Updated August, 2018
Primary Federal Statutes and Regulations Applicable to the Pawn Industry
1. Internal Revenue Service Form 8300 – Cash transaction reporting by persons engaged in trades or business.
2. Bank Secrecy Act – “Suspicious Activity Reporting” – currently voluntary for the pawn industry. Mandatory for businesses subject to FinCEN’s “Dealers in Precious Metals” Rule (see 5. below).
3. U.S. Office of Foreign Asset Controls’ “Specially Designated Nationals” (“SDN”) Regulations – US persons are prohibited from doing business with persons and organizations on the list. Source: Treasury Department, Office of Foreign Assets Control (OFAC) regulations that implement various statutes and Executive Orders dating back to 1812.
4. USA PATRIOT Act – Since 2002 designated pawnbrokers as “financial institutions” subject to the Bank Secrecy Act for some purposes; pawn industry anti-money-laundering regulation pending.
5. U.S. Financial Crimes Enforcement Network’s “Precious Metals Dealers” Rule – Implements Bank Secrecy Act anti-money-laundering compliance obligations of dealers in precious metals, precious gems or stones or jewelry containing any or all who meet specified thresholds of activity in a given year, except when selling property previously held as collateral for pawn transactions.
6. Truth in Lending Act and “Regulation Z” – Requires disclosure of credit terms in consumer credit transactions.
7. Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (GLBA) – Pawnbrokers designated as “financial institutions;” Title V gives rise to financial privacy rights for consumers and requires providers such as pawnbrokers to protect the privacy of “non-public personally identifiable information” obtained from consumers, subject to limited exceptions allowing disclosures.
8. FTC/CFPB Privacy Rule and Safeguards Rule – Rulemaking authority transferred to CFPB by Dodd-Frank Act.
9. Fair Credit Reporting Act – Restricts sharing of nonpublic personal information with unaffiliated third parties; requires care in disposal of consumer information.
10. FTC Consumer Information Disposal Rule – Implements the 2003 Fair and Accurate Credit Transactions Act amendments to the Fair Credit Reporting Act on disposal of consumer information.
11. FTC Red Flag Rule – Requires the development of programs and procedures to identify possible identity theft cases.
12. Equal Credit Opportunity Act – Prohibits discrimination in consumer credit transactions on basis of gender, age, marital status, ethnicity, national origin, religious preference, or receipt of public assistance income. The Act does NOT include the military as a ‘protected class’…see State laws.
13. Servicemembers Civil Relief Act of 2003 – Limits interest rates and charges assessable on military personnel for credit transactions entered into prior to their active duty status and provides specified remedies to service members.
14. Military Lending Act & DOD’s MLA Expanded Regulation – Became effective for pawn transactions on October 3, 2016 and limits all interest and other charges for credit to a Military Annual Percentage Rate (MAPR) of 36% for “covered borrowers”, defined as active duty service members, spouses and certain dependents. MLA Regulation disclosures are in addition to TILA-required disclosures. Failure to comply may result in a “void” transaction and penalties imposed by the CFPB, which has primary enforcement authority over the MLA.
15. FinCEN’s “Beneficial Ownership Rule”. – Requires financial institutions (including banks, credit unions, securities brokers, etc.) to obtain information about any beneficial owner of an entity seeking to open a new account after May 18, 2018.
Copyright © National Pawnbrokers Association 2018. All rights reserved