I
105TH CONGRESS
2D SESSION
H. R. 4005
To amend title 31 of the United States Code to improve methods for
preventing financial crimes, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 5, 1998
Mr. LEACH (for himself, Mr. BEREUTER, Mr. CASTLE, Mr. BACHUS, Mrs.
ROUKEMA, Mr. BAKER, Mr. LAFALCE, Mr. KANJORSKI, Mr. HINCHEY,
Ms. WATERS, and Ms. VELA´ZQUEZ) introduced the following bill; which
was referred to the Committee on Banking and Financial Services, and
in addition to the Committee on Ways and Means, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of
such provisions as fall within the jurisdiction of the committee concerned
A BILL
To amend title 31 of the United States Code to improve
methods for preventing 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 De-
terrence Act of 1998’’.
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.
(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 broaden the law enforcement commu-
nity’s access to transactional information already
being collected which relate to coins and currency re-
ceived in a nonfinancial trade or business.
(3) To express the sense of the Congress that
the Secretary of the Treasury should expedite the
development and implementation of controls de-
signed to deter money laundering activities at cer-
tain types of financial institutions.
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.—Notwith-
standing any other provision of law—
‘‘(A) any financial institution that—
‘‘(i) makes a disclosure of any possible
violation of law or regulation to an appro-
priate government agency; or
‘‘(ii) makes a disclosure pursuant to
this subsection or any other authority; or
‘‘(B) any director, officer, employee, or
agent of such institution who makes, or re-
quires another to make any such disclosure;
and
‘‘(C) any independent public accountant
who audits any such financial institution and
makes a disclosure described in subparagraph
(A),
shall not be liable to any person under any law or
regulation of the United States, any constitution,
law, or regulation of any State or political subdivi-
sion thereof, or under any contract or other legally
enforceable agreement (including any arbitration
agreement), for such disclosure or for any failure to
notify the person who is the subject of such disclo-
sure or any other person identified in the disclo-
sure.’’.
(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 such financial
institution, voluntarily or pursuant to this sec-
tion 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 other
person or government agency the fact that
such report was made.
‘‘(B) EXCEPTION
FOR
USE
BY
GOVERN-
MENT OFFICERS IN OFFICIAL CAPACITY.—Para-
graph (1) shall not apply to the use or disclo-
sure by an officer or employee of an appropriate
government agency of any report under this
subsection, or information included in such re-
port, to the extent the use is made solely in
conjunction with the performance of the official
duties of such officer or employee to conduct or
assist in the conduct of a law enforcement or
regulatory inquiry, investigation, or proceeding.
‘‘(C) 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-
(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:
‘‘SEC. 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:
‘‘SEC. 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. TRANSFER OF REPORTING REQUIREMENTS FROM
SECTION 6050I OF THE INTERNAL REVENUE
CODE OF 1986 TO TITLE 31, UNITED STATES
CODE.
(a) REENACTMENT OF SECTION 6050I.—Subchapter
2 of chapter 53 of title 31, United States Code, is amend-
ed by inserting after section 5313 the following new sec-
tion:
‘‘SEC. 5313A. REPORTS RELATING TO COINS AND CUR-
RENCY RECEIVED IN NONFINANCIAL TRADE
OR BUSINESS.
‘‘(a) COIN
AND CURRENCY RECEIPTS
OF MORE
THAN $10,000.—Any person—
‘‘(1) who is engaged in a trade or business; and
‘‘(2) who, in the course of such trade or busi-
ness, receives more than $10,000 in coins or cur-
rency in 1 transaction (or 2 or more related trans-
actions),
shall file a report described in subsection (b) with respect
to such transaction (or related transactions) at such time
as the Secretary may by regulations prescribe.
‘‘(b) FORM AND MANNER OF REPORTS.—A report is
described in this subsection if such report—
‘‘(1) is in such form as the Secretary may pre-
scribe;
‘‘(2) contains—
‘‘(A) the name, address, and taxpayer
identification number of the person from whom
the coins or currency was received;
‘‘(B) the amount of coins or currency re-
ceived;
‘‘(C) the date and nature of the trans-
action; and
‘‘(D) such other information as the Sec-
retary may prescribe.
‘‘(c) EXCEPTIONS.—
‘‘(1) AMOUNTS RECEIVED BY FINANCIAL INSTI-
TUTIONS.—Subsection 
(a) 
shall 
not 
apply 
to
amounts received in a transaction reported under
section 5313 and regulations prescribed under such
section.
‘‘(2) TRANSACTIONS OCCURRING OUTSIDE THE
UNITED STATES.—Except to the extent provided in
regulations prescribed by the Secretary, subsection
(a) shall not apply to any transaction if the entire
transaction occurs outside the United States.
‘‘(d) CURRENCY INCLUDES FOREIGN CURRENCY AND
CERTAIN MONETARY INSTRUMENTS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘currency’ includes—
‘‘(A) foreign currency; and
‘‘(B) to the extent provided in regulations
prescribed by the Secretary, any monetary in-
strument (whether or not in bearer form) with
a face amount of not more than $10,000.
‘‘(2) 
SCOPE
OF
APPLICATION.—Paragraph
(1)(B) shall not apply to any check drawn on the ac-
count of the writer in a financial institution referred
to in subparagraph (A), (B), (C), (D), (E), (F), (G),
(J), (K), (R), or (S) of section 5312(a)(2).
‘‘(e) COINS OR CURRENCY RECEIVED BY CRIMINAL
COURT CLERKS.—
‘‘(1) IN GENERAL.—Every clerk of a Federal or
State criminal court who receives more than $10,000
in coins or currency as bail for any individual
charged with a specified criminal offense shall file a
report described in paragraph (2) (at such time as
the Secretary may by regulations prescribe) with re-
spect to the receipt of such bail.
‘‘(2) REPORT.—A report is described in this
paragraph if such report—
‘‘(A) is in such form as the Secretary may
prescribe; and
‘‘(B) contains—
‘‘(i) the name, address, and taxpayer
identification number of—
‘‘(I) the individual charged with
the specified criminal offense; and
‘‘(II) each person posting the bail
(other than a person licensed as a bail
bondsman);
‘‘(ii) the amount of coins or currency
received;
‘‘(iii) the date the coins or currency
was received; and
‘‘(iv) such other information as the
Secretary may prescribe.
‘‘(3) SPECIFIED CRIMINAL OFFENSE.—For pur-
poses of this subsection, the term ‘specified criminal
offense’ means—
‘‘(A) any Federal criminal offense involv-
ing a controlled substance;
‘‘(B) racketeering (as defined in section
1951, 1952, or 1955 of title 18, United States
Code);
‘‘(C) money laundering (as defined in sec-
tion 1956 or 1957 of such title); and
‘‘(D) any State criminal offense substan-
tially similar to an offense described in sub-
paragraph (A), (B), or (C).
‘‘(4) INFORMATION
TO
FEDERAL
PROSECU-
TORS.—Each clerk required to include in a report
under paragraph (1) the information described in
paragraph (2)(B) with respect to an individual de-
scribed in paragraph (2)(B)(i)(I) shall furnish (at
such time as the Secretary may by regulations pre-
scribe) a written statement showing such informa-
tion to the United States Attorney for the jurisdic-
tion in which such individual resides and the juris-
diction in which the specified criminal offense oc-
curred.
‘‘(5) INFORMATION TO PAYORS OF BAIL.—Each
clerk required to file a report under paragraph (1)
shall furnish (at such time as the Secretary may by
regulations prescribe) to each person whose name is
required to be set forth in such report by reason of
paragraph (2)(B)(i)(II) a written statement show-
ing—
‘‘(A) the name and address of the clerk’s
office required to file the report; and
‘‘(B) the aggregate amount of coins and
currency described in paragraph (1) received by
such clerk.’’.
(b) 
PROHIBITION
ON
STRUCTURING
TRANS-
ACTIONS.—
(1) IN
GENERAL.—Section 5324 of title 31,
United States Code, is amended—
(A) by redesignating subsections (b) and
(c) as subsections clause and (d), respectively;
and
(B) by inserting after subsection (a) the
following new subsection:
‘‘(b) DOMESTIC
COIN
AND
CURRENCY
TRANS-
ACTIONS INVOLVING NONFINANCIAL TRADES OR BUSI-
NESSES.—No person shall for the purpose of evading the
report requirements of section 5313A or any regulation
prescribed under such section—
‘‘(1) cause or attempt to cause a nonfinancial
trade or business to fail to file a report required
under section 5313A or any regulation prescribed
under such section;
‘‘(2) cause or attempt to cause a nonfinancial
trade or business to file a report required under sec-
tion 5313A or any regulation prescribed under such
section that contains a material omission or
misstatement of fact; or
‘‘(3) structure or assist in structuring, or at-
tempt to structure or assist in structuring, any
transaction with 1 or more nonfinancial trades or
businesses.’’.
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENTS.—
(A) The heading for subsection (a) of sec-
tion 5324 of title 31, United States Code, is
amended by inserting ‘‘INVOLVING FINANCIAL
INSTITUTIONS’’ after ‘‘TRANSACTIONS’’.
(B) Section 5317(c) of title 31, United
States Code, is amended by striking ‘‘5324(b)’’
and inserting ‘‘5324(c)’’.
(c) DEFINITION OF NONFINANCIAL TRADE OR BUSI-
NESS.—
(1) IN GENERAL.—Section 5312(a) of title 31,
United States Code, is amended—
(A) by redesignating paragraphs (4) and
(5) as paragraphs (5) and (6), respectively; and
(B) by inserting after paragraph (3) the
following new paragraph:
‘‘(4) NONFINANCIAL
TRADE
OR
BUSINESS.—
The term ‘nonfinancial trade or business’ means any
trade or business other than a financial institution
that is subject to the reporting requirements of sec-
tion 5313 and regulations prescribed under such sec-
tion.’’.
(2) TECHNICAL
AND
CONFORMING
AMEND-
MENTS.—
(A) Section 5312(a)(3)(C) of title 31,
United States Code, is amended by striking
‘‘section 5316,’’ and inserting ‘‘sections 5313A
and 5316,’’.
(B) Subsections (a) through (f) of section
5318 of title 31, United States Code, and sec-
tions 5326 and 5328 of such title are each
amended by inserting ‘‘or nonfinancial trade or
business’’ after ‘‘financial institution’’ each
place such term appears.
(C) Section 981(a)(1)(A) of title 18,
United States Code, is amended by striking
‘‘5313(a) or 5324(a) of title 31,’’ and inserting
‘‘5313(a) or 5313A of title 31, of subsection (a)
or (b) of section 5324 of such title,’’.
(D) Section 982(a)(1) of title 18, United
States Code, is amended by inserting ‘‘5313A,’’
after ‘‘5313(a),’’.
(d) REPEAL
OF DUPLICATE PROVISION.—Section
6050I of the Internal Revenue Code of 1986 is repealed.
(e) CLERICAL AMENDMENTS.—
(1) TITLE 31.—The tables of sections for chap-
ter 53 of title 31, United States Code, is amended
by inserting after the item relating to section 5313
the following new item:
‘‘5313A. Reports relating to coins and currency received in nonfinancial trade
or business.’’.
(2) INTERNAL REVENUE CODE OF 1986.—
(A) The table of sections for subpart B of
part III of subchapter A of chapter 61 of the
Internal Revenue Code of 1986 is amended by
striking the item relating to section 6050I.
(B)(i) Subsection (l) of section 6103 of
such Code is amended by striking paragraph
(15).
(ii) 
Subparagraph 
(A) 
of 
section
6103(p)(3) of such Code is amended by striking
‘‘(15),’’.
(iii) Paragraph (4) of section 6103(p) of
such Code is amended by striking in the mate-
rial preceding subparagraph (A) ‘‘(12)’’ and all
that follows through ‘‘(16)’’ and inserting
‘‘(12), or (16)’’.
(iv) Clause (ii) of section 6103(p)(4)(F) of
such Code is amended by striking ‘‘(14), or
(15)’’ and inserting ‘‘or (14)’’.
(C) Paragraph (2) of section 6721(e) of
such Code is amended—
(i) in subparagraph (A) by striking
‘‘6050I,’’ and by adding ‘‘or’’ at the end,
(ii) by striking ‘‘or’’ at the end of sub-
paragraph (B) and inserting ‘‘and’’, and
(iii) by striking subparagraph (C).
(D) 
Subparagraph 
(B) 
of 
section
6724(d)(1) of such Code is amended by striking
clause (iv) and by redesignating the succeeding
clauses accordingly.
(E) Paragraph (2) of section 6724(d) of
such Code is amended by striking subparagraph
(K) and by redesignating the succeeding sub-
paragraphs accordingly.
(F) Section 7203 of such Code is amended
by striking the last sentence.
(f) REGULATIONS; EFFECTIVE DATE.—
(1) REGULATIONS.—Regulations which the Sec-
retary of the Treasury determines are necessary to
implement this section shall be published in final
form before the end of the 6-month period beginning
on the date of the enactment of this Act.
(2) EFFECTIVE DATE.—The amendments made
by this section shall take effect at the end of the 6-
month period beginning on the date the regulations
referred to in paragraph (1) are published in final
form in the Federal Register.
SEC. 9. SENSE OF THE CONGRESS.
It is the sense of the Congress that the Secretary of
the Treasury should, in conjunction with the Board of
Governors of the Federal Reserve System, expedite the
promulgation of ‘‘know your customer’’ regulations for fi-
nancial institutions.
Æ