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Treasury Ponders Expanding Anti-Money Laundering Rules

Federal regulators are considering applying anti-money laundering rules to car dealers and travel agents as part of the Bush administration's fight against drug dealers and terrorists.

The Treasury Department's Financial Crimes Enforcement Network is looking into whether car dealers and travel agents should be required to adopt comprehensive programs to combat money laundering and whether they should have to take certain steps to verify the identity of customers that they do business with.

The department in implementing the 2001 USA Patriot Act has already adopted similar requirements for banks, credit card firms and a host of other companies. The law -- passed in the wake of the Sept. 11 terror attacks -- expanded the government's powers to go after money launderers and to track down terrorist financiers.

Treasury said it is considering applying the anti-money laundering rules to car dealers and businesses that sell boats and airplanes, and to travel agencies in notices published in the Federal Register on Monday.

The government, among other things, said it wants to get a better handle on what the potential money laundering risks posed by these businesses are. It is asking the industry and public to provide feedback in written comments due April 10.

Travel agents will work with the government on the matter but want to ensure there is no undue regulatory burden on the industry, said Burton Rubin, general counsel at the American Society of Travel Agents. A message was left for the National Automobile Dealers Association.

Money laundering involves the movement of profits from drug or arms trafficking, political corruption, prostitution and other illegal activities through a series of accounts or businesses to disguise them as proceeds of legitimate business.

The government also uses anti-money laundering rules as a way to try and prevent people or groups from bankrolling terrorists activities.

A money laundering risk can be presented when a car or other type of vehicle is purchased with cash, "where the money launderer seeks to cleanse illegal proceeds" through the financial transaction, Treasury said.

Similarly, some money-laundering risks can be posed when large sums of cash are used to pay for travel services, Treasury said.

Even though vehicle dealers and travel agencies have to report to the government cash transactions in excess of $10,000, additional anti-money laundering rules might be warranted, Treasury said.

Last year, Treasury adopted rules requiring banks and other companies to put comprehensive anti-money laundering programs in place.

Under those programs, companies have to train employees to detect money laundering methods, establish policies and procedures to identify risks and minimize opportunities for abuse, and commission independent audits.

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