[House Report 118-317]
[From the U.S. Government Publishing Office]


118th Congress }                                          { REPORT 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-317

======================================================================
 
                     FINANCIAL PRIVACY ACT OF 2023

                                _______
                                

 December 13, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 5485]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 5485) to require the Secretary of the Treasury 
to provide for greater transparency and protections with regard 
to Bank Secrecy Act reports, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends 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 ``Financial Privacy Act of 2023''.

SEC. 2. FINDINGS.

  The Congress finds the following:
          (1) Pursuant to the Bank Secrecy Act (``BSA''), the Secretary 
        of the Treasury, acting through the Financial Crimes 
        Enforcement Network (``FinCEN''), collects millions of reports 
        annually on the economic activity of ordinary Americans.
          (2) Since 2001, FinCEN has applied the BSA to collect over 
        322,000,000 Currency Transaction Reports and more than 
        36,000,000 Suspicious Activity Reports, as well as nearly 
        5,000,000 Form 8300 Reports. In addition, FinCEN expects to 
        amass beneficial ownership information (``BOI'') from 
        32,000,000 companies in its initial year of collection, plus 
        5,000,000 additional companies implicated each year thereafter.
          (3) The mass of reporting collected by FinCEN suggests that, 
        while certain BSA reports might prove useful to combat illicit 
        finance, the bulk of BSA-related data may possess little to no 
        nexus to legitimate law enforcement or intelligence purposes, 
        even as it encompasses highly sensitive details on the everyday 
        lives of Americans.
          (4) By law, the Secretary of the Treasury must ensure the 
        security and confidentiality of BSA data. In a Notice of 
        Proposed Rulemaking from December 2022, FinCEN acknowledged 
        that ``BOI is highly sensitive information. FinCEN therefore 
        views it as critical to mitigate the risk of unauthorized 
        disclosure of BOI as much as possible.''.

SEC. 3. REPORTS TO CONGRESS; REVIEW OF PROTOCOLS FOR AGENCY ACCESS TO 
                    REPORTS.

  (a) In General.--Chapter 53 of title 31, United States Code, is 
amended--
          (1) in subchapter II, by inserting after section 5326 the 
        following:

``Sec. 5327. Reports to Congress; Review of protocols for agency access 
                    to reports

  ``(a) Reports to Congress.--Not later than 180 days following the 
date of the enactment of this section, and annually thereafter, 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 the 
following:
          ``(1) The number of reports, by type, filed each year with 
        the Financial Crimes Enforcement Network (`FinCEN') under this 
        subchapter since January 1, 2022.
          ``(2) The total number of reports filed under this subchapter 
        retained by FinCEN.
          ``(3) A description of any written protocols or guidance from 
        the Secretary to national security, law enforcement, or 
        intelligence agencies regarding agency access to, and retention 
        or dissemination of, information held by FinCEN from reports 
        filed under this subchapter, including--
                  ``(A) a description of any updates to the protocols 
                or guidance during the reporting period;
                  ``(B) the number of queries by such agencies to 
                access the information during the reporting period; and
                  ``(C) any denials of requests for, or revocations of, 
                access by a national security, law enforcement, or 
                intelligence agency, or by any employee thereof, with a 
                description of the reasons for the denial or 
                revocation, as the case may be.
  ``(b) Review and Revision of Protocols.--In consultation with the 
Director of National Intelligence and the Attorney General, the 
Secretary of the Treasury shall annually review and, as appropriate, 
revise any written protocols or guidance described under subsection (a) 
for the purposes of--
          ``(1) better tailoring the collection, retention, and 
        dissemination of information filed under this subchapter to 
        authorized national security, law enforcement, or intelligence 
        objectives;
          ``(2) enforcing prohibitions against unauthorized disclosure 
        of such information; and
          ``(3) protecting fully the legal rights of all United States 
        persons, including freedoms, civil liberties, and privacy 
        rights guaranteed by Federal law.
  ``(c) Congressional Requests; Notice of Changes.--
          ``(1) Requests for information.--Upon request of the chair or 
        ranking member of the Committee on Financial Services of the 
        House of Representatives or the Committee on Banking, Housing, 
        and Urban Affairs of the Senate, the Secretary shall provide a 
        copy of any written protocols or guidance described in 
        subsection (a)(3).
          ``(2) Notice of changes.--Not later than 30 days after 
        revising any written protocols or guidance described in 
        subsection (a)(3), the Secretary shall provide a copy of such 
        revised written protocols or guidance to the Committee on 
        Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the 
        Senate.''; and
          (2) in the table of contents for such chapter, by inserting 
        after the item relating to section 5326 the following:

``5327. Reports to Congress; Review of protocols for agency access to 
reports.''.

  (b) Sunset.--On the date that is the end of the 7-year period 
beginning on the date of enactment of this Act--
          (1) section 5327 of title 31, United States Code, is 
        repealed; and
          (2) the table of contents for chapter 53 of title 31, United 
        States Code, is amended by striking the item relating to 
        section 5327.

                          Purpose and Summary

    Introduced on September 14, 2023, by Representative French 
Hill, H.R. 5485, the Financial Privacy Act of 2023, would 
require an annual report to Congress on data collected and 
retained by the Secretary of the Department of the Treasury 
under the Bank Secrecy Act (BSA). The bill would further 
require the Secretary to report on protocols governing the 
retention and dissemination of this data, as well as notify 
Congress of any updates to the protocols. Finally, it would 
require an annual review of the protocols by the Secretary.

                  Background and Need for Legislation

    Under legal provisions collectively referred to as the BSA, 
the Financial Crimes Enforcement Network (FinCEN) requires 
financial institutions and other businesses to submit reports 
that may assist the Treasury Department's anti-money 
laundering/combatting the financing of terrorism (AML/CFT) 
efforts. These reports include suspicious activity reports 
(SARs) and currency transaction reports (CTRs). It will also 
include beneficial reporting data as mandated by the Corporate 
Transparency Act beginning in January 2024.
    Since 2001, FinCEN has collected more than 350 million SARs 
and CTRs. Each day, FinCEN receives approximately 55,000 BSA 
records. It expects to receive beneficial ownership information 
from 32 million companies in its initial year of implementation 
in addition to the current BSA records.
    On August 31, 2023, Treasury's Office of Inspector General 
(IG) issued an audit of FinCEN's ``suppression'' process. This 
process is supposed to restrict access to inaccurate, 
duplicative, or sensitive data. According to the IG, ``FinCEN 
did not: (1) timely process and adequately document the 
disposition of suppression requests, to include notifying 
requesters in writing; and (2) ensure that bulk data recipients 
removed suppressed records from their respective 
databases.''\1\
---------------------------------------------------------------------------
    \1\Office of Inspector General, Department of the Treasury. (2023) 
Audit of FinCEN's Management of BSA Data--Suppression Report. (OIG-23-
030) https://oig.treasury.gov/sites/oig/files/2023-09/OIG-23-030.pdf
---------------------------------------------------------------------------
    The August IG audit is the first in a series of reports 
examining FinCEN's BSA data management. These reports are 
expected to be similarly critical of FinCEN's processes and 
procedures. The Financial Privacy Act will allow for stronger 
oversight of FinCEN procedures and inform Congress of the scope 
of data collection under the BSA.

                                Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 5485: The Subcommittee on 
National Security, Illicit Finance, and International Financial 
Institutions of the Committee on Financial Services held a 
hearing on April 27, 2023, titled ``Oversight of the Financial 
Crimes Enforcement Network (FinCEN) and the Office of Terrorism 
and Financial Intelligence (TFI)''.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
September 20, 2023, and ordered H.R. 5485 to be reported 
favorably to the House as amended by a recorded vote of 47 ayes 
to 0 nays (Record vote no. FC-100), a quorum being present. 
Before the question was called to order the bill favorably 
reported, 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 order to report legislation and amendments thereto. H.R. 
5485 was ordered reported favorably to the House as amended by 
a recorded vote of 47 ayes to 0 nays (Record vote no. FC-100), 
a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c) 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

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 5485 is to require 
an annual report to Congress on data collected and retained by 
the Secretary of the Treasury under the BSA. The bill would 
further require the Secretary to report on protocols governing 
the retention and dissemination of this data, as well as notify 
Congress of any updates to the protocols.

                 Congressional Budget Office Estimates

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

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    Pursuant to 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 of 
1973.

                       Federal Mandates Statement

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

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

                         Earmark Identification

    Pursuant 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

    Pursuant to 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 a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This Act may be cited as the ``Financial Privacy Act of 
2023''.

Section 2. Findings

    The Congress finds:
          (1) The Financial Crimes Enforcement Network (FinCEN) 
        collects millions of reports annually on the economic 
        activity of ordinary Americans through the Bank Secrecy 
        Act (BSA).
          (2) Since 2001, FinCEN has collected over 322,000,000 
        Currency Transaction Reports, and 5,000,000 Form 8300 
        Reports. In addition, FinCEN expects to collect 
        beneficial ownership information (BOI) from 32,000,000 
        companies in its initial year of collection, and an 
        additional 5,000,000 per year thereafter.
          (3) The bulk of data collected by FinCEN possesses 
        little or no nexus to legitimate law enforcement or 
        intelligence purposes yet encompasses highly sensitive 
        details of citizens.
          (4) The Secretary of the Treasury must ensure the 
        security and confidentiality of data collected. FinCEN 
        has acknowledged that BOI is highly sensitive 
        information.

Section 3. Reports to Congress; Review of protocols for agency access 
        to reports

    Section 3 requires an annual report to Congress on data 
collected and retained by the Secretary of the Treasury under 
the Bank Secrecy Act. In addition, it requires the Secretary to 
report on protocols governing the retention and dissemination 
of this data, as well as notify Congress of any updates to the 
protocols. It requires an annual review of the protocols by the 
Secretary, including for the purpose of safeguarding civil 
liberties and privacy rights.

         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 italics, 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 II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS

     * * * * * * *
5327. Reports to Congress; Review of protocols for agency access to 
          reports.

           *       *       *       *       *       *       *


SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS

           *       *       *       *       *       *       *


Sec. 5327. Reports to Congress; Review of protocols for agency access 
                    to reports

  (a) Reports to Congress.--Not later than 180 days following 
the date of the enactment of this section, and annually 
thereafter, 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 the following:
          (1) The number of reports, by type, filed each year 
        with the Financial Crimes Enforcement Network 
        (``FinCEN'') under this subchapter since January 1, 
        2022.
          (2) The total number of reports filed under this 
        subchapter retained by FinCEN.
          (3) A description of any written protocols or 
        guidance from the Secretary to national security, law 
        enforcement, or intelligence agencies regarding agency 
        access to, and retention or dissemination of, 
        information held by FinCEN from reports filed under 
        this subchapter, including--
                  (A) a description of any updates to the 
                protocols or guidance during the reporting 
                period;
                  (B) the number of queries by such agencies to 
                access the information during the reporting 
                period; and
                  (C) any denials of requests for, or 
                revocations of, access by a national security, 
                law enforcement, or intelligence agency, or by 
                any employee thereof, with a description of the 
                reasons for the denial or revocation, as the 
                case may be.
  (b) Review and Revision of Protocols.--In consultation with 
the Director of National Intelligence and the Attorney General, 
the Secretary of the Treasury shall annually review and, as 
appropriate, revise any written protocols or guidance described 
under subsection (a) for the purposes of--
          (1) better tailoring the collection, retention, and 
        dissemination of information filed under this 
        subchapter to authorized national security, law 
        enforcement, or intelligence objectives;
          (2) enforcing prohibitions against unauthorized 
        disclosure of such information; and
          (3) protecting fully the legal rights of all United 
        States persons, including freedoms, civil liberties, 
        and privacy rights guaranteed by Federal law.
  (c) Congressional Requests; Notice of Changes.--
          (1) Requests for information.--Upon request of the 
        chair or ranking member of the Committee on Financial 
        Services of the House of Representatives or the 
        Committee on Banking, Housing, and Urban Affairs of the 
        Senate, the Secretary shall provide a copy of any 
        written protocols or guidance described in subsection 
        (a)(3).
          (2) Notice of changes.--Not later than 30 days after 
        revising any written protocols or guidance described in 
        subsection (a)(3), the Secretary shall provide a copy 
        of such revised written protocols or guidance to the 
        Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate.

[Section 3(a) of H.R. 5485 (as reported) provides for 
amendments to add a new section 5327 after section 5326 (shown 
above in italic typeface) and conforms the table of contents 
for chapter 53 by inserting a new item relating to section 
5327. Subsection (b) of such section states ``On the date that 
is the end of the 7-year period beginning on the date of 
enactment of this Act, section 5327 is repealed'' and also 
strikes the item relating to section 5327 in the table of 
contents. Upon such date, section 5327 (as so added) is 
repealed as follows:]

[Sec. 5327. Reports to Congress; Review of protocols for agency access 
                    to reports

  [(a) Reports to Congress.--Not later than 180 days following 
the date of the enactment of this section, and annually 
thereafter, 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 the following:
          [(1) The number of reports, by type, filed each year 
        with the Financial Crimes Enforcement Network 
        (``FinCEN'') under this subchapter since January 1, 
        2022.
          [(2) The total number of reports filed under this 
        subchapter retained by FinCEN.
          [(3) A description of any written protocols or 
        guidance from the Secretary to national security, law 
        enforcement, or intelligence agencies regarding agency 
        access to, and retention or dissemination of, 
        information held by FinCEN from reports filed under 
        this subchapter, including--
                  [(A) a description of any updates to the 
                protocols or guidance during the reporting 
                period;
                  [(B) the number of queries by such agencies 
                to access the information during the reporting 
                period; and
                  [(C) any denials of requests for, or 
                revocations of, access by a national security, 
                law enforcement, or intelligence agency, or by 
                any employee thereof, with a description of the 
                reasons for the denial or revocation, as the 
                case may be.
  [(b) Review and Revision of Protocols.--In consultation with 
the Director of National Intelligence and the Attorney General, 
the Secretary of the Treasury shall annually review and, as 
appropriate, revise any written protocols or guidance described 
under subsection (a) for the purposes of--
          [(1) better tailoring the collection, retention, and 
        dissemination of information filed under this 
        subchapter to authorized national security, law 
        enforcement, or intelligence objectives;
          [(2) enforcing prohibitions against unauthorized 
        disclosure of such information; and
          [(3) protecting fully the legal rights of all United 
        States persons, including freedoms, civil liberties, 
        and privacy rights guaranteed by Federal law.
  [(c) Congressional Requests; Notice of Changes.--
          [(1) Requests for information.--Upon request of the 
        chair or ranking member of the Committee on Financial 
        Services of the House of Representatives or the 
        Committee on Banking, Housing, and Urban Affairs of the 
        Senate, the Secretary shall provide a copy of any 
        written protocols or guidance described in subsection 
        (a)(3).
          [(2) Notice of changes.--Not later than 30 days after 
        revising any written protocols or guidance described in 
        subsection (a)(3), the Secretary shall provide a copy 
        of such revised written protocols or guidance to the 
        Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate.]

           *       *       *       *       *       *       *


                                  [all]