Hearing on the Administration's "National Money Laundering Strategy for 2001"


Prepared Testimony of the Honorable Marge Roukema (R-NJ)
Member of Congress

10:00 a.m., Wednesday, September 26, 2001 - Dirksen 538

Mr. Chairman, thank you for allowing me the opportunity to testify before this Committee this morning. I deeply appreciate the courtesy.

Mr. Chairman, for years I have been deeply concerned that we have not done enough to dry up the lifeblood of the illegal drug trade – free flowing cash.

Now, as our nation struggles to recover from the vicious and unprovoked attack on our homeland on September 11, our focus has expanded to include terrorism.

As our investigators work to "follow the money" to trace financial transactions back to their source – it is becoming more and more clear that free-flowing cash is also critically important to terrorists as they plan, organize and execute their murderous plots.

Over the years, I have been a strong advocate of better enforcement and stronger laws that will provide law enforcement the tools needed to fight drug dealers, money launders and terrorists. In the wake of last week’s terrorist attacks, this has never been more important.

In the 106th Congress, I worked closely with the Department of Justice and Congressman Bill McCollum who was then a member of the House Judiciary Committee to craft a comprehensive money laundering proposal to address many of the problems our law enforcement officials currently face. It is my understanding that much of that draft will be included in the legislation that the Administration will soon send to Congress for its immediate attention.

While I strongly support passage of comprehensive money laundering strategy and will continue to work with this Administration to that end. Today I am here to discuss legislation that I introduced on September 20, HR 2922, the Bulk Cash Smuggling Act of 2001. This bill is similar to ones I introduced in both the 105th and 106th Congresses and is strongly supported by the Department of Justice. This legislation takes aim at criminal activities that support terrorists and drug dealers by making currency smuggling a criminal offense.

The transport of large sums of cash in, out and through the United States is a major problem which is growing everyday. We call this bulk cash smuggling. As the Federal banking regulators and law enforcement officials have made money laundering through insured depository institutions more difficult, money launderers have apparently resorted to the smuggling of large amounts of U.S. cash and currency over the border. It has been reported that over $30 billion a year is smuggled in, out and through the United States each year by drug dealers, organized crime and terrorist organizations. This money moves by planes, trains, automobiles, ships and even by mail.

My colleagues should note that law enforcement authorities suspect that one tactic used by terrorist organizations to avoid having their funds detected in the international financial system is to move cash by courier or though bulk shipments. This may explain how so many of the individuals involved in the September 11 attacks were able to live and train in our country for extended periods of time while leaving few identifiable footprints in the banking system.

The existing laws governing bulk cash smuggling are totally inadequate. Presently, the only law enforcement weapon against bulk cash smuggling is Section 5316 of Title 31, United States Code. This statute makes it an offense to transport more than $10,000 in currency or monetary instruments into, or out of, the U.S. without filing a form with the U.S. Customs Service. Section 5316 has been rendered largely ineffective as a law enforcement tool by a 1998 Supreme Court decision, United States v. Bajakajian, in which the Court held that violations of Section 5316 constitute mere reporting violations, and do not warrant the confiscation of bulk cash - even if the smuggler has taken elaborate steps to conceal the money from Customs inspectors.

HR 2922 will give law enforcement authorities a critical tool in disrupting the channels used by terrorists to finance their activities in the U.S. The bill would make it a Federal crime to smuggle cash or currency in excess of $10,000 into or out of the United States. Violations of the law could result in the forfeiture of the terrorists’ cash or currency as well as up to five years in prison – an individual would be provided the opportunity to show that the money came from a legitimate source in which case there may be little or no forfeiture whatsoever.

Interstate currency couriers are part of the problem. One of the bill’s key provisions would make it a crime to transport more than $10,000 in criminal proceeds in interstate commerce, thereby making it more difficult for terrorists to move cash within the United States once they have succeeded in getting it into the country. This measure takes on particular relevance in light of press reports that suspected bin Laden operatives taken into custody since the September 11 attacks have been found with large sums of cash in their possession. By making bulk cash smuggling a crime – whether it is conducted within the U.S. or across our borders – we will give law enforcement an effective weapon for separating the terrorists from the funds they need to support their operations in this country.

As chairwoman of the Financial Institutions Subcommittee in the last Congress, I presided over numerous hearings on the government’s anti-money laundering enforcement efforts, including a field hearing in Newark in May of last year that focused particular attention on the bulk cash smuggling problem. Time and again in those hearings, I heard from Federal and State law enforcement agents and prosecutors that the biggest loophole in the current statutory scheme for combating money laundering is the one that allows criminal organizations to transport the proceeds of their illegal activities without fear of meaningful criminal sanctions.

For this reason, I was pleased that several weeks before the horrific events of September 11, Attorney General Ashcroft gave a speech in which he identified the criminalization of bulk cash smuggling as one of the Administration’s highest legislative priorities in combating money laundering.

Law Enforcement officials have said for years that cutting off the money is one of the most effective ways of combating organized crime. Seizing bulk cash shipments will deprive terrorists of at least some of the resources they need to carry out their hideous acts. Choking off the financial lifeblood of terrorists will of course take more than any one specific legislative proposal or law enforcement initiative. It will require a comprehensive approach.

Now I have heard some naysayers complain that some of the provisions in my legislation may cast a net so wide as to ensnarl innocent Americans. The question has been asked, "what about the innocent American who happens to be legally transporting large sums of cash or is discovered carrying his lifesaving around in the trunk of his car??

My answer is simple – each and every day our dedicated and alert law enforcement officials encounter situations that require their careful investigation. Let’s give them the tools they need to conduct those investigations and protect Americans from terrorists and drug dealers.

We need comprehensive reforms to our money laundering laws, and I wholeheartedly support the Administration’s efforts to enact those reforms. The provisions included in HR 2922 are only part of the solution, but they represent straight forward common sense reforms of our money laundering laws that we can enact right now. For the record, I am attaching a copy of my legislation – H.R. 2922 - and a section by section outlining the provisions of the bill. In addition I would be happy to provide the Committee and individual Senators with the Bulk Cash Hearing transcript from my May 2000 hearing at which the Department of Justice, Treasury and the Customs Department testified in favor of this legislation.

Again, thank you for giving me the opportunity to testify before this Committee and I look forward to working with my colleagues on both sides of the Capitol to see to it that this important legislation gets signed into law before we leave here this year.


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