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Federal R eserve Bank
OF DALLAS
ROBERT

D. M c T E E R , J R .

P R E S ID E N T
AND

C H IE F

E X E C U T IV E

DALLAS, TEXAS 75222

O F F IC E R

January 21, 1993
Notice 93-07
TO:

The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Policy Statement to Address the Use of
Large-value Funds Transfers
for Money Laundering
DETAILS

The Federal
the problem of using
statement encourages
complete information
including those sent

Reserve Board has issued a policy statement to address
large-value funds transfers for money laundering.
The
financial institutions to include, where possible,
on the sender and recipient of large payment orders,
through Fedwire, CHIPS, and SWIFT.

The B o a r d ’s action came after adoption of the statement by the
Federal Financial Institutions Examination Council.
ATTACHMENT
A copy of the B o a r d ’s policy statement is attached.
MORE INFORMATION
For more information, please contact Gayle Teague at (214) 922-6151.
For additional copies of this B a n k ’s notice, please contact the Public Affairs
Department at (214) 922-5254.
Sincerely yours,

J9.

•

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastale (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

POLICY STATEMENT
The Board of Governors of the Federal Reserve System
(Board), upon the recommendation of the Federal Financial
Institutions Examination Council, is issuing this policy
statement to address the problem of the use of large-value funds
transfers for money laundering.

The law enforcement community

both within the United States and abroad has a growing interest
in money laundering through funds transfer systems.

The Board

supports law enforcement's efforts to identify and prosecute
money laundering activities involving large-value funds transfer
systems.

The Board encourages financial institutions to support

law enforcement efforts in this area by including, to the extent
practical, complete originator and beneficiary information when
sending payment orders, including payment orders sent through
Fedwire, CHIPS, and SWIFT.

BACKGROUND
The President of the United States has joined with the
leaders of other nations to sponsor a Financial Action Task Force
(FATF)—/.

The FATF is primarily developing international

guidelines to facilitate the identification and prosecution of
money laundering activities.

Historically, law enforcement

efforts to curtail money laundering activities have focused on
-/ The FATF was formed as a direct initiative by the Heads of
State of Governments of seven major industrialized countries and
the President of the European Communities during an economic summit
in July 1989.
The total membership of FATF now stands at 28
countries, with the primary representation being law enforcement.

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the identification and documentation of currency-based
transactions; however, recent investigations have focused on the
use of funds transfer systems.

The FATF has developed

recommendations to provide more complete information about the
parties to a funds transfer.

This information is useful for law

enforcement investigations.

FATF RECOMMENDATIONS
The FATF recommends that the text of every payment
order include:

the name, address, and account number of the

person who initiated the first payment order in the funds
transfer (the originator); the beneficiary's name and address,
and when possible, account number should also be provided in the
message text.

The FATF also recommends that the identity of the

first bank that accepts a payment order from a nonbank should be
noted and retained through all subseguent processing of the funds
transfer.

(The FATF recognizes that the originator and

beneficiary information specified in its recommendations may not
be provided in transfers originated in some countries because of
provisions contained in local laws.)
In this context, SWIFT and CHIPS have recently issued
statements encouraging their participants to include the
information specified by the FATF recommendations in funds
transfers processed through those systems.

The Bank of England

has also encouraged financial institutions in the United Kingdom

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to provide complete originator and beneficiary information when
using national, international, and proprietary message transfer
systems.
To the extent practicable, the Board encourages all
domestic banking offices to implement the FATF recommendations
when sending a payment order over any funds transfer system,
including Fedwire, CHIPS, SWIFT, and any proprietary networks.
With respect to Fedwire, the Board recognizes that the
Fedwire format limits the amount of information that can be
included in a Fedwire funds transfer.

While the Federal Reserve

System is exploring changes to the Fedwire format, those changes
would require time to implement.

In the interim, the Board

encourages originating banks to ensure that the nonbank
originator, beneficiary, and any instructing bank information is
included in each Fedwire funds transfer to the extent possible
given the limited size of the Fedwire format and the need to give
priority to information necessary for payment processing.
Information concerning the originator and beneficiary
may be recorded in the payment order text.

For example, if an

originator requests depository institution A to transfer funds
over Fedwire to a beneficiary of depository institution B, and
either the originator or beneficiary information is lengthy and
exceeds the space fields specified for originator or beneficiary
information, to the extent practicable, the remaining information
may be included in the message text in optional fields that may

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otherwise not be used for that particular payment order.
When a payment order is received by a bank through one
funds transfer system and then executed through another funds
transfer system; to the extent practical, information on the
originator of the payment order received by the intermediary bank
should be included in the payment order sent by the intermediary
bank.

For example, when a SWIFT message is received by an

intermediary bank and subsequently sent to the beneficiary's bank
via Fedwire, the originator information on the SWIFT message
should be carried forward as space permits to the Fedwire
message.

If the originator information is lengthy and exceeds

the space available in the specified fields, to the extent
practical, the remaining information may be included in the
message text in optional fields that otherwise will not be used
for that particular payment order.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102