Senate Panel Backs Bill Meant to Hamper Money Launderers

A measure aimed at prohibiting criminals from laundering illegal drug profits through banks and other financial institutions sailed through the Senate Judiciary Committee Tuesday.

The bill, sponsored by the Atty. Gen. John Van de Kamp and carried by Sen. Dan McCorquodale (D-San Jose), would help law enforcement authorities catch drug traffickers who are believed to conceal an estimated $10 billion to $20 billion in illegal profits in California banks each year.

Law enforcement officials have said that California holds the notorious distinction of being a national haven for money laundering and that criminals are moving in from states where money laundering laws have been toughened.

McCorquodale told the committee his measure is “an effort to try to get to the people who make the big money in drugs.” It was approved 7 to 0 and went to the Appropriations Committee for further consideration.

Nationally, the federal Bank Secrecy Act of 1970 requires banks and other financial institutions to report to the Treasury Department any cash transaction involving more than $10,000. This allows authorities to follow a paper trail of the cash.

McCorquodale’s bill would go beyond the federal law by requiring such non-traditional financial institutions as pawn brokerages and coin dealerships to report to the state Department of Justice any transactions of $10,000 or more in cash, cashier’s checks, money orders, travelers checks, and such hard-to-trace items as gems.

It would also make money laundering a state crime and would subject bankers or others who knowingly fail to report major transactions to a three-year jail term and a heavy fine.

McCorquodale accepted several amendments to the bill, including a requirement that all transaction records be purged by the Department of Justice after five years.