FinCEN Wants to Know

WASHINGTON (CN) - The Financial Crimes Enforcement Network plans to require banks to provide it with an annual list of the taxpayer identification numbers of account holders who have sent or received money across the U.S. border by electronic funds transfer.

In addition to the annual report, the proposed rule would require banks to provide the transmittal details of all such transfers without the agency first having to obtain a search warrant, if the Secretary of the Treasury determines that reporting of transmittals is reasonably necessary to help the department prevent money laundering and restrict terrorist financing.

Current regulations require banks and other institutions to maintain the records of cross-border transfers in amounts of greater than $3,000, but do not require them to provide the data to the Financial Crimes Enforcement Network (FinCEN) on a regular basis.

Banks would be required to report all cross-border transfers without regard to the amount of the transmittal. Money transmitters such as Western Union would have to report individual transmittals over $1,000 to prevent overwhelming the transmitters with cost of maintaining records on smaller transactions. Banks, the FinCEN argues, already have most of the data the proposed rule requires on their account holders.

In a press release announcing the proposed rule, FinCEN Director James H. Freis, Jr. said "by establishing a centralized database, this regulatory plan will greatly assist law enforcement in detecting and ferreting out transnational organized crime, multinational drug cartels, terrorist financing, and international tax evasion." Freis went on to say that "FinCEN has examined the cross-border reporting issue, taking into account the exceptional benefit to law enforcement and the modest cost to industry, and we look forward to working closely with both as this rule moves forward through the public comment process."

The preamble to the proposed rule quotes extensively from the 9/11 Commission report, noting that the contemporary reporting requirements for electronic funds transfers were not sufficient to alert law enforcement agencies to the more than $130,000 sent to the 19 9/11 hijackers via electronic funds transfers.

The preamble also suggests that because several of the individuals who sent the 9/11 hijackers money were the subjects of anti-terrorism investigations, the transfers would have come to the attention of law enforcement agencies in the proposed annual report.

The proposed rule is in the public comment period and would not take effect until 2012 at the earliest.

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