[Congressional Record Volume 147, Number 152 (Tuesday, November 6, 2001)]
[House]
[Pages H7732-H7745]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            FINANCIAL SERVICES ANTIFRAUD NETWORK ACT OF 2001

  Mr. BACHUS. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1408) to safeguard the public from fraud in the financial 
services industry, to streamline and facilitate the antifraud 
information-sharing efforts of Federal and State regulators, and for 
other purposes, as amended.
  The Clerk read as follows:

                               H.R. 1408

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Financial 
     Services Antifraud Network Act of 2001''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes.

                       TITLE I--ANTIFRAUD NETWORK

             Subtitle A--Direction to Financial Regulators

Sec. 100. Creation and operation of the network.

     Subtitle B--Potential Establishment of Antifraud Subcommittee

Sec. 101. Establishment.
Sec. 102. Purposes of the Subcommittee.
Sec. 103. Chairperson; term of chairperson; meetings; officers and 
              staff.
Sec. 104. Nonagency status.
Sec. 105. Powers of the Subcommittee.
Sec. 106. Agreement on cost structure.

                   Subtitle C--Regulatory Provisions

Sec. 111. Agency supervisory privilege.
Sec. 112. Confidentiality of information.
Sec. 113. Liability provisions.
Sec. 114. Authorization for identification and criminal background 
              check.
Sec. 115. Definitions.
Sec. 116. Technical and conforming amendments to other acts.
Sec. 117. Audit of State insurance regulators.

                       Subtitle D--Anti-Terrorism

Sec. 121. Preventing international terrorism.

               TITLE II--SECURITIES INDUSTRY COORDINATION

                  Subtitle A--Disciplinary Information

Sec. 201. Investment Advisers Act of 1940.
Sec. 202. Securities Exchange Act of 1934.

 Subtitle B--Preventing Migration of Rogue Financial Professionals to 
                        the Securities Industry

Sec. 211. Securities Exchange Act of 1934.
Sec. 212. Investment Advisers Act of 1940.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to safeguard the public from fraud in the financial 
     services industry;
       (2) to streamline the antifraud coordination efforts of 
     Federal and State regulators and prevent failure to 
     communicate essential information;
       (3) to reduce duplicative information requests and other 
     inefficiencies of financial services regulation;
       (4) to assist financial regulators in detecting patterns of 
     fraud, particularly patterns that only become apparent when 
     viewed across the full spectrum of the financial services 
     industry; and
       (5) to take advantage of Internet technology and other 
     advanced data-sharing technology to modernize the fight 
     against fraud in all of its evolving manifestations and 
     permutations.

                       TITLE I--ANTIFRAUD NETWORK

             Subtitle A--Direction to Financial Regulators

     SEC. 100. CREATION AND OPERATION OF THE NETWORK.

       (a) Sharing of Public Information.--The financial 
     regulators shall, to the extent practicable and appropriate 
     and in consultation with other relevant and appropriate 
     agencies and parties--
       (1) develop procedures to provide for a network for the 
     sharing of antifraud information; and
       (2) coordinate to further improve upon the antifraud 
     efforts of the participants in the network as such 
     participants deem appropriate over time.
       (b) Minimum Requirements.--The procedures described in 
     subsection (a) shall--
       (1) provide for the sharing of public final disciplinary 
     and formal enforcement actions taken by the financial 
     regulators that are accessible electronically relating to the 
     conduct of persons engaged in the business of conducting 
     financial activities that is fraudulent, dishonest, or 
     involves a breach of trust or relates to the failure to 
     register with the appropriate financial regulator as required 
     by law;
       (2) include a plan for considering the sharing among the 
     participants of other relevant and useful antifraud 
     information relating to companies and other persons engaged 
     in conducting financial activities, to the extent practicable 
     and appropriate when adequate privacy, confidentiality, and 
     security safeguards governing access to, and the use of, such 
     information have been developed that--
       (A) is accessible by the public; or
       (B) consists of information, that does not include 
     personally identifiable information on consumers, on--
       (i) licenses and applications, financial affiliations and 
     name-relationships, aggregate trend data, appraisals, or 
     reports filed by a regulated entity with a participant; or
       (ii) similar information generated by or for a participant 
     if--

       (I) such information is being shared for the purpose of 
     verifying an application or other report filed by a regulated 
     entity; and
       (II) the participant determines such information is factual 
     and substantiated; and

       (3) provide that, if a financial regulator takes an adverse 
     action against a person engaged in the business of conducting 
     financial activities on the basis of information described in 
     paragraph (1) or (2) that was received from another 
     participant through the network, the regulator shall--
       (A) notify the person of the identity of the participant 
     from whom such information was received;
       (B) provide the person with a specific and detailed 
     description of the information that was received from the 
     other participant through the network and would be relied on 
     in taking the adverse action; and

[[Page H7733]]

       (C) notify the person of the right to a reasonable 
     opportunity to respond to such information.
       (c) Provisions Relating to Requirements.--
       (1) Time of notice.--The notice to any person, and the 
     opportunity to respond, under subsection (b)(3) shall be 
     provided to the person a reasonable period of time before any 
     final action against the person which is based on information 
     referred to in such paragraph is completed, unless the 
     financial regulator determines that such advance notice and 
     opportunity to respond is impracticable or inappropriate, in 
     which case the notice and opportunity to respond shall be 
     provided at the time of such final action.
       (2) Verification or substantiation of information.--With 
     respect to subsection (b)(3), a delay in the consideration of 
     a license, application, report, or other request for the 
     purpose of verifying or substantiating information relating 
     to such license, application, report, or other request shall 
     not be treated as an adverse action if the verification or 
     substantiation of such information is completed within a 
     reasonable time.
       (d) Implementation.--
       (1) Submission of plan.--Before the end of the 6-month 
     period beginning on the date of the enactment of this Act, 
     the Federal financial regulators shall submit to Congress a 
     plan detailing how the financial regulators (and any 
     association representing financial regulators) expect to meet 
     the requirements of subsections (a) and (b).
       (2) Deadline for implementation.--Before the end of the 2-
     year period beginning on the date of the enactment of this 
     Act, the financial regulators shall establish the network 
     described in subsections (a) and (b).
       (e) Financial Regulators Defined.--For the purposes of this 
     section, the term ``financial regulators'' means the 
     financial regulators described in subparagraphs (A) through 
     (Q) of section 115(3).
       (f) Determination of Implementation of Subtitle B.--
       (1) In general.--The provisions of subtitle B shall take 
     effect only if the Secretary of the Treasury, or a designee 
     of the Secretary, before the end of the 30-day period 
     beginning at the end of the period referred to in--
       (A) subsection (d)(1), does not determine that the Federal 
     financial regulators have submitted a plan which 
     substantially meets the requirements of such subsection; or
       (B) subsection (d)(2), does not determine that the 
     financial regulators have established a network that 
     substantially complies with the requirements of subsections 
     (a) and (b).
       (2) Scope of application.--This subtitle shall cease to 
     apply as of the date subtitle B takes effect.
       (g) Use of Centralized Databases.--
       (1) In general.--A financial regulator shall be deemed to 
     have met the requirements of subsection (b)(1) if--
       (A) the participants have access to a centralized database 
     that contains information on public final disciplinary or 
     formal enforcement actions similar to that described in such 
     subsection; or
       (B) the financial regulator makes the information described 
     in such subsection available to the public over the Internet.
       (2) State supervisors.--It is the sense of the Congress 
     that the National Association of Insurance Commissioners, the 
     Conference of State Bank Supervisors, the American Council of 
     State Savings Supervisors, the National Association of State 
     Credit Union Supervisors, and the North American Securities 
     Administrators Association should develop model guidelines 
     for regulators in their respective regulated financial 
     industries, where appropriate, to promote uniform standards 
     for sharing information with the network under this section.
       (h) Financial Regulator Control of Access.--
       (1) In general.--Except as provided in paragraph (4), each 
     participant that allows access to its databases or 
     information by other participants through the network may 
     establish parameters for controlling or limiting such access, 
     including the regulation of--
       (A) the type or category of information that may be 
     accessed by other participants and the extent to which any 
     such type or category of information may be accessed;
       (B) the participants that may have access to the database 
     or any specific type or category of information in the 
     database (whether for reasons of cost reimbursement, data 
     security, efficiency, or otherwise); and
       (C) the disclosure by any other participant of any type or 
     category of information that may be accessed by the 
     participant.
       (2) Procedures.--A participant may establish the parameters 
     described in paragraph (1) by regulation, order, or guideline 
     or on a case-by-case basis.
       (3) Disclaimer.--
       (A) In general.--Each participant shall ensure that any 
     transfer of information through the network under this 
     section, other than information described in subsection 
     (b)(1), from such participant to another participant is 
     subject to a disclaimer that the information accessed may be 
     unsubstantiated and may not be relied on as the basis for 
     denying any application or license.
       (B) Regulatory flexibility.--Each financial regulator may 
     develop guidelines, as the regulator determines to be 
     appropriate, governing the location, wording, and frequency 
     of disclaimers under this paragraph and the manner in which 
     any such disclaimer shall be made.
       (4) Final disciplinary and formal enforcement actions not 
     subject to limitation.--This subsection, and standards or 
     procedures adopted by any participant under this subsection, 
     shall not apply with respect to information described in 
     subsection (b)(1).
       (5) No effect on public or company access.--No provision of 
     this section shall replace, supersede, or otherwise affect 
     access to any databases maintained by any Federal or State 
     regulator, or any entity representing any such regulator, 
     which are accessible by the public or persons engaged in the 
     business of conducting financial activities.
       (i) Eligibility Requirements for State Securities 
     Administrators.--
       (1) In general.--No State securities administrator shall be 
     eligible to be a participant and access the network unless--
       (A) such State securities administrator participates in a 
     centralized database for broker-dealers, broker-dealer 
     agents, investment advisers, and investment advisor 
     representatives, registered or required to be registered, as 
     designated by the North American Securities Administrators 
     Association; and
       (B) such State securities administrator requires the 
     broker-dealer, broker-dealer agent, investment adviser, or 
     investment adviser representative, currently registered or 
     required to be registered, to file any application, amendment 
     to an application, or a renewal of an application through the 
     centralized registration database.
       (2) Time delay for participation in databases.--The 
     provisions of paragraph (1) shall not become effective until 
     3 years after the date of enactment of this Act.
       (j) Eligibility Requirements for State Insurance 
     Commissioners.--
       (1) Participation in databases.--No State insurance 
     commissioner shall be eligible to access the network unless 
     such commissioner participates with other State insurance 
     commissioners--
       (A) in a centralized database addressing disciplinary or 
     enforcement actions taken against persons engaged in the 
     business of insurance, such as the Regulatory Information 
     Retrieval System maintained by the National Association of 
     Insurance Commissioners or any network or database designated 
     by such Association as a successor to such System; and
       (B) in centralized databases addressing, with respect to 
     persons engaged in the business of insurance--
       (i) corporate and other business affiliations or 
     relationships, such as the Producer Database maintained by 
     the National Association of Insurance Commissioners or any 
     network or database designated by such Association as a 
     successor to such Database; and
       (ii) consumer complaints, such as the Complaints Database 
     maintained by the National Association of Insurance 
     Commissioners or any network or database designated by such 
     Association as a successor to such Database.
       (2) Time delay for participation in databases.--The 
     provisions of subparagraph (1)(B) of this section shall not 
     become effective until 3 years after the date of enactment of 
     this Act.
       (3) Accreditation.--No State insurance commissioner shall 
     be eligible to access the network unless the State insurance 
     department which such commissioner represents meets 1 of the 
     following accreditation requirements at the time of access to 
     the network:
       (A) Is accredited by the National Association of Insurance 
     Commissioners.
       (B) Has an application for accredited status pending with 
     the National Association of Insurance Commissioners.
       (k) Standards.--Each financial regulator shall consider 
     developing guidelines on--
       (1) how to denote which types of information are to receive 
     different levels of confidentiality protection; and
       (2) how entities or associations that act as agents for 
     financial regulators should denote such agency status when 
     acting in that capacity.
       (l) Other Sharing Arrangements Not Affected.--No provision 
     of this section shall be construed as limiting or otherwise 
     affecting the authority of a financial regulator to provide 
     any person, including another participant, access to any 
     information in accordance with any provision of law other 
     than this Act.

     Subtitle B--Potential Establishment of Antifraud Subcommittee

     SEC. 101. ESTABLISHMENT.

       (a) In General.--Unless the determinations described in 
     section 100(f) are made, after the applicable date described 
     in such section there shall be established within the 
     President's Working Group on Financial Markets (as 
     established by Executive Order No. 12631) a subcommittee to 
     be known as the ``Antifraud Subcommittee'' (hereafter in this 
     title referred to as the ``Subcommittee'') which shall 
     consist of the following members:
       (1) The Secretary of the Treasury, or a designee of the 
     Secretary.
       (2) The Chairman of the Securities and Exchange Commission 
     or a designee of the Chairman.
       (3) A State insurance commissioner designated by the 
     National Association of Insurance Commissioners, or a 
     designee of such commissioner.
       (4) The Chairman of the Commodity Futures Trading 
     Commission or a designee of such Chairman.

[[Page H7734]]

       (5) A designee of the Chairman of the Federal Financial 
     Institutions Examination Council.
       (b) Financial Liaisons.--The following shall serve as 
     liaisons between the Subcommittee and the agencies 
     represented by each such liaison:
       (1) A representative of each Federal banking agency 
     appointed by the head of each such agency.
       (2) A representative of the National Credit Union 
     Administration appointed by the National Credit Union 
     Administration Board.
       (3) A representative of the Farm Credit Administration, 
     appointed by the Farm Credit Administration Board.
       (4) A representative of the Federal Housing Finance Board, 
     appointed by such Board.
       (5) A representative of the Office of Federal Housing 
     Enterprise Oversight of the Department of Housing and Urban 
     Development appointed by the Director of such Office.
       (6) A representative of the Appraisal Subcommittee of the 
     Financial Institutions Examination Council designated by the 
     Chairperson of the Appraisal Subcommittee.
       (7) A representative of State bank supervisors designated 
     by the Conference of State Bank Supervisors.
       (8) A representative of State savings association 
     supervisors designated by the American Council of State 
     Savings Supervisors.
       (9) A representative of State credit union supervisors 
     designated by the National Association of State Credit Union 
     Supervisors.
       (10) A representative of State securities administrators 
     designated by the North American Securities Administrators 
     Association.
       (11) A representative of the National Association of 
     Securities Dealers appointed by the National Association of 
     Securities Dealers.
       (12) A representative of the National Futures Association 
     appointed by the National Futures Association.
       (13) Any other financial liaison as the Subcommittee may 
     provide to represent any other financial regulator or foreign 
     financial regulator, including self-regulatory agencies or 
     organizations that maintain databases on persons engaged in 
     the business of conducting financial activities, designated 
     in the manner provided by the Subcommittee.
       (c) Other Liaisons.--
       (1) Law enforcement liaisons.--The following shall serve as 
     liaisons between the Subcommittee and the agencies 
     represented by each such liaison:
       (A) A representative of the Department of Justice appointed 
     by the Attorney General.
       (B) A representative of the Federal Bureau of Investigation 
     appointed by the Director of such Bureau.
       (C) A representative of the United States Secret Service 
     appointed by the Director of such Service.
       (D) A representative of the Financial Crimes Enforcement 
     Network (as established by the Secretary of the Treasury) 
     appointed by the Secretary of the Treasury.
       (2) Subcommittee appointed liaisons.--The Subcommittee may 
     provide for any other liaison to represent any other 
     regulator, including self-regulatory agencies or 
     organizations that maintain databases on persons engaged in 
     the business of conducting financial activities, designated 
     in the manner provided by the Subcommittee.
       (d) Vacancy.--If, for any reason, the position of any 
     member of or liaison to the Subcommittee is not filled within 
     a reasonable period of time after being created or becoming 
     vacant, the President shall appoint an individual to fill the 
     position after consulting the agency or entity to be 
     represented by such member or liaison, and to the extent 
     possible, shall appoint such individual from a list of 
     possible representatives submitted by such agency or entity.
       (e) Reorganization Authority.--
       (1) In general.--If the President disbands or otherwise 
     significantly modifies the Working Group referred to in 
     subsection (a), the President shall provide for the 
     continuation of the Subcommittee's coordination functions.
       (2) Member and liaison withdrawal.--If the President 
     materially alters the structure or duties of the 
     Subcommittee, any member of or liaison to the Subcommittee 
     may withdraw from the Subcommittee.

     SEC. 102. PURPOSES OF THE SUBCOMMITTEE.

       (a) In General.--The purposes of the Subcommittee are as 
     follows:
       (1) Coordinate access by the participants to antifraud 
     databases of various regulators, by facilitating the 
     establishment, maintenance, and use of a network of existing 
     antifraud information maintained by such regulators with 
     respect to persons engaged in the business of conducting 
     financial activities.
       (2) Coordinate access by each participant to such network 
     in a manner that allows the participant to review, at a 
     minimal cost, existing information in the databases of other 
     regulators, as a part of licensure, change of control, or 
     investigation, concerning any person engaged in the business 
     of conducting financial activities.
       (3) Coordinate information sharing, where appropriate, 
     among State, Federal, and foreign financial regulators, and 
     law enforcement agencies, where sufficient privacy and 
     confidentiality safeguards exist.
       (4) Consider coordinating development by participants of a 
     networked name-relationship index for persons engaged in the 
     business of conducting financial activities using information 
     from the databases of regulators, to the extent such 
     information is available.
       (5) Advise participants on coordinating their antifraud 
     databases with the network.
       (6) Coordinate development of guidelines by participants 
     for ensuring appropriate privacy, confidentiality, and 
     security of shared information, including tracking systems or 
     testing audits, as appropriate.
       (b) Criteria for Network With Respect to Any Person Engaged 
     in the Business of Conducting Financial Activities.--
       (1) Final disciplinary and formal enforcement actions.--
     Each financial regulator that is represented by a member of 
     the Subcommittee under section 101(a) or by a financial 
     liaison to the Subcommittee under section 101(b) shall allow 
     any participant access, through the network, to any public 
     final disciplinary or formal enforcement action by such 
     regulator which is accessible electronically relating to the 
     conduct of persons engaged in the business of conducting 
     financial activities that is fraudulent or dishonest, 
     involves a breach of trust, or relates to the failure to 
     register with the appropriate financial regulator as required 
     by law.
       (2) Sense of the congress on other information.--It is the 
     sense of the Congress that the financial regulators should 
     consider sharing through the network other relevant and 
     useful antifraud information relating to companies and other 
     persons engaged in conducting financial activities, to the 
     extent practicable and appropriate when adequate privacy, 
     confidentiality, and security safeguards governing access to 
     and the use of such information have been developed that--
       (A) is accessible by the public; or
       (B) consists of information, that does not include 
     personally identifiable information on consumers, on--
       (i) licenses and applications, financial affiliations and 
     name-relationships, aggregate trend data, or reports filed by 
     a regulated entity with the participant; or
       (ii) similar information generated by or for a participant 
     if--

       (I) such information is being shared for the purpose of 
     verifying an application or other report filed by a regulated 
     entity; and
       (II) the participant determines such information is factual 
     and substantiated.

       (3) Notice and response.--If a financial regulator takes an 
     adverse action against a person engaged in the business of 
     conducting financial activities on the basis of information 
     described in paragraph (1) or (2) that was received from 
     another participant through the network, the regulator 
     shall--
       (A) notify the person of the identity of the participant 
     from whom such information was received;
       (B) provide the person with a specific and detailed 
     description of the information that was received from the 
     other participant through the network and would be relied on 
     in taking the adverse action; and
       (C) notify the person of the right to a reasonable 
     opportunity to respond to such information.
       (4) Provisions relating to requirements.--
       (A) Time of notice.--Any notice to any person, and an 
     opportunity to respond, under paragraph (3) shall be provided 
     to the person a reasonable period of time before any final 
     action against the person which is based on information 
     referred to in such paragraph is completed, unless the 
     financial regulator determines that such advance notice and 
     opportunity to respond is impracticable or inappropriate, in 
     which case the notice and opportunity to respond shall be 
     provided at the time of such final action.
       (B) Verification or substantiation of information.--With 
     respect to paragraph (3), a delay in the consideration of a 
     license, application, report, or other request for the 
     purpose of verifying or substantiating information relating 
     to such license, application, report, or other request shall 
     not be treated as an adverse action if the verification or 
     substantiation of such information is completed within a 
     reasonable time.
       (5) Use of centralized databases.--
       (A) In general.--A financial regulator shall be deemed to 
     have met the requirements of paragraph (1) if the 
     Subcommittee determines that the participants have access to 
     a centralized database that contains information on public 
     final disciplinary or formal enforcement actions similar to 
     that described in paragraph (1) or if the financial regulator 
     makes the information described in paragraph (1) available to 
     the public over the Internet.
       (B) Factors for determination.--The Subcommittee shall make 
     the determination under subparagraph (A) on an ongoing basis, 
     considering both short-term costs and technological 
     limitations, as well as the need for long-term comprehensive 
     coverage, and other appropriate factors.
       (C) State supervisors.--It is the sense of the Congress 
     that the National Association of Insurance Commissioners, the 
     Conference of State Bank Supervisors, the American Council of 
     State Savings Supervisors, the National Association of State 
     Credit Union Supervisors, and the North American Securities 
     Administrators Association should develop model guidelines 
     for regulators in their respective regulated financial 
     industries, where appropriate, to promote uniform standards 
     for sharing information with the network under this section.
       (c) Financial Regulator Control of Access.--
       (1) In general.--Except as provided in paragraph (4), each 
     participant that allows access to its databases or 
     information by other participants through the network may

[[Page H7735]]

     establish parameters for controlling or limiting such access, 
     including the regulation of--
       (A) the type or category of information that may be 
     accessed by other participants and the extent to which any 
     such type or category of information may be accessed;
       (B) the participants that may have access to the database 
     or any specific type or category of information in the 
     database (whether for reasons of cost reimbursement, data 
     security, efficiency, or otherwise); and
       (C) the disclosure by any other participant of any type or 
     category of information that may be accessed by the 
     participant.
       (2) Procedures.--A participant may establish the parameters 
     described in paragraph (1) by regulation, order, or guideline 
     or on a case-by-case basis.
       (3) Disclaimer.--
       (A) In general.--Each participant shall ensure that any 
     transfer of information through the network under this 
     section, other than information described in paragraph (1) of 
     subsection (b), from such participant to another participant 
     is subject to a disclaimer that the information accessed may 
     be unsubstantiated and may not be relied on as the basis for 
     denying any application or license.
       (B) Subcommittee flexibility.--The Subcommittee may 
     prescribe such guidelines as the Subcommittee determines to 
     be appropriate governing the location, wording, and frequency 
     of disclaimers under this paragraph and the manner in which 
     any such disclaimer shall be made.
       (4) Final disciplinary and formal enforcement actions not 
     subject to limitation.--This subsection, and standards or 
     procedures adopted by any participant under this subsection, 
     shall not apply with respect to information described in 
     paragraph (1) of subsection (b).
       (5) No effect on public or company access.--No provision of 
     this section shall replace, supersede, or otherwise affect 
     access to any databases maintained by any Federal or State 
     regulator, or any entity representing any such regulator, 
     which are accessible by the public or persons engaged in the 
     business of conducting financial activities.
       (d) Eligibility Requirements for State Securities 
     Administrators.--
       (1) In general.--No State securities administrator shall be 
     eligible to be a participant and access the network unless--
       (A) such State securities administrator participates in a 
     centralized database for broker-dealers, broker-dealer 
     agents, investment advisers, and investment advisor 
     representatives, registered or required to be registered, as 
     designated by the North American Securities Administrators 
     Association; and
       (B) such State securities administrator requires the 
     broker-dealer, broker-dealer agent, investment adviser, or 
     investment adviser representative, currently registered or 
     required to be registered, to file any application, amendment 
     to an application, or a renewal of an application through the 
     centralized registration database.
       (2) Time delay for participation in databases.--The 
     provisions of paragraph (1) shall not become effective until 
     3 years after the date of enactment of this Act.
       (e) Eligibility Requirements for State Insurance 
     Commissioners.--
       (1) Participation in databases.--No State insurance 
     commissioner shall be eligible to access the network unless 
     such commissioner participates with other State insurance 
     commissioners--
       (A) in a centralized database addressing disciplinary or 
     enforcement actions taken against persons engaged in the 
     business of insurance, such as the Regulatory Information 
     Retrieval System maintained by the National Association of 
     Insurance Commissioners or any network or database designated 
     by such Association as a successor to such System; and
       (B) in centralized databases addressing, with respect to 
     persons engaged in the business of insurance--
       (i) corporate and other business affiliations or 
     relationships, such as the Producer Database maintained by 
     the National Association of Insurance Commissioners or any 
     network or database designated by such Association as a 
     successor to such Database; and
       (ii) consumer complaints, such as the Complaints Database 
     maintained by the National Association of Insurance 
     Commissioners or any network or database designated by such 
     Association as a successor to such Database.
       (2) Time delay for participation in databases.--The 
     provisions of subparagraph (1)(B) of this section shall not 
     become effective until 3 years after the date of enactment of 
     this Act.
       (3) Accreditation.--No State insurance commissioner shall 
     be eligible to access the network unless the State insurance 
     department which such commissioner represents meets 1 of the 
     following accreditation requirements at the time of access to 
     the network:
       (A) Is accredited by the National Association of Insurance 
     Commissioners.
       (B) Has an application for accredited status pending with 
     the National Association of Insurance Commissioners.
       (C) Has a determination by the Subcommittee in effect that 
     such State insurance department meets or exceeds the 
     standards established by the National Association of 
     Insurance Commissioners for accreditation.
       (f) Subcommittee Standards.--The Subcommittee shall 
     consider developing guidelines for participants on--
       (1) how to denote which types of information are to receive 
     different levels of confidentiality protection; and
       (2) how entities or associations that act as agents for 
     financial regulators should denote such agency status when 
     acting in that capacity.
       (g) Reporting and Feasibility Requirements and Review of 
     Optimal Networking Methods.--
       (1) Report.--Before the end of the 180-day period beginning 
     on the date this subtitle takes effect in accordance with 
     section 101(a), and again before the end of the 2-year period 
     beginning on such date, the Subcommittee shall submit a 
     report to the Congress regarding the methods the regulators 
     plan to use to network information, and a description of any 
     impediments to (or recommended additional legislation for) 
     facilitating the appropriate sharing of such information.
       (2) Timeframe for networking.--
       (A) In general.--The networking of information required 
     under subsection (b)(1) shall be established before the end 
     of the 2-year period beginning on the date this subtitle 
     takes effect, unless the Subcommittee determines, in 
     conjunction with the liaisons, that such a network cannot be 
     established within such time period in a practicable and 
     cost-effective manner.
       (B) Reports on efforts if timeframe is not met.--If the 
     Subcommittee makes such a determination, the Subcommittee 
     shall report annually to the Congress on its efforts to 
     coordinate the sharing of appropriate information among the 
     regulators until the networking requirements are fulfilled.
       (h) Other Sharing Arrangements Not Affected.--No provision 
     of this section shall be construed as limiting or otherwise 
     affecting the authority of a financial regulator or other 
     member or liaison of the Subcommittee to provide any person, 
     including another participant, access to any information in 
     accordance with any provision of law other than this Act.
       (i) No New Databases or Expenditures Mandated.--In 
     implementing this Act, the Subcommittee shall not have any 
     authority to require a member or liaison to create a new 
     database or otherwise incur significant costs in modifying 
     existing databases for the networking of information.

     SEC. 103. CHAIRPERSON; TERM OF CHAIRPERSON; MEETINGS; 
                   OFFICERS AND STAFF.

       (a) Chairperson.--
       (1) Selection.--The members of the Subcommittee shall 
     select the Chairperson from among the members of the 
     Subcommittee.
       (2) Term.--The term of the Chairperson shall be 2 years.
       (b) Meetings.--The Subcommittee shall meet at the call of 
     the Chairperson or a majority of the members when there is 
     business to be conducted.
       (c) Quorum.--A majority of members of the Subcommittee 
     shall constitute a quorum.
       (d) Majority Vote.--Decisions of the Subcommittee shall be 
     made by the vote of a majority of the members of the 
     Subcommittee.
       (e) Officers and Staff.--The Chairperson of the 
     Subcommittee may appoint such officers and staff as may be 
     necessary to carry out the purposes of the Subcommittee.

     SEC. 104. NONAGENCY STATUS.

       The Subcommittee shall not be considered an advisory 
     committee for purposes of the Federal Advisory Committee Act 
     or as an agency for purposes of subchapter II of chapter 5 of 
     title 5, United States Code.

     SEC. 105. POWERS OF THE SUBCOMMITTEE.

       (a) In General.--The Subcommittee shall have such powers as 
     are necessary to carry out the purposes of the Subcommittee 
     under this title.
       (b) Information To Facilitate Coordination.--Each agency 
     and entity represented by a member or liaison shall, to the 
     extent permitted by law, provide the Subcommittee with a 
     description of the types of databases maintained by the 
     agency or entity to assist the Subcommittee in carrying out 
     the purposes described in section 102(a).
       (c) Service of Members and Liaisons.--Members of and 
     liaisons to the Subcommittee shall serve without additional 
     compensation for their work on the Subcommittee.
       (d) Administrative and Technical Support.--The Subcommittee 
     may request that any agency or entity represented by a member 
     or liaison provide the Subcommittee with any administrative, 
     technical, or other support service that the Subcommittee 
     determines is necessary or appropriate for it to carry out 
     the purposes described in section 102(a).

     SEC. 106. AGREEMENT ON COST STRUCTURE.

       (a) In General.--The Subcommittee shall determine, after 
     consultation with the affected participants or their 
     representatives, the means for providing for any costs the 
     Subcommittee may incur in carrying out the purposes of this 
     subtitle.
       (b) Consultation and Agreement on Fees and Contributions.--
     Notwithstanding any other provision of this subtitle, the 
     Subcommittee may not impose any fee or assessment on, or 
     apportion any contribution against, any member or liaison 
     under this section unless--
       (1) the Subcommittee consults with such member or liaison; 
     and
       (2) the member or liaison consents to the amounts, or to a 
     schedule, of such fees, assessments, or contributions.

[[Page H7736]]

       (c) Reimbursement of Participant Costs.--Before allowing 
     access by the Subcommittee or a participant to any 
     information described in section 102, other than access 
     described in subsection (b)(1) of such section, a member or 
     liaison may request the reimbursement of reasonable costs for 
     providing such access.

                   Subtitle C--Regulatory Provisions

     SEC. 111. AGENCY SUPERVISORY PRIVILEGE.

       (a) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) Supervisory process.--The term ``supervisory process'' 
     means any activity engaged in by a financial regulator to 
     carry out the official responsibilities of the financial 
     regulator with regard to the regulation or supervision of 
     persons engaged in the business of conducting financial 
     activities, including examinations, inspections, visitations, 
     investigations, consumer complaints, or any other regulatory 
     or supervisory activities.
       (2) Confidential supervisory information.--Subject to 
     paragraph (3), the term ``confidential supervisory 
     information'' means any of the following information which is 
     treated as, or considered to be, confidential information by 
     a financial regulator, regardless of the form or format in 
     which the information is created, conveyed, or maintained:
       (A) Any report of examination, inspection, visitation, or 
     investigation, and information prepared or collected by the 
     financial regulator in connection with the supervisory 
     process, including--
       (i) any file, work paper, or similar information;
       (ii) any correspondence, communication, or information 
     exchanged, in connection with the supervisory process, 
     between a financial regulator and a person engaged in the 
     business of conducting financial activities; and
       (iii) any information, including any report, created by or 
     on behalf of a person engaged in the business of conducting 
     financial activities that is required by, or is prepared at 
     the request of, a financial regulator in connection with the 
     supervisory process.
       (B) Any record to the extent it contains information 
     derived from any report, correspondence, communication or 
     other information described in subparagraph (A).
       (C) Any consumer complaints filed with the financial 
     regulator by a consumer with respect to a person engaged in 
     the business of conducting financial activities that have 
     been identified by the financial regulator as requiring 
     confidential treatment to protect the integrity of an 
     investigation or the safety of an individual.
       (3) Exclusions.--The term ``confidential supervisory 
     information'' shall not include--
       (A) any book, record, or other information, in the 
     possession of, or maintained on behalf of, the person engaged 
     in the business of conducting financial activities that--
       (i) is not a report required by, or prepared at the request 
     of, a financial regulator; and
       (ii) is not, and is not derived from, confidential 
     supervisory information that was created or prepared by a 
     financial regulator; or
       (B) any information required to be made publicly available 
     by--
       (i) any applicable Federal law or regulation; or
       (ii) in the case of confidential supervisory information 
     created by a State financial regulator or requested from a 
     person engaged in the business of conducting financial 
     activities by a State financial regulator, any applicable 
     State law or regulation that specifically refers to such type 
     of information.
       (b) Sharing of Reports.--
       (1) In general.--No provision of this section shall be 
     construed as preventing--
       (A) a person engaged in the business of conducting 
     financial activities from providing a report that is required 
     by, or prepared at the request of, a financial regulator (the 
     originating financial regulator) to another financial 
     regulator that has the authority to obtain the information 
     from the person under any other provision of law;
       (B) a financial regulator that obtains a report described 
     in subparagraph (A) from a person engaged in the business of 
     conducting financial activities from using or disclosing such 
     report to the extent otherwise permitted by law; or
       (C) a person engaged in the business of conducting 
     financial activities from sharing confidential supervisory 
     information with the person's attorneys, accountants, and 
     auditors, solely for the purpose of providing legal, 
     accounting, or auditing services, respectively, for such 
     person, except that--
       (i) such sharing shall not be considered a disclosure for 
     any other purpose;
       (ii) the attorneys, accountants, or auditors may not 
     further disclose such information; and
       (iii) such sharing shall be conducted in accordance with 
     any other applicable governing laws and regulations.
       (2) Privilege preserved.--If a person provides a report 
     referred to in paragraph (1) to a financial regulator other 
     than the originating financial regulator, such action shall 
     not affect the ability of the originating financial regulator 
     to assert any privilege that such financial regulator may 
     claim with respect to the report against any person that is 
     not a financial regulator.
       (c) Financial Regulator Supervisory Privilege.--
       (1) Privilege established.--
       (A) In general.--All confidential supervisory information 
     shall be privileged from disclosure to any person except as 
     provided in this section.
       (B) Prohibition on unauthorized disclosures.--No person in 
     possession of confidential supervisory information may 
     disclose such information, in whole or in part, without the 
     prior authorization of the financial regulator that created 
     the information, or requested the information from a person 
     engaged in the business of conducting financial activities, 
     except for a disclosure made in published statistical 
     material that does not disclose, either directly or when used 
     in conjunction with publicly available information, the 
     affairs of any person or other personally identifiable 
     information.
       (C) Agency waiver.--The financial regulator that created 
     the confidential supervisory information, or requested the 
     confidential supervisory information from a person engaged in 
     the business of conducting financial activities, may waive, 
     in whole or in part, in the discretion of the regulator, any 
     privilege established under this paragraph with respect to 
     such information.
       (2) Exceptions.--
       (A) Access by governmental bodies.--
       (i) Congress and general accounting office.--No provision 
     of paragraph (1) shall be construed as preventing access to 
     confidential supervisory information by duly authorized 
     committees of the Congress or the Comptroller General of the 
     United States.
       (ii) Financial regulator oversight.--No financial regulator 
     which is described in subparagraph (P), (Q), or (R) of 
     section 115(3) and is subject to the oversight of a Federal 
     financial regulator may assert the privilege described in 
     paragraph (1) to prevent access to confidential supervisory 
     information by such Federal financial regulator.
       (B) Privilege not waived.--If a financial regulator 
     provides access to confidential supervisory information to 
     the Congress, the Comptroller General, or another financial 
     regulator, such action shall not affect the ability of the 
     financial regulator to assert any privilege associated with 
     such information against any other person.
       (d) Treatment of Foreign Supervisory Information.--In any 
     proceeding before a Federal or State court of the United 
     States, in which a person seeks to compel production or 
     disclosure by a financial regulator of information or 
     documents prepared or collected by a foreign financial 
     regulator that would, had the information or document been 
     prepared or collected by a financial regulator, be 
     confidential supervisory information for purposes of this 
     section, the information or document shall be privileged to 
     the same extent that the information and documents of 
     financial regulators are privileged under this title.
       (e) Other Privileges Not Waived by Disclosure to Financial 
     Regulator.--The submission by a person engaged in the 
     business of conducting financial activities of any 
     information to a financial regulator or a foreign financial 
     regulator in connection with the supervisory process of such 
     financial regulator or foreign financial regulator shall not 
     waive, destroy, or otherwise affect any privilege such person 
     may claim with respect to such information under Federal or 
     State law as to a party other than such financial regulator 
     or foreign financial regulator.
       (f) Discovery and Disclosure of Information.--
       (1) Information available only from financial regulator.--
       (A) In general.--No person (other than the financial 
     regulator that created the information or requested the 
     information from a person engaged in the business of 
     conducting financial activities) may disclose, in whole or in 
     part, any confidential supervisory information to any person 
     who seeks such information through subpoena, discovery 
     procedures, or otherwise.
       (B) Procedure for requests submitted to financial 
     regulator.--
       (i) In general.--Any request for discovery or disclosure of 
     confidential supervisory information shall be made to the 
     financial regulator that created the information, or 
     requested the information from a person engaged in the 
     business of conducting financial activities.
       (ii) Procedure.--Upon receiving a request for confidential 
     supervisory information, the financial regulator shall 
     determine within a reasonable time period whether to disclose 
     such information pursuant to procedures and criteria 
     established by the financial regulator.
       (C) Notification.--
       (i) In general.--Before any financial regulator releases 
     confidential supervisory information that was requested from 
     a person engaged in the business of conducting financial 
     activities to a person under subparagraph (B), notice and a 
     reasonable time for comment shall be provided to the person 
     from whom such information was requested unless such 
     information--

       (I) is being provided to another financial regulator, an 
     agency or entity represented by a liaison to the 
     Subcommittee, or a Federal, State, or foreign government (or 
     any agency or instrumentality of any such government acting 
     in any capacity);
       (II) is being sought for use in a criminal proceeding or 
     investigation, or a regulatory, supervisory, enforcement, or 
     disciplinary administrative proceeding, civil action, or 
     investigation; or
       (III) was originally created, or included in information 
     created, by the financial regulator.

[[Page H7737]]

       (ii) Procedures and requirements.--A financial regulator 
     may prescribe regulations, or issue orders, guidelines, or 
     procedures, governing the notice and time period required by 
     clause (i).
       (2) Federal court jurisdiction over disputes.--
       (A) Declaratory judgment.--If a party seeks in any action 
     or proceeding to compel disclosure of confidential 
     supervisory information, a financial regulator may in a civil 
     action for a declaratory judgment seek to prevent such 
     disclosure.
       (B) Judicial review.--Judicial review of the final action 
     of a financial regulator with regard to the disposition of a 
     request for confidential supervisory information shall be 
     before a district court of the United States of competent 
     jurisdiction, subject to chapter 7 of part I of title 5, 
     United States Code.
       (g) Authority To Intervene.--In the case of any action or 
     proceeding to compel compliance with a subpoena, order, 
     discovery request, or other judicial or administrative 
     process with respect to any confidential supervisory 
     information of a financial regulator concerning any person 
     engaged in the business of conducting financial activities, 
     the financial regulator may intervene in such action or 
     proceeding, and such person may intervene with such 
     regulator, for the purpose of--
       (1) enforcing the limitations established in paragraph (1) 
     of subsections (c) and (f);
       (2) seeking the withdrawal of any compulsory process with 
     respect to such information; and
       (3) registering appropriate objections with respect to the 
     action or proceeding to the extent the action or proceeding 
     relates to or involves such information.
       (h) Right To Appeal.--Any court order that compels 
     production of confidential supervisory information may be 
     immediately appealed by the financial regulator and the order 
     compelling production shall be automatically stayed, pending 
     the outcome of such appeal.
       (i) Regulations.--
       (1) Authority to prescribe.--Each financial regulator may 
     prescribe such regulations as the regulator considers to be 
     appropriate, after consultation with the other financial 
     regulators (to the extent the prescribing financial regulator 
     considers appropriate and feasible), to carry out the 
     purposes of this section.
       (2) Authority to require notice.--Any regulations 
     prescribed by a financial regulator under paragraph (1) may 
     require any person in possession of confidential supervisory 
     information to notify the financial regulator whenever the 
     person is served with a subpoena, order, discovery request, 
     or other judicial or administrative process requiring the 
     personal attendance of such person as a witness or requiring 
     the production of such information in any proceeding.
       (j) Ability To Partially Waive Privilege Where No Other 
     Privilege Applies.--A financial regulator may, to the extent 
     permitted by applicable law governing the disclosure of 
     information by the regulator, authorize a waiver of the 
     privilege established by this section to allow access by a 
     person to confidential supervisory information created by 
     such regulator (or requested by such regulator from any 
     person engaged in the business of conducting financial 
     activities), except that--
       (1) the regulator may place appropriate limits on the use 
     and disclosure of the information shared, and may continue to 
     assert the privilege with respect to any other person that 
     seeks access to the information; and
       (2) such waiver shall not affect any other privilege or 
     confidentiality protection that any party may assert against 
     any person other than such financial regulator.
       (k) Sharing of Confidential Supervisory Information Among 
     Federal Functional Regulators.--A Federal functional 
     regulator (as defined in section 509 of the Gramm-Leach-
     Bliley Act) shall freely share, upon request, any 
     confidential supervisory information created by it with 
     another Federal functional regulator subject only to any 
     existing legal restrictions on the regulator's authority to 
     share or disclose information and to the following 
     paragraphs:
       (1) Requests directed to regulator.--A Federal functional 
     regulator may seek information described in this subsection 
     solely from the Federal functional regulator that created the 
     information (hereafter in this subsection referred to as the 
     ``originating regulator''), and not from any other person 
     (unless authorized by the originating regulator).
       (2) Review of requests.--Notwithstanding any other 
     provision of law, in response to a request for such 
     information, the originating regulator may decline to provide 
     any portion of the information if the originating regulator, 
     in consultation with the requesting regulator and after 
     giving due consideration to the request, determines that 
     withholding the information is appropriate in the public 
     interest.
       (3) Use within agency permitted.--Any confidential 
     supervisory information received by a requesting regulator 
     under this subsection may be shared freely among personnel 
     within the requesting regulator.
       (4) Approval required for other uses.--The requesting 
     regulator shall obtain the approval of the originating 
     regulator before any information described in this subsection 
     is--
       (A) made public;
       (B) provided to any third person or agency; or
       (C) cited or made a part of the record in the course of any 
     enforcement action.
       (l) Access to Information of Regulated Entity Preserved.--
     No provision of this section shall be construed as preventing 
     a Federal functional regulator (as defined in section 509 of 
     the Gramm-Leach-Bliley Act) from obtaining from any person, 
     other than a Federal functional regulator, any book, record 
     or information (other than confidential supervisory 
     information created by a Federal functional regulator), 
     including any book, record or other information referred to 
     in, or constituting the underlying data for, any confidential 
     supervisory information created by another Federal functional 
     regulator.
       (m) No Grant of Authority.--No provision of this section 
     shall be construed as providing any financial regulator any 
     new authority to request or obtain information.
       (n) No Waiver of Any Privilege of Any Other Party.--No 
     provision of this Act shall be construed as providing a 
     financial regulator with any new authority to disclose 
     information in contravention of applicable law governing 
     disclosure of information.

     SEC. 112. CONFIDENTIALITY OF INFORMATION.

       (a) In General.--
       (1) Financial regulators.--Except as otherwise provided in 
     this section or section 111, any requirement under Federal or 
     State law regarding the privacy or confidentiality of any 
     information or material in the possession of any participant, 
     and any privilege arising under Federal or State law 
     (including the rules of any Federal or State court) with 
     respect to such information or material, shall continue to 
     apply to such information or material after the information 
     or material has been disclosed through the network to another 
     participant or, if subtitle B has taken effect, the 
     Subcommittee.
       (2) Certain insurance information.--Except as otherwise 
     provided in this section or section 111, any requirement 
     under Federal or State law regarding the privacy or 
     confidentiality of any information or material in the 
     possession of the National Association of Insurance 
     Commissioners, or any member or affiliate of the Association, 
     and any privilege arising under Federal or State law 
     (including the rules of any Federal or State court) with 
     respect to such information or material, shall continue to 
     apply to such information or material after the information 
     has been disclosed to the Association, or any other member or 
     affiliate of the Association, through the computer databases 
     maintained by the Association.
       (3) Nonapplicability of certain requirements.--Information 
     or material that is subject to a privilege or confidentiality 
     under any other paragraph of this subsection shall not be 
     subject to--
       (A) disclosure under any Federal or State law governing the 
     disclosure to the public of information held by an officer or 
     an agency of the Federal Government or the respective State; 
     or
       (B) subpoena or discovery, or admission into evidence, in 
     any private civil action or administrative process,
     unless with respect to any privilege held by a participant 
     with respect to such information or material, the participant 
     waives, in whole or in part, in the discretion of the 
     participant, such privilege.
       (b) Preemption of State Law.--Any State law, including any 
     State open record law, relating to the disclosure of 
     confidential supervisory information or any information or 
     material described in subsection (a) that is inconsistent 
     with any provision of section 111 or subsection (a) of this 
     section shall be superseded by the requirements of such 
     provision to the extent State law provides less 
     confidentiality or a weaker privilege.
       (c) Duty of Financial Regulator To Maintain 
     Confidentiality.--A participant may not receive, download, 
     copy, or otherwise maintain any information or material from 
     any other member of or liaison to the Subcommittee through 
     the network unless--
       (1) the participant maintains a system that enables the 
     participant to maintain full compliance with the requirements 
     of sections 100, 102, and 111 and this section, with respect 
     to such information and material; and
       (2) if and to the extent required by the guidelines 
     established under sections 100 and 102, a record is 
     maintained of each attempt to access such information and 
     material, and the identity of the person making the attempt, 
     in order to prevent evasions of such requirements.

     SEC. 113. LIABILITY PROVISIONS.

       (a) No Liability for Good Faith Disclosures.--Any financial 
     regulator, and any officer or employee of any financial 
     regulator, shall not be subject to any civil action or 
     proceeding for monetary damages by reason of the good faith 
     action or omission of any officer or employee, while acting 
     within the scope of office or employment, relating to 
     collecting, furnishing, or disseminating regulatory or 
     supervisory information concerning persons engaged in the 
     business of conducting financial activities, to or from 
     another financial regulator, whether directly or through the 
     network.
       (b) Criminal Liability for Intentional Unlawful 
     Disclosures.--
       (1) In general.--It shall be unlawful to willfully disclose 
     to any person any information concerning any person engaged 
     in the business of conducting financial activities knowing 
     the disclosure to be in violation of any provision of this 
     title--
       (A) requiring the confidentiality of such information; or

[[Page H7738]]

       (B) establishing a privilege from disclosure for such 
     information that has not been waived by the relevant 
     financial regulator.
       (2) Penalty.--Notwithstanding section 3571 of title 18, 
     United States Code, any person who violates paragraph (1) 
     shall be fined an amount not to exceed the greater of 
     $100,000 or the amount of the actual damages sustained by any 
     person as a result of such violation, or imprisoned not more 
     than 5 years, or both.
       (c) Full, Continued Protection Under the So-Called 
     ``Federal Tort Claims Act''.--No provision of this Act shall 
     be construed as reducing or limiting any protection provided 
     for any Federal agency, or any officer or employee of any 
     Federal agency, under section 2679 of title 28, United States 
     Code.
       (d) Protection Applied to the Subcommittee.--For the 
     purposes of this section, the term ``financial regulator'' 
     includes the Subcommittee after subtitle B has taken effect.

     SEC. 114. AUTHORIZATION FOR IDENTIFICATION AND CRIMINAL 
                   BACKGROUND CHECK.

       (a) Sharing of Criminal Records.--
       (1) Attorney general authorization.--Upon receiving a 
     request from a financial regulator, the Attorney General 
     shall--
       (A) search the records of the Criminal Justice Information 
     Services Division of the Federal Bureau of Investigation, and 
     any other similar database over which the Attorney General 
     has authority and deems appropriate, for any criminal 
     background records (including wanted persons information) 
     corresponding to the identification information provided 
     under subsection (b); and
       (B) either--
       (i) shall provide any such records to any authorized agent 
     of the financial regulator, which shall provide the relevant 
     information to such regulator; or
       (ii) may provide such records directly to the financial 
     regulator if the Attorney General limits such provision of 
     records to relevant information.
       (2) Authorized agent defined.--For purposes of this 
     section, the term ``authorized agent'' means--
       (A) any agent which has been recognized by the Attorney 
     General for such purpose and authorized by at least 3 other 
     financial regulators to receive such records and perform the 
     information sharing requirements of paragraph (3);
       (B) the State attorney general for the State in which the 
     regulator is primarily located; and
       (C) any law enforcement designee of the Attorney General or 
     such State attorney general.
       (3) Information shared.--
       (A) In general.--The authorized agent shall provide to the 
     requesting financial regulator only any records that are 
     relevant information.
       (B) Relevant information defined.--For purposes of this 
     section, the term ``relevant information'' means any of the 
     following records:
       (i) All felony convictions.
       (ii) All misdemeanor convictions involving--

       (I) violation of a law involving financial activities;
       (II) dishonesty or breach of trust, within the meaning of 
     section 1033 of title 18, United States Code, including 
     taking, withholding, misappropriating, or converting money or 
     property;
       (III) failure to comply with child support obligations;
       (IV) failure to pay taxes; and
       (V) domestic violence, child abuse, or a crime of violence.

       (C) Crime of violence defined.--For purposes of 
     subparagraph (B)(ii)(V), the term ``crime of violence'' means 
     a burglary of a dwelling and a criminal offense that has as 
     an element the use or attempted use of physical force, or 
     threat of great bodily harm, or the use, attempted use, or 
     threatened use of a deadly weapon, against an individual, 
     including committing or attempting to commit murder, 
     manslaughter, kidnapping, aggravated assault, forcible sex 
     offenses, robbery, arson, extortion, and extortionate 
     extension of credit.
       (4) State uniform or reciprocity laws requirement.--
       (A) In general.--The Attorney General may not provide any 
     records under this subsection to an insurance regulator of a 
     State, or agent of such regulator, if such State does not 
     have in effect uniform or reciprocity laws and regulations 
     governing the licensure of individuals and entities 
     authorized to sell and solicit the purchase of insurance 
     within the State as set forth in section 321 of P.L. 106-102.
       (B) Determination of reciprocity.--The determination of 
     whether or not a State has uniform or reciprocity laws or 
     regulations in effect for purposes of subparagraph (A) shall 
     be made by the Attorney General, with the advice and counsel 
     of the National Association of Insurance Commissioners.
       (C) Exception under certain circumstances.--Notwithstanding 
     subparagraph (B), the Attorney General may provide records 
     under this section to an insurance regulator of a State, or 
     agent of such regulator, on the basis of a specific 
     determination by the National Association of Insurance 
     Commissioners that such State has in effect uniform or 
     reciprocity laws and regulations referred to in subparagraph 
     (A) if--
       (i) a determination by the Attorney General under 
     subparagraph (B) is pending; or
       (ii) the Attorney General considers whether such State has 
     in effect such uniform or reciprocity laws or regulations and 
     fails to make a determination, unless the Attorney General 
     subsequently determines that such State does not have in 
     effect uniform or reciprocity laws or regulations.
       (b) Form of Request.--A request under subsection (a) shall 
     include a copy of any necessary identification information 
     required by the Attorney General, such as the name and 
     fingerprints of the person about whom the record is requested 
     and a statement signed by the person acknowledging that the 
     regulator (or such regulator's designated agent under 
     subsection (g)(1)) may request the search.
       (c) Limitation on Permissible Uses of Information.--
     Information obtained under this section may--
       (1) be used only for regulatory or law enforcement 
     purposes; and
       (2) be disclosed--
       (A) only to other financial regulators or Federal or State 
     law enforcement agencies; and
       (B) only if the recipient agrees to--
       (i) maintain the confidentiality of such information; and
       (ii) limit the use of such information to appropriate 
     regulatory and law enforcement purposes.
       (d) Penalty for Improper Use.--
       (1) In general.--Whoever uses any information obtained 
     under this section knowingly and willfully for an 
     unauthorized purpose shall be fined under title 18, United 
     States Code, imprisoned for not more than 2 years, or both.
       (2) Additional penalties and waivers.--
       (A) In general.--Any authorized agent who violates 
     paragraph (1), or any individual who directs such agent to 
     violate such paragraph, shall be barred from engaging in or 
     regulating any activities related to the business of 
     insurance.
       (B) Waiver authorized.--The Attorney General, in the 
     discretion of the Attorney General, may waive the bar in 
     subparagraph (A), as appropriate.
       (e) Reliance on Information.--A financial regulator (or 
     such regulator's designated agent under subsection (g)(1)) 
     who reasonably relies on information provided under this 
     section shall not be liable in any action for using 
     information as permitted under this section in good faith.
       (f) Clarification of Section 1033.--With respect to any 
     action brought under section 1033(e)(1)(B) of title 18, 
     United States Code, no person engaged in the business of 
     conducting financial activities shall be subject to any 
     penalty resulting from such section if the individual who the 
     person permitted to engage in the business of insurance is 
     licensed, or approved (as part of an application or 
     otherwise), by a State insurance regulator that performs 
     criminal background checks under this section, unless such 
     person knows that the individual is in violation of section 
     1033(e)(1)(A) of such title.
       (g) Designation of Agent.--
       (1) In general.--A financial regulator may designate an 
     agent for facilitating requests and exchanges of information 
     under this section between or among the financial regulator, 
     the Attorney General, and any other authorized agent.
       (2) Sense of congress regarding agents of insurance 
     regulators.--It is the sense of the Congress that--
       (A) each State insurance commissioner should designate the 
     National Association of Insurance Commissioners as an agent 
     under paragraph (1);
       (B) persons engaged in the business of insurance should be 
     able to use the National Association of Insurance 
     Commissioners to facilitate obtaining fingerprints and 
     supplying identification information for use in background 
     checks under this section on a multijurisdictional basis;
       (C) the National Association of Insurance Commissioners 
     should maintain a database to obtain records under this 
     section for use by State insurance commissioners to reduce 
     multiple or duplicative fingerprinting requirements and 
     criminal background checks, except that any such record shall 
     not be maintained for more than 1 year without performing a 
     new background check to determine if the criminal background 
     record has changed;
       (D) other financial regulators that require fingerprints 
     and criminal background checks should similarly coordinate 
     efforts to reduce duplication for persons engaged in the 
     business of conducting multiple types of financial 
     activities; and
       (E) the National Association of Insurance Commissioners, 
     and other financial regulators that use this section, should 
     consult with the Attorney General to consider the feasibility 
     of developing an on-going notification system that would 
     allow the Attorney General to notify such Association when a 
     licensed or approved insurance professional is convicted of a 
     relevant crime.
       (h) Fees.--The Attorney General may charge a reasonable fee 
     for the provision of information under this section.
       (i) Rule of Construction.--This section shall not--
       (1) provide independent authorization for a financial 
     regulator to require fingerprinting as a part of a licensure 
     or other application;
       (2) require a financial regulator to perform criminal 
     background checks under this section; or
       (3) supersede or otherwise limit any other authority that 
     allows access to criminal background records.

[[Page H7739]]

       (j) Regulations.--The Attorney General may prescribe 
     regulations to carry out this section.

     SEC. 115. DEFINITIONS.

       For purposes of this title, the following definitions shall 
     apply:
       (1) Federal banking agency.--The term ``Federal banking 
     agency'' has the same meaning as given in section 3(z) of the 
     Federal Deposit Insurance Act.
       (2) Financial activities.--
       (A) In general.--The term ``financial activities''--
       (i) means banking activities (including the ownership of a 
     bank), securities activities, insurance activities, or 
     commodities activities; and
       (ii) includes all activities that are financial in nature 
     or are incidental to a financial activity (as defined under 
     section 4(k) of the Bank Holding Company Act of 1956).
       (B) Rule of construction.--Subparagraph (A) shall not be 
     construed as creating any inference, including any negative 
     inference, concerning the types or extent of activities that 
     are appropriately recognized as activities that are financial 
     in nature, or are incidental to a financial activity, for 
     purposes of section 4 of the Bank Holding Company Act of 
     1956.
       (3) Financial regulator.--The term ``financial regulator'' 
     means--
       (A) each Federal banking agency;
       (B) the Securities and Exchange Commission;
       (C) the Commodity Futures Trading Commission;
       (D) the National Credit Union Administration;
       (E) the Farm Credit Administration;
       (F) the Federal Housing Finance Board;
       (G) the Federal Trade Commission, to the extent the 
     Commission has jurisdiction over financial activities being 
     conducted by a person engaged in the business of conducting 
     financial activities;
       (H) the Secretary of the Treasury, to the extent the 
     Secretary has jurisdiction over financial activities being 
     conducted by a person engaged in the business of conducting 
     financial activities;
       (I) the Office of Federal Housing Enterprise Oversight of 
     the Department of Housing and Urban Development;
       (J) the Appraisal Subcommittee of the Financial 
     Institutions Examination Council;
       (K) any State bank supervisor (as defined in section 3(r) 
     of the Federal Deposit Insurance Act), including the 
     Conference of State Bank Supervisors only to the extent such 
     conference is acting as an agent of, and is subject to the 
     oversight of, any such State bank supervisor;
       (L) any State savings association supervisor, including the 
     American Council of State Savings Supervisors only to the 
     extent such conference is acting as an agent of, and is 
     subject to the oversight of, any such State savings 
     association supervisor;
       (M) any State insurance commissioner, including the 
     National Association of Insurance Commissioners only to the 
     extent such association is acting as the agent of, and is 
     subject to the oversight of, any such insurance commissioner;
       (N) any State securities administrator, including the North 
     American Securities Administrators Association only to the 
     extent such association is acting as the agent of, and is 
     subject to the oversight of, any such securities 
     administrator;
       (O) any State credit union supervisor, including the 
     National Association of State Credit Union Supervisors only 
     to the extent such association is acting as the agent of, and 
     is subject to the oversight of, any such credit union 
     supervisor;
       (P) the National Association of Securities Dealers, only to 
     the extent that--
       (i) such association is acting in connection with the 
     financial services industry; and
       (ii) the association and the relevant actions are subject 
     to the oversight of the Securities and Exchange Commission;
       (Q) the National Futures Association, only to the extent 
     that--
       (i) such association is acting in connection with the 
     financial services industry; and
       (ii) the association and the relevant actions are subject 
     to the oversight of the Commodity Futures Trading Commission 
     or the Securities and Exchange Commission; and
       (R) any other self-regulatory organization that engages in 
     or coordinates regulatory and supervisory activities, with 
     respect to any person engaged in the business of conducting 
     financial activities, and is subject to the oversight of the 
     Securities and Exchange Commission or the Commodity Futures 
     Trading Commission, but only to the extent that the 
     organization engages in such activities and is subject to 
     such oversight.
       (4) Foreign financial regulator.--The term ``foreign 
     financial regulator'' means any agency, entity, or body 
     (including a self-regulatory organization) that is empowered 
     by the laws of a foreign country to supervise and regulate 
     persons engaged in the business of conducting financial 
     activities, but only to the extent of such supervisory and 
     regulatory activities.
       (5) Participant.--The term ``participant'' means any entity 
     described in section 101 as being represented by a member of, 
     or a liaison to, the Subcommittee (regardless of whether 
     subtitle B has taken effect) but only to the extent the 
     regulator provides or obtains access to information through 
     the network.
       (6) Person.--The term ``person'' includes any financial 
     regulator.
       (7) Person engaged in the business of conducting financial 
     activities.--The term ``person engaged in the business of 
     conducting financial activities'' includes, to the extent 
     appropriate under the laws applicable to the jurisdiction of 
     a financial regulator over such person--
       (A) any director, officer, employee, or controlling 
     stockholder of, or agent for, any such person;
       (B) any other person who has filed or is required to file a 
     change-in-control notice with the appropriate financial 
     regulator before acquiring control of such person; and
       (C) any person who has sought approval from a financial 
     regulator to engage in the business of conducting financial 
     activities, or that was engaged in such business and subject 
     to the jurisdiction of a financial regulator; and
       (D) any shareholder, consultant, joint venture partner, and 
     any other person, including an independent contractor, as 
     determined by the appropriate financial regulator (by 
     regulation or case-by-case) who participates in the conduct 
     of the affairs of such person.
       (8) State insurance commissioner.--The term ``State 
     insurance commissioner'' means any officer, agency, or other 
     entity of any State which has primary regulatory authority 
     over the business of insurance and over any person engaged in 
     the business of insurance to the extent of such activities, 
     in such State.
       (9) State securities administrator.--The term ``State 
     securities administrator'' means the securities commission 
     (or any agency or office performing like functions) of any 
     State.

     SEC. 116. TECHNICAL AND CONFORMING AMENDMENTS TO OTHER ACTS.

       (a) Subsection (b) of section 552a of title 5, United 
     States Code, is amended--
       (1) by striking ``and'' at the end of paragraph (11);
       (2) by striking the period at the end of paragraph (12) and 
     inserting ``; or''; and
       (3) by inserting after paragraph (12) the following new 
     paragraph:
       ``(13) for recordkeeping, licensing, and other regulatory 
     and law enforcement purposes in accordance with title I of 
     the Financial Services Antifraud Network Act of 2001--
       ``(A) through a network or name-relationship index 
     maintained under such title; or
       ``(B) to a multistate database maintained by the National 
     Association of Insurance Commissioners and any subsidiary or 
     affiliate of such association, subject to the requirements of 
     such title.''.
       (b) Section 1113 of the Financial Institutions Regulatory 
     and Interest Rate Control Act of 1978 (12 U.S.C. 3413) is 
     amended by adding at the end the following new subsection:
       ``(r) This title shall not apply to disclosure by a 
     financial regulator of information pursuant to subtitle A or 
     B of title I of the Financial Services Antifraud Network Act 
     of 2001 to the extent the disclosure is made in accordance 
     with the requirements of such Act.''.
       (c) Section 602 of the Consumer Credit Protection Act (15 
     U.S.C. 1681) is amended by adding at the end the following 
     new subsection:
       ``(c) This title shall not apply to a communication between 
     participants, as defined in the Financial Services Antifraud 
     Network Act of 2001, to the extent the communication is made 
     in accordance with such Act.''.

     SEC. 117. AUDIT OF STATE INSURANCE REGULATORS.

       (a) In General.--At the request of the Congress, the 
     Comptroller General shall audit a State insurance regulator 
     or any person who maintains information on behalf of such 
     regulator.
       (b) Limitations on Disclosure of Information.--Except as 
     provided in this subsection, an officer or employee of the 
     General Accounting Office may not disclose information 
     identifying an open insurance company or a customer of an 
     open or closed insurance company. The Comptroller General may 
     disclose information related to the affairs of a closed 
     insurance company only if the Comptroller General believes 
     the customer had a controlling influence in the management of 
     the closed insurance company or was related to or affiliated 
     with a person or group having a controlling influence.
       (c) Coordination With State Regulator.--An officer or 
     employee of the General Accounting Office may discuss a 
     customer or insurance company with an official of a State 
     insurance regulator and may report an apparent criminal 
     violation to an appropriate law enforcement authority of the 
     United States Government or a State.
       (d) Congressional Oversight.--This subsection shall not be 
     construed as authorizing an officer or employee of a State 
     insurance regulator to withhold information from a committee 
     of the Congress authorized to have the information.
       (e) Administrative Aspects of Audit.--
       (1) In general.--To carry out this section, all records and 
     property of or used by a State insurance regulator, including 
     samples of reports of examinations of an insurance company 
     the Comptroller General considers statistically meaningful 
     and workpapers and correspondence related to the reports 
     shall be made available to the Comptroller General. The 
     Comptroller General shall give a State insurance regulator a 
     current list of officers and employees to whom, with proper 
     identification, records and property may be made available, 
     and who may make notes or copies necessary to carry out an 
     audit.

[[Page H7740]]

       (2) Prevention of unauthorized access.--The Comptroller 
     General shall prevent unauthorized access to records or 
     property of or used by a State insurance regulator that the 
     Comptroller General obtains during an audit.
       (f) Confidentiality.--
       (1) In general.--The Comptroller General shall maintain the 
     same level of confidentiality for a record made available 
     under this section as is required of the head of the State 
     insurance regulator from which it is obtained.
       (2) Prevention of invasion of personal privacy.--The 
     Comptroller General shall keep information described in 
     section 552(b)(6) of title 5, United States Code, that the 
     Comptroller General obtains in a way that prevents 
     unwarranted invasions of personal privacy.
       (3) Availability of information.--Except as provided in 
     subsection (b), no provision of this section shall be 
     construed as authorizing any information to be withheld from 
     the Congress.
       (g) Availability of Information and Inspection of 
     Records.--The right of access of the Comptroller General to 
     information under this section shall be enforceable under 
     section 716 of title 31, United States Code.
       (h) Definitions.--For purposes of this section, the 
     following definitions shall apply:
       (1) State insurance regulator defined.--The term ``State 
     insurance regulator'' means the principal insurance 
     regulatory authority of a State, the District of Columbia, 
     any territory of the United States, Puerto Rico, Guam, 
     American Samoa, the Trust Territory of the Pacific Islands, 
     the Virgin Islands, and the Northern Mariana Islands.
       (2) Insurance company.--The term ``insurance company'' 
     includes any person engaged in the business of insurance to 
     the extent of such activities.

                       Subtitle D--Anti-Terrorism

     SEC. 121. PREVENTING INTERNATIONAL TERRORISM.

       (a) In General.--The financial regulators shall coordinate 
     the network established under sections 100 and 101 with their 
     foreign counterparts, to the extent the regulators deem 
     possible, practicable, and appropriate, to help uncover, 
     hinder, and prosecute the financial activities of terrorists.
       (b) Report Required.--The entities described in section 
     101(a) shall report to the Congress by the end of the 6-month 
     period beginning on the date of the enactment of this Act 
     their further recommendations to the Congress for achieving 
     the goals of subsection (a).

               TITLE II--SECURITIES INDUSTRY COORDINATION

                  Subtitle A--Disciplinary Information

     SEC. 201. INVESTMENT ADVISERS ACT OF 1940.

       (a) Amendment.--Section 204 of the Investment Advisers Act 
     of 1940 (15 U.S.C. 80b-4) is amended--
       (1) by striking ``Every investment'' and inserting the 
     following:
       ``(a) In General.--Every investment''; and
       (2) by adding at the end the following:
       ``(b) Filing Depositories.--The Commission, by rule, may 
     require an investment adviser--
       ``(1) to file with the Commission any fee, application, 
     report, or notice required to be filed by this title or the 
     rules issued under this title through any entity designated 
     by the Commission for that purpose; and
       ``(2) to pay the reasonable costs associated with such 
     filing and the establishment and maintenance of the systems 
     required by subsection (c).
       ``(c) Access to Disciplinary and Other Information.--
       ``(1) Maintenance of system to respond to inquiries.--The 
     Commission shall require the entity designated by the 
     Commission under subsection (b)(1)--
       ``(A) to establish and maintain a toll-free telephone 
     listing or other readily accessible electronic process to 
     receive inquiries regarding disciplinary actions and 
     proceedings and other information involving investment 
     advisers and persons associated with investment advisers; and
       ``(B) to respond promptly to such inquiries.
       ``(2) Recovery of costs.--An entity designated by the 
     Commission under subsection (b)(1) may charge persons, other 
     than individual investors, reasonable fees for responses to 
     inquiries made under paragraph (1).
       ``(3) Limitation on liability.--An entity designated by the 
     Commission under subsection (b)(1) shall not have any 
     liability to any person for any actions taken or omitted in 
     good faith under this subsection.''.
       (b) Conforming Amendments.--
       (1) Section 203A of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3a) is amended--
       (A) by striking subsection (d); and
       (B) by redesignating subsection (e) as subsection (d).
       (2) Section 306 of the National Securities Markets 
     Improvement Act of 1996 (15 U.S.C. 80b-10, note; P.L. 104-
     290; 110 Stat. 3439) is repealed.

     SEC. 202. SECURITIES EXCHANGE ACT OF 1934.

       Subsection (i) of section 15A of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78o-3) is amended to read as follows:
       ``(i) Obligation To Maintain Disciplinary and Other Data.--
       ``(1) Maintenance of system to respond to inquiries.--A 
     registered securities association shall--
       ``(A) establish and maintain a toll-free telephone listing 
     or other readily accessible electronic process to receive 
     inquiries regarding disciplinary actions and proceedings and 
     other information involving its members and their associated 
     persons and regarding disciplinary actions and proceedings 
     and other information that has been reported to the Central 
     Registration Depository by any registered national securities 
     exchange involving its members and their associated persons; 
     and
       ``(B) promptly respond to such inquiries.
       ``(2) Recovery of costs.--Such association may charge 
     persons, other than individual investors, reasonable fees for 
     responses to such inquiries.
       ``(3) Limitation on liability.--Such an association or 
     exchange shall not have any liability to any person for any 
     actions taken or omitted in good faith under this 
     subsection.''.

 Subtitle B--Preventing Migration of Rogue Financial Professionals to 
                        the Securities Industry

     SEC. 211. SECURITIES EXCHANGE ACT OF 1934.

       (a) Brokers and Dealers.--Section 15(b) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o(b)) is amended--
       (1) in paragraph (4), by striking subparagraphs (F) and (G) 
     and inserting the following:
       ``(F) is subject to any order of the Commission barring or 
     suspending the right of the person to be associated with a 
     broker or dealer.
       ``(G) has been found by a foreign financial regulatory 
     authority to have--
       ``(i) made or caused to be made in any application for 
     registration or report required to be filed with a foreign 
     financial regulatory authority, or in any proceeding before a 
     foreign financial regulatory authority with respect to 
     registration, any statement that was at the time and in the 
     light of the circumstances under which it was made false or 
     misleading with respect to any material fact, or omitted to 
     state in any such application, report, or proceeding any 
     material fact that is required to be stated therein;
       ``(ii) violated any foreign statute or regulation regarding 
     securities, banking, thrift activities, credit union 
     activities, insurance, or contracts of sale of a commodity 
     for future delivery, traded on or subject to the rules of a 
     contract market or any board of trade; or
       ``(iii) aided, abetted, counseled, commanded, induced, or 
     procured the violation by any other person of any provision 
     of any statutory provisions enacted by a foreign government, 
     or rules or regulations thereunder, regarding securities, 
     banking, thrift activities, credit union activities, 
     insurance, or contracts of sale of a commodity for future 
     delivery traded on or subject to the rules of a contract 
     market or any board of trade, or to have failed reasonably to 
     supervise, with a view to preventing violations of such 
     statutory provisions, rules, and regulations, another person 
     who commits such a violation, if such other person is subject 
     to his supervision.
       ``(H) is subject to any final order of a State securities 
     commission (or any agency or officer performing like 
     functions), State authority that supervises or examines 
     banks, thrifts, or credit unions, State insurance commission 
     (or any agency or office performing like functions), an 
     appropriate Federal banking agency (as defined in section 3 
     of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), or 
     the National Credit Union Administration, that--
       ``(i) bars such person from association with an entity 
     regulated by such commission, authority, agency, or officer, 
     or from engaging in the business of securities, insurance, 
     banking, thrift activities, or credit union activities; or
       ``(ii) constitutes a final order based on violations of any 
     laws or regulations that prohibit fraudulent, manipulative, 
     or deceptive conduct.''; and
       (2) in paragraph (6)(A)(i), by striking ``or omission 
     enumerated in subparagraph (A), (D), (E), or (G)'' and 
     inserting ``, or is subject to an order or finding, 
     enumerated in subparagraph (A), (D), (E), (G), or (H)''.
       (b) Municipal Securities Brokers and Dealers.--Section 
     15B(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
     4(c)) is amended--
       (1) in paragraph (2)--
       (A) by striking ``or omission enumerated in subparagraph 
     (A), (D), (E), or (G)'' and inserting ``, or is subject to an 
     order or finding, enumerated in subparagraph (A), (D), (E), 
     (G), or (H)''; and
       (B) by striking ``ten'' and inserting ``10''; and
       (2) in paragraph (4) by striking ``or omission enumerated 
     in subparagraph (A), (D), (E), or (G)'' and inserting ``, or 
     is subject to an order or finding, enumerated in subparagraph 
     (A), (D), (E), (G), or (H)''.
       (c) Government Securities Brokers and Dealers.--Section 
     15C(c)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78o-5(c)(1)) is amended--
       (1) in subparagraph (A), by striking ``or omission 
     enumerated in subparagraph (A), (D), (E), or (G)'' and 
     inserting ``, or is subject to an order or finding, 
     enumerated in subparagraph (A), (D), (E), (G), or (H)''; and
       (2) in subparagraph (C), by striking ``or omission 
     enumerated in subparagraph (A), (D), (E), or (G)'' and 
     inserting ``, or is subject to an order or finding, 
     enumerated in subparagraph (A), (D), (E), (G), or (H)''.
       (d) Clearance and Settlement.--Section 17A(c) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78q-1(c)) is 
     amended--
       (1) in paragraph (3)(A), by striking ``enumerated in 
     subparagraph (A), (D), (E), or (G)'' and inserting ``, or is 
     subject to an order

[[Page H7741]]

     or finding, enumerated in subparagraph (A), (D), (E), (G), or 
     (H)''; and
       (2) in paragraph (4)(C)--
       (A) by striking ``enumerated in subparagraph (A), (D), (E), 
     or (G)'' and inserting ``, or is subject to an order or 
     finding, enumerated in subparagraph (A), (D), (E), (G), or 
     (H)''; and
       (B) by striking ``ten years'' and inserting ``10 years''.
       (e) Definition of Statutory Disqualification.--Section 
     3(a)(39)(F) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c(a)(39)(F)) is amended by striking ``has committed or 
     omitted any act enumerated in subparagraph (D), (E), or (G)'' 
     and inserting ``has committed or omitted any act, or is 
     subject to an order or finding, enumerated in subparagraph 
     (D), (E), (G), or (H)''.

     SEC. 212. INVESTMENT ADVISERS ACT OF 1940.

       (a) Authority To Deny or Revoke Registration Based on State 
     (and Other Governmental) Administrative Actions.--Section 
     203(e) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
     3(e)) is amended by striking paragraphs (7) and (8) and 
     inserting the following:
       ``(7) is subject to any order of the Commission barring or 
     suspending the right of the person to be associated with an 
     investment adviser.
       ``(8) has been found by a foreign financial regulatory 
     authority to have--
       ``(A) made or caused to be made in any application for 
     registration or report required to be filed with a foreign 
     securities authority, or in any proceeding before a foreign 
     securities authority with respect to registration, any 
     statement that was at the time and in light of the 
     circumstances under which it was made false or misleading 
     with respect to any material fact, or has omitted to state in 
     any such application, report, or proceeding any material fact 
     that is required to be stated therein;
       ``(B) violated any foreign statute or regulation regarding 
     securities, banking, thrift activities, credit union 
     activities, insurance, or contracts of sale of a commodity 
     for future delivery traded on or subject to the rules of a 
     contract market or any board of trade;
       ``(C) aided, abetted, counseled, commanded, induced, or 
     procured the violation by any other person of any foreign 
     statute or regulation regarding securities, banking, thrift 
     activities, credit union activities, insurance, or contracts 
     of sale of a commodity for future delivery traded on or 
     subject to the rules of a contract market or any board of 
     trade, or to have failed reasonably to supervise, with a view 
     to preventing violations of statutory provisions, and rules 
     and regulations promulgated thereunder, another person who 
     commits such a violation, if such other person is subject to 
     his supervision.
       ``(9) is subject to any final order of a State securities 
     commission (or any agency or officer performing like 
     functions), State authority that supervises or examines 
     banks, thrifts, or credit unions, State insurance commission 
     (or any agency or office performing like functions), an 
     appropriate Federal banking agency (as defined in section 3 
     of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), or 
     the National Credit Union Administration, that--
       ``(A) bars such person from association with an entity 
     regulated by such commission, authority, agency, or officer, 
     or from engaging in the business of securities, insurance, 
     banking, thrift activities, or credit union activities; or
       ``(B) constitutes a final order based on violations of any 
     laws or regulations that prohibit fraudulent, manipulative, 
     or deceptive conduct.''.
       (b) Bars on Felons Associated With Investment Advisers.--
     Section 203(f) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3(f)) is amended--
       (A) by striking ``or (8)'' and inserting ``(8), or (9)''; 
     and
       (B) by inserting ``or (3)'' after ``paragraph (2)''.

                              {time}  1430

  The SPEAKER pro tempore (Mr. Culberson). Pursuant to the rule, the 
gentleman from Alabama (Mr. Bachus) and the gentleman from Mississippi 
(Mr. Shows) each will control 20 minutes.
  The Chair recognizes the gentleman from Alabama (Mr. Bachus).


                             General Leave

  Mr. BACHUS. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on this legislation, and to include extraneous material in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Alabama?
  There was no objection.
  Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong support of H.R. 1408, the Financial 
Services Antifraud Network Act of 2001. This bill is the product of 
long and careful deliberations in the Committee on Financial Services 
and the Subcommittee on Financial Institutions and Consumer Credit, 
which I have the honor of chairing.
  I want to thank the subcommittee's ranking member, the gentlewoman 
from California (Ms. Waters), for working with me in the spirit of 
bipartisanship to develop legislation that commands the broad consensus 
in the committee and deserves similar support on the House floor today.
  Let me also commend the chairman of the full committee, the gentleman 
from Ohio (Mr. Oxley), who made this bill one of the committee's 
highest priorities upon assuming his chairmanship at the beginning of 
this year, and then fought tenaciously to see it through to completion.
  The gentleman from Michigan (Mr. Rogers), more than anyone in this 
House, deserves enormous credit as both the principal architect of the 
legislation and its most forceful advocate in the committee.
  As former FBI special agents who have investigated at the street 
level, both the gentleman from Ohio (Chairman Oxley) and the gentleman 
from Michigan (Mr. Rogers) are as well qualified as anyone in this body 
to lead an effort to shore up the antifraud capabilities of our 
Federal, State, and local authorities.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Michigan (Mr. Rogers), the chief architect and chief sponsor of 
this legislation.
  Mr. ROGERS of Michigan. Mr. Speaker, I thank the gentleman for 
yielding time to me.
  I want to thank the gentleman from Alabama (Chairman Bachus) and the 
gentleman from Ohio (Chairman Oxley) for their quick and decisive role 
in moving this bill, and for working with me and many others to get 
this bill to the floor today.
  I also want to thank the ranking member, the gentleman from New York 
(Mr. LaFalce) and the gentlewoman from California (Ms. Waters) for 
sitting down and working through the differences that we had on this 
bill, and for coming up with what I think is a very, very good product 
that is going to do great things to protect senior citizens and those 
who are most at risk of losing their financial savings and investments 
around the country.
  Mr. Speaker, the chairman of the Committee on the Judiciary, the 
gentleman from Wisconsin (Mr. Sensenbrenner), also was very gracious. I 
had a good conversation with him this morning, and I thank him for 
working with us and allowing us to get this bill to the floor of the 
House.
  We have spent some time here, Mr. Speaker, working on terrorism and 
focusing the energies and resources of this great body on making sure 
that the President and this country had all the resources necessary to 
fight, defend, track down, and stop terrorism, both in the United 
States and abroad very important issues.
  However, Mr. Speaker, there is that other person who is lying in the 
weeds, that other dangerous character who is, as we unfortunately know, 
in every community in America, who is just waiting for the opportunity 
to contact a senior citizen or someone who is not quite paying 
attention and bilk them out of the very precious savings that they have 
to get them through their golden years or get their kids through 
college or get that house payment made at the end of the month.
  What we found in this financial services community that we have that 
is as different and diverse as it has ever been, and coming together 
with the Gramm-Leach-Bliley Act that has been passed in the past 
Congress, the lines have been blurred, but for the better.
  One place where we had not caught up was the fact that we could drive 
a truck through the loopholes we have created between the different 
regulators of the different industries: the insurance industry, the 
securities industry, and the banking industry.
  They are all different regulators having a horrible time 
communicating together to catch individuals who might steal from the 
securities field, and then move to the insurance field with no catch in 
the system that would stop them from doing that, and then again move to 
the banking and financial services realm and do it again.
  Nothing under the current system would allow them to get caught or 
stop them from getting a license in each of those three, even if they 
had been barred from those other industries or from serving in that 
particular industry.
  Mr. Speaker, I say this because there are two cases in Michigan which 
are

[[Page H7742]]

happening today which are extremely important.
  We had a case in Michigan where an individual from Flint sold 
securities in the form of promissory notes on a casino company, LTD, 
went to these elderly individuals and sold them the idea of riches in a 
hurry, and if they invest in this key company they would reap the 
benefits of all the casino gaming industries in Michigan.
  We soon found out, much to the peril of those investing, many of whom 
were senior citizens, that that money in fact was being used to pay his 
expenses and pay the expenses of his other companies, and paying off 
other loans that he had made throughout time, better known in the 
criminal world as a Ponzi scheme. He would take the money in to pay the 
others off, and continue doing this, to live off of those savings of so 
many individuals.
  There is nothing in the law today to stop these individuals, even if 
they were barred from the securities industry forevermore, from going 
into the insurance products industry and doing something equally as 
dastardly with a license.
  So what we have said is this. We said, we are not going to create a 
new database. There is no new information that is going to be sent 
here, Mr. Speaker. The Federal Government is not going to collect 
information on consumers or regulators all around the country. That is 
simply not going to happen.
  But we are going to set up a system. We are going to be the traffic 
cop that allows these 250 regulators of securities and banking and 
insurance to talk to each other; to say that, hey, the gentleman from 
Michigan (Mr. Rogers) is applying in Ohio and Michigan to get involved 
in the insurance industry. He is also applying in Ohio and Illinois for 
the securities industry. What do we know about him? If we know that the 
securities industry has barred him, we can also stop him from getting 
in the insurance industry.
  Mr. Speaker, this is simple but extremely important because we are in 
a time when so many resources are being diverted away from white-collar 
crime, and rightly so, as our country demands it; yet this is a great 
opportunity for those who are of a scheming mind, those who will rob, 
again, those precious resources from so many around the country in a 
way that is white-collar oriented, sneaky. They can pack up in the 
middle of the night and be gone and have half of the town's savings are 
in their pocket.
  This is extremely important legislation, Mr. Speaker, and there are 
some safeguards. I just want to cover them quickly.
  The information cannot include, in this system, personally 
identifiable information on consumers. The consumers are protected in 
this law.
  There is due process notice. The bill creates a new due process right 
for persons to receive notice when any regulator uses information from 
the antifraud network to take action against them. This includes a 
description of the information used, where the information came from, 
and a reasonable opportunity to respond.
  In the privacy sector, Mr. Speaker, to protect information shared 
between regulators, the bill establishes certain confidentiality and 
liability provisions of regulatory information.
  Insurance regulators were given increased information when performing 
criminal background checks on financial professionals.
  Further safeguards were also added governing the use of such 
information, as well as strong penalties for the misuse of an 
individual's criminal records.
  Again, I want to say this clearly, because there was some concern as 
this went through all of the committees that this would not create a 
new database on this type of information to be held in the custody of 
the Federal Government.
  It simply does not do that. It allows banking regulators to talk to 
insurance regulators to talk to security regulators so we can all be on 
the same sheet of music. When we find that bad apple, that scam artist 
who is going after Grandma, this bill and this ability will allow us to 
say no and protect those very, very precious savings.
  Mr. Speaker, today the House will consider H.R. 1408, the Financial 
Services Antifraud Network Act, which is legislation that will help 
safeguard the American public from fraud in the financial services 
industry.
  While the technology needed to create this network may be technical 
and complex, the purpose of this legislation is not: protecting 
consumers from financial scams.
  As a former special agent for the Federal Bureau of Investigation, I 
know firsthand that criminals come in all shapes and sizes. Advances in 
modern technology and the internet have created a new frontier for 
criminals, allowing them to defraud consumers with a mere click of a 
computer mouse. Our regulators need the same technological tools. 
Electronically linking regulators and law enforcement closes a loophole 
and averts schemes aimed at the American public.
  In fact, following the events of September 11 and the efforts to 
crack worldwide terrorism cells, it is even more important that we give 
our law enforcement officials and regulators the tools they need to 
prevent fraud and potential abuses in the United States financial 
services system.
  The need for this common-sense legislation is clear. Currently, there 
are over 250 Federal and State financial regulators and self-regulating 
financial organizations, each with their own separate filing systems 
for antifraud records. Most regulators have already computerized their 
records and have been working on efforts to coordinate databases within 
their industries. Recently, some of the larger regulators have begun 
developing individual information sharing agreements with other 
regulators across the financial industry.
  Unfortunately, effectuating individual coordination among all these 
regulators would require tens of thousands of separate agreements. At a 
March 6, 2001 Financial Services Committee hearing, several regulators 
testified that federal legislation is necessary to establish 
confidentiality and liability protections so that financial regulators 
do not compromise existing legal privileges when sharing supervisory 
data with other regulators and law enforcement agencies. Also, the 
Financial Services Roundtable testified that financial fraud costs 
consumers and the industry about $100 billion annually, and that 
greater information sharing will significantly reduce this fraud.
  The primary focus of H.R. 1408 is to help the financial regulators 
coordinate their antifraud efforts, particularly by coordinating 
computer protocols so that their systems can seamlessly communicate and 
share critical information. It is important to point out that this 
network will not be a database; instead, it directs the regulators to 
establish computer connections allowing regulators' existing databases 
to exchange data.
  The regulators themselves will have the initial opportunity to 
establish the mechanics of the network. H.R. 1408 gives the regulators 
six months to develop a proposal and two years to implement it. If the 
regulators fail to do this on their own, H.R. 1408 then creates a 
Subcommittee with representative regulators from each of the financial 
industries to make decisions regarding network protocols. This 
Subcommittee would then have a similar time-frame to plan and establish 
the network in conjunction with the other regulators, unless they 
determine that it is impracticable or not cost efficient.
  The bill provides critical safeguards to govern information sharing 
among regulators. The measure prohibits information from being shared 
through the network unless the regulators determine that adequate 
privacy and confidentiality safeguards exist. The regulators are only 
directed to share public final disciplinary and formal enforcement 
actions taken against financial companies and professionals. 
Additionally, H.R. 1408 expresses a sense of the Congress that the 
regulators should consider sharing additional anti-fraud information 
that is publicly accessible, as well as information from financial 
reports, affiliations, and applications, which are factual and 
substantiated and do not include personally identifiable information on 
consumers. The measure also creates a new due process right for persons 
to receive notice when any regulator uses information from the anti-
fraud network to take an action against them. This includes a 
description of the type of information used, where the information came 
from, and a reasonable opportunity to respond.
  To protect information shared between regulators, the measure 
establishes certain limited legal privileges and confidentiality and 
liability protections for regulatory and supervisory information. H.R. 
1408 also allows state insurance regulators to perform FBI fingerprint 
background checks on insurance applicants to obtain relevant criminal 
records, subject to certain protections against misuse. The 
fingerprinting section also clarifies that employers relying on a state 
insurance regulator's background approval of an insurance agent are not 
subject to liability for failing to conduct additional background 
checks.
  I believe the Financial Services Antifraud Network Act is carefully 
crafted bipartisan legislation that is a positive step toward 
preventing fraud across financial service industry sectors. I would 
like to thank Financial Services Committee Chairman Mike Oxley and 
Financial Institutions Subcommittee Chairman

[[Page H7743]]

Spencer Bachus for their leadership on this issue, as well as Committee 
Ranking Member John LaFalce and Subcommittee Ranking Member Maxine 
Waters for their willingness to work together on this much-needed 
legislation. I would also like to thank Judiciary Committee Chairman 
Jim Sensenbrenner and Agriculture Committee Chairman Larry Combest, 
whose committees shared jurisdiction over H.R. 1408.
  Finally, many thanks to staff for the hard work and long hours of 
negotiation that produced the final product. Among House Financial 
Service Committee staff that deserve special recognition are Robert 
Gordon, Charles Symington, Tom McCrocklin, Jim Clinger, Bob Foster, and 
Terry Haines, as well as Matt Strawn from my personal office.
  Again, we need to catch financial perpetrators before they strike. I 
believe H.R. 1408 is a positive step in that direction and urge my 
colleagues to support its adoption.
  Mr. SHOWS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I was an original cosponsor of H.R. 1408, the Financial 
Services Antifraud Network Act of 2001. I rise in support of this 
adoption today by the full House.
  Mr. Speaker, this legislation will enhance cooperation among a vast 
array of Federal and State financial agencies and self-regulatory 
organizations, fight against those who defraud the consumer of 
financial services, and ensure that criminals like Martin Frankel are 
not able to slip into one financial services industry after being 
booted out of another.
  The bill envisions the creation of a technological link between 
Federal and State banking, securities, insurance, and other financial 
regulators so they can easily share the information that is a product 
of final adjudication in disciplinary proceedings brought against 
financial companies and professionals.
  The bill makes common-sense changes to the securities laws by 
allowing security regulators to bar persons from the security industry 
when they have been barred from the banking or insurance industries by 
appropriate regulators.
  Finally, the bill promotes effective regulation of financial 
companies by providing judicial protection for examination reports 
under appropriate circumstances.
  In the beginning, many Democratic members of the Committee on 
Financial Services had serious concerns about early versions of the 
Financial Services Antifraud Network Act of 2001.
  Most of these concerns have been substantially diminished through a 
bipartisan negotiation initiated by the leaders of the Subcommittee on 
Financial Institutions and Consumer Credit, the gentleman from Alabama 
(Mr. Bachus) and the ranking member, the gentlewoman from California 
(Ms. Waters), supported by the gentleman from Ohio (Chairman Oxley) and 
the ranking member, the gentleman from New York (Mr. LaFalce).
  We on our side raised legitimate questions about the reliability of 
the information that could be disseminated over the network envisioned 
by prior versions of the legislation, and the ability of individuals to 
correct information about themselves that was to be carried out over 
the network.
  These concerns were apparently shared by the administration and the 
financial services industry. The bill we adopt today goes a long way 
toward ensuring that unsubstantiated rumors and unfounded allegations 
will not be broadcast throughout the regulatory community over the 
antifraud network.
  Most significantly, as a result of concerns raised by Democratic 
members, the compromise bill makes clear that participants in the 
network are required to give an individual notice of any adverse 
information obtained from the network and to afford the individual an 
opportunity to respond to such adverse information.
  Many Democratic members raised concerns that prior versions of the 
legislation needlessly created a new bureaucracy. In response to this 
concern, the bill provides the financial regulators an opportunity to 
develop an antifraud network without the assistance of an antifraud 
committee, which is a potential new mechanism contemplated by the bill. 
If the regulators do not meet the deadlines for establishing that 
network, then a fraud subcommittee will be created.
  The current version has improved provisions allowing insurance 
commissioners access to the criminal history data of current and 
potential insurance professionals, while addressing legitimate privacy 
concerns raised by insurance agents. These provisions have the 
potential of providing the insurance commissioners the tools needed to 
ensure that criminals are not operating within the insurance industry. 
I urge the adoption of the bill.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. BACHUS. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, better coordination of the antifraud efforts of the more 
than 250 Federal, State, and local agencies that regulate the banking, 
securities, and insurance industry is long overdue. As my colleagues 
know, it is often society's most vulnerable members, including our 
senior citizens, older veterans, and the terminally ill that are the 
targets of financial scam artists. In fact, they fashion their pitch 
towards these groups. They also feed on charitable schemes where they 
misrepresent that they are raising money for charity.
  In light of what happened September 11, I think this country has no 
toleration for those who go out as a financial scam and take advantage 
of tragedies such as September 11 to raise money with no intention of 
giving that money to help in the cause. The cost of these outrageous 
scams is estimated to exceed $100 billion annually in this country.
  By breaking down the barriers to information exchange that have 
hampered antifraud initiatives at the national level and among State 
regulators, H.R. 1408 will go a long way in reducing the risk to 
average American consumers and investors of losing their life savings 
due to financial fraud.
  As I mentioned at the onset, this legislation was the subject of 
extensive consideration over a 4-month period by the Subcommittee on 
Financial Institutions and Consumer Credit. In addition, the Committee 
on the Judiciary, on which I serve, marked up the legislation after it 
was reported by the Committee on Financial Services.
  The gentleman from Wisconsin (Chairman Sensenbrenner) is entitled to 
praise. He was committed to bringing this bill to the floor. It would 
not be on the floor today if we did not have a commitment and the 
cooperation of the Committee on the Judiciary. I thank the Committee on 
the Judiciary and its staff, as well as the staff of the Committee on 
Financial Services.
  What emerged from this cooperative effort, both between committees 
and between the minority and the majority, is a bill that enhances the 
capability of regulators to put financial defrauders out of business, 
while at the same time guaranteeing, as the gentleman from Michigan 
(Mr. Rogers) said, due process rights of the accused, and safeguarding 
the information shared by regulators against improper disclosure or 
other misuse.

                              {time}  1445

  Evidence has emerged in the wake of the September 11 attacks on the 
World Trade Center and the Pentagon that terrorist cells in this 
country may be financing their operations in part through financial 
crimes possibly and specifically involving stolen or false identities.
  Facilitating the exchange of information on these activities, 
shutting down funding for terrorists not only protects American 
consumers but it may also help regulators and law enforcement 
authorities identify and apprehend potential terrorists and those who 
provide them with the financial support they need before further acts 
of mass murder can be committed against innocent U.S. citizens.
  As I mentioned before, at the State, Federal and local level there 
are more than 20 different agencies charged with regulating banks, 
security firms, and insurance companies. However, to date, there has 
been little coordination among them. This lack of coordination was 
evidenced when recently indicted financier Martin Frankel, after being 
barred from securities activities, slid over to insurance where he 
proceeded to bilk the industry of some $200 million over 8 years.
  Frankel's ability to move from securities to insurance and from State 
to State and ease with which he flaunted

[[Page H7744]]

financial regulators may have been deterred. In fact, we had testimony 
before our committee that it was handicapped because of lack of 
communication among State regulators and between agencies, both local, 
State, and Federal.
  The antifraud network established by this legislation will help level 
the playing field between the Martin Frankels of this world and the 
financial regulators charged with policing fraud and protecting 
consumers.
  We also had testimony, Mr. Speaker, of situations where someone would 
start a financial or insurance or securities game in the State of Iowa. 
They would then be barred from the State of Iowa from further activity. 
The State of Iowa would understand the scheme; they would move against 
it; they would bring criminal charges against this person or this group 
of people. What also happens is even though there is a conviction 
against one person, another person sort of takes up the mantle and they 
would move to another State. They would start this all over. There 
would be another round of fraud.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Ohio (Mr. Oxley), the chairman of the full committee.
  (Mr. OXLEY asked and was given permission to revise and extend his 
remarks.)
  Mr. OXLEY. Mr. Speaker, let me thank the gentleman from Alabama (Mr. 
Bachus) for his good work, the chairman of the subcommittee, along with 
the gentleman from Michigan (Mr. Rogers), my good friend, who worked 
very hard on this issue; and we are finally reaching a point now where 
we can pass this antifraud legislation.
  As I am sure other speakers have said, we had numerous hearings on 
this issue. All of us are painfully aware of the Martin Frankel 
situation that resulted in such a terrible outcome for numerous people 
who invested their savings, only to be defrauded and losing millions, 
first in the securities industry and then as he artfully moved to the 
insurance side of thing, the same thing happened.
  This bill, of course, was designed to allow for information-sharing 
among the various regulators and to focus in on people like Martin 
Frankel who would take advantage of innocent people and their life 
savings. So this is a wonderful step forward that all of us can be 
very, very pleased about.
  I want to thank the gentleman from Mississippi (Mr. Shows) for 
carrying the bill today for his side of the aisle, also the gentleman 
from New York (Mr. LaFalce), the ranking member, and other members of 
our committee, as well as the Members on the Republican side. This is a 
truly bipartisan effort. Indeed, without the help also of the Committee 
on the Judiciary and the gentleman from Wisconsin (Mr. Sensenbrenner), 
we would not be able to bring this bill to the floor today.
  My congratulations to all those concerned, and we hope and trust that 
the other body will take this up with some degree of swiftness so that 
we can get this legislation signed by the President and on the books, 
therefore protecting the American consumer from these con artists.
  On September 11, 2001, the forces of terror struck the first blow in 
a cowardly attack against our nation. President Bush has now struck 
back to defend America, using the might of our armed forces to drive 
the terrorists back into hiding. But to clear our skies for freedom, we 
need to defend against not only the planes and bombs of the enemy, but 
also the reach of their financial empire.
  Osama bin Laden and the al Qaeda network survive and thrive on an 
illegal network of financial crime and corruption. To end terrorism, we 
need to go beyond the training camps and drive a stake through the 
heart of their financial network.
  The Antifraud Network Act was originally conceived as a consumer 
protection solution. Our financial regulators currently do not have any 
system in place for the comprehensive inter-industry oversight of 
company's financial activities. Instead, government agencies are 
currently sharing information on financial companies and professionals 
on an ad-hoc basis without any standards for disclosure or recourse 
when information is used against someone.
  This bill creates consumer protection standards for the sharing of 
information among agencies, while giving our regulators additional 
tools to help integrate the regulation of our financial markets. It 
also significantly increases the information available to each 
regulator when tracking down fraud and corruption across industries. We 
are thus not only protecting our American consumers from domestic fraud 
artists, but also strengthening the ability of our government to track 
down and break apart the financial network of international terrorists.
  Financial fraud costs our nation over 100 billion dollars a year, 
hurting the lives of millions of Americans and their families. Now with 
the war on terrorism, the stakes are even higher. The Rogers bill 
protects consumers and protects our nation. It was passed out by a new 
unanimous bipartisan vote in both the Financial Services and Judiciary 
Committee after having been reviewed by hundreds of lawyers from all 
spectrums of the financial services and law enforcement systems.
  Mr. Speaker, I am also including for the Record an exchange of 
correspondence between Chairman Combest and myself regarding the 
jurisdiction of the Committee on Agriculture on this legislation. I 
thank him for his assistance in bringing this legislation forward and 
appreciate his cooperation. I also want to thank the Chairman of the 
Judiciary Committee, Mr. Sensenbrenner for his ongoing commitment to 
bring this legislation to the floor. Finally, I want to thank the 
members of the Committee on Financial Services, including Chairman 
Bachus, Ranking Member LaFalce, and Subcommittee Ranking Member Waters 
for their cooperation and hard work on this legislation. And of course, 
much of the credit for this goes to a Committee freshman and FBI alum, 
Mike Rogers from Michigan
  It is the right bill for the right time to protect consumers and stop 
terrorism. I urge your support for Mr. Rogers' Antifraud legislation.

                                         House of Representatives,


                                     Committee on Agriculture,

                                    Washington, DC, July 31, 2001.
     Hon. Michael G. Oxley,
     Chairman, Committee on Financial Services, Rayburn House 
         Office Building, Washington, DC.
       Dear Chairman Oxley: I understand that the Committee on 
     Financial Services recently ordered reported H.R. 1408, the 
     Financial Services Antifraud Network Act of 2001. As you 
     know, the legislation contains provisions which fall within 
     the jurisdiction of the Committee on Agriculture pursuant to 
     clause 1(a) of Rule X of the Rules of the House of 
     Representatives.
       Beacuse of your willingness to consult with the Committee 
     on Agriculture regarding this matter and the need to move 
     this legislation expeditiously, I will waive consideration of 
     the bill by the Committee on Agriculture. By agreeing to 
     waive its consideration of the bill, the Agriculture 
     Committee does not waive its jurisdiction over H.R. 1408. In 
     addition, the Committee reserves its authority to seek 
     conferees on any provisions of the bill that are within the 
     Agriculture Committee's jurisdiction during any House-Senate 
     conference that may be convened on this legislation.
       I request that you include this letter and your response as 
     part of your committee's report on the bill and the 
     Congressional Record during consideration of the legislation 
     on the House floor.
       Thank you for your attention to these matters,
           Sincerely,
                                                    Larry Combest,
     Chairman.
                                  ____

                                         House of Representatives,


                              Committee on Financial Services,

                                   Washington, DC, August 1, 2001.
     Hon. Larry Combest,
     Chairman, Committee on Agriculture, Longworth House Office 
         Building, Washington, DC.
       Dear Chairman Combest: Thank you for your letter regarding 
     your Committee's jurisdictional interest in H.R. 1408, the 
     Financial Services Antifraud Network Act of 2001.
       I acknowledge your committee's jurisdictional interest in 
     this legislation and appreciate your cooperation in moving 
     the bill to the House floor expeditiously. I agree that your 
     decision to forego further action on the bill will not 
     prejudice the Committee on Agriculture with respect to its 
     jurisdictional prerogatives on this or similar legislation. I 
     will include a copy of your letter and this response in the 
     Committee's report on the bill and the Congressional Record 
     when the legislation is considered by the House. 
     Additionally, I will support any request you might make for 
     conferees, should a conference be necessary.
       Thank you again for your cooperation
           Sincerely,
                                                 Michael G. Oxley,
                                                         Chairman.

  Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
  I do not know that we have any other speakers wishing to be heard. I 
want to again second what the gentleman from Ohio (Mr. Oxley), the 
chairman of the full committee, said.
  The cooperation that we have received from the gentleman from 
Mississippi (Mr. Shows), from the gentleman from New York (Mr. 
LaFalce), from the gentlewoman from California (Ms. Waters) has been 
tremendous. The gentleman from Mississippi (Mr. Shows) was an original 
cosponsor of

[[Page H7745]]

this legislation. This truly is a bipartisan, or nonpartisan, effort; 
and I think it shows what this Congress can do when they put aside 
their petty differences on many occasions and work for the common good 
of the people, and they have done that.
  Ms. WATERS. Mr. Speaker, I am very pleased to proceed with floor 
consideration of H.R. 1408, the Financial Services Antifraud Network 
Act of 2001. When we initially considered marking up this legislation 
in the Financial Institutions subcommittee, there were a number of 
problems with the structure and the content of that version. I want to 
thank my colleague, Mr. Bachus for his willingness to postpone that 
markup so that we could work together to improve this bill. A number of 
improvements have been made to this legislation since it was 
introduced. The structure for information sharing among the regulators 
has been greatly simplified. The categories of information to be shared 
among the regulators have been narrowed, and safeguards have been put 
in place to protect individuals. In addition, certain due process 
protections have been added to the bill, which grant individuals the 
right to receive notice and respond when information from the network 
is used to take action against them. Finally, this bill provides 
insurance regulators with increased access to information when 
conducting criminal background checks on financial professionals. 
Additional safeguards are provided governing the use of this 
information.
  I want to thank my colleagues Chairman Bachus, Congressman Rogers, 
Congressman Moore, Congressman Gonzalez, Ranking Member LaFalce and 
Chairman Oxley as well as their staffs for working cooperatively to 
improve this legislation. I am pleased that the process went so well 
and has resulted in a better bill, and that agreement has been reached 
on the final outstanding issue regarding financial regulators' access 
to confidential supervisory information. This issue is not a partisan 
one. We all want to combat fraud and protect consumers. In light of the 
events of September 11, it has become even more crucial to ensure that 
criminals do not evade detection merely by varying their methodology.
  I think that once we began working together, in a bipartisan manner, 
on this legislation, we realized that common ground was not an elusive 
goal. I would hope that we can continue to work together across the 
aisle on other issues of mutual concern as this Congress continues. 
Once again, I thank my colleagues for their hard work.
  Mr. BACHUS. Mr. Speaker, there being no further requests for time, I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Culberson). The question is on the 
motion offered by the gentleman from Alabama (Mr. Bachus) that the 
House suspend the rules and pass the bill, H.R. 1408, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. BACHUS. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

                          ____________________