[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1756 Enrolled Bill (ENR)]

        H.R.1756

                       One Hundred Fifth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
                                  eight


                                 An Act


 
  To amend chapter 53 of title 31, United States Code, to require the 
  development and implementation by the Secretary of the Treasury of a 
   national money laundering and related financial crimes strategy to 
  combat money laundering and related financial crimes, and for other 
                                purposes.

    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 ``Money Laundering and Financial 
Crimes Strategy Act of 1998''.

SEC. 2. MONEY LAUNDERING AND RELATED FINANCIAL CRIMES.

    (a) In General.--Chapter 53 of title 31, United States Code is 
amended by adding at the end the following new subchapter:

    ``SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

``Sec. 5340. Definitions

    ``For purposes of this subchapter, the following definitions shall 
apply:
        ``(1) Department of the treasury law enforcement 
    organizations.--The term `Department of the Treasury law 
    enforcement organizations' has the meaning given to such term in 
    section 9703(p)(1).
        ``(2) Money laundering and related financial crime.--The term 
    `money laundering and related financial crime'--
            ``(A) means the movement of illicit cash or cash equivalent 
        proceeds into, out of, or through the United States, or into, 
        out of, or through United States financial institutions, as 
        defined in section 5312 of title 31, United States Code; or
            ``(B) has the meaning given that term (or the term used for 
        an equivalent offense) under State and local criminal statutes 
        pertaining to the movement of illicit cash or cash equivalent 
        proceeds.
        ``(3) Secretary.--The term `Secretary' means the Secretary of 
    the Treasury.
        ``(4) Attorney general.--The term `Attorney General' means the 
    Attorney General of the United States.

   ``Part 1--National Money Laundering and Related Financial Crimes 
                                Strategy

``Sec. 5341. National money laundering and related financial crimes 
            strategy

    ``(a) Development and Transmittal to Congress.--
        ``(1) Development.--The President, acting through the Secretary 
    and in consultation with the Attorney General, shall develop a 
    national strategy for combating money laundering and related 
    financial crimes.
        ``(2) Transmittal to congress.--By February 1 of 1999, 2000, 
    2001, 2002, and 2003, the President shall submit a national 
    strategy developed in accordance with paragraph (1) to the 
    Congress.
        ``(3) Separate presentation of classified material.--Any part 
    of the strategy that involves information which is properly 
    classified under criteria established by Executive Order shall be 
    submitted to the Congress separately in classified form.
    ``(b) Development of Strategy.--The national strategy for combating 
money laundering and related financial crimes shall address any area 
the President, acting through the Secretary and in consultation with 
the Attorney General, considers appropriate, including the following:
        ``(1) Goals, objectives, and priorities.--Comprehensive, 
    research-based goals, objectives, and priorities for reducing money 
    laundering and related financial crime in the United States.
        ``(2) Prevention.--Coordination of regulatory and other efforts 
    to prevent the exploitation of financial systems in the United 
    States for money laundering and related financial crimes, including 
    a requirement that the Secretary shall--
            ``(A) regularly review enforcement efforts under this 
        subchapter and other provisions of law and, when appropriate, 
        modify existing regulations or prescribe new regulations for 
        purposes of preventing such criminal activity; and
            ``(B) coordinate prevention efforts and other enforcement 
        action with the Board of Governors of the Federal Reserve 
        System, the Securities and Exchange Commission, the Federal 
        Trade Commission, other Federal banking agencies, the National 
        Credit Union Administration Board, and such other Federal 
        agencies as the Secretary, in consultation with the Attorney 
        General, determines to be appropriate.
        ``(3) Detection and prosecution initiatives.--A description of 
    operational initiatives to improve detection and prosecution of 
    money laundering and related financial crimes and the seizure and 
    forfeiture of proceeds and instrumentalities derived from such 
    crimes.
        ``(4) Enhancement of the role of the private financial sector 
    in prevention.--The enhancement of partnerships between the private 
    financial sector and law enforcement agencies with regard to the 
    prevention and detection of money laundering and related financial 
    crimes, including providing incentives to strengthen internal 
    controls and to adopt on an industrywide basis more effective 
    policies.
        ``(5) Enhancement of intergovernmental cooperation.--The 
    enhancement of--
            ``(A) cooperative efforts between the Federal Government 
        and State and local officials, including State and local 
        prosecutors and other law enforcement officials; and
            ``(B) cooperative efforts among the several States and 
        between State and local officials, including State and local 
        prosecutors and other law enforcement officials,
    for financial crimes control which could be utilized or should be 
    encouraged.
        ``(6) Project and budget priorities.--A 3-year projection for 
    program and budget priorities and achievable projects for 
    reductions in financial crimes.
        ``(7) Assessment of funding.--A complete assessment of how the 
    proposed budget is intended to implement the strategy and whether 
    the funding levels contained in the proposed budget are sufficient 
    to implement the strategy.
        ``(8) Designated areas.--A description of geographical areas 
    designated as `high-risk money laundering and related financial 
    crime areas' in accordance with, but not limited to, section 5342.
        ``(9) Persons consulted.--Persons or officers consulted by the 
    Secretary pursuant to subsection (d).
        ``(10) Data regarding trends in money laundering and related 
    financial crimes.--The need for additional information necessary 
    for the purpose of developing and analyzing data in order to 
    ascertain financial crime trends.
        ``(11) Improved communications systems.--A plan for enhancing 
    the compatibility of automated information and facilitating access 
    of the Federal Government and State and local governments to 
    timely, accurate, and complete information.
    ``(c) Effectiveness Report.--At the time each national strategy for 
combating financial crimes is transmitted by the President to the 
Congress (other than the first transmission of any such strategy) 
pursuant to subsection (a), the Secretary shall submit a report 
containing an evaluation of the effectiveness of policies to combat 
money laundering and related financial crimes.
    ``(d) Consultations.--In addition to the consultations required 
under this section with the Attorney General, in developing the 
national strategy for combating money laundering and related financial 
crimes, the Secretary shall consult with--
        ``(1) the Board of Governors of the Federal Reserve System and 
    other Federal banking agencies and the National Credit Union 
    Administration Board;
        ``(2) State and local officials, including State and local 
    prosecutors;
        ``(3) the Securities and Exchange Commission;
        ``(4) the Commodities and Futures Trading Commission;
        ``(5) the Director of the Office of National Drug Control 
    Policy, with respect to money laundering and related financial 
    crimes involving the proceeds of drug trafficking;
        ``(6) the Chief of the United States Postal Inspection Service;
        ``(7) to the extent appropriate, State and local officials 
    responsible for financial institution and financial market 
    regulation;
        ``(8) any other State or local government authority, to the 
    extent appropriate;
        ``(9) any other Federal Government authority or 
    instrumentality, to the extent appropriate; and
        ``(10) representatives of the private financial services 
    sector, to the extent appropriate.

``Sec. 5342. High-risk money laundering and related financial crime 
            areas

    ``(a) Findings and Purpose.--
        ``(1) Findings.--The Congress finds the following:
            ``(A) Money laundering and related financial crimes 
        frequently appear to be concentrated in particular geographic 
        areas, financial systems, industry sectors, or financial 
        institutions.
            ``(B) While the Secretary has the responsibility to act 
        with regard to Federal offenses which are being committed in a 
        particular locality or are directed at a single institution, 
        because modern financial systems and institutions are 
        interconnected to a degree which was not possible until 
        recently, money laundering and other related financial crimes 
        are likely to have local, State, national, and international 
        effects wherever they are committed.
        ``(2) Purpose and objective.--It is the purpose of this section 
    to provide a mechanism for designating any area where money 
    laundering or a related financial crime appears to be occurring at 
    a higher than average rate such that--
            ``(A) a comprehensive approach to the problem of such crime 
        in such area can be developed, in cooperation with State and 
        local law enforcement agencies, which utilizes the authority of 
        the Secretary to prevent such activity; or
            ``(B) such area can be targeted for law enforcement action.
    ``(b) Element of National Strategy.--The designation of certain 
areas as areas in which money laundering and related financial crimes 
are extensive or present a substantial risk shall be an element of the 
national strategy developed pursuant to section 5341(b).
    ``(c) Designation of Areas.--
        ``(1) Designation by secretary.--The Secretary, after taking 
    into consideration the factors specified in subsection (d), shall 
    designate any geographical area, industry, sector, or institution 
    in the United States in which money laundering and related 
    financial crimes are extensive or present a substantial risk as a 
    `high-risk money laundering and related financial crimes area'.
        ``(2) Case-by-case determination in consultation with the 
    attorney general.--In addition to the factors specified in 
    subsection (d), any designation of any area under paragraph (1) 
    shall be made on the basis of a determination by the Secretary, in 
    consultation with the Attorney General, that the particular area, 
    industry, sector, or institution is being victimized by, or is 
    particularly vulnerable to, money laundering and related financial 
    crimes.
        ``(3) Specific initiatives.--Any head of a department, bureau, 
    or law enforcement agency, including any State or local prosecutor, 
    involved in the detection, prevention, and suppression of money 
    laundering and related financial crimes and any State or local 
    official or prosecutor may submit--
            ``(A) a written request for the designation of any area as 
        a high-risk money laundering and related financial crimes area; 
        or
            ``(B) a written request for funding under section 5351 for 
        a specific prevention or enforcement initiative, or to 
        determine the extent of financial criminal activity, in an 
        area.
    ``(d) Factors.--In considering the designation of any area as a 
high-risk money laundering and related financial crimes area, the 
Secretary shall, to the extent appropriate and in consultation with the 
Attorney General, take into account the following factors:
        ``(1) The population of the area.
        ``(2) The number of bank and nonbank financial institution 
    transactions which originate in such area or involve institutions 
    located in such area.
        ``(3) The number of stock or commodities transactions which 
    originate in such area or involve institutions located in such 
    area.
        ``(4) Whether the area is a key transportation hub with any 
    international ports or airports or an extensive highway system.
        ``(5) Whether the area is an international center for banking 
    or commerce.
        ``(6) The extent to which financial crimes and financial crime-
    related activities in such area are having a harmful impact in 
    other areas of the country.
        ``(7) The number or nature of requests for information or 
    analytical assistance which--
            ``(A) are made to the analytical component of the 
        Department of the Treasury; and
            ``(B) originate from law enforcement or regulatory 
        authorities located in such area or involve institutions or 
        businesses located in such area or residents of such area.
        ``(8) The volume or nature of suspicious activity reports 
    originating in the area.
        ``(9) The volume or nature of currency transaction reports or 
    reports of cross-border movements of currency or monetary 
    instruments originating in, or transported through, the area.
        ``(10) Whether, and how often, the area has been the subject of 
    a geographical targeting order.
        ``(11) Observed changes in trends and patterns of money 
    laundering activity.
        ``(12) Unusual patterns, anomalies, growth, or other changes in 
    the volume or nature of core economic statistics or indicators.
        ``(13) Statistics or indicators of unusual or unexplained 
    volumes of cash transactions.
        ``(14) Unusual patterns, anomalies, or changes in the volume or 
    nature of transactions conducted through financial institutions 
    operating within or outside the United States.
        ``(15) The extent to which State and local governments and 
    State and local law enforcement agencies have committed resources 
    to respond to the financial crime problem in the area and the 
    degree to which the commitment of such resources reflects a 
    determination by such government and agencies to address the 
    problem aggressively.
        ``(16) The extent to which a significant increase in the 
    allocation of Federal resources to combat financial crimes in such 
    area is necessary to provide an adequate State and local response 
    to financial crimes and financial crime-related activities in such 
    area.

       ``Part 2--Financial Crime-Free Communities Support Program

``Sec. 5351. Establishment of financial crime-free communities support 
            program

    ``(a) Establishment.--The Secretary of the Treasury, in 
consultation with the Attorney General, shall establish a program to 
support local law enforcement efforts in the development and 
implementation of a program for the detection, prevention, and 
suppression of money laundering and related financial crimes.
    ``(b) Program.--In carrying out the program, the Secretary of the 
Treasury, in consultation with the Attorney General, shall--
        ``(1) make and track grants to grant recipients;
        ``(2) provide for technical assistance and training, data 
    collection, and dissemination of information on state-of-the-art 
    practices that the Secretary determines to be effective in 
    detecting, preventing, and suppressing money laundering and related 
    financial crimes; and
        ``(3) provide for the general administration of the program.
    ``(c) Administration.--The Secretary shall appoint an administrator 
to carry out the program.
    ``(d) Contracting.--The Secretary may employ any necessary staff 
and may enter into contracts or agreements with Federal and State law 
enforcement agencies to delegate authority for the execution of grants 
and for such other activities necessary to carry out this chapter.

``Sec. 5352. Program authorization

    ``(a) Grant Eligibility.--To be eligible to receive an initial 
grant or a renewal grant under this part, a State or local law 
enforcement agency or prosecutor shall meet each of the following 
criteria:
        ``(1) Application.--The State or local law enforcement agency 
    or prosecutor shall submit an application to the Secretary in 
    accordance with section 5353(a)(2).
        ``(2) Accountability.--The State or local law enforcement 
    agency or prosecutor shall--
            ``(A) establish a system to measure and report outcomes--
                ``(i) consistent with common indicators and evaluation 
            protocols established by the Secretary, in consultation 
            with the Attorney General; and
                ``(ii) approved by the Secretary;
            ``(B) conduct biennial surveys (or incorporate local 
        surveys in existence at the time of the evaluation) to measure 
        the progress and effectiveness of the coalition; and
            ``(C) provide assurances that the entity conducting an 
        evaluation under this paragraph, or from which the applicant 
        receives information, has experience in gathering data related 
        to money laundering and related financial crimes.
    ``(b) Grant Amounts.--
        ``(1) Grants.--
            ``(A) In general.--Subject to subparagraph (D), for a 
        fiscal year, the Secretary of the Treasury, in consultation 
        with the Attorney General, may grant to an eligible applicant 
        under this section for that fiscal year, an amount determined 
        by the Secretary of the Treasury, in consultation with the 
        Attorney General, to be appropriate.
            ``(B) Suspension of grants.--If such grant recipient fails 
        to continue to meet the criteria specified in subsection (a), 
        the Secretary may suspend the grant, after providing written 
        notice to the grant recipient and an opportunity to appeal.
            ``(C) Renewal grants.--Subject to subparagraph (D), the 
        Secretary may award a renewal grant to a grant recipient under 
        this subparagraph for each fiscal year following the fiscal 
        year for which an initial grant is awarded.
            ``(D) Limitation.--The amount of a grant award under this 
        paragraph may not exceed $750,000 for a fiscal year.
        ``(2) Grant awards.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        the Secretary may, with respect to a community, make a grant to 
        one eligible applicant that represents that community.
            ``(B) Exception.--The Secretary may make a grant to more 
        than one eligible applicant that represent a community if--
                ``(i) the eligible coalitions demonstrate that the 
            coalitions are collaborating with one another; and
                ``(ii) each of the coalitions has independently met the 
            requirements set forth in subsection (a).
    ``(c) Condition Relating to Proceeds of Asset Forfeitures.--
        ``(1) In general.--No grant may be made or renewed under this 
    part to any State or local law enforcement agency or prosecutor 
    unless the agency or prosecutor agrees to donate to the Secretary 
    of the Treasury for the program established under this part any 
    amount received by such agency or prosecutor (after the grant is 
    made) pursuant to any criminal or civil forfeiture under chapter 46 
    of title 18, United States Code, or any similar provision of State 
    law.
        ``(2) Scope of application.--Paragraph (1) shall not apply to 
    any amount received by a State or local law enforcement agency or 
    prosecutor pursuant to any criminal or civil forfeiture referred to 
    in such paragraph in excess of the aggregate amount of grants 
    received by such agency or prosecutor under this part.
    ``(d) Rolling Grant Application Periods.--In establishing the 
program under this part, the Secretary shall take such action as may be 
necessary to ensure, to the extent practicable, that--
        ``(1) applications for grants under this part may be filed at 
    any time during a fiscal year; and
        ``(2) some portion of the funds appropriated under this part 
    for any such fiscal year will remain available for grant 
    applications filed later in the fiscal year.

``Sec. 5353. Information collection and dissemination with respect to 
            grant recipients

    ``(a) Applicant and Grantee Information.--
        ``(1) Application process.--The Secretary shall issue requests 
    for proposal, as necessary, regarding, with respect to the grants 
    awarded under section 5352, the application process, grant renewal, 
    and suspension or withholding of renewal grants. Each application 
    under this paragraph shall be in writing and shall be subject to 
    review by the Secretary.
        ``(2) Reporting.--The Secretary shall, to the maximum extent 
    practicable and in a manner consistent with applicable law, 
    minimize reporting requirements by a grant recipient and expedite 
    any application for a renewal grant made under this part.
    ``(b) Activities of Secretary.--The Secretary may--
        ``(1) evaluate the utility of specific initiatives relating to 
    the purposes of the program;
        ``(2) conduct an evaluation of the program; and
        ``(3) disseminate information described in this subsection to--
            ``(A) eligible State local law enforcement agencies or 
        prosecutors; and
            ``(B) the general public.

``Sec. 5354. Grants for fighting money laundering and related financial 
            crimes

    ``(a) In General.-- After the end of the 1-year period beginning on 
the date the first national strategy for combating money laundering and 
related financial crimes is submitted to the Congress in accordance 
with section 5341, and subject to subsection (b), the Secretary may 
review, select, and award grants for State or local law enforcement 
agencies and prosecutors to provide funding necessary to investigate 
and prosecute money laundering and related financial crimes in high-
risk money laundering and related financial crime areas.
    ``(b) Special Preference.--Special preference shall be given to 
applications submitted to the Secretary which demonstrate collaborative 
efforts of two or more State and local law enforcement agencies or 
prosecutors who have a history of Federal, State, and local cooperative 
law enforcement and prosecutorial efforts in responding to such 
criminal activity.

``Sec. 5355. Authorization of appropriations

    ``There are authorized to be appropriated the following amounts for 
the following fiscal years to carry out the purposes of this 
subchapter:
``For fiscal year:
The amount authorized is:
  1999
  $5,000,000.
  2000
  $7,500,000.
  2001
  $10,000,000.
  2002
  $12,500,000.
  2003
  $15,000,000.''.
    (b) Clerical Amendment.--The table of subchapters for chapter 53 of 
title 31, United States Code, is amended by adding at the end the 
following item:

     ``SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

``5340. Definitions.

    ``Part 1--National Money Laundering and Related Financial Crimes 
                                Strategy

``5341. National money laundering and related financial crimes strategy.
``5342. High-risk money laundering and related financial crime areas.

       ``Part 2--Financial Crime-Free Communities Support Program

``5351. Establishment of financial crime-free communities support 
          program.
``5352. Program authorization.
``5353. Information collection and dissemination with respect to grant 
          recipients.
``5354. Grants for fighting money laundering and related financial 
          crimes.
``5355. Authorization of appropriations.''.
    (c) Report and Recommendations.--Before the end of the 5-year 
period beginning on the date the first national strategy for combating 
money laundering and related financial crimes is submitted to the 
Congress pursuant to section 5341(a)(1) of title 31, United States Code 
(as added by section 2(a) of this Act), the Secretary of the Treasury, 
in consultation with the Attorney General, shall submit a report to the 
Committee on Banking and Financial Services and the Committee on the 
Judiciary of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs and the Committee on the Judiciary of the 
Senate on the effectiveness of and the need for the designation of 
areas, under section 5342 of title 31, United States Code (as added by 
such section 2(a)), as high-risk money laundering and related financial 
crime areas, together with recommendations for such legislation as the 
Secretary and the Attorney General may determine to be appropriate to 
carry out the purposes of such section.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.