[Congressional Record Volume 147, Number 112 (Friday, August 3, 2001)]
[Senate]
[Pages S8942-S8949]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself, Mr. Grassley, Mr. Sarbanes, Mr. Nelson 
        of Florida, Mr. Kyl, and Mr. DeWine):
  S. 1371. A bill to combat money laundering and protect the United 
States financial system by strengthening safeguards in private banking 
and correspondent banking, and for other purposes; to the Committee on 
Banking, Housing, and Urban Affairs.
  Mr. LEVIN. Mr. President, today I am introducing, along with my 
colleagues Senator Grassley, Senator Sarbanes, Senator Bill Nelson, 
Senator Mike DeWine, and Senator Jon Kyl, the Money Laundering 
Abatement Act, a bill to modernize and strengthen U.S. laws to detect, 
stop and prosecute money laundering through U.S. banks.
  The safety and soundness of our banking system, the stability of the 
U.S. dollar, the services our banks perform, and the returns our banks 
earn for depositors make the U.S. banking system an attractive location 
for money launderers. And money launderers who are able to use U.S. 
banks can take advantage of the prestige of these banks to lend 
credibility to their operations, reassure victims, and send wire 
transfers that may attract less scrutiny from law enforcement. So 
whether it is to protect their funds or further their crimes, money 
launderers want access to U.S. banks, and they are devising one scheme 
after another to infiltrate the U.S. banking system.
  The funds they want to move through our banks are enormous. Estimates 
are that at least $1 trillion in criminal proceeds are laundered each 
year, with about half of that amount, $500 billion, going through U.S. 
banks.
  Stopping this flood of dirty money is a top priority for U.S. law 
enforcement which spent about $650 million in taxpayer dollars last 
year on anti-money laundering efforts. That's because money laundering 
damages U.S. interests in so many ways, rewarding criminals and 
financing crime, undermining the integrity of international financial 
systems, weakening emerging democracies and distorting their economies, 
and impeding the international fight against corruption, drug 
trafficking and organized crime.
  The bill we are introducing today would provide new and improved 
tools to stop money laundering. Because it includes provisions that 
would outlaw the proceeds of foreign corruption, cut off the access of 
offshore shell banks to U.S. banks, and end foreign bank immunity to 
forfeiture of laundered funds, this bill would close some of the worst 
gaps and remedy some of the most glaring weaknesses in existing anti-
money laundering laws. For example, the bill would: 1. add foreign 
corruption offenses, such as bribery and theft of government funds, to 
the list of foreign crimes that can trigger a U.S. money laundering 
prosecution; 2. bar U.S. banks from providing banking services to 
foreign shell banks, which are banks that have no physical presence in 
any country and carry high money laundering risks; 3. require U.S. 
banks to conduct enhanced due diligence reviews to guard against money 
laundering when opening (a) a private bank account with $1 million or 
more for a foreign person, or (b) a correspondent account for an 
offshore bank or foreign bank in a country posing high money laundering 
risks; and 4. make a depositor's funds in a foreign bank's U.S. 
correspondent account subject to the same civil forfeiture rules that 
apply to depositors' funds in other U.S. bank accounts.
  These provisions are the product of almost three years of work by my 
staff at the Senate Permanent Subcommittee on Investigations examining 
money laundering problems in the private and correspondent banking 
fields. Countless interviews with money laundering experts, bankers, 
regulators, law enforcement personnel, criminals and victims, and the 
careful review of literally tens of thousands of pages of documents led 
to the issuance of two staff reports in 1999 and 2001, and several days 
of Subcommittee hearings, setting out the problems uncovered and 
recommendations for strengthening U.S. enforcement efforts.
  The first Subcommittee investigation examined private banking, a 
growing and lucrative banking sector which offers financial services to 
wealthy individuals, who usually must deposit $1 million or more to 
open a private bank account. In return, the client is assigned a 
``private banker'' who provides the client with sophisticated financial 
services, such as offshore accounts, shell corporations, and high 
dollar wire transfers, which raise money laundering concerns.
  A key issue to emerge from this investigation is the role that 
private banks play in opening accounts and accepting hundreds of 
millions of dollars in deposits from senior foreign officials or their 
relatives, even amid allegations or suspicions that the deposits may be 
the product of government corruption or other criminal conduct. The 
1999 staff report described four case histories of senior government 
officials or their relatives depositing hundreds of millions of suspect 
dollars into private bank accounts at Citibank, the largest bank in the 
United States. These case histories showed how Citibank Private Bank 
had become the banker for a rogues' gallery of senior government 
officials or their relatives. One infamous example is Raul Salinas, the 
brother of the former President of Mexico, who is imprisoned in Mexico 
for murder and is under indictment in

[[Page S8943]]

Switzerland for money laundering associated with drug trafficking. He 
deposited almost $100 million into his Citibank Private Bank accounts. 
Another example involves the three sons of General Sani Abacha, who was 
the former military leader of Nigeria and was notorious for 
misappropriating and extorting billions of dollars from his country. 
His sons deposited more than $110 million into Citibank Private Bank 
accounts.
  The investigation determined that Citibank's private bankers asked 
few questions before opening the accounts and accepting the funds. It 
also found that, because foreign corruption offenses are not currently 
on the list of crimes that can trigger a U.S. money laundering 
prosecution, corrupt foreign leaders may be targeting U.S. banks as a 
safe haven for their funds.
  Another striking aspect of the investigation was how a culture of 
secrecy pervaded most private banking transactions. Citibank private 
bankers, for example, routinely helped clients set up offshore shell 
companies and open bank accounts in the name of these companies or 
under other fictional names such as ``Bonaparte'' or ``Gelsobella.'' 
After opening these accounts, secrecy remained such a priority that 
Citibank private bankers were often told by their superiors not to keep 
any record in the United States disclosing the true owner of the 
offshore accounts or corporations they manage. One private banker told 
of stashing with his secretary a ``cheat sheet'' that identified which 
client owned which shell company in order to hide it from Citibank 
managers who did not allow such ownership information to be kept in the 
United States.

  On some occasions, Citibank Private Bank even hid ownership 
information from its own staff. For example, one Citibank private 
banker in London worked for years on a Salinas account without knowing 
Salinas was the beneficial owner. Salinas was instead referred to by 
the name of his offshore corporation, Trocca, Ltd., or by a code, ``CC-
2,'' which stood for ``Confidential Client Number 2.'' Citibank even 
went so far as to allow Mr. Salinas to deposit millions of dollars into 
his private bank accounts without putting his name on the wire 
transfers moving the funds, instead allowing his future wife, using an 
assumed name, to wire the funds through Citibank's own administrative 
accounts. Later, when Mr. Salinas' wife was arrested, Citibank 
discussed transferring all of his funds to Switzerland to minimize 
disclosure, abandoning that suggestion only after noting that the wire 
transfer documentation would disclose the funds' final destination.
  That's how far one major U.S. private bank went on client secrecy.
  The Subcommittee's second money laundering investigation focused on 
U.S. correspondent accounts opened for high risk foreign banks. 
Correspondent banking occurs when one bank provides services to another 
bank to move funds or carry out other financial transactions. It is an 
essential feature of international banking, allowing the rapid movement 
of funds across borders and enabling banks and their clients to conduct 
business worldwide, including in jurisdictions where the banks do not 
maintain offices.
  The problem uncovered by the Subcommittee's year-long investigation 
is that too many U.S. banks, through the correspondent accounts they 
provide to foreign banks that carry high risks of money laundering, 
have become conduits for illicit funds associated with drug 
trafficking, financial fraud, Internet gambling and other crimes. The 
investigation identified three categories of foreign banks with high 
risks of money laundering: shell banks, offshore banks, and banks in 
jurisdictions with weak anti-money laundering controls. Because many 
U.S. banks have routinely failed to screen and monitor these high risk 
foreign banks as clients, they have been exposed to poorly regulated, 
poorly managed, sometimes corrupt, foreign banks with weak or no anti-
money laundering controls. The U.S. correspondent accounts have been 
used by these foreign banks, their owners and criminal clients to gain 
direct access to the U.S. financial system, to benefit from the safety 
and soundness of the U.S. banking system, and to launder dirty money 
through U.S. bank accounts.
  In February of this year, my staff released a 450 page report 
detailing the money laundering problems uncovered in correspondent 
banking. The report indicated that virtually every U.S. bank examined, 
from Chase Manhattan, to Bank of America, to First Union, to Citibank, 
had opened correspondent accounts for offshore banks. Citibank also 
admitted opening correspondent accounts for offshore shell banks with 
no physical presence in any jurisdiction.
  The report presents ten detailed case histories showing how high risk 
foreign banks managed to move billions of dollars through U.S. banks, 
including hundreds of millions of dollars in illicit funds associated 
with drug trafficking, financial fraud or Internet gambling. In some 
cases, the foreign banks were engaged in criminal behavior; in others, 
the foreign banks had such poor anti-money laundering controls that 
they did not know or appeared not to care whether their clients were 
engaged in criminal behavior. Several of the foreign banks operated 
well outside the parameters of normal banking practices, without basic 
fiscal or administrative controls, account opening procedures or anti-
money laundering safeguards. All had limited resources and staff and 
relied heavily upon their U.S. correspondent accounts to conduct 
operations, provide client services, and move funds. Most completed 
virtually all of their transactions through their correspondent 
accounts, making correspondent banking integral to their operations. 
The result was that their U.S. correspondent accounts served as a 
significant gateway into the U.S. financial system for criminals and 
money launderers.
  In March 2001, the Subcommittee held hearings on the problem of 
international correspondent banking and money laundering. One witness 
was a former owner of an offshore bank in the Cayman Islands, John 
Mathewson, who pleaded guilty in the United States to conspiracy to 
commit money laundering and tax evasion and has spent the past 5 years 
helping to prosecute his former clients for tax evasion and other 
crimes. Mr. Mathewson testified that he had charged his bank clients 
about $5,000 to set up an offshore shell corporation and another $3,000 
for an annual corporate management fee, before opening a bank account 
for them in the name of the shell corporation. He noted that no one 
would pay $8,000 for a bank account in the Cayman Islands when they 
could have the same account for free in the United States, unless they 
were willing to pay a premium for secrecy. He testified that 95 percent 
of his 2,000 clients were U.S. citizens, and he believed that 100 
percent of his bank clients were engaged in tax evasion. He 
characterized his offshore bank as a ``run-of-the-mill'' operation. He 
also said that the Achilles' heel of the offshore banking community is 
its dependence upon correspondent banks to do business and that was how 
jurisdictions like the United States could take control of the 
situation and stop abuses, if we had the political will to do so.
  I think we do have that political will, and that's why we are 
introducing this bill today. Let me describe some of its key 
provisions.
  The Money Laundering Abatement Act would add foreign corruption 
offenses such as bribery and theft of government funds to the list of 
crimes that can trigger a U.S. money laundering prosecution. This 
provision would make it clear that corrupt funds are not welcome here, 
and that corrupt leaders can expect criminal prosecutions if they try 
to stash dirty money in our banks. After all, America can't have it 
both ways. We can't condemn corruption abroad, be it officials taking 
bribes or looting their treasuries, and then tolerate American banks 
profiting off that corruption.
  Second, the bill would require U.S. banks and U.S. branches of 
foreign banks to exercise enhanced due diligence before opening a 
private bank account of $1 million or more for a foreign person, and to 
take particular care before opening accounts for foreign government 
officials, their close relatives or associates to make sure the funds 
are not tainted by corruption. This due diligence provision targets the 
greatest money laundering risks that the Subcommittee investigation 
identified in the private banking field. While some U.S. banks are 
already performing enhanced due diligence reviews, this provision would 
put

[[Page S8944]]

that requirement into law and bring U.S. law into alignment with most 
other countries engaged in the fight against money laundering.

  The Money Laundering Abatement Act would also put an end to some of 
the extreme secrecy practices at private banks. For example, if a U.S. 
bank or a U.S. branch of a foreign bank opened or managed an account in 
the United States for a foreign accountholder, the bill would require 
the bank to keep a record in the United States identifying that foreign 
accountholder. After all, U.S. banks already keep records of accounts 
held by U.S. citizens, and there is no reason to allow U.S. banks to 
administer offshore accounts for foreign accountholders with less 
openness than other U.S. bank accounts. The bill would also put an end 
to the type of secret fund transfers that went on in the Salinas matter 
by prohibiting bank clients from independently directing funds to be 
deposited into a bank's ``concentration account,'' an administrative 
account which merges and processes funds from multiple accounts and 
transactions, and by requiring banks to link client names to all client 
funds passing through the bank's concentration accounts.
  Our bill would also take a number of steps to close the door on money 
laundering through U.S. correspondent accounts. First and most 
importantly, our bill would bar any U.S. bank or U.S. branch of a 
foreign bank from opening a U.S. correspondent account for a foreign 
offshore shell bank, which the Subcommittee investigation found to pose 
the highest money laundering risks of all foreign banks. Shell banks 
are banks that have no physical presence anywhere--no office where 
customers can go to conduct banking transactions or where regulators 
can go to inspect records and observe bank operations. They also have 
no affiliation with any other bank and are not regulated through any 
affiliated bank.
  The Subcommittee investigation examined four shell banks in detail. 
All four were found to be operating far outside the parameters of 
normal banking practice, often without paid staff, basic fiscal and 
administrative controls, or anti-money laundering safeguards. All four 
also largely escaped regulatory oversight. All four used U.S. bank 
accounts to transact business and move millions of dollars in suspect 
funds associated with drug trafficking, financial fraud, bribe money or 
other misconduct.
  Let me describe one example from the Subcommittee's investigation. 
M.A. Bank was an offshore bank that was licensed in the Cayman Islands, 
but had no physical office of its own in any country. In 10 years of 
operation, M.A. Bank never underwent an examination by any bank 
regulator. Its owners have since admitted that the bank opened accounts 
in fictitious names, accepted deposits for unknown persons, allowed 
clients to authorize third parties to make large withdrawals, and 
manufactured withdrawal slips or receipts on request.
  Nevertheless, M.A. Bank was able to open a U.S. correspondent account 
at Citibank in New York. M.A. Bank used that account to move hundreds 
of millions of dollars for clients in Argentina, including $7.7 million 
in illegal drug money. After the Subcommittee staff began investigating 
the account, Citibank closed it. After the staff report came out, the 
Cayman Islands decided to close the bank, but since the bank had no 
office, Cayman regulators at first didn't know where to go. They 
eventually sent teams to Uruguay and Argentina to locate bank documents 
and take control of bank operations. The Cayman Islands finally closed 
the bank a few months ago.
  The four shell banks investigated by the Subcommittee are only the 
tip of the iceberg. There are hundreds in existence, operating through 
correspondent accounts in the United States and around the world.
  By nature, shell banks operate in extreme secrecy and are resistant 
to regulatory oversight. No one really knows what they are up to other 
than their owners. Some jurisdictions known for offshore businesses, 
such as Jersey and Guernsey, refuse to license shell banks. Others, 
such as the Cayman Islands and the Bahamas, stopped issuing shell bank 
licenses several years ago. In addition, both the Cayman Islands and 
Bahamas announced that by the end of this year, 2001, all of their 
existing shell banks, which together number about 120, must establish a 
physical office within their respective jurisdictions, or lose their 
license. But other offshore jurisdictions, such as Nauru, Vanuatu and 
Montenegro, are continuing to license shell banks. Nauru alone has 
licensed about 400.
  Here at home, many U.S. banks, such as Bank of America and Chase 
Manhattan, will not open correspondent bank accounts for offshore shell 
banks as a matter of policy. But other banks, such as Citibank, 
continue to do business with offshore shell banks and continue to 
expose the U.S. banking system to the money laundering risks they 
bring. Our bill would close the door to these money laundering risks. 
Foreign shell banks occupy the bottom rung of the banking world, and 
they don't deserve a place in the U.S. banking system. It is time to 
shut the door to these rogue operators.
  In addition to barring offshore shell banks, the bill would require 
U.S. banks to exercise enhanced due diligence before opening a 
correspondent account for an offshore bank or a bank licensed by a 
jurisdiction known for poor anti-money laundering controls. These 
foreign banks also expose U.S. banks to high money laundering risks. 
Requiring U.S. banks to exercise enhanced due diligence prior to 
opening an account for one of these banks would not only help protect 
the U.S. banking system from the money laundering risks posed by these 
foreign banks, but would also help bring U.S. law into parity with the 
anti-money laundering laws of other countries.
  Another provision in the bill would address a key weakness in 
existing U.S. forfeiture law as applied to correspondent banking, by 
making a depositor's funds in a foreign bank's U.S. correspondent 
account subject to the same civil forfeiture rules that apply to 
depositors' funds in all other U.S. bank accounts. Right now, due to a 
quirk in the law, U.S. law enforcement faces a significant and unusual 
legal barrier to seizing funds from a correspondent account. Unlike a 
regular U.S. bank account, it is not enough for U.S. law enforcement to 
show that criminal proceeds were deposited into the correspondent 
account; the government must also show that the foreign bank holding 
the deposits was somehow part of the wrongdoing.
  That's not only a tough job, that can be an impossible job. In many 
cases, the foreign bank will not have been part of the wrongdoing, but 
that's a strange reason for letting the foreign depositor who was 
engaged in the wrongdoing escape forfeiture. And in those cases where 
the foreign bank may have been involved, no prosecutor will be able to 
allege it in a complaint without first getting the resources needed to 
chase the foreign bank abroad.

  Take the example of a financial fraud committed by a Nigerian 
national against a U.S. victim, a fraud pattern which the U.S. State 
Department has identified as affecting many U.S. citizens and 
businesses and which consumes U.S. law enforcement resources across the 
country. If the Nigerian fraudster deposits the fraud victim's funds in 
a personal account at a U.S. bank, U.S. law enforcement can freeze the 
funds and litigate the case in court. But if the fraudster instead 
deposits the victim's funds in a U.S. correspondent account belonging 
to a Nigerian bank at which the Nigerian fraudster does business, U.S. 
law enforcement cannot freeze the funds unless it is prepared to show 
that the Nigerian bank was involved in the fraud. And what prosecutor 
has the resources to travel to Nigeria to investigate a Nigerian bank? 
Even when the victim is sitting in the prosecutor's office, and his 
funds are still in the United States in a U.S. bank, the prosecutor's 
hands are tied unless he or she is willing to take on the Nigerian bank 
as well as the Nigerian fraudster. That is one reason so many Nigerian 
fraud cases are no longer being prosecuted in this country, because 
Nigerian criminals are taking advantage of that quirk in U.S. 
forfeiture law to prevent law enforcement from seizing a victim's money 
before it is transferred out of the country.
  Our bill would eliminate that quirk by placing civil forfeitures of 
funds in correspondent accounts on the same footing as forfeitures of 
funds in all

[[Page S8945]]

other U.S. accounts. There is just no reason foreign banks should be 
shielded from forfeitures when U.S. banks would not be.
  The Levin-Grassley bill has a number of other provisions that would 
help U.S. law enforcement in the battle against money laundering. They 
include giving U.S. courts ``long-arm'' jurisdiction over foreign banks 
with U.S. correspondent accounts; expanding the definition of money 
laundering to include laundering funds through a foreign bank; 
authorizing U.S. prosecutors to use a Federal receiver to find a 
criminal defendant's assets, wherever located; and requiring foreign 
banks to designate a U.S. resident for service of subpoenas.
  These are realistic, practical provisions that could make a real 
difference in the fight against money laundering. One state Attorney 
General who has reviewed the bill has written that ``there is a serious 
need for modernizing and refining the federal money laundering statutes 
to thwart the efforts of the criminal element and close the loopholes 
they use to their advantage.'' He expresses ``strong support'' for the 
bill, explaining that it ``will greatly aid law enforcement'' and 
``provide new tools that will assist law enforcement in keeping pace 
with the modern money laundering schemes.'' Another state Attorney 
General has written that the bill ``would provide much needed relief 
from some of the most pressing problems in money laundering enforcement 
in the international arena.'' She predicts that the bill's ``effects on 
money laundering affecting victims of crime and illegal drug 
trafficking would be dramatic.'' She also writes that the ``burdens it 
places on the financial institutions are well considered, closely 
tailored to the problems, and reasonable in light of the public 
benefits involved.''
  This country passed its first major anti-money laundering law in 
1970, when Congress made clear its desire to not allow U.S. banks to 
function as conduits for dirty money. Since then, the world has 
experienced an enormous growth in the accumulation of wealth by 
individuals around the world, and in the activities of private banks 
servicing these clients. At the same time there has been a rapid 
increase in offshore activities, with the number of offshore 
jurisdictions doubling from about 30 to about 60, and the number of 
offshore banks skyrocketing to an estimated worldwide total of 4,000, 
including more than 500 shell banks.
  At the same time, the Subcommittee investigations have shown that 
private and correspondent accounts have become gateways for criminals 
to carry on money laundering and other criminal activity in the United 
States and to benefit from the safety and soundness of the U.S. banking 
industry. U.S. law enforcement needs stronger tools to detect, stop and 
prosecute money launderers attempting to use these gateways into the 
U.S. banking system. Enacting this legislation would help provide the 
tools needed to close those money laundering gateways and curb the 
dirty funds seeking entry into the U.S. banking industry.
  I ask unanimous consent that letters in support for the bill from the 
two State Attorneys General of the States of Massachusetts and Arizona, 
as well as a short summary of the bill, and the text of the bill be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1371

       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''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) money laundering, the process by which proceeds from 
     criminal activity are disguised as legitimate money, is 
     contrary to the national interest of the United States, 
     because it finances crime, undermines the integrity of 
     international financial systems, impedes the international 
     fight against corruption and drug trafficking, distorts 
     economies, and weakens emerging democracies and international 
     stability;
       (2) United States banks are frequently used to launder 
     dirty money, and private banking, which provides services to 
     individuals with large deposits, and correspondent banking, 
     which occurs when 1 bank provides financial services to 
     another bank, are specific banking sectors which are 
     particularly vulnerable to money laundering;
       (3) private banking is particularly vulnerable to money 
     laundering by corrupt foreign government officials because 
     the services provided (offshore accounts, secrecy, and large 
     international wire transfers) are also key tools used to 
     launder money;
       (4) correspondent banking is vulnerable to money laundering 
     because United States banks--
       (A) often fail to screen and monitor the transactions of 
     their high-risk foreign bank clients; and
       (B) enable the owners and clients of the foreign bank to 
     get indirect access to the United States banking system when 
     they would be unlikely to get access directly;
       (5) the high-risk foreign bank that currently poses the 
     greatest money laundering risks in the United States 
     correspondent banking field is a shell bank, which has no 
     physical presence in any country, is not affiliated with any 
     other bank, and is able to evade day-to-day bank regulation; 
     and
       (6) United States anti-money laundering efforts are 
     currently impeded by outmoded and inadequate statutory 
     provisions that make United States investigations, 
     prosecutions and forfeitures more difficult when money 
     laundering involves foreign persons, foreign banks, or 
     foreign countries.
       (b) Purpose.--The purpose of this Act is to modernize and 
     strengthen existing Federal laws to combat money laundering, 
     particularly in the private banking and correspondent banking 
     fields when money laundering offenses involve foreign 
     persons, foreign banks, or foreign countries.

     SEC. 3. INCLUSION OF FOREIGN CORRUPTION OFFENSES AS MONEY 
                   LAUNDERING CRIMES.

       Section 1956(c)(7)(B) of title 18, United States Code, is 
     amended--
       (1) in clause (ii), by striking ``or destruction of 
     property by means of explosive or fire'' and inserting 
     ``destruction of property by means of explosive or fire, or a 
     crime of violence (as defined in section 16)'';
       (2) in clause (iii), by striking ``1978'' and inserting 
     ``1978)''; and
       (3) by adding at the end the following:
       ``(iv) fraud, or any scheme or attempt to defraud, against 
     that foreign nation or an entity of that foreign nation;
       ``(v) bribery of a public official, or the 
     misappropriation, theft, or embezzlement of public funds by 
     or for the benefit of a public official;
       ``(vi) smuggling or export control violations involving--

       ``(I) an item controlled on the United States Munitions 
     List established under section 38 of the Arms Export Control 
     Act (22 U.S.C. 2778); or
       ``(II) technologies with military applications controlled 
     on any control list established under the Export 
     Administration Act of 1979 (50 U.S.C. App. 2401 et seq.) or 
     any successor statute;

       ``(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 (22 U.S.C. 262r(c)(2)) in 
     contravention of any treaty or other international agreement 
     to which the United States is a party, including any articles 
     of agreement of the members of the international financial 
     institution;''.

     SEC. 4. ANTI-MONEY LAUNDERING MEASURES FOR UNITED STATES BANK 
                   ACCOUNTS INVOLVING FOREIGN PERSONS.

       (a) Requirements Relating to United States Bank Accounts 
     Involving Foreign Persons.--Subchapter II of chapter 53 of 
     title 31, United States Code, is amended by inserting after 
     section 5318 the following:

     ``Sec. 5318A. Requirements relating to United States bank 
       accounts involving foreign persons

       ``(a) Definitions.--
       ``(1) In general.--In this section, the following 
     definitions shall apply:
       ``(A) Account.--The term `account'--
       ``(i) means a formal banking or business relationship 
     established to provide regular services, dealings, or 
     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.
       ``(B) Branch or agency of a foreign bank.--The term `branch 
     or agency of a foreign bank' has the meanings given those 
     terms in section 1 of the International Banking Act of 1978 
     (12 U.S.C. 3101).
       ``(C) Correspondent account.--The term `correspondent 
     account' means an account established for a depository 
     institution, credit union, or foreign bank.
       ``(D) Correspondent bank.--The term `correspondent bank' 
     means a depository institution, credit union, or foreign bank 
     that establishes a correspondent account for and provides 
     banking services to a depository institution, credit union, 
     or foreign bank.
       ``(E) Covered financial institution.--The term `covered 
     financial institution' means--
       ``(i) a depository institution;
       ``(ii) a credit union; and
       ``(iii) a branch or agency of a foreign bank.
       ``(F) Credit union.--The term `credit union' means any 
     insured credit union, as

[[Page S8946]]

     defined in section 101 of the Federal Credit Union Act (12 
     U.S.C. 1752), or any credit union that is eligible to make 
     application to become an insured credit union pursuant to 
     section 201 of the Federal Credit Union Act (12 U.S.C. 1781).
       ``(G) Depository institution.--The term `depository 
     institution' has the same meaning as in section 3 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1813).
       ``(H) Foreign bank.--The term `foreign bank' has the same 
     meaning as in section 1 of the International Banking Act of 
     1978 (12 U.S.C. 3101).
       ``(I) Foreign country.--The term `foreign country' has the 
     same meaning as in section 1 of the International Banking Act 
     of 1978 (12 U.S.C. 3101).
       ``(J) Foreign person.--The term `foreign person' means any 
     foreign organization or any individual resident in a foreign 
     country or any organization or individual owned or controlled 
     by such an organization or individual.
       ``(K) Offshore banking license.--The term `offshore banking 
     license' means a license to conduct banking activities which, 
     as a condition of the license, prohibits the licensed entity 
     from conducting banking activities with the citizens of, or 
     with the local currency of, the foreign country which issued 
     the license.
       ``(L) Private bank account.--The term `private bank 
     account' means an account (or combination of accounts) that--
       ``(i) requires a minimum aggregate deposit of funds or 
     assets in an amount equal to not less than $1,000,000;
       ``(ii) is established on behalf of 1 or more individuals 
     who have a direct or beneficial ownership interest in the 
     account; and
       ``(iii) is assigned to, administered, or managed in whole 
     or in part by an employee of a financial institution acting 
     as a liaison between the institution and the direct or 
     beneficial owner of the account.
       ``(2) Other terms.--After consultation with the Board of 
     Governors of the Federal Reserve System, the Secretary may, 
     by regulation, order, or otherwise as permitted by law, 
     define any term that is used in this section and that is not 
     otherwise defined in this section or section 5312, as the 
     Secretary deems appropriate.
       ``(b) United States Bank Accounts With Unidentified Foreign 
     Owners.--
       ``(1) Records.--
       ``(A) In general.--A covered financial institution shall 
     not establish, maintain, administer, or manage an account in 
     the United States for a foreign person or a representative of 
     a foreign person, unless the covered financial institution 
     maintains in the United States, for each such account, a 
     record identifying, by a verifiable name and account number, 
     each individual or entity having a direct or beneficial 
     ownership interest in the account.
       ``(B) Publicly traded corporations.--A record required 
     under subparagraph (A) that identifies an entity, the shares 
     of which are publicly traded on a stock exchange regulated by 
     an organization or agency that is a member of and endorses 
     the principles of the International Organization of 
     Securities Commissions (in this section referred to as 
     `publicly traded'), is not required to identify individual 
     shareholders of the entity.
       ``(C) Foreign banks.--In the case of a correspondent 
     account that is established for a foreign bank, the shares of 
     which are not publicly traded, the record required under 
     subparagraph (A) shall identify each of the owners of the 
     foreign bank, and the nature and extent of the ownership 
     interest of each such owner.
       ``(2) Complex ownership interests.--The Secretary may, by 
     regulation, order, or otherwise as permitted by law, further 
     delineate the information to be maintained in the United 
     States under paragraph (1)(A), including information for 
     accounts with multiple, complex, or changing ownership 
     interests.
       ``(c) Prohibition on United States Correspondent Accounts 
     With Foreign Shell Banks.--
       ``(1) In general.--A covered financial institution shall 
     not establish, maintain, administer, or manage a 
     correspondent account in the United States for, or on behalf 
     of, a foreign bank that does not have a physical presence in 
     any country.
       ``(2) Prevention of indirect service to foreign shell 
     banks.--A covered financial institution shall take reasonable 
     steps to ensure that any correspondent account established, 
     maintained, administered, or managed by that covered 
     financial institution in the United States for a foreign bank 
     is not being used by that foreign bank to indirectly provide 
     banking services to another foreign bank that does not have a 
     physical presence in any country.
       ``(3) Exception.--Paragraphs (1) and (2) do not prohibit a 
     covered financial institution from providing a correspondent 
     account to a foreign bank, if the foreign bank--
       ``(A) is an affiliate of a depository institution, credit 
     union, or other foreign bank that maintains a physical 
     presence in the United States or a foreign country, as 
     applicable; and
       ``(B) is subject to supervision by a banking authority in 
     the country regulating the affiliated depository institution, 
     credit union, or foreign bank, described in subparagraph (A), 
     as applicable.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) the term `affiliate' means a foreign bank that is 
     controlled by or is under common control with a depository 
     institution, credit union, or foreign bank; and
       ``(B) the term `physical presence' means a place of 
     business that--
       ``(i) is maintained by a foreign bank;
       ``(ii) is located at a fixed address (other than solely an 
     electronic address) in a country in which the foreign bank is 
     authorized to conduct banking activities, at which location 
     the foreign bank--

       ``(I) employs 1 or more individuals on a full-time basis; 
     and
       ``(II) maintains operating records related to its banking 
     activities; and

       ``(iii) is subject to inspection by the banking authority 
     which licensed the foreign bank to conduct banking 
     activities.
       ``(d) Due Diligence for United States Private Bank and 
     Correspondent Bank Accounts Involving Foreign Persons.--
       ``(1) In general.--Each covered financial institution that 
     establishes, maintains, administers, or manages a private 
     bank account or a correspondent account in the United States 
     for a foreign person or a representative of a foreign person 
     shall establish enhanced due diligence policies, procedures, 
     and controls to prevent, detect, and report possible 
     instances of money laundering through those accounts.
       ``(2) Minimum standards.--The enhanced due diligence 
     policies, procedures, and controls required under paragraph 
     (1) of this subsection, shall, at a minimum, ensure that the 
     covered financial institution--
       ``(A) ascertains the identity of each individual or entity 
     having a direct or beneficial ownership interest in the 
     account, and obtains sufficient information about the 
     background of the individual or entity and the source of 
     funds deposited into the account as is needed to guard 
     against money laundering;
       ``(B) monitors such accounts on an ongoing basis to 
     prevent, detect, and report possible instances of money 
     laundering;
       ``(C) conducts enhanced scrutiny of any private bank 
     account requested or maintained by, or on behalf of, a senior 
     foreign political figure, or any immediate family member or 
     close associate of a senior foreign political figure, to 
     prevent, detect, and report transactions that may involve the 
     proceeds of foreign corruption;
       ``(D) conducts enhanced scrutiny of any correspondent 
     account requested or maintained by, or on behalf of, a 
     foreign bank operating--
       ``(i) under an offshore banking license; or
       ``(ii) under a banking license issued by a foreign country 
     that has been designated--

       ``(I) as noncooperative with international anti-money 
     laundering principles or procedures by an intergovernmental 
     group or organization of which the United States is a member; 
     or
       ``(II) by the Secretary as warranting special measures due 
     to money laundering concerns; and

       ``(E) ascertains, as part of the enhanced scrutiny under 
     subparagraph (D), whether the foreign bank provides 
     correspondent accounts to other foreign banks and, if so, the 
     identity of those foreign banks and related due diligence 
     information, as appropriate, under paragraph (1).''.
       (b) Regulatory Authority.--After consultation with the 
     Board of Governors of the Federal Reserve System, the 
     Secretary of the Treasury may, by regulation, order, or 
     otherwise as permitted by law, take measures that the 
     Secretary deems appropriate to carry out section 5318A of 
     title 31, United States Code (as added by this section).
       (c) Conforming Amendments.--Section 5312(a) of title 31, 
     United States Code, is amended--
       (1) by redesignating paragraph (5) as paragraph (6); and
       (2) by inserting after paragraph (4) the following:
       ``(5) `Secretary' means the Secretary of the Treasury, 
     except as otherwise provided in this subchapter.''.
       (d) 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 related to section 
     5318 the following:

``5318A. Requirements relating to United States bank accounts involving 
              foreign persons.''.
       (e) Effective Date.--Section 5318A of title 31, United 
     States Code, as added by this section, shall take effect 
     beginning 180 days after the date of enactment of this Act 
     with respect to accounts covered by that section that are 
     opened before, on, or after the date of enactment of this 
     Act.

     SEC. 5. LONG-ARM JURISDICTION OVER FOREIGN MONEY LAUNDERERS.

       Section 1956(b) of title 18, United States Code, is amended 
     by--
       (1) redesignating paragraphs (1) and (2) as subparagraphs 
     (A) and (B), respectively;
       (2) inserting ``(1)'' after ``(b)'';
       (3) inserting ``, or section 1957'' after ``or (a)(3)''; 
     and
       (4) 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, against whom the action is brought, if 
     service of process upon the foreign person is made under the 
     Federal Rules of Civil Procedure or the laws of the country 
     in which the foreign person is found, and--

[[Page S8947]]

       ``(A) the foreign person commits an offense under 
     subsection (a) involving a financial transaction that occurs 
     in whole or in part in the United States;
       ``(B) the foreign person converts, to his or her own use, 
     property in which the United States has an ownership interest 
     by virtue of the entry of an order of forfeiture by a court 
     of the United States; or
       ``(C) the foreign person is a financial institution that 
     maintains a bank account at a financial institution in the 
     United States.
       ``(3) A court, described in paragraph (2), 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.
       ``(4) A court, described in paragraph (2), may appoint a 
     Federal Receiver, in accordance with paragraph (5), to 
     collect, marshal, and take custody, control, and possession 
     of all assets of the defendant, wherever located, to satisfy 
     a judgment under this section or section 981, 982, or 1957, 
     including an order of restitution to any victim of a 
     specified unlawful activity.
       ``(5) A Federal Receiver, described in paragraph (4)--
       ``(A) may be appointed upon application of a Federal 
     prosecutor or a Federal or State regulator, by the court 
     having jurisdiction over the defendant in the case;
       ``(B) shall be an officer of the court, and the powers of 
     the Federal Receiver shall include the powers set out in 
     section 754 of title 28, United States Code; and
       ``(C) shall have standing equivalent to that of a Federal 
     prosecutor for the purpose of submitting requests to obtain 
     information regarding the assets of the defendant--
       ``(i) from the Financial Crimes Enforcement Network of the 
     Department of the Treasury; or
       ``(ii) from a foreign country pursuant to a mutual legal 
     assistance treaty, multilateral agreement, or other 
     arrangement for international law enforcement assistance, 
     provided that such requests are in accordance with the 
     policies and procedures of the Attorney General.''.

     SEC. 6. LAUNDERING MONEY THROUGH A FOREIGN BANK.

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

     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, 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, the following 
     definitions shall apply:
       ``(1) Financial institution.--The term `financial 
     institution'--
       ``(A) has the same meaning as in section 20; and
       ``(B) in addition, has the same meaning as in section 
     5312(a)(2) of title 31, United States Code.
       ``(2) Identification document.--The term `identification 
     document' has the same meaning as in section 1028(d).
       ``(3) Means of identification.--The term `means of 
     identification' has the same meaning as 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. CONCENTRATION ACCOUNTS AT FINANCIAL INSTITUTIONS.

       Section 5318(h) of title 31, United States Code, is amended 
     by adding at the end the following:
       ``(3) Concentration accounts.--The Secretary shall issue 
     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 the 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. 9. CHARGING MONEY LAUNDERING AS A COURSE OF CONDUCT.

       Section 1956(h) of title 18, United States Code, is amended 
     by --
       (1) inserting ``(1)'' before ``Any person''; and
       (2) adding at the end the following:
       ``(2) Any person who commits multiple violations of this 
     section or section 1957 that are part of the same scheme or 
     continuing course of conduct may be charged, at the election 
     of the Government, in a single count in an indictment or 
     information.''.

     SEC. 10. FUNGIBLE PROPERTY IN BANK ACCOUNTS.

       (a) In General.--Section 984 of title 18, United States 
     Code, is amended by striking subsection (b) and inserting the 
     following:
       ``(b) The provisions of this section may be invoked only if 
     the action for forfeiture was commenced by the seizure or 
     restraint of the property, or by the filing of a complaint, 
     within 2 years of the offense that is the basis for the 
     forfeiture.''.
       (b) Application.--The amendment made by this section shall 
     apply to any offense committed on or after the date which is 
     2 years before the date of enactment of this Act.

     SEC. 11. FORFEITURE OF FUNDS IN UNITED STATES INTERBANK 
                   ACCOUNTS.

       (a) Forfeiture From United States Interbank Account.--
     Section 981 of title 18, United States Code, is amended by 
     adding at the end the following:
       ``(k) Interbank Accounts.--
       ``(1) In general.--For the purpose of a forfeiture under 
     this section or under the Controlled Substances Act (21 
     U.S.C. 801 et seq.), if funds are deposited into an account 
     at a foreign bank, and that foreign bank has an interbank 
     account in the United States with a covered financial 
     institution (as defined in section 5318A of title 31), the 
     funds shall be deemed to have been deposited into the 
     interbank account in the United States, and any restraining 
     order, seizure warrant, or arrest warrant in rem regarding 
     the funds may be served on the covered financial institution, 
     and funds in the interbank account, up to the value of the 
     funds deposited into the account at the foreign bank, may be 
     restrained, seized, or arrested.
       ``(2) No requirement for government to trace funds.--If a 
     forfeiture action is brought against funds that are 
     restrained, seized, or arrested under paragraph (1), it shall 
     not be necessary for the Government to establish that the 
     funds are directly traceable to the funds that were deposited 
     into the foreign bank, nor shall it be necessary for the 
     Government to rely on the application of section 984.
       ``(3) Claims brought by owner of the funds.--If a 
     forfeiture action is instituted against funds restrained, 
     seized, or arrested under paragraph (1), the owner of the 
     funds deposited into the account at the foreign bank may 
     contest the forfeiture by filing a claim under section 983.
       ``(4) Definitions.--For purposes of this subsection, the 
     following definitions shall apply:
       ``(A) Interbank account.--The term `interbank account' has 
     the same meaning as in section 984(c)(2)(B).
       ``(B) Owner.--
       ``(i) In general.--Except as provided in clause (ii), the 
     term `owner'--

       ``(I) has the same meaning as in section 983(d)(6); and
       ``(II) does not include any foreign bank or other financial 
     institution acting as an intermediary in the transfer of 
     funds into the interbank account and having no ownership 
     interest in the funds sought to be forfeited.

       ``(ii) Exception.--The foreign bank may be considered the 
     `owner' of the funds (and no other person shall qualify as 
     the owner of such funds) only if--

       ``(I) the basis for the forfeiture action is wrongdoing 
     committed by the foreign bank; or
       ``(II) the foreign bank establishes, by a preponderance of 
     the evidence, that prior to the restraint, seizure, or arrest 
     of the funds, the foreign bank had discharged all or part of 
     its

[[Page S8948]]

     obligation to the prior owner of the funds, in which case the 
     foreign bank shall be deemed the owner of the funds to the 
     extent of such discharged obligation.''.

       (b) Bank Records.--Section 5318 of title 31, United States 
     Code, is amended by adding at the end the following:
       ``(i) Bank Records Related to Anti-Money Laundering 
     Programs.--
       ``(1) Definitions.--For purposes of this subsection, the 
     following definitions shall apply:
       ``(A) Appropriate federal banking agency.--The term 
     `appropriate Federal banking agency' has the same meaning as 
     in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813).
       ``(B) Incorporated terms.--The terms `correspondent 
     account', `covered financial institution', and `foreign bank' 
     have the same meanings as in section 5318A.
       ``(2) 48-hour rule.--Not later than 48 hours after 
     receiving a request by an appropriate Federal banking agency 
     for information related to anti-money laundering compliance 
     by a covered financial institution or a customer of such 
     institution, a covered financial institution shall provide to 
     the appropriate Federal banking agency, or make available at 
     a location specified by the representative of the appropriate 
     Federal banking agency, information and account documentation 
     for any account opened, maintained, administered or managed 
     in the United States by the covered financial institution.
       ``(3) Foreign bank records.--
       ``(A) Summons or subpoena of records.--
       ``(i) In general.--The Secretary or the Attorney General 
     may issue a summons or subpoena to any foreign bank that 
     maintains a correspondent account in the United States and 
     request records related to such correspondent account.
       ``(ii) Service of summons or subpoena.--A summons or 
     subpoena referred to in clause (i) may be served on the 
     foreign bank in the United States if the foreign bank has a 
     representative in the United States, or in a foreign country 
     pursuant to any mutual legal assistance treaty, multilateral 
     agreement, or other request for international law enforcement 
     assistance.
       ``(B) Acceptance of service.--
       ``(i) Maintaining records in the united states.--Any 
     covered financial institution which maintains a correspondent 
     account in the United States for a foreign bank shall 
     maintain records in the United States identifying the owners 
     of such foreign bank and the name and address of a person who 
     resides in the United States and is authorized to accept 
     service of legal process for records regarding the 
     correspondent account.
       ``(ii) Law enforcement request.--Upon receipt of a written 
     request from a Federal law enforcement officer for 
     information required to be maintained under this paragraph, 
     the covered financial institution shall provide the 
     information to the requesting officer not later than 7 days 
     after receipt of the request.
       ``(C) Termination of correspondent relationship.--
       ``(i) Termination upon receipt of notice.--A covered 
     financial institution shall terminate any correspondent 
     relationship with a foreign bank not later than 10 days after 
     receipt of written notice from the Secretary or the Attorney 
     General that the foreign bank has failed--

       ``(I) to comply with a summons or subpoena issued under 
     subparagraph (A); or
       ``(II) to initiate proceedings in a United States court 
     contesting such summons or subpoena.

       ``(ii) Limitation on liability.--A covered financial 
     institution shall not be liable to any person in any court or 
     arbitration proceeding for terminating a correspondent 
     relationship in accordance with this subsection.
       ``(iii) Failure to terminate relationship.--Failure to 
     terminate a correspondent relationship in accordance with 
     this subsection shall render the covered financial 
     institution liable for a civil penalty of up to $10,000 per 
     day until the correspondent relationship is so terminated.''.
       (c) Authority To Order Convicted Criminal To Return 
     Property Located Abroad.--
       (1) Forfeiture of substitute property.--Section 413 of the 
     Controlled Substances Act (21 U.S.C. 853) is amended by 
     striking subsection (p) and inserting the following:
       ``(p) Forfeiture of Substitute Property.--
       ``(1) In general.--Paragraph (2) of this subsection shall 
     apply, if any property described in subsection (a), as a 
     result of any act or omission of the defendant--
       ``(A) cannot be located upon the exercise of due diligence;
       ``(B) has been transferred or sold to, or deposited with, a 
     third party;
       ``(C) has been placed beyond the jurisdiction of the court;
       ``(D) has been substantially diminished in value; or
       ``(E) has been commingled with other property which cannot 
     be divided without difficulty.
       ``(2) Substitute property.--In any case described in any of 
     subparagraphs (A) through (E) of paragraph (1), the court 
     shall order the forfeiture of any other property of the 
     defendant, up to the value of any property described in 
     subparagraphs (A) through (E) of paragraph (1), as 
     applicable.
       ``(3) Return of property to jurisdiction.--In the case of 
     property described in paragraph (1)(C), the court may, in 
     addition to any other action authorized by this subsection, 
     order the defendant to return the property to the 
     jurisdiction of the court so that the property may be seized 
     and forfeited.''.
       (2) Protective orders.--Section 413(e) of the Controlled 
     Substances Act (21 U.S.C. 853(e)) is amended by adding at the 
     end the following:
       ``(4) Order to repatriate and deposit.--
       ``(A) In general.--Pursuant to its authority to enter a 
     pretrial restraining order under this section, including its 
     authority to restrain any property forfeitable as substitute 
     assets, the court may order a defendant to repatriate any 
     property that may be seized and forfeited, and to deposit 
     that property pending trial in the registry of the court, or 
     with the United States Marshals Service or the Secretary of 
     the Treasury, in an interest-bearing account, if appropriate.
       ``(B) Failure to comply.--Failure to comply with an order 
     under this subsection, or an order to repatriate property 
     under subsection (p), shall be punishable as a civil or 
     criminal contempt of court, and may also result in an 
     enhancement of the sentence of the defendant under the 
     obstruction of justice provision of the Federal Sentencing 
     Guidelines.''.

     SEC. 12. EFFECTIVE DATE.

       Except as otherwise 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.
                                  ____


               Summary of Money Laundering Abatement Act

       Foreign Corruption. Expands the list of foreign crimes 
     triggering a U.S. money laundering offense to include foreign 
     corruption offenses such as bribery and misappropriation of 
     government funds.
       Unidentified Foreign Accountholders. Requires U.S. banks 
     and U.S. branches of foreign banks opening or managing a bank 
     account in the United States for a foreign person to keep a 
     record in the United States identifying the account owner.
       Foreign Shell Banks. Bars U.S. banks and U.S. branches of 
     foreign banks from providing direct or indirect banking 
     services to foreign shell banks that have no physical 
     presence in any country and no bank affiliation.
       Foreign Private Bank and Correspondent Accounts. Requires 
     U.S. banks and U.S. branches of foreign banks that open a 
     private bank account with $1 million or more for a foreign 
     person, or a correspondent account for an offshore bank or 
     foreign bank in a country posing high money laundering risks, 
     to conduct enhanced due diligence reviews of those accounts 
     to guard against money laundering.
       Foreign Bank Forfeitures. Modifies forfeiture rules for 
     foreign banks' correspondent accounts by making a depositor's 
     funds in a foreign bank's U.S. correspondent account subject 
     to the same civil forfeiture rules that apply to depositors' 
     funds in other U.S. bank accounts.
       Additional Measures Targeting Foreign Money Laundering.
       Gives U.S. courts ``long-arm'' jurisdiction over foreign 
     persons committing money laundering offenses in the United 
     States, over foreign banks opening U.S. bank accounts, and 
     over foreign persons seizing assets ordered forfeited by a 
     U.S. court.
       Expands the definition of money laundering to include 
     laundering funds through a foreign bank.
       Authorizes U.S. courts to order a convicted criminal to 
     return property located abroad and, in civil forfeiture 
     proceedings, to order a defendant to return such property 
     pending a civil trial on the merits. Authorizes U.S. 
     prosecutors to use a court-appointed Federal Receiver to find 
     a criminal defendant's assets, wherever located.
       Authorizes Federal law enforcement to subpoena a foreign 
     bank with a U.S. correspondent account for account records, 
     and ask the U.S. correspondent bank to identify a U.S. 
     resident who can accept the subpoena. Requires the U.S. 
     correspondent bank, if it receives government notice that the 
     foreign bank refuses to comply or contest the subpoena in 
     court, to close the foreign bank's account.
       Other measures would make it a Federal crime to knowingly 
     falsify a bank customer's true identity; bar bank clients 
     from anonymously directing funds through a bank's general 
     administrative or ``concentration'' accounts; extend the 
     statute of limitations for civil forfeiture proceedings; 
     simplify pleading requirements for money laundering 
     indictments; and require banks to provide prompt responses to 
     regulatory requests for anti-money laundering information.
                                  ____

         The Commonwealth of Massachusetts, Office of the Attorney 
           General,
                                       Boston, MA, August 1, 2001.
     Hon. Carl Levin,
     U.S. Senate,
     Washington, DC.
       Dear Senator Levin: This letter is to express my strong 
     support for the Money Laundering Abatement Act. As I am sure 
     you are aware, money laundering has become increasingly 
     prevalent in recent years. As law enforcement has worked to 
     curb the illegal laundering of funds, the criminal element 
     has become more sophisticated and focused in its efforts to 
     evade the grasp of the law. Specifically, money launderers 
     are taking advantage of foreign shell banks, and banks in 
     jurisdictions with weak money laundering controls to hide 
     their ill-gotten gains.

[[Page S8949]]

       At this juncture, there is a serious need for modernizing 
     and redefining the Federal money laundering statutes to 
     thwart the efforts of the criminal element and close the 
     loopholes they use to their advantage. The money laundering 
     business has taken advantage of its ability under current law 
     to use foreign banks, largely without negative consequences. 
     This is an issue that must be addressed on the Federal level 
     because of its international element. Moreover, in the 
     Commonwealth of Massachusetts, there is no state level money 
     laundering legislation. As a result, we rely on Federal/State 
     law enforcement partnership to eradicate money laundering. 
     The only hope for eliminating international money laundering 
     ties within our State lies with the United States Congress. I 
     encourage the Congress to take the necessary steps to assist 
     State and Federal law enforcement in their continuing efforts 
     to control the illegal laundering of funds.
       The Money Laundering Abatement Act is an important step in 
     that process. Among many useful provisions, the Act prohibits 
     United States banks from providing services to foreign shell 
     banks that have no physical presence in any country, and as a 
     result, are easily used in the laundering of illegal funds. 
     In addition, the legislation provides for enhanced due 
     diligence procedures by United States banks which will at the 
     very least detect money laundering, and will also undoubtedly 
     deter it in the first place. Further, the Act makes it a 
     federal crime to knowingly falsify a bank customer's true 
     identity, which will make tracing of funds immeasurably 
     easier. In addition to these few provisions that I have 
     mentioned, the Act contains many other measures that will 
     greatly aid law enforcement in its mission.
       I strongly support your efforts to assist state and federal 
     law enforcement in their money laundering control efforts 
     through the Money Laundering Abatement Act. The legislation 
     strengthens the existing anti-money laundering structure and 
     provides new tools that will assist law enforcement in 
     keeping pace with the modern money laundering schemes. Good 
     luck in your efforts to pass this vital legislation.
           Sincerely,
     Thomas F. Reilly.
                                  ____

                                                 State of Arizona,


                               Office of the Attorney General,

                                      Phoenix, AZ, August 2, 2001.
     Hon. Carl Levin,
     U.S. Senate, Washington, DC.
     Hon. Chuck Grassley,
     U.S. Senate, Washington, DC.
       Dear Senators Levin and Grassley: I write to express my 
     views on the Money Laundering Abatement Act you are planning 
     to introduce soon. This bill would provide much needed relief 
     from some of the most pressing problems in money laundering 
     enforcement in the internation arena. The burdens it places 
     on the financial institutions are well considered, closely 
     tailored to the problems, and reasonable in light of the 
     public benefits involved.
       The bill focuses on the structural arrangements that allow 
     major money launderers to operate. These include the use of 
     shell banks and foreign accounts, abuse of private banking, 
     evasion of law enforcement efforts to acquire necessary 
     records, and of safe foreign havens for criminal proceeds. 
     The approach is very encouraging, because efforts to limit 
     the abuse of these international money laundering tools and 
     techniques must come from Congress rather than the state 
     legislatures, and because such measures attack money 
     laundering at a deeper and more lasting level than simpler 
     measures.
       The focus on structural matters means that this bill's 
     effects on cases actually prosecuted by state attorneys 
     general are a relatively small part of the substantial 
     effects its passage would have on money laundering as a 
     whole. Nevertheless, its effects on money laundering 
     affecting victims of crime and illegal drug trafficking would 
     be dramatic. I will use two exmples from my Office's present 
     money lauderning efforts
       My Office initiated a program to combat so-called ``prime 
     bank fraud'' in 1996, and continued to focus on these cases. 
     Some years ago, the International Chamber of Commerce 
     estimated that over $10 million per day is invested in this 
     wholly fraudulent investment scam. The ``PBI'' business has 
     grown substantially since then. To date, my Office has 
     recovered over $46 million in these cases, directly and in 
     concert with U.S. Attorneys and SEC. Prime bank fraudsters 
     rely heavily on the money movement and concealment techniques 
     that this bill would address, particularly foreign bank 
     accounts, shell banks, accounts in false identities, movement 
     of funds through ``concentration'' accounts, and impunity 
     from efforts to repatriate stolen funds. One of our targets 
     was sentenced recently in federal court to over eight years 
     in prison and ordered to make restitution of over $9 million, 
     but without the tools provided in this bill, there is little 
     hope that the victims will ever see anything that was not 
     seized for forfeiture in the early stages of the 
     investigation.
       My Office is now engaged in a program to control the 
     laundering of funds through the money transmitters in 
     Arizona, as part of the much larger problem of illegal money 
     movement to and through the Southwest border region. This 
     mechanism is a major facilitator of the drug smuggling 
     operations. Foreign bank accounts and correspondence 
     accounts, immunity from U.S. forfeitures, and false ownership 
     are significant barriers to successful control of money 
     laundering in the Southwest.
       Your bill is an example of the immense value of 
     institutions like the Permanent Subcommittee of 
     Investigations, because this type of bill requires a deeper 
     understanding of the issues that come from long term 
     inquiries by professional staff. We who are involved in state 
     level money laundering control efforts should be particularly 
     supportive of such long term strategies because they are most 
     important to the quality of life of our citizens.
       I commend your efforts for introducing this important 
     legislation and will assist you in anyway I can to gain its 
     passage.
           Yours very truly,
                                                 Janet Napolitano,
                                                 Attorney General.
                                 ______