IB
Union Calendar No. 373
105TH CONGRESS
2D SESSION
H. R. 1756
[Report No. 105–608, Part I]
To amend chapter 53 of title 31, United States Code, to require the develop-
ment and implementation by the Secretary of the Treasury of a national
money laundering and related financial crimes strategy to combat money
laundering and related financial crimes, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 3, 1997
Ms. VELA´ZQUEZ (for herself, Mr. LEACH, Mr. GONZALEZ, and Mr. BACHUS)
introduced the following bill; which was referred to the Committee on
Banking and Financial Services, and in addition to the Committee on the
Judiciary, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
JUNE 25, 1998
Reported from the Committee on Banking and Financial Services with an
amendment
[Strike out all after the enacting clause and insert the part printed in italic]
JUNE 25, 1998
Referral to the Committee on the Judiciary extended for a period ending not
later than July 31, 1998
JULY 31, 1998
Additional sponsors: Mr. SCHUMER, Mr. HINCHEY, Mr. ENGEL, and Mr.
ACKERMAN
JULY 31, 1998
Committee on the Judiciary discharged; committed to the Committee of the
Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on June 3, 1998]
A BILL
To amend chapter 53 of title 31, United States Code, to
require the development and implementation by the Sec-
retary of the Treasury of a national money laundering
and related financial crimes strategy to combat money
laundering and related financial crimes, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Money Laundering and
Financial Crimes Strategy Act of 1998’’.
SEC. 2. MONEY LAUNDERING AND RELATED FINANCIAL
CRIMES.
(a) IN GENERAL.—Chapter 53 of title 31, United
States Code is amended by adding at the end the following
new subchapter:
‘‘SUBCHAPTER III—MONEY LAUNDERING AND
RELATED FINANCIAL CRIMES
‘‘§ 5340. Definitions
‘‘For purposes of this subchapter, the following defini-
tions shall apply:
‘‘(1) DEPARTMENT OF THE TREASURY LAW EN-
FORCEMENT ORGANIZATIONS.—The term ‘Department
of the Treasury law enforcement organizations’ has
the meaning given to such term in section 9703(p)(1).
‘‘(2) MONEY LAUNDERING AND RELATED FINAN-
CIAL CRIME.—The term ‘money laundering and relat-
ed financial crime’ means an offense under sub-
chapter II of this chapter, chapter II of title I of Pub-
lic Law 91–508 (12 U.S.C. 1951, et seq.; commonly
referred to as the ‘Bank Secrecy Act’), or section
1956, 1957, or 1960 of title 18 or any related Federal,
State, or local criminal offense.
‘‘(3) SECRETARY.—The term ‘Secretary’ means
the Secretary of the Treasury.
‘‘(4) ATTORNEY GENERAL.—The term ‘Attorney
General’ means the Attorney General of the United
States.
‘‘PART 1—NATIONAL MONEY LAUNDERING AND RELATED
FINANCIAL CRIMES STRATEGY
‘‘§ 5341. National money laundering and related fi-
nancial crimes strategy
‘‘(a) DEVELOPMENT
AND
TRANSMITTAL
TO
CON-
GRESS.—
‘‘(1) DEVELOPMENT.—The President, acting
through the Secretary and in consultation with the
Attorney General, shall develop a national strategy
for combating money laundering and related finan-
cial crimes.
‘‘(2) TRANSMITTAL TO CONGRESS.—By February
1 of 1999, 2000, 2001, 2002, and 2003, the President
shall submit a national strategy developed in accord-
ance with paragraph (1) to the Congress.
‘‘(3) SEPARATE PRESENTATION OF CLASSIFIED
MATERIAL.—Any part of the strategy that involves in-
formation which is properly classified under criteria
established by Executive Order shall be submitted to
the Congress separately.
‘‘(b) DEVELOPMENT
OF STRATEGY.—The national
strategy for combating money laundering and related fi-
nancial crimes shall address any area the President, acting
through the Secretary and in consultation with the Attorney
General, considers appropriate, including the following:
‘‘(1) GOALS, OBJECTIVES, AND
PRIORITIES.—
Comprehensive, research-based goals, objectives, and
priorities for reducing money laundering and related
financial crime in the United States.
‘‘(2) PREVENTION.—Coordination of regulatory
and other efforts to prevent the exploitation of finan-
cial systems in the United States for money launder-
ing and related financial crimes, including a require-
ment that the Secretary shall—
‘‘(A) regularly review enforcement efforts
under this subchapter and other provisions of
law and, when appropriate, modify existing reg-
ulations or prescribe new regulations for pur-
poses of preventing such criminal activity; and
‘‘(B) coordinate prevention efforts and other
enforcement action with the Board of Governors
of the Federal Reserve System, the Securities and
Exchange Commission, the Federal Trade Com-
mission, other Federal banking agencies, and the
National Credit Union Administration Board.
‘‘(3) DETECTION INITIATIVES.—A description of
operational initiatives to improve detection of money
laundering and related financial crimes.
‘‘(4) ENHANCEMENT OF THE ROLE OF THE PRI-
VATE FINANCIAL SECTOR IN PREVENTION.—A descrip-
tion of the enhanced partnership between the private
financial sector and law enforcement agencies with
regard to the prevention and detection of money laun-
dering and related financial crimes, including pro-
viding incentives to strengthen internal controls and
to adopt on an industrywide basis more effective poli-
cies.
‘‘(5) INTERGOVERNMENTAL
COOPERATION.—A
description of—
‘‘(A) cooperative efforts between the Federal
Government and State and local officials, in-
cluding State and local prosecutors and other
law enforcement officials; and
‘‘(B) cooperative efforts among the several
States and between State and local officials, in-
cluding State and local prosecutors and other
law enforcement officials,
for financial crimes control which could be utilized or
should be encouraged.
‘‘(6) PROJECT AND BUDGET PRIORITIES.—A 3-
year projection for program and budget priorities and
achievable projects for reductions in financial crimes.
‘‘(7) ASSESSMENT OF FUNDING.—A complete as-
sessment of how the proposed budget is intended to
implement the strategy and whether the funding levels
contained in the proposed budget are sufficient to im-
plement the strategy.
‘‘(8) DESIGNATED AREAS.—A description of geo-
graphical areas designated as ‘high-risk money laun-
dering and related financial crime areas’ in accord-
ance with, but not limited to, section 5342.
‘‘(9) PERSONS CONSULTED.—Persons or officers
consulted by the Secretary pursuant to subsection (d).
‘‘(10) DATA
REGARDING
TRENDS
IN
MONEY
LAUNDERING AND RELATED FINANCIAL CRIMES.—The
need for additional information necessary for the pur-
pose of developing and analyzing data in order to as-
certain financial crime trends.
‘‘(11) IMPROVED COMMUNICATIONS SYSTEMS.—A
plan for enhancing the compatibility of automated in-
formation and facilitating access of the Federal Gov-
ernment and State and local governments to timely,
accurate, and complete information.
‘‘(c) EFFECTIVENESS REPORT.—At the time each na-
tional strategy for combating financial crimes is transmit-
ted by the President to the Congress (other than the 1st
transmission of any such strategy) pursuant to subsection
(a), the Secretary shall submit a report containing an eval-
uation of the effectiveness of policies to combat money laun-
dering and related financial crimes.
‘‘(d) CONSULTATIONS.—In addition to the consulta-
tions required under this section with the Attorney General,
in developing the national strategy for combating money
laundering and related financial crimes, the Secretary shall
consult with—
‘‘(1) the Board of Governors of the Federal Re-
serve System and other Federal banking agencies and
the National Credit Union Administration Board;
‘‘(2) State and local officials, including State
and local prosecutors;
‘‘(3) the Securities and Exchange Commission;
‘‘(4) the Commodities and Futures Trading
Commission;
‘‘(5) the Director of the Office of National Drug
Control Policy, with respect to money laundering and
related financial crimes involving the proceeds of
drug trafficking;
‘‘(6) the Chief of the United States Postal Inspec-
tion Service;
‘‘(7) to the extent appropriate, State and local
officials responsible for financial institution and fi-
nancial market regulation;
‘‘(8) any other State or local government author-
ity, to the extent appropriate;
‘‘(9) any other Federal Government authority or
instrumentality, to the extent appropriate; and
‘‘(10) representatives of the private financial
services sector, to the extent appropriate.
‘‘§ 5342. High-risk money laundering and related fi-
nancial crime areas
‘‘(a) FINDINGS AND PURPOSE.—
‘‘(1) FINDINGS.—The Congress finds the follow-
ing:
‘‘(A) Money laundering and related finan-
cial crimes frequently appear to be concentrated
in particular geographic areas, financial sys-
tems, industry sectors, or financial institutions.
‘‘(B) While the Secretary has the respon-
sibility to act with regard to Federal offenses
which are being committed in a particular local-
ity or are directed at a single institution, be-
cause modern financial systems and institutions
are interconnected to a degree which was not
possible until recently, money laundering and
other related financial crimes are likely to have
local, State, national, and international effects
wherever they are committed.
‘‘(2) PURPOSE AND OBJECTIVE.—It is the pur-
pose of this section to provide a mechanism for des-
ignating any area where money laundering or a re-
lated financial crime appears to be occurring at a
higher than average rate such that—
‘‘(A) a comprehensive approach to the prob-
lem of such crime in such area can be developed,
in cooperation with State and local law enforce-
ment agencies, which utilizes the authority of the
Secretary to prevent such activity; or
‘‘(B) such area can be targeted for law en-
forcement action.
‘‘(b) ELEMENT OF NATIONAL STRATEGY.—The des-
ignation of certain areas as areas in which money launder-
ing and related financial crimes are extensive or present
a substantial risk shall be an element of the national strat-
egy developed pursuant to section 5341(b).
‘‘(c) DESIGNATION OF AREAS.—
‘‘(1) DESIGNATION
BY
SECRETARY.—The Sec-
retary, after taking into consideration the factors
specified in subsection (d), shall designate any geo-
graphical area, industry, sector, or institution in the
United States in which money laundering and related
financial crimes are extensive or present a substantial
risk as a ‘high-risk money laundering and related fi-
nancial crimes area’.
‘‘(2) CASE-BY-CASE
DETERMINATION
IN
CON-
SULTATION WITH THE ATTORNEY GENERAL.—In addi-
tion to the factors specified in subsection (d), any des-
ignation of any area under paragraph (1) shall be
made on the basis of a determination by the Sec-
retary, in consultation with the Attorney General,
that the particular area, industry, sector, or institu-
tion is being victimized by, or is particularly vulner-
able to, money laundering and related financial
crimes.
‘‘(3) SPECIFIC INITIATIVES.—Any head of a de-
partment, bureau, or law enforcement agency, includ-
ing any State or local prosecutor, involved in the de-
tection, prevention, and suppression of money laun-
dering and related financial crimes and any State or
local official or prosecutor may submit—
‘‘(A) a written request for the designation of
any area as a high-risk money laundering and
related financial crimes area; or
‘‘(B) a written request for funding under
section 5351 for a specific prevention or enforce-
ment initiative, or to determine the extent of fi-
nancial criminal activity, in an area.
‘‘(d) FACTORS.—In considering the designation of any
area as a high-risk money laundering and related financial
crimes area, the Secretary shall, to the extent appropriate
and in consultation with the Attorney General, take into
account the following factors:
‘‘(1) The population of the area.
‘‘(2) The number of bank and nonbank financial
institution transactions which originate in such area
or involve institutions located in such area.
‘‘(3) The number of stock or commodities trans-
actions which originate in such area or involve insti-
tutions located in such area.
‘‘(4) Whether the area is a key transportation
hub with any international ports or airports or an
extensive highway system.
‘‘(5) Whether the area is an international center
for banking or commerce.
‘‘(6) The extent to which financial crimes and fi-
nancial crime-related activities in such area are hav-
ing a harmful impact in other areas of the country.
‘‘(7) The number or nature of requests for infor-
mation or analytical assistance which—
‘‘(A) are made to the analytical component
of the Department of the Treasury; and
‘‘(B) originate from law enforcement or reg-
ulatory authorities located in such area or in-
volve institutions or businesses located in such
area or residents of such area.
‘‘(8) The volume or nature of suspicious activity
reports originating in the area.
‘‘(9) The volume or nature of currency trans-
action reports or reports of cross-border movements of
currency or monetary instruments originating in the
area.
‘‘(10) Whether, and how often, the area has been
the subject of a geographical targeting order.
‘‘(11) Observed changes in trends and patterns of
money laundering activity.
‘‘(12) Unusual patterns, anomalies, growth, or
other changes in the volume or nature of core eco-
nomic statistics or indicators.
‘‘(13) Statistics or indicators of unusual or un-
explained volumes of cash transactions.
‘‘(14) Unusual patterns, anomalies, or changes
in the volume or nature of transactions conducted
through financial institutions operating within or
outside the United States.
‘‘(15) The extent to which State and local gov-
ernments and State and local law enforcement agen-
cies have committed resources to respond to the finan-
cial crime problem in the area and the degree to
which the commitment of such resources reflects a de-
termination by such government and agencies to ad-
dress the problem aggressively.
‘‘(16) The extent to which a significant increase
in the allocation of Federal resources to combat finan-
cial crimes in such area is necessary to provide an
adequate State and local response to financial crimes
and financial crime-related activities in such area.
‘‘PART 2—FINANCIAL CRIME-FREE COMMUNITIES
SUPPORT PROGRAM
‘‘§ 5351. Establishment of financial crime-free commu-
nities support program
‘‘(a) ESTABLISHMENT.—The Secretary of the Treas-
ury, in consultation with the Attorney General, shall estab-
lish a program to support local law enforcement efforts in
the development and implementation of a program for the
detection, prevention, and suppression of money laundering
and related financial crimes.
‘‘(b) PROGRAM.—In carrying out the program, the
Secretary of the Treasury, in consultation with the Attorney
General, shall—
‘‘(1) make and track grants to grant recipients;
‘‘(2) provide for technical assistance and train-
ing, data collection, and dissemination of information
on state-of-the-art practices that the Director deter-
mines to be effective in detecting, preventing, and
suppressing money laundering and related financial
crimes; and
‘‘(3) provide for the general administration of
the program.
‘‘(c) ADMINISTRATION.—The Secretary shall appoint
an administrator to carry out the program.
‘‘(d) CONTRACTING.—The Secretary may employ any
necessary staff and may enter into contracts or agreements
with Federal and State law enforcement agencies to delegate
authority for the execution of grants and for such other ac-
tivities necessary to carry out this chapter.
‘‘§ 5352. Program authorization
‘‘(a) GRANT ELIGIBILITY.—To be eligible to receive an
initial grant or a renewal grant under this part, a State
or local law enforcement agency or prosecutor shall meet
each of the following criteria:
‘‘(1) APPLICATION.—The State or local law en-
forcement agency or prosecutor shall submit an appli-
cation to the Secretary in accordance with section
5353(a)(2).
‘‘(2) ACCOUNTABILITY.—The State or local law
enforcement agency or prosecutor shall—
‘‘(A) establish a system to measure and re-
port outcomes—
‘‘(i) consistent with common indicators
and evaluation protocols established by the
Secretary, in consultation with the Attorney
General; and
‘‘(ii) approved by the Secretary;
‘‘(B) conduct biennial surveys (or incor-
porate local surveys in existence at the time of
the evaluation) to measure the progress and effec-
tiveness of the coalition; and
‘‘(C) provide assurances that the entity con-
ducting an evaluation under this paragraph, or
from which the applicant receives information,
has experience in gathering data related to
money laundering and related financial crimes.
‘‘(b) GRANT AMOUNTS.—
‘‘(1) GRANTS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (D), for a fiscal year, the Secretary of the
Treasury, in consultation with the Attorney Gen-
eral, may grant to an eligible applicant under
this section for that fiscal year, an amount deter-
mined by the Secretary of the Treasury, in con-
sultation with the Attorney General, to be appro-
priate.
‘‘(B) SUSPENSION
OF
GRANTS.—If such
grant recipient fails to continue to meet the cri-
teria specified in subsection (a), the Secretary
may suspend the grant, after providing written
notice to the grant recipient and an opportunity
to appeal.
‘‘(C) RENEWAL
GRANTS.—Subject to sub-
paragraph (D), the Secretary may award a re-
newal grant to a grant recipient under this sub-
paragraph for each fiscal year following the fis-
cal year for which an initial grant is awarded.
‘‘(D) LIMITATION.—The amount of a grant
award under this paragraph may not exceed
$750,000 for a fiscal year.
‘‘(2) GRANT AWARDS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the Secretary may, with re-
spect to a community, make a grant to 1 eligible
applicant that represents that community.
‘‘(B) 
EXCEPTION.—The 
Secretary 
may
make a grant to more than 1 eligible applicant
that represent a community if—
‘‘(i) the eligible coalitions demonstrate
that the coalitions are collaborating with
one another; and
‘‘(ii) each of the coalitions has inde-
pendently met the requirements set forth in
subsection (a).
‘‘(c) CONDITION RELATING TO PROCEEDS OF ASSET
FORFEITURES.—
‘‘(1) IN GENERAL.—No grant may be made or
renewed under this part to any State or local law en-
forcement agency or prosecutor unless the agency or
prosecutor agrees to donate to the Secretary of the
Treasury for the program established under this part
any amount received by such agency or prosecutor
(after the grant is made) pursuant to any criminal
or civil forfeiture under chapter 46 of title 18, United
States Code, or any similar provision of State law.
‘‘(2) SCOPE
OF
APPLICATION.—Paragraph (1)
shall not apply to any amount received by a State or
local law enforcement agency or prosecutor pursuant
to any criminal or civil forfeiture referred to in such
paragraph in excess of the aggregate amount of grants
received by such agency or prosecutor under this part.
‘‘(d) ROLLING GRANT APPLICATION PERIODS.—In es-
tablishing the program under this part, the Secretary shall
take such action as may be necessary to ensure, to the extent
practicable, that—
‘‘(1) applications for grants under this part may
be filed at any time during a fiscal year; and
‘‘(2) some portion of the funds appropriated
under this part for any such fiscal year will remain
available for grant applications filed later in the fis-
cal year.
‘‘§ 5353. Information collection and dissemination
with respect to grant recipients
‘‘(a) APPLICANT AND GRANTEE INFORMATION.—
‘‘(1) APPLICATION
PROCESS.—The Secretary
shall issue requests for proposal, as necessary, regard-
ing, with respect to the grants awarded under section
5352, the application process, grant renewal, and sus-
pension or withholding of renewal grants. Each ap-
plication under this paragraph shall be in writing
and shall be subject to review by the Secretary.
‘‘(2) REPORTING.—The Secretary shall, to the
maximum extent practicable and in a manner con-
sistent with applicable law, minimize reporting re-
quirements by a grant recipient and expedite any ap-
plication for a renewal grant made under this part.
‘‘(b) ACTIVITIES
OF
SECRETARY.—The Secretary
may—
‘‘(1) evaluate the utility of specific initiatives re-
lating to the purposes of the program;
‘‘(2) conduct an evaluation of the program; and
‘‘(3) disseminate information described in this
subsection to—
‘‘(A) eligible State local law enforcement
agencies or prosecutors; and
‘‘(B) the general public.
‘‘§ 5354. Grants for fighting money laundering and re-
lated financial crimes
‘‘(a) IN GENERAL.— After the end of the 1-year period
beginning on the date the 1st national strategy for combat-
ing money laundering and related financial crimes is sub-
mitted to the Congress in accordance with section 5341, and
subject to subsection (b), the Secretary may review, select,
and award grants for State or local law enforcement agen-
cies and prosecutors to provide funding necessary to inves-
tigate and prosecute money laundering and related finan-
cial crimes in high-risk money laundering and related fi-
nancial crime areas.
‘‘(b) SPECIAL PREFERENCE.—Special preference shall
be given to applications submitted to the Secretary which
demonstrate collaborative efforts of 2 or more State and
local law enforcement agencies or prosecutors who have a
history of Federal, State, and local cooperative law enforce-
ment and prosecutorial efforts in responding to such crimi-
nal activity.
‘‘§ 5355. Authorization of appropriations
‘‘There are authorized to be appropriated the following
amounts for the following fiscal years to carry out the pur-
poses of this subchapter:
‘‘For fiscal year:
The amount authorized is:
1999 ...................................................
$5,000,000.
2000 ...................................................
$7,500,000.
2001 ...................................................
$10,000,000.
‘‘For fiscal year:
The amount authorized is:
2002 ...................................................
$12,500,000.
2003 ...................................................
$15,000,000.’’.
(b) CLERICAL AMENDMENT.—The table of subchapters
for chapter 53 of title 31, United States Code, is amended
by adding at the end the following item:
‘‘SUBCHAPTER III—MONEY LAUNDERING AND RELATED FINANCIAL
CRIMES
‘‘5340. Definitions.
‘‘PART 1—NATIONAL MONEY LAUNDERING AND RELATED FINANCIAL CRIMES
STRATEGY
‘‘5341. National money laundering and related financial crimes strategy.
‘‘5342. High-risk money laundering and related financial crime areas.
‘‘PART 2—FINANCIAL CRIME-FREE COMMUNITIES SUPPORT PROGRAM
‘‘5351. Establishment of financial crime-free communities support program.
‘‘5352. Program authorization.
‘‘5353. Information collection and dissemination with respect to grant recipients.
‘‘5354. Grants for fighting money laundering and related financial crimes.
‘‘5355. Authorization of appropriations.’’.
(c) REPORT AND RECOMMENDATIONS.—Before the end
of the 5-year period beginning on the date the 1st national
strategy for combating money laundering and related fi-
nancial crimes is submitted to the Congress pursuant to sec-
tion 5341(a)(1) of title 31, United States Code (as added
by section 2(a) of this Act), the Secretary of the Treasury
shall submit a report 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 on the effectiveness of and the need for the designa-
tion of areas, under section 5342 of title 31, United States
Code (as added by such section 2(a)), as high-risk money
laundering and related financial crime areas, together with
such recommendations for legislation as the Secretary may
determine to be appropriate to carry out the purposes of
such section.
Union Calendar No. 373
105TH CONGRESS
2D SESSION
H. R. 1756
[Report No. 105–608, Part I]
A BILL
To amend chapter 53 of title 31, United States
Code, to require the development and implemen-
tation by the Secretary of the Treasury of a na-
tional money laundering and related financial
crimes strategy to combat money laundering and
related financial crimes, and for other purposes.
JULY 31, 1998
Committee on the Judiciary discharged; committed to the
Committee of the Whole House on the State of the
Union and ordered to be printed