Originally created 12/17/05

Treasury announces new rules on money laundering



WASHINGTON - The Treasury Department has finalized rules requiring banks, securities dealers and other financial institutions to take steps to detect money-laundering or other dubious transactions in accounts they maintain for foreign customers.

The department's Financial Crimes Enforcement Network on Friday announced the new provisions aimed at thwarting terrorist financiers, drug lords and other money launderers from using the U.S. financial system to carry out financial crimes or conceal illicit activities.

The 2001 USA Patriot Act required the department to implement rules governing foreign "correspondent" accounts and private banking. Foreign banks and other financial institutions set up correspondent accounts with U.S. banks to conduct business in this country.

The final rules require U.S. financial institutions to conduct due diligence on these accounts. At a minimum, U.S. financial institutions must assess the money laundering risks posed by these accounts, put procedures in place to detect money laundering and periodically review activity in these accounts.

U.S. financial institutions have been operating under interim provisions.

In addition, the final rules require U.S. financial institutions to give close scrutiny to accounts held by foreign senior political officials - as well as family members and close associates of those political figures.

Riggs Bank had run into trouble with regulators when it failed to suspicious transactions in the accounts of foreigners, including former Chilean dictator Augusto Pinochet.

Last year, the Office of the Comptroller of the Currency imposed a record $25 million civil fine on Riggs for alleged violation of laws to prevent money laundering.

In April of this year, federal regulators approved the acquisition of Riggs Bank's parent by PNC Financial Services Group Inc. Riggs, an old-line Washington institution, which was stripped of the embassy and international business that got it into legal trouble over suspicious transactions.

On the Net:

Financial Crimes Enforcement Network: http://www.fincen.gov/