I
106TH CONGRESS
1ST SESSION
H. R. 530
To provide that the ‘‘Know Your Customer’’ regulations proposed by the
Federal banking agencies may not take effect unless such regulations
are specifically authorized by a subsequent Act of Congress and to
require the Federal banking agencies to conduct a comprehensive study
on various economic and privacy issues raised by the proposed regulations
and submit a report on such study to the Congress, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 3, 1999
Mr. BARR of Georgia (for himself, Mr. DELAY, Mr. BAKER, Mr. CHAMBLISS,
and Mr. CAMPBELL) introduced the following bill; which was referred to
the Committee on Banking and Financial Services
A BILL
To provide that the ‘‘Know Your Customer’’ regulations pro-
posed by the Federal banking agencies may not take
effect unless such regulations are specifically authorized
by a subsequent Act of Congress and to require the
Federal banking agencies to conduct a comprehensive
study on various economic and privacy issues raised by
the proposed regulations and submit a report on such
study to the Congress, 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 ‘‘ ‘American Financial
Institutions’ Privacy Act’’.
SEC. 2. DEFINITIONS.
For purposes of this Act, the following definitions
shall apply:
(1) DEPOSITORY INSTITUTION; FEDERAL BANK-
ING AGENCIES.—The terms ‘‘depository institution’’
and ‘‘Federal banking agencies’’ have the meaning
given to such terms in section 3 of the Federal De-
posit Insurance Act.
(2) ‘‘KNOW YOUR CUSTOMER’’ REGULATION.—
(A) IN GENERAL.—The term ‘‘ ‘Know Your
Customer’ regulation’’ means any regulation
prescribed by the Secretary or any Federal
banking agency which requires any depository
institution to establish a program to—
(i) determine the identity of the cus-
tomers or prospective customers of the de-
pository institution;
(ii) determine the sources of funds of
the institution’s customers;
(iii) determine the normal and ex-
pected transactions of the institution’s cus-
tomers; and
(iv) monitor the account activity of
each customer for transactions that are in-
consistent with the normal and expected
transaction of such customer.
(B) 
INCLUSIVE
OF
FLEXIBLE
PRO-
GRAMS.—A regulation meets the definition de-
scribed in subparagraph (A) if the purposes of
the requirements of the regulation are described
in such subparagraph whether or not the regu-
lation provides depository institutions some
flexibility in designing a program to meet such
requirements on the basis of the type, size, and
complexity of the institution, the types of cus-
tomers served by the institution, the nature and
extent of the financial activities of the cus-
tomers of the institution, and the risk of illegal
activities involving such institution or customer.
(3) SECRETARY.—The term ‘‘Secretary’’—
(A) means the Secretary of the Treasury;
and
(B) includes any entity established by the
Secretary, such as the Financial Crimes En-
forcement Network, to exercise the rights, pow-
ers, and duties delegated to such entity by the
Secretary.
SEC. 3. PROHIBITION ON ‘‘KNOW YOUR CUSTOMER’’ REGU-
LATIONS UNLESS SPECIFICALLY AUTHOR-
IZED BY A SUBSEQUENT ACT OF CONGRESS.
Any ‘‘Know Your Customer’’ regulation prescribed by
the Secretary or any Federal banking agency shall not
have any force or effect after the date of the enactment
of this Act, unless the Secretary or such agency is author-
ized to prescribe such regulation by a specific provision
in an Act of Congress enacted after the date of the enact-
ment of this Act.
SEC. 4. COMPREHENSIVE STUDY REQUIRED.
(a) IN GENERAL.—The Secretary and the Federal
banking agencies shall jointly conduct a comprehensive
study of—
(1) the extent to which any ‘‘Know Your Cus-
tomer’’ regulation prescribed by the Secretary or any
such agency would—
(A) invade the privacy of individual law-
abiding Americans and their families; and
(B) impinge on the freedom of association
and other rights protected under the first 10
Amendments to the Constitution of the United
States;
(2) the effect any such ‘‘Know Your Customer’’
regulation would likely have on traditional banking
relationships of individuals and their families;
(3) the extent of the economic burden of any
‘‘Know Your Customer’’ regulation on small deposi-
tory institutions; and
(4) practical alternatives to ‘‘Know Your Cus-
tomer’’ regulations.
(b) REPORT TO CONGRESS.—The Secretary and the
Federal banking agencies shall submit to the Congress a
detailed report of the findings and conclusions of the Sec-
retary and such agencies in connection with the study con-
ducted pursuant to subsection (a), together with such rec-
ommendations for legislative or administrative action as
the Secretary and such agencies may determine to be ap-
propriate.
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