both domestic and foreign, play a role-a role that is played by the financial institutions in many cases, wittingly or unwittingly.

The key tool that is used by the Internal Revenue Service in attacking money laundering cases, of course, is the Bank Secrecy Act. Since the subcommittee is very familiar with the aspects of the act, I will not attempt to summarize title 31 of the Bank Secrecy Act, other than to comment that the principal part of title 31 of the Bank Secrecy Act that we use is the current requirement that all currency transactions in excess of $10,000 be filed with the Internal Revenue Service.

As the chart on the left reflects, back in 1975, only 11 years ago, the Internal Revenue Service only received approximately 3,400 currency transaction reports [CTR's]. Since that time there has been a gradual increase through 1984. The increase from 1983 to 1984 was approximately 50 percent. But the most substantial increase, of course, has been in the year 1985, a whopping 120 percent increase.

[The chart referred to follows:]

submit that perhaps the greatest percent of money laundering cases involves narcotics trafficking, the chart on my right reflects that not all of them do. This chart shows the total number of money laundering investigations we have had in each of the last 5 years. The number on top of each of those columns reflects the total number of investigations initiated in that year, and the orange-shaded portion of each of those columns reflects those money laundering investigations where we have been able to establish a narcotics connection. [The chart referred to follows:]

Chairman ST GERMAIN. Were you really geared up or were you straining?

Mr. WASSENAAR. No, we were geared up

Chairman ST GERMAIN. You had no problem processing those?

Mr. WASSENAAR. We had no problem processing CTR's at a volume of 60,000 to 70,000 a month. But in a 12-month period of time we saw the volume increase fourfold, and now we are receiving an average of about 250,000 a month. Of course, it has created somewhat of a backlog.

We are getting on top of that backlog, and we have every reason to believe that in the next few weeks we will be current. It is our goal to process into the computer system, into the Treasury Enforcement Communication System [TECS], which houses all of this information, currency transaction reports within 30 days after receipt.

Chairman ST GERMAIN. Let me ask you this, do you have to upgrade your computer? I do not know much about computers.

Mr. WASSENAAR. Yes; we absolutely did. The computer we had was certainly not capable of handling the capacity that we are currently experiencing.

Chairman ST GERMAIN. How about personnel?

Mr. WASSENAAR. Yes; we have had a very substantial increase in personnel.

Chairman ST GERMAIN. From what number to what number, approximately?

Mr. WASSENAAR. Last year, at this time, we had approximately 50 individuals at the Detroit Data Center involved in the processing of the CTR's. Today we have approximately 250.

Chairman ST GERMAIN. Now when you say processing-you know, it is all well to say processing-but are they also looking at these to determine whether they should go into the next phase, or the investigatory phase?

Mr. WASSENAAR. Well, most of the screening is done once it is put into the computer. Once the information is put into the computer, that is when you can have the computer help analyze and provide certain printouts in a more meaningful form.

However, when the CTR forms are first received in the data center, all of them have to be numbered so that we have adequate control over the form-not only in terms of control during the processing of the form, but also in terms of subsequently retrieving that form should it be necessary for evidentiary purposes.

There is a fairly elaborate coding and editing process, a process that is necessary before it is put into the computer. We also have people who screen the forms to determine that they are accurate. Does the form contain all of the information that is required? And if not, then that individual has to either return the currency transaction report to the bank or make a phone call to the bank to have the additional information provided.

So it is a fairly involved process, but this year we anticipate receiving approximately 3 million CTR's, which again will be almost a 100-percent increase over last year.

One of the perhaps popular misconceptions, when we talk about the subject of money laundering, is that we think that virtually all money laundering involves narcotics trafficking. And while I would

submit that perhaps the greatest percent of money laundering cases involves narcotics trafficking, the chart on my right reflects that not all of them do. This chart shows the total number of money laundering investigations we have had in each of the last 5 years. The number on top of each of those columns reflects the total number of investigations initiated in that year, and the orange-shaded portion of each of those columns reflects those money laundering investigations where we have been able to establish a narcotics connection.

[The chart referred to follows:]