WASHINGTON -- Rules extending anti-money-laundering suspicious-activity reports to the securities industry are "critical," Treasury Secretary Larry Summers said in a Feb. 1 letter to Rep. John Dingell, D-Mich., released Thursday.

Mr. Summers said Treasury's Financial Crimes Enforcement Network has been consulting with the Securities and Exchange Commission and the securities industry to devise an effective system for securities broker-dealers to detect and report suspicious transactions.

Mr. Summers said that "a comprehensive proposed SAR rule and industry guidance document have been drafted and shared with the SEC, and our goal is to issue a proposed SAR rule for securities firms later this year."

Mr. Summers also told Rep. Dingell that the Treasury does not have a specific program in place to extend SARs to the insurance industry. But "in light of the passage of the Financial Services Modernization Act of 1999, we have begun preliminary discussions directed at the vulnerabilities to money laundering with the industry," he added.

Rep. Dingell, the ranking Democratic member of the House Commerce Committee, had criticized the lack of action on regulations to bring SARs to the securities industry. Rep. Dingell dispatched letters Wednesday to Mr. Summers, SEC Chairman Arthur Levitt, and Mary Shapiro, president of NASD Regulation Inc., the regulatory arm of the National Association of Securities Dealers, asking for a progress report by Sept. 4 on an SAR regulation for the securities industry.

Rep. Dingell also asked that Treasury inform him of the results of its preliminary discussions regarding extending anti-money-laundering reports to the insurance industry.

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