Threshold transaction disclosures: access on demand through latent disclosure rather than reporting
| Date | 01 October 2005 |
| Pages | 328-334 |
| Published date | 01 October 2005 |
| DOI | https://doi.org/10.1108/13685200510620911 |
| Author | Peter A. Gallo,Christopher C. Juckes |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control Ð Vol. 8 No. 4
Threshold Transaction Disclosures:
Access on Demand through Latent
Disclosure rather than Reporting
Peter A. Gallo and Christopher C. Juckes
INTRODUCTION
Suspected cases of money laundering are generally
reported to the relevant law enforcement authorities
in one of two ways; either by a suspicious transaction
report (STR) which is exactly what the name suggests,
or Ð in those countries that have such a system Ð in a
cash transaction report (CTR), where the amount of
cash exceeds the threshold amount for such reporting.
All of these reports are generally received and analysed
by a specialist government agency called a Financial
Intelligence Unit (FIU).
The CTR is one of the most widely known anti-
money laundering measures. This is the requirement
whereby any cash transaction above a designated
threshold amount (usually set around US$10,000)
triggers a mandatory report to the competent auth-
orities. Originally introduced in the USA, the
inclusion of this idea as one of the 40 Recommen-
dations of the Financial Action Task Force (FATF)
has resulted in more countries adopting such a
policy. Australia, Canada and many of the EU enlar-
gement countries have since introduced similar cash
transaction reporting.
What were originally Recommendations No. 22
(relating to the reporting of cross-border cash move-
ments) and No. 23 (reporting of cash transactions
above a given threshold) in the 1996 edition of the
FATF 40 Recommendations, were combined as Rec-
ommendation No. 19, paragraphs `a' and `b' in the
2003 Revision.
What subsequently happened was that on 22nd
October, 2004, Recommendation 19a was removed
from the 40 and published as an additional Special
Recommendation IX (SR-IX) on Terrorist Finan-
cing. The ecacy of this measure aside, it leaves 19b
to be considered, in an environment where it is appar-
ent that the international pressure from larger and
more in¯uential nations is on the smaller ones to
implement a cash transaction reporting regime.
These are not reports of deposit balances, but simply
a system intended to identify large cash transactions
at banks, and cross-border movements of cash.
First and foremost in considering such a measure,
however, it is important for governments Ð particu-
larly of smaller and poorer countries Ð to address the
practical issues of how to collect and analyse these
reports in a way that is of some real bene®t to the
law enforcement agencies or other competent auth-
orities tasked with the investigation of money laun-
dering or terrorist ®nancing oences.
The CTR concept is often criticised on grounds of
cost, both in the IT investment the government must
commit to building and implementing a system to
receive and analyse all this data, as well as to the ®nan-
cial industry obligated to submit the reports.
There may be considerable ®nancial intelligence
value to be derived from large volumes of these
reports, but the question, at least for the budget-con-
scious government, is whether or not the bene®t to
law enforcement is justi®ed by the expense to the
Treasury.
Therein also lies the vulnerability in countries
where there is a widespread problem with political
corruption; there is an all too convenient excuse not
to incur the expense of a costly IT system for the
FIU; the cost is simply too great. The reality, however,
is that that decision is more likely to be motivated
more out of a concern that a CTR system might
reveal just who it is that regularly receives large bun-
dles of cash.
The expense is not insigni®cant, particularly to the
impoverished government of a developing third
world economy. Ironically, it is those very same econ-
omies, further handicapped by widespread corrup-
tion, that are often in most need of all the bene®ts
that IT can oer in the support of their limited law
enforcement capabilities.
The ®ght against money laundering and its under-
lying predicate oences relies on two basic foundation
blocks, one is technology, but the other is an accep-
tance by ®nancial institutions that they have an
increasing role to play.
It is popular to talk about combating money launder-
ing and the war against terrorist ®nancing, but what
Page 328
Journalof Money Laundering Control
Vol.8, No. 4, 2005, pp. 328± 334
HenryStewart Publications
ISSN1368-5201
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