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Bartimo, Frank A., Assistant General Counsel, Manpower and Reserve Af-
fairs, Department of Defense......-
Desch, Carl W., senior vice president, First National City Bank of New
York, on behalf of the New York Clearing House Association, accom-
panied by Roy C. Haberkern, Jr., Milbank, Tweed, Hadley & McCloy;
and Henry Harfield, Shearman & Sterling.
Dwinell, Lane, Assistant Administrator for Administration, Agency for
International Development, accompanied by Daniel Cohen, Special
Assistant to Chief, Financial Review Division; Leslie A. Grant, Deputy
Counsel; and Robert R. Parker, former attaché and chairman of the
Irregular Practices Committee, American Embassy, Saigon, Vietnam.

Leval, Pierre, former chief attorney, appellate division, southern district

of New York..

Morgenthau, Robert N., U.S. Attorney for the southern district of New

York..

Pollack, Irving M., Director. Division of Trading and Markets, Securities
and Exchange Commission, accompanied by Stanley Sporkin, Associate
Director; Ira H. Pearce, Special Counsel; and Allan S. Mostoff, Asso-
ciate Director, Division of Corporate Regulation _ _ _

Rossides, Hon. Eugene T., Assistant Secretary of the Treasury for Enforce-

ment and Operations, accompanied by Roy T. Englert, Deputy General

Counsel; Robert T. Cole, Special Assistant for International Tax Affairs;

Michael Bradfield, Assistant General Counsel; and Ira Tannebaum,

attorney..

Rossides, Hon. Eugene T., Assistant Secretary of the Treasury for En-

forcement and Operations, accompanied by William Dickey, Deputy

Assistant Secretary; and Robert T. Cole, Special Assistant for Inter-

national Tax Affairs..

Somer, Clifford C., vice president, American Bankers Association, accom-
panied by William Heffelfinger, staff representative, American Bankers
Association..

Thrower, Hon. Randolph W., Commissioner, Internal Revenue Service,

accompanied by Leon C. Green, Deputy Assistant Commissioner for

Compliance; Bernard Meehan, Staff Assistant in Compliance; and Paul

Peppler, Coordinator, Intelligence Division_.

Williford, Frederick L., executive vice president, National Microfilm Asso-
ciation, accompanied by Jerry P. Smith, marketing coordinator, financial
markets, Business Systems Markets Division, Eastman Kodak Co.,
Rochester, N. Y.; and Art Spaulding, staff assistant to the vice president,
engineering, Business Equipment Group, Bell & Howell Co., Chicago,

Ill
Wilson, Hon. Will, Assistant U.S. Attorney General_

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316

119

175

312

340

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American Bankers Association, comments on Treasury Department's
recommendations on H.R. 15073___

335

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Committee of Foreign-Owned Banks, comments on bank secrecy legisla-
tion, H.R. 15073, and related proposals..

Desch, Carl W., commentary on H.R. 15073..
Eastman Kodak Co., report of the use of microfilm in maintaining records:
Charts showing technical equipment with explanatory data in the
use of microfilm for records..

"Eastman Kodak Division Helps Banks To Find Needle in a Hay-
stack of Corporation Dividend Checks," article from the American
Banker....

Page

371

322

343

351

"Microfilming Safeguards

"Improving the Proof-Transit Operation," article by Arthur Van
Vlissingen..
Audits Bank Network,'
"article by

352

W. D. Sullivan, vice president of administration, Seattle First
National Bank.

349

164

368

Kennedy, Hon. David M., Secretary of the Treasury, letter to Hon.
Wright Patman, dated January 13, 1970___

National Association of Securities Dealers, Inc., statement of ---
Documents pertaining to SEC's litigation with Investors Overseas
National Association of Supervisors of State Banks, statement of...
New York Clearing House:

Comments on the testimony of Robert M. Morgenthau on H.R. 15073_
Comments on Treasury Department statement on H.R. 15073------
Patman, Hon. Wright:

Advertisement of "Swiss Credit Bank," from the Wall Street Journal,
February 9, 1970_.

"American Seized in Netherlands in Plot on HRA," article from the
New York Times, January 15, 1969_.-

Comparison of Internal Revenue Service testimony, excerpts of
formal and draft statements..

Copies of four checks stolen and forged from the Human Resources
Agency, New York, N. Y., that were deposited in a bank in Switzer-
land..

"Errors and Omissions," editorial from New York Times, February
26, 1970

"Eight Indicted in Alleged Plot To Defraud United States Through
Use of Swiss Bank Accounts," article from the Wall Street Journal,
February 26, 1970_.

Letter from Hon. David M. Kennedy, Secretary of the Treasury,
dated January 13, 1970, with an attached letter from Hon. Eugene
T. Rossides, Assistant Secretary of the Treasury, dated Janu-
ary 20, 1970..

Letter from Hon. Eugene T. Rossides, dated February 9, 1970-
Letter to Hon. David M. Kennedy, Secretary of the Treasury, dated
December 30, 1969--

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334

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31

173

29

156

157

164

88

164

Letters to Hon. Eugene T. Rossides, dated:

February 2, 1970...

166

February 10, 1970_.

89

"Report by January 31, United States Directs HRA" article from
the New York Times, January 17, 1969-

32

Staff Report on Investors Overseas Service (IOS) and its use of secret
financial facilities___

181

State Department telegram approved by Hon. Eugene T. Rossides,
Assistant Secretary of State in regard to Mutual Judicial Assistance
Treaty with Switzerland..

86

"Top Swiss Court Lets U.S. Look at Bank Files," article from the
Washington Post, February 28, 1970----

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Approval of State Department telegram in regard to Mutual Judicial
Assistance Treaty with Switzerland..

Letters to Hon. Wright Patman:

January 20, 1970

February 9, 1970..

Schoch, Dr. M. Magdalena, report entitled, "Swiss Banks and Secrecy
Laws".

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FOREIGN BANK SECRECY AND BANK RECORDS

THURSDAY, DECEMBER 4, 1969

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met, pursuant to notice, at 9:15 a.m., in room 2128, Rayburn House Office Building, Hon. Wright Patman (chairman), presiding.

Present: Representatives Patman, Barrett, Sullivan, Reuss, Moorhead, Stephens, St Germain, Gonzalez, Minish, Hanna, Gettys, Annunzio, Rees, Galifianakis, Bevill, Griffin, Hanley, Brasco, Chappell, Widnall, Halpern, Clawson, Stanton, Blackburn, Brown, and Williams.

Chairman PATMAN. The committee will please come to order.

Mr. Morgenthau and Mr. Wilson, you may come around and take the witness stand, if you will, please; and Mr. Leval, will you come forward, please.

This morning we begin hearings on H.R. 15073, a bill to amend the Federal Deposit Insurance Corporation Act to authorize the Secretary of the Treasury to issue regulations requiring the maintenance of certain records by commercial banks. Further, the bill requires the filing of reports and maintenance of records pursuant to regulations issued by the Secretary, by those who do business with foreign financial institutions in jurisdictions with bank secrecy laws. (The text of H. R. 15073 follows:)

[H.R. 15073, 91st Cong., first sess.]

A BILL To amend the Federal Deposit Insurance Act to require insured banks to maintain certain records. to require that certain transactions in United States currency be reported to the Department of the Treasury, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

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101. Retention of records by insured banks.

Section 101. Retention of records by insured banks

The Federal Deposit Insurance Act is amended (1) by redesignating sections 21 and 22 as 22 and 23, respectively, and (2) by inserting the following new section immediately after section 20:

"SEC. 21. (a) The purposes of this section are (1) to facilitate the supervision of the business of banking, (2) to aid duly constituted authorities in lawful investi

(1)

gations, and (3) to prevent the premature destruction of certain types of evidence having a high degree of usefulness in the establishment of civil and criminal liabilities.

"(b) The Secretary of the Treasury (referred to in this section as the 'Secretary') shall prescribe such regulations as he may deem appropriate to carry out the purposes of this section.

"(c) Each insured bank shall maintain such records and other evidence as the Secretary may require of the identity of each person having an account with the bank and of each individual authorized to sign checks, make withdrawals, or otherwise act with respect to any such account.

"(d) Each insured bank shall make, in accordance with the regulations of the Secretary,

"(1) a photocopy or other copy of each check, draft, or similar instrument drawn on it and presented to it for payment.

"(2) a record of each check, draft, or similar instrument received by it for deposit or collection, together with an identification of the party for whose account it is to be deposited or collected.

"(e) Whenever any individual engages (whether as principal, agent, or bailee) in any transaction with an insured bank which is required to be reported under the Currency and Foreign Transactions Reporting Act, the bank shall require and retain such evidence of the identity of that individual as the Secretary may prescribe as appropriate under the circumstances.

"(f) In addition to or in lieu of the records and evidence otherwise referred to in this section, each insured bank shall maintain such additional records and evidence as the Secretary may prescribe to carry out the purposes of this section. "(g) Any type of record or other evidence required under this section shall be retained for such period as the Secretary may prescribe for the type in question." CHAPTER 2-UNINSURED BANKS

Sec.

121. Congressional findings.

122. Authority of Secretary.

123. Injunctions.

124. Civil penalties.

125. Criminal penalty.

126. Additional criminal penalty in certain cases.

Sec. 121. Congressional findings

The Congress makes the following findings:

(1) Banks not insured by the Federal Deposit Insurance Corporation (referred to in this chapter as "uninsured banks") constitute a legally significant component of the banking industry in the United States.

(2) Uninsured banks make use of the means and instrumentalities of interstate commerce and directly affect such commerce.

(3) The regulation by the Federal Government of the banking industry is necessary and proper in order to carry into execution the power of Congress to regulate the value of money.

(4) In order to effectively regulate the banking industry' and to effectuate the purposes set forth in section 21 of the Federal Deposit Insurance Act, it is necessary and proper to confer upon the Secretary of the Treasury the authority to impose recordkeeping requirements on uninsured banks as provided in section 122 of this chapter.

Sec. 122. Authority of Secretary

The Secretary may by regulation require any type of uninsured commercial bank, trust company, or savings bank:

(1) To make such reports as the Secretary may require in respect of its ownership, control, and management and any changes therein.

(2) To require, retain, or maintain any records or other evidence of any type which the Secretary is authorized under section 21 of the Federal Deposit Insurance Act to require insured banks to require, retain, or maintain.

(3) To permit the Secretary to have access to and to obtain copies of any material referred to in paragraph (2) of this section.

(4) To maintain procedures to assure compliance with this chapter. For the purposes of any civil or criminal penalty, a separate violation of any requirement under this paragraph occurs with respect to each day and each separate office, branch, or place of business in which the violation occurs or continues.

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