U.S. regulators are working on rules that would require investment advisors, credit card firms and check cashers, among others, to serve as informers on white-collar crime, a senior U.S. official said on Monday.
The Financial Crimes Enforcement Network, known as FinCEN, is working on rules that would require those entities to file formal reports notifying U.S. authorities of any suspicious trading by employees or outside parties, said David Cohen, U.S. Treasury undersecretary for terrorism and financial intelligence.
Banks, brokerages and mutual funds are already required to file suspicious activity reports, or SARs, with FinCEN to fight insider trading and money laundering.
But U.S. regulators have been working for several years on how to expand the rules to hedge funds and others to close a big gap in U.S. anti-money laundering enforcement.
Cohen said there was an "expanding universe" of entities that are important to the financial sector and have insight into financial crime, including commodity hedge funds and retail foreign exchange dealers.
"If we are to be as effective as possible in countering illicit finance, we must begin applying appropriate record-keeping, reporting and program requirements to those entities," Cohen said in a speech at an American Bankers Association conference.
The filing of SARs took on new urgency for the financial industry in the wake of the Sept. 11, 2001 attacks on the United States as federal lawmakers moved to require banks to become more aggressive in tracking money flows by terror groups.
De-risking Scrutiny
Greater regulator scrutiny has also prompted some banks to stop dealing with risky clients entirely, even if such business is legal, a process known as "de-risking."
A top Bank of England regulator warned last week that the over-zealous application of anti-money laundering rules is hampering British banks abroad and cutting off poorer countries from global financial markets.