FinCEN Assessment against A&S World Trading for Violating Geographic Targeting Order (GTO)

Blog / FinCEN Penalizes A&S World for GTO Violations

FinCEN is an institution under the authority of the United States Department of the Treasury. It is the federal authority that enforces the Bank Secrecy Act (BSA) by examining and enforcing civil money sanctions on financial firms, non-financial trades or companies, and people for intentional and inadvertent violations of the BSA and restrictions or commands provided by law. FinCEN is responsible for enforcing the BSA. FinCEN has the authority to examine financial institutions and non-financial trades or businesses to ensure that they conform with the BSA. Additionally, since these agencies have been given jurisdiction to perform evaluations, FinCEN depends on audits carried out by government operational examiners and the Internal Revenue Service (IRS). Maintaining "jurisdiction for the imposition of punitive damages" for these kinds of infractions, as well as "overall power for regulation and conformity, along with cooperation and guidance of operations and procedures of all other organizations," is part of FinCEN's delegated powers to investigate for BSA compliance. FinCEN also has "authority for the implementation of criminal sanctions" for such infractions. 

Due to breaches of a sequence issued in accordance with the Bank Secrecy Act by A&S World Trading Incorporated (A&S), doing business as Fine Fragrance, the Financial Crimes Enforcement Network (FinCEN) has concluded that there are sufficient grounds to impose a Civil Money Penalty. This conclusion was reached as a result of an investigation into civil prosecution that was carried out by FinCEN (BSA). Antonio Campos, who was the owner of A&S and served as its Chief Executive Officer until the company was dissolved, has admitted to the Statement of Facts and Violations that are detailed below, and he has also consented to the issuing of this Consent Order. 

The Director of FinCEN has been given the overall responsibility to enforce and comply with the BSA, and it is within the Director's power to impose civil penalties for breaches of the BSA and any implementing rules or orders issued thereunder. According to the definition provided by the BSA, A&S was always operating as a "non-financial trade or company" for the whole of the time period covered by this Consent Order. A non-financial trade or corporation might be subject to specific reporting and record keeping duties thanks to Geographic Targeting Orders (also known as "GTOs"), which are authorized to be issued by FinCEN thanks to the BSA. A&S was subject to one of these orders.

FinCEN's Role in Combating Money Laundering

Reasons for FinCEN Regulation 

FinCEN took into account all of the criteria listed in the Statement on Enforcement of the BSA released on August 18, 2020 when determining whether to impose sanctions and how much of a violation to levy. The following considerations were very important in how it handled this case: 

  • Type and gravity of the violation: the huge number (114) and high value (totaling over $2,330,000) of the unreported transactions may have materially damaged the public and deprived FinCEN of useful financial information, according to one of FinCEN's key justifications for the punishment. FinCEN notes that this knowledge could have helped law enforcement thwart drug traffickers' attempts to launder money. 
  • Selective and timely reporting: FinCEN took into account the fact that A&S did not make transparency and disclosure to FinCEN and that the breaches were first discovered during the IRS inquiry. 
  • The extent of the Entity's misconduct. Even after the IRS review, A&S failed to appropriately address the matter despite having a copy of the LA Fashion District GTO and continuing to process transactions without disclosing transactions that the GTO required. The CEO's assertion that he was uninformed of the GTO and the associated obligations did not sway FinCEN's conclusion that management was engaged in the violation. 
  • Existence of timely, successful action: According to FinCEN, A&S's close-to-the-end reports omitted critical information. 
  • Partnership with organizations. However, FinCEN observed that A&S offered significant assistance during FinCEN's inquiry. 

Each of these justifications should be taken into account by GTO receivers while fulfilling reporting obligations. Particularly, individuals who are subject to GTOs should make sure that they reply to GTOs promptly, comprehend the GTO's requirements, and, if there are conformity shortcomings, mitigate by voluntarily notifying such failings to FinCEN and correcting any compliance needs.

The Bank Secrecy Act (BSA)

The BSA imposes some reporting obligations in addition to other obligations to make it easier to keep track of funds that have been earned via illegal conduct or intended to encourage criminal behavior such as money laundering. Actually, it is the major anti-money laundering (AML) statute and instrument in the United States. Its purpose is to discover, discourage, and destroy networks that are used to finance terrorist organizations. These reports offer crucial financial information that FinCEN, law enforcement, and many others utilize to protect the United States' economic system and fight major risks such as laundering illicit funds and financing terrorist organizations. The BSA also includes provisions for issuing specific monitoring and maintaining record obligations for non-financial transactions and enterprises. These requirements are designed to provide essential information that is important for monitoring and analyzing illegal financial activities.

A&S World Trading Incorporated A&S was a company that was based in the state of California. Fine Fragrance was a perfume shop that was owned and run by A&S. It was situated at 501 East Olympic Boulevard in Los Angeles, California. A&S was primarily a cash-based company that conducted business on both the wholesale and retail levels. It is estimated that around 85 percent of its total sales were wholesale transactions carried out with other companies. From the company's establishment in 2005 until its collapse in 2017, Antonio Campos was A&S's owner, manager, and Chief Executive Officer (CEO). He also oversaw all of the company's business operations. Campos agrees to be held liable on account of A&S for any breaches of A&S that are alleged in this document.

Geographic Targeting Order (GTO)

According to the BSA, the supervisor of FinCEN has the authority to issue commands that impose additional accounting and reporting requirements on domestic financial institutions or non-financial transactions or companies located in a particular geographic area for activities involving certain quantities of United States exchange rate or means of payment. These orders can apply to either national financial institutions or non-financial exchanges or companies. These directives may be in force for up to one hundred eighty days at a time.

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