Title: AML and CTF Modernization Act
Policy area: Finance and Financial Sector

Summary:
Anti-Money Laundering and Counter-Terrorism Financing Modernization Act or the AML and CTF Modernization Act
This bill directs the Department of the Treasury to increase the reporting threshold for suspicious activity reports and currency transaction reports, and otherwise revises provisions related to the sharing of information regarding suspicious financial activity.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4373 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 4373

To modernize and strengthen the United States anti-money laundering and 
                  counter-terrorism financing regime.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 13, 2017

    Mr. Royce of California (for himself and Mr. Gonzalez of Texas) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
To modernize and strengthen the United States anti-money laundering and 
                  counter-terrorism financing regime.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Anti-Money Laundering and Counter-
Terrorism Financing Modernization Act'' or the ``AML and CTF 
Modernization Act''.

SEC. 2. MODIFICATION OF CURRENCY TRANSACTION REPORTING THRESHOLD.

    (a) Subpart C of Section 1010.--
            (1) Initial adjustment.--Not later than 1 year after the 
        date of enactment of this Act, the Secretary of the Treasury 
        shall adjust the dollar amounts under subpart C of part 1010 of 
        title 31, Code of Federal Regulations, to an amount that is 
        rounded to the nearest multiple of $1,000 and--
                    (A) is not less than $30,000; and
                    (B) is not more than the amount that reflects the 
                change in the Consumer Price Index for All Urban 
                Consumers published by the Bureau of Labor Statistics 
                since the date on which such dollar amounts were last 
                established or adjusted, as applicable.
            (2) Periodic adjustments.--
                    (A) In general.--At the end of each 5-year period 
                beginning on the date that the Secretary makes the 
                adjustment required under paragraph (1), the Secretary 
                shall readjust such dollar amounts, rounded to the 
                nearest multiple of $1,000, to reflect the change in 
                the Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics since the 
                date on which such dollar amounts were last adjusted.
                    (B) Alternative adjustment authority.--If, at the 
                time of an adjustment described under subparagraph (A), 
                the Secretary, after consultation with law enforcement 
                agencies and the Bank Secrecy Act Advisory Group, 
                determines that such adjustment would significantly 
                frustrate the ability of law enforcement and financial 
                institutions to detect and prevent money laundering and 
                terrorism financing, the Secretary may make such 
                adjustment using a metric other than the Consumer Price 
                Index for All Urban Consumers published by the Bureau 
                of Labor Statistics or choose to not make such 
                adjustment.
    (b) Reports on Exporting and Importing Monetary Instruments.--
Section 5316 of title 31, United States Code, is amended by adding at 
the end the following:
    ``(e) Adjustment for Inflation.--
            ``(1) Initial adjustment.--Not later than 1 year after the 
        date of enactment of this subsection, the Secretary of the 
        Treasury shall adjust the dollar amounts under subsection (a), 
        to an amount that is rounded to the nearest multiple of $1,000 
        and--
                    ``(A) is not less than $30,000; and
                    ``(B) is not more than the amount that reflects the 
                change in the Consumer Price Index for All Urban 
                Consumers published by the Bureau of Labor Statistics 
                since the date on which such dollar amounts were last 
                amended or adjusted, as applicable.
            ``(2) Periodic adjustments.--
                    ``(A) In general.--At the end of each 5-year period 
                beginning on the date that the Secretary makes the 
                adjustment required under paragraph (1), the Secretary 
                shall readjust such dollar amounts, rounded to the 
                nearest multiple of $1,000, to reflect the change in 
                the Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics since the 
                date on which such dollar amounts were last adjusted.
                    ``(B) Alternative adjustment authority.--If, at the 
                time of an adjustment described under subparagraph (A), 
                the Secretary, after consultation with law enforcement 
                agencies and the Bank Secrecy Act Advisory Group, 
                determines that such adjustment would significantly 
                frustrate the ability of law enforcement and financial 
                institutions to detect and prevent money laundering and 
                terrorism financing, the Secretary may make such 
                adjustment using a metric other than the Consumer Price 
                Index for All Urban Consumers published by the Bureau 
                of Labor Statistics or choose to not make such 
                adjustment.''.
    (c) Reports on Coins and Currency Received in Nonfinancial Trade or 
Business.--Section 5331 of title 31, United States Code, is amended by 
adding at the end the following:
    ``(e) Adjustment for Inflation.--
            ``(1) Initial adjustment.--Not later than 1 year after the 
        date of enactment of this subsection, the Secretary of the 
        Treasury shall adjust the dollar amounts under this section, to 
        an amount that is rounded to the nearest multiple of $1,000 
        and--
                    ``(A) is not less than $30,000; and
                    ``(B) is not more than the amount that reflects the 
                change in the Consumer Price Index for All Urban 
                Consumers published by the Bureau of Labor Statistics 
                since the date on which such dollar amounts were last 
                amended or adjusted, as applicable.
            ``(2) Periodic adjustments.--
                    ``(A) In general.--At the end of each 5-year period 
                beginning on the date that the Secretary makes the 
                adjustment required under paragraph (1), the Secretary 
                shall readjust such dollar amounts, rounded to the 
                nearest multiple of $1,000, to reflect the change in 
                the Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics since the 
                date on which such dollar amounts were last adjusted.
                    ``(B) Alternative adjustment authority.--If, at the 
                time of an adjustment described under subparagraph (A), 
                the Secretary, after consultation with law enforcement 
                agencies and the Bank Secrecy Act Advisory Group, 
                determines that such adjustment would significantly 
                frustrate the ability of law enforcement and financial 
                institutions to detect and prevent money laundering and 
                terrorism financing, the Secretary may make such 
                adjustment using a metric other than the Consumer Price 
                Index for All Urban Consumers published by the Bureau 
                of Labor Statistics or choose to not make such 
                adjustment.''.

SEC. 3. MODIFICATION OF SUSPICIOUS ACTIVITY REPORTING THRESHOLD.

    (a) In General.--Each Federal department or agency that issues 
regulations with respect to reports on suspicious transactions 
described under section 5318(g) of title 31, United States Code, shall, 
not later than 1 year after the date of enactment of this Act, and 
every 5 years thereafter, adjust any dollar amount thresholds contained 
in such regulations to reflect the change in the Consumer Price Index 
for All Urban Consumers published by the Bureau of Labor Statistics 
since the date on which such dollar amounts were last established or 
adjusted, as applicable.
    (b) Alternative Adjustment Authority.--If, at the time of an 
adjustment described under subsection (a) other than the adjustment 
made within the 1-year period following the date of the enactment of 
this Act, a Federal department or agency, after consultation with law 
enforcement agencies and the Bank Secrecy Act Advisory Group, 
determines that such adjustment would significantly frustrate the 
ability of law enforcement and financial institutions to detect and 
prevent money laundering and terrorism financing, the Federal 
department or agency may make such adjustment using a metric other than 
the Consumer Price Index for All Urban Consumers published by the 
Bureau of Labor Statistics or choose to not make such adjustment.

SEC. 4. IMPROVED INFORMATION SHARING.

    (a) Disclosure to Foreign Branches or Affiliates.--Within 180 days 
after the date of enactment of this Act, the Secretary of the Treasury 
shall, by regulation, clearly authorize domestic financial institutions 
to share suspicious activity reports with a foreign branch or affiliate 
of the domestic financial institutions, if such branch or affiliate is 
located in a country that--
            (1) is a member of the Financial Action Task Force 
        (``FATF'') or a FATF-style regional body; and
            (2) has adequate privacy protections and data security 
        measures in effect to prevent the unauthorized disclosure of 
        such reports.
    (b) Liability.--A domestic financial institution that transmits, 
receives, or shares suspicious activity reports with a foreign branch 
or affiliate of the domestic financial institution in accordance with 
the regulation promulgated pursuant to subsection (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 
subdivision thereof, or under any contract or other legally enforceable 
agreement (including any arbitration agreement), for sharing such 
reports, except where such transmission, receipt, or sharing violates 
this section or regulations promulgated pursuant to this section.
    (c) Disclosure to Government Agencies.--Section 5318(g)(3)(B) of 
title 31, United States Code, is amended--
            (1) in clause (i), by striking ``or'' at the end;
            (2) in clause (ii), by striking the period and inserting 
        ``; or''; and
            (3) by adding at the end the following:
                            ``(iii) any duty or requirement of a 
                        financial institution or any director, officer, 
                        employee, or agent of such institution to 
                        demonstrate that a disclosure described in 
                        subparagraph (A) is made in good faith.''.
    (d) Cooperation Among Financial Institutions.--Section 314 of the 
USA PATRIOT Act (31 U.S.C. 5311 note) is amended--
            (1) in subsection (b)--
                    (A) by striking ``suspected of possible terrorist 
                or money laundering activities'' and inserting ``for 
                the purpose of identifying and, as appropriate, 
                reporting possible terrorist or money laundering 
                activities, or a specified unlawful activity (as 
                defined under section 1956(c)(7) of title 18, United 
                States Code)''; and
                    (B) by striking ``or money laundering activities 
                shall'' and inserting ``, money laundering activities, 
                or a specified unlawful activity (as defined under 
                section 1956(c)(7) of title 18, United States Code) 
                shall''; and
            (2) in subsection (c), by striking ``engaged in or 
        suspected of engaging in terrorist acts or money laundering 
        activities'' and inserting ``for the purpose of identifying 
        and, as appropriate, reporting possible terrorist acts or money 
        laundering activities, or a specified unlawful activity (as 
        defined under section 1956(c)(7) of title 18, United States 
        Code),''.

SEC. 5. ADMINISTRATIVE RULINGS.

    (a) In General.--Subchapter II of chapter 53 of title 31, United 
States Code, is amended by adding at the end the following:
``Sec. 5333. Administrative rulings
    ``(a) Establishment of Procedures.--
            ``(1) In general.--Not later than 1 year after the date of 
        enactment of this section, the Secretary of the Treasury, 
        acting through the Financial Crimes Enforcement Network, shall 
        establish a procedure in accordance with the requirements of 
        this section to provide written rulings in response to 
        inquiries concerning the conformance of specific conduct with 
        the Bank Secrecy Act.
            ``(2) Consultation with other agencies and the public.--In 
        establishing the procedure under paragraph (1), the Secretary 
        shall consult with other financial regulators and such other 
        Federal departments and agencies as the Secretary determines 
        appropriate, and obtain the views of all interested persons 
        through a public notice and comment period.
    ``(b) Requests.--
            ``(1) In general.--A person making a request for a ruling 
        under this section--
                    ``(A) shall make such request in writing;
                    ``(B) shall include in such request--
                            ``(i) a complete description of the 
                        situation for which the ruling is requested;
                            ``(ii) a complete statement of all material 
                        facts related to the subject transaction;
                            ``(iii) a concise and unambiguous question 
                        to be answered;
                            ``(iv) a statement certifying, to the best 
                        of the requestor's knowledge and belief, that 
                        the question to be answered is not applicable 
                        to any ongoing state or Federal investigation, 
                        litigation, grand jury proceeding, or 
                        proceeding before any other governmental body 
                        involving either the requestor, any other party 
                        to the subject transaction, or any other party 
                        with whom the requestor has an agency 
                        relationship;
                            ``(v) a statement identifying any 
                        information in the request that the requestor 
                        considers to be exempt from disclosure under 
                        section 552 of title 5, United States Code 
                        (commonly referred to as the `Freedom of 
                        Information Act'), and the reason therefor;
                            ``(vi) if the subject situation is 
                        hypothetical, a statement justifying why the 
                        particular situation described warrants the 
                        issuance of a ruling; and
                            ``(vii) the signature of--
                                    ``(I) the person making the 
                                request;
                                    ``(II) if an agent makes the 
                                request, the agent, accompanied by a 
                                statement certifying the authority 
                                under which the request is made; or
                                    ``(III) if the request is being 
                                filed by a corporation or a 
                                partnership, a corporate officer or a 
                                partner, as applicable;
                    ``(C) may advocate a particular proposed 
                interpretation and may set forth the legal and factual 
                basis for that interpretation; and
                    ``(D) shall advise immediately in writing of any 
                subsequent change in any material fact or statement 
                submitted with a request under this section.
            ``(2) Withdrawal of request.--A person may withdraw a 
        request made under this section at any time before the ruling 
        has been issued.
            ``(3) Nonconforming requests.--The Secretary shall notify a 
        requester if the request does not conform with the requirements 
        of paragraph (1). Such notice shall be in writing and shall 
        describe the requirements that have not been met. A request 
        that is not brought into conformity with such requirements 
        within 30 days from the date of such notice, unless extended 
        for good cause by the Secretary, shall be treated as though it 
        were withdrawn.
    ``(c) Right to Oral Discussions.--
            ``(1) In general.--A person who has made a request in 
        conformity with subsection (b)(1) may request an opportunity 
        for oral discussion of the issues presented in the request, 
        but--
                    ``(A) personal conferences or telephone conferences 
                may be scheduled only for the purpose of affording the 
                requester an opportunity to discuss freely and openly 
                the matters set forth in the request; and
                    ``(B) the conferees will not be bound by any 
                argument or position advocated or agreed to, expressly 
                or impliedly, during the conference.
            ``(2) At the discretion of the secretary.--The request 
        should be made to the Secretary, and any decision to grant such 
        a conference is wholly within the discretion of the Secretary.
            ``(3) Treatment of new arguments or facts.--Any new 
        arguments or facts put forth by the requester at the meeting 
        must be reduced to writing by the requester and submitted in 
        conformity with subsection (b)(1) before they may be considered 
        in connection with the request.
    ``(d) Issuing Rulings.--
            ``(1) In general.--The Secretary shall, within 120 days of 
        receiving the request for a ruling under this section, issue a 
        written ruling interpreting the relationship between the Bank 
        Secrecy Act and each situation for which such a ruling has been 
        requested under this section.
            ``(2) Public disclosure.--A ruling rendered pursuant to 
        this section shall be placed in the public record 90 days after 
        the requesting party has received the ruling, subject to any 
        limitations on public disclosure arising from statutory 
        restrictions, regulations, or the public interest. The 
        Secretary shall redact any personal, confidential, or 
        identifying information about the person or any other persons 
        mentioned in the administrative ruling, unless the person 
        consents to such disclosure.
            ``(3) Precedential value of rulings.--A ruling issued under 
        this section shall bind the Secretary and shall have 
        precedential value, and hence may be relied upon by others 
        similarly situated.
            ``(4) Availability of rulings.--The Secretary shall make 
        all such rulings available to any person upon written request 
        specifically identifying the ruling sought.
    ``(e) Modifying or Rescinding Rulings.--
            ``(1) In general.--The Secretary may modify or rescind any 
        ruling made pursuant to this section--
                    ``(A) when, in light of changes in statute or 
                regulations, the ruling no longer sets forth the 
                interpretation of the Secretary with respect to the 
                described situation;
                    ``(B) when any fact or statement submitted in the 
                original request is found to be materially inaccurate 
                or incomplete; or
                    ``(C) for other good cause.
            ``(2) Request for modification or rescission.--Any person 
        may submit to the Secretary a written request that a ruling be 
        modified or rescinded. Such request--
                    ``(A) should conform to the requirements of 
                subsection (b), explain why rescission or modification 
                is warranted, and refer to any reasons in paragraph (1) 
                that are relevant; and
                    ``(B) may advocate an alternative interpretation 
                and may set forth the legal and factual basis for that 
                interpretation.
            ``(3) Manner in which modifications or rescissions are 
        made.--The Secretary shall modify or rescind an existing ruling 
        by issuing a new ruling that rescinds the relevant prior 
        ruling.
            ``(4) Rescinded rulings lose precedential value.--Once 
        rescinded, a ruling shall no longer have any precedential 
        value.
            ``(5) Application to original parties.--A ruling may be 
        modified or rescinded retroactively with respect to one or more 
        parties to the original ruling request if the Secretary 
        determines that--
                    ``(A) a fact or statement in the original request 
                was materially inaccurate or incomplete;
                    ``(B) the requestor failed to notify in writing the 
                Secretary of a material change to any fact or statement 
                in the original request; or
                    ``(C) a party to the original request acted in bad 
                faith when relying upon the ruling.
    ``(f) Disclosure of Information.--
            ``(1) In general.--Any part of any ruling, including names, 
        addresses, or information related to the business transactions 
        of private parties, may be disclosed pursuant to a request 
        under section 552 of title 5, United States Code (commonly 
        referred to as the `Freedom of Information Act').
            ``(2) Request for exemption.--If the request for a ruling 
        contains information which the requestor wishes to be 
        considered for exemption from disclosure under such section 
        552, the requestor should clearly identify such portions of the 
        request and the reasons why such information should be exempt 
        from disclosure.
            ``(3) Notice to requestor.--A requestor claiming an 
        exemption from disclosure shall be notified by the Secretary, 
        at least 10 days before the ruling is issued, of a decision not 
        to exempt any of such information from disclosure so that the 
        underlying request for a ruling can be withdrawn if the 
        requestor so chooses.
    ``(g) Inquiry Fee.--
            ``(1) In general.--The Secretary may charge a fee for each 
        inquiry made under this section in an amount sufficient, in the 
        aggregate, to pay for the cost of carrying out this section and 
        such amounts may be used, without further appropriation, to 
        carry out this section. Such system shall provide a lower fee 
        for small business concerns compared to the fee charged to 
        other persons.
            ``(2) Notice and comment.--If the Secretary decides to 
        charge the fee described under paragraph (1)--
                    ``(A) the Secretary shall establish a system for 
                charging such fee, publish a description of such system 
                in the Federal Register, and solicit comments from the 
                public for a period of 60 days after publication; and
                    ``(B) publish a final description of the fee system 
                and implement such fee system not later than 30 days 
                after the end of such public comment period.
    ``(h) Report to Congress.--The Secretary shall, in a semi-annual 
report, submit information regarding the number of requests for an 
administrative ruling received under this section, the subject of each 
request, the number of nonconforming requests treated as withdrawn 
pursuant to subsection (b)(3), and the time needed to respond to each 
request.
    ``(i) Definitions.--For purposes of this section:
            ``(1) Bank secrecy act.--The term `Bank Secrecy Act' 
        means--
                    ``(A) this subchapter;
                    ``(B) section 21 of the Federal Deposit Insurance 
                Act;
                    ``(C) chapter 2 of title I of Public Law 91-508; 
                and
                    ``(D) section 314 of the USA PATRIOT Act.
            ``(2) Small business concern.--The term `small business 
        concern' has the meaning given such term under section 3 of the 
        Small Business Act.''.
    (b) Clerical Amendment.--The table of contents in chapter 53 of 
title 31, United States Code, is amended by inserting after the item 
relating to section 5332 the following:

``5333. Administrative rulings.''.

SEC. 6. QUALITATIVE FEEDBACK MECHANISM.

    Within 180 days after the date of enactment of this Act, the 
Secretary of the Treasury shall, after providing for public notice and 
comment, establish a mechanism to--
            (1) communicate annual anti-money laundering and countering 
        terrorism financing priorities to financial institutions, other 
        Federal financial regulators, and such other Federal 
        departments and agencies as the Secretary determines 
        appropriate; and
            (2) provide to financial institutions qualitative feedback 
        on information shared by financial institutions with the 
        Department of Treasury, including currency transaction reports 
        and suspicious activity reports.

SEC. 7. REPORT.

    Within 1 year of the date of the enactment of this Act, the 
Secretary of the Treasury, in consultation with the Federal banking 
agencies (as such term is defined under Section 3 of the Federal 
Deposit Insurance Act) and other agencies, as applicable, shall submit 
a report to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate on--
            (1) the potential for artificial intelligence, machine 
        learning, and other technologies to help detect and prevent 
        money laundering and terrorist financing;
            (2) the costs and benefits associated with the 
        establishment, by the Federal Government or by the Federal 
        Government in partnership with the private sector, of a 
        centralized database to help financial institutions detect and 
        prevent money laundering and terrorist financing, including the 
        impact of such a database on the security and privacy of 
        financial information and the ability of technology or changes 
        in law to ensure the security and privacy of such information;
            (3) actions that can be taken, administratively or through 
        the enactment of legislation, to streamline and improve 
        reporting requirements under the United States anti-money 
        laundering regime;
            (4) how to further include law enforcement within the 
        United States anti-money laundering regime and establish 
        methods for law enforcement to provide feedback to institutions 
        on the information they submit;
            (5) the utility of a single filing threshold for suspicious 
        activity reports as an alternative to varying thresholds, as 
        currently in effect; and
            (6) the mechanism described in section 6.

SEC. 8. DEFINITIONS.

    For purposes of this Act:
            (1) Currency transaction report.--The term ``currency 
        transaction report'' means a report described under section 
        5313, 5316, or 5331 of title 31, United States Code.
            (2) Financial institution.--The term ``financial 
        institution'' has the meaning given that term under section 
        5312 of title 31, United States Code.
            (3) Suspicious activity report.--The term ``suspicious 
        activity report'' means a report described under section 
        5318(g) of title 31, United States Code.
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