[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1920 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1920

  To combat money laundering and protect the United States financial 
 system by addressing the vulnerabilities of private banking to money 
                  laundering, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 10, 1999

Mr. Levin (for himself and Mr. Specter) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To combat money laundering and protect the United States financial 
 system by addressing the vulnerabilities of private banking to 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.

    This Act may be cited as the ``Money Laundering Abatement Act of 
1999''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress makes the following findings:
            (1) Money laundering is a serious problem that enables 
        criminals to reap the rewards of their crimes by hiding the 
        criminal source of their profits.
            (2) When carried out by using banks, money laundering 
        erodes the integrity of our financial institutions.
            (3) United States financial institutions are a critical 
        link in our efforts to combat money laundering.
            (4) 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.
            (5) Private banking is a growing activity among financial 
        institutions based in and operating in the United States.
            (6) The high profitability, competition, high level of 
        secrecy, and close relationships of trust developed between 
        private bankers and their clients make private banking 
        vulnerable to money laundering.
            (7) The use by United States bankers of financial centers 
        located outside of the United States that have weak financial 
        regulatory and reporting regimes and no transparency 
        facilitates global money laundering.
    (b) Purpose.--The purpose of this Act is to eliminate the 
weaknesses in Federal law that allow money laundering to flourish, 
particularly in private banking activities.

SEC. 3. IDENTIFICATION OF ACTUAL OR BENEFICIAL OWNERS OF ACCOUNTS.

    (a) Transactions and Accounts With or on Behalf of Foreign 
Entities.--Subchapter II of chapter 53 of title 31, United States Code, 
is amended by adding at the end the following:
``Sec. 5331. Requirements relating to transactions and accounts with or 
              on behalf of foreign entities
    ``(a) Definitions.--Notwithstanding any other provision of this 
subchapter, in 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 same meaning as 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, or the Commonwealth of Puerto 
        Rico.
    ``(b) Prohibition on Opening or Maintaining Accounts Belonging to 
or for the Benefit of Unidentified Owners.--A depository institution or 
a branch of a foreign bank (as defined in section 1 of the 
International Banking Act of 1978) may not open or maintain any account 
in the United States for a foreign entity or a representative of a 
foreign entity, unless--
            ``(1) for each such account, the institution completes and 
        maintains in the United States a form or record identifying, by 
        a verifiable name and account number, 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.
    ``(c) Prohibition on Opening or Maintaining Correspondent Accounts 
or Correspondent Bank Relationship With Certain Foreign Banks.--A 
depository institution, or branch of a foreign bank, as defined in 
section 1 of the International Banking Act of 1978, 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 
(other than in the case of an affiliate of a branch of a foreign bank), 
that--
            ``(1) is organized under the laws of a jurisdiction outside 
        of the United States; and
            ``(2) is not subject to comprehensive supervision or 
        regulation on a consolidated basis by the appropriate 
        authorities in such jurisdiction.
    ``(d) 48-Hour Rule.--Not later than 48 hours after receiving a 
request by the appropriate Federal banking agency (as defined in 
section 3 of the Federal Deposit Insurance Act) for information related 
to anti-money laundering compliance by a financial institution or a 
customer of that institution, a financial institution shall provide to 
the requesting agency, or make available at a location specified by the 
representative of the agency, information and account documentation for 
any account opened, maintained, or managed in the United States by the 
financial institution.''.
    (b) Technical and Conforming 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:

``5331. Requirements relating to transactions and accounts with or on 
                            behalf of foreign entities.''.
    (c) Effective Date.--The amendments made by this section shall 
apply--
            (1) with respect to any account opened on or after the date 
        of enactment of this Act, as of such date; and
            (2) with respect to any account opened before the date of 
        enactment of this Act, as of the end of the 6-month period 
        beginning on such date.

SEC. 4. PROPER MAINTENANCE OF CONCENTRATION ACCOUNTS AT FINANCIAL 
              INSTITUTIONS.

    Section 5318(h) of title 31, United States Code, is amended by 
adding at the end the following:
            ``(3) Availability of certain account information.--The 
        Secretary shall prescribe regulations under this subsection 
        that govern maintenance of concentration accounts by financial 
        institutions, in order to ensure that such accounts are not 
        used to prevent association of the identity of an individual 
        customer with the movement of funds of which the customer is 
        the direct or beneficial owner, which regulations shall, at a 
        minimum--
                    ``(A) prohibit financial institutions from allowing 
                clients to direct transactions that move their funds 
                into, out of, or through the concentration accounts of 
                the financial institution;
                    ``(B) prohibit financial institutions and their 
                employees from informing customers of the existence of, 
                or means of identifying, the concentration accounts of 
                the institution; and
                    ``(C) require each financial institution to 
                establish written procedures governing the 
                documentation of all transactions involving a 
                concentration account, which procedures shall ensure 
                that, any time a transaction involving a concentration 
                account commingles funds belonging to 1 or more 
                customers, the identity of, and specific amount 
                belonging to, each customer is documented.''.

SEC. 5. DUE DILIGENCE REQUIRED FOR PRIVATE BANKING.

    The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
amended by inserting after section 10 the following:

``SEC. 5A. DUE DILIGENCE.

    ``(a) Private Banking.--In fulfillment of its anti-money laundering 
obligations under section 5318(h) of title 31, United States Code, each 
depository institution that engages in private banking shall establish 
due diligence procedures for opening and reviewing, on an ongoing 
basis, accounts of private banking customers.
    ``(b) Minimum Standards.--The due diligence procedures required by 
paragraph (1) shall, at a minimum, ensure that the depository 
institution knows and verifies, through probative documentation, the 
identity and financial background of each private banking customer of 
the institution and obtains sufficient information about the source of 
funds of the customer to meet the anti-money laundering obligations of 
the institution.
    ``(c) Compliance Review.--The appropriate Federal banking agencies 
shall review compliance with the requirements of this section as part 
of each examination of a depository institution under this Act.
    ``(d) Regulations.--The Board of Governors of the Federal Reserve 
System shall, after consultation with the other appropriate Federal 
banking agencies, define the term `private banking' by regulation for 
purposes of this section.''.

SEC. 6. SUPPLEMENTATION OF CRIMES CONSTITUTING MONEY LAUNDERING.

    Section 1956(c)(7)(B) of title 18, United States Code, is amended--
            (1) by striking clause (ii) and inserting the following:
                            ``(ii) any conduct constituting a crime of 
                        violence;''; and
            (2) by adding at the end the following:
                            ``(iv) fraud, or any scheme to defraud, 
                        committed against a foreign government or 
                        foreign governmental entity under the laws of 
                        that government or entity;
                            ``(v) bribery of a foreign public official, 
                        or the misappropriation, theft, or embezzlement 
                        of public funds by or for the benefit of a 
                        foreign public official under the laws of the 
                        country in which the subject conduct occurred 
                        or in which the public official holds office;
                            ``(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;''.

SEC. 7. PROHIBITION ON 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:
``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;
            ``(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;
            ``(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 not more than 5 years, or 
both.
    ``(b) Definitions.--In this section:
            ``(1) 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.
            ``(2) 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).''.
    (b) Technical and Conforming Amendments.--
            (1) Title 18, united states code.--Section 1956(c)(7)(D) of 
        title 18, United States Code, 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''.
            (2) Table of sections.--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:

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

SEC. 8. APPROPRIATION FOR FINCEN TO IMPLEMENT SAR/CTR ALERT DATABASE.

    There is authorized to be appropriated $1,000,000, to remain 
available until expended, for the Financial Crimes Enforcement Network 
of the Department of the Treasury to implement an automated database 
that will alert law enforcement officials if Currency Transaction 
Reports or Suspicious Activity Reports disclose patterns that may 
indicate illegal activity, including any instance in which multiple 
Currency Transaction Reports or Suspicious Activity Reports name the 
same individual within a prescribed period of time.

SEC. 9. LONG-ARM JURISDICTION OVER FOREIGN MONEY LAUNDERERS.

    Section 1956(b) of title 18, United States Code, is amended--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively;
            (2) by inserting ``(1)'' after ``(b)'';
            (3) by inserting ``, or section 1957'' after ``or (a)(3)''; 
        and
            (4) by adding at the end the following:
    ``(2) For purposes of adjudicating an action filed or enforcing a 
penalty ordered under this section, the district courts shall have 
jurisdiction over any foreign person, including any financial 
institution authorized under the laws of a foreign country, that 
commits an offense under subsection (a) involving a financial 
transaction that occurs in whole or in part in the United States, if 
service of process upon such foreign person is made under the Federal 
Rules of Civil Procedure or the laws of the country in which the 
foreign person is found.
    ``(3) The court may issue a pretrial restraining order or take any 
other action necessary to ensure that any bank account or other 
property held by the defendant in the United States is available to 
satisfy a judgment under this section.''.

SEC. 10. LAUNDERING MONEY THROUGH A FOREIGN BANK.

    Section 1956(c)(6) of title 18, United States Code, is amended to 
read as follows:
            ``(6) the term `financial institution' includes--
                    ``(A) any financial institution described in 
                section 5312(a)(2) of title 31, or the regulations 
                promulgated thereunder; and
                    ``(B) any foreign bank, as defined in section 
                1(b)(7) of the International Banking Act of 1978 (12 
                U.S.C. 3101(7)).''.

SEC. 11. EFFECTIVE DATE.

    Except as otherwise specifically provided in this Act, this Act and 
the amendments made by this Act shall take effect 90 days after the 
date of enactment of this Act.
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