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December 23, 1996

Treasury Acts Against Flow of Dirty Money to Colombia

Treasury Under Secretary for Enforcement Raymond W. Kelly said Monday that federal authorities investigating a money laundering method in the New York metropolitan area have seized more than $29 million in illicit funds being sent to Colombia.

The anti-money laundering initiative was instituted against money remitters involved in specific transactions with Colombia. About 3,500 money remitter agents in the New York metropolitan area have been subject to reporting requirements under the geographical targeting order, known as a GTO.

Issued under the authority of the Bank Secrecy Act (BSA), a key anti-money laundering law, a GTO is used to impose stricter reporting and recordkeeping requirements on specified financial service providers in a certain geographical area for a limited time period. The GTO requires the remitters in question to obtain and report identifying information about the parties to all remittances of cash to Colombia of $750 or more. The order will remain in place until February 2, 1997.

The GTO was requested by U.S. Attorneys for the Eastern District of New York, the Southern District of New York and the District of New Jersey, along with senior enforcement officials of the U.S. Customs Service and Internal Revenue Service. It is designed to assist the El Dorado Task Force, a multi-agency anti-money laundering task force comprising federal, state and local law enforcement authorities. The request for the GTO was made to the Treasury's Financial Crimes Enforcement Network (FinCEN), which administers the BSA.

"Money remitters in the New York area funneled more than $1.5 billion to Colombia last year. Colombian drug cartels have been proven to use money remitters in the New York metropolitan area to launder their drug profits," Mr. Kelly said. "Treasury Secretary Rubin has made fighting money laundering a top priority of this department. The results of the New York GTO provide Treasury with an opportunity to make a real difference in the fight against money laundering, by moving quickly and decisively against abuses of the money remitter industry."

Remitters are businesses which receive money from customers and remit these funds to designated recipients, often located overseas. Evidence gathered by law enforcement identified the state-licensed money remittance companies and their agents in the New York metropolitan area that were particularly vulnerable to abuse by cartel money launderers.

Much of the foundation to justify the GTO was laid during investigations of several money remitters and their agents in New York. On July 24, 1996, Vigo Remittance Corp. pleaded guilty to structuring financial transactions to avoid standard BSA reporting requirements. Earlier this month, Remesas America Oriental was indicted for activities related to money laundering. Numerous other agents and their employees have been successfully prosecuted for money laundering over the past few years.

"In addition to virtually halting the movement of narcotics proceeds to Colombia through most New York area money remitters, including many remitters not covered by the GTO, the GTO confirmed the suspicion that the proceeds sent through these money remitters were controlled by Colombian cartels," Mr. Kelly said.

The GTO has dramatically reduced the flow of narcotics proceeds through money remitters in New York City to Colombia. For example:

"Based on the success of the GTO, and the analysis that FinCEN is conducting in cooperation with other law enforcement agencies, it is clear that we need to consider other applications of geographical targeting orders, as well as broader, more permanent regulatory steps to address vulnerabilities in the money remitter industry," said Stanley E. Morris, Director of FinCEN.