

Baltic provided customers with unlimited money transmission services to and from Latvia.  From January 2005 and September 2010, Baltic allegedly failed to maintain its MSB registration with FinCEN despite knowledge of registration obligations imposed on independent money transmitters by the BSA.  Furthermore, Baltic allegedly failed to respond in a timely manner when repeatedly reminded that its registration with FinCEN had lapsed and continued to engage in money transmission without registering under the BSA.

These Civil Money Penalties illustrate FinCEN’s continued efforts to apply its enforcement authority to persons and companies engaged in money transmitting that fail to register as money services businesses (MSBs) with FinCEN.  Similarly, the cases demonstrate the existence of criminal exposure for those that engage in money transmitting businesses in the United States without appropriate state licensing or FinCEN MSB registration.  This will become even more significant when FinCEN issues its final rule redefining an MSB, which expanded definition is expected to cover anyone, wherever situated (that is not subject to an exception under the rule), who transmits funds for others through the U.S. regardless of a physical presence.

To read complete copies of the Announcements on the FinCEN website, click here and here:

 

This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken which might be influenced by this publication.

Should you wish to receive further information concerning matters discussed in this publication, please contact the following attorneys in our Banking & Financial Services Practice:

Clemente L. Vazquez-Bello
305.376.6082 ▪ [email protected]
Andres A. Fernandez
305.376.6097 ▪ [email protected]
Marina Olman
305.376.6069 ▪ [email protected]

 

Established in 1925, Gunster Yoakley is one of Florida’s oldest and largest full-service law firms.  Its substantial and diversified practice serves an extensive client base of international, national and local businesses, institutions, local governments and prominent individuals.  The firm maintains a strong presence in Florida with offices in Fort Lauderdale, Miami, Palm Beach, Stuart, Vero Beach, West Palm Beach, Jacksonville, and Tallahassee. Gunster Yoakley is home to more than 160 attorneys and 329 employees, providing counsel to clients through 18 practice groups including corporate, immigration, employment, technology and emerging companies, tax, banking and financial services,  real estate, land use and environmental, business litigation, and private wealth services.

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