[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1756 Reported in House (RH)]






                                                 Union Calendar No. 373
105th CONGRESS
  2d Session
                                H. R. 1756

                      [Report No. 105-608, Part I]

  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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 3, 1997

 Ms. Velazquez (for herself, Mr. Leach, Mr. Gonzalez, and Mr. Bachus) 
 introduced the following bill; which was referred to the Committee on 
Banking and Financial Services, and in addition to the Committee on the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

                             June 25, 1998

 Reported from the Committee on Banking and Financial Services with an 
                               amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                             June 25, 1998

Referral to the Committee on the Judiciary extended for a period ending 
                      not later than July 31, 1998

                             July 31, 1998

   Additional sponsors: Mr. Schumer, Mr. Hinchey, Mr. Engel, and Mr. 
                                Ackerman

                             July 31, 1998

 Committee on the Judiciary discharged; committed to the Committee of 
  the Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on June 3, 
                                 1998]

_______________________________________________________________________

                                 A BILL


 
  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' means an 
        offense under subchapter II of this chapter, chapter II of 
        title I of Public Law 91-508 (12 U.S.C. 1951, et seq.; commonly 
        referred to as the `Bank Secrecy Act'), or section 1956, 1957, 
        or 1960 of title 18 or any related Federal, State, or local 
        criminal offense.
            ``(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.
    ``(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, and the National Credit Union 
                Administration Board.
            ``(3) Detection initiatives.--A description of operational 
        initiatives to improve detection of money laundering and 
        related financial crimes.
            ``(4) Enhancement of the role of the private financial 
        sector in prevention.--A description of the enhanced 
        partnership 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) Intergovernmental cooperation.--A description 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 1st 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 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 Director 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 1 eligible applicant that 
                represents that community.
                    ``(B) Exception.--The Secretary may make a grant to 
                more than 1 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 1st 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 2 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 1st 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 
shall submit a report to the Committee on Banking and Financial 
Services of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs 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 such 
recommendations for legislation as the Secretary may determine to be 
appropriate to carry out the purposes of such section.
                                     

                                                 Union Calendar No. 373

105th CONGRESS

  2d Session

                               H. R. 1756

                      [Report No. 105-608, Part I]

_______________________________________________________________________

                                 A BILL

  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.

_______________________________________________________________________

                             July 31, 1998

 Committee on the Judiciary discharged; committed to the Committee of 
  the Whole House on the State of the Union and ordered to be printed