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How to prepare for, and survive, a Title 31 Exam

Possible discussion points

  • What determines if I will have an exam? Is it something I did?
    • Once I have an exam will I ever have to have another one?
  • What does the IRS think I am doing that I have to have the exam? I’m just a pawnbroker!
    • Give examples of money laundering opportunities found in pawnshops across the country.
      • Use marijuana dispensaries as an example. They have lots of money they can’t bank. The act of buying items and running the money through a third party (Paypal) to put the money in an account is a form of money laundering. Might the pawn shop be a party to that? When would they know? How would they know? What could happen if they know and keep going?
      • Other real-world examples such as gold coins and bullion being used by drug dealers. Drug money used to buy gold which is then taken across town and sold at another shop for example.
  • What is the difference between a Title 26 audit and a Title 31 exam?
    • What types of things might cause a Title 31 exam to morph into a Title 26 audit?
  • Help folks understand related transactions as they relate to 8300 forms
  • Help folks understand the importance of tracking high dollar transactions for suspicious behavior
  • When should I file an SAR since they are voluntary? Help give clarity here
  • What is the difference between a suspicious 8300 and an SAR? Under what circumstances would I file them so I file the correct form
  • What are the most common errors that auditors see during Title 31 exams?
    • Does it matter that I am trying?
  • What can happen if I don’t have a current AML program in place when I get my 4479 letter?
  • Clarify the importance of being able to source inventory
  • What types of errors do you see in the way folks present their documents from the 4564? In other words, what common gaps are there that if they knew ahead of time, they might be able to do a better job of being ready for their exam? Organization etc..?
  • How long does the process take when you are onsite?
  • Once you leave, am I done?
  • Can you tell the difference between a company who has the AML program in its muscle memory as opposed to someone who is trying to fake it? How long does it take from the moment you walk in the door until you know? Or do you already know because of their responses to the 4564 and the type of materials they provided along with their communication or lack thereof?
  • What is the single most important thing that shops can do to survive the exam? Conversely, what is the single worst thing shops can do that will almost be an instant fail?
  • Do I have to do SDN searches? I never get any and the potential matches are always wrong. How do I prove to you that I am doing them anyway?

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