In response to a question from Congressman McCollum, Governor Seger subsequently furnished the following response for the record: I would generally defer to the opinion of the Departments of Treasury and Justice on such a law enforcement issue, since they are the primary enforcement agencies for the Bank Secrecy Act. One thing, however, that is troubling about the concept of a fine for negligently failing to report is that I fear that it might, in practice, result in penalties to banks for clerical errors and omissions in CTR filings that may occur despite a bank's best efforts to comply with the Bank Secrecy Act. Mr. MCCOLLUM. Second, the bankers will say later today in their testimony that they would like a provision in the law that would grant them immunity if they discover an error in failing to report Bank Secrecy Act provisions, and they report it themselves. Would you favor or oppose an immunity for a bank that voluntarily discloses a failure to report? Governor SEGER. I must say as a citizen, I would feel that makes sense. If someone does a self-analysis, steps forward and says, you know, we have goofed, we have missed these, we have not carried out this responsibility the way we should but we are coming clean, I think they ought to be treated in a different way than someone who has had to be caught. Mr. MCCOLLUM. The last area I would like to ask you about deals with the Treasury subpoena powers. I don't recall in looking at your testimony and hearing what you have said this morning that you commented on the request that the Treasury Department has made for being given broader powers than they now have to get at the records when they are looking for compliance directly at the Treasury Department. My understanding is that some of the agencies that come under the supervision for bank reporting purposes do have powers but that the Treasury Department inhouse does not. Does the Fed have any objections to our giving them the broader powers they are requesting? Governor SEGER. I think I will turn that over to Mr. Biern, too. Mr. McCOLLUM. If Mr. Biern wouldn't mind responding, I would appreciate it. Governor SEGER. I couldn't remember that we had an objection but he just said we don't. We do not. Mr. MCCOLLUM. You don't. Good. Governor SEGER. We do not have an objection. Mr. MCCOLLUM. That covers the questions I wanted to ask. I yield back, Mr. Chairman, thank you. Chairman ST GERMAIN. Governor Seger, I have additional questions I would like to submit in writing, and as I stated, I agree with you in quite a few instances, but I am not too sympathetic to the change on the international basis, to the international branches doing business over there. But other than that, we are pretty much in sync. So we want to thank you. We will submit additional questions to you in writing and hopefully we will be with you a week from tomorrow in the great State of Rhode Island. We are one of the smallest States with one of the biggest names. By the way, you will be in my congressional district as well, Newport. Governor SEGER. I know that, that is why I need to go. Chairman ST GERMAIN. Thank you. I hope you come up to testify more frequently. You are very, very vibrant and you did a good job. Governor SEGER. Thank you. [The following correspondence contains Chairman St Germain's written questions and Governor Seger's responses:] The Subcommittee appreciates your appearance at our hearings on May 14. Your testimony is of great assistance in our review of the Bank Secrecy Act and other pertinent issues. There are several questions which the Subcommittee would like to have you answer and which will be submitted for the record. They are as follows: 1. 2. You mention on pages 14 and 15 of your testimony that What What possibilities does the Federal Reserve have in On page 14 of your testimony, you state that "the Can you provide specific instances of when and how the 60-672 0 - 86 - 31 3. 4. -2 The 1984 Interim Report of the President's Commission on Organized Crime chronicles in detail the important roles Panama and Hong Kong play as financial centers for drug-related money laundering activities originating in the United States. What is the Federal Reserve doing to encourage those governments and financial communities to eradicate or reduce money laundering? What steps are planned to aid those countries in cracking down on such activities? On pages 9 and 10 of your testimony, you stated, in a footnote, that because of a recent decision in the U.S. Court of Appeals Congress may wish to consider legislation clarifying the bank regulatory agencies' enforcement authority against certain individuals. Could you please explain the need for such a clarification? Does the Federal Reserve have any proposed language prepared to clarify this situation? Again, the Subcommittee is appreciative of your efforts in this area. Please submit your responses to the Subcommittee no later than June 4, 1986. Subcommittee on Financial Institutions Supervision, Committee on Banking, Finance and Urban Affairs Washington, D.C. 20515 Dear Chairman St Germain: Thank you for your letter of May 23 containing written questions in connection with the hearing held on May 14. I am pleased to enclose my responses to the questions for inclusion in the record of the hearing. I hope this information is helpful. Please let me know if I can be of further assistance. Sincerely, Enclosure |