U.S. Crackdown On Drug Cartel Money Transfers

New York Times

Washington

The Clinton administration will announce new rules today in an effort to
make it far more difficult for drug cartels to move their profits from
the United States to Colombia and other drug centers in Latin America,
building on a successful experiment in New York City, officials familiar
with the plan say.

Under the new rules, street corner checkcashing services as well as
large money transmitters like Western Union and American Express would be
required to report wire transfers outside the United States of more than
$750 to the Treasury. Until now, only transfers of more than $10,000
required the filing of a government form that includes basic informa tion
about the sender.

Ordinary banks, which operate under separate rules requiring r~ ports of
suspicious activities, will be exempted, though they must still file
reports of international transactions of more than $10,000. Nonbanks,
which largely do $200 billion a year in legitimate business, say they
fear that the new reporting requirements could create a paperwork
nightmare.

The new rules grew out of a federal and state crackdown on money
laundering that began in New York City in August. Using the emergency
powers under the Bank Secrecy Act, the Treasury required cash
transmitters in New York City to report transactions of more than $750 or
face large penalties.

Intelligence reports suggested that the New York transmitters moved more
than $1 billion in drug money a year to Latin America, chiefly to
Colombia, in increments just under $10,000, to avoid the government
reporting requirments. Law enforcement officials said the $750 limit
virtually dried up the cartel's moneywiring business.