On September 29, the Washington Post and New York Times reported that the United States Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued a proposal this week that would require US banks to report all electronic money transfers into and out of the United States. James Freis Jr., director of the FinCEN, explained that the proposal would “greatly assist law enforcement in detecting and ferreting out transnational organized crime, multinational drug cartels, terrorist financing and international tax evasion.”
Currently, US financial institutions are required to report any transfers exceeding $10,000 as well as transfers that the institutions deem “suspicious.” Under the Treasury Department’s new proposal, US banks would be required to report all electronic money transfers into and out of the United States, no matter how small. The new rule would not apply to credit card or ATM transactions.
The announcement is a long-awaited follow-up to the 2004 Intelligence Reform and Terrorism Prevention Act which overhauled the national intelligence system in a response to the 9/11 terrorist attacks. After those attacks, it was revealed that the terrorists were financed in part by $130,000 in overseas wire transfers – many of which were below the reporting threshold. The 2004 Act imposed a requirement on the Secretary of the Treasury to heighten the cross-border reporting requirements for financial institutions.
The proposed expansion of reporting requirements would not take effect until 2012 and up to 300 deposit-taking banks and 700 money-services business would be affected. Under the plan, approximately 750 million transfers a year would be reported and stored in a national database. This information would then be available to law enforcement and regulatory agencies. Along with the personal information that typically accompanies such transfers, like names, addresses and account numbers, the financial institutions would also be required to report the social security numbers for all wire transfers on an annual basis.