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11 Sep 2012

Check Cashing / Money Transmitting Business Cleared Of Illegal Banking

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On June 12, 2007, agents from the St. Lucie County Sheriff’s Office (SLCSO) and the Florida Department of Law Enforcement (FDLE) executed a search warrant on a convenience store located in a predominantly immigrant/Hispanic part of Fort Pierce. The search focused on financial records involving the “transmitting” of funds and “check cashing”. Boxes of records were seized and carried away.

Following this search, the family which ran the convenience store retained Jeffrey H. Garland for assistance in responding to the possibility of arrest on criminal charges. NM, his wife, LM, and his son, AHM, were subsequently arrested on June 21, 2007, on charges of unauthorized banking and unlicensed practice of a healthcare profession.

As part of this investigation, law enforcement initiated a forfeiture action which effectively froze both business and personal accounts. As a result of these police activities, Western Union Financial Services discontinued its money transmitting relationship with the business.

As already noted, the business was located in an area of Fort Pierce where the clientele was predominantly Hispanic. A prominent aspect of the business involved “money transmitting” funds to Central American countries such as Mexico, El Salvador, Nicaragua and Guatemala. The freezing of both business and personal accounts, together with the refusal of Western Union to continue business, essentially shut down the most profitable part of the business.

The family retained Fort Lauderdale attorney John “Jack” F. O’Donnell, to assist them with the civil and forfeiture aspects of the case. Attorneys Garland and O’Donnell worked together to resolve all aspects of the case as quickly as possible.

Initially, the criminal and forfeiture cases followed different “tracks”. State prosecutors filed an amended information charging multiple counts of unlawful banking and threatened to bring additional charges of money laundering and illegal money transmitting. The defense responded with a detailed transaction-by-transaction accounting for the various transmissions of funds.

The nub of this case turned out not to be the criminal component. It seemed that the SLCSO’s primary goal was to force a financial settlement in connection with the forfeiture aspect of the case. If the State were to have filed additional money transmittal/money laundering charges, the risks of extended litigation, and the potential for lengthy incarceration, would have been greatly increased. The costs of defense would also have increased dramatically due to the need for experts in forensic accounting and money transmitting.

With the active and important involvement of Attorney Jack O’Donnell, all parties to both the civil and criminal components of the case met together at length. During the process of reviewing the many boxes of documents seized during the execution of the search warrant, the parties were able to resolve their differences. The evidence showed good faith efforts to comply with a complex regulatory scheme. There were, arguably, several instances of “regulatory” concern – as opposed to criminal or forfeiture.

On the agreed settlement of claims in the forfeiture action, all criminal charges were dropped. The family’s personal and business accounts were unfrozen. Western Union resumed doing business with the convenience store. The convenience store was able to resume doing business in much the same way as it had before – except that better records would be kept for each and every money transmitting transaction.

This case highlighted certain requirements imposed by the “money transmitter’s code” as it appears in Chapter 560 of the Florida Statutes. This code imposes certain record keeping requirements for certain money transmitting and check cashing transactions, particularly those involving either $10,000.00 in cash or multiple transactions which might be “aggregated” to equal $10,000.00 or more. This money transmitter’s code specifically interacts with federal laws governing money transmitting and money laundering. See Chapters 655 and 896, Fl.Stat. There are special requirements for verifying the identity of persons transmitting $3,000.00 or more in a given transaction.

This case highlights the practical difficulty of reconciling efficient business practices with the failure of federal government to regulate illegal immigration. As everyone knows, there are many “illegal” immigrants in the United States. These illegal immigrants are expected to work and live without violating any rule. However, the federal government will not issue them social security cards or “green cards”, and the State will not issue driver licenses without proof of lawful residency. Under these circumstances, the so-called “illegal immigrants” are forced to use identification from their home countries or embassies. In some instances, illegal immigrants use identification belonging to someone else or which is obtained via illegal channels.

Many employers know the difficulty of hiring and verifying lawful residency. These difficulties are not just limited to employers, but extend to those engaged in the money transmitting business. There is no specific rule as to what constitutes a sufficient and acceptable form of identification for the purpose of state and federal regulation of money transmitters and for money laundering. Overlaid onto this is the law enforcement penchant for periodically “swooping down” in well-publicized raids on businesses serving an immigrant population.

It should be remembered that the primary goal of money transmitter/money laundering regulation is stopping the illegal transfer of funds connected with drugs and other illegal activities. It is unlikely that the money transmitter/money laundering laws were intended to hinder or prevent individual immigrants, whether here legally or not, from transmitting lawfully earned wages to their families still residing in other countries.

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