ANTI-MONEY-LAUNDERING POWERS SOUGHT

WASHINGTON - The Clinton administration said Thursday it wants
broad new powers to fight money laundering, including the authority to
ban financial transactions between offshore financial havens and U.S.
banks and brokerage firms.

The administration wants to stanch the flow of billions of dollars
from drug trafficking and other criminal activities through the U.S.
financial system2E

The leaders of the House Banking Committee liked the administration's
proposal so much they said Thursday they would co-sponsor it in Congress.

Money laundering came under the public spotlight last summer, when
federal authorities said the Bank of New York, one of the country's
largest banks, had served as a conduit for about $7 billion in Russian
money, some of it believed to be from criminal activities.

Outlining the new proposal in a speech Thursday, Treasury Secretary
Lawrence Summers identified Russia, Colombia and Nigeria as among the
biggest sources of illicit money, and the Caribbean islands of
Dominica and Antigua, Nauru in the South Pacific and Liechtenstein in
Europe as some of the leading money-laundering centers.

``When dirty money finds its way into American banks, the reputations
of all involved suffer,'' Summers told an audience of bankers and
securities industry executives.

Money laundering is estimated to absorb nearly $600 billion annually,
or up to 5 percent of the world's gross domestic product. Profits from
drug trafficking, prostitution and other criminal activities are moved
through a series of bank or brokerage accounts to make them appear to
be proceeds of legitimate business activity.

In the proposal, the Treasury Department is seeking the power to ask
U.S. financial institutions to collect data on all kinds of
transactions with an offshore bank or financial company. In cases
where foreign governments shield banks from investigation, Treasury
wants the authority to cut them off from the U.S. financial system
without seeking congressional approval.

Last fall, Committee Chairman Rep. Jim Leach, R-Iowa, and the panel's
senior Democrat, Rep. John LaFalce of New York, proposed a stricter
measure that would have required U.S. banks to collect detailed
information on their customers from countries considered to be
money-laundering havens. The administration's proposal would leave it
up to Treasury to decide whether to impose data-collecting
requirements on banks.

The lawmakers' proposal had been opposed by the banking industry.
Groups representing the banking and securities industries applauded
the administration's plan Thursday.

Sen. Charles Schumer, D-N.Y., said the Clinton proposal ``doesn't go
far enough'' because it gives Treasury discretion to decide whether to
take action, rather than requiring it.

``Diplomacy usually prevails over the domestic need to curb money
laundering,'' Schumer said in a telephone interview. He and Sen. Paul
Coverdell, R-Ga., have proposed their own legislation.

Summers noted in his speech that Treasury officials already have begun
informing U.S. banks about foreign banks or nations that repeatedly
refuse to abide by generally accepted standards to protect against
money laundering.

In September, Treasury unveiled its first national money-laundering
strategy, a package of proposed new laws and rules that include
requirements that storefront check cashers, brokerage firms and
casinos notify authorities of suspicious activities the way banks are
required to do.

That package, and the new proposals outlined by Summers, will be
submitted to Congress in the coming weeks.