Bending to Senate and White House demands, House negotiators agreed to roll into an omnibus anti-terrorism bill measures against money laundering that Rep. John J. LaFalce has sought for more than two years.
According to House banking committee sources, almost the entire package of reforms proposed by LaFalce, the top Democrat on the House Financial Services Committee, in the last Congress were approved for inclusion during discussions early Thursday in the terrorism bill. It is scheduled for a vote next week.
"It is strong but balanced medicine," said the Town of Tonawanda Democrat.
The compromise bill would give Treasury Secretary Paul O'Neill increased powers to block transfer of funds from offshore banks to American institutions. It would increase the government's power to track terrorist and criminal money kept in secret offshore tax havens, and require foreign banks to cooperate with the United States.
Working from his Washington apartment after the House side of the Capitol was closed, LaFalce stayed in touch with his committee chairman, Republican Michael Oxley of Ohio, and Maryland Sen. Paul Sarbanes, the Democratic Senate Banking Committee chairman.
During the negotiations, LaFalce agreed to drop for the time being his legislation banning gambling on the Internet.
Oxley supported the ban, but he was overruled by House Speaker J. Dennis Hastert, R-Ill., and House Majority Leader Dick Armey, R-Texas.
Oxley's committee approved the Internet ban because of reports that Internet gambling gave terrorists the opportunity to use offshore gambling accounts to finance their attacks on Western interests.
If the accord holds through the weekend, the compromise will be a bitter defeat for Armey, House Republican Whip Tom DeLay and Sen. Phil Gramm, all Texans heavily backed by the banking industry with lavish campaign contributions.
Phil Singer, spokesman for Sen. Charles E. Schumer, D-N.Y., who authored anti-laundering bills passed by the Senate, said his boss could not vouch for the compromise because he had not seen details.
President Bush, whose candidacy was heavily backed by the banking industry, had initially resisted this legislation. O'Neill and Lawrence Lindsay, Bush's top economic adviser, opposed it on grounds that the measures restricted financial freedoms.
But the Sept. 11 attacks changed all that when the White House found it lacked the power it needs to block terrorists' access to money.