[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2905 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2905

To eliminate money laundering in the private banking system, to require 
 the Secretary of the Treasury to take certain actions with regard to 
foreign countries in which there is a concentration of money laundering 
                  activities, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 21, 1999

  Ms. Waters (for herself, Mr. Vento, Ms. Velazquez, and Mr. Hinchey) 
 introduced the following bill; which was referred to the Committee on 
                     Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
To eliminate money laundering in the private banking system, to require 
 the Secretary of the Treasury to take certain actions with regard to 
foreign countries in which there is a concentration of money laundering 
                  activities, 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 ``Integrity in Banking and Money 
Laundering Prevention Act of 1999''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds as follows:
            (1) Money laundering is a serious problem: between 
        $100,000,000,000 and $300,000,000,000 in United States currency 
        is ``laundered'' each year and the total dollar amount involved 
        in international money laundering likely exceeds 
        $500,000,000,000.
            (2) Money laundering is critical to the survival of the 
        illicit drug trade, which has annual worldwide revenues of more 
        than $400,000,000,000, more than 8 percent of the total value 
        of international trade.
            (3) Money laundering affords drug dealers, terrorists, arms 
        dealers, and other criminals the opportunity to erode the 
        integrity of our financial institutions.
            (4) Through money laundering, criminals are able to hide 
        profits from narcotics sales, tax fraud, terrorism, and arms 
        smuggling.
            (5) Money laundering by international criminal enterprises 
        challenges the legitimate authority of national governments, 
        corrupts government institutions, endangers the financial and 
        economic stability of nations, and routinely violates legal 
        norms, property rights, and human rights.
            (6) United States financial institutions are a critical 
        link in our efforts to combat money laundering.
            (7) The high profitability, intense competition, high level 
        of confidentiality, and close relationships of trust developed 
        between private bankers and their clients make private banking 
        vulnerable to money laundering, and it is estimated that 
        private banking services have banking assets ranging from 
        $200,000,000,000 to $300,000,000,000.
            (8) As private banking grows, and competition for high net 
        worth individuals as customers increases, anti-money laundering 
        legislation should be extended to reach all financial 
        institutions, including such entities as securities brokers and 
        dealers.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To ensure that United States financial institutions 
        make combating money laundering the highest of priorities.
            (2) To close the existing gaps in law that allow money 
        laundering to flourish in the private banking system.
            (3) To designate foreign high-intensity money laundering 
        areas for the purpose of targeting areas of concentrated money 
        laundering activities.
            (4) To establish a comprehensive report on the extent of 
        private banking by banks and other financial institutions 
        operating within the United States.
            (5) To prevent the abuse of concentration, omnibus, or 
        suspense accounts by money launderers and drug traffickers.
            (6) To enhance the ability of law enforcement officials to 
        reconstruct an audit trail in the course of a criminal 
        investigation by requiring United States financial institutions 
        to maintain documentation of offshore accounts.
            (7) To subject securities brokers and dealers to the 
        suspicious activities reporting requirements to which 
        depository institutions are subject.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Beneficial owner.--The term ``beneficial owner'', with 
        respect to an account at a financial institution, any person or 
        group which controls the account or for whose benefit the 
        account is maintained.
            (2) Concentration account.--The term ``concentration 
        account'' means a business account maintained by a financial 
        institution in which funds from various sources are commingled.
            (3) Financial institution.--The term ``financial 
        institution'' has the meaning given to such term in section 
        5312(a)(2) of title 31, United States Code.
            (4) High net worth individual.--The term ``high net worth 
        individual'' means any individual--
                    (A) whose individual net worth, or, in the case of 
                a married individual, whose joint net worth (with such 
                individual's spouse), exceeds $1,000,000; or
                    (B) who had--
                            (i) individual gross income in excess 
                        $400,000 in each of the 2 preceding calendar 
                        years; or
                            (ii) who had joint gross income (with such 
                        individuals spouse) in excess of $600,000 in 
                        each of the 2 preceding calendar years,
                and who has a reasonable expectation of achieving gross 
                income in the current calendar year in excess of the 
                amount described in clause (i) or (ii), as the case may 
                be.
            (5) Money laundering.--The term ``money laundering'' means 
        any action or process whereby the existence, illegal source, or 
        illegal application or expenditure of income is concealed or 
        disguised so as to give income the appearance of legitimacy.
            (6) Private banking.--The term ``private banking'' means, 
        with respect to a financial institution, the personal delivery 
        of financial products and services to high net worth 
        individuals, which may include the acceptance of deposits, 
        lending, investing in investment companies, personal trust and 
        estate administration, fund transfer services, establishing 
        payable through accounts, the establishment of accounts in 
        foreign banks, and other services which are not provided 
        generally to all clients of the financial institution.

SEC. 4. REPORT ON PRIVATE BANKING ACTIVITIES.

    (a) In General.--Before the end of the 18-month period beginning on 
the date of the enactment of this Act, the Secretary of the Treasury, 
in consultation with the Securities and Exchange Commission and the 
Federal banking agencies (as defined in section 3(z) of the Federal 
Deposit Insurance Act) shall submit a report on private banking 
activities in the United States 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.
    (b) Contents of Report.--The report required under subsection (a) 
shall include information on the following:
            (1) The nature and extent of private banking in the United 
        States.
            (2) Regulatory efforts to monitor private banking and 
        ensure that such private banking operations are conducted in 
        compliance with subchapter II of chapter 53 of title 31, United 
        States Code, and section 21 of the Federal Deposit Insurance 
        Act.
            (3) The policies and procedures of financial institutions 
        that are designed to ensure compliance by such institutions 
        with the requirements of subchapter II of chapter 53 of title 
        31, United States Code, and section 21 of the Federal Deposit 
        Insurance Act.

SEC. 5. REQUIRE THAT ANTI-MONEY LAUNDERING PROGRAMS PROHIBIT MONEY 
              LAUNDERING THROUGH CONCENTRATION ACCOUNTS AT FINANCIAL 
              INSTITUTIONS BY REQUIRING PROPER MAINTENANCE OF SUCH 
              ACCOUNTS.

    Section 5318(h) of title 31, United States Code, is amended by 
adding at the end the following new paragraph:
            ``(3) Availability of certain account information.--The 
        Secretary of the Treasury shall prescribe regulations under 
        this subsection which require financial institutions to 
        maintain all accounts in such a way as to ensure that the name 
        of the account holder and the number of the account are 
        associated with all account activity of the account holder.''

SEC. 6. DESIGNATION OF FOREIGN HIGH-INTENSITY MONEY LAUNDERING AREAS.

    (a) In General.--Subchapter III of chapter 53 of title 31, United 
States Code (as added by the Money Laundering and Financial Crimes 
Strategy Act of 1998) is amended by adding at the end the following new 
part:

 ``Part 3--International Money Laundering and Related Financial Crimes

``Sec. 5361. Designation of foreign high-intensity money laundering 
              areas
    ``(a) In General.--The Secretary, in consultation with the Attorney 
General and the Federal banking agencies, shall develop criteria for 
identifying areas outside the United States in which money laundering 
activities are concentrated.
    ``(b) Designation.--The Secretary shall designate as a high-
intensity money laundering area any foreign country in which there is 
an area identified, in accordance with the criteria developed pursuant 
to subsection (a), as an area in which money laundering activities are 
concentrated.
    ``(c) Notice and Warning.--Upon the designation, under subsection 
(b), of a country as a high-intensity money laundering area, the 
Secretary shall provide--
            ``(1) a written notice to each financial institution of the 
        identity of the country designated; and
            ``(2) a written warning that there is a concentration of 
        money laundering activity in such country.''.
    (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:

 ``Part 3--International Money Laundering and Related Financial Crimes

``5361. Designation of foreign high-intensity money laundering 
                            areas.''.

SEC. 7. DOUBLE THE CRIMINAL PENALTIES FOR VIOLATIONS INVOLVING HIGH-
              INTENSITY MONEY LAUNDERING AREAS.

    (a) In General.--Section 5322 of title 31, United States Code, is 
amended by adding at the end the following new subsection:
    ``(d) Doubled Penalty.--The court may double the sentence of fine 
or imprisonment, or both, that could otherwise be imposed on any person 
for a violation described in subsection (a) or (b) if the person 
commits the violation with respect to a transaction involving a person 
in, a relationship maintained for a person in, or a transport of a 
monetary instrument involving a foreign country, knowing that a 
designation of the foreign country as a high-intensity money laundering 
area under section 5361 was in effect at the time of the violation.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to any violation committed on or after the date of 
the enactment of this Act.

SEC. 8. ENHANCED ABILITY TO IDENTIFY PROPERLY THE BENEFICIAL OWNER OF 
              OFFSHORE ACCOUNT.

    Section 5318 of title 31, United States Code, is amended by adding 
at the end the following new subsection:
    ``(i) Requirements Relating to Effective Enforcement of 
Subchapter.--
            ``(1) In general.--In an effort to assist law enforcement 
        in tracing funds identifying beneficial owners of accounts set 
        up by financial institutions in the United States, the 
        Secretary of the Treasury shall require any domestic financial 
        institution making a transaction for any person or maintaining 
        a relation for any person with a foreign financial institution 
        or a foreign financial agency, including a foreign branch or 
        subsidiary of the domestic financial institution, to keep and 
        maintain records within the United States of the beneficial 
        owner of any accounts outside the United States to which funds 
        of that person are transferred by the domestic financial 
        institution or at a place--
                    ``(A) where a summons under this section to produce 
                such records is legally effective; and
                    ``(B) from which the records are capable of being 
                delivered to the place designated in accordance with 
                subsection (c)(1) within 48 hours of the receipt of the 
                summons.
            ``(2) Information in records.--The records required under 
        paragraph (1) shall contain the following information in the 
        manner and to the extent that the Secretary prescribes in 
        regulations, and subject to such exemptions as the Secretary 
        determines to be appropriate:
                    ``(A) The identity and address of participants in a 
                transaction or relationship.
                    ``(B) The legal capacity in which a participant is 
                acting.
                    ``(C) The identity of the real parties in 
                interest.''.

SEC. 9. REGULATIONS RELATING TO SUSPICIOUS ACTIVITY REPORTS BY BROKERS 
              AND DEALERS.

    Before the end of the 1-year period beginning on the date of the 
enactment of this Act, the Secretary of the Treasury, in consultation 
with the Securities and Exchange Commission, shall prescribe 
regulations in final form under section 5318(g) of title 31, United 
States Code, requiring brokers and dealers registered with the 
Securities and Exchange Commission under the Securities Exchange Act of 
1934 to report, in accordance with such section 5318(g), any suspicious 
transaction relevant to a possible violation of law or regulation.
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