The Patriot Act hits home: few laws are as controversial or far-reaching as the USA Patriot Act, passed within weeks of 9/11. Touching nearly every aspect of international business, from trade to tourism, it has sent companies across South Florida scrambling to implement its requirements and avoid potentially hefty sanctions and fines - Chief Executive Opinion

South Florida CEO, March, 2004 by Pat Roth

At a recent public roundtable organized by the Greater Miami Chamber of Commerce with representatives from the Department of Homeland Security, South Florida companies listened to and talked about the realities of the USA Patriot Act and doing business in a post-9/11 world. The discussions made it clear just how extensive the new regulations are in terms of their impact.

New visa requirements now affect businesses ranging from local hospitals to language schools. Under the new visa process, for example, not all of the more than 10,000 foreigners (generally high-net worth individuals) who choose South Florida for medical attention each year can now get visas. Language schools have also seen a drop of more than 30 percent in enrollment of foreign students.

International trade, one of South Florida's most important industries, has been strongly impacted. Delays of several days in the turnaround time for container cargo give a strong competitive edge to the newly constructed port in Freeport, Bahamas, just hours away from South Florida, as well as to other regional, non-US ports vying for our trade.

The international banking industry in South Florida, however, finds itself in an advantageous position, relative to meeting the requirements of the Patriot Act. Two of the act's key mandates for the financial industry are to know your customer, and to identify and report suspicious activities. South Florida's international banks, with the help of the Florida International Bankers Association (FIBA), have been doing both of these things for more than 20 years. During these decades, FIBA member banks have worked with regulators to develop standards and procedures to know who their customers are, and to monitor transactions to make sure no illicit funds get into Florida banks.

Nonetheless, under the Patriot Act, the compliance burden on the financial industry has been greatly enhanced, and the civil and administrative penalties for non-compliance have significantly expanded. Both foreign and domestic banks in the US have upgraded existing software programs, and many of those with international clients have added more compliance staff.

Broker-dealers and money transmitters, as well, are required by the Patriot Act to check out their customers and to monitor transactions, and they face the same stiff penalties. Before the Patriot Act, many of the larger broker-dealers implemented "Know Your Customer" rules on a voluntary basis as a good-business practice, but the bar has been raised significantly under the new law.

For money transmitters, the Patriot Act means they are now in the sights of the financial regulators and the US Treasury Department for the first time. These companies range in size from big national players to the small mom-and-pop money transmitters found on the street corners of immigrant communities across South Florida. All told, they move more than $3 billion a year from foreign workers in the US; in many countries in the Caribbean and Central and South America, these remittances now exceed foreign direct investment as a major source of income. Like the financial houses, money transmitters are now required to know with whom they are dealing, and must monitor transactions in order to detect money laundering.

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One problem with compliance for some of these and other businesses is lack of knowledge, both in terms of requirements and solutions. To help educate the local business community, FIBA will focus on these new requirements at its Anti Money Laundering and USA Patriot Act Conference on March 11 and 12, in Miami. William Fox, the Director of FinCEN (the Financial Crimes Enforcement Network) is expected to be the keynote speaker.

Compliance regulations span multiple agencies--including the IRS, the NASD, the Federal Reserve, the Office of the Comptroller of the Currency and the State of Florida. These agencies recognize the complexity of today's global financial world, and so are sending representatives to the conference. In a special session for money transmitters, speakers from Western Union and Vigo Remittances will help these businesses understand the Patriot Act and develop strong compliance programs.

These new regulations do not just affect Florida bankers (who will receive a certificate of completion for their participation, as required under their training requirements). The International Section of the Florida Bar has recognized the importance of keeping its members up to date as well; attorneys will receive 13.5 hours of continuing education credit at the conference. Members of the Cayman Islands Bankers Association and the Federation of Latin American Banks (FELABAN) will also participate.

It is important for South Florida companies to stay ahead of the curve on this critical issue for all firms that do business with foreign nationals.