Panel OKs Money-Laundering Measure

The Senate Banking Committee on Thursday unanimously approved legislation to toughen U.S. laws against money laundering, part of an accelerated effort to target the financial networks that may have supported last month’s devastating attacks on New York and the Pentagon.

The full Senate is expected to take up the measure next week, and a similar bill introduced in the House on Wednesday is on the fast track there. The Bush administration has expressed support for the efforts.

“We’re trying to move quickly,” Banking Committee Chairman Paul S. Sarbanes, a Maryland Democrat, said. “We’ve been presented with a major challenge, and we need to treat it that way.”

Money laundering involves moving illicit funds--which may be linked to terrorism, drug trafficking or organized crime--through a series of financial institutions or accounts to disguise their origin, ownership or ultimate purpose.

Many of the proposals approved Thursday had previously stalled in Congress, but the Sept. 11 attacks gave them new life.

Among other things, the bill would bar U.S. banks from dealing with shadowy foreign “shell” banks, make them keep better records on foreign account holders and require closer review of some so-called correspondent accounts.

Correspondent accounts allow foreign banks to use U.S. banks’ services, such as wire transfers and check clearing, giving them direct access to the U.S. financial system.

Osama bin Laden, the prime suspect in last month’s attacks, may have used such accounts at banks around the world for years to finance his Al Qaeda network, lawmakers have said.

The legislation would give the Treasury new powers to target foreign countries or banks deemed to present a major money-laundering threat. These range from making U.S. banks keep detailed records of dealings with those institutions or jurisdictions to an outright ban on doing business with them.

Meanwhile, representatives from leading securities firms were scheduled to meet Thursday with law enforcement officials in a summit to discuss money laundering, among other topics.

Officials from the FBI, CIA, Secret Service and Securities and Exchange Commission, among others, were expected to attend, said Dan Michaelis, spokesman for the Securities Industry Assn., which represents big investment banks such as Merrill Lynch, Goldman Sachs and Morgan Stanley.

Officials of the New York Stock Exchange and the Nasdaq Stock Market also were scheduled to take part in the New York meeting, he said.

The participants had released no statements about their discussions.