[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.