The September 11th attacks have been put to all sorts of uses by interest groups with preexisting agendas. Some of the claims are patently absurd: Some legislators, for instance, are trying to push the Farm Security Act, which protects such things as peanut butter sandwiches, as more necessary than ever in the wake of an attack on American soil.

But it’s the claims that appear reasonable that may prove to be the most damaging to freedom in the long run. The inverse relationship between laughability and lethality is easily explained: The serious claims deal with government police powers, which are necessary to ensure our domestic security but also contain the most potential for abuse. That’s certainly the case with the anti-terrorism bill Attorney General John Ashcroft has been attempting to rush through Congress. It’s just as true of money laundering legislation that may be bundled into the anti-terrorism bill or considered as a stand-alone package.

At first glance, anti-money-laundering efforts appear directly related to a war on terrorist networks. To do their deeds terrorists must, after all, spend money. And one of Bush’s first acts was to freeze assets of suspected terrorist funders and ask other governments to do the same. To date, 19 countries have frozen the accounts of 27 groups. This action may in time prove to be overbroad, but the government already had the authority to undertake it. The debate moving forward both in Congress and internationally will have precious little to do with terrorism and plenty to do with the boring but important issues of financial privacy and international tax competition.

The Organization for Economic Cooperation and Development (OECD) has been campaigning against countries it labels tax havens. Its high-tax members resent their citizens' ability to park money offshore and therefore avoid taxes. The OECD wants information exchange and tax harmonization, but was unable to secure the backing of the Bush administration earlier this year. Without the support of U.S. -- the world’s largest tax haven by OECD standards -- the initiative stalled. Then the Twin Towers fell.

The Financial Times weighed in with an article chiding the U.S. government for hypocrisy and accusing the Center for Freedom and Prosperity, the leading opponent of the OECD’s efforts, of having a change of heart, since it issued a memo expressing a desire to see those responsible for the World Trade Center massacre brought to justice. Unnamed European Union officials have been quoted saying they think the OECD effort is alive and kicking. Said one EU official, "Politically it is now going to be very difficult to defend the continuation of tax havens."

But "tax havens" should and must be defended. The issues of money laundering, financial privacy, and tax harmonization are very distinct from one another. Many countries considered tax havens are willing to work with law enforcement officials to seize the assets of people who commit crimes that are recognized by all involved. Piloting a plane into a skyscraper full of people is such a crime. What some countries reject is treating all their citizens as criminals, and turning over their financial information to governments. Not a single country on OECD’s tax haven hit list stands accused of harboring al Qaeda money. The same can’t be said of the U.S. According to The Washington Post, some of the terrorists maintained nine checking accounts at Sun Trust Bank in Florida.

This shows the limits of government snooping. U.S. financial transactions and bank accounts are already heavily monitored, something I know from personal experience. Shortly after I opened a checking account at a Washington, D.C. branch of First Union roughly three years ago, it was frozen by the corporate office because I fit a "criminal profile." I’d opened an account by phone and deposited "large" sums of money in it in a high crime area. The large amount of money was two checks that totaled less than $4,000 and were drawn on First Union accounts. The high crime area was 17th Street and Pennsylvania Avenue, which is almost yelling distance from the White House’s West Wing.

The government and banks are so busy snooping on everybody that they catch virtually nobody. Like our intelligence officials who can’t analyze all the data they currently collect, U.S. financial snoops are buried under paperwork. Out of 77 million reports that banks filed from 1987 to 1996, the U.S. Treasury Department convicted a mere 580 people of currency transaction violations.

Perhaps if the feds weren’t so busy keeping track of us petty criminals, and the international community wasn’t so busy trying to insulate high-tax countries from tax competition, they’d be able to devote the necessary human intelligence to figure out exactly where bin Laden and other al Qaeda funders park their money. After all, they’ve reportedly been pursuing this very issue for more than two years. According to the Post, al Qaeda doesn’t usually rely on traditional money-laundering techniques such as offshore banks and large wire transfers. Unfortunately, that won’t stop politicians from going after such banks--and large numbers of law-abiding citizens.