Retailers face new rules under USA Patriot Act

Retailers face new rules under USA Patriot Act

By Joe Baker

By Joe Baker

Senior Editor

Retailers as spies for the government? That’s what The Boston Globe claims in a recent article on the USA Patriot Act.

The Globe said that under provisions buried in the 300-page law, ordinary businesses, from bicycle shops to bowling alleys, will be required to monitor their customers and report any “suspicious transactions” to the U.S. Treasury Department.

President Bush signed the law last month. It states, “any person engaged in a trade or business” has to file a government report if a customer spends $10,000 or more in cash.

That amount is cumulative and applies to multiple purchases. If someone bought several pieces of furniture that exceeds or totals that figure, it would trigger a filing.

Up till now, only banks, thrifts and credit unions were required to report cash transactions to the Financial Crimes Enforcement Network of the Treasury Department under the Bank Secrecy Act of 1970.

“This is a big deal, and a big change, for the vast majority of American businesses,” said Joe Rubin, chief lobbyist for the U.S. Chamber of Commerce. “..I don’t think anybody realizes it’s happened.”

The effect on consumers is less clear, The Globe said. Privacy advocates are nervous about the prospect of a massive database that could result in government scrutiny of innocent people. Immigrants and the working poor are most likely to end up in such a file because they make less use of the banking system.

A financial consultant in Alexandria, Va., Bert Ely, commented: “The scope of this thing is huge. It’s going to affect literally millions of people.”

Specifics of the filing requirement are yet to be worked out, the newspaper reported. The Treasury Department has until March 25 to issue regulations about how to implement this provision.

“The law itself doesn’t go into any detail, because you’d presume that’s what the Treasury regulations are for,” said Victoria Fimea, senior counsel at the American Council of Life Insurers. “And the devil, of course, is in the details,” she said.

President Bush said the new rules are designed to halt counterfeiting, smuggling and money laundering. Billions of dollars flow outside the banking system and across national borders annually.

It’s also illegal under the new law to make a series of transactions just under the $10,000 filing threshold if it’s done to avoid filing.

Banks, insurers, stock brokers and other financial services companies must meet a higher standard under the new law. The Globe said such companies must name a compliance officer and implement a comprehensive training program for employees in how to spot money laundering.

James Rockett, a San Francisco attorney who represents banks and insurance companies, said he doubts this procedure will produce any useful information.

“You’re trying to turn an untrained populace into the monitors of money laundering activity,” he said. “If you want to stop this, it’s got to be done with police work, not tracking consumers’ buying habits,” Rockett said.

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