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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 Interim Report of the President's Commission on Organized Crime. Included in H. R. 1367 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. In 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 requirements.
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. As proposed, the current civil penalty of $10,000 would be increased to the amount of the transaction where the violation involved a transaction reporting requirement. This provision introduces the concept of forfeiture as a penalty. 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 Secrecy Act. 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. The 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 forfeitures from any unlawful act back into the enforcement of the Bank Secrecy Act.
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 is unclear.
H.R. 4573, as introduced by Representative Pickle, would deal with the problem of structured transactions or "smurfing" 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 derived monies for cashiers checks, travelers checks, etc. 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 Espriella3 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 DeConcini introduced S. 1385, the "Money Laundering 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 (or 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 penalty 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 compliance, 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