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US Attends FATF Madrid Meeting Without Crucial Money-Laundering Legislation

Jeremy Hetherington-Gore, Tax-news.com, Madrid

04 October 2000

'I think the clock's run out on that,' said Sen. Phil Gramm (R, Texas) Chairman of the Senate Banking Committee, about the anti-money laundering bill that has been languishing in the Congress these last weeks, 'I think it's too much power to give the secretary of the Treasury.'

The legislation started life as a co-operation between the Clinton administration and some prominent Republican congressmen, and would have allowed the Treasury Department to ban some transactions between US banks and offshore financial centres.

'This is an important piece of legislation needed in the continued crackdown on illegal drug cartels and other international criminal syndicates,' said Rep. Jim Leach, (R, Iowa) Chairman of the House banking panel. 'Unfortunately, it has ... been the subject of ... quiet but effective interest-group opposition.'

With only a few days working time left before Congress adjourns, the money-laundering legislation has not been scheduled for a vote in either the House or the Senate, effectively ending its chances in the 106th Congress.

Many factors account for the legislation's lack of success, including opposition from banking interest groups (especially Texan ones, it is said), and a growing feeling among senior legislators such as Dick Armey that the rich countries attack on 'offshore' has gone too far.

US delegates to the OECD's Madrid FATF conference taking place this week in Madrid, which was meant to deliver another crack of the whip to the 15 countries deemed 'unco-operative' in the fight against money laundering, are left seeming ill-prepared. At first the US had played its part to perfection, issuing advisories in July to its domestic banks, warning they could inadvertently make illegal transactions with the named countries and territories.

U.S. officials are disappointed they don't have the new legislation in hand in time for the meeting of the task force: 'Let me be clear: without the passage of this bill, the US will have a much weaker hand when dealing with recalcitrant money-laundering havens,'' said Deputy Treasury Secretary Stuart Eizenstat. 'We're very disappointed that the legislation has not yet passed.'

The 15 countries and territories named by the FATF: the Bahamas, the Cayman Islands, the Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, the Marshall Islands, Nauru, Niue, Panama, the Philippines, Russia, St. Kitts and Nevis, and St. Vincent and the Grenadines, may not agree with him.

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