Pursuing Criminals Gets Priority Over Scrutinizing Banks

WASHINGTON -- Pamela J. Johnson's trump card -- and she plays it well -- is that she speaks two languages. Those tongues are not French and Greek, but bank and government.

After 10 years in banking, Ms. Johnson is now on the other side as the Treasury Department's money-laundering cop. Since 1991, Ms. Johnson has acted as an arbiter between the two worlds.

Assistant director for compliance in Treasury's financial enforcement office, Ms. Johnson thinks it's time to change the way her office tracks money laundering.

"We really need to shift the focus, not just the forms," she said. That shift, she said, involves going after the bad guys, not punishing institutions for paperwork mistakes.

Reducing Red Tape

Ms. Johnson, 32, runs the Treasury Department's year-old money laundering task force, which is made up of 15 agency officials. The group is working in tandem with Treasury's new Bank Secrecy Act advisory group, with 30 members from government and the private sector.

Ms. Johnson said banks should expect some major paperwork reductions and some clarifications on how to file suspicious transactions. She also hopes to formalize "know your customer" guidelines, which most banks already have in place.

"We're trying to make it easier," she said.

Part of her job, she said, is to think like a money launderer. Ms. Johnson said it's the launderers, not the bankers she's really after.

'Not a Witch-Hunt'

When she goes into institutions with suspected compliance problems, she said she looks for a systemic compliance deficiency within the bank rather than one isolated mistake. Her office issued just 17 penalties to banks last year. "This is not a witch-hunt," Ms. Johnson said.

About 80% of her time is spent working on the task force, which reports to President Clinton's nominee for under secretary for enforcement, Ronald Noble. The rest of her job is spent training -- traveling all over the world teaching bankers about money laundering.

Ms. Johnson said this is the best part of her job. She likes to travel, meet new people, and move constantly. "I like to go whirlwind," she said. Ms. Johnson, who is better known as P.J., talks so fast and is so energetic it seems she might explode.

Academic Household

Ms. Johnson said because her parents were both teachers she has an ingrained appreciation for learning. "We never had any blue pens in the house, they were all red," Ms. Johnson said. "I'm lucky I'm not a nerd."

She also said her family taught her to have a strong work ethic -- one that often keeps her at work until 10 at night at her office across from the White House.

When she goes to seminars and conferences, she talks to bankers about how to implement regulations and how to stay up-to-date on the issues. Ms. Johnson said she has been roasted by a couple of her audiences because she represents the government. But once the bankers see she knows their world as well, she said she gets more respect.

Ms. Johnson said training enables her to stay current with bankers' concerns and problems, which helps her figure out what the industry needs.

"I get to tell law enforcement what the banks mean and how their records can be used, and I get to tell the bank what Treasury means," she said.

Keeping Up

Ms. Johnson tells her audiences to do two things to stay up on money-laundering issues: attend conferences and call the Bank Secrecy Act bulletin board, which can be accessed by computer modem. The bulletin board is a year-old forum for banks to ask money-laundering questions and read Treasury proposals and press releases.

"You've got to stay vigilant," she said. "You might have good currency transaction reports. But don't be lulled into thinking that's all you need to do."

Training employees at all levels to be aware of suspicious activity should be part of every bank's plan, Ms. Johnson said. A bank teller who realized an ice cream store making deposits in $100 bills was unusual, spotted money laundering by using common sense.

Ms. Johnson started in banking as a teller during summers off from college. After graduating, she worked her way up to vice president for compliance at a branch of Bank of New England in Danvers, Mass. One of her projects was to develop a Bank Secrecy Act compliance program.

She spent so many months in the bank's basement working on the project that other employees painted a fake window and flower box on the basement wall. "That I'm actually involved in changing the BSA now is exciting. I've grown up with it," she said.

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