The Treasury Department will issue a proposed rule later this year that would require broker-dealers to detect and report transactions which give rise to suspicions of money laundering, according to a letter sent to Rep. John Dingell (D-Mich), the ranking Democratic member of the House Commerce Committee, by Treasury Secretary Larry Summers.

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Treasury Department-Financial Crimes Enforcement Network

The letter--a response to Dingell's inquiry on money laundering--states that the Treasury's Financial Crimes Enforcement Network (FinCEN) has been working with the SEC and the members of the securities industry to develop effective and practical methods of reporting suspicious activities reports (SAR). It went on to say that the Treasury is "committed to extending suspicious activity reporting to the securities industry as well as other non-bank financial institutions."

Earlier this year, the Clinton administration released its "National Money Laundering Strategy," designed to combat the problem. That strategy set forth rules for banks and other financial institutions, but not the securities industry. Dingell has been vocal in the past in his criticism of the Treasury for not extending those rules to the securities industry, describing the need as "critical."

A spokesman with the Securities Industry Association said the association has been in informal talks with Treasury. He added that the SIA will work with the department to ensure that SARs for the securities industry are tailored to meet its needs versus the ones required by banks.

A spokesperson at the SEC said it would be "premature" to comment on the rules prior to their formal proposal and a spokesperson for FinCEN declined comment as well. 

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