WASHINGTON -- The Bank Secrecy Act Advisory Group, meeting for the first time this month, is considering changes to cumbersome currency transaction reports.
The Treasury Department founded the group in March, hoping it could help agency reform anti-money-laundering regulations.
The group is chaired by Ronald K. Noble, nominated by President Clinton to be under secretary for enforcement at Treasury.
The 30 members represent the private sector, including bankers, car dealers, and check cashers, and the government, including officials from half a dozen agencies.
Recommendations for Bentsen
No decisions were reached at the April 8 meeting, but several recommendations for Treasury Secretary Lloyd Bentsen are expected at the next meeting, set for June 6.
Peter Djinis, a member of the high-powered group and director of Treasury's office of financial enforcement, said issues ripe for decision include simplifying the CTR report, dropping the $3,000 log, and developing two rules covering customer identification and wire transfers.
"We're trying to eliminate form over substance," Mr. Djinis said. "But life is never a simple as that, and we don't want to create any new loopholes."
Less Information
A major simplification of currency transaction reports is in the works.
John Byrne, another member of the group and senior counsel at the American Bankers Association, said a 30% to 40% reduction in the information required is possible.
Banks must file a form on every currency transaction of $10,000 or more. Each CTR has 55 questions.
"There's a recognition that the system isn't working," Mr. Byrne said.
The group also is discussing whether to eliminate the "$3,000 log."
In 1990, the Treasury began requiring banks to record all sales of monetary instruments, such as cashier's checks, bank drafts and travelers checks, that exceed $3,000.
'Know Your Customer'
"The log is absolutely useless, and I hope it goes the way of the Susan B. Anthony coin," said Mr. Byrne. "I've yet to meet a banker who's had this looked at."
While these two moves would ease the paperwork, the group also may institute a new rule.
The Treasury is expected to issue a "know your customer" rule this year. While the rule is still being developed, it is expected to merely formalize current industry practice. Mr. Byrne said 86% of banks now have such a program in place.
Customer identification programs are stricter in some banks than others.
Some develop a transaction profile of each customer. That way, banks could check to see if customers are engaged in transactions unusual for their normal practices.
Other banks might just make sure new customers have several forms of identification, and then follow up with calls to the person's home and business.
Wire Transfers
Possibly the first result of the group's work will be write transfer rules.
These regulations were supposed to take effect in January, but Treasury postponed their release so the group could review them.
Mr. Djinis said the group is not recommending any major changes, and he expects new rules to be out in a few months. The rules wil require banks to keep detailed records of the wire transfers they send and receive for five years.
Law enforcement officials hope to use the paper trail to investigate suspected money laundering.
While these three issues affect banks directly, the group is studying how to extend anti-money-laundering regulations to nonbank companies. The group is struggling with how to define a nonbank.
Rules for Stores Uncertain
Mr. Djinis said check cashers are likely to be covered, but the group has not yet decided whether grocery stores or convenience stores should be included.
The advisory group is expected to meet four or five times over the coming year.
