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and it should not be used indiscriminately. The statute authorize's it for particular crimes punishable under federal
Beca use of the scope of the money laundering crime discussed above, adding the proposed section 1956 as a wiretapping offense would vastly expand federal wiretapping authority to cover a. significant number of crimes up to now exempted from the wiretap authority of Title III. They would now be subject to wiretapping by federal law enforcement agencies under the "money laundering" offense. We object in principle to adding any crimes under the Safestreets Act. If Congress adopts the Administration's definition of money laundering, which we oppose, we urge it not to add it to the crimes covered by the federal wiretap statute.
II. Breadth of the Money Laundering Crime
Independent of our concerns about bank record privacy, we urge the Congress to consider the possible overbreadth of the mon į laundering crime proposed in 8.R. 2785 and the wisdom and even constitutional difficulties posed by the enactment of such a sweeping criminal statute. As stated earlier, this bill does not only apply to cases where cash is laundered through a bank. It applies to any monetary transaction involving the movement of funds that affects interstate commerce conducted with the intent to facilitate any unlawful activity or with the knowledge or reckless disregard of the fact that the money was derived from illegal activity. It is not limited to cash transactions but applies to any "monetary instrument, including cash, traveler's
checks, personal checks, bank checks, money orders, investment
securities, gold or precious coins, and negotiable instruments in bearer form. A host of issues are posed:
First, there is the issue of federalism. Under this statute,
federal agencies would be able to investigate and prosecute as "money laundering" a myriad of crimes usually left to state and local authorities. The purchase of drugs, the sale of a handgun, real estate swindles, garden variety extortion, or misrepresentation in the sale of a used car could be reached
under section 1956.
Second there is the problem of overbreadth which might affect protected constitutional rights. For example, a retainer
received by a criminal defense lawyer might subject th: lawyer to
possible criminal prosecution for engaging in a money transaction knowing or in "reckless disregard" of the fact that the funds were derived directly or indirectly from illegal activity. An investigation and prosecution in such circumstances poses Sixth Amendment Right to Counsel as well as Attorney aient Privilege issues. The example, given recent prosecutorial efforts to seek "forfeiture" of attorneys fees paid in drug cases, is not
We note in this context that section 9 of the bill amends Title 18 of the United States Code by adding a chapter dealing specifically with forfeitures. This section provides for both criminal and civil forefeitures of money involved in money laundering, money or property traceable to money laundering, and where this money or property cannot be located or has been
transferred to a third party.
The same Sixth Amendment issues
raised in the context of the current forfeiture statute would be
exascerbated under this legislation.
Applications of this statute could have a "chilling effect"
on protected First Amendment activity. For example, it could be a crime for a candidate to receive money from certain unions if
the candidate should have known that the union was involved in
illegal activity or if leaders of the union had some connection with organized crime figures. could a congressional investigation or a report by the President's Organized Crime Commission about certain union officials or corporate executives
put politicians at peril if they accepted PAC money from them?
Is this statute a potential basis for even more intrusive, even politically motivated versions of Abs cam?
While we would expect federal agencies to use "discretion", it would be wiser to enact a narrow statute which addressed money
laundering through financial institutions perse; one that indeed established a more direct way to investigate and prosecute such schemes than reliance on the Bank Secrecy Act but avoided the potential pitfalls of the Adminstration proposal. We believe this is the ntent of Chairman Hughes in introducing 8.R. 1474 and why
we do not oppose his bill or other bills which make money laundering a crime but leave alone the provisions of the Right to
Financial Privacy Act.
III. Other Crimes
At the outset of our testimony, we described the Administration proposal as a prosecutor's "wish list" rather than a balanced approach to the problem of money laundering. The
first proof of this is the scope of the money laundering crime.
The second is the unnecessary amendment of the Right to Financial
The third is that section 8 of the bill also
establishes a crime of "facilitation" and a new offense of "receiving the proceeds of a crime."
These are crimes of general application and may have sweeping and dangerous applications. We believe the crime of facilitation goes far beyond established concepts of criminal mens rea and is both overbroad and vague. Does a bus company
facilitate a crime by bringing demonstrators to Washington who
are planning to engage in civil disobedience?
Does a hotel
facilitate a crime by making space available to alleged mafia figures who use the facility to plan a crime?
The crime of receiving the proceeds of a crime would punish anyone who received such proceeds knowing or believing the same
has been obtained in violation of law.
ees of E.F.
Button or a defense contractor found to have violated the law
guilty of a crime for taking home their pay checks because they believed the money was derived from illegal activity?
In conclusion, Mr. Chairman, we have today focused our testimony on the Administration bill, H.R. 27 85 and principally on how it would adversely effect bank record privacy. However, We believe the legislation de serves close and broad scrutiny on a
range of issues posed by various other sections of the bill.
As we said at the outset, we believe money laundering is a
problem but that a balanced approach which meets law enforcement
needs without violating civil liberties is necessary. H.R. 2785 is not balanced and constitutes a serious threat to civil liberties. We urge its rejection and that the Congress proceed with more narrowly drawn legislation that indeed strikes a just balance between competing and compelling public interests.