A relatively minor change in reporting rules could slash the paperwork that banks file to help the government nab money launderers, a recent report indicates.
The report by the General Accounting Office, an arm of Congress, focused on the filing of currency transaction reports, which financial institutions are required to file for transactions involving more than $10,000 in cash.
The GAO report said that 58% of the 9 million currency transaction reports filed in 1992 were for transactions involving less than $20,000.
This implies that a modest increase in the reporting threshold, to $15,000 for instance, could cut the number of reports filed by more than a third, said Charles A. Intriago, a money laundering expert and publisher of a Miami-based newsletter, Money Laundering Alert.
Savings Seen in Millions
Figuring that it takes a bank an average of 19 minutes to file a currency report, the savings in manpower alone could total millions of dollars industrywide, Mr. Intriago said.
"Since the initial [$10,000] figure was established 23 years ago, in my opinion inflation alone would justify a slight increase to $15,000," he added.
Mr. Intriago said that if the increase in the reporting threshold were coupled with incentives for financial institutions to make greater use of reporting exemptions, which are available for legitimate businesses but not widely used, the number of currency reports filed could be cut by more than 50%.
These changes may be needed to stanch the rising flow of paperwork, he added.
Legislation Pending
The GAO report said that by April, 49.8 million currency transaction reports had been filed since the government began requiring the reports in 1970.
The GAO estimates that in four years more than 92 million currency reports will have been filed.
In an effort to reduce the regulatory burden, Rep. Henry B. Gonzalez, chairman of the House Banking Committee, has sponsored legislation now before his committee that sets as a goal a one-third reduction in the filing of currency reports.
Mr. Gonzalez has said he believes this goal can be accomplished by encouraging banks to make greater use of reporting exemptions.
Despite suggestions from banks that raising the reporting threshold would also help, Rep. Gonzalez has not included it in his legislation.
Concern over Laundering
Furthermore, Ronald K. Noble, a senior Treasury official for enforcement and a top money laundering policy strategies for the Clinton administration, has said that an increase of the reporting threshold will not happen.
There is a fear among many government officials that raising the reporting threshold would let too much money laundering go undetected.
In a related matter, another recent GAO report indicates that computer systems under development by a unit of the Treasury called the Financial Crimes Enforcement Network hold promise for helping law enforcement agencies prosecute money launderers.
Fincen, as the organizations is known, was founded in April 1990.
The 207 employees of this organization, which had a 1993 budget of $18 million, help law enforcement agencies identify suspected money launderers by using computers to analyze currency transaction reports and other data filed with government agencies.
In March, Fincen began using artificial intelligence software to help its personnel analyze the data.
In September, the organization began maintaining a central data base with criminal referral forms filed by financial institutions.
In its report, the GAO said these two computer systems "have the potential to make a significant contribution" to enforcement of money laundering laws.
But it said the systems "have not been operational for a sufficient period of time to measure their effectiveness."
