US Attorney-General Pitches In On Money-Laundering

by Mike Godfrey, Tax-News.com, New York

14 August 2001

Less than a week after a powerful group of US Senators introduced tough new legislation to cut down on corruption and money laundering taking place through the US financial system, Attorney General John Ashcroft threw his support behind the idea in a speech delivered in Chicago to a conference on organized crime.

'Money laundering constitutes a serious threat to our communities, to the integrity of our financial institutions and to our national security;' said Mr Ashcroft, 'the Department of Justice has identified several areas in which our money laundering laws need to be updated to more effectively combat organized crime and to better serve the cause of justice.'

The Senate bill is supported by Chairman of the Senate Permanent Subcommittee on Investigations, Democrat Carl Levin, Co-Chairman of the Senate Drug Caucus, Republican Charles Grassley, and Chairman of the Senate Banking Committe, Democrat Paul Sarbanes, among others.

The Attorney-General's proposals differ somewhat from the Senate bill, which deals mainly with toughening scrutiny in the U.S. banking system. Mr Ashcroft said any new laws should in addition address the following concerns:

• Smuggling of bulk cash, which is currently a minor offense and which rarely results in the seizure of the money.
  Ashcroft said that, in one recent case, a man boarding a plane in Puerto Rico for the Dominican Republic was found to have $139,000 in his socks. The courier got a 12-month sentence for not filing a required Customs report, but a court ruled that the Customs Services could not seize the cash unless it could prove the money was acquired through criminal activity.
  
  
• Transporting cash from criminal proceeds domestically. In another case, a police officer seized $10,000 found in the trunk of a car driven by men with drug convictions and found to have cocaine on it. But the case was thrown out of court because the judge ruled that it isn't a crime to transport drug money.

Mr Ashcroft also wants to expand the types of crime covered by money-laundering legislation so that other criminal activities, including investment scams, government corruption and Mafia syndicates, can be prosecuted under anti-laundering laws.

Efforts to kick-start an anti-money laundering initiative follow embarrassing revelations that US banks have been used to launder billions of dollars from drug trafficking, fraud, and organised crime activities. Senator Levin estimated that over $500 billion was being laundered through US financial institutions each year, and called the existing anti-money laundering laws 'out-of-date and inadequate'.

Mr Ashcroft said the Justice Department is now considering asking Congress for several changes in money laundering legislation: 'This gaping hole in U.S. law makes it extraordinarily difficult for federal law enforcement to keep the proceeds of foreign crimes out of U.S. financial institutions,' he said.

'Obviously, Sen. Levin welcomes those comments,' said Elise Bean, deputy chief counsel for the Senate investigations subcommittee, referring to Ashcroft's speech. 'We think he is right.'

However, the standpoint of the Bush administration on this topic has been uncertain to say the least. Although it has publicly stated that it is committed to tougher enforcement of existing laws, privately, officials are said to be concerned about the return on the money which is being spent to combat the problem.

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