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The bill also provides seizure and forfeiture authority for

currency related to a domestic (CTR) reporting violation or

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interest in property traceable to the currency.

The forfeiture

would not affect bona fide purchasers who took the currency or

property without notice of a reporting violation.


there is forfeiture authority only for monetary instruments

underlying violations of the reporting requirements for internationally transported monetary instruments. The forfeiture would not be applicable to domestic financial institutions

examined by a federal bank supervisory agency or a financial

institution regulated by the Securities and Exchange Commission.

with respect to the other bills before the Committee,

Treasury opposes two provisions in H.R. 1474., Section 3 of
H.R. 1474 would provide that every Bank Secrecy Act reporting

exemption be approved by the Secretary.

Under the current

regulations (31 C.F.R. S 103.22(b)), a bank may exempt from reporting certain cash deposits and withdrawals of accounts

of retail businesses in amounts commensurate with the lawful,

customary conduct of such a business.

The bank has a continuing

duty to monitor the qualifications for such exemptions, and it

would be unwise, in our view, to shift the burden of monitoring

the eligibility of bank customers for exemptions away from the


The bank is in the best position to know its customers and

The provision is accordingly

changes in their status.

inefficient, overly burdensome and unnecessary.



Section 4 of H.R. 1474 would require that every person,

including every financial institution, report all outgoing

international wire transfers.

As discussed above, with respect

to Treasury's new international transaction reporting regula

tions, Treasury already has authority under 31 U.S.C. S 5314 to

require reporting of international wire transfers.


wholesale reporting of international wire transfers would not be

in keeping with the restriction of 5314 that Treasury consider

the need to "avoid burdening unreasonably a person making a transaction with a foreign financial agency." This broad reporting reguirement would create a virtual blizzard of reports,

burdening financial institutions out of all proportion to the

utility of the information generated and would bury the Treasury Department in an avalanche of reporting forms, all but a very few

of which would be unrelated to money laundering.

I would now like to turn to H.R. 4280.

This bill would make

two major changes to the Bank Secrecy Act.

First, it would amend

31 U.S.C. $ 5313 to provide that the Treasury could only require

reporting of domestic currency transactions in excess of $10,000.

As you know, $10,000 is the reporting amount currently under

Treasury regulations.

We disagree strongly with this restriction

on Treasury rulemaking flexibility and the ability to respond to

chang ing law enforcement needs.

There may be instances where the

$10,000 reporting trigger is too high.

For example, we have

discussed various ways to address the smurfing pr lem by regulatory changes. One idea that has been circulated within



Treasury is to require reports at the time of cash purchases of

cashier's checks in excess of $3,000.

This reporting requirement

or similar use of the regulations to address such changing law

enforcement problems would be precluded by H.R. 4280.

Another provision of H.R. 4280 would require a financial

institution to keep special records relating to any cash

transaction in excess of $3,000. Similar proposals have been under discussion within Treasury and within the Department of

Justice as regulatory solutions to the various schemes being used

to avoid the currency reporting requirements. We believe that a regulatory rather than legislative response is appropriate to


hese situations, so

that we

can main

ain the flexibility

to respond to changing law enforcement needs. Moreover, in

considering any proposal that imposes a

new requirement on

financial institutions, we must assess the cost and administra

tive burden to financial institutions in relation to'the

law enforcement interests served.

Another bill introduced by Congressman Wortly provides that

Treasury review all exemptions not less than once a year and "in

any case in which there is a change in management or control of a

financial institution."

As we have discussed above with respect

to H.R. 1474, the annual review of all exemptions is a practical impossibility. However, we would have no objection to the review of exemptions when there is a change in control. We generally

support increased attention to Bank Secrecy Act compliance at the

time of changes in control.



Finally, Mr. Chairman, I want to express my appreciation

for the continuing interest and support that you and the other

members of this committee have demonstrated for Treasury's

administration of the Bank Secrecy Act.

This concludes my prepared remarks.

Mr. Stankey and I would

be pleased to answer any questions the Committee may have.

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Enclosed are our written responses to the questions you posed to me following my testimony on April 17th. I very much appreciated the opportunity to appear before the Committee. Your sustained interest in Bank Secrecy Act enforcement, especially in good quality examination by bank supervisory agencies, is essential to Treasury's Bank Secrecy Act enforcement objectives. If you have any further questions or if Treasury can be of any further assistance with respect to the legislation you are drafting, please do not hesitate to call on me or my staff.



Plank A. Keating, II
Assistant Secretary
( Enforcement)

The Honorable Fernand J. St. Germain
Chairman, Committee on Banking,

Finance and Urban Affairs
United States House of Representatives
Washington, D. C. 20515


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