Source: Washington Post Address: 1150 15th St. NW Address: Washington DC 20071 0001 Pubdate: Tue, 29 Jul 1997 Page c3 AntiMoneyLaundering Plan Hit Financial Service Firms Call Treasury's Proposed Rules Too Strict By Jill Dutt Washington Post Staff Writer NEW YORK, July 28—Treasury officials are treading gingerly as they push forward on a set of rule proposals that would, for the first time, subject about 158,000 nonbank financial service providers to federal oversight. In an effort to crack down on illegal money laundering, the Treasury Department proposed in May that sellers of money orders and traveler's checks, as well as money transmitters and checkcashing and currency exchange firms, be required to register with the government. The firms, which often serve immigrants who have no bank accounts, also would be required to keep tabs on any suspicious customer activity, including asking for photo identification and filing reports to Treasury on all cash transactions of more than $750. Although money service providers say they support the goal of reducing illegal money transfers, several questioned at a meeting here whether the proposals were too stringent. "I haven't seen where the $750 limit has been justified," said David T. Wittman, vice president for compliance at Western Union. Wittman added that the costs of training and supervising thousands of agents in the effort to have them fill out the required forms would be "significant." Western Union handled 81 percent of the money wired overseas last year, according to a study released today that was prepared by Coopers & Lybrand LLP for the Treasury Department. The $10.8 billion moneytransmitting business is the most profitable and fastestgrowing of the various financial services targeted by the proposals. In total, the firms that would be subject to Treasury's new rules handled about $200 billion in transactions last year, according to the study. "We support this industry and we want it to flourish," Raymond W. Kelly, Treasury's undersecretary for enforcement, said during a break in today's hearing, one of four the department is holding to field industry comments. Treasury also extended by 40 days, until Sept. 30, the deadline for written comments on the rules. Kelly denied charges that the rules would hurt immigrants disproportionately, noting that the average overseas money transfer is just $300 well below the proposed reporting limit. Although several industry officials complained the $750 limit is too low, Kelly said "at this junction, the $750 threshold seems reasonable." Treasury officials suggested the $750 level because it worked well in a joint federal, state and local enforcement operation in New York City that eventually targeted 22 money transmitters suspected of wiring drug money to Colombia. The operation, launched last August, required the transmitters to ask for identification and to report any suspicious activity and all cash transactions of more than $750. That operation initially targeted a dozen money transmitters; of those 12, three have stopped sending funds to Colombia, Treasury said. Three people have been arrested and others are under investigation for trying to structure transactions to avoid the $750 limit. Meanwhile, Treasury has seized about $50 million in illegal cash elsewhere on the Eastern Seaboard in the past year, about four times as much as in previous periods, citing the New York City operation for forcing money launderers to resort to more risky bulk currency smuggling to move their funds. Although the new rules might seem overly strict for some remote communities, Stanley E. Morris, director of Treasury's financial crimes enforcement network, said the rules should be applied evenly throughout the United States to prevent launderers from simply moving their operations to another city or state to escape the added oversight. © Copyright 1997 The Washington Post Company