Message from the President & CEO
On October 26, 2001 President Bush signed the USA Patriot Act into law. The primary purpose of the law is to prevent Terrorism. Title III, entitled “International Money Laundering Abatement and Antiterrorist Financing Act of 2001” specifically addresses money laundering. Prior laws such as the Bank Secrecy Act required financial institutions to report certain transactions and made money laundering a crime.
Title III of the USA Patriot Act directs expansion of the existing anti-money laundering regulatory schemes to encompass all financial institutions, including escrow agents. It also centralizes the authority to oversee regulatory compliance in the United States Treasury Department, which is now charged to develop and implement responsive regulations.
One of the most important provisions directly affecting escrow agents is Section 352 of the Act, which specifies that all financial institutions, including escrow agents, develop certain anti-money laundering policies and programs. Escrow agents are required to:
- Develop internal policies, procedures and controls
- Designate a compliance officer
- Maintain an ongoing training program
- Establish an independent audit function to test programs
In order to meet requirements of the USA Patriot Act, Interactive Voices Inc. has developed the attached Anti-Money Laundering Policy. This Policy needs to be strictly enforced. The United States Treasury Department is expected to enact regulations specific to escrow agents by the end of June. These may require additional policies and programs.
President and CEO
Interactive Voices Inc.'s Anti-Money Laundering Policy
Recent Federal anti-money laundering legislation has caused Interactive Voices Inc. to review and revise our policy for handling funds. The changes are necessary to ensure we comply with money laundering regulations and not accept payments that expose Interactive Voices Inc. and its producers to possible criminal fines and penalties.
Money Laundering Defined
Money Laundering is any transaction or series of transactions undertaken to conceal or disguise the nature and source of funds that have been obtained from illegal activity. The main objective of the money launderer is to transform ‘dirty' money into seemingly clean money or other assets in a way to leave as little trace as possible of the transformation. Examples of illegal activities that often involve money laundering are: drug trafficking; terrorism; smuggling; fraud; bribery; robbery; embezzlement; and illegal gambling.
There are three recognized forms of the money laundering process:
- Placement - Physically depositing “cash” into banks and non-bank financial institutions such as currency exchanges; converting “cash” into other financial instruments such as by purchasing monetary instruments (travelers' checks, payment orders); or using “cash” to purchase expensive items that can be resold. Launderers often seek to deposit cash into banks in less regulated countries and then transfer these funds to banks in regulated environments as “clean”. Smurfing - a form of Placement where the launderer makes many small cash deposits instead of a large one to evade local regulatory reporting requirements applicable to cash transactions.
- Layering - Separating the proceeds of criminal activity from their source through the use of layers of financial transactions (multiple transfers of funds among financial institutions, early surrender of an annuity without regard to penalties, cash collateralized loans, L/Cs with false invoices/bills of lading, etc.) to disguise the origin of the funds, disrupt any audit trail, and provide anonymity. Launderers want to move funds around, changing both the form of the funds and their location in order to make it harder for law enforcement authorities to identify “dirty” money.
- Integration - Placing the laundered proceeds back into the economy in such a way that they re-enter the financial system as apparently legitimate funds.
It is also illegal to transport, transmit or transfer, or attempt to transport, transmit or transfer a monetary instrument or funds in excess of $10,000 either into or out of the United States, if the purpose is to carry out an illegal activity, or to avoid reporting requirements. Penalties for violations are up to 20 years in prison and up to $500,000 in fines. United States Customs Service Regulations require a person to file a “CMIR” Report upon physically transporting, mailing or shipping funds or monetary instruments in an aggregate amount of $10,000 or more, either into or out of the United States.
Interactive Voices Inc. has made the following effective immediately
- Agents and employees should always know the source of client funds used to pay premiums. Funds derived from illegal activities should never be accepted.
- Cash should never be accepted. Other monetary instruments (cashier's checks, money orders, bank drafts and traveler's checks) should not be accepted or transported into the United States by an agent, unless the agent knows the source of funds is legal, and the agent completes all required disclosure forms (CMIR).
Acceptable forms of payment for Interactive Voices Inc.
- Personal or business checks drawn on a U.S. bank, or branch of a foreign bank located in the United States, and subject to the Bank Secrecy Act.
- Third party checks where there is a clear connection of the third party to the underlying transaction.
- Cashier's checks, money orders, bank drafts and traveler's checks for over $10,000 in a single denomination.
- Wires that are received and processed through banks located in the United States, and subject to the Bank Secrecy Act.
Unacceptable forms of payment for Interactive Voices Inc.
- Personal or business checks drawn on a foreign bank.
- Third party checks where there is no clear connection of the third party to the underlying transaction.
- Checks made payable to individual producers, agencies, or to "cash".
- Routine payments by cashier's checks, money orders, bank drafts and traveler's checks for $10,000 or less. Payments using these instruments will be evaluated.
- Agents' personal checks or checks drawn on agency bank accounts to pay for clients' transactions.
All managers will develop written procedures for their areas of responsibility in order to promote compliance with this policy.
The Compliance Officer for this policy is the Chief Executive Officer (currently David A. Ciccarelli). The responsibility of the Compliance Officer is to ascertain that Company policy is in compliance with the current laws and regulations, and that the policy is communicated to the appropriate agents and employees.
Prior to April 10, 2009 all employees, agents and producers will be provided with a copy of this policy. All new employees, agents, and producers will be provided with a copy of this policy at their time of hiring. It will be the responsibility of all managers to provide ongoing training regarding this policy and the procedures for compliance.
Internal Audit will complete an audit of compliance with this policy no later than six months after the effective date and at appropriate intervals thereafter.
We appreciate your understanding and full cooperation in implementing this policy. Senior Management approved this policy on April 17, 2009.