[105th Congress Public Law 310]
[From the U.S. Government Printing Office]


<DOC>
[DOCID: f:publ310.105]


[[Page 112 STAT. 2941]]

Public Law 105-310
105th Congress

                                 An Act


 
  To amend chapter 53 of title 31, United States Code, to require the 
  development and implementation by the Secretary of the Treasury of a 
   national money laundering and related financial crimes strategy to 
  combat money laundering and related financial crimes, and for other 
            purposes. <<NOTE: Oct. 30, 1998 -  [H.R. 1756]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Money Laundering and 
Financial Crimes Strategy Act of 1998.>> assembled,

SECTION 1. <<NOTE:  31 USC 5301 note.>> SHORT TITLE.
31 USC 
5301 note.

    This Act may be cited as the ``Money Laundering and Financial Crimes 
Strategy Act of 1998''.

SEC. 2. MONEY LAUNDERING AND RELATED FINANCIAL CRIMES.

    (a) In General.--Chapter 53 of title 31, United States Code is 
amended by adding at the end the following new subchapter:

     ``SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

``Sec. 5340. Definitions

    ``For purposes of this subchapter, the following definitions shall 
apply:
            ``(1) Department of the treasury law enforcement 
        organizations.--The term `Department of the Treasury law 
        enforcement organizations' has the meaning given to such term in 
        section 9703(p)(1).
            ``(2) Money laundering and related financial crime.--The 
        term `money laundering and related financial crime'--
                    ``(A) means the movement of illicit cash or cash 
                equivalent proceeds into, out of, or through the United 
                States, or into, out of, or through United States 
                financial institutions, as defined in section 5312 of 
                title 31, United States Code; or
                    ``(B) has the meaning given that term (or the term 
                used for an equivalent offense) under State and local 
                criminal statutes pertaining to the movement of illicit 
                cash or cash equivalent proceeds.
            ``(3) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(4) Attorney general.--The term `Attorney General' means 
        the Attorney General of the United States.

[[Page 112 STAT. 2942]]

    ``Part 1--National Money Laundering and Related Financial Crimes 
                                Strategy

``Sec. 5341. National money laundering and related financial crimes 
                        strategy

    ``(a) <<NOTE: President.>>  Development and Transmittal to 
Congress.--
            ``(1) Development.--The President, acting through the 
        Secretary and in consultation with the Attorney General, shall 
        develop a national strategy for combating money laundering and 
        related financial crimes.
            ``(2) Transmittal to congress.--By February 1 of 1999, 2000, 
        2001, 2002, and 2003, the President shall submit a national 
        strategy developed in accordance with paragraph (1) to the 
        Congress.
            ``(3) Separate presentation of classified material.--Any 
        part of the strategy that involves information which is properly 
        classified under criteria established by Executive Order shall 
        be submitted to the Congress separately in classified form.

    ``(b) Development of Strategy.--The national strategy for combating 
money laundering and related financial crimes shall address any area the 
President, acting through the Secretary and in consultation with the 
Attorney General, considers appropriate, including the following:
            ``(1) Goals, objectives, and priorities.--Comprehensive, 
        research-based goals, objectives, and priorities for reducing 
        money laundering and related financial crime in the United 
        States.
            ``(2) Prevention.--Coordination of regulatory and other 
        efforts to prevent the exploitation of financial systems in the 
        United States for money laundering and related financial crimes, 
        including a requirement that the Secretary shall--
                    ``(A) <<NOTE: Regulations.>> regularly review 
                enforcement efforts under this subchapter and other 
                provisions of law and, when appropriate, modify existing 
                regulations or prescribe new regulations for purposes of 
                preventing such criminal activity; and
                    ``(B) coordinate prevention efforts and other 
                enforcement action with the Board of Governors of the 
                Federal Reserve System, the Securities and Exchange 
                Commission, the Federal Trade Commission, other Federal 
                banking agencies, the National Credit Union 
                Administration Board, and such other Federal agencies as 
                the Secretary, in consultation with the Attorney 
                General, determines to be appropriate.
            ``(3) Detection and prosecution initiatives.--A description 
        of operational initiatives to improve detection and prosecution 
        of money laundering and related financial crimes and the seizure 
        and forfeiture of proceeds and instrumentalities derived from 
        such crimes.
            ``(4) Enhancement of the role of the private financial 
        sector in prevention.--The enhancement of partnerships between 
        the private financial sector and law enforcement agencies with 
        regard to the prevention and detection of money laundering and 
        related financial crimes, including providing incentives to 
        strengthen internal controls and to adopt on an industrywide 
        basis more effective policies.

[[Page 112 STAT. 2943]]

            ``(5) Enhancement of intergovernmental cooperation.--The 
        enhancement of--
                    ``(A) cooperative efforts between the Federal 
                Government and State and local officials, including 
                State and local prosecutors and other law enforcement 
                officials; and
                    ``(B) cooperative efforts among the several States 
                and between State and local officials, including State 
                and local prosecutors and other law enforcement 
                officials,
        for financial crimes control which could be utilized or should 
        be encouraged.
            ``(6) Project and budget priorities.--A 3-year projection 
        for program and budget priorities and achievable projects for 
        reductions in financial crimes.
            ``(7) Assessment of funding.--A complete assessment of how 
        the proposed budget is intended to implement the strategy and 
        whether the funding levels contained in the proposed budget are 
        sufficient to implement the strategy.
            ``(8) Designated areas.--A description of geographical areas 
        designated as `high-risk money laundering and related financial 
        crime areas' in accordance with, but not limited to, section 
        5342.
            ``(9) Persons consulted.--Persons or officers consulted by 
        the Secretary pursuant to subsection (d).
            ``(10) Data regarding trends in money laundering and related 
        financial crimes.--The need for additional information necessary 
        for the purpose of developing and analyzing data in order to 
        ascertain financial crime trends.
            ``(11) Improved communications systems.--A plan for 
        enhancing the compatibility of automated information and 
        facilitating access of the Federal Government and State and 
        local governments to timely, accurate, and complete information.

    ``(c) Effectiveness Report.--At the time each national strategy for 
combating financial crimes is transmitted by the President to the 
Congress (other than the first transmission of any such strategy) 
pursuant to subsection (a), the Secretary shall submit a report 
containing an evaluation of the effectiveness of policies to combat 
money laundering and related financial crimes.
    ``(d) Consultations.--In addition to the consultations required 
under this section with the Attorney General, in developing the national 
strategy for combating money laundering and related financial crimes, 
the Secretary shall consult with--
            ``(1) the Board of Governors of the Federal Reserve System 
        and other Federal banking agencies and the National Credit Union 
        Administration Board;
            ``(2) State and local officials, including State and local 
        prosecutors;
            ``(3) the Securities and Exchange Commission;
            ``(4) the Commodities and Futures Trading Commission;
            ``(5) the Director of the Office of National Drug Control 
        Policy, with respect to money laundering and related financial 
        crimes involving the proceeds of drug trafficking;
            ``(6) the Chief of the United States Postal Inspection 
        Service;
            ``(7) to the extent appropriate, State and local officials 
        responsible for financial institution and financial market 
        regulation;

[[Page 112 STAT. 2944]]

            ``(8) any other State or local government authority, to the 
        extent appropriate;
            ``(9) any other Federal Government authority or 
        instrumentality, to the extent appropriate; and
            ``(10) representatives of the private financial services 
        sector, to the extent appropriate.

``Sec. 5342. High-risk money laundering and related financial crime 
                        areas

    ``(a) Findings and Purpose.--
            ``(1) Findings.--The Congress finds the following:
                    ``(A) Money laundering and related financial crimes 
                frequently appear to be concentrated in particular 
                geographic areas, financial systems, industry sectors, 
                or financial institutions.
                    ``(B) While the Secretary has the responsibility to 
                act with regard to Federal offenses which are being 
                committed in a particular locality or are directed at a 
                single institution, because modern financial systems and 
                institutions are interconnected to a degree which was 
                not possible until recently, money laundering and other 
                related financial crimes are likely to have local, 
                State, national, and international effects wherever they 
                are committed.
            ``(2) Purpose and objective.--It is the purpose of this 
        section to provide a mechanism for designating any area where 
        money laundering or a related financial crime appears to be 
        occurring at a higher than average rate such that--
                    ``(A) a comprehensive approach to the problem of 
                such crime in such area can be developed, in cooperation 
                with State and local law enforcement agencies, which 
                utilizes the authority of the Secretary to prevent such 
                activity; or
                    ``(B) such area can be targeted for law enforcement 
                action.

    ``(b) Element of National Strategy.--The designation of certain 
areas as areas in which money laundering and related financial crimes 
are extensive or present a substantial risk shall be an element of the 
national strategy developed pursuant to section 5341(b).
    ``(c) Designation of Areas.--
            ``(1) Designation by secretary.--The Secretary, after taking 
        into consideration the factors specified in subsection (d), 
        shall designate any geographical area, industry, sector, or 
        institution in the United States in which money laundering and 
        related financial crimes are extensive or present a substantial 
        risk as a `high-risk money laundering and related financial 
        crimes area'.
            ``(2) Case-by-case determination in consultation with the 
        attorney general.--In addition to the factors specified in 
        subsection (d), any designation of any area under paragraph (1) 
        shall be made on the basis of a determination by the Secretary, 
        in consultation with the Attorney General, that the particular 
        area, industry, sector, or institution is being victimized by, 
        or is particularly vulnerable to, money laundering and related 
        financial crimes.
            ``(3) Specific initiatives.--Any head of a department, 
        bureau, or law enforcement agency, including any State or

[[Page 112 STAT. 2945]]

        local prosecutor, involved in the detection, prevention, and 
        suppression of money laundering and related financial crimes and 
        any State or local official or prosecutor may submit--
                    ``(A) a written request for the designation of any 
                area as a high-risk money laundering and related 
                financial crimes area; or
                    ``(B) a written request for funding under section 
                5351 for a specific prevention or enforcement 
                initiative, or to determine the extent of financial 
                criminal activity, in an area.

    ``(d) Factors.--In considering the designation of any area as a 
high-risk money laundering and related financial crimes area, the 
Secretary shall, to the extent appropriate and in consultation with the 
Attorney General, take into account the following factors:
            ``(1) The population of the area.
            ``(2) The number of bank and nonbank financial institution 
        transactions which originate in such area or involve 
        institutions located in such area.
            ``(3) The number of stock or commodities transactions which 
        originate in such area or involve institutions located in such 
        area.
            ``(4) Whether the area is a key transportation hub with any 
        international ports or airports or an extensive highway system.
            ``(5) Whether the area is an international center for 
        banking or commerce.
            ``(6) The extent to which financial crimes and financial 
        crime-related activities in such area are having a harmful 
        impact in other areas of the country.
            ``(7) The number or nature of requests for information or 
        analytical assistance which--
                    ``(A) are made to the analytical component of the 
                Department of the Treasury; and
                    ``(B) originate from law enforcement or regulatory 
                authorities located in such area or involve institutions 
                or businesses located in such area or residents of such 
                area.
            ``(8) The volume or nature of suspicious activity reports 
        originating in the area.
            ``(9) The volume or nature of currency transaction reports 
        or reports of cross-border movements of currency or monetary 
        instruments originating in, or transported through, the area.
            ``(10) Whether, and how often, the area has been the subject 
        of a geographical targeting order.
            ``(11) Observed changes in trends and patterns of money 
        laundering activity.
            ``(12) Unusual patterns, anomalies, growth, or other changes 
        in the volume or nature of core economic statistics or 
        indicators.
            ``(13) Statistics or indicators of unusual or unexplained 
        volumes of cash transactions.
            ``(14) Unusual patterns, anomalies, or changes in the volume 
        or nature of transactions conducted through financial 
        institutions operating within or outside the United States.
            ``(15) The extent to which State and local governments and 
        State and local law enforcement agencies have committed 
        resources to respond to the financial crime problem in the area 
        and the degree to which the commitment of such resources

[[Page 112 STAT. 2946]]

        reflects a determination by such government and agencies to 
        address the problem aggressively.
            ``(16) The extent to which a significant increase in the 
        allocation of Federal resources to combat financial crimes in 
        such area is necessary to provide an adequate State and local 
        response to financial crimes and financial crime-related 
        activities in such area.

       ``Part 2--Financial Crime-Free Communities Support Program

``Sec. 5351. Establishment of financial crime-free communities support 
                        program

    ``(a) Establishment.--The Secretary of the Treasury, in consultation 
with the Attorney General, shall establish a program to support local 
law enforcement efforts in the development and implementation of a 
program for the detection, prevention, and suppression of money 
laundering and related financial crimes.
    ``(b) Program.--In carrying out the program, the Secretary of the 
Treasury, in consultation with the Attorney General, shall--
            ``(1) <<NOTE: Grants.>> make and track grants to grant 
        recipients;
            ``(2) provide for technical assistance and training, data 
        collection, and dissemination of information on state-of-the-art 
        practices that the Secretary determines to be effective in 
        detecting, preventing, and suppressing money laundering and 
        related financial crimes; and
            ``(3) provide for the general administration of the program.

    ``(c) Administration.--The Secretary shall appoint an administrator 
to carry out the program.
    ``(d) Contracting.--The Secretary may employ any necessary staff and 
may enter into contracts or agreements with Federal and State law 
enforcement agencies to delegate authority for the execution of grants 
and for such other activities necessary to carry out this chapter.

``Sec. 5352. Program authorization

    ``(a) Grant Eligibility.--To be eligible to receive an initial grant 
or a renewal grant under this part, a State or local law enforcement 
agency or prosecutor shall meet each of the following criteria:
            ``(1) Application.--The State or local law enforcement 
        agency or prosecutor shall submit an application to the 
        Secretary in accordance with section 5353(a)(2).
            ``(2) Accountability.--The State or local law enforcement 
        agency or prosecutor shall--
                    ``(A) establish a system to measure and report 
                outcomes--
                          ``(i) consistent with common indicators and 
                      evaluation protocols established by the Secretary, 
                      in consultation with the Attorney General; and
                          ``(ii) approved by the Secretary;
                    ``(B) conduct biennial surveys (or incorporate local 
                surveys in existence at the time of the evaluation) to 
                measure the progress and effectiveness of the coalition; 
                and
                    ``(C) provide assurances that the entity conducting 
                an evaluation under this paragraph, or from which the 
                applicant receives information, has experience in 
                gathering

[[Page 112 STAT. 2947]]

                data related to money laundering and related financial 
                crimes.

    ``(b) Grant Amounts.--
            ``(1) Grants.--
                    ``(A) In general.--Subject to subparagraph (D), for 
                a fiscal year, the Secretary of the Treasury, in 
                consultation with the Attorney General, may grant to an 
                eligible applicant under this section for that fiscal 
                year, an amount determined by the Secretary of the 
                Treasury, in consultation with the Attorney General, to 
                be appropriate.
                    ``(B) Suspension of grants.--If such grant recipient 
                fails to continue to meet the criteria specified in 
                subsection (a), the Secretary may suspend the grant, 
                after providing written notice to the grant recipient 
                and an opportunity to appeal.
                    ``(C) Renewal grants.--Subject to subparagraph (D), 
                the Secretary may award a renewal grant to a grant 
                recipient under this subparagraph for each fiscal year 
                following the fiscal year for which an initial grant is 
                awarded.
                    ``(D) Limitation.--The amount of a grant award under 
                this paragraph may not exceed $750,000 for a fiscal 
                year.
            ``(2) Grant awards.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Secretary may, with respect to a 
                community, make a grant to one eligible applicant that 
                represents that community.
                    ``(B) Exception.--The Secretary may make a grant to 
                more than one eligible applicant that represent a 
                community if--
                          ``(i) the eligible coalitions demonstrate that 
                      the coalitions are collaborating with one another; 
                      and
                          ``(ii) each of the coalitions has 
                      independently met the requirements set forth in 
                      subsection (a).

    ``(c) Condition Relating to Proceeds of Asset Forfeitures.--
            ``(1) In general.--No grant may be made or renewed under 
        this part to any State or local law enforcement agency or 
        prosecutor unless the agency or prosecutor agrees to donate to 
        the Secretary of the Treasury for the program established under 
        this part any amount received by such agency or prosecutor 
        (after the grant is made) pursuant to any criminal or civil 
        forfeiture under chapter 46 of title 18, United States Code, or 
        any similar provision of State law.
            ``(2) Scope of application.--Paragraph (1) shall not apply 
        to any amount received by a State or local law enforcement 
        agency or prosecutor pursuant to any criminal or civil 
        forfeiture referred to in such paragraph in excess of the 
        aggregate amount of grants received by such agency or prosecutor 
        under this part.

    ``(d) Rolling Grant Application Periods.--In establishing the 
program under this part, the Secretary shall take such action as may be 
necessary to ensure, to the extent practicable, that--
            ``(1) applications for grants under this part may be filed 
        at any time during a fiscal year; and
            ``(2) some portion of the funds appropriated under this part 
        for any such fiscal year will remain available for grant 
        applications filed later in the fiscal year.

[[Page 112 STAT. 2948]]

``Sec. 5353. Information collection and dissemination with respect to 
                        grant recipients

    ``(a) Applicant and Grantee Information.--
            ``(1) Application process.--The Secretary shall issue 
        requests for proposal, as necessary, regarding, with respect to 
        the grants awarded under section 5352, the application process, 
        grant renewal, and suspension or withholding of renewal grants. 
        Each application under this paragraph shall be in writing and 
        shall be subject to review by the Secretary.
            ``(2) Reporting.--The Secretary shall, to the maximum extent 
        practicable and in a manner consistent with applicable law, 
        minimize reporting requirements by a grant recipient and 
        expedite any application for a renewal grant made under this 
        part.

    ``(b) Activities of Secretary.--The Secretary may--
            ``(1) evaluate the utility of specific initiatives relating 
        to the purposes of the program;
            ``(2) conduct an evaluation of the program; and
            ``(3) disseminate information described in this subsection 
        to--
                    ``(A) eligible State local law enforcement agencies 
                or prosecutors; and
                    ``(B) the general public.

``Sec. 5354. Grants for fighting money laundering and related financial 
                        crimes

    ``(a) In General.-- After the end of the 1-year period beginning on 
the date the first national strategy for combating money laundering and 
related financial crimes is submitted to the Congress in accordance with 
section 5341, and subject to subsection (b), the Secretary may review, 
select, and award grants for State or local law enforcement agencies and 
prosecutors to provide funding necessary to investigate and prosecute 
money laundering and related financial crimes in high-risk money 
laundering and related financial crime areas.
    ``(b) Special Preference.--Special preference shall be given to 
applications submitted to the Secretary which demonstrate collaborative 
efforts of two or more State and local law enforcement agencies or 
prosecutors who have a history of Federal, State, and local cooperative 
law enforcement and prosecutorial efforts in responding to such criminal 
activity.

``Sec. 5355. Authorization of appropriations

    ``There are authorized to be appropriated the following amounts for 
the following fiscal years to carry out the purposes of this subchapter:
``For fiscal year:        The amount authorized is:
    1999..................$5,000,000.
    2000..................$7,500,000.
    2001..................$10,000,000.
    2002..................$12,500,000.
    2003..................$15,000,000.''.

    (b) Clerical Amendment.--The table of subchapters for chapter 53 of 
title 31, United States Code, is amended by adding at the end the 
following item:

[[Page 112 STAT. 2949]]

     ``SUBCHAPTER III--MONEY LAUNDERING AND RELATED FINANCIAL CRIMES

``5340. Definitions.

    ``Part 1--National Money Laundering and Related Financial Crimes 
                                Strategy

``5341. National money laundering and related financial crimes strategy.
``5342. High-risk money laundering and related financial crime areas.

       ``Part 2--Financial Crime-Free Communities Support Program

``5351. Establishment of financial crime-free communities support 
           program.
``5352. Program authorization.
``5353. Information collection and dissemination with respect to grant 
           recipients.
``5354. Grants for fighting money laundering and related financial 
           crimes.
``5355. Authorization of appropriations.''.

    (c) Report <<NOTE: 31 USC 5342 note.>> and Recommendations.--Before 
the end of the 5-year period beginning on the date the first national 
strategy for combating money laundering and related financial crimes is 
submitted to the Congress pursuant to section 5341(a)(1) of title 31, 
United States Code (as added by section 2(a) of this Act), the Secretary 
of the Treasury, in consultation with the Attorney General, shall submit 
a report to the Committee on Banking and Financial Services and the 
Committee on the Judiciary of the House of Representatives and the 
Committee on Banking, Housing, and Urban Affairs and the Committee on 
the Judiciary of the Senate on the effectiveness of and the need for the 
designation of areas, under section 5342 of title 31, United States Code 
(as added by such section 2(a)), as high-risk money laundering and 
related financial crime areas, together with recommendations for such 
legislation as the Secretary and the Attorney General may determine to 
be appropriate to carry out the purposes of such section.

  

    Approved October 30, 1998.

LEGISLATIVE HISTORY--H.R. 1756:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 105-608, Pt. 1 (Comm. on Banking and Financial 
Services).
CONGRESSIONAL RECORD, Vol. 144 (1998):
            Oct. 5, considered and passed House.
            Oct. 15, considered and passed Senate, amended.
            Oct. 16, House concurred in Senate amendment.

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