Pubdate: Thu, 18 Oct 2001 Source: New York Times (NY) Section: National Copyright: 2001 The New York Times Company Contact: http://www.nytimes.com/ Details: http://www.mapinc.org/media/298 Author: Adam Clymer The House HOUSE ADOPTS TERRORISM BILL THAT LIMITS FLOW OF CASH WASHINGTON, Oct. 17 -- The House passed legislation to fight money laundering today by a 412-to-1 vote, setting the stage for final approval of the measure that would require American banks to know who their depositors are and authorize a cutoff of banking ties to nations refusing to assist United States law enforcement authorities. On another measure sought by the Bush administration that would allow wiretapping and eavesdropping on terrorist suspects, the House and Senate reached a compromise tonight under which the expanded authority would expire in four years, The Associated Press reported. The House money laundering legislation contains provisions, long opposed by the banking industry, which law enforcement authorities have sought to use against organized crime and drug traffickers. It gained quick momentum after the Sept. 11 terrorist attacks and subsequent revelations about the money trail left by the hijackers. Representative Michael G. Oxley, the Ohio Republican who heads the Financial Services Committee, told the House today there was now a consensus "that the time for business as usual is over." The Senate adopted very similar legislation last week as part of a broader antiterrorism bill that passed 96 to 1. Staff members from the House and Senate set to work immediately to reconcile the two money-laundering bills. Senator Paul S. Sarbanes, the Maryland Democrat who heads the Senate Banking Committee, said this afternoon, "I expect to resolve the differences rather quickly." Mr. Sarbanes said the House leadership was "amenable to inclusion" of money-laundering provisions in an overall bill, though the House, largely because of committee rivalries, passed them separately. The House left town this afternoon, so the staff work reconciling the bills cannot be formally ratified until next week. Then the antiterrorism package could be quickly adopted and sent to President Bush. The House acted under a procedure that allowed only 40 minutes of debate. To smooth the bill's prospects, House leaders stripped out a controversial provision on Internet gambling. The Federal Bureau of Investigation had told Mr. Oxley's committee that the Internet was a major route for money laundering. The provision prohibited gambling interests from accepting credit cards, electronic fund transfers and checks from American banks. To enforce those bans, the Treasury could have ordered American banks to stop doing business with the gambling companies. The Senate bill had no counterpart provision, so including it could have delayed agreement. The only negative vote was cast by Representative Ron Paul, Republican of Texas. In a statement, he attacked a provision that extends to broker-dealers the requirement imposed on banks to report suspicious activity by customers. He said this would only lead authorities "to waste time snooping through the financial records of innocent Americans." Representative John J. LaFalce of New York, the senior Democrat on the Financial Services Committee, pointed out that the bill was similar to one he worked on last year with Representative Jim Leach, the Iowa Republican who headed the House Banking Committee. House leaders never brought that bill to a vote. One new provision empowers the Treasury to monitor activities in the United States by hawalas, the nearly paperless banks in the Middle East and South Asia. Representative Sue W. Kelly, Republican of New York, said the bill would make hawalas subject to laws against transmission of money by unlicensed businesses. The measure also strengthens laws against smuggling of large amounts of currency. One central provision long opposed by banks would let the Treasury require them to use enhanced "due diligence" to determine the source of large private banking and correspondent accounts. If the Treasury found that a bank or nation that was the source of the deposit was "of primary money-laundering concern," banks would have to obtain as much information about a foreign depositor as they would about someone in the United States. The bill flatly prohibits United States banks from doing business with offshore "shell banks," which have no connection to any regulated banking industry and may have no physical facilities. A major purpose of the legislation is to force countries with bank secrecy laws to cooperate with the F.B.I. and other federal agencies by providing information on depositors. As leverage, the bill gives the Treasury secretary various sanctions to impose on those nations, up to barring United States banks from dealing with them. - --- MAP posted-by: Beth