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daemon@ATHENA.MIT.EDU (Anonymous)
Wed Aug 18 23:55:00 1999
Date: Thu, 19 Aug 1999 05:38:28 +0200 (CEST)
Message-Id: <199908190338.FAA04699@mail.replay.com>
From: Anonymous <nobody@replay.com>
To: cypherpunks@cyberpass.net
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August 19, 1999
Economy
U.S. Treasury Moves to Require
Registration of Money Shops
By NEIL KING JR.
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- In an effort to crack down on a key conduit for money laundering, the Treasury Department will require the nation's tens of thousands of check-cashing shops and money transmitters to register on a national database.
Under the new rules, all so-called money-service businesses must sign up with the Treasury's enforcement arm by the end of 2001. The U.S. will also demand that the nation's big transmitters, such as Western Union Financial Services Inc., more closely monitor their vast network of agents by reporting any that do more than $100,000 of business a month.
The government says about $57 billion in drug proceeds moves through the U.S. each year. Treasury officials say the new rules should help the department's Financial Crimes Enforcement Network, or FinCEN, get a grip on an industry that handles more than $200 billion a year, but which is largely unregulated.
"This is the first step forward," said Elisabeth Bresee, the Treasury's assistant secretary for enforcement. "At the moment we have no national agency to keep track of what businesses are even out there."
Industry representatives say the rules came about after lengthy consultation with FinCEN, and that the registration requirement won't prove onerous. "This closely reflects the needs of the industry," said Peter Ziverts, spokesman for Western Union, which has more than 26,000 agents in the U.S.
The rules, announced Wednesday, follow two major investigations of the industry in New York City that monitored money flows to Colombia and Puerto Rico in 1996 and 1997. Investigators have long suspected that drug dealers and other criminals use the services of neighborhood check-cashing shops to move money around the world in small sums, evading the much stricter rules of the traditional banking industry.
In one case, investigators found that 12 New York City's cash shops sent $800 million to Colombia in a single year, more than the annual earnings of all the city's Colombian households. When the Treasury demanded that all New York money remitters sending funds to Puerto Rico report any transactions over $750, business dropped off substantially. In turn, the amount of smuggled cash seized along the Atlantic seaboard jumped by 400%, said Ms. Bresee.
Treasury officials said the long delay before registration becomes mandatory would allow time to reach out to the industry's 5,000 to 8,000 businesses, many of them small, corner shops in low-income neighborhoods across the country.
In time, the government also hopes to impose other rules on the industry similar to those that affect banks. Cash shops, for instance, would then be required to blow the whistle on customers they suspect of trying to launder money. Banks have had to live under similar suspicious-activity rules since 1996.
Treasury officials had originally contemplated requiring money-service businesses to report any transactions over $750, but they dropped that idea as too cumbersome. Still, they said they might move later to lower the reporting requirement well below the $10,000 trigger now in place.
With limited funds for enforcement, the Treasury hopes that the new rules and others to come will compel the big companies like Western Union to keep closer tabs on their agents. The eight largest money transmitters handle well over half of all the funds sent through cash shops and other retail outlets, according to FinCEN.
James F. Sloan, the director of FinCEN, said the desire wasn't to crack down on the industry but "only to make life difficult for money launderers."
