Crackdown on Laundering of Money Backed

Mayor Tom Bradley and Los Angeles County Dist. Atty. Ira Reiner called Monday for passage of legislation that would make it a crime in California to knowingly launder drug and gambling money.

In a news conference held by the campaign committee supporting Bradley for governor, the mayor and the district attorney endorsed two pending bills that would also require banks and other financial institutions to report all cash transactions over $10,000 to the state attorney general’s office in addition to, as at present, federal authorities.

Laundering of money is the process of concealing an illegal source of income and disguising it to appear legitimate. For instance, cash may be deposited into a checking account, then transferred into another account and then checks issued back to the depositor or to someone else.

Reporting Requirements

According to the attorney general’s office, prosecutions of laundering, always by federal authorities, have usually used violations of federal reporting requirements to get at alleged launderers. The laundering itself has not been illegal. The new law would make it so, at least on the state level.

“Frankly, the business climate for crime is too good in this state,” Bradley said Monday. “The big-time dope dealers and racketeers can spend their ill-gotten gain with impunity, while our communities pay the price in corruption, wasted lives and bloodshed. We need a law that will take some of the profit out of crime, and drive the ‘Misfortune 500’ out of California.”

The bills endorsed by Bradley and Reiner are authored by state Sen. Dan McCorquodale (D-San Jose) and Assemblyman Steve Clute (D-Riverside). The McCorquodale bill is in the most advanced stage. It has passed the Senate and is scheduled to go to the Assembly floor Aug. 14.

Bradley said the California Bankers Assn. has agreed to support the money laundering ban as long as it is worded to allow only those who know the money is illegitimate to be prosecuted, not just those who have some reason to believe it is. Originally, the “reason to believe” language was used, but that has been amended out of both bills at the request of the bankers.

The bills both would punish first-time laundering violations with up to a year in jail and a fine of $250,000, or double the amount of the cash being laundered, whichever was greater. A second violation would draw a fine of $500,000 or five times the amount being laundered, whichever was greater.

The mayor cited estimates that between $10 billion and $20 billion a year in cash is being deposited in California by drug traffickers and other organized crime figures.

In the first eight months of 1985, he said, California financial institutions had a surplus of more than $1.4 billion in bills of $50 and $100 denominations, a strong indication that drug money is being run through the banking system.

“California’s absence of control over large cash transactions has provided drug traffickers and organized crime syndicates a powerful incentive to operate in California,” Bradley said, calling such transactions “the lifeblood of organized crime and drug pushers.” He said some other states have already tightened their laws.

Reiner said he believes the drug trade has become “the single most serious social and criminal problem we face today.” It is not, as some assert, a victimless crime at all, he said.

The district attorney said he had gone to the press conference at the request of the Bradley campaign organization.

Gary Schons, the deputy state attorney general who drafted the McCorquodale and Clute bills, said that he would expect Gov. George Deukmejian, Bradley’s Republican opponent, to sign such legislation if it reaches his desk.