Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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2/7/2007 Architecture of Cross-Border Wire Transfer System Subject of Treasury/FinCEN Report

Treasury and the Financial Crimes Enforcement Network have submitted to Congress a feasibility report on cross-border wire transfer reporting. The report, mandated by the Intelligence Reform and Terrorism Prevention Act of 2004, provides a blueprint for how FinCEN expects wire transfer reporting to work, including detailed program goals for establishing the reporting system in about three and a half years. Reporting responsibilities will be determined on a “first in/last out” basis under which the first financial institution inside the U.S. to receive incoming wires will be responsible for reporting, while the last institution inside the U.S. on an outbound transfer will be responsible for reporting. Following procedures already established for such reporting in Canada and Australia, FinCEN expects that institutions using message systems such as SWIFT, CHIPS, and Fedwire will be able to submit reports that take data from the standardized message formats of those systems. Reporting requirements are not expected to exceed current recordkeeping requirements of the Funds Transfer and Travel Rules of the BSA regulations. Despite a recent proposal to lower the recordkeeping threshold on funds transfers to $1,000 because of evidence that criminals may be structuring wire transfers to avoid the $3,000 recordkeeping threshold, the Feasibility Report states that the reporting threshold “should apply only to discrete transactions and not to the aggregated total value of multiple transactions conducted very closely to one another in time.” Perhaps FinCEN is confident that its link analysis system, described in detail in an appendix to the Report, will be able to detect structuring. The Report will be the subject of an extended analysis in the April issue of the Monitor.

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