Senate Tries To Stop Administration's Review Of Money Laundering Rules

by Mike Godfrey, Tax-news.com, Washington

11 June 2001

As part of a top-to-bottom survey of all government department functions, designed to find out whether taxpayers are getting value for money, Treasury Secretary Paul O'Neill has ordered a major review of the US anti-money laundering regulations, it was revealed recently. In his congressional testimony last month, O'Neill questioned the way in which the $700 million spent annually on initiatives to crack down on money laundering was being used, suggesting that the current law, which requires US banks to report all transactions over $10,000 imposed 'a significant cost on society,' and questioning whether that much information was actually necessary.

Unsurprisingly, the Democrats are pulling the other way on this one. They too believe that the money laundering legislation needs to be reviewed, but are in favour of strengthening it. Senator Carl Levin, the newly appointed chairman of the Senate Governmental Affairs Committee's investigative panel said he would use his new power to scrutinise the actions of the treasury, explaining: 'It would be a real setback to the progress that has been made in anti-money laundering efforts in our country and internationally if the Treasury Department attempts to weaken the programs we now have in place.'

Democrat Senators John Kerry and John La Falce recently proposed new legislation which would give the Treasury Secretary new powers if he were to identify an area of 'primary money laundering concern' offshore. The proposed new tools would include the requirement that US banks which operate outside the country maintain records or report on transactions of foreign operations.

Combating illicit money laundering first became a major priority for the US under the Clinton administration, when it was revealed in 1999 that over $7 billion in Russian money had been laundered through one of the country's largest banks. However, under the stewardship of George Bush, the US government has recently taken a fairly sizeable step back from the OECD campaign to impose punitive sanctions on offshore financial centres, signalling a change in pace and focus. Advocates of offshore havens have welcomed the Treasury's new attitude. 'The OECD has to realise that it can print all the blacklists it wants to,' said Bob Bauman, legal advisor to the Sovereign Society,'But without any enforcement mechanism, they're lost.'

Recommended