In light of the number of wire transfers that occur between institutions daily, we doubt this provision would be cost-effective. Also, in light of the new Treasury regulation which enables Treasury to require a specific financial institution to provide copies of all wire transfers for a particular period, we do not believe such a provision is necessary. In addition to the legislative initiatives needed to specifically address money laundering, we believe changes are needed in other laws, which may have been enacted without consideration of their potential effect on drug trafficking and money laundering problems, as the laws constitute constraints on our efforts in working with the law enforcement community. These barriers, which include the RFPA, certain state privacy acts, grand jury secrecy rules, and the procedures of various agencies, limit cooperation among Federal supervisory and law enforcement officials. While these statutes are designed to protect values we all support, they unduly restrain legitimate government information-gathering and the free flow of information between and among agencies. We have found that the RFPA in particular has interfered with our criminal referrals and has in all likelihood degraded the ability of the recipient agency to decide which of those referrals should be pursued. Similarly, the grand jury secrecy limits prevent the law enforcement community from working 13 closely with our office and sharing information obtained before a grand jury. These limitations on the ability of Federal agencies to cooperate were highlighted in the Department of Justice/Financial Institutions Regulatory Working Group Agreement of April 2, 1985, with a unanimous recommendation that legislative relief be swiftly obtained. We believe that these overly restrictive statutory barriers to interagency cooperation should be examined and consideration given to reducing them so as to remove unnecessary impediments to law enforcement while at the same time protecting the important interests they were intended to preserve. CONCLUSION While much has been accomplished since January 1985, we recognize that more needs to be done. First, as we have indicated, we believe that continued coordination and cooperation among the agencies which share BSA compliance and enforcement responsibilities are critical. Second, greater use of available data to target compliance and enforcement efforts will, we believe, significantly increase the return on our resources. To assist us in our efforts, we encourage the Congress to consider favorably those legislative proposals before it which would eliminate present restraints on our efforts in working with the law enforcement community and their working with us. Finally, as we have said in the past, law enforcement agencies and bank regulators alone can only provide a part of the solution. The industry's own commitment and efforts at self-policing are essential because the banks' own internal control processes are the most effective mechanisms for ensuring compliance. With the changes we have urged and with an active interagency working group and a committed industry, we are confident that substantial additional progress in efforts to prevent the nation's financial institutions from wittingly or unwittingly being used to further criminal activities will be possible. I would be pleased to respond to any questions you might have. EMBARGOED UNTIL DELIVERY ATTACHMENT TO THE ROBERT B. SERINO DEPUTY CHIEF COUNSEL (OPERATIONS) SUBCOMMITTEE ON FINANCIAL INSTITUTIONS - 2 I. Title I (Supervisory Authority Over Depository Institutions) Question A. Specifically, is there any merit to considering giving the regulators authority to impose civil money penalties upon financial institutions for their failure to report under BSA, or should the Treasury continue to have the authority to impose such penalties? OCC believes that the Treasury Department should continue to maintain responsibility for civil money penalties against institutions or individuals who violate the Bank Secrecy Act (BSA). Treasury, which has oversight responsibility over the BSA, is in the best position to apply the civil money penalty authority consistently against all financial institutions whether state or Federal. In addition, the purpose of the BSA is to aid law enforcement. Where there are willful violations of the statute, we believe it most appropriate for them to be handled by the law enforcement community. In any case where there are violations the OCC already has available to it a broad-based authority to take independent action under its cease and desist authorities to address any supervisory concerns which might arise. In this regard, the OCC has specifically directed that banks take corrective actions when necessary to address supervisory concerns raised by violations of the BSA. Where those violations rise to a level where they might be considered willful, the OCC has, as a matter of course, made referrals to the Treasury Department and the IRS for consideration of civil and/or criminal action. Since the beginning of 1985, OCC has made more than 75 such referrals. Recently, OCC provided the Treasury Department and the IRS/Financial Institutions Regulatory Working Group with a series of proposed changes to the guidelines for determining when and how such referrals should be made. OCC has suggested that Treasury and the group review the guidelines and the proposed procedures to improve them, with the objective of having consistent referral procedures. A combination of consistent guidelines and consistent application of the civil money penalty process coordinated by Treasury would appear to be the best approach to imposing civil money penalties in the BSA area. Question B. To what extent could these powers be improved upon to lend support in appropriate cases to criminal law enforcement investigations? Each of the bank regulatory agencies currently enjoys broad enforcement authority. To a large extent, this authority has proven to be adequate in dealing with violations of laws, rules, and orders which do not amount to criminal violations. Nevertheless, OCC supports certain modifications |