-Caveat Lector-
Money Transmitters Must Now Register
By MARCY GORDON
.c The Associated Press
WASHINGTON (AP) - Big cash transmitters like Western Union and thousands of
storefront check-cashing and money order operations now will be required to
register with the government as part of a Treasury Department move to disrupt
money laundering by drug traffickers.
Treasury officials announced the regulation Wednesday. It stems from
legislation enacted in 1994 as lawmakers became aware that parts of the
multibillion-dollar money-services business have been used by drug
traffickers to illegally transfer large amounts of cash.
The officials view the new rule as a strike at the ``Achilles heel'' of
organized crime - the need to convert illegal and unusable proceeds into
usable funds. An estimated $57 billion in drug money is laundered each year.
Elisabeth Bresee, assistant Treasury secretary for enforcement, said some
drug traffickers have moved their money laundering from banks to
money-services businesses as banking regulations have been tightened.
``The money launderers are creative,'' she told reporters in a conference
call. ``That's why we're trying to cut off all avenues.''
The money-services businesses will have more than two years to register with
Treasury's Financial Crimes Enforcement Network, known as FinCen. The
requirement will take effect on Dec. 31, 2001.
Failure to register will be considered a crime, punishable by fines of $5,000
a day and up to five years in prison.
``The great majority of money-services businesses in the United States are
law-abiding,'' said FinCen Director James F. Sloan.
The officials estimate the rule will apply to 5,000 to 8,000 businesses
nationwide, including big corporations such as Western Union, American
Express and Travelers Express/MoneyGram as well as independent storefront
operations.
The businesses, which transmit money, sell and redeem money orders and
traveler's checks, cash checks and exchange foreign currency, account for an
estimated $200 billion a year in transactions.
By requiring the businesses to register with the government every two years,
the officials said they will get the first comprehensive look at the
money-services industry - where the companies are, who owns them and what
services they provide.
That will help law enforcement authorities discover where money laundering
may be occurring and the risk of prosecution could drive ``underground''
businesses into the open, they said.
The businesses also will be required to provide lists of their authorized
agents starting Jan. 1, 2002.
The new rule builds on a special emergency order that Treasury put into
effect in 1996 after evidence showed that some money transmitting businesses
and their agents in New York had engaged in a scheme to move drug money to
Colombia. The temporary order required some money transmitters in the New
York area and Puerto Rico to report information about all transmissions to
Colombia and the Dominican Republic of $750 or more.
A dozen transmitting businesses were discovered to be sending $800 million a
year to Colombia, far more than would be normal for people to send home to
relatives, Ms. Bresee said.
Under existing law, money-services businesses must report any currency
transactions exceeding $10,000. Treasury postponed a decision on a proposal
that would lower that threshold.
Peter Ziverts, a spokesman for Western Union, said the new rule was ``not too
onerous'' for the company and its 26,000 agents in the United States.
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