There has been some confusion from a few funding portals regarding their anti-money laundering (“AML”) responsibilities, in part from (misguided) efforts to try and save a little bit of money on transaction costs. The final rules from the SEC on Title III did not say that funding portals don’t have AML obligations, it said that it’s the Treasury’s call and not theirs.
As expected, the Treasury is weighing in. And they vote “yes”, Funding Portals do have full BSA (Bank Secrecy Act) obligations, which includes Patriot Act responsibilities, just like all other financial institutions (banks, trusts, broker-dealers, etc). Here’s the draft rule, which we expect will be final shortly.
This is, of course, already integrated into FundAmerica’s technology and services. At $2 per domestic investor and $60 per international, including handling all the inevitable exceptions and maintaining compliance with reporting and record-keeping, it’s likely far cheaper that trying to do it yourself.
Failure to do this right can and often does lead to fines and jail time, something the regulators have been getting increasingly aggressive about enforcing. Here are a few random examples (search Google for more).
Compliance is the cornerstone of being in the securities industry. With all the changes brought about by the JOBS Act, including Titles II, III and IV, you should stay on top of things by coming to the Crowdfunding Compliance Conference on April 26 & 27 where leading attorney’s and others will be discussing the most pressing issues facing this industry.
These materials are my personal opinions and for informational purposes only and not for the purpose of providing legal or tax advice. The issues discussed include complicated areas of law and legal advice should only be obtained and relied upon from a securities attorney about your specific circumstances.