The first section of the report documents the movement of drug money between the United States and Canada. Findings are presented from a 1987 report by the U.S. Customs Service regarding the number of filings of the Report of International Transfer of Currency or Monetary Instruments by individuals entering the United States through Canada. Only non-U.S. and non- Canadian citizens were included in the study. The findings suggest that the laundering of drug money is occurring across the U.S.-Canadian border. The second section of this report focuses on money laundering and the United States/Canada banking systems. Banking laws designed to address money laundering through financial institutions in the two countries are reviewed. This is followed by a discussion of money laundering techniques. In the United States, the most common method involves traffickers taking their cash to a bank and conducting any number of transactions. To increase the portability of cash, the trafficker may exchange smaller denomination bills for larger ones. Cash is also exchanged for Treasury bills, bank drafts, letters of credit, travelers checks, etc. A recent trend towards using foreign currency exchanges as a means of laundering money has been noted in Canada. Other topics addressed in this special report are "financial havens"; current asset forfeiture laws and pending legislation in the United States and Canada; programs used to identify, trace, freeze, and seize drug assets; and international initiatives.