Bsa Exemption Review: Fill & Download for Free

Money laundering is the process of making illegally-gained proceeds (i.e. "dirty money") appear legal (i.e. "clean"). Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the "dirty money" appears "clean." Money laundering can facilitate crimes such as drug trafficking and terrorism, and can adversely impact the global economy.In its mission to "safeguard the financial system from the abuses of financial crime, including terrorist financing, money laundering and other illicit activity," the Financial Crimes Enforcement Network acts as the designated administrator of the Bank Secrecy Act (BSA). The BSA was established in 1970 and has become one of the most important tools in the fight against money laundering. Since then, numerous other laws have enhanced and amended the BSA to provide law enforcement and regulatory agencies with the most effective tools to combat money laundering. An index of anti-money laundering laws since 1970 with their respective requirements and goals are listed below in chronological order.Bank Secrecy Act (1970)Established requirements for recordkeeping and reporting by private individuals, banks and other financial institutionsDesigned to help identify the source, volume, and movement of currency and other monetary instruments transported or transmitted into or out of the United States or deposited in financial institutionsRequired banks to (1) report cash transactions over $10,000 using the Currency Transaction Report; (2) properly identify persons conducting transactions; and (3) maintain a paper trail by keeping appropriate records of financial transaction.Money Laundering Control Act (1986)Established money laundering as a federal crimeProhibited structuring transactions to evade CTR filingsIntroduced civil and criminal forfeiture for BSA violationsDirected banks to establish and maintain procedures to ensure and monitor compliance with the reporting and recordkeeping requirements of the BSA.Annunzio-Wylie Anti-Money Laundering Act (1992)Strengthened the sanctions for BSA violationsRequired Suspicious Activity Reports and eliminated previously used Criminal Referral FormsRequired verification and recordkeeping for wire transfersEstablished the Bank Secrecy Act Advisory Group (BSAAG)Money Laundering Suppression Act (1994)Required banking agencies to review and enhance training, and develop anti-money laundering examination proceduresRequired banking agencies to review and enhance procedures for referring cases to appropriate law enforcement agenciesStreamlined CTR exemption processRequired each Money Services Business (MSB) to be registered by an owner or controlling person of the MSBRequired every MSB to maintain a list of businesses authorized to act as agents in connection with the financial services offered by the MSBMade operating an unregistered MSB a federal crimeRecommended that states adopt uniform laws applicable to MSBsMoney Laundering and Financial Crimes Strategy Act (1998)Required banking agencies to develop anti-money laundering training for examinersRequired the Department of the Treasury and other agencies to develop a National Money Laundering StrategyCreated the High Intensity Money Laundering and Related Financial Crime Area (HIFCA) Task Forces to concentrate law enforcement efforts at the federal, state and local levels in zones where money laundering is prevalent. HIFCAs may be defined geographically or they can also be created to address money laundering in an industry sector, a financial institution, or group of financial institutions.

So how do you legally start a drop shipping business and acquire the right licenses and banking setup? Here are 7 points that will help you get started on the right path to success!1. Get A Tax ID Number (TIN)Also known as an EIN (Employer Identification Number), you can get an TIN by calling the IRS and requestingone. You do not need a TIN if you’re running your business as a sole proprietor with no employees. I still recommend you obtain one as you’ll need it to convert your company to any other business-entity type in the future, or if you purchase a business and then run it as a sole proprietor. It’ll also be helpful to have this number in order to build your business credit with your bank. Be sure to open your business checking accounts and credit cards using this TIN number for proper IRS reporting.2. Business LicensesAssuming your dropshipping store is selling tangible goods, you need to make sure you have all the necessary licenses to operate in your business’s state of registration. You cannot operate without an address, so after deciding where your business location will be, you need to obtain the following licenses and certificates:Name Registration–often confused for a business license, the name registration is only the first step in licensing. You will need to register your business’s name with your State’s registrar and keep a copy of this registration to obtain city and county business licenses. You can operate under a multitude of different business set-ups, such as an LLC, sole proprietorship, or a corporation. Whichever legal set up you choose, you need to register yourself as a business first and foremost. ChinabrandsCounty License–The next step is to obtain your county business license. Depending on your business address, you will need to contact your local county hall or visit the county website and obtain a county business license. This license is usually renewed annually and allows you to conduct business in that county.City License–Similar to a county business license, a city license allows you to conduct business, online or physically, within that city. I know, I know, your shop is online, but you still are a business paying taxes to a specific city or county. Simply being online does not mean you’re nowhere to be found and exempt from any licensing obligations. Bear in mind, some street addresses are not registered to a specific city and are considered “unincorporated”. This means you do not need to obtain a city license yet, since the address is not within city limits.Reseller’s License–A reseller’s license or resale certificate allows you to sell tangible goods through your dropshipping store. You generally will not pay taxes on sales made outside of your State (with some exceptions–your suppliers will let you know which), but you must pay State and County taxes on all sales made in your State/County of registration. These taxes generally need to be paid quarterly.To legally start a dropshipping business you must absolutely meet all of these requirements. If you skip any of them and business activity is traced back to you, you leave yourself open to numerous penalties and failure. Some counties can charge you penalties of up $1,000 per sale you’ve made as an unlicensed dropshipping store.3. Business Checking AccountIt totally stumps me how some people talk about how successful they want their stores to become, but they don’t even have the most basic foundation laid down: the business checking account! You should never use a personal checking account to transact any business. Do many people do it and get away with it? Absolutely. Does your bank allow personal accounts to double as business accounts? Most likely not.You can usually get away with using a personal account for business if your business name is your personal name. Even then, you still need to double-check with your bank to make sure they allow you to use the account for business purposes. Business accounts often have higher balance requirements and more fees.The moral of the story is: walk the straight and narrow. Open business accounts for business activity. Don’t open yourself up to penalties or litigation. Don’t be another idiot in an ignorant crowd. I recommend you choose online banks for business accounts, such as Capital One Sparks or Everbank Business, since they understand ecommerce far better than brick & mortar banks.4. Business Credit CardUsing a business credit card vs. a personal credit card is really a matter of choice. If your credit is decent, however, I recommend you apply for a business credit card. For one, business credit cards tend to have much higher limits. This is really helpful when you need a decent credit limit to float money.Second, separating your personal and business expenses really helps your book-keeping. And third, if you aren’t getting perks on your personal cards, many business credit cards do offer excellent perks. My favorite is the CapitalOne Business Cash Back Credit Card– 2% cash back on any purchase! You can apply for business cards using your personal name and social security number too.5. Cloaking IPsFATCA, FBAR, Patriot Act, BSA–the number of rules and regulations banks have to follow is ever-increasing. More and more, banks are becoming risk-averse and will shy away from opening accounts for expats living abroad. In order to open a bank account online, many banks will also prefer you login within the US. But, what’s even more worrisome are the numerous horror stories of banks closing your accounts because you live abroad.This has personally happened to me.My bank account was closed for no reason other than I was not residing in the country at the time. Most banks have the same rule in their fine print (the fact they can close your account for any or no reason), so my advice is to always log in to your bank account using a VPN pointing to a location in the US. Better to err on the side of safety.6. ACH Deposit TitlesThis is a very easy one to overlook, but it can often raise red flags at your bank and initiate a fraud review. Many eCommerce platforms, Shopify included, direct deposit into your account under the title name “X”. This means that when your bank receives the ACH (ie direct deposit) for the sales you’ve made, they will simply see the payee (you) as “X”. Multiply this X by a dozen transactions, and eyebrows get raised. If you’re living abroad especially, you’ll want to be very careful.Thankfully, all you need to do to fix this issue is to contact customer support and have them instruct their banking partner to direct deposit in your or your company’s name. Low transaction shops will probably fly under the radar, but if you start selling high-volume or at higher price points, you may trigger a fraud review.7. Plagiarism/Copyright InfringementAlthough this has absolutely nothing to do with banking or licenses, I have to include it here because so many people violate copyright laws when they set up a dropshipping store. Do not, do not, do not under any circumstance remotely copy your competition’s web site design or text. You could be on the hook for $125,000 per infringing page.I’ve seen people sued and closed down within a day.If you use an eCommerce platform and they are served a cease and desist by a competitor who claims you infringed on their copyright, you may be permanently banned from ever using their platform again.Be original, don’t be lazy.Your competition put in the hours to be where they are today and trust me you won’t last long if being a copycat is your game. Many stores customize product descriptions and if you get caught copying and pasting–even if you delete the offending text later–you may be on the hook for hundreds of thousands of dollars in an intellectual property/ copyright infringement suit.In order to legally start a dropshipping business, you’ll need to follow these steps and then some. This isn’t meant to dissuade you–but to let you know that starting a business isn’t as simple as just publishing a store front. There is a lot that goes on behind the scenes. If possible, I also recommend you consult with a tax advisor or tax attorney, since the nuances of doing business online are constantly changing.