WASHINGTON -- The Treasury and the Federal Reserve are readying regulations to make financial institutions standardize and retain their records of wire transfers.
Currently, the only regulation or reporting requirement that governs electronic payment of funds is that if a transmitter keeps a record of a transaction, it must keep the information for five years.
In 1990, the regulations the Treasury proposed to govern wire transfers garnered 333 unfavorable comment letters and were never implemented, said Peter G. Djinis, director of the department's Office of Financial Enforcement.
"I think we have accommodated the vast majority of those concerns," Mr. Djinis said. "What we have suggested is to adopt, in essence, standardization of information."
The Federal Reserve is expected to sign off on the regulation this month.
At that point the agencies will have two options: issue a final rule, or issue a revision of the 1990 proposal and solicit comments again.
"The wire transfer system has been exploited by money launderers and other individuals who are engaging in transactions," Mr. Djinis said. There needs to be "some way of at least tracing [money] once it is already in the system."
A Wide Net
The proposal would require financial institutions that perform such transfers - whether banks, security broker-dealers, consumer currency exchanges, thrifts, or casinos - to collect and keep information on wire transfers for five years.
The information would not have to be reported to the government unless the financial institution filed a criminal referral or otherwise reported the transaction as suspicious.
But the data would have to be standardized. The transmitting institution would have to record the identity of the person sending the money, the financial institution acting as a conduit, and the recipient.
The sender and recipient would have to be identified by account number, if possible, as well as by address.
Trade Group Worried
John Byrne, the senior counsel for the American Bankers Association, said the group has no idea what changes the wire transfer regulations will require.
As a result, the ABA is concerned about whether banks could comply with new regulations by next Jan. 1, when they are required by law to take effect.
The ABA suggests pushing back the effective date.
"We are still aiming for January," said Mr. Djinis. "Obviously, a critical factor is the ability of the industry to comply with the regulations."
"I am confident that if there are going to be surprise over the text of the wire transfer regulations that are going to be announced," Mr. Djinis said, they will be "happy surprises."