WASHINGTON -- Bankers are ecstatic about the new wire transfer regulations they will be asked to comply with starting next year.
"This new regulation is nothing revolutionary. It is responsible banking," said Jane L. Wexton, vice president and senior attorney at Citibank.
The Federal Reserve Board on Aug. 13 issued for public comment proposed regulations that would require banks and nonbank financial institutions to keep records for five years of the international wire transfers they send and receive.
Domestic Transfers Excluded
Bankers had been worried that the new regulations would cover domestic and international transfers, and would contain onerous reporting requirements as well.
Last year, 270,000 wire transfers worth $800 billion were sent on an average day over Fedwire.
Under the proposed regulations, institutions would not be required to report the information they collect to the government unless the transfer raises suspicions of illegal activity. Comments are due Oct. 4 on the new rules.
The government believes the regulations will help it track laundered money by leaving a paper trail of all money wired abroad. Investigators can check the records in suspicious cases.
Won't Lead to New Cases
Wire transfer records can't lead the government to new cases, Ms. Wexton said. "What they can do, if properly maintained, is provide evidence after a case has begun," she said.
Under the proposed rules, the bank that originates a wire transfer abroad must keep records of the name and address of the sender, the amount of money, the date it was sent, and all payment instructions received -- such as the account number and the name of the bank the money is being sent to.
In addition, if the sender gives such information, the originating bank is required to keep a record of the name and address of the person to receive the money.
A bank that receives the wire transfer must keep a copy of the payment order on file. If the person receiving the money has a deposit account or a loan from the bank, the bank must keep account records in a retrievable form.
If the person receiving the wire transfer payment does not have an account at the bank, it must obtain and record the receiver's name, address, and social security number, alien identification number, or employer identification number, or note the lack of such a number in the record.
When the bank delivers the funds in person to a nonaccount holder, it must verify the receiver's name and address.
If there is an intermediary bank involved in the wire transfer, it must retain a copy of the transfer order it receives from the originating bank before passing the transfer on to the recipient bank, under the proposed rules.
