By J. Michael Considine, Jr. and Francesca Ranza

Knowledge about the currency market, the largest yet least regulated market in the world, and new alternatives, will help avoid problems in business. Michael Taylor, Philadelphia Branch Manager, Philadelphia, Alex Eadie, Vice-President of Operations and Compliance, Edmonton, Alberta, Firma Foreign Exchange Corporation, and David R. Glusman, CPA, Marcum Accountants and Advisors, Bala Cynwyd counselled on how to avoid currency and money laundering problems. Do an investigation of your customer and know them. Ask questions. Who is the beneficial owner? Where do they make their money? Be cautious about cash businesses, a different name on the source than expected or funds from unidentified third parties. Firma takes no cash. Sanctions list are checked to make sure a party on that list is not involved. As transactions of $10,000 and up must be recorded, multiple transactions in a day to come to that total, multiple checks, deals involving high-risk areas such as Iran, North Korea, Greece or the FATF or EXIM.gov list of countries with inadequate money laundering protocols require special scrutiny. Firma will not accept sports betting or gambling proceeds or accept individuals as clients. Companies may be liable so all suspicious activity must be reported.
Private firms offer a personal trader who can monitor rates and guarantee a currency rate up to 6 months in advance. Deliverable forwarding requiring a transaction that day may be required to prevent speculative trading. Rollovers are not permitted. Banks must comply with Dodds Frank.
New digital currencies, which charge lower fees for transactions, such as bitcoins and 4-5 others are creating a stir. Bitcoin rates change daily. A buyer buys a certain amount of bitcoins at the current rate online and can use them to pay for items or transfer it to the account of another bitcoin account holder in exchange for a good or service or to a bank to take out in another currency, e.g. Euros. The largest bitcoins bank went bankrupt. All transactions are by bank wire transfer. While some business transactions in excess of $100,000 are using bitcoins, it is a small player and banks and currency firms often avoid bitcoin. Bitcoin is shrouded in secrecy yet becoming increasingly popular. The websites state no address, phone number or names of staff. It was started to protect secrecy. A significant number of bitcoins were lost and not yet found. It is open source, encryption is 256. Hundreds of millions is bitcoins are gone and forensic accountants cannot trace them. Bitcoin is anonymous. Glusman suspects bitcoin is located outside the U.S. Bitcoin transactions must be reported to the I.R.S. as if they were cash.
How do the bad guys finance their transactions and use currency markets? Many terrorist endeavors are not very expensive, especially suicide bombers. 9/11 is estimated to have cost less than $100,000. They use banks that don’t ask questions, attaché cases filled with $100. U.S. bills, barter or avoid using banks. Be careful using alternative currencies.
J. Michael Considine, Jr., is Chairman of the International Business Initiative. Francesca Ranza, L.L.M., was a legal intern for J. Michael Considine, Jr., P.C. The International Business Initiative, a task force of the Philadelphia Bar Association, announces the formation of an international business panel that will sponsor presentations, publish articles and provide help to readers of the Philadelphia Business Journal on issues of international business. The next seminar How the Strong Dollar Can Help Your Global Business will feature Joseph Manimbo, Senior Market Analyst, and Andrew Gummer, Manager, Foreign Exchange, Law Firms, Western Union Business Solutions, Washington, D.C. at noon February 27, 2015 at the Philadelphia Business Journal, 400 Market Street, Suite 1200, Philadelphia, PA. with a lunch sponsored by National Penn Bank.