The Obama administration is proposing a plan to beef up reporting on all electronic money transfers that go into and come out of the U.S. The Treasury Department, whose Financial Crimes Enforcement Network (FinCEN) is responsible for enforcing laws surrounding international money transfers, says that adding this new reporting requirement would improve their ability to track down sources of terrorist funding.
Currently, financial institutions must disclose and make available to the Treasury Department information regarding transactions in excess of $3,000. In addition, any transactions deemed suspicious by the financial institution must also be disclosed. The new regulation, however, would go beyond simple disclosure to require active reporting of these types of international wire transfers and others, which could make it easier for law enforcement to spot problems before they become tragedies.
“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,” said James H. Freis Jr., Director of FinCEN, in a statement.
Fears voiced by privacy advocates echo those that proliferated after the passage of the Patriot Act. According to Marc Rotenberg, Executive Director of the Electronic Privacy Information Center, “These new banking surveillance programs are testing the boundaries of privacy.”
The rules are a long-overdue outcome of the 2004 Intelligence Reform and Terrorism Prevention Act, which was intended to reform the intelligence community and prevent the conditions that failed to stop the terrorist attacks of 9/11. The law required the Secretary of the Treasury to determine whether such reporting was feasible and reasonably necessary, and if so, to implement the rule.
FinCEN conducted an extensive study of the feasibility of imposing such a requirement. In January of 2007, they published their report; Feasibility of a Cross-Border Electronic Funds Transfer Reporting System under the Bank Secrecy Act. The report affirmed the feasibility of the beefed-up reporting requirements. The agency then went on to conduct a follow-up study, Implications and Benefits of Cross-Border Funds Transmittal Reporting, to determine the benefits to the public and the costs to affected parties. After reviewing the published information, FinCEN has determined the benefits of new reporting rules would outweigh the costs.
Money Services Businesses (MSBs) that conduct cross-border electronic transmittals of funds will soon be required to report international transactions of $1,000 or more. While immigration lawyers have yet to respond, the public comment period begins this week, with comments accepted up to 90 days after the proposed new rules are published in the Federal Register.