I'm against the war of drugs, but not sure it's to blame here. A law criminalizing the use of illegally-gained funds is a useful law for them in general, and it happened that their big focus at the time was the war on drugs so that's where they'd get the most use from it. But as far as I know, it was never claimed to be only for the war on drugs, and they didn't attach it to the war on drugs as a smokescreen the way they attached the Patriot Act to terrorism.
I could be wrong about that, but as far as I'm aware it was an innocent connection to drugs. After all, if you are impeaching civil liberties you may need a smokescreen like drugs or terrorism, but making it illegal to use illegally-gained funds is something I suspect most US citizens would be OK with immediately without the need for deception.
So how US managed to survive without that law for all the years? I can't imagine the law was necessary for anything, except that it allowed US to prosecute those who'd be off the hook otherwise. So yes I do believe it was the "War on Drugs" peddled as the rationale for the law: "look these drug guys are slipping away, we have to make a new law and get them with it."
A lot of the financial transaction laws are contemporaneous with RICO, and were aimed at organized crime which is as a huge problem back then. Mafia families were conducting hits in midtown Manhattan back in the 1970's, in highly public places like high end restaurants. This is pre-1980's escalation of the drug war too.
I am not entirely sure that it is necessary to charge people twice for the same thing. If someone robs a bank, it is to try and spend that money. Making it an extra crime of spending the money isn't going to stop people from trying to spend the money. That is what the money is for. What it does do, is encourage the bank robber try and get other people to spend the money on their behalf, to try and offload those potential charges, so corrupting and jailing an ever widening circle of people.
My argument isn't that the law is good/bad (I don't know much about it, other than what was in this Ars article), just that I think they wanted the law to make it easier to catch criminals in general and it just so happened the criminals at the top of their list were drugs related, rather than the implication that the war on drugs led to this law.
With a bit more knowledge I could certainly be persuaded (not that it matters) into thinking this additional law is either good or bad for society - and I'm someone who supports the decriminalization (and probably the legalization, but my mind isn't quite made up on that) of all drugs, so purely within the scope of the war on drugs I'm against any law that furthers it.
Saying "making it illegal to use illegally-gained funds is something I suspect most US citizens would be OK with", is making an argument that the law is good in the eyes of US society, even if it doesn't state your specific position.
But we aren't starting from a position of knowing that a majority of society agrees, which is my point. If you state that you don't know much about x, so have no opinion, but believe that most reasonable people believe y about it, then you still are stating an opinion about x, even if you are doing it at one level removed by saying what you think other people might think.
I think that a majority of society thinks about law and order through an entirely simplified lens, and would see such a law through said lens without considering the actual implications of it. The idea that "money came from bad people doing bad things, so we should punish them" being the only really "logic" here.
Much in the same way that you can skew poll results based on the way that you phrase a question. For example, years ago there was a poll about whether or not people wanted ala carte cable channels. The question they were asked was, "Do you want more choice or less choice in cable programming?" Obviously people want more choice, but this answer was associated (by the pollsters) as being against ala carte options for cable.
I could be wrong about that, but as far as I'm aware it was an innocent connection to drugs. After all, if you are impeaching civil liberties you may need a smokescreen like drugs or terrorism, but making it illegal to use illegally-gained funds is something I suspect most US citizens would be OK with immediately without the need for deception.