subchapter (except section 5315 or 5324 of this title or 
a regulation prescribed under section 5315 or 5324), sec-
tion 21 of the Federal Deposit Insurance Act, or section 
123 of Public Law 91–508, the maximum prison terms 
under such subsections shall be treated as 20 years.’’; and 
(3) by adding at the end the following: 
‘‘(f) REPORT.—In any case in which the Department 
of Justice settles a case with an individual or institution 
for violations under the this subchapter in exchange for 
a monetary penalty, the Department shall report to the 
Congress on why it did or did not pursue prison sentences 
in conjunction with the monetary penalty.’’. 
(b) GAO REVIEW OF BANK SECRECY ACT CRIMINAL 
SENTENCES AND MANDATORY MINIMUM SENTENCING.— 
(1) STUDY.—The Comptroller General of the 
United States shall carry out a study of the manda-
tory minimum sentencing laws and guidelines for 
narcotics-related offenses and the prosecutorial dis-
cretion provided to the Department of Justice in de-
termining criminal penalties for persons found guilty 
of violating Federal anti-money laundering laws. In 
carrying out such study, the Comptroller General 
shall compare and contrast the severity of the two 
sets of felonies. 
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(2) REPORT.—Not later than the end of the 6- 
month period following the date of the enactment of 
this Act, the Comptroller General shall issue a re-
port to the Congress containing all findings and de-
terminations made in carrying out the study re-
quired by subsection (a), including any disparities 
identified in the appropriateness of the differing sen-
tencing procedures and recommendations for estab-
lishing a more balanced sentencing system for Fed-
eral felonious acts. 
SEC. 103. STRENGTHENING CIVIL INJUNCTIVE AUTHORITY. 
Section 5320 of title 31, United States Code, is 
amended— 
(1) by striking ‘‘When the Secretary’’ and in-
serting the following: 
‘‘(a) IN GENERAL.—When the Secretary’’; and 
(2) by inserting after ‘‘will violate’’ the fol-
lowing: ‘‘or has caused, is causing, or will cause a 
violation of’’; and 
(3) by inserting at the end the following: 
‘‘(b) PROHIBITION ON CERTAIN INDIVIDUALS.—In 
any proceeding under subsection (a), the court may pro-
hibit, conditionally or unconditionally, and permanently or 
for such period of time as it shall determine, any indi-
vidual who violated this subchapter, or a regulation pre-
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scribed or order issued under this subchapter, from acting 
as an officer or director of a financial institution if the 
person’s conduct demonstrates unfitness to serve as an of-
ficer or director of a financial institution.’’. 
SEC. 104. CLARIFICATION OF REMOVAL AND PROHIBITION 
AUTHORITY UNDER THE FDIA. 
Section 8(e)(2)(A) of the Federal Deposit Insurance 
Act (12 U.S.C. 1818(e)(2)(A)) is amended— 
(1) in clause (i), by striking ‘‘was not inad-
vertent or unintentional’’ and inserting ‘‘involved a 
reckless disregard for the law or any applicable regu-
lations or prior order of the appropriate Federal 
banking agency’’; and 
(2) in clause (ii), by striking ‘‘has knowledge’’ 
and inserting ‘‘knew, or should have known,’’. 
SEC. 105. INDEPENDENT LITIGATION AUTHORITY FOR 
FINCEN. 
Section 310 of title 31, United States Code, is 
amended— 
(1) by redesignating subsection (d) as sub-
section (e); and 
(2) by inserting after subsection (c) the fol-
lowing: 
‘‘(d) INDEPENDENT
LITIGATION
AUTHORITY.— 
FinCEN may act in its own name and through its own 
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attorneys in enforcing any provision of subchapter II of 
chapter 53, section 21 of the Federal Deposit Insurance 
Act, section 123 of Public Law 91–508, any rules there-
under, or any other law or regulation, or in any action, 
suit, or proceeding relating to such laws or regulations to 
which the Financial Crimes Enforcement Network is a 
party.’’. 
SEC. 106. TREATMENT OF EXECUTIVE COMPENSATION AND 
PERSONAL LIABILITY. 
(a) CERTAIN EXECUTIVE COMPENSATION INCEN-
TIVES BARRED.—The appropriate Federal banking agen-
cies, the Securities and Exchange Commission, the Com-
modities Futures Trading Commission, and the Financial 
Crimes Enforcement Network shall issue regulations pro-
hibiting financial institutions that are subject to an anti- 
money laundering program requirement under chapter X 
of title 31, Code of Federal Regulations, from providing 
executive compensation based on any criteria that could 
undermine compliance by individuals with the require-
ments of subchapter II of chapter 53 of title 31, United 
States Code, section 21 of the Federal Deposit Insurance 
Act (12 U.S.C. 1829b), or section 123 of Public Law 91– 
508. 
(b) NO AVOIDANCE OF PERSONAL LIABILITY.— 
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(1) IN
GENERAL.—An officer, director, em-
ployee, or other institution-affiliated party of a fi-
nancial institution that is subject to an anti-money 
laundering program requirement under chapter X of 
title 31, Code of Federal Regulations, who is re-
quired by a Federal bank secrecy law that provides 
for personal liability, or any rule or order promul-
gated by an appropriate Federal banking agency, the 
Securities and Exchange Commission, the Com-
modity Futures Trading Commission, or the Finan-
cial Crimes Enforcement Network thereunder, to 
repay previously earned executive compensation or 
pay a civil money penalty— 
(A) shall be personally liable for the 
amounts so owed; and 
(B) may not, directly or indirectly, insure 
or hedge against, or otherwise transfer the risks 
associated with, personal liability for the 
amounts so owed. 
(2) RULE OF CONSTRUCTION.—Paragraph (1) 
shall not preclude a person from being provided 
funds necessary to defend against an action to re-
cover previously earned executive compensation or a 
civil money penalty described under paragraph (1)— 
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(A) from the relevant financial institution 
subject to an anti-money laundering program 
under chapter X of title 31, Code of Federal 
Regulations; 
(B) under an insurance policy; or 
(C) pursuant to court order. 
(c) DEFINITIONS.—For purposes of this section: 
(1) APPROPRIATE
FEDERAL
BANKING
AGEN-
CY.—The term ‘‘appropriate Federal banking agen-
cy’’ has the meaning given such term under section 
3 of the Federal Deposit Insurance Act (12 U.S.C. 
1813). 
(2) EXECUTIVE
COMPENSATION.—The term 
‘‘executive compensation’’ means anything of value, 
regardless of the form in which provided, that is 
given by any institution subject to subsection (a) or 
its parent company to an officer, director, employee, 
or other institution-affiliated party in return for that 
individual’s service to such entity. 
(3) FEDERAL BANK SECRECY LAW.—The term 
‘‘Federal bank secrecy law’’ means— 
(A) the reporting requirements set forth in 
section 21 of the Federal Deposit Insurance Act 
(12 U.S.C. 1829b); 
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(B) section 123 of Public Law 91–508; 
and 
(C) subchapter II of chapter 53 of title 31, 
United States Code. 
(4) 
INSTITUTION-AFFILIATED
PARTY.—The 
term ‘‘institution-affiliated party’’— 
(A) has the meaning given such term 
under subsection (u) of section 3 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813); and 
(B) shall apply with respect to an institu-
tion subject to subsection (a) and its parent 
company to the same extent as such subsection 
applies to an insured depository institution. 
SEC. 107. CORPORATE GOVERNANCE AND THE LEGAL RE-
SPONSIBILITIES. 
(a) IN GENERAL.—Chapter 53 of title 31, United 
States Code, is amended— 
(1) by inserting after section 5322, the fol-
lowing: 
‘‘§ 5322A. Corporate governance and the legal respon-
sibility of officers and employees 
‘‘(a) ENSURING COMPLIANCE.—The Secretary of the 
Treasury, in consultation with the appropriate Federal 
banking agencies, the Securities and Exchange Commis-
sion, and the Commodities Futures Trading Commission, 
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shall issue regulations requiring each financial institution 
that is subject to an anti-money laundering program re-
quirement under chapter X of title 31, Code of Federal 
Regulations, to ensure compliance with the anti-money 
laundering program requirements described under section 
5318(h) by establishing written policies, procedures, and 
risk management standards for ensuring compliance with 
the requirements of this subtitle that— 
‘‘(1) require the head of compliance for each 
business line of such institution to make regular re-
ports directly to the board of directors and the chief 
executive officer of such institution on the business 
line’s compliance activities; 
‘‘(2) require the board to certify each report re-
ceived pursuant to paragraph (1); 
‘‘(3) ensure adequate staffing and funding for 
entities within the institution responsible for compli-
ance with the requirements of this subtitle; and 
‘‘(4) periodically test the effectiveness of the in-
stitution’s programs for compliance with the require-
ments of this subtitle. 
‘‘(b) LEGAL RESPONSIBILITY OF CERTAIN OFFICERS 
AND EMPLOYEES.—With respect to any violation of this 
subtitle by a each financial institution that is subject to 
an anti-money laundering program requirement under 
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chapter X of title 31, Code of Federal Regulations, any 
officer or other employee who was in a position that would 
have enabled such officer or employee to materially affect 
compliance with the requirements of this subtitle shall also 
be in violation of this subtitle, if such officer or other em-
ployee knew, or should have known, that such violation 
was being committed and did not take meaningful steps 
to stop such violation. 
‘‘(c) CLAWBACK EMPLOYMENT PROVISION.—Each fi-
nancial institution that is subject to an anti-money laun-
dering program requirement under chapter X of title 31, 
Code of Federal Regulations, shall, in each employment 
agreement entered into by such institution, include a pro-
vision that gives the institution the right to require the 
repayment of any bonus or other compensation paid to the 
employee in any case where such employee was violating 
a provision of this subchapter and knew, or should have 
known, of such violation. 
‘‘(d) DEFINITION.—For purposes of this section, the 
term ‘appropriate Federal banking agency’ has the mean-
ing given such term under section 3 of the Federal Deposit 
Insurance Act (12 U.S.C.1813).’’; and 
(2) in the table of contents for such chapter, by 
inserting after the item relating to section 5322 the 
following new item: 
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‘‘5322A. Corporate governance and the legal responsibility of officers and em-
ployees’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to a financial institution (as 
such term is defined under section 5312 of title 31, United 
States Code) after the end of the 6-month period begin-
ning on the date of the enactment of this Act. 
TITLE II—STRENGTHENING OF 
REGULATORY 
OVERSIGHT 
AND ACCOUNTABILITY 
SEC. 201. REPORTING AND OVERSIGHT OF BANK SECRECY 
ACT-RELATED ENFORCEMENT ACTIONS. 
(a) IN GENERAL.—Chapter 53 of title 31, United 
States Code, is amended— 
(1) by inserting after section 5326 the fol-
lowing: 
‘‘§ 5327. Oversight of examination and enforcement 
activities 
‘‘(a) REPORTING OF ENFORCEMENT ACTIVITIES TO 
FINCEN.—Each appropriate Federal banking agency, the 
Securities and Exchange Commission, and the Commodity 
Futures Trading Commission shall report to FinCEN on 
each formal and informal enforcement or supervisory ac-
tion, including each matter requiring attention, and each 
matter requiring immediate attention, related to a viola-
tion of this subchapter or anti-money laundering defi-
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ciency, taken by such agency to enforce the requirements 
of this subchapter, including, for each such action— 
‘‘(1) the type of violation or deficiency with re-
spect to which the enforcement or supervisory action 
was taken; and 
‘‘(2) the specific type of formal or informal en-
forcement or supervisory action taken. 
‘‘(b) REVIEW OF REPORTS BY FINCEN.— 
‘‘(1) IN GENERAL.—FinCEN shall review all re-
ports submitted by agencies under subsection (a) to 
identify systemic or repeated instances of non-com-
pliance and, if FinCEN determines that an agency 
has failed to adequately or appropriately carry out 
the agency’s enforcement responsibilities with re-
spect to the requirements of this subchapter, 
FinCEN shall issue a report to such agency con-
taining an explanation of FinCEN’s determination. 
‘‘(2) REPORT
TO
THE
CONGRESS.—FinCEN 
shall issue an annual report to the Congress con-
taining— 
‘‘(A) a summary of all formal and informal 
enforcement or supervisory actions for which 
FinCEN received notification from the agencies 
under subsection (a), but without any privileged 
or confidential information contained in such 
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report, as identified by the agency submitting 
the report; and 
‘‘(B) 
any 
recommendations 
made 
by 
FinCEN to such agencies in response to a de-
termination by FinCEN that the agency failed 
to adequately or appropriately carry out the 
agency’s enforcement or supervisory responsi-
bility or failed to take adequate or appropriate 
corrective action in response to any individual 
violation or pattern of violations. 
‘‘(c) INSPECTOR
GENERAL
REVIEW
OF
PROCE-
DURES.—The Inspector General of each appropriate Fed-
eral banking agency shall— 
‘‘(1) carry out at least one review each year of 
the agency’s examination and enforcement activities 
with respect to ensuring compliance with the re-
quirements of this subchapter and ensuring ade-
quate resources are being devoted to such enforce-
ment; and 
‘‘(2) make such reviews available to the public, 
including on the website of the Inspector General. 
‘‘(d) DEFINITIONS.—For purposes of this section: 
‘‘(1) FINCEN.—The term ‘FinCEN’ means the 
Financial Crimes Enforcement Network. 
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‘‘(2) OTHER TERMS.—The terms ‘appropriate 
Federal banking agency’ and ‘insured depository in-
stitution’ have the meaning given those terms, re-
spectively, under section 3 of the Federal Deposit 
Insurance Act (12 U.S.C.1813).’’; and 
(2) in the table of contents for such chapter, by 
inserting after the item relating to section 5326 the 
following new item: 
‘‘5327. Oversight of examination and enforcement activities.’’. 
(b) CONFIDENTIALITY OF INFORMATION SUBMITTED 
TO FINCEN.—Section 310 of title 31, United States 
Code, is amended— 
(1) by redesignating subsection (d) as sub-
section (e); and 
(2) by inserting after subsection (c) the fol-
lowing: 
‘‘(d) CONFIDENTIALITY
OF
INFORMATION
SUB-
MITTED TO FINCEN.—The submission by any appro-
priate Federal banking agency (as such term is defined 
under section 3 of the Federal Deposit Insurance Act) of 
any information to FinCEN for any purpose in the course 
of any supervisory or regulatory process of such agency 
shall not be construed as waiving, destroying, or otherwise 
affecting any privilege, including confidentiality of super-
visory information, that any agency or person may claim 
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with respect to such information under Federal or State 
law.’’. 
SEC. 202. CONSIDERATION OF BSA COMPLIANCE IN MAN-
AGEMENT RATINGS. 
(a) IN GENERAL.—To the extent there are ratings 
of a depository institution’s management and internal con-
trols, the appropriate Federal banking agencies shall con-
sider the extent to which the institution complies with the 
requirements of the Bank Secrecy Act. 
(b) DEFINITIONS.— 
(1) BANK SECRECY ACT.—The term ‘‘Bank Se-
crecy Act’’ has the meaning given the term ‘‘Federal 
bank secrecy law’’ under section 106(c)(5). 
(2) OTHER DEFINITIONS.—The terms ‘‘appro-
priate Federal banking agency’’ and ‘‘depository in-
stitution’’ have the meaning given those terms, re-
spectively, under section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813). 
TITLE III—CLARIFICATION OF 
SAFE HARBOR PROTECTIONS 
SEC. 301. SAFE HARBOR PROTECTIONS. 
(a) DISCLOSURE TO GOVERNMENT AGENCIES.—Sec-
tion 5318(g)(3)(B) of title 31, United States Code, is 
amended— 
(1) in clause (i), by striking ‘‘or’’ at the end; 
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(2) in clause (ii), by striking the period and in-
serting ‘‘; or’’; and 
(3) by adding at the end the following: 
‘‘(iii) any duty or requirement of a fi-
nancial institution or any director, officer, 
employee, or agent of such institution to 
demonstrate that a disclosure described in 
subparagraph (A) is made in good faith.’’. 
(b) DISCLOSURE
TO FINANCIAL INSTITUTIONS.— 
Section 314 of the USA PATRIOT Act (31 U.S.C. 5311 
note) is amended— 
(1) in subsection (b)— 
(A) by striking ‘‘terrorist or money laun-
dering activities’’ and inserting ‘‘terrorist or 
money laundering activities or a specified un-
lawful activity (as defined in section 1956(c)(7) 
of title 18, United States Code)’’; and 
(B) by striking ‘‘terrorist acts or money 
laundering activities’’ and inserting ‘‘such acts 
or activities’’; and 
(2) in subsection (c), by striking ‘‘terrorist acts 
or money laundering activities’’ and inserting ‘‘ter-
rorist or money laundering activities or a specified 
unlawful activity (as defined in section 1956(c)(7) of 
title 18, United States Code)’’. 
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TITLE IV—STRENGTHENING RE-
QUIREMENTS AND CLOSING 
LOOPHOLES 
SEC. 401. EXPANDING THE CRIMES THAT CAN BE A PREDI-
CATE OFFENSE TO MONEY LAUNDERING. 
Section 1956(c)(7) of title 18, United States Code, 
is amended to read as follows: 
‘‘(7) the term ‘specified unlawful activity’ 
means any act or activity constituting an offense in 
violation of the laws of the United States punishable 
by imprisonment for a term exceeding 1 year;’’. 
SEC. 402. CLOSING LOOPHOLES IN BANK SECRECY ACT RE-
PORTING. 
(a) REPORT TO CONGRESS ON THE STATUS OF THE 
TEMPORARY EXEMPTIONS.—FinCEN shall issue a report 
to Congress on the status of the temporary exemptions 
under section 1010.205(b) of title 31, Code of Federal 
Regulations, including any reviews, studies, or proposed 
or notice of a rulemaking that FinCEN has undertaken 
with regard to each financial institution that is exempted 
from the requirement concerning the establishment of 
anti-money laundering programs. The report shall also in-
clude a justification for the exemption of each category 
of financial institution exempted under the regulation. 
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(b) REPORTING BY CERTAIN TRANSPORTERS.—Not 
later than the end of the 270-day period beginning on the 
date of the enactment of this Act, the Secretary of the 
Treasury shall issue final regulations to establish the man-
ner in which operators of armored cars and other commer-
cial monetary instrument transport enterprises are to 
comply with the reporting requirements under section 
5316 of title 31, United States Code. 
SEC. 403. DEFINITION OF AN INSTITUTION-AFFILIATED 
PARTY. 
(a) DEFINITION.—Section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813(u)) is amended— 
(1) in subsection (u)(4), by striking ‘‘know-
ingly’’ and all that follows through the end of the 
paragraph and inserting ‘‘participates in the conduct 
of, the affairs of, or conducts the business of an in-
sured depository institution.’’; and 
(2) by adding at the end the following: 
‘‘(aa) UNSAFE OR UNSOUND PRACTICE.—The term 
‘unsafe or unsound practice’ means, any action, or lack 
of action, which is contrary to generally accepted stand-
ards of prudent operation, the possible consequences of 
which, if continued, would be abnormal risk or loss or 
damage to an institution, its shareholders, or the Deposit 
Insurance Fund.’’. 
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(b) RULE OF CONSTRUCTION RELATED TO INDE-
PENDENT CONTRACTORS.—Section 8 of the Federal De-
posit Insurance Act (12 U.S.C. 1818) is amended by add-
ing at the end the following: 
‘‘(x) RULE OF CONSTRUCTION RELATED TO INDE-
PENDENT CONTRACTORS.—For purposes of this Act, an 
independent contractor participates in the conduct of the 
affairs of, or conducts the business of, an insured deposi-
tory institution by performing services for the institu-
tion.’’. 
TITLE V—WHISTLEBLOWER 
PROTECTIONS 
SEC. 501. MODERNIZATION AND UPGRADING WHISTLE-
BLOWER PROTECTIONS. 
(a) IN GENERAL.—Section 5328 of title 31, United 
States Code, is amended— 
(1) by striking subsections (a) and (b) and in-
serting the following: 
‘‘(a) PROHIBITION AGAINST DISCRIMINATION.—No 
financial institution or nonfinancial trade or business may 
discharge or otherwise discriminate against any applicant 
for employment, employee, or former employee with re-
spect to compensation, terms, conditions, or privileges of 
employment because the applicant, employee, or former 
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employee (or any person acting pursuant to the request 
of the employee)— 
‘‘(1) provided, was about to provide, assisted in 
providing, or was perceived as providing information 
to the Secretary of the Treasury, the Attorney Gen-
eral, any Federal supervisory agency, or the Con-
gress regarding a possible violation of any provision 
of this subchapter or section 1956, 1957, or 1960 of 
title 18, or any regulation under any such provision, 
by the financial institution or nonfinancial trade or 
business or any director, officer, or employee of the 
financial institution or nonfinancial trade or busi-
ness; or 
‘‘(2) objected to, or refused to participate in, 
any activity, policy, practice, or assigned task that 
the applicant, employee, former employee (or other 
such person) reasonably believed to be in violation of 
any provision of this subchapter or any other Act 
enforced by the Secretary of the Treasury, the At-
torney General, a Federal supervisory agency, or any 
order, rule, regulation, standard, or ban under this 
subchapter of any of such Acts. 
‘‘(b) ENFORCEMENT.—Within the 2-year period be-
ginning on the date an applicant, employee, or former em-
ployee who believes that such applicant, employee, or 
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former employee has been discharged or discriminated 
against in violation of subsection (a), such applicant, em-
ployee, or former employee may— 
‘‘(1) file a civil action in the appropriate United 
States district court, in accordance with the burdens 
of proof and remedies set forth in section 1057 of 
the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5567); or 
‘‘(2) file a complaint with the Secretary of 
Labor with regards to a violation of subsection (a) 
to seek relief in accordance with the procedures, bur-
dens of proof, and remedies set forth in section 1057 
of the Consumer Financial Protection Act of 2010 
(12 U.S.C. 5567) for a violation of subsection (a) of 
such section, except that for purposes of such a com-
plaint, the time period specified under subsection 
(c)(1)(A) of such section shall be deemed to be a 2- 
year period.’’; 
(2) in subsection (c), by inserting after ‘‘district 
court’’ the following: ‘‘or the Secretary, as applica-
ble,’’; and 
(3) by amending subsection (e) to read as fol-
lows: 
‘‘(e) EDUCATION.—The Secretary of the Treasury 
shall issue regulations requiring each financial institution 
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and nonfinancial trade or business to provide education 
and training to its employees on the rights and remedies 
provided under this section, including through individual 
notice to its employees, posting information on its website 
home page, and providing mandatory training for its em-
ployees. Such education and training may be incorporated 
into existing education or training on the requirements of 
this subtitle provided by such institution or trade or busi-
ness. 
‘‘(f) INDEPENDENT LINES OF COMMUNICATION.— 
The Secretary of the Treasury shall issue regulations re-
quiring each financial institution and nonfinancial trade 
or business— 
‘‘(1) to have a procedure in place for an em-
ployee or former employee to report directly to the 
chief executive officer, a representative appointed by 
and reporting directly to the chief executive officer 
who is specifically designated to receive such a re-
port, or through a hotline consistent with profes-
sional best practices to the audit committee of the 
board of directors, if such employee or former em-
ployee believes that violations of this subchapter 
have occurred or are occurring at such institution, 
trade, or business; and 
VerDate Mar 15 2010 
06:51 Oct 24, 2013
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