Now that you know that you have to comply with the USA Patriot Act, what’s next? Have you assumed you’re already doing everything you need to do to be compliant with the law? How do you know? Who do you ask? Is your attorney an expert at Patriot Act compliance? Does your compliance provider have all the answers you need?
The fine for noncompliance is $11,000 per day, which translates to more than $4 million per year. Few dealerships in this country make that kind of net profit annually. Yet that’s the risk being taken each day by these sorts of assumptions. All businesses require hard work and sacrifice if they are to be successful.
The dealership business is certainly not an exception to this rule, and in fact, the workload and investment of time and money made by most dealers is far greater than most other industries.
So, why would anyone risk his or her hard-earned money on an opinion or a guess? The reason appears to be because there are no sure answers. When asked this question, General Manager Paul Miller of County Line Lexus in Hollywood, Fla, said, "Patriot Act compliance must be a first agenda issue for all car dealers."
Navigating the Legal Nuances
The line in the sand has not been drawn through cases appearing in courts to date. No one can accurately predict what "compliant enough" will be until a precedent setting case gets into the judicial system. Until then, it is up to every dealer to make sure they have protected their dealership to the best of their ability. The public conglomerates have an even greater responsibility, protecting not only their assets, but those of their shareholders as well.
It seems that dealers have been left with numerous loopholes within the various systems of checking the U.S. Treasury Department Specially Designated Nationals (SDN) list on the Internet for compliance as required by the Patriot Act.
Given the history of legal practices in the United States, negligence could be one of the hardest items to defend in this regard. "Pointing to an outside party providing compliance services and trying to lay the responsibility at its doorstep might not suffice in a court of law if a defense has to be mounted by a dealer," says attorney Alan Lewine in Washington, D.C.
Attorneys’ interpretations of the Patriot Act and what compliance to it means are as varied as the color of jellybeans. In fairness to the legal profession, no one could really be an expert at the interpretation yet.
Lewine continues, "Like most laws passed by Congress, the Patriot Act is the law, but it is not until the courts begin to issue rulings interpreting the law — especially in close cases — that we have clear guidance on how the law should be interpreted and implemented."
How Can You Prove Compliance?
Is your internet connection reliable enough for critically important solutions? This is a question every dealer needs to consider. Attempted compliance or due diligence is not good enough when the dealer is ultimately responsible.
Lack of knowledge is not a defense for negligent practices. If the dealership is not maintaining thorough records of its compliance searches, it is leaving itself open to attack.
Thorough records of every search should be maintained at the dealership. If ever audited, trying to mount a defense by pointing to a third party would be a poor excuse for weak practices. While some solution companies are storing the search data, others are not. The question is, will that stored data be good enough as evidence in a court of law or under the scrutiny of the federal government?
"We keep a signed F&I menu in every deal jacket to prove we followed a very specific path," says Gerrick Wilkins, general sales manager at John Eagle Honda in Dallas. "Why wouldn’t I want to keep documentation where proof of compliance for the Patriot Act is concerned?"
Maintaining Compliance and Efficiency
The Patriot Act has added one more step to an already cumbersome process of selling a car and staying compliant with all the various federal and state laws. Time is money, and slowing down the process is the last thing any dealer or customer wants to experience.
"I don’t want my sales staff spending two to three hours with a customer only to find out later that we can’t sell him a car," says Adam Berman, general manager of Northpoint Ford in Atlanta. "If there’s a problem with a customer on the SDN list, I want to know about it before they start driving one of my cars around town."
Berman, who is also a licensed attorney, adds, "As citizens, we don’t always like or agree with the laws that are passed, and as a business man, it’s often inconvenient to have to alter my business to be in compliance, but since it is the law, I’m going to do everything I can to safeguard my dealership. But I also want to solve those issues in the most time efficient manner possible. My customers’ time is important, and I don’t want the process delayed any longer than it already takes."