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How Osama Bin Laden Changed Wall Street

NEW YORK ( TheStreet) -- The Sept. 11, 2001 attacks were, among many other things, an attack on Wall Street.

Killed by U.S. forces on Sunday, Osama Bin Laden was largely ineffective in bringing down the U.S. financial system.

However, some important changes to the system did result.

Many of Wall Street's best-known companies at the time, such as Morgan Stanley (MS - Get Report), Bear Stearns and JPMorgan Chase (JPM - Get Report), were headquartered in Midtown at the time of the attacks.

Others that were downtown, including Goldman Sachs (GS - Get Report), Merrill Lynch, Lehman Brothers and Citigroup (C - Get Report), escaped largely unscathed.

Three firms with important ties to Wall Street, Cantor Fitzgerald, Keefe Bruyette & Woods (KBW)and Sandler O'Neill, were headquartered in the twin towers and lost many of their employees. Nonetheless, those businesses carried on and are in many ways stronger than they were before the attacks.

The attacks also resulted in important advances for anti money laundering legislation, part of the 2001 USA Patriot Act, according to Tom Cardamone, managing director of Global Financial Integrity, a non-profit anti-money laundering organization.

"9/11 really focused everybody's attention on money laundering and terrorist financing and how you get at it. The Patriot Act did that to a great degree," Cardamone says.

One of the law's large accomplishments was a ban on U.S. financial institutions dealing with shell banks that have no physical presence or affiliation with any other bank.

"At one time you could have a shell bank where the owners weren't known and basically the legislation said any U.S. bank doing any business with a shell bank would be basically put out of business," Cardamone said.

The legislation also required a host of financial institutions, including banks, broker-dealers, money service businesses, insurance companies, mutual funds, futures commission merchants and "introducing brokers" in commodities, jewelry stores and casinos, according to an April 5 letter from Senator Carl Levin (D.,Mich.) to the Treasury's Financial Crimes Enforcement Network (FinCEN).

However, Levin notes in the letter that exemptions that were supposed to be temporary were granted to several other entities, including "a person involved in real estate closings and settlements," a "loan or finance company," or "an investment company."

Levin argues in his letter that, despite the passing of nine years, "FinCEN has yet to propose or finalize rules requiring that the exempted financial institutions establish AML safeguards."

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