Feds Tighten Reporting Rules for L.A. Fashion District Businesses

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Federal officials said today they would implement heightened financial disclosure requirements for more than 2,000 businesses in the L.A. Fashion District.

The U.S. Treasury Department announced it would issue an order requiring businesses to report any instance in which they receive $3,000 or more in cash. The requirement takes effect on Oct. 9 and will continue for six months.

The new rule comes weeks after about 1,000 law enforcement officials descended on the district, collecting more than $90 million from homes, businesses and automobiles in raids targeting a money laundering scheme involving Mexican and Colombian drug traffickers.

“That’s a mindboggling amount of money, and it makes it abundantly clear the scale of criminal activity we’re up against,” said Claude Arnold, special agent in charge for Homeland Security Investigations in Los Angeles.

Garment and textile stores, transportation companies and some electronics stores are among those businesses that will be subject to the increased reporting and recordkeeping requirements.

The businesses searched last month were suspected of laundering narcotics profits using so-called “Black Market Peso Exchange” schemes in which bags crammed with dollars are dropped off at American businesses and then systematically distributed to a number of banks in deposits less than $10,000 each, to avoid regulatory reporting requirements.

In addition to the seizure of cash and property, nine people were arrested in the September raids.

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