- 8 report large cash transactions. There is a clear need for an effective publicity program to inform the public at large of the new cash reporting requirements. 2. Provide the Secretary of the Treasury and the Attorney Effective administrative investigations of compliance with the reporting requirements of the Bank Secrecy Act has been frustrated by confusion and restrictive court interpretations which have limited the investigative authority of the Secretary of the Treasury. This can be rectified by the enactment of legislation giving the Secretary of the Treasury and the Attorney General specific authority to issue administrative summonses for testimony and records in investigations of compliance with the Bank Secrecy Act. I would also recommend the Subcommittee consider granting to the Secretary the power to grant "use" immunity in such investigations. Under current law, the Secretary is authorized to prescribe regulations and reporting requirements to comply with requirements of the Bank Secrecy Act. However, current law does not grant the Secretary the authority to effectively investigate the law. Under current law, the Secretary is authorized to seek an injunction to enjoin violations of the Bank Secrecy Act (31 U.S.C., Sec. 5320) and impose civil penalties for violation of its requirements (31 U.S.C., Sec. 5321). The Secretary has no specific authority to conduct criminal investigations. As a result, the effectiveness of the Bank Secrecy Act has been diminished by the Secretary's lack of specific authority to conduct criminal investigations and use appropriate investigative tools. The President's Commission on Organized Crime has pointed out a specific example of where this has occurred. In United States v. Deak-Perera & Co., 566 F. Supp. 1398 (D.D.C. 1983), the District Court denied enforcement of an IRS recordkeeping summons issued to Deak-Perera for production of documents reflecting transactions with a particular customer. An IRS Revenue Agent had performed a Bank Secrecy Act compliance examination at Deak-Perera's Washington, D.C., office in May 1980 and compiled a list of 83 transactions involving $25,000 or more, noting the customer's name, address and other identifying information. He referred the list to IRS field offices to facilitate audits of the customer's tax returns. An IRS Special Agent, who had information from an independent source with respect to other precious metal transactions by a particular individual caused a summons to be issued to Deak-Perera for records pertaining to the customer. In denying enforcement of the summons, the Court found the Bank Secrecy Act and implementing regulations do not authorize a general sharing of intelligence acquired in a compliance audit, even intra-agency as is the case of the IRS, if to do so would violate a subject's legitimate expectation of privacy. Id. at 1402. Thus, the Examination Division compliance audit staff was effectively precluded from referring potential Bank Secrecy Act and tax violations to the logical investigative agency, IRS Criminal Investigation Division. See, Interim Report, p. 86, Endnote 26. Unintended results such as this can be eliminated by giving the Secretary the specific authority recommended. Insuring compliance with the reporting requirements of the Bank Secrecy Act is an effective step that can be taken to deter money laundering and prosecute offenses associated with it. To insure compliance with this Act, the Secretary must have the authority to investigate both noncompliance by the financial institutions and the customer transactions that caused the noncompliance or report to be filed. 3. Amend the Bank Secrecy Act to provide for faster Although the Bank Secrecy Act provides for the reporting of potential money laundering transactions, its effectiveness is greatly diminished by the inexcusable length of time it takes for information on suspect transactions to reach law enforcement agencies. In some cases, more than two months have elapsed between the transaction date and its reporting to an investigating agency. Most of this delay is due to cumbersome government procedures and inaction; not bank laxity in reporting. As a result of these delays, successful investigations are frequently impossible because of the staleness of the information. This is particularly true in fictitious names transactions. The President's Commission on Organized Crime has described the process by which reported information is made available to law enforcement agencies as follows: - 11 When financial institutions file CTRS in accordance with current Treasury Department regulations and procedures, it may take the Treasury Department six or eight weeks or longer for the data on CTRS to be processed and made ready for analysis at the Treasury Financial Law Enforcement Center (TFLEC). Treasury Department regulations currently permit financial institutions to file a CTR as late as 15 days after the day on which the transaction occurred. Thereafter, the IRS must process all CTR data at its facility in Ogden, Utah, and transport the input data to a U.S. Customs Service office in San Diego, California, before reporting the data to TFLEC at headquarters. TFLEC analysts and Treasury Department officials may then require additional time for review and analysis of the CTR data. Interim Report, p. 25. These procedures clearly diminish the effectiveness of the reporting provisions of the Bank Secrecy Act. The President's Commission on Organized Crime has recommended that, to reduce the time required to process and analyze CTR data, the Secretary of the Treasury should consolidate the processing of such data in a single location. Interim Report, p. 57. The President's Commission on Organized Crime has also recommmended: То expedite the process by which financial institutions can inform law enforcement agencies of specific violations of the reporting requirements under the Bank Secrecy Act, the Secretary of the Treasury and financial institutions should coordinate the implementation of a procedure whereby a financial institution can make a special standardized notation on and CTR or CMIR, as appropriate, to the IRS or Customs officer responsible for inputting such data, and telephone a particular office (such as the IRS compliance officer) to alert it to the contents of the CTR or CMIR. Interim Report, p. 57. I concur with the recommendations of the President's Commission on Organized Crime. In addition, I would also recommend that the Subcommittee consider the following specific steps to improve the reporting of potential money laundering transactions: 1. 2. 3. Financial institutions should be required to mail Financial institutions should be required to inform Special regulations should be implemented for dealing There does not appear to be any real need for the fifteen days allowed by current regulations for financial institutions to mail the CMIR reports required by the Bank Secrecy Act. All of the information concerning the transaction is available when the customer comes into the financial institution to conduct the transaction. The CMIR can easily be completed at that time and mailed. shorten the time the information becomes available to law enforcement authorities. By reporting the essential information on the CMIR to the Treasury through an 800 number, a decision could be made as to whether the transaction requires an immediate investigation. This would Special treatment is required for treasurer's checks and cashier's checks purchased by nonaccount holders. This is one of the most commonly used devices to launder street drug money. It must be recognized that cashier's checks are the functional equivalent of cash. In fact, they are better than cash because there is less |