A task force of top Treasury Department officials is studying the effectiveness of rules implementing the USA Patriot Act and plans to recommend improvements by early June, a senior Treasury official said last week.
One of the likely changes will clarify when financial institutions may rely on due-diligence by other parties to satisfy the law's tough anti-money-laundering and anti-terrorist finance provisions.
The task force also wants to give the industry a clearer idea of what regulators expect from financial institutions.
The Treasury task force is led by Deputy Secretary Kenneth W. Dam and includes Under Secretary for International Affairs John B. Taylor, Under Secretary for Domestic Finance Peter R. Fisher, Under Secretary for Enforcement Jimmy Gurule, and General Counsel David Aufhauser. The senior Treasury official said that Dam created the task force because he recognized that the Patriot Act rules would have to be adjusted to keep pace with ever-changing methods that criminals and terrorists use to launder money. The rules also may need tweaking as the Treasury takes into account the business practices of industries that have never been subject to such regulations before, he said.
Signed into law in October 2001, the Patriot Act greatly extended the application of anti-money-laundering regulations, pulling in such diverse targets as the securities industry and travel agencies.
"The idea in creating this task force was to take a retrospective look at the regulations we have implemented under the Patriot Act and see how they can be better calibrated to better disrupt terrorist financing and money laundering efforts," the official said.
Treasury staff members have been meeting with industry representatives in Washington and New York, and are expected to travel to similar meetings in cities in the Southeast and on the West Coast within the next several weeks, the official said.
They will also reach out to consumer advocates, other financial regulators, and law enforcement officials.
According to the Treasury official, early industry feedback has indicated particular concern about the question of due diligence.
Several sections of the Patriot Act require financial institutions to gather certain information about their customers/members-such as positive identification at account opening, and, in the case of certain relationships with foreign individuals and institutions, the beneficial ownership of accounts.