WASHINGTON -- Just a year out of law school, Ronald K. Noble got his first big break prosecuting a sophisticated money-laundering case, one that started with a pregnant teenager and led to dozens of dentists.
So Mr. Noble's new job -- supervising the Treasury Department's fight against money laundering -- is something of a homecoming.
|A Great Case'
"It was dubbed the |yuppie conspiracy,'" recalled Mr. Noble, now assistant Treasury secretary for enforcement, in a recent interview.
"It was a great money-laundering case."
It all started with some University of Pennsylvania dental students who started dealing cocaine, in part to support their own habits, Mr. Noble said.
Soon, the students had a $50 million-a-year business operating in 13 states and Canada. They bough cars and homes with their drug profits and used sham companies to hide the proceeds.
Sophisticated Operation
"They laundered their money in many ways," Mr. Noble said. It was "absolutely extraordinary."
They were also exceptional retailers, he said. "They would do things like employ market segmentation and product differentiation."
By the time the case went to court in 1983, many of the students had graduated and gone on to successful careers.
"We ended up indicting and convicting a number of dentists and lawyers and stockbrokers and pilots," Mr. Noble said. "It was a very wealthy, upper-class group who made tremendous amounts of money."
Hot Potato
Where did the pregnant teenager come in?
Mr. Noble was a junior assistant U.S. attorney when his office began the case by indicting the ringleader and a pregnant 19-year-old.
"The senior prosecutors did not want to go to trial against this young pregnant woman, so they assigned the case to me and another junior assistant U.S. attorney," Mr. Noble said.
"My first trial wasn't against the classic criminal one would think of," he said.
"It was against a 19-year-old woman, obviously with child, eating gummy bears and drinking milk during the trial."
80 Convictions
The woman was convicted, and that case helped generate other leads.
In all, 80 people were convicted.
The experience is one reason that Mr. Noble thinks he will be effective in leading the federal government's fight against money laundering.
The 37-year-old lawyer is now part of the Clinton administration's young brigade. His sunny corner office in the stately Treasury building overlooks the Washington Monument on one side and the White House lawn on the other.
Mr. Noble expects financial institutions to help in the fight by setting up roadblocks for criminals who send their proceeds coursing through the nation's financial system.
"We are going to be much more collaborative and cooperative with private industry and with the institutions we are attempting to regulate," Mr. Noble said.
The banking and nonbank financial institutions "are the experts," he said.
"They are the ones who know what their customers do or don't do. It just seems common sense to talk to the experts before you regulate the experts."
Advisory Panel
Before yearend the Treasury is to appoint 20 to 25 industry representatives to an advisory group that is have a say in the agency's comprehensive review of money-laundering laws.
Mr. Noble said the panel will include a cross-section of representatives from banks and nonbanks.
So far in its review, the Treasury has decided to simplify currency-transaction reports, which banks are required to fill out when a customer completes a cash transaction of $10,000 or more.
Needless Work
In addition, Treasury's task force has found that banks aren't using exemptions that are theoretically available to them, "because it is almost easier for them to just send us all the forms," Mr. Noble said.
"There is a way to expand the exemption process, and that will simplify matters," he added.
The Treasury has also shined a spotlight on the Financial Crimes Enforcement Network (Fincen), the government's central source for data on money laundering and other financial crimes.
One thing Mr. Noble and the money-laundering task force are considering is whether the enforcement network should be combined with Treasury's Office of Financial Enforcement, he said.
In any case, Mr. Noble plans to define the network's mission more clearly.
"Right now Fincen is this great, great resource for essentially 50 states and all the federal law enforcement agencies," he said.
But because it has become known across the country and its serving are free, "people are drawing on them too frequently," he said.
Mr. Noble wants to "refine the customer list, if you will, and limit it somewhat."
He also signaled willingness to changes rules that require banks to file suspicious-transaction reports with several federal agencies.
"A process that requires a bank to file to six different federal agencies or departments is a silly process," Mr. Noble said.
"We've got to come up with a better process."
Centralizing the Data
One possibility is making Fincen the central repository for such information.
"We'd save bankers the cost, and we might even save some trees in the process," Mr. Noble said.
He said he would also like to help banks cut down on the number of currency-transaction reports filed.
The current nine million a year "is indicative that you have too many," he said.
Safe Harbor
Banks can already seek exemptions for reporting on a particular client's transactions, Mr. Noble pointed out.
But the Treasury may go a step further, creating a safe-harbor list of companies on which reports need not be filed, he said.
"We would take the burden here at Treasury, based on information that we get from banks and from our investigators," to decide which companies banks could exempt from their currency transaction report filings, Mr. Noble said.
Details are not available, but the government would consider exempting ordinary businesses that take in a lot of cash, such as grocery stores and videotape rental establishments, as long as they had strong internal controls.
Delay Sought
The Treasury, along with the Federal Reserve, recently issued rules requiring banks to keep records on most wire transfers.
Mr. Noble said that the Treasury would like to get Congress' nod to delay the effective date of the new rules from Dec. 31 until sometime next year.
Banks have called for such an extension.
Banks can better help the government fight money laundering by completing currency-transaction reports and other forms "as efficiently and thoroughly and accurately as they can," Mr. Noble said.
They can also help by using a know-your-customer approach, he said.
"The banks know when something suspicious is going on," Mr. Noble said. "They know what sticks out like a sore thumb."
