[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 530 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 530

To provide that the ``Know Your Customer'' regulations proposed by the 
 Federal banking agencies may not take effect unless such regulations 
  are specifically authorized by a subsequent Act of Congress and to 
 require the Federal banking agencies to conduct a comprehensive study 
     on various economic and privacy issues raised by the proposed 
regulations and submit a report on such study to the Congress, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 3, 1999

Mr. Barr of Georgia (for himself, Mr. DeLay, Mr. Baker, Mr. Chambliss, 
and Mr. Campbell) introduced the following bill; which was referred to 
            the Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
To provide that the ``Know Your Customer'' regulations proposed by the 
 Federal banking agencies may not take effect unless such regulations 
  are specifically authorized by a subsequent Act of Congress and to 
 require the Federal banking agencies to conduct a comprehensive study 
     on various economic and privacy issues raised by the proposed 
regulations and submit a report on such study to the Congress, 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 ```American Financial Institutions' 
Privacy Act''.

SEC. 2. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Depository institution; federal banking agencies.--The 
        terms ``depository institution'' and ``Federal banking 
        agencies'' have the meaning given to such terms in section 3 of 
        the Federal Deposit Insurance Act.
            (2) ``Know your customer'' regulation.--
                    (A) In general.--The term ```Know Your Customer' 
                regulation'' means any regulation prescribed by the 
                Secretary or any Federal banking agency which requires 
                any depository institution to establish a program to--
                            (i) determine the identity of the customers 
                        or prospective customers of the depository 
                        institution;
                            (ii) determine the sources of funds of the 
                        institution's customers;
                            (iii) determine the normal and expected 
                        transactions of the institution's customers; 
                        and
                            (iv) monitor the account activity of each 
                        customer for transactions that are inconsistent 
                        with the normal and expected transaction of 
                        such customer.
                    (B) Inclusive of flexible programs.--A regulation 
                meets the definition described in subparagraph (A) if 
                the purposes of the requirements of the regulation are 
                described in such subparagraph whether or not the 
                regulation provides depository institutions some 
                flexibility in designing a program to meet such 
                requirements on the basis of the type, size, and 
                complexity of the institution, the types of customers 
                served by the institution, the nature and extent of the 
                financial activities of the customers of the 
                institution, and the risk of illegal activities 
                involving such institution or customer.
            (3) Secretary.--The term ``Secretary''--
                    (A) means the Secretary of the Treasury; and
                    (B) includes any entity established by the 
                Secretary, such as the Financial Crimes Enforcement 
                Network, to exercise the rights, powers, and duties 
                delegated to such entity by the Secretary.

SEC. 3. PROHIBITION ON ``KNOW YOUR CUSTOMER'' REGULATIONS UNLESS 
              SPECIFICALLY AUTHORIZED BY A SUBSEQUENT ACT OF CONGRESS.

    Any ``Know Your Customer'' regulation prescribed by the Secretary 
or any Federal banking agency shall not have any force or effect after 
the date of the enactment of this Act, unless the Secretary or such 
agency is authorized to prescribe such regulation by a specific 
provision in an Act of Congress enacted after the date of the enactment 
of this Act.

SEC. 4. COMPREHENSIVE STUDY REQUIRED.

    (a) In General.--The Secretary and the Federal banking agencies 
shall jointly conduct a comprehensive study of--
            (1) the extent to which any ``Know Your Customer'' 
        regulation prescribed by the Secretary or any such agency 
        would--
                    (A) invade the privacy of individual law-abiding 
                Americans and their families; and
                    (B) impinge on the freedom of association and other 
                rights protected under the first 10 Amendments to the 
                Constitution of the United States;
            (2) the effect any such ``Know Your Customer'' regulation 
        would likely have on traditional banking relationships of 
        individuals and their families;
            (3) the extent of the economic burden of any ``Know Your 
        Customer'' regulation on small depository institutions; and
            (4) practical alternatives to ``Know Your Customer'' 
        regulations.
    (b) Report to Congress.--The Secretary and the Federal banking 
agencies shall submit to the Congress a detailed report of the findings 
and conclusions of the Secretary and such agencies in connection with 
the study conducted pursuant to subsection (a), together with such 
recommendations for legislative or administrative action as the 
Secretary and such agencies may determine to be appropriate.
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