Union Calendar No. 405
105TH CONGRESS
2D SESSION
H. R. 4005
[Report No. 105–611, Part I]
A BILL
To amend title 31 of the United States Code to im-
prove methods for preventing financial crimes,
and for other purposes.
SEPTEMBER 11, 1998
Committee on Ways and Means discharged; committed to
the Committee of the Whole House on the State of the
Union and ordered to be printed
IB
Union Calendar No. 405
105TH CONGRESS
2D SESSION
H. R. 4005
[Report No. 105–611, Part I]
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
JULY 8, 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]
JULY 8, 1998
Referred to the Committee on the Judiciary for a period ending not later than
July 31, 1998, for consideration of such provisions of the bill and amend-
ment recommended by the Committee on Banking and Financial Services
as fall within the jurisdiction of that committee pursuant to clause 1(c),
rule X
JULY 8, 1998
Referral to the Committee on Ways and Means extended for a period ending
not later than July 31, 1998
JULY 31, 1998
Committee on the Judiciary discharged
JULY 31, 1998
Referral to the Committee on Ways and Means extended for a period ending
not later than August 7, 1998
AUGUST 7, 1998
Referral to the Committee on Ways and Means extended for a period ending
not later than September 11, 1998
SEPTEMBER 11, 1998
Additional sponsors: Mr. LAZIO of New York, Mr. FOLEY, and Mr.
MCCOLLUM
SEPTEMBER 11, 1998
Committee on Ways and Means 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 5, 1998]
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 an-
nually.
(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 proceeds
of criminal activity were identified and described in
congressional hearings, including the use of financial
service providers which are not depository institu-
tions, 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 De-
partment of the Treasury law enforcement agencies,
New York State troopers, and New York City police
officers.
(6) Money laundering by international criminal
enterprises challenges the legitimate authority of na-
tional governments, corrupts government institutions,
endangers the financial and economic stability of na-
tions, and routinely violates legal norms, property
rights, and human rights. In some countries, such as
Columbia, Mexico, and Russia, the wealth and power
of organized criminal enterprises rivals their own
government’s.
(7) The structure of international criminal en-
terprises engaged in money laundering is complex, di-
verse, and fragmented. Organized criminal enterprises
such as the Colombian and Mexican cartels, the Rus-
sian ‘‘mafiya’’, Sicilian crime families, and Chinese
gangs are highly resistant to conventional law en-
forcement techniques. Their financial management
and organizational infrastructure are highly sophisti-
cated 
and 
difficult 
to 
track 
because 
of 
the
globalization of the financial service industry.
(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 enforce-
ment community with the necessary legal authority to
combat money laundering.
(2) To broaden the law enforcement community’s
access to transactional information already being col-
lected which relate to coins and currency received in
a nonfinancial trade or business.
(3) To expedite the issuance by the Secretary of
the Treasury of regulations designed to deter money
laundering activities at certain types of financial in-
stitutions.
SEC. 3. AMENDMENTS RELATING TO REPORTING OF SUS-
PICIOUS ACTIVITIES.
(a) AMENDMENT RELATING TO CIVIL LIABILITY IMMU-
NITY FOR DISCLOSURES.—Section 5318(g)(3) of title 31,
United States Code, is amended to read as follows:
‘‘(3) LIABILITY FOR DISCLOSURES.—
‘‘(A) IN
GENERAL.—Notwithstanding any
other provision of law—
‘‘(i) any financial institution that—
‘‘(I) makes a disclosure of any
possible violation of law or regulation
to an appropriate government agency;
or
‘‘(II) makes a disclosure pursuant
to this subsection or any other author-
ity;
‘‘(ii) any director, officer, employee, or
agent of such institution who makes, or re-
quires another to make any such disclosure;
and
‘‘(iii) any independent public account-
ant who audits any such financial institu-
tion and makes a disclosure described in
clause (i),
shall not be liable to any person under any law
or regulation of the United States, any constitu-
tion, law, or regulation of any State or political
subdivision 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 disclosure or any other person
identified in the disclosure.
‘‘(B) EXCEPTION.—Subparagraph (A) shall
not apply to a disclosure or communication re-
quired under Federal securities law, other than
provisions of law that specifically refer to the
Currency and Foreign Transactions Reporting
Act of 1970.’’.
(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 financial in-
stitution, voluntarily or pursuant to this section
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 trans-
action that the transaction has been re-
ported and may not disclose any informa-
tion included in the report to any such per-
son; 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 person in-
volved in the transaction that the trans-
action has been reported or any information
included in the report.
‘‘(B) 
COORDINATION
WITH
PARAGRAPH
(5).—Subparagraph (A) shall not be construed as
prohibiting any financial institution, or any di-
rector, officer, employee, or agent of such institu-
tion, from including, in a written employment
reference that is provided in accordance with
paragraph (5) in response to a request from an-
other financial institution, information that was
included in a report to which subparagraph (A)
applies, but such written employment reference
may not disclose that such information 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.—Section
5318(g) of title 31, United States Code, is amended by add-
ing at the end the following new paragraph:
‘‘(5) EMPLOYMENT REFERENCES MAY INCLUDE
SUSPICIONS OF INVOLVEMENT IN ILLEGAL ACTIVITY.—
‘‘(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 institu-
tion-affiliated party of such institution which is
provided to another financial institution in re-
sponse to a request from such other institution,
information concerning the possible involvement
of such institution-affiliated party in any sus-
picious transaction relevant to a possible viola-
tion 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 (including
any arbitration agreement), for any disclosure
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 disregard
for the truth in making the disclosure.
‘‘(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 Fed-
eral Deposit Insurance Act, except such section
3(u) shall be applied by substituting ‘financial
institution’ for ‘insured depository institution’.’’.
(d) AMENDMENTS RELATING
TO AVAILABILITY
OF
SUSPICIOUS ACTIVITY REPORTS FOR OTHER AGENCIES.—
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 sec-
tion 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 Exchange Act of
1934), if the Securities and Exchange Commission de-
termines that such dissemination is necessary or ap-
propriate to permit such organization to perform its
function under the Securities Exchange 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 compli-
ance with the requirements of this subchapter, section 21
of the Federal Deposit Insurance Act, and chapter 2 of Pub-
lic Law 91–508 and regulations prescribed pursuant to
such provisions, investigations relating to reports filed by
financial institutions or other persons pursuant to any such
provision or regulation, and’’ after ‘‘in connection with’’.
SEC. 5. PENALTIES FOR VIOLATIONS OF GEOGRAPHIC TAR-
GETING 
ORDERS 
AND 
CERTAIN 
RECORD-
KEEPING REQUIREMENTS.
(a) CIVIL PENALTY FOR VIOLATION OF TARGETING
ORDER OR CERTAIN RECORDKEEPING REQUIREMENTS.—
Section 5321(a)(1) of title 31, United States Code, is
amended—
(1) by inserting ‘‘or order issued’’ after ‘‘regula-
tion prescribed’’ the 1st place it appears; and
(2) by inserting ‘‘, or willfully violating a regu-
lation prescribed under section 21 of the Federal De-
posit Insurance Act or under section 123 of Public
Law 91–508,’’ before ‘‘is liable’’.
(b) CRIMINAL PENALTIES FOR VIOLATION OF TARGET-
ING
ORDER
OR
CERTAIN
RECORDKEEPING
REQUIRE-
MENTS.—Section 5322 of title 31, United States Code, is
amended—
(1) in each of subsections (a) and (b), by insert-
ing ‘‘or order issued’’ after ‘‘regulation prescribed’’
the 1st place it appears;
(2) in subsection (a), by inserting ‘‘, or willfully
violating a regulation prescribed under section 21 of
the Federal Deposit Insurance Act or under section
123 of Public Law 91–508,’’ before ‘‘shall’’; and
(3) in subsection (b), by inserting ‘‘or willfully
violating a regulation prescribed under section 21 of
the Federal Deposit Insurance Act or under section
123 of Public Law 91–508,’’ before ‘‘while violating’’.
(c) STRUCTURING TRANSACTIONS TO EVADE TARGET-
ING
ORDER
OR
CERTAIN
RECORDKEEPING
REQUIRE-
MENTS.—Section 5324(a) of title 31, United States Code,
is amended—
(1) in the portion of such section which precedes
paragraph (1), by inserting ‘‘, the reporting require-
ments imposed by any order issued under section
5326, or the recordkeeping requirements imposed by
any regulation prescribed under section 21 of the Fed-
eral Deposit Insurance Act or section 123 of Public
Law 91–508’’ after ‘‘regulation prescribed under any
such section’’; and
(2) in paragraphs (1) and (2), by inserting ‘‘, to
file a report required by any order issued under sec-
tion 5326, or to maintain a record required pursuant
to any regulation prescribed under section 21 of the
Federal Deposit Insurance Act or section 123 of Pub-
lic Law 91–508’’ after ‘‘regulation prescribed under
any such section’’ where such term appears in each
such paragraph.
(d) INCREASE IN CIVIL PENALTIES FOR VIOLATION OF
CERTAIN RECORDKEEPING REQUIREMENTS.—
(1) FEDERAL DEPOSIT INSURANCE ACT.—Section
21(j)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1829b(j)(1)) is amended by striking ‘‘$10,000’’
and inserting ‘‘the greater of the amount (not to ex-
ceed $100,000) involved in the transaction (if any)
with respect to which the violation occurred or
$25,000’’.
(2) PUBLIC LAW 91–508.—Section 125(a) of Pub-
lic Law 91–508 (12 U.S.C. 1955(a)) is amended by
striking ‘‘$10,000’’ and inserting ‘‘the greater of the
amount (not to exceed $100,000) involved in the
transaction (if any) with respect to which the viola-
tion occurred or $25,000’’.
(e) CRIMINAL PENALTIES FOR VIOLATION OF CERTAIN
RECORDKEEPING REQUIREMENTS.—
(1) SECTION 126.—Section 126 of Public Law
91–508 (12 U.S.C. 1956) is amended to read as fol-
lows:
‘‘§ 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:
‘‘§ 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 orders
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 II
of chapter 53 of title 31, United States Code, is amended
by inserting after section 5313 the following new section:
‘‘§ 5313A. Reports relating to coins and currency re-
ceived 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 business,
receives more than $10,000 in coins or currency in 1
transaction (or 2 or more related transactions),
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 iden-
tification 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 transaction;
and
‘‘(D) such other information as the Sec-
retary may prescribe.
‘‘(c) EXCEPTIONS.—
‘‘(1) AMOUNTS RECEIVED BY FINANCIAL INSTITU-
TIONS.—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 trans-
action occurs outside the United States.
‘‘(d) CURRENCY INCLUDES FOREIGN CURRENCY AND
CERTAIN MONETARY INSTRUMENTS.—
‘‘(1) IN GENERAL.—For purposes of this section,
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 account
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 respect
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 involving
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 subpara-
graph (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 information
to the United States Attorney for the jurisdiction in
which such individual resides and the jurisdiction in
which the specified criminal offense occurred.
‘‘(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 of-
fice 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 TRANSACTIONS.—
(1) IN
GENERAL.—Section 5324 of title 31,
United States Code, is amended—
(A) by redesignating subsections (b) and (c)
as subsections (c) and (d), respectively; and
(B) by inserting after subsection (a) the fol-
lowing new subsection:
‘‘(b) DOMESTIC COIN AND CURRENCY TRANSACTIONS
INVOLVING NONFINANCIAL TRADES OR BUSINESSES.—No
person shall for the purpose of evading the report require-
ments 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