SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Money Laundering Deterrence Act of 1998’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Amendments relating to reporting of suspicious activities.
Sec. 4. Expansion of scope of summons power.
Sec. 5. Penalties for violations of geographic targeting orders and certain rec-
ordkeeping requirements.
Sec. 6. Repeal of certain reporting requirements.
Sec. 7. Limited exemption from Paperwork Reduction Act.
Sec. 8. Promulgation of ‘‘know your customer’’ regulations.
Sec. 9. Report on private banking activities.
Sec. 10. Availability of certain account information.
Sec. 11. Sense of the Congress.
Sec. 12. Designation of foreign high intensity money laundering areas.
Sec. 13. Doubling of criminal penalties for violations of laws aimed at prevent-
ing money laundering in foreign high intensity money launder-
ing areas.
Sec. 14. Laundering money through a foreign bank.
Sec. 15. Criminal forfeiture for money laundering conspiracies.
Sec. 16. Charging money laundering as a course of conduct.
Sec. 17. Venue in money laundering cases.
Sec. 18. Technical amendment to restore wiretap authority for certain money
laundering offenses.
Sec. 19. Knowledge that the property is the proceeds of a felony.
Sec. 20. Coverage of foreign bank branches in the territories.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds as follows:
(1) The dollar amount involved in international
money laundering likely exceeds $500,000,000,000
annually.
(2) Organized crime groups are continually de-
vising new methods to launder the proceeds of illegal
activities in an effort to subvert the transaction re-
porting requirements of subchapter II of chapter 53
of title 31, United States Code, and chapter 2 of
Public Law 91–508.
(3) A number of methods to launder the pro-
ceeds of criminal activity were identified and de-
scribed in congressional hearings, including the use
of financial service providers which are not deposi-
tory institutions, such as money transmitters and
check cashing services, the purchase and resale of
durable goods, and the exchange of foreign currency
in the so-called ‘‘black market’’.
(4) Recent successes in combating domestic
money laundering have involved the application of
the heretofore seldom-used authority granted to the
Secretary of the Treasury and the cooperative
efforts of Federal, State, and local law enforcement
agencies.
(5) Such successes have been exemplified by the
implementation of the geographic targeting order in
New York City and through the work of the El
Dorado task force, a group comprised of agents of
Department of the Treasury law enforcement agen-
cies, New York State troopers, and New York City
police officers.
(6) Money laundering by international criminal
enterprises challenges the legitimate authority of na-
tional governments, corrupts government institu-
tions, endangers the financial and economic stability
of nations, and routinely violates legal norms, prop-
erty rights, and human rights. In some countries,
such as Columbia, Mexico, and Russia, the wealth
and power of organized criminal enterprises rivals
their own government’s.
(7) The structure of international criminal en-
terprises engaged in money laundering is complex,
diverse, and fragmented. Organized criminal enter-
prises such as the Colombian and Mexican cartels,
the Russian ‘‘mafiya’’, Sicilian crime families, and
Chinese gangs are highly resistant to conventional
law enforcement techniques. Their financial manage-
ment and organizational infrastructure are highly
sophisticated and difficult to track because of the
globalization of the financial service industry.
(b) PURPOSES.—The purposes of this Act are as fol-
lows:
(1) To amend subchapter II of chapter 53 of
title 31, United States Code, to provide the law en-
forcement community with the necessary legal au-
thority to combat money laundering.
(2) To expedite the issuance by the Secretary of
the Treasury of regulations designed to deter money
laundering activities at certain types of financial in-
stitutions.
SEC. 3. AMENDMENTS RELATING TO REPORTING OF SUS-
PICIOUS ACTIVITIES.
(a) AMENDMENT RELATING TO CIVIL LIABILITY IM-
MUNITY FOR DISCLOSURES.—Section 5318(g)(3) of title
31, United States Code, is amended to read as follows:
‘‘(3) LIABILITY FOR DISCLOSURES.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law—
‘‘(i) any financial institution that—
‘‘(I) makes a disclosure of any
possible violation of law or regulation
to an appropriate government agency;
or
‘‘(II) makes a disclosure pursu-
ant to this subsection or any other au-
thority;
‘‘(ii) any director, officer, employee, or
agent of such institution who makes, or re-
quires another to make any such disclo-
sure; and
‘‘(iii) any independent public account-
ant who audits any such financial institu-
tion and makes a disclosure described in
clause (i),
shall not be liable to any person under any law
or regulation of the United States, any con-
stitution, law, or regulation of any State or po-
litical subdivision thereof, or under any contract
or other legally enforceable agreement (includ-
ing any arbitration agreement), for such disclo-
sure or for any failure to notify the person who
is the subject of such disclosure or any other
person identified in the disclosure.
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply to a disclosure or communica-
tion required under Federal securities law,
other than provisions of law that specifically
refer to the Currency and Foreign Transactions
Reporting Act of 1970.
‘‘(C) RULE OF CONSTRUCTION.—Subpara-
graph (A) shall not be construed as creating—
‘‘(i) any inference that the term ‘per-
son’, as used in such subparagraph, may
be construed more broadly than its ordi-
nary usage so to include any government
or agency of government; or
‘‘(ii) any immunity against, or other-
wise affecting, any civil or criminal action
brought by any government or agency of
government to enforce any constitution,
law, or regulation of such government or
agency.’’.
(b) PROHIBITION
ON NOTIFICATION
OF DISCLO-
SURES.—Section 5318(g)(2) of title 31, United States
Code, is amended to read as follows:
‘‘(2) NOTIFICATION PROHIBITED.—
‘‘(A) IN GENERAL.—If a financial institu-
tion, any director, officer, employee, or agent of
any financial institution, or any independent
public accountant who audits any financial in-
stitution, voluntarily or pursuant to this section
or any other authority, reports a suspicious
transaction to an appropriate government agen-
cy—
‘‘(i) the financial institution, director,
officer, employee, agent, or accountant
may not notify any person involved in the
transaction that the transaction has been
reported and may not disclose any infor-
mation included in the report to any such
person; and
‘‘(ii) any other person, including any
officer or employee of any government,
who has any knowledge that such report
was made may not disclose to any person
involved in the transaction that the trans-
action has been reported or any informa-
tion included in the report.
‘‘(B) COORDINATION
WITH
PARAGRAPH
(5).—Subparagraph (A) shall not be construed
as prohibiting any financial institution, or any
director, officer, employee, or agent of such in-
stitution, from including, in a written employ-
ment reference that is provided in accordance
with paragraph (5) in response to a request
from another financial institution, information
that was included in a report to which subpara-
graph (A) applies, but such written employment
reference may not disclose that such informa-
tion was also included in any such report or
that such report was made.’’.
(c) AUTHORIZATION TO INCLUDE SUSPICIONS OF IL-
LEGAL ACTIVITY IN EMPLOYMENT REFERENCES.—Sec-
tion 5318(g) of title 31, United States Code, is amended
by adding at the end the following new paragraph:
‘‘(5) EMPLOYMENT REFERENCES MAY INCLUDE
SUSPICIONS OF INVOLVEMENT IN ILLEGAL ACTIV-
ITY.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law and subject to subpara-
graph (B) of this paragraph and paragraph
(2)(C), any financial institution, and any direc-
tor, officer, employee, or agent of such institu-
tion, may disclose, in any written employment
reference relating to a current or former insti-
tution-affiliated party of such institution which
is provided to another financial institution in
response to a request from such other institu-
tion, information concerning the possible in-
volvement of such institution-affiliated party in
any suspicious transaction relevant to a possible
violation of law or regulation.
‘‘(B) LIMIT
ON
LIABILITY
FOR
DISCLO-
SURES.—A financial institution, and any direc-
tor, officer, employee, or agent of such institu-
tion, shall not be liable to any person under any
law or regulation of the United States, any con-
stitution, law, or regulation of any State or po-
litical subdivision thereof, or under any contract
or other legally enforceable agreement (includ-
ing any arbitration agreement), for any disclo-
sure under subparagraph (A), to the extent—
‘‘(i) the disclosure does not contain in-
formation which the institution, director,
officer, employee, agent, or accountant
knows to be false; and
‘‘(ii) the institution, director, officer,
employee, agent, or accountant has not
acted with malice or with reckless dis-
regard for the truth in making the disclo-
sure.
‘‘(C) INSTITUTION-AFFILIATED PARTY DE-
FINED.—For purposes of this paragraph, the
term ‘institution-affiliated party’ has the mean-
ing given to such term in section 3(u) of the
Federal Deposit Insurance Act, except such sec-
tion 3(u) shall be applied by substituting ‘finan-
cial institution’ for ‘insured depository institu-
tion’.’’.
(d) AMENDMENTS RELATING TO AVAILABILITY OF
SUSPICIOUS
ACTIVITY
REPORTS
FOR
OTHER
AGEN-
CIES.—Section 5319 of title 31, United States Code, is
amended—
(1) in the 1st sentence, by striking ‘‘5314, or
5316’’ and inserting ‘‘5313A, 5314, 5316, or
5318(g)’’;
(2) in the last sentence, by inserting ‘‘under
section 5313, 5313A, 5314, 5316, or 5318(g)’’ after
‘‘records of reports’’; and
(3) by adding the following new sentence after
the last sentence: ‘‘The Secretary of the Treasury
may permit the dissemination of information in any
such reports to any self-regulatory organization (as
defined in section 3(a)(26) of the Securities Ex-
change Act of 1934), if the Securities and Exchange
Commission determines that such dissemination is
necessary or appropriate to permit such organization
to perform its function under the Securities Ex-
change Act of 1934 and regulations prescribed
under such Act.’’.
SEC. 4. EXPANSION OF SCOPE OF SUMMONS POWER.
Section 5318(b)(1) of title 31, United States Code,
is amended by inserting ‘‘examinations to determine com-
pliance with the requirements of this subchapter, section
21 of the Federal Deposit Insurance Act, and chapter 2
of Public Law 91–508 and regulations prescribed pursu-
ant to such provisions, investigations relating to reports
filed by financial institutions or other persons pursuant
to any such provision or regulation, and’’ after ‘‘in connec-
tion with’’.
SEC. 5. PENALTIES FOR VIOLATIONS OF GEOGRAPHIC TAR-
GETING ORDERS AND CERTAIN RECORD-
KEEPING REQUIREMENTS.
(a) CIVIL PENALTY FOR VIOLATION OF TARGETING
ORDER OR CERTAIN RECORDKEEPING REQUIREMENTS.—
Section 5321(a)(1) of title 31, United States Code, is
amended—
(1) by inserting ‘‘or order issued’’ after ‘‘regu-
lation prescribed’’ the 1st place it appears; and
(2) by inserting ‘‘, or willfully violating a regu-
lation prescribed under section 21 of the Federal
Deposit Insurance Act or under section 123 of Pub-
lic Law 91–508,’’ before ‘‘is liable’’.
(b) CRIMINAL PENALTIES FOR VIOLATION OF TAR-
GETING ORDER OR CERTAIN RECORDKEEPING REQUIRE-
MENTS.—Section 5322 of title 31, United States Code, is
amended—
(1) in each of subsections (a) and (b), by insert-
ing ‘‘or order issued’’ after ‘‘regulation prescribed’’
the 1st place it appears;
(2) in subsection (a), by inserting ‘‘, or willfully
violating a regulation prescribed under section 21 of
the Federal Deposit Insurance Act or under section
123 of Public Law 91–508,’’ before ‘‘shall’’; and
(3) in subsection (b), by inserting ‘‘or willfully
violating a regulation prescribed under section 21 of
the Federal Deposit Insurance Act or under section
123 of Public Law 91–508,’’ before ‘‘while violat-
ing’’.
(c) STRUCTURING TRANSACTIONS TO EVADE TAR-
GETING ORDER OR CERTAIN RECORDKEEPING REQUIRE-
MENTS.—Section 5324(a) of title 31, United States Code,
is amended—
(1) in the portion of such section which pre-
cedes paragraph (1), by inserting ‘‘, the reporting
requirements imposed by any order issued under sec-
tion 5326, or the recordkeeping requirements im-
posed by any regulation prescribed under section 21
of the Federal Deposit Insurance Act or section 123
of Public Law 91–508’’ after ‘‘regulation prescribed
under any such section’’; and
(2) in paragraphs (1) and (2), by inserting ‘‘,
to file a report required by any order issued under
section 5326, or to maintain a record required pur-
suant to any regulation prescribed under section 21
of the Federal Deposit Insurance Act or section 123
of Public Law 91–508’’ after ‘‘regulation prescribed
under any such section’’ where such term appears in
each such paragraph.
(d) INCREASE IN CIVIL PENALTIES FOR VIOLATION
OF CERTAIN RECORDKEEPING REQUIREMENTS.—
(1) FEDERAL DEPOSIT INSURANCE ACT.—Sec-
tion 21(j)(1) of the Federal Deposit Insurance Act
(12 U.S.C. 1829b(j)(1)) is amended by striking
‘‘$10,000’’ and inserting ‘‘the greater of the amount
(not to exceed $100,000) involved in the transaction
(if any) with respect to which the violation occurred
or $25,000’’.
(2) PUBLIC LAW 91–508.—Section 125(a) of
Public Law 91–508 (12 U.S.C. 1955(a)) is amended
by striking ‘‘$10,000’’ and inserting ‘‘the greater of
the amount (not to exceed $100,000) involved in the
transaction (if any) with respect to which the viola-
tion occurred or $25,000’’.
(e) CRIMINAL PENALTIES FOR VIOLATION OF CER-
TAIN RECORDKEEPING REQUIREMENTS.—
(1) SECTION 126.—Section 126 of Public Law
91–508 (12 U.S.C. 1956) is amended to read as fol-
lows:
‘‘§ 126. Criminal penalty
‘‘A person willfully violating this chapter, section 21
of the Federal Deposit Insurance Act, or a regulation pre-
scribed under this chapter or such section, shall be fined
not more than $250,000, or imprisoned for not more than
five years, or both.’’.
(2) SECTION 127.—Section 127 of Public Law
91–508 (12 U.S.C. 1957) is amended to read as fol-
lows:
‘‘§ 127. Additional criminal penalty in certain cases
‘‘A person willfully violating this chapter, section 21
of the Federal Deposit Insurance Act, or a regulation pre-
scribed under this chapter or such section, while violating
another law of the United States or as part of a pattern
of any illegal activity involving more than $100,000 in a
12-month period, shall be fined not more than $500,000,
imprisoned for not more than 10 years, or both.’’.
SEC. 6. REPEAL OF CERTAIN REPORTING REQUIREMENTS.
Section 407(d) of the Money Laundering Suppression
Act of 1994 (31 U.S.C. 5311 note) is amended by striking
‘‘subsection (c)’’ and inserting ‘‘subsection (c)(2)’’.
SEC. 7. LIMITED EXEMPTION FROM PAPERWORK REDUC-
TION ACT.
Section 3518(c)(1) of title 44, United States Code,
is amended—
(1) by redesignating subparagraphs (C) and
(D) as subparagraphs (D) and (E), respectively; and
(2) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) pursuant to regulations prescribed or or-
ders issued by the Secretary of the Treasury under
section 5318(h) or 5326 of title 31;’’.
SEC. 8. PROMULGATION OF ‘‘KNOW YOUR CUSTOMER’’ REG-
ULATIONS.
(a) IN GENERAL.—Within 120 days after the date
of the enactment of this Act, the Secretary of the Treasury
shall promulgate ‘‘Know Your Customer’’ regulations for
financial institutions.
(b) RULE OF CONSTRUCTION.—This section shall not
be construed as precluding any supervisory agency for any
financial institution from requiring the financial institu-
tion to submit any information or report to the agency
or another agency pursuant to any other applicable provi-
sion of law.
(c) DEFINITION OF FINANCIAL INSTITUTION.—For
purposes of subsection (a), the term ‘‘financial institution’’
shall not include any broker, dealer, investment company,
or investment adviser as such terms are defined in the
Securities Exchange Act of 1934.
SEC. 9. REPORT ON PRIVATE BANKING ACTIVITIES.
(a) IN GENERAL.—Within 1 year after the date of
the enactment of this Act, the Secretary of the Treasury,
in consultation with Federal banking agencies, shall sub-
mit to the Committee on Banking and Financial Services
of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate a re-
port on—
(1) the nature and extent of private banking ac-
tivities in the United States;
(2) regulatory efforts to monitor such activities
and ensure that such activities are conducted in
compliance with the Bank Secrecy Act; and
(3) policies and procedures of depository insti-
tutions that are designed to ensure that such activi-
ties are conducted in compliance with the Bank Se-
crecy Act.
(b) PRIVATE BANKING ACTIVITIES.—In subsection
(a), the term ‘‘private banking activities’’, with respect to
an institution, includes, among other things, personalized
services such as money management, financial advice, and
investment services that are provided to clients with high
net worth and that are not provided generally to all clients
of the institution.
SEC. 10. AVAILABILITY OF CERTAIN ACCOUNT INFORMA-
TION.
Section 5318(h) of title 31, United States Code, is
amended by adding at the end the following new para-
graph:
‘‘(3) AVAILABILITY OF CERTAIN ACCOUNT IN-
FORMATION.—The Secretary of the Treasury shall
prescribe regulations under this subsection which re-
quire financial institutions to maintain all accounts
in such a way as to ensure that the name of an ac-
count holder and the number of the account are as-
sociated with all account activity of the account
holder, and to ensure that all such information is
available for purposes of account supervision and
law enforcement.’’.
SEC. 11. SENSE OF THE CONGRESS.
It is the sense of the Congress that the Secretary of
the Treasury should make available to all Federal, State,
and local law enforcement agencies and financial regu-
latory agencies the full contents of the data base of reports
that have been filed pursuant to subchapter II of chapter
53 of title 31, United States Code.
SEC. 12. DESIGNATION OF FOREIGN HIGH INTENSITY
MONEY LAUNDERING AREAS.
(a) IN GENERAL.—Subchapter II of chapter 53 of
title 31, United States Code, is amended by inserting after
section 5326 the following new section:
‘‘§ 5327. Designation of foreign high intensity money
laundering areas
‘‘(a) CRITERIA.—The Secretary of the Treasury, in
consultation with appropriate Federal law enforcement
agencies, shall develop criteria by which to identify areas
outside the United States in which money laundering ac-
tivities are concentrated.
‘‘(b) DESIGNATION.—The Secretary of the Treasury
shall designate as a foreign high intensity money launder-
ing area any foreign country in which there is an area
which is identified, using the criteria developed under sub-
section (a), as an area in which money laundering activi-
ties are concentrated.
‘‘(c) NOTICE.—On the designation under subsection
(b) of a country as a foreign high intensity money launder-
ing area, the Secretary of the Treasury shall provide writ-
ten notice to each insured depository institution (as de-
fined in section 3(c)(2) of the Federal Deposit Insurance
Act) and each depository institution holding company (as
defined in section 3(w)(1) of such Act) that has control
over an insured depository institution of the identity of
the foreign country and include with the notice a written
warning that there is a concentration of money laundering
activities in the foreign country.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for such chapter is amended by inserting after the item
relating to section 5326 the following new item:
‘‘5327. Designation of foreign high intensity money laundering areas.’’.
SEC. 13. DOUBLING OF CRIMINAL PENALTIES FOR VIOLA-
TIONS OF LAWS AIMED AT PREVENTING
MONEY LAUNDERING IN FOREIGN HIGH IN-
TENSITY MONEY LAUNDERING AREAS.
Section 5322 of title 31, United States Code, is
amended by adding at the end the following new sub-
section:
‘‘(d) The court may double the sentence of fine or
imprisonment, or both, that would otherwise be imposed
on a person for a violation described in subsection (a) or
(b) if person commits the violation with respect to a trans-
action involving a person in, a relationship maintained for
a person in, or a transport of a monetary instrument in-
volving a foreign country, knowing that the foreign coun-
try is designated under section 5327(b) as a foreign high
intensity money laundering area.’’.
SEC. 14. LAUNDERING MONEY THROUGH A FOREIGN BANK.
Section 1956(c)(6) of title 18, United States Code,
is amended to read as follows:
‘‘(6) the term ‘financial institution’ includes any
financial institution described in section 5312(a)(2)
of title 31, United States Code, or the regulations
promulgated thereunder, as well as any foreign
bank, as defined in paragraph (7) of section 1(b) of
the International Banking Act of 1978 (12 U.S.C.
3101(7)).’’.
SEC. 15. CRIMINAL FORFEITURE FOR MONEY LAUNDERING
CONSPIRACIES.
Section 982(a)(1) of title 18, United States Code, is
amended by inserting ‘‘, or a conspiracy to commit any
such offense’’ after ‘‘of this title’’.
SEC. 16. CHARGING MONEY LAUNDERING AS A COURSE OF
CONDUCT.
Section 1956(h) of title 18, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ before ‘‘Any person’’;
and
(2) by adding at the end the following:
‘‘(2) Any person who commits multiple violations of
this section or section 1957 that are part of the same
scheme or continuing course of conduct may be charged,
at the election of the Government, in a single count in
an indictment or information.’’.
SEC. 17. VENUE IN MONEY LAUNDERING CASES.
Section 1956 of title 18, United States Code, is
amended by adding at the end the following new sub-
section:
‘‘(i) VENUE.—(1) Except as provided in paragraph
(2), a prosecution for an offense under this section or sec-
tion 1957 may be brought in—
‘‘(A) any district in which the financial or mon-
etary transaction is conducted, or
‘‘(B) any district where a prosecution for the
underlying specified unlawful activity could be
brought, if the defendant participated in the transfer
of the proceeds of the specified unlawful activity
from that district to the district where the financial
or monetary transaction is conducted.
‘‘(2) A prosecution for an attempt or conspiracy of-
fense under this section or section 1957 may be brought
in the district where venue would lie for the completed of-
fense under paragraph (1), or in any other district where
an act in furtherance of the attempt or conspiracy took
place.’’.
SEC. 18. TECHNICAL AMENDMENT TO RESTORE WIRETAP
AUTHORITY FOR CERTAIN MONEY LAUNDER-
ING OFFENSES.
Section 2516(1)(g) of title 18, United States Code,
is amended by striking ‘‘a violation of section 5322 of title
31, United States Code (dealing with the reporting of cur-
rency transactions)’’ and inserting ‘‘a violation of section
5322 or 5324 of title 31, United States Code (dealing with
the reporting and illegal structuring of currency trans-
actions)’’.
SEC. 19. KNOWLEDGE THAT THE PROPERTY IS THE PRO-
CEEDS OF A FELONY.
Section 1956(c)(1) of title 18, United States Code,
is amended by inserting ‘‘, and regardless of whether or
not the person knew that the activity constituted a felony’’
before the semicolon at the end.
SEC. 20. COVERAGE OF FOREIGN BANK BRANCHES IN THE
TERRITORIES.
Section 20(9) of title 18, United States Code, is
amended by inserting ‘‘, except that, for purposes of the
application of that definition, the term ‘State’ as used in
such Act includes a commonwealth, territory, or posses-
sion of the United States’’ after ‘‘Banking Act of 1978’’.
Passed the House of Representatives October 5,
1998.
Attest:
Clerk.