115
and subject to the terms of any applicable 
cooperative agreement with the State bank 
supervisor of such home State, examine 
such branch for the purpose of determining 
compliance with host State laws that are 
applicable pursuant to section 24(j) of this 
Act, including those that govern commu-
nity reinvestment, fair lending, and con-
sumer protection; and 
‘‘(ii) if expressly permitted under and 
subject to the terms of a cooperative agree-
ment with the State bank supervisor of the 
bank’s home State or if such out-of-State 
insured State bank has been determined to 
be in a troubled condition by either the 
State bank supervisor of the bank’s home 
State or the bank’s appropriate Federal 
banking agency, participate in the exam-
ination of the bank by the State bank su-
pervisor of the bank’s home State to ascer-
tain that the activities of the branch in 
such host State are not conducted in an 
unsafe or unsound manner. 
‘‘(B) NOTICE OF DETERMINATION.—
116
‘‘(i) IN
GENERAL.—The State bank 
supervisor of the home State of an insured 
State bank should notify the State bank 
supervisor of each host State of the bank 
if there has been a final determination that 
the bank is in a troubled condition. 
‘‘(ii) TIMING OF NOTICE.—The State 
bank supervisor of the home State of an 
insured State bank should provide notice 
under clause (i) as soon as reasonably pos-
sible but in all cases within 15 business 
days after the State bank supervisor has 
made such final determination or has re-
ceived written notification of such final de-
termination. 
‘‘(3) HOST STATE ENFORCEMENT.—If the State 
bank supervisor of a host State determines that a 
branch of an out-of-State State insured State bank 
is violating any law of the host State that is applica-
ble to such branch pursuant to section 24(j) of this 
Act, including a law that governs community rein-
vestment, fair lending, or consumer protection, the 
State bank supervisor of the host State or, to the ex-
tent authorized by the law of the host State, a host 
State law enforcement officer may, with written no-
117
tice to the State bank supervisor of the bank’s home 
State and subject to the terms of any applicable co-
operative agreement with the State bank supervisor 
of the bank’s home State, undertake such enforce-
ment actions and proceedings as would be permitted 
under the law of the host State as if the branch 
were a bank chartered by that host State. 
‘‘(4) COOPERATIVE AGREEMENT.—
‘‘(A) IN GENERAL.—The State bank super-
visors from 2 or more States may enter into co-
operative agreements to facilitate State regu-
latory supervision of State banks, including co-
operative agreements relating to the coordina-
tion of examinations and joint participation in 
examinations. For purposes of this subsection 
(h), the term ‘cooperative agreement’ means a 
written agreement that is signed by the home 
State bank supervisor and host State bank su-
pervisor to facilitate State regulatory super-
vision of State banks and includes nationwide 
or multi-state cooperative agreements and coop-
erative agreements solely between the home 
State and host State. 
‘‘(B) RULE
OF
CONSTRUCTION.—Except 
for State bank supervisors, no provision of this
118
subsection relating to such cooperative agree-
ments shall be construed as limiting in any way 
the authority of home and host State law en-
forcement officers, regulatory supervisors, or 
other officials that have not signed such cooper-
ative agreements to enforce host State laws that 
are applicable to a branch of an out-of-State in-
sured State bank located in the host State pur-
suant to section 24(j) of this Act. 
‘‘(5) FEDERAL REGULATORY AUTHORITY.—No 
provision of this subsection shall be construed as 
limiting in any way the authority of any Federal 
banking agency. 
‘‘(6) STATE
TAXATION
AUTHORITY
NOT
AF-
FECTED.—No provision of this subsection (h) shall 
be construed as affecting the authority of any State 
or political subdivision of any State to adopt, apply, 
or administer any tax or method of taxation to any 
bank, bank holding company, or foreign bank, or 
any affiliate of any bank, bank holding company, or 
foreign bank, to the extent such tax or tax method 
is otherwise permissible by or under the Constitution 
of the United States or other Federal law. 
‘‘(7) DEFINITIONS.—For purpose of this sec-
tion, the following definition shall apply:
119
‘‘(A) HOST STATE, HOME STATE, OUT-OF-
STATE BANK.—The terms ‘host State’, ‘home 
State’, and ‘out-of-State bank’ have the same 
meanings as in section 44(g). 
‘‘(B) STATE
SUPERVISORY
FEES.—The 
term ‘State supervisory fees’ means assess-
ments, examination fees, branch fees, license 
fees, and all other fees that are levied or 
charged by a State bank supervisor directly 
upon an insured State bank or upon branches 
of an insured State bank. 
‘‘(C) TROUBLED
CONDITION.—Solely for 
purposes of subparagraph (2)(B) of this sub-
section (h), an insured State bank has been de-
termined to be in ‘troubled condition’ if the 
bank—
‘‘(i) has a composite rating, as deter-
mined in its most recent report of exam-
ination, of 4 or 5 under the Uniform Fi-
nancial 
Institutions 
Ratings 
System 
(UFIRS); or 
‘‘(ii) is subject to a proceeding initi-
ated by the Corporation for termination or 
suspension of deposit insurance; or
120
‘‘(iii) is subject to a proceeding initi-
ated by the State bank supervisor of the 
bank’s home State to vacate, revoke, or 
terminate the charter of the bank, or to 
liquidate the bank, or to appoint a receiver 
for the bank. 
‘‘(D) FINAL
DETERMINATION.—For the 
purposes of paragraph (2)(B), the term ‘final 
determination’ means the transmittal of a re-
port of examination to the bank or transmittal 
of official notice of proceedings to the bank.’’. 
SEC. 620. NONWAIVER OF PRIVILEGES. 
(a) INSURED DEPOSITORY INSTITUTIONS.—Section 
18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) 
is amended by adding at the end the following new sub-
section: 
‘‘(x) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO 
BANKING AGENCY OR SUPERVISOR.—
‘‘(1) IN GENERAL.—The submission by any per-
son of any information to any Federal banking agen-
cy, State bank supervisor, or foreign banking au-
thority for any purpose in the course of any super-
visory or regulatory process of such agency, super-
visor, or authority shall not be construed as waiving, 
destroying, or otherwise affecting any privilege such
121
person may claim with respect to such information 
under Federal or State law as to any person or enti-
ty other than such agency, supervisor, or authority. 
‘‘(2) RULE OF CONSTRUCTION.—No provision 
of paragraph (1) may be construed as implying or 
establishing that—
‘‘(A) any person waives any privilege appli-
cable to information that is submitted or trans-
ferred under any circumstance to which para-
graph (1) does not apply; or 
‘‘(B) any person would waive any privilege 
applicable to any information by submitting the 
information to any Federal banking agency, 
State bank supervisor, or foreign banking au-
thority, but for this subsection.’’. 
(b) INSURED CREDIT UNIONS.—Section 205 of the 
Federal Credit Union Act (12 U.S.C.1785) is amended by 
adding at the end the following new subsection: 
‘‘(j) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO 
BANKING AGENCY OR SUPERVISOR.—
‘‘(1) IN GENERAL.—The submission by any per-
son of any person to the Administration, any State 
credit union supervisor, or foreign banking authority 
for any purpose in the course of any supervisory or 
regulatory process of such Board, supervisor, or au-
122
thority shall not be construed as waiving, destroying, 
or otherwise affecting any privilege such person may 
claim with respect to such information under Fed-
eral or State law as to any person or entity other 
than such Board, supervisor, or authority. 
‘‘(2) RULE OF CONSTRUCTION.—No provision 
of paragraph (1) may be construed as implying or 
establishing that—
‘‘(A) any person waives any privilege appli-
cable to information that is submitted or trans-
ferred under any circumstance to which para-
graph (1) does not apply; or 
‘‘(B) any person would waive any privilege 
applicable to any information by submitting the 
information to the Administration, any State 
credit union supervisor, or foreign banking au-
thority, but for this subsection.’’. 
SEC. 621. RIGHT TO FINANCIAL PRIVACY ACT OF 1978 
AMENDMENT. 
Paragraph (1) of section 1101 of the Right to Finan-
cial Privacy Act of 1978 (12 U.S.C. 3401) is amended 
by inserting ‘‘(including any lender who advances funds 
on pledges of personal property)’’ after ‘‘consumer finance 
institution’’.
123
TITLE VII—‘‘BSA’’ COMPLIANCE 
BURDEN REDUCTION 
SEC. 701. REFORM OF THE CURRENCY TRANSACTION RE-
PORT EXEMPTION SYSTEM. 
(a) FINDINGS.—The Congress finds as follows: 
(1) The completion of and filing of currency 
transaction reports under section 5313 of title 31, 
United States Code, poses a compliance burden on 
the financial industry. 
(2) Due to the nature of the transactions or the 
persons and entities conducting such transactions, 
certain such reports as currently filed do not appear 
to be relevant to the detection, deterrence, or inves-
tigation of financial crimes, including money laun-
dering and the financing of terrorism. 
(3) However, the data contained in such reports 
can provide valuable context for the analysis of other 
data derived pursuant to subchapter II of chapter 
53 of title 31, United States Code, as well as inves-
tigative data, which provides invaluable and indis-
pensable information supporting efforts to combat 
money laundering and other financial crimes. 
(4) An exemption from the reporting require-
ments for certain currency transactions that are of 
little or no value to ongoing efforts of law enforce-
124
ment agencies, financial regulatory agencies, and the 
financial services industry to investigate, detect, or 
deter financial crimes would serve to balance the 
burden placed on members of the financial services 
industry with the compelling need to produce and 
provide meaningful information to policy-makers, fi-
nancial regulators, law enforcement and intelligence 
agencies. 
(5) The Secretary of the Treasury has by regu-
lation, and in accordance with section 5313 of title 
31, United States Code, implemented a process by 
which institutions may seek exemptions from filing 
certain currency transaction reports based on appro-
priate circumstances; however, the existing exemp-
tion process has not adequately balanced the burden 
on the financial industry with the government’s need 
for data to support its efforts in combating financial 
crime. 
(b) ADDITIONAL
FLEXIBILITY
FOR
CURRENCY 
TRANSACTION REPORT EXEMPTION REVIEW PROCESS.—
(1) REVIEW OF EXISTING DISCRETIONARY EX-
EMPTION.—
(A) IN GENERAL.—Section 5313(e)(5)(A) 
of title 31, United States Code, is amended by 
striking ‘‘, at least once each year, the qualified
125
business customers’’ and inserting ‘‘, at such 
time and in such manner as the Secretary may 
prescribe, any qualified business customer’’. 
(B) TECHNICAL AND CONFORMING AMEND-
MENT.—The heading for section 5313(e)(5)(A) 
of title 31, United States Code, is amended by 
striking ‘‘ANNUAL
REVIEW’’ and inserting 
‘‘PERIODIC REVIEW AUTHORIZED’’. 
(2) PORTABILITY OF EXISTING DISCRETIONARY 
EXEMPTION.—Section 5313(e)(6) of title 31, United 
States Code, is amended to read as follows: 
‘‘(6) CONTINUITY OF EXEMPTION.—If any de-
pository institution has been granted an exemption 
under this subsection with respect to any qualified 
business customer for more than such minimum pe-
riod of time as the Secretary determines to be ap-
propriate, no provision of this subsection shall be 
construed as denying the eligibility of any other de-
pository institution to be granted an exemption for 
the same business customer immediately upon the 
transfer of the business relationship (that formed 
the basis of the exemption) by such customer from 
the former depository institution to the latter deposi-
tory institution, if the latter depository institution
126
submits reports to the Secretary under this section 
electronically.’’. 
(c) REVIEW OF AND REPORT ON ADDITIONAL REGU-
LATORY OR LEGISLATIVE CHANGES.—
(1) REVIEW REQUIRED.—Before the end of the 
3-month period beginning on the date of the enact-
ment of this Act, the Secretary of the Treasury shall 
conduct a review of the currency transaction report 
exemption process to determine what regulatory or 
legislative changes are appropriate to balance the 
burden of the currency transaction reporting re-
quirements under subchapter II of chapter 53 of 
title 31, United States Code, on depository institu-
tions with the compelling analytical and investigative 
needs of the Federal Government. 
(2) ISSUES TO BE CONSIDERED.—The review 
conducted under paragraph (1) shall include consid-
eration of the following issues: 
(A) SEASONED
CUSTOMERS.—The estab-
lishment of new criteria for exempting trans-
actions of seasoned customers of domestic fi-
nancial institutions that do not have a high de-
gree of usefulness for law enforcement purposes 
(and are not already exempt under section