[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2896 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2896

  To combat money laundering and protect the United States financial 
                    system, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 21, 1999

 Mr. Leach (for himself, Mr. McCollum, Mr. LaFalce, Mrs. Roukema, Ms. 
Waters, Mr. Bereuter, Mr. Baker, Mr. Lazio, Mr. Bachus, and Mr. Castle) 
 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

_______________________________________________________________________

                                 A BILL


 
  To combat money laundering and protect the United States financial 
                    system, 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 ``Foreign Money Laundering Deterrence 
and Anticorruption Act''.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) Money laundering enables international organized crime 
        groups to control and legitimize proceeds from a wide variety 
        of illegal activities including theft, racketeering, terrorism, 
        tax evasion, fraud, insider trading, and traffic in narcotics, 
        arms, and other contraband. In many instances, these activities 
        impact United States citizens and territory and frustrate 
        United States foreign policy.
            (2) Money laundering by international criminal enterprises 
        challenges the legitimate authority of national governments, 
        corrupts officials and professionals, endangers the financial 
        and economic stability of nations, diminishes the efficiency of 
        global interest rate markets, and routinely violates legal 
        norms, property rights, and human rights.
            (3) In some countries, such as Colombia, Mexico, and 
        Russia, the wealth and power of organized criminal enterprises 
        rival the wealth and power of the government of the country.
            (4) Organized criminal enterprises, such as the Colombian 
        and Mexican cartels, the Russian ``mafiya'', Sicilian crime 
        families, and Chinese gangs, are highly resistant to 
        conventional law enforcement techniques, and the financial 
        management and organizational infrastructure of such 
        enterprises are highly sophisticated and difficult to track 
        because of the globalization of the financial services 
        industry.
            (5) In addition to organized crime enterprises, corrupt 
        government officials around the world increasingly employ 
        sophisticated money laundering schemes to conceal wealth they 
        have plundered or extorted from their nations or received as 
        bribes, and these practices weaken the legitimacy of foreign 
        states, threaten the integrity of international financial 
        markets, and harm foreign populations--sometimes to the point 
        of impoverishment.
            (6) The existence of ``offshore financial centers'' 
        (nations, regions, zones, and cities that in many instances 
        have virtually impenetrable financial secrecy laws and weak 
        financial regulatory and reporting regimes, which are tailored 
        to violate or circumvent the laws of other nations) facilitates 
        global money laundering and, as some of the long-established 
        offshore financial centers begin to respond to international 
        pressure to implement internationally acceptable standards, 
        money-laundering transactions have started migrating to new 
        centers that have been rapidly proliferating.
            (7) Recent advances in communications and information 
        technology, particularly in the field of online transactions, 
        have meant that offshore financial centers, originally 
        concentrated near the ``onshore'' nations whose rules they 
        circumvented, are being established in increasingly remote 
        locations that are difficult and costly for law enforcement and 
        supervisory authorities to monitor and visit.

SEC. 3. REQUIREMENTS RELATING TO TRANSACTIONS AND ACCOUNTS WITH OR ON 
              BEHALF OF FOREIGN ENTITIES.

    (a) In General.--Subchapter II of chapter 53 of title 31, United 
States Code, is amended by adding at the end the following new section:
``Sec. 5331. Requirements relating to transactions and accounts with or 
              on behalf of foreign entities
    ``(a) Prohibition on Opening or Maintaining Accounts Belonging to 
or for the Benefit of Unidentified Owners.--A financial institution may 
not open or maintain any account in the United States for a foreign 
entity or a representative of a foreign entity, unless--
            ``(1) the institution identifies, and maintains a record of 
        the identity of, each person having a direct or beneficial 
        ownership interest in the account; or
            ``(2) some or all of the shares of the foreign entity are 
        publicly traded.
    ``(b) Prohibition on Opening or Maintaining Correspondent Accounts 
or Correspondent Bank Relationship With Certain Foreign Banks.--
            ``(1) In general.--A depository institution may not open or 
        maintain a correspondent account in the United States for or on 
        behalf of a foreign banking institution, or establish or 
        maintain a correspondent bank relationship with a foreign 
        banking institution, that--
                    ``(A) is organized under the laws of a jurisdiction 
                outside the United States but is not licensed or 
                permitted to offer, or is not offering, any banking 
                service to any resident of such jurisdiction; and
                    ``(B) is not subject to comprehensive supervision 
                or regulation on a consolidated basis by the 
                appropriate authorities in such jurisdiction.
            ``(2) Exception.--Paragraph (1) shall not apply to a 
        foreign banking institution, if the institution is an affiliate 
        of--
                    ``(A) a depository institution; or
                    ``(B) a foreign bank (as defined in section 1(b)(7) 
                of the International Banking Act of 1978) that is 
                subject to comprehensive supervision or regulation on a 
                consolidated basis by the appropriate authorities in 
                the foreign jurisdiction under whose laws it is 
                organized.
    ``(c) Prohibition on Opening or Maintaining Payable-Through 
Accounts for Foreign Banking Institutions.--A depository institution 
may not open or maintain a payable-through account in the United States 
for a foreign banking institution, unless the depository institution is 
able--
            ``(1) to identify each customer of the foreign banking 
        institution who is permitted to use the account; and
            ``(2) with respect to each such customer, to obtain the 
        same information about the customer that it obtains, in the 
        ordinary course, with respect to a customer residing in the 
        United States who opens or maintains an account through which 
        they are authorized to conduct the same transactions as may be 
        conducted through the payable-through account.
    ``(d) Definitions.--Notwithstanding any other provision of this 
subchapter, for purposes of this section, the following definitions 
shall apply:
            ``(1) Account.--The term `account'--
                    ``(A) means a formal banking or business 
                relationship established to provide regular services, 
                dealings, and other financial transactions; and
                    ``(B) includes a demand deposit, savings deposit, 
                or other asset account and a credit account or other 
                extension of credit.
            ``(2) Correspondent account.--The term `correspondent 
        account' means an account established to receive deposits from 
        and make payments on behalf of a correspondent bank.
            ``(3) Correspondent bank.--The term `correspondent bank' 
        means a depository institution that accepts deposits from 
        another financial institution and provides services on behalf 
        of such other financial institution.
            ``(4) Depository institution.--The term `depository 
        institution' has the meaning given such term in section 
        19(b)(1)(A) of the Federal Reserve Act.
            ``(5) Foreign banking institution.--The term `foreign 
        banking institution' means a foreign entity that engages in the 
        business of banking, and includes foreign commercial banks, 
        foreign merchant banks, and other foreign institutions that 
        engage in banking activities usual in connection with the 
        business of banking in the countries where they are organized 
        or operating.
            ``(6) Foreign entity.--The term `foreign entity' means an 
        entity that is not organized under the laws of the Federal 
        Government of the United States, any State of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Virgin Islands, Guam, American Samoa, the 
        Commonwealth of the Northern Mariana Islands, the Republic of 
        the Marshall Islands, the Federated States of Micronesia, or 
        the Republic of Palau.
            ``(7) Payable-through account.--The term `payable-through 
        account' means an account, including a transaction account (as 
        defined in section 19(b)(1)(C) of the Federal Reserve Act), 
        opened at a depository institution by a foreign banking 
        institution by means of which the foreign banking institution 
        permits its customers to engage, either directly or through a 
        sub-account, in banking activities usual in connection with the 
        business of banking in the United States.''.
    (b) Clerical Amendment.--The table of sections for subchapter II of 
chapter 53 of title 31, United States Code, is amended by inserting 
after the item relating to section 5330 the following new item:

``5331. Requirements relating to transactions and accounts with or on 
                            behalf of foreign entities.''.
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply--
            (1) with respect to accounts opened on or after the date of 
        the enactment of this Act, as of such date; and
            (2) with respect to accounts opened before the date of the 
        enactment of this Act, as of the end of the 6-month period 
        beginning on such date.
    (d) Rule of Construction.--No provision of the amendment made by 
subsection (a) shall be construed as requiring or authorizing a 
financial institution to disclose any information described in such 
amendment to any other entity.

SEC. 4. CORRUPTION IN FOREIGN GOVERNMENTS.

    (a) In General.--It is the sense of the Congress that, in 
deliberations between the United States Government and any other 
country on money laundering and corruption issues, the United States 
Government should--
            (1) emphasize an approach that addresses not only the 
        laundering of the proceeds of traditional criminal activity but 
        also the increasingly endemic problem of governmental 
        corruption and the corruption of ruling elites; and
            (2) encourage the enactment and enforcement of laws in such 
        country to prevent money laundering and systemic corruption.
    (b) United States Votes in International Financial Institutions.--
The Secretary of the Treasury shall instruct the United States 
Executive Directors of each international financial institution (as 
defined in section 1701(c) of the International Financial Institutions 
Act) to oppose any loan, disbursement, or other utilization of 
resources by the international financial institution, other than to 
address basic human needs, for any country that the Secretary of the 
Treasury determines--
            (1) has a high level of corruption;
            (2) is not effectively implementing good governance and 
        anticorruption measures; and
            (3) is not taking meaningful steps to improve good 
        governance and reduce corruption.
    (c) Report Required.--
            (1) In general.--The Secretary of the Treasury shall submit 
        an annual report to the Congress on the deliberations between 
        the United States and other countries on money laundering and 
        corruption issues.
            (2) Contents of report.--Each report submitted under 
        paragraph (1) shall contain--
                    (A) an assessment by the Secretary of the extent of 
                corruption in each country covered by the report; and
                    (B) an assessment by the Secretary of the extent to 
                which such country maintains effective money laundering 
                and corruption prevention measures or is implementing 
                such measures.

SEC. 5. AMENDMENTS RELATING TO REPORTING OF SUSPICIOUS ACTIVITIES.

    (a) Amendment Relating to Civil Liability Immunity for 
Disclosures.--Section 5318(g)(3) of title 31, United States Code, is 
amended to read as follows:
            ``(3) Liability for disclosures.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law--
                            ``(i) any financial institution that--
                                    ``(I) makes a disclosure of any 
                                possible violation of law or regulation 
                                to an appropriate government agency; or
                                    ``(II) makes a disclosure pursuant 
                                to this subsection or any other 
                                authority;
                            ``(ii) any director, officer, employee, or 
                        agent of such institution who makes, or 
                        requires another to make any such disclosure; 
                        and
                            ``(iii) any independent public accountant 
                        who audits any such financial institution and 
                        makes a disclosure described in clause (i),
                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 such disclosure or for any failure to 
                notify the person who is the subject of such disclosure 
                or any other person identified in the disclosure.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to a disclosure or communication required under Federal 
                securities law, other than provisions of law that 
                specifically refer to the Currency and Foreign 
                Transactions Reporting Act of 1970.
                    ``(C) Rule of construction.--Subparagraph (A) shall 
                not be construed as creating--
                            ``(i) any inference that the term `person', 
                        as used in such subparagraph, may be construed 
                        more broadly than its ordinary usage so to 
                        include any government or agency of government; 
                        or
                            ``(ii) any immunity against, or otherwise 
                        affecting, any civil or criminal action brought 
                        by any government or agency of government to 
                        enforce any constitution, law, or regulation of 
                        such government or agency.''.
    (b) Prohibition on Notification of Disclosures.--Section 5318(g)(2) 
of title 31, United States Code, is amended to read as follows:
            ``(2) Notification prohibited.--
                    ``(A) In general.--If a financial institution, any 
                director, officer, employee, or agent of any financial 
institution, or any independent public accountant who audits any 
financial institution, voluntarily or pursuant to this section or any 
other authority, reports a suspicious transaction to an appropriate 
government agency--
                            ``(i) the financial institution, director, 
                        officer, employee, agent, or accountant may not 
                        notify any person involved in the transaction 
                        that the transaction has been reported and may 
                        not disclose any information included in the 
                        report to any such person; and
                            ``(ii) any other person, including any 
                        officer or employee of any government, who has 
                        any knowledge that such report was made may not 
                        disclose to any person involved in the 
                        transaction that the transaction has been 
                        reported or any information included in the 
                        report.
                    ``(B) Coordination with paragraph (5).--
                Subparagraph (A) shall not be construed as prohibiting 
                any financial institution, or any director, officer, 
                employee, or agent of such institution, from including, 
                in a written employment reference that is provided in 
                accordance with paragraph (5) in response to a request 
                from another financial institution, information that 
                was included in a report to which subparagraph (A) 
                applies, but such written employment reference may not 
                disclose that such information was also included in any 
                such report or that such report was made.''.
    (c) Authorization To Include Suspicions of Illegal Activity in 
Employment References.--Section 5318(g) of title 31, United States 
Code, is amended by adding at the end the following new paragraph:
            ``(5) Employment references may include suspicions of 
        involvement in illegal activity.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law and subject to subparagraph (B) of 
                this paragraph and paragraph (2)(C), any financial 
                institution, and any director, officer, employee, or 
                agent of such institution, may disclose, in any written 
                employment reference relating to a current or former 
                institution-affiliated party of such institution which 
                is provided to another financial institution in 
                response to a request from such other institution, 
                information concerning the possible involvement of such 
                institution-affiliated party in any suspicious 
                transaction relevant to a possible violation of law or 
                regulation.
                    ``(B) Limit on liability for disclosures.--A 
                financial institution, and any director, officer, 
                employee, or agent of such institution, 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 any 
                disclosure under subparagraph (A), to the extent--
                            ``(i) the disclosure does not contain 
                        information which the institution, director, 
                        officer, employee, agent, or accountant knows 
                        to be false; and
                            ``(ii) the institution, director, officer, 
                        employee, agent, or accountant has not acted 
                        with malice or with reckless disregard for the 
                        truth in making the disclosure.
                    ``(C) Institution-affiliated party defined.--For 
                purposes of this paragraph, the term `institution-
affiliated party' has the meaning given to such term in section 3(u) of 
the Federal Deposit Insurance Act, except such section 3(u) shall be 
applied by substituting `financial institution' for `insured depository 
institution'.''.
    (d) Amendments Relating to Availability of Suspicious Activity 
Reports for Other Agencies.--Section 5319 of title 31, United States 
Code, is amended--
            (1) in the 1st sentence, by striking ``5314, or 5316'' and 
        inserting ``5313A, 5314, 5316, or 5318(g)'';
            (2) in the last sentence, by inserting ``under section 
        5313, 5313A, 5314, 5316, or 5318(g)'' after ``records of 
        reports''; and
            (3) by adding the following new sentence after the last 
        sentence: ``The Secretary of the Treasury may permit the 
        dissemination of information in any such reports to any self-
        regulatory organization (as defined in section 3(a)(26) of the 
        Securities Exchange Act of 1934), if the Securities and 
        Exchange Commission determines that such dissemination is 
        necessary or appropriate to permit such organization to perform 
        its function under the Securities Exchange Act of 1934 and 
        regulations prescribed under such Act.''.

SEC. 6. SPECIFIED UNLAWFUL ACTIVITIES FOR MONEY LAUNDERING.

    Section 1956(c)(7) of title 18, United States Code, is amended--
            (1) in subparagraph (B)--
                    (A) by striking clause (ii) and inserting the 
                following new clause:
                            ``(ii) any conduct constituting a crime of 
                        violence;''; and
                    (B) by adding at the end the following new clauses:
                            ``(iv) fraud, or any scheme to defraud, 
                        committed against a foreign government or 
                        foreign governmental entity;
                            ``(v) bribery of a public official, or the 
                        misappropriation, theft, or embezzlement of 
                        public funds by or for the benefit of a public 
                        official;
                            ``(vi) smuggling or export control 
                        violations involving munitions listed in the 
                        United States Munitions List or technologies 
                        with military applications, as defined in the 
                        Commerce Control List of the Export 
                        Administration Regulations;
                            ``(vii) an offense with respect to which 
                        the United States would be obligated by a 
                        multilateral treaty either to extradite the 
                        alleged offender or to submit the case for 
                        prosecution, if the offender were found within 
                        the territory of the United States; or
                            ``(viii) the misuse of funds of, or 
                        provided by, the International Monetary Fund in 
                        contravention of the Articles of Agreement of 
                        the Fund or the misuse of funds of, or provided 
                        by, any other international financial 
                        institution (as defined in section 1701(c)(2) 
                        of the International Financial Institutions 
                        Act) in contravention of any international 
                        treaty or other international agreement to 
                        which the United States is a party, including 
                        any articles of agreement of the members of 
                        such international financial institution.'';
            (2) in subparagraph (D)--
                    (A) by inserting ``section 541 (relating to goods 
                falsely classified),'' before ``section 542'';
                    (B) by inserting ``section 924(m) (relating to 
                firearms trafficking),'' before ``section 956'';
                    (C) by inserting ``section 1030 (relating to 
                computer fraud and abuse),'' before ``1032''; and
                    (D) by inserting ``any felony violation of the 
                Foreign Agents Registration Act of 1938, as amended,'' 
                before ``or any felony violation of the Foreign Corrupt 
                Practices Act'';
            (3) in subparagraph (E)--
                    (A) by inserting ``section 42 or 43 of this title 
                (commonly called the Lacey Act),'' after ``a felony 
                violation of'';
                    (B) by inserting ``the Clean Air Act (42 U.S.C. 
                7401 et seq.),'' after ``the Safe Drinking Water Act 
                (42 U.S.C. 300f et seq.),''; and
            (4) by adding at the end the following new subparagraph:
                    ``(G) Any offense under any Federal law consisting 
                of the failure to report to an appropriate Federal 
                agency the ownership or control of a foreign 
                corporation, the ownership or control of a foreign 
                financial account, or a beneficial interest in a 
                foreign trust.''.

SEC. 7. FALSE STATEMENTS TO FINANCIAL INSTITUTIONS CONCERNING THE 
              IDENTITY OF A CUSTOMER.

    (a) In General.--Chapter 47 of title 18, United States Code 
(relating to fraud and false statements) is amended by inserting after 
section 1007 the following new section:
``Sec. 1008. False statements concerning the identity of customers of 
              financial institutions
    ``(a) In General.--Whoever knowingly in any manner--
            ``(1) falsifies, conceals, or covers up, or attempts to 
        falsify, conceal, or cover up, the identity of any person in 
        connection with any transaction with a financial institution; 
        or
            ``(2) makes, or attempts to make, any materially false, 
        fraudulent, or fictitious statement or representation of the 
        identity of any person in connection with a transaction with a 
        financial institution; or
            ``(3) makes or uses, or attempts to make or use, any false 
        writing or document knowing the same to contain any materially 
        false, fictitious, or fraudulent statement or entry concerning 
        the identity of any person in connection with a transaction 
        with a financial institution; or
            ``(4) uses or presents, or attempts to use or present, in 
        connection with a transaction with a financial institution, an 
        identification document or means of identification the 
        possession of which is a violation of section 1028,
shall be fined under this title, imprisoned for not more than 5 years, 
or both.
    ``(b) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Identification document and means of 
        identification.--The terms `identification document' and `means 
        of identification' have the meanings given to such terms in 
        section 1028(d).
            ``(2) Financial institution.--In addition to the meaning 
        given to the term `financial institution' by section 20, the 
        term `financial institution' also has the meaning given to such 
        term in section 5312(a)(2) of title 31.''.
    (b) Technical and Conforming Amendment.--Section 1956(c)(7)(D) of 
title 18, United States Code (as amended by section 6(2) of this Act) 
is amended by striking ``1014 (relating to fraudulent loan'' and 
inserting ``section 1008 (relating to false statements concerning the 
identity of customers of financial institutions), section 1014 
(relating to fraudulent loan''.
    (c) Clerical Amendment.--The table of sections for chapter 47 of 
title 18, United States Code, is amended by inserting after the item 
relating to section 1007 the following new item:

``1008. False statements concerning the identity of customers of 
                            financial institutions.''.
                                 <all>