MONEY - LAUNDERING PROPOSALS DENOUNCED

WASHINGTON (AP) -- Administration officials on Tuesday stopped short of
supporting recommendations of a key Democratic senator for cracking down on
foreign banks' use of big U.S. banks for laundering money from drug
trafficking and other illicit activities.

A new report by Senate investigators already has led to the closing of some
offshore banks identified as high-risk.

"We are looking very carefully at it," Joseph M. Myers, the Treasury
Department's acting deputy assistant secretary for enforcement policy, said
at a Senate subcommittee hearing. He was referring to recommendations by
Sen. Carl Levin of Michigan, senior Democrat on the Senate Governmental
Affairs Committee's investigative panel, that include prohibiting U.S.
banks from opening correspondent accounts for shell banks lacking physical
presence.

Because the Bush administration has only been in office for a few weeks,
Myers said, it would be premature for Treasury to take a position.

The Internal Revenue Service, meanwhile, said its agents had raided the
California offices of Jerome Schneider, who writes advice books on moving
assets offshore to avoid taxes, and his lawyer, Eric Witmeyer.

Schneider's books include, "The Complete Guide to Offshore Money Havens,"
and "How to Own Your Own Private International Bank."

Harland Braun, another attorney representing Schneider, denied his client
violated any laws.

Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce
Committee, appeared as a speaker at a Schneider seminar in Vancouver,
Canada, in June 1999. He also was quoted in an advertisement as
recommending one of Schneider's books. Retired Marine Col. and Iran-Contra
figure Oliver North also has given speeches at two seminars, in Vancouver
and Hawaii.

Ken Johnson, Tauzin's spokesman, on Tuesday said it was his idea that
Tauzin speak at the seminar to promote a retail sales tax to replace the
national income tax. After they spent some time there, Johnson said, "I
realized it was a mistake and I got him out of there as soon as possible."

Regarding the quote in the ad, which appeared in The Wall Street Journal
and other publications, Johnson said Tauzin "never read the book" and the
quote he provided "was intended to be innocuous and certainly not an
endorsement."

North's spokesman, Tom Kilgannon, said North's speeches were about
politics, not taxes, and were arranged by a professional speakers bureau.

"We did not know that any of this was going on" with Schneider, Kilgannon said.

Democratic staff of the Senate investigative subcommittee found in a
yearlong investigation that many big U.S. banks have failed to take
adequate steps to prevent laundering of dirty money through their
correspondent bank accounts.

The investigators' report named Bank of America Corp., Bank of New York
Co., Bank One Corp., Chase Manhattan -- now part of JP Morgan Chase & Co.
- -- Citigroup Inc.'s Citibank unit, First Union Corp., FleetBoston Financial
Corp., Wells Fargo & Co. and other U.S. banks.

Correspondent banking, a lucrative activity in which banks provide each
other services such as moving funds or exchanging currencies, allows banks
to conduct business in countries where they have no physical presence.

"We have a responsibility of controlling our banks" to ensure they don't
unwittingly become depositories for drug money, bribes and other illicit
funds, Levin said at the close of the hearing, the last of three the panel
recently held on the subject.