II

105TH CONGRESS

1ST SESSION S. 1003

To amend chapter 53 of title 31, United States Code, to require the development and implementation by the Secretary of the Treasury of a national

money laundering and related financial crimes strategy to combat money

laundering and related financial crimes, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 10, 1997

Mr. GRASSLEY (for himself, Mr. D’AMATO, Mrs. FEINSTEIN, Mr. HUTCHINSON, Mr. GRAHAM, Mr. HAGEL, Mr. STEVENS, Mr. THURMOND, and Mr.

FAIRCLOTH) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To amend chapter 53 of title 31, United States Code, to

require the development and implementation by the Secretary of the Treasury of a national money laundering

and related financial crimes strategy to combat money

laundering and related financial crimes, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Money Laundering and

5 Financial Crimes Strategy Act of 1997’’.
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1 SEC. 2. MONEY LAUNDERING AND RELATED FINANCIAL

2 CRIMES.

3 (a) IN GENERAL.—Chapter 53 of title 31, United

4 States Code is amended by adding at the end the following

5 new subchapter:

6 ‘‘Subchapter III—Money Laundering and

7 Related Financial Crimes

8 ‘‘SEC. 5341. DEFINITIONS.

9 ‘‘For purposes of this subchapter, the following defi10 nitions shall apply:

11 ‘‘(1) DEPARTMENT OF THE TREASURY LAW EN12 FORCEMENT ORGANIZATIONS.—The term ‘Depart13 ment of the Treasury law enforcement organizations’

14 has the meaning given to such term in section

15 9703(p)(1).

16 ‘‘(2) MONEY LAUNDERING AND RELATED FI17 NANCIAL CRIME.—The term ‘money laundering and

18 related financial crime’ means an offense under this

19 subchapter, chapter II of title I of Public Law 91–

20 508 (12 U.S.C. 1951, et seq.; commonly referred to

21 as the ‘Bank Secrecy Act’), or section 1956, 1957,

22 or 1960 of title 18 or any related Federal, State, or

23 local criminal offense.

24 ‘‘(3) SECRETARY.—The term ‘Secretary’ means

25 the Secretary of the Treasury.
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1 ‘‘(4) STRATEGY.—The term ‘Strategy’ means

2 the National Strategy for Combating Money Laun3 dering and Related Financial Crimes developed in

4 accordance with section 5342.

5 ‘‘SEC. 5342. NATIONAL MONEY LAUNDERING AND RELATED

6 FINANCIAL CRIMES STRATEGY.

7 ‘‘(a) DEVELOPMENT AND SUBMISSION TO CON8 GRESS.—

9 ‘‘(1) DEVELOPMENT.—The President, acting

10 through the Secretary, shall coordinate and develop

11 a National Strategy for Combating Money Launder12 ing and Related Financial Crimes (hereafter in this

13 section referred to as the ‘Strategy’).

14 ‘‘(2) SUBMISSION TO CONGRESS.—On February

15 1 of fiscal years 1999 through 2003, the Secretary

16 shall submit the Strategy to Congress in written

17 form, in accordance with this subchapter.

18 ‘‘(3) SEPARATE PRESENTATION OF CLASSIFIED

19 MATERIAL.—Any part of the Strategy that involves

20 information which is properly classified under cri21 teria established by Executive order shall be submit22 ted to Congress separately.

23 ‘‘(4) CONTENTS.—Each Strategy submitted

24 under paragraph (2) shall include—
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1 ‘‘(A) comprehensive, research-based, quan2 tifiable goals for reducing money laundering

3 and related financial crime in the United

4 States;

5 ‘‘(B) 3-year budget projections for pro6 gram and budget priorities to implement the

7 Strategy;

8 ‘‘(C) a review of State and local strategies

9 to control money laundering and other financial

10 crimes to ensure that the United States pursues

11 well-coordinated and effective money laundering

12 and other financial crime controls at all levels

13 of Government;

14 ‘‘(D) a description of existing operational

15 initiatives to improve detection of money laun16 dering and related financial crimes;

17 ‘‘(E) a description of the actions taken by

18 the Secretary to achieve an enhanced partner19 ship between the private financial sector and

20 law enforcement agencies, as required under

21 subsection (b)(3);

22 ‘‘(F) a description of—

23 ‘‘(i) cooperative efforts between the

24 Federal Government and State and local

25 officials, including State and local prosecu-
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1 tors and other law enforcement officials;

2 and

3 ‘‘(ii) cooperative efforts among the

4 several States and between State and local

5 officials, including State and local prosecu6 tors and other law enforcement officials,

7 for financial crimes control which could be

8 utilized or should be encouraged;

9 ‘‘(G) a complete assessment of how the

10 proposed budget is intended to implement the

11 Strategy, and whether the funding levels con12 tained in the proposed budget are sufficient to

13 implement the Strategy;

14 ‘‘(H) the level of compatibility of auto15 mated information systems, including the ease

16 of access of the Federal Government and State

17 and local governments to timely, accurate, and

18 complete information;

19 ‘‘(I) a list of persons or officers consulted

20 by the Secretary pursuant to subsection (c);

21 and

22 ‘‘(J) any other information necessary for

23 the purpose of developing and analyzing data in

24 order to ascertain financial crime trends.
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1 ‘‘(b) DEVELOPMENT OF STRATEGY.—The Strategy

2 shall address any area that the President, acting through

3 the Secretary, considers appropriate, including the follow4 ing:

5 ‘‘(1) GOALS, OBJECTIVES, AND PRIORITIES.—

6 Comprehensive, research-based goals, objectives, and

7 priorities for reducing money laundering and related

8 financial crime in the United States.

9 ‘‘(2) PREVENTION.—Coordination of regulatory

10 and other efforts to prevent the exploitation of fi11 nancial systems in the United States for money

12 laundering and related financial crimes, including a

13 requirement that the Secretary shall—

14 ‘‘(A) regularly review enforcement efforts

15 under this subchapter and other provisions of

16 law and, when appropriate, modify existing reg17 ulations or prescribe new regulations for pur18 poses of preventing such criminal activity; and

19 ‘‘(B) coordinate prevention efforts and

20 other enforcement action with the Board of

21 Governors of the Federal Reserve System, the

22 Securities and Exchange Commission, the Fed23 eral Trade Commission, other Federal banking

24 agencies, and the National Credit Union Ad25 ministration Board.
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1 ‘‘(3) ENHANCEMENT OF ROLE OF PRIVATE FI2 NANCIAL SECTOR IN PREVENTION.—The Secretary

3 shall pursue an enhanced partnership between the

4 private financial sector and law enforcement agen5 cies with regard to the prevention and detection of

6 money laundering and related financial crimes, in7 cluding providing incentives to strengthen internal

8 controls and to adopt on an industrywide basis more

9 effective policies.

10 ‘‘(4) DESIGNATED AREAS.—A description of

11 geographical areas designated as ‘high-risk money

12 laundering and related financial crime areas’ in ac13 cordance with section 5343.

14 ‘‘(5) DATA REGARDING TRENDS IN MONEY

15 LAUNDERING AND RELATED FINANCIAL CRIMES.—

16 The need for additional information necessary for

17 the purpose of developing and analyzing data in

18 order to ascertain financial crime trends.

19 ‘‘(6) IMPROVED COMMUNICATIONS SYSTEMS.—

20 The compatibility of automated information and fa21 cilitating access of the Federal Government and

22 State and local governments to timely, accurate, and

23 complete information, and what steps may be nec24 essary to improve such access.
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1 ‘‘(c) CONSULTATIONS.—In developing the Strategy,

2 the Secretary shall consult with—

3 ‘‘(1) law enforcement organizations of the De4 partment of the Treasury involved in the detection,

5 prevention, and suppression of money laundering

6 and related financial crimes;

7 ‘‘(2) the Attorney General;

8 ‘‘(3) the Board of Governors of the Federal Re9 serve System, the National Credit Union Adminis10 tration Board, and other Federal banking agencies;

11 ‘‘(4) State and local officials, including State

12 and local prosecutors;

13 ‘‘(5) the Securities and Exchange Commission;

14 ‘‘(6) the Commodities and Futures Trading

15 Commission;

16 ‘‘(7) to the extent appropriate, State and local

17 officials responsible for financial institution and fi18 nancial market regulation;

19 ‘‘(8) any other State or local government au20 thority, to the extent appropriate;

21 ‘‘(9) any other Federal Government authority

22 or instrumentality, to the extent appropriate; and

23 ‘‘(10) representatives of the private financial

24 services sector, to the extent appropriate.
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1 ‘‘SEC. 5343. HIGH-RISK MONEY LAUNDERING AND RELATED

2 FINANCIAL CRIME AREAS.

3 ‘‘(a) FINDINGS AND PURPOSE.—

4 ‘‘(1) FINDINGS.—The Congress finds that—

5 ‘‘(A) money laundering and related finan6 cial crimes frequently appear to be concentrated

7 in particular geographic areas, financial sys8 tems, industry sectors, or financial institutions;

9 and

10 ‘‘(B) while the Secretary has the respon11 sibility to act with regard to Federal offenses

12 committed in a particular locality or are di13 rected at a single institution, because modern

14 financial systems and institutions are inter15 connected to a great degree, money laundering

16 and other related financial crimes are likely to

17 have local, State, national, and international ef18 fects wherever they are committed.

19 ‘‘(2) PURPOSE AND OBJECTIVE.—The purpose

20 of this section is to provide a mechanism for des21 ignating any area where money laundering or a re22 lated financial crime appears to be occurring at a

23 higher than average rate, such that—

24 ‘‘(A) a comprehensive approach to the

25 problem of such crime in such area can be de26 veloped, in cooperation with State and local law
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1 enforcement agencies, which utilizes the author2 ity of the Secretary to prevent such activity; or

3 ‘‘(B) the area can be targeted for law en4 forcement action.

5 ‘‘(b) ELEMENT OF NATIONAL STRATEGY.—The des6 ignation of certain areas as areas in which money launder7 ing and related financial crimes are extensive or present

8 a substantial risk shall be an element of the Strategy de9 veloped pursuant to section 5342.

10 ‘‘(c) DESIGNATION OF AREAS.—

11 ‘‘(1) DESIGNATION BY SECRETARY.—The Sec12 retary, after taking into consideration the factors

13 specified in subsection (d), shall designate any geo14 graphical area, industry, sector, or institution in the

15 United States in which money laundering and relat16 ed financial crimes are extensive or present a sub17 stantial risk as a ‘high-risk money laundering and

18 related financial crimes area’.

19 ‘‘(2) SPECIFIC INITIATIVES.—Any head of a de20 partment, bureau, or law enforcement agency, in21 cluding any State or local prosecutor, involved in the

22 detection, prevention, and suppression of money

23 laundering and related financial crimes and any

24 State or local official or prosecutor may submit a

25 written request for the designation of any area as a
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1 high-risk money laundering and related financial

2 crimes area.

3 ‘‘(3) CASE-BY-CASE DETERMINATION.—In addi4 tion to the factors specified in subsection (d), a des5 ignation of any area under this subsection shall be

6 made on the basis of a determination by the Sec7 retary that the particular area, industry, sector, or

8 institution is being victimized by, or is particularly

9 vulnerable to, money laundering and related finan10 cial crimes.

11 ‘‘(d) FACTORS.—In designating an area as a high12 risk money laundering and related financial crimes area

13 under this section, the Secretary shall, to the extent ap14 propriate, take into account—

15 ‘‘(1) the population of the area;

16 ‘‘(2) the number of bank and nonbank financial

17 institution transactions that originate in such area

18 or involve institutions located in such area;

19 ‘‘(3) the number of stock or commodities trans20 actions that originate in such area or involve institu21 tions located in such area;

22 ‘‘(4) whether the area is a key transportation

23 hub with any international ports or airports or an

24 extensive highway system;
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1 ‘‘(5) whether the area is an international center

2 for banking or commerce;

3 ‘‘(6) the extent to which financial crimes and fi4 nancial crime-related activities in such area are hav5 ing a harmful impact in other areas of the country;

6 ‘‘(7) the number or nature of requests for infor7 mation or analytical assistance that—

8 ‘‘(A) are made to the analytical component

9 of the Department of the Treasury; and

10 ‘‘(B) originate from law enforcement or

11 regulatory authorities located in such area, or

12 involve institutions or businesses located in such

13 area or residents of such area;

14 ‘‘(8) whether the area is or has been the subject

15 of active money laundering investigations;

16 ‘‘(9) the volume or nature of suspicious activity

17 reports originating in the area;

18 ‘‘(10) the volume or nature of currency trans19 action reports or reports of cross-border movements

20 of currency or monetary instruments originating in

21 the area;

22 ‘‘(11) whether, and how often, the area has

23 been the subject of a geographical targeting order

24 under section 5326 before being considered for such

25 designation;
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1 ‘‘(12) observed changes in trends and patterns

2 of money laundering activity;

3 ‘‘(13) unusual patterns, anomalies, growth, or

4 other changes in the volume or nature of core eco5 nomic statistics or indicators;

6 ‘‘(14) statistics or indicators of unusual or un7 explained volumes of cash transactions;

8 ‘‘(15) unusual patterns, anomalies, or changes

9 in the volume or nature of transactions conducted

10 through financial institutions operating within or

11 outside the United States;

12 ‘‘(16) the extent to which State and local gov13 ernments and State and local law enforcement agen14 cies have committed resources to respond to the fi15 nancial crime problem in the area and the degree to

16 which the commitment of such resources reflects a

17 determination by such government and agencies to

18 address the problem aggressively;

19 ‘‘(17) the extent to which a significant increase

20 in the allocation of Federal resources to combat fi21 nancial crimes in such area is necessary to provide

22 an adequate State and local response to financial

23 crimes and financial crime-related activities in such

24 area; and
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1 ‘‘(18) such other factors as the Secretary con2 siders relevant.

3 ‘‘SEC. 5344. ASSISTANCE FOR FIGHTING MONEY LAUNDER4 ING AND RELATED FINANCIAL CRIMES.

5 ‘‘(a) GRANT PROGRAM AUTHORIZED.—

6 ‘‘(1) IN GENERAL.—After the end of the 1-year

7 period beginning on the date on which the first

8 Strategy is submitted to the Congress in accordance

9 with section 5342, the Secretary may review, select,

10 and award grants in accordance with this subchapter

11 from among applications submitted under paragraph

12 (2) to State or local law enforcement agencies and

13 prosecutors in an area designated as a high-risk

14 money laundering and related financial crimes area

15 under section 5343. Such grants shall be used to

16 provide funding necessary to investigate and pros17 ecute money laundering and related financial crimes

18 in those areas.

19 ‘‘(2) APPLICATION PROCESS.—The Secretary

20 shall award grants under this subchapter upon re21 ceipt of written application, in accordance with such

22 terms and procedures as the Secretary may estab23 lish.

24 ‘‘(3) SPECIAL PREFERENCE.—In awarding

25 grants under this subsection, special preference shall
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1 be given to applicants that represent collaborative ef2 forts of 2 or more State and local law enforcement

3 agencies or prosecutors who have a history of Fed4 eral, State, and local cooperative law enforcement

5 and prosecutorial efforts in responding to such

6 criminal activity.

7 ‘‘(b) OTHER ASSISTANCE AUTHORIZED.—Notwith8 standing whether a grant is awarded in an area designated

9 as a high-risk money laundering and related financial

10 crimes area, the Secretary may, in any such area—

11 ‘‘(1) recommend increases in Federal assistance

12 that the Secretary determines are necessary to com13 bat financial crimes in such areas; and

14 ‘‘(2) establish joint cooperative efforts and co15 ordinate enforcement activities among Federal law

16 enforcement organizations involved in the detection,

17 prevention, and suppression of money laundering

18 and related financial crimes and State and local law

19 enforcement agencies with respect to financial

20 crimes in such area.

21 ‘‘SEC. 5345. AUTHORIZATION OF APPROPRIATIONS.

22 ‘‘There are authorized to be appropriated to carry out

23 this subchapter, subject to an appropriations Act—

24 ‘‘(1) $5,000,000 for fiscal year 1999;

25 ‘‘(2) $7,500,000 for fiscal year 2000;
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1 ‘‘(3) $10,000,000 for fiscal year 2001;

2 ‘‘(4) $12,500,000 for fiscal year 2002; and

3 ‘‘(5) $15,000,000 for fiscal year 2003.’’.

4 (b) CLERICAL AMENDMENT.—The table of sub5 chapters for chapter 53 of title 31, United States Code,

6 is amended by adding at the end the following items relat7 ing to the subchapter added by subsection (a) of this sec8 tion:

‘‘SUBCHAPTER III—MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

‘‘Sec. 5341. Definitions.

‘‘Sec. 5342. National money laundering and related financial crimes strategy.

‘‘Sec. 5343. High-risk money laundering and related financial crime areas.

‘‘Sec. 5344. Assistance for fighting money laundering and related financial

crimes.

‘‘Sec. 5345. Authorization of appropriations.’’.

9 SEC. 3. BUDGETS FOR LAW ENFORCEMENT ACTIVITIES RE10 LATING TO MONEY LAUNDERING AND RELAT11 ED FINANCIAL CRIMES.

12 Section 1105 of title 31, United States Code, is

13 amended by adding at the end the following new sub14 section:

15 ‘‘(h) TREATMENT OF FUNDING.—The Director of the

16 Office of Management and Budget shall establish the

17 funding for law enforcement activities with respect to

18 money laundering and related financial crimes for each ap19 plicable department or agency as a separate object class

20 in each budget annually submitted to the Congress under

21 this section.’’.
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1 SEC. 4. REPORT AND RECOMMENDATIONS.

2 Before the end of the 5-year period beginning on the

3 date on which the first National Strategy for Combating

4 Money Laundering and Related Financial Crimes is sub5 mitted to the Congress pursuant to section 5342 of title

6 31, United States Code (as added by this Act), the Sec7 retary of the Treasury shall submit a report to the Com8 mittee on Banking and Financial Services of the House

9 of Representatives and the Committee on Banking, Hous10 ing, and Urban Affairs of the Senate on the effectiveness

11 of and the need for the designation of areas, under section

12 5343 of title 31, United States Code (as added by this

13 Act), as high-risk money laundering and related financial

14 crime areas, together with such recommendations for leg15 islation as the Secretary of the Treasury may determine

16 to be appropriate to carry out the purposes of that section.

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