AML and CTF Modernization Act

Bill: 115-hr-4373
Sponsor: full_name: Rep. Royce, Edward R. [R-CA-39]
Introduced: 2017-11-13
Policy area: Finance and Financial Sector
Subjects: Administrative law and regulatory procedures

Administrative remedies

Banking and financial institutions regulation

Business records

Computers and information technology

Congressional oversight

Crime prevention

Criminal investigation, prosecution, interrogation

Criminal justice information and records

Currency

Department of the Treasury

Fraud offenses and financial crimes

Government information and archives

Inflation and prices

Terrorism

User charges and fees
Latest action: action_date: 2017-11-13
text: Referred to the House Committee on Financial Services.

Summaries:
action_date: 2017-11-13
action_desc: Introduced in House
text: <p><b>Anti-Money Laundering and Counter-Terrorism Financing Modernization Act or the AML and CTF Modernization Act</b></p> <p>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.</p>

tv_txt: I 115th CONGRESS 1st Session H. R. 4373 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.

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 . 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. . 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. 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), . 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: 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. . 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. 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. 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.