A man who laundered money for Colombian drug dealers told a congressional committee Thursday how he crisscrossed the United States by plane and mobile home to supervise a $20 million ”smurfing” operation.
”Smurfing” was described as supplying illegal drug money to scores of underlings who use it to obtain cashier`s checks or money orders from banks. The money orders and checks are then cashed. In this way currency obtained from illegal drug deals is replaced with ”clean” money.
The money dealer, who wore a black hood and was identified only as Mario, testified during a hearing of the House Subcommittee on Crime.
Rep. BillHughes (D., N.J.), chairman of the panel, which has been preparing legislation to control money-laundering, said it the witness`
identity was concealed because of fear of reprisal by former colleagues against whom he is expected to testify.
The witness said he directed a ”smurfing” ring from late 1982 until well into 1984. He said that ”smurfs,” or money couriers, used fictitious names to obtain money orders in varying amounts.
All the amounts were under $10,000 to circumvent federal laws requiring banks to report transactions of more than $10,000, he said.
The subcommittee hearing coincided with announcement of the administration`s own proposal to curb money-laundering by imposing tough criminal and civil penalties for persons and financial institutions engaged in the practice.
Atty. Gen. Edwin Meese said the bill would prohibit a person or financial institution from transacting any business if it were known the money was obtained illegally.
Violators could face fines of $250,000 or twice the amount involved in the transaction, and also 20 years in prison. Banks would be prohibited from telling customers that their financial records had been subpoenaed by a government agency.
Testifying about the money-changing game, Mario told the subcommittee that drug-dealing and money-laundering are two distinctively different operations.
”We never mingled or socialized with the people who gave us the money to launder,” he said. ”We are two different groups. We are well educated in contrast to drug dealers, and we fit easily in the business world with our suits and briefcases.”
Gang members in San Francisco and San Diego dressed casually, the witness testified. Suits and ties were required in such Eastern metropolitan financial centers such as Chicago and New York.
