Magazine article American Banker

Banks Back Plan to Give Treasury More Power on Money Laundering

Magazine article American Banker

Banks Back Plan to Give Treasury More Power on Money Laundering

Article excerpt


Treasury Secretary Lawrence H. Summers is expected on Thursday to propose anti-money-laundering legislation that would give him more authority to single out parts of the world where U.S. financial institutions may not do business.

The industry would prefer that approach to a proposal by House Banking Committee Chairman Jim Leach, which would bar banks from establishing relationships with financial institutions from countries that lack "comprehensive" and "consolidated" supervision. The reason, said American Bankers Association senior counsel John J. Byrne, is that the Leach bill would put too much responsibility on banks to make that determination instead of the government.

"We are not in a position to know how strong the regulatory oversight of a particular country is," Mr. Byrne said. "Chairman Leach's bill places too much onus on the private sector. ... To the extent that Treasury is willing to take this burden, that would not only be preferable, but it is the only way to go."

Mr. Summers is scheduled to discuss his legislative proposal and preview some details of the Clinton administration's other anti-money-laundering initiatives Thursday.

Treasury officials and lawmakers from both parties have said they share a common aim: keeping criminal proceeds out of the banking system and preventing U.S. financial institutions from establishing relationships with so-called "brass plate" banks, or shell companies in offshore locations such as the Caribbean or Pacific. But they have been negotiating details.

Sources in the industry and on Capitol Hill said Mr. …

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