Home > 105th Congressional Bills > H.R. 4005 (ih) To amend title 31 of the United States Code to improve methods for preventing financial crimes, and for other purposes. ...H.R. 4005 (ih) To amend title 31 of the United States Code to improve methods for preventing financial crimes, and for other purposes. ...
105th CONGRESS
2d Session
H. R. 4005
_______________________________________________________________________
AN ACT
To amend titles 18 and 31, United States Code, to improve methods for
preventing money laundering and other financial crimes, and for other
purposes.
105th CONGRESS
2d Session
H. R. 4005
_______________________________________________________________________
AN ACT
To amend titles 18 and 31, United States Code, to improve methods for
preventing money laundering and other financial crimes, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Money Laundering
Deterrence Act of 1998''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Amendments relating to reporting of suspicious activities.
Sec. 4. Expansion of scope of summons power.
Sec. 5. Penalties for violations of geographic targeting orders and
certain recordkeeping requirements.
Sec. 6. Repeal of certain reporting requirements.
Sec. 7. Limited exemption from Paperwork Reduction Act.
Sec. 8. Promulgation of ``know your customer'' regulations.
Sec. 9. Report on private banking activities.
Sec. 10. Availability of certain account information.
Sec. 11. Sense of the Congress.
Sec. 12. Designation of foreign high intensity money laundering areas.
Sec. 13. Doubling of criminal penalties for violations of laws aimed at
preventing money laundering in foreign high
intensity money laundering areas.
Sec. 14. Laundering money through a foreign bank.
Sec. 15. Criminal forfeiture for money laundering conspiracies.
Sec. 16. Charging money laundering as a course of conduct.
Sec. 17. Venue in money laundering cases.
Sec. 18. Technical amendment to restore wiretap authority for certain
money laundering offenses.
Sec. 19. Knowledge that the property is the proceeds of a felony.
Sec. 20. Coverage of foreign bank branches in the territories.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds as follows:
(1) The dollar amount involved in international money
laundering likely exceeds $500,000,000,000 annually.
(2) Organized crime groups are continually devising new
methods to launder the proceeds of illegal activities in an
effort to subvert the transaction reporting requirements of
subchapter II of chapter 53 of title 31, United States Code,
and chapter 2 of Public Law 91-508.
(3) A number of methods to launder the proceeds of criminal
activity were identified and described in congressional
hearings, including the use of financial service providers
which are not depository institutions, such as money
transmitters and check cashing services, the purchase and
resale of durable goods, and the exchange of foreign currency
in the so-called ``black market''.
(4) Recent successes in combating domestic money laundering
have involved the application of the heretofore seldom-used
authority granted to the Secretary of the Treasury and the
cooperative efforts of Federal, State, and local law
enforcement agencies.
(5) Such successes have been exemplified by the
implementation of the geographic targeting order in New York
City and through the work of the El Dorado task force, a group
comprised of agents of Department of the Treasury law
enforcement agencies, New York State troopers, and New York
City police officers.
(6) Money laundering by international criminal enterprises
challenges the legitimate authority of national governments,
corrupts government institutions, endangers the financial and
economic stability of nations, and routinely violates legal
norms, property rights, and human rights. In some countries,
such as Columbia, Mexico, and Russia, the wealth and power of
organized criminal enterprises rivals their own government's.
(7) The structure of international criminal enterprises
engaged in money laundering is complex, diverse, and
fragmented. Organized criminal enterprises such as the
Colombian and Mexican cartels, the Russian ``mafiya'', Sicilian
crime families, and Chinese gangs are highly resistant to
conventional law enforcement techniques. Their financial
management and organizational infrastructure are highly
sophisticated and difficult to track because of the
globalization of the financial service industry.
(b) Purposes.--The purposes of this Act are as follows:
(1) To amend subchapter II of chapter 53 of title 31,
United States Code, to provide the law enforcement community
with the necessary legal authority to combat money laundering.
(2) To expedite the issuance by the Secretary of the
Treasury of regulations designed to deter money laundering
activities at certain types of financial institutions.
SEC. 3. AMENDMENTS RELATING TO REPORTING OF SUSPICIOUS ACTIVITIES.
(a) Amendment Relating to Civil Liability Immunity for
Disclosures.--Section 5318(g)(3) of title 31, United States Code, is
amended to read as follows:
``(3) Liability for disclosures.--
``(A) In general.--Notwithstanding any other
provision of law--
``(i) any financial institution that--
``(I) makes a disclosure of any
possible violation of law or regulation
to an appropriate government agency; or
``(II) makes a disclosure pursuant
to this subsection or any other
authority;
``(ii) any director, officer, employee, or
agent of such institution who makes, or
requires another to make any such disclosure;
and
``(iii) any independent public accountant
who audits any such financial institution and
makes a disclosure described in clause (i),
shall not be liable to any person under any law or
regulation of the United States, any constitution, law,
or regulation of any State or political subdivision
thereof, or under any contract or other legally
enforceable agreement (including any arbitration
agreement), for such disclosure or for any failure to
notify the person who is the subject of such disclosure
or any other person identified in the disclosure.
``(B) Exception.--Subparagraph (A) shall not apply
to a disclosure or communication required under Federal
securities law, other than provisions of law that
specifically refer to the Currency and Foreign
Transactions Reporting Act of 1970.
``(C) Rule of Construction.--Subparagraph (A) shall
not be construed as creating--
``(i) any inference that the term `person',
as used in such subparagraph, may be construed
more broadly than its ordinary usage so to
include any government or agency of government;
or
``(ii) any immunity against, or otherwise
affecting, any civil or criminal action brought
by any government or agency of government to
enforce any constitution, law, or regulation of
such government or agency.''.
(b) Prohibition on Notification of Disclosures.--Section 5318(g)(2)
of title 31, United States Code, is amended to read as follows:
``(2) Notification prohibited.--
``(A) In general.--If a financial institution, any
director, officer, employee, or agent of any financial
institution, or any independent public accountant who
audits any financial institution, voluntarily or
pursuant to this section or any other authority,
reports a suspicious transaction to an appropriate
government agency--
``(i) the financial institution, director,
officer, employee, agent, or accountant may not
notify any person involved in the transaction
that the transaction has been reported and may
not disclose any information included in the
report to any such person; and
``(ii) any other person, including any
officer or employee of any government, who has
any knowledge that such report was made may not
disclose to any person involved in the
transaction that the transaction has been
reported or any information included in the
report.
``(B) Coordination with paragraph (5).--
Subparagraph (A) shall not be construed as prohibiting
any financial institution, or any director, officer,
employee, or agent of such institution, from including,
in a written employment reference that is provided in
accordance with paragraph (5) in response to a request
from another financial institution, information that
was included in a report to which subparagraph (A)
applies, but such written employment reference may not
disclose that such information was also included in any
such report or that such report was made.''.
(c) Authorization To Include Suspicions of Illegal Activity in
Employment References.--Section 5318(g) of title 31, United States
Code, is amended by adding at the end the following new paragraph:
``(5) Employment references may include suspicions of
involvement in illegal activity.--
``(A) In general.--Notwithstanding any other
provision of law and subject to subparagraph (B) of
this paragraph and paragraph (2)(C), any financial
institution, and any director, officer, employee, or
agent of such institution, may disclose, in any written
employment reference relating to a current or former
institution-affiliated party of such institution which
is provided to another financial institution in
response to a request from such other institution,
information concerning the possible involvement of such
institution-affiliated party in any suspicious
transaction relevant to a possible violation of law or
regulation.
``(B) Limit on liability for disclosures.--A
financial institution, and any director, officer,
employee, or agent of such institution, shall not be
liable to any person under any law or regulation of the
United States, any constitution, law, or regulation of
any State or political subdivision thereof, or under
any contract or other legally enforceable agreement
(including any arbitration agreement), for any
disclosure under subparagraph (A), to the extent--
``(i) the disclosure does not contain
information which the institution, director,
officer, employee, agent, or accountant knows
to be false; and
``(ii) the institution, director, officer,
employee, agent, or accountant has not acted
with malice or with reckless disregard for the
truth in making the disclosure.
``(C) Institution-affiliated party defined.--For
purposes of this paragraph, the term `institution-
affiliated party' has the meaning given to such term in
section 3(u) of the Federal Deposit Insurance Act,
except such section 3(u) shall be applied by
substituting `financial institution' for `insured
depository institution'.''.
(d) Amendments Relating to Availability of Suspicious Activity
Reports for Other Agencies.--Section 5319 of title 31, United States
Code, is amended--
(1) in the 1st sentence, by striking ``5314, or 5316'' and
inserting ``5313A, 5314, 5316, or 5318(g)'';
(2) in the last sentence, by inserting ``under section
5313, 5313A, 5314, 5316, or 5318(g)'' after ``records of
reports''; and
(3) by adding the following new sentence after the last
sentence: ``The Secretary of the Treasury may permit the
dissemination of information in any such reports to any self-
regulatory organization (as defined in section 3(a)(26) of the
Securities Exchange Act of 1934), if the Securities and
Exchange Commission determines that such dissemination is
necessary or appropriate to permit such organization to perform
its function under the Securities Exchange Act of 1934 and
regulations prescribed under such Act.''.
SEC. 4. EXPANSION OF SCOPE OF SUMMONS POWER.
Section 5318(b)(1) of title 31, United States Code, is amended by
inserting ``examinations to determine compliance with the requirements
of this subchapter, section 21 of the Federal Deposit Insurance Act,
and chapter 2 of Public Law 91-508 and regulations prescribed pursuant
to such provisions, investigations relating to reports filed by
financial institutions or other persons pursuant to any such provision
or regulation, and'' after ``in connection with''.
SEC. 5. PENALTIES FOR VIOLATIONS OF GEOGRAPHIC TARGETING ORDERS AND
CERTAIN RECORDKEEPING REQUIREMENTS.
(a) Civil Penalty for Violation of Targeting Order or Certain
Recordkeeping Requirements.--Section 5321(a)(1) of title 31, United
States Code, is amended--
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