and the date of enactment of this Act as the base 
date. 
(B) 
EXCEPTION.—Notwithstanding 
sub-
paragraph (A), the Secretary may make appro-
priate adjustments to the threshold amounts de-
scribed under subparagraph (A) in high-risk 
areas (e.g., High Intensity Financial Crime 
Areas or HIFCAs), if the Secretary has demon-
strable evidence that shows a threshold raise 
would increase serious crimes, such as traf-
ficking, or endanger national security. 
(2) GAO CTR STUDY.— 
(A) STUDY.—The Comptroller General of 
the United States shall carry out a study of cur-
rency transaction reports. Such study shall in-
clude— 
(i) a review (carried out in consulta-
tion with the Secretary of the Treasury, the 
Financial Crimes Enforcement Network, the 
United States Attorney General, the State 
Attorneys General, and State, Tribal, and 
local law enforcement) of the effectiveness of 
the current currency transaction reporting 
regime; 
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(ii) an analysis of the importance of 
currency transaction reports to law enforce-
ment; and 
(iii) an analysis of the effects of rais-
ing the currency transaction report thresh-
old. 
(B) REPORT.—Not later than the end of the 
1-year period beginning on the date of enactment 
of this Act, the Comptroller General shall issue 
a report to the Secretary of the Treasury and the 
Congress containing— 
(i) all findings and determinations 
made in carrying out the study required 
under subparagraph (A); and 
(ii) recommendations for improving 
the current currency transaction reporting 
regime. 
(b) MODIFIED SARS STUDY AND DESIGN.— 
(1) STUDY.—The Director of the Financial 
Crimes Enforcement Network shall carry out a study, 
in consultation with industry stakeholders (including 
community banks and credit unions), regulators, and 
law enforcement, of the design of a modified sus-
picious activity report form for certain customers and 
activities. Such study shall include— 
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(A) an examination of appropriate optimal 
SARs thresholds to determine the level at which 
a modified SARs form could be employed; 
(B) an evaluation of which customers or 
transactions would be appropriate for a modified 
SAR, including— 
(i) seasoned business customers; 
(ii) 
financial 
technology 
(Fintech) 
firms; 
(iii) structuring transactions; and 
(iv) any other customer or transaction 
that may be appropriate for a modified 
SAR; and 
(C) an analysis of the most effective meth-
ods to reduce the regulatory burden imposed on 
financial institutions in complying with the 
Bank Secrecy Act, including an analysis of the 
effect of— 
(i) modifying thresholds; 
(ii) shortening forms; 
(iii) combining Bank Secrecy Act 
forms; 
(iv) filing reports in periodic batches; 
and 
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(v) any other method that may reduce 
the regulatory burden. 
(2) STUDY CONSIDERATIONS.—In carrying out 
the study required under paragraph (1), the Director 
shall seek to balance law enforcement priorities, regu-
latory burdens experienced by financial institutions, 
and the requirement for reports to have a ‘‘high de-
gree of usefulness to law enforcement’’ under the Bank 
Secrecy Act. 
(3) REPORT.—Not later than the end of the 1- 
year period beginning on the date of enactment of this 
Act, the Director shall issue a report to Congress con-
taining— 
(A) all findings and determinations made 
in carrying out the study required under sub-
section (a); and 
(B) sample designs of modified SARs forms 
based on the study results. 
(4) CONTRACTING
AUTHORITY.—The Director 
may contract with a private third-party to carry out 
the study required under this subsection. 
(c) DEFINITIONS.—For purposes of this section: 
(1) BANK SECRECY ACT.—The term ‘‘Bank Se-
crecy Act’’ has the meaning given that term under 
section 5312 of title 31, United States Code. 
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(2) REGULATORY
BURDEN.—The term ‘‘regu-
latory burden’’ means the man-hours to complete fil-
ings, cost of data collection and analysis, and other 
considerations of chapter 35 of title 44, United States 
Code (commonly referred to as the Paperwork Reduc-
tion Act). 
(3) SAR; SUSPICIOUS
ACTIVITY
REPORT.—The 
term ‘‘SAR’’ and ‘‘suspicious activity report’’ mean a 
report of a suspicious transaction under section 
5318(g) of title 31, United States Code. 
(4) SEASONED BUSINESS CUSTOMER.—The term 
‘‘seasoned business customer’’, shall have such mean-
ing as the Secretary of the Treasury shall prescribe, 
which shall include any person that— 
(A) is incorporated or organized under the 
laws of the United States or any State, or is reg-
istered as, licensed by, or otherwise eligible to do 
business within the United States, a State, or 
political subdivision of a State; 
(B) has maintained an account with a fi-
nancial institution for a length of time as deter-
mined by the Secretary; and 
(C) meet such other requirements as the Sec-
retary may determine necessary or appropriate. 
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SEC. 216. STREAMLINING REQUIREMENTS FOR CURRENCY 
TRANSACTION REPORTS AND SUSPICIOUS AC-
TIVITY REPORTS. 
(a) REVIEW.—The Secretary of the Treasury (in con-
sultation with Federal law enforcement agencies, the Direc-
tor of National Intelligence, and the Federal functional reg-
ulators and in consultation with other relevant stake-
holders) shall undertake a formal review of the current fi-
nancial institution reporting requirements under the Bank 
Secrecy Act and its implementing regulations and propose 
changes to further reduce regulatory burdens, and ensure 
that the information provided is of a ‘‘high degree of useful-
ness’’ to law enforcement, as set forth under section 5311 
of title 31, United States Code. 
(b) CONTENTS.—The review required under subsection 
(a) shall include a study of— 
(1) whether the timeframe for filing a suspicious 
activity report should be increased from 30 days; 
(2) whether or not currency transaction report 
and suspicious activity report thresholds should be 
tied to inflation or otherwise periodically be adjusted; 
(3) whether the circumstances under which a fi-
nancial institution determines whether to file a ‘‘con-
tinuing suspicious activity report’’, or the processes 
followed by a financial institution in determining 
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whether to file a ‘‘continuing suspicious activity re-
port’’ (or both) can be narrowed; 
(4) analyzing the fields designated as ‘‘critical’’ 
on the suspicious activity report form and whether 
the number of fields should be reduced; 
(5) the increased use of exemption provisions to 
reduce currency transaction reports that are of little 
or no value to law enforcement efforts; 
(6) the current financial institution reporting re-
quirements under the Bank Secrecy Act and its im-
plementing regulations and guidance; and 
(7) such other items as the Secretary determines 
appropriate. 
(c) REPORT.—Not later than the end of the one year 
period beginning on the date of the enactment of this Act, 
the Secretary of the Treasury, in consultation with law en-
forcement and persons subject to Bank Secrecy Act require-
ments, shall issue a report to the Congress containing all 
findings and determinations made in carrying out the re-
view required under subsection (a). 
(d) DEFINITIONS.—For purposes of this section: 
(1) FEDERAL
FUNCTIONAL
REGULATOR.—The 
term ‘‘Federal functional regulator’’ has the meaning 
given that term under section 103. 
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(2) OTHER TERMS.—The terms ‘‘Bank Secrecy 
Act’’ and ‘‘financial institution’’ have the meaning 
given those terms, respectively, under section 5312 of 
title 31, United States Code. 
TITLE III—MODERNIZING THE 
AML SYSTEM 
SEC. 301. ENCOURAGING INNOVATION IN BSA COMPLIANCE. 
Section 5318 of title 31, United States Code, as amend-
ed by section 203, is further amended by adding at the end 
the following: 
‘‘(p) ENCOURAGING INNOVATION IN COMPLIANCE.— 
‘‘(1) IN GENERAL.—The Federal functional regu-
lators shall encourage financial institutions to con-
sider, evaluate, and, where appropriate, responsibly 
implement innovative approaches to meet the require-
ments of this subchapter, including through the use of 
innovation pilot programs. 
‘‘(2) EXEMPTIVE RELIEF.—The Secretary, pur-
suant to subsection (a), may provide exemptions from 
the requirements of this subchapter if the Secretary 
determines such exemptions are necessary to facilitate 
the testing and potential use of new technologies and 
other innovations. 
‘‘(3) RULE OF CONSTRUCTION.—This subsection 
may not be construed to require financial institutions 
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to consider, evaluate, or implement innovative ap-
proaches to meet the requirements of the Bank Secrecy 
Act. 
‘‘(4) FEDERAL
FUNCTIONAL
REGULATOR
DE-
FINED.—In this subsection, the term ‘Federal func-
tional regulator’ means the Board of Governors of the 
Federal Reserve System, the Comptroller of the Cur-
rency, the Federal Deposit Insurance Corporation, the 
National Credit Union Administration, the Securities 
and Exchange Commission, and the Commodity Fu-
tures Trading Commission.’’. 
SEC. 302. INNOVATION LABS. 
(a) IN GENERAL.—The table of contents for subchapter 
II of chapter 53 of title 31, United States Code, is amended 
by adding at the end the following: 
‘‘§ 5334. Innovation Labs 
‘‘(a) ESTABLISHMENT.—There is established within 
the Department of the Treasury and each Federal func-
tional regulator an Innovation Lab. 
‘‘(b) DIRECTOR.—The head of each Innovation Lab 
shall be a Director, to be appointed by the Secretary of the 
Treasury or the head of the Federal functional regulator, 
as applicable. 
‘‘(c) DUTIES.—The duties of the Innovation Lab shall 
be— 
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‘‘(1) to provide outreach to law enforcement 
agencies, financial institutions, and other persons 
(including vendors and technology companies) with 
respect to innovation and new technologies that may 
be used to comply with the requirements of the Bank 
Secrecy Act; 
‘‘(2) to support the implementation of respon-
sible innovation and new technology, in a manner 
that complies with the requirements of the Bank Se-
crecy Act; 
‘‘(3) to explore opportunities for public-private 
partnerships; and 
‘‘(4) to develop metrics of success. 
‘‘(d) FINCEN LAB.—The Innovation Lab established 
under subsection (a) within the Department of the Treasury 
shall be a lab within the Financial Crimes Enforcement 
Network. 
‘‘(e) FEDERAL FUNCTIONAL REGULATOR DEFINED.— 
In this subsection, the term ‘Federal functional regulator’ 
means the Board of Governors of the Federal Reserve Sys-
tem, the Comptroller of the Currency, the Federal Deposit 
Insurance Corporation, the National Credit Union Admin-
istration, the Securities and Exchange Commission, and the 
Commodity Futures Trading Commission.’’. 
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(b) CLERICAL AMENDMENT.—The table of contents for 
subchapter II of chapter 53 of title 31, United States Code, 
is amended by adding at the end the following: 
‘‘5334. Innovation Labs.’’. 
SEC. 303. INNOVATION COUNCIL. 
(a) IN GENERAL.—Subchapter II of chapter 53 of Title 
31, United States Code, as amended by section 302, is fur-
ther amended by adding at the end the following: 
‘‘§ 5335. Innovation Council 
‘‘(a) ESTABLISHMENT.—There is established the Inno-
vation Council (hereinafter in this section referred to as the 
‘Council’), which shall consist of each Director of an Inno-
vation Lab established under section 5334 and the Director 
of the Financial Crimes Enforcement Network. 
‘‘(b) CHAIR.—The Director of the Innovation Lab of 
the Department of the Treasury shall serve as the Chair 
of the Council. 
‘‘(c) DUTY.—The members of the Council shall coordi-
nate on activities related to innovation under the Bank Se-
crecy Act, but may not supplant individual agency deter-
minations on innovation. 
‘‘(d) MEETINGS.—The meetings of the Council— 
‘‘(1) shall be at the call of the Chair, but in no 
case may the Council meet less than semi-annually; 
‘‘(2) may include open and closed sessions, as de-
termined necessary by the Council; and 
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‘‘(3) shall include participation by public and 
private entities and law enforcement agencies. 
‘‘(e) REPORT.—The Council shall issue an annual re-
port, for each of the 7 years beginning on the date of enact-
ment of this section, to the Secretary of the Treasury on 
the activities of the Council during the previous year, in-
cluding the success of programs as measured by metrics of 
success developed pursuant to section 5334(c)(4), and any 
regulatory or legislative recommendations that the Council 
may have.’’. 
(b) CLERICAL AMENDMENT.—The table of contents for 
subchapter II of chapter 53 of title 31, United States Code, 
is amended by adding the end the following: 
‘‘5335. Innovation Council.’’. 
SEC. 304. PARALLEL RUNS RULEMAKING. 
(a) IN GENERAL.—Section 5318 of title 31, United 
States Code, as amended by section 301, is further amended 
by adding at the end the following: 
‘‘(q) PARALLEL RUNS RULEMAKING.— 
‘‘(1) IN GENERAL.—The Secretary of the Treas-
ury, in consultation with the head of each agency to 
which the Secretary has delegated duties or powers 
under subsection (a), shall issue a rule to specify— 
‘‘(A) with respect to technology and proc-
esses designed to facilitate compliance with the 
Bank Secrecy Act requirements, under what cir-
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cumstances it is necessary for a financial insti-
tution to test new technology and processes 
alongside legacy technology and processes (‘par-
allel runs’); 
‘‘(B) if parallel runs are required, what 
standards must be met; and 
‘‘(C) in what instances or under what cir-
cumstance and criteria a financial institution 
may replace or terminate such legacy technology 
and processes for any examinable technology or 
process without the replacement or termination 
being determined an examination deficiency. 
‘‘(2) 
STANDARDS.—The 
standards 
described 
under paragraph (1)(B) may include— 
‘‘(A) an emphasis on using innovative ap-
proaches, such as machine learning, rather than 
rules-based systems; 
‘‘(B) risk-based back-testing of the regime to 
facilitate calibration of relevant systems; 
‘‘(C) requirements for appropriate data pri-
vacy and security; and 
‘‘(D) a requirement that the algorithms used 
by the regime be disclosed to the Financial 
Crimes Enforcement Network. 
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‘‘(3) CONFIDENTIALITY OF ALGORITHMS.—If a 
financial institution or any director, officer, em-
ployee, or agent of any financial institution, volun-
tarily or pursuant to this subsection or any other au-
thority, discloses the institution’s algorithms to a 
Government agency, such algorithms and any mate-
rials associated with the creation of such algorithms 
shall be considered confidential and not subject to 
public disclosure.’’. 
(b) UPDATE OF MANUAL.—The Financial Institutions 
Examination Council shall ensure— 
(1) that any manual prepared by the Council is 
updated to reflect the rulemaking required by the 
amendment made by subsection (a); and 
(2) that financial institutions are not penalized 
for the decisions based on such rulemaking to replace 
or terminate technology used for compliance with the 
Bank Secrecy Act (as defined under section 5312 of 
title 31, United States Code) or other anti-money 
laundering laws. 
SEC. 305. FINCEN STUDY ON USE OF EMERGING TECH-
NOLOGIES. 
(a) STUDY.— 
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(1) IN GENERAL.—The Director of the Financial 
Crimes Enforcement Network (‘‘FinCEN’’) shall carry 
out a study on— 
(A) the status of implementation and inter-
nal use of emerging technologies, including arti-
ficial intelligence (‘‘AI’’), digital identity tech-
nologies, blockchain technologies, and other inno-
vative technologies within FinCEN; 
(B) whether AI, digital identity tech-
nologies, blockchain technologies, and other inno-
vative technologies can be further leveraged to 
make FinCEN’s data analysis more efficient and 
effective; and 
(C) how FinCEN could better utilize AI, 
digital identity technologies, blockchain tech-
nologies, and other innovative technologies to 
more actively analyze and disseminate the infor-
mation it collects and stores to provide investiga-
tive leads to Federal, State, Tribal, and local law 
enforcement, and other Federal agencies (collec-
tive, ‘‘Agencies’’), and better support its ongoing 
investigations when referring a case to the Agen-
cies. 
(2) INCLUSION
OF
GTO
DATA.—The study re-
quired under this subsection shall include data col-
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lected through the Geographic Targeting Orders 
(‘‘GTO’’) program. 
(3) CONSULTATION.—In conducting the study re-
quired under this subsection, FinCEN shall consult 
with the Directors of the Innovations Labs established 
in section 302. 
(b) REPORT.—Not later than the end of the 6-month 
period beginning on the date of the enactment of this Act, 
the Director shall issue a report to the Committee on Bank-
ing, Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of Represent-
atives containing— 
(1) all findings and determinations made in car-
rying out the study required under subsection (a); 
(2) with respect to each of subparagraphs (A), 
(B) and (C) of subsection (a)(1), any best practices 
or significant concerns identified by the Director, and 
their applicability to AI, digital identity technologies, 
blockchain technologies, and other innovative tech-
nologies with respect to U.S. efforts to combat money 
laundering and other forms of illicit finance; and 
(3) any policy recommendations that could fa-
cilitate and improve communication and coordina-
tion between the private sector, FinCEN, and Agen-
cies through the implementation of innovative ap-
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proaches, in order to meet their Bank Secrecy Act (as 
defined under section 5312 of title 31, United States 
Code) and anti-money laundering compliance obliga-
tions. 
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Union Calendar No. 195 
116TH CONGRESS 
1ST SESSION 
H. R. 2514 
[Report No. 116–245, Part I] 
A BILL 
To make reforms to the Federal Bank Secrecy Act 
and anti-money laundering laws, and for other 
purposes. 
OCTOBER 21, 2019 
Reported from the Committee on Financial Services with 
an amendment 
OCTOBER 21, 2019 
Committee on Ways and Means discharged; committed to 
the Committee of the Whole House on the State of the 
Union and ordered to be printed 
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