Check cashers and other nonbank competitors would have to comply with money-laundering rules under a proposal released Monday by the Treasury Department.
"As we have made it more difficult to launder money through banks, criminals have increasingly turned to these other institutions," said Raymond W. Kelly, Treasury under secretary for enforcement. "These rules will make it a lot harder to smuggle money out of the U.S."
Under the rules, check cashers, money transmitters, and sellers and redeemers of money orders would be required to notify the Treasury of any international wire transfers exceeding $750. They also would have to report all suspicious transactions, regardless of the dollar amount. Finally, all nonbanks would have to register with the Treasury, supplying details about their owners and locations.
Commercial banks already are required to report suspicious transactions. They also must report all wire transfers exceeding $10,000. The nonbank threshold would be set lower because most legitimate wire transfers conducted through check cashers or money transmitters are for much less than $10,000.
Mr. Kelly said the $750 threshold has been proven effective. He touted a Treasury Department crackdown conducted in New York last August, in which 23 wire transmitters were required to report all transfers larger than $750. The move virtually eradicated drug cartels' illegal wire transfers from New York to South America, Mr. Kelly said.
Banking industry representatives applauded the Treasury's plan.
"Banks spend millions of dollars a year training their employees to look for suspicious activities, but nonbanks haven't been required to," said John Byrne, senior counsel to the American Bankers Association. "This would close a major gap in criminal reporting."
Lawrence E. Sabbath, lobbyist for the National Check Cashers Association, said his group supported the 1994 law that mandated the registration requirement. However, he declined to comment on the specifics of the Treasury plan.
"It will take a while to comb through this proposal," Mr. Sabbath said. Check cashers' main concern is that rules apply evenly to all competitors.
"We want to make sure that the registration requirements apply to a broad enough group of people," he said.
The Treasury plan does contain some exemptions-money orders sent through the mail and traveler's checks would not have to be reported.
The plan is open for public comment for 90 days, and will be finalized by the end of the year, according to Mr. Kelly.
