FOREIGN BANK SECRECY AND BANK RECORDS HEARINGS BEFORE THE COMMITTEE ON BANKING AND CURRENCY HOUSE OF REPRESENTATIVES NINETY-FIRST CONGRESS FIRST AND SECOND SESSIONS ON H.R. 15073 A BILL TO AMEND THE FEDERAL DEPOSIT INSURANCE ACT TO REQUIRE INSURED BANKS TO MAINTAIN CERTAIN RECORDS, TO REQUIRE THAT CERTAIN TRANSACTIONS IN U.S. CURRENCY BE REPORTED TO THE DEPARTMENT OF THE TREASURY, AND FOR OTHER PURPOSES DECEMBER 4, 10, 1969; FEBRUARY 10, MARCH 2, AND 9, 1970 41-642 Printed for the use of the U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1970 Bartimo, Frank A., Assistant General Counsel, Manpower and Reserve Af- Desch, Carl W., senior vice president, First National City Bank of New Dwinell, Lane, Assistant Administrator for Administration, Agency for Leval, Pierre, former chief attorney, appellate division, southern district Morgenthau, Robert N., U.S. Attorney for the southern district of New Pollack, Irving M., Director, Division of Trading and Markets, Securities Rossides, Hon. Eugene T., Assistant Secretary of the Treasury for Enforce- ment and Operations, accompanied by Roy T. Englert, Deputy General Counsel; Robert T. Cole, Special Assistant for International Tax Affairs; Michael Bradfield, Assistant General Counsel; and Ira Tannebaum, Rossides, Hon. Eugene T., Assistant Secretary of the Treasury for En- forcement and Operations, accompanied by William Dickey, Deputy Assistant_Secretary; and Robert T. Cole, Special Assistant for Inter- Somer, Clifford C., vice president, American Bankers Association, accom- Thrower, Hon. Randolph W., Commissioner, Internal Revenue Service, accompanied by Leon C. Green, Deputy Assistant Commissioner for Compliance; Bernard Meehan, Staff Assistant in Compliance; and Paul Peppler, Coordinator, Intelligence Division... – Williford, Frederick L., executive vice president, National Microfilm Asso- Wilson, Hon. Will, Assistant U.S. Attorney General_. 128 316 119 175 312 340 14 American Bankers Association, comments on Treasury Department's 335 Committee of Foreign-Owned Banks, comments on bank secrecy legisla- "Eastman Kodak Division Helps Banks To Find Needle in a Hay- Page 371 322 343 351 "Microfilming Safeguards "Improving the Proof-Transit Operation," article by Arthur Van 352 349 Kennedy, Hon. David M., Secretary of the Treasury, letter to Hon. 164 368 National Association of Securities Dealers, Inc., statement of-- Comments on the testimony of Robert M. Morgenthau on H.R. 15073_ Advertisement of "Swiss Credit Bank," from the Wall Street Journal, “American Seized in Netherlands in Plot on HRA," article from the Comparison of Internal Revenue Service testimony, excerpts of formal and draft statements_ Copies of four checks stolen and forged from the Human Resources Agency, New York, N. Y., that were deposited in a bank in Switzerland__ "Errors and Omissions," editorial from New York Times, February 26, 1970. "Eight Indicted in Alleged Plot To Defraud United States Through Use of Swiss Bank Accounts," article from the Wall Street Journal, February 26, 1970.. Letter from Hon. David M. Kennedy, Secretary of the Treasury, Letter from Hon. Eugene T. Rossides, dated February 9, 1970– 370 336 334 141 31 173 29 156 157 164 88 164 Letters to Hon. Eugene T. Rossides, dated: February 2, 1970__ 166 February 10, 1970_. 89 "Report by January 31, United States Directs HRA" article from the New York Times, January 17, 1969_ 32 Staff Report on Investors Overseas Service (IOS) and its use of secret financial facilities___ 181 State Department telegram approved by Hon. Eugene T. Rossides, 86 "Top Swiss Court Lets U.S. Look at Bank Files," article from the Washington Post, February 28, 1970.......... 158 Pollack, Irving M.: Documents pertaining to SEC's litigation with Investors Overseas 198 Response to questions submitted by Chairman Patman__. 309 Rossides, Hon. Eugene T.: Approval of State Department telegram in regard to Mutual Judicial Schoch, Dr. M. Magdalena, report entitled, "Swiss Banks and Secrecy 2 Laws". 363 FOREIGN BANK SECRECY AND BANK RECORDS THURSDAY, DECEMBER 4, 1969 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met, pursuant to notice, at 9:15 a.m., in room 2128, Rayburn House Office Building, Hon. Wright Patman (chairman), presiding. Present: Representatives Patman, Barrett, Sullivan, Reuss, Moorhead, Stephens, St Germain, Gonzalez, Minish, Hanna, Gettys, Annunzio, Rees, Galifianakis, Bevill, Griffin, Hanley, Brasco, Chappell, Widnall, Halpern, Clawson, Stanton, Blackburn, Brown, and Williams. Chairman PATMAN. The committee will please come to order. Mr. Morgenthau and Mr. Wilson, you may come around and take the witness stand, if you will, please; and Mr. Leval, will you come forward, please. This morning we begin hearings on H.R. 15073, a bill to amend the Federal Deposit Insurance Corporation Act to authorize the Secretary of the Treasury to issue regulations requiring the maintenance of certain records by commercial banks. Further, the bill requires the filing of reports and maintenance of records pursuant to regulations issued by the Secretary, by those who do business with foreign financial institutions in jurisdictions with bank secrecy laws. (The text of H. R. 15073 follows:) [H.R. 15073, 91st Cong., first sess.] A BILL To amend the Federal Deposit Insurance Act to require insured banks to maintain certain records, to require that certain transactions in United States currency be reported to the Department of the Treasury, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, 101. Retention of records by insured banks. Section 101. Retention of records by insured banks The Federal Deposit Insurance Act is amended (1) by redesignating sections 21 and 22 as 22 and 23, respectively, and (2) by inserting the following new section immediately after section 20: "SEC. 21. (a) The purposes of this section are (1) to facilitate the supervision of the business of banking, (2) to aid duly constituted authorities in lawful investi |