No Decision on Reporting Transactions as Low as $3,000 : New Rules on Tracing Drug Funds Issued

The Treasury Department issued new rules Monday to help track down drug money as it passes through banks but reserved final judgment on its most controversial proposal--reporting any transaction of more than $3,000.

Most of the regulations will take effect in 30 days and the rest will start in 90 days, the Treasury Department said. They affect not only banks but savings and loans and similar financial institutions.

Utilizing Computers

A senior departmental official said that the changes would enlist the latest generation of banking computers in the fight against drug dealers, who generally are more closely in contact with the laundering of their money than they are with the drugs.

“We want to attack the money end of the narcotics business,” said the official, who spoke on condition that he not be identified.

One of the most significant of the new regulations will require a bank to report to the government whenever it learns of any aggregate currency transactions involving more than $10,000.

A similar version of that rule is in effect now, but drug dealers have been getting around it by having teams of money launderers each put in just less than the triggering amount.

Aggregate Transactions

The amendment attacks that scheme by counting aggregate transactions.

“As long as ‘a transaction in currency of more than $10,000’ has occurred, it does not matter if it was done by one person with one account, several persons with the same account, or one person with several accounts,” the Treasury Department said in explanatory notes accompanying its final rules.

The senior department official said banks would be required to report such transactions only if they had computer equipment that enabled them to do so. The rules do not force banks to go out and buy such computers, but, “if you have computer software that can tell you when you get over $10,000 aggregate, you’ve got to use it,” he said.

The new requirements, implementing changes to the Bank Secrecy Act made by Congress last year, originally called for financial institutions to report and record cash purchases of financial instruments--mainly checks and money orders--exceeding $3,000. But the department said Monday that it has decided to reserve judgment on the idea.

Operational Problems

“After review of the comments (from financial institutions), it was apparent that there were several operational problems with the proposal,” the department said in a statement.

The senior Treasury Department official said his agency has not decided whether to drop the idea, modify it or put it into effect as originally written.