[House Report 115-780]
[From the U.S. Government Publishing Office]


115th Congress     }                                {          Report
                        HOUSE OF REPRESENTATIVES
 2d Session        }                                {         115-780

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



 
     COOPERATE WITH LAW ENFORCEMENT AGENCIES AND WATCH ACT OF 2018

                                _______
                                

 June 25, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 5783]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 5783) to provide a safe harbor for financial 
institutions that maintain a customer account at the request of 
a Federal or State law enforcement agency, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.
    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 ``Cooperate with Law Enforcement 
Agencies and Watch Act of 2018.

SEC. 2. SAFE HARBOR WITH RESPECT TO KEEP OPEN LETTERS.

  (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. Safe harbor with respect to keep open letters

  ``(a) In General.--With respect to a customer account of a financial 
institution, if a Federal, State, Tribal, or local law enforcement 
agency requests, in writing, the financial institution to keep such 
account open--
          ``(1) the financial institution shall not be liable under 
        this subchapter for maintaining such account consistent with 
        the parameters of the request; and
          ``(2) no Federal or State department or agency may take any 
        adverse supervisory action under this subchapter with respect 
        to the financial institution for maintaining such account 
        consistent with the parameters of the request.
  ``(b) Rule of Construction.--Nothing in this section may be 
construed--
          ``(1) from preventing a Federal or State department or agency 
        from verifying the validity of a written request described 
        under subsection (a) with the Federal, State, Tribal, or local 
        law enforcement agency making the written request; or
          ``(2) to relieve a financial institution from complying with 
        any reporting requirements, including the reporting of 
        suspicious transactions under section 5318(g).
  ``(c) Letter Termination Date.--For purposes of this section, any 
written request described under subsection (a) shall include a 
termination date after which such request shall no longer apply.
  (b) Clerical Amendment.--The table of contents for chapter 53 of 
title 31, United States Code, is amended by inserting after the item 
relating to section 5332 the following:

``5333. Safe harbor with respect to keep open letters.

                          Purpose and Summary

    On May 11, 2018, Representative French Hill introduced H.R. 
5783, the ``Cooperate with Law Enforcement Agencies and Watch 
Act''. H.R. 5783 amends Subchapter II of chapter 53 of title 
31, United States Code, to provide a safe harbor to financial 
institutions that keep an account open at the written request 
of a federal, state, tribal, or law enforcement agency for 
investigatory purposes. The legislation directs that no federal 
department or agency may take an adverse supervisory action 
with respect to the financial institution for keeping such an 
account open.

                  Background and Need for Legislation

    The goal of H.R. 5783 is to support law enforcement by 
allowing banks to maintain accounts without fear of being 
penalized under the Bank Secrecy Act. This bill provides a safe 
harbor to banks to maintain an account at the written request 
of law enforcement, so authorities may monitor transactions and 
build stronger cases against money launderers, terrorist 
financiers, human traffickers, and any number of other illicit 
actors moving money through our financial system.
    Sometimes financial institutions receive notices from law 
enforcement agencies, known as ``keep open'' letters. These 
``keep open'' letters request that the institution keep an 
account open so that they can track payments and better monitor 
potential criminal activities. Such requests could come from 
the Federal Bureau of Investigation, the Drug Enforcement 
Administration, Department of Homeland Security, Treasury's 
Financial Crimes Enforcement Network (FinCEN), local police, or 
any other law enforcement agency.
    If banks help law enforcement and comply with the ``keep 
open'' letter request, they face the risk of enforcement 
actions, as well as fines and penalties from the banking or 
other regulators if they allow an account to be used for 
criminal purposes. Law enforcement agencies are supposed to 
provide a written notice to the financial institution that they 
requested that the account be kept open, but that is currently 
not guaranteed. This situation has put financial institutions 
in a difficult position between wanting to help law 
enforcement, while also adhering to demands from the prudential 
regulators.
    H.R. 5783 will provide financial institutions with the 
legal certainty they need to both comply with requests from law 
enforcement and simultaneously fulfill their obligations to 
comply with all applicable banking laws and regulations.

                                Hearings

    The Committee on Financial Services did not hold a hearing 
examining matters relating to H.R. 5783.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 6, 2018, and ordered H.R. 5783 to be reported favorably to 
the House as amended by a recorded vote of 55 yeas to 0 nays 
(recorded vote no. FC-180), a quorum being present. Before the 
motion to report was offered, the Committee adopted an 
amendment in the nature of a substitute offered by Mr. Hill by 
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. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House as amended. The motion 
was agreed to by a recorded vote of 55 yeas to 0 nays (Record 
vote no. FC-180), a quorum being present.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    The Committee has not received an estimate of new budget 
authority contained in the cost estimate prepared by the 
Director of the Congressional Budget Office pursuant to Sec. 
402 of the Congressional Budget Act of 1974. In compliance with 
clause 3(c)(2) of rule XIII of the Rules of the House, the 
Committee opines that H.R. 5783 will not establish any new 
budget or entitlement authority or create any tax expenditures.

                 Congressional Budget Office Estimates

    The cost estimate prepared by the Director of the 
Congressional Budget Office pursuant to Sec. 402 of the 
Congressional Budget Act of 1974 was not submitted timely to 
the Committee.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      Advisory Committee Statement

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

                  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 the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 5783 as the ``Cooperate with Law 
Enforcement Agencies and Watch Act.''

Section 2. Safe Harbor with Respect to Keep Open Letters

    Amends Subchapter II of chapter 53 of title 31, United 
States Code, by adding Section 5333, titled ``Safe Harbor with 
Respect to Keep Open Letters.''
    A financial institution may keep a customer account open if 
a Federal, State, Tribal, or local law enforcement agency 
requests, in writing, that the financial institution keep the 
account open. A financial institution shall not be held liable 
for maintaining the account consistent with the parameters of 
the request. No Federal or State department or agency may take 
any adverse supervisory action against the financial 
institution for maintaining the account consistent with the 
parameters of the request.
    A Federal or State department or agency is not prevented 
from verifying the validity of a written request with the 
Federal, State, Tribal, or Local law enforcement agency making 
the written request. A financial institution is not relieved 
from complying with any reporting requirements, including the 
reporting of suspicious activity reports under section 5318(g).
    Any written request from law enforcement shall include a 
termination date after which the request will no longer apply.

         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, and existing law in which no 
change is proposed is shown in roman):

         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 (new matter is 
printed in italic and 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 I--CREDIT AND MONETARY EXPANSION

Sec.
5301. Buying obligations of the United States Government.

 SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS

     * * * * * * *
5333. Safe harbor with respect to keep open letters.

           *       *       *       *       *       *       *


SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS

           *       *       *       *       *       *       *


Sec. 5333. Safe harbor with respect to keep open letters

  (a) In General.--With respect to a customer account of a 
financial institution, if a Federal, State, Tribal, or local 
law enforcement agency requests, in writing, the financial 
institution to keep such account open--
          (1) the financial institution shall not be liable 
        under this subchapter for maintaining such account 
        consistent with the parameters of the request; and
          (2) no Federal or State department or agency may take 
        any adverse supervisory action under this subchapter 
        with respect to the financial institution for 
        maintaining such account consistent with the parameters 
        of the request.
  (b) Rule of Construction.--Nothing in this section may be 
construed--
          (1) from preventing a Federal or State department or 
        agency from verifying the validity of a written request 
        described under subsection (a) with the Federal, State, 
        Tribal, or local law enforcement agency making the 
        written request; or
          (2) to relieve a financial institution from complying 
        with any reporting requirements, including the 
        reporting of suspicious transactions under section 
        5318(g).
  (c) Letter Termination Date.--For purposes of this section, 
any written request described under subsection (a) shall 
include a termination date after which such request shall no 
longer apply.

           *       *       *       *       *       *       *


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