Money-Laundering Laws Being Dodged, Panel Finds

Congressional investigators said today that businesses are routinely conniving with customers to circumvent money-laundering laws requiring large cash transactions be reported to the Internal Revenue Service.

“Businesses from across our land are willing to assist others in laundering money and evading taxes for a ‘quick buck,’ ” said Rep. J. J. Pickle (D-Tex.), chairman of a House Ways and Means subcommittee.

Loopholes in the present law are “big enough to . . . drive a brand new Mercedes-Benz through,” said Rep. Richard Schulze (R-Pa.).

Under a 1984 law, businesses are required to report to the IRS all transactions that involve more than $10,000 in cash. The purpose was to help the IRS identify taxpayers with large cash incomes that might otherwise be under-reported.

However, the subcommittee investigators found that car dealers, jewelers, yacht salesmen and others are willing to ignore the law in order to make big cash sales.

“It is shocking that businesses throughout the country are routinely conniving with customers to violate the law,” Pickle said during a hearing Thursday.

The subcommittee investigators reported on their visits to 79 businesses nationwide where they negotiated for the purchase of $4.2 million in luxury goods, each for more than $10,000 cash.

“Seventy-six out of 79 of these businesses agreed to accept cash and not report the transactions to the IRS. In fact, some of the businesses actually suggested ploys to circumvent the reporting requirements,” Pickle said.

The investigators bought a $55,000 Persian rug, a $250,000 condominium, a $22,000 antique mirror and a $73,000 Porsche.

Schulze criticized the IRS for lax enforcement, saying, “Our investigation found an almost total breakdown in the program.”

But Schulze said it was obvious that many businesses are anxious to hide large cash transactions and they need to be pressured into compliance.