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General Instructions

This report is required by Treasury Department regulations (31 Code of Federal Regulations 103).

Who Must File. Each person who physically transports, mails, or ships, or causes to be physically transported, maited, shipped or
received currency or other monetary instruments in an aggregate amount exceeding $5,000 on any one occasion from the United
States to any place outside the United States, or into the United States from any place outside the United States.

A TRANSFER OF FUNDS THROUGH NORMAL BANKING PROCEDURES WHICH DOES NOT INVOLVE THE PHYSICAL
TRANSPORTATION OF CURRENCY OR MONETARY INSTRUMENTS IS NOT REQUIRED TO BE REPORTED.
Exceptions.-The following persons are not required to file reports: (1) a Federal reserve bank, (2) a bank, a foreign bank, or a broker
or dealer in securities in respect to currency or other monetary instruments mailed or shipped through the postal service
or by common carrier, (3) a commercial bank or trust company organized under the laws of any State or of the United States with
respect to overland shipments of currency or monetary instruments shipped to or received from an established customer maintain-
ing a deposit relationship with the bank, in amounts which the bank may reasonably conclude do not exceed amounts commensu-
rate with the customary conduct of the business, industry or profession of the customer concerned, (4) a person who is not a citizen
or resident of the United States in respect to currancy or other monetary instruments mailed or shipped from abroad to a bank or
broker or dealer in securities through the postal service or by common carrier, (5) a common carrier of passengers in respect to cur
rency or other monetary instruments in the possession of its passengers, (6) a common carrier of goods in respect to shipments of
currency or monetary instruments not declared to be such by the shipper. (7) a travelers' check issuer or its agent in respect to the
transportation of travelers' checks prior to their delivery to selling agents for eventual sale to the public, nor by (8) a person engag-
ed as a business in the transportation of currency, monetary instruments and other commercial papers with respect to the transpor.
tation of currency or other monetary instruments overland between established offices of banks or brokers or dealers in securities
and foreign persons.

When and Where to File:

A. Recipients - Each person who receives currency or other monetary instruments shall file Form 4790, within 30 days after receipt, with the Customs officer in charge at any port of entry or departure or by mail with the Commissioner of Customs, Attention: Currency Transportation Reports, Washington, D.C. 20229.

B. Shippers or Mallers. If the currency or other monetary instrument does not accompany the person entering or departing the United States, Form 4790 may be filed by mail on or before the date of entry, departure, mailing, or shipping with the Commissioner of Customs, Attention: Currency Transportation Reports, Washington, D.C. 20229.

C Travelers - Travelers carrying currency or other monetary instruments with them shall file Form 4790 at the time of entry into
the United States or the time of departure from the United States with the Customs officer in charge at any Customs port of entry
or departure.

An additional report of a particular transporation, mailing, or shipping of currency or other monetary instruments, is not required
If a complete and truthful report has already been filed. However, no person otherwise required to file a report shall be excused
from liability for failure to do so if, in fact, a complete and truthful report has not been filed. Forms may be obtained from any
United States Customs Service office.

PENALTIES.-Civil and criminal penalties, including under certain circumstances a fine of not more than $500,000 and Imprison-
ment of not more than five years, are provided for failure to file a report, supply information, and for filing a false or fraudulent
report. In addition, the currency or monetary Instrument may be subject to seizure and forfeiture. See sections 103.47, 103.48
and 103.49 of the regulations.

Definitions

Bank. Each agent, agency, branch or office within the United States of a foreign bank and each agency, branch or office within
the United States of any person going business in one or more of the capacities listed: (1) a commercial bank or trust company
organized under the laws of any state or of the United States; (2) a private bank; (3) a savings and loan association or a building and
loan association organized under the laws of any state or of the United States: (4) an insured institution as defined in section 401 of
the National Housing Act; (5) a savings bank, industrial bank or other thrift institution: (6) a credit union organized under the laws
of any state or of the United States; and (7) any other organization chartered under the banking laws of any state and subject to the
supervision of the bank supervisory authorities of a state.

Foreign Bank.-A bank organized under foreign law, or an agency, branch or office located outside the United States of a bank.
The term does not include an agent, agency, branch or office within the United States of a bank organized under foreign law.
Broker or Dealer In Securities. A broker or dealer in securities, registered or required to be registered with the Securities and Ex-
change Commission under the Securities Exchange Act of 1934.

IDENTIFYING NUMBER. — Individuals should enter their social security number, if any. However, aliens who do not have a
social security number should enter passport or alien registration number. All others should enter their employer identification
number.

Investment Security. An instrument which: (1) is issued in bearer or registered form: (2) is of a type commonly dealt in upon
securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment;
(3) is either one of a class or series or by its terms is divisible into a class or series of instruments; and (4) evidences a share, par-
ticipation or other interest in property or in an enterprise or evidences an obligation of the issuer.

Monetary Instruments. — Coin or currency of the United States or of any other country, travelers' checks, money orders, investment
securities in bearer form or otherwise in such form that title thereto passes upon delivery, and negotiable instruments (except ware-
house receipts or bills of lading) in bearer form or other in such form that title thereto passes upon delivery. The term includes bank
checks, travelers' checks and money orders which are signed but on which the name of the payee has been omitted, but does not in-
clude bank checks, travelers' checks or money orders made payable to the order of a named person which have not been endorsed
or which bear restrictive endorsements.

Person. - An individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, and all entities cognizable as legal personalities.

Special Instructions

You should complete each line which applies to you. Part II. Line 22, Enter the exact date you shipped or received currency or the monetary instrument(s). Line 23, Check the applicable box and give the complete name and address of the shipper or recipient. Part III.-Line 26, if currency or monetary instruments of more than one country is involved, attach a schedule showing each kind, country, and amount.

PRIVACY ACT NOTIFICATION

Pursuant to the requirements of Public Law 93-579. (Privacy Act of 1974), notice is hereby given that the authority to collect information on Form
4790 in accordance with 5 U.S.C. $52()(3) is Public Law 91-508: 31 U.S.C. 1101: 5 U.S.C. 301: Reorganization Plan No. 1 of 1950: Treasury De-
partment No. 165, revised, as amended: 31 CFR 103.

The principal purpose for collecting the information is to assure maintenance of reports or records where such reports or records have a high degree
of usefulness in criminal, tax, or regulatory investigations ur proceedings. The information collected may he provided to those officers and employees
of the Customs Service and any other constituent unit of the Department of the Treasury who have a need for the records in the performance of
their duties. The records may be referred to any other department or agency of the Federal Government upon the request of the head of such de-
partment or agency.

Disclosure of this information is mandatory. Failure to provide all or any part of the requested information may subject the currency or monetary
instruments to seizure and forfeiture, as well as subject the individual to civil and criminal habilities.

Disclosure of the social security number is mandatory. The authority to collect this number is 31 CFR 103.25. The social security number will be used as a means to identify the individual who files the record.

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USE OF CASINOS TO LAUNDER PROCEEDS OF DRUG TRAFFICKING AND ORGANIZED CRIME

THURSDAY, JUNE 21, 1984

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON CRIME,
COMMITTEE ON THE JUDICIARY,
Washington, DC.

The subcommittee met, pursuant to notice, at 10:15 a.m., in room 2226, Rayburn House Office Building, Hon. William J. Hughes (chairman of the subcommittee) presiding.

Present: Representatives Hughes, Smith, Feighan, and Sawyer. Staff present: Hayden W. Gregory, counsel; Eric E. Sterling, assistant counsel; Theresa Bourgeois, staff assistant; Charlene Vanlier, associate counsel; and Phyllis Henderson, clerk.

Mr. HUGHES. The subcommittee will come to order.

I apologize for the delay, but we are waiting for another member in order to secure a quorum.

I'm going to go ahead with my opening statement, and hopefully we will have another member momentarily so we can move ahead expeditiously this morning.

This morning the subcommittee is continuing its investigation of the use of gaming casinos to launder money by organized crime figures and drug traffickers.

At our first hearing in Atlantic City, NJ, last February, the subcommittee established by an overwhelming accumulation of evidence that we do have a serious problem of money laundering. Up until that time, while the Treasury Department had been studying the problem for some 14 months, little had been done to define the extent of the problem or, for that matter, to achieve a resolution. On several occasions, we had been promised that the Department of the Treasury was close to achieving a resolution of various issues and was about to propose regulations that would close a loophole in the Bank Secrecy Act that facilitates money laundering through gaming casinos.

I think that after February's hearing no one doubted that we have a serious problem and that we have to close what appears to be a major loophole. I sincerely believe that our hearing helped to demonstrate the need for expeditious resolution of the issue. Since then, there have been numerous meetings and exchanges of proposals between the Treasury Department and the casino gaming industry.

I have been informed that this morning John Walker, the Assistant Secretary of the Treasury, will unveil Treasury's proposed reg(111)

ulations that are designed to address the casino money laundering problem. The purpose of our hearing today is to examine those proposed regulations, to learn what they are, and how they are expected to work.

I want to commend my distinguished colleague from Nevada, Harry Reid, for playing an important role in helping to develop an atmosphere of constructive cooperation to prevent further money laundering through gaming casinos. Harry Reid has played an invaluable role.

We are pleased that the casino gaming industry has sent representatives of the principal trade associations to explain their understanding of how the proposed regulations will affect their procedures and how they expect to implement the regulations.

We are guided by three principal concerns: First, how can we prevent money laundering at the casinos? Second, how can we best use information about financial transactions to support the investigation and prosecution of drug traffickers and organized crime figures? Third, are these proposals workable and reasonable so that we do not unreasonably interfere with an industry that has been established by the people of New Jersey, Nevada, and Puerto Rico to meet important economic and social goals?

Let me say that the evidence is quite clear, both from those instances that have been testified to and, I might say, ongoing investigations that have not been testified to, for very obvious reasons, that the gaming industry, in those instances where there has been money laundering, has been duped.

We found no evidence that the casino industry itself has been involved in any of the instances. Where there have been reported instances of some involvement, the authorities have dealt with it very severely. There is no suggestion that the casino industry has in any way been involved in money laundering.

The casino industry, like most industries that handle large sums of money, is a natural target. This became particularly acute after a great deal of scrutiny was focused on financial institutions. It became very clear that those who are involved in organized crime and those who are involved in drug trafficking look for new avenues to launder funds and the casinos were just one of many sources, they collected. Holding this hearing is not to suggest that casino money laundering is the only example, because any firm that handles large sums of money is a potential target; it's not just casino gaming; and I wouldn't want it suggested in any fashion that the casino industry has been singled out because they are alone in this area.

My colleague, Mr. Smith, is with us, and we have a quorum.

The Chair has received a request to cover this hearing in whole or in part by television broadcast, radio broadcast, still photography, or by other similar methods. In accordance with committee rule 5(a), permission will be granted unless there is objection. Is there objection?

Hearing none, coverage is permitted.

The gentleman from Florida.

Mr. SMITH. Thank you, Mr. Chairman. I appreciate the chairman's scheduling this hearing today as one of a continuing series of hearings. Unfortunately, I couldn't attend the hearing which

was previously held in Atlantic City. I couldn't attend because of some illness in my family.

I do want to state, as the Chair is well aware, for the record, that some of the problems of money laundering has again filtered its way south, and once again I must admit that south Florida is the recipient of some of this problem, as it is subject to invasion by all the tiers of drug involvement and certain other illegal operations. In Florida, we have had a large number of legal institutions involved in the money laundering problem, and that has created a very difficult situation for us. Illegal assets are being diffused through legal corporations from Miami and the other areas of south Florida overseas to the tax havens, has been a problem for us and there have been not only prosecutions but convictions of people involved in businesses in Florida-banks and others-who have been involved in the process of money laundering.

I commend the chairman for scheduling these hearings. This is an acute problem. This hearing is another good way to attack the problem of illegal operations of all types and kinds, especially attacking the use of the funds from drugs. There is no question that, in addition to keeping these operations from operating by attacking the root cause, but also by being able to attack the profit endwhere they are going to put the money, how they are going to keep the money, et cetera-you get a situation where, I think, you take away the ability to keep their profits-not the profit motive, but being able to keep their ill-gotten gains.

When you make it impossible for that to happen, there will begin a motivation not to engage in that enterprise, and I think it is extremely important that the chairman has scheduled these hearings. It's another area where I think it needs to be looked at, and I'm very glad that the witnesses here today will have an opportunity to testify.

I think that, to a large degree, many of the people that are here to testify in behalf of the operations of legal gambling in this country have, by and large, played within the rules and obeyed the laws. I would hope that those small numbers of people who may be bending or breaking the law will take note of these hearings today and understand that we are serious-and I know the chairman is very serious-about getting to the problem and getting to a solution to this problem.

So I'm grateful to the witnesses and to the chairman. Thank you. Mr. HUGHES. Thank you, Larry.

Our first witness this morning is John M. Walker, Jr., the Assistant Secretary of the Treasury for Enforcement and Operations. In this position, Mr. Walker supervises the Bureau of Alcohol, Tobacco and Firearms; the Secret Service; the U.S. Customs Service; and the Federal Law Enforcement Training Center in Glynco, GA.

Mr. Walker is a graduate of Yale University, and the University of Michigan Law School. He had the unique experience of being involved in criminal prosecutions in the African nation of Botswana, as well as a narcotics prosecutor in the Office of the U.S. attorney for the Southern District of New York in New York City.

He was in private practice in New York for some 6 years before he was appointed to the Treasury Department this year.

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