As the May 23 kickoff for "sends" approaches, whispers have been circulating that some big-if unnamed-banks will not meet the new FedWire Expanded Funds format compliance deadline, implying they will run afoul of the Money Laundering Act-also known as the Travel Rule-and begin the fall of civilization as we know it.
The facts suggest otherwise. Enforcement of the deadline was delayed until January 1, 1998 by the federal Financial Crime Enforcement Network (FinCEN), which makes May 23 merely the beginning of a six-month phase-in period instead of a drop-dead date."A lot of (the banks) won't be able to send on May 23, but none (of them) won't be able to send by the last business day of 1997," says Dara Hunt, svp of wholesale payment products at the New York Fed.
The Expanded Funds format is one of the banking success stories so rarely reported. In development since 1993 in cooperation with the American Bankers Association, it standardizes electronic payment formats and incorporates information that allows law enforcement agencies to track drug-related and other money laundering schemes which attempt to spirit money out of the country. Most banks use FedLine software developed by the Fed itself; the nation's big banks use private software sold by companies like Framingham, MA-based IntraNet, which has folded the format into its Money Transfer System, and Jersey City, NJ-based FundTech Corp.
Many banks will be ready for the May 23 "receives" date and have been working closely with the New York Fed to meet the deadline. IBJ Schroeder Bank's New York branch, for instance, has been running since last December, says vp Joseph Jacovina, and can now receive in the Expanded Funds format both through FedWire and CHIPS, though sends won't be allowed until the May 23 date. Jacovina says he expects to be able to do "sends" by around the fourth quarter of this year. "We had to dedicate a person on our staff for whatever time the Fed allowed us to sit here and run through their test scripts, and they were very, very, very extensive test scripts."