[House Report 109-506]
[From the U.S. Government Publishing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     109-506

======================================================================



 
              SEASONED CUSTOMER CTR EXEMPTION ACT OF 2006

                                _______
                                

 June 19, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5341]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 5341) to amend section 5313 of title 31, United 
States Code, to reform certain requirements for reporting cash 
transactions, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     4
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     6
Performance Goals and Objectives.................................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Constitutional Authority Statement...............................     7
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill, as Reported............     9

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Seasoned Customer CTR Exemption Act of 
2006''.

SEC. 2. EXCEPTION FROM CURRENCY TRANSACTION REPORTS FOR SEASONED 
                    CUSTOMERS.

  (a) Findings.--The Congress finds as follows:
          (1) The completion of and filing of currency transaction 
        reports under section 5313 of title 31, United States Code, 
        poses a compliance burden on the financial industry.
          (2) Due to the nature of the transactions or the persons and 
        entities conducting such transactions, some reports as 
        currently filed may not be relevant to the detection, 
        deterrence, or investigation of financial crimes, including 
        money laundering and the financing of terrorism.
          (3) However, the data contained in such reports can provide 
        valuable context for the analysis of other data derived 
        pursuant to subchapter II of chapter 53 of title 31, United 
        States Code, as well as investigative data, which provide 
        invaluable and indispensable information supporting efforts to 
        combat money laundering and other financial crimes.
          (4) An appropriate exemption process from the reporting 
        requirements for certain currency transactions that are of 
        little or no value to ongoing efforts of law enforcement 
        agencies, financial regulatory agencies, and the financial 
        services industry to investigate, detect, or deter financial 
        crimes would continue to fulfill the compelling need to produce 
        and provide meaningful information to policy-makers, financial 
        regulators, law enforcement, and intelligence agencies, while 
        potentially lowering the compliance burden placed on financial 
        institutions by the need to file such reports.
          (5) The Secretary of the Treasury has by regulation, and in 
        accordance with section 5313 of title 31, United States Code, 
        implemented a process by which institutions may seek exemptions 
        from filing certain currency transaction reports based on 
        appropriate circumstances; however, the financial industry has 
        not taken full advantage of these provisions and has contended 
        that they are unduly burdensome.
          (6) The act of providing notice to the Secretary of the 
        Treasury of designations of exemption--
                  (A) provides meaningful information to law 
                enforcement officials on exempt customers and enables 
                law enforcement to obtain account information through 
                appropriate legal process; and
                  (B) complements other sections of title 31, United 
                States Code, whereby law enforcement can locate 
                financial institutions with relevant records relating 
                to a person of investigative interest, such as 
                information requests made pursuant to regulations 
                implementing section 314(a) of the USA PATRIOT Act of 
                2001.
          (7) A designation of exemption has no effect on requirements 
        for depository institutions to apply the full range of anti-
        money laundering controls required under subchapter II of 
        chapter 53 of title 31, United States Code, and related 
        provisions of law, including the requirement to apply the 
        customer identification program pursuant to section 5326 of 
        such title, and the requirement to identify, monitor, and, if 
        appropriate, report suspicious activity in accordance with 
        section 5318(g) of such title.
          (8) The Federal banking agencies and the Financial Crimes 
        Enforcement Network have recently provided guidance through the 
        Federal Financial Institutions Examination Council Bank Secrecy 
        Act/Anti-Money Laundering Examination Manual on applying 
        appropriate levels of due diligence and identifying suspicious 
        activity by the types of cash-intensive businesses that 
        generally will be subject to exemption.
  (b) Seasoned Customer Exemption.--Section 5313(e) of title 31, United 
States Code, is amended to read as follows:
  ``(e) Qualified Customer Exemption.--
          ``(1) In general.--Before the end of the 270-day period 
        beginning on the date of the enactment of the Seasoned Customer 
        CTR Exemption Act of 2006, the Secretary of the Treasury shall 
        prescribe regulations that exempt any depository institution 
        from filing a report pursuant to this section in a transaction 
        for the payment, receipt, or transfer of United States coins or 
        currency (or other monetary instruments the Secretary of the 
        Treasury prescribes) with a qualified customer of the 
        depository institution.
          ``(2) Qualified customer defined.--For purposes of this 
        section, the term `qualified customer', with respect to a 
        depository institution, has such meaning as the Secretary of 
        the Treasury shall prescribe, which shall include any person 
        that--
                  ``(A) is incorporated or organized under the laws of 
                the United States or any State, including a sole 
                proprietorship (as defined in 31 C.F.R. 
                103.22(d)(6)(vii), as in effect on May 10, 2006), or is 
                registered as and eligible to do business within the 
                United States or a State;
                  ``(B) has maintained a deposit account with the 
                depository institution for at least 12 months; and
                  ``(C) has engaged, using such account, in multiple 
                currency transactions that are subject to the reporting 
                requirements of subsection (a).
          ``(3) Regulations.--
                  ``(A) In general.--The Secretary of the Treasury 
                shall prescribe regulations requiring a depository 
                institution to file a 1-time notice of designation of 
                exemption for each qualified customer of the depository 
                institution.
                  ``(B) Form and content of exemption notice.--The 
                Secretary shall by regulation prescribe the form, 
                manner, content, and timing of the qualified customer 
                exemption notice and such notice shall include 
                information sufficient to identify the qualified 
                customer and the accounts of the customer.
                  ``(C) Authority of secretary.--
                          ``(i) In general.--The Secretary may suspend, 
                        reject, or revoke any qualified customer 
                        exemption notice, in accordance with criteria 
                        prescribed by the Secretary by regulation.
                          ``(ii) Conditions.--The Secretary may 
                        establish conditions, in accordance with 
                        criteria prescribed by regulation, under which 
                        exempt qualified customers of an insured 
                        depository institution that is merged with or 
                        acquired by another insured depository 
                        institution will continue to be treated as 
                        designated exempt qualified customers of the 
                        surviving or acquiring institution.''.
  (c) 3-Year Review and Report.--Before the end of the 3-year period 
beginning on the date of the enactment of this Act, the Secretary of 
the Treasury, in consultation with the Attorney General, the Secretary 
of Homeland Security, the Federal banking agencies, the banking 
industry, and such other persons as the Secretary deems appropriate, 
shall evaluate the operations and effect of the provisions of the 
amendment made by subsection (a) and make recommendations to Congress 
as to any legislative action with respect to such provision as the 
Secretary may determine to be appropriate.

SEC. 3. PERIODIC REVIEW OF REPORTING THRESHOLD AND ADJUSTMENT FOR 
                    INFLATION.

  Section 5318 of title 31, United States Code, is amended by adding at 
the end the following new subsection:
  ``(o) Periodic Review of Reporting Threshold and Adjustment for 
Inflation.--
          ``(1) In general.--Before the end of the 90-day period 
        beginning on the date of the enactment of the Seasoned Customer 
        CTR Exemption Act of 2006 and at least every 5 years after the 
        end of such period, the Secretary of the Treasury shall--
                  ``(A) review the continuing appropriateness, 
                relevance, and utility of each threshold amount or 
                denomination established by the Secretary, in the 
                Secretary's discretion, for any report required by the 
                Secretary under this subchapter; and
                  ``(B) adjust each such amount, at such time and in 
                such manner as the Secretary considers appropriate, for 
                any inflation that the Secretary determines has 
                occurred since the date any such amount was established 
                or last adjusted, as the case may be.
          ``(2) Report.--Before the end of the 60-day period beginning 
        upon the completion of any review by the Secretary of the 
        Treasury under paragraph (1), the Secretary shall submit a 
        report to the Congress containing the findings and conclusions 
        of the Secretary in connection with such review, together with 
        an explanation for any adjustment, or lack of adjustment, of 
        any threshold amount or denomination by the Secretary as a 
        result of such review, including the adjustment for 
        inflation.''.

                          Purpose and Summary

    H.R. 5341, as amended, modifies the process by which 
financial institutions may apply for exemption from filing 
currency transaction reports (CTRs) for certain ``seasoned 
customers.'' ``Seasoned customers'' are longtime bank customers 
that routinely deal in large volumes of cash but whose business 
dealings are well-enough understood by the institution to rule 
out the possibility of money laundering or the financing of 
terror. The Treasury Secretary, through FinCEN, is directed to 
develop new regulations for the existing exemption process that 
will continue to gather the sorts of information useful to law 
enforcement, while streamlining the exemption application 
process for filings on transactions by ``seasoned customers'' 
that the institution knows well enough to understand that a 
large cash transaction is part of the course of normal 
business. The legislation also states that the Secretary may 
consider new regulations to accommodate exemption continuity in 
the case of a merger or acquisition.

                  Background and Need for Legislation

    H.R. 5341 introduced by Financial Institutions and Consumer 
Credit Subcommittee Chairman Spencer Bachus and Full Committee 
Ranking Member Barney Frank, along with bipartisan members of 
the Financial Services Committee, is based on Title VII of H.R. 
3505, the ``Financial Services Regulatory Relief Act,'' 
authored by Representatives Jeb Hensarling and Dennis Moore. 
H.R. 3505 passed the House in March 2006 by a vote of 415-2. 
The Senate did not include this provision in the Senate 
counterpart to H.R. 3505, S. 2856, which was approved by the 
Senate Banking Committee on May 4, 2006 and the full Senate on 
May 25, 2006. A legislative hearing on H.R 5341 was held on May 
18, 2006 in the Financial Institutions and Consumer Credit 
Subcommittee. The hearing provided law enforcement and industry 
an opportunity to comment on the legislation.
    The Bank Secrecy Act (BSA), enacted in 1970, authorizes the 
Secretary of the Treasury to issue regulations requiring that 
financial institutions keep records and file reports on certain 
financial transactions. The BSA requires the filing of CTRs by 
financial institutions, by trades or businesses, or by other 
persons for a transaction in currency, such as a deposit, 
withdrawal, exchange or transfer of currency, in excess of 
$10,000.
    Until 1996, CTRs were the primary BSA tool used by law 
enforcement to identify activity indicative of money 
laundering. Since 1996, Treasury's Financial Crimes Enforcement 
Network (FinCEN) and the bank regulators issued final 
regulations requiring the filing of Suspicious Activity Reports 
(SARs). SARs in many ways have replaced CTRs as the primary 
tool for identifying suspicious activity but the filing of CTRs 
is still required.
    The Department of Treasury currently has the authority to 
establish the criteria for granting a financial institution an 
exemption from filing a CTR on a transaction by a ``qualified 
business customer'' above the $10,000 trigger. In 1997, FinCEN 
promulgated new rules establishing categories of entities 
eligible for exemptions (generally banks, governmental 
entities, public companies, and domestic companies that have 
cash-intensive businesses or payrolls). However, the process by 
which an exemption is granted to an institution from filing on 
transactions by a local grocery store chain or a Target store, 
for example, is considered by many to be difficult to 
understand, cumbersome to use and requires annual renewals of 
the exemption.
    The Financial Crimes Enforcement Network received over 12 
million CTRs in 2005. According to a survey conducted by 
Treasury (as required by the USA PATRIOT Act), over 30 percent 
of the CTRs filed were filed on recurring customer transactions 
that were eligible for exemption from CTR filing under existing 
rules. Many believe that these millions of excess forms have 
little value for law enforcement purposes and impose 
substantial compliance costs upon financial institutions.
    The cost of filing these forms is significant for the 
financial services industry. In fact, as published in the U.S. 
Money Laundering Threat Assessment released earlier this year, 
the number of CTRs filed on an annual basis now tops 13.1 
million. Even at FinCEN's conservative estimate of around 25 
minutes per report for filing and record-keeping, it means that 
the banking industry as a whole devoted around 5.5 million 
staff-hours to handling CTRs in 2005. Based on a survey by the 
American Bankers Association, the industry paid around $187 
million in wages for this staff time. A typical bank with $2 
billion of assets filed 1,400 CTRs in 2005. These filings took 
583 staff-hours, with 438 of the staff-hours simply to report 
on long-standing customers.

                                Hearings

    The Subcommittee on Financial Institutions and Consumer 
Credit held a hearing on May 18, 2006, on H.R. 5341, the 
``Seasoned Customer CTR Exemption Act.'' The following 
witnesses testified:
    Mr. Robert W. Werner, Director, Financial Crimes 
Enforcement Network, U.S. Department of the Treasury;
    Mr. Michael F.A. Morehart, Chief, Terrorist Financing 
Operations Section, Federal Bureau of Investigation, U.S. 
Department of Justice;
    Mr. Kevin A. DelliColli, Deputy Assistant Director, 
Financial and Trade Investigations, Office of Investigations, 
U.S. Immigration and Customs Enforcement, U.S. Department of 
Homeland Security;
    Mr. F. Weller Meyer, Chairman, President & CEO, Acacia 
Federal Savings Bank, representing America's Community Bankers;
    Mr. Robert Rowe, Regulatory Counsel, Independent Community 
Bankers of America, and;
    Mr. Bradley E. Rock, Chairman of the Board and President & 
CEO, Bank of Smithtown, representing the American Bankers 
Association.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 24, 2006, and ordered H.R. 5341, as amended, reported to 
the House by a voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in conjunction with the consideration 
of this legislation. A motion by Mr. Oxley to order the bill, 
as amended, reported to the House with a favorable 
recommendation was agreed to by a voice vote. During the 
consideration of the bill, the following amendments were 
considered:
    An amendment by Mrs. Kelly, No. 1, providing an effective 
date, was offered and WITHDRAWN.
    An amendment by Mr. Hensarling, No. 2, requiring a periodic 
review of reporting threshold and adjustment for inflation, was 
AGREED TO by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 5341, as amended, modifies the process by which 
financial institutions may apply for exemption from filing 
currency transaction reports (CTRs) for certain ``seasoned 
customers.'' ``Seasoned customers'' are longtime bank customers 
that routinely deal in large volumes of cash but whose business 
dealings are well-enough understood by the institution to rule 
out the possibility of money laundering or the financing of 
terror.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                     June 16, 2006.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5341, the Seasoned 
Customer CTR Exemption Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 5341--Seasoned Customer CTR Exemption Act of 2006

    H.R. 5341 would establish the terms and conditions for when 
depository institutions would no longer be required to submit 
reports on currency transactions involving certain customers. 
It would direct the Secretary of the Treasury to issue 
regulations to implement those changes and to prepare various 
reports for the Congress related to this program.
    Based on information from the Treasury Department, CBO 
estimates that implementing this bill would have no significant 
budgetary impact. Costs for completing the required reports 
under H.R. 5341 would likely total less than $500,000 a year 
and would be subject to the availability of appropriated funds. 
Enacting the bill would not affect direct spending or revenues.
    H.R. 5341 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not impose any significant costs on state, local, or 
tribal governments.
    The CBO staff contact for this estimate is Kathleen Gramp. 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.
    The following provides a section-by-section analysis of 
H.R. 5341:

                      Section-by-Section Analysis


Section 1. Short title

    This section sets forth the short title of this 
legislation--the ``Seasoned Customer CTR Exemption Act of 
2006.''

Section 2(a). Findings

    This section provides the findings of Congress concerning 
currency transaction reports (CTRs). Specifically, Congress 
finds that the existing completion of and filing of currency 
transaction reports poses a compliance burden on the financial 
industry. Due to the nature of the transactions or the persons 
and entities conducting such transactions, some reports as 
currently filed may not be relevant to the detection, 
deterrence, or investigation of financial crimes, including 
money laundering and the financing of terrorism. An appropriate 
exemption process from the reporting requirements for certain 
currency transactions that are of little or no value to ongoing 
efforts of law enforcement agencies, financial regulatory 
agencies, and the financial services industry to investigate, 
detect, or deter financial crimes would continue to fulfill the 
compelling need to produce and provide meaningful information, 
while potentially lowering the compliance burden placed on 
financial institutions by the need to file such reports. A 
designation of exemption has no effect on requirements for 
depository institutions to apply the full range of anti-money 
laundering controls already required, including the requirement 
to apply the customer identification programs, and the 
requirement to identify, monitor, and, if appropriate, report 
suspicious activity.
            Seasoned Customer Exemption Section 5313(e)
    The Seasoned Customer Exemption Section 5313(e) of title 31 
of the United States Code is also amended by this Act. The 
Secretary of the Treasury is directed to prescribe regulations, 
within 270 days following the enactment of this Act, under 
which any depository Institution may apply for an exemption 
from filing a report with a qualified customer of the 
depository institution.
    ``Qualified customer'' would be defined by the Secretary of 
the Treasury but may include any person that 1) is incorporated 
or organized under the laws of the United States or any State, 
including a sole proprietorship, or is registered as and 
eligible to do business within the United States or a State; 2) 
has maintained a deposit account with the depository 
institution for at least 12 months; and 3) has engaged, using 
such account within that period, in ``multiple'' currency 
transactions that are subject to the reporting requirements. 
The Committee intends that ``multiple'' transactions be defined 
by the Secretary as more than two transactions, fewer than 
transactions conducted ``frequently'' as defined by FinCEN in 
its guidance on the criteria for exemptions under 31C.F.R. 
103.22(d)(2)(vi)(B), and enough transactions that the Secretary 
may thoroughly understand the particular business, its customer 
mix and business mix, and the nature of its operations.
    The Secretary of the Treasury is directed to prescribe 
regulations requiring a depository institution to file a 1-time 
notice of designation of exemption for each qualified customer 
of the depository institution. The Secretary shall also, by 
regulation prescribe the form, manner, content, and timing of 
the qualified customer exemption notice and such notice shall 
include information sufficient to identify the qualified 
customer and the accounts of the customer.
    The Secretary of the Treasury may suspend, reject, or 
revoke any qualified customer exemption notice, in accordance 
with criteria prescribed by the Secretary by regulation. The 
Secretary may establish conditions, and prescribe by 
regulation, under which exempt qualified customers of an 
insured depository institution that is merged with or acquired 
by another insured depository institution will continue to be 
treated as designated exempt qualified customers.

Section 2(c). Review and report

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

Section 3. Periodic review of reporting threshold and adjustment for 
        inflation

    The Secretary of the Treasury is required to review the 
continuing appropriateness, relevance, and utility of each 
threshold amount established by the Secretary, in the 
Secretary's discretion, for any report required under this 
subsection and adjust each such amount, at such time and in 
such manner as the Secretary considers appropriate, for any 
inflation that the Secretary determines has occurred since the 
date any such amount was established or last adjusted. This 
must be done within 90 days of enactment of this Act and at 
least every 5 years there after.
    The Secretary of the Treasury must also submit a report to 
the Congress, before the end of the 60-day period beginning 
upon the completion of any review, containing the findings and 
conclusions of the Secretary in connection with such review, 
together with an explanation for any adjustment, or lack of 
adjustment, of any threshold amount by the Secretary as a 
result of such review, including the adjustment for inflation.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 31, UNITED STATES CODE




           *       *       *       *       *       *       *
SUBTITLE IV--MONEY

           *       *       *       *       *       *       *


CHAPTER 53--MONETARY TRANSACTIONS

           *       *       *       *       *       *       *



SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS

           *       *       *       *       *       *       *



Sec. 5313. Reports on domestic coins and currency transactions

  (a) * * *

           *       *       *       *       *       *       *

  [(e) Discretionary Exemptions From Reporting Requirements.--
          [(1) In general.--The Secretary of the Treasury may 
        exempt, pursuant to section 5318(a)(6), a depository 
        institution from the reporting requirements of 
        subsection (a) with respect to transactions between the 
        depository institution and a qualified business 
        customer of the institution on the basis of information 
        submitted to the Secretary by the institution in 
        accordance with procedures which the Secretary shall 
        establish.
          [(2) Qualified business customer defined.--For 
        purposes of this subsection, the term ``qualified 
        business customer'' means a business which--
                  [(A) maintains a transaction account (as 
                defined in section 19(b)(1)(C) of the Federal 
                Reserve Act) at the depository institution;
                  [(B) frequently engages in transactions with 
                the depository institution which are subject to 
                the reporting requirements of subsection (a); 
                and
                  [(C) meets criteria which the Secretary 
                determines are sufficient to ensure that the 
                purposes of this subchapter are carried out 
                without requiring a report with respect to such 
                transactions.
          [(3) Criteria for exemption.--The Secretary of the 
        Treasury shall establish, by regulation, the criteria 
        for granting and maintaining an exemption under 
        paragraph (1).
          [(4) Guidelines.--
                  [(A) In general.--The Secretary of the 
                Treasury shall establish guidelines for 
                depository institutions to follow in selecting 
                customers for an exemption under this 
                subsection.
                  [(B) Contents.--The guidelines may include a 
                description of the types of businesses or an 
                itemization of specific businesses for which no 
                exemption will be granted under this subsection 
                to any depository institution.
          [(5) Annual review.--The Secretary of the Treasury 
        shall prescribe regulations requiring each depository 
        institution to--
                  [(A) review, at least once each year, the 
                qualified business customers of such 
                institution with respect to whom an exemption 
                has been granted under this subsection; and
                  [(B) upon the completion of such review, 
                resubmit information about such customers, with 
                such modifications as the institution 
                determines to be appropriate, to the Secretary 
                for the Secretary's approval.
          [(6) 2-year phase-in provision.--During the 2-year 
        period beginning on the date of enactment of the Money 
        Laundering Suppression Act of 1994, this subsection 
        shall be applied by the Secretary on the basis of such 
        criteria as the Secretary determines to be appropriate 
        to achieve an orderly implementation of the 
        requirements of this subsection.]
  (e) Qualified Customer Exemption.--
          (1) In general.--Before the end of the 270-day period 
        beginning on the date of the enactment of the Seasoned 
        Customer CTR Exemption Act of 2006, the Secretary of 
        the Treasury shall prescribe regulations that exempt 
        any depository institution from filing a report 
        pursuant to this section in a transaction for the 
        payment, receipt, or transfer of United States coins or 
        currency (or other monetary instruments the Secretary 
        of the Treasury prescribes) with a qualified customer 
        of the depository institution.
          (2) Qualified customer defined.--For purposes of this 
        section, the term ``qualified customer'', with respect 
        to a depository institution, has such meaning as the 
        Secretary of the Treasury shall prescribe, which shall 
        include any person that--
                  (A) is incorporated or organized under the 
                laws of the United States or any State, 
                including a sole proprietorship (as defined in 
                31 C.F.R. 103.22(d)(6)(vii), as in effect on 
                May 10, 2006), or is registered as and eligible 
                to do business within the United States or a 
                State;
                  (B) has maintained a deposit account with the 
                depository institution for at least 12 months; 
                and
                  (C) has engaged, using such account, in 
                multiple currency transactions that are subject 
                to the reporting requirements of subsection 
                (a).
          (3) Regulations.--
                  (A) In general.--The Secretary of the 
                Treasury shall prescribe regulations requiring 
                a depository institution to file a 1-time 
                notice of designation of exemption for each 
                qualified customer of the depository 
                institution.
                  (B) Form and content of exemption notice.--
                The Secretary shall by regulation prescribe the 
                form, manner, content, and timing of the 
                qualified customer exemption notice and such 
                notice shall include information sufficient to 
                identify the qualified customer and the 
                accounts of the customer.
                  (C) Authority of secretary.--
                          (i) In general.--The Secretary may 
                        suspend, reject, or revoke any 
                        qualified customer exemption notice, in 
                        accordance with criteria prescribed by 
                        the Secretary by regulation.
                          (ii) Conditions.--The Secretary may 
                        establish conditions, in accordance 
                        with criteria prescribed by regulation, 
                        under which exempt qualified customers 
                        of an insured depository institution 
                        that is merged with or acquired by 
                        another insured depository institution 
                        will continue to be treated as 
                        designated exempt qualified customers 
                        of the surviving or acquiring 
                        institution.

           *       *       *       *       *       *       *


Sec. 5318. Compliance, exemptions, and summons authority

  (a) * * *

           *       *       *       *       *       *       *

  (o) Periodic Review of Reporting Threshold and Adjustment for 
Inflation.--
          (1) In general.--Before the end of the 90-day period 
        beginning on the date of the enactment of the Seasoned 
        Customer CTR Exemption Act of 2006 and at least every 5 
        years after the end of such period, the Secretary of 
        the Treasury shall--
                  (A) review the continuing appropriateness, 
                relevance, and utility of each threshold amount 
                or denomination established by the Secretary, 
                in the Secretary's discretion, for any report 
                required by the Secretary under this 
                subchapter; and
                  (B) adjust each such amount, at such time and 
                in such manner as the Secretary considers 
                appropriate, for any inflation that the 
                Secretary determines has occurred since the 
                date any such amount was established or last 
                adjusted, as the case may be.
          (2) Report.--Before the end of the 60-day period 
        beginning upon the completion of any review by the 
        Secretary of the Treasury under paragraph (1), the 
        Secretary shall submit a report to the Congress 
        containing the findings and conclusions of the 
        Secretary in connection with such review, together with 
        an explanation for any adjustment, or lack of 
        adjustment, of any threshold amount or denomination by 
        the Secretary as a result of such review, including the 
        adjustment for inflation.

           *       *       *       *       *       *       *


                                  
