Newly Released Mexican Regulations Imposing Restrictions on Mexican Banks for Transactions in U.S. Currency

The Department of the Treasury, Financial Crimes Enforcement Network (FinCEN) issued guidance on June 21, 2010 regarding the newly released Mexican Regulations, which are likely to impact financial institutions in the United States.  The regulations are an attempt to decrease the significant amount of U.S. currency in Mexican banks that are proceeds of illegal activities, including the sale of narcotics within the U.S.  The Mexican Finance Ministry, Secretaria de Hacienda y Credito Publico de Mexico (SHCP), recently published the new anti-money laundering regulations, which will restrict the amount of physical U.S. Currency Mexican Banks may receive.  The regulations are expected to go into effect approximately ninety calendar days after official publication, which is expected to be on or about September 14, 2010.

The regulations provide that Mexican Banks shall be prohibited from receiving U.S. currency for transactions involving currency exchange, for receipt of payment for services, or for transfers or remittances of funds.  The regulations make a distinction between customers and non-customers.  All U.S. currency transactions are prohibited for legal entities and trusts that are non-customers.  Individual non-customers may deposit up to $300 of U.S. currency per day and $1,500 per month.  For non-Mexican non-customers (e.g. foreign tourists), the daily threshold will not apply, but they will be subject to the $1500 monthly threshold for individual non-customers.  Legal entities and trusts classified as customers are generally prohibited from U.S. currency transactions with one exception.  The exception involves legal entities or trusts who are customers and conduct most of their business within a tourist area, within twenty miles of a United States border, or within the States of Baja California or South Baja California.  The bank may receive an aggregate limit of $7,000 in U.S. Currency per calendar month from the legal entities and trusts meeting the qualifications of this exception.  The individual customers have an aggregate limit of $4,000 that can be deposited in a Mexican Bank per calendar month.  Finally, the regulations do not restrict non-cash transactions denominated in U.S. Currency such as wire transfers, ACH payments, credit card transactions, and travelers checks. 

The change in Mexican regulations is likely to have a significant impact on the operations of U.S. financial institutions.  When a financial institution is determining whether to file a suspicious activity report (SAR), they are advised to consider these regulations in conjunction with other information such as transaction volumes and source of funds.  FinCEN and law enforcement have stated that if a financial institution determines that a transaction is suspicious and thus has an obligation to file a SAR, and the facts and circumstances of the transaction lead the institution to suspect that the transaction is being entered into as a result of the Mexican currency restrictions, the financial institution is to include the specific term, “MX Restriction” in the narrative portion of the SAR filing.  FinCEN and law enforcement further request that the financial institution include all information available for each party suspected in engaging in this activity within the suspect/subject information section of the SAR.  This section should also include any available information on the common carrier, courier, or shipper of the currency, and information on the point of exportation of the currency from Mexico and the point of importation in the United States, if known. 

FinCEN expects changes in transaction activity before the regulations become effective.  Some of these predicted changes include the decline of the overall amount of U.S. currency repatriated by Mexican banks to the United States.  FinCEN anticipates that individuals and businesses who are no longer able to deposit U.S. currency in Mexican banks may instead look directly to U.S. financial institutions to deposit U.S. currency.  The limitations may also lead to increased demands by Mexican persons and non-Mexican persons doing business with Mexico to utilize other types of payment services or products to settle debts.   Additionally, the regulations may lead criminals in the United States to attempt to launder U.S. currency within the United States, possibly through trade-based money laundering conducted by transfers of non-cash proceeds to Mexico.  Criminals may also use intermediary countries to divert U.S. currency to Mexico.  Because of this concern, FinCEN asks financial institutions to consider and monitor significant increases in U.S. currency activities involving countries other than Mexico. 

If you have any questions pertaining to the newly released Mexican regulations above or any other anti-money laundering provision, contact Fuerst Ittleman PL at contact@fidjlaw.com.

Miami Medicare Fraud Ring Linked to Check Cashing Stores

Casual news-watchers may have missed the significance of the seemingly unrelated stories, but the legal and regulatory compliance professionals at FHI clearly saw the connection.As we reported previously, federal law enforcement agencies have increased their enforcement focus on Medicare fraud in the Miami area in a significant way. Under this program, on June 23, 2009, Federal officials in Miami announced that eight defendants were charged in an elaborate Medicare fraud that spanned five states, used 29 fake storefronts, and attempted to steal $100 million from Medicare and Medicare Advantage.

The indictments allege that Michel De Jesus Huarte and the defendants fronted their scam through more than a dozen phony medical clinics throughout the Southeast United States. In many cases, the storefronts were simply post office boxes.

They would submit fraudulent invoices to the government, then use check cashing stores to launder the reimbursements; money is harder to track through these stores than through conventional banks. The fraud group owned two check cashing stores in the Miami area and netted between $30,000 and $80,000 in cash several times a week.

According to government court filings, Huarte paid the fake store owners in cash “with the understanding that (they) would flee to Cuba to avoid law enforcement detection or capture.” Two of the defendants and approximately $30 million are still missing.

This fraud ring is similar to a scheme run through the La Bamba Check Cashing store. In that case, the Benitez brothers were accused of laundering $24 million in Medicare fraud money by using shell companies to cash checks at a local chain of stores. As we reported in our blog, Juan Rene Caro, owner of La Bamba, was recently sentenced in Federal court for using the check cashing store to launder funds from a construction fraud ring involving violations of the Bank Secrecy Act. You can read about the harsh sentence handed down to Mr. Caro here.

Viewed through a single lens, these indictments and convictions mean that the Federal government is not only going after those who perpetrate Medicare fraud, but those who move and launder the funds from these schemes as well. The implications are clear: if you are involved in Medicare fraud activities in any way, the government will be coming for you.

Let Fuerst Ittleman assist your health care company with its regulatory compliance to help protect you against fraud and other illegal activities. Please contact us at 305-350-5690 or contact@fidjlaw.com.

Harsh Sentence for Miami Check-Cashing Store Owner

The owner of Miami, Florida’s La Bamba Check Cashing store, Juan Rene Caro was sentenced in Federal court on June 23, 2009 to serve 216 months in prison, pay a $250,000 penalty, and forfeit $11 million in assets for his conviction on conspiracy and fraud charges in violation of the Bank Secrecy Act.Caro’s now-defunct store offered illegal check-cashing services to construction companies and other business people seeking to mask the identity of the true recipients of the funds. A company would engage La Bamba to cash a check in the name of a shell corporation, but the real company’s owner would take cash. Most of these companies were local construction companies and subcontractors.

Under the Bank Secrecy Act, financial institutions – including check-cashing stores – are required to file currency transaction reports (CTRs), a notification to the U.S. Department of Treasury, disclosing the identity of parties to a transaction when amounts greater than $10,000 are involved. The financial institution must also verify and record the identity, social security number, or taxpayer ID number of the person benefiting from the transaction.

The companies using La Bamba’s services evaded taxation on an amalgamated total of $132 million. La Bamba profited from the filing of false CTRs by taking a fee of between 3% and 5% for performing such transactions.

U.S. Department of Justice enforcement of CTR requirements has ramped up recently with charges against small and big-time players alike. For example, Newport Beach, California, financier Danny Pang was accused this Spring of structuring transactions to avoid filing CTRs, as were the owners of a small machine shop in Rhode Island who similarly avoided CTRs in order to conceal business receipts and thereby evade taxation.

Although Caro’s attorney called the sentence unfair, comments from the Department of Justice and the Judge Joan Lenard’s hefty sentence indicate broad acceptance of a zero-tolerance attitude towards fraud and financial crimes that harm the American taxpayer. It should also be noted that the prosecution sought a longer prison term and more assets than those ordered to be forfeited by Judge Lenard.

Read the Department of Justice’s posting of the indictment against Mr. Caro for a detailed description of the mechanics of Caro’s crime as well as a list of the assets sought by the government.

For insight and strategies on maintaining compliance with state and federal regulation of financial services, please contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.

Fuerst Ittleman Assists Clients and Earns a “Thank You”

Bio-Nucleonics, Inc., a leading Florida company specializing in radiopharmaceuticals, medical devices and imaging agents, gave a hearty “Thanks” to Fuerst Ittleman in its most recent issue of BioBulletin, the companys newsletter.

Fuerst Ittleman recently assisted Bio-Nucleonics with gaining FDA approval for the companys new Doral, Florida product manufacturing facility. The FDAs approval certifies that Bio-Nucleonics uses “current Good Manufacturing Practice” (cGMP) in all its production at this state-of-the art facility.

The FDA also gave approval to Bio-Nucleonics for its proposed release criteria and timeframes for specific lot release tests to be completed prior to shipment of finished drug products. The importance of this ruling is that no material is lost to radioactive decay and each dose can be shipped immediately to the customer.

FHI assisted Bio-Nucleonics with both of these efforts. We found it such a pleasure to work with clients who were as knowledgeable, dedicated, and thorough as the team at Bio-Nucleonics, and were glad that they liked working with us, too.

Let Fuerst Ittleman help guide your company to its next success. For more information, contact us today at 305.350.5690 or contact@fidjlaw.com

Foreign Bank Accounts and the IRS

Original Article: Mitchell S. Fuerst: Foreign Bank Accounts and the IRS [pdf]

Mitchell S. Fuerst, Esq., and Andrew S. Ittleman, Esq.,

Mitchell S. Fuerst, Esq., and Andrew S. Ittleman, Esq., C.A.M.S. will speak at the International Money Transmitters Convention on November 15–16, 2007 at the Bahia Mar Beach Resort, 801 Seabreeze Blvd., Fort Lauderdale, FL

Link : https://www.nmta.us/portal/page.php?47

Additional information:

The panel : Ask the Experts: Money Transmitters and Money Laundering Prosecutions for The Defense:
– George Brown, Merle, Brown & Nakamura P.C.
– Sam Rosenthal, Curtis, Mallet-Prevost, Colt & Mosle LLP
– Mitchell Fuerst, Fuerst Ittleman
– Andrew Ittleman, Fuerst Ittleman

The IMTC is being organized by the National Money Transmitters Association www.nmta.us in cooperation with the Florida International Bankers Association (FIBA). Anyone who has an interest in the money transfer industry will benefit and is invited to attend, including not only transmitters and their employees, but also agents, bankers, credit unions, micro-finance institutions, professional service providers, folks from all related MSB industries, and government officials.