Enforcement: FinCEN in re: Baltic Financial Services, Inc, New Jersey
Acting under its Bank Secrecy Act (BSA) authority, the USA's Financial Crimes Enforcement Network (FinCEN) has assessed a civil money penalty against Baltic Financial Services Inc (BFS) of Montclair, New Jersey.
In what is only FinCEN's fifth enforcement action in 2010, it was found that BFS was
a) an independent money transmitter
b) a privately owned company registered in New Jersey, USA
c) it has "assets" of approx USD76,000.
d) BFS operate a funds transfer service and at all material times was, therefore, a "money services business," a "money transmitter" and "a financial institution" under the definitions in the Bank Secrecy Act and regulations made under it.
e) All or most of BFS's funds transfer business was with Latvia which the USA defines as "a major money laundering country." (see State Department International Narcotics Control Strategy Reports 2006 - 2010).
f) The USA's Inland Revenue Service (IRS) examined money services businesses (MSBs) for compliance with the BSA under authority delegated by FinCEN.
g) The state of New Jersey has its own laws, in addition to the BSA, relating to money services businesses and under those laws, the New Jersey Department of Banking and Insurance examined MSBs to ensure compliance with those laws.
h) BFS did not maintain its registration as an MSB after 2003 even though it had notice and knowledge of the BSA and state requirements.
i) BFS operated by taking deposits and placing them into its own bank account. Once those deposits were cleared, BFS instructed its bankers to wire the required amounts, less fees, to a bank account in Latvia.
FinCEN says "for a majority of the time between 2005 and 2010, BFS conducted business as an unregistered money transmitter."
Penalty: USD12,000 payable in four quarterly instalments.
This is a light penalty: FinCEN says a civil money penalty for failure to register..USD5,000 per breach. Each day..constitutes a separate breach."
BFS has agreed to make the penalty but has not confirmed or denied any of FinCEN's allegations.
FinCEN has not identified the bankers which received, credited and transmitted the funds paid in by BFS.
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