[House Report 107-250]
[From the U.S. Government Publishing Office]
107th Congress Rept. 107-250
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
FINANCIAL ANTI-TERRORISM ACT OF 2001
_______
October 17, 2001.--Ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3004]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (H.R. 3004) to combat the financing of terrorism and other
financial crimes, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 33
Background and Need for Legislation.............................. 34
Hearings......................................................... 40
Committee Consideration.......................................... 40
Committee Votes.................................................. 40
Committee Oversight Findings..................................... 44
Performance Goals and Objectives................................. 45
New Budget Authority, Entitlement Authority, and Tax Expenditures 45
Committee Cost Estimate.......................................... 45
Congressional Budget Office Estimate............................. 45
Federal Mandates Statement....................................... 49
Advisory Committee Statement..................................... 49
Constitutional Authority Statement............................... 50
Applicability to Legislative Branch.............................. 50
Exchange of Committee Correspondence............................. 50
Section-by-Section Analysis of the Legislation................... 52
Changes in Existing Law Made by the Bill, as Reported............ 76
Dissenting Views................................................. 121
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Financial Anti-
Terrorism Act of 2001''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--STRENGTHENING LAW ENFORCEMENT
Sec. 101. Bulk cash smuggling into or out of the United States.
Sec. 102. Forfeiture in currency reporting cases.
Sec. 103. Interstate currency couriers.
Sec. 104. Illegal money transmitting businesses.
Sec. 105. Long-arm jurisdiction over foreign money launderers.
Sec. 106. Laundering money through a foreign bank.
Sec. 107. Specified unlawful activity for money laundering.
Sec. 108. Laundering the proceeds of terrorism.
Sec. 109. Violations of reporting requirements for nonfinancial trades
and business.
Sec. 110. Proceeds of foreign crimes.
Sec. 111. Availability of reports relating to coins and currency
received in nonfinancial trade or business.
Sec. 112. Penalties for violations of geographic targeting orders and
certain record keeping requirements.
Sec. 113. Exclusion of aliens involved in money laundering.
Sec. 114. Standing to contest forfeiture of funds deposited into
foreign bank that has a correspondent account in the United States.
Sec. 115. Subpoenas for records regarding funds in correspondent bank
accounts.
Sec. 116. Authority to order convicted criminal to return property
located abroad.
Sec. 117. Corporation represented by a fugitive.
Sec. 118. Enforcement of foreign judgments.
Sec. 119. Reporting provisions and anti-terrorist activities of United
States intelligence agencies.
Sec. 120. Financial Crimes Enforcement Network.
Sec. 121. Customs Service border searches.
Sec. 122. Prohibition on false statements to financial institutions
concerning the identity of a customer.
Sec. 123. Verification of identification.
Sec. 124. Consideration of anti-money laundering record.
Sec. 125. Reporting of suspicious activities by informal underground
banking systems, such as hawalas.
TITLE II--PUBLIC-PRIVATE COOPERATION
Sec. 201. Establishment of highly secure network.
Sec. 202. Report on improvements in data access and other issues.
Sec. 203. Reports to the financial services industry on suspicious
financial activities.
Sec. 204. Efficient use of currency transaction report system.
Sec. 205. Public-private task force on terrorist financing issues.
Sec. 206. Suspicious activity reporting requirements.
Sec. 207. Amendments relating to reporting of suspicious activities.
Sec. 208. Authorization to include suspicions of illegal activity in
written employment references.
Sec. 209. International cooperation on identification of originators of
wire transfers.
Sec. 210. Check truncation study.
TITLE III--COMBATTING INTERNATIONAL MONEY LAUNDERING
Sec. 301. Special measures for jurisdictions, financial institutions,
or international transactions of primary money laundering concern.
Sec. 302. Special due diligence for correspondent accounts and private
banking accounts.
Sec. 303. Prohibition on United States correspondent accounts with
foreign shell banks.
Sec. 304. Anti-money laundering programs.
Sec. 305. Concentration accounts at financial institutions.
Sec. 306. International cooperation in investigations of money
laundering, financial crimes, and the finances of terrorist groups.
Sec. 307. Prohibition on acceptance of any bank instrument for unlawful
Internet gambling.
Sec. 308. Internet gambling in or through foreign jurisdictions.
TITLE IV--CURRENCY PROTECTION
Sec. 401. Counterfeiting domestic currency and obligations.
Sec. 402. Counterfeiting foreign currency and obligations.
Sec. 403. Production of documents.
Sec. 404. Reimbursement.
TITLE I--STRENGTHENING LAW ENFORCEMENT
SEC. 101. BULK CASH SMUGGLING INTO OR OUT OF THE UNITED STATES.
(a) Findings.--The Congress finds the following:
(1) Effective enforcement of the currency reporting
requirements of subchapter II of chapter 53 of title 31, United
States Code, and the regulations prescribed under such
subchapter, has forced drug dealers and other criminals engaged
in cash-based businesses to avoid using traditional financial
institutions.
(2) In their effort to avoid using traditional financial
institutions, drug dealers and other criminals are forced to
move large quantities of currency in bulk form to and through
the airports, border crossings, and other ports of entry where
the currency can be smuggled out of the United States and
placed in a foreign financial institution or sold on the black
market.
(3) The transportation and smuggling of cash in bulk form may
now be the most common form of money laundering, and the
movement of large sums of cash is one of the most reliable
warning signs of drug trafficking, terrorism, money laundering,
racketeering, tax evasion and similar crimes.
(4) The intentional transportation into or out of the United
States of large amounts of currency or monetary instruments, in
a manner designed to circumvent the mandatory reporting
provisions of subchapter II of chapter 53 of title 31, United
States Code,, is the equivalent of, and creates the same harm
as, the smuggling of goods.
(5) The arrest and prosecution of bulk cash smugglers are
important parts of law enforcement's effort to stop the
laundering of criminal proceeds, but the couriers who attempt
to smuggle the cash out of the United States are typically low-
level employees of large criminal organizations, and thus are
easily replaced. Accordingly, only the confiscation of the
smuggled bulk cash can effectively break the cycle of criminal
activity of which the laundering of the bulk cash is a critical
part.
(6) The current penalties for violations of the currency
reporting requirements are insufficient to provide a deterrent
to the laundering of criminal proceeds. In particular, in cases
where the only criminal violation under current law is a
reporting offense, the law does not adequately provide for the
confiscation of smuggled currency. In contrast, if the
smuggling of bulk cash were itself an offense, the cash could
be confiscated as the corpus delicti of the smuggling offense.
(b) Purposes.--The purposes of this section are--
(1) to make the act of smuggling bulk cash itself a criminal
offense;
(2) to authorize forfeiture of any cash or instruments of the
smuggling offense;
(3) to emphasize the seriousness of the act of bulk cash
smuggling; and
(4) to prescribe guidelines for determining the amount of
property subject to such forfeiture in various situations.
(c) Enactment of Bulk Cash Smuggling Offense.--Subchapter II of
chapter 53 of title 31, United States Code, is amended by adding at the
end the following:
``Sec. 5331. Bulk cash smuggling into or out of the United States
``(a) Criminal Offense.--
``(1) In general.--Whoever, with the intent to evade a
currency reporting requirement under section 5316, knowingly
conceals more than $10,000 in currency or other monetary
instruments on the person of such individual or in any
conveyance, article of luggage, merchandise, or other
container, and transports or transfers or attempts to transport
or transfer such currency or monetary instruments from a place
within the United States to a place outside of the United
States, or from a place outside the United States to a place
within the United States, shall be guilty of a currency
smuggling offense and subject to punishment pursuant to
subsection (b).
``(2) Concealment on person.--For purposes of this section,
the concealment of currency on the person of any individual
includes concealment in any article of clothing worn by the
individual or in any luggage, backpack, or other container worn
or carried by such individual.
``(b) Penalty.--
``(1) Term of imprisonment.--A person convicted of a currency
smuggling offense under subsection (a), or a conspiracy to
commit such offense, shall be imprisoned for not more than 5
years.
``(2) Forfeiture.--In addition, the court, in imposing
sentence under paragraph (1), shall order that the defendant
forfeit to the United States, any property, real or personal,
involved in the offense, and any property traceable to such property,
subject to subsection (d) of this section.
``(3) Procedure.--The seizure, restraint, and forfeiture of
property under this section shall be governed by section 413 of
the Controlled Substances Act.
``(4) Personal money judgment.--If the property subject to
forfeiture under paragraph (2) is unavailable, and the
defendant has insufficient substitute property that may be
forfeited pursuant to section 413(p) of the Controlled
Substances Act, the court shall enter a personal money judgment
against the defendant for the amount that would be subject to
forfeiture.
``(c) Civil Forfeiture.--
``(1) In general.--Any property involved in a violation of
subsection (a), or a conspiracy to commit such violation, and
any property traceable to such violation or conspiracy, may be
seized and, subject to subsection (d) of this section,
forfeited to the United States.
``(2) Procedure.--The seizure and forfeiture shall be
governed by the procedures governing civil forfeitures in money
laundering cases pursuant to section 981(a)(1)(A) of title 18,
United States Code.
``(3) Treatment of certain property as involved in the
offense.--For purposes of this subsection and subsection (b),
any currency or other monetary instrument that is concealed or
intended to be concealed in violation of subsection (a) or a
conspiracy to commit such violation, any article, container, or
conveyance used, or intended to be used, to conceal or
transport the currency or other monetary instrument, and any
other property used, or intended to be used, to facilitate the
offense, shall be considered property involved in the offense.
``(d) Proportionality of Forfeiture.--
``(1) In general.--Upon a showing by the property owner by a
preponderance of the evidence that the currency or monetary
instruments involved in the offense giving rise to the
forfeiture were derived from a legitimate source, and were
intended for a lawful purpose, the court shall reduce the
forfeiture to the maximum amount that is not grossly
disproportional to the gravity of the offense.
``(2) Factors to be considered.--In determining the amount of
the forfeiture, the court shall consider all aggravating and
mitigating facts and circumstances that have a bearing on the
gravity of the offense, including the following:
``(A) The value of the currency or other monetary
instruments involved in the offense.
``(B) Efforts by the person committing the offense to
structure currency transactions, conceal property, or
otherwise obstruct justice.
``(C) Whether the offense is part of a pattern of
repeated violations of Federal law.''.
(c) Clerical Amendment.--The table of sections for subchapter II of
chapter 53 of title 31, United States Code, is amended by inserting
after the item relating to section 5330, the following new item:
``5331. Bulk cash smuggling into or out of the United States.''.
SEC. 102. FORFEITURE IN CURRENCY REPORTING CASES.
(a) In General.--Subsection (c) of section 5317 of title 31, United
States Code, is amended to read as follows:
``(c) Forfeiture.--
``(1) In general.--The court in imposing sentence for any
violation of section 5313, 5316, or 5324 of this title, or
section 6050I of the Internal Revenue Code of 1986, or any
conspiracy to commit such violation, shall order the defendant
to forfeit all property, real or personal, involved in the
offense and any property traceable thereto.
``(2) Procedure.--Forfeitures under this subsection shall be
governed by the procedures established in section 413 of the
Controlled Substances Act and the guidelines established in
paragraph (4).
``(3) Civil forfeiture.--Any property involved in a violation
of section 5313, 5316, or 5324 of this title, or section 6050I
of the Internal Revenue Code of 1986, or any conspiracy to
commit any such violation, and any property traceable to any
such violation or conspiracy, may be seized and, subject to
paragraph (4), forfeited to the United States in accordance
with the procedures governing civil forfeitures in money
laundering cases pursuant to section 981(a)(1)(A) of title 18,
United States Code.
``(4) Proportionality of forfeiture.--
``(A) In general.--Upon a showing by the property
owner by a preponderance of the evidence that any
currency or monetary instruments involved in the
offense giving rise to the forfeiture were derived from
a legitimate source, and were intended for a lawful
purpose, the court shall reduce the forfeiture to the
maximum amount that is not grossly disproportional to
the gravity of the offense.
``(B) Factors to be considered.--In determining the
amount of the forfeiture, the court shall consider all
aggravating and mitigating facts and circumstances that
have a bearing on the gravity of the offense, including
the following:
``(i) The value of the currency or other
monetary instruments involved in the offense.
``(ii) Efforts by the person committing the
offense to structure currency transactions,
conceal property, or otherwise obstruct
justice.
``(iii) Whether the offense is part of a
pattern of repeated violations of Federal
law.''.
(b) Conforming Amendments.--(1) Section 981(a)(1)(A) of title 18,
United States Code, is amended by striking ``of section 5313(a) or
5324(a) of title 31, or''.
(2) Section 982(a)(1) of title 18, United States Code, is amended by
striking ``of section 5313(a), 5316, or 5324 of title 31, or''.
SEC. 103. INTERSTATE CURRENCY COURIERS.
Section 1957 of title 18, United States Code, is amended by adding at
the end the following new subsection:
``(g) Any person who conceals more than $10,000 in currency on his or
her person, in any vehicle, in any compartment or container within any
vehicle, or in any container placed in a common carrier, and
transports, attempts to transport, or conspires to transport such
currency in interstate commerce on any public road or highway or on any
bus, train, airplane, vessel, or other common carrier, knowing that the
currency was derived from some form of unlawful activity, or knowing
that the currency was intended to be used to promote some form of
unlawful activity, shall be punished as provided in subsection (b). The
defendant's knowledge may be established by proof that the defendant
was willfully blind to the source or intended use of the currency. For
purposes of this subsection, the concealment of currency on the person
of any individual includes concealment in any article of clothing worn
by the individual or in any luggage, backpack, or other container worn
or carried by such individual.''.
SEC. 104. ILLEGAL MONEY TRANSMITTING BUSINESSES.
(a) Scienter Requirement for Section 1960 Violation.--Section 1960 of
title 18, United States Code, is amended to read as follows:
``Sec. 1960. Prohibition of unlicensed money transmitting businesses
``(a) Whoever knowingly conducts, controls, manages, supervises,
directs, or owns all or part of an unlicensed money transmitting
business, shall be fined in accordance with this title or imprisoned
not more than 5 years, or both.
``(b) As used in this section--
``(1) the term `unlicensed money transmitting business' means
a money transmitting business which affects interstate or
foreign commerce in any manner or degree and--
``(A) is operated without an appropriate money
transmitting license in a State where such operation is
punishable as a misdemeanor or a felony under State
law, whether or not the defendant knew that the
operation was required to be licensed or that the
operation was so punishable;
``(B) fails to comply with the money transmitting
business registration requirements under section 5330
of title 31, United States Code, or regulations
prescribed under such section; or
``(C) otherwise involves the transportation or
transmission of funds that are known to the defendant
to have been derived from a criminal offense or are
intended to be used to be used to promote or support
unlawful activity;
``(2) the term `money transmitting' includes transferring
funds on behalf of the public by any and all means including
but not limited to transfers within this country or to
locations abroad by wire, check, draft, facsimile, or courier;
and
``(3) the term `State' means any State of the United States,
the District of Columbia, the Northern Mariana Islands, and any
commonwealth, territory, or possession of the United States.''.
(b) Seizure of Illegally Transmitted Funds.--Section 981(a)(1)(A) of
title 18, United States Code, is amended by striking ``or 1957'' and
inserting ``, 1957 or 1960''.
(c) Clerical Amendment.--The table of sections for chapter 95 of
title 18, United States Code, is amended in the item relating to
section 1960 by striking ``illegal'' and inserting ``unlicensed''.
SEC. 105. LONG-ARM JURISDICTION OVER FOREIGN MONEY LAUNDERERS.
Section 1956(b) of title 18, United States Code, is amended--
(1) by striking ``(b) Whoever'' and inserting ``(b)(1)
Whoever'';
(2) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively;
(3) by striking ``subsection (a)(1) or (a)(3),'' and
inserting ``subsection (a)(1) or (a)(2) or section 1957,''; and
(4) by adding at the end the following new paragraphs:
``(2) For purposes of adjudicating an action filed or enforcing a
penalty ordered under this section, the district courts shall have
jurisdiction over any foreign person, including any financial
institution authorized under the laws of a foreign country, against
whom the action is brought, if--
``(A) service of process upon such foreign person is made
under the Federal Rules of Civil Procedure or the laws of the
country where the foreign person is found; and
``(B) the foreign person--
``(i) commits an offense under subsection (a)
involving a financial transaction that occurs in whole
or in part in the United States;
``(ii) converts to such person's own use property in
which the United States has an ownership interest by
virtue of the entry of an order of forfeiture by a
court of the United States; or
``(iii) is a financial institution that maintains a
correspondent bank account at a financial institution
in the United States.
``(3) The court may issue a pretrial restraining order or take any
other action necessary to ensure that any bank account or other
property held by the defendant in the United States is available to
satisfy a judgment under this section.''.
SEC. 106. LAUNDERING MONEY THROUGH A FOREIGN BANK.
Section 1956(c)(6) of title 18, United States Code, is amended to
read as follows:
``(6) the term `financial institution' includes any financial
institution described in section 5312(a)(2) of title 31, United
States Code, or the regulations promulgated thereunder, as well
as any foreign bank, as defined in paragraph (7) of section
1(b) of the International Banking Act of 1978 (12 U.S.C.
3101(7));''.
SEC. 107. SPECIFIED UNLAWFUL ACTIVITY FOR MONEY LAUNDERING.
Section 1956(c)(7) of title 18, United States Code, is amended--
(1) in subparagraph (B)--
(A) by striking clause (ii) and inserting the
following new clause:
``(ii) any act or acts constituting a crime
of violence, as defined in section 16 of this
title;''; and
(B) by inserting after clause (iii) the following new
clauses:
``(iv) bribery of a public official, or the
misappropriation, theft, or embezzlement of
public funds by or for the benefit of a public
official;
``(v) smuggling or export control violations
involving munitions listed in the United States
Munitions List or technologies with military
applications as defined in the Commerce Control
List of the Export Administration Regulations;
or
``(vi) an offense with respect to which the
United States would be obligated by a bilateral
treaty either to extradite the alleged offender
or to submit the case for prosecution, if the
offender were found within the territory of the
United States;''; and
(2) in subparagraph (D)--
(A) by inserting ``section 541 (relating to goods
falsely classified),'' before ``section 542'';
(B) by inserting ``section 922(1) (relating to the
unlawful importation of firearms), section 924(n)
(relating to firearms trafficking),'' before ``section
956'';
(C) by inserting ``section 1030 (relating to computer
fraud and abuse),'' before ``1032'';
(D) by inserting ``any felony violation of the
Foreign Agents Registration Act of 1938, as amended,''
before ``or any felony violation of the Foreign Corrupt
Practices Act''; and
(E) by striking ``fraud in the sale of securities''
and inserting ``fraud in the purchase or sale of
securities''.
SEC. 108. LAUNDERING THE PROCEEDS OF TERRORISM.
Section 1956(c)(7)(D) of title 18, United States Code, is amended by
inserting ``or 2339B'' after ``2339A''.
SEC. 109. VIOLATIONS OF REPORTING REQUIREMENTS FOR NONFINANCIAL TRADES
AND BUSINESS.
(a) Civil Forfeiture.--Section 981(a)(1)(A) of title 18, United
States Code, is amended by inserting ``section 6050I of the Internal
Revenue Code of 1986, or'' before ``section 1956''.
(b) Criminal Forfeiture.--Section 982(a)(1) of title 18, United
States Code, is amended by inserting ``section 6050I of the Internal
Revenue Code of 1986, or'' before ``section 1956''.
SEC. 110. PROCEEDS OF FOREIGN CRIMES.
Section 981(a)(1)(B) of title 18, United States Code, is amended to
read as follows:
``(B) Any property, real or personal, within the jurisdiction
of the United States, constituting, derived from, or traceable
to, any proceeds obtained directly or indirectly from an
offense against a foreign nation, or any property used to
facilitate such offense, if--
``(i) the offense involves the manufacture,
importation, sale, or distribution of a controlled
substance (as such term is defined for the purposes of
the Controlled Substances Act), or any other conduct
described in section 1956(c)(7)(B),
``(ii) the offense would be punishable within the
jurisdiction of the foreign nation by death or
imprisonment for a term exceeding one year, and
``(iii) the offense would be punishable under the
laws of the United States by imprisonment for a term
exceeding one year if the act or activity constituting
the offense had occurred within the jurisdiction of the
United States.''.
SEC. 111. AVAILABILITY OF REPORTS RELATING TO COINS AND CURRENCY
RECEIVED IN NONFINANCIAL TRADE OR BUSINESS.
(a) Action Required.--Before the end of the 6-month period beginning
on the date of the enactment of this Act, the Secretary of the Treasury
shall take such action and establish such procedures as may be
necessary and appropriate to make the information contained on returns
filed under section 6050I of the Internal Revenue Code of 1986
available through the Financial Crimes Enforcement Network to
government agencies in accordance with subsections (l)(15) and (p)(4)
of section 6103 of such Code and other applicable laws.
(b) Report.--The Secretary of the Treasury shall submit a report to
the Congress within 15 days after the end of the 6-month period
described in subsection (a) containing a description of the actions of
the Secretary pursuant to such subsection, together with such
recommendations for legislative and administrative action as the
Secretary may determine to be appropriate to achieve the goal described
in such subsection.
SEC. 112. PENALTIES FOR VIOLATIONS OF GEOGRAPHIC TARGETING ORDERS AND
CERTAIN RECORD KEEPING REQUIREMENTS.
(a) Civil Penalty for Violation of Targeting Order.--Section
5321(a)(1) of title 31, United States Code, is amended--
(1) by inserting ``or order issued'' after ``subchapter or a
regulation prescribed''; and
(2) by inserting ``, or willfully violating a regulation
prescribed under section 21 of the Federal Deposit Insurance
Act or section 123 of Public Law 91-508,'' after ``sections
5314 and 5315)''.
(b) Criminal Penalties for Violation of Targeting Order.--
Section 5322 of title 31, United States Code, is amended--
(1) in subsection (a)--
(A) by inserting ``or order issued'' after
``willfully violating this subchapter or a regulation
prescribed''; and
(B) by inserting ``, or willfully violating a
regulation prescribed under section 21 of the Federal
Deposit Insurance Act or section 123 of Public Law 91-
508,'' after ``under section 5315 or 5324)'';
(2) in subsection (b)--
(A) by inserting ``or order issued'' after
``willfully violating this subchapter or a regulation
prescribed''; and
(B) by inserting ``or willfully violating a
regulation prescribed under section 21 of the Federal
Deposit Insurance Act or section 123 of Public Law 91-
508,'' after ``under section 5315 or 5324),'';
(c) Structuring Transactions To Evade Targeting Order or Certain
Record Keeping Requirements.--Section 5324(a) of title 31, United
States Code, is amended--
(1) by inserting a comma after ``shall'';
(2) by striking ``section--'' and inserting ``section, the
reporting requirements imposed by any order issued under
section 5326, or the record keeping requirements imposed by any
regulation prescribed under section 21 of the Federal Deposit
Insurance Act or section 123 of Public Law 91-508--''; and
(3) in paragraphs (1) and (2), by inserting ``, to file a
report required by any order issued under section 5326, or to
maintain a record required pursuant to any regulation
prescribed under section 21 of the Federal Deposit Insurance
Act or section 123 of Public Law 91-508'' after ``regulation
prescribed under any such section'' each place that term
appears.
(d) Increase in Civil Penalties for Violation of Certain Record
Keeping Requirements.--
(1) Federal deposit insurance act.--Section 21(j)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1829b(j)(1)) is
amended by striking ``$10,000'' and inserting ``the greater
of--
``(A) the amount (not to exceed $100,000) involved in
the transaction (if any) with respect to which the
violation occurred; or
``(B) $25,000''.
(2) Public law 91-508.--Section 125(a) of Public Law 91-508
(12 U.S.C. 1955(a)) is amended by striking ``$10,000'' and
inserting ``the greater of--
``(1) the amount (not to exceed $100,000) involved in the
transaction (if any) with respect to which the violation
occurred; or
``(2) $25,000''.
(e) Criminal Penalties for Violation of Certain Record Keeping
Requirements.--
(1) Section 126.--Section 126 of Public Law 91-508 (12 U.S.C.
1956) is amended to read as follows:
``SEC. 126. CRIMINAL PENALTY.
``A person that willfully violates this chapter, section 21 of the
Federal Deposit Insurance Act, or a regulation prescribed under this
chapter or that section 21, shall be fined not more than $250,000, or
imprisoned for not more than 5 years, or both.''.
(2) Section 127.--Section 127 of Public Law 91-508 (12 U.S.C.
1957) is amended to read as follows:
``SEC. 127. ADDITIONAL CRIMINAL PENALTY IN CERTAIN CASES.
``A person that willfully violates this chapter, section 21 of the
Federal Deposit Insurance Act, or a regulation prescribed under this
chapter or that section 21, while violating another law of the United
States or as part of a pattern of any illegal activity involving more
than $100,000 in a 12-month period, shall be fined not more than
$500,000, imprisoned for not more than 10 years, or both.''.
SEC. 113. EXCLUSION OF ALIENS INVOLVED IN MONEY LAUNDERING.
(a) In General.--Section 212 of the Immigration and Nationality Act,
as amended (8 U.S.C. 1182), is amended in subsection (a)(2)--
(1) by redesignating subparagraphs (D), (E), (F), (G), and
(H) as subparagraphs (E), (F), (G), (H), and (I), respectively;
and
(2) by inserting after subparagraph (C) the following new
subparagraph (D):
``(D) Money laundering activities.--
``(i) In general.--Any alien who the consular
officer or the Attorney General knows or has
reason to believe is or has been engaged in
activities which if engaged in within the
United States would constitute a violation of
the money laundering provisions section 1956,
1957, or 1960 of title 18, United States Code,
or has knowingly assisted, abetted, or
conspired or colluded with others in any such
illicit activity is inadmissible.
``(ii) Related individuals.--Any alien who
the consular officer or the Attorney General
knows or has reason to believe is the spouse,
son, or daughter of an alien inadmissible under
clause (i), has, within the previous 5 years,
obtained any financial or other benefit from
such illicit activity of that alien, and knew
or reasonably should have known that the
financial or other benefit was the product of
such illicit activity, is inadmissible, except
that the Attorney General may, in the full
discretion of the Attorney General, waive the
exclusion of the spouse, son, or daughter of an
alien under this clause if the Attorney General
determines that exceptional circumstances exist
that justify such waiver.''.
(b) Conforming amendment.--Section 212(h)(1)(A)(i) of the Immigration
and Nationality Act, as amended (8 U.S.C. 1182), is amended by striking
``(D)(i) or (D)(ii)'' and inserting ``(E)(i) or (E)(ii)''.
SEC. 114. STANDING TO CONTEST FORFEITURE OF FUNDS DEPOSITED INTO
FOREIGN BANK THAT HAS A CORRESPONDENT ACCOUNT IN
THE UNITED STATES.
Section 981 of title 18, United States Code, is amended by adding the
following after the last subsection:
``(k) Correspondent Bank Accounts.--
``(1) Treatment of accounts of correspondent bank in domestic
financial institutions.--
``(A) In general.--For the purpose of a forfeiture
under this section or under the Controlled Substances
Act, if funds are deposited into a dollar-denominated
bank account in a foreign financial institution, and
that foreign financial institution has a correspondent
account with a financial institution in the United
States, the funds deposited into the foreign financial
institution (the respondent bank) shall be deemed to
have been deposited into the correspondent account in
the United States, and any restraining order, seizure
warrant, or arrest warrant in rem regarding such funds
may be served on the correspondent bank, and funds in
the correspondent account up to the value of the funds
deposited into the dollar-denominated account in the
foreign financial institution may be seized, arrested
or restrained.
``(B) Authority to suspend.--The Attorney General, in
consultation with the Secretary, may suspend or
terminate a forfeiture under this section if the
Attorney General determines that a conflict of law
exists between the laws of the jurisdiction in which
the foreign bank is located and the laws of the United
States with respect to liabilities arising from the
restraint, seizure, or arrest of such funds, and that
such suspension or termination would be in the interest
of justice and would not harm the national interests of
the United States.
``(2) No requirement for government to trace funds.--If a
forfeiture action is brought against funds that are restrained,
seized, or arrested under paragraph (1), the Government shall
not be required to establish that such funds are directly
traceable to the funds that were deposited into the respondent
bank, nor shall it be necessary for the Government to rely on
the application of Section 984 of this title.
``(3) Claims brought by owner of the funds.--If a forfeiture
action is instituted against funds seized, arrested, or
restrained under paragraph (1), the owner of the funds may
contest the forfeiture by filing a claim pursuant to section
983.
``(4) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Correspondent account.--The term `correspondent
account' has the meaning given to the term `interbank
account' in section 984(c)(2)(B).
``(B) Owner.--
``(i) In general.--Except as provided in
clause (ii), the term `owner'--
``(I) means the person who was the
owner, as that term is defined in
section 983(d)(6), of the funds that
were deposited into the foreign bank at
the time such funds were deposited; and
``(II) does not include either the
foreign bank or any financial
institution acting as an intermediary
in the transfer of the funds into the
interbank account.
``(ii) Exception.--The foreign bank may be
considered the `owner' of the funds (and no
other person shall qualify as the owner of such
funds) only if--
``(I) the basis for the forfeiture
action is wrongdoing committed by the
foreign bank; or
``(II) the foreign bank establishes,
by a preponderance of the evidence,
that prior to the restraint, seizure,
or arrest of the funds, the foreign
bank had discharged all or part of its
obligation to the prior owner of the
funds, in which case the foreign bank
shall be deemed the owner of the funds
to the extent of such discharged
obligation.''.
SEC. 115. SUBPOENAS FOR RECORDS REGARDING FUNDS IN CORRESPONDENT BANK
ACCOUNTS.
(a) In General.--Subchapter II of chapter 53 of title 31, United
States Code, is amended by inserting after section 5331 (as added by
section 101) the following new section:
``Sec. 5332. Subpoenas for records
``(a) Designation by Foreign Financial Institution of Agent.--Any
foreign financial institution that has a correspondent bank account at
a financial institution in the United States shall designate a person
residing in the United States as a person authorized to accept a
subpoena for bank records or other legal process served on the foreign
financial institution.
``(b) Maintenance of Records by Domestic Financial Institution.--
``(1) In general.--Any domestic financial institution that
maintains a correspondent bank account for a foreign financial
institution shall maintain records regarding the names and
addresses of the owners of the foreign financial institution,
and the name and address of the person who may be served with a
subpoena for records regarding any funds transferred to or from
the correspondent account.
``(2) Provision to law enforcement agency.--A domestic
financial institution shall provide names and addresses
maintained under paragraph (1) to a Government authority (as
defined in section 1101(3) of the Right to Financial Privacy
Act of 1978) within 7 days of the receipt of a request, in
writing, for such records.
``(c) Administrative Subpoena.--
``(1) In general.--The Attorney General and the Secretary of
the Treasury may each issue an administrative subpoena for
records relating to the deposit of any funds into a dollar-
denominated account in a foreign financial institution that
maintains a correspondent account at a domestic financial
institution.
``(2) Manner of issuance.--Any subpoena issued by the
Attorney General or the Secretary of the Treasury under
paragraph (1) shall be issued in the manner described in
section 3486 of this title, and may be served on the
representative designated by the foreign financial institution
pursuant to subsection (a) to accept legal process in the
United States, or in a foreign country pursuant to any mutual
legal assistance treaty, multilateral agreement, or other
request for international law enforcement assistance.
``(d) Correspondent Account Defined.--For purposes of this section,
the term `correspondent account' has the same meaning as the term
`interbank account' as such term is defined in section 984(c)(2)(B) of
title 18, United States Code.''.
(b) Clerical amendments.--The table of sections for subchapter II of
chapter 53 of title 31, United States Code, is amended by inserting
after the item relating to section 5331 the following new item:
``5332. Subpoenas for records.''.
(c) Effective Date.--Section 5332(a) of title 31, United States Code,
(as added by subsection (a) of this section shall apply after the end
of the 30-day period beginning on the date of the enactment of this
Act.
(d) Requests for Records.--Section 3486(a)(1)(A)(i) of title 18,
United States Code, is amended by striking ``; or (II) a Federal
offense involving the sexual exploitation or abuse of children,'' and
inserting ``, (II) a Federal offense involving the sexual exploitation
or abuse of children, or (III) a money laundering offense in violation
of section 1956, 1957 or 1960 of this title,''.
SEC. 116. AUTHORITY TO ORDER CONVICTED CRIMINAL TO RETURN PROPERTY
LOCATED ABROAD.
(a) Forfeiture of Substitute Property.--Section 413(p) of the
Controlled Substances Act (21 U.S.C. 853) is amended to read as
follows:
``(p) Forfeiture of Substitute Property.--
``(1) In general.--Paragraph (2) of this subsection shall
apply, if any property described in subsection (a), as a result
of any act or omission of the defendant--
``(A) cannot be located upon the exercise of due
diligence;
``(B) has been transferred or sold to, or deposited
with, a third party;
``(C) has been placed beyond the jurisdiction of the
court;
``(D) has been substantially diminished in value; or
``(E) has been commingled with other property which
cannot be divided without difficulty.
``(2) Substitute property.--In any case described in any of
subparagraphs (A) through (E) of paragraph (1), the court shall
order the forfeiture of any other property of the defendant, up
to the value of any property described in subparagraphs (A)
through (E) of paragraph (1), as applicable.
``(3) Return of property to jurisdiction.--In the case of
property described in paragraph (1)(C), the court may, in
addition to any other action authorized by this subsection,
order the defendant to return the property to the jurisdiction
of the court so that the property may be seized and
forfeited.''.
(b) Protective Orders.--Section 413(e) of the Controlled Substances
Act (21 U.S.C. 853(e)) is amended by adding at the end the following:
``(4) Order To Repatriate and Deposit.--
``(A) In general.--Pursuant to its authority to enter a
pretrial restraining order under this section, including its
authority to restrain any property forfeitable as substitute
assets, the court may order a defendant to repatriate any
property that may be seized and forfeited, and to deposit that
property pending trial in the registry of the court, or with
the United States Marshals Service or the Secretary of the
Treasury, in an interest-bearing account, if appropriate.
``(B) Failure to comply.--Failure to comply with an order
under this subsection, or an order to repatriate property under
subsection (p), shall be punishable as a civil or criminal
contempt of court, and may also result in an enhancement of the
sentence of the defendant under the obstruction of justice
provision of the Federal Sentencing Guidelines.''.
SEC. 117. CORPORATION REPRESENTED BY A FUGITIVE.
Section 2466 of title 28, United States Code, is amended by
designating the present matter as subsection (a), and adding at the end
the following:
``(b) Subsection (a) may be applied to a claim filed by a corporation
if any majority shareholder, or individual filing the claim on behalf
of the corporation is a person to whom subsection (a) applies.''.
SEC. 118. ENFORCEMENT OF FOREIGN JUDGMENTS.
Section 2467 of title 28, United States Code, is amended--
(1) in subsection (d), by inserting after paragraph (2) the
following new paragraph:
``(3) Preservation of property.--To preserve the availability
of property subject to a foreign forfeiture or confiscation
judgment, the Government may apply for, and the court may
issue, a restraining order pursuant to section 983(j) of title
18, United States Code, at any time before or after an
application is filed pursuant to subsection (c)(1). The court,
in issuing the restraining order--
``(A) may rely on information set forth in an
affidavit describing the nature of the proceeding or
investigation underway in the foreign country, and
setting forth a reasonable basis to believe that the
property to be restrained will be named in a judgment
of forfeiture at the conclusion of such proceeding; or
``(B) may register and enforce a restraining order
that has been issued by a court of competent
jurisdiction in the foreign country and certified by
the Attorney General pursuant to subsection (b)(2).
No person may object to the restraining order on any ground
that is the subject of parallel litigation involving the same
property that is pending in a foreign court.'';
(2) in subsection (b)(1)(C), by striking ``establishing that
the defendant received notice of the proceedings in sufficient
time to enable the defendant'' and inserting ``establishing
that the foreign nation took steps, in accordance with the
principles of due process, to give notice of the proceedings to
all persons with an interest in the property in sufficient time
to enable such persons'';
(3) in subsection (d)(1)(D), by striking ``the defendant in
the proceedings in the foreign court did not receive notice''
and inserting ``the foreign nation did not take steps, in
accordance with the principles of due process, to give notice
of the proceedings to a person with an interest in the
property''; and
(4) in subsection (a)(2)(A), by inserting ``, any violation
of foreign law that would constitute a violation of an offense
for which property could be forfeited under Federal law if the
offense were committed in the United States'' after ``United
Nations Convention''.
SEC. 119. REPORTING PROVISIONS AND ANTI-TERRORIST ACTIVITIES OF UNITED
STATES INTELLIGENCE AGENCIES.
(a) Amendment Relating to the Purposes of Chapter 53 of Title 31,
United States Code.--Section 5311 of title 31, United States Code, is
amended by inserting before the period at the end the following: ``, or
in the conduct of intelligence or counterintelligence activities,
including analysis, to protect against international terrorism''.
(b) Amendment Relating to Reporting of Suspicious Activities.--
Section 5318(g)(4)(B) of title 31, United States Code, is amended by
striking ``or supervisory agency'' and inserting ``, supervisory
agency, or United States intelligence agency for use in the conduct of
intelligence or counterintelligence activities, including analysis, to
protect against international terrorism''.
(c) Amendment Relating to Availability of Reports.--Section 5319 of
title 31, United States Code, is amended to read as follows:
``Sec. 5319. Availability of reports
``The Secretary of the Treasury shall make information in a report
filed under this subchapter available to an agency, including any State
financial institutions supervisory agency or United States intelligence
agency, upon request of the head of the agency. The report shall be
available for a purpose that is consistent with this subchapter. The
Secretary may only require reports on the use of such information by
any State financial institutions supervisory agency for other than
supervisory purposes or by United States intelligence agencies.
However, a report and records of reports are exempt from disclosure
under section 552 of title 5.''.
(d) Amendments to the Right to Financial Privacy Act.--The Right to
Financial Privacy Act of 1978 is amended--
(1) in section 1112(a) (12 U.S.C. 3412(a)), by inserting ``,
or intelligence or counterintelligence activity, investigation
or analysis related to international terrorism'' after
``legitimate law enforcement inquiry'';
(2) in section 1114(a)(1) (12 U.S.C. 3414(a)(1))--
(A) in subparagraph (A), by striking ``or'' at the
end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``; or''; and
(C) by adding at the end the following:
``(C) a Government authority authorized to conduct
investigations of, or intelligence or
counterintelligence analyses related to, international
terrorism for the purpose of conducting such
investigations or analyses.''; and
(3) in section 1120(a)(2) (12 U.S.C. 3420(a)(2)), by
inserting ``, or for a purpose authorized by section 1112(a)''
before the semicolon at the end.
(e) Amendment to the Fair Credit Reporting Act.--
(1) In general.--The Fair Credit Reporting Act (15 U.S.C.
1681 et seq.) is amended--
(A) by redesignating the second of the 2 sections
designated as section 624 (15 U.S.C. 1681u) (relating
to disclosure to FBI for counterintelligence purposes)
as section 625; and
(B) by adding at the end the following new section:
``Sec. 626. Disclosures to governmental agencies for counterterrorism
purposes
``(a) Disclosure.--Notwithstanding section 604 or any other provision
of this title, a consumer reporting agency shall furnish a consumer
report of a consumer and all other information in a consumer's file to
a government agency authorized to conduct investigations of, or
intelligence or counterintelligence activities or analysis related to,
international terrorism when presented with a written certification by
such government agency that such information is necessary for the
agency's conduct or such investigation, activity or analysis.
``(b) Form of Certification.--The certification described in
subsection (a) shall be signed by the Secretary of the Treasury, or an
officer designated by the Secretary from among officers of the
Department of the Treasury whose appointments to office are required to
be made by the President, by and with the advice and consent of the
Senate.
``(c) Confidentiality.--No consumer reporting agency, or officer,
employee, or agent of such consumer reporting agency, shall disclose to
any person, or specify in any consumer report, that a government agency
has sought or obtained access to information under subsection (a).
``(d) Rule of Construction.--Nothing in section 625 shall be
construed to limit the authority of the Director of the Federal Bureau
of Investigation under this section.
``(e) Safe Harbor.--Notwithstanding any other provision of this
subchapter, any consumer reporting agency or agent or employee thereof
making disclosure of consumer reports or other information pursuant to
this section in good-faith reliance upon a certification of a
governmental agency pursuant to the provisions of this section shall
not be liable to any person for such disclosure under this subchapter,
the constitution of any State, or any law or regulation of any State or
any political subdivision of any State.''.
(2) Clerical amendments.--The table of sections for the Fair
Credit Reporting Act (15 U.S.C. 1681 et seq.) is amended--
(A) by redesignating the second of the 2 items
designated as section 624 as section 625; and
(B) by inserting after the item relating to section
625 (as so redesignated) the following new item:
``626. Disclosures to governmental agencies for counterterrorism
purposes.''.
SEC. 120. FINANCIAL CRIMES ENFORCEMENT NETWORK.
(a) In General.--Subchapter I of chapter 3 of title 31, United States
Code, is amended--
(1) by redesignating section 310 as section 311; and
(2) by inserting after section 309 the following new section:
``Sec. 310. Financial Crimes Enforcement Network
``(a) In General.--The Financial Crimes Enforcement Network
established by order of the Secretary of the Treasury (Treasury Order
Numbered 105-08) on April 25, 1990, shall be a bureau in the Department
of the Treasury.
``(b) Director.--
``(1) Appointment.--The head of the Financial Crimes
Enforcement Network shall be the Director who shall be
appointed by the President, by and with the consent of the
Senate, to a term of 4 years.
``(2) Duties and powers.--The duties and powers of the
Director are as follows:
``(A) Advise and make recommendations on matters
relating to financial intelligence, financial criminal
activities, and other financial activities to the Under
Secretary for Enforcement.
``(B) Maintain a government-wide data access service,
with access, in accordance with applicable legal
requirements, to the following:
``(i) Information collected by the Department
of the Treasury, including report information
filed under subchapters II and III of chapter
53 of this title (such as reports on cash
transactions, foreign financial agency
transactions and relationships, foreign
currency transactions, exporting and importing
monetary instruments, and suspicious
activities), chapter 2 of Public Law 91-508,
section 21 of the Federal Deposit Insurance Act
and section 6050I of the Internal Revenue Code
of 1986.
``(ii) Information regarding national and
international currency flows.
``(iii) Other records and data maintained by
other Federal, State, local, and foreign
agencies, including financial and other records
developed in specific cases.
``(iv) Other privately and publicly available
information.
``(C) Analyze and disseminate the available data in
accordance with applicable legal requirements and
policies and guidelines established by the Secretary of
the Treasury and the Under Secretary for Enforcement
to--
``(i) identify possible criminal activity to
appropriate Federal, State, local, and foreign
law enforcement agencies;
``(ii) support ongoing criminal financial
investigations and prosecutions and related
proceedings, including civil and criminal tax
and forfeiture proceedings;
``(iii) identify possible instances of
noncompliance with subchapters II and III of
chapter 53 of this title, chapter 2 of Public
Law 91-508, and section 21 of the Federal
Deposit Insurance Act to Federal agencies with
statutory responsibility for enforcing
compliance with such provisions and other
appropriate Federal regulatory agencies;
``(iv) evaluate and recommend possible uses
of special currency reporting requirements
under section 5326; and
``(v) determine emerging trends and methods
in money laundering and other financial crimes.
``(D) Establish and maintain a financial crimes
communications center to furnish law enforcement
authorities with intelligence information related to
emerging or ongoing investigations and undercover
operations.
``(E) Furnish research, analytical, and informational
services to financial institutions, appropriate Federal
regulatory agencies with regard to financial
institutions, and appropriate Federal, State, local,
and foreign law enforcement authorities, in accordance
with policies and guidelines established by the
Secretary of the Treasury or the Under Secretary of the
Treasury for Enforcement, in the interest of detection,
prevention, and prosecution of terrorism, organized
crime, money laundering, and other financial crimes.
``(F) Establish and maintain a special unit dedicated
to combatting the use of informal, nonbank networks and
payment and barter system mechanisms that permit the
transfer of funds or the equivalent of funds without
records and without compliance with criminal and tax
laws.
``(G) Provide computer and data support and data
analysis to the Secretary of the Treasury for tracking
and controlling foreign assets.
``(H) Coordinate with financial intelligence units in
other countries on anti-terrorism and anti-money
laundering initiatives, and similar efforts.
``(I) Administer the requirements of subchapters II
and III of chapter 53 of this title, chapter 2 of
Public Law 91-508, and section 21 of the Federal
Deposit Insurance Act, to the extent delegated such
authority by the Secretary of the Treasury.
``(J) Such other duties and powers as the Secretary
of the Treasury may delegate or prescribe.
``(c) Requirements Relating to Maintenance and Use of Data Banks.--
The Secretary of the Treasury shall establish and maintain operating
procedures with respect to the government-wide data access service and
the financial crimes communications center maintained by the Financial
Crimes Enforcement Network which provide--
``(1) for the coordinated and efficient transmittal of
information to, entry of information into, and withdrawal of
information from, the data maintenance system maintained by the
Network, including--
``(A) the submission of reports through the Internet
or other secure network, whenever possible;
``(B) the cataloguing of information in a manner that
facilitates rapid retrieval by law enforcement
personnel of meaningful data; and
``(C) a procedure that provides for a prompt initial
review of suspicious activity reports and other
reports, or such other means as the Secretary may
provide, to identify information that warrants
immediate action; and
``(2) in accordance with section 552a of title 5 and the
Right to Financial Privacy Act of 1978, appropriate standards
and guidelines for determining--
``(A) who is to be given access to the information
maintained by the Network;
``(B) what limits are to be imposed on the use of
such information; and
``(C) how information about activities or
relationships which involve or are closely associated
with the exercise of constitutional rights is to be
screened out of the data maintenance system.
``(d) Authorization of Appropriations.--There are authorized to be
appropriated for the Financial Crimes Enforcement Network such sums as
may be necessary for fiscal years 2002, 2003, 2004, and 2005.''.
(b) Compliance With Existing Reports Compliance.--The Secretary of
the Treasury shall study methods for improving compliance with the
reporting requirements established in section 5314 of title 31, United
States Code, and shall submit a report on such study to the Congress by
the end of the 6-month period beginning on the date of the enactment of
this Act and each 1-year period thereafter. The initial report shall
include historical data on compliance with such reporting requirements.
(c) Clerical Amendment.--The table of sections for subchapter I of
chapter 3 of title 31, United States Code, is amended--
(1) by redesignating the item relating to section 310 as
section 311; and
(2) by inserting after the item relating to section 309 the
following new item:
``310. Financial Crimes Enforcement Network''.
SEC. 121. CUSTOMS SERVICE BORDER SEARCHES.
Section 5317(b) of title 31, United States Code, is amended to read
as follows:
``(b) Searches at Border.--
``(1) In general.--For purposes of ensuring compliance with
the laws enforced by the United States Customs Service, a
customs officer may stop and search, at the border and without
a search warrant, any vehicle, vessel, aircraft, or other
conveyance, any envelope or other container, and any person
entering, transiting, or departing from the United States.
``(2) International shipments of mail.--With respect to
shipments of international mail that are exported or imported
by the United States Postal Service, the Customs Service and
other appropriate Federal agencies shall, subject to paragraph
(3), apply the customs laws of the United States and all other
laws relating to the importation or exportation of such
shipments in the same manner to both shipments by the United
States Postal Service and similar shipments by private
companies.
``(3) Safeguards.--No provision of this subsection shall be
construed as authorizing any customs officer or any other
person to read any correspondence unless--
``(A) a search warrant has been issued pursuant to
Rule 41 of the Federal Rules of Criminal Procedure
which permits such correspondence to be read; or
``(B) the sender or addressee of the correspondence
has given written consent for any such action.''.
SEC. 122. PROHIBITION ON FALSE STATEMENTS TO FINANCIAL INSTITUTIONS
CONCERNING THE IDENTITY OF A CUSTOMER.
(a) In General.--Chapter 47 of title 18, United States Code, is
amended by inserting after section 1007 the following:
``Sec. 1008. False statements concerning the identity of customers of
financial institutions
``(a) In General.--Whoever, in connection with information submitted
to or requested by a financial institution, knowingly in any manner--
``(1) falsifies, conceals, or covers up, or attempts to
falsify, conceal, or cover up, the identity of any person in
connection with any transaction with a financial institution;
``(2) makes, or attempts to make, any materially false,
fraudulent, or fictitious statement or representation of the
identity of any person in connection with a transaction with a
financial institution;
``(3) makes or uses, or attempts to make or use, any false
writing or document knowing the same to contain any materially
false, fictitious, or fraudulent statement or entry concerning
the identity of any person in connection with a transaction
with a financial institution; or
``(4) uses or presents, or attempts to use or present, in
connection with a transaction with a financial institution, an
identification document or means of identification the
possession of which is a violation of section 1028;
shall be fined under this title, imprisoned not more than 5 years, or
both.
``(b) Definitions.--In this section, the following definitions shall
apply:
``(1) Financial institution.--The term `financial
institution'--
``(A) has the same meaning as in section 20; and
``(B) in addition, has the same meaning as in section
5312(a)(2) of title 31, United States Code.
``(2) Identification document.--The term `identification
document' has the same meaning as in section 1028(d).
``(3) Means of identification.--The term `means of
identification' has the same meaning as in section 1028(d).''.
(b) Technical and Conforming Amendments.--
(1) Title 18, united states code.--Section 1956(c)(7)(D) of
title 18, United States Code, is amended by striking ``1014
(relating to fraudulent loan'' and inserting ``section 1008
(relating to false statements concerning the identity of
customers of financial institutions), section 1014 (relating to
fraudulent loan''.
(2) Table of sections.--The table of sections for chapter 47
of title 18, United States Code, is amended by inserting after
the item relating to section 1007 the following:
``1008. False statements concerning the identity of customers of
financial institutions.''.
SEC. 123. VERIFICATION OF IDENTIFICATION.
(a) In General.--Section 5318 of title 31, United States Code, is
amended by adding at the end the following new subsection:
``(i) Identification and Verification of Accountholders.--
``(1) In general.--Subject to the requirements of this
subsection, the Secretary of the Treasury shall prescribe
regulations setting forth the minimum standards regarding
customer identification that shall apply in connection with the
opening of an account at a financial institution.
``(2) Minimum requirements.--The regulations shall, at a
minimum, require financial institutions to implement procedures
for--
``(A) verifying the identity of any person seeking to
open an account to the extent reasonable and
practicable;
``(B) maintaining records of the information used to
verify a person's identity, including name, address,
and other identifying information;
``(C) consulting applicable lists of known or
suspected terrorists or terrorist organizations
generated by government agencies to determine whether a
person seeking to open an account appears on any such
list.
``(3) Factors to be considered.--In prescribing regulations
under this subsection, the Secretary shall take into
consideration the various types of accounts maintained by
various types of financial institutions, the various methods of
opening accounts, and the various types of identifying
information available.
``(4) Certain financial institutions.--In the case of any
financial institution the business of which is engaging in
financial activities described in section 4(k) of the Bank
Holding Company Act of 1956 (including financial activities
subject to the jurisdiction of the Commodity Futures Trading
Commission), the regulations prescribed by the Secretary under
paragraph (1) shall be prescribed jointly with each Federal
functional regulator (as defined in section 509 of the Gramm-
Leach-Bliley Act, including the Commodity Futures Trading
Commission) appropriate for such financial institution.
``(5) Exemptions.--The Secretary of the Treasury (and, in the
case of any financial institution described in paragraph (4),
any Federal agency described in such paragraph) may, by
regulation or order, exempt any financial institution or type
of account from the requirements of any regulation prescribed
under this subsection in accordance with such standards and
procedures as the Secretary may prescribe.
``(6) Effective date.--Final regulations prescribed under
this subsection shall take effect before the end of the 1-year
period beginning on the date of the enactment of the Financial
Anti-Terrorism Act of 2001.''.
(b) Study and Report Required.--Within 6 months after the date of the
enactment of this Act, the Secretary of the Treasury, in consultation
with the Federal functional regulators (as defined in section 509 of
the Gramm-Leach-Bliley Act) and other appropriate Government agencies,
shall submit a report to the Congress containing recommendations for--
(1) determining the most timely and effective way to require
foreign nationals to provide domestic financial institutions
and agencies with appropriate and accurate information,
comparable to that which is required of United States
nationals, concerning their identity, address, and other
related information necessary to enable such institutions and
agencies to comply with the requirements of this section;
(2) requiring foreign nationals to apply for and obtain,
before opening an account with a domestic financial
institution, an identification number which would function
similarly to a Social Security number or tax identification
number; and
(3) establishing a system for domestic financial institutions
and agencies to review information maintained by relevant
Government agencies for purposes of verifying the identities of
foreign nationals seeking to open accounts at those
institutions and agencies.
SEC. 124. CONSIDERATION OF ANTI-MONEY LAUNDERING RECORD.
(a) Bank Holding Company Act of 1956.--
(1) In general.--Section 3(c) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1842(c)) is amended by adding at the end the
following new paragraph:
``(6) Money laundering.--In every case the Board shall take
into consideration the effectiveness of the company or
companies in combating and preventing money laundering
activities, including in overseas branches.''.
(2) Scope of application.--The amendment made by paragraph (1) shall
apply with respect to any application submitted to the Board of
Governors of the Federal Reserve System under section 3 of the Bank
Holding Company Act of 1956 after December 31, 2000, which has not been
approved by the Board before the date of the enactment of this Act.
(b) Mergers Subject to Review Under Federal Deposit Insurance Act.--
(1) In general.--Section 18(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(c)) is amended--
(A) by redesignating paragraph (11) as paragraph
(12); and
(B) by inserting after paragraph (10), the following
new paragraph:
``(11) Money laundering.--In every case, the responsible
agency shall take into consideration the effectiveness of any
insured depository institution involved in the proposed merger
transaction in combating and preventing money laundering
activities, including in overseas branches.''.
(2) Scope of application.--The amendment made by paragraph (1) shall
apply with respect to any application submitted to the responsible
agency under section 18(c) of the Federal Deposit Insurance Act after
December 31, 2000, which has not been approved by all appropriate
responsible agencies before the date of the enactment of this Act.
SEC. 125. REPORTING OF SUSPICIOUS ACTIVITIES BY INFORMAL UNDERGROUND
BANKING SYSTEMS, SUCH AS HAWALAS.
(a) Definition for Subchapter.--Subparagraph (R) of section
5312(a)(2) of title 31, United States Code, is amended to read as
follows:
``(R) a licensed sender of money or any other person
who engages as a business in the transmission of funds,
including through an informal value transfer banking
system or network of people facilitating the transfer
of value domestically or internationally outside of the
conventional financial institutions system;''.
(b) Money Transmitting Business.--Section 5330(d)(1)(A) of title 31,
United States Code, is amended by inserting before the semicolon the
following: ``or any other person who engages as a business in the
transmission of funds, including through an informal value transfer
banking system or network of people facilitating the transfer of value
domestically or internationally outside of the conventional financial
institutions system''.
(c) Applicability of Rules.--Section 5318 of title 31, United States
Code, as amended by this title, is amended by adding at the end the
following:
``(l) Applicability of Rules.--Any rules prescribed pursuant to the
authority contained in section 21 of the Federal Deposit Insurance Act
shall apply, in addition to any other financial institution to which
such rules apply, to any person that engages as a business in the
transmission of funds, including through an informal value transfer
banking system or network of people facilitating the transfer of value
domestically or internationally outside of the conventional financial
institutions system.''.
(d) Report.--Not later than 1 year after the date of enactment of
this Act, the Secretary of the Treasury shall report to Congress on the
need for any additional legislation relating to--
(1) informal value transfer banking systems or networks of
people facilitating the transfer of value domestically or
internationally outside of the conventional financial
institutions system;
(2) anti-money laundering controls; and
(3) regulatory controls relating to underground money
movement and banking systems, such as the system referred to as
``hawala'', including whether the threshold for the filing of
suspicious activity reports under section 5318(g) of title 31,
United States Code should be lowered in the case of such
systems.
TITLE II--PUBLIC-PRIVATE COOPERATION
SEC. 201. ESTABLISHMENT OF HIGHLY SECURE NETWORK.
(a) In General.--The Secretary of the Treasury shall establish a
highly secure network in the Financial Crimes Enforcement Network
that--
(1) allows financial institutions to file reports required
under subchapter II or III of chapter 53 of title 31, United
States Code, chapter 2 of Public Law 91-508, or section 21 of
the Federal Deposit Insurance Act through the network; and
(2) provides financial institutions with alerts and other
information regarding suspicious activities that warrant
immediate and enhanced scrutiny.
(b) Expedited Development.--The Secretary of the Treasury shall take
such action as may be necessary to ensure that the website required
under subsection (a) is fully operational before the end of the 9-month
period beginning on the date of the enactment of this Act.
SEC. 202. REPORT ON IMPROVEMENTS IN DATA ACCESS AND OTHER ISSUES.
Before the end of the 6-month period beginning on the date of the
enactment of this Act, the Secretary of the Treasury shall report to
the Congress on the following issues:
(1) Data collection and analysis.--Progress made since such
date of enactment in meeting the requirements of section 310(c)
of title 31, United States Code (as added by this Act).
(2) Barriers to exchange of financial crime information.--
Technical, legal, and other barriers to the exchange of
financial crime prevention and detection information among and
between Federal law enforcement agencies, including an
identification of all Federal law enforcement data systems
between which or among which data cannot be shared for whatever
reason.
(3) Private banking.--Private banking activities in the
United States, including information on the following:
(A) The nature and extent of private banking
activities in the United States.
(B) Regulatory efforts to monitor private banking
activities and ensure that such activities are
conducted in compliance with subchapter II of chapter
53 of title 31, United States Code, and section 21 of
the Federal Deposit Insurance Act.
(C) With regard to financial institutions that offer
private banking services, the policies and procedures
of such institutions that are designed to ensure
compliance with the requirements of subchapter II of
chapter 53 of title 31, United States Code, and section
21 of the Federal Deposit Insurance Act with respect to
private banking activity.
SEC. 203. REPORTS TO THE FINANCIAL SERVICES INDUSTRY ON SUSPICIOUS
FINANCIAL ACTIVITIES.
At least once each calendar quarter, the Secretary of the Treasury
shall--
(1) publish a report containing a detailed analysis
identifying patterns of suspicious activity and other
investigative insights derived from suspicious activity reports
and investigations conducted by Federal, State, and local law
enforcement agencies to the extent appropriate; and
(2) distribute such report to financial institutions (as
defined in section 5312 of title 31, United States Code).
SEC. 204. EFFICIENT USE OF CURRENCY TRANSACTION REPORT SYSTEM.
(a) Findings.--The Congress finds the following:
(1) The Congress established the currency transaction
reporting requirements in 1970 because the Congress found then
that such reports have a high degree of usefulness in criminal,
tax, and regulatory investigations and proceedings and the
usefulness of such reports has only increased in the years
since the requirements were established.
(2) In 1994, in response to reports and testimony that excess
amounts of currency transaction reports were interfering with
effective law enforcement, the Congress reformed the currency
transaction report exemption requirements to provide--
(A) mandatory exemptions for certain reports that had
little usefulness for law enforcement, such as cash
transfers between depository institutions and cash
deposits from government agencies; and
(B) discretionary authority for the Secretary of the
Treasury to provide exemptions, subject to criteria and
guidelines established by the Secretary, for financial
institutions with regard to regular business customers
that maintain accounts at an institution into which
frequent cash deposits are made.
(3) Today there is evidence that some financial institutions
are not utilizing the exemption system, or are filing reports
even if there is an exemption in effect, with the result that
the volume of currency transaction reports is once again
interfering with effective law enforcement.
(b) Study and Report.--
(1) Study required.--The Secretary of the Treasury shall
conduct a study of--
(A) the possible expansion of the statutory exemption
system in effect under 5313 of title 31, United States
Code; and
(B) methods for improving financial institution
utilization of the statutory exemption provisions as a
way of reducing the submission of currency transaction
reports that have little or no value for law
enforcement purposes, including improvements in the
systems in effect at financial institutions for regular
review of the exemption procedures used at the
institution and the training of personnel in its
effective use.
(2) Report required.--The Secretary of the Treasury shall
submit a report to the Congress before the end of the 90-day
period beginning on the date of the enactment of this Act
containing the findings and conclusions of the Secretary with
regard to the study required under subsection (a) and such
recommendations for legislative or administrative action as the
Secretary determines to be appropriate.
SEC. 205. PUBLIC-PRIVATE TASK FORCE ON TERRORIST FINANCING ISSUES.
Section 1564 of the Annunzio--Wylie Anti-Money Laundering Act (31
U.S.C. 5311 note) is amended by adding at the end the following new
subsection:
``(d) Terrorist Financing Issues.--
``(1) In general.--The Secretary of the Treasury shall
provide, either within the Bank Secrecy Act Advisory Group, or
as a subcommittee or other adjunct of the Advisory Group, for a
task force of representatives from agencies and officers
represented on the Advisory Group, a representative of the
Director of the Office of Homeland Security, and
representatives of financial institutions, private
organizations that represent the financial services industry,
and other interested parties to focus on--
``(A) issues specifically related to the finances of
terrorist groups, the means terrorist groups use to
transfer funds around the world and within the United
States, including through the use of charitable
organizations, nonprofit organizations, and
nongovernmental organizations, and the extent to which
financial institutions in the United States are
unwittingly involved in such finances and the extent to
which such institutions are at risk as a result;
``(B) the relationship, particularly the financial
relationship, between international narcotics
traffickers and foreign terrorist organizations, the
extent to which their memberships overlap and engage in
joint activities, and the extent to which they
cooperate with each other in raising and transferring
funds for their respective purposes; and
``(C) means of facilitating the identification of
accounts and transactions involving terrorist groups
and facilitating the exchange of information concerning
such accounts and transactions between financial
institutions and law enforcement organizations.
``(2) Applicability of other provisions.--Sections 552, 552a,
and 552b of title 5, United States Code, and the Federal
Advisory Committee Act shall not apply to the task force
established pursuant to paragraph (1).''.
SEC. 206. SUSPICIOUS ACTIVITY REPORTING REQUIREMENTS.
(a) Deadline For Suspicious Activity Reporting Requirements For
Registered Brokers and Dealers.--The Secretary of the Treasury, in
consultation with the Securities and Exchange Commission, shall publish
proposed regulations in the Federal Register before January 1, 2002,
requiring brokers and dealers registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 to submit
suspicious activity reports under section 5318(g) of title 31, United
States Code. Such regulations shall be published in final form no later
than June 1, 2002.
(b) Suspicious Activity Reporting Requirements For Futures Commission
Merchants, Commodity Trading Advisors, and Commodity Pool Operators.--
The Secretary of the Treasury, in consultation with the Commodity
Futures Trading Commission, may prescribe regulations requiring futures
commission merchants, commodity trading advisors, and commodity pool
operators registered under the Commodity Exchange Act to submit
suspicious activity reports under section 5318(g) of title 31, United
States Code.
SEC. 207. AMENDMENTS RELATING TO REPORTING OF SUSPICIOUS ACTIVITIES.
(a) Amendment Relating to Civil Liability Immunity for Disclosures.--
Section 5318(g)(3) of title 31, United States Code, is amended to read
as follows:
``(3) Liability for disclosures.--
``(A) In general.--Any financial institution that
makes a voluntary disclosure of any possible violation
of law or regulation to a government agency or makes a
disclosure pursuant to this subsection or any other
authority, and any director, officer, employee, or
agent of such institution who makes, or requires
another to make any such disclosure, shall not be
liable to any person under any law or regulation of the
United States, any constitution, law, or regulation of
any State or political subdivision of any State, or
under any contract or other legally enforceable
agreement (including any arbitration agreement), for
such disclosure or for any failure to provide notice of
such disclosure to any person.
``(B) Rule of construction.--Subparagraph (A) shall
not be construed as creating--
``(i) any inference that the term `person',
as used in such subparagraph, may be construed
more broadly than its ordinary usage so to
include any government or agency of government;
or
``(ii) any immunity against, or otherwise
affecting, any civil or criminal action brought
by any government or agency of government to
enforce any constitution, law, or regulation of
such government or agency.''.
(b) Prohibition on Notification of Disclosures.--Section 5318(g)(2)
of title 31, United States Code, is amended to read as follows:
``(2) Notification prohibited.--
``(A) In general.--If a financial institution or any
director, officer, employee, or agent of any financial
institution, voluntarily or pursuant to this section or
any other authority, reports a suspicious transaction
to a government agency--
``(i) the financial institution, director,
officer, employee, or agent may not notify any
person involved in the transaction that the
transaction has been reported; and
``(ii) no officer or employee of the Federal
Government or of any State, local, tribal, or
territorial government within the United
States, who has any knowledge that such report
was made may disclose to any person involved in
the transaction that the transaction has been
reported other than as necessary to fulfill the
official duties of such officer or employee.
``(B) Disclosures in certain employment references.--
Notwithstanding the application of subparagraph (A) in
any other context, subparagraph (A) shall not be
construed as prohibiting any financial institution, or
any director, officer, employee, or agent of such
institution, from including, in a written employment
reference that is provided in accordance with section
18(v) of the Federal Deposit Insurance Act in response
to a request from another financial institution or a
written termination notice or employment reference that
is provided in accordance with the rules of the self-
regulatory organizations registered with the Securities
and Exchange Commission, information that was included
in a report to which subparagraph (A) applies, but such
written employment reference may not disclose that such
information was also included in any such report or
that such report was made.''.
SEC. 208. AUTHORIZATION TO INCLUDE SUSPICIONS OF ILLEGAL ACTIVITY IN
WRITTEN EMPLOYMENT REFERENCES.
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is
amended by adding at the end the following new subsection:
``(w) Written Employment References May Contain Suspicions of
Involvement in Illegal Activity.--
``(1) In general.--Notwithstanding any other provision of
law, any insured depository institution, and any director,
officer, employee, or agent of such institution, may disclose
in any written employment reference relating to a current or
former institution-affiliated party of such institution which
is provided to another insured depository institution in
response to a request from such other institution, information
concerning the possible involvement of such institution-
affiliated party in potentially unlawful activity, to the
extent--
``(A) the disclosure does not contain information
which the institution, director, officer, employee, or
agent knows to be false; and
``(B) the institution, director, officer, employee,
or agent has not acted with malice or with reckless
disregard for the truth in making the disclosure.
``(2) Definition.--For purposes of this subsection, the term
`insured depository institution' includes any uninsured branch
or agency of a foreign bank.''.
SEC. 209. INTERNATIONAL COOPERATION ON IDENTIFICATION OF ORIGINATORS OF
WIRE TRANSFERS.
The Secretary of the Treasury shall--
(1) in consultation with the Attorney General and the
Secretary of State, take all reasonable steps to encourage
foreign governments to require the inclusion of the name of the
originator in wire transfer instructions sent to the United
States and other countries, with the information to remain with
the transfer from its origination until the point of
disbursement; and
(2) report annually to the Committee on Financial Services of
the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate on--
(A) progress toward the goal enumerated in paragraph
(1), as well as impediments to implementation and an
estimated compliance rate; and
(B) impediments to instituting a regime in which all
appropriate identification, as defined by the
Secretary, about wire transfer recipients shall be
included with wire transfers from their point of
origination until disbursement.
SEC. 210. CHECK TRUNCATION STUDY.
Before the end of the 90-day period beginning on the date of the
enactment of this Act, the Secretary of the Treasury, in consultation
with the Attorney General and the Board of Governors of the Federal
Reserve System, shall conduct a study of the impact on crime
prevention, law enforcement, and the administration of consumer
protection laws of any policy of the Board of Governors of the Federal
Reserve System relating to the promotion of check electronification,
through truncation or other means, or migration from paper checks.
TITLE III--COMBATTING INTERNATIONAL MONEY LAUNDERING
SEC. 301. SPECIAL MEASURES FOR JURISDICTIONS, FINANCIAL INSTITUTIONS,
OR INTERNATIONAL TRANSACTIONS OF PRIMARY MONEY
LAUNDERING CONCERN.
(a) In General.--Subchapter II of chapter 53 of title 31, United
States Code, is amended by inserting after section 5318 the following
new section:
``Sec. 5318A. Special measures for jurisdictions, financial
institutions, or international transactions of
primary money laundering concern
``(a) International Counter-Money Laundering Requirements.--
``(1) In general.--The Secretary may require domestic
financial institutions and domestic financial agencies to take
1 or more of the special measures described in subsection (b)
if the Secretary finds that reasonable grounds exist for
concluding that a jurisdiction outside of the United States, 1
or more financial institutions operating outside of the United
States, 1 or more classes of transactions within, or involving,
a jurisdiction outside of the United States, or 1 or more types
of accounts is of primary money laundering concern, in
accordance with subsection (c).
``(2) Form of requirement.--The special measures described
in--
``(A) subsection (b) may be imposed in such sequence
or combination as the Secretary shall determine;
``(B) paragraphs (1) through (4) of subsection (b)
may be imposed by regulation, order, or otherwise as
permitted by law; and
``(C) subsection (b)(5) may be imposed only by
regulation.
``(3) Duration of orders; rulemaking.--Any order by which a
special measure described in paragraphs (1) through (4) of
subsection (b) is imposed (other than an order described in
section 5326)--
``(A) shall be issued together with a notice of
proposed rulemaking relating to the imposition of such
special measure; and
``(B) may not remain in effect for more than 120
days, except pursuant to a regulation prescribed on or
before the end of the 120-day period beginning on the
date of issuance of such order.
``(4) Process for selecting special measures.--In selecting
which special measure or measures to take under this
subsection, the Secretary--
``(A) shall consult with the Chairman of the Board of
Governors of the Federal Reserve System, any other
appropriate Federal banking agency (as defined in
section 3 of the Federal Deposit Insurance Act), the
Securities and Exchange Commission, the National Credit
Union Administration Board, and in the sole discretion
of the Secretary such other agencies and interested
parties as the Secretary may find to be appropriate;
and
``(B) shall consider--
``(i) whether similar action has been or is
being taken by other nations or multilateral
groups;
``(ii) whether the imposition of any
particular special measure would create a
significant competitive disadvantage, including
any undue cost or burden associated with
compliance, for financial institutions
organized or licensed in the United States; and
``(iii) the extent to which the action or the
timing of the action would have a significant
adverse systemic impact on the international
payment, clearance, and settlement system, or
on legitimate business activities involving the
particular jurisdiction, institution, or class
of transactions.
``(5) No limitation on other authority.--This section shall
not be construed as superseding or otherwise restricting any
other authority granted to the Secretary, or to any other
agency, by this subchapter or otherwise.
``(b) Special Measures.--The special measures referred to in
subsection (a), with respect to a jurisdiction outside of the United
States, financial institution operating outside of the United States,
class of transaction within, or involving, a jurisdiction outside of
the United States, or 1 or more types of accounts are as follows:
``(1) Recordkeeping and reporting of certain financial
transactions.--
``(A) In general.--The Secretary may require any
domestic financial institution or domestic financial
agency to maintain records, file reports, or both,
concerning the aggregate amount of transactions, or
concerning each transaction, with respect to a
jurisdiction outside of the United States, 1 or more
financial institutions operating outside of the United
States, 1 or more classes of transactions within, or
involving, a jurisdiction outside of the United States,
or 1 or more types of accounts if the Secretary finds
any such jurisdiction, institution, or class of
transactions to be of primary money laundering concern.
``(B) Form of records and reports.--Such records and
reports shall be made and retained at such time, in
such manner, and for such period of time, as the
Secretary shall determine, and shall include such
information as the Secretary may determine, including--
``(i) the identity and address of the
participants in a transaction or relationship,
including the identity of the originator of any
funds transfer;
``(ii) the legal capacity in which a
participant in any transaction is acting;
``(iii) the identity of the beneficial owner
of the funds involved in any transaction, in
accordance with such procedures as the
Secretary determines to be reasonable and
practicable to obtain and retain the
information; and
``(iv) a description of any transaction.
``(2) Information relating to beneficial ownership.--In
addition to any other requirement under any other provision of
law, the Secretary may require any domestic financial
institution or domestic financial agency to take such steps as
the Secretary may determine to be reasonable and practicable to
obtain and retain information concerning the beneficial
ownership of any account opened or maintained in the United
States by a foreign person (other than a foreign entity whose
shares are subject to public reporting requirements or are
listed and traded on a regulated exchange or trading market),
or a representative of such a foreign person, that involves a
jurisdiction outside of the United States, 1 or more financial
institutions operating outside of the United States, 1 or more
classes of transactions within, or involving, a jurisdiction
outside of the United States, or 1 or more types of accounts if
the Secretary finds any such jurisdiction, institution,
transaction, or account to be of primary money laundering
concern.
``(3) Information relating to certain payable-through
accounts.--If the Secretary finds a jurisdiction outside of the
United States, 1 or more financial institutions operating
outside of the United States, or 1 or more classes of
transactions within, or involving, a jurisdiction outside of
the United States to be of primary money laundering concern,
the Secretary may require any domestic financial institution or
domestic financial agency that opens or maintains a payable-
through account in the United States for a foreign financial
institution involving any such jurisdiction or any such
financial institution operating outside of the United States,
or a payable through account through which any such transaction
may be conducted, as a condition of opening or maintaining such
account--
``(A) to identify each customer (and representative
of such customer) of such financial institution who is
permitted to use, or whose transactions are routed
through, such payable-through account; and
``(B) to obtain, with respect to each such customer
(and each such representative), information that is
substantially comparable to that which the depository
institution obtains in the ordinary course of business
with respect to its customers residing in the United
States.
``(4) Information relating to certain correspondent
accounts.--If the Secretary finds a jurisdiction outside of the
United States, 1 or more financial institutions operating
outside of the United States, or 1 or more classes of
transactions within, or involving, a jurisdiction outside of
the United States to be of primary money laundering concern,
the Secretary may require any domestic financial institution or
domestic financial agency that opens or maintains a
correspondent account in the United States for a foreign
financial institution involving any such jurisdiction or any
such financial institution operating outside of the United
States, or a correspondent account through which any such
transaction may be conducted, as a condition of opening or
maintaining such account--
``(A) to identify each customer (and representative
of such customer) of any such financial institution who
is permitted to use, or whose transactions are routed
through, such correspondent account; and
``(B) to obtain, with respect to each such customer
(and each such representative), information that is
substantially comparable to that which the depository
institution obtains in the ordinary course of business
with respect to its customers residing in the United
States.
``(5) Prohibitions or conditions on opening or maintaining
certain correspondent or payable-through accounts.--If the
Secretary finds a jurisdiction outside of the United States, 1
or more financial institutions operating outside of the United
States, or 1 or more classes of transactions within, or
involving, a jurisdiction outside of the United States to be of
primary money laundering concern, the Secretary, in
consultation with the Secretary of State, the Attorney General,
and the Chairman of the Board of Governors of the Federal
Reserve System, may prohibit, or impose conditions upon, the
opening or maintaining in the United States of a correspondent
account or payable- through account by any domestic financial
institution or domestic financial agency for or on behalf of a
foreign banking institution, if such correspondent account or
payable-through account involves any such jurisdiction or
institution, or if any such transaction may be conducted
through such correspondent account or payable-through account.
``(c) Consultations and Information To Be Considered in Finding
Jurisdictions, Institutions, Types of Accounts, or Transactions To Be
of Primary Money Laundering Concern.--
``(1) In general.--In making a finding that reasonable
grounds exist for concluding that a jurisdiction outside of the
United States, 1 or more financial institutions operating
outside of the United States, 1 or more classes of transactions
within, or involving, a jurisdiction outside of the United
States, or 1 or more types of accounts is of primary money
laundering concern so as to authorize the Secretary to take 1
or more of the special measures described in subsection (b),
the Secretary shall consult with the Secretary of State, and
the Attorney General.
``(2) Additional considerations.--In making a finding
described in paragraph (1), the Secretary shall consider in
addition such information as the Secretary determines to be
relevant, including the following potentially relevant factors:
``(A) Jurisdictional factors.--In the case of a
particular jurisdiction--
``(i) evidence that organized criminal
groups, international terrorists, or both, have
transacted business in that jurisdiction;
``(ii) the extent to which that jurisdiction
or financial institutions operating in that
jurisdiction offer bank secrecy or special
regulatory advantages to nonresidents or
nondomiciliaries of that jurisdiction;
``(iii) the substance and quality of
administration of the bank supervisory and
counter-money laundering laws of that
jurisdiction;
``(iv) the relationship between the volume of
financial transactions occurring in that
jurisdiction and the size of the economy of the
jurisdiction;
``(v) the extent to which that jurisdiction
is characterized as an offshore banking or
secrecy haven by credible international
organizations or multilateral expert groups;
``(vi) whether the United States has a mutual
legal assistance treaty with that jurisdiction,
and the experience of United States law
enforcement officials, and regulatory officials
in obtaining information about transactions
originating in or routed through or to such
jurisdiction; and
``(vii) the extent to which that jurisdiction
is characterized by high levels of official or
institutional corruption.
``(B) Institutional factors.--In the case of a
decision to apply 1 or more of the special measures
described in subsection (b) only to a financial
institution or institutions, or to a transaction or
class of transactions, or to a type of account, or to
all 3, within or involving a particular jurisdiction--
``(i) the extent to which such financial
institutions, transactions, or types of
accounts are used to facilitate or promote
money laundering in or through the
jurisdiction;
``(ii) the extent to which such institutions,
transactions, or types of accounts are used for
legitimate business purposes in the
jurisdiction; and
``(iii) the extent to which such action is
sufficient to ensure, with respect to
transactions involving the jurisdiction and
institutions operating in the jurisdiction,
that the purposes of this subchapter continue
to be fulfilled, and to guard against
international money laundering and other
financial crimes.
``(d) Notification of Special Measures Invoked by the Secretary.--Not
later than 10 days after the date of any action taken by the Secretary
under subsection (a)(1), the Secretary shall notify, in writing, the
Committee on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate of any
such action.
``(e) Definitions.--Notwithstanding any other provision of this
subchapter, for purposes of this section, the following definitions
shall apply:
``(1) Bank definitions.--The following definitions shall
apply with respect to a bank:
``(A) Account.--The term `account'--
``(i) means a formal banking or business
relationship established to provide regular
services, dealings, and other financial
transactions; and
``(ii) includes a demand deposit, savings
deposit, or other transaction or asset account
and a credit account or other extension of
credit.
``(B) Correspondent account.--The term `correspondent
account' means an account established to receive
deposits from, make payments on behalf of a foreign
financial institution, or handle other financial
transactions related to such institution.
``(C) Payable-through account.--The term `payable-
through account' means an account, including a
transaction account (as defined in section 19(b)(1)(C)
of the Federal Reserve Act), opened at a depository
institution by a foreign financial institution by means
of which the foreign financial institution permits its
customers to engage, either directly or through a
subaccount, in banking activities usual in connection
with the business of banking in the United States.
``(D) Secretary.--The term `Secretary' means the
Secretary of the Treasury.
``(2) Definitions applicable to institutions other than
banks.--With respect to any financial institution other than a
bank, the Secretary shall, after consultation with the
appropriate Federal functional regulators (as defined in
section 509 of the Gramm-Leach-Bliley Act), define by
regulation the term `account', and shall include within the
meaning of that term, to the extent, if any, that the Secretary
deems appropriate, arrangements similar to payable-through and
correspondent accounts.
``(3) Regulatory definition.--The Secretary shall promulgate
regulations defining beneficial ownership of an account for
purposes of this subchapter. Such regulations shall address
issues related to an individual's authority to fund, direct, or
manage the account (including the power to direct payments into
or out of the account), and an individual's material interest
in the income or corpus of the account, and shall ensure that
the identification of individuals under this section does not
extend to any individual whose beneficial interest in the
income or corpus of the account is immaterial.
``(4) Other terms.--The Secretary may, by regulation, further
define the terms in paragraphs (1) and (2) and define other
terms for the purposes of this section, as the Secretary deems
appropriate.''.
(b) Financial Institutions Specified in Subchapter II of Chapter 53
of Title 31, United States Code.--
(1) Credit unions.--Subparagraph (E) of section 5312(2) of
title 31, United States Code, is amended to read as follows:
``(E) any credit union;''.
(2) Futures commission merchant; commodity trading advisor;
commodity pool operator.--Section 5312 of title 31, United
States Code, is amended by adding at the end the following new
subsection:
``(c) Additional Definitions.--For purposes of this subchapter, the
following definitions shall apply:
``(1) Certain institutions included in definition.--The term
`financial institution' (as defined in subsection (a)) includes
the following:
``(A) Any futures commission merchant, commodity
trading advisor, or commodity pool operator registered,
or required to register, under the Commodity Exchange
Act.''.
(3) CFTC included.--For purposes of this Act and any
amendment made by this Act to any other provision of law, the
term ``Federal functional regulator'' includes the Commodity
Futures Trading Commission.
(c) Clerical Amendment.--The table of sections for subchapter II of
chapter 53 of title 31, United States Code, is amended by inserting
after the item relating to section 5318 the following new item:
``5318A. Special measures for jurisdictions, financial institutions, or
international transactions of primary money laundering concern.''.
SEC. 302. SPECIAL DUE DILIGENCE FOR CORRESPONDENT ACCOUNTS AND PRIVATE
BANKING ACCOUNTS.
(a) In General.--Section 5318 of title 31, United States Code, is
amended by inserting after subsection (i) (as added by section 123 of
this Act) the following new subsection:
``(j) Due Diligence for United States Private Banking and
Correspondent Bank Accounts Involving Foreign Persons.--
``(1) In general.--Each financial institution that
establishes, maintains, administers, or manages a private
banking account or a correspondent account in the United States
for a non-United States person, including a foreign individual
visiting the United States, or a representative of a non-United
States person, shall establish appropriate, specific, and,
where necessary, enhanced due diligence policies, procedures,
and controls to detect and report instances of money laundering
through those accounts.
``(2) Minimum standards for correspondent accounts.--
``(A) In general.--Subparagraph (B) shall apply if a
correspondent account is requested or maintained by, or
on behalf of, a foreign bank operating--
``(i) under an offshore banking license; or
``(ii) under a banking license issued by a
foreign country that has been designated--
``(I) as noncooperative with
international anti-money laundering
principles or procedures by an
intergovernmental group or organization
of which the United States is a member
with which designation the Secretary of
the Treasury concurs; or
``(II) by the Secretary as warranting
special measures due to money
laundering concerns.
``(B) Policies, procedures, and controls.--The
enhanced due diligence policies, procedures, and
controls required under paragraph (1) for foreign banks
described in subparagraph (A) shall, at a minimum,
ensure that the financial institution in the United
States takes reasonable steps--
``(i) to ascertain for any such foreign bank,
the shares of which are not publicly traded,
the identity of each of the owners of the
foreign bank, and the nature and extent of the
ownership interest of each such owner;
``(ii) to conduct enhanced scrutiny of such
account to guard against money laundering and
report any suspicious transactions under
section 5318(g); and
``(iii) to ascertain whether such foreign
bank provides correspondent accounts to other
foreign banks and, if so, the identity of those
foreign banks and related due diligence
information, as appropriate under paragraph
(1).
``(3) Minimum standards for private banking accounts.--If a
private banking account is requested or maintained by, or on
behalf of, a non-United States person, then the due diligence
policies, procedures, and controls required under paragraph (1)
shall, at a minimum, ensure that the financial institution
takes reasonable steps--
``(A) to ascertain the identity of the nominal and
beneficial owners of, and the source of funds deposited
into, such account as needed to guard against money
laundering and report any suspicious transactions under
section 5318(g); and
``(B) to conduct enhanced scrutiny of any such
account that is requested or maintained by, or on
behalf of, a senior foreign political figure, or any
immediate family member or close associate of a senior
foreign political figure, to prevent, detect, and
report transactions that may involve the proceeds of
foreign corruption.
``(4) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Offshore banking license.--The term `offshore
banking license' means a license to conduct banking
activities which, as a condition of the license,
prohibits the licensed entity from conducting banking
activities with the citizens of, or with the local
currency of, the country which issued the license.
``(B) Private bank account.--The term `private bank
account' means an account (or any combination of
accounts) that--
``(i) requires a minimum aggregate deposits
of funds or other assets of not less than
$1,000,000;
``(ii) is established on behalf of 1 or more
individuals who have a direct or beneficial
ownership interest in the account; and
``(iii) is assigned to, or is administered or
managed by, in whole or in part, an officer,
employee, or agent of a financial institution
acting as a liaison between the financial
institution and the direct or beneficial owner
of the account.
``(5) Regulatory authority.--Before the end of the 6-month
period beginning on the date of the enactment of the Financial
Anti-Terrorism Act of 2001, the Secretary, in consultation with
the appropriate Federal functional regulators (as defined in
section 509 of the Gramm-Leach-Bliley Act) shall further define
and clarify, by regulation, the requirements of this
subsection.''.
(b) Effective Date.--The amendments made by this section shall take
effect beginning 180 days after the date of the enactment of this Act
with respect to accounts covered by subsection (j) of section 5318 of
title 31, United States Code (as added by this section) that are opened
before, on, or after the date of the enactment of this Act.
SEC. 303. PROHIBITION ON UNITED STATES CORRESPONDENT ACCOUNTS WITH
FOREIGN SHELL BANKS.
Section 5318 of title 31, United States Code, is amended by inserting
after subsection (j) (as added by section 302 of this title) the
following new subsection:
``(k) Prohibition on United States Correspondent Accounts With
Foreign Shell Banks.--
``(1) In general.--A depository institution shall not
establish, maintain, administer, or manage a correspondent
account in the United States for, or on behalf of, a foreign
bank that does not have a physical presence in any country.
``(2) Prevention of indirect service to foreign shell
banks.--
``(A) In general.--A depository institution shall
take reasonable steps to ensure that any correspondent
account established, maintained, administered, or
managed by that institution in the United States for a
foreign bank is not being used by that foreign bank to
indirectly provide banking services to another foreign
bank that does not have a physical presence in any
country.
``(B) Regulations.--The Secretary shall, in
regulations, delineate reasonable steps necessary for a
depository institution to comply with this subsection.
``(3) Exception.--Paragraphs (1) and (2) shall not be
construed as prohibiting a depository institution from
providing a correspondent account to a foreign bank, if the
foreign bank--
``(A) is an affiliate of a depository institution,
credit union, or other foreign bank that maintains a
physical presence in the United States or a foreign
country, as applicable; and
``(B) is subject to supervision by a banking
authority in the country regulating the affiliated
depository institution, credit union, or foreign bank,
described in subparagraph (A), as applicable.
``(4) Definitions.--For purposes of this section, the
following definitions shall apply:
``(A) Affiliate.--The term `affiliate' means a
foreign bank that is controlled by or is under common
control with a depository institution, credit union, or
foreign bank.
``(B) Depository institution.--The `depository
institution'--
``(i) has the meaning given such term in
section 3 of the Federal Deposit Insurance Act;
and
``(ii) includes a credit union.
``(C) Physical presence.--The term `physical
presence' means a place of business that--
``(i) is maintained by a foreign bank;
``(ii) is located at a fixed address (other
than solely an electronic address) in a country
in which the foreign bank is authorized to
conduct banking activities, at which location
the foreign bank--
``(I) employs 1 or more individuals
on a full-time basis; and
``(II) maintains operating records
related to its banking activities; and
``(iii) is subject to inspection by the
banking authority which licensed the foreign
bank to conduct banking activities.''.
SEC. 304. ANTI-MONEY LAUNDERING PROGRAMS.
(a) In General.--Section 5318(h) of title 31, United States Code, is
amended to read as follows:
``(h) Anti-Money Laundering Programs.--
``(1) In general.--In order to guard against money laundering
through financial institutions, each financial institution
shall establish anti-money laundering programs, including, at a
minimum--
``(A) the development of internal policies,
procedures, and controls;
``(B) the designation of an officer of the financial
institution responsible for compliance;
``(C) an ongoing employee training program; and
``(D) an independent audit function to test programs.
``(2) Regulations.--The Secretary may, after consultation
with the appropriate Federal functional regulators (as defined
in section 509 of the Gramm-Leach-Bliley Act), prescribe
minimum standards for programs established under paragraph (1),
and may exempt from the application of those standards any
financial institution that is not subject to the provisions of
the regulations contained in part 103 of title 31, of the Code
of Federal Regulations, as in effect on the date of the
enactment of the Financial Anti-Terrorism Act of 2001, or any
successor to such regulations, for so long as such financial
institution is not subject to the provisions of such
regulations.''.
(b) Effective Date.--The amendment made by subsection (a) shall take
effect at the end of the 180-day period beginning on the date of the
enactment of this Act.
(c) Date of Application of Regulations; Factors to Be Taken Into
Account.--Before the end of the 180-day period beginning on the date of
the enactment of this Act, the Secretary of the Treasury shall
prescribe regulations to implement the amendment made by subsection
(a). In prescribing such regulations, the Secretary shall consider the
extent to which the requirements imposed under such regulations are
commensurate with the size, location, and activities of the financial
institutions to which such regulations apply.
SEC. 305. CONCENTRATION ACCOUNTS AT FINANCIAL INSTITUTIONS.
Section 5318(h) of title 31, United States Code (as amended by
section 304) is amended by adding at the end the following:
``(3) Concentration accounts.--The Secretary may prescribe
regulations under this subsection that govern maintenance of
concentration accounts by financial institutions, in order to
ensure that such accounts are not used to prevent association
of the identity of an individual customer with the movement of
funds of which the customer is the direct or beneficial owner,
which regulations shall, at a minimum--
``(A) prohibit financial institutions from allowing
clients to direct transactions that move their funds
into, out of, or through the concentration accounts of
the financial institution;
``(B) prohibit financial institutions and their
employees from informing customers of the existence of,
or the means of identifying, the concentration accounts
of the institution; and
``(C) require each financial institution to establish
written procedures governing the documentation of all
transactions involving a concentration account, which
procedures shall ensure that, any time a transaction
involving a concentration account commingles funds
belonging to 1 or more customers, the identity of, and
specific amount belonging to, each customer is
documented.''.
SEC. 306. INTERNATIONAL COOPERATION IN INVESTIGATIONS OF MONEY
LAUNDERING, FINANCIAL CRIMES, AND THE FINANCES OF
TERRORIST GROUPS.
(a) Negotiations.--
(1) In general.--In addition to the requirements of section
4702 of the Anti-Drug Abuse Act of 1988, the Secretary of the
Treasury (hereinafter in this section referred to as the
``Secretary''), in consultation with the Attorney General, the
Secretary of State, and the Board of Governors of the Federal
Reserve System, shall enter into negotiations with the
appropriate financial supervisory agencies and other officials
of any foreign country the financial institutions of which do
business with United States financial institutions or which may
be utilized by any foreign terrorist organization (as
designated under section 219 of the Immigration and Nationality
Act), any person who is a member or representative of any such
organization, or any person engaged in money laundering or
financial or other crimes.
(2) Purposes of negotiations.--In carrying out negotiations
under paragraph (1), the Secretary shall seek to enter into and
further cooperative efforts, voluntary information exchanges,
the use of letters rogatory, mutual legal assistance treaties,
and international agreements to--
(A) ensure that foreign banks and other financial
institutions maintain adequate records of--
(i) large United States currency
transactions; and
(ii) transaction and account information
relating to any foreign terrorist organization
(as designated under section 219 of the
Immigration and Nationality Act), any person
who is a member or representative of any such
organization, or any person engaged in money
laundering or financial or other crimes; and
(B) establish a mechanism whereby such records may be made
available to United States law enforcement officials and
domestic financial institution supervisors, when appropriate.
(b) Reports.--
(1) Interim report.--Not later than 1 year after the date of
the enactment of this Act, the Secretary shall submit an
interim report to the Congress on progress in the negotiations
under subsection (a).
(2) Final report.--Not later than 2 years after the date of
the enactment of this Act, the Secretary shall submit a final
report to the President and the Congress, on the outcome of
negotiations under subsection (a).
(3) Identification of certain countries.--In the report
submitted under paragraph (2), the Secretary shall identify
countries--
(A) with respect to which the Secretary determines
there is evidence that the financial institutions in
such countries are being utilized, knowingly or
unwittingly, by any foreign terrorist organization (as
designated under section 219 of the Immigration and
Nationality Act), any person who is a member or
representative of any such organization, or any person
engaged in money laundering or financial or other
crimes; and
(B) which have not reached agreement with United
States authorities to meet the objectives of
subparagraphs (A) and (B) of subsection (a)(2).
(c) Authority for Other Action.--
(1) In general.--If the President determines that--
(A) a foreign country is described in subparagraphs
(A) and (B) of subsection (b)(3); and
(B) such country--
(i) is not negotiating in good faith to reach
an agreement described in subsection (a)(2); or
(ii) or a financial institution of such
country, has not complied with a request, made
by an official of the United States Government
authorized to make such request, for
information regarding a foreign terrorist
organization (as designated under section 219
of the Immigration and Nationality Act), a
person who is a member or representative of any
such organization, or a person engaged in money
laundering for or with any such organization,
the President may impose appropriate penalties and sanctions on
such country and, except as provided in paragraph (3),
financial institutions of such country.
(2) Penalties and sanctions.--The penalties and sanctions
which may be imposed by the President under paragraph (1)
include temporarily or permanently--
(A) prohibiting such persons, institutions, or other
entities as the President may designate in any such
country from participating in any United States dollar
clearing or wire transfer system; and
(B) prohibiting such persons, institutions or
entities as the President may designate in such
countries from maintaining an account with any bank or
other financial institution chartered under the laws of
the United States or any State.
(3) Exemption for certain financial institutions.--Financial
institutions that maintain adequate records shall be exempt
from such penalties and sanctions.
SEC. 307. PROHIBITION ON ACCEPTANCE OF ANY BANK INSTRUMENT FOR UNLAWFUL
INTERNET GAMBLING.
(a) In General.--No person engaged in the business of betting or
wagering may knowingly accept, in connection with the participation of
another person in unlawful Internet gambling--
(1) credit, or the proceeds of credit, extended to or on
behalf of such other person (including credit extended through
the use of a credit card);
(2) an electronic fund transfer or funds transmitted by or
through a money transmitting business, or the proceeds of an
electronic fund transfer or money transmitting service, from or
on behalf of the other person;
(3) any check, draft, or similar instrument which is drawn by
or on behalf of the other person and is drawn on or payable at
or through any financial institution; or
(4) the proceeds of any other form of financial transaction
as the Secretary may prescribe by regulation which involves a
financial institution as a payor or financial intermediary on
behalf of or for the benefit of the other person.
(b) Definitions.--For purposes of this Act, the following definitions
shall apply:
(1) Bets or wagers.--The term ``bets or wagers''--
(A) means the staking or risking by any person of
something of value upon the outcome of a contest of
others, a sporting event, or a game subject to chance,
upon an agreement or understanding that the person or
another person will receive something of greater value
than the amount staked or risked in the event of a
certain outcome;
(B) includes the purchase of a chance or opportunity
to win a lottery or other prize (which opportunity to
win is predominantly subject to chance);
(C) includes any scheme of a type described in
section 3702 of title 28, United States Code;
(D) includes any instructions or information
pertaining to the establishment or movement of funds in
an account by the bettor or customer with the business
of betting or wagering; and
(E) does not include--
(i) any activity governed by the securities
laws (as that term is defined in section
3(a)(47) of the Securities Exchange Act of
1934) for the purchase or sale at a future date
of securities (as that term is defined in
section 3(a)(10) of such Act);
(ii) any transaction on or subject to the
rules of a contract market designated pursuant
to the Commodity Exchange Act;
(iii) any over-the-counter derivative
instrument;
(iv) any contract of indemnity or guarantee;
(v) any contract for insurance;
(vi) any deposit or other transaction with a
depository institution (as defined in section
3(c) of the Federal Deposit Insurance Act);
(vii) any participation in a simulation
sports game or an educational game or contest
that--
(I) is not dependent solely on the
outcome of any single sporting event or
nonparticipant's singular individual
performance in any single sporting
event;
(II) has an outcome that reflects the
relative knowledge and skill of the
participants with such outcome
determined predominantly by accumulated
statistical results of sporting events;
and
(III) offers a prize or award to a
participant that is established in
advance of the game or contest and is
not determined by the number of
participants or the amount of any fees
paid by those participants; and
(viii) any transaction with a business
licensed by a State.
(2) Business of betting or wagering.--The term ``business of
betting or wagering'' does not include, other than for purposes
of subsection (e), any creditor, credit card issuer, insured
depository institution, financial institution, operator of a
terminal at which an electronic fund transfer may be initiated,
money transmitting business, or international, national,
regional, or local network utilized to effect a credit
transaction, electronic fund transfer, stored value product
transaction, or money transmitting service, or any participant
in such network.
(3) Internet.--The term ``Internet'' means the international
computer network of interoperable packet switched data
networks.
(4) Unlawful internet gambling.--The term ``unlawful Internet
gambling'' means to place, receive, or otherwise transmit a bet
or wager by any means which involves the use, at least in part,
of the Internet where such bet or wager is unlawful under any
applicable Federal or State law in the State in which the bet
or wager is initiated, received, or otherwise made.
(5) Other terms.--
(A) Credit; creditor; and credit card.--The terms
``credit'', ``creditor'', and ``credit card'' have the
meanings given such terms in section 103 of the Truth
in Lending Act.
(B) Electronic fund transfer.--The term ``electronic
fund transfer''--
(i) has the meaning given such term in
section 903 of the Electronic Fund Transfer
Act; and
(ii) includes any fund transfer covered by
Article 4A of the Uniform Commercial Code, as
in effect in any State.
(C) Financial institution.--The term ``financial
institution'' has the meaning given such term in
section 903 of the Electronic Fund Transfer Act.
(D) Money transmitting business and money
transmitting service.--The terms ``money transmitting
business'' and ``money transmitting service'' have the
meanings given such terms in section 5330(d) of title
31, United States Code.
(E) Secretary.--The term ``Secretary'' means the
Secretary of the Treasury.
(c) Civil Remedies.--
(1) Jurisdiction.--The district courts of the United States
shall have original and exclusive jurisdiction to prevent and
restrain violations of this section by issuing appropriate
orders in accordance with this section, regardless of whether a
prosecution has been initiated under this section.
(2) Proceedings.--
(A) Institution by federal government.--
(i) In general.--The United States, acting
through the Attorney General, may institute
proceedings under this subsection to prevent or
restrain a violation of this section.
(ii) Relief.--Upon application of the United
States under this subparagraph, the district
court may enter a preliminary injunction or an
injunction against any person to prevent or
restrain a violation of this section, in
accordance with Rule 65 of the Federal Rules of
Civil Procedure.
(B) Institution by state attorney general.--
(i) In general.--The attorney general of a
State (or other appropriate State official) in
which a violation of this section allegedly has
occurred or will occur may institute
proceedings under this subsection to prevent or
restrain the violation.
(ii) Relief.--Upon application of the
attorney general (or other appropriate State
official) of an affected State under this
subparagraph, the district court may enter a
preliminary injunction or an injunction against
any person to prevent or restrain a violation
of this section, in accordance with Rule 65 of
the Federal Rules of Civil Procedure.
(C) Indian lands.--
(i) In general.--Notwithstanding
subparagraphs (A) and (B), for a violation that
is alleged to have occurred, or may occur, on
Indian lands (as that term is defined in
section 4 of the Indian Gaming Regulatory
Act)--
(I) the United States shall have the
enforcement authority provided under
subparagraph (A);
(II) the enforcement authorities
specified in an applicable Tribal-State
compact negotiated under section 11 of
the Indian Gaming Regulatory Act shall
be carried out in accordance with that
compact; and
(III) class III Internet gaming
activities shall be lawful only if such
activities are--
(aa) located in a State that
permits Internet gambling;
(bb) conducted in conformance
with a tribal-State compact
pursuant to section 11(d)(3) of
the Indian Gaming Regulatory
Act; and
(cc) the person placing or
transmitting the wager or bet
is located in a jurisdiction
that permits Internet gambling.
(ii) Rule of construction.--No provision of
this section shall be construed as altering,
superseding, or otherwise affecting the
application of the Indian Gaming Regulatory
Act.
(D) Banking regulators.--Before initiating any
proceeding under this paragraph with respect to a
violation or potential violation of subsection (e) by
an insured depository institution (as defined in
section 3 of the Federal Deposit Insurance Act), the
Attorney General of the United States or an attorney
general of a State (or other appropriate State
official) shall--
(i) notify the appropriate Federal banking
agency (as defined in such section) of such
violation or potential violation; and
(ii) allow such agency a reasonable time to
issue an order to such insured depository
institution under section 8(x) of the Federal
Deposit Insurance Act.
(3) Expedited proceedings.--In addition to any proceeding
under paragraph (2), a district court may, in exigent
circumstances, enter a temporary restraining order against a
person alleged to be in violation of this section upon
application of the United States under paragraph (2)(A), or the
attorney general (or other appropriate State official) of an
affected State under paragraph (2)(B), in accordance with Rule
65(b) of the Federal Rules of Civil Procedure.
(4) Limitation.--No provision of this section shall be
construed as authorizing an injunction against an interactive
computer service (as defined in section 230(f) of the
Communications Act of 1934) unless such interactive computer
service is acting in concert or participation with a person who
violates this section and such service receives actual notice
of the order.
(d) Criminal Penalty.--
(1) In general.--Whoever violates this section shall be fined
under title 18, United States Code, or imprisoned for not more
than 5 years, or both.
(2) Permanent injunction.--Upon conviction of a person under
this subsection, the court may enter a permanent injunction
enjoining such person from placing, receiving, or otherwise
making bets or wagers or sending, receiving, or inviting
information assisting in the placing of bets or wagers.
(e) Circumventions Prohibited.--Notwithstanding subsection (b)(2), a
creditor, credit card issuer, financial institution, operator of a
terminal at which an electronic fund transfer may be initiated, money
transmitting business, or international, national, regional, or local
network utilized to effect a credit transaction, electronic fund
transfer, or money transmitting service, or any participant in such
network, may be liable under this section if such creditor, issuer,
institution, operator, business, network, or participant has actual
knowledge and control of bets and wagers--
(1) operates, manages, supervises, or directs an Internet
website at which unlawful bets or wagers may be placed,
received, or otherwise made or at which unlawful bets or wagers
are offered to be placed, received, or otherwise made; or
(2) owns or controls, or is owned or controlled by, any
person who operates, manages, supervises, or directs an
Internet website at which unlawful bets or wagers may be
placed, received, or otherwise made or at which unlawful bets
or wagers are offered to be placed, received, or otherwise
made.
(f) Enforcement Actions.--Section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818) is amended by adding at the end the following new
subsection:
``(x) Depository Institution Involvement in Internet Gambling.--If
any appropriate Federal banking agency determines that any insured
depository institution is engaged in any of the following activities,
the agency may issue an order to such institution prohibiting such
institution from continuing to engage in any of the following
activities:
``(1) Extending credit, or facilitating an extension of
credit, electronic fund transfer, or money transmitting service
with the actual knowledge that any person is violating section
3(a) of the Unlawful Internet Gambling Funding Prohibition Act
in connection with such extension of credit, electronic fund
transfer, or money transmitting service.
``(2) Paying, transferring, or collecting on any check,
draft, or other instrument drawn on any depository institution
with the actual knowledge that any person is violating section
3(a) of the Unlawful Internet Gambling Funding Prohibition Act
in connection with such check, draft, or other instrument.''.
SEC. 308. INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS.
(a) In General.--In deliberations between the United States
Government and any other country on money laundering, corruption, and
crime issues, the United States Government should--
(1) encourage cooperation by foreign governments and relevant
international fora in identifying whether Internet gambling
operations are being used for money laundering, corruption, or
other crimes;
(2) advance policies that promote the cooperation of foreign
governments, through information sharing or other measures, in
the enforcement of this Act; and
(3) encourage the Financial Action Task Force on Money
Laundering, in its annual report on money laundering
typologies, to study the extent to which Internet gambling
operations are being used for money laundering.
(b) Report Required.--The Secretary of the Treasury shall submit an
annual report to the Congress on the deliberations between the United
States and other countries on issues relating to Internet gambling.
TITLE IV--CURRENCY PROTECTION
SEC. 401. COUNTERFEITING DOMESTIC CURRENCY AND OBLIGATIONS.
(a) Counterfeit Acts Committed Outside the United States.--Section
470 of title 18, United States Code, is amended--
(1) in paragraph (2), by inserting ``analog, digital, or
electronic image,'' after ``plate, stone,''; and
(2) by striking ``shall be fined under this title, imprisoned
not more than 20 years, or both'' and inserting ``shall be
punished as is provided for the like offense within the United
States''.
(b) Obligations or securities of the United States.--Section 471 of
title 18, United States Code, is amended by striking ``fifteen years''
and inserting ``20 years''.
(c) Uttering Counterfeit Obligations or Securities.--Section 472 of
title 18, United States Code, is amended by striking ``fifteen years''
and inserting ``20 years''.
(d) Dealing in Counterfeit Obligations or Securities.--Section 473 of
title 18, United States Code, is amended by striking ``ten years'' and
inserting ``20 years''.
(e) Plates, Stones, or Analog, Digital, or Electronic Images For
Counterfeiting Obligations or Securities.--
(1) In general.--Section 474(a) of title 18, United States
Code, is amended by inserting after the second paragraph the
following new paragraph:
``Whoever, with intent to defraud, makes, executes, acquires, scans,
captures, records, receives, transmits, reproduces, sells, or has in
such person's control, custody, or possession, an analog, digital, or
electronic image of any obligation or other security of the United
States; or''.
(2) Amendment to definition.--Section 474(b) of title 18,
United States Code, is amended by striking the first sentence
and inserting the following new sentence: ``For purposes of
this section, the term `analog, digital, or electronic image'
includes any analog, digital, or electronic method used for the
making, execution, acquisition, scanning, capturing, recording,
retrieval, transmission, or reproduction of any obligation or
security, unless such use is authorized by the Secretary of the
Treasury.''.
(3) Technical and conforming amendment.--The heading for
section 474 of title 18, United States Code, is amended by
striking ``or stones'' and inserting ``, stones, or analog,
digital, or electronic images''.
(4) Clerical amendment.--The table of sections for chapter 25
of title 18, United States Code, is amended in the item
relating to section 474 by striking ``or stones'' and inserting
``, stones, or analog, digital, or electronic images''.
(f) Taking Impressions of Tools Used for Obligations or Securities.--
Section 476 of title 18, United States Code, is amended--
(1) by inserting ``analog, digital, or electronic image,''
after ``impression, stamp,''; and
(2) by striking ``ten years'' and inserting ``25 years''.
(g) Possessing or Selling Impressions of Tools Used for Obligations
or Securities.--Section 477 of title 18, United States Code, is
amended--
(1) in the first paragraph, by inserting ``analog, digital,
or electronic image,'' after ``imprint, stamp,'';
(2) in the second paragraph, by inserting ``analog, digital,
or electronic image,'' after ``imprint, stamp,''; and
(3) in the third paragraph, by striking ``ten years'' and
inserting ``25 years''.
(h) Connecting Parts of Different Notes.--Section 484 of title 18,
United States Code, is amended by striking ``five years'' and inserting
``10 years''.
(i) Bonds and Obligations of Certain Lending Agencies.--The first and
second paragraphs of section 493 of title 18, United States Code, are
each amended by striking ``five years'' and inserting ``10 years''.
SEC. 402. COUNTERFEITING FOREIGN CURRENCY AND OBLIGATIONS.
(a) Foreign Obligations or Securities.--Section 478 of title 18,
United States Code, is amended by striking ``five years'' and inserting
``20 years''.
(b) Uttering Counterfeit Foreign Obligations or Securities.--Section
479 of title 18, United States Code, is amended by striking ``three
years'' and inserting ``20 years''.
(c) Possessing Counterfeit Foreign Obligations or Securities.--
Section 480 of title 18, United States Code, is amended by striking
``one year'' and inserting ``20 years''.
(d) Plates, Stones, or Analog, Digital, or Electronic Images for
Counterfeiting Foreign Obligations or Securities.--
(1) In general.--Section 481 of title 18, United States Code,
is amended by inserting after the second paragraph the
following new paragraph:
``Whoever, with intent to defraud, makes, executes, acquires, scans,
captures, records, receives, transmits, reproduces, sells, or has in
such person's control, custody, or possession, an analog, digital, or
electronic image of any bond, certificate, obligation, or other
security of any foreign government, or of any treasury note, bill, or
promise to pay, lawfully issued by such foreign government and intended
to circulate as money; or''.
(2) Increased sentence.--The last paragraph of section 481 of
title 18, United States Code, is amended by striking ``five
years'' and inserting ``25 years''.
(3) Technical and conforming amendment.--The heading for
section 481 of title 18, United States Code, is amended by
striking ``or stones'' and inserting ``, stones, or analog,
digital, or electronic images''.
(4) Clerical amendment.--The table of sections for chapter 25
of title 18, United States Code, is amended in the item
relating to section 481 by striking ``or stones'' and inserting
``, stones, or analog, digital, or electronic images''.
(e) Foreign Bank Notes.--Section 482 of title 18, United States Code,
is amended by striking ``two years'' and inserting ``20 years''.
(f) Uttering Counterfeit Foreign Bank Notes.--Section 483 of title
18, United States Code, is amended by striking ``one year'' and
inserting ``20 years''.
SEC. 403. PRODUCTION OF DOCUMENTS.
Section 5114(a) of title 31, United States Code (relating to
engraving and printing currency and security documents), is amended--
(1) by striking ``(a) The Secretary of the Treasury'' and
inserting:
``(a) Authority To Engrave and Print.--
``(1) In general.--The Secretary of the Treasury''; and
(2) by adding at the end the following new paragraph:
``(2) Engraving and printing for other governments.--The
Secretary of the Treasury may, if the Secretary determines that
it will not interfere with engraving and printing needs of the
United States, produce currency, postage stamps, and other
security documents for foreign governments, subject to a
determination by the Secretary of State that such production
would be consistent with the foreign policy of the United
States.''.
SEC. 404. REIMBURSEMENT.
Section 5143 of title 31, United States Code (relating to payment for
services of the Bureau of Engraving and Printing), is amended--
(1) in the first sentence, by inserting ``, any foreign
government, or any territory of the United States'' after
``agency'';
(2) in the second sentence, by inserting ``and other'' after
``administrative''; and
(3) in the last sentence, by inserting ``, foreign
government, or territory of the United States'' after
``agency''.
Purpose and Summary
H.R. 3004, the Financial Anti-Terrorism Act of 2001,
provides the United States government with new tools to combat
the financing of terrorism and other financial crimes. The
legislation contains provisions to strengthen law enforcement
authorities, as well as enhance public-private cooperation
between government and industry in disrupting terrorist
funding.
The bill (1) makes it a crime to smuggle over $10,000 into
or out of the United States, and to transport more than $10,000
in criminal proceeds across State lines; (2) gives the Justice
Department new prosecutorial tools to combat terrorist-related
and other money laundering through U.S. financial institutions;
(3) provides statutory authorization for the Financial Crimes
Enforcement Network (FinCEN), which analyzes reports filed by
financial institutions on currency transactions and suspicious
financial activity; (4) sets up a unit in FinCEN directed at
oversight and analysis of hawalas and other underground black
market banking systems; (5) authorizes the Customs Service to
inspect outbound international mail; (6) makes it a crime to
knowingly falsify one's identity in opening an account at a
financial institution and directs the Treasury to develop
regulations to guide financial institutions in identifying
account holders; (7) directs the Treasury Department to
establish a secure web site to receive electronic filings of
Suspicious Activity Reports (SARs) and provide financial
institutions with alerts and other information regarding
patterns of terrorist or other suspicious activity that warrant
enhanced scrutiny; (8) requires the Secretary of the Treasury
to report quarterly to industry on how SARs are used to assist
law enforcement in combating terrorism and other crimes; (10)
authorizes intelligence agency access to reports filed by
financial institutions and expands government access to
consumer financial records and credit histories; (11) creates a
public-private task force on terrorist financing; (12) sets a
December 31, 2001, deadline for proposed regulations on SAR
reporting requirements for broker-dealers and authorizes the
Department of the Treasury to require SARs of certain commodity
futures traders; (13) authorizes the Secretary of the Treasury
to impose ``special measures'' if a foreign country, financial
institution, transaction, or account is deemed to be a
``primary money laundering concern''; (14) prohibits U.S.
financial institutions from providing banking services to
``shell'' banks that have no physical presence in any country
nor any affiliation with a financial institution; (15) requires
greater due diligence for certain correspondent and private
banking accounts; (16) authorizes Treasury to regulate
concentration accounts; (17) requires financial institutions to
have anti-money laundering programs; (18) authorizes the
President to impose certain sanctions (including limiting
access to the U.S. financial system) against foreign
governments that refuse to cooperate in law enforcement efforts
against terrorism and money laundering; (19) prohibits the use
of financial instruments for unlawful Internet gambling; and
(20) updates U.S. anti-counterfeiting laws.
Background and Need for Legislation
In the wake of the September 11, 2001, terrorist attacks on
the World Trade Center and the Pentagon, the financial
transactions and infrastructure associated with the terrorists
have received extensive coverage. Early reports revealed that
terrorist operatives used thousands of dollars in cash for
expensive flight school training, paid their rent with checks
drawn on local American banks, bought airline tickets over the
Internet with credit cards, and engaged in numerous other
financial transactions. Although the hijackers are suspected to
have underwritten much of their low-budget operation from funds
generated in the United States, perhaps by petty financial
crime, experts suspect that at least some of the seed money may
have originated overseas from Osama Bin Laden's organization,
Al Qaeda.
According to press reports, Mr. Bin Laden's financial net
worth may be as high as $300 million. His fortune derives from
an inheritance from his wealthy Saudi family and from revenue
generated by a far-flung business empire engaged in everything
from construction and agriculture to banking and trade.
Witnesses at the trial earlier this year of terrorists
responsible for the U.S. embassy bombings in Africa described
Mr. Bin Laden's banking relationship with Al Shamal Islamic
Bank in the Sudan. Mr. Bin Laden also reportedly enjoys
financial support from Persian Gulf businessmen as well as from
front organizations posing as Islamic charities.
Despite evidence suggesting Mr. Bin Laden and Al Qaeda
utilize formal banking relationships as part of their global
financial network, experts believe that a major share of
terrorist financing is conducted through international cash
couriers as well as through informal banking systems, like the
ancient South Asian money exchange system called hawala. The
latter consists of an international network of non-bank
financial agents, often built on trusted family or cultural
relationships. In most cases, the funds themselves are never
transferred, just messages relating to receipt or disbursement
of funds. These underground systems are exploited by terrorists
and other financial criminals because of the lack of record-
keeping and opportunity for anonymity.
Immediately after the September 11 terrorist attacks, the
Administration mounted an aggressive strategy to track and
disrupt the financial networks that sustain international
terrorism. On September 14, 2001, the Treasury Department
announced the creation of a Foreign Terrorist Asset Tracking
Center (FTAT) in Treasury's Office of Foreign Asset Control
(OFAC). On September 24, vowing that ``we will starve
terrorists of funding,'' the President issued Executive Order
13224 under the International Emergency Economic Powers Act
(IEEPA), directing Treasury to freeze any U.S. assets of, and
prohibit any financial transactions with, twenty-seven
individuals and organizations including Mr. Bin Laden, his top
subordinates, Al Qaeda, and business and charitable entities
providing support to Al Qaeda. The Executive Order was broader
than previous orders, most notably by authorizing the blocking
of U.S. assets of foreign banks that refuse to freeze terrorist
assets abroad. On October 12, the Administration added 39 more
individuals and entities to the blocking list.
In addition to the OFAC order, Federal regulators advised
U.S. banks and other financial institutions to search their
records for any transactions associated with the FBI's list of
19 hijacking suspects,and Treasury's Financial Crimes
Enforcement Network (FinCEN) established a 24-hour hotline for banks
and other financial institutions to report suspicious transactions that
may be related to terrorist activity against the United States. To
further bolster its efforts to disrupt terrorist financing, Treasury is
accelerating the implementation of registration and suspicious activity
reporting (SAR) requirements for non-bank financial institutions,
including hawala. At the international level, the Administration has
been working with the G-8 countries and the United Nations to tackle
the financial underpinnings of terrorism. Several allies, including
Switzerland and Britain, have already frozen accounts of suspected
terrorists and, on September 28, the U.N. Security Council unanimously
passed a U.S.-drafted resolution directing all member nations to freeze
the assets of terrorists and to prohibit all financial support to
terrorist organizations. All countries were urged to report to the
Security Council within 90 days on steps they have taken to implement
the resolution.
Despite the provisions of the 1970 Bank Secrecy Act and
various money laundering laws enacted since, the current money
laundering regime appears to have been ineffective in detecting
or preventing the terrorist hijackers from operating freely in
the United States. For example, current law requires that U.S.
banks file Currency Transaction Reports (CTRs) for financial
transactions in excess of $10,000, and Suspicious Activity
Reports (SARs) for potentially criminal financial transactions
of $5,000 or more. The evidence gathered thus far indicates
that these thresholds exceeded many of the reported financial
transactions of the terrorists. Even the Currency or Monetary
Instrument Reports (CMIRs) which must be filed by any person
transporting more than $10,000 into or out of the United States
may have proved futile in detecting any large cash flows
through U.S. ports of entry.
At the Committee's October 3, 2001, hearing on terrorist
funding, Treasury Under Secretary Gurule testified how Al Qaeda
operatives ``use checks, credit cards, ATM cards, and wire-
transfer systems and brokerage accounts throughout the world,
including the U.S.'' He explained how some Islamic charities
have been penetrated and their fund-raising activities
exploited by terrorists. He also testified that Al Qaeda uses
banks, legal businesses, front companies, and underground
financial systems to finance the organization's activities, and
that some elements of the organization rely on profits from the
drug trade. Under Secretary Gurule outlined the steps U.S.
officials are taking to address financial networks and
transactions that support terrorism including: (1)
investigating terrorist organizations and their supporters; (2)
identifying assets to be blocked; (3) figuring out the methods
terrorists use to move funds for operational support; (4)
identifying the gaps in U.S. law enforcement and regulatory
regimes that terrorists exploit in order to move funds; (5)
sharing information with law enforcement agencies and other
organizations around the world; and (6) utilizing the powers of
existing laws and regulations, such as the International
Emergency Economic Powers Act, the Bank Secrecy Act, and the
Anti-Terrorism Act, to deprive terrorists of access to any
funds or other financial assets in the United States.
In testimony presented on behalf of Assistant Attorney
General Michael Chertoff, Deputy Assistant Attorney General
Mary Lee Warren warned that ``we are fighting with outdated
weapons in the money laundering arena today.'' She described
money laundering as an increasingly global problem involving
cross-border smuggling of bulk cash and the international
electronic transfer of funds enabling criminals in one country
to conceal their funds in another.
Mr. Dennis Lormel, Chief of the Financial Crimes Section of
the Federal Bureau of Investigation's (FBI's) Criminal
Investigations Division expressed support for the money
laundering legislation proposed by the Administration and
described the Bureau's concerns regarding vulnerabilities in
the current financial system which facilitate movement of
terrorist funds. Like Ms. Warren, he warned that terrorist and
other criminal organizations ``rely heavily upon wire
transfers'' and called for greater transparency in the
originators of such funds. Mr. Lormel also cited correspondent
banking as another ``potential vulnerability in the financial
services sector that can offer terrorist organizations a
gateway into U.S. banks,'' and called for banks to ``more
thoroughly screen and monitor foreign banks as clients.'' He
also warned of the problems associated with nonbank financial
institutions, so-called ``Money Services Businesses'' (MSBs),
which terrorists are able to exploit because of heretofore
inadequate regulation.
Industry witnesses from the American Bankers Association
and the Securities Industry Association discussed their current
efforts to cooperate with law enforcement to stop terrorist
funding and outlined some of the obstacles they are
encountering in that endeavor. Both called for enhanced efforts
to strengthen the ongoing public-private partnership.
Former Deputy Secretary of Treasury Stuart Eizenstat
underscored the need for new tools to deal in a ``measured,
precise, and cost-effective way with particular money
laundering threats,'' and endorsed legislation passed by the
House Banking Committee in the last Congress and reintroduced
in the 107th Congress as H.R. 1114. Finally, money laundering
expert John Moynihan of BERG Associates noted that the
``Achilles heel of any criminal organization is its
financialinfrastructure'' and described in detail how underground
``black market banking'' operations--like hawala systems--are used by
criminals to finance their trade.
Bulk Cash Smuggling.--As recent Congressional hearings have
demonstrated, currency smuggling is an extremely serious law
enforcement problem. Hundreds of millions of dollars in U.S.
currency-representing the proceeds of drug trafficking and
other criminal offenses--is annually transported out of the
United States to foreign countries in shipments of bulk cash.
Smugglers use all available means to transport the currency out
of the country, from false bottoms in personal luggage, to
secret compartments in automobiles, to concealment in durable
goods exported for sale abroad.
Even more serious, press reports indicate that persons
involved in planning and perpetrating terrorist acts in the
United States may have smuggled currency into the United States
from abroad.
Presently, the only law enforcement weapon against such
smuggling is section 5316 of title 31, United States Code,
which makes it an offense to transport more than $10,000 in
currency or monetary instruments into, or out of, the United
States without filing a report with the United States Customs
Service. The effectiveness of section 5316 as a law enforcement
tool has been diminished, however, by a recent Supreme Court
decision. In United States v. Bajakajian, 118 S. Ct. 2028
(1998), the Supreme Court held that section 5316 constitutes a
mere reporting violation, which is not a serious offense for
purposes of the Excessive Fines Clause of the Eighth Amendment.
Accordingly, confiscation of the full amount of the smuggled
currency is unconstitutional, even if the smuggler took
elaborate steps to conceal the currency and otherwise obstruct
justice.
Confiscation of the smuggled currency is, of course, the
most effective weapon that can be employed against currency
smugglers. Accordingly, in response to the Bajakajian decision,
the Department of Justice proposed making the act of bulk cash
smuggling itself a criminal offense, and to authorize the
imposition of the full range of civil and criminal sanctions
when the offense is discovered. Because the act of concealing
currency for the purpose of smuggling it out of the United
States is inherently more serious than simply failing to file a
Customs report, strong and meaningful sanctions, such as
confiscation of the smuggled currency, are likely to withstand
Eighth Amendment challenges to the new statute.
The Committee felt that this proposal would be an important
weapon in the arsenal against terrorism, and included these
provisions in the legislation.
Interstate Currency Couriers.--An essential component of
the money laundering cycle in drug cases is the consolidation
of cash proceeds of drug sales at a collection point.
Typically, money-laundering organizations employ couriers to
pick-up cash at various locations and transport it to another
location. A number of recent cases illustrate this process. See
United States v. $141,770.00 in U.S. Currency, 157 F.3d 600
(8th Cir. 1998) (currency packaged in three-layers of zip-lock
bags wrapped in fabric-softener sheets found in hidden vehicle
compartment); United States v. $189,825.00 in U.S. Currency, 8
F. Supp.2d 1300 (N.D. Okla. 1998) (currency bundled and hidden
in gas tank); United States v. $206,323.56 in U.S. Currency,
998 F. Supp. 693 (S.D. W. Va. 1998) (courier flees during
highway stop when drug dog detects concealed currency); United
States v. $94,010 U.S. Currency, 1998 WL 567837 (W.D.N.Y. 1998)
(currency concealed in false compartment).
The common elements in these cases include the
transportation of a large quantity of currency, bundled in
street denominations and concealed in a vehicle, on an
interstate or other major highway, by a person or persons who
disclaim any knowledge of where the currency came from or where
it is to be delivered. Yet under current law, the person
transporting the currency may not be guilty of any money
laundering offense. See United States v. Puig-Infante, 19 F.3d
929 (5th Cir. 1994) (simply transporting drug proceeds from
Fla. to Tex. not a money laundering offense).
Having the tools to stop interstate currency smuggling is
particularly important in terrorism cases because terrorists,
as press reports reveal, engage in a form of reverse money
laundering: instead of conducting transactions to conceal or
disguise criminal proceeds, terrorists transport funds from
seemingly legitimate sources, but with the intent to use those
funds for an illegal purpose. Criminalizing such activity at
the Federal level follows the example of the State of Florida,
which has made such transportation an offense under State money
laundering laws. See Florida Statutes, section 896.101(b).
Improving Money Laundering Laws.--The Committee's review of
current law regarding money laundering revealed a number of
shortcomings. For instance, section 1956 of title 18, United
States Code, makes it an offense to conduct a transaction
involving a financial institution if the transaction involves
criminally derived property. Similarly, 18 U.S.C. Sec. 1957
creates an offense relating to the deposit, withdrawal,
transfer or exchange of criminally derived funds ``by, to or
through a financial institution.'' For the purposes of both
statutes, the term ``financial institution'' is defined in 31
U.S.C. Sec. 5312. See 18 U.S.C. Sec. 1956(c)(6); 18 U.S.C.
Sec. 1957(f).
The definition of ``financial institution'' in Sec. 5312
does not explicitly include foreign banks. Such banks may well
be covered because they fall within the meaning of ``commercial
bank'' or other terms in the statute, but as presently drafted,
there is some confusion over whether the government can rely on
section 5312 to prosecute an offense under either Sec. 1956 or
Sec. 1957 involving a transaction through a foreign bank, even
if the offense occurs in part in the United States. For
example, if a person in the United States sends criminal
proceeds abroad--say to a Mexican bank--and launders them
through a series of financial transactions, the government
conceivably could not rely on the definition of a ``financial
institution'' in Sec. 1956(c)(6) to establish that the
transaction was a ``financial transaction'' within the meaning
of Sec. 1956(c)(4)(B) (defining a ``financial transaction'' as
a transaction involving the use of a ``financial
institution''), or that it was a ``monetary transaction''
within the meaning of Sec. 1957(f) (defining ``monetary
transaction'' as, inter alia, a transaction that would be a
``financial transaction'' under Sec. 1956(c)(4)(B)).
Similarly, the money laundering laws in effect in most
countries simply make it an offense to launder the proceeds of
any crime, foreign or domestic. In the United States, however,
the money laundering statute is violated only when a person
launders the proceeds of one of the crimes set forth on a list
of ``specified unlawful activities.'' 18 U.S.C.
Sec. 1956(c)(7). Currently only a handful of foreign crimes
appear on that list. See Sec. 1956(c)(7)(B).
Most importantly, the Committee found significant
shortcomings in the use of information already in possession of
the government. Section 6050I of the Internal Revenue Code
requires that any person engaged in a trade or business (other
than financial institutions required to report under the Bank
Secrecy Act) file a report with the Federal government on cash
transactions in excess of $10,000. Reports filed pursuant to
this requirement provide law enforcement authorities with a
paper trail that can, among other things, lead to the detection
and prosecution of money laundering activity.
Under current law, non-financial institutions are required
to report cash transactions exceeding $10,000 to the Internal
Revenue Service (IRS) on IRS Form 8300. Because the requirement
that such reports be filed is contained in the Internal Revenue
Code, Form 8300 information is considered tax return
information, and is subject to the procedural and record-
keeping requirements of section 6103 of the Internal Revenue
Code. For example, section 6103(p)(4)(E) requires agencies
seeking Form 8300 information to file a report with the
Secretary of the Treasury that describes the procedures
established and utilized by the agency for ensuring the
confidentiality of the information. IRS requires that agencies
requesting Form 8300 information file a ``Safeguard Procedures
Report'' which must be approved by the IRS before any such
information can be released. For that reason, Federal, State
and local law enforcement agencies are not given access to the
Form 8300s as Congress anticipated when it last amended this
statute. See 26 U.S.C. Sec. 6103(l)(15).
While the IRS uses Form 8300 to identify individuals who
may be engaged in tax evasion, Form 8300 information can also
be instrumental in helping law enforcement authorities trace
cash payments by drug traffickers and other criminals for
luxury cars, jewelry, and other expensive merchandise. Because
of the restrictions on their dissemination outlined above,
however, Form 8300s are not nearly as accessible to law
enforcement authorities as the various reports mandated by the
Bank Secrecy Act, which can typically be retrieved
electronically from a database maintained by the Treasury
Department. The differential access to the two kinds of reports
is made anomalous by the fact that Form 8300 elicits much the
same information that is required to be disclosed by the Bank
Secrecy Act. For example, just as Form 8300 seeks the name,
address, and social security number of a customer who engages
in a cash transaction exceeding $10,000 with a trade or
business, Currency Transaction Reports (CTRs) mandated by the
Bank Secrecy Act require the same information to be reported on
a cash transaction exceeding $10,000 between a financial
institution and its customer.
The Committee believes that these are significant
oversights, and has included provisions intended to address
these shortcomings.
Internet Gambling.--Among the subjects covered at the
hearing was offshore Internet gambling operations. The FBI, the
Department of Justice, and an investigator specializing in
money laundering cases testified that Internet gambling serves
as a vehicle for money laundering activities and can be
exploited by terrorists to launder money. The FBI currently has
at least two pending cases involving Internet gambling as a
conduit for money laundering, as well as a number of pending
cases linking Internet gambling to organized crime.
As the Committee learned at earlier Subcommittee hearings,
unlike casino gambling, State lotteries, and horse racing--
which are highly regulated, and legal when licensed by a
particular State--Internet gambling is illegal in most U.S.
jurisdictions, and operates largely from offshore sites that
are outside the reach of U.S. regulators and law enforcement.
The National Gambling Impact Study Commission, in a final
report in June 1999, recommended that wire transfers to
Internet gambling sites or their banks be outlawed.
The vast majority of an estimated 1,500 Internet gambling
sites operate offshore--outside the coverage of U.S. law. These
``virtual casinos'' are free to misuse a bettor's credit card
information or manipulate the odds of a particular wager to the
casino's advantage. The only effective way to curb these abuses
is by implementing effective civil remedies such as those
contained in this legislation.
Summary.--In sum, H.R. 3004 is designed to supplement and
reinforce existing U.S. money laundering laws by expanding the
strategies the United States can employ to combat international
money laundering. Numerous provisions in the bill have been
drawn from anti-terrorism and anti-money laundering legislation
the Administration submitted to Congress. In addition, the bill
draws on provisions contained in H.R. 3886 from the 106th
Congress, reintroduced as H.R. 1114 in this Congress. Finally,
the bill also incorporates bulk cash smuggling language from
H.R. 2920 and H.R. 2922, and H.R. 556 (similar to H.R. 4419
which was approved by the Committee on Banking and Financial
Services in the 106th Congress), which addresses Internet
gambling.
Hearings
The full Committee held a hearing on October 3, 2001,
entitled ``Dismantling the Financial Infrastructure of Global
Terrorism'' to examine the methods by which Osama Bin Laden,
his terrorist organization Al Qaeda, and other terrorist
organizations finance their operations. Treasury Secretary Paul
O'Neill and Under Secretary for Enforcement Jimmy Gurule
testified, as well as Mary Lee Warren, Deputy Assistant
Attorney General for the Criminal Division of the Justice
Department, and Special Agent Dennis Lormel, Chief of the
Financial Crimes Section of the FBI's Criminal Investigations
Division. Private witnesses included Ed Yingling of the
American Bankers Association (ABA), Marc Lackritz of the
Securities Industry Association (SIA), former Deputy Secretary
of Treasury Stuart Eizenstat, and money laundering expert John
Moynihan of BERG Associates. Written testimony was received
jointly from the Independent Community Bankers of America
(ICBA) and America's Community Bankers (ACB).
Committee Consideration
On October 11, 2001, the Committee met in open session and
ordered H.R. 3004 reported, with an amendment, to the House
with a favorable recommendation by a record vote of 62 yeas and
1 nay.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Oxley to report the bill to the House with a
favorable recommendation was agreed to by a record vote of 62
yeas and 1 nay (Record vote no. 9). The names of members voting
for and against follow:
YEAS NAYS
Mr. Oxley Mr. Paul
Mr. Leach
Mrs. Roukema
Mr. Bereuter
Mr. Baker
Mr. Bachus
Mr. Castle
Mr. Royce
Mr. Lucas of Oklahoma
Mr. Ney
Mr. Barr of Georgia
Mrs. Kelly
Mr. Gillmor
Mr. Cox
Mr. Weldon of Florida
Mr. Ryun of Kansas
Mr. Riley
Mr. LaTourette
Mr. Manzullo
Mr. Jones of North Carolina
Mr. Ose
Mrs. Biggert
Mr. Green of Wisconsin
Mr. Toomey
Mr. Shadegg
Mr. Fossella
Mr. Gary G. Miller of California
Mr. Cantor
Mr. Grucci
Ms. Hart
Mrs. Capito
Mr. Ferguson
Mr. Rogers of Michigan
Mr. Tiberi
Mr. LaFalce
Mr. Frank
Mr. Kanjorski
Ms. Waters
Mr. Sanders
Mrs. Maloney of New York
Mr. Gutierrez
Mr. Watt of North Carolina
Mr. Ackerman
Mr. Bentsen
Mr. Maloney of Connecticut
Ms. Hooley of Oregon
Ms. Carson of Indiana
Mr. Sherman
Mr. Sandlin
Ms. Lee
Mr. Mascara
Mr. Inslee
Ms. Schakowsky
Mr. Moore
Mr. Capuano
Mr. Ford
Mr. Lucas of Kentucky
Mr. Shows
Mr. Crowley
Mr. Clay
Mr. Israel
Mr. Ross
The following amendments were not agreed to by a record
vote. The names of Members voting for and against follow:
An amendment to the amendment in the nature of a substitute
by Mr. Barr, no. 1m, prohibiting the Customs Service from
opening outgoing international mail without a warrant during
cross-border searches, was not agreed to by a record vote of 20
yeas and 43 nays (Record vote no. 8).\1\
---------------------------------------------------------------------------
\1\ An earlier voice vote on which the nays prevailed was vacated
by unanimous consent, and the question put to the Committee de novo.
YEAS NAYS
Mr. Barr of Georgia Mr. Oxley
Mr. Paul Mr. Leach
Mr. Jones of North Carolina Mrs. Roukema
Mr. Ose Mr. Bereuter
Ms. Hart Mr. Baker
Mr. Frank Mr. Bachus
Mr. Kanjorski Mr. Castle
Ms. Waters Mr. Royce
Mr. Sanders Mr. Lucas of Oklahoma
Mrs. Maloney of New York Mr. Ney
Mr. Gutierrez Mrs. Kelly
Mr. Watt of North Carolina Mr. Gillmor
Mr. Ackerman Mr. Cox
Ms. Carson of Indiana Mr. Weldon of Florida
Mr. Sandlin Mr. Ryun of Kansas
Ms. Lee Mr. Riley
Mr. Inslee Mr. LaTourette
Ms. Schakowsky Mr. Manzullo
Mr. Capuano Mrs. Biggert
Mr. Clay Mr. Green of Wisconsin
Mr. Toomey
Mr. Shays
Mr. Shadegg
Mr. Fossella
Mr. Gary G. Miller of California
Mr. Cantor
Mr. Grucci
Mrs. Capito
Mr. Ferguson
Mr. Rogers of Michigan
Mr. Tiberi
Mr. LaFalce
Mr. Bentsen
Mr. Maloney of Connecticut
Ms. Hooley of Oregon
Mr. Sherman
Mr. Mascara
Mr. Moore
Mr. Ford
Mr. Lucas of Kentucky
Mr. Shows
Mr. Crowley
Mr. Israel
An amendment to the amendment in the nature of a substitute
by Mr. Castle, no. 1p, striking provisions relating to Internet
gambling, was not agreed to by a record vote of 25 yeas and 37
nays (Record vote no. 7).
YEAS NAYS
Mr. Baker Mr. Oxley
Mr. Castle Mr. Leach
Mr. Ney Mrs. Roukema
Mr. Barr of Georgia Mr. Bereuter
Mr. Paul Mr. Bachus
Mr. Gillmor Mr. Royce
Mr. Cox Mr. Lucas of Oklahoma
Mr. Jones of North Carolina Mrs. Kelly
Mr. Ose Mr. Weldon of Florida
Mrs. Biggert Mr. Ryun of Kansas
Mr. Toomey Mr. Riley
Mr. Fossella Mr. Green of Wisconsin
Mr. Cantor Mr. Shays
Mr. Tiberi Mr. Shadegg
Mr. Frank Mr. Gary G. Miller of California
Mr. Kanjorski Mr. Grucci
Mr. Watt of North Carolina Ms. Hart
Mr. Ackerman Mrs. Capito
Mr. Bentsen Mr. Ferguson
Mr. Sandlin Mr. Rogers of Michigan
Ms. Schakowsky Mr. LaFalce
Mr. Moore Ms. Waters
Mr. Capuano Mr. Sanders
Mr. Crowley Mrs. Maloney of New York
Mr. Clay Mr. Gutierrez
Mr. Maloney of Connecticut
Ms. Hooley of Oregon
Ms. Carson of Indiana
Mr. Sherman
Ms. Lee
Mr. Mascara
Mr. Inslee
Mr. Ford
Mr. Lucas of Kentucky
Mr. Shows
Mr. Israel
Mr. Ross
The following amendments were agreed to by a voice vote:
An amendment in the nature of a substitute by Mr. Oxley,
no. 1, making various changes to the bill;
An amendment to the amendment in the nature of a substitute
by Mr. LaFalce, no. 1a, making technical changes requested by
the Administration;
An amendment to the amendment in the nature of a substitute
by Mr. Bentsen, no. 1c, striking a study of the feasibility of
imposing sanctions against financial institutions that file
currency transaction reports that qualify for exemptions;
An amendment to the amendment in the nature of a substitute
by Ms. Waters, no. 1e, requiring the consideration of a
financial institution's money laundering record in reviewing of
merger applications;
An amendment to the amendment in the nature of a substitute
by Mr. Leach, no. 1f, reinstating coverage for checks and
drafts;
An amendment to the amendment in the nature of a substitute
by Mr. Israel, no. 1g, addressing the consideration of
charitable organizations by the public-private anti-terrorism
task force;
An amendment to the amendment in the nature of a substitute
by Mrs. Kelly, no. 1h, addressing the date of application of
regulations requiring financial institutions to establish anti-
money laundering programs and the factors to be taken into
account for anti-money laundering programs;
An amendment to the amendment in the nature of a substitute
by Mr. Maloney of Connecticut, no. 1i, making explicit that
hawala-type systems are covered by certain statutory
requirements;
An amendment to the amendment in the nature of a substitute
by Mr. Sherman, no. 1k, regarding Presidential sanctions on
non-cooperating countries;
An amendment to the amendment in the nature of a substitute
by Mr. Baker, no. 1l, modifying the Secretary's authority to
require financial institutions to apply enhanced due diligence
standards to correspondent accounts;
A substitute amendment to the amendment offered by Mr.
Baker by Mr. LaFalce, no. 1l(1), clarifying the circumstances
under which the Secretary of the Treasury must require
financial institutions to apply enhanced due diligence
standards to correspondent accounts, as modified by unanimous
consent;
An amendment to the amendment in the nature of a substitute
by Mr. Watt, no. 1o, clarifying the term ``compliance
officer''; and
An amendment to the amendment in the nature of a substitute
by Mr. Watt, no. 1q, clarifying the exemption for Internet
service providers from certain Internet gambling provisions.
The following amendment was not agreed to by a voice vote:
An amendment to the amendment in the nature of a substitute
by Mr. Sherman, no. 1n, authorizing the President to prohibit
certain credit and contract transactions with non-cooperative
countries.
The following amendments were withdrawn:
An amendment to the amendment in the nature of a substitute
by Mr. Weldon of Florida, no. 1b, relating to the sharing of
grand jury information relating to money laundering and bulk
cash smuggling;
An amendment to the amendment in the nature of a substitute
by Mr. Leach, no. 1d, eliminating the exemption for ISPs from
Internet gambling restrictions; and,
An amendment to the amendment in the nature of a substitute
by Mr. Weldon of Florida, no. 1j, striking certain factors from
those the Secretary of the Treasury must consider in
designating jurisdictions as ``primary money laundering
concerns''.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a hearing and made
findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The President and the Secretary of the Treasury will use
the authority granted by this legislation to track and prevent
individuals from laundering the proceeds of criminal activity
and from diverting funds to terrorist or criminal activities.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that this
legislation would result in no new budget authority,
entitlement authority, or tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 16, 2001.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services, House of Representatives,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3004, the
Financial Anti-Terrorism Act of 2001.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Mark
Grabowicz and Mark Hadley (for federal costs), Susan Sieg
Tompkins (for the state and local impact), and Jean Talarico
(for the private-sector impact).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director.)
Enclosure.
H.R. 3004--Financial Anti-Terrorism Act of 2001
Summary: H.R. 3004 would expand the powers of federal
financial regulators to prevent money laundering, internet
gambling, and smuggling of currency. It also would establish
new federal crimes relating to such acts. H.R. 3004 would
authorize the appropriation of such sums as necessary for each
of fiscal years 2002 through 2005 for the Financial Crimes
Enforcement Network (FINCEN), an agency in the Department of
the Treasury that collects data from banks and other financial
institutions and serves as a clearinghouse for financial
intelligence. The bill would authorize the Secretary of the
Treasury, through financial regulators, to impose special
requirements on U.S. financial institutions if the Secretary
suspects the transactions of their foreign clients are tied to
money laundering.
Assuming appropriation of the necessary amounts, CBO
estimates that implementing H.R. 3004 would cost about $36
million in fiscal year 2002 and about $210 million over the
2002-2006 period, mostly for FINCEN. This estimate assumes
adjustments for anticipated inflation. Without such
adjustments, we estimate that implementation would cost $202
million over the 2002-2006 period. H.R. 3004 would affect
direct spending and receipts, so pay-as-you-go procedures would
apply, but CBO estimates that any such effects would be less
than $500,000 a year.
H.R. 3004 contains intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA) because it would impose
requirements on certain state and local agencies and because it
includes a preemption of state laws. CBO estimates that the
total cost of complying with those mandates would be small, and
would not exceed the threshold established in UMRA ($56 million
in 2001, adjusted annually for inflation).
The bill also contains private-sector mandates as defined
in UMRA. The bill would impose new information collection,
reporting, and recordkeeping requirements on financial
institutions and agencies as defined in the bill. Because those
new requirements would depend on specific regulations that
would be established by the Secretary of the Treasury, CBO
cannot determine whether the direct cost to the private sector
would exceed the annual threshold specified in UMRA ($113
million in 2001, adjusted annually for inflation).
Estimated cost to the Federal Government: For this
estimate, CBO assumes that the bill will be enacted near the
start of fiscal year 2002 and that the necessary amount will be
appropriated each year. The estimated budgetary impact of H.R.
3004 is shown in the following table. The costs of this
legislation fall within budget functions 370 (commerce and
housing credit) and 750 (administration of justice).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------
2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\
FINCEN:
Estimated authorization level \2\......................... 48 49 51 52 0
Estimated outlays......................................... 33 49 50 52 15
Administrative cost to regulatory agencies:
Estimated authorization level............................. 2 2 2 2 2
Estimated outlays......................................... 2 2 2 2 2
Reports by Department of Treasury:
Estimated authorization level............................. 1 (\3\) (\3\) (\3\) (\3\)
Estimated outlays......................................... 1 (\3\) (\3\) (\3\) (\3\)
Total:
Estimated authorization level............................. 51 51 53 54 2
Estimated outlays......................................... 36 51 52 54 17
----------------------------------------------------------------------------------------------------------------
\1\ The bill also would affect direct spending and revenues, but CBO estimates that those changes would each be
less than $500,000 a year.
\2\ FINCEN received an appropriation of $38 million for fiscal year 2001. For fiscal year 2002, there is no
authorization in current law for the agency and a full-year appropriation has not yet been enacted.
\3\ Less than $500,000.
Basis of estimate
CBO estimates that implementing H.R. 3004 would cost about
$50 million annually for FINCEN, about $2 million annually for
increased administrative costs at agencies thatregulate
financial institutions, and about $1 million in 2002 for additional
reports by the Secretary of the Treasury. In addition to these effects
on discretionary spending, the bill also would have a negligible effect
on the collection and spending of civil and criminal penalties.
Finally, the legislation would have a small effect on the operating
costs of the Federal Deposit Insurance Corporation (FDIC).
Spending subject to appropriation
FINCEN.--H.R. 3004 would authorize the appropriation of
such sums as necessary for FINCEN for each of fiscal years 2002
through 2005. Based on information from the agency, CBO
estimates that FINCEN would need about $46 million in 2002 to
carry out its current statutory responsibilities and an
additional $2 million to perform new duties required by the
bill. Thus, CBO estimates that implementing H.R. 3004 would
require appropriations of $48 million in fiscal year 2002 and
$200 million over the 2002-2005 period, assuming annual
adjustments for inflation.
Administrative costs.--H.R. 3004 would authorize the
Secretary of the Treasury to impose special measures on U.S.
financial institutions if the Secretary suspects the
transactions of their foreign clients are tied to money
laundering. Such measures would be implemented by the
Department of the Treasury, the Securities and Exchange
Commission (SEC), the Commodity Futures Trading Commission, and
other financial regulators, and could include increasing
recordkeeping and reporting requirements and regulating or
prohibiting certain types of financial accounts. Based on
information from the affected agencies, CBO estimates that
implementing H.R. 3004 would cost a total of about $2 million a
year over the 2002-2006 period. Most of these funds would pay
for additional SEC staff to examine the records of investment
advisors and investment companies for transactions that may
involve money laundering, and to oversee the efforts of self-
regulating securities markets to detect money laundering.
Reports.--H.R. 3004 would require the Department of
Treasury to develop regulations and prepare studies for the
Congress relating to financial crimes. CBO estimates these
requirements would cost $1 million in fiscal year 2002 and less
than $500,000 in each of the subsequent years.
Direct spending and revenues
Trustees' Administrative Costs.--The National Credit Union
Administration (NCUA), Office of the Comptroller of the
Currency, and the Office of Thrift Supervision charge fees to
the institutions they regulate to cover all of their
administrative costs; therefore, any additional spending by
these agencies to implement the bill would have no net budget
effect. That is not the case with the FDIC, however, which uses
deposit insurance premiums paid by all banks to cover the
expenses it incurs to supervise state-chartered banks. The bill
would cause a small increase in FDIC spending, but would
probably not affect its premium income. In any case, CBO
estimates that imposing special measures would increase direct
spending and offsetting receipts for those agencies by less
than $500,000 a year over the 2002-2006 period.
Bureau of Engraving and Printing.--H.R. 3004 would allow
the Bureau of Engraving and Printing (BEP) to impose charges
for any BEP services provided to any foreign government or any
territory of the United States. Because foreign governments or
territories of the United States would pay BEP for the full
cost of producing any documents, and because BEP has the
authority to retain and spend such collections without further
appropriation this would have no significant net budgetary
impact.
Additional Fines.--Enacting H.R. 3004 would establish civil
and criminal fines for new crimes that would be established by
the bill. Civil fines are classified as governmental receipts
(revenues). Criminal fines are recorded as receipts and
deposited in the Crime Victims Fund, and spent without further
appropriation action. Based on information from the Department
of the Treasury and the Department of Justice, CBO estimates
that any net increase in collections would not be significant
because of the small number of individuals that are likely to
be subject to such fines.
Federal Reserve.--Budgetary effects on the Federal Reserve
are also recorded as changes in revenues. Based on information
from the Federal Reserve, CBO estimates that enforcing the
special requirements on U.S. Financial Trustees under the bill
would reduce such revenues by less than $500,000 a year over
the 2002-2006 period.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you go procedures
for legislation affecting direct spending or receipts. CBO
estimates that enacting H.R. 3004 would affect direct spending
and governmental receipts but that there would be no
significant impact in any year.
Estimated impact on state, local, and tribal governments:
H.R. 3004 contains intergovernmental mandates as defined in
UMRA, but CBO estimates that the total cost of complying with
these mandates would be small, and would not exceed the
threshold established in that act ($56 million in 2001,
adjusted annually for inflation). Provisions in several
sections of this bill would place new reporting, monitoring,
recordkeeping, and other procedural requirements on financial
institutions. (Financial institutions include certain state and
local agencies acting in that capacity.) Largely because the
number of affected agencies would be very small, CBO estimates
that state and local governments would incur minimal costs to
comply with these requirements. Another provision would impose
a mandate by prohibiting employees of state, local, tribal, and
territorial governments from disclosing certain information.
This bill also includes a preemption of state and local
laws. It would require consumer reporting agencies to furnish a
report and all other information in a consumer's file, without
notifying the consumer, to a government agency authorized to
conduct investigations, intelligence, and or
counterintelligence activities. The legislation would
explicitly preempt state law by exempting these agencies from
liability for violating the constitution of any state, or the
law or regulations of any state or local government. Such a
preemption would be a mandate under UMRA. CBO estimates,
however, that it would not affect the budgets of state, local,
or tribal governments, because, while it would limit the
application of state law, it would impose no duty on states
that would result in additional spending.
Estimated impact on the private sector: The bill also
contains private-sector mandates as defined in UMRA. The bill
would impose new information collection, reporting, and
recordkeeping requirements on financial institutions and
agencies as defined in the bill. Because those new requirements
would depend on specific regulations that would be established
by the Secretary of the Treasury, CBO cannot determine whether
the direct cost to the private sector would exceed the annual
threshold specified in UMRA ($113 million in 2001, adjusted
annually for inflation).
Although H.R. 3004 would prohibit gambling businesses from
accepting credit card payments and other bank instruments from
gamblers who bet illegally over the Internet, the bill would
not create a new private-sector mandate. Under current federal
and state law, gambling businesses are generally prohibited
from accepting bets or wagers over the Internet. Thus, H.R.
3004 does not contain a new mandate relative to current law.
H.R. 3004 would authorize federal banking regulators to
require depository institutions that have knowingly
participated in transactions with unlawful Internet gambling
businesses to cease doing so. This provision would not create a
new private-sector mandate for depository institutions because
federal banking regulators already have such powers under
current law.
Estimate prepared by: Federal spending: Mark Grabowicz,
Mark Hadley, Ken Johnson, Matthew Pickford, and Lanette Walker;
Federal revenues: Carolyn Lynch and Erin Whitaker; impact on
state, local, and tribal governments: Susan Sieg Tompkins;
impact on the private sector: Jean Talarico.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
Section 205 of the bill directs the Secretary of the
Treasury to establish, either within the Bank Secrecy Act
Advisory Group or a subcommittee or other adjunct of that
advisory group, a task force comprised of representatives of
the agencies and officers represented on the advisory group, a
representative from the Office of Homeland Security, and
representatives of financial institutions, private
organizations that represent the financial services industry,
and other interested parties to focus on the finances of
terrorist groups, the financial relationships between
international narcotics traffickers and foreign terrorist
organizations, and the means of facilitating the identification
of accounts and transactions involving foreign terrorist
organizations. Pursuant to the requirements of subsection 5(b)
of the Federal Advisory Committee Act, the Committee finds that
the functions of the proposed advisory committees are not and
cannot be performed by an existing Federal agency or advisory
commission requiring the enlargement of the mandate of the Bank
Secrecy Act Advisory Group.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States), clause 3 (relating to
the power to regulate interstate commerce), and clause 5
(relating to the power to coin money and regulate the value
thereof).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Exchange of Committee Correspondence
House of Representatives,
Committee on Agriculture,
Washington, DC, April 2, 2001.
Hon. Michael G. Oxley,
Chairman, House Committee on Financial Services, Rayburn House Office
Building, Washington, DC.
Dear Chairman Oxley: I understand that the Committee on
Financial Services recently ordered H.R. 3004, the ``Financial
Anti-Terrorism Act of 2001'', reported to the House. Further,
it is my understanding that your Committee amended this
legislation in a manner that effects certain entities
registered with the Commodity Futures Trading Commission
pursuant to the Commodity Exchange Act. As you know, the
Committee on Agriculture has jurisdiction over that Act under
rule X of the Rules of the House of Representatives, which
grants the Agriculture Committee jurisdiction over ``commodity
exchanges''.
Because of the importance of this matter, I recognize your
desire to bring this legislation before the House in an
expeditious manner and will waive consideration of the bill by
the Agriculture Committee. By agreeing to waive its
consideration of the bill, the Agriculture Committee does not
waive its jurisdiction over H.R. 3004. In addition, the
Committee reserves its authority to seek conferees on any
provisions of the bill that are within the Committee's
jurisdiction during any House-Senate conference that may be
convened on this legislation. I ask your commitment to support
any request by the Committee on Agriculture for conferees on
H.R. 3004 or related legislation.
I request that you include this letter and your response as
part of the Congressional Record during consideration of the
legislation on the House floor.
Thank you for your attention to these matters.
Sincerely,
Larry Combest, Chairman.
------
House of Representatives,
Committee on Financial Services,
Washington, DC, April 2, 2001.
Hon. Larry Combest,
Chairman, House Committee on Agriculture, Longworth House Office
Building, Washington, DC.
Dear Chairman Combest: Thank you for your letter regarding
your Committee's jurisdictional interest in H.R. 3004, the
``Financial Anti-Terrorism Act of 2001''.
I acknowledge your committee's jurisdictional interest in
this legislation and appreciate your cooperation in moving the
bill to the House floor expeditiously. I agree that your
decision to forego further action on the bill will not
prejudice the Committee on Agriculture with respect to its
jurisdictional prerogatives on this or similar legislation. I
will include a copy of your letter and this response in the
Committee's report on the bill and the Congressional Record
when the legislation is considered by the House.
Thank you again for your cooperation.
Sincerely,
Michael G. Oxley, Chairman.
------
House of Representatives,
Committee on Agriculture,
Washington, DC, October 15, 2001.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services, Rayburn House Office
Building, Washington, DC.
Dear Chairman Oxley: I understand that the Committee on
Financial Services recently ordered H.R. 3004, the ``Financial
Anti-Terrorism Act of 2001'', reported to the House. Further,
it is my understanding that your Committee amended this
legislation in a manner that effects certain entities
registered with the Commodity Futures Trading Commission
pursuant to the Commodity Exchange Act. As you know, the
Committee on Agriculture has jurisdiction over that Act under
rule X of the Rules of the House of Representatives, which
grants the Agriculture Committee jurisdiction over ``commodity
exchanges''.
Because of the importance of this matter, I recognize your
desire to bring this legislation before the House in an
expeditious manner and will waive consideration of the bill by
the Agriculture Committee. By agreeing to waive its
consideration of the bill, the Agriculture Committee does not
waive its jurisdiction over H.R. 3004. In addition, the
Committee reserves its authority to seek conferees on any
provisions of the bill that are within the Committee's
jurisdiction during any House-Senate conference that may be
convened on this legislation. I ask your commitment to support
any request by the Committee on Agriculture for conferees on
H.R. 3004 or related legislation.
I request that you include this letter and your response as
part of the Congressional Record during consideration of the
legislation on the House floor.
Thank you for your attention to these matters.
Sincerely,
Larry Combest, Chairman.
------
House of Representatives,
Committee on Financial Services,
Washington, DC, October 15, 2001.
Hon. Larry Combest,
Chairman, Committee on Agriculture, Longworth House Office Building,
Washington, DC.
Dear Chairman Combest: Thank you for your letter regarding
your Committee's jurisdictional interest in H.R. 3004, the
``Financial Anti-Terrorism Act of 2001''.
I acknowledge your committee's jurisdictional interest in
this legislation and appreciate your cooperation in moving the
bill to the House floor expeditiously. I agree that your
decision to forego further action on the bill will not
prejudice the Committee on Agriculture with respect to its
jurisdictional prerogatives on this or similar legislation. I
will include a copy of your letter and this response in the
Committee's report on the bill and the Congressional Record
when the legislation is considered by the House.
Thank you again for your cooperation.
Sincerely,
Michael G. Oxley, Chairman.
Section-by-Section Analysis of the Legislation
Section 1. Short Title; Table of Contents
This section provides the short title of the bill, the
``Financial Anti-Terrorism Act of 2001'' and a table of
contents.
TITLE I--STRENGTHENING LAW ENFORCEMENT
Section 101. Bulk Cash Smuggling Into or Out of the United States
Subsections (a) through (c) set forth the new bulk cash
smuggling offense as well as a set of findings explaining why
the smuggling of bulk cash is a serious law enforcement
problem. The new offense, which would be codified at 31 U.S.C.
Sec. 5331, would make it an offense for anyone to knowingly
conceal more than $10,000 in currency or other monetary
instruments on his person or in any conveyance, article of
luggage, merchandise or other container, and to transport or
attempt to transport that currency across the border with the
intent to avoid the reporting requirements in section 5316. In
other words, the offense has three elements: (1) concealment;
(2) transportation (or attempted transportation); and (3)
specific intent to evade filing a complete and accurate report
with the Customs Service.
The penalty section provides for incarceration of up to 5
years. In addition, and in lieu of any criminal fine, the
penalty section authorizes the confiscation of the smuggled
money in accordance with the usual procedures for criminal and
civil forfeiture, including all of the due process protections
enacted as part of the Civil Asset Forfeiture Reform Act of
2000. Confiscation of smuggled goods has been regarded as the
appropriate penalty for smuggling offenses since the first
Customs laws were enacted in the 18th Century. In the
alternative, in accordance with rule 32.2 of the Federal Rules
of Criminal Procedure and existing case law, the court may
enter a personal money judgment against the defendant. See
United States v. Candelaria-Silva, 166 F.3d 19 (1st Cir. 1999)
(criminal forfeiture order may take several forms: money
judgment, directly forfeitable property, and substitute
assets).
To address concerns that such confiscation is a blunt
instrument that should be mitigated in some circumstances to
avoid a hardship, the bill explicitly authorizes courts to
mitigate forfeitures of currency involved in currency reporting
offenses to avoid Eighth Amendment violations by considering a
range of aggravating and mitigating circumstances. Those
circumstances include the value of the currency orother
monetary instruments involved in the offense; efforts by the person
committing the offense to structure currency transactions, conceal
property or otherwise obstruct justice; and whether the offense is part
of a pattern of repeated violations.
The Committee believes, however, that bulk cash smuggling
is an inherently more serious offense than simply failing to
file a Customs report. Because the constitutionality of a
forfeiture is dependent on the ``gravity of the offense'' under
Bajakajian, it is anticipated that the full forfeiture of
smuggled money will withstand constitutional scrutiny in most
cases. For the confiscation to be reduced at all, the smuggler
will have to show that the money was derived from a legitimate
source and not intended to be used for any unlawful purpose.
Even then, the court's duty will be to reduce the amount of
confiscation to the maximum that would be permitted in
accordance with the Eighth Amendment and the aggravating and
mitigating factors set forth in the statute. The civil
forfeiture provision would apply to conduct occurring before
the effective date of the act.
Section 102. Forfeiture in Currency Reporting Cases
Section 102 makes conforming amendments to the existing
criminal and civil forfeiture provisions for the reporting and
structuring violations in title 31. The section creates
parallel forfeiture authority for violating the currency
reporting requirements applicable to businesses under 26 U.S.C.
Sec. 6050I and sets forth rules for mitigating the forfeitures
to avoid constitutional violations in accordance with
Bajakajian. This is necessary to address the concern expressed
by the Court in Bajakajian that Congress had not made it clear
that trial courts are authorized to reduce forfeitures down to
the maximum level permissible to avoid violating the Excessive
Fines Clause when a statute, on its face, appears to authorize
only the forfeiture of the full amount of structured or
unreported currency.
Section 103. Interstate Currency Couriers
This section amends the money laundering statute to make it
an offense for anyone to transport more than $10,000 in
currency concealed in a vehicle traveling in interstate
commerce (e.g. on an interstate highway) knowing that the
currency was derived from some kind of unlawful activity, or
knowing that the currency was intended to be used to promote
such activity. The courier's willful blindness regarding the
source or intended use of the currency would be sufficient to
establish the requisite knowledge.
Section 104. Illegal Money Transmitting Businesses
The operation of an unlicensed money transmitting business
is a violation of Federal law under 18 U.S.C. Sec. 1960. First,
section 104 clarifies the scienter requirement in Sec. 1960 to
avoid the problems that occurred when the Supreme Court
interpreted the currency transaction reporting statutes to
require proof that the defendant knew that structuring a cash
transaction to avoid the reporting requirements had been made a
criminal offense. See Ratzlaf v. United States, 114 S. Ct. 655
(1994). The proposal makes clear that an offense under
Sec. 1960 is a general intent crime for which a defendant is
liable if he knowingly operates an unlicensed money
transmitting business. For purposes of a criminal prosecution,
the Government would not have to show that the defendant knew
that a State license was required or that the Federal
registration requirements promulgated pursuant to 31 U.S.C.
Sec. 5330 applied to the business.
Second, section 104 expands the definition of an unlicensed
money transmitting business to include a business engaged in
the transportation or transmission of funds that the defendant
knows are derived from a criminal offense, or are intended to
be used for an unlawful purpose. Thus, a person who agrees to
transmit or to transport drug proceeds for a drug dealer, or
funds from any source for a terrorist, knowing such funds are
to be used to commit a terrorist act, would be engaged in the
operation of an unlicensed money transmitting business. It
would not be necessary for the Government to show that the
business was a storefront or other formal business open to
walk-in trade. To the contrary, it would be sufficient to show
that the defendant offered his services as a money transmitter
to another.
Finally, when Congress enacted Sec. 1960 in 1992, it
provided for criminal but not civil forfeiture. The proposal
corrects this oversight, and allows the government to obtain
forfeiture of property involved in the operation of an illegal
money transmitting business even if the perpetrator is a
fugitive.
Section 105. Long-Arm Jurisdiction over Foreign Money Launderers
The first provision in this section creates a long arm
statute that gives the district court jurisdiction over a
foreign person, including a foreign bank, that commits a money
laundering offense in the United States or converts laundered
funds that have been forfeited to the Government to his own
use. Thus, if the Government files a civil enforcement action
under section 1956(b), or files a civil lawsuit to recover
forfeited property from a third party, the district court would
have jurisdiction over the defendant if the defendant has been
served with process pursuant to the applicable statutes or
rules of procedure,and the constitutional requirement of
minimum contacts is satisfied in one of three ways: the money
laundering offense took place in the United States; in the case of
converted property, the property was the property of the United States
by virtue of a civil or criminal forfeiture judgment; or in the case of
a financial institution, the defendant maintained a correspondent bank
account at another bank in the United States. Under this provision, for
example, the district courts would have had jurisdiction over the
defendant in the circumstances described in United States v. Swiss
American Bank, 191 F.3d 30 (1st Cir. 1999).
The second provision, modeled on 18 U.S.C. Sec. 1345(b),
gives the district court the power to restrain property, issue
seizure warrants, or take other action necessary to ensure that
a defendant in an action covered by the statute does not
dissipate the assets that would be needed to satisfy a
judgment.
This section also authorizes a court, on the motion of the
Government or a State or Federal regulator, to appoint a
receiver to gather and protect assets needed to satisfy a
judgment under sections 1956 and 1957, and the forfeiture
provisions in sections 981 and 982. This authority is intended
to apply in three circumstances: (1) when there is a judgment
in a criminal case, including an order of restitution,
following a conviction for a violation of section 1956 or 1957;
(2) when there is a judgment in a civil case under section
1956(b) assessing a penalty for a violation of either section
1956 or 1957; and (3) when there is a civil forfeiture judgment
under section 981 or a criminal forfeiture judgment, including
a personal money judgment, under section 982.
The amendment also makes section 1956(b) applicable to
violations of section 1957. It applies to conduct occurring
before the effective date of the Act.
Section 106. Laundering Money through a Foreign Bank
This section eliminates the ambiguity in current law
regarding money laundering through foreign banks by including
foreign banks within the definition of ``financial
institution'' in Sec. 1956(c)(6). The definition is the same as
the one set forth in 12 U.S.C. Sec. 3101(7), which is already
employed in Sec. 1956(c)(7)(B) for another purpose.
Section 107. Specified Unlawful Activity for Money Laundering
This amendment enlarges the list of foreign crimes that can
lead to money laundering prosecutions in this country when the
proceeds of additional foreign crimes are laundered in the
United States. The additional crimes include all crimes of
violence, public corruption, and offenses covered by existing
bilateral extradition treaties. The Committee intends this
provision to send a strong signal that the United States will
not tolerate the use of its financial institutions for the
purpose of laundering the proceeds of such activities.
Section 108. Laundering the Proceeds of Terrorism
The Antiterrorism and Effective Death Penalty Act of 1996
(AEDPA) made it a criminal offense to provide material support
or resources to an organization designated by the Secretary of
State as a ``foreign terrorist organization.'' 18 U.S.C.
Sec. 2339B.
Section 2339B, however, was not added to the list of money
laundering predicate offenses in section 1956(c)(7)(D). This
provision adds Sec. 2339B to the list of money laundering
predicates.
Section 109. Violations of Reporting Requirements for Nonfinancial
Trades and Businesses
18 U.S.C. Sec. Sec. 981 and 982 are the civil and criminal
forfeiture statutes pertaining to money laundering. Presently,
they provide for forfeiture for money laundering violations
under the Bank Secrecy Act (31 U.S.C. Sec. 5311 et seq.) and
the Money Laundering Control Act (18 U.S.C. Sec. Sec. 1956-57).
This section would add 26 U.S.C. Sec. 6050I of the Internal
Revenue Code to this list in both statutes.
Section 6050I is the statute that requires any trade or
business receiving more than $10,000 in cash to report the
transaction to the IRS on Form 8300. Subsection (f) makes it an
offense to structure a transaction with the intent to avoid the
filing of such form. Thus, section 6050I is the counterpart to
31 U.S.C. Sec. Sec. 5313 and 5324 which require the filing of
Currency Transaction Reports (CTRs) and Currency or Monetary
Instrument Report (CMIRs) by financial institutions whenever a
$10,000 cash transaction takes place, and by other persons
whenever they send more than $10,000 in currency into or out of
the United States. Including a reference to section 6050I in
sections 981 and 982 thus means that violations of the Form
8300 requirement will be treated the same as CTR and CMIR
violations for forfeiture purposes.
Section 110. Proceeds of Foreign Crimes
This section is intended to reinforce the United States'
compliance with the Vienna Convention. It amends 18 U.S.C.
Sec. 981(a)(1)(B) to allow the United States to institute its
own action against the proceeds of foreign criminal offenses
when such proceeds are found in the United States. As required
by the Vienna Convention, it also authorizes the confiscation
of property used to facilitate such crimes. The listof foreign
crimes to which this section applies is determined by cross-reference
to the foreign crimes that are money laundering predicates under
Sec. 1956(c)(7)(B). This section will permit the forfeiture of property
involved in conduct occurring before the effective date of the Act.
Section 111. Availability of Reports Relating to Coins and Currency
Received in Non-Financial Trade or Business
Section 111 addresses the problem of the accessibility of
the Form 8300 information by directing the Secretary of the
Treasury to take the necessary actions and establish the
necessary procedures to make the information contained on Form
8300 available to government agencies through the network
administered by FinCEN. The Secretary is given six months from
date of enactment to achieve this objective, and is required to
report to Congress on the actions taken pursuant to this
section, together with recommendations for any legislative or
administrative action determined to be appropriate by the
Secretary.
The Committee believes that safeguards built into the
FinCEN information-sharing protocols currently satisfies
appropriate confidentiality concerns, as specified by section
6103 (p)(4), but expects the Secretary to address--and
resolve--the issue squarely within the six-month timeline
specified. The Committee is aware that some of the ``outreach''
and data-sharing aspects of FinCEN's duties might be
problematic with regards the sharing of other tax data,
specifically personal or corporate income data. However, the
Committee does not view what is essentially law-enforcement
data about specific transactions to be personal or corporate
``income data,'' regardless of the fact that it is collected by
the Internal Revenue Service.
Section 112. Penalties for Violations of Geographic Targeting Orders
and Certain Record Keeping Requirements
31 U.S.C. Sec. Sec. 5321 and 5322 impose civil and criminal
penalties, respectively, for violations of the Bank Secrecy Act
(BSA) and BSA regulations; 31 U.S.C. Sec. 5324 creates
additional criminal offenses for failing to file a report,
filing a false or incomplete report, and structuring currency
transactions in order to evade a reporting requirement under
the BSA. Those statutes, however, do not specifically refer to
reports required by GTOs (geographic targeting orders) issued
under 31 U.S.C. Sec. 5326. This provision eliminates any
ambiguity concerning the applicability of these provisions to
GTOs by inserting specific references to 31 U.S.C. Sec. 5326 in
the respective statutes.
Section 113. Exclusion of Aliens Involved in Money Laundering
This section will provide for inadmissibility of any
individual who a consular officer has reason to believe has or
is engaged in certain money laundering offenses, or any
criminal activity in a foreign country that would constitute
such an offense if committed in the United States, regardless
of whether a judgment of conviction has been entered or avoided
due to flight, corruption, etc. This section treats money
launderers with the same standard applicable to drug
traffickers and will make the United States' ability to exclude
aliens involved in such activities less dependent upon the
Nation's ability to draw inferences about a person's intent to
do something illicit in the United States. Money laundering
offenses are, in general, related to underlying crimes
involving moral turpitude that are already grounds for
exclusion under the Immigration and Nationality Act.
As an added deterrent, the amendment allows the consular
officer to exclude the money launderer's family members, while
also giving the Attorney General the authority to waive such
exclusion if he determines that exceptional circumstances
exist.
Section 114. Standing to Contest Forfeiture of Funds Deposited Into
Foreign Bank that has a Correspondent Account in the United
States
Section 114 creates a new provision in the civil forfeiture
statute, 18 U.S.C. Sec. 981(k), authorizing the forfeiture of
funds found in an interbank account. The new provision is
necessary to reconcile the law regarding the forfeiture of
funds in bank accounts with the realities of the global
movement of electronic funds and the use of off-shore banks to
insulate criminal proceeds from forfeiture.
To prevent drug dealers and other criminals from taking
advantage of certain nuances of forfeiture law to insulate
their property from forfeiture even though it is deposited in a
bank account in the United States, it is necessary to change
the law regarding the location of the debt that a bank owes to
its depositor, and the identity of the real party in interest
with standing to contest the forfeiture. The amendment in this
section addresses the location issue by treating a deposit made
into an account in a foreign bank that has a correspondent
account at a U.S. bank as if the deposit had been made into the
U.S. bank directly. Second, the section treats the deposit in
the correspondent account as a debt owed directly to the
depositor, and not as a debt owed to the respondent bank. In
other words, the correspondent account is treated as if it were
the foreign bank itself, and the funds in the correspondent
account were debts owed to the foreign bank's customers.
Under this arrangement, if funds traceable to criminal
activity are deposited into a foreign bank, the Government may
bring a forfeiture action against funds in that bank's
correspondent account, and only the initial depositor, and not
the intermediary bank, would have standing to contest it.
The section authorizes the Attorney General to suspend or
terminate a forfeiture in cases where there exists a conflict
of laws between the U.S. and the jurisdiction in which the
foreign bank is located, where such suspension or termination
would be in the interest of justice and not harm U.S. national
interests.
Section 115. Subpoenas for Records Regarding Funds in Correspondent
Bank Accounts
Section 115 gives the Attorney General and the Secretary of
the Treasury new authority to subpoena records from a foreign
bank that relate to transactions occurring overseas. Under this
provision, a foreign bank that maintains a correspondent
account in the United States must have a representative in the
United States who will accept service of a subpoena for any
records of any transaction with the foreign bank that occurs
overseas. This is necessary to enable law enforcement to
determine the source of money being placed in the United States
through the correspondent banking system. The duty to comply
with such a subpoena is now a requirement for foreign banks
that choose to avail themselves of access to that system in the
United States.
Subsection (c) delays the effective date for the
requirement to appoint a person authorized to accept service of
a subpoena for 30 days, but once in effect, the provision
allows the Government to subpoena records relating to
transactions occurring before the effective date of the Act.
Subsection (d) contains a conforming amendment, revising
the existing authority in 18 U.S.C. Sec. 3486 to allow the
Attorney General to issue subpoenas in money laundering cases.
Currently, section 3486 contains such authority in health care
fraud and child pornography cases. Thus, the subpoena would be
issued in the manner and for the purposes previously authorized
for the issuance of such subpoenas in those cases. See United
States v. Doe, 235 F.3d 256 (6th Cir. 2001) (discussing
standard for enforcement of administrative subpoena issued
under section 3486).
Section 116. Authority to Order Convicted Criminal to Return Property
Located Abroad
Section 116 authorizes a court to order a criminal
defendant to repatriate his property to the United States in
criminal cases. In criminal forfeiture cases, the sentencing
court is authorized to order the forfeiture of ``substitute
assets'' when the defendant has placed the property otherwise
subject to forfeiture ``beyond the jurisdiction of the court.''
Frequently, this provision is applied when a defendant has
transferred drug proceeds or other criminally derived property
to a foreign country. In many cases, however, the defendant has
no other assets in the United States of a value commensurate
with the forfeitable property overseas. In such cases, ordering
the forfeiture of substitute assets is a hollow sanction.
This section amends 21 U.S.C. Sec. 853 to make clear that a
court in a criminal case may issue a repatriation order--either
post-trial as part of the criminal sentence and judgment, or
pre-trial pursuant to the court's authority under 21 U.S.C.
Sec. 853(e) to restrain property--so that they will be
available for forfeiture. Failure to comply with such an order
would be punishable as a contempt of court, or it could result
in a sentencing enhancement, such as a longer prison term,
under the U.S. Sentencing Guidelines, or both.
Section 117. Corporation Represented by a Fugitive
Currently, 28 U.S.C. Sec. 2466 permits a court to disallow
the claim filed in a forfeiture proceeding by a person who is a
fugitive in a related criminal case. The amendment clarifies
that a natural person who is a fugitive may not circumvent this
provision by filing, or having another person file, a claim on
behalf of a corporation that the fugitive controls.
Section 118. Enforcement of Foreign Judgments
Under current law, 28 U.S.C. Sec. 2467(d) gives Federal
courts the authority to enforce civil and criminal forfeiture
judgments entered by foreign courts. This section amends that
provision to include a mechanism for preserving property
subject to forfeiture in a foreign country.
Specifically, a Federal court could issue a restraining
order under 18 U.S.C. Sec. 983(j) or register and enforce a
foreign restraining order, if the Attorney General certified
that such foreign order was obtained in accordance with the
principles of due process. A person seeking to contest the
restraining order could do so on the ground that 28 U.S.C.
Sec. 2467 was not properly applied to the particular case, but
could not oppose the restraining order on any ground that could
also be raised in the proceedings pending in a foreign court.
This provision preventsa litigant from taking ``two bites at
the apple'' by raising objections to the basis for the forfeiture in
the Federal court that he also raised, or is entitled to raise, in the
foreign court where the forfeiture action is pending. It complements
the existing provision in section 2467(e) providing that the Federal
court is bound by the findings of fact of the foreign court, and may
not look behind such findings in determining whether to enter an order
enforcing a foreign forfeiture judgment.
This section also amends 28 U.S.C. Sec. 2467 to make clear
that it is not necessary to prove that the person asserting an
interest in the property received actual notice of the
forfeiture proceedings. As is the case with respect to
forfeitures under U.S. law, it is sufficient if the foreign
nation takes steps to provide notice, in accordance with the
principles of due process. See Gonzalez v. United States, 1997
WL 278123 (S.D.N.Y. 1997) (``the [G]overnment is not required
to ensure actual receipt of notice that is properly mailed'');
Albajon v. Gugliotta, 72 F. Supp. 2d 1362 (S.D. Fla. 1999)
(notice sent to various addresses on claimant's
identifications, and mailed after claimant released from jail,
is sufficient to satisfy due process, even if claimant never
received notice); United States v. Schiavo, 897 F. Supp. 644,
648-49 (D. Mass. 1995) (sending notice to fugitive's last known
address is sufficient; due process satisfied even if he did not
receive the notice).
Finally, 28 U.S.C. Sec. 2467 is amended to authorize the
enforcement of a forfeiture judgment based on any foreign
offense that would constitute an offense giving rise to a civil
or criminal forfeiture of the same property if the offense had
been committed in the United States. This is one of two
safeguards that the statute contains against the enforcement of
judgments that the United States does not consider appropriate
for enforcement: if the judgment is based on an act that would
not constitute a crime in the United States, such as removing
assets from the reach of a repressive regime, it could not be
enforced. In addition, section 2467 already provides that a
foreign judgment may only be enforced by a Federal court at the
request of the United States, and only after the Attorney
General has certified that the judgment was obtained in
accordance with the principles of due process. Thus, neither a
foreign Government nor a foreign private party could enforce a
foreign judgment on its own under this provision.
Section 119. Reporting Provisions and Anti-Terrorist Activities of
United States Intelligence Agencies
This section clarifies the authority of the Secretary of
the Treasury to share Bank Secrecy Act information with the
intelligence community for intelligence or counterintelligence
activities related to domestic or international terrorism.
Under current law, the Secretary may share BSA information with
the intelligence community for the purpose of investigating and
prosecuting terrorism. This section would make clear that the
intelligence community may use this information for purposes
unrelated to law enforcement.
The provision would also expand a Right to Financial
Privacy Act (RFPA) exemption, currently applicable to law
enforcement inquiries, to allow an agency or department to
share relevant financial records with another agency or
department involved in intelligence or counterintelligence
activities, investigations, or analyses related to domestic or
international terrorism. The section would also exempt from
most provisions of the RFPA a government authority engaged in
investigations of or analyses related to domestic or
international terrorism. This section would also authorize the
sharing of financial records obtained through a Federal grand
jury subpoena when relevant to intelligence or
counterintelligence activities, investigations, or analyses
related to domestic or international terrorism. In each case,
the transferring governmental entity must certify that there is
reason to believe that the financial records are relevant to
such an activity, investigation, or analysis.
Finally, this section facilitates government access to
information contained in suspected terrorists' credit reports
when the governmental inquiry relates to an investigation of,
or intelligence activity or analysis relating to, domestic or
international terrorism. Even though private entities such as
lenders and insurers can access an individual's credit history,
the government is strictly limited in its ability under current
law to obtain the information. This section would permit those
investigating suspected terrorists prompt access to credit
histories that may reveal key information about the terrorist's
plan or source of funding--without notifying the target. To
obtain the information, the governmental authority must certify
to the credit bureau that the information is necessary to
conduct a terrorism investigation or analysis. The amendment
would also create a safe harbor from liability for credit
bureaus acting in good faith that comply with a government
agency's request for information.
Section 120. Financial Crimes Enforcement Network
The Financial Crimes Enforcement Network, or FinCEN, was
created by executive order in 1990, and its duties augmented by
several subsequent orders. Its mission is to create and
maintain a computer system that holds information on financial
crimes--allowing law enforcement agencies to view and query the
data with appropriate safeguards--and to analyze the
information to identify leads for further investigation or
possible prosecution.
This section codifies the executive orders, establishing
FinCEN as a permanent bureau of the Treasury, giving it a
separate authorization (FY 2002 through FY 2005) and assigning
duties consistent with those of the executive orders. This
section also makes the Director of FinCEN a Presidential
appointee, with a four year term. Additionally, the section
establishes a special unit within FinCEN to deal with informal
value-transferring arrangements such as the hawala
organizations thought to be a method by which some terrorists
transfer funds outside of normal banking channels. Also
assigned as a new duty is support of the Treasury Secretary's
efforts in tracking and controlling foreign terrorists' assets
by providing computer storage and analysis to the new Foreign
Terrorist Asset Tracking Center recently established at the
Office of Foreign Assets Control.
References in section 120(c)(2) to section 552(a) of title
V and the Right to Financial Privacy Act are not intended by
the Committee to impose additional and/or more stringent
standards than what the Privacy Act outlines.
This section also requires the Treasury Secretary to report
to Congress regularly on compliance with laws requiring the
reporting of foreign bank accounts, along with methods for
improving compliance. The Committee is aware that non-
compliance with such regulations is a possible method of
laundering money or financing terrorism, and that compliance
over the last decades has been unacceptably low--probably in
the single-digit percentages.
Section 121. Customs Service Border Searches
This section authorizes the U.S. Customs Service to conduct
warrantless searches of outbound mail transmitted by or for the
Postal Service for bulk cash, dangerous contraband, and other
items subject to the laws enforced by Customs. Because the
Customs Service is responsible for enforcing laws vital to the
national interest, including provisions on the export of
weapons of mass destruction, child pornography, and munitions,
there is a critical need for Customs to have this authority.
The Customs Service currently has the authority to conduct
such warrantless searches in virtually every situation in which
people or merchandise cross the U.S. border, including the
authority to search shipments sent by private carrier, such as
Federal Express or United Parcel Service. This section simply
extends this authority to outbound mail sent via the Postal
Service, and is intended to ensure that in rule and practice
Postal mail is subject to the same types of border searches as
currently are authorized for private carrier shipments. This
section is not intended to change in any way the existing
authority of Customs to conduct border searches of shipments
sent by private carriers.
The provision includes safeguards prohibiting Customs
officers from reading any correspondence in mail sent by the
Postal Service without a search warrant or the written consent
of the sender or addressee. Finally, with regard to sealed
letter class mail exported by the Postal Service, it is
intended that Customs officers must have reasonable suspicion
that such mail contains merchandise before opening or examining
it. This parallels the existing rule for Customs border
searches of imported letter class mail. See 19 C.F.R.
Sec. 145.3.
Section 122. Prohibition on False Statements to Financial Institutions
Concerning the Identity of a Customer
This section makes it a Federal crime, punishable by up to
5 years in prison, for a person submitting information to a
financial institution to knowingly falsify or conceal their
true identity in a transaction with a financial institution,
including a bank, securities firm, or insurance company.
Section 123. Verification of Identification
Section 123(a) amends 31 U.S.C. Sec. 5318 by adding a new
subsection governing the identification of account holders.
Paragraph (1) directs Treasury to prescribe regulations setting
forth minimum standards for customer identification by
financial institutions in connection with the opening of an
account. By referencing ``customers'' in this section, the
Committee intends that the regulations prescribed by Treasury
take an approach similar to that of regulations promulgated
under title V of the Gramm-Leach-Bliley Act of 1999, where the
functional regulators defined ``customers'' and ``customer
relationship'' for purposes of the financial privacy rules.
Under this approach, for example, where a mutual fund sells its
shares to the public through a broker-dealer and maintains a
``street name'' or omnibus account in the broker-dealer's name,
the individual purchasers of the fund shares are customers of
the broker-dealer, rather than the mutual fund. The mutual fund
would not be required to ``look through'' the broker-dealer to
identify and verify the identities of those customers.
Similarly, where a mutual fund sells its shares to a qualified
retirement plan, the plan, and not its participants, would be
the fund's customers. Thus, the fund would not be required to
``look through'' the plan to identify its participants.
Paragraph (2) requires that the regulations must, at a
minimum, require financial institutions to implement procedures
to verify (to the extent reasonable and practicable) the
identity of any person seekingto open an account, maintain
records of the information used to do so, and consult applicable lists
of known or suspected terrorist or terrorist organizations. The lists
of known or suspected terrorists that the Committee intends financial
institutions to consult are those already supplied to financial
institutions by the Office of Foreign Asset Control (OFAC), and
occasionally by law enforcement and regulatory authorities, as in the
days immediately following the September 11, 2001, attacks on the World
Trade Center and the Pentagon. It is the Committee's intent that the
verification procedures prescribed by Treasury make use of information
currently obtained by most financial institutions in the account
opening process. It is not the Committee's intent for the regulations
to require verification procedures that are prohibitively expensive or
impractical.
Paragraph (3) requires that Treasury consider the various
types of accounts maintained by various financial institutions,
the various methods of opening accounts, and the various types
of identifying information available in promulgating its
regulations. This would require Treasury to consider, for
example, the feasibility of obtaining particular types of
information for accounts opened through the mail,
electronically, or in other situations where the accountholder
is not physically present at the financial institution.
Millions of Americans open accounts at mutual funds, broker-
dealers, and other financial institutions in this manner; it is
not the Committee's intent that the regulations adopted
pursuant to this legislation impose burdens that would make
this prohibitively expensive or impractical. This provision
allows Treasury to adopt regulations that are appropriately
tailored to these types of accounts.
Current regulatory guidance instructs depository
institutions to make reasonable efforts to determine the true
identity of all customers requesting an institution's services.
(See, e.g., FDIC Division of Supervision Manual of Exam
Policies, section 9.4 VI.) The Committee intends that the
regulations prescribed under this section adopt a similar
approach, and impose requirements appropriate to the size,
location, and type of business of an institution.
Paragraph (4) requires that Treasury consult with the
appropriate functional regulator in developing the regulations.
This will help ensure that the regulations are appropriately
tailored to the business practices of various types of
financial institutions, and the risks that such practices may
pose.
Paragraph (5) gives each functional regulator the authority
to exempt, by regulation or order, any financial institution or
type of account from the regulations prescribed under paragraph
(1).
Paragraph (6) requires that Treasury's regulations
prescribed under paragraph (1) become effective within one year
after enactment of this bill.
Section 124. Consideration of Anti-Money Laundering Record
This section amends the Bank Holding Company Act and
Federal Deposit Insurance Act to require Federal banking
regulators, when considering merger applications, to take into
account the effectiveness of all parties to the transaction in
combating and preventing money laundering activities, including
in overseas branches.
Section 125. Reporting of Suspicious Activities by Informal Underground
Banking Systems, such as Hawalas
Although the Committee believes that informal value
transfer banking systems like hawalas are already adequately
covered by references to money transmitting businesses in
certain provisions of existing law, this section makes that
understanding explicit. First, it makes clear that informal
value transfer banking systems are included in the definition
of ``financial institutions'' under the Bank Secrecy Act.
Second, it makes clear such systems are included under
statutory registration requirements for money transmitting
businesses. Third, it makes clear that informal value transfer
banking systems are included under record-keeping rules for
international wire transfers.
The section requires the Secretary of the Treasury to
report to Congress within one year from the date of enactment
on the need for any additional legislation relating to informal
value transfer banking systems. The report is to cover such
items as anti-money laundering and other regulatory controls,
including a discussion of whether the $5,000 threshold for the
filing of suspicious activity reports (SARs) should be lowered
for hawalas and similar systems.
TITLE II--PUBLIC-PRIVATE COOPERATION
Section 201. Establishment of Highly Secure Network
This section directs the Secretary of the Treasury to
establish a highly secure computer network dedicated to (1)
receiving electronic filings of reports of suspicious activity
and large currency transactions filed by financial
institutions; and (2) providing financial institutions with
alerts and other information regarding suspicious activity that
warrants immediate and enhanced scrutiny. The network is to be
fully operational within nine months of the date of enactment
of this legislation.
Section 202. Report on Improvements in Data Access and Other Issues
The section requires the Secretary of the Treasury to file
three separate reports to Congress within six months of
enactment, covering:
(1) Progress made in the improvements of data entry, data
access and data analysis with respect to the computer systems
maintained by the Financial Crimes Enforcement Network
(FinCEN);
(2) Technical, legal and other barriers to the exchange of
financial crime prevention and detection information between
Federal law-enforcement agencies; and,
(3) The nature and extent of private banking activities in
the United States.
The Committee continues to be concerned that FinCEN
computer systems are not used to their maximum efficiency
because it is difficult, costly and time-consuming to enter
data into them; analytical tools need constant improvement; and
a number of technical and legal constraints as well as some
inter-agency ``turf'' issues appear to prevent all financial
crime data from being housed in a single system to which all
Federal law enforcement has access. The Committee believes that
constant improvement must be made to the FinCEN system's
hardware and software to improve its effectiveness, and that
until such barriers to data-sharing are eliminated, FinCEN will
be impaired in performance of its mission, and enforcement of
anti-money-laundering and anti-terrorism laws will suffer as a
result.
Section 203. Reports to the Financial Services Industry on Suspicious
Financial Activities
This section directs the Secretary of the Treasury to
disseminate quarterly reports to the financial services
industry identifying and analyzing patterns of suspicious
financial activity disclosed by the reports filed by the
industry pursuant to the Bank Secrecy Act.
Section 204. Efficient Use of Currency Transaction Report System
This section requires the Secretary of the Treasury to
report to Congress within 90 days of enactment on (1) possible
expansion of the statutory exemptions to the CTR requirement
available under current law; and (2) methods for improving
compliance by financial institutions with the exemptions. The
Committee intends that the Secretary's report look specifically
at methods to reduce unnecessary filing of CTRs, and to improve
the quality of data available to law enforcement. The Committee
does not intend that the Secretary's review encompass the issue
of increasing the monetary thresholds for filing CTRs.
Section 205. Public-Private Task Force on Terrorist Financing Issues
This section mandates the creation of a public-private task
force, under the aegis of the Bank Secrecy Act Advisory Group,
to focus on issues related to terrorist financing. Among the
issues to be addressed by the task force are the methods used
by terrorist organizations to transfer funds globally and
within the U.S., including through the use of charitable
organizations; the relationship between international narcotics
traffickers and foreign terrorist organizations; and the means
of facilitating the identification of accounts and transactions
involving terrorist groups, and facilitating the exchange of
information concerning terrorist financing between financial
institutions and law enforcement organizations.
Section 206. Suspicious Activity Reporting Requirements
This section directs the Secretary of the Treasury, in
consultation with the Securities Exchange Commission (SEC), to
publish by no later than December 31, 2001, a proposed
regulation requiring securities broker-dealers to file
Suspicious Activity Reports. The Secretary is also authorized,
in consultation with the Commodity Futures Trading Commission
(CFTC), to prescribe regulations requiring futures commission
merchants, commodity trading advisors, and commodity pool
operators registered under the Commodity Exchange Act (CEA) to
file Suspicious Activity Reports.
At the time the Secretary of the Treasury proposes any
reporting rules for futures commission merchants, the Secretary
should consult with the Securities and Exchange Commission and
the Commodity Futures Trading Commission and take steps to
provide for a reporting process for entities registered as both
securities brokers or dealers and futures commission merchants
that requires only a single report, to the extent practicable
and consistent with the Bank Secrecy Act. The Secretary should
also act to prevent inconsistent regulations being applied to
dually registered entities. Further, the Secretary should
consult with the Commodity Futures Trading Commission to
promote the use of a single reporting form for the Commodity
Futures Trading Commission and Treasury, to the extent
practicable and consistent with the Bank Secrecy Act.
The Committee notes that, under the Bank Secrecy Act, the
Secretary currently has the authority to require Suspicious
Activity Reports of entities similar to futures commission
merchants, commodity trading advisors, and commodity pool
operators, namely registered investment advisors and registered
investment companies. Accordingly, registered investment
advisors and registered investment companies are not
specifically identified in section 206(a). The Secretary and
theCommodity Futures Trading Commission should consider the
money laundering regulations and requirements imposed on registered
investment companies and investment advisors when considering what
regulations, if any, should apply to registered commodity pool
operators and commodity trading advisors so as to ensure that these
similar entities are treated in a comparable manner.
Section 207. Amendments Relating to Reporting of Suspicious Activities
Subsection (a) of section 207 makes certain technical and
clarifying amendments to 31 U.S.C. Sec. 5318(g)(3), the Bank
Secrecy Act's ``safe harbor'' provision that protects financial
institutions that disclose possible violations of law or
regulation from civil liability for reporting their suspicions
and for not alerting those identified in the reports. The safe
harbor is directed at Suspicious Activity Reports and similar
reports to the government and regulatory authorities under the
Bank Secrecy Act.
First, section 207(a) amends section 5318(g)(3) to make
clear that the safe harbor from civil liability applies in
arbitration, as well as judicial, proceedings. Second, it
amends section 5318(g)(3) to clarify the safe harbor's coverage
of voluntary disclosures (that is, those not covered by the SAR
regulatory reporting requirement). The language in section
5318(g)(3)(A) providing that ``any financial institution that *
* * makes a disclosure pursuant to * * * any other authority *
* * shall not be liable to any person'' is not intended to
avoid the application of the reporting and disclosure
provisions of the Federal securities laws to any person, or to
insulate any issuers from private rights of actions for
disclosures made under the Federal securities laws.
Subsection 207(b) amends section 5318(g)(2) of title 31--
which currently prohibits notification of any person involved
in a transaction reported in a SAR that a SAR has been filed--
to clarify (1) that any government officer or employee who
learns that a SAR has been filed may not disclose that fact to
any person identified in the SAR, except as necessary to
fulfill the officer or employee's official duties, and (2) that
disclosure by a financial institution of potential wrongdoing
in a written employment reference provided in response to a
request from another financial institution pursuant to section
18(v) of the Federal Deposit Insurance Act, or in a written
termination notice or employment reference provided in
accordance with the rules of a securities self-regulatory
organization, is not prohibited simply because the potential
wrongdoing was also reported in a SAR.
Section 208. Authorization to Include Suspicions of Illegal Activity in
Written Employment References
This section deals with the same employment reference issue
addressed in section 207 but with respect to title 12.
Occasionally banks develop suspicions that a bank officer or
employee has engaged in potentially unlawful activity. These
suspicions typically result in the bank filing a SAR. Under
present law, however, the ability of banks to share these
suspicions in written employment references with other banks
when such an officer or employee seeks new employment is
unclear. Section 208 would amend 12 U.S.C. Sec. 1828 to permit
a bank, upon request by another bank, to share information in a
written employment reference concerning the possible
involvement of a current or former officer or employee in
potentially unlawful activity without fear of civil liability
for sharing the information, but only to the extent that the
disclosure does not contain information which the bank knows to
be false, and the bank has not acted with malice or with
reckless disregard for the truth in making the disclosure.
Section 209. International Cooperation on Identification of Originators
of Wire Transfers
This section directs the Secretary of the Treasury, in
consultation with the Attorney General and the Secretary of
State, to (1) take all reasonable steps to encourage foreign
governments to require the inclusion of the name of the
originator in wire transfer instructions sent to the U.S. and
other countries; and (2) report annually to Congress on
Treasury's progress in achieving this objective, and on
impediments to instituting a regime in which all appropriate
identification about wire transfer recipients is included with
wire transfers from their point of origination until
disbursement.
The Committee is concerned that inadequate information on
the originator of wire transfers from a number of foreign
jurisdictions makes it difficult for both law enforcement and
financial institutions to properly understand the source of
funds entering the United States in wire transfers. Such a lack
of clarity could aid money launderers or terrorists in moving
their funds into the United States financial system.
Additionally, while arguments have been made that there are
technical impediments to requiring that complete addressee
information appear on all wire transfers terminating in or
passing through the United States, the Committee believes that
having such information is technically feasible and would aid
both financial institutions in performing due diligence and law
enforcement in tracking or seizing money that is the derivative
of or would be used in the commission of a crime.
Section 210. Check Truncation Study
This section directs the Secretary of the Treasury, in
consultation with the Attorney General and the Federal Reserve
Board of Governors, to study the impact on crime prevention,
law enforcement, and the administration of consumer protection
laws of check electronification, through truncation or
migration from paper checks.
TITLE III--COMBATING INTERNATIONAL MONEY LAUNDERING
Section 301. Special Measures for Jurisdictions, Financial
Institutions, or International Transactions of Primary Money
Laundering Concern
Section 301 adds a new section 5318A to the Bank Secrecy
Act, authorizing the Secretary of the Treasury to require
domestic financial institutions and agencies to take one or
more of five ``special measures'' if the Secretary finds that
reasonable grounds exist to conclude that a foreign
jurisdiction, a financial institution operating outside the
United States, a class of international transactions, or one or
more types of accounts is a ``primary money laundering
concern.'' Prior to invoking any of the special measures
contained in section 5318A(b), the Secretary is required to
consult with the Chairman of the Board of Governors of the
Federal Reserve System, any other appropriate Federal banking
agency, the Securities and Exchange Commission, the National
Credit Union Administration Board, and, in the sole discretion
of the Secretary, such other agencies and interested parties as
the Secretary may find to be appropriate. Among other things,
this consultation is designed to ensure that the Secretary
possesses information on the effect that any particular special
measure may have on the domestic and international banking
system. In addition, the Committee encourages the Secretary to
consult with non-governmental ``interested parties,''
including, for example, the Bank Secrecy Act Advisory Group, to
obtain input from those who may be subject to a regulation or
order under this section.
Prior to invoking any of the special measures contained in
section 5318A, the Secretary must consider three discrete
factors, namely (1) whether other countries or multilateral
groups have taken similar action; (2) whether the imposition of
the measure would create a significant competitive
disadvantage, including any significant cost or burden
associated with compliance, for firms organized or licensed in
the United States; and (3) the extent to which the action would
have an adverse systemic impact on the payment system or
legitimate business transactions.
Finally, subsection (a) makes clear that this new authority
is not to be construed as superseding or restricting any other
authority of the Secretary or any other agency.
Subsection (b) of the new section 5318A outlines the five
``special measures'' the Secretary may invoke against a foreign
jurisdiction, financial institution operating outside the U.S.,
class of transaction within, or involving, a jurisdiction
outside the U.S., or one or more types of accounts, that he
finds to be of primary money laundering concern.
The first such measure would require domestic financial
institutions \2\ to maintain records and/or file reports on
certain transactions involving the primary money laundering
concern, to include any information the Secretary requires,
such as the identity and address of participants in a
transaction, the legal capacity in which the participant is
acting, the beneficial ownership of the funds (in accordance
with steps that the Secretary determines to be reasonable and
practicable to obtain such information), and a description of
the transaction. The records and/or reports authorized by this
section must involve transactions from a foreign jurisdiction,
a financial institution operating outside the United States, or
class of international transactions within, or involving, a
foreign jurisdiction, and are not to include transactions that
both originate and terminate in, and only involve, domestic
financial institutions.
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\2\ The term ``domestic financial institution'' means a financial
institution, wherever organized, that operates in the United States,
but only to the extent of its U.S. operations. See 31 U.S.C.
Sec. 5312(b)(2).
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The second special measure would require domestic financial
institutions to take such steps as the Secretary determines to
be reasonable and practicable to ascertain beneficial ownership
of accounts opened or maintained in the U.S. by a foreign
person (excluding publicly traded foreign corporations)
associated with what has been determined to be a primary money
laundering concern.
The third special measure the Secretary could impose in the
case of a primary money laundering concern would require
domestic financial institutions, as a condition of opening or
maintaining a ``payable-through account'' for a foreign
financial institution, to identify each customer (and
representative of the customer) who is permitted to use or
whose transactions flow through such an account, and to obtain
for each customer (and representative) information that is
substantially comparable to the information it would obtain
with respect to its own customers. A ``payable-through
account'' is defined for purposes of thelegislation as an
account, including a transaction account (as defined in section
19(b)(1)(C) of the Federal Reserve Act), opened at a depository
institution by a foreign financial institution by means of which the
foreign financial institution permits its customers to engage, either
directly or through a sub-account, in banking activities usual in
connection with the business of banking in the United States.
The fourth special measure the Secretary could impose in
the case of a primary money laundering concern would require
domestic financial institutions, as a condition of opening or
maintaining a ``correspondent'' account for a foreign financial
institution, to identify each customer (and representative of
the customer) who is permitted to use or whose transactions
flow through such an account, and to obtain for each customer
(and representative) information that is substantially
comparable to the information that it would obtain with respect
to its own customers. With respect to a bank, the term
``correspondent account'' means an account established to
receive deposits from and make payments on behalf of a foreign
financial institution.
The fifth measure the Secretary could impose in the case of
a primary money laundering concern would prohibit or impose
conditions (beyond those already provided for in the third and
fourth measures) on domestic financial institutions'
correspondent or payable-through accounts with foreign banking
institutions. In addition to the required consultation with the
Chairman of the Board of Governors of the Federal Reserve,
prior to imposing this measure the Secretary is also directed
to consult with the Secretary of State and the Attorney
General.
The five special measures authorized by this section may be
imposed in any sequence or combination as the Secretary
determines. The first four special measures may be imposed by
regulation, order, or otherwise as permitted by law. However,
if the Secretary proceeds by issuing an order, the order must
be accompanied by a notice of proposed rulemaking relating to
the imposition of the special measure, and may not remain in
effect for more than 120 days, except pursuant to a regulation
prescribed on or before the end of the 120-day period. The
fifth special measure may be imposed only by regulation.
Section 5318A(c) guides the Secretary's determination
whether reasonable grounds exist to conclude that a
jurisdiction, financial institution class of international
transactions or type of account is of ``primary money
laundering concern.'' In determining whether reasonable grounds
exist for reaching this conclusion regarding a particular
jurisdiction, the Secretary is to consider relevant
information, including: (1) evidence that organized criminal
groups, international terrorists, or both, have transacted
business in that jurisdiction; (2) the extent to which the
jurisdiction or financial institutions operating in the
jurisdiction offer bank secrecy or other regulatory advantages
to nonresidents; (3) the quality of the jurisdiction's bank
supervision and anti-money laundering laws; (4) the volume of
financial transactions occurring in the jurisdiction relative
to its economic size; (5) whether credible international
entities characterize the jurisdiction as a bank secrecy haven;
(6) whether the United States has a mutual legal assistance
treaty with the jurisdiction and what the U.S. experience in
obtaining information from the jurisdiction has been; and (7)
the extent to which the jurisdiction is characterized by high
levels of official or institutional corruption.
In deciding whether reasonable grounds exist to conclude
that an institution, a class of transactions, or a type of
account represent a primary money laundering concern, the
Secretary is to consider: (1) the extent to which the
institution, transaction, or account facilitates money
laundering; (2) the extent to which the institution,
transaction, or account is used for legitimate business; and
(3) the extent to which the Secretary's finding will be
effective in guarding against money laundering.
To ensure that the Secretary is apprised of the pertinent
diplomatic and law enforcement implications of determinations
made pursuant to this section, subsection (c)(1) requires the
Secretary to consult with the Secretary of State and the
Attorney General. The Committee expects that the Secretary will
not routinely determine that reasonable grounds exist to
conclude that a jurisdiction, financial institution, class of
international transactions, or type of account is of primary
money laundering concern, but instead will exercise this
authority only to combat identified and significant money
laundering threats.
Subsection (d) requires the Secretary to notify, in
writing, the relevant Committees in the House and Senate within
10 days of taking a special measure to address a primary money
laundering concern.
Subsection (e) defines the terms ``account,''
``correspondent account,'' and ``payable-through account'' for
banks, and requires the Secretary, in consultation with the
appropriate Federal functional regulators, to define these
terms for application to non-bank financial institutions.
Subsection (e) also requires the Secretary of the Treasury
to promulgate regulations defining beneficial ownership of an
account for purposes of subchapter II of title 31. The
regulations are required to address issues related to an
individual's authority to fund, direct or manage the account
(including the power to direct payments into or out of the
account), and an individual's material interest in the incomeor
corpus of the account, and must ensure that the identification of
individuals under this section does not extend to any individual whose
beneficial interest in the income or corpus of the account is
immaterial.
Section 301 also amends the definition of ``financial
institution'' in 31 U.S.C. Sec. 5312 to include credit unions,
futures commission merchants, commodity trading advisors, and
commodity pool operators registered, or required to register,
under the Commodity Exchange Act. The section also clarifies
that for purposes of this Act and any amendment made by this
Act to any other provision of law, the term ``Federal
functional regulator'' includes the Commodity Futures Trading
Commission.
Section 302. Special Due Diligence for Correspondent Accounts and
Private Banking Accounts
Section 302 amends 31 U.S.C. Sec. 5318 to require financial
institutions that establish, maintain, administer, or manage
private banking or correspondent accounts for non-U.S. persons
to establish appropriate, specific, and, where necessary,
enhanced due diligence policies, procedures, and controls to
detect and report instances of money laundering through those
accounts.
The section requires financial institutions to apply
enhanced due diligence procedures when opening or maintaining a
correspondent account for a foreign bank operating (1) under a
license to conduct banking activities which, as a condition of
the license, prohibits the licensed entity from conducting
banking activities with the citizens of, or with the local
currency of, the country which issued the license; or (2) under
a license issued by a foreign country that has been designated
(a) as non-cooperative with international anti-money laundering
principles by an intergovernmental group or organization of
which the United States is a member, with which designation the
Secretary of the Treasury concurs, or (b) by the Secretary as
warranting special measures due to money laundering concerns.
The enhanced due diligence procedures include (1)
ascertaining the identity of each of the owners of the foreign
bank (except for banks that are publicly traded); (2)
conducting enhanced scrutiny of the correspondent account to
guard against money laundering and report any suspicious
activity; and (3) ascertaining whether the foreign bank
provides correspondent accounts to other foreign banks and, if
so, the identity of those foreign banks and related due
diligence information.
For private banking accounts requested or maintained by a
non-United States person, a financial institution is required
to implement procedures for (1) ascertaining the identity of
the nominal and beneficial owners of, and the source of funds
deposited into, the account as needed to guard against money
laundering and report suspicious activity; and (2) conducting
enhanced scrutiny of any such account requested or maintained
by, or on behalf of, a senior foreign political figure, or his
immediate family members or close associates, to prevent,
detect and report transactions that may involve the proceeds of
foreign corruption. A private bank account is defined as an
account (or any combination of accounts) that requires a
minimum aggregate deposit of funds or other assets of not less
than $1 million; is established on behalf of one or more
individuals who have a direct or beneficial ownership in the
account; and is assigned to, or administered or managed by, an
officer, employee or agent of a financial institution acting as
a liaison between the institution and the direct or beneficial
owner of the account.
This section directs the Secretary of the Treasury, within
6 months of enactment of this bill and in consultation with
appropriate Federal functional regulators, to further define
and clarify, by regulation, the requirements imposed by this
section.
Section 303. Prohibition on United States Correspondent Accounts with
Foreign Shell Banks
This section bars U.S. depository institutions from
providing correspondent banking services to foreign shell banks
that have no physical presence in any country. It also requires
depository institutions to take reasonable steps to ensure that
any correspondent account established, maintained, administered
or managed for a foreign bank is not being used to indirectly
provide banking services to another foreign bank that does not
have a physical presence in any country. This section does not
prevent a U.S. bank from opening a correspondent account for a
foreign bank that is (1) affiliated with a depository
institution, credit union, or other foreign bank that maintains
a physical presence in the U.S. or a foreign country, and (2)
is subject to supervision by a banking authority in the country
regulating the affiliated entity.
The Secretary of the Treasury is directed to prescribe
regulations delineating reasonable steps necessary for a
depository institution to comply with this section.
Section 304. Anti-Money Laundering Programs
This section directs financial institutions to establish
anti-money laundering programs, including the development of
internal policies, procedures, and controls; the designation of
an officer of the financialinstitution responsible for
compliance; an ongoing employee training program; and an independent
audit function to test programs.
The Secretary of the Treasury is required to prescribe
regulations implementing this section within 180 days of
enactment of this Act, taking into consideration the extent to
which the requirements imposed by such regulations are
commensurate with the size, location and activities of the
financial institutions to which such regulations apply. The
Committee believes that the regulations to be issued by the
Secretary under this section, and those issued by banking and
thrift regulators as well under other authority, could
contribute to the detection and prevention of money laundering
crimes by reconciling rules that could be interpreted in a way
that places conflicting burdens on financial institutions.
Section 305. Concentration Accounts at Financial Institutions
This section gives the Secretary of the Treasury
discretionary authority to prescribe regulations governing the
maintenance of concentration accounts by financial
institutions, to ensure that these accounts are not used to
prevent association of the identity of an individual customer
with the movement of funds of which the customer is the direct
or beneficial owner. If promulgated, the regulations are
required to prohibit financial institutions from allowing
clients to direct transactions into, out of, or through the
concentration accounts of the institution; prohibit financial
institutions and their employees from informing customers of
the existence of, or means of identifying, the concentration
accounts of the institution; and to establish written
procedures governing the documentation of all transactions
involving a concentration account.
Section 306. International Cooperation in Investigations of Money
Laundering, Financial Crimes, and the Finances of Terrorist
Groups
This section directs the Secretary of the Treasury, in
consultation with the Attorney General, the Secretary of State,
and the Board of Governors of the Federal Reserve, to enter
into negotiations with the appropriate financial supervisory
agencies and other officials of any foreign country whose
financial institutions do business with United States financial
institutions or which may be utilized by any foreign terrorist
organization, any person who is a member or representative of
any such organization, or any person engaged in money
laundering or financial or other crimes. The purpose of the
negotiations is to further cooperative efforts to (1) ensure
that foreign banks and other financial institutions maintain
adequate records of large United States currency transactions,
and transaction and account information relating to any foreign
terrorist organization or member or representative thereof, or
any person engaged in money laundering or financial or other
crimes; and (2) establish a mechanism for making such records
available to United States law enforcement officials and
domestic financial institution supervisors, where appropriate.
The Secretary of the Treasury is required to submit an
interim report to Congress on progress in the negotiations
outlined above within one year of the date of enactment of this
Act, and a final report on the outcome of the negotiations to
the President and the Congress within two years. In the final
report, the Secretary is directed to identify countries whose
financial institutions are being utilized by any foreign
terrorist organization or representative or member thereof, or
any person engaged in money laundering or financial or other
crimes, and which have not reached agreement with the United
States on the maintenance and exchange of information relating
to such activities.
If the President determines that a country identified in
the report is not negotiating in good faith with the United
States to reach agreement on matters identified in this
section, or that a financial institution in such country has
not complied with a United States request for information
regarding a foreign terrorist organization or a person engaged
in money laundering for any such organization, the President
may impose appropriate penalties on such country. The penalties
imposed by the President may include prohibiting persons,
institutions, or other entities in the relevant foreign country
from (1) participating in any United States dollar clearing or
wire transfer system; and (2) maintaining an account with any
bank or other financial institution chartered under United
States law.
Section 307. Prohibition on Acceptance of Any Bank Instrument for
Unlawful Internet Gambling
This section prohibits a gambling business from accepting
bank instruments in connection with unlawful Internet gambling.
Covered instruments include credit cards, electronic fund
transfers, and checks. A financial intermediary would not be
held responsible under this section unless it was involved in
the actual operation of an illegal Internet gambling site. The
legislation covers only unlawful Internet gambling, and would
not apply to future lawful Internet gambling should a State
decide to authorize it, as Nevada did this year in passing
legislation to authorize in-State Internet gambling, provided
such operations do not violate Federal law.
Subsection (b) defines the term ``bets or wagers'' as the
staking or risking by any person of something of value upon the
outcome of acontest of others, a sporting event, or a game
predominantly subject to chance with the agreement that the winner will
receive something of greater value than the amount staked or risked.
This subsection clarifies that ``bets or wagers'' does not include a
bona fide business transaction governed by the securities laws; a
transaction subject to the Commodity Exchange Act; an over-the-counter
derivative instrument; a contract of indemnity or guarantee; a contract
for life, health, or accident insurance; a deposit with a depository
institution; or certain participation in a simulation sports game or
education game. The subsection also clarifies that ``business of
betting or wagering'' does not generally include any financial
intermediary (creditor, credit card issuer, insured depository
institution, transmitter of an electric fund transfer, money
transmitting business, or network used to effect a credit transaction,
electronic fund transfer, stored value product transaction, or money
transmitting service, or any participant in such network). Subsection
(b) also defines the terms ``Internet'' and ``unlawful Internet
gambling.''
Subsection (c) authorizes civil remedies, including a
preliminary injunction, or injunction against any person other
than an Internet service provider (unless that Internet service
provider is acting in concert or participation with a person
violating this section and receives actual knowledge of the
order) to prevent or restrain a violation of this section,
including expedited proceedings in exigent circumstances. The
subsection authorizes such proceedings to be brought by the
U.S. Attorney General, or the attorney general of a State or
other appropriate State official. The subsection clarifies that
this section should not be construed as altering, superseding,
or otherwise affecting the application of the Indian Gaming
Regulatory Act. The subsection requires that, before any
proceeding under this subsection is initiated against an
insured depository institution, notification must be made to
the appropriate Federal banking agency and such agency must be
allowed a reasonable time to issue the appropriate regulatory
order.
Subsection (d) authorizes criminal penalties for violation
of 307(a), including fines or imprisonment for not more than
five years, or both. The subsection also authorizes a permanent
injunction against a person convicted under this subsection,
enjoining such person from placing, receiving, or otherwise
making bets or wagers or sending, receiving, or inviting
information assisting in the placing of bets or wagers.
Subsection (e) provides that the safe harbor provided to a
financial intermediary (creditor, credit card issuer, financial
institution, operator of a terminal at which an electronic fund
transfer may be initiated, money transmitting business, or
national, regional, or local network) under subsection (b)(2)
does not apply to a financial intermediary that operates,
manages, supervises, or directs an Internet website at which
unlawful bets or wagers are or may be placed, received, or
otherwise made; or is owned or controlled by any person who
operates, manages, supervises, or directs such an Internet
website.
Subsection (f) allows the appropriate Federal banking
agency to prohibit an insured depository institution from
extending credit, or facilitating an extension of credit,
electronic fund transfer, or money transmitting service, or
from paying, transferring, or collecting on any check, draft,
or other instrument drawn on any depository institution, where
the institution has actual knowledge that a person is violating
this section in connection with such activities. This
subsection, in conjunction with subsections (b)(2) and (e), is
intended to ensure that a financial intermediary is not held
liable for a violation of this section solely based on the
unknowing and unintentional involvement of the intermediary
through the use of the facilities of such intermediary in an
unlawful Internet gambling transaction, unless the intermediary
acted as an agent of a gambling business and had: (1) actual
knowledge that the specific transaction is an unlawful Internet
gambling transaction; and (2) the intent to engage in the
business of submitting into the payment system Internet
gambling transactions prohibited by this section.
Section 308. Internet Gambling In or Through Foreign Jurisdictions
This section provides that, in deliberations between the
U.S. Government and any other country on money laundering,
corruption, and crime issues, the U.S. Government should
encourage cooperation by foreign governments in identifying
whether Internet gambling operations are being used for money
laundering, corruption, or other crimes, advance policies that
promote the cooperation by foreign governments in the
enforcement of this Act, and encourage the Financial Action
Task Force on Money Laundering to study the extent to which
Internet gambling operations are being used for money
laundering.
TITLE IV--CURRENCY PROTECTION
Section 401. Counterfeiting Domestic Currency and Obligations
This section makes it a criminal offense to possess an
electronic image of an obligation or security document of the
United States with intent to defraud. The provision harmonizes
counterfeiting language to clarify that possessing either
analog or digital copies with intent to defraud constitutes an
offense. This section mimics existing language that makes it a
felony to possess the plates from which currency can be
printed, and takes into account the fact that most counterfeit
currency seized today is generated by computers or computer-
based equipment. The section also increases maximum sentences
for a series of counterfeiting offenses.
Section 402. Counterfeiting Foreign Currency and Obligations
This section conforms the legal prohibition on
counterfeiting foreign security documents or obligations within
the U.S. to that of counterfeiting U.S. security documents or
obligations, and raises penalties to parity with those
established in section 401.
Section 403. Production of Documents
This section allows the Secretary of the Treasury to
authorize production of currency, stamps or other security
documents for foreign countries if such work does not interfere
with the production of such documents for the U.S. and if the
Secretary of State has concurred in the production.
Section 404. Reimbursement
This section provides that the Treasury be fully reimbursed
for the printing authorized in section 403, including all real,
administrative and other costs, by the foreign nation for which
production services are performed.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 31, UNITED STATES CODE
* * * * * * *
CHAPTER 3--DEPARTMENT OF THE TREASURY
* * * * * * *
SUBCHAPTER I--ORGANIZATION
Sec.
301. Department of the Treasury.
* * * * * * *
310. Financial Crimes Enforcement Network
[310.] 311. Continuing in office.
* * * * * * *
SUBCHAPTER I--ORGANIZATION
* * * * * * *
Sec. 310. Financial Crimes Enforcement Network
(a) In General.--The Financial Crimes Enforcement Network
established by order of the Secretary of the Treasury (Treasury
Order Numbered 105-08) on April 25, 1990, shall be a bureau in
the Department of the Treasury.
(b) Director.--
(1) Appointment.--The head of the Financial Crimes
Enforcement Network shall be the Director who shall be
appointed by the President, by and with the consent of
the Senate, to a term of 4 years.
(2) Duties and powers.--The duties and powers of the
Director are as follows:
(A) Advise and make recommendations on
matters relating to financial intelligence,
financial criminal activities, and other
financial activities to the Under Secretary for
Enforcement.
(B) Maintain a government-wide data access
service, with access, in accordance with
applicable legal requirements, to the
following:
(i) Information collected by the
Department of the Treasury, including
report information filed under
subchapters II and III of chapter 53 of
this title (such as reports on cash
transactions, foreign financial agency
transactions and relationships, foreign
currency transactions, exporting and
importing monetary instruments, and
suspicious activities), chapter 2 of
Public Law 91-508, section 21 of the
Federal Deposit Insurance Act and
section 6050I of the Internal Revenue
Code of 1986.
(ii) Information regarding national
and international currency flows.
(iii) Other records and data
maintained by other Federal, State,
local, and foreign agencies, including
financial and other records developed
in specific cases.
(iv) Other privately and publicly
available information.
(C) Analyze and disseminate the available
data in accordance with applicable legal
requirements and policies and guidelines
established by the Secretary of the Treasury
and the Under Secretary for Enforcement to--
(i) identify possible criminal
activity to appropriate Federal, State,
local, and foreign law enforcement
agencies;
(ii) support ongoing criminal
financial investigations and
prosecutions and related proceedings,
including civil and criminal tax and
forfeiture proceedings;
(iii) identify possible instances of
noncompliance with subchapters II and
III of chapter 53 of this title,
chapter 2 of Public Law 91-508, and
section 21 of the Federal Deposit
Insurance Act to Federal agencies with
statutory responsibility for enforcing
compliance with such provisions and
other appropriate Federal regulatory
agencies;
(iv) evaluate and recommend possible
uses of special currency reporting
requirements under section 5326; and
(v) determine emerging trends and
methods in money laundering and other
financial crimes.
(D) Establish and maintain a financial crimes
communications center to furnish law
enforcement authorities with intelligence
information related to emerging or ongoing
investigations and undercover operations.
(E) Furnish research, analytical, and
informational services to financial
institutions, appropriate Federal regulatory
agencies with regard to financial institutions,
and appropriate Federal, State, local, and
foreign law enforcement authorities, in
accordance with policies and guidelines
established by the Secretary of the Treasury or
the Under Secretary of the Treasury for
Enforcement, in the interest of detection,
prevention, and prosecution of terrorism,
organized crime, money laundering, and other
financial crimes.
(F) Establish and maintain a special unit
dedicated to combatting the use of informal,
nonbank networks and payment and barter system
mechanisms that permit the transfer of funds or
the equivalent of funds without records and
without compliance with criminal and tax laws.
(G) Provide computer and data support and
data analysis to the Secretary of the Treasury
for tracking and controlling foreign assets.
(H) Coordinate with financial intelligence
units in other countries on anti-terrorism and
anti-money laundering initiatives, and similar
efforts.
(I) Administer the requirements of
subchapters II and III of chapter 53 of this
title, chapter 2 of Public Law 91-508, and
section 21 of the Federal Deposit Insurance
Act, to the extent delegated such authority by
the Secretary of the Treasury.
(J) Such other duties and powers as the
Secretary of the Treasury may delegate or
prescribe.
(c) Requirements Relating to Maintenance and Use of Data
Banks.--The Secretary of the Treasury shall establish and
maintain operating procedures with respect to the government-
wide data access service and the financial crimes
communications center maintained by the Financial Crimes
Enforcement Network which provide--
(1) for the coordinated and efficient transmittal of
information to, entry of information into, and
withdrawal of information from, the data maintenance
system maintained by the Network, including--
(A) the submission of reports through the
Internet or other secure network, whenever
possible;
(B) the cataloguing of information in a
manner that facilitates rapid retrieval by law
enforcement personnel of meaningful data; and
(C) a procedure that provides for a prompt
initial review of suspicious activity reports
and other reports, or such other means as the
Secretary may provide, to identify information
that warrants immediate action; and
(2) in accordance with section 552a of title 5 and
the Right to Financial Privacy Act of 1978, appropriate
standards and guidelines for determining--
(A) who is to be given access to the
information maintained by the Network;
(B) what limits are to be imposed on the use
of such information; and
(C) how information about activities or
relationships which involve or are closely
associated with the exercise of constitutional
rights is to be screened out of the data
maintenance system.
(d) Authorization of Appropriations.--There are authorized to
be appropriated for the Financial Crimes Enforcement Network
such sums as may be necessary for fiscal years 2002, 2003,
2004, and 2005.
Sec. [310] 311. Continuing in office
When the term of office of an officer of the Department of
the Treasury ends, the officer may continue to serve until a
successor is appointed and qualified.
* * * * * * *
SUBTITLE IV--MONEY
* * * * * * *
CHAPTER 51--COINS AND CURRENCY
* * * * * * *
SUBCHAPTER II--GENERAL AUTHORITY
* * * * * * *
Sec. 5114. Engraving and printing currency and security documents
[(a) The Secretary of the Treasury]
(a) Authority To Engrave and Print.--
(1) In general.--The Secretary of the Treasury shall
engrave and print United States currency and bonds of
the United States Government and currency and bonds of
United States territories and possessions from intaglio
plates on plate printing presses the Secretary selects.
However, other security documents and checks may be
printed by any process the Secretary selects. Engraving
and printing shall be carried out within the Department
of the Treasury if the Secretary decides the engraving
and printing can be carried out as cheaply, perfectly,
and safely as outside the Department.
(2) Engraving and printing for other governments.--
The Secretary of the Treasury may, if the Secretary
determines that it will not interfere with engraving
and printing needs of the United States, produce
currency, postage stamps, and other security documents
for foreign governments, subject to a determination by
the Secretary of State that such production would be
consistent with the foreign policy of the United
States.
* * * * * * *
SUBCHAPTER IV--BUREAU OF ENGRAVING AND PRINTING
* * * * * * *
Sec. 5143. Payment for services
The Secretary of the Treasury shall impose charges for Bureau
of Engraving and Printing services the Secretary provides to an
agency, any foreign government, or any territory of the United
States. The charges shall be in amounts the Secretary considers
adequate to cover the costs of the services (including
administrative and other costs related to providing the
services). The agency, foreign government, or territory of the
United States shall pay promptly bills submitted by the
Secretary.
* * * * * * *
CHAPTER 53--MONETARY TRANSACTIONS
* * * * * * *
SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS
5311. Declaration of purpose.
* * * * * * *
5318A. Special measures for jurisdictions, financial institutions, or
international transactions of primary money laundering
concern.
* * * * * * *
5331. Bulk cash smuggling into or out of the United States.
5332. Subpoenas for records.
* * * * * * *
Sec. 5311. Declaration of purpose.
It is the purpose of this subchapter (except section 5315) to
require certain reports or records where they have a high
degree of usefulness in criminal, tax, or regulatory
investigations or proceedings, or in the conduct of
intelligence or counterintelligence activities, including
analysis, to protect against international terrorism.
Sec. 5312. Definitions and application
(a) In this subchapter--
(1) * * *
(2) ``financial institution'' means--
(A) * * *
* * * * * * *
[(E) an insured institution (as defined in
section 401(a) of the National Housing Act (12
U.S.C. 1724(a)));]
(E) any credit union;
* * * * * * *
[(R) a licensed sender of money;]
(R) a licensed sender of money or any other
person who engages as a business in the
transmission of funds, including through an
informal value transfer banking system or
network of people facilitating the transfer of
value domestically or internationally outside
of the conventional financial institutions
system;
* * * * * * *
(c) Additional Definitions.--For purposes of this subchapter,
the following definitions shall apply:
(1) Certain institutions included in definition.--The
term ``financial institution'' (as defined in
subsection (a)) includes the following:
(A) Any futures commission merchant,
commodity trading advisor, or commodity pool
operator registered, or required to register,
under the Commodity Exchange Act.
* * * * * * *
Sec. 5317. Search and forfeiture of monetary instruments
(a) * * *
[(b) Searches at Border.--For purposes of ensuring compliance
with the requirements of section 5316, a customs officer may
stop and search, at the border and without a search warrant,
any vehicle, vessel, aircraft, or other conveyance, any
envelope or other container, and any person entering or
departing from the United States.
[(c) If a report required under section 5316 with respect to
any monetary instrument is not filed (or if filed, contains a
material omission or misstatement of fact), the instrument and
any interest in property, including a deposit in a financial
institution, traceable to such instrument may be seized and
forfeited to the United States Government. Any property, real
or personal, involved in a transaction or attempted transaction
in violation of section 5324(b), or any property traceable to
such property, may be seized and forfeited to the United States
Government. A monetary instrument transported by mail or a
common carrier, messenger, or bailee is being transported under
this subsection from the time the instrument is delivered to
the United States Postal Service, common carrier, messenger, or
bailee through the time it is delivered to the addressee,
intended recipient, or agent of the addressee or intended
recipient without being transported further in, or taken out
of, the United States.]
(b) Searches at Border.--
(1) In general.--For purposes of ensuring compliance
with the laws enforced by the United States Customs
Service, a customs officer may stop and search, at the
border and without a search warrant, any vehicle,
vessel, aircraft, or other conveyance, any envelope or
other container, and any person entering, transiting,
or departing from the United States.
(2) International shipments of mail.--With respect to
shipments of international mail that are exported or
imported by the United States Postal Service, the
Customs Service and other appropriate Federal agencies
shall, subject to paragraph (3), apply the customs laws
of the United States and all other laws relating to the
importation or exportation of such shipments in the
same manner to both shipments by the United States
Postal Service and similar shipments by private
companies.
(3) Safeguards.--No provision of this subsection
shall be construed as authorizing any customs officer
or any other person to read any correspondence unless--
(A) a search warrant has been issued pursuant
to Rule 41 of the Federal Rules of Criminal
Procedure which permits such correspondence to
be read; or
(B) the sender or addressee of the
correspondence has given written consent for
any such action.
(c) Forfeiture.--
(1) In general.--The court in imposing sentence for
any violation of section 5313, 5316, or 5324 of this
title, or section 6050I of the Internal Revenue Code of
1986, or any conspiracy to commit such violation, shall
order the defendant to forfeit all property, real or
personal, involved in the offense and any property
traceable thereto.
(2) Procedure.--Forfeitures under this subsection
shall be governed by the procedures established in
section 413 of the Controlled Substances Act and the
guidelines established in paragraph (4).
(3) Civil forfeiture.--Any property involved in a
violation of section 5313, 5316, or 5324 of this title,
or section 6050I of the Internal Revenue Code of 1986,
or any conspiracy to commit any such violation, and any
property traceable to any such violation or conspiracy,
may be seized and, subject to paragraph (4), forfeited
to the United States in accordance with the procedures
governing civil forfeitures in money laundering cases
pursuant to section 981(a)(1)(A) of title 18, United
States Code.
(4) Proportionality of forfeiture.--
(A) In general.--Upon a showing by the
property owner by a preponderance of the
evidence that any currency or monetary
instruments involved in the offense giving rise
to the forfeiture were derived from a
legitimate source, and were intended for a
lawful purpose, the court shall reduce the
forfeiture to the maximum amount that is not
grossly disproportional to the gravity of the
offense.
(B) Factors to be considered.--In determining
the amount of the forfeiture, the court shall
consider all aggravating and mitigating facts
and circumstances that have a bearing on the
gravity of the offense, including the
following:
(i) The value of the currency or
other monetary instruments involved in
the offense.
(ii) Efforts by the person committing
the offense to structure currency
transactions, conceal property, or
otherwise obstruct justice.
(iii) Whether the offense is part of
a pattern of repeated violations of
Federal law.
Sec. 5318. Compliance, exemptions, and summons authority
(a) * * *
* * * * * * *
(g) Reporting of Suspicious Transactions.--
(1) * * *
[(2) Notification prohibited.--A financial
institution, and a director, officer, employee, or
agent of any financial institution, who voluntarily
reports a suspicious transaction, or that reports a
suspicious transaction pursuant to this section or any
other authority, may not notify any person involved in
the transaction that the transaction has been reported.
[(3) Liability for disclosures.--Any financial
institution that makes a disclosure of any possible
violation of law or regulation or a disclosure pursuant
to this subsection or any other authority, and any
director, officer, employee, or agent of such
institution, shall not be liable to any person under
any law or regulation of the United States or any
constitution, law, or regulation of any State or
political subdivision thereof, for such disclosure or
for any failure to notify the person involved in the
transaction or any other person of such disclosure.]
(2) Notification prohibited.--
(A) In general.--If a financial institution
or any director, officer, employee, or agent of
any financial institution, voluntarily or
pursuant to this section or any other
authority, reports a suspicious transaction to
a government agency--
(i) the financial institution,
director, officer, employee, or agent
may not notify any person involved in
the transaction that the transaction
has been reported; and
(ii) no officer or employee of the
Federal Government or of any State,
local, tribal, or territorial
government within the United States,
who has any knowledge that such report
was made may disclose to any person
involved in the transaction that the
transaction has been reported other
than as necessary to fulfill the
official duties of such officer or
employee.
(B) Disclosures in certain employment
references.--Notwithstanding the application of
subparagraph (A) in any other context,
subparagraph (A) shall not be construed as
prohibiting any financial institution, or any
director, officer, employee, or agent of such
institution, from including, in a written
employment reference that is provided in
accordance with section 18(v) of the Federal
Deposit Insurance Act in response to a request
from another financial institution or a written
termination notice or employment reference that
is provided in accordance with the rules of the
self-regulatory organizations registered with
the Securities and Exchange Commission,
information that was included in a report to
which subparagraph (A) applies, but such
written employment reference may not disclose
that such information was also included in any
such report or that such report was made.
(3) Liability for disclosures.--
(A) In general.--Any financial institution
that makes a voluntary disclosure of any
possible violation of law or regulation to a
government agency or makes a disclosure
pursuant to this subsection or any other
authority, and any director, officer, employee,
or agent of such institution who makes, or
requires another to make any such disclosure,
shall not be liable to any person under any law
or regulation of the United States, any
constitution, law, or regulation of any State
or political subdivision of any State, or under
any contract or other legally enforceable
agreement (including any arbitration
agreement), for such disclosure or for any
failure to provide notice of such disclosure to
any person.
(B) Rule of construction.--Subparagraph (A)
shall not be construed as creating--
(i) any inference that the term
``person'', as used in such
subparagraph, may be construed more
broadly than its ordinary usage so to
include any government or agency of
government; or
(ii) any immunity against, or
otherwise affecting, any civil or
criminal action brought by any
government or agency of government to
enforce any constitution, law, or
regulation of such government or
agency.
(4) Single designee for reporting suspicious
transactions.--
(A) * * *
(B) Duty of designee.--The officer or agency
of the United States designated by the
Secretary of the Treasury pursuant to
subparagraph (A) shall refer any report of a
suspicious transaction to any appropriate law
enforcement [or supervisory agency],
supervisory agency, or United States
intelligence agency for use in the conduct of
intelligence or counterintelligence activities,
including analysis, to protect against
international terrorism.
* * * * * * *
[(h) Anti-Money Laundering Programs.--
[(1) In general.--In order to guard against money
laundering through financial institutions, the
Secretary may require financial institutions to carry
out anti-money laundering programs, including at a
minimum
[(A) the development of internal policies,
procedures, and controls,
[(B) the designation of a compliance officer,
[(C) an ongoing employee training program,
and
[(D) an independent audit function to test
programs.
[(2) Regulations.--The Secretary may prescribe
minimum standards for programs established under
paragraph (1).]
(h) Anti-Money Laundering Programs.--
(1) In general.--In order to guard against money
laundering through financial institutions, each
financial institution shall establish anti-money
laundering programs, including, at a minimum--
(A) the development of internal policies,
procedures, and controls;
(B) the designation of an officer of the
financial institution responsible for
compliance;
(C) an ongoing employee training program; and
(D) an independent audit function to test
programs.
(2) Regulations.--The Secretary may, after
consultation with the appropriate Federal functional
regulators (as defined in section 509 of the Gramm-
Leach-Bliley Act), prescribe minimum standards for
programs established under paragraph (1), and may
exempt from the application of those standards any
financial institution that is not subject to the
provisions of the regulations contained in part 103 of
title 31, of the Code of Federal Regulations, as in
effect on the date of the enactment of the Financial
Anti-Terrorism Act of 2001, or any successor to such
regulations, for so long as such financial institution
is not subject to the provisions of such regulations.
(3) Concentration accounts.--The Secretary may
prescribe regulations under this subsection that govern
maintenance of concentration accounts by financial
institutions, in order to ensure that such accounts are
not used to prevent association of the identity of an
individual customer with the movement of funds of which
the customer is the direct or beneficial owner, which
regulations shall, at a minimum--
(A) prohibit financial institutions from
allowing clients to direct transactions that
move their funds into, out of, or through the
concentration accounts of the financial
institution;
(B) prohibit financial institutions and their
employees from informing customers of the
existence of, or the means of identifying, the
concentration accounts of the institution; and
(C) require each financial institution to
establish written procedures governing the
documentation of all transactions involving a
concentration account, which procedures shall
ensure that, any time a transaction involving a
concentration account commingles funds
belonging to 1 or more customers, the identity
of, and specific amount belonging to, each
customer is documented.
(i) Identification and Verification of Accountholders.--
(1) In general.--Subject to the requirements of this
subsection, the Secretary of the Treasury shall
prescribe regulations setting forth the minimum
standards regarding customer identification that shall
apply in connection with the opening of an account at a
financial institution.
(2) Minimum requirements.--The regulations shall, at
a minimum, require financial institutions to implement
procedures for--
(A) verifying the identity of any person
seeking to open an account to the extent
reasonable and practicable;
(B) maintaining records of the information
used to verify a person's identity, including
name, address, and other identifying
information;
(C) consulting applicable lists of known or
suspected terrorists or terrorist organizations
generated by government agencies to determine
whether a person seeking to open an account
appears on any such list.
(3) Factors to be considered.--In prescribing
regulations under this subsection, the Secretary shall
take into consideration the various types of accounts
maintained by various types of financial institutions,
the various methods of opening accounts, and the
various types of identifying information available.
(4) Certain financial institutions.--In the case of
any financial institution the business of which is
engaging in financial activities described in section
4(k) of the Bank Holding Company Act of 1956 (including
financial activities subject to the jurisdiction of the
Commodity Futures Trading Commission), the regulations
prescribed by the Secretary under paragraph (1) shall
be prescribed jointly with each Federal functional
regulator (as defined in section 509 of the Gramm-
Leach-Bliley Act, including the Commodity Futures
Trading Commission) appropriate for such financial
institution.
(5) Exemptions.--The Secretary of the Treasury (and,
in the case of any financial institution described in
paragraph (4), any Federal agency described in such
paragraph) may, by regulation or order, exempt any
financial institution or type of account from the
requirements of any regulation prescribed under this
subsection in accordance with such standards and
procedures as the Secretary may prescribe.
(6) Effective date.--Final regulations prescribed
under this subsection shall take effect before the end
of the 1-year period beginning on the date of the
enactment of the Financial Anti-Terrorism Act of 2001.
(j) Due Diligence for United States Private Banking and
Correspondent Bank Accounts Involving Foreign Persons.--
(1) In general.--Each financial institution that
establishes, maintains, administers, or manages a
private banking account or a correspondent account in
the United States for a non-United States person,
including a foreign individual visiting the United
States, or a representative of a non-United States
person, shall establish appropriate, specific, and,
where necessary, enhanced due diligence policies,
procedures, and controls to detect and report instances
of money laundering through those accounts.
(2) Minimum standards for correspondent accounts.--
(A) In general.--Subparagraph (B) shall apply
if a correspondent account is requested or
maintained by, or on behalf of, a foreign bank
operating--
(i) under an offshore banking
license; or
(ii) under a banking license issued
by a foreign country that has been
designated--
(I) as noncooperative with
international anti-money
laundering principles or
procedures by an
intergovernmental group or
organization of which the
United States is a member with
which designation the Secretary
of the Treasury concurs; or
(II) by the Secretary as
warranting special measures due
to money laundering concerns.
(B) Policies, procedures, and controls.--The
enhanced due diligence policies, procedures,
and controls required under paragraph (1) for
foreign banks described in subparagraph (A)
shall, at a minimum, ensure that the financial
institution in the United States takes
reasonable steps--
(i) to ascertain for any such foreign
bank, the shares of which are not
publicly traded, the identity of each
of the owners of the foreign bank, and
the nature and extent of the ownership
interest of each such owner;
(ii) to conduct enhanced scrutiny of
such account to guard against money
laundering and report any suspicious
transactions under section 5318(g); and
(iii) to ascertain whether such
foreign bank provides correspondent
accounts to other foreign banks and, if
so, the identity of those foreign banks
and related due diligence information,
as appropriate under paragraph (1).
(3) Minimum standards for private banking accounts.--
If a private banking account is requested or maintained
by, or on behalf of, a non-United States person, then
the due diligence policies, procedures, and controls
required under paragraph (1) shall, at a minimum,
ensure that the financial institution takes reasonable
steps--
(A) to ascertain the identity of the nominal
and beneficial owners of, and the source of
funds deposited into, such account as needed to
guard against money laundering and report any
suspicious transactions under section 5318(g);
and
(B) to conduct enhanced scrutiny of any such
account that is requested or maintained by, or
on behalf of, a senior foreign political
figure, or any immediate family member or close
associate of a senior foreign political figure,
to prevent, detect, and report transactions
that may involve the proceeds of foreign
corruption.
(4) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Offshore banking license.--The term
``offshore banking license'' means a license to
conduct banking activities which, as a
condition of the license, prohibits the
licensed entity from conducting banking
activities with the citizens of, or with the
local currency of, the country which issued the
license.
(B) Private bank account.--The term ``private
bank account'' means an account (or any
combination of accounts) that--
(i) requires a minimum aggregate
deposits of funds or other assets of
not less than $1,000,000;
(ii) is established on behalf of 1 or
more individuals who have a direct or
beneficial ownership interest in the
account; and
(iii) is assigned to, or is
administered or managed by, in whole or
in part, an officer, employee, or agent
of a financial institution acting as a
liaison between the financial
institution and the direct or
beneficial owner of the account.
(5) Regulatory authority.--Before the end of the 6-
month period beginning on the date of the enactment of
the Financial Anti-Terrorism Act of 2001, the
Secretary, in consultation with the appropriate Federal
functional regulators (as defined in section 509 of the
Gramm-Leach-Bliley Act) shall further define and
clarify, by regulation, the requirements of this
subsection.
(k) Prohibition on United States Correspondent Accounts With
Foreign Shell Banks.--
(1) In general.--A depository institution shall not
establish, maintain, administer, or manage a
correspondent account in the United States for, or on
behalf of, a foreign bank that does not have a physical
presence in any country.
(2) Prevention of indirect service to foreign shell
banks.--
(A) In general.--A depository institution
shall take reasonable steps to ensure that any
correspondent account established, maintained,
administered, or managed by that institution in
the United States for a foreign bank is not
being used by that foreign bank to indirectly
provide banking services to another foreign
bank that does not have a physical presence in
any country.
(B) Regulations.--The Secretary shall, in
regulations, delineate reasonable steps
necessary for a depository institution to
comply with this subsection.
(3) Exception.--Paragraphs (1) and (2) shall not be
construed as prohibiting a depository institution from
providing a correspondent account to a foreign bank, if
the foreign bank--
(A) is an affiliate of a depository
institution, credit union, or other foreign
bank that maintains a physical presence in the
United States or a foreign country, as
applicable; and
(B) is subject to supervision by a banking
authority in the country regulating the
affiliated depository institution, credit
union, or foreign bank, described in
subparagraph (A), as applicable.
(4) Definitions.--For purposes of this section, the
following definitions shall apply:
(A) Affiliate.--The term ``affiliate'' means
a foreign bank that is controlled by or is
under common control with a depository
institution, credit union, or foreign bank.
(B) Depository institution.--The ``depository
institution''--
(i) has the meaning given such term
in section 3 of the Federal Deposit
Insurance Act; and
(ii) includes a credit union.
(C) Physical presence.--The term ``physical
presence'' means a place of business that--
(i) is maintained by a foreign bank;
(ii) is located at a fixed address
(other than solely an electronic
address) in a country in which the
foreign bank is authorized to conduct
banking activities, at which location
the foreign bank--
(I) employs 1 or more
individuals on a full-time
basis; and
(II) maintains operating
records related to its banking
activities; and
(iii) is subject to inspection by the
banking authority which licensed the
foreign bank to conduct banking
activities.
(l) Applicability of Rules.--Any rules prescribed pursuant to
the authority contained in section 21 of the Federal Deposit
Insurance Act shall apply, in addition to any other financial
institution to which such rules apply, to any person that
engages as a business in the transmission of funds, including
through an informal value transfer banking system or network of
people facilitating the transfer of value domestically or
internationally outside of the conventional financial
institutions system.
Sec. 5318A. Special measures for jurisdictions, financial institutions,
or international transactions of primary money
laundering concern
(a) International Counter-Money Laundering Requirements.--
(1) In general.--The Secretary may require domestic
financial institutions and domestic financial agencies
to take 1 or more of the special measures described in
subsection (b) if the Secretary finds that reasonable
grounds exist for concluding that a jurisdiction
outside of the United States, 1 or more financial
institutions operating outside of the United States, 1
or more classes of transactions within, or involving, a
jurisdiction outside of the United States, or 1 or more
types of accounts is of primary money laundering
concern, in accordance with subsection (c).
(2) Form of requirement.--The special measures
described in--
(A) subsection (b) may be imposed in such
sequence or combination as the Secretary shall
determine;
(B) paragraphs (1) through (4) of subsection
(b) may be imposed by regulation, order, or
otherwise as permitted by law; and
(C) subsection (b)(5) may be imposed only by
regulation.
(3) Duration of orders; rulemaking.--Any order by
which a special measure described in paragraphs (1)
through (4) of subsection (b) is imposed (other than an
order described in section 5326)--
(A) shall be issued together with a notice of
proposed rulemaking relating to the imposition
of such special measure; and
(B) may not remain in effect for more than
120 days, except pursuant to a regulation
prescribed on or before the end of the 120-day
period beginning on the date of issuance of
such order.
(4) Process for selecting special measures.--In
selecting which special measure or measures to take
under this subsection, the Secretary--
(A) shall consult with the Chairman of the
Board of Governors of the Federal Reserve
System, any other appropriate Federal banking
agency (as defined in section 3 of the Federal
Deposit Insurance Act), the Securities and
Exchange Commission, the National Credit Union
Administration Board, and in the sole
discretion of the Secretary such other agencies
and interested parties as the Secretary may
find to be appropriate; and
(B) shall consider--
(i) whether similar action has been
or is being taken by other nations or
multilateral groups;
(ii) whether the imposition of any
particular special measure would create
a significant competitive disadvantage,
including any undue cost or burden
associated with compliance, for
financial institutions organized or
licensed in the United States; and
(iii) the extent to which the action
or the timing of the action would have
a significant adverse systemic impact
on the international payment,
clearance, and settlement system, or on
legitimate business activities
involving the particular jurisdiction,
institution, or class of transactions.
(5) No limitation on other authority.--This section
shall not be construed as superseding or otherwise
restricting any other authority granted to the
Secretary, or to any other agency, by this subchapter
or otherwise.
(b) Special Measures.--The special measures referred to in
subsection (a), with respect to a jurisdiction outside of the
United States, financial institution operating outside of the
United States, class of transaction within, or involving, a
jurisdiction outside of the United States, or 1 or more types
of accounts are as follows:
(1) Recordkeeping and reporting of certain financial
transactions.--
(A) In general.--The Secretary may require
any domestic financial institution or domestic
financial agency to maintain records, file
reports, or both, concerning the aggregate
amount of transactions, or concerning each
transaction, with respect to a jurisdiction
outside of the United States, 1 or more
financial institutions operating outside of the
United States, 1 or more classes of
transactions within, or involving, a
jurisdiction outside of the United States, or 1
or more types of accounts if the Secretary
finds any such jurisdiction, institution, or
class of transactions to be of primary money
laundering concern.
(B) Form of records and reports.--Such
records and reports shall be made and retained
at such time, in such manner, and for such
period of time, as the Secretary shall
determine, and shall include such information
as the Secretary may determine, including--
(i) the identity and address of the
participants in a transaction or
relationship, including the identity of
the originator of any funds transfer;
(ii) the legal capacity in which a
participant in any transaction is
acting;
(iii) the identity of the beneficial
owner of the funds involved in any
transaction, in accordance with such
procedures as the Secretary determines
to be reasonable and practicable to
obtain and retain the information; and
(iv) a description of any
transaction.
(2) Information relating to beneficial ownership.--In
addition to any other requirement under any other
provision of law, the Secretary may require any
domestic financial institution or domestic financial
agency to take such steps as the Secretary may
determine to be reasonable and practicable to obtain
and retain information concerning the beneficial
ownership of any account opened or maintained in the
United States by a foreign person (other than a foreign
entity whose shares are subject to public reporting
requirements or are listed and traded on a regulated
exchange or trading market), or a representative of
such a foreign person, that involves a jurisdiction
outside of the United States, 1 or more financial
institutions operating outside of the United States, 1
or more classes of transactions within, or involving, a
jurisdiction outside of the United States, or 1 or more
types of accounts if the Secretary finds any such
jurisdiction, institution, transaction, or account to
be of primary money laundering concern.
(3) Information relating to certain payable-through
accounts.--If the Secretary finds a jurisdiction
outside of the United States, 1 or more financial
institutions operating outside of the United States, or
1 or more classes of transactions within, or involving,
a jurisdiction outside of the United States to be of
primary money laundering concern, the Secretary may
require any domestic financial institution or domestic
financial agency that opens or maintains a payable-
through account in the United States for a foreign
financial institution involving any such jurisdiction
or any such financial institution operating outside of
the United States, or a payable through account through
which any such transaction may be conducted, as a
condition of opening or maintaining such account--
(A) to identify each customer (and
representative of such customer) of such
financial institution who is permitted to use,
or whose transactions are routed through, such
payable-through account; and
(B) to obtain, with respect to each such
customer (and each such representative),
information that is substantially comparable to
that which the depository institution obtains
in the ordinary course of business with respect
to its customers residing in the United States.
(4) Information relating to certain correspondent
accounts.--If the Secretary finds a jurisdiction
outside of the United States, 1 or more financial
institutions operating outside of the United States, or
1 or more classes of transactions within, or involving,
a jurisdiction outside of the United States to be of
primary money laundering concern, the Secretary may
require any domestic financial institution or domestic
financial agency that opens or maintains a
correspondent account in the United States for a
foreign financial institution involving any such
jurisdiction or any such financial institution
operating outside of the United States, or a
correspondent account through which any such
transaction may be conducted, as a condition of opening
or maintaining such account--
(A) to identify each customer (and
representative of such customer) of any such
financial institution who is permitted to use,
or whose transactions are routed through, such
correspondent account; and
(B) to obtain, with respect to each such
customer (and each such representative),
information that is substantially comparable to
that which the depository institution obtains
in the ordinary course of business with respect
to its customers residing in the United States.
(5) Prohibitions or conditions on opening or
maintaining certain correspondent or payable-through
accounts.--If the Secretary finds a jurisdiction
outside of the United States, 1 or more financial
institutions operating outside of the United States, or
1 or more classes of transactions within, or involving,
a jurisdiction outside of the United States to be of
primary money laundering concern, the Secretary, in
consultation with the Secretary of State, the Attorney
General, and the Chairman of the Board of Governors of
the Federal Reserve System, may prohibit, or impose
conditions upon, the opening or maintaining in the
United States of a correspondent account or payable-
through account by any domestic financial institution
or domestic financial agency for or on behalf of a
foreign banking institution, if such correspondent
account or payable-through account involves any such
jurisdiction or institution, or if any such transaction
may be conducted through such correspondent account or
payable-through account.
(c) Consultations and Information To Be Considered in Finding
Jurisdictions, Institutions, Types of Accounts, or Transactions
To Be of Primary Money Laundering Concern.--
(1) In general.--In making a finding that reasonable
grounds exist for concluding that a jurisdiction
outside of the United States, 1 or more financial
institutions operating outside of the United States, 1
or more classes of transactions within, or involving, a
jurisdiction outside of the United States, or 1 or more
types of accounts is of primary money laundering
concern so as to authorize the Secretary to take 1 or
more of the special measures described in subsection
(b), the Secretary shall consult with the Secretary of
State, and the Attorney General.
(2) Additional considerations.--In making a finding
described in paragraph (1), the Secretary shall
consider in addition such information as the Secretary
determines to be relevant, including the following
potentially relevant factors:
(A) Jurisdictional factors.--In the case of a
particular jurisdiction--
(i) evidence that organized criminal
groups, international terrorists, or
both, have transacted business in that
jurisdiction;
(ii) the extent to which that
jurisdiction or financial institutions
operating in that jurisdiction offer
bank secrecy or special regulatory
advantages to nonresidents or
nondomiciliaries of that jurisdiction;
(iii) the substance and quality of
administration of the bank supervisory
and counter-money laundering laws of
that jurisdiction;
(iv) the relationship between the
volume of financial transactions
occurring in that jurisdiction and the
size of the economy of the
jurisdiction;
(v) the extent to which that
jurisdiction is characterized as an
offshore banking or secrecy haven by
credible international organizations or
multilateral expert groups;
(vi) whether the United States has a
mutual legal assistance treaty with
that jurisdiction, and the experience
of United States law enforcement
officials, and regulatory officials in
obtaining information about
transactions originating in or routed
through or to such jurisdiction; and
(vii) the extent to which that
jurisdiction is characterized by high
levels of official or institutional
corruption.
(B) Institutional factors.--In the case of a
decision to apply 1 or more of the special
measures described in subsection (b) only to a
financial institution or institutions, or to a
transaction or class of transactions, or to a
type of account, or to all 3, within or
involving a particular jurisdiction--
(i) the extent to which such
financial institutions, transactions,
or types of accounts are used to
facilitate or promote money laundering
in or through the jurisdiction;
(ii) the extent to which such
institutions, transactions, or types of
accounts are used for legitimate
business purposes in the jurisdiction;
and
(iii) the extent to which such action
is sufficient to ensure, with respect
to transactions involving the
jurisdiction and institutions operating
in the jurisdiction, that the purposes
of this subchapter continue to be
fulfilled, and to guard against
international money laundering and
other financial crimes.
(d) Notification of Special Measures Invoked by the
Secretary.--Not later than 10 days after the date of any action
taken by the Secretary under subsection (a)(1), the Secretary
shall notify, in writing, the Committee on Financial Services
of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate of any such action.
(e) Definitions.--Notwithstanding any other provision of this
subchapter, for purposes of this section, the following
definitions shall apply:
(1) Bank definitions.--The following definitions
shall apply with respect to a bank:
(A) Account.--The term ``account''--
(i) means a formal banking or
business relationship established to
provide regular services, dealings, and
other financial transactions; and
(ii) includes a demand deposit,
savings deposit, or other transaction
or asset account and a credit account
or other extension of credit.
(B) Correspondent account.--The term
``correspondent account'' means an account
established to receive deposits from, make
payments on behalf of a foreign financial
institution, or handle other financial
transactions related to such institution.
(C) Payable-through account.--The term
``payable-through account'' means an account,
including a transaction account (as defined in
section 19(b)(1)(C) of the Federal Reserve
Act), opened at a depository institution by a
foreign financial institution by means of which
the foreign financial institution permits its
customers to engage, either directly or through
a subaccount, in banking activities usual in
connection with the business of banking in the
United States.
(D) Secretary.--The term ``Secretary'' means
the Secretary of the Treasury.
(2) Definitions applicable to institutions other than
banks.--With respect to any financial institution other
than a bank, the Secretary shall, after consultation
with the appropriate Federal functional regulators (as
defined in section 509 of the Gramm-Leach-Bliley Act),
define by regulation the term ``account'', and shall
include within the meaning of that term, to the extent,
if any, that the Secretary deems appropriate,
arrangements similar to payable-through and
correspondent accounts.
(3) Regulatory definition.--The Secretary shall
promulgate regulations defining beneficial ownership of
an account for purposes of this subchapter. Such
regulations shall address issues related to an
individual's authority to fund, direct, or manage the
account (including the power to direct payments into or
out of the account), and an individual's material
interest in the income or corpus of the account, and
shall ensure that the identification of individuals
under this section does not extend to any individual
whose beneficial interest in the income or corpus of
the account is immaterial.
(4) Other terms.--The Secretary may, by regulation,
further define the terms in paragraphs (1) and (2) and
define other terms for the purposes of this section, as
the Secretary deems appropriate.
[Sec. 5319. Availability of reports
The Secretary of the Treasury shall make information in a
report filed under section 5313, 5314, or 5316 of this title
available to an agency, including any State financial
institutions supervisory agency, on request of the head of the
agency. The report shall be available for a purpose consistent
with those sections or a regulation prescribed under those
sections. The Secretary may only require reports on the use of
such information by any State financial institutions
supervisory agency for other than supervisory purposes.
However, a report and records of reports are exempt from
disclosure under section 552 of title 5.]
Sec. 5319. Availability of reports
The Secretary of the Treasury shall make information in a
report filed under this subchapter available to an agency,
including any State financial institutions supervisory agency
or United States intelligence agency, upon request of the head
of the agency. The report shall be available for a purpose that
is consistent with this subchapter. The Secretary may only
require reports on the use of such information by any State
financial institutions supervisory agency for other than
supervisory purposes or by United States intelligence agencies.
However, a report and records of reports are exempt from
disclosure under section 552 of title 5.
* * * * * * *
Sec. 5321. Civil penalties
(a)(1) A domestic financial institution, and a partner,
director, officer, or employee of a domestic financial
institution, willfully violating this subchapter or a
regulation prescribed or order issued under this subchapter
(except sections 5314 and 5315 of this title or a regulation
prescribed under sections 5314 and 5315), or willfully
violating a regulation prescribed under section 21 of the
Federal Deposit Insurance Act or section 123 of Public Law 91-
508, is liable to the United States Government for a civil
penalty of not more than the greater of the amount (not to
exceed $100,000) involved in the transaction (if any) or
$25,000. For a violation of section 5318(a)(2) of this title or
a regulation prescribed under section 5318(a)(2), a separate
violation occurs for each day the violation continues and at
each office, branch, or place of business at which a violation
occurs or continues.
* * * * * * *
Sec. 5322. Criminal penalties
(a) A person willfully violating this subchapter or a
regulation prescribed or order issued under this subchapter
(except section 5315 or 5324 of this title or a regulation
prescribed under section 5315 or 5324), or willfully violating
a regulation prescribed under section 21 of the Federal Deposit
Insurance Act or section 123 of Public Law 91-508, shall be
fined not more than $250,000, or imprisoned for not more than
five years, or both.
(b) a person willfully violating this subchapter or a
regulation prescribed or order issued under this subchapter
(except section 5315 or 5324 of this title or a regulation
prescribed under section 5315 or 5324), or willfully violating
a regulation prescribed under section 21 of the Federal Deposit
Insurance Act or section 123 of Public Law 91-508, while
violating another law of the United States or as part of a
pattern of any illegal activity involving more than $100,000 in
a 12-month period, shall be fined not more than $500,000,
imprisoned for not more than 10 years, or both.
* * * * * * *
Sec. 5324. Structuring transactions to evade reporting requirement
prohibited
(a) Domestic Coin and Currency Transactions.--No person
shall, for the purpose of evading the reporting requirements of
section 5313(a) or 5325 or any regulation prescribed under any
such [section--] section, the reporting requirements imposed by
any order issued under section 5326, or the record keeping
requirements imposed by any regulation prescribed under section
21 of the Federal Deposit Insurance Act or section 123 of
Public Law 91-508--
(1) cause or attempt to cause a domestic financial
institution to fail to file a report required under
section 5313(a) or 5325 or any regulation prescribed
under any such section, to file a report required by
any order issued under section 5326, or to maintain a
record required pursuant to any regulation prescribed
under section 21 of the Federal Deposit Insurance Act
or section 123 of Public Law 91-508;
(2) cause or attempt to cause a domestic financial
institution to file a report required under section
5313(a) or 5325 or any regulation prescribed under any
such section, to file a report required by any order
issued under section 5326, or to maintain a record
required pursuant to any regulation prescribed under
section 21 of the Federal Deposit Insurance Act or
section 123 of Public Law 91-508 that contains a
material omission or misstatement of fact; or
* * * * * * *
Sec. 5330. Registration of money transmitting businesses
(a) * * *
* * * * * * *
(d) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Money transmitting business.--The term ``money
transmitting business'' means any business other than
the United States Postal Service which--
(A) provides check cashing, currency
exchange, or money transmitting or remittance
services, or issues or redeems money orders,
travelers' checks, and other similar
instruments or any other person who engages as
a business in the transmission of funds,
including through an informal value transfer
banking system or network of people
facilitating the transfer of value domestically
or internationally outside of the conventional
financial institutions system;
* * * * * * *
Sec. 5331. Bulk cash smuggling into or out of the United States
(a) Criminal Offense.--
(1) In general.--Whoever, with the intent to evade a
currency reporting requirement under section 5316,
knowingly conceals more than $10,000 in currency or
other monetary instruments on the person of such
individual or in any conveyance, article of luggage,
merchandise, or other container, and transports or
transfers or attempts to transport or transfer such
currency or monetary instruments from a place within
the United States to a place outside of the United
States, or from a place outside the United States to a
place within the United States, shall be guilty of a
currency smuggling offense and subject to punishment
pursuant to subsection (b).
(2) Concealment on person.--For purposes of this
section, the concealment of currency on the person of
any individual includes concealment in any article of
clothing worn by the individual or in any luggage,
backpack, or other container worn or carried by such
individual.
(b) Penalty.--
(1) Term of imprisonment.--A person convicted of a
currency smuggling offense under subsection (a), or a
conspiracy to commit such offense, shall be imprisoned
for not more than 5 years.
(2) Forfeiture.--In addition, the court, in imposing
sentence under paragraph (1), shall order that the
defendant forfeit to the United States, any property,
real or personal, involved in the offense, and any
property traceable to such property, subject to
subsection (d) of this section.
(3) Procedure.--The seizure, restraint, and
forfeiture of property under this section shall be
governed by section 413 of the Controlled Substances
Act.
(4) Personal money judgment.--If the property subject
to forfeiture under paragraph (2) is unavailable, and
the defendant has insufficient substitute property that
may be forfeited pursuant to section 413(p) of the
Controlled Substances Act, the court shall enter a
personal money judgment against the defendant for the
amount that would be subject to forfeiture.
(c) Civil Forfeiture.--
(1) In general.--Any property involved in a violation
of subsection (a), or a conspiracy to commit such
violation, and any property traceable to such violation
or conspiracy, may be seized and, subject to subsection
(d) of this section, forfeited to the United States.
(2) Procedure.--The seizure and forfeiture shall be
governed by the procedures governing civil forfeitures
in money laundering cases pursuant to section
981(a)(1)(A) of title 18, United States Code.
(3) Treatment of certain property as involved in the
offense.--For purposes of this subsection and
subsection (b), any currency or other monetary
instrument that is concealed or intended to be
concealed in violation of subsection (a) or a
conspiracy to commit such violation, any article,
container, or conveyance used, or intended to be used,
to conceal or transport the currency or other monetary
instrument, and any other property used, or intended to
be used, to facilitate the offense, shall be considered
property involved in the offense.
(d) Proportionality of Forfeiture.--
(1) In general.--Upon a showing by the property owner
by a preponderance of the evidence that the currency or
monetary instruments involved in the offense giving
rise to the forfeiture were derived from a legitimate
source, and were intended for a lawful purpose, the
court shall reduce the forfeiture to the maximum amount
that is not grossly disproportional to the gravity of
the offense.
(2) Factors to be considered.--In determining the
amount of the forfeiture, the court shall consider all
aggravating and mitigating facts and circumstances that
have a bearing on the gravity of the offense, including
the following:
(A) The value of the currency or other
monetary instruments involved in the offense.
(B) Efforts by the person committing the
offense to structure currency transactions,
conceal property, or otherwise obstruct
justice.
(C) Whether the offense is part of a pattern
of repeated violations of Federal law.
Sec. 5332. Subpoenas for records
(a) Designation By Foreign Financial Institution of Agent.--
Any foreign financial institution that has a correspondent bank
account at a financial institution in the United States shall
designate a person residing in the United States as a person
authorized to accept a subpoena for bank records or other legal
process served on the foreign financial institution.
(b) Maintenance of Records By Domestic Financial
Institution.--
(1) In general.--Any domestic financial institution
that maintains a correspondent bank account for a
foreign financial institution shall maintain records
regarding the names and addresses of the owners of the
foreign financial institution, and the name and address
of the person who may be served with a subpoena for
records regarding any funds transferred to or from the
correspondent account.
(2) Provision to law enforcement agency.--A domestic
financial institution shall provide names and addresses
maintained under paragraph (1) to a Government
authority (as defined in section 1101(3) of the Right
to Financial Privacy Act of 1978) within 7 days of the
receipt of a request, in writing, for such records.
(c) Administrative Subpoena.--
(1) In general.--The Attorney General and the
Secretary of the Treasury may each issue an
administrative subpoena for records relating to the
deposit of any funds into a dollar-denominated account
in a foreign financial institution that maintains a
correspondent account at a domestic financial
institution.
(2) Manner of issuance.--Any subpoena issued by the
Attorney General or the Secretary of the Treasury under
paragraph (1) shall be issued in the manner described
in section 3486 of this title, and may be served on the
representative designated by the foreign financial
institution pursuant to subsection (a) to accept legal
process in the United States, or in a foreign country
pursuant to any mutual legal assistance treaty,
multilateral agreement, or other request for
international law enforcement assistance.
(d) Correspondent Account Defined.--For purposes of this
section, the term ``correspondent account'' has the same
meaning as the term ``interbank account'' as such term is
defined in section 984(c)(2)(B) of title 18, United States
Code.
* * * * * * *
----------
TITLE 18, UNITED STATES CODE
* * * * * * *
PART I--CRIMES
* * * * * * *
CHAPTER 25--COUNTERFEITING AND FORGERY
Sec.
470. Counterfeit acts committed outside the United States.
* * * * * * *
474. Plates [or stones], stones, or analog, digital, or electronic
images for counterfeiting obligations or securities.
* * * * * * *
481. Plates [or stones], stones, or analog, digital, or electronic
images for counterfeiting foreign obligations or securities.
* * * * * * *
Sec. 470. Counterfeit acts committed outside the United States
A person who, outside the United States, engages in the act
of--
(1) making, dealing, or possessing any counterfeit
obligation or other security of the United States; or
(2) making, dealing, or possessing any plate, stone,
analog, digital, or electronic image, or other thing,
or any part thereof, used to counterfeit such
obligation or security,
if such act would constitute a violation of section 471, 473,
or 474 if committed within the United States, [shall be fined
under this title, imprisoned not more than 20 years, or both]
shall be punished as is provided for the like offense within
the United States.
Sec. 471. Obligations or securities of United States
Whoever, with intent to defraud, falsely makes, forges,
counterfeits, or alters any obligation or other security of the
United States, shall be fined under this title or imprisoned
not more than [fifteen] 20 years, or both.
Sec. 472. Uttering counterfeit obligations or securities
Whoever, with intent to defraud, passes, utters, publishes,
or sells, or attempts to pass, utter, publish, or sell, or with
like intent brings into the United States or keeps in
possession or conceals any falsely made, forged, counterfeited,
or altered obligation or other security of the United States,
shall be fined under this title or imprisoned not more than
[fifteen] 20 years, or both.
Sec. 473. Dealing in counterfeit obligations or securities
Whoever buys, sells, exchanges, transfers, receives, or
delivers any false, forged, counterfeited, or altered
obligation or other security of the United States, with the
intent that the same be passed, published, or used as true and
genuine, shall be fined under this title or imprisoned not more
than [ten] 20 years, or both.
Sec. 474. Plates [or stones], stones, or analog, digital, or electronic
images for counterfeiting obligations or securities
(a) Whoever, having control, custody, or possession of any
plate, stone, or other thing, or any part thereof, from which
has been printed, or which may be prepared by direction of the
Secretary of the Treasury for the purpose of printing, any
obligation or other security of the United States, uses such
plate, stone, or other thing, or any part thereof, or knowingly
suffers the same to be used for the purpose of printing any
such or similar obligation or other security, or any part
thereof, except as may be printed for the use of the United
States by order of the proper officer thereof; or
Whoever makes or executes any plate, stone, or other thing in
the likeness of any plate designated for the printing of such
obligation or other security; or
Whoever, with intent to defraud, makes, executes, acquires,
scans, captures, records, receives, transmits, reproduces,
sells, or has in such person's control, custody, or possession,
an analog, digital, or electronic image of any obligation or
other security of the United States; or
* * * * * * *
(b) [For purposes of this section, the terms ``plate'',
``stone'', ``thing'', or ``other thing'' includes any
electronic method used for the acquisition, recording,
retrieval, transmission, or reproduction of any obligation or
other security, unless such use is authorized by the Secretary
of the Treasury.] For purposes of this section, the term
``analog, digital, or electronic image'' includes any analog,
digital, or electronic method used for the making, execution,
acquisition, scanning, capturing, recording, retrieval,
transmission, or reproduction of any obligation or security,
unless such use is authorized by the Secretary of the Treasury.
The Secretary shall establish a system (pursuant to section
504) to ensure that the legitimate use of such electronic
methods and retention of such reproductions by businesses,
hobbyists, press and others shall not be unduly restricted.
* * * * * * *
Sec. 476. Taking impressions of tools used for obligations or
securities
Whoever, without authority from the United States, takes,
procures, or makes an impression, stamp, analog, digital, or
electronic image, or imprint of, from or by the use of any
tool, implement, instrument, or thing used or fitted or
intended to be used in printing, stamping, or impressing, or in
making other tools, implements, instruments, or things to be
used or fitted or intended to be used in printing, stamping, or
impressing any obligation or other security of the United
States, shall be fined under this title or imprisoned not more
than [ten] 25 years, or both.
Sec. 477. Possessing or selling impressions of tools used for
obligations or securities
Whoever, with intent to defraud, possesses, keeps,
safeguards, or controls, without authority from the United
States, any imprint, stamp, analog, digital, or electronic
image, or impression, taken or made upon any substance or
material whatsoever, of any tool, implement, instrument or
thing, used, fitted or intended to be used, for any of the
purposes mentioned in section 476 of this title; or
Whoever, with intent to defraud, sells, gives, or delivers
any such imprint, stamp, analog, digital, or electronic image,
or impression to any other person--
Shall be fined under this title or imprisoned not more than
[ten] 25 years, or both.
Sec. 478. Foreign obligations or securities
Whoever, within the United States, with intent to defraud,
falsely makes, alters, forges, or counterfeits any bond,
certificate, obligation, or other security of any foreign
government, purporting to be or in imitation of any such
security issued under the authority of such foreign government,
or any treasury note, bill, or promise to pay, lawfully issued
by such foreign government and intended to circulate as money,
shall be fined under this title or imprisoned not more than
[five] 20 years, or both.
Sec. 479. Uttering counterfeit foreign obligations or securities
Whoever, within the United States, knowingly and with intent
to defraud, utters, passes, or puts off, in payment or
negotiation, any false, forged, or counterfeited bond,
certificate, obligation, security, treasury note, bill, or
promise to pay, mentioned in section 478 of this title, whether
or not the same was made, altered, forged, or counterfeited
within the United States, shall be fined under this title or
imprisoned not more than [three] 20 years, or both.
Sec. 480. Possessing counterfeit foreign obligations or securities
Whoever, within the United States, knowingly and with intent
to defraud, possesses or delivers any false, forged, or
counterfeit bond, certificate, obligation, security, treasury
note, bill, promise to pay, bank note, or bill issued by a bank
or corporation of any foreign country, shall be fined under
this title or imprisoned not more than [one year] 20 years, or
both.
Sec. 481. Plates [or stones], stones, or analog, digital, or electronic
images for counterfeiting foreign obligations or
securities
Whoever, within the United States except by lawful authority,
controls, holds, or possesses any plate, stone, or other thing,
or any part thereof, from which has been printed or may be
printed any counterfeit note, bond, obligation, or other
security, in whole or in part, of any foreign government, bank,
or corporation, or uses such plate, stone, or other thing, or
knowingly permits or suffers the same to be used in
counterfeiting such foreign obligations, or any part thereof;
or
Whoever, except by lawful authority, makes or engraves any
plate, stone, or other thing in the likeness or similitude of
any plate, stone, or other thing designated for the printing of
the genuine issues of the obligations of any foreign
government, bank, or corporation; or
Whoever, with intent to defraud, makes, executes, acquires,
scans, captures, records, receives, transmits, reproduces,
sells, or has in such person's control, custody, or possession,
an analog, digital, or electronic image of any bond,
certificate, obligation, or other security of any foreign
government, or of any treasury note, bill, or promise to pay,
lawfully issued by such foreign government and intended to
circulate as money; or
* * * * * * *
Shall be fined under this title or imprisoned not more than
[five] 25 years, or both.
Sec. 482. Foreign bank notes
Whoever, within the United States, with intent to defraud,
falsely makes, alters, forges, or counterfeits any bank note or
bill issued by a bank or corporation of any foreign country,
and intended by the law or usage of such foreign country to
circulate as money, such bank or corporation being authorized
by the laws of such country, shall be fined under this title or
imprisoned not more than [two] 20 years, or both.
Sec. 483. Uttering counterfeit foreign bank notes
Whoever, within the United States, utters, passes, puts off,
or tenders in payment, with intent to defraud, any such false,
forged, altered, or counterfeited bank note or bill, mentioned
in section 482 of this title, knowing the same to be so false,
forged, altered, and counterfeited, whether or not the same was
made, forged, altered, or counterfeited within the United
States, shall be fined under this title or imprisoned not more
than [one year] 20 years, or both.
Sec. 484. Connecting parts of different notes
Whoever so places or connects together different parts of two
or more notes, bills, or other genuine instruments issued under
the authority of the United States, or by any foreign
government, or corporation, as to produce one instrument, with
intent to defraud, shall be guilty of forgery in the same
manner as if the parts so put together were falsely made or
forged, and shall be fined under this title or imprisoned not
more than [five] 10 years, or both.
* * * * * * *
Sec. 493. Bonds and obligations of certain lending agencies
Whoever falsely makes, forges, counterfeits or alters any
note, bond, debenture, coupon, obligation, instrument, or
writing in imitation or purporting to be in imitation of, a
note, bond, debenture, coupon, obligation, instrument or
writing, issued by the Reconstruction Finance Corporation,
Federal Deposit Insurance Corporation, National Credit Union
Administration, Home Owners' Loan Corporation, Farm Credit
Administration, Department of Housing and Urban Development, or
any land bank, intermediate credit bank, insured credit union,
bank for cooperatives or any lending, mortgage, insurance,
credit or savings and loan corporation or association
authorized or acting under the laws of the United States, shall
be fined under this title or imprisoned not more than [five] 10
years, or both.
Whoever passes, utters, or publishes, or attempts to pass,
utter or publish any note, bond, debenture, coupon, obligation,
instrument or document knowing the same to have been falsely
made, forged, counterfeited or altered, contrary to the
provisions of this section, shall be fined under this title or
imprisoned not more than [five] 10 years, or both.
* * * * * * *
CHAPTER 46--FORFEITURE
* * * * * * *
Sec. 981. Civil forfeiture
(a)(1) The following property is subject to forfeiture to the
United States:
(A) Any property, real or personal, involved in a
transaction or attempted transaction in violation [of
section 5313(a) or 5324(a) of title 31, or] of section
6050I of the Internal Revenue Code of 1986, or section
1956 [or 1957], 1957 or 1960 of this title, or any
property traceable to such property. However, no
property shall be seized or forfeited in the case of a
violation of section 5313(a) of title 31 by a domestic
financial institution examined by a Federal bank
supervisory agency or a financial institution regulated
by the Securities and Exchange Commission or a partner,
director, or employee thereof.
[(B) Any property, real or personal, within the
jurisdiction of the United States, constituting,
derived from, or traceable to, any proceeds obtained
directly or indirectly from an offense against a
foreign nation involving the manufacture, importation,
sale, or distribution of a controlled substance (as
such term is defined for the purposes of the Controlled
Substances Act), within whose jurisdiction such offense
would be punishable by death or imprisonment for a term
exceeding one year and which would be punishable under
the laws of the United States by imprisonment for a
term exceeding one year if such act or activity
constituting the offense against the foreign nation had
occurred within the jurisdiction of the United States.]
(B) Any property, real or personal, within the
jurisdiction of the United States, constituting,
derived from, or traceable to, any proceeds obtained
directly or indirectly from an offense against a
foreign nation, or any property used to facilitate such
offense, if--
(i) the offense involves the manufacture,
importation, sale, or distribution of a
controlled substance (as such term is defined
for the purposes of the Controlled Substances
Act), or any other conduct described in section
1956(c)(7)(B),
(ii) the offense would be punishable within
the jurisdiction of the foreign nation by death
or imprisonment for a term exceeding one year,
and
(iii) the offense would be punishable under
the laws of the United States by imprisonment
for a term exceeding one year if the act or
activity constituting the offense had occurred
within the jurisdiction of the United States.
* * * * * * *
(k) Correspondent Bank Accounts.--
(1) Treatment of accounts of correspondent bank in
domestic financial institutions.--
(A) In general.--For the purpose of a
forfeiture under this section or under the
Controlled Substances Act, if funds are
deposited into a dollar-denominated bank
account in a foreign financial institution, and
that foreign financial institution has a
correspondent account with a financial
institution in the United States, the funds
deposited into the foreign financial
institution (the respondent bank) shall be
deemed to have been deposited into the
correspondent account in the United States, and
any restraining order, seizure warrant, or
arrest warrant in rem regarding such funds may
be served on the correspondent bank, and funds
in the correspondent account up to the value of
the funds deposited into the dollar-denominated
account in the foreign financial institution
may be seized, arrested or restrained.
(B) Authority to suspend.--The Attorney
General, in consultation with the Secretary,
may suspend or terminate a forfeiture under
this section if the Attorney General determines
that a conflict of law exists between the laws
of the jurisdiction in which the foreign bank
is located and the laws of the United States
with respect to liabilities arising from the
restraint, seizure, or arrest of such funds,
and that such suspension or termination would
be in the interest of justice and would not
harm the national interests of the United
States.
(2) No requirement for government to trace funds.--If
a forfeiture action is brought against funds that are
restrained, seized, or arrested under paragraph (1),
the Government shall not be required to establish that
such funds are directly traceable to the funds that
were deposited into the respondent bank, nor shall it
be necessary for the Government to rely on the
application of Section 984 of this title.
(3) Claims brought by owner of the funds.--If a
forfeiture action is instituted against funds seized,
arrested, or restrained under paragraph (1), the owner
of the funds may contest the forfeiture by filing a
claim pursuant to section 983.
(4) Definitions.--For purposes of this subsection,
the following definitions shall apply:
(A) Correspondent account.--The term
``correspondent account'' has the meaning given
to the term ``interbank account'' in section
984(c)(2)(B).
(B) Owner.--
(i) In general.--Except as provided
in clause (ii), the term ``owner''--
(I) means the person who was
the owner, as that term is
defined in section 983(d)(6),
of the funds that were
deposited into the foreign bank
at the time such funds were
deposited; and
(II) does not include either
the foreign bank or any
financial institution acting as
an intermediary in the transfer
of the funds into the interbank
account.
(ii) Exception.--The foreign bank may
be considered the ``owner'' of the
funds (and no other person shall
qualify as the owner of such funds)
only if--
(I) the basis for the
forfeiture action is wrongdoing
committed by the foreign bank;
or
(II) the foreign bank
establishes, by a preponderance
of the evidence, that prior to
the restraint, seizure, or
arrest of the funds, the
foreign bank had discharged all
or part of its obligation to
the prior owner of the funds,
in which case the foreign bank
shall be deemed the owner of
the funds to the extent of such
discharged obligation.
Sec. 982. Criminal forfeiture
(a)(1) The court, in imposing sentence on a person convicted
of an offense in violation [of section 5313(a), 5316, or 5324
of title 31, or] of section 6050I of the Internal Revenue Code
of 1986, or section 1956, 1957, or 1960 of this title, shall
order that the person forfeit to the United States any
property, real or personal, involved in such offense, or any
property traceable to such property. However, no property shall
be seized or forfeited in the case of a violation of section
5313(a) of title 31 by a domestic financial institution
examined by a Federal bank supervisory agency or a financial
institution regulated by the Securities and Exchange Commission
or a partner, director, or employee thereof.
* * * * * * *
CHAPTER 47--FRAUD AND FALSE STATEMENTS
Sec.
1001. Statements or entries generally.
* * * * * * *
1008. False statements concerning the identity of customers of
financial institutions.
* * * * * * *
Sec. 1008. False statements concerning the identity of customers of
financial institutions
(a) In General.--Whoever, in connection with information
submitted to or requested by a financial institution, knowingly
in any manner--
(1) falsifies, conceals, or covers up, or attempts to
falsify, conceal, or cover up, the identity of any
person in connection with any transaction with a
financial institution;
(2) makes, or attempts to make, any materially false,
fraudulent, or fictitious statement or representation
of the identity of any person in connection with a
transaction with a financial institution;
(3) makes or uses, or attempts to make or use, any
false writing or document knowing the same to contain
any materially false, fictitious, or fraudulent
statement or entry concerning the identity of any
person in connection with a transaction with a
financial institution; or
(4) uses or presents, or attempts to use or present,
in connection with a transaction with a financial
institution, an identification document or means of
identification the possession of which is a violation
of section 1028;
shall be fined under this title, imprisoned not more than 5
years, or both.
(b) Definitions.--In this section, the following definitions
shall apply:
(1) Financial institution.--The term ``financial
institution''--
(A) has the same meaning as in section 20;
and
(B) in addition, has the same meaning as in
section 5312(a)(2) of title 31, United States
Code.
(2) Identification document.--The term
``identification document'' has the same meaning as in
section 1028(d).
(3) Means of identification.--The term ``means of
identification'' has the same meaning as in section
1028(d).
* * * * * * *
CHAPTER 95--RACKETEERING
Sec.
1951. Interference with commerce by threats or violence.
* * * * * * *
1960. Prohibition of [illegal] unlicensed money transmitting
businesses.
* * * * * * *
Sec. 1956. Laundering of monetary instruments
(a) * * *
(b)(1) Whoever conducts or attempts to conduct a transaction
described in [subsection (a)(1) or (a)(3),] subsection (a)(1)
or (a)(2) or section 1957, or a transportation, transmission,
or transfer described in subsection (a)(2), is liable to the
United States for a civil penalty of not more than the greater
of--
[(1)] (A) the value of the property, funds, or
monetary instruments involved in the transaction; or
[(2)] (B) $10,000.
(2) For purposes of adjudicating an action filed or enforcing
a penalty ordered under this section, the district courts shall
have jurisdiction over any foreign person, including any
financial institution authorized under the laws of a foreign
country, against whom the action is brought, if--
(A) service of process upon such foreign person is
made under the Federal Rules of Civil Procedure or the
laws of the country where the foreign person is found;
and
(B) the foreign person--
(i) commits an offense under subsection (a)
involving a financial transaction that occurs
in whole or in part in the United States;
(ii) converts to such person's own use
property in which the United States has an
ownership interest by virtue of the entry of an
order of forfeiture by a court of the United
States; or
(iii) is a financial institution that
maintains a correspondent bank account at a
financial institution in the United States.
(3) The court may issue a pretrial restraining order or take
any other action necessary to ensure that any bank account or
other property held by the defendant in the United States is
available to satisfy a judgment under this section.
(c) As used in this section--
(1) * * *
* * * * * * *
[(6) the term ``financial institution'' has the
definition given that term in section 5312(a)(2) of
title 31, United States Code, or the regulations
promulgated thereunder;]
(6) the term ``financial institution'' includes any
financial institution described in section 5312(a)(2)
of title 31, United States Code, or the regulations
promulgated thereunder, as well as any foreign bank, as
defined in paragraph (7) of section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101(7));
(7) the term ``specified unlawful activity'' means--
(A) * * *
(B) with respect to a financial transaction
occurring in whole or in part in the United
States, an offense against a foreign nation
involving--
(i) * * *
[(ii) murder, kidnapping, robbery, extortion,
or destruction of property by means of
explosive or fire;]
(ii) any act or acts constituting a
crime of violence, as defined in
section 16 of this title;
* * * * * * *
(iv) bribery of a public official, or
the misappropriation, theft, or
embezzlement of public funds by or for
the benefit of a public official;
(v) smuggling or export control
violations involving munitions listed
in the United States Munitions List or
technologies with military applications
as defined in the Commerce Control List
of the Export Administration
Regulations; or
(vi) an offense with respect to which
the United States would be obligated by
a bilateral treaty either to extradite
the alleged offender or to submit the
case for prosecution, if the offender
were found within the territory of the
United States;
* * * * * * *
(D) an offense under section 32 (relating to
the destruction of aircraft), section 37
(relating to violence at international
airports), section 115 (relating to
influencing, impeding, or retaliating against a
Federal official by threatening or injuring a
family member), section 152 (relating to
concealment of assets; false oaths and claims;
bribery), section 215 (relating to commissions
or gifts for procuring loans), section 351
(relating to congressional or Cabinet officer
assassination), any of sections 500 through 503
(relating to certain counterfeiting offenses),
section 513 (relating to securities of States
and private entities), section 541 (relating to
goods falsely classified), section 542
(relating to entry of goods by means of false
statements), section 545 (relating to smuggling
goods into the United States), section 549
(relating to removing goods from Customs
custody), section 641 (relating to public
money, property, or records), section 656
(relating to theft, embezzlement, or
misapplication by bank officer or employee),
section 657 (relating to lending, credit, and
insurance institutions), section 658 (relating
to property mortgaged or pledged to farm credit
agencies), section 666 (relating to theft or
bribery concerning programs receiving Federal
funds), section 793, 794, or 798 (relating to
espionage), section 831 (relating to prohibited
transactions involving nuclear materials),
section 844 (f) or (i) (relating to destruction
by explosives or fire of Government property or
property affecting interstate or foreign
commerce), section 875 (relating to interstate
communications), section 922(1) (relating to
the unlawful importation of firearms), section
924(n) (relating to firearms trafficking),
section 956 (relating to conspiracy to kill,
kidnap, maim, or injure certain property in a
foreign country), section 1005 (relating to
fraudulent bank entries), 1006 (relating to
fraudulent Federal credit institution entries),
1007 (relating to Federal Deposit Insurance
transactions), [1014 (relating to fraudulent
loan] section 1008 (relating to false
statements concerning the identity of customers
of financial institutions), section 1014
(relating to fraudulent loan or credit
applications), section 1030 (relating to
computer fraud and abuse), 1032 (relating to
concealment of assets from conservator,
receiver, or liquidating agent of financial
institution), section 1111 (relating to
murder), section 1114 (relating to murder of
United States law enforcement officials),
section 1116 (relating to murder of foreign
officials, official guests, or internationally
protected persons), section 1201 (relating to
kidnapping), section 1203 (relating to hostage
taking), section 1361 (relating to willful
injury of Government property), section 1363
(relating to destruction of property within the
special maritime and territorial jurisdiction),
section 1708 (theft from the mail), section
1751 (relating to Presidential assassination),
section 2113 or 2114 (relating to bank and
postal robbery and theft), section 2280
(relating to violence against maritime
navigation), section 2281 (relating to violence
against maritime fixed platforms), or section
2319 (relating to copyright infringement),
section 2320 (relating to trafficking in
counterfeit goods and services),, section 2332
(relating to terrorist acts abroad against
United States nationals), section 2332a
(relating to use of weapons of mass
destruction), section 2332b (relating to
international terrorist acts transcending
national boundaries), or section 2339A or 2339B
(relating to providing material support to
terrorists) of this title, section 46502 of
title 49, United States Code,, a felony
violation of the Chemical Diversion and
Trafficking Act of 1988 (relating to precursor
and essential chemicals), section 590 of the
Tariff Act of 1930 (19 U.S.C. 1590) (relating
to aviation smuggling), section 422 of the
Controlled Substances Act (relating to
transportation of drug paraphernalia), section
38(c) (relating to criminal violations) of the
Arms Export Control Act, section 11 (relating
to violations) of the Export Administration Act
of 1979, section 206 (relating to penalties) of
the International Emergency Economic Powers
Act, section 16 (relating to offenses and
punishment) of the Trading with the Enemy Act,
any felony violation of section 15 of the Food
Stamp Act of 1977 (relating to food stamp
fraud) involving a quantity of coupons having a
value of not less than $5,000, any violation of
section 543(a)(1) of the Housing Act of 1949
(relating to equity skimming), any felony
violation of the Foreign Agents Registration
Act of 1938, as amended, or any felony
violation of the Foreign Corrupt Practices Act;
or
* * * * * * *
Sec. 1957. Engaging in monetary transactions in property derived from
specified unlawful activity
(a) * * *
* * * * * * *
(g) Any person who conceals more than $10,000 in currency on
his or her person, in any vehicle, in any compartment or
container within any vehicle, or in any container placed in a
common carrier, and transports, attempts to transport, or
conspires to transport such currency in interstate commerce on
any public road or highway or on any bus, train, airplane,
vessel, or other common carrier, knowing that the currency was
derived from some form of unlawful activity, or knowing that
the currency was intended to be used to promote some form of
unlawful activity, shall be punished as provided in subsection
(b). The defendant's knowledge may be established by proof that
the defendant was willfully blind to the source or intended use
of the currency. For purposes of this subsection, the
concealment of currency on the person of any individual
includes concealment in any article of clothing worn by the
individual or in any luggage, backpack, or other container worn
or carried by such individual.
* * * * * * *
[Sec. 1960. Prohibition of illegal money transmitting businesses
[(a) Whoever conducts, controls, manages, supervises,
directs, or owns all or part of a business, knowing the
business is an illegal money transmitting business, shall be
fined in accordance with this title or imprisoned not more than
5 years, or both.
[(b) As used in this section--
[(1) the term ``illegal money transmitting business''
means a money transmitting business which affects
interstate or foreign commerce in any manner or degree
and--
[(A) is intentionally operated without an
appropriate money transmitting license in a
State where such operation is punishable as a
misdemeanor or a felony under State law; or
[(B) fails to comply with the money
transmitting business registration requirements
under section 5330 of title 31, United States
Code, or regulations prescribed under such
section;
[(2) the term ``money transmitting'' includes but is
not limited to transferring funds on behalf of the
public by any and all means including but not limited
to transfers within this country or to locations abroad
by wire, check, draft, facsimile, or courier; and
[(3) the term ``State'' means any State of the United
States, the District of Columbia, the Northern Mariana
Islands, and any commonwealth, territory, or possession
of the United States.]
Sec. 1960. Prohibition of unlicensed money transmitting businesses
(a) Whoever knowingly conducts, controls, manages,
supervises, directs, or owns all or part of an unlicensed money
transmitting business, shall be fined in accordance with this
title or imprisoned not more than 5 years, or both.
(b) As used in this section--
(1) the term ``unlicensed money transmitting
business'' means a money transmitting business which
affects interstate or foreign commerce in any manner or
degree and--
(A) is operated without an appropriate money
transmitting license in a State where such
operation is punishable as a misdemeanor or a
felony under State law, whether or not the
defendant knew that the operation was required
to be licensed or that the operation was so
punishable;
(B) fails to comply with the money
transmitting business registration requirements
under section 5330 of title 31, United States
Code, or regulations prescribed under such
section; or
(C) otherwise involves the transportation or
transmission of funds that are known to the
defendant to have been derived from a criminal
offense or are intended to be used to be used
to promote or support unlawful activity;
(2) the term ``money transmitting'' includes
transferring funds on behalf of the public by any and
all means including but not limited to transfers within
this country or to locations abroad by wire, check,
draft, facsimile, or courier; and
(3) the term ``State'' means any State of the United
States, the District of Columbia, the Northern Mariana
Islands, and any commonwealth, territory, or possession
of the United States.
* * * * * * *
PART II--CRIMINAL PROCEDURE
* * * * * * *
CHAPTER 223--WITNESSES AND EVIDENCE
* * * * * * *
Sec. 3486. Administrative subpoenas
(a) Authorization.--(1)(A) In any investigation of--
(i)(I) a Federal health care offense[; or (II) a
Federal offense involving the sexual exploitation or
abuse of children,], (II) a Federal offense involving
the sexual exploitation or abuse of children, or (III)
a money laundering offense in violation of section
1956, 1957 or 1960 of this title, the Attorney General;
or
* * * * * * *
----------
FEDERAL DEPOSIT INSURANCE ACT
* * * * * * *
Sec. 8. (a) * * *
* * * * * * *
(x) Depository Institution Involvement in Internet
Gambling.--If any appropriate Federal banking agency determines
that any insured depository institution is engaged in any of
the following activities, the agency may issue an order to such
institution prohibiting such institution from continuing to
engage in any of the following activities:
(1) Extending credit, or facilitating an extension of
credit, electronic fund transfer, or money transmitting
service with the actual knowledge that any person is
violating section 3(a) of the Unlawful Internet
Gambling Funding Prohibition Act in connection with
such extension of credit, electronic fund transfer, or
money transmitting service.
(2) Paying, transferring, or collecting on any check,
draft, or other instrument drawn on any depository
institution with the actual knowledge that any person
is violating section 3(a) of the Unlawful Internet
Gambling Funding Prohibition Act in connection with
such check, draft, or other instrument.
* * * * * * *
Sec. 18. (a) * * *
* * * * * * *
(c)(1) * * *
* * * * * * *
(11) Money laundering.--In every case, the
responsible agency shall take into consideration the
effectiveness of any insured depository institution
involved in the proposed merger transaction in
combating and preventing money laundering activities,
including in overseas branches.
[(11)] (12) The provisions of this subsection do not apply to
any merger transaction involving a foreign bank if no party to
the transaction is principally engaged in business in the
United States.
* * * * * * *
(w) Written Employment References May Contain Suspicions of
Involvement in Illegal Activity.--
(1) In general.--Notwithstanding any other provision
of law, any insured depository institution, and any
director, officer, employee, or agent of such
institution, may disclose in any written employment
reference relating to a current or former institution-
affiliated party of such institution which is provided
to another insured depository institution in response
to a request from such other institution, information
concerning the possible involvement of such
institution-affiliated party in potentially unlawful
activity, to the extent--
(A) the disclosure does not contain
information which the institution, director,
officer, employee, or agent knows to be false;
and
(B) the institution, director, officer,
employee, or agent has not acted with malice or
with reckless disregard for the truth in making
the disclosure.
(2) Definition.--For purposes of this subsection, the
term ``insured depository institution'' includes any
uninsured branch or agency of a foreign bank.
* * * * * * *
Sec. 21. (a) * * *
* * * * * * *
(j) Civil Penalties.--
(1) Penalty imposed.--Any insured depository
institution and any director, officer, or employee of
an insured depository institution who willfully or
through gross negligence violates, or any person who
willfully causes such a violation, any regulation
prescribed under subsection (b) shall be liable to the
United States for a civil penalty of not more than
[$10,000] the greater of--
(A) the amount (not to exceed $100,000)
involved in the transaction (if any) with
respect to which the violation occurred; or
(B) $25,000.
* * * * * * *
----------
ACT OF OCTOBER 26, 1970
(Public Law 91-508)
AN ACT To amend the Federal Deposit Insurance Act to require insured
banks to maintain certain records, to require that certain transactions
in the United States currency be reported to the Department of the
Treasury, and for other purposes.
* * * * * * *
Sec. 125. Civil penalties
(a) For each willful or grossly negligent violation of any
regulation under this chapter, the Secretary may assess upon
any person to which the regulation applies, or any person
willfully causing a violation of the regulation, and, if such
person is a partnership, corporation, or other entity, upon any
partner, director, officer, or employee thereof who willfully
or through gross negligence participates in the violation, a
civil penalty not exceeding [$10,000] the greater of--
(1) the amount (not to exceed $100,000) involved in
the transaction (if any) with respect to which the
violation occurred; or
(2) $25,000.
* * * * * * *
[Sec. 126. Criminal penalty
[Whoever willfully violates any regulation under this chapter
shall be fined not more than $1,000 or imprisoned not more than
one year, or both.
[Sec. 127. Additional criminal penalty in certain cases
[Whoever willfully violates, or willfully causes a violation
of any regulation under this chapter, section 21 of the Federal
Deposit Insurance Act, or section 411 of the National Housing
Act, where the violation is committed in furtherance of the
commission of any violation of Federal law punishable by
imprisonment for more than one year, shall be fined not more
than $10,000 or imprisoned not more than five years, or both.]
SEC. 126. CRIMINAL PENALTY.
A person that willfully violates this chapter, section 21 of
the Federal Deposit Insurance Act, or a regulation prescribed
under this chapter or that section 21, shall be fined not more
than $250,000, or imprisoned for not more than 5 years, or
both.
SEC. 127. ADDITIONAL CRIMINAL PENALTY IN CERTAIN CASES.
A person that willfully violates this chapter, section 21 of
the Federal Deposit Insurance Act, or a regulation prescribed
under this chapter or that section 21, while violating another
law of the United States or as part of a pattern of any illegal
activity involving more than $100,000 in a 12-month period,
shall be fined not more than $500,000, imprisoned for not more
than 10 years, or both.
* * * * * * *
----------
SECTION 212 OF THE IMMIGRATION AND NATIONALITY ACT
GENERAL CLASSES OF ALIENS INELIGIBLE TO RECEIVE VISAS AND INELIGIBLE
FOR ADMISSION; WAIVERS OF INADMISSIBILITY
Sec. 212. (a) Classes of Aliens Ineligible for Visas or
Admission.--Except as otherwise provided in this Act, aliens
who are inadmissible under the following paragraphs are
ineligible to receive visas and ineligible to be admitted to
the United States:
(1) * * *
(2) Criminal and related grounds.--
(A) * * *
* * * * * * *
(D) Money laundering activities.--
(i) In general.--Any alien who the
consular officer or the Attorney
General knows or has reason to believe
is or has been engaged in activities
which if engaged in within the United
States would constitute a violation of
the money laundering provisions section
1956, 1957, or 1960 of title 18, United
States Code, or has knowingly assisted,
abetted, or conspired or colluded with
others in any such illicit activity is
inadmissible.
(ii) Related individuals.--Any alien
who the consular officer or the
Attorney General knows or has reason to
believe is the spouse, son, or daughter
of an alien inadmissible under clause
(i), has, within the previous 5 years,
obtained any financial or other benefit
from such illicit activity of that
alien, and knew or reasonably should
have known that the financial or other
benefit was the product of such illicit
activity, is inadmissible, except that
the Attorney General may, in the full
discretion of the Attorney General,
waive the exclusion of the spouse, son,
or daughter of an alien under this
clause if the Attorney General
determines that exceptional
circumstances exist that justify such
waiver.
[(D)] (E) Prostitution and commercialized
vice.--Any alien who--
(i) * * *
* * * * * * *
[(E)] (F) Certain aliens involved in serious
criminal activity who have asserted immunity
from prosecution.--Any alien--
(i) * * *
* * * * * * *
[(F)] (G) Waiver authorized.--For provision
authorizing waiver of certain subparagraphs of
this paragraph, see subsection (h).
[(G)] (H) Foreign government officials who
have engaged in particularly severe violations
of religious freedom.--Any alien who, while
serving as a foreign government official, was
responsible for or directly carried out, at any
time during the preceding 24-month period,
particularly severe violations of religious
freedom, as defined in section 3 of the
International Religious Freedom Act of 1998,
and the spouse and children, if any, are
inadmissible.
[(H)] (I) Significant traffickers in
persons.--
(i) * * *
* * * * * * *
(h) The Attorney General may, in his discretion, waive
the application of subparagraphs (A)(i)(I), (B), (D), and (E)
of subsection (a)(2) and subparagraph (A)(i)(II) of such
subsection insofar as it relates to a single offense of simple
possession of 30 grams or less of marijuana if--
(1)(A) in the case of any immigrant it is established
to the satisfaction of the Attorney General that--
(i) the alien is inadmissible only under
subparagraph [(D)(i) or (D)(ii)] (E)(i) or
(E)(ii) of such subsection or the activities
for which the alien is inadmissible occurred
more than 15 years before the date of the
alien's application for a visa, admission, or
adjustment of status,
* * * * * * *
----------
SECTION 413 OF THE CONTROLLED SUBSTANCES ACT
Criminal Forfeitures
PROPERTY SUBJECT TO CRIMINAL FORFEITURE
Sec. 413. (a) * * *
* * * * * * *
PROTECTIVE ORDERS
(e)(1) * * *
* * * * * * *
(4) Order To Repatriate and Deposit.--
(A) In general.--Pursuant to its authority to enter a
pretrial restraining order under this section,
including its authority to restrain any property
forfeitable as substitute assets, the court may order a
defendant to repatriate any property that may be seized
and forfeited, and to deposit that property pending
trial in the registry of the court, or with the United
States Marshals Service or the Secretary of the
Treasury, in an interest-bearing account, if
appropriate.
(B) Failure to comply.--Failure to comply with an
order under this subsection, or an order to repatriate
property under subsection (p), shall be punishable as a
civil or criminal contempt of court, and may also
result in an enhancement of the sentence of the
defendant under the obstruction of justice provision of
the Federal Sentencing Guidelines.
* * * * * * *
[(p) If any of the property described in subsection (a), as a
result of any act or omission of the defendant--
[(1) cannot be located upon the exercise of due
diligence;
[(2) has been transferred or sold to, or deposited
with, a third party;
[(3) has been placed beyond the jurisdiction of the
court;
[(4) has been substantially diminished in value; or
[(5) has been commingled with other property which
cannot be divided without difficulty;
the court shall order the forfeiture of any other property of
the defendant up to the value of any property described in
paragraphs (1) through (5).]
(p) Forfeiture of Substitute Property.--
(1) In general.--Paragraph (2) of this subsection
shall apply, if any property described in subsection
(a), as a result of any act or omission of the
defendant--
(A) cannot be located upon the exercise of
due diligence;
(B) has been transferred or sold to, or
deposited with, a third party;
(C) has been placed beyond the jurisdiction
of the court;
(D) has been substantially diminished in
value; or
(E) has been commingled with other property
which cannot be divided without difficulty.
(2) Substitute property.--In any case described in
any of subparagraphs (A) through (E) of paragraph (1),
the court shall order the forfeiture of any other
property of the defendant, up to the value of any
property described in subparagraphs (A) through (E) of
paragraph (1), as applicable.
(3) Return of property to jurisdiction.--In the case
of property described in paragraph (1)(C), the court
may, in addition to any other action authorized by this
subsection, order the defendant to return the property
to the jurisdiction of the court so that the property
may be seized and forfeited.
* * * * * * *
----------
TITLE 28, UNITED STATES CODE
* * * * * * *
PART VI--PARTICULAR PROCEEDING
* * * * * * *
CHAPTER 163--FINES, PENALTIES AND FORFEITURES
* * * * * * *
Sec. 2466. Fugitive disentitlement
(a) A judicial officer may disallow a person from using the
resources of the courts of the United States in furtherance of
a claim in any related civil forfeiture action or a claim in
third party proceedings in any related criminal forfeiture
action upon a finding that such person--
(1) * * *
* * * * * * *
(b) Subsection (a) may be applied to a claim filed by a
corporation if any majority shareholder, or individual filing
the claim on behalf of the corporation is a person to whom
subsection (a) applies.
Sec. 2467. Enforcement of foreign judgment
(a) Definitions.--In this section--
(1) * * *
(2) the term ``forfeiture or confiscation judgment''
means a final order of a foreign nation compelling a
person or entity--
(A) to pay a sum of money representing the
proceeds of an offense described in Article 3,
Paragraph 1, of the United Nations Convention,
any violation of foreign law that would
constitute a violation of an offense for which
property could be forfeited under Federal law
if the offense were committed in the United
States, or any foreign offense described in
section 1956(c)(7)(B) of title 18, or property
the value of which corresponds to such
proceeds; or
* * * * * * *
(b) Review by Attorney General.--
(1) In general.--A foreign nation seeking to have a
forfeiture or confiscation judgment registered and
enforced by a district court of the United States under
this section shall first submit a request to the
Attorney General or the designee of the Attorney
General, which request shall include--
(A) * * *
* * * * * * *
(C) an affidavit or sworn declaration
[establishing that the defendant received
notice of the proceedings in sufficient time to
enable the defendant] establishing that the
foreign nation took steps, in accordance with
the principles of due process, to give notice
of the proceedings to all persons with an
interest in the property in sufficient time to
enable such persons to defend against the
charges and that the judgment rendered is in
force and is not subject to appeal; and
* * * * * * *
(d) Entry and Enforcement of Judgment.--
(1) In general.--The district court shall enter such
orders as may be necessary to enforce the judgment on
behalf of the foreign nation unless the court finds
that--
(A) * * *
* * * * * * *
(D) [the defendant in the proceedings in the
foreign court did not receive notice] the
foreign nation did not take steps, in
accordance with the principles of due process,
to give notice of the proceedings to a person
with an interest in the property of the
proceedings in sufficient time to enable him or
her to defend; or
* * * * * * *
(3) Preservation of property.--To preserve the
availability of property subject to a foreign
forfeiture or confiscation judgment, the Government may
apply for, and the court may issue, a restraining order
pursuant to section 983(j) of title 18, United States
Code, at any time before or after an application is
filed pursuant to subsection (c)(1). The court, in
issuing the restraining order--
(A) may rely on information set forth in an
affidavit describing the nature of the
proceeding or investigation underway in the
foreign country, and setting forth a reasonable
basis to believe that the property to be
restrained will be named in a judgment of
forfeiture at the conclusion of such
proceeding; or
(B) may register and enforce a restraining
order that has been issued by a court of
competent jurisdiction in the foreign country
and certified by the Attorney General pursuant
to subsection (b)(2).
No person may object to the restraining order on any
ground that is the subject of parallel litigation
involving the same property that is pending in a
foreign court.
* * * * * * *
----------
RIGHT TO FINANCIAL PRIVACY ACT OF 1978
TITLE XI--RIGHT TO FINANCIAL PRIVACY
Sec. 1100. This title may be cited as the ``Right to
Financial Privacy Act of 1978''.
* * * * * * *
USE OF INFORMATION
Sec. 1112. (a) Financial records originally obtained
pursuant to this title shall not be transferred to another
agency or department unless the transferring agency or
department certifies in writing that there is reason to believe
that the records are relevant to a legitimate law enforcement
inquiry, or intelligence or counterintelligence activity,
investigation or analysis related to international terrorism
within the jurisdiction of the receiving agency or department.
* * * * * * *
SPECIAL PROCEDURES
Sec. 1114. (a)(1) Nothing in this title (except sections
1115, 1117, 1118, and 1121) shall apply to the production and
disclosure of financial records pursuant to requests from--
(A) a Government authority authorized to conduct
foreign counter- or foreign positive-intelligence
activities for purposes of conducting such activities;
[or]
(B) the Secret Service for the purpose of conducting
its protective functions (18 U.S.C. 3056; 3 U.S.C. 202,
Public Law 90-331, as amended)[.]; or
(C) a Government authority authorized to
conduct investigations of, or intelligence or
counterintelligence analyses related to,
international terrorism for the purpose of
conducting such investigations or analyses.
* * * * * * *
GRAND JURY INFORMATION
Sec. 1120. (a) Financial records about a customer
obtained from a financial institution pursuant to a subpena
issued under the authority of a Federal grand jury--
(1) * * *
(2) shall be used only for the purpose of considering
whether to issue an indictment or presentment by that
grand jury, or of prosecuting a crime for which that
indictment or presentment is issued, or for a purpose
authorized by rule 6(e) of the Federal Rules of
Criminal Procedure, or for a purpose authorized by
section 1112(a);
* * * * * * *
----------
FAIR CREDIT REPORTING ACT
TITLE VI--CONSUMER CREDIT REPORTING
Sec.
601. Short title.
* * * * * * *
[624.] 625. Disclosures to FBI for counterintelligence purposes.
626. Disclosures to governmental agencies for counterterrorism purposes.
Sec. 601. Short title
This title may be cited as the Fair Credit Reporting Act.
* * * * * * *
[Sec. 624.] Sec. 625. Disclosures to FBI for counterintelligence
purposes
(a) * * *
* * * * * * *
Sec. 626. Disclosures to governmental agencies for counterterrorism
purposes
(a) Disclosure.--Notwithstanding section 604 or any other
provision of this title, a consumer reporting agency shall
furnish a consumer report of a consumer and all other
information in a consumer's file to a government agency
authorized to conduct investigations of, or intelligence or
counterintelligence activities or analysis related to,
international terrorism when presented with a written
certification by such government agency that such information
is necessary for the agency's conduct or such investigation,
activity or analysis.
(b) Form of Certification.--The certification described in
subsection (a) shall be signed by the Secretary of the
Treasury, or an officer designated by the Secretary from among
officers of the Department of the Treasury whose appointments
to office are required to be made by the President, by and with
the advice and consent of the Senate.
(c) Confidentiality.--No consumer reporting agency, or
officer, employee, or agent of such consumer reporting agency,
shall disclose to any person, or specify in any consumer
report, that a government agency has sought or obtained access
to information under subsection (a).
(d) Rule of Construction.--Nothing in section 625 shall be
construed to limit the authority of the Director of the Federal
Bureau of Investigation under this section.
(e) Safe Harbor.--Notwithstanding any other provision of this
subchapter, any consumer reporting agency or agent or employee
thereof making disclosure of consumer reports or other
information pursuant to this section in good-faith reliance
upon a certification of a governmental agency pursuant to the
provisions of this section shall not be liable to any person
for such disclosure under this subchapter, the constitution of
any State, or any law or regulation of any State or any
political subdivision of any State.
----------
SECTION 3 OF THE BANK HOLDING COMPANY ACT OF 1956
ACQUISITION OF BANK SHARES OR ASSETS
Sec. 3. (a) * * *
* * * * * * *
(c) Factors for Consideration by Board.--
(1) * * *
* * * * * * *
(6) Money laundering.--In every case the Board shall
take into consideration the effectiveness of the
company or companies in combating and preventing money
laundering activities, including in overseas branches.
* * * * * * *
----------
ANNUNZIO-WYLIE ANTI-MONEY LAUNDERING ACT
TITLE XV--ANNUNZIO-WYLIE ANTI-MONEY LAUNDERING ACT
SEC. 1500. SHORT TITLE.
This title may be cited as the ``Annunzio-Wylie Anti-Money
Laundering Act''.
* * * * * * *
Subtitle F--Miscellaneous Provisions
* * * * * * *
SEC. 1564. ADVISORY GROUP ON REPORTING REQUIREMENTS.
(a) * * *
* * * * * * *
(d) Terrorist Financing Issues.--
(1) In general.--The Secretary of the Treasury shall
provide, either within the Bank Secrecy Act Advisory
Group, or as a subcommittee or other adjunct of the
Advisory Group, for a task force of representatives
from agencies and officers represented on the Advisory
Group, a representative of the Director of the Office
of Homeland Security, and representatives of financial
institutions, private organizations that represent the
financial services industry, and other interested
parties to focus on--
(A) issues specifically related to the
finances of terrorist groups, the means
terrorist groups use to transfer funds around
the world and within the United States,
including through the use of charitable
organizations, nonprofit organizations, and
nongovernmental organizations, and the extent
to which financial institutions in the United
States are unwittingly involved in such
finances and the extent to which such
institutions are at risk as a result;
(B) the relationship, particularly the
financial relationship, between international
narcotics traffickers and foreign terrorist
organizations, the extent to which their
memberships overlap and engage in joint
activities, and the extent to which they
cooperate with each other in raising and
transferring funds for their respective
purposes; and
(C) means of facilitating the identification
of accounts and transactions involving
terrorist groups and facilitating the exchange
of information concerning such accounts and
transactions between financial institutions and
law enforcement organizations.
(2) Applicability of other provisions.--Sections 552,
552a, and 552b of title 5, United States Code, and the
Federal Advisory Committee Act shall not apply to the
task force established pursuant to paragraph (1).
* * * * * * *
DISSENTING VIEWS
The so-called Financial Anti-Terrorism Act of 2001 (HR
3004) has more to do with the ongoing war against financial
privacy than with the war against international terrorism. Of
course, the federal government should take all necessary and
constitutional actions to enhance the ability of law
enforcement to locate and seize funds flowing to known
terrorists and their front groups. For example, America should
consider signing more mutual legal assistance treaties with its
allies so we can more easily locate the assets of terrorists
and other criminals.
Unfortunately, instead of focusing on reasonable measures
aimed at enhancing the ability to reach assets used to support
terrorism, HR 3004 is a laundry list of dangerous,
unconstitutional power grabs. Many of these proposals have
already been rejected by the American people when presented as
necessary to ``fight the war on drugs'' or ``crackdown on
white-collar crime.'' Even a ban on Internet gambling has
somehow made it into this ``anti-terrorism'' bill!
Among the most obnoxious provisions of this bill are:
expanding the war on cash by creating a new federal crime of
taking over $10,000 cash into or out of the United States;
codifying the unconstitutional authority of the Financial
Crimes Enforcement Network (FinCEN) to snoop into the private
financial dealings of American citizens; and expanding the
``suspicious activity reports'' mandate to broker-dealers, even
though history has shown that these reports fail to
significantly aid in apprehending criminals. These measures
will actually distract from the battle against terrorism by
encouraging law enforcement authorities to waste time snooping
through the financial records of innocent Americans who simply
happen to demonstrate an ``unusual'' pattern in their financial
dealings.
HR 3004 also attacks the Fourth Amendment by allowing
Customs officials to open incoming or outgoing mail without a
search warrant. Allowing government officials to read mail
going out of or coming into the country at whim is
characteristic of totalitarian regimes, not free societies.
The Financial Anti-Terrorism Act of 2001 (HR 3004) is a
package of unconstitutional expansions of the financial police
state, most of which will prove ultimately ineffective in the
war against terrorism. I therefore urge my colleagues to reject
this bill and work to fashion a measure aimed at giving the
government a greater ability to locate and seize the assets of
terrorists while respecting the constitutional rights of
American citizens.
Ron Paul.