Advertisement

U.S. Pushes Bill to Expand ‘Money Laundering’ Fight

Times Staff Writer

The Reagan Administration proposed legislation Thursday that would give prosecutors wide-ranging new tools to combat “money laundering” by persons trying to hide illicit profits from drug trafficking, tax evasion and other crimes.

The legislation, to be introduced in Congress next week, would provide stiff penalties--including prison terms of as much as 20 years--for bankers, lawyers, accountants or anyone else convicted of the newly defined crime of money laundering. The proposals also would make it easier for bank employees and regulatory officials to report suspicious financial transactions to investigators, Administration officials said.

“Professional money launderers play a key role for any criminal enterprise,” Atty. Gen. Edwin Meese III said at a news conference. “They are functionally equal to a ‘fence’ utilized by a burglar. They provide a service to the thieves to hide or conceal illegal money.”

Meese refused to estimate how much money is being illegally concealed. But he said the amount is “huge” because “the amount of money involved in drug trafficking is huge.” The President’s Commission on Organized Crime estimated last fall that as much as $10 billion in narcotics profits are being deposited annually in U.S. financial institutions.

Advertisement

The proposed legislation follows new initiatives by federal officials to thwart the use of banks and other institutions to disguise the amount and ownership of money gained from crime. At least 40 financial institutions are under investigation for possible involvement in money laundering, said John M. Walker Jr., assistant Treasury secretary for enforcement.

Investigators have found that money laundering has taken many forms, some as simple as obtaining a cashier’s check in exchange for a large amount of cash. Others have involved schemes as complex as buying winning lottery tickets off the black market to dispose of illegal cash.

Up to now, officials have had to proceed indirectly against money laundering by invoking laws against fraud, conspiracy and racketeering, along with provisions of the Bank Secrecy Act requiring financial institutions to report cash transactions of $10,000 or more.

Bank of Boston Case Cited

Advertisement

In one recent case, the Bank of Boston was fined $500,000 after pleading guilty to failing to report more than $1 billion in cash transactions with foreign banks, some of which involved firms linked to organized crime. And last week federal agents raided branches of seven financial institutions in Puerto Rico, arresting 17 persons, including current and former bank executives.

Other new measures to expand the arsenal of prosecutorial weapons already are pending before Congress. The Administration’s proposals would be the broadest in scope, enabling authorities to proceed directly against money-laundering schemes, officials said Thursday.

Under the Administration plan, money laundering itself would be a criminal offense, directly prohibited under a statute forbidding individuals or institutions to conduct a financial transaction generated by the commission of any crime. Violators would be subject to a maximum of 20 years in prison and fines of up to $250,000 or twice the amount of the money involved in the transaction, whichever was more. It also would become a crime to knowingly “facilitate” money laundering by someone else.

Beyond Drug Traffickers

Advertisement

Associate Deputy Atty. Gen. Charles W. Blau, describing the proposed legislation for reporters, said its provisions would enable authorities to move not only against money laundering by drug traffickers--the main targets thus far--but also against persons involved in tax evasion, bribery, investment fraud, illegal tax shelters, securities fraud, prostitution, gambling or even international terrorism.

In another development, a convicted money launderer using the name “Mario” told the House Judiciary subcommittee on crime how he had gone to banks across the country, exchanging illicitly obtained cash for cashier’s checks that subsequently would be deposited in foreign accounts.

The witness, wearing a black hood to conceal his identity, said that banks sometimes made the transactions easy--and that the teller at one bank in California had warned him: “The IRS is after you. Watch out.” In all, he said, he had laundered about $10 million, in small amounts, before being apprehended.


Advertisement