Administration's bill eliminates the reference to a "series of

transactions" because such a phrase makes the inclusion of

multiple counts in an indictment more difficult and may allow

certain money launderers to escape deserved punishment by casting several different crimes as but one.

Fifth, the Administration's bill, would reach money

laundering through wire transfers, whereas H.R. 1367 and H.R. 1945 would not. This is a potentially serious omission in light of the use of wire transfers in sending unlawfully obtained money out of the country and returning it thereafter.

In our

Finally, the Administration's bill contains forfeiture and civil penalty provisions while H.R. 1367 and H.P. 1945 do not. Turning now to H.R. 1474, this bill also provides, in Section 2, for a new money laundering offense in Title 18. It would proscribe the engaging or attempting to "engage in a financial transaction in criminally derived property." view, this provision suffers from some of the same problems as are found in the money laundering provisions in H.R. 1367 and H.R. 1945. The offense would be limited to laundering money through financial institutions which are too restrictive because it excludes money laundering through other types of businesses. Moreover, the definition of "financial transactions" limits the term to "the deposit, withdrawal, transfer, or exchange of funds or a monetary instrument, (as defined for the purposes of subchapter II of Chapter 53 of Title 31) by, through, or to a financial institution." This may well exclude such transactions as the purchase of stock in a bank, or the placing of funds in

escrow as collateral for a loan, both of which are possible ways

to launder money. In addition, the offense would be limited to laundering money derived from offenses that are predicate offenses for a violation of the RICO statute. As mentioned previously, this may well cover most common offenses that

generate "dirty money,' but it leaves out some others that should

be included.

Sections 3 through

of H.R. 1474 make changes in the Bank Sections 3, 4, and 5, are of primary

Secrecy Act in Title 31. concern to the Treasury Department but I would briefly note that Section 3 would amend 31 U.S.C. $5318 to provide that exemptions to the reporting requirements under the Bank Secrecy Act must be approved by the Secretary of the Treasury. Under current law the banks themselves may grant exemptions. Section 4 would amend 31 U.S.C. $5316 (a) (1) to require the reporting to the Treasury Department of wire of electronic fund transfers of $10,000 or more into or out of the United States. The present law only requires the reporting of the transporting of monetary instruments into or out of the United States and does not reach electronic fund transfers. Section 5 would amend Section 5318 of Title 31 to require the bank supervisory agencies to which the Secretary of Treasury has delegated duties and powers under the Bank Secrecy Act to look for violations of that Act every time they make a regular audit or inspection.

We have no objection to these provisions on their face although it is our understanding that requiring reports of all

foreign wire transfers of funds of $10,000 or more would present difficult practical problems that may not be justified.

However,

we think that even greater changes in the Bank Secrecy Act are needed than those in Sections 3 through 5 of H.R. 1474. Specifically, we believe that the Secretary of the Treasury should be given authority to issue a summons to financial institutions or persons having custody of the records required to be kept under the Bank Secrecy Act requiring them to give testimony and to produce documents relevant to the civil enforcement of the Act. needs to be revised to allow the Treasury Department to share more efficiently the information it obtains in reports filed under the Act with other federal and state law enforcement agencies, to increase civil penalties for violations of the Act, and to clarify the definitions of certain terms used in the Act. In short, the Administration favors the more comprehensive approach taken in its bill to the provisions in Sections 3 through 5 of H.R. 1474 and to the Title 31 amendments made in H.R. 1367 and H.R. 1945.

Moreover, as stated before, the Act

As for Section 6 of H.R. 1474, this section is now

unnecessary.

Prior to the passage of the Comprehensive Crime Control Act of 1984, 31 U.S.C. $5316 (a) punished one who "transports or has transported monetary instruments" of a certain

amount into or out of the United States without filing a

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report.

9/

There was no attempt provision and the prosecution of persons discovered with large amounts of undeclared currency about to board departing international flights was often

difficult.

Courts had drawn fine lines as to the particular

point at which the provision was violated, with some holding that no violation could be found until the person with the currency was on the verge of boarding the plane or other mode of transportation at the final call for departure (at which point apprehension was often difficult) even though the person had falsely stated to a Customs Officer some time earlier that he was not transporting more than the reportable amount. Section 901(c) of the Comprehensive Crime Control Act added an attempt provision to 31 U.S.C. $5316 (a), thus overcoming this problem.

Section 6 of H.R. 1474 would replace the new attempt provision and make the subsection reach one who "transports, is about to transport, or has transported" unreported monetary instruments of $10,000 or more. In our view, while such a change would probably not lessen our ability to reach the conduct now covered by the attempt provision, it is simply not necessary to replace this provision, which sets out a familiar concept applied in a number of circumstances, with the unique phrase "about to transport" which may well cause needless litigation.

9/

Under the old law, reports were required whenever a person transported $5,000 or more. The Comprehensive Crime Control Act raised the amount for which reports would be required to $10,000

or more.

Recent

I would also like to point out, Mr. Chairman that in spite of the successes that United States law enforcement agencies have achieved in the war against drug trafficking and its close partner in crime, money laundering, through the use of the Bank Secrecy Act, its inherent limitations and the limitations imposed by some provisions of the Right to Financial Privacy Act, were such that we are falling short in providing law enforcement with the right weapons to use against money laundering. appellate court decisions have dealt a severe blow to our efforts in using the reporting requirements of the Bank Secrecy Act to identify money launderers. The United States v. Anzalone decision by the United States Court of Appeals for the First Circuit issued July 1, 1985, (766 F.2d 676) reversed a conviction based on the government's theory of the illegality of "structuring" separate currency transactions of less than $10,000 to defeat the filing requirements of the Bank Secrecy Act. "Structuring" as used by the government in criminal prosecutions under Title 31 of the United States Code, consists of breaking up a single currency transaction of more than $10,000 into separate smaller transactions in order not to trigger the CTR filing

requirements.

More recently, two other Courts of Appeals and one District Court have partially or entirely followed in the First Circuit's footsteps and reversed convictions for "structuring." 10/ All

10/ See attached list of cases with a short summary of the Court's ruling.