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The bill also provides seizure and forfeiture authority for
currency related to a domestic (CTR) reporting violation or
interest in property traceable to the currency.
would not affect bona fide purchasers who took the currency or
property without notice of a reporting violation.
there is forfeiture authority only for monetary instruments
underlying violations of the reporting requirements for internationally transported monetary instruments. The forfeiture would not be applicable to domestic financial institutions
examined by a federal bank supervisory agency or a financial
institution regulated by the Securities and Exchange Commission.
with respect to the other bills before the Committee,
Treasury opposes two provisions in H.R. 1474., Section 3 of
exemption be approved by the Secretary.
Under the current
regulations (31 C.F.R. S 103.22(b)), a bank may exempt from reporting certain cash deposits and withdrawals of accounts
of retail businesses in amounts commensurate with the lawful,
customary conduct of such a business.
The bank has a continuing
duty to monitor the qualifications for such exemptions, and it
would be unwise, in our view, to shift the burden of monitoring
the eligibility of bank customers for exemptions away from the
The bank is in the best position to know its customers and
The provision is accordingly
changes in their status.
inefficient, overly burdensome and unnecessary.
Section 4 of H.R. 1474 would require that every person,
including every financial institution, report all outgoing
international wire transfers.
As discussed above, with respect
to Treasury's new international transaction reporting regula
tions, Treasury already has authority under 31 U.S.C. S 5314 to
require reporting of international wire transfers.
wholesale reporting of international wire transfers would not be
in keeping with the restriction of 5314 that Treasury consider
the need to "avoid burdening unreasonably a person making a transaction with a foreign financial agency." This broad reporting reguirement would create a virtual blizzard of reports,
burdening financial institutions out of all proportion to the
utility of the information generated and would bury the Treasury Department in an avalanche of reporting forms, all but a very few
of which would be unrelated to money laundering.
I would now like to turn to H.R. 4280.
This bill would make
two major changes to the Bank Secrecy Act.
First, it would amend
31 U.S.C. $ 5313 to provide that the Treasury could only require
reporting of domestic currency transactions in excess of $10,000.
As you know, $10,000 is the reporting amount currently under
We disagree strongly with this restriction
on Treasury rulemaking flexibility and the ability to respond to
chang ing law enforcement needs.
There may be instances where the
$10,000 reporting trigger is too high.
For example, we have
discussed various ways to address the smurfing pr lem by regulatory changes. One idea that has been circulated within
Treasury is to require reports at the time of cash purchases of
cashier's checks in excess of $3,000.
This reporting requirement
or similar use of the regulations to address such changing law
enforcement problems would be precluded by H.R. 4280.
Another provision of H.R. 4280 would require a financial
institution to keep special records relating to any cash
transaction in excess of $3,000. Similar proposals have been under discussion within Treasury and within the Department of
Justice as regulatory solutions to the various schemes being used
to avoid the currency reporting requirements. We believe that a regulatory rather than legislative response is appropriate to
hese situations, so
ain the flexibility
to respond to changing law enforcement needs. Moreover, in
considering any proposal that imposes a
new requirement on
financial institutions, we must assess the cost and administra
tive burden to financial institutions in relation to'the
law enforcement interests served.
Another bill introduced by Congressman Wortly provides that
Treasury review all exemptions not less than once a year and "in
any case in which there is a change in management or control of a
As we have discussed above with respect
to H.R. 1474, the annual review of all exemptions is a practical impossibility. However, we would have no objection to the review of exemptions when there is a change in control. We generally
support increased attention to Bank Secrecy Act compliance at the
time of changes in control.
Finally, Mr. Chairman, I want to express my appreciation
for the continuing interest and support that you and the other
members of this committee have demonstrated for Treasury's
administration of the Bank Secrecy Act.
This concludes my prepared remarks.
Mr. Stankey and I would
be pleased to answer any questions the Committee may have.
Enclosed are our written responses to the questions you posed to me following my testimony on April 17th. I very much appreciated the opportunity to appear before the Committee. Your sustained interest in Bank Secrecy Act enforcement, especially in good quality examination by bank supervisory agencies, is essential to Treasury's Bank Secrecy Act enforcement objectives. If you have any further questions or if Treasury can be of any further assistance with respect to the legislation you are drafting, please do not hesitate to call on me or my staff.
Plank A. Keating, II
The Honorable Fernand J. St. Germain
Finance and Urban Affairs