BANKING INDUSTRY WANTS CHANGES

WASHINGTON -- In a tricky balancing act, the banking industry is trying to
force changes in anti-terrorism legislation without appearing unpatriotic
or uninterested in catching criminals.

Pressing the effort are some of the most politically powerful and
well-monied interests, including the American Bankers Association, Citibank
and J.P. Morgan Chase.

At issue are proposals to impose new restrictions and requirements on U.S.
banks to make it tougher for terrorists, drug dealers and others to use
them to hide money.

Supporters are pushing for fast approval, saying the legislation would help
law enforcement cut off terrorists' assets, including the money behind the
Sept. 11 attacks on the United States.

President Bush supports the Senate legislation and is urging Congress to
work "very quickly in approving additional tools to combat terrorism,"
White House spokeswoman Claire Buchan said.

A Senate anti-terrorism bill would ban U.S. banks from doing business with
shell banks, which have no physical presence in any country and serve as
vehicles for money laundering, said Sen. Carl Levin, D-Mich.

The bill, expected to get a Senate vote this week, also would put a greater
burden on banks to detect money laundering.

The House Financial Services Committee planned to consider similar
legislation Thursday.

The American Bankers Association supports tougher money laundering laws
generally, but is concerned about some of the details, ABA lobbyist Ed
Yingling said.

Those include the definition of shell bank, which itself is a term the
banking industry does not favor, he said.

"'Brass plate bank' is the term we use, because the theory is it's nothing
more than a brass plate on the wall on some island," Yingling said. "There
is a question about what the definition of that is because there are
legitimate banks in some of these places."

He said the association also wants Congress to leave some of the details
about what banks can do up to the Treasury Department rather than spell out
all the specific in the law.

The industry is trying to win such changes to the legislation while also
making it clear that banks want to help the United States go after the
terrorist money trail, Yingling said.

"All we're trying to do is make it as workable as possible," he said.

Levin said some banks are paying "lip service" to the idea of tougher money
laundering laws but working behind the scenes to derail such legislation in
the House.

Citibank is lobbying to add language that would let U.S. banks do business
with any shell bank affiliated with a financial services company, a
congressional source said on condition of anonymity. Any shell bank could
set up a shell corporation to meet that requirement, the source said.

Christina Pretto, a spokeswoman for Citibank's parent, Citigroup, said the
company is working with the Bush administration and Congress "to achieve
the most effective means to ensure that the banking system worldwide is
never used by terrorists and other criminals."

A Senate subcommittee investigation found that several large U.S. banks,
including Citibank, Bank of America, Bank One Corp. and Wells Fargo & Co.,
failed to take sufficient steps to prevent money laundering through
accounts with other banks.

Such correspondent accounts let banks do business in countries where they
have no physical presence, providing each other services such as
transferring funds or exchanging currencies.

Commercial banks were the seventh biggest donor to congressional campaigns
in last year's election, giving a total of $10.6 million, according to the
Center for Responsive Politics. Banks spent nearly $15 million lobbying
last year.

Links related to this article: Information on the bills, S. 1510 and H.R.
2975,available at: thomas.loc.gov/