Lapas attēli
PDF
ePub
[ocr errors][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small]

On April 16, 1986, the Subcommittee on Financial
Institutions Supervision, Regulation and Insurance will begin
hearings on proposals to protect against financial
institutions becoming havens for tax evaders, drug
traffickers and launderers of funds derived from criminal
activity. It is requested that Richard Wassenaar, Assistant
Comm issioner (Criminal Investigation) and Percy P. Woodard,
Jr., Assistant Commissioner (Examination) appear before the
Subcommittee to discuss these matters which are more fully
explained in this letter of invitation.

Mr. Wassenaar should appear before the Subcommittee on Wednesday, April 16, 1986, at 10:00 a.m., and Mr. Woodard should appear before the Subcommittee on Thursday, April 17, at 10:00a.m., in Room 2128 Rayburn House Office Building.

For your information, last year the Subcommittee held three days of hearings on this nation's financial institutions' compliance with the currency and foreign transactions reporting requirements under the Bank Secrecy Act (BSA) and the administrative efforts of the banking regulators to fulfill their responsibilities to enforce such compliance. A major focus of this Subcommittee's attention centered on the Bank of Boston's failure to comply with certain provisions of the BSA which resulted in that institution's plea of guilty to knowingly and willfully violating the law.

At that time, I stated that the Subcommittee was determined to find out how widespread the noncompliance had become and to find out why. Subsequent to the Bank of Boston

-2

hearing, a number of financial institutions, voluntarily and some not came forward "confessing" that they too had violated the law. Since then, information received by the Subcommittee indicates that as of February 14, 198 , 13 banks or holding companies have entered into civil settlements with the Treasury Department and have paid over $10 million in fines. This seems to confirm the Subcommittee's early suspicions that BSA violations are widespread and extremely serious.

In that regard, the Subcommittee will continue to examine efforts undertaken by the Treasury, IRS, and banking regulators to improve their enforcement procedures of the BSA in the series of hearings beginning on April 16. It is my understanding that since March of 1985, the IRS has increased its commitment of staff resources in enforcing the provisions of the Bank Secrecy Act. This increase in commitment includes a greater effort in the processing and computerization of the large increase in currency transaction reports. It is also my understanding that IRS agreed in late 1985 to assume the day-to-day responsibility for reviewing exemptions from CTR reporting requirements and approving special exemptions pursuant to current regulations. The testimony of IRS in these and other related administrative matters would be extremely beneficial to the Subcommittee.

It has become apparent that limiting the Subcommittee's review to BSA provisions, as important as that is, does not fully address the grievous problems that currently exist with respect to criminal elements in our society using financial institutions for tax evasion, drug trafficking, money laundering, and other criminal activity. Therefore, the Subcommittee intends to revisit other banking statutes and to review a number of bills that have been referred to the Banking Committee, which bills are generally referred to as *money laundering" legislation.

In addition, it is important that the Subcommittee have an understanding of the many schemes used by tax evaders, drug traffickers, money launderers, and others. In that regard, it would be most beneficial to the Subcommittee if IRS could provide in its testimony various examples of how these schemes develop, what success the Service has had in combatting these activities, and especially how depository institutions are used to facilitate these schemes.

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

-3

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 the Service might have with respect to the aforementioned Titles that you believe would provide guidance to us in these matters.

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

[blocks in formation]
[ocr errors][ocr errors][merged small][ocr errors][merged small][ocr errors][merged small][merged small][merged small]

On April 16, 1986, the Subcommittee will begin hearings
on proposals to protect against financial institutions
becoming havens for tax evaders, drug traffickers and
launderers of funds derived from criminal activity. It is
requested that Francis A. Keating il, Assistant Secretary
(Enforcement and Operations) appear before the Subcommittee
on Thursday, April 17, 1986, at 10:00 a.m. in Room 2128,
Rayburn House Office Building, to discuss these matters which
are more fully explained in this letter of invitation.

А

As you know, last year the Subcommittee on Financial
Institutions Supervision, Regulation and Insurance held three
days of hearings on this nation's financial institutions'
compliance with the currency and foreign transactions
reporting requirements under the Bank Secrecy Act (BSA) and
the administrative efforts of the banking regulators to
fulfill their responsibilities to enforce such compliance.
major focus of this Subcommittee's attention centered on the
Bank of Boston's failure to comply with certain provisions of
the BSA which resulted in that institution's plea of guilty
to knowingly and willfully violating the law.

At that time, I stated that the Subcommittee was
determined to find out how widespread the noncompliance had
become and to find out why. Subsequent to the Bank of Boston
hearing, a number of financial institutions, voluntarily
and some not -- came forward "confessing" that they too had
violated the law. Since then, information received by the
Subcommittee indicates that as of February 14, 1986, 13 banks
or holding companies have entered into civil settlements with
the Treasury Department and have paid over $10 million in
fines. This seems to confirm the Subcommittee's early

-2

suspicions that BSA violations are widespread and extremely serious.

In that regard, the Subcommittee will continue to examine efforts undertaken by the banking regulators to improve their enforcement procedures of the BSA in the series of hearings beginning on April 16. In accordance with my request of January 14, 1986, the Subcommittee appreciates the written report submitted by Assistant Secretary Reating concerning the activities of the office of Enforcement and Operations to promote the compliance of financial institutions with the provisions of the Bank Secrecy Act. In his testimony on April 17, the Committee would appreciate an update of that report and any additional information which your office deems relevant to the subject matter before us.

It has become apparent that limiting the Subcommittee's review to BSA provisions, as important as that is, does not fully address the grievous problems that currently exist with respect to criminal elements in our society using financial institutions for tax evasion, drug trafficking, money laundering, and other criminal activity. Therefore, the Subcommittee intends to revisit other banking statutes and to review the number of bills that have been referred to the Banking Committee, which bills are generally referred to as *money laundering" legislation.

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).

Your response to the following questions and any other comments you feel are pertinent to the issues raised would be appreciated. Title I (Supervisory Authority Over Depository Institutions)

In 1978 Congress gave banking regulators authority to impose civil money penalties for violations of laws, rules and orders. The new authority gave the agencies the flexibility they needed to impose penalties on individuals or institutions for violations which did not rise to a criminal violation.

[ocr errors]
« iepriekšējāTurpināt »