[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3886 Introduced in House (IH)]
106th CONGRESS
2d Session
H. R. 3886
To combat international money laundering, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 9, 2000
Mr. Leach (for himself, Mr. LaFalce, Mrs. Roukema, and Mr. Vento)
introduced the following bill; which was referred to the Committee on
Banking and Financial Services
_______________________________________________________________________
A BILL
To combat international money laundering, 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``International
Counter-Money Laundering Act of 2000''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
TITLE I--INTERNATIONAL COUNTER-MONEY LAUNDERING MEASURES
Sec. 101. Special measures for jurisdictions, financial institutions,
or international transactions of primary
money laundering concern.
TITLE II--CURRENCY TRANSACTION REPORTING AMENDMENTS AND RELATED
IMPROVEMENTS
Sec. 201. Amendments relating to reporting of suspicious activities.
Sec. 202. Penalties for violations of geographic targeting orders and
certain recordkeeping requirements, and
lengthening effective period of geographic
targeting orders.
Sec. 203. Authorization to include suspicions of illegal activity in
written employment references.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds as follows:
(1) International money laundering provides the financial
fuel that permits international criminal enterprises to conduct
and expand their operations to the detriment of the safety and
security of American citizens.
(2) Money launderers subvert legitimate financial
mechanisms and banking relationships by using them as
protective covering for the movement of criminal proceeds and,
by so doing, can undermine the integrity of our financial
institutions and of the global financial and trading systems
upon which our prosperity and growth depend.
(3) Money launderers rely upon the existence and use of
certain jurisdictions outside the United States that offer bank
secrecy and special tax or regulatory advantages to
nonresidents, and often complement those advantages with weak
financial supervisory and regulatory regimes.
(4) Certain kinds of transactions involving such offshore
jurisdictions--for example, those transactions specifically
designed to offer anonymity or the avoidance of regulatory
scrutiny--make it even more difficult for law enforcement and
regulators to follow the trail of money earned by criminals who
traffic in human misery, whether they are narcotics dealers,
pornographers, terrorists, arms smugglers, or those whose
frauds prey upon law abiding citizens.
(5) Certain banking relationships between financial
institutions in the United States and financial institutions
located in such offshore jurisdictions, such as correspondent
and payable-through accounts, are particularly vulnerable to
abuse because of the difficulty in obtaining accurate
information about the beneficial owners whose funds pass
through such accounts.
(6) The ability to mount effective counter-measures to
international money launderers requires national, as well as
bilateral and multilateral action, using tools specially
designed for that use.
(b) Purposes.--The purposes of this Act are as follows:
(1) To ensure that banking transactions and financial
relationships, the conduct of such transactions and
relationships, or both, do not contravene the purposes of
subchapter II of chapter 53 of title 31, United States Code,
section 21 of the Federal Deposit Insurance Act, and chapter 2
of title I of Public Law 91-508, or facilitate the evasion of
any such provision, to ensure that the purposes of such
subchapter II continue to be fulfilled, and to guard against
international money laundering and other financial crimes.
(2) To provide a clear national mandate for subjecting to
special scrutiny those foreign jurisdictions, financial
institutions operating outside the United States, and classes
of international transactions that pose particular,
identifiable opportunities for money laundering.
(3) To provide the Secretary of the Treasury with broad
discretionary authority to take certain measures tailored to
the particular money laundering problems presented by specific
foreign jurisdictions, financial institutions operating outside
the United States, and classes of international transactions.
(4) To provide domestic financial institutions with
guidance on which foreign jurisdictions, financial institutions
operating outside the United States, and classes of
international transactions are of primary money laundering
concern to the United States government.
(5) To encourage the filing of suspicious activity reports
by financial institutions by improving the terms of the safe
harbor from civil liability for filing such reports.
(6) To strengthen the Secretary's authority to issue and
administer geographic targeting orders, and to clarify that
violations of such orders or any other requirement imposed
under the authority contained in chapter 2 of title I of Public
Law 91-508 and subchapters II and III of chapter 53 of title
31, United States Code, may result in criminal and civil
penalties.
(7) To strengthen the ability of financial institutions to
maintain the integrity of their employee population.
TITLE I--INTERNATIONAL COUNTER-MONEY LAUNDERING MEASURES
SEC. 101. SPECIAL MEASURES FOR JURISDICTIONS, FINANCIAL INSTITUTIONS,
OR INTERNATIONAL TRANSACTIONS OF PRIMARY MONEY LAUNDERING
CONCERN.
(a) In General.--Subchapter II of chapter 53 of title 31, United
States Code, is amended by inserting after section 5318 the following
new section:
``Sec. 5318A. Special measures for jurisdictions, financial
institutions, or international transactions of primary
money laundering concern
``(a) International Counter-Money Laundering Requirements.--
``(1) In general.--The Secretary may require domestic
financial institutions and domestic financial agencies to take
1 or more of the special measures described in subsection (b)
if the Secretary finds that reasonable grounds exist for
concluding that a jurisdiction outside the United States, 1 or
more financial institutions operating outside the United
States, or 1 or more classes of transactions within or
involving a jurisdiction outside the United States is of
primary money laundering concern, in accordance with subsection
(c).
``(2) Form of requirement.--The special measures described
in subsection (b) may be imposed by regulation, order, or
otherwise as permitted by law, and in such sequence or
combination, as the Secretary shall determine.
``(3) Process.--
``(A) In general.--In selecting which special
measure or measures to take under this subsection, the
Secretary shall consult with the Chairman of the Board
of Governors of the Federal Reserve System.
``(B) Factors.--The Secretary also shall consider--
``(i) whether similar action has been or is
being taken by other nations or multilateral
groups;
``(ii) whether the imposition of any
particular special measure would create a
significant competitive disadvantage for
financial institutions organized in the United
States; and
``(iii) the extent to which the action
would have a significant adverse systemic
impact on the international payment, clearance
and settlement system, or on legitimate
business activities involving the particular
jurisdiction.
``(4) No limitation on other authority.--This section shall
not be construed as superseding or otherwise restricting any
other authority granted to the Secretary, or to any other
agency, by this subchapter or otherwise.
``(b) Special Measures.--The special measures referred to in
subsection (a), with respect to a jurisdiction outside the United
States, financial institution operating outside the United States, or
class of transaction within or involving a jurisdiction outside the
United States, are as follows:
``(1) Recordkeeping and reporting of certain financial
transactions.--
``(A) In general.--The Secretary may require a
domestic financial institution or domestic financial
agency to maintain records, file reports, or both,
concerning the aggregate amount of transactions, or
concerning each transaction, with respect to a
jurisdiction outside the United States, 1 or more
financial institutions operating outside the United
States, or 1 or more classes of transactions within or
involving a jurisdiction outside the United States, if
the Secretary finds any such jurisdiction, institution,
or transaction to be of primary money laundering
concern.
``(B) Form of records and reports.--Such records
and reports shall be made and retained at such time, in
such manner, and for such period of time, as the
Secretary shall determine, and shall include such
information as the Secretary may determine, including--
``(i) the identity and address of the
participants in a transaction or relationship,
including the identity of the originator of any
funds transfer;
``(ii) the legal capacity in which a
participant in any transaction is acting;
``(iii) the identity of the beneficial
owner of the funds involved in any transaction;
and
``(iv) a description of any transaction.
``(2) Identification of beneficial owner.--The Secretary
may require any domestic financial institution or domestic
financial agency to obtain and retain information concerning the
identity of each beneficial owner, and any agent of such beneficial
owner, of any account opened or maintained in the United States by a
foreign person (other than a foreign entity some or all of whose shares
are publicly-traded), or a representative of such a foreign person,
that involves a jurisdiction outside the United States, 1 or more
financial institutions operating outside the United States, or 1 or
more classes of transactions within or involving a jurisdiction outside
the United States, if the Secretary finds any such jurisdiction,
institution, or transaction to be of primary money laundering concern.
``(3) Information relating to certain payable-through
accounts.--If the Secretary finds a jurisdiction outside the
United States, 1 or more financial institutions operating
outside the United States, or 1 or more classes of transactions
within or involving a jurisdiction outside the United States to
be of primary money laundering concern, the Secretary may
require any domestic financial institution or domestic
financial agency that opens or maintains a payable-through
account in the United States for a foreign financial
institution involving any such jurisdiction or any such
financial institution operating outside the United States, or a
payable-through account through which any such transaction may
be conducted, as a condition of opening or maintaining such
account, to--
``(A) identify each customer (and representative of
such customer) of such financial institution who is
permitted to use, or whose transactions are routed
through, such payable-through account; and
``(B) obtain, with respect to each such customer
(and each such representative), the same information
that the depository institution obtains in the ordinary
course of business with respect to customers residing
in the United States.
``(4) Information relating to certain correspondent
accounts.--If the Secretary finds a jurisdiction outside the
United States, 1 or more financial institutions operating
outside the United States, or 1 or more classes of transactions
within or involving a jurisdiction outside the United States to
be of primary money laundering concern, the Secretary may
require any domestic financial institution or domestic
financial agency that opens or maintains a correspondent
account in the United States for a foreign financial
institution involving any such jurisdiction or any such
financial institution operating outside the United States, or a
correspondent account through which any such transaction may be
conducted, as a condition of opening or maintaining such
account, to--
``(A) identify each customer (and representative of
such customer) of any such financial institution who is
permitted to use, or whose transactions are routed
through, such correspondent account; and
``(B) obtain, with respect to each such customer
(and each such representative), the same information
that the depository institution obtains in the ordinary
course with respect to customers residing in the United
States.
``(5) Prohibitions or conditions on opening or maintaining
certain correspondent or payable-through accounts.--If the
Secretary finds a jurisdiction outside the United States, 1 or
more financial institutions operating outside the United
States, or 1 or more classes of transactions within or
involving a jurisdiction outside the United States to be of
primary money laundering concern, the Secretary, in
consultation with the Secretary of State and the Attorney
General, may prohibit, or impose conditions upon, the opening
or maintaining in the United States of a correspondent account
or payable-through account by a domestic financial institution
or domestic financial agency for or on behalf of a foreign
banking institution if such correspondent account or payable-
through account involves any such jurisdiction or institution,
or if any such transaction may be conducted through such
correspondent account or payable-through account.
``(c) Information To Be Considered in Finding Jurisdictions,
Institutions, or Transactions To Be of Primary Money Laundering
Concern.--
``(1) In general.--In making a finding that reasonable
grounds exist for concluding that a jurisdiction outside the
United States, 1 or more financial institutions operating
outside the United States, or 1 or more classes of transactions
within or involving a jurisdiction outside the United States is
of primary money laundering concern so as to allow the
Secretary to invoke 1 or more of the special measures of
subsection (b), the Secretary shall consult with the Secretary
of State and the Attorney General.
``(2) Information.--The Secretary also shall consider such
information as the Secretary considers to be relevant,
including the following potentially relevant factors:
``(A) In the case of a particular jurisdiction--
``(i) the extent to which that jurisdiction
or financial institutions operating therein
offer bank secrecy or special tax or regulatory
advantages to nonresidents or nondomiciliaries
of such jurisdiction;
``(ii) the substance and quality of
administration of the jurisdiction's bank
supervisory and counter-money laundering laws;
``(iii) the relationship between the volume
of financial transactions occurring in that
jurisdiction and the size of the jurisdiction's
economy;
``(iv) the extent to which the jurisdiction
is characterized as a tax haven or offshore
banking or secrecy haven by credible
international organizations or multilateral
expert groups; and
``(v) the experience of United States law
enforcement officials, regulatory officials,
and tax administrators in obtaining information
about transactions originating in or routed
through or to such jurisdictions;
``(B) In the case of a decision to apply 1 or more
of the special measures described in subsection (b)
only to a financial institution or institutions, or to
a transaction or class of transactions, or to both,
within or involving a particular jurisdiction--
``(i) the extent to which such financial
institutions or transactions are used to
facilitate or promote money laundering in or
through the jurisdiction;
``(ii) the extent to which such
institutions or transactions are used for
legitimate business purposes in such
jurisdiction; and
``(iii) the extent to which such action is
sufficient to ensure, with respect to
transactions involving such jurisdiction and
institutions operating in such jurisdiction,
that the purposes of this subchapter continue
to be fulfilled, and to guard against
international money laundering and other
financial crimes.
``(d) Definitions.--Notwithstanding any other provision of this
subchapter, for purposes of this section, the following definitions
shall apply:
``(1) Defined terms.--
``(A) Bank definitions.--The following definitions
shall apply with respect to a bank:
``(i) Account.--The term `account'--
``(I) means a formal banking or
business relationship established to
provide regular services, dealings, and
other financial transactions; and
``(II) includes a demand deposit,
savings deposit, or other transaction
or asset account and a credit account
or other extension of credit.
``(ii) Correspondent account.--The term
`correspondent account' means an account
established to receive deposits from and make
payments on behalf of a correspondent bank.
``(iii) 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.
``(B) Definitions applicable to institutions other
than banks.--With respect to any financial institution
other than a bank, the Secretary shall define, by
regulation, order, or otherwise as permitted by law,
the term `account' and shall include within the meaning
of such term arrangements similar to payable-through
and correspondent accounts.
``(2) Other terms.--The Secretary may, by regulation,
order, or otherwise as permitted by law, further define the
terms in paragraph (1) and define other terms for the purposes
of this section, as the Secretary deems appropriate.''.
(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 5318 the following new item:
``5318A. Special measures for jurisdictions, financial institutions, or
international transactions of primary money
laundering concern.''.
TITLE II--CURRENCY TRANSACTION REPORTING AMENDMENTS AND RELATED
IMPROVEMENTS
SEC. 201. 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 voluntary disclosure
of any possible violation of law or
regulation to a 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 of
any State, 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 subchapter II of chapter 53 of
title 31, United States Code.
``(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 a 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
``(ii) no officer or employee of the
Federal Government or of any state, local,
tribal, or territorial government within the
United States, who has any knowledge that such
report was made may disclose to any person
involved in the transaction that the
transaction has been reported other than as
necessary to fulfill any such person's duties
as required by law.
``(B) Disclosures in certain employment
references.--Notwithstanding the application of
subparagraph (A) in any other context, 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 section 18(v) of the Federal Deposit Insurance Act
in response to a request from another financial
institution or a written termination notice or
employment reference that is provided in accordance
with the rules of the self-regulatory organizations
registered with the Securities and Exchange Commission,
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.''.
SEC. 202. PENALTIES FOR VIOLATIONS OF GEOGRAPHIC TARGETING ORDERS AND
CERTAIN RECORDKEEPING REQUIREMENTS, AND LENGTHENING
EFFECTIVE PERIOD OF GEOGRAPHIC TARGETING ORDERS.
(a) Civil Penalty for Violation of Targeting Order.--Section
5321(a)(1) of title 31, United States Code, is amended--
(1) by inserting ``or order issued'' after ``subchapter or
a regulation prescribed''; and
(2) by inserting ``, or willfully violating a regulation
prescribed under section 21 of the Federal Deposit Insurance
Act or section 123 of Public Law 91-508,'' after ``section 5314
and 5315)''.
(b) Criminal Penalties for Violation of Targeting order.--Section
5322 of title 31, United States Code, is amended--
(1) in subsection (a)--
(A) by inserting ``or order issued'' after
``willfully violating this subchapter or a regulation
prescribed''; and
(B) by inserting ``, or willfully violating a
regulation prescribed under section 21 of the Federal
Deposit Insurance Act or section 123 of Public Law 91-
508,'' after ``under section 5315 or 5324),'';
(2) in subsection (b)--
(A) by inserting ``or order issued'' after
``willfully violating this subchapter or a regulation
prescribed''; and
(B) by inserting ``or willfully violating a
regulation prescribed under section 21 of the Federal
Deposit Insurance Act or section 123 of Public Law 91-
508,'' after ``under section 5315 or 5324),''.
(c) Structuring Transactions To Evade Targeting Order or Certain
Recordkeeping Requirements.--Section 5324(a) of title 31, United States
Code, is amended--
(1) by inserting a comma after ``shall'';
(2) by striking ``section--'' and inserting ``section, the
reporting or recordkeeping requirements imposed by any order
issued under section 5326, or the recordkeeping requirements
imposed by any regulation prescribed under section 21 of the
Federal Deposit Insurance Act or section 123 of Public Law 91-
508--'';
(3) in paragraph (1) by inserting ``, to file a report or
to maintain a record required by an order issued under section
5326, or to maintain a record required pursuant to any
regulation prescribed under section 21 of the Federal Deposit
Insurance Act or section 123 of Public Law 91-508'' after
``regulation prescribed under any such section''; and
(4) in paragraph (2) by inserting ``, to file a report or
to maintain a record required by any order issued under section
5326, or to maintain a record required pursuant to any
regulation prescribed under section 5326, or to maintain a
record required pursuant to any regulation prescribed under
section 21 of the Federal Deposit Insurance Act or section 123
of Public Law 91-508,'' after ``regulation prescribed under any
such section''.
(d) Lengthening Effective Period of Geographic Targeting Orders.--
Section 5326(d) of title 31, United States Code, is amended by striking
``60'' after ``shall be effective for more than'' and inserting
``180''.
SEC. 203. AUTHORIZATION TO INCLUDE SUSPICIONS OF ILLEGAL ACTIVITY IN
WRITTEN EMPLOYMENT REFERENCES.
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is
amended by adding at the end the following new paragraph:
``(v) Written Employment References May Contain Suspicions of
Involvement in Illegal Activity.--
``(1) In general.--Notwithstanding any other provision of
law, any insured depository 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 insured depository institution in
response to a request from such other institution, information
concerning the possible involvement of such institution-
affiliated party in potentially unlawful activity.''
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