What FinCEN's Geographic Targeting Order Means
What's the impact in Miami and For Miami and for its electronics expor business in the wake of the order tageting about 700 businesses.
May 08, 2015 at 05:48 AM
6 minute read
The Financial Crimes Enforcement Network recently issued a geographic targeting order to approximately 700 businesses in the Miami area which export electronics and mobile phones, and companies are struggling to understand what this means for Miami and its electronics industry.
The GTO contains several important reporting requirements for covered businesses which are triggered by cash transactions of $3,000, which is significantly lower than the usual $10,000 threshold. The report to the government, Internal Revenue Service Form 8300, must include detailed information about the transaction and the people involved, and must be retained by the filing party for a period of five years.
Understanding the significance of the GTO requires an understanding of Miami's electronics export industry, as well as the money laundering risk it presents. First and foremost, the GTO should not be interpreted to mean that Miami's community of electronics exporters is somehow illegitimate or otherwise criminal in nature. Rather, these business serve a legitimate and important purpose: electronics manufacturers are typically unwilling to sell their products into Latin America due to the credit risk presented by large transactions, so hundreds of U.S. businesses have stepped into that void with the willingness to extend credit where the manufactures themselves would not. This allows Latin American distributors and retailers to purchase their inventory on terms (payable in 30, 60, 90 days, etc.), and Latin American consumers to purchase first world electronics at reasonable prices.
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