NATIONAL Security Minister Peter Phillips yesterday announced that he will bring money transfer companies — which have mushroomed in Jamaica over the past decade — under the money laundering regulations, requiring them to report suspicious transactions to the authorities.

Phillips told reporters at a press conference that he had already signed an order to amend the schedule to the Money Laundering Act.

However, as the order is subject to affirmative resolution by the legislature, the new regulation will not come into force until Phillips is able to take it to Parliament for assent.

“We are just adding a new set of institutions to the list,” Phillips explained last night.

It was not immediately clear how the new regulations will affect the money transfer companies, the largest of which is Grace, Kennedy Money Transfer, the agent for Western Union, the big American wire transfer outfit.

A substantial portion of the estimated US$750-million a year in remittances to Jamaica pass through these agencies, whose outlets in supermarkets and stores, and relatively uncomplicated procedures make them accessible and convenient to the average individual.

But with hundreds of millions of dollars transferred to Jamaica via these companies, the administration apparently believes that they provide a good vehicle for money laundering and Phillips’ move to bring them within the ambit of the law is part of the measures he announced Wednesday night to clamp down on the drug trade.

The minister has argued that drug running is the biggest facilitator to the flow of arms and violent crime in the country. He vowed in Wednesday night’s speech to “assault the finance proceeds of the trade, hitting it in the pocket where it hurts most”.

Under the Money Laundering Act, passed in 1998, financial institutions, such as banks and merchant banks, are obliged to report cash transactions of US$50,000 and over, or its Jamaican equivalent, to the authorities, although they get a waiver from the finance ministry in respect of customers who have to conduct regular transactions for their businesses.

In the case of exchange bureaux, the reporting threshold is US$8,000 or over.

It was not immediately clear what will be the trigger amount for reporting by the wire transfer companies and whether the other reporting regulations under the law will apply to them.

For instance, the law demands that financial institutions pay special attention to “all complex, unusual or large business transactions or unusual patterns of transactions, whether completed or not”, once they appear to be “inconsistent with the normal pattern of transactions” carried out by the customer.

Once the institution has “reasonable suspicion” that the transaction could constitute or be related to money laundering, it is required “to promptly report the transaction to the designated authority”.

When the money laundering bill was being developed and debated, these requirements caused concern for bankers, who were worried that it would require their staff acting as sleuths and, at the same time, possibly drive away customers.

However, the United States, which pressured the Jamaican government to push through the law, as part of a wider hemispheric attack on the cocaine trade, did not believe that the legislation went far enough.

Under the current law, financial institutions are required to name responsible officers to manage its requirements, but whether this will apply to the wire transfer company was not spelled out.