[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 466 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 466

  To provide that ``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, to require 
 a comprehensive study and report to the Congress on various economic 
 and privacy issues raised by the proposed regulations, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 25, 1999

 Mr. Jeffords introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To provide that ``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, to require 
 a comprehensive study and report to the Congress on various economic 
 and privacy issues raised by the proposed regulations, 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 of 1999''.

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 same meanings as 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 
                        customers of the institution;
                            (iii) determine the normal and expected 
                        transactions of the customers of the 
                        institution; 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 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 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 that 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.--Not later than 180 days after the date of 
enactment of this Act, 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.
                                 <all>