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Few agents can be spared because IRS employees are working overtime to contain an explosion of smaller-time money-laundering cases involving car salesmen, ordinary investors, real estate agents and other entrepreneurs. In Florida undercover IRS agents operating a sting operation that they touted as a "full-service financial-investment corporation" have nabbed 50 would-be money launderers in the past year. "Some are lawyers and businessmen who are skimming cash from their businesses, and they've heard about what you can do through an offshore bank," says Tampa IRS supervisor Morris Dittman. "Others have cash that rolls out of the drug trade. When a druggie buys a big home and car for cash, you have a real estate agent and a salesman with sudden cash, and they begin wondering if they have to share it with the Government."
Such amateurs are running afoul of laws that professionals have already discovered. The statutes began tightening in 1986, when money laundering became a specific crime. Later it became illegal to evade the $10,000 currency-reporting requirements by making groups of smaller deposits. Banks have begun to exercise more internal supervision as well, prodded by a series of investigations in the mid-1980s in which such institutions as Bank of America and Bank of Boston were forced to pay hefty fines for their involvement in laundering schemes. Yet many major banks are still participants, witting or not, in ever more sophisticated laundering operations.
To close the gap, Bush's offensive against drug-cash handlers is being placed in the hands of a newly created task force that includes the CIA, the National Security Agency and the Pentagon, as well as a team of drug, tax and customs agents. FINCEN is already at work in a crowded Virginia office littered with discarded coffee cups, overflowing ashtrays, computer terminals and maps of the world. "We're going to be a financial think tank to help train cops who are deluged in financial data," says Gene Weinschenk, acting director of FINCEN's research-and-development division. "We're looking for money, not dope."
The biggest problem may be in deciding how to handle all the borderline illegality the task force will find. "How do you separate drug money from capital-flight money?" asks one of the mavens. "It will be more than drug money we come up with, and what happens when we stumble over a really major company and hold up its dirty linen? Maybe the banks will start turning in the narcotics people rather than lose their biggest customers."
To make a dent in the money-laundering trade, authorities will need more support from the financial community. "They're now willing to tell us about people coming in with bags of cash," says a regulator, "but as far as anything else goes, you can forget it." Yet many bankers think the feds have become indiscriminate in their crackdown. "They are characterizing traditional, ordinary, international banking transactions as money laundering," gripes Gerald Houlihan, a Miami attorney who represents financial institutions in money-laundering and forfeiture cases. "They are not going after money launderers, but are attempting to terrorize banks in an effort to give the impression they are doing something about drugs."