4 Regs to Know Before Banking With Used Car Dealers
— Excerpt from an article published at www.cutimes.com on August 4, 2016.
The list of potential crimes taking place within a used car dealership could include, but are not limited to, identity fraud, human trafficking, fair lending abuses and more … with money laundering topping the list. If you pay attention to the news, you know that used car lots have now emerged as one of America’s most popular money washing vehicles. In a typical scenario, a criminal approaches a used car dealer and offers to provide cash to purchase vehicles, usually at a price above the sticker so the dealer can cash in, too.
This type of money laundering chain is complicated and relies on trust. That is a big ask in any criminal activity, but particularly in the car business. The majority of used car lot owners are simply not financially or savvy enough to generate much profit from these associations and they end up taking a fall when the chain breaks, which in most cases happens at the financial institution. That is, if the credit union is conducting its due diligence from a Know Your Customer standpoint and following the established regulations.
A good credit union might consider providing robust customer service by counseling his or her new commercial clients on how to stay one step ahead of the law by making sure that they are aware of and complying with the many regulations related to used car dealerships, some of which include the following (fairly) new additions:
- Form 8300 and Reporting Cash Payments of Over $10,000: The majority of business owners recognize that cash deposits in excess of $10,000 draw attention from the IRS. Hence the existence of Form 8300, which the business owner must file by the 15th day after the date the cash transaction occurred. The penalties for not filing are harsh. According to the IRS, “If you willfully fail to file Form 8300, you can be fined up to $250,000 ($500,000 for corporations) or sentenced to up to five years in prison, or both.”
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Originally published at www.cutimes.com on August 4, 2016.
