An industry official warned Friday that the stunning failure of the know-your-customer proposal may encourage consumer privacy advocates to attack pivotal anti-fraud laws.

John Byrne, senior federal counsel for the American Bankers Association, said privacy bills sponsored by Rep. Ron E. Paul, R-Tex, could limit banks' abilities to monitor suspicious check and currency transactions.

"My fear is that customers, consumers, and Internet users who attacked know-your-customer don't think they're done," he told the National Conference of State Legislators. "They want to go further and say that the banking industry has no right to report any crimes to the government. I think that's a mistake."

Speaking to a reporter after his remarks, Mr. Byrne said the 29-year-old Bank Secrecy Act, which requires banks to report to the Internal Revenue Service cash transactions exceeding $10,000, should be reviewed in its entirety to spark a wide-ranging debate on which privacy measures are appropriate.

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