I

106TH CONGRESS

1ST SESSION H. R. 1471

To eliminate money laundering in the private banking system, to require

the Secretary of the Treasury to warn insured depository institutions

of foreign countries in which there is a concentration of money laundering

activities, to amend the Bank Holding Company Act of 1956 to require

the Board of Governors of the Federal Reserve System to include money

laundering activities in the consideration of applications under section

3 of such Act, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 15, 1999

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

Committee on Banking and Financial Services

A BILL

To eliminate money laundering in the private banking system, to require the Secretary of the Treasury to warn

insured depository institutions of foreign countries in

which there is a concentration of money laundering activities, to amend the Bank Holding Company Act of

1956 to require the Board of Governors of the Federal

Reserve System to include money laundering activities

in the consideration of applications under section 3 of

such Act, 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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Money Laundering

3 Prevention Act of 1999’’.

4 SEC. 2. FINDINGS AND PURPOSES.

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

6 findings:

7 (1) Money laundering is a serious problem: be8 tween $100,000,000,000 and $300,000,000,000 in

9 United States currency is ‘‘laundered’’ each year

10 and the total dollar amount involved in international

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

12 (2) Money laundering is critical to the survival

13 of the illicit drug trade, which has annual worldwide

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

15 8 percent of the total value of international trade.

16 (3) United States financial institutions are a

17 critical link in our efforts to combat money laun18 dering.

19 (4) Highly secretive and loosely regulated pri20 vate banking services that cater to wealthy clients

21 are particularly vulnerable to use by drug traffickers

22 for money laundering purposes, and it is estimated

23 that private banking services have banking assets

24 ranging from $200,000,000,000 to

25 $300,000,000,000.
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1 (b) PURPOSES.—The purposes of this Act are as fol2 lows:

3 (1) To ensure that United States financial in4 stitutions make combating money laundering the

5 highest of priorities.

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

7 money laundering to flourish in the private banking

8 system.

9 (3) To designate foreign high-intensity money

10 laundering areas for the purpose of targeting areas

11 of concentrated money laundering activities.

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

13 Federal Reserve System to take into account money

14 laundering activities in the consideration of applica15 tions under section 3 of the Bank Holding Company

16 Act of 1956.

17 SEC. 3. REPORT ON PRIVATE BANKING ACTIVITIES.

18 (a) IN GENERAL.—Before the end of the 1-year pe19 riod beginning on the date of the enactment of this Act,

20 the Secretary of the Treasury, in consultation with the

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

22 the Federal Deposit Insurance Act) shall submit a report

23 on private banking activities in the United States to the

24 Committee on Banking and Financial Services of the
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1 House of Representatives and the Committee on Banking,

2 Housing, and Urban Affairs of the Senate.

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

4 under subsection (a) shall include information on the fol5 lowing:

6 (1) The nature and extent of private banking

7 activities in the United States.

8 (2) Regulatory efforts to monitor private bank9 ing activities and ensure that such activities are con10 ducted in compliance with subchapter II of chapter

11 53 of title 31, United States Code, and section 21

12 of the Federal Deposit Insurance Act.

13 (3) The policies and procedures of depository

14 institutions that are designed to ensure compliance

15 by such institutions with the requirements of sub16 chapter II of chapter 53 of title 31, United States

17 Code, and section 21 of the Federal Deposit Insur18 ance Act.

19 (c) PRIVATE BANKING ACTIVITIES DEFINED.—For

20 purposes of this section, the term ‘‘private banking activi21 ties’’ includes, with respect to a financial institution, per22 sonalized services, such as money management, financial

23 advice, and investment services, that are provided to indi24 viduals with a high net worth and are not provided gen25 erally to all clients of the financial institution.
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1 SEC. 4. REQUIRE THAT ANTI-MONEY LAUNDERING PRO2 GRAMS PROHIBIT MONEY LAUNDERING

3 THROUGH CONCENTRATION ACCOUNTS AT

4 FINANCIAL INSTITUTIONS BY REQUIRING

5 THE AVAILABILITY OF CERTAIN ACCOUNT IN6 FORMATION.

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

8 amended by adding at the end the following new para9 graph:

10 ‘‘(3) AVAILABILITY OF CERTAIN ACCOUNT IN11 FORMATION.—The Secretary of the Treasury shall

12 prescribe regulations under this subsection which re13 quire financial institutions to maintain all accounts

14 in such a way as to ensure that—

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

16 the number of the account are associated with

17 all account activity of the account holder; and

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

19 purposes of account supervision and law en20 forcement.’’

21 SEC. 5. DESIGNATION OF FOREIGN HIGH-INTENSITY

22 MONEY LAUNDERING AREAS.

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

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

25 Laundering and Financial Crimes Strategy Act of 1998)

26 is amended by adding at the end the following new part:
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1 ‘‘PART 3—INTERNATIONAL MONEY LAUNDERING AND

2 RELATED FINANCIAL CRIMES

3 ‘‘§ 5361. Designation of foreign high-intensity money

4 laundering areas

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

6 with the Federal banking agencies, shall develop criteria

7 for identifying areas outside the United States in which

8 money laundering activities are concentrated.

9 ‘‘(b) DESIGNATION.—The Secretary shall designate

10 as a high-intensity money laundering area any foreign

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

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

13 an area in which money laundering activities are con14 centrated.

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

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

17 money laundering area, the Secretary shall provide—

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

19 institution (as defined in section 3 of the Federal

20 Deposit Insurance Act), and each depository institu21 tion holding company (as defined in such section 3)

22 that controls an insured depository institution, of

23 the identity of the country designated; and
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1 ‘‘(2) a written warning that there is a con2 centration of money laundering activity in such

3 country.

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 item:

‘‘PART 3—INTERNATIONAL MONEY LAUNDERING AND RELATED FINANCIAL

CRIMES

‘‘5361. Designation of foreign high-intensity money laundering areas.’’.

7 SEC. 6. DOUBLE THE CRIMINAL PENALTIES FOR VIOLA8 TIONS INVOLVING HIGH-INTENSITY MONEY

9 LAUNDERING AREAS.

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

11 States Code, is amended by adding at the end the fol12 lowing new subsection:

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

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

15 otherwise be imposed on any person for a violation de16 scribed in subsection (a) or (b) if the person commits the

17 violation with respect to a transaction involving a person

18 in, a relationship maintained for a person in, or a trans19 port of a monetary instrument involving a foreign country,

20 knowing that a designation of the foreign country as a

21 high-intensity money laundering area under section 5361

22 was in effect at the time of the violation.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

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

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

4 Act.

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

6 COMPANY ACT OF 1956.

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

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

9 by adding at the end the following new paragraph:

10 ‘‘(6) MONEY LAUNDERING.—In every case—

11 ‘‘(A) the Board shall take into consider12 ation the effectiveness of the company or com13 panies in combating and preventing money

14 laundering activities, including in overseas

15 branches;

16 ‘‘(B) the Board shall not consider any ap17 plication under this section involving any com18 pany which is the subject of any—

19 ‘‘(i) pending Federal investigation of

20 possible money laundering or other related

21 financial crimes; or

22 ‘‘(ii) pending Federal prosecution for

23 money laundering or other related financial

24 crimes,
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1 until such investigation or prosecution is com2 pleted and a finding is made, except that this

3 subparagraph shall not apply if the period for

4 such completion and the making of findings ex5 ceeds 3 years; and

6 ‘‘(C) the Board shall disapprove any appli7 cation under this section involving any company

8 which has been found criminally or civilly liable

9 for money laundering or any related financial

10 crime during the 5-year period preceding the

11 consideration of such application by the

12 Board.’’.

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

14 by subsection (a) shall apply with respect to any applica15 tion submitted to the Board of Governors of the Federal

16 Reserve System under section 3 of the Bank Holding

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

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

19 the enactment of this Act.

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