Washington, May 18 -

Yesterday, Congressman Scott Garrett wrote U.S. Attorney General Alberto R. Gonzales and Secretary of the Treasury John Snow, requesting information about the usefulness of Currency Transaction Reports and Suspicious Activity Reports, which financial institutions have been required to file since 1970 and Federal investigators have used to track financing for drug traffickers, organized crime, and terrorist organizations. These reports collect data on certain large transactions as they move through the banking process.

Garrett and others have questioned whether the Bank Secrecy Act, which established these reports, needs to be updated to remain effective in tracking money laundering activities. “Ultimately, we must help our financial institutions be better partners with law enforcement in protecting our homeland,” said Garrett. “Simple changes to the law would allow banks to direct their resources to more effective ends and allow law enforcement agencies to better identify truly suspicious activities.”

Congressman Garrett also participated in a hearing today of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit regarding the Seasoned Customer CTR Exemption Act, H.R. 5341. Garrett is a cosponsor of this bill, which would make progress in updating the Bank Secrecy Act. He questioned Administration officials on the effectiveness of the current law and the proposals for improving it that he outlined in his letter to Gonzales and Snow.

(Text of Congressman Garrett’s letter is below):

“Dear General Gonzales and Secretary Snow:

I am writing to express my concerns about current anti-money laundering requirements imposed on our nation’s financial institutions and ask how this information is being used to prevent terrorist attacks. I appreciate all of the hard work you and your Departments are doing to keep this country safe.

As you know, in 1970, with growing complexity in our financial system and with the number of ways for criminals to move money around rapidly increasing, Congress passed the anti-money laundering statute known as the Bank Secrecy Act (BSA). The statute was put in place to prevent criminals, particularly drug dealers, from using our financial institutions to move money to commit their crimes. The BSA was both necessary and good, and it has served its purpose well.

Much has changed in 36 years. The new money laundering threat is terrorist organizations. What was once a law created to help catch drug traffickers has now morphed into a law that lies on the front lines of the war on terror.

The two filing provisions that are at the core of ongoing congressional debate are the – Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs). I believe that both reports, while well-intentioned, have imposed a tremendous regulatory burden on financial institutions, have forced many average citizens to sacrifice some of their financial privacy and have provided an over-abundance of information to law enforcement agencies without a corresponding increase in benefit to our efforts to thwart terrorist networks.

The Currency Transaction Reports were created to follow any large transaction through financial institutions to catch money laundering before it became a fait accompli. However, since the original threshold of $10,000 remains the same to this day, banks are locked in a situation by which they are filing CTRs for many everyday transactions. I am concerned that potentially criminal transactions that should set off alarms with banks and law enforcement are drowned out in a sea of paperwork

Significantly, the transactions made by the terrorists prior to their September 11th attacks did not even reach the $10,000 threshold. Terrorists have shown time and time again that they know how to exploit our laws, and the Bank Secrecy Act is no different.

I therefore would respectfully request your response to the following questions:

What specific cases can you site for which you have specifically used information from a Currency Transaction Report to prevent a terrorist attack or apprehend a terrorist prior to their committing a planned attack here in the U.S.?

What specific cases can you site for which you have specifically used information from a Suspicious Activity Report to prevent a terrorist attack or apprehend a terrorist prior to their committing a planned attack here in the U.S.?

What is the number of cases for which you have specifically used information from a CTR and/or a SAR to prevent a terrorist attack or apprehend a terrorist prior to their committing a planned attack here in the U.S.?

If the House passed Regulatory Relief bill, H.R. 3505, were signed into law, how would Title VII affect your abilities to prevent a terrorist attack or catch a terrorist prior to their committing a planned attack here in the U.S.?

How long are the CTRs and SARs filed by financial institutions to law enforcement kept in the database? Does that information stay on the books at DOJ or FinCen indefinitely?

If specific guidance was given to banks regarding SARs to more closely pay attention to transactions of over $10K, could SARs, if applied the correct way with new guidance, eliminate the need to file CTRs?

Due to the Department of Justice’s power to subpoena information from financial institutions relating to a crime or possible crime, is there information that CTRs provide that the Department could not otherwise retrieve after the fact in order to build their case once a suspected terrorist is apprehended?

Because of terrorists’ ability to move money through “hawalas” or by smaller amounts, would it be more effective for law enforcement to work more closely with financial institutions by informing them of potential terrorists so that the institutions can provide better and more relevant information on the suspect?

I want to ensure that the benefits received from gathering and storing this vast amount of data received from financial institutions is worth the tremendous regulatory and administrative costs that these filing requirements create and the significant privacy costs imposed on the citizens of this country.

I believe that the top priority of the Federal government is to protect its citizens from harm, but I also feel that tangible, real results must be derived from the enormous burden being placed on individuals and our financial institutions.

I want to ensure that the time and efforts of our law enforcement officials are not wasted wading through excessive paperwork, particularly when we have the means to be more targeted in our efforts. Thank you for all of the hard work you and your Departments do to keep Americans safe from terrorist attacks.

I look forward to your thoughtful responses to these questions and to working with you to find the appropriate balance that benefits our security needs, privacy rights, and regulatory burdens. Please feel free to contact me or my Senior Legislative Assistant, Chris Russell, at 225-4465 if you have any questions.”