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TITLE III—MODERNIZING THE AML SYSTEM 
Sec. 301. Encouraging innovation in BSA compliance. 
Sec. 302. Innovation Labs. 
Sec. 303. Innovation Council. 
Sec. 304. Testing methods rulemaking. 
Sec. 305. FinCEN study on use of emerging technologies. 
Sec. 306. Discretionary surplus funds. 
SEC. 2. BANK SECRECY ACT DEFINITION. 
Section 5312(a) of title 31, United States Code, is 
amended by adding at the end the following: 
‘‘(7) BANK SECRECY ACT.—The term ‘Bank Se-
crecy act’ means— 
‘‘(A) section 21 of the Federal Deposit In-
surance Act; 
‘‘(B) chapter 2 of title I of Public Law 91– 
508; and 
‘‘(C) this subchapter.’’. 
SEC. 3. DETERMINATION OF BUDGETARY EFFECTS. 
The budgetary effects of this Act, for the purpose of 
complying with the Statutory Pay-As-You-Go Act of 2010, 
shall be determined by reference to the latest statement 
titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 
Act, submitted for printing in the Congressional Record 
by the Chairman of the House Budget Committee, pro-
vided that such statement has been submitted prior to the 
vote on passage. 
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TITLE I—STRENGTHENING 
TREASURY 
SEC. 101. IMPROVING THE DEFINITION AND PURPOSE OF 
THE BANK SECRECY ACT. 
Section 5311 of title 31, United States Code, is 
amended— 
(1) by inserting ‘‘to protect our national secu-
rity, to safeguard the integrity of the international 
financial system, and’’ before ‘‘to require’’; and 
(2) by inserting ‘‘to law enforcement and’’ be-
fore ‘‘in criminal’’. 
SEC. 102. SPECIAL HIRING AUTHORITY. 
(a) IN GENERAL.—Section 310 of title 31, United 
States Code, is amended— 
(1) by redesignating subsection (d) as sub-
section (g); and 
(2) by inserting after subsection (c) the fol-
lowing: 
‘‘(d) SPECIAL HIRING AUTHORITY.— 
‘‘(1) IN
GENERAL.—The Secretary of the 
Treasury may appoint, without regard to the provi-
sions of sections 3309 through 3318 of title 5, can-
didates directly to positions in the competitive serv-
ice (as defined in section 2102 of that title) in 
FinCEN. 
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‘‘(2) PRIMARY
RESPONSIBILITIES.—The pri-
mary responsibility of candidates appointed pursuant 
to paragraph (1) shall be to provide substantive sup-
port in support of the duties described in subpara-
graphs (A), (B), (E), and (F) of subsection (b)(2).’’. 
(b) REPORT.—Not later than 360 days after the date 
of enactment of this Act, and every year thereafter for 
7 years, the Director of the Financial Crimes Enforcement 
Network shall submit a report to the Committee on Finan-
cial Services of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs of 
the Senate that includes— 
(1) the number of new employees hired since 
the preceding report through the authorities de-
scribed under section 310(d) of title 31, United 
States Code, along with position titles and associ-
ated pay grades for such hires; and 
(2) a copy of any Federal Government survey of 
staff perspectives at the Office of Terrorism and Fi-
nancial Intelligence, including findings regarding the 
Office and the Financial Crimes Enforcement Net-
work from the most recently administered Federal 
Employee Viewpoint Survey. 
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SEC. 103. CIVIL LIBERTIES AND PRIVACY OFFICER. 
(a) APPOINTMENT OF OFFICERS.—Not later than the 
end of the 3-month period beginning on the date of enact-
ment of this Act, a Civil Liberties and Privacy Officer 
shall be appointed, from among individuals who are attor-
neys with expertise in data privacy laws— 
(1) within each Federal functional regulator, by 
the head of the Federal functional regulator; 
(2) within the Financial Crimes Enforcement 
Network, by the Secretary of the Treasury; and 
(3) within the Internal Revenue Service Small 
Business and Self-Employed Tax Center, by the Sec-
retary of the Treasury. 
(b) DUTIES.—Each Civil Liberties and Privacy Offi-
cer shall, with respect to the applicable regulator, Net-
work, or Center within which the Officer is located— 
(1) be consulted each time Bank Secrecy Act or 
anti-money laundering regulations affecting civil lib-
erties or privacy are developed or reviewed; 
(2) be consulted on information-sharing pro-
grams, including those that provide access to person-
ally identifiable information; 
(3) ensure coordination and clarity between 
anti-money laundering, civil liberties, and privacy 
regulations; 
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(4) contribute to the evaluation and regulation 
of new technologies that may strengthen data pri-
vacy and the protection of personally identifiable in-
formation collected by each Federal functional regu-
lator; and 
(5) develop metrics of program success. 
(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. 
(2) FEDERAL FUNCTIONAL REGULATOR.—The 
term ‘‘Federal functional regulator’’ means the 
Board of Governors of the Federal Reserve System, 
the Comptroller of the Currency, the Federal De-
posit Insurance Corporation, the National Credit 
Union Administration, the Securities and Exchange 
Commission, and the Commodity Futures Trading 
Commission. 
SEC. 104. CIVIL LIBERTIES AND PRIVACY COUNCIL. 
(a) ESTABLISHMENT.—There is established the Civil 
Liberties and Privacy Council (hereinafter in this section 
referred to as the ‘‘Council’’), which shall consist of the 
Civil Liberties and Privacy Officers appointed pursuant to 
section 103. 
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