The Financial Crimes Enforcement Network has imposed a $275,000 civil money penalty on A&S World Trading, Inc., a California company doing business during the relevant time period as Fine Fragrance, for failing to comply with the requirements of a Geographic Targeting Order (GTO) applicable to businesses in the Los Angeles Fashion District. This is the first such penalty imposed by FinCEN, which issues GTOs covering non-financial business based on their geographical locations, pursuant to Section 5326(a) of the Bank Secrecy Act (31 USC §§ 5311-5314, 5316-5336).
The GTO relevant to the instant case was issued by FinCEN on September 26, 2014, and applied to businesses located within the Los Angeles, California fashion district. It required covered businesses to report cash transactions over $3,000 via FinCEN’s electronic reporting system.
According to the statement of facts, A&S processed $4,646,211 cash sales between October 9, 2014 and April 6, 2015, yet failed to report any of the transactions as required by the LA Fashion District GTO. FinCEN determined that the company had failed to take measures to comply with the recordkeeping and reporting requirements of the GTO on at least 114 separate occasions involving transactions valued at $2,330,000, despite having received a copy of the GTO by certified mail on October 15, 2014.
FinCEN determined that A&S willfully violated the GTO, and that the violations led to the loss of valuable financial intelligence that could help law enforcement efforts to identify and curb money laundering by international drug trafficking organizations, even in the absence of direct evidence connecting the cash transactions to illegal sources. FinCEN found A&S’s wrongdoing to be pervasive, and its management to be complicit. Moreover, even after the Internal Revenue Service identified the 114 missing GTO reports in September 2015, A&S failed to correct the deficiencies, and failed to disclosure them voluntarily to FinCEN. FinCEN does credit the company with substantial cooperation during the course of the investigation. A&S’s former Chief Executive Officer, Antonio Campos, who served as owner, operator and CEO of the company until its dissolution in 2017, has assumed liability on behalf of the company, and will be responsible for the civil monetary penalty imposed on A&S.