sending out the IRS forms this year that the IRS should advise people that there is going to be some enforcement in this area and I feel that the work of this committee is going to solidify their efforts in that regard.

Mr. ARNOLD. We would hope so.

Mr. SHAW. What do you think about sending out some type of notification with tax forms

Mr. SMITH. There is this poster that the IRS has put out notifying businesses of the requirement.

However, at least in the Washington, D.C. area, of the businesses we went to, only one had any kind of notice posted in a viewable area and it wasn't this notice.

[The poster referred to follows:]

CASH PAYMENTS OVER $10,000

RECEIVED FOR GOODS AND SERVICES

Did you know that currency payments over $10,000 for any goods, services, or other types of payments received in any trade or business must be reported to the Internal Revenue Service by the vendor within 15 days of the date the cash is received? Report these payments by completing a Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, and Sending it to the Internal Revenue Service, Detroit Computing Center, P.O. Box 32621, Detroit, MI 48232 or by calling your local I.R.S. office.

The law requires that owners or operators of any trade or business must file a Form 8300 on all cash payments over $10,000. Failure to do so could result in civil and criminal penalties including up to 5 years imprisonment.

If you are suspicious of a large cash payment; have questions concerning the filing requirements; or are asked not to prepare a Form 8300, please call the I.R.S. Criminal Investigation Division at:

Department of the Treasury
Internal Revenue Service
Publication 1428 (Rev. 4-90)

Catalog Number 10404S

Mr. SHAW. Thank you.

Chairman PICKLE. Mr. Anthony.

Mr. ANTHONY. I want to get into one area to make sure that I personally understand it.

Mr. Arnold, in your statement on page 2, when you talk about the filing requirement that applies to all transactions involving the same person within a 24-hour period and related transactions over a period of time, at the end of that paragraph, you say "does not

include transactions using a combination of cashier's checks or money orders."

Mr. ARNOLD. Right.

The statute defines cash as meaning coin or currency only, and not other forms of payment that we would consider to be similar to cash.

That would be required-if you carried cashier's checks or any other form of monetary instrument across the border, you would have to file with the Customs Service, but in this case, it is defined as just currency.

Mr. ANTHONY. Someone would offer to buy an item for $30,000 in cash

Mr. ARNOLD. He would make it clear that he was referring to currency, greenbacks, bags of money, satchels of money, to make it clear that he meant currency, and not that you would just write a check or bring a cashier's check so that we would separate that possible misunderstanding or eliminate it.

Mr. ANTHONY. Mr. Gomez and Ms. Jackson, in each of the instances, you clearly tried to do that so that your investigation would clearly show the intent was to transact business in cash and currency?

Ms. JACKSON. Yes, I think we did. We let them know we are talking green dollars, not cashier's checks or any other type of note. Mr. ANTHONY. They would offer advice and suggestions on how to reduce the actual currency or cash to include a cashier's checkwould that be a violation of the law if, in fact they did a completed transaction in that way, you go in and say $20,000 cash and they say, "Give me $9,000 in cash and the rest in cashier's checks."

You leave and get the cashier's check and give them less than $10,000 in cash, the rest in a cashier's check.

Is that a violation?

Mr. HECK. Mr. Anthony, section 60501 deals with individuals who cause or attempt to cause a trade or business to fail to file a form. I think there are provisions there which attempt to get at folks who cause a business to evade the reporting requirements.

I am a little unclear as to the aspects of cashier's checks, but I think it is clear when somebody sits down with a businessman and tries to structure a deal to get around it, there is a clause in law saying that is a violation. That is something that may need to be clarified with legislation.

Mr. ANTHONY. So the testimony that you gave earlier about one of the participants in your operation, when they said it is the letter of the law and not the spirit of the law, that person, as cynical as they may be, may be correct in this particular circumstance.

They might have known that they were violating a clear spirit of the law, but maybe a sharp attorney could get them off on the technicality.

Is that what Mr. Heck is saying?

Mr. ARNOLD. Perhaps.

In our opinion, that would fall into this area where the violation, if there were one, would be for structuring and that falls into the unclear area of whether the structuring applies to the business themselves and not just the customer.

Mr. ANTHONY. If it is unclear, it falls upon the legislative body to conduct a hearing like this to establish a legislative history and then make recommendations. I assume you are recommending this matter be clarified.

Has the committee received from the administration any recommendations for clarification in this area in the last few months?

Mr. HECK. I can say that during our investigation and review of section 60501 we have been in contact with both Treasury and IRS to get ideas and recommendations on how the section can be improved to make it more enforceable.

Mr. ANTHONY. Have they made recommendations to you?

Mr. HECK. I think they will be prepared to give guidance today on what can be done.

Mr. ANTHONY. Have they given your recommendations in the past, specific recommendations that everybody could understand? Mr. HECK. No.

Mr. ANTHONY. They may be prepared to do so in their testimony today?

Mr. HECK. Yes.

Mr. ANTHONY. But there has been a failure until today, in an area that is potentially unclear they have not given guidance; is that correct?

They can state their viewpoints on this, but I want to know how you feel about it in terms of whether you are getting any guidance. Mr. HECK. No.

I think we are the ones that brought it to their attention.

Mr. ANTHONY. In other words, our staff brought it to their attention?

Mr. HECK. The issues discussed today, yes.

I think they were aware of the fact that there are businesses not complying.

I think this hearing today will spur them on.

Mr. ANTHONY. I think it should spur them on.

I liked what Mr. Shaw said-some of these requirements were put into the law in 1984. That is almost 6 full years, Mr. Chairman, for them to learn and understand the police community, that is, what their responsibility is.

I think it is fairly clear from Mr. Gomez and Ms. Jackson's testimony and their report that there is a good understanding of the law and because of that fact it gives them a burden to go forward.

Just to be crystal clear and to be abundantly fair, I think maybe we ought to try to devise some additional way to notify the business community at large of the responsibility, but I think that first we have got to inform them of how bad the problem is.

I think if one transaction takes place, it would be easy for that one business person to say this one transaction isn't going to have that great an impact on money laundering.

I think if they were aware of the magnitude of this problem, they would be shocked and maybe be willing to say no.

It is a fear of loss of sales. If they knew their competitor was saying no and it was being enforced, at least they are walking into a better atmosphere.

We are here to use this as an investigatory tool to stop the original criminal activity and it doesn't have to be drugs.

It could be a whole host of criminal activity that we would be seeking to halt.

I would just say to you if you could suggest to us some additional ways that we could notify the business community so that they could never have the opportunity to say, "Well, they weren't sure.

I know that is not a clear defense of the law, but I think probably the community at large may be willing to give them a second chance.

Chairman PICKLE. Would the gentleman yield?

Mr. ANTHONY. Yes.

Chairman PICKLE. When we made amendments to the 1988 drug program and section 60501 was amended, it made it clear that the imposed penalties were for causes or attempts to cause a business not to file a return or to file a return that contains a material omission or misstatement.

These amendments imposed penalties on persons who were engaged in business who caused a customer to structure a transaction to avoid reporting.

The intent also is to say to the purchaser that the same obligation goes to that individual who would also be guilty of violation of the law.

Mr. Anthony, I am going to make some suggestions at the end of the hearing today, recommendations by the staff to our committee for corrections in the law.

We will be asking Treasury and IRS their position on some of these matters, but it is an area I think we must go forward in this testimony to see what we can do to correct it.

I thank you very much, Mr. Arnold and the staff. You have done a good job.

Mr. Gomez and Ms. Jackson, we appreciate the excellent investigatory work that you have conducted.

It has been very valuable to us and we thank you both.

Now we will ask the U.S. Department of the Treasury if they would come forward.

We have Mr. Peter Nunez, who is Assistant Secretary for Enforcement, accompanied by Amelia Gomez and Shelley Altenstadter.

We also appreciate the cooperation of Mr. Navera in making it possible for us to go forward with this testimony today.

Mr. Nunez is Assistant Secretary for Enforcement. Ms. Gomez is Special Advisor to the Director of the Office of Financial Enforcement; and Shelley Altenstadter is the Deputy Director of the Financial Crimes Enforcement Network.

STATEMENT OF HON. PETER K. NUNEZ, ASSISTANT SECRETARY FOR ENFORCEMENT, U.S. DEPARTMENT OF THE TREASURY, ACCOMPANIED BY SHELLEY G. ALTENSTADTER, DEPUTY DIRECTOR, FINANCIAL CRIMES ENFORCEMENT NETWORK; AND AMELIA A. GOMEZ, SPECIAL ADVISER TO THE OFFICE OF FINANCIAL ENFORCEMENT

Mr. NUNEZ. Thank you, Mr. Chairman and members of the committee. I would like to thank you for this opportunity to testify about Treasury's role in the fight against money laundering and