[Congressional Record Volume 165, Number 170 (Monday, October 28, 2019)]
[House]
[Pages H8494-H8503]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COORDINATING OVERSIGHT, UPGRADING AND INNOVATING TECHNOLOGY, AND
EXAMINER REFORM ACT OF 2019
Mr. DAVID SCOTT of Georgia. Mr. Speaker, I move to suspend the rules
and pass the bill (H.R. 2514) to make reforms to the Federal Bank
Secrecy Act and anti-money laundering laws, and for other purposes, as
amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2514
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
``Coordinating Oversight, Upgrading and Innovating
Technology, and Examiner Reform Act of 2019'' or the
``COUNTER Act of 2019''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Bank Secrecy Act definition.
Sec. 3. Determination of Budgetary Effects.
TITLE I--STRENGTHENING TREASURY
Sec. 101. Improving the definition and purpose of the Bank Secrecy Act.
Sec. 102. Special hiring authority.
Sec. 103. Civil Liberties and Privacy Officer.
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Sec. 104. Civil Liberties and Privacy Council.
Sec. 105. International coordination.
Sec. 106. Treasury Attaches Program.
Sec. 107. Increasing technical assistance for international
cooperation.
Sec. 108. FinCEN Domestic Liaisons.
Sec. 109. FinCEN Exchange.
Sec. 110. Study and strategy on trade-based money laundering.
Sec. 111. Study and strategy on de-risking.
Sec. 112. AML examination authority delegation study.
Sec. 113. Study and strategy on Chinese money laundering.
TITLE II--IMPROVING AML/CFT OVERSIGHT
Sec. 201. Pilot program on sharing of suspicious activity reports
within a financial group.
Sec. 202. Sharing of compliance resources.
Sec. 203. GAO Study on feedback loops.
Sec. 204. FinCEN study on BSA value.
Sec. 205. Sharing of threat pattern and trend information.
Sec. 206. Modernization and upgrading whistleblower protections.
Sec. 207. Certain violators barred from serving on boards of United
States financial institutions.
Sec. 208. Additional damages for repeat Bank Secrecy Act violators.
Sec. 209. Justice annual report on deferred and non-prosecution
agreements.
Sec. 210. Return of profits and bonuses.
Sec. 211. Application of Bank Secrecy Act to dealers in antiquities.
Sec. 212. Geographic targeting order.
Sec. 213. Study and revisions to currency transaction reports and
suspicious activity reports.
Sec. 214. Streamlining requirements for currency transaction reports
and suspicious activity reports.
TITLE III--MODERNIZING THE AML SYSTEM
Sec. 301. Encouraging innovation in BSA compliance.
Sec. 302. Innovation Labs.
Sec. 303. Innovation Council.
Sec. 304. Testing methods rulemaking.
Sec. 305. FinCEN study on use of emerging technologies.
Sec. 306. Discretionary surplus funds.
SEC. 2. BANK SECRECY ACT DEFINITION.
Section 5312(a) of title 31, United States Code, is amended
by adding at the end the following:
``(7) Bank secrecy act.--The term `Bank Secrecy act'
means--
``(A) section 21 of the Federal Deposit Insurance Act;
``(B) chapter 2 of title I of Public Law 91-508; and
``(C) this subchapter.''.
SEC. 3. DETERMINATION OF BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in the Congressional Record by the
Chairman of the House Budget Committee, provided that such
statement has been submitted prior to the vote on passage.
TITLE I--STRENGTHENING TREASURY
SEC. 101. IMPROVING THE DEFINITION AND PURPOSE OF THE BANK
SECRECY ACT.
Section 5311 of title 31, United States Code, is amended--
(1) by inserting ``to protect our national security, to
safeguard the integrity of the international financial
system, and'' before ``to require''; and
(2) by inserting ``to law enforcement and'' before ``in
criminal''.
SEC. 102. SPECIAL HIRING AUTHORITY.
(a) In General.--Section 310 of title 31, United States
Code, is amended--
(1) by redesignating subsection (d) as subsection (g); and
(2) by inserting after subsection (c) the following:
``(d) Special Hiring Authority.--
``(1) In general.--The Secretary of the Treasury may
appoint, without regard to the provisions of sections 3309
through 3318 of title 5, candidates directly to positions in
the competitive service (as defined in section 2102 of that
title) in FinCEN.
``(2) Primary responsibilities.--The primary responsibility
of candidates appointed pursuant to paragraph (1) shall be to
provide substantive support in support of the duties
described in subparagraphs (A), (B), (E), and (F) of
subsection (b)(2).''.
(b) Report.--Not later than 360 days after the date of
enactment of this Act, and every year thereafter for 7 years,
the Director of the Financial Crimes Enforcement Network
shall submit a report to the Committee on Financial Services
of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate that includes--
(1) the number of new employees hired since the preceding
report through the authorities described under section 310(d)
of title 31, United States Code, along with position titles
and associated pay grades for such hires; and
(2) a copy of any Federal Government survey of staff
perspectives at the Office of Terrorism and Financial
Intelligence, including findings regarding the Office and the
Financial Crimes Enforcement Network from the most recently
administered Federal Employee Viewpoint Survey.
SEC. 103. CIVIL LIBERTIES AND PRIVACY OFFICER.
(a) Appointment of Officers.--Not later than the end of the
3-month period beginning on the date of enactment of this
Act, a Civil Liberties and Privacy Officer shall be
appointed, from among individuals who are attorneys with
expertise in data privacy laws--
(1) within each Federal functional regulator, by the head
of the Federal functional regulator;
(2) within the Financial Crimes Enforcement Network, by the
Secretary of the Treasury; and
(3) within the Internal Revenue Service Small Business and
Self-Employed Tax Center, by the Secretary of the Treasury.
(b) Duties.--Each Civil Liberties and Privacy Officer
shall, with respect to the applicable regulator, Network, or
Center within which the Officer is located--
(1) be consulted each time Bank Secrecy Act or anti-money
laundering regulations affecting civil liberties or privacy
are developed or reviewed;
(2) be consulted on information-sharing programs, including
those that provide access to personally identifiable
information;
(3) ensure coordination and clarity between anti-money
laundering, civil liberties, and privacy regulations;
(4) contribute to the evaluation and regulation of new
technologies that may strengthen data privacy and the
protection of personally identifiable information collected
by each Federal functional regulator; and
(5) develop metrics of program success.
(c) Definitions.--For purposes of this section:
(1) Bank secrecy act.--The term ``Bank Secrecy Act'' has
the meaning given that term under section 5312 of title 31,
United States Code.
(2) Federal functional regulator.--The term ``Federal
functional regulator'' means the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the National Credit
Union Administration, the Securities and Exchange Commission,
and the Commodity Futures Trading Commission.
SEC. 104. CIVIL LIBERTIES AND PRIVACY COUNCIL.
(a) Establishment.--There is established the Civil
Liberties and Privacy Council (hereinafter in this section
referred to as the ``Council''), which shall consist of the
Civil Liberties and Privacy Officers appointed pursuant to
section 103.
(b) Chair.--The Director of the Financial Crimes
Enforcement Network shall serve as the Chair of the Council.
(c) Duty.--The members of the Council shall coordinate on
activities related to their duties as Civil Liberties Privacy
Officers, but may not supplant the individual agency
determinations on civil liberties and privacy.
(d) Meetings.--The meetings of the Council--
(1) shall be at the call of the Chair, but in no case may
the Council meet less than quarterly;
(2) may include open and partially closed sessions, as
determined necessary by the Council; and
(3) shall include participation by public and private
entities, law enforcement agencies, and a representative of
State bank supervisors (as defined under section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)).
(e) Report.--The Chair of the Council shall issue an annual
report to the Congress on the program and policy activities,
including the success of programs as measured by metrics of
program success developed pursuant to section 103(b)(5), of
the Council during the previous year and any legislative
recommendations that the Council may have.
(f) Nonapplicability of FACA.--The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply to the Council.
SEC. 105. INTERNATIONAL COORDINATION.
(a) In General.--The Secretary of the Treasury shall work
with the Secretary's foreign counterparts, including through
the Financial Action Task Force, the International Monetary
Fund, the World Bank, the Egmont Group of Financial
Intelligence Units, the Organisation for Economic Co-
operation and Development, and the United Nations, to promote
stronger anti-money laundering frameworks and enforcement of
anti-money laundering laws.
(b) Cooperation Goal.--In carrying out subsection (a), the
Secretary of the Treasury may work directly with foreign
counterparts and other organizations where the goal of
cooperation can best be met.
(c) International Monetary Fund.--
(1) Support for capacity of the international monetary fund
to prevent money laundering and financing of terrorism.--
Title XVI of the International Financial Institutions Act (22
U.S.C. 262p et seq.) is amended by adding at the end the
following:
``SEC. 1629. SUPPORT FOR CAPACITY OF THE INTERNATIONAL
MONETARY FUND TO PREVENT MONEY LAUNDERING AND
FINANCING OF TERRORISM.
``The Secretary of the Treasury shall instruct the United
States Executive Director at the International Monetary Fund
to support the increased use of the administrative budget of
the Fund for technical assistance that strengthens the
capacity of Fund members to prevent money laundering and the
financing of terrorism.''.
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(2) National advisory council report to congress.--The
Chairman of the National Advisory Council on International
Monetary and Financial Policies shall include in the report
required by section 1701 of the International Financial
Institutions Act (22 U.S.C. 262r) a description of--
(A) the activities of the International Monetary Fund in
the most recently completed fiscal year to provide technical
assistance that strengthens the capacity of Fund members to
prevent money laundering and the financing of terrorism, and
the effectiveness of the assistance; and
(B) the efficacy of efforts by the United States to support
such technical assistance through the use of the Fund's
administrative budget, and the level of such support.
(3) Sunset.--Effective on the date that is the end of the
4-year period beginning on the date of enactment of this Act,
section 1629 of the International Financial Institutions Act,
as added by paragraph (1), is repealed.
SEC. 106. TREASURY ATTACHES PROGRAM.
(a) In General.--Title 31, United States Code, is amended
by inserting after section 315 the following:
``Sec. 316. Treasury Attaches Program
``(a) In General.--There is established the Treasury
Attaches Program, under which the Secretary of the Treasury
shall appoint employees of the Department of the Treasury,
after nomination by the Director of the Financial Crimes
Enforcement Network (`FinCEN'), as a Treasury attache, who
shall--
``(1) be knowledgeable about the Bank Secrecy Act and anti-
money laundering issues;
``(2) be co-located in a United States embassy;
``(3) perform outreach with respect to Bank Secrecy Act and
anti-money laundering issues;
``(4) establish and maintain relationships with foreign
counterparts, including employees of ministries of finance,
central banks, and other relevant official entities;
``(5) conduct outreach to local and foreign financial
institutions and other commercial actors, including--
``(A) information exchanges through FinCEN and FinCEN
programs; and
``(B) soliciting buy-in and cooperation for the
implementation of--
``(i) United States and multilateral sanctions; and
``(ii) international standards on anti-money laundering and
the countering of the financing of terrorism; and
``(6) perform such other actions as the Secretary
determines appropriate.
``(b) Number of Attaches.--The number of Treasury attaches
appointed under this section at any one time shall be not
fewer than 6 more employees than the number of employees of
the Department of the Treasury serving as Treasury attaches
on March 1, 2019.
``(c) Compensation.--Each Treasury attache appointed under
this section and located at a United States embassy shall
receive compensation at the higher of--
``(1) the rate of compensation provided to a Foreign
Service officer at a comparable career level serving at the
same embassy; or
``(2) the rate of compensation the Treasury attache would
otherwise have received, absent the application of this
subsection.
``(d) Bank Secrecy Act Defined.--In this section, the term
`Bank Secrecy Act' has the meaning given that term under
section 5312.''.
(b) Clerical Amendment.--The table of contents for chapter
3 of title 31, United States Code, is amended by inserting
after the item relating to section 315 the following:
``316. Treasury Attaches Program.''.
SEC. 107. INCREASING TECHNICAL ASSISTANCE FOR INTERNATIONAL
COOPERATION.
(a) In General.--There is authorized to be appropriated for
each of fiscal years 2020 through 2024 to the Secretary of
the Treasury for purposes of providing technical assistance
that promotes compliance with international standards and
best practices, including in particular those aimed at the
establishment of effective anti-money laundering and
countering the financing of terrorism regimes, in an amount
equal to twice the amount authorized for such purpose for
fiscal year 2019.
(b) Activity and Evaluation Report.--Not later than 360
days after enactment of this Act, and every year thereafter
for five years, the Secretary of the Treasury shall issue a
report to the Congress on the assistance (as described under
subsection (a)) of the Office of Technical Assistance of the
Department of the Treasury containing--
(1) a narrative detailing the strategic goals of the Office
in the previous year, with an explanation of how technical
assistance provided in the previous year advances the goals;
(2) a description of technical assistance provided by the
Office in the previous year, including the objectives and
delivery methods of the assistance;
(3) a list of beneficiaries and providers (other than
Office staff) of the technical assistance;
(4) a description of how technical assistance provided by
the Office complements, duplicates, or otherwise affects or
is affected by technical assistance provided by the
international financial institutions (as defined under
section 1701(c) of the International Financial Institutions
Act); and
(5) a copy of any Federal Government survey of staff
perspectives at the Office of Technical Assistance, including
any findings regarding the Office from the most recently
administered Federal Employee Viewpoint Survey.
SEC. 108. FINCEN DOMESTIC LIAISONS.
Section 310 of title 31, United States Code, as amended by
section 102, is further amended by inserting after subsection
(d) the following:
``(e) FinCEN Domestic Liaisons.--
``(1) In general.--The Director of FinCEN shall appoint at
least 6 senior FinCEN employees as FinCEN Domestic Liaisons,
who shall--
``(A) each be assigned to focus on a specific region of the
United States;
``(B) be located at an office in such region (or co-located
at an office of the Board of Governors of the Federal Reserve
System in such region); and
``(C) perform outreach to BSA officers at financial
institutions (including non-bank financial institutions) and
persons who are not financial institutions, especially with
respect to actions taken by FinCEN that require specific
actions by, or have specific effects on, such institutions or
persons, as determined by the Director.
``(2) Definitions.--In this subsection:
``(A) BSA officer.--The term `BSA officer' means an
employee of a financial institution whose primary job
responsibility involves compliance with the Bank Secrecy Act,
as such term is defined under section 5312.
``(B) Financial institution.--The term `financial
institution' has the meaning given that term under section
5312.''.
SEC. 109. FINCEN EXCHANGE.
Section 310 of title 31, United States Code, as amended by
section 108, is further amended by inserting after subsection
(e) the following:
``(f) FinCEN Exchange.--
``(1) Establishment.--The FinCEN Exchange is hereby
established within FinCEN, which shall consist of the FinCEN
Exchange program of FinCEN in existence on the day before the
date of enactment of this paragraph.
``(2) Purpose.--The FinCEN Exchange shall facilitate a
voluntary public-private information sharing partnership
among law enforcement, financial institutions, and FinCEN
to--
``(A) effectively and efficiently combat money laundering,
terrorism financing, organized crime, and other financial
crimes;
``(B) protect the financial system from illicit use; and
``(C) promote national security.
``(3) Report.--
``(A) In general.--Not later than one year after the date
of enactment of this subsection, and annually thereafter for
the next five years, the Secretary of the Treasury shall
submit to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate a report containing--
``(i) an analysis of the efforts undertaken by the FinCEN
Exchange and the results of such efforts;
``(ii) an analysis of the extent and effectiveness of the
FinCEN Exchange, including any benefits realized by law
enforcement from partnership with financial institutions; and
``(iii) any legislative, administrative, or other
recommendations the Secretary may have to strengthen FinCEN
Exchange efforts.
``(B) Classified annex.--Each report under subparagraph (A)
may include a classified annex.
``(4) Information sharing requirement.--Information shared
pursuant to this subsection shall be shared in compliance
with all other applicable Federal laws and regulations.
``(5) Rule of construction.--Nothing under this subsection
may be construed to create new information sharing
authorities related to the Bank Secrecy Act (as such term is
defined under section 5312 of title 31, United States Code).
``(6) Financial institution defined.--In this subsection,
the term `financial institution' has the meaning given that
term under section 5312.''.
SEC. 110. STUDY AND STRATEGY ON TRADE-BASED MONEY LAUNDERING.
(a) Study.--The Secretary of the Treasury shall carry out a
study, in consultation with appropriate private sector
stakeholders and Federal departments and agencies, on trade-
based money laundering.
(b) Report.--Not later than the end of the 1-year period
beginning on the date of the enactment of this Act, the
Secretary shall issue a report to the Congress containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) proposed strategies to combat trade-based money
laundering.
(c) Classified Annex.--The report required under this
section may include a classified annex.
(d) Contracting Authority.--The Secretary may contract with
a private third-party to carry out the study required under
this section. The authority of the Secretary to enter into
contracts under this subsection shall be in effect for each
fiscal year only to the extent and in the amounts as are
provided in advance in appropriations Acts.
SEC. 111. STUDY AND STRATEGY ON DE-RISKING.
(a) Review.--The Secretary of the Treasury, in consultation
with appropriate private
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sector stakeholders, examiners, the Federal functional
regulators (as defined under section 103), State bank
supervisors, and other relevant stakeholders, shall undertake
a formal review of--
(1) any adverse consequences of financial institutions de-
risking entire categories of relationships, including
charities, embassy accounts, money services businesses (as
defined under section 1010.100(ff) of title 31, Code of
Federal Regulations) and their agents, countries,
international and domestic regions, and respondent banks;
(2) the reasons why financial institutions are engaging in
de-risking;
(3) the association with and effects of de-risking on money
laundering and financial crime actors and activities;
(4) the most appropriate ways to promote financial
inclusion, particularly with respect to developing countries,
while maintaining compliance with the Bank Secrecy Act,
including an assessment of policy options to--
(A) more effectively tailor Federal actions and penalties
to the size of foreign financial institutions and any
capacity limitations of foreign governments; and
(B) reduce compliance costs that may lead to the adverse
consequences described in paragraph (1);
(5) formal and informal feedback provided by examiners that
may have led to de-risking;
(6) the relationship between resources dedicated to
compliance and overall sophistication of compliance efforts
at entities that may be experiencing de-risking versus those
that have not experienced de-risking; and
(7) any best practices from the private sector that
facilitate correspondent bank relationships.
(b) De-risking Strategy.--The Secretary shall develop a
strategy to reduce de-risking and adverse consequences
related to de-risking.
(c) Report.--Not later than the end of the 1-year period
beginning on the date of the enactment of this Act, the
Secretary, in consultation with the Federal functional
regulators, State bank supervisors, and other relevant
stakeholders, shall issue a report to the Congress
containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) the strategy developed pursuant to subsection (b).
(d) Definitions.--In this section:
(1) De-risking.--The term ``de-risking'' means the
wholesale closing of accounts or limiting of financial
services for a category of customer due to unsubstantiated
risk as it relates to compliance with the Bank Secrecy Act.
(2) BSA terms.--The terms ``Bank Secrecy Act'' and
``financial institution'' have the meaning given those terms,
respectively, under section 5312 off title 31, United States
Code.
(3) State bank supervisor.--The term ``State bank
supervisor'' has the meaning given that term under section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813).
SEC. 112. AML EXAMINATION AUTHORITY DELEGATION STUDY.
(a) Study.--The Secretary of the Treasury shall carry out a
study, in consultation with State bank supervisors (as
defined under section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813)), and other relevant stakeholders, on the
Secretary's delegation of examination authority under the
Bank Secrecy Act, including--
(1) an evaluation of the efficacy of the delegation,
especially with respect to the mission of the Bank Secrecy
Act;
(2) whether the delegated agencies have appropriate
resources to perform their delegated responsibilities; and
(3) whether the examiners in delegated agencies have
sufficient training and support to perform their
responsibilities.
(b) Report.--Not later than one year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate a report containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) recommendations to improve the efficacy of delegation
authority, including the potential for de-delegation of any
or all such authority where it may be appropriate.
(c) Bank Secrecy Act Defined.--The term ``Bank Secrecy
Act'' has the meaning given that term under section 5312 off
title 31, United States Code.
SEC. 113. STUDY AND STRATEGY ON CHINESE MONEY LAUNDERING.
(a) Study.--The Secretary of the Treasury shall carry out a
study on the extent and effect of Chinese money laundering
activities in the United States, including territories and
possessions of the United States, and worldwide.
(b) Strategy to Combat Chinese Money Laundering.--Upon the
completion of the study required under subsection (a), the
Secretary shall, in consultation with such other Federal
departments and agencies as the Secretary determines
appropriate, develop a strategy to combat Chinese money
laundering activities.
(c) Report.--Not later than the end of the 1-year period
beginning on the date of enactment of this Act, the Secretary
of the Treasury shall issue a report to Congress containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) the strategy developed under subsection (b).
TITLE II--IMPROVING AML/CFT OVERSIGHT
SEC. 201. PILOT PROGRAM ON SHARING OF SUSPICIOUS ACTIVITY
REPORTS WITHIN A FINANCIAL GROUP.
(a) In General.--
(1) Sharing with foreign branches and affiliates.--Section
5318(g) of title 31, United States Code, is amended by adding
at the end the following:
``(5) Pilot program on sharing with foreign branches,
subsidiaries, and affiliates.--
``(A) In general.--The Secretary of the Treasury shall
issue rules establishing the pilot program described under
subparagraph (B), subject to such controls and restrictions
as the Director of the Financial Crimes Enforcement Network
determines appropriate, including controls and restrictions
regarding participation by financial institutions and
jurisdictions in the pilot program. In prescribing such
rules, the Secretary shall ensure that the sharing of
information described under such subparagraph (B) is subject
to appropriate standards and requirements regarding data
security and the confidentiality of personally identifiable
information.
``(B) Pilot program described.--The pilot program required
under this paragraph shall--
``(i) permit a financial institution with a reporting
obligation under this subsection to share reports (and
information on such reports) under this subsection with the
institution's foreign branches, subsidiaries, and affiliates
for the purpose of combating illicit finance risks,
notwithstanding any other provision of law except
subparagraphs (A) and (C);
``(ii) terminate on the date that is five years after the
date of enactment of this paragraph, except that the
Secretary may extend the pilot program for up to two years
upon submitting a report to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate that
includes--
``(I) a certification that the extension is in the national
interest of the United States, with a detailed explanation of
the reasons therefor;
``(II) an evaluation of the usefulness of the pilot
program, including a detailed analysis of any illicit
activity identified or prevented as a result of the program;
and
``(III) a detailed legislative proposal providing for a
long-term extension of the pilot program activities,
including expected budgetary resources for the activities, if
the Secretary determines that a long-term extension is
appropriate.
``(C) Prohibition involving certain jurisdictions.--In
issuing the regulations required under subparagraph (A), the
Secretary may not permit a financial institution to share
information on reports under this subsection with a foreign
branch, subsidiary, or affiliate located in--
``(i) the People's Republic of China;
``(ii) the Russian Federation; or
``(iii) a jurisdiction that--
``(I) is subject to countermeasures imposed by the Federal
Government;
``(II) is a state sponsor of terrorism; or
``(III) the Secretary has determined cannot reasonably
protect the privacy and confidentiality of such information
or would otherwise use such information in a manner that is
not consistent with the national interest of the United
States.
``(D) Implementation updates.--Not later than 360 days
after the date rules are issued under subparagraph (A), and
annually thereafter for three years, the Secretary, or the
Secretary's designee, shall brief the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate on--
``(i) the degree of any information sharing permitted under
the pilot program, and a description of criteria used by the
Secretary to evaluate the appropriateness of the information
sharing;
``(ii) the effectiveness of the pilot program in
identifying or preventing the violation of a United States
law or regulation, and mechanisms that may improve such
effectiveness; and
``(iii) any recommendations to amend the design of the
pilot program.
``(E) Rule of construction.--Nothing in this paragraph
shall be construed as limiting the Secretary's authority
under provisions of law other than this paragraph to
establish other permissible purposes or methods for a
financial institution sharing reports (and information on
such reports) under this subsection with the institution's
foreign headquarters or with other branches of the same
institution.
``(F) Notice of use of other authority.--If the Secretary,
pursuant to any authority other than that provided under this
paragraph, permits a financial institution to share
information on reports under this subsection with a foreign
branch, subsidiary, or affiliate located in a foreign
jurisdiction, the
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Secretary shall notify the Committee on Financial Services of
the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of such permission and the
applicable foreign jurisdiction.
``(6) Treatment of foreign jurisdiction-originated
reports.--A report received by a financial institution from a
foreign affiliate with respect to a suspicious transaction
relevant to a possible violation of law or regulation shall
be subject to the same confidentiality requirements provided
under this subsection for a report of a suspicious
transaction described under paragraph (1).''.
(2) Notification prohibitions.--Section 5318(g)(2)(A) of
title 31, United States Code, is amended--
(A) in clause (i), by inserting after ``transaction has
been reported'' the following: ``or otherwise reveal any
information that would reveal that the transaction has been
reported''; and
(B) in clause (ii), by inserting after ``transaction has
been reported,'' the following: ``or otherwise reveal any
information that would reveal that the transaction has been
reported,''.
(b) Rulemaking.--Not later than the end of the 360-day
period beginning on the date of enactment of this Act, the
Secretary of the Treasury shall issue regulations to carry
out the amendments made by this section.
SEC. 202. SHARING OF COMPLIANCE RESOURCES.
(a) In General.--Section 5318 of title 31, United States
Code, is amended by adding at the end the following:
``(o) Sharing of Compliance Resources.--
``(1) Sharing permitted.--Two or more financial
institutions may enter into collaborative arrangements in
order to more efficiently comply with the requirements of
this subchapter.
``(2) Outreach.--The Secretary of the Treasury and the
appropriate supervising agencies shall carry out an outreach
program to provide financial institutions with information,
including best practices, with respect to the sharing of
resources described under paragraph (1).''.
(b) Rule of Construction.--The amendment made by subsection
(a) may not be construed to require financial institutions to
share resources.
SEC. 203. GAO STUDY ON FEEDBACK LOOPS.
(a) Study.--The Comptroller General of the United States
shall carry out a study on--
(1) best practices within the United States Government for
providing feedback (``feedback loop'') to relevant parties
(including regulated private entities) on the usage and
usefulness of personally identifiable information (``PII''),
sensitive-but-unclassified (``SBU'') data, or similar
information provided by such parties to Government users of
such information and data (including law enforcement or
regulators); and
(2) any practices or standards inside or outside the United
States for providing feedback through sensitive information
and public-private partnership information sharing efforts,
specifically related to efforts to combat money laundering
and other forms of illicit finance.
(b) Report.--Not later than the end of the 18-month period
beginning on the date of the enactment of this Act, the
Comptroller General shall issue a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a);
(2) with respect to each of paragraphs (1) and (2) of
subsection (a), any best practices or significant concerns
identified by the Comptroller General, and their
applicability to public-private partnerships and feedback
loops with respect to U.S. efforts to combat money laundering
and other forms of illicit finance; and
(3) recommendations to reduce or eliminate any unnecessary
Government collection of the information described under
subsection (a)(1).
SEC. 204. FINCEN STUDY ON BSA VALUE.
(a) Study.--The Director of the Financial Crimes
Enforcement Network shall carry out a study on Bank Secrecy
Act value.
(b) Report.--Not later than the end of the 30-day period
beginning on the date the study under subsection (a) is
completed, the Director shall issue a report to the Committee
on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate containing all findings and determinations made in
carrying out the study required under this section.
(c) Classified Annex.--The report required under this
section may include a classified annex, if the Director
determines it appropriate.
(d) Bank Secrecy Act Defined.--For purposes of this
section, the term ``Bank Secrecy Act'' has the meaning given
that term under section 5312 of title 31, United States Code.
SEC. 205. SHARING OF THREAT PATTERN AND TREND INFORMATION.
Section 5318(g) of title 31, United States Code, as amended
by section 201(a)(1), is further amended by adding at the end
the following:
``(7) Sharing of threat pattern and trend information.--
``(A) SAR activity review.--The Director of the Financial
Crimes Enforcement Network shall restart publication of the
`SAR Activity Review - Trends, Tips & Issues', on not less
than a semi-annual basis, to provide meaningful information
about the preparation, use, and value of reports filed under
this subsection by financial institutions, as well as other
reports filed by financial institutions under the Bank
Secrecy Act.
``(B) Inclusion of typologies.--In each publication
described under subparagraph (A), the Director shall provide
financial institutions with typologies, including data that
can be adapted in algorithms (including for artificial
intelligence and machine learning programs) where
appropriate, on emerging money laundering and counter terror
financing threat patterns and trends.
``(C) Typology defined.--For purposes of this paragraph,
the term `typology' means the various techniques used to
launder money or finance terrorism.''.
SEC. 206. MODERNIZATION AND UPGRADING WHISTLEBLOWER
PROTECTIONS.
(a) Rewards.--Section 5323(d) of title 31, United States
Code, is amended to read as follows:
``(d) Source of Rewards.--For the purposes of paying a
reward under this section, the Secretary may, subject to
amounts made available in advance by appropriation Acts, use
criminal fine, civil penalty, or forfeiture amounts recovered
based on the original information with respect to which the
reward is being paid.''.
(b) Whistleblower Incentives.--
Chapter 53 of title 31, United States Code, is amended--
(1) by inserting after section 5323 the following:
``Sec. 5323A. Whistleblower incentives
``(a) Definitions.--In this section:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any
judicial or administrative action brought by FinCEN under the
Bank Secrecy Act that results in monetary sanctions exceeding
$1,000,000.
``(2) FinCEN.--The term `FinCEN' means the Financial Crimes
Enforcement Network.
``(3) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative
action, means--
``(A) any monies, including penalties, disgorgement, and
interest, ordered to be paid; and
``(B) any monies deposited into a disgorgement fund as a
result of such action or any settlement of such action.
``(4) Original information.--The term `original
information' means information that--
``(A) is derived from the independent knowledge or analysis
of a whistleblower;
``(B) is not known to FinCEN from any other source, unless
the whistleblower is the original source of the information;
and
``(C) is not exclusively derived from an allegation made in
a judicial or administrative hearing, in a governmental
report, hearing, audit, or investigation, or from the news
media, unless the whistleblower is a source of the
information.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought
by FinCEN, means any judicial or administrative action that
is based upon original information provided by a
whistleblower that led to the successful enforcement of the
action.
``(6) Secretary.--The term `Secretary' means the Secretary
of the Treasury.
``(7) Whistleblower.--The term `whistleblower' means any
individual who provides, or 2 or more individuals acting
jointly who provide, information relating to a violation of
laws enforced by FinCEN, in a manner established, by rule or
regulation, by FinCEN.
``(b) Awards.--
``(1) In general.--In any covered judicial or
administrative action, or related action, the Secretary,
under such rules as the Secretary may issue and subject to
subsection (c), shall pay an award or awards to 1 or more
whistleblowers who voluntarily provided original information
to FinCEN that led to the successful enforcement of the
covered judicial or administrative action, or related action,
in an aggregate amount equal to not more than 30 percent, in
total, of what has been collected of the monetary sanctions
imposed in the action.
``(2) Source of awards.--For the purposes of paying any
award under paragraph (1), the Secretary may, subject to
amounts made available in advance by appropriation Acts, use
monetary sanction amounts recovered based on the original
information with respect to which the award is being paid.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount of an
award made under subsection (b) shall be in the discretion of
the Secretary.
``(B) Criteria.--In responding to a disclosure and
determining the amount of an award made, FinCEN staff shall
meet with the whistleblower to discuss evidence disclosed and
rebuttals to the disclosure, and shall take into
consideration--
``(i) the significance of the information provided by the
whistleblower to the success of the covered judicial or
administrative action;
``(ii) the degree of assistance provided by the
whistleblower and any legal representative of the
whistleblower in a covered judicial or administrative action;
[[Page H8499]]
``(iii) the mission of FinCEN in deterring violations of
the law by making awards to whistleblowers who provide
information that lead to the successful enforcement of such
laws; and
``(iv) such additional relevant factors as the Secretary
may establish by rule.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the time the
whistleblower acquired the original information submitted to
FinCEN, a member, officer, or employee of--
``(i) an appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a self-regulatory organization; or
``(iv) a law enforcement organization;
``(B) to any whistleblower who is convicted of a criminal
violation, or who the Secretary has a reasonable basis to
believe committed a criminal violation, related to the
judicial or administrative action for which the whistleblower
otherwise could receive an award under this section;
``(C) to any whistleblower who gains the information
through the performance of an audit of financial statements
required under the Bank Secrecy Act and for whom such
submission would be contrary to its requirements; or
``(D) to any whistleblower who fails to submit information
to FinCEN in such form as the Secretary may, by rule,
require.
``(3) Statement of reasons.--For any decision granting or
denying an award, the Secretary shall provide to the
whistleblower a statement of reasons that includes findings
of fact and conclusions of law for all material issues.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who
makes a claim for an award under subsection (b) may be
represented by counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who anonymously makes
a claim for an award under subsection (b) shall be
represented by counsel if the whistleblower anonymously
submits the information upon which the claim is based.
``(B) Disclosure of identity.--Prior to the payment of an
award, a whistleblower shall disclose their identity and
provide such other information as the Secretary may require,
directly or through counsel for the whistleblower.
``(e) Appeals.--Any determination made under this section,
including whether, to whom, or in what amount to make awards,
shall be in the discretion of the Secretary. Any such
determination, except the determination of the amount of an
award if the award was made in accordance with subsection
(b), may be appealed to the appropriate court of appeals of
the United States not more than 30 days after the
determination is issued by the Secretary. The court shall
review the determination made by the Secretary in accordance
with section 706 of title 5.
``(f) Employee Protections.--The Secretary of the Treasury
shall issue regulations protecting a whistleblower from
retaliation, which shall be as close as practicable to the
employee protections provided for under section 1057 of the
Consumer Financial Protection Act of 2010.''; and
(2) in the table of contents for such chapter, by inserting
after the item relating to section 5323 the following new
item:
``5323A. Whistleblower incentives.''.
SEC. 207. CERTAIN VIOLATORS BARRED FROM SERVING ON BOARDS OF
UNITED STATES FINANCIAL INSTITUTIONS.
Section 5321 of title 31, United States Code, is amended by
adding at the end the following:
``(f) Certain Violators Barred From Serving on Boards of
United States Financial Institutions.--
``(1) In general.--An individual found to have committed an
egregious violation of a provision of (or rule issued under)
the Bank Secrecy Act shall be barred from serving on the
board of directors of a United States financial institution
for a 10-year period beginning on the date of such finding.
``(2) Egregious violation defined.--With respect to an
individual, the term `egregious violation' means--
``(A) a felony criminal violation for which the individual
was convicted; and
``(B) a civil violation where the individual willfully
committed such violation and the violation facilitated money
laundering or the financing of terrorism.''.
SEC. 208. ADDITIONAL DAMAGES FOR REPEAT BANK SECRECY ACT
VIOLATORS.
(a) In General.--Section 5321 of title 31, United States
Code, as amended by section 208, is further amended by adding
at the end the following:
``(g) Additional Damages for Repeat Violators.--In addition
to any other fines permitted by this section and section
5322, with respect to a person who has previously been
convicted of a criminal provision of (or rule issued under)
the Bank Secrecy Act or who has admitted, as part of a
deferred- or non-prosecution agreement, to having previously
committed a violation of a criminal provision of (or rule
issued under) the Bank Secrecy Act, the Secretary may impose
an additional civil penalty against such person for each
additional such violation in an amount equal to up three
times the profit gained or loss avoided by such person as a
result of the violation.''.
(b) Prospective Application of Amendment.--For purposes of
determining whether a person has committed a previous
violation under section 5321(g) of title 31, United States
Code, such determination shall only include violations
occurring after the date of enactment of this Act.
SEC. 209. JUSTICE ANNUAL REPORT ON DEFERRED AND NON-
PROSECUTION AGREEMENTS.
(a) Annual Report.--The Attorney General shall issue an
annual report, every year for the five years beginning on the
date of enactment of this Act, to the Committees on Financial
Services and the Judiciary of the House of Representatives
and the Committees on Banking, Housing, and Urban Affairs and
the Judiciary of the Senate containing--
(1) a list of deferred prosecution agreements and non-
prosecution agreements that the Attorney General has entered
into during the previous year with any person with respect to
a violation or suspected violation of the Bank Secrecy Act;
(2) the justification for entering into each such
agreement;
(3) the list of factors that were taken into account in
determining that the Attorney General should enter into each
such agreement; and
(4) the extent of coordination the Attorney General
conducted with the Financial Crimes Enforcement Network prior
to entering into each such agreement.
(b) Classified Annex.--Each report under subsection (a) may
include a classified annex.
(c) Bank Secrecy Act Defined.--For purposes of this
section, the term ``Bank Secrecy Act'' has the meaning given
that term under section 5312 of title 31, United States Code.
SEC. 210. RETURN OF PROFITS AND BONUSES.
(a) In General.--Section 5322 of title 31, United States
Code, is amended by adding at the end the following:
``(e) Return of Profits and Bonuses.--A person convicted of
violating a provision of (or rule issued under) the Bank
Secrecy Act shall--
``(1) in addition to any other fine under this section, be
fined in an amount equal to the profit gained by such person
by reason of such violation, as determined by the court; and
``(2) if such person is an individual who was a partner,
director, officer, or employee of a financial institution at
the time the violation occurred, repay to such financial
institution any bonus paid to such individual during the
Federal fiscal year in which the violation occurred or the
Federal fiscal year after which the violation occurred.''.
(b) Rule of Construction.--The amendment made by subsection
(a) may not be construed to prohibit a financial institution
from requiring the repayment of a bonus paid to a partner,
director, officer, or employee if the financial institution
determines that the partner, director, officer, or employee
engaged in unethical, but non-criminal, activities.
SEC. 211. APPLICATION OF BANK SECRECY ACT TO DEALERS IN
ANTIQUITIES.
(a) In General.--Section 5312(a)(2) of title 31, United
States Code, is amended--
(1) in subparagraph (Y), by striking ``or'' at the end;
(2) by redesignating subparagraph (Z) as subparagraph (AA);
and
(3) by inserting after subsection (Y) the following:
``(Z) a person trading or acting as an intermediary in the
trade of antiquities, including an advisor, consultant or any
other person who engages as a business in the solicitation of
the sale of antiquities; or''.
(b) Study on the Facilitation of Money Laundering and
Terror Finance Through the Trade of Works of Art or
Antiquities.--
(1) Study.--The Secretary of the Treasury, in coordination
with Federal Bureau of Investigation, the Attorney General,
and Homeland Security Investigations, shall perform a study
on the facilitation of money laundering and terror finance
through the trade of works of art or antiquities, including
an analysis of--
(A) the extent to which the facilitation of money
laundering and terror finance through the trade of works of
art or antiquities may enter or affect the financial system
of the United States, including any qualitative data or
statistics;
(B) whether thresholds and definitions should apply in
determining which entities to regulate;
(C) an evaluation of which markets, by size, entity type,
domestic or international geographical locations, or
otherwise, should be subject to regulations, but only to the
extent such markets are not already required to report on the
trade of works of art or antiquities to the Federal
Government;
(D) an evaluation of whether certain exemptions should
apply; and
(E) any other points of study or analysis the Secretary
determines necessary or appropriate.
(2) Report.--Not later than the end of the 180-day period
beginning on the date of the enactment of this Act, the
Secretary of the Treasury shall issue a report to the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate containing all findings and
determinations made in carrying out the study required under
paragraph (1).
(c) Rulemaking.--Not later than the end of the 180-day
period beginning on the date the Secretary issues the report
required under subsection (b)(2), the Secretary shall issue
[[Page H8500]]
regulations to carry out the amendments made by subsection
(a).
SEC. 212. GEOGRAPHIC TARGETING ORDER.
The Secretary of the Treasury shall issue a geographic
targeting order, similar to the order issued by the Financial
Crimes Enforcement Network on November 15, 2018, that--
(1) applies to commercial real estate to the same extent,
with the exception of having the same thresholds, as the
order issued by FinCEN on November 15, 2018, applies to
residential real estate; and
(2) establishes a specific threshold for commercial real
estate.
SEC. 213. STUDY AND REVISIONS TO CURRENCY TRANSACTION REPORTS
AND SUSPICIOUS ACTIVITY REPORTS.
(a) Currency Transaction Reports.--
(1) CTR indexed for inflation.--
(A) In general.--Every 5 years after the date of enactment
of this Act, the Secretary of the Treasury shall revise
regulations issued with respect to section 5313 of title 31,
United States Code, to update each $10,000 threshold amount
in such regulation to reflect the change in the Consumer
Price Index for All Urban Consumers published by the
Department of Labor, rounded to the nearest $100. For
purposes of calculating the change described in the previous
sentence, the Secretary shall use $10,000 as the base amount
and the date of enactment of this Act as the base date.
(B) Exception.--Notwithstanding subparagraph (A), the
Secretary may make appropriate adjustments to the threshold
amounts described under subparagraph (A) in high-risk areas
(e.g., High Intensity Financial Crime Areas or HIFCAs), if
the Secretary has demonstrable evidence that shows a
threshold raise would increase serious crimes, such as
trafficking, or endanger national security.
(2) GAO ctr study.--
(A) Study.--The Comptroller General of the United States
shall carry out a study of currency transaction reports. Such
study shall include--
(i) a review (carried out in consultation with the
Secretary of the Treasury, the Financial Crimes Enforcement
Network, the United States Attorney General, the State
Attorneys General, and State, Tribal, and local law
enforcement) of the effectiveness of the current currency
transaction reporting regime;
(ii) an analysis of the importance of currency transaction
reports to law enforcement; and
(iii) an analysis of the effects of raising the currency
transaction report threshold.
(B) Report.--Not later than the end of the 1-year period
beginning on the date of enactment of this Act, the
Comptroller General shall issue a report to the Secretary of
the Treasury and the Congress containing--
(i) all findings and determinations made in carrying out
the study required under subparagraph (A); and
(ii) recommendations for improving the current currency
transaction reporting regime.
(b) Modified SARs Study and Design.--
(1) Study.--The Director of the Financial Crimes
Enforcement Network shall carry out a study, in consultation
with industry stakeholders (including money services
businesses, community banks, and credit unions), the Federal
functional regulators, State bank supervisors, and law
enforcement, of the design of a modified suspicious activity
report form for certain customers and activities. Such study
shall include--
(A) an examination of appropriate optimal SARs thresholds
to determine the level at which a modified SARs form could be
employed;
(B) an evaluation of which customers or transactions would
be appropriate for a modified SAR, including--
(i) seasoned business customers;
(ii) financial technology (Fintech) firms;
(iii) structuring transactions; and
(iv) any other customer or transaction that may be
appropriate for a modified SAR; and
(C) an analysis of the most effective methods to reduce the
regulatory burden imposed on financial institutions in
complying with the Bank Secrecy Act, including an analysis of
the effect of--
(i) modifying thresholds;
(ii) shortening forms;
(iii) combining Bank Secrecy Act forms;
(iv) filing reports in periodic batches; and
(v) any other method that may reduce the regulatory burden.
(2) Study considerations.--In carrying out the study
required under paragraph (1), the Director shall seek to
balance law enforcement priorities, regulatory burdens
experienced by financial institutions, and the requirement
for reports to have a ``high degree of usefulness to law
enforcement'' under the Bank Secrecy Act.
(3) Report.--Not later than the end of the 1-year period
beginning on the date of enactment of this Act, the Director
shall issue a report to Congress containing--
(A) all findings and determinations made in carrying out
the study required under subsection (a); and
(B) sample designs of modified SARs forms based on the
study results.
(4) Contracting authority.--The Director may contract with
a private third-party to carry out the study required under
this subsection. The authority of the Director to enter into
contracts under this paragraph shall be in effect for each
fiscal year only to the extent and in the amounts as are
provided in advance in appropriations Acts.
(c) Definitions.--For purposes of this section:
(1) Bank secrecy act.--The term ``Bank Secrecy Act'' has
the meaning given that term under section 5312 of title 31,
United States Code.
(2) Federal functional regulator.--The term ``Federal
functional regulator'' has the meaning given that term under
section 103.
(3) Regulatory burden.--The term ``regulatory burden''
means the man-hours to complete filings, cost of data
collection and analysis, and other considerations of chapter
35 of title 44, United States Code (commonly referred to as
the Paperwork Reduction Act).
(4) SAR; suspicious activity report.--The term ``SAR'' and
``suspicious activity report'' mean a report of a suspicious
transaction under section 5318(g) of title 31, United States
Code.
(5) Seasoned business customer.--The term ``seasoned
business customer'', shall have such meaning as the Secretary
of the Treasury shall prescribe, which shall include any
person that--
(A) is incorporated or organized under the laws of the
United States or any State, or is registered as, licensed by,
or otherwise eligible to do business within the United
States, a State, or political subdivision of a State;
(B) has maintained an account with a financial institution
for a length of time as determined by the Secretary; and
(C) meet such other requirements as the Secretary may
determine necessary or appropriate.
(6) State bank supervisor.--The term ``State bank
supervisor'' has the meaning given that term under section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813).
SEC. 214. STREAMLINING REQUIREMENTS FOR CURRENCY TRANSACTION
REPORTS AND SUSPICIOUS ACTIVITY REPORTS.
(a) Review.--The Secretary of the Treasury (in consultation
with Federal law enforcement agencies, the Director of
National Intelligence, the Federal functional regulators, and
State bank supervisors and in consultation with other
relevant stakeholders) shall undertake a formal review of the
current financial institution reporting requirements under
the Bank Secrecy Act and its implementing regulations and
propose changes to further reduce regulatory burdens, and
ensure that the information provided is of a ``high degree of
usefulness'' to law enforcement, as set forth under section
5311 of title 31, United States Code.
(b) Contents.--The review required under subsection (a)
shall include a study of--
(1) whether the timeframe for filing a suspicious activity
report should be increased from 30 days;
(2) whether or not currency transaction report and
suspicious activity report thresholds should be tied to
inflation or otherwise periodically be adjusted;
(3) whether the circumstances under which a financial
institution determines whether to file a ``continuing
suspicious activity report'', or the processes followed by a
financial institution in determining whether to file a
``continuing suspicious activity report'' (or both) can be
narrowed;
(4) analyzing the fields designated as ``critical'' on the
suspicious activity report form and whether the number of
fields should be reduced;
(5) the increased use of exemption provisions to reduce
currency transaction reports that are of little or no value
to law enforcement efforts;
(6) the current financial institution reporting
requirements under the Bank Secrecy Act and its implementing
regulations and guidance; and
(7) such other items as the Secretary determines
appropriate.
(c) Report.--Not later than the end of the one year period
beginning on the date of the enactment of this Act, the
Secretary of the Treasury, in consultation with law
enforcement and persons subject to Bank Secrecy Act
requirements, shall issue a report to the Congress containing
all findings and determinations made in carrying out the
review required under subsection (a).
(d) Definitions.--For purposes of this section:
(1) Federal functional regulator.--The term ``Federal
functional regulator'' has the meaning given that term under
section 103.
(2) State bank supervisor.--The term ``State bank
supervisor'' has the meaning given that term under section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813).
(3) Other terms.--The terms ``Bank Secrecy Act'' and
``financial institution'' have the meaning given those terms,
respectively, under section 5312 of title 31, United States
Code.
TITLE III--MODERNIZING THE AML SYSTEM
SEC. 301. ENCOURAGING INNOVATION IN BSA COMPLIANCE.
Section 5318 of title 31, United States Code, as amended by
section 202, is further amended by adding at the end the
following:
``(p) Encouraging Innovation in Compliance.--
``(1) In general.--The Federal functional regulators shall
encourage financial institutions to consider, evaluate, and,
where appropriate, responsibly implement innovative
approaches to meet the requirements of this subchapter,
including through the use of innovation pilot programs.
[[Page H8501]]
``(2) Exemptive relief.--The Secretary, pursuant to
subsection (a), may provide exemptions from the requirements
of this subchapter if the Secretary determines such
exemptions are necessary to facilitate the testing and
potential use of new technologies and other innovations.
``(3) Rule of construction.--This subsection may not be
construed to require financial institutions to consider,
evaluate, or implement innovative approaches to meet the
requirements of the Bank Secrecy Act.
``(4) Federal functional regulator defined.--In this
subsection, the term `Federal functional regulator' means the
Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the National Credit Union Administration, the
Securities and Exchange Commission, and the Commodity Futures
Trading Commission.''.
SEC. 302. INNOVATION LABS.
(a) In General.--Subchapter II of chapter 53 of title 31,
United States Code, is amended by adding at the end the
following:
``Sec. 5333. Innovation Labs
``(a) Establishment.--There is established within the
Department of the Treasury and each Federal functional
regulator an Innovation Lab.
``(b) Director.--The head of each Innovation Lab shall be a
Director, to be appointed by the Secretary of the Treasury or
the head of the Federal functional regulator, as applicable.
``(c) Duties.--The duties of the Innovation Lab shall be--
``(1) to provide outreach to law enforcement agencies,
State bank supervisors, financial institutions, and other
persons (including vendors and technology companies) with
respect to innovation and new technologies that may be used
to comply with the requirements of the Bank Secrecy Act;
``(2) to support the implementation of responsible
innovation and new technology, in a manner that complies with
the requirements of the Bank Secrecy Act;
``(3) to explore opportunities for public-private
partnerships; and
``(4) to develop metrics of success.
``(d) FinCEN Lab.--The Innovation Lab established under
subsection (a) within the Department of the Treasury shall be
a lab within the Financial Crimes Enforcement Network.
``(e) Definitions.--In this subsection:
``(1) Federal functional regulator.--The term `Federal
functional regulator' means the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the National Credit
Union Administration, the Securities and Exchange Commission,
and the Commodity Futures Trading Commission.
``(2) State bank supervisor.--The term `State bank
supervisor' has the meaning given that term under section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813).''.
(b) Clerical Amendment.--The table of contents for
subchapter II of chapter 53 of title 31, United States Code,
is amended by adding at the end the following:
``5333. Innovation Labs.''.
SEC. 303. INNOVATION COUNCIL.
(a) In General.--Subchapter II of chapter 53 of Title 31,
United States Code, as amended by section 302, is further
amended by adding at the end the following:
``Sec. 5334. Innovation Council
``(a) Establishment.--There is established the Innovation
Council (hereinafter in this section referred to as the
`Council'), which shall consist of each Director of an
Innovation Lab established under section 5334, a
representative of State bank supervisors (as defined under
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)), and the Director of the Financial Crimes Enforcement
Network.
``(b) Chair.--The Director of the Innovation Lab of the
Department of the Treasury shall serve as the Chair of the
Council.
``(c) Duty.--The members of the Council shall coordinate on
activities related to innovation under the Bank Secrecy Act,
but may not supplant individual agency determinations on
innovation.
``(d) Meetings.--The meetings of the Council--
``(1) shall be at the call of the Chair, but in no case may
the Council meet less than semi-annually;
``(2) may include open and closed sessions, as determined
necessary by the Council; and
``(3) shall include participation by public and private
entities and law enforcement agencies.
``(e) Report.--The Council shall issue an annual report,
for each of the 7 years beginning on the date of enactment of
this section, to the Secretary of the Treasury on the
activities of the Council during the previous year, including
the success of programs as measured by metrics of success
developed pursuant to section 5334(c)(4), and any regulatory
or legislative recommendations that the Council may have.''.
(b) Clerical Amendment.--The table of contents for
subchapter II of chapter 53 of title 31, United States Code,
is amended by adding the end the following:
``5334. Innovation Council.''.
SEC. 304. TESTING METHODS RULEMAKING.
(a) In General.--Section 5318 of title 31, United States
Code, as amended by section 301, is further amended by adding
at the end the following:
``(q) Testing.--
``(1) In general.--The Secretary of the Treasury, in
consultation with the head of each agency to which the
Secretary has delegated duties or powers under subsection
(a), shall issue a rule to specify--
``(A) with respect to technology and related technology-
internal processes (`new technology') designed to facilitate
compliance with the Bank Secrecy Act requirements, the
standards by which financial institutions are to test new
technology; and
``(B) in what instances or under what circumstance and
criteria a financial institution may replace or terminate
legacy technology and processes for any examinable technology
or process without the replacement or termination being
determined an examination deficiency.
``(2) Standards.--The standards described under paragraph
(1) may include--
``(A) an emphasis on using innovative approaches, such as
machine learning, rather than rules-based systems;
``(B) risk-based back-testing of the regime to facilitate
calibration of relevant systems;
``(C) requirements for appropriate data privacy and
security; and
``(D) a requirement that the algorithms used by the regime
be disclosed to the Financial Crimes Enforcement Network,
upon request.
``(3) Confidentiality of algorithms.--If a financial
institution or any director, officer, employee, or agent of
any financial institution, voluntarily or pursuant to this
subsection or any other authority, discloses the
institution's algorithms to a Government agency, such
algorithms and any materials associated with the creation of
such algorithms shall be considered confidential and not
subject to public disclosure.''.
(b) Update of Manual.--The Financial Institutions
Examination Council shall ensure--
(1) that any manual prepared by the Council is updated to
reflect the rulemaking required by the amendment made by
subsection (a); and
(2) that financial institutions are not penalized for the
decisions based on such rulemaking to replace or terminate
technology used for compliance with the Bank Secrecy Act (as
defined under section 5312 of title 31, United States Code)
or other anti-money laundering laws.
SEC. 305. FINCEN STUDY ON USE OF EMERGING TECHNOLOGIES.
(a) Study.--
(1) In general.--The Director of the Financial Crimes
Enforcement Network (``FinCEN'') shall carry out a study on--
(A) the status of implementation and internal use of
emerging technologies, including artificial intelligence
(``AI''), digital identity technologies, blockchain
technologies, and other innovative technologies within
FinCEN;
(B) whether AI, digital identity technologies, blockchain
technologies, and other innovative technologies can be
further leveraged to make FinCEN's data analysis more
efficient and effective; and
(C) how FinCEN could better utilize AI, digital identity
technologies, blockchain technologies, and other innovative
technologies to more actively analyze and disseminate the
information it collects and stores to provide investigative
leads to Federal, State, Tribal, and local law enforcement,
and other Federal agencies (collective, ``Agencies''), and
better support its ongoing investigations when referring a
case to the Agencies.
(2) Inclusion of gto data.--The study required under this
subsection shall include data collected through the
Geographic Targeting Orders (``GTO'') program.
(3) Consultation.--In conducting the study required under
this subsection, FinCEN shall consult with the Directors of
the Innovations Labs established in section 302.
(b) Report.--Not later than the end of the 6-month period
beginning on the date of the enactment of this Act, the
Director shall issue a report to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives
containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a);
(2) with respect to each of subparagraphs (A), (B) and (C)
of subsection (a)(1), any best practices or significant
concerns identified by the Director, and their applicability
to AI, digital identity technologies, blockchain
technologies, and other innovative technologies with respect
to U.S. efforts to combat money laundering and other forms of
illicit finance; and
(3) any policy recommendations that could facilitate and
improve communication and coordination between the private
sector, FinCEN, and Agencies through the implementation of
innovative approaches, in order to meet their Bank Secrecy
Act (as defined under section 5312 of title 31, United States
Code) and anti-money laundering compliance obligations.
SEC. 306. DISCRETIONARY SURPLUS FUNDS.
(a) In General.--The dollar amount specified under section
7(a)(3)(A) of the Federal Reserve Act (12 U.S.C.
289(a)(3)(A)) is reduced by $27,000,000.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on September 30, 2029.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
[[Page H8502]]
Georgia (Mr. David Scott) and the gentlewoman from Missouri (Mrs.
Wagner) each will control 20 minutes.
The Chair recognizes the gentleman from Georgia.
General Leave
Mr. DAVID SCOTT of Georgia. 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 insert extraneous
material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Georgia?
There was no objection.
Mr. DAVID SCOTT of Georgia. Mr. Speaker, I yield myself such time as
I may consume.
In recent weeks, we have had the opportunity to discuss the valuable
anti-money laundering aspects of the COUNTER Act of 2019, H.R. 2514,
introduced by the gentleman from Missouri (Mr. Cleaver).
This important piece of legislation is the first major reform in the
United States anti-money laundering regime since 2001 and makes
critical changes to close loopholes and ensure better enforcement of
this country's AML and Bank Secrecy Act laws.
Today, I would like to highlight how this bill also addresses the
costs and burdens of the Bank Secrecy Act and anti-money laundering
compliance for smaller financial institutions, including credit unions
and community banks.
This bill includes multiple avenues to improve information-sharing
and feedback loops, including new programs of domestic liaisons for the
Financial Crime Enforcement Network of FinCEN, sending FinCEN officials
to the field to connect directly with financial institutions.
It also makes permanent the FinCEN Exchange program, allowing for
more robust exchange of threat information and analysis among
participants. It revives the popular ``SAR Activity Review,'' which was
a FinCEN publication that provided timely threat detection information,
which will help banks to better direct their resources, and result in
more efficient and effective collection of information from both banks
and law enforcement.
The COUNTER Act also codifies the Federal financial regulators'
guidance to encourage resource-sharing among similar institutions.
Mr. Speaker, we heard from many smaller institutions that they were
more apt to invest in resource-sharing if they knew that the permission
to do so wouldn't change with new directors or administrations.
The bill also raises the Currency Transaction Reports threshold,
increasing it every 5 years, pegged to inflation. This is a key issue
for smaller institutions and addresses their concerns, while balancing
the investigative needs of law enforcement.
Further focused on the compliance burden, this bill requires FinCEN,
working with industry and law enforcement, to consider the design of a
shortened, modified Suspicious Activity Report, or SAR, form for
certain customers and activities.
These reforms are among the reasons that the National Association of
Federally Insured Credit Unions, the Independent Community Bankers of
America, the Credit Union National Association, all of the State
banking associations, and many, many others have expressed support for
this important bill.
Overall, I believe that the COUNTER Act of 2019 is a significant step
forward for small businesses, law enforcement, and other stakeholders.
I want to thank Mr. Cleaver for introducing this bill, and I want to
thank our Republican colleagues for working collaboratively with a team
effort to refine this legislation, for this is truly a bipartisan bill,
ensuring that this bill passed out of the Financial Services Committee
with a unanimous 55-0 vote.
Mr. Speaker, I reserve the balance of my time.
Mrs. WAGNER. Mr. Speaker, I yield myself such time as I may consume.
I appreciate the majority moving H.R. 2514, the COUNTER Act of 2019,
again, this week, as a standalone piece of legislation.
Both Republicans and Democrats agree, protecting the financial system
from bad actors is a priority. We must give financial institutions the
tools and resources they need to fight these bad actors.
According to a 2016 report by the U.S. Government Accountability
Office, from January 2009 to December 2015, Federal agencies assessed
roughly $5.1 billion in fines, forfeitures, and penalties for
violations of the Bank Secrecy Act and anti-money laundering
regulations, often referred to as BSA/AML.
A separate 2016 analysis of anti-money laundering enforcement found
that penalties and fines for BSA violations significantly increased
since the 2008 financial crisis. This report concluded that regulators
had become more aggressive in pursuing BSA violations in the wake of
the crisis.
However, this data is from 2016. We know that the current enforcement
regime is outdated. Technology has outpaced the tools and resources
available to Federal agencies to pursue these bad actors.
H.R. 2514 makes important changes to strengthen BSA and AML
enforcement. The bill includes key aspects of the BSA/AML reform
package from last Congress, including a provision that allows for
tailored information-sharing by financial institutions with their
foreign branches to better identify suspicious activity.
The bill also includes important updates to the reporting thresholds
for Suspicious Activities Reports, or SARs.
H.R. 2514 reforms the SAR framework by requiring the Financial Crimes
Enforcement Network to carry out a study examining whether the current
SAR thresholds are adequate.
This study will provide the necessary data to alter the current SAR
filing regime in the future. There is clearly a recognition on both
sides of the aisle that the status quo is unacceptable.
The bill also encourages greater innovation, ensures efficiency, and
requires treasury to play a prominent role in coordinating AML policy.
These measures will help ensure that the most effective AML policies
are being used to stop terrorists and bad actors.
I want to thank the gentleman from Missouri (Mr. Cleaver) and the
gentleman from Ohio (Mr. Stivers) for all their hard work and effort on
this bill.
Additionally, I want to thank the gentleman from Missouri (Mr.
Luetkemeyer), the gentleman from Virginia (Mr. Riggleman), and the
gentleman from Ohio (Mr. Gonzalez).
Mr. Speaker, their priorities have made the bill stronger, and more
focused, which will enable the Treasury Department and other Federal
agencies to carry out critical anti-money laundering processes.
I encourage my colleagues to support H.R. 2514, and I yield back the
balance of my time.
Mr. DAVID SCOTT of Georgia. Mr. Speaker, I yield myself the balance
of my time.
This is a very critical piece of legislation for our financial
services industry that will help close loopholes in existing law, and
prevent criminals, prevent terrorists, and other bad state actors from
escaping the United States Anti-Money Laundering and Counter-Threat
Finance laws; it is badly needed, and that is why this is so important.
I am proud to stand up to support small businesses here today, while
we are making important and necessary updates to these regimes.
I would especially like to congratulate my colleague from Missouri,
Mr. Cleaver, the chairman of the House Committee on Financial Services,
National Security, International Development, and Monetary Policy
Subcommittee for introducing this bill.
A champion of small business himself, Mr. Cleaver has diligently
engaged stakeholders, including government, industry, nongovernmental
organizations, and Members from across the political spectrum on the
text that we vote on here today. The result is this comprehensive bill
with broad bipartisan support.
I urge my colleagues to join me in supporting this important piece of
legislation.
Mr. Speaker, I yield back the balance of my time.
{time} 1700
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Georgia (Mr. David Scott) that the House suspend the
rules and pass the bill, H.R. 2514, as amended.
[[Page H8503]]
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________