2 November 1998
Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html

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[DOCID: f:h1756eh.txt]
105th CONGRESS

  2d Session

                               H. R. 1756

_______________________________________________________________________

                                 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.



105th CONGRESS
  2d Session
                                H. R. 1756

_______________________________________________________________________

                                 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.

    Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    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' means an
        offense under subchapter II of this chapter, chapter II of
        title I of Public Law 91-508 (12 U.S.C. 1951, et seq.; commonly
        referred to as the `Bank Secrecy Act'), or section 1956, 1957,
        or 1960 of title 18 or any related Federal, State, or local
        criminal offense.
            ``(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.

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

``Sec. 5341. National money laundering and related financial crimes
              strategy
    ``(a) 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) 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.
            ``(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 1st 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;
            ``(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 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
        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) 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 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 1 eligible applicant that
                represents that community.
                    ``(B) Exception.--The Secretary may make a grant to
                more than 1 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.
``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 1st 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 2 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:

    ``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 and Recommendations.--Before the end of the 5-year
period beginning on the date the 1st 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.

            Passed the House of Representatives October 5, 1998.

            Attest:

                                                                 Clerk.
