Surprise move to curb terror cash law

Ministers faced new questions today over a surprise bid to water down laws on money laundering and fighting terrorism.

They seem set to abolish a 2002 law which compels accountants to report clients involved in illegal financial schemes that could be linked to tax dodging, organised crime or terror fundraising. It is feared some accounting firms could use this to justify advice on dodgy schemes.

Critics in the City and Westminster questioned why the Government apparently wants to dilute laws passed after the September 11 atrocity. They point out accountancy giants have become big Labour donors.

KPMG, for instance, has given £225,000 to the party since 2002 by seconding expert staff to its HQ at no charge. It is involved in government contracts worth some ?12 billion a year.

PricewaterhouseCoopers gave £19,000 during the 2001 election period in free staff and has won valuable government contracts.

Pressure for a change in the law has come from accountancy professional bodies, but a Home Office spokesman said no decision had yet been taken.