WASHINGTON - The Treasury and Justice departments issued a fleshed-out strategy Wednesday to combat money laundering, including new reporting requirements for some nonbanks and more details on potential guidelines for helping bankers spot financial criminals.
The strategy included an announcement that the Financial Crimes Enforcement Network, a unit of the Treasury Department, had issued a final rule requiring money service businesses - such as check cashers, money transmitters, and currency dealers - to submit suspicious activity reports. By yearend, the Treasury is to issue additional reporting rules for casinos and card clubs, and it expects the Securities and Exchange Commission to issue a proposed rule for reporting suspect activities by securities broker/dealers.
"Money laundering is a growing threat to the United States," said Deputy Treasury Secretary Stuart Eizenstat. "It undermines confidence and the integrity of our financial systems, facilitates crime and corruption, and allows criminals to savor the rewards of their illegal actions."
Regulators and law enforcement officials also are to give more feedback to institutions making the reports.
Both moves were applauded by the industry. John J. Byrne, senior counsel for the American Bankers Association, said that he was pleased to see that bankers were no longer being asked "to carry the full load" of suspicious activity reporting, and he said that the industry has been calling for more feedback from law enforcement for 15 years.
"The only way any of this works is if the requirements to report crimes are not a rote process but an analytical tool to help banks in the future and to get these cases that we send them prosecuted," Mr. Byrne said.
A number of the goals laid out in The National Money Laundering Strategy for 2000 were previewed by Treasury Secretary Lawrence H. Summers in a speech last week, including legislation that would give him more power to identify countries and institutions around the world where U.S. banks may not do business. Treasury officials also support legislation that would increase the number of offenses that could trigger money laundering prosecutions, including foreign corruption.
But the plan released Wednesday offered new specifics on several aspects of the administration's strategy.
The new approach will replace regulators' disastrous know-your-customer proposal with guidelines for enhanced scrutiny of customers and transactions that pose high risk of illegality.
Treasury officials said that unlike the abandoned know-your-customer effort, which would have allowed regulators to dictate the way banks kept tabs on their customers, the guidelines on how to identify and monitor suspect activity will be developed cooperatively by the departments of Treasury and Justice, bank regulators, and bankers.The guidelines will not have the force of a regulation.
Additionally, bank regulators will be required to submit a review of their examination procedures for money laundering by November.
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