Wrong Signal on Money Laundering
"The Treasury secretary's review is partly a response to the wishes of some in the financial industry, a
generous contributor to George W. Bush's presidential campaign.
A loose coalition of banks, privacy and free-market advocates helped persuade Mr. O'NEILL a month
ago TO WEAKEN a three-year effort by the Organization for Economic Cooperation and Development
TO CRACK DOWN ON OFFSHORE TAX HAVENS. "
June 28, 2001
Editorial
From The New York Times
If Americans doubted the extent to which
the country's banking system is being used
to launder the profits of global criminals, they
received fresh evidence this week with the
arrest of the former Peruvian spy chief, Vladimiro Montesinos. His hiding place in
Venezuela reportedly was exposed when he sent an emissary to Miami to withdraw
$38 million he had sequestered in various American bank accounts.
But now the Bush administration seems intent on weakening a worldwide campaign to clamp down on
money laundering. If it does, coordinated global efforts to combat narcotics trafficking, arms smuggling,
terrorism and other forms of organized crime will suffer a serious setback.
Ever since the first Bush administration, the United States has been a leader in
international efforts to crack down on money laundering — the main device by
which criminals profit from and finance their activities. Among the most important
weapons are longstanding rules that require banks to report any suspicious
transactions to the government, as well as cash deposits over $10,000 — a figure
that Treasury Secretary Paul O'Neill might raise to $25,000. The requirement that banks report suspicious
activities has been an especially effective deterrent to money launderers and a valuable evidentiary tool for
prosecutors.
Mr. O'Neill, however, says that these and other laws impose "significant cost on society," an apparent
reference to the paperwork required of banks. He has also questioned the value of the $700 million the
government spends annually to fight laundering.
Rigorous scrutiny of costs and benefits is certainly appropriate, but it must also take
into account costs imposed on society by organized crime. These include everything
from drug addiction to human smuggling, arms trafficking and official corruption.
Over the years, money laundering has also helped destabilize entire financial
systems, most recently in Asia and Russia.
Mr. O'Neill's decision to reassess broadly accepted rules has sent an alarming signal
to America's law enforcement community as well as to the nation's allies even as
Washington continues to join them in pressuring nations like Russia and the
Philippines to adopt the same kinds of rules.
The Treasury secretary's review is partly a response to the wishes of some in the financial industry, a
generous contributor to George W. Bush's presidential campaign. A loose coalition of banks, privacy
and free-market advocates helped persuade Mr. O'Neill a month ago to weaken a three-year effort by
the Organization for Economic Cooperation and Development to crack down on offshore tax havens.
They also helped to block legislation last year that would have expanded rules that require banks to find out more
about individuals and foreign jurisdictions they are dealing with.
The legislation won bipartisan support, but was blocked by Senator Phil Gramm of Texas a foe of
government regulation and a friend of Texas banks, which fear losing business with Mexican banks.
Republicans cannot claim to be tough on crime as long as they continue to sabotage domestic and international
efforts to prevent criminals from laundering their profits.
nytimes.com |
