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tackle a new Title 18 crime.
As you are aware, Mr Chairman, a number of proposals repeal the procedural safeguards found in The Right to Financial Privacy Act.
not convinced that the procedural protections in the RFPA severely hamper
law enforcement activities. Therefore, we do not believe it should be
amended in any fashion.
H.R. 1367 as introduced by Representative McCollum (R-FL) contains many of the recommendations made in the Inter im Report of the President's
Commission on Organized Crime.
Included in H.R. 1357 are a new crime of
money laundering, changes in the Federal wiretap statute, and changes in
the Right to Financial Privacy Act.
H.R. 1367 would also expand the authority of the Secretary of the Treasury under the Bank Secrecy Act (BSA). The Secretary would be given the authority to examine any data or records of a domestic financial
institution required by the recordkeeping requirements of BSA.
addition, the Secretary could summon an officer or employee of a financial
institution to appear before the Secretary or his delegate and produce such records, data, or sworn testimony as may be relevant or material.
The bill proposes making judicial orders authorizing wiretaps for the interception of telephone calls, telexes, and other forms of wire or oral
communications available for investigations of possible violations of the
criminal provisions of the Bank Secrecy Act (i.e. willful violations of the
reporting requirements) and of the proposed crime of money laundering.
H.R. 1474 as introduced by Representative Hughes (D-NJ) creates a new crime of money laundering and requires individuals to file directly with the Secretary of the Treasury for exemption from the BSA reporting
H.R. 1945, as introduced by Representative Hubbard, contains two
titles. First, The Drug Money Seizure Act which would increase the
penalties for a willful violation of the Bank Secrecy Act.
the current civil penalty of $10,000 would be increased to the amount of
the transaction where the violation involved a transaction reporting
This provision introduces the concept of forfeiture as a
Mr. Hubbard's bill also grants the Secretary of the Treasury
summons authority. This is a response to the assertion by the Department of the Treasury that it lacks subpoena power sufficient to enforce the Bank
If the Congress finds the current means of obtaining a
subpoena available to the Secretary of the Treasury are inadequate to
enforce the Act, we would support the expansion of the Treasury's subpoena
authority as proposed. Second, H.R. 1945 creates a crime of money
H.R. 2785 ("the Administration bill"), as introduced by
Representatives St Germain and Wylie at the request of the Administration,
creates among other things a new crime of money laundering, amends the
Federal Rules of Criminal procedure, and establishes criminal and civil
forfeiture under Title 18.
H.R. 2785 also gives the Secretary of the Treasury authority to
examine records, papers, and other data of the financial institution
relevant to the reporting requirements of the Bank Secrecy Act.
financial institution could be required through a summons to produce at its
own expense such documents and records at any location within 500 miles of
the institution's place of business.
H.R. 3892, as introduced by Representative Wortley, would require the
Secretary of the Treasury to review all exemption lists on an annual basis
and, in a case of a change in bank control or management, the Secretary
would be required to review the exemption list within 30 days.
Additionally, H.R. 3892 would amend the Federal Deposit Insurance Act and
the National Housing Act by extending the time frame within which
supervisory agencies could review change of bank control applications for
compliance with the Bank Secrecy Act.
Finally, H.R. 3892 would recycle the proceeds of seizures and
for feitures from any unlawful act back into the enforcement of the Bank
H.R. 4280, as introduced by Representative Torres, would increase the recordkeeping of financial institutions by requiring extensive records on
all currency transactions of $3,000 or more to be kept for 5 years. This is an attempt to increase information available for investigations. This proposal will obviously increase the amount of records a financial
institution will be required to keep, however, the utility of the proposal
H.R. 4573, as introduced by Representative Pickle, would deal with the
problem of structured transactions or "smur fing" by making it a crime to cause or attempt to cause a financial institution to fail to properly file a Currency Transaction Report on a transaction. Proceeds or property
interests directly traceable to the failure to file would be subject to
seizure or forfeiture. We believe H.R. 4573 is a cogent attempt to stem
the evasive tactics of money launderers.
It focuses everyone's attention
on the motivation of the drug trafficker.
As mentioned above, "structuring" or "smurfing," allows criminals to exchange illegally der ived monies for cashiers checks, travelers checks,
Mr. Pickle's approach would subject persons to civil and criminal
liability for causing or attempting to cause a domestic financial institution to "fail to file a (currency transaction) report", or to file the report with "a material omission or misstatement of fact" or structuring or assisting in structuring a transaction "for the purpose of evading the reporting requirements." This language will address the structured transaction problem which has forced the courts to dismiss
charges against individuals who may have been involved in deliberate evasion of the Bank Secrecy Act reporting requirements. 1
While there have been several cases that have found "structured
transactions" violative of 31 U.S.C. 5313(a) 2, the confusion over the statute and its implementing regulations needs to be solved once and for all; otherwise dismissals of charges such as that in the recent United States v. Dela Espr iella3 will continue.
ABA would like to suggest to this Committee another proposal, already
offered in the Senate by Senator De Concini and very similar to Mr.
Wortley's proposal in H.R. 3892, which would complement this Committee's response to tightening the Bank Secrecy Act. Senator De Concini introduced s. 1385, the "Money Launder ing Crimes and Disclosure Act" which deals in
part with the reporting problem associated with currency transaction report
exemptions. S. 1385 would amend 31 U.S.C. 5318, which gives the Secretary
of the Treasury authority to "prescribe for revoke) an appropriate exemption" by requiring the financial institution to provide to the Secretary of the Treasury (or his delegate) "a list of customers of the
financial institution whose transactions have been exempted" and by further
requiring the Secretary to "review and approve or revoke the list of
exemptions within 90 days after the date of receipt." If the Secretary
failed to notify the financial institution within the time provided, the
exemption list would be deemed approved. These proposed changes would encourage frequent review of the CTR exemption lists and provide financial institutions with an incentive to internally review and update their lists. These reviews would guarantee that the lists are used only for their intended purposes: to exclude from the reporting requirements only those customers clearly intended to qualify under the regulations.
Additionally, we would like to suggest some new language relating to an internal audit of the financial institution. Specifically, a section such as the following should be added :
"No liability for a civil penalty shall be imposed upon a
This amendment provides that liability for a civil nalty will not be imposed upon financial institution for violations of the Bank Secrecy Act or regulations thereunder if the financial institution discovers such violations and promptly discloses them to the Treasury Department. The
purpose of this amendment is to encourage financial institutions to audit
for Bank Secrecy Act compliance and to disclose and report negligent failures to comply with the Act. Absent such a provision, the consequences to the institution would be the same whether violations were discovered in
the course of an internal audit or an external examination. Since the
amendment will induce financial institutions to ensure full compl iance, it will further the general purposes of the Bank Secrecy Act.
There have been numerous proposed solutions aimed at curbing drug trafficking. Our Association supports the Chairman's goal of immediate, effective action. This goal can only be met by putting aside the all