So many billions of dollars in drug profits are flowing through Miami that some banks have become "addicted" to the cash, Sen. William Proxmire (D-Wis.) charged yesterday.

"Miami is virtually drowning in cash from drugs," the chairman of the Senate Banking Committee said during hearings on the effect of south Florida's $7 billion annual drug trade.

Although all other areas of the country report a shortage of currency, an estimated $6 billion in surplus cash bundled up by Miami banks and sent to the Federal Reserve this year "is at least twice as large as the surplus reported in all other Fed offices combined," said Proxmire.

According to the senator, the banks and the entire economy of the region have been corrupted. "Not only are millions of Americans addicted to drugs, many banks are addicted to drug money," he said.

Former Miami federal prosecutor R. Jerome Sanford said between six and 10 Miami area banks are the main outlets for laundering the drug money and that traffickers use bribery and more elaborate financial schemes to make it difficult to trace the money.

One such scheme involves setting up an office in the Bahamas -- beyond the reach of U.S. banking laws -- with a telex machine, calling it a bank and transferring the drug cash from a Miami bank by wire, evading reporting requirements because it is an exempt "bank-to-bank transfer," Sanford said.

"This method allows the original narcotics money to be funneled into foreign corporations, which then use this money to invest in legitimate enterprises in the United States," Sanford said.

The only bank he names was the National Bank of South Florida in Hialeah -- described by one former employe as a "laundromat" -- which, according to witnesses Sanford quoted, received money from "depositors . . . bringing cash into the bank in large sums in paper bags, shopping bags, attache cases and other containers that 'smelled funny.'"

The "multitude of violations of banking regulations" found by auditors in 1977 resulted only in the misdemeanor prosecution of one bank official, who was acquitted, he said.

Sanford said the Internal Revenue Service overruled attempts to prosecute the directors on felony charges.

He also said there is no "tangible, patent proof" of the allegation that some banks may be owned by drug traffickers, which was to be the subject of the second day of hearings today.

The panel is considering legislation to tighten reporting requirements on large cash transactions, to allow authorities to arrest people trying to leave the country with more than $5,000 in unreported cash and to authorize rewards for tipsters on illegal cash transactions.

"What accounts for the poor record of the banking regulatory agencies?" Proxmire asked. "It looks as if they're dragging their feet. They're not doing their job. This is pitiful."

Assistant Treasury Secretary Richard J. Davis said the agencies "are getting more involved" in discovering possible violators of the federal Bank Secrecy Act, which is aimed at exposing underworld deposits in banks.

Davis said the Treasury began in 1978 to request that regulatory agencies provide the name of any bank that wasn't complying with the law's disclosure requirements. Those provisions include reporting any transfer to a foreign country of more than $10,000.

Sen. George Mitchell (D-Maine) asked Davis rhetorically: "Can you think of anything that would encourage compliance more than to send a banker to jail?"

Proxmire said one unnamed bank, with $37 million in assets, deposited about $600 million in currency in the Miami Federal Reserve bank last year. "What makes that figure so astounding is that the bank, if it had deposited the average currency amount for Florida banks, would have been expected to deposit with the Fed $13 million," he added.

Several witnesses, including Davis, agreed with Proxmire that drug smugglers would have trouble conducting their illegal business if they couldn't deposit cash in banks and use cashier's checks to send the money outside the country.

Anthony Infante, president of the Intercontinental Bank of Miami Beach, said that "without banks, it would be almost impossible to smuggle drugs and convert it into cash." Infante added that it would be "very difficult for any proffessional banker to be used (by a drug dealer) without knowing it." He said any pattern of heavy cash deposits was a tipoff to experienced bankers that the customer could be involved in illicit activities.

Meanwhile, the Miami Herald reported yesterday that Miami banks received deposits of $109 million from suspected drug smugglers during a one-year period. The newspaper said the figure came from a secret Treasury Department report on the situation.

"Based on our experience, $109 million is a conservative figure," said Arthur F. Nehrbass, who heads the Miami FBI offfice.

The report doesn't suggest the Miami banks were aware some of their depositors were suspected of laundering drug money.