[Congressional Record Volume 144, Number 151 (Wednesday, October 21, 1998)]
[Extensions of Remarks]
[Page E2300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


       MONEY LAUNDERING AND FINANCIAL CRIMES STRATEGY ACT OF 1998

                                 ______
                                 

                               speech of

                        HON. NYDIA M. VELAZQUEZ

                              of new york

                    in the house of representatives

                        Friday, October 16, 1998

  Ms. VELAZQUEZ. Mr. Speaker, to many, money laundering may seem like 
the stuff of spy novels. But, to my constituents, money laundering by 
drug cartels is a plague on the community. The fact of the matter is 
that money laundering has become big business, which is why it is drawn 
to financial centers like New York City. But in doing so, it has 
settled in areas like Jackson Heights, Queens in my district. The 
unfortunate reality is that these criminals do not bring investment 
dollars and a better way of life for my constituents--they bring guns, 
fear and death.
  To date, Congress has done little as a partner in this war. The time 
was long overdue for Washington to reach out even more and form 
partnerships with those on the front lines.
  Finally this year, the Banking Committee held a hearing to highlight 
the work of the El Dorado Task Force in New York City. El Dorado is a 
network of federal, state and local law enforcement officers and 
prosecutors who focus on fighting money laundering in Jackson Heights, 
Queens and Washington Heights, Harlem.
  El Dorado has targeted money remitter services that are used more and 
more frequently by drug cartels to launder money abroad. In fact, the 
task force identified 12 large scale businesses in the New York 
Metropolitan area that were used to wire hundreds of millions of 
dollars in illegal drug proceeds overseas. These companies are 
affiliated with hundreds of smaller businesses ranging from travel 
agencies to beeper and cellular telephone outlets, which are found in 
predominantly poor immigrant neighborhoods throughout the city.
  The result was that communities like Jackson Heights were becoming 
magnets for drug cartels to funnel their illicit proceeds from drug 
sales to drug source countries. That is how I became involved almost 
four years ago.
  Hoping to reclaim their neighborhoods, I was approached by several 
constituents during a community meeting in Jackson Heights. They told 
me that Roosevelt Avenue was becoming overrun by envios, or money wire 
services, that drug dealers were using to launder money to Medillin and 
Cali. They wanted my help, because they saw their neighborhoods being 
overrun by drugs, violence and more crime.
  Joining forces with District Attorney, Richard Brown, I formed a 
working group to put an end to this type of crime. First of all, 
everyone agreed that the best way to attack the drug cartels was to get 
them where it would hurt them the most--their profits. In order for 
cartels to reap profits, proceeds must be laundered. That is how the 
Money Laundering and Financial Crimes Strategy Act was conceived.
  The idea was to bring together every person and entity involved in 
the war on drugs from state and local police and prosecutors to federal 
agencies. In order to better coordinate these efforts to fight money 
laundering, the Department of Treasury was made the lead agency, in 
conjunction with the Department of Justice.
  The two agencies were charged with developing a national strategy 
that would coordinate efforts between all federal, state and local 
financial institutions, law enforcement, and prosecutors. Since cartels 
change their mode of laundering illegal proceeds as quickly as law 
enforcement officials catch up with them, the definition for money 
laundering was key. The original definition of money laundering 
included many predicate offenses, that might cause confusion when 
developing the national strategy. For that reason, the Administration 
requested and the Senate agreed to change the definition of money 
laundering. As it is now defined in H.R. 1756, money laundering is more 
narrow, while giving the Secretary of the Treasury the ability to keep 
up with the different ways that money can be moved in, out and through 
any financial institution in the United States. However, the definition 
of money laundering in this legislation has always included related 
state and local statutes, and it still does.
  The goal of the strategy is to coordinate a response to money 
laundering between federal, state and local law enforcement and 
prosecutors. The intention was never to give the Secretary of Treasury 
new powers over other agencies or for the Department of Treasury to 
usurp the authority of other agencies involved in our war on drugs. 
However, some concerns were raised by the Chairman of the Commerce 
Committee with respect to the Securities and Exchange Commission. As 
author of this bill, I will state clearly and unequivocally for the 
record that it is not the intention of this legislation to give the 
Secretary of the Treasury any new or additional powers over the SEC. It 
is purely our intention that all agencies involved work together and 
coordinate a federal response against money laundering. Since agencies 
like the SEC, although not political in nature, regulate entities that 
are subject to a lot of money laundering, the SEC needs to participate 
in developing the strategy and combating these crimes.
  Additionally, state and local law enforcement voiced their concern 
about not having enough resources to fight huge crime syndicates. They 
made it clear that they wanted to be at the table in order to include 
their experience. For that reason, the definition of money laundering 
stipulates that state and local statutes on money laundering are to be 
considered when developing the national strategy. Also, the theme 
throughout the legislation is a coordinated response with localities, 
to help them deal with the problem of money laundering.
  In fact, the designation of high risk money laundering areas is meant 
to highlight that certain communities experience more severe problems 
with money laundering and need more help. The grant section of the 
legislation is specifically meant to provide additional money to local 
law enforcement officials and prosecutors--especially those with a 
proven track record of joining forces with other localities--to help 
them combat money laundering. These localities should be the recipients 
of the grant money--not federal or state officials.
  The goal of H.R. 1756, the Money Laundering and Financial Crimes 
Strategy Act of 1998, is the formation of better partnerships and more 
equitable distribution of resources in our war on drugs. Greater 
attention can now be given to fostering participation by smaller local 
law enforcement agencies, by making additional resources available and 
giving them a greater ability to share information with each other and 
the federal government. Together, we will be able to hit drug cartels 
where they feel it the most. Together, we will win this war on drugs.




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