[Congressional Record Volume 142, Number 19 (Tuesday, February 13, 1996)]
[Extensions of Remarks]
[Pages E196-E197]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE MONEY PLANE
______
HON. CHARLES E. SCHUMER
of new york
in the house of representatives
Tuesday, February 13, 1996
Mr. SCHUMER. Mr. Speaker, a weekly magazine recently published a
lengthy article raising serious questions about the business activities
conducted by Republic National Bank of New York with Russian banks.
Republic is a large, well-respected institution serving the New York
community and employing thousands of its residents. In the interest of
fairness, so that the other side of the story can be heard, I would
like to submit for the Record the attached materials. Included among
them are several letters from law enforcement agencies and bank
regulatory bodies. These letters testify to the bank's record of
compliance with the law and cooperation with law enforcement officials
and bank regulators.
Comptroller of the Currency,
Administrator of National Banks,
Washington, DC, January 17, 1996.
Walter H. Weiner,
Chairman and Chief Executive Officer, Republic National Bank
of New York, New York, NY.
Dear Mr. Weiner: Thank you for your letter drawing my
attention to the article entitled ``The Money Plane'' in the
January 22, 1996 issue of New York magazine. The article
concerns sales of U.S. dollars to Russian banks by Republic
Bank and includes several statements attributed to an unnamed
OCC official.
We doubt that those statements were in fact made by an OCC
official. However, if they were made, please be assured that
the statements were unauthorized and do not represent the
views of this office. More specifically, these statements do
not reflect the OCC's position concerning Republic Bank's
bank note detailings with Russian banks.
As you are aware, the OCC supervises and regulates all
national banks, including those that have substantial bank
note dealings with Russian banks. As part of our oversight,
we monitor the bank note activities of those banks, including
Republic. We are satisfied that Republic's bank note
activities are conducted in a manner consistent with the
applicable laws we administer.
Sincerely,
Eugene A. Ludwig,
Comptroller of the Currency.
____
U.S. Department of Justice,
Office of Professional Responsibility,
Washington, DC, February 1, 1996.
Walter H. Weiner,
Chairman and Chief Executive Officer, Republic National Bank
of New York, New York, N.Y.
Dear Mr. Weiner: The Attorney General received your letter
dated January 15, 1996, calling attention to an article
entitled ``The Money Plane'' in the January 22, 1996 issue of
New York magazine. She also received a letter from Republic
National Bank Deputy General Counsel, Anne T. Vitale,
concerning that same article. The Attorney General asked this
Office to investigate the issues raised in the two letters
and respond to you.
``The Money Plane'' discusses sales of U.S. dollars by
Republic National Bank to various banks in Russia. The
article contains a statement attributed to an Assistant
United States Attorney (AUSA) about certain accounts at
Republic National Bank.
I wish to assure you that the statements attributed to the
AUSA do not represent the views of the Department of Justice.
More specifically, the attributed statements do not reflect
any position of the Department of Justice on Republic
National Bank's banknote transactions with Russian banks.
Sincerely,
Michael E. Shaheen, Jr.,
Counsel.
____
The District Attorney,
County of New York,
January 16, 1996.
The Editor,
New York Magazine,
New York, NY.
To the Editor: I read the article entitled ``The Money
Plane'' in the January 22, 1996 issue of New York magazine.
It does raise a reasonable question about our Government's
policy to permit and facilitate the sale of U.S. dollars by
American and foreign banks to Russian banks. I was surprised,
however, by the suggestion that it is improper for Republic
National Bank to engage in this practice as well as the
article's utter failure to mention that other reputable and
well-known banks also engage in similar transactions.
The fact is that the U.S. Treasury, the Federal Reserve
System and the State Department approve and facilitate the
sale of dollars by American banks to Russian banks. Indeed,
the Federal Reserve Bank of New York sells dollars with the
knowledge that they are going to be resold to Russian banks.
Additionally, the banks who purchase and resell the dollars
file reports on each transaction with the Federal Reserve
System, the United States Treasury Department, U.S. Customs
and the Controller of the Currency. These are not covert
transactions.
Finally, under current law, banks which buy dollars in New
York and resell them to Russian banks are not required to
and, indeed are unable to know, the identity of the Russian
banks' customers. Republic, in fact, sells only to banks
licensed by the Russian Central Bank. Unless a bank has
specific information of criminal control of a Russian bank, a
U.S. bank may sell banknotes to Russian banks.
My office has aggressively investigated money laundering
cases for many years and does so on a regular and continuous
basis. As a routine matter, we have looked at Republic's sale
of dollars to Russian banks and found no evidence of
misconduct or wrongdoing by Republic.
Sincerely,
Robert M. Morgenthau.
____
STATE OF NEW YORK,
BANKING DEPARTMENT,
New York, NY, February 1, 1996.
Mr. Walter H. Weiner,
Chairman and Chief Executive Officer, Republic National Bank
of New York, New York, NY.
Dear Mr. Weiner: This letter responds to your recent letter
to me enclosing a copy of the ``The Money Plane'' article in
the January 22, 1996 issue of New York Magazine, together
with copies of the January 16, 1996 letter to you from the
Office of the Comptroller of the Currency, the January 17,
1996 letter to New York Magazine from Robert M. Morgenthau,
the District Attorney for New York County and the January 24,
1996 letter to Republic National Bank of New York
(``Republic'') Senior Vice President Vitale from FINCEN
Director Morris. Each of these letters relates to that
article.
New York Magazine's article concerns, among other things,
sales of U.S. dollars to Russian banks by Republic. It
includes some purported quotations and statements of unnamed
sources said to be former employees of this Department who
then had law enforcement investigation responsibilities.
You can be assured that if, and to the extent that, such
statements may have been made by former employees of this
Department, they have not been authorized to be made by this
Department, were made without our awareness and do not
constitute, in any manner, statements or positions of the New
York State Banking Department in respect of Republic or with
regard to banknotes dealings with Russian banks by Republic
and other banks.
Moreover, it is the U.S. Comptroller of the Currency, and
not this Department, which has been and continues to be the
primary bank regulator of Republic. Thus, in the course of
our functions, we do not examine
[[Page E197]]
Republic, nor have we conducted an investigation directed at Republic
in respect of its banknotes dealings with Russian banks.
Very truly yours,
------ ------.
____
Financial Crimes
Enforcement Network,
Vienna, VA, January 24, 1996.
Anne T. Vitale, Esq.,
Senior Vice President and Deputy General Counsel, Republic
National Bank of New York, New York, NY.
Dear Anne: Your letter to me, dated January 17, 1996,
concerned an article entitled ``The Money Plane'' in the
January 22 issue of New York Magazine. That article dealt, in
part, with the sale of American currency to banks in Russia
by Republic National Bank of New York (``Republic'').
As you point out in your letter, the shipment of bank notes
by United States banks to other banks, in Russia or anywhere
else, is permitted by U.S. law and there is nothing
inherently illegal about such activities. The New York
article was certainly unfair in suggesting otherwise.
Furthermore, we have never encountered a money laundering
scheme which seeks to convert assets already in financial
institutions into bank notes.
Banks such as Republic, with a history of strong compliance
programs and valuable cooperation with law enforcement
authorities in this country, can be expected to recognize the
risks of particular transactions in their efforts to avoid
becoming ensnared in wrongdoing. Republic has indeed, as your
letter also points out, been supplying voluntary reports to
federal law enforcement of its shipments of bank notes to
Russia and other countries in an effort to assist U.S.
authorities.
Our program of partnership with the financial community
relies on highly experienced officials such as you and banks
such as Republic to carry out our law enforcement mission. I
look forward to continuing to work with you in the fight
against money laundering.
With best wishes.
Sincerely,
Stanley E. Morris,
Director.
____
Akin, Gump, Strauss, Hauer
& Feld, L.L.P., Attorneys at Law,
Washington, DC, January 29, 1996.
Editor, New York,
K-III Magazine Corporation,
New York, NY.
Dear Sir: The article entitled ``The Money Plane'' in your
January 22, 1996 issue of New York magazine misleads your
readers by relying on anonymous innuendo to impeach the
integrity of respected U.S. banks. As a former Ambassador to
Russia, I have seen firsthand the importance of selling
dollars to Russian banks: U.S. currency helps to stabilize
the Russian economy as that nation's political leadership
struggles to modernize and democratize their country and that
in the best interests of the U.S. and the free world.
The circulation of the U.S. currency in Russia is an
important element of U.S. trade and foreign policy. Through
banknote and other transactions, U.S. banks remain engaged
with their Russian counterparts, introduce them to and
reinforce the high standards of the international banking
system, and prevent the sort of economic isolation that could
undermine the continuing development of Russia's financial
system. Providing a steady supply of U.S. currency to Russian
banks is perhaps the single most efficient form of support
the U.S. can offer any country in a position as delicate as
Russia's. Not to be overlooked is the fact that this banking
activity also opens important avenues of commerce between
Russia and the West.
Your article alleges that U.S. banks, Republic National
Bank in particular, knowingly conduct banknote transactions
with Russian banks that are controlled by or associated with
organized crime. No one can deny that crime and corruption
are today among the greatest threats to the creation of a
modern democracy in Russia. However, while I am no expert on
the subject, my understanding is that all banknote
transactions between U.S. and Russian banks are conducted in
strict accordance with the reporting and ``know-your-
customer'' evidence to the contrary. The fact is that the
U.S. banks that handle banknote transactions, with Russia or
any other country, monitor to the best of their ability the
activities of the banks with which they do business,
continuously seek reliable information regarding the
integrity of those institutions, and will discontinue
transactions with any institution that government authorities
indicate is involved in criminal activity. Furthermore, I
know of no instances where federal banking or law enforcement
officials have indicated that there are Russian banks with
whom business should be discontinued.
As far as criminal activity in Russia is concerned, it
should be stopped by increasing the resources and
capabilities of Russian law enforcement and continuing the
cooperation that exists between U.S. and Russian authorities.
You did a disservice to your readers and I hope that, as a
matter of integrity, you will publicly apologize and correct
your misstatements that I am sure were inadvertent.
Respectfully,
Robert S. Strauss.
____
At a press conference on January 18, 1996, United States
Ambassador to Russia, Thomas Pickering stated:
American and international banks who are depositories with
the federal reserve system will be the principal conduits,
may be as many as a dozen of those bringing money here to
Russia, where it will be redistributed through their
arrangements with the Russian banking system into the Russian
system to meet the demands that people will have in this
country for new dollars.
* * * * *
We do not believe that activities taken through the
currency provide an effective remedy for money laundering or
the use of currency in criminal activities and, indeed,
suggestions that this be done, in our view, would produce
greater negative effects on the stability of worldwide
currency systems than they would produce benefits in
attacking the criminal culture. . . .
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