Attorney General Edwin Meese III yesterday outlined tough legislation on money-laundering that would provide much stiffer penalties and make it easier for authorities to go after banking officials and institutions that launder money for criminal organizations.

Accompanied by officials of the Treasury Department and the President's Commission on Organized Crime, Meese told reporters that he would ask Congress to provide criminal penalties for laundering money of up to 20 years in prison and fines of $250,000 or the amount of the transaction, whichever is larger.

"We are taking this step to eliminate the huge profits reaped by those who deal in crime," he said. "Money-laundering supports, encourages and facilitates a large variety of criminal activities, including narcotics trafficking, income-tax evasion, domestic bribery, investment fraud . . . and gambling."

Saying that laundering, which disguises the origins of illegally gotten money, is becoming more "professional," Meese said he planned to go after the "attorneys, accountants, bankers and brokers" who help criminals conceal their profits.

Some law-enforcement officials have estimated that more than $100 million, most of it in drug profits, is laundered annually. Meese said, "I don't think anybody can tell . . . . But it's a tremendous amount of money."

The Bank Secrecy Act requires financial institutions to report to the Treasury cash transactions of $10,000 or more. The administration's proposal would prohibit an individual or institution from knowingly conducting a transaction involving movement of money generated by a crime.

"It targets the money-launderer, . . . who preys upon our society," said John M. Walker Jr., assistant Treasury secretary for enforcement. "No illegal business can survive if it cannot effectively launder its proceeds."

In addition to cash transactions, the proposal would deal electronic transfers of money.

A number of U.S. banks are under investigation in money-laundering cases. One Treasury official recently said that more than 100 such investigations had been authorized. Walker confirmed that more than 40 probes were under way.

The best known of these involves the Bank of Boston, which was fined $500,000 this year after officials pleaded guilty to failing to report $1.22 billion in cash transactions with foreign banks, some for companies owned by a reputed local Mafia family.

Walker said he would not grant civil amnesty to banks that come to him voluntarily, seeking to correct past reporting failures. Meese added that such disclosures would "mitigate criminal intent."

The administration bill, believed to have broad support in Congress, would allow the government to seek to seize criminal assets. It also would amend privacy laws to allow courts, at the request of law-enforcement officials, to order a bank not to notify a customer whose records are subpoenaed.

Associate Deputy Attorney General Charles Blau noted "a number of instances where a criminal case went down the tubes when the financial institution . . . notified a client of a grand-jury subpoena."