[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.
                                                 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.
                                          Michael E. Shaheen, Jr.,

                                            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 
       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.
     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 
       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. 
       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.
                                                Stanley E. Morris,

                                        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.
                                                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. . . .