I

106TH CONGRESS

1ST SESSION H. R. 1426

To prevent the laundering of money.

IN THE HOUSE OF REPRESENTATIVES

APRIL 14, 1999

Ms. WATERS introduced the following bill; which was referred to the

Committee on Banking and Financial Services

A BILL

To prevent the laundering of money.

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

5 Prevention Act of 1999’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—The Congress makes the following

8 findings:

9 (1) Money laundering is a serious problem: be10 tween $100,000,000,000 and $300,000,000,000 in

11 United States currency is ‘‘laundered’’ each year
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1 and the total dollar amount involved in international

2 money laundering likely exceeds $500,000,000,000.

3 (2) Money laundering is critical to the survival

4 of the illicit drug trade, which has annual worldwide

5 revenues of more than $400,000,000,000, more than

6 8 percent of the total value of international trade.

7 (3) United States financial institutions are a

8 critical link in our efforts to combat money laun9 dering.

10 (4) Highly secretive and loosely regulated pri11 vate banking services that cater to wealthy clients

12 are particularly vulnerable to use by drug traffickers

13 for money laundering purposes, and it is estimated

14 that private banking services have banking assets

15 ranging from $200,000,000,000 to

16 $300,000,000,000.

17 (b) PURPOSES.—The purposes of this Act are as fol18 lows:

19 (1) To ensure that United States financial in20 stitutions make combating money laundering the

21 highest of priorities.

22 (2) To close the existing gaps in law that allow

23 money laundering to flourish in the private banking

24 system.
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1 (3) To designate foreign high-intensity money

2 laundering areas for the purpose of targeting areas

3 of concentrated money laundering activities.

4 (4) To require the Board of Governors of the

5 Federal Reserve System to take into account money

6 laundering activities in the consideration of applica7 tions under section 3 of the Bank Holding Company

8 Act of 1956.

9 SEC. 3. REPORT ON PRIVATE BANKING ACTIVITIES.

10 (a) IN GENERAL.—Before the end of the 1-year pe11 riod beginning on the date of the enactment of this Act,

12 the Secretary of the Treasury, in consultation with the

13 Federal banking agencies (as defined in section 3(z) of

14 the Federal Deposit Insurance Act) shall submit a report

15 on private banking activities in the United States to the

16 Committee on Banking and Financial Services of the

17 House of Representatives and the Committee on Banking,

18 Housing, and Urban Affairs of the Senate.

19 (b) CONTENTS OF REPORT.—The report required

20 under subsection (a) shall include information on the fol21 lowing:

22 (1) The nature and extent of private banking

23 activities in the United States.

24 (2) Regulatory efforts to monitor private bank25 ing activities and ensure that such activities are con-
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1 ducted in compliance with subchapter II of chapter

2 53 of title 31, United States Code, and section 21

3 of the Federal Deposit Insurance Act.

4 (3) The policies and procedures of depository

5 institutions that are designed to ensure compliance

6 by such institutions with the requirements of sub7 chapter II of chapter 53 of title 31, United States

8 Code, and section 21 of the Federal Deposit Insur9 ance Act.

10 (c) PRIVATE BANKING ACTIVITIES DEFINED.—For

11 purposes of this section, the term ‘‘private banking activi12 ties’’ includes, with respect to a financial institution, per13 sonalized services, such as money management, financial

14 advice, and investment services, that are provided to indi15 viduals with a high net worth and are not provided gen16 erally to all clients of the financial institution.

17 SEC. 4. REQUIRE THAT ANTI-MONEY LAUNDERING PRO18 GRAMS PROHIBIT MONEY LAUNDERING

19 THROUGH CONCENTRATION ACCOUNTS AT

20 FINANCIAL INSTITUTIONS BY REQUIRING

21 THE AVAILABILITY OF CERTAIN ACCOUNT IN22 FORMATION.

23 Section 5318(h) of title 31, United States Code, is

24 amended by adding at the end the following new para25 graph:
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1 ‘‘(3) AVAILABILITY OF CERTAIN ACCOUNT IN2 FORMATION.—The Secretary of the Treasury shall

3 prescribe regulations under this subsection which re4 quire financial institutions to maintain all accounts

5 in such a way as to ensure that—

6 ‘‘(A) the name of the account holder and

7 the number of the account are associated with

8 all account activity of the account holder; and

9 ‘‘(B) all such information is available for

10 purposes of account supervision and law en11 forcement.’’

12 SEC. 5. DESIGNATION OF FOREIGN HIGH-INTENSITY

13 MONEY LAUNDERING AREAS.

14 (a) IN GENERAL.—Subchapter III of chapter 53 of

15 title 31, United States Code (as added by the Money

16 Laundering and Financial Crimes Strategy Act of 1998)

17 is amended by adding at the end the following new part:

18 ‘‘PART 3—INTERNATIONAL MONEY LAUNDERING AND

19 RELATED FINANCIAL CRIMES

20 ‘‘§ 5361. Designation of foreign high-intensity money

21 laundering areas

22 ‘‘(a) IN GENERAL.—The Secretary, in consultation

23 with the Federal banking agencies, shall develop criteria

24 for identifying areas outside the United States in which

25 money laundering activities are concentrated.
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1 ‘‘(b) DESIGNATION.—The Secretary shall designate

2 as a high-intensity money laundering area any foreign

3 country in which there is an area identified, in accordance

4 with the criteria developed pursuant to subsection (a), as

5 an area in which money laundering activities are con6 centrated.

7 ‘‘(c) NOTICE AND WARNING.—Upon the designation,

8 under subsection (b), of a country as a high-intensity

9 money laundering area, the Secretary shall provide—

10 ‘‘(1) a written notice to each insured depository

11 institution (as defined in section 3 of the Federal

12 Deposit Insurance Act), and each depository institu13 tion holding company (as defined in such section 3)

14 that controls an insured depository institution, of

15 the identity of the country designated; and

16 ‘‘(2) a written warning that there is a con17 centration of money laundering activity in such

18 country.’’.

19 (b) CLERICAL AMENDMENT.—The table of sub20 chapters for chapter 53 of title 31, United States Code,

21 is amended by adding at the end the following item:

‘‘PART 3—INTERNATIONAL MONEY LAUNDERING AND RELATED FINANCIAL

CRIMES

‘‘5361. Designation of foreign high-intensity money laundering areas.’’.
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1 SEC. 6. DOUBLE THE CRIMINAL PENALTIES FOR VIOLA2 TIONS INVOLVING HIGH-INTENSITY MONEY

3 LAUNDERING AREAS.

4 (a) IN GENERAL.—Section 5322 of title 31, United

5 States Code, is amended by adding at the end the fol6 lowing new subsection:

7 ‘‘(d) DOUBLED PENALTY.—The court may double

8 the sentence of fine or imprisonment, or both, that could

9 otherwise be imposed on any person for a violation de10 scribed in subsection (a) or (b) if the person commits the

11 violation with respect to a transaction involving a person

12 in, a relationship maintained for a person in, or a trans13 port of a monetary instrument involving a foreign country,

14 knowing that a designation of the foreign country as a

15 high-intensity money laundering area under section 5361

16 was in effect at the time of the violation.’’.

17 (b) EFFECTIVE DATE.—The amendment made by

18 subsection (a) shall apply with respect to any violation

19 committed on or after the date of the enactment of this

20 Act.

21 SEC. 7. AMENDMENT TO SECTION 3 OF THE BANK HOLDING

22 COMPANY ACT OF 1956.

23 (a) IN GENERAL.—Section 3(c) of the Bank Holding

24 Company Act of 1956 (12 U.S.C. 1842(c)) is amended

25 by adding at the end the following new paragraph:

26 ‘‘(6) MONEY LAUNDERING.—In every case—
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1 ‘‘(A) the Board shall take into consider2 ation the effectiveness of the company or com3 panies in combating and preventing money

4 laundering activities, including in overseas

5 branches;

6 ‘‘(B) the Board shall not consider any ap7 plication under this section involving any com8 pany which is the subject of any—

9 ‘‘(i) pending Federal investigation of

10 possible money laundering or other related

11 financial crimes; or

12 ‘‘(ii) pending Federal prosecution for

13 money laundering or other related financial

14 crimes,

15 until such investigation or prosecution is com16 pleted and a finding is made, except that this

17 subparagraph shall not apply if the period for

18 such completion and the making of findings ex19 ceeds 3 years; and

20 ‘‘(C) the Board shall disapprove any appli21 cation under this section involving any company

22 which has been found criminally or civilly liable

23 for money laundering or any related financial

24 crime during the 5-year period preceding the
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1 consideration of such application by the

2 Board.’’.

3 (b) SCOPE OF APPLICATION.—The amendment made

4 by subsection (a) shall apply with respect to any applica5 tion submitted to the Board of Governors of the Federal

6 Reserve System under section 3 of the Bank Holding

7 Company Act of 1956 after December 31, 1997, which

8 has not been approved by the Board before the date of

9 the enactment of this Act.

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