99–006

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

2

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

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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:

‘‘§ 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 violaVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6621 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
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tion 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.

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‘‘(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:

‘‘§ 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,

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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:

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‘‘(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.—

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(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 REQUIRE- MENTS.—

(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 dollardenominated 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

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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:

‘‘§ 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

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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:

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‘‘(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:

‘‘§ 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;

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(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:

‘‘§ 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:

‘‘§ 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:

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‘‘(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;

14

‘‘(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:

‘‘§ 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;

15

‘‘(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 GrammLeach-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

16

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.’’.

17

(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

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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 REG- ISTERED BROKERS AND DEALERS.—The Secretary of the Treasury, in consultation

19

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 selfregulatory 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.’’.

20

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 institutionaffiliated 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:

‘‘§ 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—

21

‘‘(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

22

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 payablethrough 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 subVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6621 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
23

section (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.

24

‘‘(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 ‘ac- count’, 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.

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‘‘(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

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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 GrammLeach-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:

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‘‘(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 AntiDrug 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—

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(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—

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(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.—

30

(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 TribalState 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

31

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—

32

(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 SE- CURITIES.—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

33

(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 antimoney 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.

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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, twentyseven 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.

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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

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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 financial infrastructure’’ 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

37

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. PuigInfante, 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

38

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. § 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. § 5312. See 18 U.S.C. § 1956(c)(6); 18 U.S.C. § 1957(f).

The definition of ‘‘financial institution’’ in § 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 §1956 or §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 §1956(c)(6) to establish that the transaction was a ‘‘financial transaction’’ within the meaning of §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 §1957(f) (defining ‘‘monetary transaction’’ as, inter

alia, a transaction that would be a ‘‘financial transaction’’ under

§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. §1956(c)(7). Currently only a handful of foreign

crimes appear on that list. See §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

39

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. § 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.

40

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

41

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

42

1 An earlier voice vote on which the nays prevailed was vacated by unanimous consent, and

the question put to the Committee de novo.

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

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

43

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 inVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00043 Fmt 6659 Sfmt 6602 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
44

stitution’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 antimoney laundering programs;

An amendment to the amendment in the nature of a substitute

by Mr. Maloney of Connecticut, no. 1i, making explicit that hawalatype 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 noncooperating 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.

45

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 AntiTerrorism 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 colVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00045 Fmt 6659 Sfmt 6602 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
46

lects 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-yougo 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.

47

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 that regulate 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

48

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

49

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

50

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 AntiTerrorism 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.

51

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 AntiTerrorism 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.

52

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. § 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

53

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 or other 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. § 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

54

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. § 1960. First, section 104

clarifies the scienter requirement in § 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 §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. § 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 § 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.

55

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. § 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 § 1956(c)(6).

The definition is the same as the one set forth in 12 U.S.C.

§ 3101(7), which is already employed in § 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. § 2339B.

Section 2339B, however, was not added to the list of money laundering predicate offenses in section 1956(c)(7)(D). This provision

adds § 2339B to the list of money laundering predicates.

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Section 109. Violations of Reporting Requirements for Nonfinancial

Trades and Businesses

18 U.S.C. §§ 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. § 5311 et seq.) and the Money Laundering

Control Act (18 U.S.C. §§ 1956–57). This section would add 26

U.S.C. § 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. §§ 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.

§ 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 list of foreign crimes to which this section applies is determined by cross-reference to the foreign crimes

that are money laundering predicates under § 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,

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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. §§ 5321 and 5322 impose civil and criminal penalties,

respectively, for violations of the Bank Secrecy Act (BSA) and BSA

regulations; 31 U.S.C. § 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. § 5326. This provision eliminates any

ambiguity concerning the applicability of these provisions to GTOs

by inserting specific references to 31 U.S.C. § 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. § 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 offshore 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.

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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. § 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

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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. § 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. § 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. § 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. § 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. § 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. § 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 prevents a 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. § 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

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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. § 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

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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

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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. § 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. § 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

seeking to 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

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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

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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.

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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

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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 the Commodity 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. §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.

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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.

§ 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.

68

2The 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.

§ 5312(b)(2).

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 reasonVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00068 Fmt 6659 Sfmt 6602 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
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able 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.

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 the legislation 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

70

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

71

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

income or 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. § 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. § 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 antimoney 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 nonUnited 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 acVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00071 Fmt 6659 Sfmt 6602 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
72

count 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

financial institution 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

73

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

74

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 a contest 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

75

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

76

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

ø310.¿ 311. Continuing in office.

* * * * * * *

SUBCHAPTER I—ORGANIZATION

* * * * * * *

§ 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

77

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.

78

(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

79

(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.

§ ø310¿ 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

* * * * * * *

§ 5114. Engraving and printing currency and security documents

ø(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

* * * * * * *

80

§ 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.

* * * * * * *

§ 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.

§ 5312. Definitions and application

(a) In this subchapter—

(1) * * *

(2) ‘‘financial institution’’ means—

(A) * * *

* * * * * * *

ø(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;

* * * * * * *

ø(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;

* * * * * * *

81

(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.

* * * * * * *

§ 5317. Search and forfeiture of monetary instruments

(a) * * *

ø(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.

ø(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—

82

(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.

§ 5318. Compliance, exemptions, and summons authority

(a) * * *

* * * * * * *

(g) REPORTING OF SUSPICIOUS TRANSACTIONS.—

(1) * * *

ø(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

83

other authority, may not notify any person involved in the

transaction that the transaction has been reported.

ø(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 REF- ERENCES.—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

84

(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

øor 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.

* * * * * * *

ø(h) ANTI-MONEY LAUNDERING PROGRAMS.— ø(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

ø(A) the development of internal policies, procedures,

and controls,

ø(B) the designation of a compliance officer,

ø(C) an ongoing employee training program, and

ø(D) an independent audit function to test programs.

ø(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 FedVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00084 Fmt 6659 Sfmt 6603 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
85

eral 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 CommisVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00085 Fmt 6659 Sfmt 6603 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
86

sion), 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-LeachBliley 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 AntiTerrorism 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 nonUnited 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 antimoney 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

87

(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.

88

(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.

89

§ 5318A. Special measures for jurisdictions, financial institutions, or international transactions of primary

money laundering concern

(a) INTERNATIONAL COUNTER-MONEY LAUNDERING REQUIRE- MENTS.—

(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

90

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

91

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 AC- COUNTS.—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 MAINTAIN- ING CERTAIN CORRESPONDENT OR PAYABLE-THROUGH AC- COUNTS.—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 consultaVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00091 Fmt 6659 Sfmt 6603 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
92

tion 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 payablethrough 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 CON- CERN.—

(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.

93

(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 SEC- RETARY.—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 ‘‘payablethrough 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

94

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.

ø§ 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.¿

§ 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.

* * * * * * *

§ 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 FedVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00094 Fmt 6659 Sfmt 6601 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
95

eral 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.

* * * * * * *

§ 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.

* * * * * * *

§ 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

øsection—¿ 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

96

of Public Law 91–508 that contains a material omission or

misstatement of fact; or

* * * * * * *

§ 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;

* * * * * * *

§ 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.

97

(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.

§ 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.—

98

(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 øor stones¿, stones, or analog, digital, or electronic images for counterfeiting obligations or securities.

* * * * * * *

481. Plates øor stones¿, stones, or analog, digital, or electronic images for counterfeiting foreign obligations or securities.

* * * * * * *

99

§ 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, øshall 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.

§ 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 øfifteen¿ 20 years, or both.

§ 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 øfifteen¿ 20 years, or both.

§ 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 øten¿ 20 years, or both.

§ 474. Plates øor 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

* * * * * * *

100

(b) øFor 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.

* * * * * * *

§ 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 øten¿ 25 years, or both.

§ 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 øten¿

25 years, or both.

§ 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 øfive¿ 20 years, or both.

101

§ 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 øthree¿ 20 years, or both.

§ 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

øone year¿ 20 years, or both.

§ 481. Plates øor 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 øfive¿

25 years, or both.

§ 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

øtwo¿ 20 years, or both.

102

§ 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 øone year¿ 20 years, or both.

§ 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 øfive¿ 10 years, or both.

* * * * * * *

§ 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 øfive¿

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

øfive¿ 10 years, or both.

* * * * * * *

CHAPTER 46—FORFEITURE

* * * * * * *

§ 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 øof section 5313(a) or

5324(a) of title 31, or¿ of section 6050I of the Internal Revenue

Code of 1986, or section 1956 øor 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

103

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.

ø(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 deterVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00103 Fmt 6659 Sfmt 6603 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
104

mines 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.

§ 982. Criminal forfeiture

(a)(1) The court, in imposing sentence on a person convicted of

an offense in violation øof 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

105

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.

* * * * * * *

§ 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).

* * * * * * *

106

CHAPTER 95—RACKETEERING

Sec.

1951. Interference with commerce by threats or violence.

* * * * * * *

1960. Prohibition of øillegal¿ unlicensed money transmitting businesses.

* * * * * * *

§ 1956. Laundering of monetary instruments

(a) * * *

(b)(1) Whoever conducts or attempts to conduct a transaction described in øsubsection (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—

ø(1)¿ (A) the value of the property, funds, or monetary instruments involved in the transaction; or

ø(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) * * *

* * * * * * *

ø(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) * * *

107

(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) * * *

ø(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

108

country), section 1005 (relating to fraudulent bank entries), 1006 (relating to fraudulent Federal credit institution entries), 1007 (relating to Federal Deposit Insurance

transactions), ø1014 (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

* * * * * * *

109

§ 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.

* * * * * * *

ø§ 1960. Prohibition of illegal money transmitting businesses

ø(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.

ø(b) As used in this section— ø(1) the term ‘‘illegal money transmitting business’’ means a

money transmitting business which affects interstate or foreign

commerce in any manner or degree and— ø(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

ø(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;

ø(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

ø(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.¿

§ 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

110

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

* * * * * * *

§ 3486. Administrative subpoenas

(a) AUTHORIZATION.—(1)(A) In any investigation of— (i)(I) a Federal health care offenseø; 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 GAM- BLING.—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 prohibVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00110 Fmt 6659 Sfmt 6603 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
111

iting 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.

ø(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 SUS- PICIONS 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.—

112

(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 ø$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.

* * * * * * *

§ 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 ø$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.

* * * * * * *

ø§ 126. Criminal penalty

øWhoever willfully violates any regulation under this chapter

shall be fined not more than $1,000 or imprisoned not more than

one year, or both.

ø§ 127. Additional criminal penalty in certain cases

øWhoever 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

113

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.

ø(D)¿ (E) PROSTITUTION AND COMMERCIALIZED VICE.—

Any alien who—

(i) * * *

* * * * * * *

114

ø(E)¿ (F) CERTAIN ALIENS INVOLVED IN SERIOUS CRIMI- NAL ACTIVITY WHO HAVE ASSERTED IMMUNITY FROM PROS- ECUTION.—Any alien— (i) * * *

* * * * * * *

ø(F)¿ (G) WAIVER AUTHORIZED.—For provision authorizing waiver of certain subparagraphs of this paragraph,

see subsection (h).

ø(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.

ø(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

ø(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

115

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.

* * * * * * *

ø(p) If any of the property described in subsection (a), as a result

of any act or omission of the defendant—

ø(1) cannot be located upon the exercise of due diligence;

ø(2) has been transferred or sold to, or deposited with, a

third party;

ø(3) has been placed beyond the jurisdiction of the court;

ø(4) has been substantially diminished in value; or

ø(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

* * * * * * *

116

CHAPTER 163—FINES, PENALTIES AND FORFEITURES

* * * * * * *

§ 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.

§ 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 øestablishing 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—

117

(A) * * *

* * * * * * *

(D) øthe 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.

* * * * * * *

118

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; øor¿

(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)ø.¿; 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.

* * * * * * *

ø624.¿ 625. Disclosures to FBI for counterintelligence purposes.

626. Disclosures to governmental agencies for counterterrorism purposes.

§ 601. Short title

This title may be cited as the Fair Credit Reporting Act.

* * * * * * *

ø§ 624.¿ § 625. Disclosures to FBI for counterintelligence

purposes

(a) * * *

* * * * * * *

§ 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 conVerDate 11-MAY-2000 05:00 Oct 19, 2001 Jkt 099006 PO 00000 Frm 00118 Fmt 6659 Sfmt 6603 E:\HR\OC\HR250P1.XXX pfrm11 PsN: HR250P1
119

sumer 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.

* * * * * * *

120

ANNUNZIO-WYLIE ANTI-MONEY LAUNDERING ACT

TITLE XV—ANNUNZIO-WYLIE ANTIMONEY 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).

* * * * * * *

(121)

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.

Æ