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Why is Miami so different? Why would you say Miami should be so different that there should be so much cash, legal cash?
Here is Mr. Friedberg, in a regular suit, with nothing big on the watch. He doesn't look like a multimillionaire to me. I don't think he looks like that to you. I repeat my question. He comes in four or five times a month with $9,000, month after month. You would not be suspicious at all?
Mr. BANDSTRA. No, I believe I would, Mr. Chairman. I did not mean to convey I wouldn't be. I would be suspicious.
Chairman ST GERMAIN. Very sincerely, the aggregation problem is one that we are facing here in addition to the attitude that you had when you said to me, “I'm concerned about these banks." We had the Bank of Boston hearing, where this woman in the south end of Boston was receiving these gunny sacks full of money from the same people, who by the way, had been written up in the papers, the Anguilo's. Have you heard about them? They have been convicted.
For years and years, everybody in that district of Boston knew what type of characters these were and never did the lady who managed that branch ever call anybody in the main office and say, "I have all this cash coming in.” As a matter of fact, they had an exception, because they said they were collecting rents.
I have to feel that these institutions have a little more responsibility than to just assume that you have foreigners coming in with all kinds of money and a lot of legitimate businesses. If they are legitimate, they should be registered for an exception.
Mr. TORRES. Thank you, Mr. Chairman. You have been most generous in allowing me time to participate on your subcommittee, of which I am not a member. However, I do serve on the main Banking Committee. As the committee knows and the subcommittee knows, I have introduced legislation, H.R. 4280, which attempts to amend title 31, United States Code, to establish new recordkeeping and reporting requirements, in order to combat money laundering, to act as a deterrent to the kind of situation you are familiar with, Mr. Friedberg.
You will notice that when you ask the car leasing company which was the best neighborhood to do business in, they pointed to Wilshire Boulevard. Mr. Chairman, that is not my district. You know where I am from.
I am concerned that Los Angeles has now reached a peak, perhaps in the country, as being the top city now involved in money laundering, perhaps passing Miami now. This is the reason for this kind of legislation.
In your response to a Member of the subcommittee, when he asked you, what do you think could be done about this, you said you didn't have an idea. I am going to ask a question that maybe you could comment on.
My legislation specifically puts a limit on the amount of money that can be brought in by a person like yourself, under the $10,000 provision. My bill calls for $3,000. That is, anyone coming off the street with $3,000 or more and attempting to launder money, the bank would be required to record this, as well as asking for identification of that person walking in off the street.
your estimation, is this a possible deterrent to money laundering?
Mr. FRIEDBERG. Anything that makes it more difficult to launder money is a deterrent, sir. I don't think it would stop it. I certainly think it would slow it down. Looking at the commission structure that the banker is willing to pay the launderer, if you are doing it in $3,000 increments or $4,000 to $5,000, they are looking for a day's pay. That's really what the Smurf is looking for. He is just going to have to call on more banks or get up a little earlier in the morning.
I don't know if it will stop it. Anything to deter it, to slow them down, will help.
Mr. TORRES. Thank you. One other question. Perhaps Mr. Bandstra could answer this. You mentioned a number of banks in Miami doing business. What was the bank you indicated? You mentioned Pan American where you had your own account.
Mr. FRIEDBERG. Yes, sir.
Mr. FRIEDBERG. Capital Bank is one where I had an account; yes, sir.
Mr. TORRES. You laundered money through Capital Bank? Mr. FRIEDBERG. Yes, sir. Mr. TORRES. Thank you, Mr. Chairman. I yield back the balance of my time.
Chairman ST GERMAIN. I would direct this to either Mr. Friedberg or Mr. Bandstra. Was Mr. Behar laundering only the money that was coming into him from Alex, his contact in Colombia, or was he handling an overage from other operators similar to him?
Mr. FRIEDBERG. Mr. Behar had made additional contacts and yes, he was handling quite a bit of overage. He had developed a good reputation and a good organization. His reputation had opened up some other doors to him.
Chairman ST GERMAIN. Would you have been the first man who began laundering for him or did he have others before you?
Mr. FRIEDBERG. Mr. Behar was doing it, I think, at least a year prior to my joining him.
Chairman St GERMAIN. Would he do it himself?
Mr. WYLIE. Thank you, Mr. Chairman. I think this has been some of the most fascinating testimony I have heard since I have been on this committee. I want to thank you. You have certainly dramatized the problem that we face. Mr. Bandstra, I think your testimony has been most helpful and valuable, too.
It looks like we have the responsibility of trying to come up with some answers to this problem.
I have no questions, Mr. Chairman.
Mr. PARRIS. Mr. Chairman, I just want to make sure that the record indicates that I did not mean in any way to suggest that the committee should not offset the expenses of Mr. Friedberg.
Chairman ST GERMAIN. I understand that.
Mr. PARRIS. I would just like to offer Mr. Friedberg a job. It is hard to find an honest man these days.
Mr. FRIEDBERG. I will accept.
Mr. PARRIS. Do you have some money you want laundered? I have some shirts.
Mr. FRIEDBERG. We have one institution that I think you will enjoy this, where I can walk in with $50,000 in cash and buy 50,000 dollars' worth of money orders and never worry about a currency transaction report being made. That is the U.S. Post Office. You might want to sit on that for a while. Mrs. Behar made it a practice to buy all her money orders at the Post Office.
Chairman ST GERMAIN. My staff informs me that this is not covered under the Bank Secrecy Act. Is that right, Mr. Bandstra?
Mr. BANDSTRA. That is right, Mr. Chairman. It is not.
Chairman ST GERMAIN. I have spent a lot of time sitting in this chair, Mr. Bandstra. With all due deference, the last thing I would want to be is a judge.
Mr. BANDSTRA. I am sorry. It is force of habit.
Mr. Chairman, if I might make one comment to the committee. In addition to stating perhaps the obvious, and that is that Mr. Friedberg's cooperation has been invaluable to the United States and the convictions that have resulted would not have been possible without his cooperation and without his working as a confidential informant for the United States.
The other comment that I wish to make, no one asked me what I would like to do about money laundering, and perhaps it is improper to state
Chairman ST GERMAIN. Consider yourself asked.
Mr. BANDSTRA. In listening to the comments of Mr. Pickle, I believe that the first two items that he listed and discussed with the committee this morning would be very helpful in correcting a situation under title 31 as it now exists. We as prosecutors with the U.S. Attorney's Office are experiencing various difficulties in various parts of the United States with title 31, two of which I think will be corrected with the-
Chairman ST GERMAIN. Be a little more specific. I want it in the record. Why don't you elaborate for us?
Mr. BANDSTRA. All right. Perhaps I can answer it in the formtake the approach of answering a question asked by Mr. Annunzio when he asked Mr. Friedberg, when you went in and purchased a check for $9,000, that wasn't illegal, was it? Mr. Friedberg said, no. He said, if you were to go in and purchase 50,000 dollars' worth of checks, that wouldn't be illegal either, would it? Mr. Friedberg said, no. The answer to that question varies. The legality of doing that particular kind of behavior varies according to where a person is doing that in the United States.
Chairman ST GERMAIN. Because of different decisions by the appellate courts?
Mr. BANDSTRA. Yes.
Chairman ST GERMAIN. This is the aggregation we are talking about.
Mr. BANDSTRA. It is the aggregation. Of course, it is the aggregation on a particular day. There is no requirement or the requirement to file a currency transaction report has to be on a single day, at a single financial institution.
a There is a division in the circuits right now. One of the problems relates to whether an individual can cause a financial institution to violate the Bank Secrecy Act by failing to file a currency transaction report. In the southern district of Florida, an individual can still cause a bank to violate that particular statute. In California, in the Federal district, of which California is a part, and also in New York, an individual cannot any longer cause a bank to fail to file.
Chairman ST GERMAIN. Would you explain what you mean by that?
Mr. BANDSTRA. Of course, it is a matter of judicial interpretation, but various cases involving these kinds of Smurfing activities have been filed, of course, throughout the United States, and it is the seventh and the ninth judicial circuits that have now expressed judicial opinions which say that an individual can structure his financial transactions in any way that he wants to and that his intent in structuring his financial transactions is not important; so therefore, an individual in the second and ninth judicial circuits can go now today to banks in New York and banks in California and purchase as many cashiers checks or money orders in whatever amounts he wants to and for whatever purpose he has without violating.
Chairman ST GERMAIN. As long as he doesn't or she doesn't purchase one with cash in the amount of $10,000 or more; is that correct?
Mr. BANDSTRA. No, Mr. Chairman, that is not correct.
Chairman ST GERMAIN. That is what I want you to explain so that everybody understands.
Mr. BANDSTRA. All right. To make it very simple, I could go into a bank in certain areas of the United States and ask to purchase three cashiers checks, and let's say I go in at three different times during the day and ask to purchase a check for $9,000 on each time, so that I am purchasing cashiers checks in the total amount of $27,000 in 1 day at a particular bank. Under those circumstances, of course, if a bank knew that I was doing this, it would be required to aggregate and to file a currency transaction report.
If I were to go in or cause Mr. Friedberg to go into that bank in order to disguise myself or to have three different persons actually conduct this transaction, in those particular areas it is no longer considered a violation of title 31.
Perhaps to state it more simply, and what I said before, an individual cannot cause a bank to fail to file a currency transaction report in various locations in the United States, and of course, the interpretations and the reasons for that get lengthy and perhaps are even a little bit beyond what I can say just off the top of my head here at this time.
Chairman ST GERMAIN. What I think you just said was that in those jurisdictions where they don't buy aggregation, they don't think aggregation is a violation or that it has to be reported. But the example you just gave was that Mr. Friedberg went in with $9,000, and Mr. Parris went in with $9,000, all $27,000 of which belonged to you. Is that your example?
Mr. BANDSTRA. That is right.
Chairman ST GERMAIN. In that instance I would agree with you, I can't fault the bank there. How would the bank know? It is three different individuals coming in. Are you telling me that there is a jurisdiction that has held that if three individuals come in on any a given day with $9,000 and purchase three money orders for $9,000, that-how can they aggregate?
Mr. BANDSTRA. I think I can simplify my example a little bit.
Mr. BANDSTRA. Perhaps to use three individuals only confuses things. If I were to use three different branches of a particular bank, I think it would make it a little bit more simple. If I as an individual, just myself, would take $27,000 and go to three branches of the same bank and purchase a $9,000 cashiers check in each of those three branches on a particular day in the southern district of Florida, and my intent is to cause that bank to fail to file a currency transaction report, that is against the law in Miami, FL, and in the southern district of Florida.
Chairman ST GERMAIN. Because of the court decision.
Chairman ST GERMAIN. But it would not be against the law in New York or California.
Mr. BANDSTRA. Yes; it would not be. And part of the problem there is because the courts have said that an individual cannot cause a bank to fail to file a CTR. From what I understand from what Mr. Pickle addressed to the committee here this morning, that this would be a part of his legislation, that an individual can cause a bank to fail to file a currency transaction report. In my opinion, that would clarify some of the problem. That would assist us as prosecutors and make a more uniform enforcement of title 31.
The second thing is, of course, the forfeiture provision. I am presently dealing with cases in the southern district of Florida in which there is a great deal of money seized and a great deal of money laundered, but simply by having that money seized as a result of money laundering does not make it forfeitable.
In fact, in one particular case that is now pending, a great deal of money, in order to make that money forfeitable, we have to prove that there is a drug connection with that money.
Chairman ST GERMAIN. Let me ask you this question. Mr. Behar is—that's his name?
Mr. BANDSTRA. Yes, Mr. Behar.
Mr. BANDSTRA. Some money was seized from Mr. Behar. I don't know the exact amount, and it wasn't a great deal.
a Chairman ST GERMAIN. It was not a great deal. Mr. BANDSTRA. No; it was not.