"Adam Service Faces Penalty for Bank Secrecy Act Breaches: A Financial Compliance Fallout"

BREIF INTRO: Adam Service Money Service Business offered financial services like currency exchange, money transfers, and payment solutions. They aimed to provide secure and efficient transactions. Saleh H. Adam, doing business as Adam Service, was penalized by the Financial Crimes Enforcement Network for Bank Secrecy Act violations. Adam Service admitted the violations, accepted the penalty, and underwent investigations and examinations by the IRS.

WHAT WENT WRONG?

1. FAILURE TO REGISTER AS MSB: The Bank Secrecy Act and its regulations required certain money services businesses (MSBs), including money transmitters, to register with the Financial Crimes Enforcement Network by filing a Registration of Money Services Business (RMSB) and renewing it every two years. Adam Service was obligated to register as an MSB due to its operations as a money transmitter. However, Adam Service conducted its business without continuous registration with the Financial Crimes Enforcement Network for 237 days during 2010.

2. INADEQAUTE AML PROGRAM: Adam Service failed to implement an adequate AML program and provided wire services to Yemen, a high-risk country. Since 2007, it transmitted about 1,400 wires per year and did not review transactions for suspicious activity. Mr. Adam admitted to avoiding customer identification to retain business and allowed direct deposits into his account. The Financial Crimes Enforcement Network found multiple violations of reporting and recordkeeping requirements, showing a reckless disregard for AML regulations.

CIVIL MONEY PENALTY: The Financial Crimes Enforcement Network had determined that a civil money penalty in the amount of $12,000 is warranted for ADAM SERVICE violations of the Bank Secrecy Act.

LESSONS LEARNED:

Key learnings for other financial institutions:

1. Compliance Was Non-Negotiable

2. Timely Reporting Was Essential

3. Customer Due Diligence Could Not Be Overlooked

4. Effective Use of Technology

5. Regular Audits and Reviews Were Necessary

FPM AML-CHECK® offered an advanced screening solution to help financial institutions in Pakistan combat financial crimes, with a comprehensive database of domestic Politically Exposed Persons (PEPs). Recognized for excellence and endorsed by the NBFI and Modaraba Association of Pakistan, our award-winning AML solution ensured robust compliance.

For more information, contact us at:

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Email: haris@fpmamlcheck.com