Global Policy Forum

US to Offer Strategy on Money Laundering


By Timothy L. O'Brien

New York Times
March 8, 2000

The Treasury Department plans to roll out its heavily promoted anti-money laundering program today as part of the Clinton administration's effort to combat international financial crime. In what it bills as a "national money laundering strategy for 2000," the Treasury Department will offer an array of legislative and regulatory initiatives aimed at money laundering, including the designation of metropolitan areas deemed as high-risk zones for such activities.

Among the areas that the Treasury Department will cite as particularly attractive to money launderers are metropolitan New York, Los Angeles and San Juan, P.R., according to people with knowledge of the initiative. Other metropolitan areas are expected to be added to the list. Last week, Treasury Secretary Lawrence H. Summers said that the Clinton administration planned to ask Congress for broad new powers to combat money laundering, including the authority to ban financial transactions between United States banks or brokerage houses and offshore financial centers.

Today's proposals will flesh out the domestic component of the initiative, and will call for greater coordination among financial regulators and federal, state and local law enforcement officials to help combat money laundering. "It's a comprehensive strategy to fight money laundering," said Representative Nydia M. Velazquez, Democrat of New York, who has worked closely with the administration on its proposal. "For the first time we are coordinating the activities of various regulatory and law enforcement agencies charged with combating money laundering."

Money laundering refers to the practice of filtering profits from illegal activities through banks to disguise their origin. The White House proposal will call for enhanced scrutiny of the role played by accountants, lawyers and other professionals who participate in financial dealings that might involve money laundering. It will also establish milestones for judging how adequately banks and brokerage firms are monitoring suspect accounts and suspect transactions at their institutions. The initiative is a response to heightened awareness of money laundering abuses that emerged in the wake of last year's disclosure that $7 billion in suspect Russian funds had moved through the Bank of New York.

The administration's proposal has been criticized by some in Washington as being too little, too late. The House and Senate Banking Committees already have submitted anti-money laundering legislation and members of both committees have been working closely with one another to devise a compromise bill. That legislation would place a greater burden on financial institutions to police money-laundering problems themselves or be penalized.

Although the White House has made some efforts to work with those drafting the Congressional legislation, those involved in the talks said that the administration had provided little feedback on those bills. The banking industry, which prefers the Clinton administration's proposal to legislation introduced in the House and Senate, has argued that there are already adequate legal and regulatory tools in place for battling money laundering and that further regulation will put banks in the United States at a disadvantage to competitors abroad.


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