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