When bankers faced the "death penalty," they put John J. Byrne on the case.
In its first incarnation, the 1990 legislative proposal would have required regulators to revoke a bank's charter, without a hearing, if an institution or its employees were convicted on money laundering charges.
When the dust settled two years later, the industry and Mr. Byrne had won a significant victory. Though the death penalty remained, the law included a number of safeguards and even a long-sought "safe harbor" to shield banks from privacy lawsuits when they report suspicious customers.
|A Lot of Emotion'
"We were afraid back then that we were going to lose," Mr. Bryne said. "There was a lot of emotion surrounding the issue when the bill was introduced."
For nearly a decade, Mr. Byrne has been the American Bankers Association's point man on money laundering and while-collar crime, the lobbyist who deals with lawmakers who write the laws and the regulators who implement them.
In between, he teaches classes on money laundering regulations at two ABA schools each year and speaks at conferences. He even ventured to Eastern Europe a year ago to explain the ins and outs of money laundering to Polish authorities. In addition, he is the trade group's specialist on environmental law.
Living with the money laundering laws will never be easy, Mr. Byrne said. But he suggested a number of things bankers can do to make their lives a little easier.
First, he said, establish a relationship with the local office of the Internal Revenue Service's Criminal Investigations Division, as well as local and state police.
Getting in touch with IRS authorities is a lot easier in small towns with few banks than in big cities. Mr. Bryne said, but the effort is worth it no matter where you're located.
"It will help you stay up to date on changes in patterns of illegal activity and you'll get a quicker response" when you need to talk to authorities, he said. And when something goes wrong, "you may get the benefit of the doubt," Mr. Byrne added.
The effort will also help in the event that bank ever faces the loss of its charter because employees engaged in money laundering. Under the provisions of the 1992 death penalty law sponsored by Rep. Frank Annunzio, D-Ill., and Rep. Chalmers P. Wylie, R-Ohio, past cooperation with law enforcement authorities is a factor regulators are required to consider.
Second, bankers should listen carefully when regulators criticize their compliance efforts.
"A lot of the recent Treasury penalties were levied on banks that were warned their compliance efforts were poor, but who didn't clean up their act," Mr. Byrne said.
Finally, the ABA counsel said, bankers should pay close attention to the more technical areas, such as Treasury's explanation of what kind of businesses are entitled to exemptions from requirements for reporting cash transactions. The rules are by no means obvious.
Didn't Seek Career
Consider: Among the businesses automatically entitled to exemptions are convenience stores, auto-supply shops and sports arenas.
By contrast, businesses which cannot be exempted without permission include churches, auto repair shops, and ferries.
Though money laundering regulation turned into a career path for Mr. Byrne, he hadn't given it much thought when he joined the ABA in 1984. In fact, the banking industry as a whole was paying almost no attention to the cash reporting requirements that had been on the books since 1973.
All that changed with two events. First, the director of the President's Commission on Organized Crime singled out the industry in 1984 by declaring that each bullet fired at a drug agent had been financed by a bank that turned a blind eye to money laundering.
A few months later, in March 1985, the issue moved to the front pages when First National Bank of Boston copped a plea to a felony count of failing to report $1.2 billion in foreign, interbank currency transactions.
The issue quickly got hot on Capitol Hill and within law enforcement circles. "There were all these proposals flying around and nobody at the ABA had any expertise," Mr. Byrne recalled.
Mr. Byrne, then a lawyer working on election law, was drafted to fill the void.
Into the Political Arena
Mr. Byrne, his wife, Sue, and their three children live in suburban Virginia, where he divides his time among jogging, coaching baseball, and civic activities. And he has managed to carry his work in money laundering over to the political world.
A Democratic candidate for the Virginia Assembly, Mr. Byrne wants to attack gun control by requiring gun dealers to report suspicious customers to authorities, much as banks are now required to report suspicious cash transactions.
What's good for banks, he reasoned, ought to be good for gun dealers as well.