money laundering in the casinos or other areas of endeavor, we will enjoy the same support. The gentleman from Michigan. Mr. SAWYER. Yes, thank you, Mr. Chairman. I want to join you in welcoming the witnesses here today to discuss the Currency and Foreign Transaction Reporting Act Amendments in the President's Comprehensive Crime Control Act of 1983. These amendments provide us with important tools to enable Federal law enforcement officials to reduce money laundering in this country and beyond our borders. The large amount of money laundering taking place today is unacceptable. The movements of large amounts of unreported cash results in highly profitable drug trafficking, organized crime endeavors, tax evasion, and other crimes that negatively impact all Americans. I have become convinced that the way to reduce highly profitable crimes like drug trafficking is to remove the profits from these criminals. Taking the profit out of crime is the key to the proposals before us today. It is also the heart of forfeiture reform, which the chairman and I both support. For this important reason, these proposals will go a long way in reducing money laundering and, therefore, in reducing other profitable crimes. I commend the chairman for moving this important portion of the President's Comprehensive Crime Control Act. Mr. HUGHES. Thank you. The Subcommittee on Crime is pleased to welcome once again. Robert E. Powis and John C. Keeney. If you would come forward and take seats at the witness table, we would appreciate it. Bob Powis is the Assistant Secretary of the Treasury for Enforcement and a frequent witness before this subcommittee. He was named to this position in June 1981, after having served as a special agent in the U.S. Secret Service for some 26 years. He has held numerous positions of responsibility in the field and in Secret Service headquarters. He has had a most distinguished career. John Keeney is a Deputy Assistant Attorney General in the Criminal Division of the U.S. Department of Justice. He has been an attorney on the staff of the Department since 1951, working in the Criminal Division. He was named Deputy Assistant Attorney General in 1973 and, likewise, has had a most distinguished career in public service. Gentlemen, I want to again express my regret that we were not able to get a quorum earlier on and I appreciate your indulgence so that we could get out the resolution for the President's Crime Commission. We have your prepared text, which will be made a part of the record in full, and you may proceed as you see fit. Why don't we start with you, Mr. Keeney. TESTIMONY OF JOHN KEENEY, DEPUTY ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, ACCOMPANIED BY CHARLES W. BLAU, CHIEF, NARCOTICS AND DANGEROUS DRUG SECTION, CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE; AND ROBERT E. POWIS, DEPUTY ASSISTANT SECRETARY (ENFORCEMENT), U.S. TREASURY DEPARTMENT Mr. KEENEY. Mr. Chairman, I would like to offer my statement for the record and just briefly comment. The need for the legislation that is before the subcommittee has been demonstrated, both in your statement, Mr. Chairman, and Mr. Sawyer's statement. It has been demonstrated most graphically in the last few days in the extensive arrests we have made involving narcotic trafficking and money laundering in New York, Detroit, the southern part of the United States and various other areas where additional indictments, I assume, will be returned. The problem is a serious one. All of the proposals that are before the committee would be helpful in enabling us to more effectively enforce the Bank Secrecy Act and to cut down on money laundering. Mr. Chairman, you have outlined the various provisions. As I say, some of them are more important than others, but all of them are important. I would like, if I may, just to address one of them-the Customs search authority-and then I will be perfectly agreeable to answering any questions the committee may have with respect to any of these provisions. As I say, I think all of them would be useful and helpful. Now, the Customs search authority is a clarification which we think would be very useful. It would explicitly authorize Customs officers to conduct warrantless searches of persons and property where there is reasonable cause to believe that monetary instruments are unlawfully being brought into or taken out of the United States. Currently, the Bank Secrecy Act provides that the Secretary of the Treasury may apply for a warrant to search for monetary instruments where there is probable cause to believe that such monetary instruments are being transported in violation of the reporting requirements. The requirement of a warrant supported by a traditional probable cause standard is a very impractical requirement in the context of searches of incoming and outgoing travelers and vastly reduces the ability of Customs authorities to effectively enforce the act. Moreover, Mr. Chairman, as you well know, these requirements are plainly in excess of the established fourth amendment principles. The amendment to be added by section 901(d) would not confer the full scope of constitutionally permissible authority on Customs agents to search travelers for illegally transported monetary instruments on a routine basis. We do not seek such broad authority, or such a broad amendment, because we do not believe that such authority is necessary for effective enforcement. Rather, the amendment is designed to provide authority to conduct such searches only where there is reasonable cause to believe that travelers are carrying monetary instruments in violation of the Bank Secrecy Act. Such an amendment with respect to border searches in cases involving currency offenses would, in our view, strike a proper balance between privacy concerns and the interest of law enforcement. The other provisions-with respect to rewards, increased penalties, laundering a RICO predicate offense, allowing wiretapping with respect to money laundering offenses-are all amendments we support. The Department of Justice supports all of them, Mr. Chairman, and we believe that the passage by the House of this legislation would revolutionize the ability of law enforcement to enforce the Bank Secrecy Act and to convict major organized crime and controlled substance violators who engage in illegal money laundering activities. Mr. Chairman, that concludes my remarks. I would be delighted to try to answer any questions. [The statement of Mr. Keeney follows:] STATEMENT OF JOHN C. Keeney, Deputy Assistant ATTORNEY General, Criminal DIVISION Mr. Chairman and Members of the Subcommittee. I appreciate the opportunity to present the views of the Department of Justice on the Bank Secrecy Act amendments contained in Titles IX and XII of S. 1762, the Comprehensive Crime Control Act of 1984. I speak today in support of several provisions of the bill dealing with amendments to Titles 18 and 31 of the United States Code designed to improve our efforts to stem the illicit flow of currency involved in drug trafficking and money laundering. Since the enactment in 1970 of the Bank Records and Foreign Transaction Act (Pub. L. No. 91-508), the so-called Bank Secrecy Act has received an increasing amount of attention from the federal law enforcement community. Only in the last few years, however, has the Currency and Foreign Transactions Reporting Act (Title II of the larger Act) been used to such an extent that the shortcomings in the reporting requirements could be clearly seen. On the basis of the experience with the laws in recent years, several law enforcement agencies have proposed that certain substantive amendments be made to the foreign and domestic financial transaction reporting sections of the Bank Secrecy Act. These proposed amendments stem from the recognition that the Bank Secrecy Act has failed to fully achieve the effect which Congress envisioned it would have: curtailing the use of secret foreign bank accounts to facilitate tax and regulatory violations, and halting the flow of illegally derived currency in and out of the United States. To the contrary, we believe that billions of unreported dollars go to offshore havens each year and are hidden from the Internal Revenue Service. Moreover, despite the export/import reporting requirements, many criminals either have traveled to foreign countries with hidden cash or have laundered their currency with minimal risk and total impunity. Since the late 1970s, however, the government has more actively enforced the reporting provisions of Title 31 of the United States Code. As part of its efforts to curb the laundering of money by major drug traffickers, government investigators and prosecutors have moved against Florida banks which routinely had accepted large amounts of cash without filing the required reports. The Treasury Department tightened its regulations which permitted banks to exempt some of their customers from the reporting requirements. Later, the government took steps to enforce the foreign financial transaction reporting requirements. Throughout the United States, federal law enforcement authorities identified and prosecuted private money launderers who laundered large amounts of unreported currency. This resulted in the indictment of several drug dealers, couriers, and money launderers. Notwithstanding these efforts, large amounts of unreported currency have been exported and imported annually. Three reasons have been offered for the present limited effectiveness of the reporting requirements: (1) deficiencies in the regulations which have been promulgated to implement the Bank Secrecy Act; (2) lack of coordination and cooperation among the various law |