MONEY LAUNDERING AND FINANCIAL CRIMES STRATEGY ACT OF 1998
(House of Representatives - October 16, 1998)

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[Pages H11029-H11031]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       MONEY LAUNDERING AND FINANCIAL CRIMES STRATEGY ACT OF 1998

  Mr. BACHUS. Mr. Speaker, I move to suspend the rules and concur in 
the Senate amendment to 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 crime strategy to combat money 
laundering and related financial crimes, and for other purposes.
  The Clerk read as follows:

       Senate amendment:
       Page 2, strike out all after line 20, over to and including 
     line 3 on age 3 and insert:
       ``(2) Money laundering and related financial crime.--The 
     term `money laundering and related financial crime'--
       ``(A) means the movement of illicit cash or cash equivalent 
     proceeds into, out of, or through the United States, or into, 
     out of, or through United States financial institutions, as 
     defined in section 5312 of title 31, United States Code; or
       ``(B) has the meaning given that term (or the term used for 
     an equivalent offense) under State and local criminal 
     statutes pertaining to the movement of illicit cash or cash 
     equivalent proceeds.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Alabama (Mr. Bachus) and the gentlewoman from New York (Ms. Velazquez) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Alabama (Mr. Bachus).


                             General Leave

  Mr. BACHUS. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on H.R. 1756.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Alabama?
  There was no objection.

                              {time}  1330

  Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, H.R. 1756 is the Money Laundering and Financial Crimes 
Strategy Act of 1998. It was introduced by the gentlewoman from New 
York (Ms. Velazquez), the gentleman from Iowa (Mr. Leach) and myself, 
and it directs the Secretary of the Treasury to create a national 
strategy for combating money laundering and other financial crimes by 
coordinating money laundering and other financial crimes. It also 
supplies resources to Federal, state and local agencies in the 
coordination of their efforts.
  I would explain to Members what is so important about money 
laundering. Money laundering is the flip side of narcotics trafficking. 
When we talk about the war on drugs, when we talk about our efforts 
against drugs, some people do not realize that it is a two-way street. 
On the TV we observe pictures of large amounts of drugs being seized, 
of drugs being destroyed, of them being intercepted, and, in fact, we 
have been very successful in seizing a great percentage of the drugs 
coming into this Nation.
  Where we have failed, where we have not addressed the problem that 
needs to be addressed, is in money laundering. When drugs are sold, for 
them to be profitable to the money launderers and the drug cartels 
overseas, they not only have to sell their product, they have to reap 
their profit. That means that the money must flow back out of the 
country. They must get the money back out.
  In fact, law enforcement agencies and policy makers tell us that if 
you want to hit the drug cartels where it hurts the worst, you do not 
seize the drugs, because there is an endless supply of that; you seize 
the money. And that is what this new strategy is about. Unfortunately, 
we estimate we are seizing less than 1 percent of drug proceeds money, 
and, therefore, this legislation I think is going to be a hallmark and 
really a nail in hopefully the coffin of drug cartels overseas which 
are preying on our young men and women on the streets of America.
  The legislation provides for the designation of high risk money 
laundering areas for the purpose of providing those localities with 
increased Federal attention and funding for state and local law 
enforcement efforts.
  We had a pilot project in New York City in the district of the 
gentlewoman from New York (Ms. Velazquez), who, I am sure, will cover 
this in more detail. But to tell you about the gravity of this 
situation, this effort was headed up by the New York police, the city 
police, New York State police, Customs. In a short period of time, over 
$1 billion of money transfers to Colombia were intercepted during this 
effort. I am not talking about $1 million, I am not talking about tens 
of millions of dollars. Over $1 billion in transfers were intercepted. 
So that gives you some idea about the magnitude of this problem.
  Now, the House passed this measure earlier this month by voice vote. 
On Wednesday, the Senate passed it with an amendment, again by 
unanimous consent. The Senate amendment is relatively modest in scope. 
I think it improves the bill, and I have been asked by Members of the 
Committee on the Judiciary and the Committee on Commerce to explain 
that amendment for the record.
  As passed by the House, this act provided that the Secretary of the 
Treasury's authority to develop a national strategy for combating money 
laundering and related crimes extended to all potential violations of 
title 18, sections 1956 and 1957. Those sections are the basic criminal 
money laundering provisions of our Federal law, and they contain more 
than 100 predicate offenses involving crimes as varied or desperate as 
obscenity and arms control export violations.
  The Federal Bureau of Investigation raised concerns that the shear 
breadth of the criminal conduct covered by these two sections, 1956 and 
1957, might complicate the Treasury Department's ability to develop a 
coherent national strategy for combating money laundering and in 
allocating scarce law enforcement resources to initiatives undertaken 
at the state and local level.
  In response to that, we in the House, the gentlewoman from New York 
(Ms. Velazquez), requested and the Senate conceded and actually offered 
an amendment, and also the Senate was very supportive of this amendment 
and amended the bill to provide that the national strategy should be 
directed at the movement of elicit cash or cash equivalent proceeds 
into, out of and through the United States, or into, out of and through 
United States financial institutions, because many of these are 
electronic transfers, rather than directing the scope to the more broad 
offenses delineated in title 18 and other portions of the U.S. Code. We 
all agree this is a good amendment that strengthens the bill.
  I also want to, at the request of the Committee on Commerce, take 
this opportunity to clarify the legislative intent behind another 
provision of H.R. 1756, and that is section 2.

[[Page H11030]]

  Section 2 amends chapter 53 of title 31 of the U.S. Code to direct 
the Secretary of the Treasury to regularly review enforcement efforts 
under the chapter and under the subchapter and other provisions of the 
law, and, when appropriate, modify existing regulations or prescribe 
new regulations for the purposes of preventing money laundering and 
related financial crimes.
  On June 25, 1998, the distinguished chairman of the Committee on 
Commerce, the gentleman from Virginia (Mr. Bliley) wrote to the 
gentleman from Iowa (Mr. Leach), the gentlewoman from New York (Ms. 
Velazquez) and myself, to express concern that such a broad mandate 
could be interpreted to authorize the Secretary of the Treasury to 
review enforcement actions under the Federal securities laws or to 
modify regulations promulgated pursuant to Federal security laws or to 
grant the Secretary of Treasury new or additional authority to 
prescribe regulations applicable to entities that are regulated 
pursuant to the Federal securities law.
  In response, the gentleman from Iowa (Mr. Leach) affirmed that it is 
not the Committee on Banking and Financial Services's intent for the 
language in section 2 to grant the Secretary of Treasury any new or 
additional authority over entities that are regulated pursuant to the 
Federal securities law or to require or encourage the Secretary of the 
Treasury to review enforcement actions under the Federal securities 
law, or to modify or recommend the modification of regulations 
promulgated under the Federal securities laws. That response has been 
accepted.
  Mr. Speaker, in closing I want to emphasize that H.R. 1756 is an 
excellent example of the spirit of bipartisanship and comity that has 
historically characterized the Committee on Banking and Financial 
Services's deliberation on anti-money laundering initiatives.
  We do hear a lot of partisanship and wrangling in this body. That is 
not always the case. In bringing this bill before both the House and 
the Senate, Democrats and Republicans have joined together, they worked 
closely with the administration, and the result has been a nonpartisan 
or bipartisan effort, which we believe will go a long way in combating 
illegal drugs and money laundering.

  The gentlewoman from New York (Ms. Velazquez) should be particularly 
commended for her work, and by this I mean her hard work on this 
matter. She has been a big help in dealing with the law enforcement 
agencies.
  In addition, I would like to commend and give special recognition to 
the gentleman from Iowa (Chairman Leach) and to the ranking minority 
member, the gentleman from New York (Mr. LaFalce) for their efforts in 
moving this important bill through the Committee on Banking and 
Financial Services.
  Also I want to commend members of the Subcommittee on General 
Oversight and Investigations staff for their hard work on money 
laundering in this Congress.
  An example of the administration and the Congress working together on 
this bill is that Dave Cohen from my staff, who basically worked with 
Ms. Velazquez on a daily basis in the particulars of this bill, as a 
result of working with Customs, he is no longer with the subcommittee. 
He was in fact hired by Customs, which sort of pays us a compliment to 
his ability. Dave, within the last month, has taken the position as 
assistant to the Commissioner, Ray Kelly, at Customs. So I think that 
ought to be a compliment to the entire Congress and to the staff that 
worked on this bill.
  In addition, I would like to compliment the legal staff that worked 
on this bill. Jim Clinger, the Clinger name is a name that most of us 
in Congress recognize. His father, Bill Clinger, served in this body 
with distinction. Jim Clinger and Win Yerby, legal counsel for the 
majority, worked closely on this bill. I am particularly pleased that 
Win Yerby is a native Alabamian.
  On the democratic side, Rick Maurano, who is seated at the table with 
Ms. Velazquez, also did yeoman's work on this bill. Again, this was a 
totally nonpartisan effort.
  As Chairman of the Subcommittee on Oversight and Investigations, I 
will say in closing that I have had six money laundering hearings. In 
fact, money laundering has been the central focus of the subcommittee's 
work, because I see it as one of the most important responsibilities of 
the Committee on Banking and Financial Services Subcommittee on General 
Oversight and Investigations. The reason I do is because the threat 
that narcotic drugs has in every community, in every state, in every 
locality, to us, to the integrity of our law enforcement agencies, and 
to the safety and welfare of our citizens.
  As I said, again, thanks to the gentlewoman from New York, this bill 
will go a long way in hitting the drug cartels where it hurts the 
worst, in the pocketbook.
  Mr. Speaker, H.R. 1756, the Money Laundering and Financial Crimes 
Strategy Act of 1998, introduced by the gentlelady from New York, Ms. 
Velazquez. Chairman Leach, Representative Gonzalez, and myself, directs 
the Secretary of the Treasury 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 
attention and funding for State and local law enforcement efforts.
  The House passed this measure earlier this month by voice vote, and 
on Wednesday, the other body passed it with an amendment by unanimous 
consent. The Senate amendment is relatively modest in scope.
  As passed by the House, H.R. 1756 provided that the Secretary of the 
Treasury's authority to develop a national strategy for combating 
``money laundering and related crimes'' extended to all potential 
violations of 18 U.S.C. sections 1956 and 1957, the basic criminal 
money laundering provisions, which themselves contain more than 100 
predicate offenses involving crimes as disparate as obscenity and arms 
control export violations. After the Federal Bureau of Investigation 
raised concerns that the sheer breadth of criminal conduct covered by 
sections 1956 and 1957 might complicate the Treasury Department's 
ability to develop a coherent national strategy for combating money 
laundering and to allocate scarce law enforcement resources to 
initiatives undertaken at the State and local levels, the Senate 
amended the bill to provide that the national strategy should be 
directed at the ``movement of illicit cash or cash equivalent proceeds 
into, out of or through the United States, or into, out of or through 
United States financial institutions,'' rather than at the specific 
underlying offenses delineated in title 18 and other portions of the 
United States Code.
  Mr. Speaker, I also want to take this opportunity to clarify the 
legislative intent behind another provision of H.R. 1756. Section 2 of 
the legislation amends chapter 53 of title 31 of the United States Code 
to direct the Secretary of the Treasury to ``regularly review 
enforcement efforts under this subchapter and other provisions of laws 
and, when appropriate, modify existing regulations or prescribe new 
regulations for purposes of preventing'' money laundering and related 
financial crimes. On June 25, 1998, the distinguished chairman of the 
Committee on Commerce, Mr. Bliley, wrote to Chairman Leach to express 
the concern that ``such a broad mandate could be interpreted to 
authorize the Secretary of the Treasury to review enforcement actions 
under the Federal securities laws or to modify regulations promulgated 
pursuant to the Federal securities laws, or to grant the Secretary of 
the Treasury new or additional authority to prescribe regulations 
applicable to entities that are regulated pursuant to the Federal 
securities laws.''
  In response, Chairman Leach affirmed that it is not the Banking 
Committee's intent for the language in section 2 to grant the Secretary 
of the Treasury any new or additional authority over entities that are 
regulated pursuant to the Federal securities laws, or to require or 
encourage the Secretary of the Treasury to review enforcement actions 
under the Federal securities laws or to modify, or recommend the 
modification of, regulations promulgated under the Federal securities 
laws.
  In closing, Mr. Speaker, let me emphasize that H.R. 1756 is an 
excellent example of the spirit of bipartisanship and comity that has 
historically characterized the Banking Committee's deliberations on 
antimoney laundering initiatives. The gentlewoman from New York Ms. 
Velazquez, should be particularly commended for her hard work on this 
matter. Special recognition should also be accorded to Chairman Leach 
and to the ranking minority member, Mr. LaFalce for their efforts in 
moving this important bill through the Banking Committee. I also want 
to commend members of the Banking Oversight Subcommittee for their hard 
work on money laundering in this Congress. As chairman of the Oversight 
Subcommittee, I have made money laundering a central focus of the 
subcommittee's work because I see it as one of the most important 
responsibilities of the Banking and Financial Services Committee.

[[Page H11031]]

  Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I would like to begin by again thanking the gentleman 
from Iowa (Mr. Leach), the gentleman from New York (Mr. LaFalce), and 
the gentleman from Alabama (Mr. Bachus) for all their work on this 
legislation. Also I would like to recognize the work that for the last 
four years my legislative director, Catherine Cruz Wojtasik, has been 
doing on this legislation.
  This bill proves that crime fighting is a bipartisan issue. Today's 
Money Laundering and Financial Crimes Strategy Act is the same anti-
money laundering legislation that passed the House last week. Technical 
changes were made by the Senate that will broaden the definition of 
money laundering. These changes are endorsed by the Treasury 
Department, the Justice Department, the FBI and the local district 
attorneys in New York City.
  In the expanded definition we allow Federal, state and local law 
enforcement officials to keep up with the changing trends in money 
laundering. It will provide police officers and prosecutors with the 
tools that they need to effectively combat large and sophisticated 
crime syndicates.
  The Money Laundering and Financial Crimes Strategy Act is an 
important step in helping communities fight drug traffickers that 
launder money in their neighborhood. I urge all Members to support this 
bill.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would like to say in conclusion that Catherine Cruz 
Wojtasik did work very hard on this bill. I think it shows that the 
gentlewoman from New York (Ms. Velazquez) has assembled a good staff, 
and I would like to commend Ms. Cruz Wojtasik on her work on the bill.

                              {time}  1345

  Mr. Speaker, I apologize for that oversight.
  Mr. BACHUS. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Brady of Texas). The question is on the 
motion offered by the gentleman from Alabama (Mr. Bachus) that the 
House suspend the rules and concur in the Senate amendment to H.R. 
1756.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules suspended and the Senate amendment was concurred in.
  A motion to reconsider was laid on the table.

                          ____________________