Usa Patriot Act Forcing Moneytransfer Services Out Of Business

By Shannon Pettypiece
Money-transfer services are going out of business because they cannot comply with USA Patriot Act regulations, experts say.

Money services are being required to develop robust compliance systems, hire additional staff to monitor suspicious activity and install new computer systems by the Patriot Act. But many of them are small operations and cannot afford costly upgrades.

"These smaller money-transfer businesses don’t have the ability to put in place the compliance systems," said Bruce Goslin of Kroll Risk Consulting. "They have to show that they have robust compliance systems and file suspicious activity. They just can’t afford to comply."

More than $32 billion is wired abroad each year – mostly from Miami, New York, Texas and California, said Katherine Johnson of Kroll. She said money wired from the US accounts for 10% of some countries’ gross domestic product.

Many money-transfer services are being forced to close because their banks have decided it isn’t cost-effective to monitor their accounts, said Mariano Fernandez of Ocean Bank. "We had a few of these accounts and asked them to close. We are very reluctant to accept any new business at this time. If a bank does open those types of accounts, they have additional burdens to make sure they are monitoring their transactions.

"We have definitely seen an increase since the Patriot Act in the number of requests to open these type of accounts," Mr. Fernandez said, "and the reason is because they are being closed at other places. They have either lost their accounts or have been asked to leave by the banks."

Mr. Goslin said that without a bank account, money-transfer services can’t exist. "As soon as they lose their account with a big bank, they are essentially out of business," he said.

Officials say they don’t know how many money-transfer services are in Miami.

"At the end of the day, what the money-service business does is a very important social function," Mr. Goslin said. "The impact this money has going back to all these countries is phenomenal."