Patriot Act would make watchdogs of firms
" 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."
By Scott Bernard Nelson, Globe Staff, 11/18/2001
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.''
Scott Bernard Nelson can be reached by e-mail at nelson@globe
.com.
This story ran on page G1 of the Boston Globe on 11/18/2001.
© Copyright 2001 Globe Newspaper Company. |
