Laundering Measures Suddenly A Priority

By Garver, Rob | American Banker, August 13, 2001 | Go to article overview

Laundering Measures Suddenly A Priority


Garver, Rob, American Banker


Could this be the year -- or at least the Congress -- in which federal laws against money laundering are finally updated?

Anti-laundering legislation has languished on Capitol Hill for the past two years. One bill, approved 31-1 by the House Banking Committee last year, died on the way to a vote on the House floor. Another, introduced in the Senate, ran into adamant Republican opposition and died in committee.

If anything, the prospects for passage of new money-laundering legislation seemed even dimmer when the 107th Congress convened in January.

Sen. Phil Gramm, R-Tex., who single-handedly killed such legislation in the last Congress, remained chairman of the Senate Banking Committee. Additionally, Treasury Secretary Paul O'Neill was making public comments that led many to assume that, unlike the Clinton administration, which had been ardently supportive of further enforcement powers, the newcomers wanted to scale back anti-laundering efforts.

In announcing a wide-ranging review of money-laundering enforcement policies, Mr. O'Neill implied that much of the current regulatory structure -- including suspicious-activity reports and currency transaction reports -- is too flimsy to bother with.

His remarks provoked a warning from Democratic Sens. Paul Sarbanes of Maryland and Charles Schumer of New York. "We are disturbed by a number of recent actions taken by the Treasury Department that suggest that the administration is shifting and weakening the longstanding U.S. policy regarding money laundering," they wrote in a letter to Mr. O'Neill.

But in just a few months the outlook has changed dramatically.

Sen. Gramm lost his chairmanship in June when the Democrats took control of the Senate. His successor, Sen. Sarbanes, is much more sympathetic to anti-laundering legislation. He has co-sponsored a bipartisan bill to limit U.S. banks' interaction with foreign "shell banks," and he plans to hold hearings on the measure next month.

Even Mr. O'Neill has changed his tune.

In hearings before the Senate Permanent Subcommittee on Investigations July 18, Mr. O'Neill said the Bush administration "is committed to aggressive enforcement of the money-laundering and asset-forfeiture laws." He also said that the enforcement of anti-money-laundering statutes will be the "top priority" for Jimmy Gurule, the Treasury's recently confirmed under secretary for enforcement.

At the same hearing, Assistant Attorney General Michael Chertoff told Congress that law enforcement officials "need, and are committed to using, all of the legal and regulatory tools we have at our disposal today," and that "some of these tools, such as our money laundering statutes themselves, need to be updated."

Those stances got the skeptics' attention.

"It is that kind of statement that I find very encouraging," said Stuart E. Eizenstat, the former deputy Treasury secretary, who spearheaded anti-money-laundering programs for the Clinton administration. "My general impression is that they are moving this from the deep freeze to a more significant priority. …

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