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Published: Sunday, 10/21/2001

Wring out the laundry

Is this a country of unlimited opportunity or what? First, commercial airlines exploit the tragedy of 6,000 deaths from the terrorist hijackings to pull the ripcord on a $15 billion bailout of their previously troubled industry. Then several other businesses stepped up to the same government trough.

Fortunately, however, the banking lobby apparently has been rebuffed in its attempt to scuttle a long-overdue move in Congress to combat terrorism by putting some real teeth in the nation's money-laundering laws.

It's long been established that terrorists and other international criminals prefer to sanitize their money by running it through legitimate banks. Last year, months before the murderous attacks on New York and Washington, a Justice Department report stated that money laundering “provides the fuel that allows drug traffickers, arms dealers, terrorists, and others to conduct their criminal business.”

Sen. Carl Levin, Democrat of Michigan, who has been investigating money laundering for several years, says that an estimated $500 billion to $1 trillion in ill-gotten gain is laundered through banks worldwide each year, about half through U.S. banks.

But until congressional leaders intervened late last week, conservatives and lobbyists for banking interests were dead-set on stopping new restrictions. Why? Like the man said, “Follow the money.”

Banks make money - lots and lots of money - by helping people move large amounts of cash hither and yon around the world, as secretly as possible. They do this through such devices as “private banking,” which caters to the ultra-wealthy and offers wire transfers to offshore accounts and shell corporations.

While bankers have cooperated to some extent to curb money laundering, they clearly did not want any new laws that might derail this gravy train. Their lobbyists used the bogus claim that the proposed laws would require banks to spy and rat on customers.

Actually, the measures would put a halt to some dealings with questionable foreign banks, require them to gather more information about foreign customers and their money, and generally give closer scrutiny to funds being passed through the U.S. financial system. And the legislation would outlaw carrying more than $10,000 in unreported money in or out of the country.

Under a 1986 law, banks already are required to refuse to accept illegal money and to report suspicious activity. But Congress, in 1998, decided that more stringent controls were needed and the legislation, now attached to the omnibus anti-terrorism bill, is the result of that mandate.

What may have finally overcome the banking industry's objections was evidence presented to Congress that Osama bin Laden and his network have long been taking advantage of loopholes in current law.

While care needs to be taken that the legislation isn't sabotaged at the last minute, the congressional leadership, in both parties, is to be commended for its willingness to stand up to special interests and make the compromises necessary to get this crucial component in the war against terrorism into operation as quickly as possible.

Spurious arguments about banking privacy don't hold up under emergency circumstances in which all Americans are being asked to sacrifice at least some bit of freedom to the cause. There's nothing wrong in requiring the bankers to do their part.



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