so that the Government authority may proceed with a summons, subpoena, or search warrant for additional information. Therefore, in order to alleviate concerns in the financial community, subsection 3(c) makes explicit that the information a financial agency may provide to law enforcement includes the name or names and other identifying information concerning the individuals or account involved as well as the nature of the suspected illegal activity. This provision would not authorize full disclosure of all information and records in the financial institution's possession. Another proposed amendment would allow a financial institution to make full disclosure in certain narrowly defined situations. Subsection 1113 of the Right to Financial Privacy Act is amended to allow a financial institution to provide the Government, without customer notice or fear of civil liability, all information and records which it has reason to believe may be relevant to certain possible crimes, crimes by or against a financial institution or financial institution supervisory agency, Bank Secrecy Act violations, violations of the proposed money laundering offense, or enumerated drug related crimes. With respect to the other bills before the committee, Treasury would oppose two provisions in H.R. 1474. Section 3 of H.R. 1474 would provide that every Bank Secrecy Act reporting exemption be approved by the Secretary. Currently, under the regulations, a bank may exempt from reporting certain cash deposits and withdrawals of accounts of retail businesses in amounts commensurate with the lawful customary conduct of such a business. The bank has a continuing duty to monitor the qualifications for such exemptions. It would be unwise, in our view, to shift the burden of monitoring the eligibility of bank customers for exemptions away from the bank. The bank is in the best position to know its customers and changes in their status. The provision is, accordingly, overly burdensome to the Government and, in our view, not necessary. We are considering instead, at Treasury, a regulation that would provide IRS with copies of all exempt list applications to be filled out on a specified form and filed by the person applying for the exemption with the bank. The truthfulness of the representations on these forms would then be compelled under the sanction of 18 USC section 1001. Section 4 of H.R. 1474 would require that every person, including every financial institution, report all outgoing_international wire transfers. As discussed above with respect to Treasury's new targeting regulations, Treasury already has authority under 31 U.S.C. 5314 to require reporting of international wire transfers. However, wholesale reporting of international wire transfers would not be in keeping, we believe, with the restriction in section 5314 that Treasury consider the need to "avoid burdening unreasonably a person making a transaction with a foreign financial agency." This broad reporting requirement would create a virtual blizzard of reports, burdening financial institutions out of all proportion to the utility of the information generated and would bury the Treas ury Department in an avalanche of reporting forms, all but a very few of which would be unrelated to money laundering. Mr. Chairman, this concludes my prepared remarks. I would be happy to answer any questions the committee might have. [Statement of John Walker follows:] SUMMARY OF THE STATEMENT OF JOHN M. WALKER, JR. ASSISTANT SECRETARY (ENFORCEMENT AND OPERATIONS) AT THE HEARING OF THE SUBCOMMITTEE ON CRIME, COMMITTEE ON THE JUDICIARY, U.S. HOUSE OF REPRESENTATIVES JULY 24, 1985 I am pleased to discuss the several bills before the Committee that address the problem of money laundering and its connection with organized crime, especially H.R. 2785 and 2786 (identical bills), "the Money Laundering and Related Crimes Act of 1985, prepared by the Department of Justice and the Department of the Treasury. My remarks concern mostly section 3 and section 5 of the bill dealing with amendments to the Right to Financial Privacy Act (RFPA) and the Bank Secrecy Act, respectively. The amendments to the RFPA are designed to refine the extent to which financial institutions may cooperate in law enforcement efforts without risk of civil liability under the RFPA. Among the highlights of the Bank Secrecy Act amendments are the following: O Bank Secrecy Act summons authority for the Secretary of Increased Bank Secrecy Act civil penalties, up to o A penalty for negligent Bank Secrecy Act violations. O O Clarification of the Secretary's authority to I would also like to update the Committee on recent Bank Secrecy Act enforcement activities by the Department of Treasury since the Bank of Boston case, including: Imposition of civil penalties on banks for Bank Secrecy Establishment of a supervisory agency task force to Promulgation of regulations that allow Treasury to Promulgation of regulations that impose certain Bank STATEMENT OF JOHN M. WALKER, JR. ASSISTANT SECRETARY (ENFORCEMENT AND OPERATIONS) AT THE HEARING OF THE SUBCOMMITTEE ON CRIME, COMMITTEE ON THE JUDICIARY, U.S. HOUSE OF REPRESENTATIVES JULY 24, 1985 I WANT TO THANK THE CHAIRMAN AND THE COMMITTEE FOR THEIR CONTINUED INTEREST IN AND SUPPORT FOR OUR GOVERNMENT'S ATTACK ON MONEY LAUNDERING AND THE ILLEGALITY THAT IT SUPPORTS. I ALSO APPRECIATE THIS OPPORTUNITY TO TESTIFY ABOUT THE SEVERAL BILLS BEFORE THE COMMITTEE THAT ADDRESS THE PROBLEM OF MONEY LAUNDERING AND ITS CONNECTIONS WITH ORGANIZED CRIME IN OUR SOCIETY. WHILE ALL THE BILLS BEFORE THE COMMITTEE HAVE MUCH TO COMMEND THEM, I AM ESPECIALLY PLEASED TO DISCUSS H.R. 2785 AND 2786 (IDENTICAL BILLS), THE "MONEY LAUNDERING AND RELATED CRIMES ACT OF 1985," WHICH WAS PREPARED BY THE DEPARTMENT OF JUSTICE AND THE DEPARTMENT OF THE TREASURY. NOT ONLY WOULD THIS BILL CREATE A NEW CRIMINAL OFFENSE OF MONEY LAUNDERING, BUT IT WOULD -2 SIGNIFICANTLY STRENGTHEN TREASURY'S BANK SECRECY ACT ENFORCEMENT EFFORT. ANOTHER SIGNIFICANT BENEFIT OF THIS BILL IS ITS REMOVAL OF CERTAIN IMPEDIMENTS TO LAW ENFORCEMENT POSED BY THE RIGHT TO FINANCIAL PRIVACY ACT. IT IS THESE ASPECTS OF THE BILL THE BANK SECRECY ACT AMENDMENTS IN SECTION 5 AND THE RIGHT TO FINANCIAL PRIVACY ACT AMENDMENTS IN SECTION 3 - THAT I WILL BE MOST CONCERNED WITH IN MY REMARKS TODAY. THE PROVISIONS IN THE BILL AMENDING THE CRIMINAL CODE, INCLUDING THE NEW OFFENSE OF MONEY LAUNDERING, WILL BE ADDRESSED BY THE ASSISTANT ATTORNEY GENERAL FOR THE CRIMINAL DIVISION. BEFORE DISCUSSING THE MONEY LAUNDERING INITIATIVES, I WOULD LIKE TO TAKE THIS OPPORTUNITY TO UPDATE THE COMMITTEE ON TREASURY'S BANK SECRECY ACT ENFORCEMENT ACTIVITIES SINCE I WAS LAST BEFORE THE COMMITTEE ON APRIL 16TH: FIRST, IN THE WAKE OF THE CRIMINAL INVESTIGATION IN WHICH THE BANK OF BOSTON PLEADED GUILTY TO NUMEROUS VIOLATIONS OF THE BANK SECRECY ACT, IT HAS BECOME APPARENT THAT BANK SECRECY ACT COMPLIANCE IS IN NEED OF IMPROVEMENT THROUGHOUT THE FINANCIAL VIOLATIONS. ON JUNE 18, 1985, TREASURY ANNOUNCED THAT CIVIL |