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Treasury Widens Rules on Money Laundering

April 24, 2002|From Bloomberg News

Securities brokers, credit card companies and other businesses that handle large financial transactions must take steps to ensure they're not used for money laundering under rules announced Tuesday by the U.S. Treasury.

Treasury will require financial services firms to use many of the same anti-money-laundering controls that banks already have in place, such as having an internal compliance officer, training employees to detect money laundering and reporting suspicious transactions to the government.

The rules are part of U.S. efforts to cut funding to terrorists and drug traffickers and track their movements. A Treasury official said they strike a balance between obtaining useful information on suspected terrorists and not creating a burden on businesses. "We only want to know enough to stop the next calamity," said David Aufhauser, Treasury general counsel.

The rules will cover mutual funds and operators of credit card networks such as Visa International, MasterCard International and American Express within the next 90 days. They also cover money services businesses such as wire transfer companies and check cashers, and securities and commodities brokers.

Treasury is still studying how to apply the rules to hedge funds, insurance firms, dealers of gems and precious metals, pawnbrokers, loan and finance firms, travel agencies, dealers of cars, airplanes and boats, travel agencies, telegraph firms and mortgage brokers.

The requirements spring from a law Congress passed in October in response to the Sept. 11 terrorist attacks. Other parts of the law, known as the USA Patriot Act, require banks to step up monitoring of accounts held for non-U.S. citizens and requirements on securities dealers and brokers to report suspicious activities. Financial institutions will be required to take steps to identify suspicious transactions, know their customers better and inform the government when things are amiss.

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