The Patriot Act was enacted in the aftermath of the September 11, 2001 attacks in the United States to protect US national security about terrorism significantly (especially foreign terrorism). The USA Patriot Act's primary purpose is to deter and punish terrorist acts in the United States and worldwide.
An Overview of the USA Patriot Act
On October 23, 2001, the Patriot Act was written following September 11, 2001, to strengthen the 2001 anthrax attacks and ensure national security significantly. The Patriot Act was enacted by creating overwhelming, bipartisan margins and arming law enforcement agencies with new means to detect and prevent terrorism. The US Patriot Act was passed almost unanimously with Senate 98-1 and House 357-66.
In general, the Patriot Act had three main provisions of the law. We can summarize them as follows: expanding the surveillance skills of law enforcement agencies, for example, enabling law enforcement to wire local and international phones, facilitating inter-agency communication so that federal agencies can use all resources more effectively in their efforts to combat terrorism, increased penalties for terrorism, and an expanded list of activities was issued that would lead the person to be accused of terrorism.
Purposes of the Patriot Act
The USA Patriot Act's primary purpose is to deter and punish terrorist acts in the United States and the world and some purposes. We will list some of these purposes below:
- Strengthen USA measures to prevent, detect and prosecute international money laundering and the financing of terrorism
- Requiring the reporting of suspicious money laundering activities of the financial services industry
- Ensuring the materialization of Special Due Diligence for Correspondent Accounts and Private Banking Accounts
- Banning US Correspondent Accounts at Foreign Shell Banks
- Authentication in institutions
- Establishment of Anti-Money Laundering Programs
- Reporting of Suspicious Activities by Underground Banking Systems
- Establishing a Highly Secure Network
Anti-Money Laundering Under the USA Patriot Act
As mentioned above, one of the USA Patriot Act's main goals is to provide stricter laws and improved investigative tools. Money laundering refers to criminals' attempts to portray the proceeds from illegal activities as funds derived from a legitimate enterprise. The inadequacy of current laws in combating money laundering in the United States was discussed before the September 11, 2001 incident. Still, after the September 11 attacks, the laws in this area were strengthened. Generally, Title III of the Patriot Act replaces the two existing statutes. The first law was the Money Laundering Control Act of 1986, which laid down criminal laws designed to combat it.
The second law is the Bank Secrecy Act (BSA) of 1970, a record-keeping and reporting law that is generally valid for banking institutions. Most of the provisions of Title III of the Patriot Act change the BSA by expanding the applicability of selected existing requirements and imposing new requirements.
AML Requirements for FI under the Patriot Act
The USA Patriot Act places several obligations on financial institutions (FI) to detect and prevent money laundering. By the '352 of the Patriot Act, all Financial Institutions should develop and implement anti-money laundering programs suitable for them. These programs should at least include the following:
- Developing internal policies, AML controls, and procedures;
- Appointment of a compliance officer to financial institutions by AML policies;
- Training employees to understand money laundering and its laws in financial institutions
- Independent audit function for testing AML programs
Anti-money laundering programs of Financial Institutions should include procedures that could reasonably be expected to identify and report activities associated with money laundering. It is essential to have detection procedures to prevent money laundering activities in financial institutions and avoid possible criminal liability. Institutions that have complied with these laws and developed an appropriate AML program can protect themselves against the risks of money laundering, do not receive penalties by complying with the law, and protect their reputation against these crimes.