Testimony as prepared for delivery
Chairman Jenkins, Ranking Member Lewis, and distinguished members of the Committee. Thank you for the opportunity to address the Department of Justice’s exhaustive review of 256 petitions for the return of judicially forfeited funds in structuring cases investigated by the IRS Criminal Investigation (CI). As the Acting Assistant Attorney General of the Criminal Division, and previously a longtime national security and international narcotics prosecutor, I am privileged to represent the Department today and to address our commitment to fighting crime in accordance with our law enforcement priorities and our highest ideals of justice and fairness.
Money laundering poses an acute threat to the U.S. financial system, where we enjoy the deepest, most liquid, and most stable markets in the world. But those very hallmarks also attract bad actors looking to “launder” their dirty money. The Department is committed to keeping our financial system safe from money launderers and other criminals. But at the same time, the Department has heard concerns raised by certain members of Congress about perceived overreach by law enforcement and we have ensured that we are focused on the most serious criminal threats, including the most serious structuring offenses.
The Bank Secrecy Act imposes several reporting requirements on financial institutions, including for transactions that exceed $10,000 in currency. “Structuring” – which occurs when an individual engages in transactions to evade a reporting requirement – causes the government to lose valuable information about potential unlawful activity, and can often obscure serious criminal activity. For these reasons, Congress made structuring a stand-alone criminal offense.
But let me emphasize: The law does not punish people for merely depositing $9,000 in a bank. It only punishes those who do so deliberately to get around a reporting requirement. If the government cannot prove that an individual intended to evade a reporting requirement, then that individual has not committed structuring.
Congress has authorized various sanctions for structuring violations, including imprisonment, fines, and criminal and civil forfeiture of the structured funds. Civil forfeitures frequently are initiated by a judicially-authorized seizure warrant that requires probable cause that structuring occurred – the same probable cause standard required for an arrest warrant. Moreover, in a civil forfeiture based on a structuring violation, the government must prove by a preponderance of the evidence that the crime occurred and that the property to be forfeited is linked to that crime.
Even after a forfeiture is complete, owners, lienholders, and victims can seek the return of property by filing petitions for remission or mitigation, which are effectively pardon requests for the property. Petitioners who themselves structure do not qualify for remission because they are not “innocent” owners of the property. Nevertheless, the Department may decide that mitigation is warranted – a discretionary decision that is based on criteria set forth in federal regulations.
Over the past 18 months, the Department has conducted an exhaustive review of 256 petitions for remission or mitigation of judicial forfeitures based on structuring offenses investigated by IRS CI. The Department sought information and recommendations from both the local IRS and U.S. Attorney’s Offices. The Department also issued guidance to the U.S. Attorney’s Offices detailing the petition process, regulations, and required documentation. These procedures ensured that the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) was equipped to make consistent, even-handed decisions on all 256 petitions with a full picture of the facts.
The Department notified each petitioner in writing of our decision, including the bases for any denial and the process for seeking reconsideration. Reconsideration requests were then assigned to a different attorney and senior manager at MLARS for yet another layer of review.
Although the Department will not comment on any particular petition, I can provide a high level summary of the results of our review. Of the 256 petitions received, the Department granted 41 petitions and denied 215 petitions.
As the acting head of the Criminal Division, I am proud of the close attention and thorough review conducted by experienced and dedicated prosecutors in MLARS. All 256 petitions were reviewed pursuant to consistent standards and in accordance with due process.
Thank you and I look forward to your questions.