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correspondent clearing banks file a report with any of the bank regulatory agencies as to the foreign banks for which they are acting in this capacity. Identifying such correspondent banks would enable us to pick up many transactions of investigative interest without having to seek the records of the foreign bank itself.
Finally, in response to the Subcommittee's specific request for suggestions, there are a number of areas in which legislation may be appropriate in order to assist the efforts of United States law enforcement authorities in combatting and investigating international criminal activity affecting this country. Neither the Department nor the Administration is formally recommending specific legislation, but some areas for discussion are:
Further removing obstacles to information sharing between federal law enforcement agencies. At present, there are restrictions on United States criminal investigative agencies prohibiting them from sharing critical information about criminal activity which transcends agency jurisdiction.
2. Changing the Federal Rules of Evidence to facilitate the introduction of foreign business records -- particularly foreign bank records on the basis of the certification of the custodian of those records, before an appropriate foreign official, that they were kept in accordance with the requirements of Rule 803(6) of the Federal Rules of Evidence. The signature of the foreign official would then be authenticated in accordance with Rule 902 (3) or the applicable mutual assistance treaty in criminal matters, and the records would be admissible in United States court proceedings unless the defendant could make a proper showing that there was significant reason to believe the records lacked trustworthiness.
Criminalizing attempted violations of the Bank Secrecy Act with respect to exportation of currency and monetary insturments from the United States, and specifically authorizing customs searches of persons and property leaving the United States.
4. Increasing penalties for failure to report the import or export of currency and monetary insturments, and for the failure to report beneficial interests in foreign bank accounts on income tax returns.
5. Amendment of statute of limitations provisions to exclude time required to obtain foreign evidence when there is a showing that the defendant made use of the foreign jurisdictions in committing an offense.
to authorize expressly the issuance of requests for
to require defendants to pay the costs of obtaining evidence abroad when it is there due to actions of the defendant;
7. Modify costs statutes to authorize the trial court to impos on defendants costs of investigation as well as prosecution.
Consider amendment of the Speedy Trial Act to designate as excludable time the period between the issuance of a request for international judicial assistance and its execution by the foreign judicial authority or until such time as the issuing court determines that there is no reasonable expectation of receiving such assistance.
The tremendous growth in the importance of internationl crimina activity in the United States is a relatively recent phenomena. The Department of Justice is fully aware of the magnitude of this problem, and intends to play a leadership role in developing measures and program to effectively deal with it. Such measures and programs, of course, wil be significantly dependent on Congressional support. In this respect, we are very pleased with this Subcommittee's interest in the problem and the fine work it and its fine staff are doing.
Violent Crimes includas homicide, rape, kidnapping, explosivon and weapons of fannos, tarrorists
A fugitiva whosa extradition was bought for more than one crima category la
Mr. Chairman and members of the Subcommittee:
Thank you for the opportunity to appear before you and present the views of the Tax Division regarding the use of offshore banks and other foreign entities by United States citizens. We welcome these hearings in light of the increasing misuse of offshore jurisdictions in order to circumvent domestic law, including our tax laws.
At the outset, I would like to place the role of the Justice Department's Tax Division in perspective. The detection, selection and development of criminal tax cases is primarily the responsibility of the IRS. The Tax Division is responsible for authorization of prosecutions and grand jury investigations of tax offensesd and supervision over prosecutions and investigations conducted by the United States Attorneys.
In a number of cases, the Tax Division assumes responsibility for conducting the grand jury investigation or prosecution. These cases often involve offshore transactions. Our staff also works closely with the Criminal Division, particularly the Office of International Affairs, in treaty negotiations and advises the Treasury Department's International Tax Counsel concerning exchange of information provisions of tax treaties. In addition, we assist United States Attorneys with regard to foreign information gathering and evidence problems, including the initiation of formal requests under tax conventions and mutual assistance treaties.
The use of offshore banks, corporations, trusts and other entities located or formed in foreign countries for illegal activities creates some of the most difficult and vexing problems facing those of us in tax enforcement and litigation today. These cases include the laundering of profits from both legal and illegal business activities and the use of nominee entities and fictitious transactions to create tax shelter deductions or to promote various tax protestor schemes. The money laundering problem is not, of course, confined to the tax area it impacts on the enforcement of many other areas of criminal priority, such as narcotics trafficking, securities fraud, and organized crime. Overall, money laundering has become one of the most important and vital aspects of criminal activity generally.
In solving crimes involving offshore banks, the investigator and prosecutor are faced with several significant difficulties: first, discovering where and when money laundering, fictitious transactions and sham entities have occurred or been used; second, obtaining sufficient information and leads to follow the complex schemes that are employed; and, third, securing documents, testimony and other evidence than will be admissible in court to prove the criminal violations. Enormous resources, both investigative and prosecutorial, must be committed to ferrett out and convict the perpetrators of these unlawful offshore activities and, in the case of tax crimes, additional resources are necessary to proceed with the audits and investigations necessary to determine civil tax liabilities and thereafter to collect such liabilities.
Following hearings before the Ways and Means Subcommittee on Oversight in 1979, the Commissioner of Internal Revenue, the Assistant Attorney General, Tax Division, Department of Justice, and the Assistant Secretary of the Treasury (Tax Policy) asked Richard A.
Gordon to accept