Politics & Policy

CRITICS FRANTICALLY TRY TO WEAKEN BILLS AIMED AT MONEY LAUNDERING

WASHINGTON -- Financial-privacy libertarians and antitax conservatives are
fighting a rear-guard action to try to weaken money-laundering bills now
racing through Capitol Hill.

With bipartisan momentum building behind legislation in the wake of the
Sept. 11 hijackings, opponents are frantically trying to kill provisions
they believe give the federal government too much power to tap bank-account
data in its fight against terrorism, drug dealing and organized crime.

"What we're seeing now in this rushed panic is that law enforcement seems
to be more dominant and sidelining other concerns," said J. Bradley Jansen,
of the conservative Free Congress Foundation here. Mr. Jansen is
particularly worried about provisions that would make banks collect more
information about customers, bar the secret transport of large amounts of
cash across international borders and allow the Treasury secretary to sever
transactions with certain countries or foreign banks. "To give that kind of
power to a single man with no congressional oversight or firmer guidance
than what they're doing in the bill raises serious constitutional
concerns," he said.

The bill's opponents, however, are running low on time. Lawmakers and the
White House are eager for new tools to fight money laundering -- channeling
illicit funds through the financial system to mask their source or purpose,
something critical for terrorists dispersed across the globe. The Senate
included money-laundering provisions in its counterterrorism bill, and the
House, which passed a terrorism bill of its own, could vote on separate
money-laundering measures as early as Wednesday.

Differences between the bills will have to be ironed out in House-Senate
negotiations, the last chance for opponents outside government to convince
their allies inside to cut language they don't like. But conservative
lawmakers and administration officials who might have fought that battle a
year ago don't want to be seen as obstructing the fight against terrorism
today. "I don't know if it has been a 180-degree turn, but they have
certainly turned more to the law-enforcement view," said Michael Zeldin, a
former head of the Justice Department money-laundering section who is a
partner at Deloitte & Touche specializing in money-laundering compliance.

One potential ally for conservatives is Lawrence Lindsey, an influential
economic adviser to President Bush, who in 1999 argued against regulations
that would have required banks to collect more information about their
customers. Congressional aides who favor the bills suspect Mr. Lindsey is
working against them. He didn't respond to requests for comment.

Another conservative, House Majority Leader Dick Armey (R., Texas), still
is trying to fiddle with the House bill, which passed the Financial
Services Committee 62-1, before it gets to the floor, an aide said. Mr.
Armey cited "the precious Bill of Rights that we are fighting to defend in
the first place." He has been critical of international efforts to crack
down on tax havens, arguing that they are disguised attempts to force small
countries to raise tax rates.

That issue is surfacing again in the money-laundering debate. The bills
would give the Treasury secretary authority to impose controls on
transactions involving jurisdictions suspected of money laundering.