The American Bankers' Association (ABA) has called for the US government to block a massive data collection project that would require banks in the country to report details of the 500 million international wire transfers sent each year.
According to a report by Dow Jones Newswires, the banking industry trade group has written to US Treasury Secretary Henry Paulson asking him to pull the plug on the database project, which is part of a government initiative to track money laundering and terrorist funding.
A Treasury division called the Financial Crimes Enforcement Network (Fincen) is conducting a study to determine whether it is feasible for all financial services firms to report cross-border wire transfers.
Although the ABA is one of several trade groups that participated in the study it is now raising concerns about the programme and its potential burden on banks, says DJN. The trade group also argues that the Treasury doesn't have the resources to administer the programme adequately.
In the letter Wayne Abernathy, the ABA's executive director for financial institutions policy and regulatory affairs, says there is "no chance" that Fincen would be able to certify it has the technical capability to receive, store, analyse and protect data.
Abernathy says several recent incidents have prompted the trade body to raise objections to the scheme, particularly the disclosure by officials that the US government has been secretly scrutinising suspect wire transfers sent over the interbank Swift network.
According to the reports the ABA preferred this scheme over the database project because it was more targeted and allowed law enforcement officals to scan information without requiring new reporting requirements from banks.
Also, Fincen said last month that it was ditching a project that would update a database for law enforcement officials to track potential money laundering and terror financing. The agency cited cost overruns and said it wasn't even sure it could "achieve the desired product", says DJN.
US banks are already required to keep records for transfers over $3000 but are not required to send the data to regulators. However US regulators are considering to lower this threshold to just $1000.