BANK REPORTING LAW COMES UNDER FIRE

WASHINGTON - Flush with their success in forcing regulators to
drop proposed rules on tracking bank customers' habits, civil
libertarians and other groups are organizing a big e-mail campaign to
end reporting requirements for cash transactions.

Law enforcement authorities, in response, are warning against any
weakening of the Bank Secrecy Act.

Officials of the Justice and Treasury departments and the U.S. Customs
Service are expected to tell Congress Tuesday that the 1974 law is an
essential tool for detecting and prosecuting money launderers and drug
traffickers. They are scheduled to testify at a hearing of the House
Banking subcommittees on oversight and financial institutions.

For example, the Customs Service says it used about 80 suspicious
activity reports filed by banks under the law to identify bank
accounts of money launderers targeted in Operation Casablanca. That
enabled Customs agents to locate suspects' assets that were seized and
forfeited in the 1998 operation, which was the biggest drug
money-laundering case in U.S. history.

Far-reaching legislation pushed by Rep. Ron Paul, R-Texas, would
repeal the Bank Secrecy Act, which requires banks to report customers'
cash transactions of $10,000 or more, as well as suspicious
activities, to law enforcement authorities.

The law is designed to combat money laundering techniques used by drug
traffickers and other criminals to hide illegal profits.

But Paul maintains it violates the Fourth Amendment prohibition
against unreasonable search and seizure and that at any rate, it has
failed to help catch drug dealers, who he says "are smarter than most
bankers."

The Libertarian Party, the American Civil Liberties Union, privacy
advocacy associations and other groups are mobilizing to generate
support for Paul's bill.

"We will try to inundate Congress with another torrent of e-mails,"
Libertarian Party spokesman George Getz said Monday.

Getz was referring to the earlier blitz of some 225,000 e-mail
messages and letters, nearly all in opposition, received by the
Federal Deposit Insurance Corp. on proposed anti-money laundering
rules that would have tracked the transaction patterns of bank customers.

Bowing to the public outcry over privacy, the FDIC and three other
federal banking agencies scrapped the proposal last month.

This time, Getz said, the Libertarians want people to contact their
member of Congress, since the Bank Secrecy Act already is law and
there is no request for public comment from the banking regulators.

"We've got a bigger gun this time," he said, explaining that the group
can draw on the people who earlier protested the so-called "Know Your
Customer" rules.

Gregory Nojeim, legislative counsel for the ACLU, said the group
recently started a "Know Your Banker" campaign on its Web site to help
consumers understand banks' current monitoring practices and encourage
competition among banks based on their privacy policies.

Legislative prospects for Paul's bill appear dim, as they do for a
companion measure he proposed that would let people see the files on
them created by the federal Financial Crimes Enforcement Network.

Rep. Marge Roukema, R-N.J., chairwoman of the financial institutions
subcommittee, said Monday she does not want the Bank Secrecy Act repealed.

"We need to deal with the real world of money laundering, and the Bank
Secrecy Act has helped (law enforcement) do an excellent job," Roukema
said in a telephone interview. She said she may seek changes in the
law to improve law enforcement's ability to fight money laundering.

As of Monday, Paul had found only two co-sponsors for his bill, Reps.
John Thune, R-S.D., and Bob Schaffer, R-Colo.

Paul, a physician who is on the House Banking Committee, once ran for
president as the Libertarian Party's nominee. His strict
constitutionalist beliefs routinely put him at odds with his fellow
Republicans.

Money laundering, which is a major concern of law enforcement
officials, reached an estimated $30 billion in this country last year.

Laundering includes the use of wire transfers and bank drafts as well
as "smurfing," the practice of breaking down transactions into smaller
amounts that do not have to be reported under the Bank Secrecy Act.