I
106TH CONGRESS
1ST SESSION
H. R. 2905
To eliminate money laundering in the private banking system, to require
the Secretary of the Treasury to take certain actions with regard to
foreign countries in which there is a concentration of money laundering
activities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 21, 1999
Ms. WATERS (for herself, Mr. VENTO, Ms. VELA´ZQUEZ, and Mr. HINCHEY)
introduced the following bill; which was referred to the Committee on
Banking and Financial Services
A BILL
To eliminate money laundering in the private banking sys-
tem, to require the Secretary of the Treasury to take
certain actions with regard to foreign countries in which
there is a concentration of money laundering activities,
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 ‘‘Integrity in Banking
and Money Laundering Prevention Act of 1999’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds as follows:
(1) Money laundering is a serious problem: be-
tween $100,000,000,000 and $300,000,000,000 in
United States currency is ‘‘laundered’’ each year
and the total dollar amount involved in international
money laundering likely exceeds $500,000,000,000.
(2) Money laundering is critical to the survival
of the illicit drug trade, which has annual worldwide
revenues of more than $400,000,000,000, more than
8 percent of the total value of international trade.
(3) Money laundering affords drug dealers, ter-
rorists, arms dealers, and other criminals the oppor-
tunity to erode the integrity of our financial institu-
tions.
(4) Through money laundering, criminals are
able to hide profits from narcotics sales, tax fraud,
terrorism, and arms smuggling.
(5) 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.
(6) United States financial institutions are a
critical link in our efforts to combat money laun-
dering.
(7) The high profitability, intense competition,
high level of confidentiality, and close relationships
of trust developed between private bankers and their
clients make private banking vulnerable to money
laundering, and it is estimated that private banking
services 
have 
banking 
assets 
ranging 
from
$200,000,000,000 to $300,000,000,000.
(8) As private banking grows, and competition
for high net worth individuals as customers in-
creases, anti-money laundering legislation should be
extended to reach all financial institutions, including
such entities as securities brokers and dealers.
(b) PURPOSES.—The purposes of this Act are as fol-
lows:
(1) To ensure that United States financial in-
stitutions make combating money laundering the
highest of priorities.
(2) To close the existing gaps in law that allow
money laundering to flourish in the private banking
system.
(3) To designate foreign high-intensity money
laundering areas for the purpose of targeting areas
of concentrated money laundering activities.
(4) To establish a comprehensive report on the
extent of private banking by banks and other finan-
cial institutions operating within the United States.
(5) To prevent the abuse of concentration, om-
nibus, or suspense accounts by money launderers
and drug traffickers.
(6) To enhance the ability of law enforcement
officials to reconstruct an audit trail in the course
of a criminal investigation by requiring United
States financial institutions to maintain documenta-
tion of offshore accounts.
(7) To subject securities brokers and dealers to
the suspicious activities reporting requirements to
which depository institutions are subject.
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions
shall apply:
(1) BENEFICIAL OWNER.—The term ‘‘beneficial
owner’’, with respect to an account at a financial in-
stitution, any person or group which controls the ac-
count or for whose benefit the account is main-
tained.
(2) CONCENTRATION
ACCOUNT.—The term
‘‘concentration account’’ means a business account
maintained by a financial institution in which funds
from various sources are commingled.
(3) FINANCIAL
INSTITUTION.—The term ‘‘fi-
nancial institution’’ has the meaning given to such
term in section 5312(a)(2) of title 31, United States
Code.
(4) HIGH NET WORTH INDIVIDUAL.—The term
‘‘high net worth individual’’ means any individual—
(A) whose individual net worth, or, in the
case of a married individual, whose joint net
worth (with such individual’s spouse), exceeds
$1,000,000; or
(B) who had—
(i) individual gross income in excess
$400,000 in each of the 2 preceding cal-
endar years; or
(ii) who had joint gross income (with
such individuals spouse) in excess of
$600,000 in each of the 2 preceding cal-
endar years,
and who has a reasonable expectation of achiev-
ing gross income in the current calendar year in
excess of the amount described in clause (i) or
(ii), as the case may be.
(5) MONEY LAUNDERING.—The term ‘‘money
laundering’’ means any action or process whereby
the existence, illegal source, or illegal application or
expenditure of income is concealed or disguised so as
to give income the appearance of legitimacy.
(6) PRIVATE
BANKING.—The term ‘‘private
banking’’ means, with respect to a financial institu-
tion, the personal delivery of financial products and
services to high net worth individuals, which may in-
clude the acceptance of deposits, lending, investing
in investment companies, personal trust and estate
administration, fund transfer services, establishing
payable through accounts, the establishment of ac-
counts in foreign banks, and other services which
are not provided generally to all clients of the finan-
cial institution.
SEC. 4. REPORT ON PRIVATE BANKING ACTIVITIES.
(a) IN GENERAL.—Before the end of the 18-month
period beginning on the date of the enactment of this Act,
the Secretary of the Treasury, in consultation with the Se-
curities and Exchange Commission and the Federal bank-
ing agencies (as defined in section 3(z) of the Federal De-
posit Insurance Act) shall submit a report on private
banking activities in the United States to the Committee
on Banking and Financial Services of the House of Rep-
resentatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate.
(b) CONTENTS OF REPORT.—The report required
under subsection (a) shall include information on the fol-
lowing:
(1) The nature and extent of private banking in
the United States.
(2) Regulatory efforts to monitor private bank-
ing and ensure that such private banking operations
are conducted in compliance with subchapter II of
chapter 53 of title 31, United States Code, and sec-
tion 21 of the Federal Deposit Insurance Act.
(3) The policies and procedures of financial in-
stitutions that are designed to ensure compliance by
such institutions with the requirements of sub-
chapter II of chapter 53 of title 31, United States
Code, and section 21 of the Federal Deposit Insur-
ance Act.
SEC. 5. REQUIRE THAT ANTI-MONEY LAUNDERING PRO-
GRAMS 
PROHIBIT 
MONEY 
LAUNDERING
THROUGH CONCENTRATION ACCOUNTS AT
FINANCIAL 
INSTITUTIONS 
BY 
REQUIRING
PROPER MAINTENANCE OF SUCH ACCOUNTS.
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 the ac-
count holder and the number of the account are as-
sociated with all account activity of the account
holder.’’
SEC. 
6. 
DESIGNATION 
OF 
FOREIGN 
HIGH-INTENSITY
MONEY LAUNDERING AREAS.
(a) IN GENERAL.—Subchapter III of chapter 53 of
title 31, United States Code (as added by the Money
Laundering and Financial Crimes Strategy Act of 1998)
is amended by adding at the end the following new part:
‘‘PART 3—INTERNATIONAL MONEY LAUNDERING AND
RELATED FINANCIAL CRIMES
‘‘§ 5361. Designation of foreign high-intensity money
laundering areas
‘‘(a) IN GENERAL.—The Secretary, in consultation
with the Attorney General and the Federal banking agen-
cies, shall develop criteria for identifying areas outside the
United States in which money laundering activities are
concentrated.
‘‘(b) DESIGNATION.—The Secretary shall designate
as a high-intensity money laundering area any foreign
country in which there is an area identified, in accordance
with the criteria developed pursuant to subsection (a), as
an area in which money laundering activities are con-
centrated.
‘‘(c) NOTICE AND WARNING.—Upon the designation,
under subsection (b), of a country as a high-intensity
money laundering area, the Secretary shall provide—
‘‘(1) a written notice to each financial institu-
tion of the identity of the country designated; and
‘‘(2) a written warning that there is a con-
centration of money laundering activity in such
country.’’.
(b) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 53 of title 31, United States Code,
is amended by adding at the end the following item:
‘‘PART 3—INTERNATIONAL MONEY LAUNDERING AND RELATED FINANCIAL
CRIMES
‘‘5361. Designation of foreign high-intensity money laundering areas.’’.
SEC. 7. DOUBLE THE CRIMINAL PENALTIES FOR VIOLA-
TIONS INVOLVING HIGH-INTENSITY MONEY
LAUNDERING AREAS.
(a) IN GENERAL.—Section 5322 of title 31, United
States Code, is amended by adding at the end the fol-
lowing new subsection:
‘‘(d) DOUBLED PENALTY.—The court may double
the sentence of fine or imprisonment, or both, that could
otherwise be imposed on any person for a violation de-
scribed in subsection (a) or (b) if the person commits the
violation with respect to a transaction involving a person
in, a relationship maintained for a person in, or a trans-
port of a monetary instrument involving a foreign country,
knowing that a designation of the foreign country as a
high-intensity money laundering area under section 5361
was in effect at the time of the violation.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to any violation
committed on or after the date of the enactment of this
Act.
SEC. 8. ENHANCED ABILITY TO IDENTIFY PROPERLY THE
BENEFICIAL 
OWNER 
OF 
OFFSHORE 
AC-
COUNT.
Section 5318 of title 31, United States Code, is
amended by adding at the end the following new sub-
section:
‘‘(i) REQUIREMENTS RELATING TO EFFECTIVE EN-
FORCEMENT OF SUBCHAPTER.—
‘‘(1) IN GENERAL.—In an effort to assist law
enforcement in tracing funds identifying beneficial
owners of accounts set up by financial institutions in
the United States, the Secretary of the Treasury
shall require any domestic financial institution mak-
ing a transaction for any person or maintaining a
relation for any person with a foreign financial insti-
tution or a foreign financial agency, including a for-
eign branch or subsidiary of the domestic financial
institution, to keep and maintain records within the
United States of the beneficial owner of any ac-
counts outside the United States to which funds of
that person are transferred by the domestic financial
institution or at a place—
‘‘(A) where a summons under this section
to produce such records is legally effective; and
‘‘(B) from which the records are capable of
being delivered to the place designated in ac-
cordance with subsection (c)(1) within 48 hours
of the receipt of the summons.
‘‘(2) INFORMATION IN RECORDS.—The records
required under paragraph (1) shall contain the fol-
lowing information in the manner and to the extent
that the Secretary prescribes in regulations, and
subject to such exemptions as the Secretary deter-
mines to be appropriate:
‘‘(A) The identity and address of partici-
pants in a transaction or relationship.
‘‘(B) The legal capacity in which a partici-
pant is acting.
‘‘(C) The identity of the real parties in in-
terest.’’.
SEC. 9. REGULATIONS RELATING TO SUSPICIOUS ACTIVITY
REPORTS BY BROKERS AND DEALERS.
Before the end of the 1-year period beginning on the
date of the enactment of this Act, the Secretary of the
Treasury, in consultation with the Securities and Ex-
change Commission, shall prescribe regulations in final
form under section 5318(g) of title 31, United States
Code, requiring brokers and dealers registered with the
Securities and Exchange Commission under the Securities
Exchange Act of 1934 to report, in accordance with such
section 5318(g), any suspicious transaction relevant to a
possible violation of law or regulation.
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