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US Department of Treasury Proposes Reporting of Cross Border Wire Transfers

A FinCEN (the Financial Crimes Enforcement Network) report to Congress states that reporting of cross-border wire transfers is technically feasible for the US government but that it requires further collaboration. A press release was issued this past Wednesday, just days after the US government indicted two founders of third party payment processor, NETeller, which conducted much of its business within the United States. NETeller was also heavily involved in the multi-billion dollar industry of online gambling.

Bank wiring has long been considered one of the more private methods in which to send funds via US banking. In gambling circles, this is the method of choice among professional sports bettors.

The FinCEN report suggests that reporting of such data would be useful in the US government's efforts to stop money laundering.

"FinCEN is firmly committed to working with the financial services industry and our partners in regulatory and law enforcement communities to consider the design and implementation of a suitable and efficient potential reporting regime," said William F. Baity, FinCEN's acting Director. "I believe this inclusive, step-by-step approach will allow us to determine the right balance between providing real anti-money laundering and anti-terrorist financing benefits without imposing a burden and will go a long way in helping our efforts to protect our economic and national security."

Building a database of appropriate magnitude will take considerably longer than the originally suggest end of 2007, making this deadline unreasonable, according to the report. The system would take $32.6 million and over three years to build.

Cory Levine, Wall Street & Technology:

"Despite arguing for the feasibility of such a system, the FinCEN report raises the question of data privacy in an era when many private companies and government offices alike struggle to keep sensitive information under wraps. Further, why spend millions of taxpayer dollars on a system to monitor international transactions, when the Treasury is already in cahoots with European financial messaging service provider SWIFT? In 2006 alone, SWIFT completed 1.6 billion payment transaction globally on its network. If FinCEN expects to get this information, it appears to make more sense to continue reaching out to transaction processing utilities, rather than building brand-new systems and placing the burden on FSIs to comply with new regulations.

"Meanwhile, the dust has yet to settle on the privacy issues raised by the information sharing from SWIFT, as reported originally in The New York Times on June 23 of last year. Demanding more transactional data at the expense of the public could lead to some serious Big Brother backlash."

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