IRS Offers More Rules to Deter Launderers
WASHINGTON - The Internal Revenue Service is moving to tighten its rules against moneylaundering by requiring businesses to file reports on travelers checks, money orders, and other financial instruments as they do for cash.
The rule, proposed formally on May 15, would not affect banks, which already file currency transaction reports on many deposits greater than $10,000. Bankers have complained that they were enlisted to fight the drug war single-handedly, without help from other businesses.
The new IRS rule would require nonbank businesses to treat travelers checks, money orders, cashier's checks, and bank drafts as cash when used in purchases of big-ticket items like cars, boats, furs, jewelry, and Oriental rugs. Sellers will have to file a Form 8300 with the IRS for each $10,000 cash-equivalent transaction.
The IRS said businesses have filed 107,000 of the forms since they were first required in 1985. Filings for the last three years have averaged about 23,000 annually, and the IRS said it is stepping up efforts to assure compliance.
Banks file about 7 million currency transaction reports annually.
Drug dealers, coached by some businesses, are said to be using travelers checks and other noncash instruments to skirt the cash-reporting law.
John J. Byrne, senior federal legislative counsel for the American Bankers Association, said bankers would fight any attempt by the IRS to require them to file reports on the noncash instruments. Banks are currently required to take information from customers on cashier's checks, travelers checks, and bank checks greater than $3,000.
The IRS conducted a sweep of businesses in 12 states this spring to see if they were complying with the 8300 rule.
As a result of the compliance checks, the agency fined 1,700 businesses a total of $227,000.