SETTING STAGE FOR CONFLICT WITH SENATE, HOUSE PASSES MONEY-LAUNDERING BILL

WASHINGTON -- The House overwhelmingly approved legislation Wednesday aimed
at making it more difficult for terrorists, drug traffickers and other
criminals to launder money, but lawmakers dropped a provision barring
credit-card use for Internet gambling.

As their staffs were preparing to evacuate their Capitol Hill offices to
make way for an anthrax sweep, lawmakers voted 412-1 for a bill that would,
among other things, make it a crime to secretly carry $10,000 or more in
cash across U.S. borders; allow the Treasury secretary to set special
controls on transactions with banks or countries suspected of money
laundering; and force banks to collect more information about their wealthy
private-banking clients and correspondent-banking partners.

The bill provides "a new array of weapons in the fight to disrupt the
funding of international terrorist organizations," said Rep. John J.
LaFalce (D., N.Y.), one of its sponsors.

At the last minute on Tuesday, however, the House abandoned a provision
that would have banned the use of credit cards, debit cards and other
monetary instruments to pay for Internet gambling. The credit-card
industry, including Visa USA Inc. and MasterCard, lobbied hard against the
measure.

Similar money-laundering legislation floundered last year, with banks,
financial-privacy advocates and antitax conservatives leading the charge
against it. Some conservatives argue that language in the bill could lead
the Treasury to crack down on tax havens in the name of fighting money
laundering; some lawmakers, such as House Majority Leader Dick Armey (R.,
Texas), say countries should compete by offering the lowest tax rates
possible, while others see the havens as facilitating tax evasion. The
Sept. 11 attacks made it all but impossible for lawmakers to be seen as
actively opposed to the measure. Only Rep. Ron Paul (R., Texas), a longtime
advocate of keeping financial records private, voted against the bill on
the House floor. He called it a "package of unconstitutional expansions of
the financial police state, most of which will prove ultimately ineffective
in the war against terrorism."

To the frustration of their Democratic colleagues, House Republicans did
manage to separate the money-laundering provisions from a larger
antiterrorism bill passed earlier. The Democrat-led Senate included both
issues in the same bill -- the approach favored by President Bush -- and
the two chambers must now negotiate to reconcile their differences.