[Congressional Record Volume 147, Number 37 (Tuesday, March 20, 2001)]
[Extensions of Remarks]
[Pages E397-E398]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  INTRODUCTION OF THE INTERNATIONAL COUNTER-MONEY LAUNDERING AND ANTI-
                         CORRUPTION ACT OF 2001

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Tuesday, March 20, 2001

  Mr. LaFALCE. Mr. Speaker, I am pleased to be introducing today, in 
cooperation with Senator John Kerry, anti-money laundering legislation 
that passed, on a bipartisan vote of 31-1, the House Banking and 
Financial Services Committee in the 106th Congress. Unfortunately, the 
full House did not consider this legislation in the previous Congress. 
But I am hopeful that we will make a serious effort in the 107th 
Congress to enact this important bill into law.
  The purpose of the International Counter-Money Laundering and Anti-
corruption Act of 2001 is to provide the United States with new tools 
to combat foreign money laundering threats, and to prevent the use of 
the domestic financial system by money launderers and corrupt foreign 
officials. The bill specifically addresses the abuse of offshore 
secrecy havens by criminals who seek to launder their illicit monetary 
gains.
  Let me stress an important point: offshore secrecy havens are used by 
financial institutions and businesses around the world for perfectly 
legal and legitimate transactions. However, the officially recognized 
secrecy, and almost non-existent supervision, of the financial sectors 
in many of these jurisdictions, make it remarkably easy for criminals 
to abuse them. And with the global growth of electronic commerce and 
banking, and the unprecedented expansion of global commerce in general, 
the financial system is more vulnerable to abuse.
  In a speech to international bankers in the Spring of 2000, former 
Treasury Secretary Larry Summers highlighted three important reasons to 
embark on an aggressive fight against money laundering:
  First, it help us pursue criminals who commit the underlying 
organized crimes that generate tainted money, such as drug trafficking, 
tax evasion, and fraud;
  Second, it helps us fight the foreign corruption that undermines U.S. 
and multilateral assistance programs to promote democracy and 
economical development abroad; and lastly,
  It helps us protect the stability of the international financial 
system.
  The bill we are introducing today enshrines these principles. The 
bill provides the Treasury Secretary with the authority and discretion 
to address a specific money laundering
  Current law provides limited options for law enforcement; the 
Treasury Secretary can either issue informational advisories to U.S. 
financial institutions about specific offshore jurisdictions, or take 
the more extreme approach of invoking sweeping and often disruptive 
economic sanctions. In an effort to strengthen our ability to fight 
money laundering, the bill I am introducing today provides new 
discretionary authority to the Treasury Secretary, which can be invoked 
under certain select circumstances. For instance, the Secretary can use 
these discretionary tools if he or she were to identify an area of 
``primary money laundering concern'' offshore. If invoked by the 
Treasury Secretary, these discretionary tools only apply to the 
activities of U.S. financial institutions outside the U.S., but not 
domestically.
  Our bill grants the Treasury Secretary the authority, and policy 
discretion, to use several new tools that fall between informational 
advisories, on the one hand, and economic sanctions on the other. For 
example, the Secretary could identify a particular institution in a 
foreign jurisdiction as a primary money laundering concern without 
making a determination

[[Page E398]]

regarding the entire foreign jurisdiction, and then, impose 
restrictions on activities concerning such an institution. The approach 
taken in the bill offers the kind of regulatory flexibility, which does 
not exist today, needed to tackle a fast-moving and remarkably 
adaptable class of criminals.
  More specifically, the bill would do the following:
  Authorize the Secretary of the Treasury to impose one or more of five 
new special measures upon finding a jurisdiction, financial institution 
operating outside the United States, or class of international 
transactions to be of ``primary money laundering concern'';
  Require the Secretary, in selecting a measure, to consult with the 
Federal Reserve and consider several factors of concern to domestic 
financial institutions;
  Outline the special measures, including enhanced recordkeeping and 
reporting; collection of information on beneficial ownership of certain 
accounts; conditions on opening so-called payable-through and 
correspondent accounts; and prohibition of payable-through or 
correspondent accounts;
  Require the Secretary to consult with selected Federal officials and 
consider a number of factors in making a finding relative to a primary 
money laundering concern;
  Require the Secretary to notify Congress within 10 days of taking a 
special measure;
  Authorize banks to share suspicions of employee misconduct in 
employment references with other banks without fear of civil liability, 
and clarify prohibitions against disclosure of a suspicious activity 
report to the subject of the report;
  Clarify penalties for violating Geographic Targeting Orders issued by 
the Secretary to combat money laundering in designated geographical 
areas;
  Require the Bank Secrecy Act Advisory Group to include a privacy 
advocate among its membership and to operate under the ``sunshine'' 
provisions of the Federal Advisory Committee Act;
  Require reports from the Treasury Department and banking agencies 
regarding penalties for Bank Secrecy Act and safety-and-soundness 
violations;
  Express the sense of the Congress that the U.S. should press foreign 
governments to take action against money laundering and corruption, and 
make clear that the United States will work to return the proceeds of 
foreign corruption to the citizens of countries to whom such assets 
belong; and,
  Express the sense of the Congress that the U.S. should support the 
efforts of the Financial Action Task Force, an international anti-money 
laundering organization, to identify jurisdictions that do not 
cooperate with international efforts to combat money laundering.
  We are often told by the financial services industry that it self-
regulates well in the area of international and correspondent banking, 
and that, therefore, no legislation is needed. However, a recent staff 
report by the Senate's Permanent Subcommittee on Investigations 
concluded that U.S. correspondent banking provides an important avenue 
for rogue foreign banks and their criminal clients to carry on money 
laundering and other criminal activity in the U.S. We are also too 
often reminded by egregious cases--such as the recent one involving the 
laundering of Russian organized crime funds through offshore centers 
and U.S. financial institutions--that our current regulatory and law 
enforcement system may not be as protected as we like to think. A well 
targeted, common sense approach--such as the one in this bill--that 
fills in gaps in current law makes sense. Moreover, keeping in mind the 
need to protect legitimate commerce, the bill is crafted in a way that 
evenly balances burden-sharing between regulators and the financial 
services industry.
  In sum, I am pleased to propose comprehensive money laundering 
legislation to address one of the most insidious and challenging of 
financial crimes. Money laundering is now estimated to absorb somewhere 
between 2 and 5 percent of the world's domestic product, or nearly $600 
billion, and represents a significant threat to the international 
financial system. The enhanced tools in this proposed legislation will 
lead to improved ways of preserving the integrity of the international 
financial system, working in partnership with our major trading 
partners and the world's market economies.
  As we consider policy changes in this area, we must address the 
appropriate needs of law enforcement without impeding legitimate 
commerce. By empowering the Federal government with more flexible and 
effective tools than those offered under existing law, the bill moves 
us closer to meeting this goal. I look forward to working with the Bush 
Administration, law enforcement officials, and the financial services 
industry, to enact a common sense approach to fighting money 
laundering.

                          ____________________