Lapas attēli

It could be a whole host of criminal activity that we would be seeking to halt.

I would just say to you if you could suggest to us some additional ways that we could notify the business community so that they could never have the opportunity to say, "Well, they weren't sure.

I know that is not a clear defense of the law, but I think probably the community at large may be willing to give them a second chance.

Chairman PICKLE. Would the gentleman yield?


Chairman PICKLE. When we made amendments to the 1988 drug program and section 60501 was amended, it made it clear that the imposed penalties were for causes or attempts to cause a business not to file a return or to file a return that contains a material omission or misstatement.

These amendments imposed penalties on persons who were engaged in business who caused a customer to structure a transaction to avoid reporting.

The intent also is to say to the purchaser that the same obligation goes to that individual who would also be guilty of violation of the law.

Mr. Anthony, I am going to make some suggestions at the end of the hearing today, recommendations by the staff to our committee for corrections in the law.

We will be asking Treasury and IRS their position on some of these matters, but it is an area I think we must go forward in this testimony to see what we can do to correct it.

I thank you very much, Mr. Arnold and the staff. You have done a good job.

Mr. Gomez and Ms. Jackson, we appreciate the excellent investigatory work that you have conducted.

It has been very valuable to us and we thank you both.

Now we will ask the U.S. Department of the Treasury if they would come forward.

We have Mr. Peter Nunez, who is Assistant Secretary for Enforcement, accompanied by Amelia Gomez and Shelley Altenstadter.

We also appreciate the cooperation of Mr. Navera in making it possible for us to go forward with this testimony today.

Mr. Nunez is Assistant Secretary for Enforcement. Ms. Gomez is Special Advisor to the Director of the Office of Financial Enforcement; and Shelley Altenstadter is the Deputy Director of the Financial Crimes Enforcement Network.


Mr. NUNEZ. Thank you, Mr. Chairman and members of the committee. I would like to thank you for this opportunity to testify about Treasury's role in the fight against money laundering and

the criminal enterprises that it sustains. I have submitted a lengthy statement which I ask you to be submitted for the record. As you indicated, seated to my right is Shelley Altenstadter, the Deputy Director of the Treasury, Financial Crimes Enforcement Network, and to my left is Amelia Gomez, Special Adviser to the Office of Financial Enforcement and former Deputy Director of that office. Ms. Altenstadter will follow my remarks with a discussion of the mission and operations of the FinCEN. As the chairman had indicated Mr. Brian Bruh, the Director, and Amy Rudnick, the Director of the Office of Financial Enforcement were unable to attend today because of their religious objections and I appreciate the committee's willingness to allow them to submit written statements if they wish.

Secretary Brady and Deputy Secretary Robson have placed money laundering at the forefront of Treasury's enforcement priorities. We recognize that it is in the area of antimoney laundering activities that Treasury can make our most significant contribution to the war on drugs.

Money laundering is a complex economic crime that demands a thorough understanding of how financial institutions and other businesses operate in order to prevent their abuse. Treasury brings to the problem the perspective of a law enforcement agency, a financial institution regulatory agency, and the agency concerned with the overall condition of our domestic and international financial systems.

We understand law enforcement concerns. We also appreciate the necessity of balancing law enforcement needs with other legitimate considerations such as the cost of enforcement measures to financial institutions and other businesses and issues such as financial and taxpayer privacy. Achieving the appropriate balance is a challenge shared by the administration and Congress as we seek solutions to this problem.

Experience has taught us that significant progress can only be made against drug trafficking, and the money laundering that fuels it, by painstaking, sophisticated financial analysis on our part. In this way, we can uncover the tangled web of financial dealings of drug and other criminal organizations so that we might deprive the organizations of their ill-gotten gains. Given the international character of drug trafficking and money laundering, this analysis cannot stop at any border, but depends upon the active and willing cooperation of other countries committed to equally stringent antimoney laundering measures.

Treasury's antimoney laundering program can be characterized as following three related tracks-criminal investigation, collection and analysis of data in support of money laundering and other financial crimes, and promotion of international cooperation.

First Treasury shares with the Justice Department and the Postal Service investigatory authority for the crime of money laundering. Treasury's authority is exercised by delegations from my office to IRS, Customs, the Bureau of Alcohol, Tobacco and Firearms and the Secret Service.

The U.S. Customs Service and the Internal Revenue Service also have been delegated authority to investigate criminal violations of

the Bank Secrecy Act, which are directly indicative of money laundering activity.

Customs and IRS have developed unparalleled expertise in financial investigations which make them essential players in major Federal money laundering investigations.

Second, Treasury performs a unique data collection and financial analysis function built on the foundation of the Bank Secrecy Act. This reporting and recordkeeping requirements of the Bank Secrecy Act assist in identifying criminal organizations by creating a paper trail to trace money back to illegal sources of funds. The currency reporting system has become an essential component of the U.S. financial enforcement program against money laundering, tax evasion and other criminal activity. It is relied upon by law enforcement agencies, not just to target suspicious activity, but to further ongoing investigations, prosecutions, and forfeiture actions in a variety of ways.

Under my responsibility, the Office of Financial Enforcement is responsible for Bank Secrecy Act enforcement and compliance.

Treasury has delegated responsibility for examination for compliance with the Bank Secrecy Act to the regulatory agencies according to the types of institutions they examine.

The key function of analysis of information reported under the Bank Secrecy Act now rests within FinCEN which also reports directly to the Assistant Secretary for Enforcement. FinCEN was established within Treasury, at Secretary Brady's initiative and with the support of the Office of National Drug Control Policy. Its mission is to provide a multi-source data access and financial analysis service to Federal, State, local and foreign law enforcement to assist in the investigation and prosecution of money laundering and other crimes. FinCEN will muster our resources in an efficient and effective way as we pair off against that most ingenious category of criminals, the money launderers.

The third major aspect of the Treasury money laundering program is international cooperation. Drug money laundering is a global problem that demands global solutions if we are to make meaningful progress. Therefore, Treasury is working on a number of initiatives to further our goals of forging a worldwide network of countries linked together with a common resolve to take effective measures against domestic and international money laundering.

The committee has asked Treasury to address the issue of reporting under section 60501 of the Internal Revenue Code. Since 1984, that section has required trades or businesses other than financial institutions subject to the Bank Secrecy Act to report cash received over $10,000 to the Internal Revenue Service. Similarly, under the Bank Secrecy Act domestic financial institutions must file Currency Transaction Reports on all currency transactions by, through, or to the institution in excess of $10,000. The reports under section 60501 are filed on IRS form 8300. These reports have utility far beyond tax enforcement and are of comparable interest to law enforcement as Currency Transaction Reports, especially in drug and drug money laundering cases.

The premise of all currency reporting, whether under 60501 or under the Bank Secrecy Act, is that large expenditures of cashwhether in financial institution deposits or purchases of goods and

services are frequently indicative of illegal activity. A cash transaction can be a helpful means for law enforcement in any number of ways. For instance, the information can be used to identify unknown targets or to help identify assets for forfeiture against known targets.

Currency transaction reports and other reports filed under Bank Secrecy Act are available for tax, regulatory and criminal investigations and proceedings. My office has issued detailed dissemination guidelines to ensure the proper use and dissemination of this sensitive financial data. Pursuant to these guidelines dissemination can be made upon written request by Federal, State and local, and foreign law enforcement authorities under appropriate circumstances. They are also available for regulatory and civil as well as for criminal enforcement purposes. Most important, the information is subject to analysis by FinCEN, which by applying a variety of analytical methods, including artificial intelligence, can identify possible targets for criminal violations as well as areas of possible noncompliance with the reporting requirements.

Because of the disclosure restrictions of section 6103 of the Internal Revenue Code, however, the 8300 reports have not been analyzed and disseminated to the same extent as currency transaction reports in the past. Prior to the Anti-Drug Abuse Act of 1988, 8300 information was unavailable to law enforcement for analytical purposes and was only available to Federal law enforcement agencies for nontax administrative purposes through the judicial proceeding of section 6103(i)(1) based on a name-specific request. At the administration's urging, an amendment was included in the 1988 drug bill adding section 6103(i)(8) to section 6103. Section 6103(i)(8) authorizes disclosure to Federal agencies for criminal enforcement purposes and was enacted with a 2-year sunset provision. We are pleased that the full committee has agreed to our request that this authority be extended for another 2 years through a provision in the pending crime bill, H.R. 5269.

The 1988 amendment means that, subject to IRS approval, Federal law enforcement agencies can have access to 8300 information through the IRS for criminal cases without recourse to a judicial proceeding and further that Treasury, through FinCEN, will be able to analyze the information and provide the results of our analysis to other Federal law enforcement agencies for action. However, State and local or foreign law enforcement agencies still cannot have access, nor can Federal or other agencies use it to pursue purely civil remedies.

Treasury has long been of the view that the disclosure of information collected in tax documents needs to be strictly limited. Treasury's support of special disclosure rules for form 8300 reports is based on the fact that such reports are very different from other tax documents and are comparable in purpose and use to the reports filed under the Bank Secrecy Act. What distinguishes a form 8300 report is that, unlike other tax documents or information returns, it provides information only with respect to a transaction that by its nature is suspect. Accordingly, it must be made clear that any special disclosure rules for form 8300 reports should not be viewed as precedent for broader exceptions to the general policy of nondisclosure of tax documents.

Chairman PICKLE. Mr. Nunez, if that is the case, what good will the form 8300 do for you? You said it was just an item for suspects, but you cannot use it for everything else. Should it be corrected? Mr. NUNEZ. We will address that, Mr. Chairman, yes, sir.

Chairman PICKLE. Are you recommending that we should change form 8300?

Mr. NUNEZ. We think there are changes that should be made in the disclosure portions.

Chairman PICKLE. Are you making recommendations to us for those changes.

Mr. NUNEZ. We are about to make that recommendation now, yes, we are.

Chairman PICKLE. You are in the process of doing it as of now? Mr. NUNEZ. Yes, sir.

Chairman PICKLE. There is a possibility that this has been transferred under the FinCEN Program, as recommended by Secretary Brady. But there has been no action. I don't want to interrupt your testimony, but have you actually convicted people under form 8300, you or agencies connected with our Government? Have any suits been brought because you have used form 8300 which was a disclosure used in cash?

Mr. NUNEZ. Mr. Chairman, we would defer to IRS on that. We have some information I can provide you. It is difficult for IRS to differentiate the prosecutions and

Chairman PICKLE. We have talked about IRS, but I have to assume you don't know of any case where the suit has been brought and has resulted in a conviction?

Mr. NUNEZ. Not specifically, not that I know of. I know there have been some indictments, including one recently here in the Washington area.

Chairman PICKLE. You said you referred to to the IRS. In your testimony you say you did in 1988 subject this to IRS approval and that you can now use this 8300 without some kind of a judicial permission being given for the tax information. But even though you have, no case has been prosecuted on it.

It seems to me like you have the authority, but nothing has been done.

Mr. NUNEZ. Well, the authority has been given to IRS to share. I think the 8300 information has been made available to several other law enforcement agencies which have used it, but I cannot tell you the number of cases that specifically resulted in 8300 prosecutions.

Chairman PICKLE. Go ahead with your testimony.

Mr. NUNEZ. To accommodate both law enforcement needs and the general policy of nondisclosure of tax documents, we believe the subcommittee should consider, after reviewing all the ramifications, removing cash reporting provisions from sections 60501, 6103, and 6721 and creating a separate chapter under title 26 for reporting for money laundering enforcement purposes.

We envision that the authority under this new chapter would be administered in a manner similar to the administration of the authority of the Bank Secrecy Act and would be delegated from the Secretary through the Office of the Assistant Secretary for En

« iepriekšējāTurpināt »