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Bin Laden's global financial reach detailed

WASHINGTON (CNN) -- Tougher laws against money laundering are needed if the United States is going to cripple Osama bin Laden's international financial support network, congressional and administration officials said Wednesday on Capitol Hill.

The Senate Banking Committee discussed several proposals to strengthen money laundering laws at a previously scheduled hearing that took on an added sense of urgency because of the September 11 terrorist attacks on New York and Washington. Federal investigators believe the attacks were the work of bin Laden and his al Qaeda organization.

Supporters of tougher laws also called for greater pressure on foreign governments and financial institutions to cooperate.

Several called President Bush's move on Monday to freeze assets belonging to bin Laden and others affiliated with terrorism a good start, but they said more needs to be done to heighten international pressure on money launderers.

"If you are going to be serious about fighting a war on terrorism, the first order of priority is to implement an extraordinary diplomatic effort to raise the international standards of accountability and transparency and exchange of information," said Sen. John Kerry, D-Massachusetts, a proponent of tougher money laundering laws.

Senator wants probe of 'stunning' intelligence failure  

Kerry and others at the hearing noted al Qaeda's extensive international reach and gave a few examples of bin Laden's involvement with international banking to present their case for tougher sanctions on banks and governments that provide havens for terrorist money.

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Kerry said bin Laden once held accounts at the now-defunct, fraud-ridden Bank of Credit and Commerce International, which was closed in the early 1990s.

"When we shut it down, we dealt him a very serious economic blow," said Kerry, who conducted an investigation into the BCCI scandal at the time as a member of the Senate Foreign Relations Committee.

The global BCCI, established by Pakistanis but incorporated in Luxembourg, was shut down by regulators in a multi-billion dollar collapse.

It was not only a haven for money launderers but also a major route of financing for the volunteer Islamic force that went to Afghanistan -- of which bin Laden was a part -- to fight the Soviet army.

Sen. Carl Levin, D-Michigan, also highlighted information about the operation of a bank in Sudan established by bin Laden in the early 1990s.

Levin cited a 1996 State Department report that said bin Laden reportedly provided the AlShamal Islamic Bank with $50 million in start-up capital.

The senator noted a bin Laden associate testified earlier this year at the embassy bombings trial in New York that al Qaeda held a half-dozen bank accounts at AlShamal, including one in bin Laden's name.

The AlShamal bank's Web site cites correspondent relationships with major banks in financial capitals, Levin said, including three in the United States: Citibank, American Express Bank and the Arab American Bank, the latter recently purchased by the National Bank of Egypt.

"Thankfully, all three banks told us that the correspondent accounts they had with the AlShamal Bank are either closed or have been largely inactive since 1997 or 1998," Levin said in his statement at the hearing.

The U.S. government took action in 1997 to add Sudan to its list of states that support terrorism.

Levin and Kerry are among the leading advocates of tougher money laundering laws. The banking committee is considering their proposals as well as those of the Bush administration, which also has issued a set of recommendations, to craft a package of legislation.

Among the measures being proposed are some that would put pressure on foreign governments and financial institutions to cooperate with the U.S. efforts.

"I think it's time to get tough -- fair, but tough," Kerry said. "We have the strongest market in the world. People must access our market to be meaningful players. And we must use the access to our market as the leverage for the behavior of these countries."

Government officials historically have used anti-money laundering laws to prevent criminals such as drug dealers and those involved in organized crime from hiding the proceeds of their illegal activities.

In the wake of the September 11 attacks the focus of those efforts shifted to combating terrorism.

Terrorists are believed to use the same methods of "laundering" money gained via illegal means as other criminals. And officials at Wednesday's hearing said there is some overlap between terrorists and other criminals.

Bin Laden's organization, for example, is believed to derive much of its funding through the heroin and opium trade that originates in Afghanistan, where bin Laden is believed to be hiding.

"Frankly, we can't differentiate between terrorism and organized crime and drug dealing," Assistant Attorney General Michael Chertoff told the banking committee.

"These groups don't hold themselves independently: They work with one another. Terrorists get engaged in drug activity. They have relationships with organized crime," Chertoff said.

-- CNNfn's Allan Dodds Frank and CNN's Manuel Perez-Rivas contributed to this report.


• AlShamal Islamic Bank
• Senate Banking Committee
• Sen. John Kerry
• Sen. Carl Levin
• U.S. Department of Justice

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