The federal assault on money laundering is hitting pay dirt.

Nearly three years after warning that a crackdown was coming, the government is striking hard against the use of banks to shield the profits of organized crime and drug trafficking:

* Early this year the Bank of Boston was fined $500,000 after pleading guilty to failing to report $1.22 billion in cash transactions with foreign banks -- some for companies owned by a local Mafia family.

* In a case that will go to trial soon, New York heroin traffickers are accused of using accounts at E.F. Hutton & Co. to launder $15.6 million, much of it cash stuffed into gym bags. The brokerage house has not been charged with wrongdoing.

* On the West Coast, a group of elderly women recently laundered $25 million in a "smurfing" operation -- going from bank to bank depositing just under $10,000, the amount at which a currency transaction form must be filed with the Treasury Department. More than 100 other money laundering investigations are under way across the nation, according to a high-ranking Treasury Department official.

* Treasury Secretary James A. Baker III disclosed this week that his department may create an office of financial investigation to attack money laundering and other crime in the banking industry.

U.S. officials say their increased priority on money laundering investigations pays double dividends: The seizure of illegal assets can cripple a criminal organization and mob kingpins who are well insulated from their illegal activities can often be linked to the profits.

A typical money laundering scheme allows an individual to transform cash into funds that cannot be traced. It can provide a legitimate cover for large profits from, for example, drug trafficking, prostitution, gambling and other illegal enterprise, that he otherwise cannot account for.

The money launderer might secretly transport the funds, by courier or bank wire, to a corporate account in a foreign country where taxes are low and banking records are secret. His corporation, which probably would exist only on paper, could then lend the money back to him, and he might even take a U.S. tax writeoff on imaginary interest payments.

In 1982, U.S. Customs Commissioner William von Raab warned the banking industry of the coming crackdown on money laundering in what is now known as his "fire and brimstone" speech to the Florida Bankers Association.

Von Raab says he believed then that some Florida bankers were "complicit, not just fellow travellers," with drug dealers seeking to launder their profits and that the bankers' compliance with federal law requiring them to report large cash deposits was "lousy."

As the television cameras rolled, von Raab told the bankers he was "ashamed" of them. "Then, when I told them that there were a lot of sleazy bankers in Florida, all hell broke loose. Guys leapt up and started screaming and yelling." The convention, scheduled through the next day, was quickly adjourned.

The speech was an abrupt signal that the federal government was about to get serious about the 1970 Bank Secrecy Act, which was amended in 1980 to require financial institutions to notify the Treasury Department of cash transactions of $10,000 or more. Staring this month, gambling casinos also must notify Treasury of such transactions.

Many federal law enforcement officials view the Bank Secrecy Act as one of the government's top weapons against organized crime and drug trafficking.

"Investigating money laundering is an indirect way to get at the mob," said James Harmon, executive director of the President's Commission on Organized Crime. "We recognized pretty early that you've got to figure out a way to get at the economic benefits of organized crime. Narcotics, labor payoffs, payoffs to public officials -- the problem for them is always how to get rid of the cash. The common denominator is always cash."

John M. Walker Jr., assistant treasury secretary for enforcement, told a congressional committee recently, "If we can trace the money, the trail will often lead to high-level criminals. The leaders in any criminal enterprise usually take great pains to distance themselves from the illegal source of their income. But they can usually be found close to the money."

One Treasury Department official said money laundering by American banks is "a situation that occurs hundreds of times, if not thousands of times, each day. Many major cities have gambling, horses, prostitution. It's a daily business. There has to be some means of laundering that flow of money."

Walker said estimates indicate $50 billion and $65 billion a year is laundered from from drug trafficking alone.

"We know that a single money laundering enterprise can wash $300 million or more in crime proceeds in less than a year's time," he said.

Rep. Charles B. Rangel (D-N.Y.), chairman of the House Select Committee on Narcotics Abuse and Control, recently estimated that drug profits reach as much as $110 billion annually.

Richard Mangan, a money laundering expert in the Drug Enforcement Administration, warns, "They all are ballpark figures. Drug organizations are not posting year-end profit statements."

With its new emphasis on the Bank Secrecy Act, Walker says that the Treasury Department has seized $81.8 million in currency and $34.3 million in property since 1980.

The most prominent investigation is the ongoing federal grand jury probe of the Bank of Boston, whose chairman, William L. Brown, has said, "Through confusion and error, we failed to to incorporate the 1980 change in the reporting law into our operating procedures."

Brown has also said that two companies controlled by members of the Gennaro Angiulo organized crime family were placed on a special "exempt" list of special bank customers -- usually reserved for large cash-producing retail operations -- that are not required to file the Treasury Department forms.

In a case known as the "pizza connection" -- because of the New York pizza parlors accused of serving as fronts for a $1.65 billion heroin trafficking operation in the early 1980s -- launderers allegedly made deposits of $4.9 million at Merrill, Lynch, Pierce, Fenner & Smith Inc. before officials there became suspicious and closed its accounts and $15.6 million into accounts at E.F. Hutton & Co.

U.S. Attorney Rudolph W. Giuliani, whose New York office is handling the "pizza connection" case, said, "People were walking into E.F. Hutton with a million or one and a half million dollars in cash that was eventually going into Swiss accounts."

Giuliani said that when federal investigators subpoenaed records from E.F. Hutton and asked Hutton employes specifically not to mention it to their client, Hutton "tipped the suspect . . . . It made it impossible to go forward with the investigation at that time. When the customer was notified, he ceased all transactions."

A year later, by chance, investigators developed additional information involving the same suspects and were able to proceed with the case, Giuliani said.

A spokesman for E.F. Hutton said the investment firm refused further cash deposits from the suspect after it was informed that the money might be coming from organized crime. He said the customer was informed of the decision before the federal investigators made their request for secrecy. "It's a very unfortunate misunderstanding . . . . We had no intention of aiding crime," the spokesman said.

As for accepting the large cash deposits, the E.F. Hutton spokesman said all required reporting forms were filed with the Treasury Department.

Federal investigators say large-scale money laundering operations use both U.S. and foreign banks, particularly those in such traditional tax havens as Switzerland, Panama, the Cayman Islands and the Bahamas.

Law enforcement officials say their successes have forced criminals to turn to cruder methods of laundering cash.

Some simply fly it out of the country. But von Raab points out that a suitcase with $1 million in $20 bills weighs more than 100 pounds.

Other launderers deal in smaller sums to avoid the reporting requirements. In the "Grandma Mafia" case, a group that included several grandmothers was accused of running a $25 million cocaine operation from Florida to Los Angeles and then laundering the money through California banks. Several people have been convicted in the continuing case.

But despite the successes, there have been problems.

Federal law enforcement officials complain that authority for examining banks, credit unions and savings and loans is scattered among five agencies, depending on the type of financial institution. In addition, they say, there are no uniform qualifications required for the examiners, and many are not trained accountants or auditors.

Mangan adds that money laundering schemes are growing more elaborate.

"We used to go in with search warrants and seize notebooks and ledgers. Now, we go in and get computers and floppy disks," he said, adding that trafficking and laundering methods vary in different parts of the country.

"In Florida, you're talking about cocaine and Panamanian bank accounts . . . . In New York, it's the Chinese heroin traffic out of Thailand and Hong Kong. There's much less use of the traditional banking system and a great deal of use of underground banking systems -- gold shops, family connections . . . . The paper trail is far less obvious, the track is much more difficult to follow," he said.

Despite problems, federal enforcers believe there has been progress. Von Raab estimates that since 1980 bank compliance in reporting cash transactions has jumped from about 10 percent to 80 or 90 percent today, and several bills are pending in Congress to ease the federal access to records of financial transactions.

And in the end, officials say, the strongest enforcement push may come from the public. After all, they reason, who wants to do business with a bank that has been exposed as having been used for money laundering by the Mafia or some other criminal enterprise?

For example, a recent bankruptcy filing by a Deak-Perera subsidiary was precipitated in part by customers withdrawing deposits after the President's Commission on Organized Crime reported that a 1982 Internal Revenue Service investigation had discovered that a convicted Colombian drug trafficker had laundered about $97 million through Deak-Perera.

Giuliani says he hopes that banks have learned a lesson from the federal spotlight on money laundering. "An institution with any self-respect wouldn't want to be used for furthering criminal activities," he said.

"Banks and financial institutions should follow the know-your-customer rule. They should know what business the customer is in. If not, they should check it out. If you write down that you're a baker, and then come in with $1 million every two or three weeks, then either you're the biggest baker in the United States or you lied.