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The Financial Crimes Enforcement Network (FinCEN) announced the assessment of a civil money penalty in the amount of $12 million against Sigue Corporation and Sigue, LLC, a money services business headquartered in San Fernando, California, for violations of the Bank Secrecy Act (BSA). Sigue, without admitting or denying the allegations, consented to the civil money penalty. Concurrently, the Department of Justice announced today that Sigue has also entered into a deferred prosecution agreement on charges of failing to maintain an effective anti-money laundering program and will forfeit $15 million to the U.S. government. FinCEN’s penalty will be deemed satisfied by a portion of the $15 million payment to the Department of Justice.

Sigue has more than 7,000 agent businesses or “authorized delegates” located throughout the United States, providing money transmission services from the United States to Mexico and Latin America. The authorized delegates, which are typically small businesses and Sigue each, earn a small fee for the transactions conducted through these agents.

FinCEN determined that Sigue failed to establish and implement an anti-money laundering program reasonably designed to ensure compliance with the Bank Secrecy Act which led, in turn, to a failure by management at Sigue to implement measures to respond to continued patterns of suspicious activity, with repeated common characteristics, at certain agent locations. Specifically, on multiple occasions over an extended period of time, 47 agents assisted customers in the structuring of transactions represented to be drug trafficking proceeds to avoid the currency transaction reporting requirements of the Bank Secrecy Act. Sigue’s failure to implement effective internal controls, training or independent testing to manage the risk of money laundering was serious, longstanding and systemic.

“Today’s enforcement action reinforces our message on the importance of compliance by all the diverse sizes and types of financial institutions subject to the Bank Secrecy Act,” said James H. Freis, Jr., Director of the Financial Crimes Enforcement Network. “Principals of money services businesses must exercise effective oversight and control over the authorization, transactional activity and operations of their agents to ensure compliance with the BSA and prevent money

The 2007 Annual Conference of the Money Transmitter Regulators Association (MTRA) kicked off on October 9th in Charlotte, North Carolina. Over 200 regulators and industry officials attended the three day event, representing member states and money transmitters across the country. James H. Freis, Jr., Director of the Financial Crimes Enforcement Network (FinCEN) was the keynote speaker.

In his address, Director Freis announced the availability of a new resource to help reduce common errors found on Suspicious Activity Reports (SARs). The activities and transactions reported through SARs provide law enforcement and regulatory authorities with useful information to detect and disrupt potentially illegal activities such as money laundering and terrorist financing. The document was compiled after FinCEN completed an analysis of SARs (http://www.fincen.gov/SAR_Common_Errors_Web_Posting.pdf).

The conferees also heard presentations from academics who shared their research on money transmission. Dr. Dean Yang from the University of Michigan described his theory linking the volume of transmissions with the degree of control held by the remitter over the ultimate use of the funds. The results of his study of money transmission by Salvadoran migrant workers in Washington, D.C., Virginia and Maryland will be completed in 2008. Dr. Manuel Orozco reviewed and analyzed the main dynamics of the $100 billion in annual remittances from U.S. migrants which represent 30% of global flows.

In a separate meeting of regulators, the preliminary results of a MTRA survey of state regulation of money transmission in the U.S. were presented by Nick C. Kyrus and Karen S. Heede. The survey showed that with the exception of Alaska, Montana and South Carolina, 47 states and the District of Columbia require money transmitters to obtain licenses prior to offering services to their residents. Before issuing licenses, most state laws require regulators to make findings about the character and financial responsibility of the applicant and its senior members. Supervision of operations of money transmitters consists of on-site and off-site examinations, review of periodic reports filed by licensees, and resolving consumer complaints. The regulators elected the following MTRA directors and officers for a two year term: Joseph E. Rooney (MD) President and Director, Randall S. James (TX) Vice President and Director, Robert Venchiarutti (CA) Secretary and Director, Tracy M Hudson (WV) Treasurer and Director, Sonya L. Allen (KS) Director, John Bishop (OH) Director, Reitzel Deaton (NC) Director, Greg Gonzales (TN) Director, Nicholas C. Kyrus (VA) Director, and Regina A. Stone (NY) Director.

President Rooney announced that the 2008 MTRA Annual Conference will be held at the Snow King Resort, Jackson Hole, Wyoming on September 3-5.

Twenty-five state examiners attended the first week-long MTRA School for Money Transmitter Examiners held in San Francisco, California on June 18-22, 2007. Attendance was limited to the first 25 registrants and due to high demand, another session of the school will be held in Annapolis, Maryland, August 20-24 at the Historic Inns of Annapolis.

MTRA president Joseph Rooney praised the organizers and school instructors for their hard work and dedication. He stated that the use of veteran examiners as instructors, the careful selection of relevant topics for discussion, and the prevailing informal atmosphere made the school more meaningful and a great success.

Six veteran state examiners made presentations on topics such as planning the exam, analysis of financial statements of money transmitters, data mining, the MTRA core exam, the MTRA rating system, and anti money laundering and OFAC compliance. The instructors were Jeanette Barraza, CAMS, Financial Institutions Supervisor, California; John Bishop, Senior Administrator, OH; Bert Gonzalez, Financial Examiner, TX; Julio Prada, CAMS, Assistant Deputy Commissioner, CA; Julie Vanderslice, CAMS, Financial Examiner Supervisor, WA; Robert Venchiarutti, Deputy Commissioner, California; and Robert Mbama, CAMS, Consultant. The curriculum of the school was developed by the speakers.

The MTRA Board of Directors had a strategic planning retreat in Austin Texas last month for the purpose of defining MTRA’s mission, objectives/ goals, and devise strategies to meet them over the next five years. The meeting was facilitated by J. Keith Hughey of Wilson, Hughey & Yarbrough, LLC, a management consulting firm, and hosted by Texas Banking Commissioner Randall James. The mission of MTRA, as formulated by the Board, is “to advance the efficient and effective regulation of the money transmission industry”. It was agreed that the core values needed to meet MTRA’s mission are cooperation, integrity, service, and excellence. The Board’s vision for the next five years is the establishment of a cooperative state regulatory framework for the benefit of the member states, the industry and the public. Such a regulatory framework will be established by (a) advancing uniform examination standards, reports, forms and ratings that are crucial in providing value to both the membership and the industry; (b) promote a more efficient and less burdensome state regulatory system that has universal respect and credibility; (c) provide quality educational opportunities and certification to participants through a well defined curriculum: (d) collect and disseminate reliable industry specific data , common analytical standards, and best practices: (e) serves as the authority for money transmission issues on a national scale; and (f) partner with state and federal authorities to further efforts in the direction and elimination of illegal activities, including terrorist financing.

Twenty-five state examiners have registered for MTRA’s School for Money Transmitter Examiners to be held in San Francisco, California on June 18-22, 2007. The school will run Monday through Friday noon at the Holiday Inn Express Hotel & Suites, 373 S Airport Blvd, San Francisco, located close to the SF Airport. The school will be limited to 25 state examiners. Due to high demand, another session of the school will be held in Annapolis, Maryland, August 20-24 at the Historic Inns of Annapolis.

The curriculum of the school has been developed by Robert Mbama, a former money transmitter supervisory examiner at the California Department of Financial Institutions and a group of supervisory examiners headed by MTRA directors Robert Venchiarutti of California and John Bishop of Ohio. Six instructors will cover topics such as planning the exam, analysis of financial statements of money transmitters, discussion of the core exam, discussion of the MTRA rating system, and anti money laundering and OFAC compliance.