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The New York Times, March 2, 2000

Copyright 2000 The New York Times Company

The New York Times

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March 2, 2000, Thursday, Late Edition - Final

SECTION: Section A; Page 1; Column 2; Foreign Desk

LENGTH: 1214 words

HEADLINE: Money Laundering Prompts U.S. Drive For a Tougher Law

BYLINE: By JOSEPH KAHN

DATELINE: WASHINGTON, March 1

BODY:
The Clinton administration plans to ask Congress for sweeping new powers to combat money
laundering including the authority to ban financial transactions between United States banks
or brokerage houses and off-shore financial centers, administration officials said today.

The request is the centerpiece of administration efforts to tighten money-laundering laws

after the Bank of New York was found to have served as a conduit for about $7 billion in
Russian money, some of which investigators believe was derived from illegal activities. The
administration has also been searching for ways to make it harder for drug traffickers to
funnel their profits through American banks.

Treasury Secretary Lawrence H. Summers plans to announce proposed legislation in a speech

to bankers on Thursday, officials said. The legislation would give his department a broad
range of powers to investigate and in serious cases forbid transactions between American
financial institutions and individual foreign banks or entire foreign countries.

Administration officials say that current laws do not provide enough authority to fight money
laundering, the practice of filtering profits from illegal activities through banks to disguise
their origin. Short of having Congress declare emergency sanctions against countries deemed
to be a national security threat, the officials said, they are mostly confined to waving a finger
at nations that tolerate money laundering and urging American banks to be wary of doing
business with such places.

"The issue of money laundering is so prominent and public that it can't be ignored
anymore," a senior official said. "We need to be able to target the root problems without
unnecessarily hindering legitimate economic activity."

The effort to seek new powers is clearly a response to Russia, where financial
mismanagement has been a problem for the Clinton administration and the International
Monetary Fund. Some analysts and members of Congress have complained that widespread
corruption in that country — helped in part by the ease of transferring funds abroad —
undermined multibillion-dollar foreign aid programs and left one of the administration's top

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