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Chairman St. Germain, Members of the House Subcommittee on Financial Institutions Supervision, Regulation and Insurance: I am pleased to appear before you today to discuss drug trafficking and money laundering.

Before describing the Drug Enforcement Administration's role in money laundering investigations, I would like to briefly explain DEA's role in drug law enforcement.

The Drug Enforcement Administration is responsible for

the investigation of violations of the controlled substances laws, targetting major violators who operate at interstate and international levels. DEA also manages a national narcotics intelligence system in cooperation with Federal, State, local and foreign officials and is responsible for ensuring that legitimately produced pharmaceutical products are not diverted into the illegal drug market. Our criminal investigators and diversion investigators work in offices in the United States and in countries overseas.

In addition, DEA assists and supports other Federal, State, and local agencies and foreign governments with training, crop eradication programs and other

non-enforcement programs designed to reduce the availability

of illicit drugs. Under the policy guidance of the Secretary of State and U.S. Ambassadors, DEA shares responsibility for all programs associated with drug law enforcement counterparts in foreign countries.

The Drug Enforcement Administration acts as liaison with the United Nations, Interpol, and other organizations on matters relating to international narcotics control programs. DEA works closely with the State Department on international liaison, and with the Federal Bureau

of Investigation, the Customs Service, the Coast Guard, and several other Federal agencies on a variety of national and international initiatives, including the seizure and forfeiture of assets derived from, traceable to, or intended to be used for illicit drug trafficking.

Today's drug traffickers are truly international

entrepreneurs and, because of this, international cooperation in investigating cases, obtaining evidence, and coordinating prosecutions is crucial to DEA and Justice Department enforcement efforts. DEA has encouraged bilateral mutual legal assistance treaties, other bilateral agreements, and a number of other cooperative arrangements to provide us with better intelligence and with evidence which might otherwise be unavailable because of bank secrecy laws.

As you have requested, I would now like to expand on the subject of money laundering of drug profits and the Federal Government's seizure and forfeiture of drug assets.

Seizure and Forfeiture of Assets

Financial investigations leading to the seizure and forfeiture of assets are a crucial part of narcotics enforcement. The Comprehensive Crime Control Act of 1984, makes seizure and forfeiture of the profits and assets generated by trafficking in narcotics important weapons in the government's war on drugs.

Because of the enormous profits being reaped by drug traffickers today, the Drug Enforcement Administration has greatly increased its emphasis on programs to separate traffickers from their ill-gotten gains. Experience has shown that regardless of the size of an illegal drug operation, the arrest of an organization's members--or even its leaders--will not necessarily put the operation out of business. There are always associates, lieutenants, or family members ready to continue operations while the boss is in jail--and the boss may even be calling the shots from behind bars.

But, when DEA seizes all of the property belonging to

the leaders of one of these drug operations, the organization is rendered impotent. Whenever we can, we take their cars, airplanes, bank accounts, homes, ranches, racehorses, businesses, stocks and bonds, and everything else that can be legally forfeited to the government.

DEA, the Federal Bureau of Investigation, the Internal Revenue Service, the U.S. Marshals Service, the Organized Crime Drug Enforcement Task Forces, and the Criminal Division of the Department of Justice all cooperate in tracing drug assets and in the use of criminal and civil forfeiture laws, currency and tax laws, and international agreements against tax evasion and money laundering.

DEA and the FBI often initiate the tracing of money and property, and the Internal Revenue Service identifies and investigates individuals who derive substantial income from narcotics trafficking. IRS agents also assist in tracing the movement of funds and the acquisition of assets and they investigate violations of the Bank Secrecy Act, which has criminal penalties for financial institutions and officials who intentionally fail to file or falsify the necessary reporting forms.

Seized cash and the proceeds received from auctioning seized and forfeited property are generally turned over to the U.S. Marshals Service, through its National Asset Seizure and Forfeiture Program, for deposit in the DOJ Asset Forfeiture Fund. Federal law enforcement agencies often use the cars, boats and aircrafts for future law enforcement operations, and state and local agencies frequently share pro rata in all of the assets seized in a cooperative investigation.

In FY-1985, DEA seized cash and other property valued in excess of $250 million and we plan to do more. We are forming and training specialized teams of agents and analysts in many of our division offices--supplemented in some cases by IRS agents and state and local officers. These teams review all of the cases developed in their offices; they identify property, locate it, determine legal ownership, and work with United States Attorneys to effect ultimate forfeiture. The prototype asset removal team in our San Diego office has had outstanding success. As this technique is implemented elsewhere, DEA looks forward to substantial increases in nationwide asset removals.

But while DEA is pleased with the progress of its asset removal program, we are also anticipating that our success will create other problems--in particular, an increase in trafficker efforts to hide assets and launder money.

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