Short title

This Act may be cited as the

CTR Modernization Act

Purposes

The purposes of this Act are as follows: (1)To improve the quality and usefulness of currency transaction reports in criminal, tax, and regulatory investigations or proceedings. (2)To eliminate filing currency transaction reports related to many innocent, infrequent, or idiosyncratic deposit activities. (3)To further focus anti-money laundering investigations and prosecutions by reducing the number of spurious, duplicative, and innocent currency transaction reports and increasing the usefulness of suspicious activity reports. (4)To maintain the high degree of usefulness of currency transaction reports and adjust for inflation and current financial practices the threshold for currency transaction reports to a level consistent with the amount established pursuant to Public Law 91–508 upon the enactment of such Public Law in 1970. (5)To increase the usefulness of data collected through currency transaction reports and suspicious activity reports and for other purposes.

Modification of currency transaction reporting threshold

(a)

Threshold

(1)

Nondepository institutions

The 1st sentence of section 5313(a) of title 31, United States Code, is amended by inserting , other than a depository institution, after domestic financial institution. (2)

Depository institutions

Subsection (a) of section 5313 of title 31, United States Code, is amended by inserting after the 1st sentence (as amended by paragraph (1) of this subsection) the following new sentence: When a depository institution is involved in a transaction for the payment, receipt, or transfer of United States coins or currency (or other monetary instruments the Secretary of the Treasury prescribes), in an amount, denomination, or amount and denomination of not less than $30,000 and under circumstances the Secretary prescribes by regulation, the depository institution and any other participant in the transaction the Secretary may prescribe shall file a report on the transaction at the time and in the way the Secretary prescribes.. (b)

Regulation

After the end of the 270-day period beginning on the date of the enactment of the CTR Modernization Act, the Secretary of the Treasury shall not require a depository institution to file a currency transaction report when the transaction involves the transfer of currency of an amount and denomination of less than $30,000. (c)

Technical and conforming amendment

Subsection (c) of section 5312 of title 31, United States Code, is amended by adding at the end the following new paragraph:

(2)

Depository institution

The term depository institution means any insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act) and any insured credit union (as defined in section 101(7) of the Federal Credit Union Act).

Periodic review of reporting threshold and adjustment for inflation

Section 5318 of title 31, United States Code, is amended by adding at the end the following new subsection:

(o)

Periodic review of reporting threshold and adjustment for inflation

(1)

In general

Before the end of the 5-year period beginning on the date of the enactment of the CTR Modernization Act and at least every 5 years after the expiration of such period, the secretary of the treasury shall— (A)solicit and review public comments about the appropriateness, relevance, and utility of the then-current threshold amount or denomination established by the Secretary; (B)review the continuing appropriateness, relevance, and utility of each threshold amount or denomination established by the Secretary, in the Secretary’s discretion, for any report required by the Secretary under this subchapter; and (C)adjust such amount, at such time and in such manner as the Secretary considers appropriate but in no case later than 365 days following the expiration of the public comment period, for any inflation that the Secretary of the Treasury determines has occurred since the date any such amount was established or last adjusted, except that the Secretary of the Treasury shall not reduce such amount to an amount and denomination of less than $30,000. (2)

Report

Before the end of the 365-day period beginning upon the completion of any review by the Secretary of the Treasury under paragraph (1), the Secretary shall submit a report to the Congress containing the findings and conclusions of the Secretary in connection with such review, together with an explanation for any adjustment, or lack of adjustment, of any threshold amount or denomination by the Secretary as a result of such review, including the adjustment for inflation.

Modification of exemption process

(a)

Seasoned customer exemption

Subsection (e) of section 5313 of title 31, United States Code, is amended to read as follows:

(e)

Qualified customer exemption

(1)

In general

Before the end of the 270-day period beginning on the date of the enactment of the CTR Modernization Act, the Secretary of the Treasury shall prescribe regulations that exempt any depository institution from filing a report pursuant to this section in a transaction for the payment, receipt, or transfer of United States coins or currency (or other monetary instruments the Secretary of the Treasury prescribes) with a qualified customer of the depository institution. (2)

Qualified customer defined

For purposes of this section, the term qualified customer, with respect to a depository institution, has such meaning as the Secretary of the Treasury shall prescribe, which shall include any person that— (A)is incorporated or organized under the laws of the United States or any State, including a sole proprietorship (as defined in 31 C.F.R. 103.22(d)(6)(vii), as in effect on May 10, 2006), or is registered as and eligible to do business within the United States or a State; (B)has maintained a deposit account with the depository institution for at least 12 months; and (C)has engaged, using such account, in multiple currency transactions that are subject to the reporting requirements of subsection (a). (3)

Regulations

(A)

In general

The Secretary of the Treasury shall prescribe regulations requiring a depository institution to file a 1-time notice of designation of exemption for each qualified customer of the depository institution. (B)

Form and content of exemption notice

The Secretary shall by regulation prescribe the form, manner, content, and timing of the qualified customer exemption notice and such notice shall include information sufficient to identify the qualified customer and the accounts of the customer. (C)

Authority of Secretary

(i)

In general

The Secretary may suspend, reject, or revoke any qualified customer exemption notice, in accordance with criteria prescribed by the Secretary by regulation. (ii)

Conditions

The Secretary may establish conditions, in accordance with criteria prescribed by regulation, under which exempt qualified customers of an insured depository institution that is merged with or acquired by another insured depository institution will continue to be treated as designated exempt qualified customers of the surviving or acquiring institution.

(b)

3-year review and report

Before the end of the 3-year period beginning on the date of the enactment of this Act, the Secretary of the Treasury, in consultation with the Attorney General, the Secretary of Homeland Security, the Federal banking agencies, the banking industry, and such other persons as the Secretary deems appropriate, shall evaluate the operations and effect of the provisions of the amendment made by subsection (a) and make recommendations to the Congress as to any legislative action with respect to such provision as the Secretary may determine to be appropriate.

Identifying suspicious activity

Subsection 5318(g) of title 31, United States Code, is amended by adding at the end the following new paragraph:

(5)

Guidance on when to file a report

Before the end of the 270-day period beginning on the date of the enactment of the CTR Modernization Act, the Secretary of the Treasury shall prescribe regulations that provide guidance on examples of transactions that— (A)involved funds derived from illegal activities; (B)were designed to evade any requirements under this subchapter, chapter 2 of title I of Public Law 91–508, or the Internal Revenue Code of 1986; and (C)have no business or apparent lawful purpose.

Providing general information regarding suspicious activity report requirements

Subsection 5318(g) of title 31, United States Code, is amended by inserting after paragraph (5) (as added by section 6 of this Act) the following new paragraph:

(6)

General notification to customers

(A)

In general

Before the end of the 270-day period beginning on the date of the enactment of the CTR Modernization Act, the Secretary of the Treasury shall prescribe regulations that create a list of information that may be disclosed to customers prior to the reporting of suspicious activity. (B)

Rule of construction

Subparagraph (A) of this paragraph shall not be construed as creating any immunity from the notification prohibition under paragraph (2).