(continued)
As for the business-filing requirement, specifics
about what companies have to do and when they have to
do it still need to be worked out. The Treasury
Department has until March 25 -- the date the Patriot
Act becomes law -- to issue regulations about how to
put the new rules into practice.
"The law itself doesn't go into any detail, because
you'd presume that's what the Treasury regulations are
for," said Victoria Fimea, senior counsel at the
American Council of Life Insurers. "And the devil, of
course, is in the details."
When he signed the legislation, President Bush said
the new rules were designed to "put an end to
financial counterfeiting, smuggling, and money
laundering." The problem, he and others have said, was
keeping tabs on the billions of dollars that flow
outside the traditional banking system and across
national borders each year.
Money launderers often disguise the source of their
money by using cash to buy pricey things. Later, they
can resell the products and move the money into a bank
account -- at which point it has been laundered, or
made to look legitimate, by the aboveboard sale.
Making a series of transactions just below the $10,000
filing threshold is also illegal under the new law if
it's done to keep a business from contacting the
government.
Financial services companies such as banks, insurers,
and stock brokerages face a higher standard under the
new law than other businesses. In addition to the
filing requirements, they have to take steps such as
naming a compliance officer and implementing a
comprehensive program to train employees about how to
spot money laundering.
Unlike other businesses, though, most financial
services companies already have a process in place to
deal with government regulation.
"Certainly for the bigger [insurance] companies, they
most likely are already tooled up for this," said
Fimea. "For other companies, this creates a whole new
landscape."
James Rockett, a San Francisco lawyer who represents
banks and insurance companies in disputes with
regulators, said he's skeptical the authorities will
get any useful information from reports filed by
nonfinancial companies.
"You're trying to turn an untrained populace into the
monitors of money laundering activity," Rockett said.
"If you want to stop this, it's got to be done with
police work, not tracking consumers' buying habits."
Voices opposing any of the new law-enforcement
measures appear to be in the minority, however. For
now, at least, few people and few companies want to be
perceived as being terrorist sympathizers.
"In a political sense, it would have been very hard
for us to go to Congress in this case and loudly argue
that the legislation shouldn't include
nonfinancial-services guys," said Rubin, of the US
Chamber of Commerce. "Everybody wants to help and to
stop money laundering right now."
Scott Bernard Nelson can be reached by e-mail at
[email protected].
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