Anti-Laundering Bid Denounced

Administration officials on Tuesday stopped short of supporting recommendations of a key Democratic senator for cracking down on foreign banks’ use of big U.S. banks for laundering money from drug trafficking and other illicit activities.

A new report by Senate investigators already has led to the closing of some offshore banks identified as high risk.

“We are looking very carefully at it,” Joseph M. Myers, the Treasury Department’s acting deputy assistant secretary for enforcement policy, said at a Senate subcommittee hearing. He was referring to recommendations by Sen. Carl Levin (D-Mich.), senior Democrat on the Senate Governmental Affairs Committee’s investigative panel, that include prohibiting U.S. banks from opening correspondent accounts for shell banks lacking physical presence.

Because the Bush administration has been in office for only a short time, Myers said, it would be premature for Treasury to take a position.

Meanwhile, federal prosecutors said six people in California, New Jersey, Washington state and Costa Rica were charged in a conspiracy to launder $470,000 through an illegal offshore trust program also used by clients to avoid paying U.S. taxes.