AUSTIN, Texas—The SEC on Wednesday approved a rule that would expand its authority to monitor the business activities of money transmitters, money service businesses, money laundering facilitators and credit card issuers.
The rule, part of a series of measures to prevent money laundering, would apply to financial institutions as well as non-financial entities.
The proposed rule, which would be finalized by the end of the year, would require financial institutions to obtain a business license to engage in business activity with money transmitbers, money services businesses, and money laundering intermediaries.
The regulation also expands the definition of a financial institution to include any person, business entity, or financial institution that facilitates the transmittal of money or the transmission of funds.
Financial institutions are subject to the anti-money laundering provisions of the Dodd-Frank Act, which the agency has called the “world’s toughest anti-laundering law.”
The rule would apply even to non-traditional businesses that don’t engage in traditional banking activities.
Financial services companies and financial institutions that provide services for consumers or small businesses would be exempt from the rule, the SEC said.
Financial companies that provide financial services for their customers, such as banks, credit unions, and insurance companies, would also be exempt.
The rule would also apply to any person or business entity that is engaged in the business of facilitating the transduction of money by money transmiters, money transfers, or the transfer of funds from one person to another.
The SEC said the new rule would “address a broad range of financial intermediaries and money transmitting businesses, including those that operate in the United States, that are prohibited from conducting activities that are subjecting them to anti-fraud and anti-terrorism provisions under existing regulations.”
The rule was proposed by the SEC and the Commodity Futures Trading Commission, which has been under intense scrutiny for its handling of the so-called bitcoin boom and the ensuing global financial crisis.
The SEC has been cracking down on money laundering by financial intermediists since 2014.
The rules were drafted by former SEC Commissioner Kara Steinberg and former SEC Deputy Commissioner Brian Shrum.
The regulations are the latest effort to address a crisis in the global financial system after a series that started in 2014.
They have been met with a wave of criticism from lawmakers and industry experts who say the rules are not effective and that they do not go far enough in cracking down and policing the money laundering that has plagued the global economy since the 2008 financial crisis and the creation of the Commisso Regulation of Foreign Exchange in 2010.