U.S. Opens New Assault on Drug Cartel MoneyLaundering
By David E. Sanger
New York Times Service

WASHINGTON The administration has devised new rules
in an effort to make it far more difficult for drug cartels to move their
profits from the United States to Colombia and other drug centers in
Latin America, building on a successful experiment in New York City,
officials familiar with the plan say.
Under the new rules, streetcorner checkcashing services and
large moneytransmitters like Western Union and American Express
would be required to report to the Treasury wire transfers of more than
$750 outside of the United States. Until now, only transfers of more
than $10,000 required the filing of a government form that includes
basic information about the sender. The regulations, which would go
into effect after a 90day comment period, were to be announced by
Treasury Secretary Robert Rubin and Raymond Kelly the former New
York City police commissioner who is head of the Treasury's
enforcement division.
Ordinary banks, which operate under separate rules requiring
reports of suspicious activities, will be exempted, though they must still
file reports of international transactions of more than $10,000.
The new rules grew out of a federal and state crackdown on
moneylaundering that began in New York City in August. Using the
Treasury's emergency powers under the Bank Secrecy Act, Mr. Kelly
required cash transmitters in New York City chiefly storefront shops
in Queens and northern Manhattan that immigrants often use to wire
money home to report transactions of more than $750 or face large
penalties.
Intelligence reports suggested that the New York transmitters
moved more than $1 billion in drug money a year to Latin America,
chiefly to Colombia in increments just under $;0,000, to avoid the
government reporting requirements. Lawenforcement officials,
presumably after eavesdropping on the drug operations, said the $750
limit virtually dried up the cartel's moneywiring business in the city,
because the burden of dividing up a remittance of, say, a $500,000
payment to Colornbia in such increments was significant.
"It was more successful than we could have imagined," said a
senior administration official deeply involved in the crackdown. "It
didn't cut the money off, but it required the cartels to move a lot more
in cash. And that is dangerous for them."
During the sixmonth experiment cash seizures at Kennedy and
Newark International Airports and Logan International Airport in
Boston rose to $50 million, a fourfold increase over the previous year,
Treasury officials said.