- Ordinary businesses, from bicycle shops to bookstores
to bowling alleys, are being pressed into service on the home front in
the war on terrorism.
-
- Under the USA Patriot Act, signed into law by President
Bush late last month, they soon will be required to monitor their customers
and report "suspicious transactions" to the Treasury Department
-- though most businesses may not be aware of this.
-
- Buried in the more than 300 pages of the new law is a
provision that "any person engaged in a trade or business" has
to file a government report if a customer spends $10,000 or more in cash.
The threshold is cumulative and applies to multiple purchases if they're
somehow related -- three $4,000 pieces of furniture, for example, might
trigger a filing.
-
- Until now, only banks, thrifts, and credit unions have
been required to report cash transactions to the Treasury Department's
Financial Crimes Enforcement Network, under the Bank Secrecy Act of 1970.
A handful of other businesses, including car dealers and pawnbrokers, have
to file similar reports with the Internal Revenue Service.
-
- "This is a big deal, and a big change, for the vast
majority of American businesses," said Joe Rubin, chief lobbyist for
the US Chamber of Commerce. "But I don't think anybody realizes it's
happened."
-
- The impact is less clear for consumers, although privacy
advocates are uncomfortable with the thought of a massive database that
could bring government scrutiny on innocent people. Immigrants and the
working poor are the most likely to find themselves in the database, since
they tend to use the traditional banking system the least.
-
- "The scope of this thing is huge," said Bert
Ely, a financial services consultant in Alexandria, Va. "It's going
to affect literally millions of people."
-
- The filing of so-called suspicious activity reports,
though, is only the latest in a series of law enforcement moves the
government
has made in response to the Sept. 11 terrorist attacks on New York and
Washington. And so far, the filing requirement has been overshadowed by
debate over the other changes.
-
- The Patriot Act signed into law Oct. 26, for example,
gives the government a vast arsenal of surveillance tools, easier access
to personal information, and increased authority to detain and deport
noncitizens.
House and Senate negotiators came to terms Thursday on a bill that would
add 28,000 employees to the federal payroll in an effort to bolster airport
security, and Attorney General John Ashcroft has said he is reorganizing
the Justice Department and the FBI to focus on counterterrorism
efforts.
-
- 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."
-
- ___
-
-
- Article Originally published 11-18-01
- Scott Bernard Nelson can be reached by e-mail at
nelson@globe.com.
-
- To see more of The Boston Globe, or to subscribe to the
newspaper, go to http://www.boston.com/globe
(c) 2001
- The Boston Globe
- Distributed by Knight Ridder/Tribune Business News
- Copyright © iSyndicate Inc 2001
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