Jewelers, Insurers to Get Cash-Tracking Rules

Tiffany & Co., American International Group Inc. and other jewelry and insurance businesses will be the next group of companies required by the U.S. to train staff and check transactions with clients to catch money launderers.

The U.S. Treasury’s Financial Crimes Enforcement Network plans to issue rules in the next 30 days to extend the 2001 Patriot Act’s rules intended to prevent money laundering and the financing of terrorism. Those rules were first applied to banks, credit unions, casinos, securities broker-dealers and mutual funds.

President Bush signed the law 45 days after the Sept. 11, 2001, attacks. Jewelry retailers and insurers are concerned that they will have additional expenses to study transactions with a low risk of money laundering. Enforcement officials want to prevent terrorists from using other cash-intensive businesses as alternatives after banks and casinos implemented the law.

“As you tighten control in the formal financial sector, banks for example, people will look to move elsewhere to try and integrate dirty money into the system,” William Langford, associate director for regulatory policy at the network, said in an interview Monday.

Insurance companies also would be required to file suspicious-activity reports to the government. “Both rules, I hope, will be out in the next month,” Langford said.

Jewelers and insurers were among the industries Congress identified as most susceptible to money laundering. The agency focused on implementing the law’s rules to banks and casinos first and needed additional time “defining the scope of these industries we’ve never regulated before,” Langford said. “We’ve got to do it right, and we’ve got to treat people squarely.”

Companies will have to train workers to recognize suspicious transactions, appoint compliance officers to run the programs and conduct independent tests to monitor the effectiveness of anti-laundering programs. The goal is to identify money launderers or terrorists when they first try to make their money look legitimate.

Jewelers and insurers told the agency that it didn’t understand their companies and made the rules too restrictive.

“Our main concern is that rules be drafted in such a way that they don’t cover activity that is really low risk for money laundering,” said Cecilia Gardner, executive director of the Jewelers Vigilance Committee, a trade group.