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.
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