6 July 1998
Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html

See related bill: http://jya.com/hr1756.txt

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[DOCID: f:hr608p1.105]
From the House Reports Online via GPO Access
[wais.access.gpo.gov]

105th Congress                                            Rept. 105-608
                        HOUSE OF REPRESENTATIVES

 2d Session                                                      Part 1
_______________________________________________________________________


       MONEY LAUNDERING AND FINANCIAL CRIMES STRATEGY ACT OF 1998

_______________________________________________________________________

                 June 25, 1998.--Ordered to be printed

                                _______


   Mr. Leach, from the Committee on Banking and Financial Services,
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1756]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Banking and Financial Services, to whom was
referred the bill (H.R. 1756) to amend chapter 53 of title 31,
United States Code, to require the development and
implementation by the Secretary of the Treasury of a national
money laundering and related financial crimes strategy to
combat money laundering and related financial crimes, and for
other purposes, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Money Laundering and Financial Crimes
Strategy Act of 1998''.

SEC. 2. MONEY LAUNDERING AND RELATED FINANCIAL CRIMES.

  (a) In General.--Chapter 53 of title 31, United States Code is
amended by adding at the end the following new subchapter:

    ``SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

``Sec. 5340. Definitions

  ``For purposes of this subchapter, the following definitions shall
apply:
          ``(1) Department of the treasury law enforcement
        organizations.--The term `Department of the Treasury law
        enforcement organizations' has the meaning given to such term
        in section 9703(p)(1).
          ``(2) Money laundering and related financial crime.--The term
        `money laundering and related financial crime' means an offense
        under subchapter II of this chapter, chapter II of title I of
        Public Law 91-508 (12 U.S.C. 1951, et seq.; commonly referred
        to as the `Bank Secrecy Act'), or section 1956, 1957, or 1960
        of title 18 or any related Federal, State, or local criminal
        offense.
          ``(3) Secretary.--The term `Secretary' means the Secretary of
        the Treasury.
          ``(4) Attorney general.--The term `Attorney General' means
        the Attorney General of the United States.

   ``Part 1--National Money Laundering and Related Financial Crimes
                                Strategy

``Sec. 5341. National money laundering and related financial crimes
                    strategy

  ``(a) Development and Transmittal to Congress.--
          ``(1) Development.--The President, acting through the
        Secretary and in consultation with the Attorney General, shall
        develop a national strategy for combating money laundering and
        related financial crimes.
          ``(2) Transmittal to congress.--By February 1 of 1999, 2000,
        2001, 2002, and 2003, the President shall submit a national
        strategy developed in accordance with paragraph (1) to the
        Congress.
          ``(3) Separate presentation of classified material.--Any part
        of the strategy that involves information which is properly
        classified under criteria established by Executive Order shall
        be submitted to the Congress separately.
  ``(b) Development of Strategy.--The national strategy for combating
money laundering and related financial crimes shall address any area
the President, acting through the Secretary and in consultation with
the Attorney General, considers appropriate, including the following:
          ``(1) Goals, objectives, and priorities.--Comprehensive,
        research-based goals, objectives, and priorities for reducing
        money laundering and related financial crime in the United
        States.
          ``(2) Prevention.--Coordination of regulatory and other
        efforts to prevent the exploitation of financial systems in the
        United States for money laundering and related financial
        crimes, including a requirement that the Secretary shall--
                  ``(A) regularly review enforcement efforts under this
                subchapter and other provisions of law and, when
                appropriate, modify existing regulations or prescribe
                new regulations for purposes of preventing such
                criminal activity; and
                  ``(B) coordinate prevention efforts and other
                enforcement action with the Board of Governors of the
                Federal Reserve System, the Securities and Exchange
                Commission, the Federal Trade Commission, other Federal
                banking agencies, and the National Credit Union
                Administration Board.
          ``(3) Detection initiatives.--A description of operational
        initiatives to improve detection of money laundering and
        related financial crimes.
          ``(4) Enhancement of the role of the private financial sector
        in prevention.--A description of the enhanced partnership
        between the private financial sector and law enforcement
        agencies with regard to the prevention and detection of money
        laundering and related financial crimes, including providing
        incentives to strengthen internal controls and to adopt on an
        industrywide basis more effective policies.
          ``(5) Intergovernmental cooperation.--A description of--
                  ``(A) cooperative efforts between the Federal
                Government and State and local officials, including
                State and local prosecutors and other law enforcement
                officials; and
                  ``(B) cooperative efforts among the several States
                and between State and local officials, including State
                and local prosecutors and other law enforcement
                officials,
        for financial crimes control which could be utilized or should
        be encouraged.
          ``(6) Project and budget priorities.--A 3-year projection for
        program and budget priorities and achievable projects for
        reductions in financial crimes.
          ``(7) Assessment of funding.--A complete assessment of how
        the proposed budget is intended to implement the strategy and
        whether the funding levels contained in the proposed budget are
        sufficient to implement the strategy.
          ``(8) Designated areas.--A description of geographical areas
        designated as `high-risk money laundering and related financial
        crime areas' in accordance with, but not limited to, section
        5342.
          ``(9) Persons consulted.--Persons or officers consulted by
        the Secretary pursuant to subsection (d).
          ``(10) Data regarding trends in money laundering and related
        financial crimes.--The need for additional information
        necessary for the purpose of developing and analyzing data in
        order to ascertain financial crime trends.
          ``(11) Improved communications systems.--A plan for enhancing
        the compatibility of automated information and facilitating
        access of the Federal Government and State and local
        governments to timely, accurate, and complete information.
  ``(c) Effectiveness Report.--At the time each national strategy for
combating financial crimes is transmitted by the President to the
Congress (other than the 1st transmission of any such strategy)
pursuant to subsection (a), the Secretary shall submit a report
containing an evaluation of the effectiveness of policies to combat
money laundering and related financial crimes.
  ``(d) Consultations.--In addition to the consultations required under
this section with the Attorney General, in developing the national
strategy for combating money laundering and related financial crimes,
the Secretary shall consult with--
          ``(1) the Board of Governors of the Federal Reserve System
        and other Federal banking agencies and the National Credit
        Union Administration Board;
          ``(2) State and local officials, including State and local
        prosecutors;
          ``(3) the Securities and Exchange Commission;
          ``(4) the Commodities and Futures Trading Commission;
          ``(5) the Director of the Office of National Drug Control
        Policy, with respect to money laundering and related financial
        crimes involving the proceeds of drug trafficking;
          ``(6) the Chief of the United States Postal Inspection
        Service;
          ``(7) to the extent appropriate, State and local officials
        responsible for financial institution and financial market
        regulation;
          ``(8) any other State or local government authority, to the
        extent appropriate;
          ``(9) any other Federal Government authority or
        instrumentality, to the extent appropriate; and
          ``(10) representatives of the private financial services
        sector, to the extent appropriate.

``Sec. 5342. High-risk money laundering and related financial crime
                    areas

  ``(a) Findings and Purpose.--
          ``(1) Findings.--The Congress finds the following:
                  ``(A) Money laundering and related financial crimes
                frequently appear to be concentrated in particular
                geographic areas, financial systems, industry sectors,
                or financial institutions.
                  ``(B) While the Secretary has the responsibility to
                act with regard to Federal offenses which are being
                committed in a particular locality or are directed at a
                single institution, because modern financial systems
                and institutions are interconnected to a degree which
                was not possible until recently, money laundering and
                other related financial crimes are likely to have
                local, State, national, and international effects
                wherever they are committed.
          ``(2) Purpose and objective.--It is the purpose of this
        section to provide a mechanism for designating any area where
        money laundering or a related financial crime appears to be
        occurring at a higher than average rate such that--
                  ``(A) a comprehensive approach to the problem of such
                crime in such area can be developed, in cooperation
                with State and local law enforcement agencies, which
                utilizes the authority of the Secretary to prevent such
                activity; or
                  ``(B) such area can be targeted for law enforcement
                action.
  ``(b) Element of National Strategy.--The designation of certain areas
as areas in which money laundering and related financial crimes are
extensive or present a substantial risk shall be an element of the
national strategy developed pursuant to section 5341(b).
  ``(c) Designation of Areas.--
          ``(1) Designation by secretary.--The Secretary, after taking
        into consideration the factors specified in subsection (d),
        shall designate any geographical area, industry, sector, or
        institution in the United States in which money laundering and
        related financial crimes are extensive or present a substantial
        risk as a `high-risk money laundering and related financial
        crimes area'.
          ``(2) Case-by-case determination in consultation with the
        attorney general.--In addition to the factors specified in
        subsection (d), any designation of any area under paragraph (1)
        shall be made on the basis of a determination by the Secretary,
        in consultation with the Attorney General, that the particular
        area, industry, sector, or institution is being victimized by,
        or is particularly vulnerable to, money laundering and related
        financial crimes.
          ``(3) Specific initiatives.--Any head of a department,
        bureau, or law enforcement agency, including any State or local
        prosecutor, involved in the detection, prevention, and
        suppression of money laundering and related financial crimes
        and any State or local official or prosecutor may submit--
                  ``(A) a written request for the designation of any
                area as a high-risk money laundering and related
                financial crimes area; or
                  ``(B) a written request for funding under section
                5351 for a specific prevention or enforcement
                initiative, or to determine the extent of financial
                criminal activity, in an area.
  ``(d) Factors.--In considering the designation of any area as a high-
risk money laundering and related financial crimes area, the Secretary
shall, to the extent appropriate and in consultation with the Attorney
General, take into account the following factors:
          ``(1) The population of the area.
          ``(2) The number of bank and nonbank financial institution
        transactions which originate in such area or involve
        institutions located in such area.
          ``(3) The number of stock or commodities transactions which
        originate in such area or involve institutions located in such
        area.
          ``(4) Whether the area is a key transportation hub with any
        international ports or airports or an extensive highway system.
          ``(5) Whether the area is an international center for banking
        or commerce.
          ``(6) The extent to which financial crimes and financial
        crime-related activities in such area are having a harmful
        impact in other areas of the country.
          ``(7) The number or nature of requests for information or
        analytical assistance which--
                  ``(A) are made to the analytical component of the
                Department of the Treasury; and
                  ``(B) originate from law enforcement or regulatory
                authorities located in such area or involve
                institutions or businesses located in such area or
                residents of such area.
          ``(8) The volume or nature of suspicious activity reports
        originating in the area.
          ``(9) The volume or nature of currency transaction reports or
        reports of cross-border movements of currency or monetary
        instruments originating in the area.
          ``(10) Whether, and how often, the area has been the subject
        of a geographical targeting order.
          ``(11) Observed changes in trends and patterns of money
        laundering activity.
          ``(12) Unusual patterns, anomalies, growth, or other changes
        in the volume or nature of core economic statistics or
        indicators.
          ``(13) Statistics or indicators of unusual or unexplained
        volumes of cash transactions.
          ``(14) Unusual patterns, anomalies, or changes in the volume
        or nature of transactions conducted through financial
        institutions operating within or outside the United States.
          ``(15) The extent to which State and local governments and
        State and local law enforcement agencies have committed
        resources to respond to the financial crime problem in the area
        and the degree to which the commitment of such resources
        reflects a determination by such government and agencies to
        address the problem aggressively.
          ``(16) The extent to which a significant increase in the
        allocation of Federal resources to combat financial crimes in
        such area is necessary to provide an adequate State and local
        response to financial crimes and financial crime-related
        activities in such area.

       ``Part 2--Financial Crime-Free Communities Support Program

``Sec. 5351. Establishment of financial crime-free communities support
                    program

  ``(a) Establishment.--The Secretary of the Treasury, in consultation
with the Attorney General, shall establish a program to support local
law enforcement efforts in the development and implementation of a
program for the detection, prevention, and suppression of money
laundering and related financial crimes.
  ``(b) Program.--In carrying out the program, the Secretary of the
Treasury, in consultation with the Attorney General, shall--
          ``(1) make and track grants to grant recipients;
          ``(2) provide for technical assistance and training, data
        collection, and dissemination of information on state-of-the-
        art practices that the Director determines to be effective in
        detecting, preventing, and suppressing money laundering and
        related financial crimes; and
          ``(3) provide for the general administration of the program.
  ``(c) Administration.--The Secretary shall appoint an administrator
to carry out the program.
  ``(d) Contracting.--The Secretary may employ any necessary staff and
may enter into contracts or agreements with Federal and State law
enforcement agencies to delegate authority for the execution of grants
and for such other activities necessary to carry out this chapter.

``Sec. 5352. Program authorization

  ``(a) Grant Eligibility.--To be eligible to receive an initial grant
or a renewal grant under this part, a State or local law enforcement
agency or prosecutor shall meet each of the following criteria:
          ``(1) Application.--The State or local law enforcement agency
        or prosecutor shall submit an application to the Secretary in
        accordance with section 5353(a)(2).
          ``(2) Accountability.--The State or local law enforcement
        agency or prosecutor shall--
                  ``(A) establish a system to measure and report
                outcomes--
                          ``(i) consistent with common indicators and
                        evaluation protocols established by the
                        Secretary, in consultation with the Attorney
                        General; and
                          ``(ii) approved by the Secretary;
                  ``(B) conduct biennial surveys (or incorporate local
                surveys in existence at the time of the evaluation) to
                measure the progress and effectiveness of the
                coalition; and
                  ``(C) provide assurances that the entity conducting
                an evaluation under this paragraph, or from which the
                applicant receives information, has experience in
                gathering data related to money laundering and related
                financial crimes.
  ``(b) Grant Amounts.--
          ``(1) Grants.--
                  ``(A) In general.--Subject to subparagraph (D), for a
                fiscal year, the Secretary of the Treasury, in
                consultation with the Attorney General, may grant to an
                eligible applicant under this section for that fiscal
                year, an amount determined by the Secretary of the
                Treasury, in consultation with the Attorney General, to
                be appropriate.
                  ``(B) Suspension of grants.--If such grant recipient
                fails to continue to meet the criteria specified in
                subsection (a), the Secretary may suspend the grant,
                after providing written notice to the grant recipient
                and an opportunity to appeal.
                  ``(C) Renewal grants.--Subject to subparagraph (D),
                the Secretary may award a renewal grant to a grant
                recipient under this subparagraph for each fiscal year
                following the fiscal year for which an initial grant is
                awarded.
                  ``(D) Limitation.--The amount of a grant award under
                this paragraph may not exceed $750,000 for a fiscal
                year.
          ``(2) Grant awards.--
                  ``(A) In general.--Except as provided in subparagraph
                (B), the Secretary may, with respect to a community,
                make a grant to 1 eligible applicant that represents
                that community.
                  ``(B) Exception.--The Secretary may make a grant to
                more than 1 eligible applicant that represent a
                community if--
                          ``(i) the eligible coalitions demonstrate
                        that the coalitions are collaborating with one
                        another; and
                          ``(ii) each of the coalitions has
                        independently met the requirements set forth in
                        subsection (a).
  ``(c) Condition Relating to Proceeds of Asset Forfeitures.--
          ``(1) In general.--No grant may be made or renewed under this
        part to any State or local law enforcement agency or prosecutor
        unless the agency or prosecutor agrees to donate to the
        Secretary of the Treasury for the program established under
        this part any amount received by such agency or prosecutor
        (after the grant is made) pursuant to any criminal or civil
        forfeiture under chapter 46 of title 18, United States Code, or
        any similar provision of State law.
          ``(2) Scope of application.--Paragraph (1) shall not apply to
        any amount received by a State or local law enforcement agency
        or prosecutor pursuant to any criminal or civil forfeiture
        referred to in such paragraph in excess of the aggregate amount
        of grants received by such agency or prosecutor under this
        part.
  ``(d) Rolling Grant Application Periods.--In establishing the program
under this part, the Secretary shall take such action as may be
necessary to ensure, to the extent practicable, that--
          ``(1) applications for grants under this part may be filed at
        any time during a fiscal year; and
          ``(2) some portion of the funds appropriated under this part
        for any such fiscal year will remain available for grant
        applications filed later in the fiscal year.

``Sec. 5353. Information collection and dissemination with respect to
                    grant recipients

  ``(a) Applicant and Grantee Information.--
          ``(1) Application process.--The Secretary shall issue
        requests for proposal, as necessary, regarding, with respect to
        the grants awarded under section 5352, the application process,
        grant renewal, and suspension or withholding of renewal grants.
        Each application under this paragraph shall be in writing and
        shall be subject to review by the Secretary.
          ``(2) Reporting.--The Secretary shall, to the maximum extent
        practicable and in a manner consistent with applicable law,
        minimize reporting requirements by a grant recipient and
        expedite any application for a renewal grant made under this
        part.
  ``(b) Activities of Secretary.--The Secretary may--
          ``(1) evaluate the utility of specific initiatives relating
        to the purposes of the program;
          ``(2) conduct an evaluation of the program; and
          ``(3) disseminate information described in this subsection
        to--
                  ``(A) eligible State local law enforcement agencies
                or prosecutors; and
                  ``(B) the general public.

``Sec. 5354. Grants for fighting money laundering and related financial
                    crimes

  ``(a) In General.-- After the end of the 1-year period beginning on
the date the 1st national strategy for combating money laundering and
related financial crimes is submitted to the Congress in accordance
with section 5341, and subject to subsection (b), the Secretary may
review, select, and award grants for State or local law enforcement
agencies and prosecutors to provide funding necessary to investigate
and prosecute money laundering and related financial crimes in high-
risk money laundering and related financial crime areas.
  ``(b) Special Preference.--Special preference shall be given to
applications submitted to the Secretary which demonstrate collaborative
efforts of 2 or more State and local law enforcement agencies or
prosecutors who have a history of Federal, State, and local cooperative
law enforcement and prosecutorial efforts in responding to such
criminal activity.

``Sec. 5355. Authorization of appropriations

  ``There are authorized to be appropriated the following amounts for
the following fiscal years to carry out the purposes of this
subchapter:

``For fiscal year:                  The amount authorized is:
    1999
                                        $5,000,000.
    2000
                                        $7,500,000.
    2001
                                        $10,000,000.
    2002
                                        $12,500,000.
    2003
                                        $15,000,000.''.

  (b) Clerical Amendment.--The table of subchapters for chapter 53 of
title 31, United States Code, is amended by adding at the end the
following item:

    ``SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

``5340. Definitions.

   ``Part 1--National Money Laundering and Related Financial Crimes
                                Strategy

``5341. National money laundering and related financial crimes
strategy.
``5342. High-risk money laundering and related financial crime areas.

       ``Part 2--Financial Crime-Free Communities Support Program

``5351. Establishment of financial crime-free communities support
program.
``5352. Program authorization.
``5353. Information collection and dissemination with respect to grant
recipients.
``5354. Grants for fighting money laundering and related financial
crimes.
``5355. Authorization of appropriations.''.

  (c) Report and Recommendations.--Before the end of the 5-year period
beginning on the date the 1st national strategy for combating money
laundering and related financial crimes is submitted to the Congress
pursuant to section 5341(a)(1) of title 31, United States Code (as
added by section 2(a) of this Act), the Secretary of the Treasury shall
submit a report to the Committee on Banking and Financial Services of
the House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate on the effectiveness of and the need for
the designation of areas, under section 5342 of title 31, United States
Code (as added by such section 2(a)), as high-risk money laundering and
related financial crime areas, together with such recommendations for
legislation as the Secretary may determine to be appropriate to carry
out the purposes of such section.

                          Purpose and Summary

    The purpose of H.R. 1756, the Money Laundering and
Financial Crimes Strategy Act, is to create a national strategy
for combating money laundering and other financial crimes by
coordinating Federal, state and local efforts and resources.
The legislation provides for the designation of high risk money
laundering areas for the purpose of providing these localities
with increased Federal assistance and access to information
relating to money laundering and other financial crimes. The
bill also provides a mechanism to fund money laundering
investigations conducted by state and local law enforcement
agencies.

                  Background and Need for Legislation

    Efforts by law enforcement officials to combat money
laundering--the process by which criminal elements seek to
legitimize the proceeds of their illegal activities--have taken
on particular urgency as the operations of large-scale criminal
organizations in the U.S. and abroad have grown increasingly
sophisticated. Money laundering and related financial crimes,
which are often inextricably tied to the illegal drug trade
that has ravaged so many American communities, are frequently
concentrated in specific geographic areas where drug
trafficking is also prevalent. State and local law enforcement
officials and prosecutors in these areas often find themselves
overwhelmed by the sheer size and scope of the criminal
enterprises arrayed against them, and encounter particular
difficulty in following the complex ``money trails'' by which
these organizations conceal and launder their ill-gotten gains.
    Recent law enforcement initiatives have demonstrated that
working partnerships among Federal, state and local agencies
can yield impressive results in the fight against drug-related
money laundering. Perhaps the best example of the benefits of a
coordinated law enforcement response to money laundering can be
found in the Treasury Department's successful use of a
Geographic Targeting Order (GTO) in 1996 and 1997 to combat
money laundering in a segment of the money transmitter industry
in the New York City metropolitan area. The New York GTO, which
was the subject of a hearing of the Subcommittee on General
Oversight and Investigations in March 11, 1997, was issued
pursuant to the Secretary of the treasury's authority under the
Bank Secrecy Act to require a group of financial institutions
in a geographic area to comply with special reporting or
record-keeping requirements. It required 22 licensed money
transmitters and their appropriately 3,500 agents to report
information about the senders and recipients of all cash
purchased transmissions to Colombia of $750 or more. By
lowering the reporting threshold and targeting a specific
sector of the money transmitting industry long thought to be a
conduit for the proceeds of the Colombian cartels' U.S. street
sales of narcotics, the New York GTO achieved a dramatic
reduction in the volume of illicit funds moving to Colombia
through New York money transmitters.
    A critical component of the New York GTO's success was the
investigative work of an interagency task force comprised of
140 agents, police officers and support personnel from 13
different Federal, State, and local agencies, including the
U.S. Customs Service, the Internal Revenue Service, the Secret
Service, the Justice Department, the New York Police
Department, the New York State Banking Department, and the
Nassau and Suffolk County, New York, Police Departments. The
task force compiled a comprehensive database of information on
the money remitter industry and its customers, and stepped up
its street level enforcement and surveillance activity in the
targeted area to impede the narco-traffickers' use of alternate
routes for their illicit proceeds once the GTO made money
transmitters a less attractive option.
    In testimony before the Subcommittee on General Oversight
and Investigations, Deputy Assistant Attorney General for the
Criminal Division Robert S. Litt stated that ``the most
important lesson from the GTO experience is the value of
consistent and close interagency cooperation,'' involving the
efforts of prosecutors and investigators to ``target the
appropriate financial sector, to identify their targets, to
obtain and analyze as many financial records as can be made
available, and, if necessary, to take the time to start
enforcement at the lowest level and work slowly up the
ladder.''
    H.R. 1756 is designed to apply to lessons of the New York
GTO on a national level, by calling for the formulation of a
national strategy for combating money laundering and related
financial crimes that emphasizes the importance of coordination
and information-sharing among Federal, state, and local
authorities, and by singling out localities in which money
laundering is particularly rampant for increased financial
assistance and Federal law enforcement support.

                                Hearings

    On June 3, 1997, Rep. Nydia Velazquez (D-NY.) introduced
H.R. 1756, the Money laundering and Financial Crimes Strategy
Act of 1997. The Committee held a hearing on the legislation
and related issues on June 11, 1998. Testifying were The
Honorable Charles Grassley (R-Iowa); Raymond Kelly, Treasury
Undersecretary for Enforcement; Mary Lee Warren, Deputy
Assistant Attorney General for the Criminal Division; Jonathan
Weiner, Deputy Assistant Secretary of State; Herbert A. Biern,
Associate Director of the Federal Reserve Board's Division of
Banking Supervision and Regulation; Robert B. Serino, Deputy
Chief Counsel of the Office of the Comptroller of the Currency;
Jack A. Blum of the law firm of Lobel, Novins & Lamont, and
Charles S. Saphos of the law firm of Fila & Saphos.

                   Committee Consideration and Votes

    On June 11, 1998, the full Committee met in open session to
mark up H.R. 1756, the Money Laundering and Financial Crimes
Strategy Act. The Committee considered as original text for
purposes of amendment an Amendment in the Nature of a
Substitute offered by Ms. Velaquez. The Amendment in the Nature
of a Substitute was adopted by voice vote.
    The Committee adopted, by voice vote, a motion by Mr.
Bereuter to authorize the Chairman to offer such motions as may
be necessary in the House of Representatives to go to
conference with the Senate.

                      Committee Oversight Findings

    In compliance with clause 2(l) (3)(A) of rule XI of the
Rules of the House of Representatives, the Committee reports
that the findings and recommendations of the Committee, based
on oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings and recommendations of the Committee on
Government Reform and Oversight were received as referred to in
clause 2(l)(3)(D) of rule XI of the Rules of the House of
Representatives.

                        Constitutional Authority

    In compliance with clause 2(l)(4) of rule XI of the Rules
of the House of the Representatives, the constitutional
authority for Congress to enact this legislation is derived
from the interstate commerce clause (Clause 3, Section 8,
Article I). In addition, the power ``to provide for the
punishment of counterfeiting * * * current coin of the U.S.''
(Cause 6, Section 8, Article I) and to ``coin money'' and
``regulate the value thereof'' (Clause 5, Section 8, Article I)
has been broadly construed to allow for the Federal regulation
of the provision of credit, financial institutions, and money.

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of rule XI of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.

                    Congressional Accountability Act

    The reporting requirement under section 102(b)(3) of the
Congressional Accountability Act (P.L. 104-1) is inapplicable
because this legislation does not relate to terms and
conditions of employment or access to public services or
accommodations.

    Congressional Budget Office Cost Estimate and Unfunded Mandates
                                Analysis

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 24, 1998.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1756, the Money
Laundering and Financial Crimes Strategy Act of 1998.
    If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark
Grabowicz (for federal costs) and Leo Lex (for the state and
local impact).
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 1756--Money Laundering and Financial Crimes Strategy Act of 1998

    Summary: H.R. 1756 would direct the Secretary of the
Treasury to develop a national strategy for combating money
laundering and related financial crimes. The bill also would
direct the Secretary to establish a grant program to support
state and local law enforcement efforts against such crimes.
This legislation would authorize the appropriation of $50
million over the 1999-2003 period to carry out these programs.
    CBO estimates that implementing H.R. 1756 would result in
additional discretionary spending of about $36 million over the
1999-2003 period, assuming appropriation of the authorized
amounts. This legislation could lead to an increase in
receipts, so pay-as-you-go procedures would apply, but we
estimate that any increases would be less than $500,000
annually.
    H.R. 1756 contains no intergovernmental or private-sector
mandates, as defined in the Unfunded Mandates Reform Act
(UMRA).
    Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 1756 is shown in the following table.
For the purposes of this estimate, CBO assumes that the
authorized amounts will be appropriated by the start of each
fiscal year and that outlays would be consistent with
historical spending patterns for similar programs. The costs of
this legislation fall within budget function 750
(administration of justice).

                                    [By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                  1999      2000      2001      2002      2003
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Authorization level...........................................         5         7        10        13        15
Estimated outlays.............................................         1         4         8        10        13
----------------------------------------------------------------------------------------------------------------
Note: Enacting H.R. 1756 could increase governmental receipts through donations from grant recipients, but we do
  not expect any such amounts to be significant.

    Pay-as-you-go considerations: Section 252 of the Balanced
Budget and Emergency Deficit Control Act sets up pay-as-you-go
procedures for legislation affecting direct spending or
receipts. Many of the grants established by H.R. 1756 would be
used to expand investigations into financial crimes and could
result in the forfeiture of more criminals' assets to state and
local governments. The bill would require grant recipients to
pay to the Department of the Treasury amounts received as a
result of successful investigations, up to the amount of the
individual grant. These payments would be classified as
governmental receipts, but we do not expect any such amounts to
be significant.
    Estimated impact on State, local, and tribal governments:
H.R. 1756 contains no intergovernmental mandates as defined in
UMRA. The bill would establish grant programs for state and
local law enforcement efforts to prevent and prosecute money
laundering and other financial crimes. To qualify for these
grants, state and local agencies would have to meet certain
conditions, including relinquishing claims to a portion of the
assets that are forfeited as a result of civil or criminal
prosecution. Because these requirements would be conditions of
assistance, they would not be considered mandates under UMRA.
    Estimated impact on the private sector: H.R. 1756 contains
no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Costs: Mark Grabowicz; Impact
on State, Local, and Tribal Governments: Leo Lex.
    Estimate approved by: Robert A. Sunshine, Deputy Director
for Budget Analysis.

                      Section-by-Section Analysis

Section 1. Short title

    ``Money Laundering and Financial Crimes Strategy Act of
1998''

Section 2. Money laundering and related financial crimes

    This section would amend chapter 53 of title 31 of the
United States Code by adding a new Subchapter III, comprised of
the following sections:

Section 5340. Definitions

    This section defines several terms for purposes of new
Subchapter III. The definition of ``money laundering and
related financial crime'' is intended to be sufficiently broad
to allow the Secretary of the Treasury and the Attorney General
to keep pace with rapidly changing trends in money laundering
activity in developing the national strategy mandated by the
legislation.

Section 5341. National money laundering and related financial crimes
        strategy

    The legislation authorizes the Secretary of the Treasury,
in consultation with the Attorney General, to promulgate a
National Money Laundering Strategy, to be submitted to Congress
on an annual basis. The Strategy would, among other things, (1)
establish comprehensive, research-based goals, objectives and
priorities for reducing money laundering; (2) coordinate
efforts by Federal government agencies, state and local law
enforcement authorities, and the private financial sector to
prevent money laundering and related financial crimes; (3)
describe operational initiatives to improve detection of money
laundering and related financial crimes; (4) project three-year
program and budget priorities and identify achievable projects
for reducing financial crimes; (5) assess the sufficiency of
the proposed budget in implementing the Strategy; (6) describe
the geographical areas designated as ``high-risk money
laundering and related financial crime areas'' pursuant to
section 5342; (7) identify any additional information needed to
ascertain trends in financial crimes; and (8) outline a plan
for enhancing the compatibility of automated information
systems and facilitating access by Federal, state and local
officials to timely and accurate information relating to money
laundering and related financial crimes.
    This section also mandates preparation of an annual report
by the Secretary of the Treasury evaluating the effectiveness
of policies to combat money laundering and related financial
crimes. It provides that in developing the national strategy
for combating money laundering and related financial crimes,
the Secretary of the Treasury and the Attorney General shall
consult with the Department of the Treasury law enforcement
organizations involved in the detection, prevention, and
suppression of money laundering and related financial crimes,
the Board of Governors of the Federal Reserve System and other
Federal banking agencies, and the National Credit Union
Administration Board, state and local officials, including
prosecutors, and representatives of the private financial
services sector, among others.

Section 5342. High-risk money laundering and related financial crime
        areas

    Because money laundering and related financial crimes are
frequently concentrated in particular geographic areas,
financial systems, industry sectors, or financial institutions,
and because these crimes have a destructive influence on many
local communities, the legislation authorizes the Secretary of
the Treasury, in consultation with the Attorney General, to
designate certain regions as high risk money laundering areas.
Areas so designated would be targeted for increased scrutiny by
Federal, state and local law enforcement officials. This
approach is modeled after the High Intensity Drug Trafficking
Area (HIDTA) Program administered by the Office of National
Drug Control Policy, which coordinates the efforts of Federal,
state, and local agencies in regions with critical narcotics
trafficking problems.
    In making designations pursuant to this section, the
Secretary of the Treasury is directed to take into account the
following factors: the population of the area; the number of
bank and non-bank financial institution transactions which
originate at or involve institutions in the area; the number of
stock or commodities transactions which originate at or involve
institutions in the area; whether the area is a key
transportation hub with any international ports or airports or
an extensive highway system; whether the area is an
international center for banking or commerce; the extent to
which financial crimes and financial crime-related activities
are having a harmful impact in the area; whether the area is or
has been the subject of active money laundering investigations;
the volume or nature of suspicious activity reports originating
in the area; the volume or nature of currency transaction
reports or reports of cross-border movements of currency or
monetary instruments originating in the area; whether, and how
often, the area has been the subject of a geographical
targeting order; any observed changes in trends and patterns of
money laundering activity; unusual patterns, anomalies, growth,
or other changes in the volume or nature of core economic
statistics or indicators; statistics or indicators of unusual
or unexplained volumes of cash transactions; unusual patterns,
anomalies, growth, or changes in the volume or nature of
transactions conducted through financial institutions operating
within or outside the United States; the extend to which state
and local governments and state and local law enforcement
agencies have committed resources to the financial crime
problem in the area and the degree to which the commitment of
such resources reflects a determination by such government and
agencies to address the problem aggressively; and the extent to
which a significant increase in the allocation of Federal
resources to combat financial crimes in such area is necessary
to provide an adequate state and local response to financial
crimes and financial crime-related activities in such area.

Section 5351. Establishment of financial crime-free communities support
        program

    This section directs the Secretary of the Treasury, in
consultation with the Attorney General, to establish an
assistance program for communities that find themselves
besieged by money laundering. The Financial Crime-Free
Communities Support Program would provide grants, technical
assistance and training, and information on ``best practices''
to support local law enforcement efforts to detect and prevent
money laundering and related financial crimes. This section
also authorizes the appointment of a director to administer the
program.

Section 5352. Program authorization

    This section outlines the eligibility criteria for
Financial Crime-Free Communities Support Program grants. To
qualify for assistance, a state or local law enforcement agency
or prosecutor must (1) establish a system for measuring and
reporting outcomes consistent with standards set by the
Secretary of the Treasury, in consultation with the Attorney
General; (2) conduct biennial surveys to measure the progress
and effectiveness of anti-money laundering efforts in the
relevant jurisdiction; and (3) provide assurances that the
entity conducting the survey has experience in gathering data
related to money laundering and related financial crimes.
    The section authorizes the Secretary of the Treasury, in
consultation with the Attorney General, to make grants in
amounts of up to $750,000 in any one fiscal year, and to
suspend any such grant upon a determination that the recipient
no longer meets the criteria for eligibility. As a condition of
assistance, grant recipients must agree to remit to the
Secretary of the Treasury the proceeds of any asset forfeiture
executed under chapter 46 of title 18 of the United States
Code, or any similar provision of state law, up to the
aggregate amount of grants awarded to the recipient under the
Financial Crime-Free Communities Support Program.
    The section authorizes the Secretary of the Treasury to
establish a rolling grant process, whereby applications for
funding could be filed at any time during the fiscal year, and
some portion of the funds appropriated in such fiscal year
would remain available for grant requests made later in the
fiscal year.

Section 5353. Information collection and dissemination with respect to
        grant recipients

    This section specifies the procedures to be followed by the
Secretary of the Treasury in administering the Financial Crime-
Free Communities Support Program, including the application
process and the dissemination of information regarding the
program to eligible law enforcement agencies and the general
public.

Section 5354. Grants for fighting money laundering and related
        financial crimes

    This section authorizes the Secretary of the Treasury to
make grants to state and local law enforcement agencies and
prosecutors for the purpose of investigating and prosecuting
money laundering and related financial crimes in high-risk
money laundering and related financial crime areas. In making
such awards, the Secretary of the Treasury will accord special
preference to localities that demonstrate collaborative efforts
by two or more state and local law enforcement agencies or
prosecutors who have a history of Federal, state, and local
cooperative law enforcement and prosecutorial efforts in
responding to money laundering.

Section 5355. Authorization of appropriations

    This section authorizes the appropriation of $5 million in
its first year, with a $2.5 million increase in each subsequent
year for five years, for fulfilling the requirements of the
legislation. It also mandates submission of a report by the
Secretary of the Treasury to the House and Senate Banking
Committees on the effectiveness of and need for the designation
of high intensity money laundering areas.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the
House of Representatives, changes in existing law made by the
bill, as reported, are shown as follows (new matter is printed
in italic and existing law in which no change is proposed is
shown in roman):

TITLE 31, UNITED STATES CODE

           *       *       *       *       *       *       *

                   CHAPTER 53--MONETARY TRANSACTIONS

               SUBCHAPTER I--CREDIT AND MONETARY EXPANSION

Sec.
5301.  Buying obligations of the United States Government.
     * * * * * * *

      SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

5340. Definitions.

 Part 1--National Money Laundering and Related Financial Crimes Strategy

5341. National money laundering and related financial crimes strategy.
5342. High-risk money laundering and related financial crime areas.

        Part 2--Financial Crime-Free Communities Support Program

5351. Establishment of financial crime-free communities support program.
5352. Program authorization.
5353. Information collection and dissemination with respect to grant
          recipients.
5354. Grants for fighting money laundering and related financial crimes.
5355. Authorization of appropriations.
     * * * * * * *

     SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

Sec. 5340. Definitions

  For purposes of this subchapter, the following definitions
shall apply:
          (1) Department of the treasury law enforcement
        organizations.--The term ``Department of the Treasury
        law enforcement organizations'' has the meaning given
        to such term in section 9703(p)(1).
          (2) Money laundering and related financial crime.--
        The term ``money laundering and related financial
        crime'' means an offense under subchapter II of this
        chapter, chapter II of title I of Public Law 91-508 (12
        U.S.C. 1951, et seq.; commonly referred to as the
        ``Bank Secrecy Act''), or section 1956, 1957, or 1960
        of title 18 or any related Federal, State, or local
        criminal offense.
          (3) Secretary.--The term ``Secretary'' means the
        Secretary of the Treasury.
          (4) Attorney general.--The term ``Attorney General''
        means the Attorney General of the United States.

Part 1--National Money Laundering and Related Financial Crimes Strategy

Sec. 5341. National money laundering and related financial crimes
                    strategy

  (a) Development and Transmittal to Congress.--
          (1) Development.--The President, acting through the
        Secretary and in consultation with the Attorney
        General, shall develop a national strategy for
        combating money laundering and related financial
        crimes.
          (2) Transmittal to congress.--By February 1 of 1999,
        2000, 2001, 2002, and 2003, the President shall submit
        a national strategy developed in accordance with
        paragraph (1) to the Congress.
          (3) Separate presentation of classified material.--
        Any part of the strategy that involves information
        which is properly classified under criteria established
        by Executive Order shall be submitted to the Congress
        separately.
  (b) Development of Strategy.--The national strategy for
combating money laundering and related financial crimes shall
address any area the President, acting through the Secretary
and in consultation with the Attorney General, considers
appropriate, including the following:
          (1) Goals, objectives, and priorities.--
        Comprehensive, research-based goals, objectives, and
        priorities for reducing money laundering and related
        financial crime in the United States.
          (2) Prevention.--Coordination of regulatory and other
        efforts to prevent the exploitation of financial
        systems in the United States for money laundering and
        related financial crimes, including a requirement that
        the Secretary shall--
                  (A) regularly review enforcement efforts
                under this subchapter and other provisions of
                law and, when appropriate, modify existing
                regulations or prescribe new regulations for
                purposes of preventing such criminal activity;
                and
                  (B) coordinate prevention efforts and other
                enforcement action with the Board of Governors
                of the Federal Reserve System, the Securities
                and Exchange Commission, the Federal Trade
                Commission, other Federal banking agencies, and
                the National Credit Union Administration Board.
          (3) Detection initiatives.--A description of
        operational initiatives to improve detection of money
        laundering and related financial crimes.
          (4) Enhancement of the role of the private financial
        sector in prevention.--A description of the enhanced
        partnership between the private financial sector and
        law enforcement agencies with regard to the prevention
        and detection of money laundering and related financial
        crimes, including providing incentives to strengthen
        internal controls and to adopt on an industrywide basis
        more effective policies.
          (5) Intergovernmental cooperation.--A description
        of--
                  (A) cooperative efforts between the Federal
                Government and State and local officials,
                including State and local prosecutors and other
                law enforcement officials; and
                  (B) cooperative efforts among the several
                States and between State and local officials,
                including State and local prosecutors and other
                law enforcement officials,
        for financial crimes control which could be utilized or
        should be encouraged.
          (6) Project and budget priorities.--A 3-year
        projection for program and budget priorities and
        achievable projects for reductions in financial crimes.
          (7) Assessment of funding.--A complete assessment of
        how the proposed budget is intended to implement the
        strategy and whether the funding levels contained in
        the proposed budget are sufficient to implement the
        strategy.
          (8) Designated areas.--A description of geographical
        areas designated as ``high-risk money laundering and
        related financial crime areas'' in accordance with, but
        not limited to, section 5342.
          (9) Persons consulted.--Persons or officers consulted
        by the Secretary pursuant to subsection (d).
          (10) Data regarding trends in money laundering and
        related financial crimes.--The need for additional
        information necessary for the purpose of developing and
        analyzing data in order to ascertain financial crime
        trends.
          (11) Improved communications systems.--A plan for
        enhancing the compatibility of automated information
        and facilitating access of the Federal Government and
        State and local governments to timely, accurate, and
        complete information.
  (c) Effectiveness Report.--At the time each national strategy
for combating financial crimes is transmitted by the President
to the Congress (other than the 1st transmission of any such
strategy) pursuant to subsection (a), the Secretary shall
submit a report containing an evaluation of the effectiveness
of policies to combat money laundering and related financial
crimes.
  (d) Consultations.--In addition to the consultations required
under this section with the Attorney General, in developing the
national strategy for combating money laundering and related
financial crimes, the Secretary shall consult with--
          (1) the Board of Governors of the Federal Reserve
        System and other Federal banking agencies and the
        National Credit Union Administration Board;
          (2) State and local officials, including State and
        local prosecutors;
          (3) the Securities and Exchange Commission;
          (4) the Commodities and Futures Trading Commission;
          (5) the Director of the Office of National Drug
        Control Policy, with respect to money laundering and
        related financial crimes involving the proceeds of drug
        trafficking;
          (6) the Chief of the United States Postal Inspection
        Service;
          (7) to the extent appropriate, State and local
        officials responsible for financial institution and
        financial market regulation;
          (8) any other State or local government authority, to
        the extent appropriate;
          (9) any other Federal Government authority or
        instrumentality, to the extent appropriate; and
          (10) representatives of the private financial
        services sector, to the extent appropriate.

Sec. 5342. High-risk money laundering and related financial crime areas

  (a) Findings and Purpose.--
          (1) Findings.--The Congress finds the following:
                  (A) Money laundering and related financial
                crimes frequently appear to be concentrated in
                particular geographic areas, financial systems,
                industry sectors, or financial institutions.
                  (B) While the Secretary has the
                responsibility to act with regard to Federal
                offenses which are being committed in a
                particular locality or are directed at a single
                institution, because modern financial systems
                and institutions are interconnected to a degree
                which was not possible until recently, money
                laundering and other related financial crimes
                are likely to have local, State, national, and
                international effects wherever they are
                committed.
          (2) Purpose and objective.--It is the purpose of this
        section to provide a mechanism for designating any area
        where money laundering or a related financial crime
        appears to be occurring at a higher than average rate
        such that--
                  (A) a comprehensive approach to the problem
                of such crime in such area can be developed, in
                cooperation with State and local law
                enforcement agencies, which utilizes the
                authority of the Secretary to prevent such
                activity; or
                  (B) such area can be targeted for law
                enforcement action.
  (b) Element of National Strategy.--The designation of certain
areas as areas in which money laundering and related financial
crimes are extensive or present a substantial risk shall be an
element of the national strategy developed pursuant to section
5341(b).
  (c) Designation of Areas.--
          (1) Designation by secretary.--The Secretary, after
        taking into consideration the factors specified in
        subsection (d), shall designate any geographical area,
        industry, sector, or institution in the United States
        in which money laundering and related financial crimes
        are extensive or present a substantial risk as a
        ``high-risk money laundering and related financial
        crimes area''.
          (2) Case-by-case determination in consultation with
        the attorney general.--In addition to the factors
        specified in subsection (d), any designation of any
        area under paragraph (1) shall be made on the basis of
        a determination by the Secretary, in consultation with
        the Attorney General, that the particular area,
        industry, sector, or institution is being victimized
        by, or is particularly vulnerable to, money laundering
        and related financial crimes.
          (3) Specific initiatives.--Any head of a department,
        bureau, or law enforcement agency, including any State
        or local prosecutor, involved in the detection,
        prevention, and suppression of money laundering and
        related financial crimes and any State or local
        official or prosecutor may submit--
                  (A) a written request for the designation of
                any area as a high-risk money laundering and
                related financial crimes area; or
                  (B) a written request for funding under
                section 5351 for a specific prevention or
                enforcement initiative, or to determine the
                extent of financial criminal activity, in an
                area.
  (d) Factors.--In considering the designation of any area as a
high-risk money laundering and related financial crimes area,
the Secretary shall, to the extent appropriate and in
consultation with the Attorney General, take into account the
following factors:
          (1) The population of the area.
          (2) The number of bank and nonbank financial
        institution transactions which originate in such area
        or involve institutions located in such area.
          (3) The number of stock or commodities transactions
        which originate in such area or involve institutions
        located in such area.
          (4) Whether the area is a key transportation hub with
        any international ports or airports or an extensive
        highway system.
          (5) Whether the area is an international center for
        banking or commerce.
          (6) The extent to which financial crimes and
        financial crime-related activities in such area are
        having a harmful impact in other areas of the country.
          (7) The number or nature of requests for information
        or analytical assistance which--
                  (A) are made to the analytical component of
                the Department of the Treasury; and
                  (B) originate from law enforcement or
                regulatory authorities located in such area or
                involve institutions or businesses located in
                such area or residents of such area.
          (8) The volume or nature of suspicious activity
        reports originating in the area.
          (9) The volume or nature of currency transaction
        reports or reports of cross-border movements of
        currency or monetary instruments originating in the
        area.
          (10) Whether, and how often, the area has been the
        subject of a geographical targeting order.
          (11) Observed changes in trends and patterns of money
        laundering activity.
          (12) Unusual patterns, anomalies, growth, or other
        changes in the volume or nature of core economic
        statistics or indicators.
          (13) Statistics or indicators of unusual or
        unexplained volumes of cash transactions.
          (14) Unusual patterns, anomalies, or changes in the
        volume or nature of transactions conducted through
        financial institutions operating within or outside the
        United States.
          (15) The extent to which State and local governments
        and State and local law enforcement agencies have
        committed resources to respond to the financial crime
        problem in the area and the degree to which the
        commitment of such resources reflects a determination
        by such government and agencies to address the problem
        aggressively.
          (16) The extent to which a significant increase in
        the allocation of Federal resources to combat financial
        crimes in such area is necessary to provide an adequate
        State and local response to financial crimes and
        financial crime-related activities in such area.

        Part 2--Financial Crime-Free Communities Support Program

Sec. 5351. Establishment of financial crime-free communities support
                    program

  (a) Establishment.--The Secretary of the Treasury, in
consultation with the Attorney General, shall establish a
program to support local law enforcement efforts in the
development and implementation of a program for the detection,
prevention, and suppression of money laundering and related
financial crimes.
  (b) Program.--In carrying out the program, the Secretary of
the Treasury, in consultation with the Attorney General,
shall--
          (1) make and track grants to grant recipients;
          (2) provide for technical assistance and training,
        data collection, and dissemination of information on
        state-of-the-art practices that the Director determines
        to be effective in detecting, preventing, and
        suppressing money laundering and related financial
        crimes; and
          (3) provide for the general administration of the
        program.
  (c) Administration.--The Secretary shall appoint an
administrator to carry out the program.
  (d) Contracting.--The Secretary may employ any necessary
staff and may enter into contracts or agreements with Federal
and State law enforcement agencies to delegate authority for
the execution of grants and for such other activities necessary
to carry out this chapter.

Sec. 5352. Program authorization

  (a) Grant Eligibility.--To be eligible to receive an initial
grant or a renewal grant under this part, a State or local law
enforcement agency or prosecutor shall meet each of the
following criteria:
          (1) Application.--The State or local law enforcement
        agency or prosecutor shall submit an application to the
        Secretary in accordance with section 5353(a)(2).
          (2) Accountability.--The State or local law
        enforcement agency or prosecutor shall--
                  (A) establish a system to measure and report
                outcomes--
                          (i) consistent with common indicators
                        and evaluation protocols established by
                        the Secretary, in consultation with the
                        Attorney General; and
                          (ii) approved by the Secretary;
                  (B) conduct biennial surveys (or incorporate
                local surveys in existence at the time of the
                evaluation) to measure the progress and
                effectiveness of the coalition; and
                  (C) provide assurances that the entity
                conducting an evaluation under this paragraph,
                or from which the applicant receives
                information, has experience in gathering data
                related to money laundering and related
                financial crimes.
  (b) Grant Amounts.--
          (1) Grants.--
                  (A) In general.--Subject to subparagraph (D),
                for a fiscal year, the Secretary of the
                Treasury, in consultation with the Attorney
                General, may grant to an eligible applicant
                under this section for that fiscal year, an
                amount determined by the Secretary of the
                Treasury, in consultation with the Attorney
                General, to be appropriate.
                  (B) Suspension of grants.--If such grant
                recipient fails to continue to meet the
                criteria specified in subsection (a), the
                Secretary may suspend the grant, after
                providing written notice to the grant recipient
                and an opportunity to appeal.
                  (C) Renewal grants.--Subject to subparagraph
                (D), the Secretary may award a renewal grant to
                a grant recipient under this subparagraph for
                each fiscal year following the fiscal year for
                which an initial grant is awarded.
                  (D) Limitation.--The amount of a grant award
                under this paragraph may not exceed $750,000
                for a fiscal year.
          (2) Grant awards.--
                  (A) In general.--Except as provided in
                subparagraph (B), the Secretary may, with
                respect to a community, make a grant to 1
                eligible applicant that represents that
                community.
                  (B) Exception.--The Secretary may make a
                grant to more than 1 eligible applicant that
                represent a community if--
                          (i) the eligible coalitions
                        demonstrate that the coalitions are
                        collaborating with one another; and
                          (ii) each of the coalitions has
                        independently met the requirements set
                        forth in subsection (a).
  (c) Condition Relating to Proceeds of Asset Forfeitures.--
          (1) In general.--No grant may be made or renewed
        under this part to any State or local law enforcement
        agency or prosecutor unless the agency or prosecutor
        agrees to donate to the Secretary of the Treasury for
        the program established under this part any amount
        received by such agency or prosecutor (after the grant
        is made) pursuant to any criminal or civil forfeiture
        under chapter 46 of title 18, United States Code, or
        any similar provision of State law.
          (2) Scope of application.--Paragraph (1) shall not
        apply to any amount received by a State or local law
        enforcement agency or prosecutor pursuant to any
        criminal or civil forfeiture referred to in such
        paragraph in excess of the aggregate amount of grants
        received by such agency or prosecutor under this part.
  (d) Rolling Grant Application Periods.--In establishing the
program under this part, the Secretary shall take such action
as may be necessary to ensure, to the extent practicable,
that--
          (1) applications for grants under this part may be
        filed at any time during a fiscal year; and
          (2) some portion of the funds appropriated under this
        part for any such fiscal year will remain available for
        grant applications filed later in the fiscal year.

Sec. 5353. Information collection and dissemination with respect to
                    grant recipients

  (a) Applicant and Grantee Information.--
          (1) Application process.--The Secretary shall issue
        requests for proposal, as necessary, regarding, with
        respect to the grants awarded under section 5352, the
        application process, grant renewal, and suspension or
        withholding of renewal grants. Each application under
        this paragraph shall be in writing and shall be subject
        to review by the Secretary.
          (2) Reporting.--The Secretary shall, to the maximum
        extent practicable and in a manner consistent with
        applicable law, minimize reporting requirements by a
        grant recipient and expedite any application for a
        renewal grant made under this part.
  (b) Activities of Secretary.--The Secretary may--
          (1) evaluate the utility of specific initiatives
        relating to the purposes of the program;
          (2) conduct an evaluation of the program; and
          (3) disseminate information described in this
        subsection to--
                  (A) eligible State local law enforcement
                agencies or prosecutors; and
                  (B) the general public.

Sec. 5354. Grants for fighting money laundering and related financial
                    crimes

  (a) In General.-- After the end of the 1-year period
beginning on the date the 1st national strategy for combating
money laundering and related financial crimes is submitted to
the Congress in accordance with section 5341, and subject to
subsection (b), the Secretary may review, select, and award
grants for State or local law enforcement agencies and
prosecutors to provide funding necessary to investigate and
prosecute money laundering and related financial crimes in
high-risk money laundering and related financial crime areas.
  (b) Special Preference.--Special preference shall be given to
applications submitted to the Secretary which demonstrate
collaborative efforts of 2 or more State and local law
enforcement agencies or prosecutors who have a history of
Federal, State, and local cooperative law enforcement and
prosecutorial efforts in responding to such criminal activity.

Sec. 5355. Authorization of appropriations

  There are authorized to be appropriated the following amounts
for the following fiscal years to carry out the purposes of
this subchapter:

For fiscal year:    The amount authorized is:
  1999..............$5,000,000..........................................
  2000..............$7,500,000..........................................
  2001..............$10,000,000.........................................
  2002..............$12,500,000.........................................
  2003..............$15,000,000.......................................

           *       *       *       *       *       *       *

      DISSENTING VIEW OF RON PAUL REGARDING MONEY LAUNDERING BILLS

    The support for the passage of these bills is recognition
that the current policy has failed. These two bills, H.R. 4005,
the Money Laundering Deterrence Act of 1998, and H.R. 1756, the
Money Laundering and Financial Crimes Strategy Act of 1998,
should be rejected. Despite the desire to appear to be ``doing
something'' to thwart personal behavior that some find
objectionable, the more justifiable position is to stand for
and respect the U.S. constitution, good economic sense,
individual rights and privacy. Ours is a federal government of
limited powers, restricted by the United States Constitution
and the too-often-forgotten Bill of Rights preserving
individual liberty and reserving certain powers to the states.

                        constitutional concerns

    Constitutionally there are only three federal crimes. These
are treason, piracy on the high seas, and counterfeiting. The
federal government's role in law enforcement ought to be
limited to these constitutionally federal crimes. As such, the
criminal laws concerning issues other than these must,
according to the ninth and tenth amendments, be reserved to
state and local governments. The eighteenth and twenty-first
amendments are testaments to the constitutional restrictions
placed upon police power at the federal level of government.
    This interventionist approach (further expanded by these
two bills) has not only failed to stem the flow of drugs into
this country, substantially reduce the illegal drug trades'
profitability or reduce consumption of publicly disapproved-of
substances, but it has introduced a new, violent element into
the mix. As a result of government coercion attempting to
stifle individual choice and voluntary exchange, profits on the
trade of now-illegal substances are artificially high which
induces some individuals to risk official retribution. Before
drug prohibition and the so-called war on drugs, some
individuals chose to use some drugs--just as some do today.
However, the violence associated with the drug trade is a
result of the failed federal government's attempt to restrict
individual liberty.
    It is an irrational policy: what is the rationale behind a
policy whereby morphine is legal but marijuana is not? Perhaps,
following the logic of the prohibitionists, we should, by
federal governmental intervention, outlaw fatty foods that
allegedly harm one's health.

               unfunded mandate and great regulatory cost

    These bills will join the misnamed Bank Secrecy Act and
other measures that amount to an unfunded mandate on private
bankers whose only crime is to meet the needs of their
customers. Such a federal government intervention in this
voluntary exchange is obviously wrong and unjustified by our
constitutional rights.
    The costs of showing that one complies with the current
forms far exceed any alleged benefit. These bills will only add
to that burden. Calculations using statistics provided by the
Financial Crime Enforcement Network (FinCEN) put costs of
compliance at $83,454,000 in 1996 for just one law, the Bank
Secrecy Act. This estimate was made by totalling only the
number of forms required by the Bank Secrecy Act (multiplied by
the cost of compliance of each type of form) to the respondent
financial institution, according to numbers supplied in
response to a September 1997 request by my office to FinCEN.
Two forms were not included in the total which undoubtably
would push the current total compliance cost higher. IRS 8852
had been required for less than one year, and TDF 90-2249 was
not yet active.

             regulatory burdens contribute to bank mergers

    Compliance costs for smaller banks are disproportionately
high. According to a study prepared for the Independent Banks
Association of America by Grant Thorton in 1993, annual
compliance costs for the Bank Secrecy Act in 1992 were
estimated at 2,083,003 hours and $59,660,479 just for community
banks. It noted that ``smaller banks face the highest
compliance cost in relation to total assets, equity capital and
net income before taxes. For each $1 million in assets, banks
less than $30 million in assets incur almost three times the
compliance cost of banks between $30-65 million in assets.
These findings are consistent for both equity capital and net
income measurements.'' In short, these regulations impose a
marginal advantage to larger institutions and are a
contributing factor to the rise in mergers into ever-larger
institutions. These bills will only exacerbate this factor.
    The Cost of Banking Regulation: A Review of the Evidence,
(Gregory Elliehausen, Board of Governors of the Federal Reserve
System Staff Study 171, April 1998), concurs that the new
regulations will impose a disproportionately large cost on
smaller institutions. The estimated, aggregate cost of bank
regulation (noninterest expenses) on commercial banks was
$125.9 billion in 1991, according to the Fed Staff Study. As
the introduction of new entrants into the market becomes more
costly, smaller institutions will face a marginally increased
burden and will be more likely to consolidate. ``The basic
conclusion is similar for all of the studies of economies of
scale: Average compliance costs for regulations are
substantially greater for banks at low levels of output than
for banks at moderate or high levels of output,'' the Staff
study concludes.
    In addition to all of the problems associated with the
obligations and requirements that the government regulations
impose on the productive, private sectors of the economy, the
regulatory burdens amount to a government credit allocation
scheme. As Ludwig von Mises explained well in The Theory of
Money and Credit (originally) in 1912, governmental credit
allocation is a misdirection of credit which leads to
malinvestment and contributes to an artificial boom and bust
cycle. Nobel laureate Frederick A. Hayek and Mises' other
brilliant student Murray Rothbard expounded in this idea.
    The unintended consequences of the passage of this bill, as
written, will be to stifle the formation of new financial
institutions, to consolidate current financial institutions
into larger ones better able to internalize the cost of the
additional regulations, and to lower productivity and economic
growth due to the misallocation of credit. This increased
burden must ultimately be passed on to the consumer. The
increased costs on financial institutions these bills impose
will lead to a reduction of access to financial institutions,
higher fees and higher rates. These provisions are anti-
consumer. The marginal consumers are the ones who will suffer
most under these bills.

                     little benefit for great cost

    Despite the great costs this interventionist approach
imposes on the economy, the alleged benefits are poor. Let all
of those who believe that the current anti-money laundering
laws work stand up and take credit for the success of their
approach: drugs are still readily available on the streets. The
proponents of these bills need to explain how the additional
burden that these bills will impose will meet their objectives.
They have failed to justify the costs.
    ``The drive to stem these flows has imposed an enormous
paperwork burden on banks. According to the American Bankers
Association, the cost of meeting all the regulations required
by the U.S. government may total $10 billion a year. That might
be acceptable if convictions for money laundering kept pace
with the millions of documents banks must file each year. But
the scorecard has been disappointing,'' reads the Journal of
Commerce (December 10, 1996).
    Referring to the same Justice Department figures cited in
the Journal of Commerce article, Richard Rahn, president and
CEO of Novecon, LTD, writes, ``In the ten year period from
1987-1996, banks filed more than 77 million Currency
Transaction Reports (CTRs) with the U.S. Treasury. This amounts
to approximately 308,000 pounds of paper * * * 7,300 defendants
were charged but only 580 people were convicted, according to
the Justice Department. Environmentalists take note: this works
out to about 531 pounds of paper per conviction [America the
Financial Imperialist, to be presented at the Cato Institute
Conference, Collateral Damage: The Economic Cost of U.S.
Foreign Policy, June 23, 1998].''
    Mr. Rahn cites arguments by former Federal Reserve Board
Governor Lawrence Lindsey who explained that money laundering
laws discriminate against the poor. Mr. Rahn's paper
elaborates, ``[The poor] are the least likely to have
established relationships with banks and the most likely to
operate primarily with cash. Hence, they are the first to be
targeted, and this even further discourages bankers from
wanting their business.''

           legal liability questions not adequately addressed

    These laws open the financial institutions up to a new area
of legal liability. These bills do not adequately address these
concerns. Responding to the Treasury Department money
laundering proposal, John J. Byrne, the American Bankers
Association's money laundering expert, said the industry
opposes plans that impose onerous record-keeping requirements
and banks fear being sued by the government or another company
if they incorrectly certify that a customer has not committed
any illegal acts (American Banker, November 11, 1997). These
regulations effectively deputize bank tellers as law
enforcement officers.
    The Independent Bankers Association of America (IBAA) has
called for FinCEN to establish a ``safe harbor'' in these
regulations. In nearly all cases, the bank has acted in good
faith and should not risk being punished. Says a January 1998
IBAA letter to FinCEN, ``If a bank has acted in good faith,
knowing that there is some protection from liability will
encourage banks to use the exemption process. For many banks,
especially smaller banks which do not experience as many large
currency transactions, it is much simpler to file a CTR. Many
are concerned about the possible liability attached to
incorrect usage of the exemption list. To avoid any hint of
liability, and to avoid criticism for examiners, bankers avoid
using the exemption process. A safe harbor from liability would
go a long way to encourage them to use exemptions, and to cut
down on the number of CTRs.'' Banks filed 12.75 million
currency transaction reports in 1996, nearly double the number
only six years earlier without any appreciable reduction in the
drug trade.

                     infringes on right to privacy

          Subtler and more far-reaching means of invading
        privacy have become available to the government.
        Discovery and invention have made it possible for the
        government, by means far more effective than stretching
        upon the rack, to obtain disclosure in court of what is
        whispered in the closet.--US Supreme Court Justice
        Louis Brandeis (1928).

    A Winston Smith, or any other average citizen, would have
good reason to be even more concerned with the technological
reach of a not so fraternal, big government agency. In his
opening statement before the Subcommittee on General Oversight
and Investigations, House Banking and Financial Services
Committee, Hearing to Review the Department of the Treasury's
Proposed Rules for Money Service Businesses, Chairman Spencer
Bachus championed privacy rights saying, ``We have to be
cognizant that rules often have unintended consequences * * *
These rules will require a huge increase in the amount of
information on private citizens that will be provided to
federal law enforcement. We need to know whether this creates a
potential for abuse, either by those in the industries that do
the reporting or by those in government that receive the
information * * * this is not an insignificant concern.''
    At the same hearing, John Byrne of the American Bankers
Association trumpeted our tradition of common law rights of
privacy and supported ``meaningful, consumer-friendly''
frameworks based on self-regulating privacy regimes. That is a
much preferred approach.
    It is proposed that some banks like the Bank Secrecy Act
because of the safety and soundness concerns associated with
``illicit'' funds. The problem lies with the government's
interventionist drug policies. Would those same proponents of
the money-laundering laws still argue about safety and
soundness of deposits from beer and wine wholesalers and
distributors?

           fincen's blemished record safeguarding our privacy

    The mere existence of the databases holding confidential
information on private individuals opens up the possibility of
abuse. Unfortunately, it is not just an unfounded fear based on
hypotheticals. In fact, the employees of FinCEN itself cannot
always be trusted. In 1993, one employee took the liberty of
using the resources at his disposal to do a little digging into
the (assumed to be) private records of the mother of his
girlfriend. In the same year, another employee of FinCEN left
her desk unattended with the opportunity available for others
to access privileged information--and someone else used the
opportunity to pursue personally-motivated independent
research.
    FinCEN defends itself in a fax to our office in response to
our inquiries saying ``our system of security controls is * * *
obviously working out. Because of the controls we have in
place, the twoviolations which occurred were picked up right
away and dealt with immediately.'' Neither employee was prosecuted nor
fired. No systemic changes were made to safeguard privacy.
    The General Accounting Office has criticized FinCEN for
failing to keep Congress adequately informed. The agency has
missed congressionally-mandated deadlines and sometimes
implemented fewer than one-half of the provisions of
congressional acts, according to one recent GAO report (Money
Laundering: FinCEN Needs to Better Manage Bank Secrecy Act
Civil Penalty Cases, June 1998).
    Computer vulnerability to hackers is another concern
expressed by a major trade group. ``The Independent Bankers of
American said the Treasury Department's Financial Crimes
Enforcement Network needs to do more to make sure that reports
on questionable bank transactions are not vulnerable to anyone
with a computer, a modem and some spare time,'' reports The
American Banker (November 30, 1995).
    ``By requiring the disclosure of detailed information on
customers and their transactions, the proposed regulations
would conflict with the confidentiality inherent in encrypted
communications in electronic banking and commerce,'' writes
Thomas E. Crocker (The American Banker, September 23, 1997) in
an editorial entitled ``Broadening Bank Secrecy Act Is Risky.''
He wrote opposing Treasury Department's proposal to expand the
BSA's reach into electronic commerce, but the comments are
valid in a broader context as well.
    No government agency can be trusted to safeguard adequately
our privacy.

             barr amendment would reduce privacy safeguards

    The sense of Congress amendment offered by Mr. Barr would
make a bad situation worse. Since current safeguards have
proved insufficient, we must not reduce what little protection
our constituents have. ```The government has tremendous
information resources at its disposal in data base centers,
like the Financial Crimes Enforcement Network (FinCEN) * * *
FinCEN has literally everything there is to know about you--tax
records, postal addresses credit records, banking information,
you name it--and if more taxpayers knew about it, they would be
outraged [emphasis added]'' claimed Grover G. Norquist,
president, Americans for Tax Reforms, in a statement to the
House Judiciary Committee at the hearing on ``Security and
Freedom Through Encryption.''
    FinCEN, in a written response to questions concerning his
testimony, said ``FinCEN has no access to income tax data of
any kind * * * The only tax records to which FinCEN has access
are property tax records of the kind that any citizen may view
in any courthouse * * * FinCEN does obtain from credit agencies
certain basic identifying information for individuals as
permitted by the Fair Credit Reporting Act. Finally, it has no
general access to banking records but only to reports of large
currency transactions and suspicious activity.''
    Mr. Norquist was ahead of his time. This bill gives FinCEN
access to income tax records. In addition, the Treasury
Department has tried to lower the threshold for ``large
currency transactions'' to only $750. Of course, if you look
``suspicious,'' let's make it only $500, they say. ``Suspicious
activities'' by customers is inherently subjective and open to
abuse. Mr. Norquist is right to point out that taxpayers should
be outraged. In addition, the so-called ``know your customer''
amendment adopted by the committee further infringes on the
right to privacy.

                      not every citizen is a crook

    In Supreme Court Justice William O. Douglas dissented in
California Bankers Assn v. Shultz, 416 U.S. 21 (1974),
questioning the Constitutionality of the Bank Secretary Act,
writing:

          First, as to the recordkeeping requirements, their
        announced purpose is that they will have ``a high
        degree of usefulness in criminal, tax, or regulatory
        investigations or proceedings,'' 12 U.S.C. 1829b * * *
        It is estimated that a minimum of 20 billion checks--
        and perhaps 30 billion--will have to be photocopied and
        that the weight of these little pieces of paper will
        approximately 166 million pounds a year * * * It would
        be highly useful to governmental espionage to have like
        reports from all our bookstores, all our hardware [416
        U.S. 21, 85] and retail stores, all our drugstores.
        These records too might be `useful' in criminal
        investigations.
          One's reading habits furnish telltale clues to those
        who are bent on bending us to one point of view. What
        one buys at the hardware and retail stores may furnish
        clues to potential uses of wires, soap powders, and the
        like used by criminals. A mandatory recording of all
        telephone conversations would be better than the
        recording of checks under the Bank Secrecy Act, if Big
        Brother is to have his way [emphasis added]. The
        records of checks--now available to the investigators--
        are highly useful. In a sense a person is defined by
        the checks he writes. By examining them the agents get
        to know his doctors, lawyers, creditors, political
        allies, social connections, religious affiliation,
        educational interests, the papers and magazines he
        reads, and so on ad infinitum. These are all tied to
        one's social security number; and now that we have the
        data banks, these other items will enrich that
        storehouse and make it possible for a bureaucrat--by
        pushing one button--to get in an instant the names of
        the 190 million American who are subversives or
        potential and likely candidates.
          It is, I submit, sheer nonsense to agree with the
        Secretary that all bank records of every citizen ``have
        a high degree of usefulness in criminal, tax, or
        regulatory investigations or proceedings.'' That is
        unadulterated nonsense unless we are to assume that
        every citizen is a crook, an assumption I cannot
        make,'' Justice Douglas concluded.

                 casablanca operation worsens situation

    The police ``sting'' operation has caused international
problems since such operations are illegal in Mexico with some
referring to it as ``a debacle for U.S. diplomacy.'' Rosario
Green, Mexico's foreign minister, says, ``This has been a very
strong blow to binational cooperation, especially on matters of
drug trafficking.'' (Wall Street Journal, May 28, 1998) U.S.
banks named in the investigation were left untouched. She
claims to have evidence that U.S. agents broke Mexican law and
Mexico may demand their extradition; she termed the operation a
``violation of national sovereignty.''
    The illegal string operation will make only a paltry dent
in money laundering activities. Sinceit is estimated that $300
billion to $500 billion is cycled through the U.S. financial system on
an annual basis, the operation will have little real effect. Federal
officials expect to seize as much as $152 million in more than 100
accounts in the United States, Europe and the Caribbean (Washington
Post, May 20, 1998).
    ``In general, U.S. government sting operations have failed
to produce many convictions. Of 142 cases filed and 290
defendants charged as the result of bank stings between 1990
and 1995, only 29 were found guilty,'' the Journal of Commerce
(December 10, 1996) article continues. And drugs are still
available on the schoolyard.

                  Oppose regulations of gold as money

    The Financial Action Task Force (FATF) on Money Laundering
(based at the Organization for Economic Cooperation and
Development), 1997-1998 Report on Money Laundering Typologies
(12 February 1998), suggested expanding still further the reach
of governmental police intervention--this time in the gold
market. ``The FATF experts considered for the first time the
possibilities of laundering in the gold market. The scale of
laundering in this sector, which is not a recent development,
constitutes a real threat.

          Gold is a very popular recourse for launderers
        because of the following characteristics:
            --a universally accepted medium of exchange;
            --a hedge in times of uncertainly;
            --prices set daily, hence a reasonably foreseeable
        value;
            --a material traded on world markets;
            --anonymity;
            --easy changeability of its forms;
            --possibility for dealers of layering transactions
        in order to blur the audit trail;
            --possibilities of double invoicing, false
        shipments and other fraudulent practices.

    The FATF report continued, ``Gold is the only raw material
comparable to money.'' While the FATF experts are clearly right
in concluding that gold is money, we should steadfastly oppose
the report's consideration of an expanded governmental reach to
control gold.
    ``It is impossible to grasp the meaning of the idea of
sound money if one does not realize that it was devised as an
instrument for the protection of civil liberties against
despotic inroads on the part of governments. Ideologically it
belongs in the same class with political constitutions and
bills of rights,'' Ludwig von Mises wrote in The Theory of
Money and Credit.

           Congress should safeguard our freedoms and privacy

    In Supreme Court Justice Thurgood Marshall's dissent in
California Bankers Assn v. Shultz, 416 U.S. 21 (1974), he
wrote:
    ``As this Court settled long ago in Boyd v. United States,
116 U.S. 616, 622 (1886), `a compulsory production of a man's
private papers to establish a criminal charge against him * * *
is within the scope of the Fourth Amendment to the Constitution
* * *.' The acquisition of records in this case, as we said of
the order to produce an invoice in Boyd, may lack the
`aggravating incidents of actual search and seizure, such as
forcible entry into a man's house and searching amongst his
papers * * *,' ibid., but this cannot change its intrinsic
character as a search and seizure. We do well to recall the
admonishment in Boyd, id., at 635:

          It may be that it is the obnoxious thing in its
        mildest and least repulsive form; but illegitimate and
        unconstitutional practices get their first footing in
        that way, namely, by silent approaches and slight
        deviations from legal modes of procedure.

First Amendment freedoms are `delicate and vulnerable.' They
need breathing space to survive * * * More importantly, however
slight may be the inhibition of First Amendment rights caused
by the bank's maintenance of the list of contributors, the
crucial factor is that the Government has shown no need,
compelling or otherwise, for the maintenance of such records.
Surely the fact that some may use negotiable instruments for
illegal purposes cannot justify the Government's running
roughshod over the First Amendment rights of the hundreds of
lawful yet controversial organizations like the ACLU. Congress
may well have been correct in concluding that law enforcement
would be facilitated by the dragnet requirements of this Act.
Those who wrote our Constitution, however, recognized more
important values [emphasis added],'' Justice Marshall
explained.
    ``Congress should block the proposed regulations and repeal
the Bank Secrecy Act, under which such rules are possible,''
wrote Richard Rahn, president of Novecon Corp. and an adjunct
scholar at the Cato Institute (Investor's Business Daily,
August 12, 1997). ``Our freedoms and our privacy are much too
important to be compromised merely to make money-laundering
more costly and inconvenient for criminals.''
    I agree.
                                                          Ron Paul.

                                <greek-d>
