U.S. to tighten money transfer law

NEW YORK (AP) Drug cartels would have a tougher time moving money out of
the United States under new Treasury Department rules reportedly requiring
nonbank wire transfers of more than $750 be reported to the government.

The current reporting threshold outside the New York City area is $10,000.

A Treasury official confirmed Sunday night that Treasury Secretary Robert
Rubin would make an announcement today. But the official declined to say what
it would be.

The New York Times said in today's editions that Rubin and Raymond Kelly, the
former New York City police commissioner who now heads Treasury's enforcement
division, would announce the new rules today.

The new rules would make nationwide what has been in effect in New York City
since last summer on an emergency basis.

Streetcorner checkcashing services as well as large money transmitters such
as Western Union and American Express would be required to report wire
transfers of more than $750 outside the United States. The reporting
threshold for banks would remain at $10,000.

While the New York City rules could be imposed on an emergency basis,
imposition of the rules nationwide requires a 90day comment period.

Since the new rules were imposed in New York, hundreds of small money stores,
many of them storefront operations in Queens, have had to report all money
transactions greater than $750.

Kelly told a House Banking subcommittee in March that drug dealers have
resorted to trying to sneak huge bundles of U.S. currency out of the country
stashed in suitcases, gutted electronics gear and even shipments of hotwater
heaters.

Since August, when order went into effect, beefed up Customs inspections have
seized more than $50 million at ports and airports, or about four times the
amount confiscated in previous years, Kelly told the panel.

Small shops that sell money orders, cash checks and wire funds to other
countries play an important role in many New York neighborhoods, filling a
niche for many immigrants who do not use banks.

However drug dealers, sometimes working with owners of the money stores, have
been using them to electronically transfer drug proceeds back to Colombia,
Kelly said.

He said studies showed a community of about 25,000 households in New York was
sending about $1.2 billion a year to South America, mostly to Colombia.

``To account for this figure, each Colombian household would have to send
approximately $50,000 per year through money transmitters to Colombia,''
Kelly told lawmakers. ``Given that the median household income of this same
community is roughly $27,000 a year, there was cause for concern.''