Subject: Tracking drug profits difficult, offical says

Tracking drug profits
difficult, officials say

S. Texas surplus cash shows agency's
challenges

WASHINGTON South Texas banks awash in cash are pouring more than $3
billion a year of surplus currency into the San Antonio branch of the
Federal Reserve. But a yearlong study by federal investigators has failed to
prove or disprove suspicions that the money comes from drug trafficking,
officials will tell a House committee Thursday.

Unlike the 1980s, when excess cash helped target banks doing business
with drug dealers, it now says little about the course of criminal
dollars, say investigators who helped prepare Thursday's report.

Instead, they say their work helps prove that the task of tracking crimes
and their profits is growing more complex, requiring new approaches and
international cooperation.

Prosecutors say the work is important to the fight against drug trafficking,
where almost all sales are made for cash. Traffickers must get the currency
into the banking system, making them particular dependent on money
laundering, experts say.

At the center of the fight against money laundering is the Financial Crimes
Enforcement Network or, FinCEN, a young and littleknown agency within
the Treasury Department charged with tracking the flow of large currency
transfers.

With a fulltime staff of fewer than 200 people, the network has created
a web of financial data, highspeed computers and analysts that prosecutors
say has helped snare numerous money launderers.

But FinCEN has disappointed some moneylaundering experts. They want the
agency to better identify moneylaundering suspects and trends and to
answer questions such as those about the San Antonio Fed.

The network, as well as the Internal Revenue Service and police agencies,
apparently can't explain the $3 billion cash surplus at the San Antonio
Fed, said Rep. Henry Gonzalez, DSan Antonio, who called for Thursday's
hearing into the issue.

"Neither law enforcement agencies nor bank regulators have provided me
anything other than anecdotes and speculation," Mr. Gonzalez said earlier
this year. "We are left wondering whether the excess cash moving through
South Texas is legitimate."

FinCEN understands the need to provide more intelligence and recently
established an intelligence and analysis division, said Director
Stanley E. Morris.

"We're increasingly concerned about the intelligence we can provide," he
said in an interview. We want to help identify practices that are going on
and be able to tell people in the field what to be watching for."

But Mr. Morris also made clear that FinCEN can be expected to do only so
much. "We can provide data and analysis to investigators," he said. "We
are not an investigatory agency."

Created in 1990, FinCEN consolidated several smaller offices in the
Treasury Department that administered the 1986 Bank Secrecy Act. That law
targeted money laundering at the nation's banks requiring, for example,
the filing of reports for any cash transactions greater than $10,000.

Now more than 12 million of those reports each year flood giant computers
in Detroit, where they become available to the analysts at FinCEN, itself
housed in a commercial office building in Virginia outside
Washington.

Making the reports available to federal investigators, and more recently
to state and local agencies, has opened up a paper trail that's often
invaluable, prosecutors say.

"Without FinCEN's data, we couldn't have started any kind of a
moneylaundering investigative unit like we now have," said Don Clemmer,
head of the financial investigations unit of the Texas attorney
general's office.

FinCEN data, for example, provided many of the leads that allowed
prosecutors to target money exchange houses in Houston, which laundered as
much as $35 million a year, Mr. Clemmer said.

The state group worked with local detectives in closing nearly 100 of the
money exchange firms, called giro houses for the Spanish word for wire.

"The federal data helped us identify many giro houses we didn't even know
were operating," Mr.Clemmer said.

But some critics say FinCEN hasn't generated enough leads from its
mountains of data. "It's a dismal failure," said Charles Intriago,
publisher of Money Laundering Alert, a newsletter based in Miami.

He cited a recent Texas case involving a former Mexican prosecutor
accused of taking drug bribes. The prosecutor, Mario Ruiz Massieu,
shipped $9 million in cash across the border to a Texas bank
using suitcases packed with small bills, and filling out all the forms
required under U.S. banking laws.

"It's amazing that the bank, and FinCEN, didn't flag what was going on,"
Mr. Intriago said.

At least the data provided by Mr. Ruiz Massieu's filings helped
prosecutors, who successfully siezed $7.9 million in a recent trial, Mr.
Morris said.

"We talk as much about deterrence here as we do detection," he said.

Investigators can hope that computers one day will spit out leads, said
Bruce Zagaris, a Washingtonbased attorney and money laundering
expert. "But it doesn't work that way."

Moneylaundering cases, like most lawenforcement work, still require a
tip to narrow the search, he said.

They also increasingly require international cooperation, analysts widely
agree.

As much as half of the cash surplus at the San Antonio Fed, for example,
may be coming from Mexican banks returning currency to the United States,
investigators say. They say much may come from traffickers who
increasingly smuggle bulk cash in containers across the border to Mexico,
where they find it easier to launder.

Mexico recently enacted antilaundering regulations and is beginning to
share information with FinCEN, Mr. Morris said.

"It's just starting," he said. "We're anxious to see better cooperation
develop."
By David LaGesse / The Dallas Morning News

05/15/97