16 June 1998
Source: http://www.usia.gov/current/news/topic/global/98061111.lgi.html?/products/washfile/newsitem.shtml

United States Information Service Washington File

11 June 1998

### TEXT: RAYMOND KELLY TESTIMONY ON OPERATION CASABLANCA

    (Drug-money sting operation has resulted in seizure of $100 million)
    (4820)

    WASHINGTON -- "Money laundering is the life support system of
    sophisticated international criminal enterprises," says Treasury
    Department Under Secretary for Enforcement Raymond Kelly. "The better
    we are at tracking dirty money, the better our ability to bring down
    the leaders of drug trafficking and other criminal groups."

    Testifying June 11 before the House Committee on Banking and Financial
    Services, Kelly provided a broad description of Operation Casablanca,
    the three-year drug money laundering investigation conducted by
    undercover agents of the Justice and Treasury Departments. The sting
    operation implicated several Mexican banks in its probe of the
    financial infrastructure of the Cali and Juarez drug cartels,
    resulting in the arrest of 167 people and the seizure of roughly $100
    million.

    "We expect further arrests and seizures in this investigation," Kelly
    declared.

    While the exposure of Mexican bankers' complicity in laundering vast
    sums of drug money has strained diplomatic relations between the
    United States and Mexico, Kelly vigorously defended the investigation.
    "We believe that Operation Casablanca represents a significant step
    forward to curb money laundering," he said. "However, it is only the
    most recent example of law enforcement's efforts to close off U.S. and
    foreign money laundering systems used by drug traffickers and other
    criminals."

    Following is the text of Kelly's remarks, as prepared for delivery:

    (begin text)

    Text as Prepared for Delivery

    June 11, 1998

                       TREASURY UNDER SECRETARY (ENFORCEMENT)

                                  RAYMOND W. KELLY

                 HOUSE COMMITTEE ON BANKING AND FINANCIAL SERVICES

    Chairman Leach, Mr. LaFalce, members of the Committee, it is a
    pleasure to be here today to speak about a top priority of President
    Clinton, Secretary Rubin, Attorney General Reno, and the Congress --
    the federal government's efforts to combat money laundering.

    Treasury Department enforcement bureaus and offices are responsible
    for significant elements of this fight. The U.S. Customs Service, the
    Criminal Investigation Division of the Internal Revenue Service
    (IRS-CI), the U.S. Secret Service and the Bureau of Alcohol, Tobacco
    and Firearms are charged with investigating money laundering in cases
    where the underlying criminal act lies within their core jurisdiction.
    The Financial Crimes Enforcement Network -- FinCEN -- is charged with
    administering the Bank Secrecy Act, which prescribes transaction
    reporting and record-keeping requirements for financial institutions
    designed to insulate those institutions from money laundering, and to
    provide a paper trail for investigators. FinCEN also serves as the
    central point for collection and analysis of Bank Secrecy Act data,
    providing case support to law enforcement investigations. The Office
    of Foreign Assets Control is responsible for implementing sanctions
    against nations determined to be a threat to the national security,
    economy or foreign policy of the United States, pursuant to the
    International Emergency Economic Powers Act (IEEPA), including
    sanctions aimed at the Colombian drug cartels. Treasury enforcement
    agencies work closely with one another, other law enforcement
    agencies, the Department of Justice, and with the Federal Reserve, the
    Office of the Comptroller of the Currency and other regulators as part
    of a comprehensive attack on money launderers and their underlying
    criminal activities.

    Operation Casablanca

    The impact these entities can have on money laundering is reflected in
    the Customs Service's recently concluded Operation Casablanca, the
    largest drug money laundering investigation in U.S. history. Although
    I cannot discuss the case in detail because the investigation and
    prosecutions are ongoing, I will provide a brief description of the
    operation based on information which has already been made public.

    Prior to 1995, agents in Customs' Los Angeles Office had information
    that drug cartel members were laundering narcotics proceeds through
    branches of Mexican banks along the border. Operation Casablanca began
    in earnest in November 1995, after undercover agents participated in a
    money laundering transaction involving high-level money launderers for
    the Cali and Juarez cartels. The investigation then expanded to
    include the financial infrastructure of the Juarez Cartel, including
    its money manager Victor Alcala Navarro, and a principal in the
    cartel, Jose Alvarez Tostado.

    The investigation targeted both the financial infrastructure of the
    Juarez and Cali cartels and the financial systems used by these
    cartels to launder their U.S. drug proceeds. During the course of this
    investigation, undercover agents posed as money launderers for the
    cartels and met with Mexican and Venezuelan bankers who were willing
    to launder the cartels' illicit funds. These bankers established bogus
    accounts and would issue bank drafts to avoid anti-money laundering
    regulations. As a result of this investigation, indictments were
    brought against members of the Juarez and Cali Cartels and their
    financial brokers and bankers. One indictment charged 26 Mexican bank
    officials and three Mexican banks -- CONFIA, BANCOMER, and BANCA
    SERFIN – with money laundering.

    To date, Operation Casablanca has resulted in the arrest of 167
    individuals and the seizure of approximately $100 million. We expect
    further arrests and seizures in this investigation.

    We believe that Operation Casablanca represents a significant step
    forward to curb money laundering. However, it is only the most recent
    example of law enforcement's efforts to close off U.S. and foreign
    money laundering systems used by drug traffickers and other criminals.
    Today, I want to speak about all aspects of Treasury's fight against
    money laundering -- a three-pronged strategy aimed at preventing money
    laundering through regulation, detecting money laundering through
    investigation, and deterring money laundering through international
    efforts. Before I discuss our efforts, however, I want to briefly
    discuss the challenges we are confronting.

    The Money Laundering Threat

    Money laundering is the life support system of sophisticated
    international criminal enterprises. The ability to sanitize ill-gotten
    gains permits drug trafficking and other criminal groups to
    perpetuate, and live lavishly from, their illegal activity. But, as
    Casablanca demonstrates, money laundering provides a point of
    vulnerability for these organizations. Indeed, the steps which
    criminal groups must take to lend the appearance of legitimacy to
    their illicit profits, provide us with an invaluable opportunity to
    attack the criminal organizations themselves. The better we are at
    tracking dirty money, the better our ability to bring down the leaders
    of drug trafficking and other criminal groups. For while the drug
    kingpins can separate themselves from street-level sales, they cannot
    separate themselves from the profits those sales generate.

    The money laundering problem we face today is increasingly
    international in character. The greater integration of the world
    economy, and the removal of barriers to the free movement of capital,
    have combined to create new commercial opportunities. Unfortunately,
    the efficiency and convenience that the global economy affords to
    legitimate commerce, make the job of disposing of criminal proceeds
    easier.

    Late last year, this Committee held hearings on a money laundering
    system that serves as an excellent example of the scope and complexity
    of money laundering today -- the Colombian Black Market Peso Exchange.
    This system works as follows: Cocaine is shipped from Colombia to the
    United States where it is sold. The narcotics proceeds are then
    deposited by the Colombian drug cartels into U.S. bank accounts
    belonging to a black market peso broker in Colombia. The peso broker
    then sells these dollars to Colombian businessmen for pesos which are
    paid to the drug trafficker in exchange for the dollars. The Colombian
    businessmen use the dollars to purchase goods in the U.S. which are
    shipped to Colombia. This method permits the drug trafficker to
    convert dirty money -- the drug proceeds -- into clean money -- the
    Colombian pesos -- which can be spent legitimately.

    Treasury's Response: Regulatory and Enforcement Efforts

    To address this increasingly complex money laundering threat we must
    continue to focus our anti-money laundering efforts on both prevention
    and enforcement. In so doing, we cannot stop at our borders, but must
    promote an aggressive international campaign to ensure that all
    nations are vigilantly pursuing the money laundering problem.

    Domestic Efforts -- Regulatory and Enforcement

    Domestically, our goal is to combine effective prevention of money
    laundering with proactive aggressive enforcement. Leveraging
    Treasury's unique regulatory authority in concert with its enforcement
    capabilities (and those of other agencies), we seek a comprehensive
    approach to the money laundering problem -- one that both insulates
    financial institutions from criminal proceeds, and enhances the
    prospects for identifying launderers and disrupting their illegal
    schemes.

    Domestic Regulatory Efforts

    We are accomplishing this objective in several ways. To enhance our
    ability to prevent money laundering, for example, we are developing
    more intelligent, targeted regulations for banks and other financial
    institutions. In the last several years, FinCEN has been engaged in an
    effort to streamline regulations while actually increasing the utility
    of the information provided to law enforcement.

    As part of the continuing process of reforming the BSA, we have
    introduced an invigorated system of suspicious transaction reporting.
    Our objective is to permit the financial sector to redirect its
    resources from mechanical compliance to more proactive detection
    methods. We are building our alliance with the U.S. financial services
    community, utilizing its expertise to identify potential criminal
    conduct within its midst.

    We are also working to revitalize anti-money laundering controls for
    institutions other than banks. To that end, FinCEN recently issued
    proposed regulations expanding suspicious activity reporting to
    casinos and will soon add securities firms. FinCEN also is in the
    process of finalizing regulations requiring the registration of
    issuers and sellers of traveler's checks and money orders, money
    transmitters and other "money services" businesses. These regulations
    will also require certain of these institutions to report suspicious
    activity. Finally, FinCEN has proposed regulations that would impose a
    special currency reporting rule on certain outbound currency transfers
    stemming from Treasury's use of Geographic Targeting Orders, which I
    will talk about below.

    Domestic Enforcement Efforts

    In addition to our regulatory efforts, which are geared toward
    preventing the placement of illicit proceeds in our nation's financial
    institutions, Treasury's investigative bureaus have been working to
    enhance the detection and investigation of money laundering. Customs
    and IRS-CI in particular are aggressively pursuing investigations in
    which the disruption of a money laundering operation, and the arrest
    and prosecution of the launderers, are the primary objectives.
    Together, these agencies have approximately 1,100 expert financial
    investigators and staff dedicated to "pure" money laundering
    investigations. Last year alone, Customs conducted nearly 4,500 money
    laundering investigations. IRS-CI conducted almost 2,500.

    Just last week, Customs seized more than $15 million in cash believed
    to be illegal drug proceeds in four separate incidents in Houston, San
    Diego, Newark, and Chicago. The money was destined for Colombia,
    Venezuela and Mexico.

    Domestic Efforts -- The Comprehensive Approach

    As I stated earlier, we believe our efforts are most successful when
    we combine prevention with enforcement to shut down entire money
    laundering systems. This comprehensive approach can be seen in
    Operation Casablanca and in Treasury's use of Geographic Targeting
    Orders, or GTOs.

    The Comprehensive Approach -- Casablanca

    On its face, Casablanca may appear to be strictly an enforcement
    action. In light of its own regulatory authority, Treasury understands
    how law enforcement can benefit by working with regulators. In the
    case of Casablanca, the involvement of the Federal Reserve Board made
    it possible for it to immediately issue temporary cease and desist
    orders to six banks (Banamex, Banca Serfin, Bital, Bancomer and Banco
    Santander, Banco Industrial de Venezuela). The orders require these
    banks to describe their current anti-money laundering programs, to
    tell the Federal Reserve their understanding of what broke and to
    submit an acceptable plan to fix what was broken.

    More broadly, Treasury is reviewing its regulations to see what, if
    any, changes are needed to better prevent and detect money laundering
    schemes such as those utilized in Casablanca.

    The Comprehensive Approach -- GTOs

    Another example of Treasury's comprehensive approach is its use of
    Geographic Targeting Orders -- GTOs. In 1996 and 1997, Treasury,
    working with the Department of Justice, issued a number of GTOs
    mandating additional record-keeping and reporting requirements for
    certain money transmitters sending money to Colombia and the Dominican
    Republic. As with Casablanca, in the case of the GTOs, investigative
    work led to regulatory action. With the GTOs, however, the regulatory
    action also spawned enforcement activity.

    Through the work of a Treasury-led task force, Operation El Dorado, it
    became apparent that Colombian drug traffickers were using certain
    money remitters in the New York City area to launder drug cash. The
    evidence demonstrated that 12 remitters had funneled approximately
    $800 million a year to Colombia. To account for this money
    legitimately, each Colombian household in the area would have had to
    wire $30,000 to Colombia each year -- an amount which exceeds the
    $27,000 average annual income for this community.

    To address this problem, Treasury invoked a previously little-used
    statutory provision which grants the Secretary of the Treasury
    authority to require special reporting and record keeping by financial
    institutions in specific geographic areas where necessary to fulfill
    the purposes of the Bank Secrecy Act.

    In August 1996, Treasury issued a GTO aimed at remittances from the
    New York City area to Colombia. It required 12 New York area money
    remitters and their approximately 1,600 agents to obtain and report
    identifying information on all cash remittances of $750 or more to
    Colombia. A second GTO was signed in October 1996, extending the
    heightened reporting requirements to 10 additional remitters and their
    agents. The GTOs were extended by Treasury several more times before
    expiring in October, 1997. Following the Colombian GTOs, Treasury
    issued a series of similar GTOs covering money remittances sent to the
    Dominican Republic by certain remitters in New York, New Jersey and
    Puerto Rico.

    While we are still reviewing the effect of the Dominican Republic
    GTOs, it is clear that the Colombian GTOs had a significant impact on
    the flow of drug proceeds through the targeted remitters. Several of
    the remitters targeted under the GTOs stopped sending funds to
    Colombia altogether, while many others sent significantly lower
    amounts. Thirteen individuals and two corporations have been indicted
    or have pled guilty to structuring transactions to avoid the GTOs.
    Several others are under investigation.

    The GTOs also forced the traffickers to resort to other, more
    difficult tactics to move their profits back to Colombia. In the first
    six months after the Colombian GTOs went into effect, Customs'
    currency seizures at East Coast ports of entry increased approximately
    four hundred percent as traffickers were forced to move money in bulk.

    The Colombian GTOs represent the model for intelligent money
    laundering control. Beyond using traditional law enforcement
    techniques to address discrete instances of criminal activity, the
    GTOs marshaled Treasury's regulatory authority to identify and correct
    a weakness that had penetrated a small but important part of the money
    transmitter industry. This preventative effort, in turn, triggered a
    wave of enforcement activity, as money launderers were forced to
    resort to riskier means of moving their funds once the vulnerabilities
    in the transmitter industry had been remedied. Finally, the evidence
    gleaned through the GTO experience prompted Treasury to propose a more
    permanent solution to the problems it sought to address. FinCEN is in
    the process of finalizing the three regulations it proposed last May
    to deal with money services businesses. The regulatory process has
    emphasized frank and full discussions with industry in five open
    meetings and the review of more than 80 comments. The final rules will
    build on the GTO experience by dealing with abuse in sectors of the
    money remitter industry and giving us the tools to carry on the work
    begun by the El Dorado Task Force.

    International Efforts

    Through innovation in regulation and enforcement, then, we are working
    to make U.S. financial channels less user friendly to criminal
    enterprises. Indeed, as our experiences in Casablanca and with the
    GTOs demonstrate, we have been successful at forcing drug traffickers
    to alter their money laundering schemes. But these are only two fronts
    in the battle.

    Drug traffickers and other criminal organizations will continue to
    search for the path of least resistance to launder their money. Thus,
    no country's individual efforts -- whether in the legal, regulatory,
    or law enforcement arena -- will be sufficient given the relative ease
    with which money flows across borders.

    In this regard, important strides have been made through multilateral
    initiatives. Chief among those have been the Financial Action Task
    Force, or "FATF." The FATF is an independent, international group
    formed in 1989 by the G-7 nations to cultivate the development of
    effective anti-money laundering controls and enhance cooperation in
    investigations among its membership and around the globe. In the nine
    years since its inception, the FATF has made significant progress. The
    FATF 40 Recommendations, issued originally in 1990 and updated in
    1996, serve as the principal benchmark for governments addressing the
    legal, financial and regulatory aspects of money laundering. Moreover,
    prior to the establishment of the FATF, money laundering was a
    criminal offense only in the U.S. and a couple of other nations.
    Today, all 26 FATF member nations have such laws in place.

    Over the next several years, the FATF will expand its membership to
    include strategically important countries from under-represented parts
    of the world, and foster the development of FATF-style regional
    bodies, such as the Caribbean Financial Action Task Force and the Asia
    Pacific Group.

    A related initiative designed to build upon the FATF's success in the
    Western Hemisphere has begun under the auspices of the Summit of the
    Americas. As a follow up to the 1994 Summit in Miami, Secretary Rubin
    convened a conference of Finance and Justice Ministers representing 29
    of the 34 democracies of the region in Buenos Aires in December 1995.
    The purpose of the Buenos Aires conference was to develop a
    coordinated, hemispheric strategy to combat money laundering. The
    conference produced an agreement on the basic elements of such a
    strategy, including the need to: criminalize the laundering of the
    proceeds of drug trafficking and other serious crimes; adopt reporting
    and record keeping regulations to protect financial institutions; take
    steps to enhance international cooperation in money laundering
    investigations; and create financial intelligence units that
    specialize in the collection and analysis of pertinent financial
    records in order to help track criminals' financial activities.

    The Summit process has yielded promising results. Over one third of
    the Summit nations have passed legislation criminalizing money
    laundering, or have issued anti-money laundering regulations. Many
    others are considering doing so. Four Summit countries have
    established financial intelligence units and a fifth, Paraguay, is
    expected to have a financial intelligence unit in place by July 1,
    1998.

    In addition to multilateral efforts, Treasury -- in conjunction with
    our partners at the Departments of Justice and State -- works
    bilaterally with a number of countries to strengthen the global fight
    against money laundering. In so doing, we provide assistance in a
    wide-range of areas. Treasury and Justice have assisted Mexico,
    Panama, El Salvador and others in drafting anti-money laundering
    legislation and regulations. FinCEN has provided technical assistance
    to Canada, Venezuela, Argentina, and other countries regarding the
    establishment of financial intelligence units and has trained analysts
    staffing such units. In the last year, IRS-CI has trained foreign
    investigators and prosecutors from, among other places, Russia, El
    Salvador, Trinidad and Tobago, and Brazil. In fact, just last week,
    IRS-CI and Customs participated in a training session for Colombian
    prosecutors and investigators sponsored by the Department of Justice.
    Through these multilateral and bilateral efforts we will continue to
    make it more difficult for criminals to launder their illicit funds in
    all countries.

    IEEPA

    The final component of Treasury's international strategy is the IEEPA
    Specially Designated Narcotics Traffickers program directed against
    the Colombian drug cartels. This economic sanctions program against
    the Colombian narcotics traffickers was imposed by President Clinton
    through Executive Order 12978 issued under authority of the
    International Emergency Economic Powers Act. The principal tool for
    implementing the IEEPA narcotics trafficking sanctions is the list of
    Specially Designated Narcotics Traffickers ("SDNTs") developed by
    Treasury's Office of Foreign Assets Control ("OFAC") in close
    consultation with the Justice and State Departments.

    The objectives of the SDNT program are to identify, expose, isolate
    and incapacitate the businesses and agents of the Colombian cartels
    and to deny them access to the U.S. financial system and to the
    benefits of trade and transactions involving United States businesses
    and individuals. For example, SDNTs are denied access to banking
    services in the U.S. and Colombia, and existing SDNT accounts have
    been terminated. To date, OFAC has identified nearly 400 closed
    Colombian bank accounts affecting over 200 SDNTs. OFAC has issued
    seven lists identifying SDNTs since the inception of the IEEPA
    sanctions in October 1995. As of today, OFAC has listed 451 companies
    and individuals as SDNTs against which the prohibitions and blocking
    authorities of Executive Order 12978 apply. The SDNT list includes the
    four kingpins of the Cali cartel named by President Clinton as
    significant narcotics traffickers, the newly-designated significant
    North Coast trafficker, Julio Caesar Nasser David, 154 companies, and
    292 additional individuals involved in the ownership or management of
    the Colombian drug cartels' "legitimate" business empire. Work is
    underway on naming more SDNTs.

    Next Steps

    The drug traffickers and other criminals never rest in their attempts
    to find new, easier methods of laundering their dirty money. We must
    be ever vigilant in our efforts to stop them. Just as we continue to
    hurt the criminal groups through enforcement activity, we also
    continue to revise our regulations to respond to new threats. To
    ensure that prosecutors and investigators in the field are informed
    about regulatory and other tools as they are developed, Treasury and
    Justice co-sponsor a series of money laundering conferences. To date,
    conference attendees, which include nearly 200 federal investigators
    and prosecutors from across the country, have discussed Geographic
    Targeting Orders, FinCEN's Suspicious Activity Reporting System, and
    money laundering trends including the use money orders and bulk cash
    shipments.

    Additionally, our efforts to continually improve our anti-money
    laundering regime include reviewing relevant law to see if changes
    need to be made. In this regard, I would like to encourage the
    Committee to support President Clinton's International Crime Control
    Act. The new authorities contained in the Act would give Treasury more
    weapons to fight a wide-range of international crimes, including money
    laundering. I particularly want to highlight the provision permitting
    Customs to search outbound mail.

    Currently, the Customs Service conducts legal, warrantless border
    searches in virtually every situation in which merchandise crosses the
    border. The one exception is outbound international mail sent through
    the U.S. Postal Service. We are certain that this fact has not gone
    unnoticed by international criminals and terrorists, who are only too
    happy to take advantage of this relatively safe and inexpensive means
    of transporting contraband and cash out of the United States. Express
    mail parcels can accommodate up to $90,000 in $100 bills, making it
    one of the most efficient and cost-effective means of smuggling
    currency out of the country. Similarly, a single international letter
    class parcel can hold as much as $180,000 in $100 bills. The outbound
    mail provision of the President's International Crime Control Act
    would make it easier for Customs to interdict such shipments.

    In addition to the President's International Crime Control Act, I also
    want to take a moment to comment on your bill, Mr. Chairman, as well
    as the bill introduced by Representative Velazquez. In doing so,
    however, I would only note that I must limit my comments to technical
    matters pending a more detailed analysis and formal position by the
    Administration on each of the bills.

    The money laundering problem is complex and extends across the country
    and beyond our borders, and potentially involves different sectors of
    the financial services industry. The Department of the Treasury
    appreciates the efforts made by this committee and its members to help
    us in the fight against money laundering, including the development of
    legislation to enhance anti-money laundering measures.

    "Money Laundering Deterrence Act of 1998" (Leach Bill)

    The Money Laundering Deterrence Act contains a number of provisions
    with objectives that could further our fight against money laundering.

    In particular, we appreciate the attempt the bill makes to address the
    use of form 8300 to assist law enforcement investigations of money
    laundering and financial crimes. This form is essentially the
    equivalent of a Currency Transaction Report (CTR) for non-financial
    businesses such as car dealerships. Changing the status of this form
    so that it is required by the Bank Secrecy Act rather than the
    Internal Revenue Code could provide valuable information to federal,
    state, and local law enforcement organizations conducting financial
    crime investigations and tracking down the laundering of drug profits
    and other criminal proceeds.

    We also appreciate the effort made in this bill to extend a "safe
    harbor" from liability for reporting suspicious financial activity. As
    we view it, the provisions in the bill would grant immunity to
    accountants who report suspicious activities and would make clear that
    a "safe harbor" for suspicious activity reporting applies to
    arbitration.

    This legislation also expands BSA summons authority, which could be
    used by FinCEN to develop a modern civil enforcement program with
    easier access to important information. This provision would clarify
    the scope of laws covering BSA administrative summons to cover
    compliance audits and investigations related to the filing of BSA
    reports for any person.

    In one of its sections, the bill also attempts to clarify penalties
    for violations of GTO's and funds transfer rules. The bill would make
    plain that violations of GTO's and of wire transfer rules constitute
    violations of law, and that structuring violations extend to
    transactions that are broken up to avoid the $3,000 floor for wire
    transfer record-keeping requirements. These changes solve important
    technical problems.

    "Money Laundering and Related Financial Crimes Strategy Act of 1998"
    (Velazquez Bill)

    We appreciate that Congresswoman Velazquez's Money Laundering Strategy
    Act recognizes the scope of the money laundering problem and attempts
    to develop a mechanism to address these challenges.

    An anti-money laundering strategy could prove to be useful in setting
    priorities and communicating them to Congress and the public. Money
    laundering enforcement is complex and resource-intensive. Enforcement
    of money laundering laws could benefits from proper coordination among
    federal, state, and local law enforcement.

    We also appreciate the bill's effort to make additional resources for
    anti-money laundering activities available to the men and women
    fighting money laundering in State and local law enforcement.
    Financial crime investigations are complex and require specialized
    expertise, as well as resource commitments to follow leads that take
    time to develop. Like our some of recent investigations indicate,
    cases themselves may span years and are information-intensive. Because
    of this, State and local law enforcement can benefit from additional
    resources and expertise to fully join the fight against money
    laundering.

    "Money Laundering Act of 1998" (McCollum Bill)

    The Money Laundering Act of 1998 introduced by Congressman McCollum
    includes provisions that were in a money laundering bill the
    Administration supports. This bill could also help us in our
    continuing fight against money laundering, both in the United States
    and abroad.

    The Administration has previously supported a bill containing most,
    though not all, of the provisions in this proposal. This bill was
    primarily designed to address international laundering of criminal
    proceeds, either by criminals committing offenses in the U.S. and
    attempting to conceal their gains abroad, or by criminals who commit
    offenses in other nations and attempt to use our financial system to
    launder their profits. For example, Section 8 of this legislation
    would expand the predicate offenses for money laundering to include a
    number of foreign crimes, such as terrorism, fraud and corruption, and
    crimes of violence. Section 16 also raises the standard necessary for
    successfully asserting the "innocent owner" defense if individuals buy
    tainted profits on the so-called "Black Market Peso Exchange."

    Under this legislation, such a claim would be subject to the legal
    standard applicable in drug cases, which requires a person to
    establish that he or she was a bona fide purchaser who took all
    reasonable affirmative steps to make sure that the money was not
    derived from a criminal offense.

    The Justice Department took the lead in drafting the original
    legislation from which this bill draws, and will likely have further
    comments about other significant provisions contained in this bill.

    Further collaboration

    As you consider all of this legislation, we want to be of the greatest
    possible assistance in giving you the best considered view regarding
    technical aspects of the bills. These anti-money laundering bills
    highlight the Committee's determined support to assist federal law
    enforcement and regulators in the fight against laundering of dirty
    money. We would like to continue to work with each of you as you move
    forward with your respective bills.

    Once again, I would like to thank the Committee for allowing me to
    speak today on this very important issue. I look forward to continuing
    our work to combat money laundering in the U.S. and abroad. Thank you.

    (end text)