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The Subcommittee received testimony from the Assistant Attorney General for the Criminal Division of the Department of Justice, who briefed the Subcommittee on the status of the negotiations between the United States and other countries in efforts to enact a mutual legal assistance treaty. Should the central banks provide assistance to their respective countries in these deliberations, as they relate to international banking transactions?

It is acknowledged that financial institutions, both u.s. and foreign, have rapidly expanded their overseas offices. The Basle Committee, recognizing that such activity may create safety and soundness problems, attempts to deal with these concerns through efforts to coordinate bank supervision. Why shouldn't the Basle Committee, or some other international banking committee which included the Federal Reserve as a participant, provide an exchange of information on suspected illegai activities which have to rely on the international banking network as a vital support system?

The Subcommittee looks forward to the Federal Reserve's testimony and responses to the issues raised above.


fernand J. St Germain Chairman

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On May 14, 1986, the Subcommittee on Financial Institutions Supervision, Regulation and Insurance will continue its hearings on proposals to protect against financial institutions becoming havens for tax evaders, drug traffickers and launderers of funds derived from criminal activity.

As part of these hearings, the Subcommittee will conduct hearings on the several bills dealing with money laundering, including the Administration's bill, HR 2785. The other bills the Subcommittee intends to review are : BR 1367 (Mr. McCollum), HR 1945 (Mr. Hubbard), HR 1474 (Mr. Hughes), HR 3892 (Mr. Wortley), HR 4280 (Mr. Torres), and HR 4573 (ME. Pickle).

The views of the Association of the Bar of the City of New York on these proposals would be of value to the Subcommittee in its deliberations. It is requested, therefore, that you appear and testify before the Subcommittee concerning these matters on May 14, 1986, at 10:00 a.m. in Room 2128, Rayburn House office Building.

In addition to the bills mentioned above, there are four titles of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRICA), also known as the Safe Banking Act of 1978, which the Subcommittee intends to review and which we feel may lend support to our efforts to fight those criminals who use our financial institutions for their illegal gains. They are Titles I, VI, VII and XI (Supervisory Authority over Depository Institutions ; Change in Bank control Act; Change in Savings and Loan Control Act; and the Right to Financial privacy Act, respectively).


The Subcommittee would appreciate any comments or opinions which you might have with respect to the aforementioned Titles and that you believe would provide guidance to us.

Please provide the Subcommittee with 175 copies of your testimony no later than 24 hours in advance of your appearance. Please contact Earl F. Rieger, Counsel of the Full Committee staff, if there are any questions.

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Attention: Mr. Charles Zuver
Dear Mr. Hadlow:

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 followst.
1. Under current regulations, the Currency

Transaction Report or CTR filing duties
are placed solely upon the financial
institution, not the customer. Wouldn't
placing a duty also on the customer to
file or to sign a sworn statement be an

additional effective law enforcement tool?
2. Under current law, monetary instruments

transported in violation of the CMIR
reporting requirements may be seized and
forfeited to the Government. No
comparable provision exists for failure to
file CTRS, although legislative proposals
have been submitted to provide civil
forfeiture authority for those
Should seizure and forfeiture authority be
extended as proposed? If so, what
protections should be written into such
legislation to protect an innocent victim
from possible governmental abuse?



H.R. 2785 and H.R. 1367 would confer on
the Secretary of the Treasury summons
authority which would enable the Secretary
to question directors, officers and
employees and examine records of financial
institutions. Do you favor this


The Administration's bill (H.R. 2786)
contains an amendment to the Right to
Financial Privacy Act that would
explicitly preempt any state laws or
constitutions which may contain even more
protective provisions as to a bank
customer's rights to privacy in their bank
records, than our federal law presently

In your opinion, is there a need for such
a preemption provision? Are you aware of
how many and what states have more
protective right to financial privacy laws
than the federal statute, or have
documentation of how many prosecutorial
opportunities were lost because of state

right to financial privacy statutes? Again, the Subcommittee is appreciative of your efforts in this area. Please submit your responses to the Subcommittee no later than June 4, 1986.

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