WASHINGTON -- Legislation that President Clinton is scheduled to sign Friday will curb money laundering while reducing bank paperwork, Treasury officials said Tuesday.

The new law will allow authorities to zero in on suspect cash transactions, said Ronald K. Noble, the Department of Treasury's undersecretary for enforcement.

"Banks had complained that each time, they had to fill out the cash transaction form, even for trusted customers," Mr. Noble said during an appearance before the House Ways and Means oversight subcommittee.

"By trying to get the number of reports down to a manageable number, we can focus on the suspicious cash transactions," he added.

The bill directs Treasury to reduce by 30% the nearly 10 million reports banks file annually on customers who deposit more than $10,000 in a cash transaction.

The reports are required under the Bank Secrecy Act.

The legislation awaiting President Clinton's signature aims to cut down on the mass of paperwork required by the Bank Secrecy Act by limiting the number of businesses that need to file cash transaction reports.

The legislation will do much to make money laundering more difficult, especially when coupled with the gradual growth in anti-laundering sentiments in banks, Mr. Noble said.

"Banks, through the combined efforts of-Treasury agencies, federal, and state banking regulators, and the industry itself, have undergone a revolution in attitudes and compliance since the early 1980s," Mr. Noble said. It has become "far more difficult to pass large amounts of cash directly into the nation's banks."

Industry sources were pleased to hear that banking regulators no longer feel tempted to use banks as money-laundering scapegoats.

"It's just another confirmation that we've been on the right road," said John Byrne, a lobbyist for the American Bankers Association.

"The good news is that Treasury believes sincerely that banks are partners in this and that we did have a point about routine reports. It's nice to hear that there is such cooperation among the agencies, Congress, and banks."

Mr. Noble said that banks should be entitled to information on investigations into suspicious cash transactions, a concept not included in the community development banking bill.

"When a referral is made, it's not common for investigators to give private citizens status reports of our investigations," Mr. Noble said.

"Banks often say, 'We do these forms, but we never hear back from you.'"

The money-laundering provisions in the bill require the secretary of the Treasury to develop a system of exemptions from the filing requirements.

Government agencies, interbank transactions, and businesses for which transaction reports have little or no value will be exempted.

Banks will also be able to create a list of customers that meet criteria approved by Treasury. The list must be approved by Treasury.

Banks will then be able to exempt transactions from those customers without fear of the government challenging the exemption later.

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