WASHINGTON -- Peter G. Djinis, the Treasury Department's point man on money laundering, says several important modifications in the program will soon occur.
As the director of Treasury's Office of Financial Enforcement, Mr. Djinis oversees financial institutions' compliance with the Bank Secrecy Act and other money-laundering laws.
Before he came to Treasury, he used to be even closer to the front lines. At the Justice Department he was one of the main coordinators of Operation Polar Cap, the largest money-laundering investigation and prosecution to date.
Polar Cap tracked more than $1 billion in drug proceeds that flowed through American banks and sham companies from the Medellin cartel in Colombia.
Know Your Customer
"There are two new, key components which Treasury will be telling bankers about in coming months: |know-your-customer' regulations and guidelines to help banks recognize suspicious activities," he said.
"The know-your-customer policy basically means that the bank must attempt ... to understand the nature of their customers' business," Mr. Djinis said. The regulation is expected to apply to banks and nonbanks.
"It suggests that you take a look at the information, no matter where within the bank it is, and try to put all the pieces together. Don't start and stop at the teller's window. Look at the loan department. Look at the wire room. Determine whether or not your customer is engaged in routine wire transfers that are going outside the country. Are deposits made by different people? That's the know-your-customer concept," he said.
After bankers learn more about their customers, certain activities should set off alarm bells. Treasury has come up with a master list of suspicious activities. From that, Treasury expects to issue guidelines so that banks and other financial firms know what to look for.
"It is much more specific than anything that has ever been released before," Mr. Djinis said. Banks don't have to wait for the new guidelines to start beefing up their anti-money-laundering practices.
"Complying with the Bank Secrecy Act will help you a lot," he said. He acknowledged, however, "Even if you cross all your t's and dot all your i's on your currency transaction reports, that doesn't mean the bank is going to stay out of trouble. I can't give that assurance because you might have the best BSA compliance program in the world, but esentially if you don't have any idea of what your customers are doing ... you could easily get in trouble."
One common source of problems for a bank is the failure to properly identify customers on reports of cash transactions of more than $10,000. The slip-up can be as simple as failing to note the customer's occupation.
"It's almost laughable, but on occasion ... somebody will put down |businessman,'" Mr. Djinis said. "We don't expect you to slay |drug trafficker,' but we would expect you to identify if it is a ... grocery store or a shoe store."
Another common problem is when CTRs list a post office box as an address, he said. "Don't use a post office box, use the real street address," Mr. Djinis said.
Hindrance to Investigations
Banks that don't take down enough information hinder those using Treasury's data bases to track criminals. Sometimes the problem is "not obtaining a very valuable identifier -- either a driver's license or Social Security number - or if you do obtain it, not putting it down on the CTR," Mr. Djinis said.
"Either one is going to be fatal, because again, if there is a name like Jones or a business with a common name, there is no way to separate Jones with a New York driver's license from Jones with a Florida driver's license."
Also, banks often do a poor job of maintaining their $3,000 identification log, which applies to all cash transactions of more than $3,000 but less than the $10,000 limit that would require a CTR.