key term - Patriot Act

Definition

The Patriot Act is a U.S. legislation enacted in 2001 to enhance national security measures, particularly in the areas of surveillance and intelligence gathering. It has significant implications for financial institutions regarding anti-money laundering and combating the financing of terrorism (AML/CFT).

5 Must Know Facts For Your Next Test

1. The Patriot Act requires financial institutions to establish anti-money laundering programs.
2. It mandates enhanced due diligence procedures for foreign bank accounts and correspondent accounts.
3. Section 326 of the Act requires financial institutions to verify the identity of individuals opening accounts.
4. The Act includes provisions that allow for greater information sharing between financial institutions and government agencies.
5. Non-compliance with Patriot Act regulations can result in severe penalties, including fines and legal repercussions.

Review Questions

Related terms

Anti-Money Laundering (AML): A set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income.

Financial Crimes Enforcement Network (FinCEN): A bureau of the U.S. Department of Treasury that collects and analyzes information about financial transactions to combat money laundering and terrorist financing.

Customer Due Diligence (CDD): The process used by financial institutions to collect relevant information about their customers to assess risks involved in maintaining a business relationship.