article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Money Laundering Abatement Act of 1999''. SEC. 2. FINDINGS AND PURPOSE. (a) Findings.--Congress makes the following findings: (1) Money laundering is a serious problem that enables criminals to reap the rewards of their crimes by hiding the criminal source of their profits. (2) When carried out by using banks, money laundering erodes the integrity of our financial institutions. (3) United States financial institutions are a critical link in our efforts to combat money laundering. (4) In addition to organized crime enterprises, corrupt government officials around the world increasingly employ sophisticated money laundering schemes to conceal wealth they have plundered or extorted from their nations or received as bribes, and these practices weaken the legitimacy of foreign states, threaten the integrity of international financial markets, and harm foreign populations. (5) Private banking is a growing activity among financial institutions based in and operating in the United States. (6) The high profitability, competition, high level of secrecy, and close relationships of trust developed between private bankers and their clients make private banking vulnerable to money laundering. (7) The use by United States bankers of financial centers located outside of the United States that have weak financial regulatory and reporting regimes and no transparency facilitates global money laundering. (b) Purpose.--The purpose of this Act is to eliminate the weaknesses in Federal law that allow money laundering to flourish, particularly in private banking activities. SEC. 3. IDENTIFICATION OF ACTUAL OR BENEFICIAL OWNERS OF ACCOUNTS. (a) Transactions and Accounts With or on Behalf of Foreign Entities.--Subchapter II of chapter 53 of title 31, United States Code, is amended by adding at the end the following: ``Sec. 5331. Requirements relating to transactions and accounts with or on behalf of foreign entities ``(a) Definitions.--Notwithstanding any other provision of this subchapter, in this section the following definitions shall apply: ``(1) Account.--The term `account'-- ``(A) means a formal banking or business relationship established to provide regular services, dealings, and other financial transactions; and ``(B) includes a demand deposit, savings deposit, or other asset account and a credit account or other extension of credit. ``(2) Correspondent account.--The term `correspondent account' means an account established to receive deposits from and make payments on behalf of a correspondent bank. ``(3) Correspondent bank.--The term `correspondent bank' means a depository institution that accepts deposits from another financial institution and provides services on behalf of such other financial institution. ``(4) Depository institution.--The term `depository institution' has the same meaning as in section 19(b)(1)(A) of the Federal Reserve Act. ``(5) Foreign banking institution.--The term `foreign banking institution' means a foreign entity that engages in the business of banking, and includes foreign commercial banks, foreign merchant banks, and other foreign institutions that engage in banking activities usual in connection with the business of banking in the countries where they are organized or operating. ``(6) Foreign entity.--The term `foreign entity' means an entity that is not organized under the laws of the Federal Government of the United States, any State of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. ``(b) Prohibition on Opening or Maintaining Accounts Belonging to or for the Benefit of Unidentified Owners.--A depository institution or a branch of a foreign bank (as defined in section 1 of the International Banking Act of 1978) may not open or maintain any account in the United States for a foreign entity or a representative of a foreign entity, unless-- ``(1) for each such account, the institution completes and maintains in the United States a form or record identifying, by a verifiable name and account number, each person having a direct or beneficial ownership interest in the account; or ``(2) some or all of the shares of the foreign entity are publicly traded. ``(c) Prohibition on Opening or Maintaining Correspondent Accounts or Correspondent Bank Relationship With Certain Foreign Banks.--A depository institution, or branch of a foreign bank, as defined in section 1 of the International Banking Act of 1978, may not open or maintain a correspondent account in the United States for or on behalf of a foreign banking institution, or establish or maintain a correspondent bank relationship with a foreign banking institution (other than in the case of an affiliate of a branch of a foreign bank), that-- ``(1) is organized under the laws of a jurisdiction outside of the United States; and ``(2) is not subject to comprehensive supervision or regulation on a consolidated basis by the appropriate authorities in such jurisdiction. ``(d) 48-Hour Rule.--Not later than 48 hours after receiving a request by the appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act) for information related to anti-money laundering compliance by a financial institution or a customer of that institution, a financial institution shall provide to the requesting agency, or make available at a location specified by the representative of the agency, information and account documentation for any account opened, maintained, or managed in the United States by the financial institution.''. (b) Technical and Conforming Amendment.--The table of sections for subchapter II of chapter 53 of title 31, United States Code, is amended by inserting after the item relating to section 5330 the following: ``5331. Requirements relating to transactions and accounts with or on behalf of foreign entities.''. (c) Effective Date.--The amendments made by this section shall apply-- (1) with respect to any account opened on or after the date of enactment of this Act, as of such date; and (2) with respect to any account opened before the date of enactment of this Act, as of the end of the 6-month period beginning on such date. SEC. 4. PROPER MAINTENANCE OF CONCENTRATION ACCOUNTS AT FINANCIAL INSTITUTIONS. Section 5318(h) of title 31, United States Code, is amended by adding at the end the following: ``(3) Availability of certain account information.--The Secretary shall prescribe regulations under this subsection that govern maintenance of concentration accounts by financial institutions, in order to ensure that such accounts are not used to prevent association of the identity of an individual customer with the movement of funds of which the customer is the direct or beneficial owner, which regulations shall, at a minimum-- ``(A) prohibit financial institutions from allowing clients to direct transactions that move their funds into, out of, or through the concentration accounts of the financial institution; ``(B) prohibit financial institutions and their employees from informing customers of the existence of, or means of identifying, the concentration accounts of the institution; and ``(C) require each financial institution to establish written procedures governing the documentation of all transactions involving a concentration account, which procedures shall ensure that, any time a transaction involving a concentration account commingles funds belonging to 1 or more customers, the identity of, and specific amount belonging to, each customer is documented.''. SEC. 5. DUE DILIGENCE REQUIRED FOR PRIVATE BANKING. The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by inserting after section 10 the following: ``SEC. 5A. DUE DILIGENCE. ``(a) Private Banking.--In fulfillment of its anti-money laundering obligations under section 5318(h) of title 31, United States Code, each depository institution that engages in private banking shall establish due diligence procedures for opening and reviewing, on an ongoing basis, accounts of private banking customers. ``(b) Minimum Standards.--The due diligence procedures required by paragraph (1) shall, at a minimum, ensure that the depository institution knows and verifies, through probative documentation, the identity and financial background of each private banking customer of the institution and obtains sufficient information about the source of funds of the customer to meet the anti-money laundering obligations of the institution. ``(c) Compliance Review.--The appropriate Federal banking agencies shall review compliance with the requirements of this section as part of each examination of a depository institution under this Act. ``(d) Regulations.--The Board of Governors of the Federal Reserve System shall, after consultation with the other appropriate Federal banking agencies, define the term `private banking' by regulation for purposes of this section.''. SEC. 6. SUPPLEMENTATION OF CRIMES CONSTITUTING MONEY LAUNDERING. Section 1956(c)(7)(B) of title 18, United States Code, is amended-- (1) by striking clause (ii) and inserting the following: ``(ii) any conduct constituting a crime of violence;''; and (2) by adding at the end the following: ``(iv) fraud, or any scheme to defraud, committed against a foreign government or foreign governmental entity under the laws of that government or entity; ``(v) bribery of a foreign public official, or the misappropriation, theft, or embezzlement of public funds by or for the benefit of a foreign public official under the laws of the country in which the subject conduct occurred or in which the public official holds office; ``(vi) smuggling or export control violations involving munitions listed in the United States Munitions List or technologies with military applications, as defined in the Commerce Control List of the Export Administration Regulations; ``(vii) an offense with respect to which the United States would be obligated by a multilateral treaty either to extradite the alleged offender or to submit the case for prosecution, if the offender were found within the territory of the United States; or ``(viii) the misuse of funds of, or provided by, the International Monetary Fund in contravention of the Articles of Agreement of the Fund or the misuse of funds of, or provided by, any other international financial institution (as defined in section 1701(c)(2) of the International Financial Institutions Act) in contravention of any international treaty or other international agreement to which the United States is a party, including any articles of agreement of the members of such international financial institution;''. SEC. 7. PROHIBITION ON FALSE STATEMENTS TO FINANCIAL INSTITUTIONS CONCERNING THE IDENTITY OF A CUSTOMER. (a) In General.--Chapter 47 of title 18, United States Code (relating to fraud and false statements), is amended by inserting after section 1007 the following: ``Sec. 1008. False statements concerning the identity of customers of financial institutions ``(a) In General.--Whoever knowingly in any manner-- ``(1) falsifies, conceals, or covers up, or attempts to falsify, conceal, or cover up, the identity of any person in connection with any transaction with a financial institution; ``(2) makes, or attempts to make, any materially false, fraudulent, or fictitious statement or representation of the identity of any person in connection with a transaction with a financial institution; ``(3) makes or uses, or attempts to make or use, any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry concerning the identity of any person in connection with a transaction with a financial institution; or ``(4) uses or presents, or attempts to use or present, in connection with a transaction with a financial institution, an identification document or means of identification the possession of which is a violation of section 1028; shall be fined under this title, imprisoned not more than 5 years, or both. ``(b) Definitions.--In this section: ``(1) Financial institution.--In addition to the meaning given to the term `financial institution' by section 20, the term `financial institution' also has the meaning given to such term in section 5312(a)(2) of title 31. ``(2) Identification document and means of identification.--The terms `identification document' and `means of identification' have the meanings given to such terms in section 1028(d).''. (b) Technical and Conforming Amendments.-- (1) Title 18, united states code.--Section 1956(c)(7)(D) of title 18, United States Code, is amended by striking ``1014 (relating to fraudulent loan'' and inserting ``section 1008 (relating to false statements concerning the identity of customers of financial institutions), section 1014 (relating to fraudulent loan''. (2) Table of sections.--The table of sections for chapter 47 of title 18, United States Code, is amended by inserting after the item relating to section 1007 the following: ``1008. False statements concerning the identity of customers of financial institutions.''. SEC. 8. APPROPRIATION FOR FINCEN TO IMPLEMENT SAR/CTR ALERT DATABASE. There is authorized to be appropriated $1,000,000, to remain available until expended, for the Financial Crimes Enforcement Network of the Department of the Treasury to implement an automated database that will alert law enforcement officials if Currency Transaction Reports or Suspicious Activity Reports disclose patterns that may indicate illegal activity, including any instance in which multiple Currency Transaction Reports or Suspicious Activity Reports name the same individual within a prescribed period of time. SEC. 9. LONG-ARM JURISDICTION OVER FOREIGN MONEY LAUNDERERS. Section 1956(b) of title 18, United States Code, is amended-- (1) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively; (2) by inserting ``(1)'' after ``(b)''; (3) by inserting ``, or section 1957'' after ``or (a)(3)''; and (4) by adding at the end the following: ``(2) For purposes of adjudicating an action filed or enforcing a penalty ordered under this section, the district courts shall have jurisdiction over any foreign person, including any financial institution authorized under the laws of a foreign country, that commits an offense under subsection (a) involving a financial transaction that occurs in whole or in part in the United States, if service of process upon such foreign person is made under the Federal Rules of Civil Procedure or the laws of the country in which the foreign person is found. ``(3) The court may issue a pretrial restraining order or take any other action necessary to ensure that any bank account or other property held by the defendant in the United States is available to satisfy a judgment under this section.''. SEC. 10. LAUNDERING MONEY THROUGH A FOREIGN BANK. Section 1956(c)(6) of title 18, United States Code, is amended to read as follows: ``(6) the term `financial institution' includes-- ``(A) any financial institution described in section 5312(a)(2) of title 31, or the regulations promulgated thereunder; and ``(B) any foreign bank, as defined in section 1(b)(7) of the International Banking Act of 1978 (12 U.S.C. 3101(7)).''. SEC. 11. EFFECTIVE DATE. Except as otherwise specifically provided in this Act, this Act and the amendments made by this Act shall take effect 90 days after the date of enactment of this Act.
summary: (Sec. 3) Requires a financial institution to comply within 48 hours with a Federal banking agency request for anti- money laundering information. (Sec. 4) Instructs the Secretary of the Treasury to prescribe regulations governing maintenance of concentration accounts by financial institutions to ensure that such accounts are not used to prevent association of the identity of an individual customer with the movement of funds of which the customer is the direct or beneficial owner. (Sec. 5) Amends the Federal Deposit Insurance Act to require each depository institution engaging in private banking to establish due diligence procedures for ongoing review of private banking customer accounts. (Sec. 6) Amends Federal criminal law to: (1) expand the designations of unlawful laundering of monetary instruments; (2) impose a fine and imprisonment for false statements to financial institutions concerning the identity of a customer; and (3) grant district courts jurisdiction over any foreign person that commits a financial transaction offense in the United States, including court issuance of a pretrial restraining order. (Sec. 8) Authorizes appropriations for the Financial Crimes Enforcement Network of the Department of the Treasury to implement an automated database to alert law enforcement officials if Currency Transaction Reports or Suspicious Activity Reports disclose patterns of illegal activity, including multiple Currency Transaction Reports or Suspicious Activity Reports which name the same individual within a prescribed period of time.