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House chair calls for single anti-money laundering agency

Rep. Sue Kelly, R-N.Y., laments "vast expanse of bureaucracies" that are currently responsible for seeking to cut off terrorist financing.

Arguing that the nation's "fragmented" anti-money laundering system is structurally incapable of keeping pace with the war on terrorism, House Financial Services Oversight and Investigations Subcommittee Chairwoman Sue Kelly, R-N.Y., said Wednesday that lawmakers should establish a single federal office to ensure compliance with the Bank Secrecy Act.

"To those who resist this proposal, I would hope that there is at least recognition of the need to establish a vigilant watch tower above the vast expanse of bureaucracies that are currently responsible for the Bank Secrecy Act," Kelly said during a hearing on the Treasury Department's operations. "There must be a unifying center to our anti-money laundering efforts."

Dennis Schindel, Treasury's acting inspector general, said audits have revealed gaps in various regulators' monitoring of financial institutions' BSA compliance efforts.

"While it is evident from our work that Treasury takes its responsibilities very seriously, in almost every area we have audited we have identified problems significant enough to impact Treasury's ability to effectively carry out its role in combating terrorist financing and money laundering," Schindel said.

A recent report, for example, found that the Office of the Treasury Secretary was "not aggressive" in taking enforcement actions against thrifts found to be in "substantial noncompliance" with BSA requirements, according to Schindel.

Schindel said other audits have shown that Treasury's Financial Crimes Enforcement Network's database of suspicious activity reports has lacked critical information and contained inaccurate data. Schindel also said FinCEN must take "a more aggressive leadership role" in coordinating financial regulators' anti-money laundering efforts.

FinCEN Director William Fox said his office is establishing an examination program unit and taking other steps to strengthen its role in BSA compliance and improve coordination between agencies.