AML Compliance

As a leading precious metals dealer and respected financial institution, Wilshire Capital Group takes the utmost care to follow the law as well as maintain the highest standards of security.

Our legal department actively monitors current laws and regulations, ensuring that we remain compliant through any policy changes. Throughout our entire company, Wilshire Capital Group is dedicated to following industry best practices. This includes communications with the public to facilitate awareness about these best practices, and with our customers to keep you informed about the policies around your retirement investments.

Compliance with the USA PATRIOT Act

One of the most important pieces of legislation that pertains to precious metals is the USA PATRIOT Act, passed by Congress in 2001 in direct response to the September 11 terrorist attacks. Money laundering was made illegal in 1986 when the Money Laundering Control Act was passed, but it was the USA PATRIOT Act that detailed the specific resources that need to be consistently used to target money laundering and prevent organized crime.

In this Act, the specific requirements to which financial institutions must adhere to protect against money laundering are clearly outlined. Section 352 of the USA PATRIOT ACT specifically states that:

“In order to guard against money laundering through financial institutions, each financial institution shall establish anti-money laundering programs, including, at a minimum–

(A) the development of internal policies, procedures, and controls;
(B) the designation of a compliance officer;
(C) an ongoing employee training program; and
(D) an independent audit function to test programs.”

Wilshire Capital Gold Group adheres to all items outlined in the USA PATRIOT Act and is dedicated to both stopping and preventing money laundering activities from taking place.

What is Money Laundering?

According to the US Treasury, money laundering is the attempted concealment of illegally obtained financial assets within legitimate financial systems and institutions.

There are three main steps to money laundering:

  1. Placementoccurs when the cash is placed into the financial system, such as when a money order is purchased using the illegal funds. “Smurfing” is a tactic frequently employed for placement, where the total sum of cash to be laundered—usually a large amount—is broken up into many smaller accounts that are less likely to be detected.
  2. Layeringis the transfer or transformation of the illegal funds through several forms in an attempt to confuse any efforts to trace them. Bookkeeping tricks are often employed in this step, like the inflation of cash receipts in a business that accepts cash.
  3. Integrationis the gain of profit or property from the use of the money as the final step of successful laundering, as the money becomes “hidden” in assets like automobiles, real estate, etc.

While these steps may seem simple, the ways in which they may be carried out can be quite creative and therefore require proactive measures, active monitoring, and transparency. Business “fronts” can be developed to funnel cash into hiding, ready for withdrawal when needed. Individuals can be used as “mules” to physically smuggle cash, even across borders. These are just a couple of tricks used in money laundering, with the scams and schemes always evolving.

It is important for employees working in finance- and investment-related groups—particularly at businesses that handle large amounts of value—to know what sorts of warning signs they should be looking for.

Criminals think that if they store their illegal funds within legal establishments, they can successfully hide their activities and retain their money. Frequently, these money-laundering criminals are drug dealers, terrorists, or similarly destructive individuals, involved in multiple layers of illegal activity. Stopping them is of high importance for the general public.

Annual Compliance Training

The entire Wilshire Capital Group team undergoes mandatory annual compliance training to detect, fight, and prevent money laundering and similar crimes. This training fulfills the ongoing programming requirement outlined by the USA PATRIOT Act.

This training is run by an anti-money laundering expert who retired from the Criminal Investigation department of the IRS after 30 years of federal service. The training curriculum is based on actual situations that have occurred at precious metals dealers throughout the country. It is designed to train employees to pick up on potential money laundering efforts and to respond appropriately in order to both stop them and report incidents.

Internal Operating Procedures and Compliance Officer

The USA Patriot Act requires that businesses accepting cash as payment have clearly outlined standard operating procedures for its employees to adhere to when handling financial transactions, in order to detect and stop money laundering activities. These operating procedures are to be managed by an internal Compliance Officer.

Some steps that employees in such companies are expected to take in order to prevent money laundering include:

  • Obtain and document official identification from all customers performing transactions;
  • Use an IRS Form 8300 to report transactions above $10,000;
  • Consult with government authorities and agencies whenever possibly suspicious activity arises.

In addition to maintaining the policies outlined in the US PATRIOT Act, the Compliance Officer must also make sure that all federal and state anti-money laundering laws are also enforced.

An important clarification to make here is that this section’s requirements apply to businesses that accept cash for payment, which Wilshire Capital Gold Group does not.

Annual Independent Audit

Each year Wilshire Capital Group conducts an independent audit of the anti-money laundering processes it has in place. In order for it to be independent, the Compliance Officer cannot perform this audit.

Instead, another individual—whether senior management, an attorney, or a financial professional—who is familiar with anti-money laundering requirements and regulations should review the processes in place to ensure they are adequate, current, and effected properly, and that all employees are trained to follow these processes