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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

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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

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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

STATEMENT OF

ROBERT B. SERINO
DEPUTY CHIEF COUNSEL (OPERATIONS)
OFFICE OF THE COMPTROLLER OF THE CUR“ ENCY

BEFORE THE
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

SUPERVISION, REGULATION, AND INSURANCE
COMMITTEE ON BANKING, FINANCE, AND URBAN AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES

April 17, 1986

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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

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