ILLICIT CASH Act

II 116TH CONGRESS 1ST SESSION S. 2563 To improve laws relating to money laundering, and for other purposes. IN THE SENATE OF THE UNITED STATES SEPTEMBER 26, 2019 Mr. WARNER (for himself, Mr. COTTON, Mr. JONES, Mr. ROUNDS, Mr. MENENDEZ, Mr. KENNEDY, Ms. CORTEZ MASTO, and Mr. MORAN) intro- duced the following bill; which was read twice and referred to the Com- mittee on Banking, Housing, and Urban Affairs A BILL To improve laws relating to money laundering, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Improving Laundering Laws and Increasing Comprehen- 5 sive Information Tracking of Criminal Activity in Shell 6 Holdings Act’’ or the ‘‘ILLICIT CASH Act’’. 7 (b) TABLE OF CONTENTS.—The table of contents for 8 this Act is as follows: 9 Sec. 1. Short title; table of contents. Sec. 2. Findings and purposes. VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2563 IS Sec. 3. Definitions. Sec. 4. Sense of Congress. TITLE I—ANTI-MONEY LAUNDERING PROGRAMS AND THE FINANCIAL CRIMES ENFORCEMENT NETWORK Sec. 101. Establishment of national exam and supervision priorities. Sec. 102. FinCEN compensation. Sec. 103. Subcommittee on Innovation; investigator research hub. Sec. 104. Establishment of FinCEN financial institution liaison. Sec. 105. Interagency AML-CFT personnel rotation program. Sec. 106. Subcommittee on Privacy and Civil Liberties. Sec. 107. International coordination. Sec. 108. Strengthening FinCEN. TITLE II—IMPROVING AML-CFT COMMUNICATION, OVERSIGHT, AND PROCESSES Sec. 201. Annual reporting requirements. Sec. 202. Law enforcement feedback on suspicious activity reports. Sec. 203. Streamlining requirements for currency transaction reports and sus- picious activity reports. Sec. 204. Currency transaction report and suspicious activity report thresholds review. Sec. 205. Review of regulations and guidance. Sec. 206. Penalty coordination. Sec. 207. Cooperation with law enforcement. Sec. 208. Additional damages for repeat Bank Secrecy Act violators. Sec. 209. Encouraging information sharing and public-private partnerships. TITLE III—MODERNIZATION OF AML/CFT SYSTEM Sec. 301. Approved systems for identifying suspicious activities. Sec. 302. Financial crimes tech symposium. Sec. 303. Deidentified AML information. Sec. 304. No action letters. Sec. 305. OECD pilot program on sharing of suspicious activity reports within a financial group. Sec. 306. Foreign evidentiary requests. Sec. 307. Updating whistleblower incentives and protection. Sec. 308. Value that substitutes currency or funds. Sec. 309. Fight illicit networks and detect trafficking. Sec. 310. Study and strategy on Chinese money laundering. Sec. 311. Financial technology task force. Sec. 312. Study on the efforts of authoritarian regimes to exploit the financial system of the United States. Sec. 313. Additional studies. TITLE IV—BENEFICIAL OWNERSHIP DISCLOSURE REQUIREMENTS Sec. 401. Beneficial ownership. Sec. 402. Geographic targeting order. VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2563 IS Sec. 403. Beneficial ownership studies. TITLE V—STRENGTHENING THE ABILITY OF THE SECURITIES AND EXCHANGE COMMISSION TO PURSUE VIOLATIONS OF THE SECURITIES LAWS Sec. 501. Short title. Sec. 502. Investigations and prosecutions of violations of the securities laws. SEC. 2. FINDINGS AND PURPOSES. 1 (a) FINDINGS.—Congress finds the following: 2 (1) The practice known as bank de-risking, 3 whereby financial institutions avoid rather than 4 manage anti-money-laundering and countering-the- 5 financing-of-terrorism sanctions compliance risk, has 6 negatively impacted the ability of nonprofit organiza- 7 tions to conduct lifesaving activities around the 8 globe. 9 (2) Two-thirds of nonprofit organizations based 10 in the United States with international activities 11 face difficulties with financial access, most com- 12 monly the inability to send funds internationally 13 through transparent, regulated financial channels. 14 (3) Without access to timely and predictable 15 banking services, nonprofit organizations cannot 16 carry out essential humanitarian activities that lit- 17 erally can mean life or death to affected commu- 18 nities. 19 (4) De-risking ultimately drives money into less 20 transparent channels through carrying of cash or 21 use of unlicensed or unregistered money service re- 22 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2563 IS mitters, thus reducing transparency and traceability, 1 which are critical for financial integrity, and in- 2 creases the risk of money falling into the wrong 3 hands. 4 (5) Federal agencies must work to address de- 5 risking through establishment of guidance enabling 6 financial institutions to bank nonprofit organizations 7 and promoting focused and proportionate measures 8 consistent with a risk-based approach. 9 (6) The Federal Government should work coop- 10 eratively with other donor states to promote a multi- 11 stakeholder approach to risk-sharing among govern- 12 ments, financial institutions, and nonprofit organiza- 13 tions. 14 (b) PURPOSES.—The purposes of this Act are— 15 (1) to improve coordination among the agencies 16 tasked with administering anti-money-laundering 17 and countering-the-financing-of-terrorism require- 18 ments, the agencies that examine financial institu- 19 tions for compliance with those requirements, Fed- 20 eral law enforcement agencies, the intelligence com- 21 munity, and financial institutions; 22 (2) to establish beneficial ownership reporting 23 requirements to improve transparency concerning 24 corporate structures and insight into the flow of il- 25 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 2563 IS licit funds through such structures, discourage the 1 use of shell corporations as a tool to disguise illicit 2 funds, assist law enforcement with the pursuit of se- 3 rious crimes, and protect the national security of the 4 United States; 5 (3) to modernize anti-money-laundering and 6 counter-financing-of-terrorism laws to adapt the gov- 7 ernment and private sector response to new threats; 8 (4) to encourage technological innovation and 9 the adoption of new technology by financial institu- 10 tions to more effectively counter money laundering 11 and terrorist financing; and 12 (5) to reinforce that the anti-money-laundering 13 and countering-the-financing-of-terrorism policies, 14 procedures, and controls of financial institutions 15 shall be risk-based. 16 SEC. 3. DEFINITIONS. 17 In this Act: 18 (1) BANK SECRECY ACT.—The term ‘‘Bank Se- 19 crecy Act’’ means— 20 (A) section 21 of the Federal Deposit In- 21 surance Act (12 U.S.C. 1829b); 22 (B) chapter 2 of title I of Public Law 91– 23 508 (12 U.S.C. 1951 et seq.); and 24 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 2563 IS (C) subchapter II of chapter 53 of title 31, 1 United States Code. 2 (2) FEDERAL FUNCTIONAL REGULATOR.—The 3 term ‘‘Federal functional regulator’’ has the mean- 4 ing given the term in section 509 of the Gramm- 5 Leach-Bliley Act (15 U.S.C. 6809). 6 (3) FINCEN.—The term ‘‘FinCEN’’ means the 7 Financial Crimes Enforcement Network of the De- 8 partment of the Treasury. 9 (4) FINANCIAL INSTITUTION.—The term ‘‘fi- 10 nancial institution’’ has the meaning given the term 11 in section 5312 of title 31, United States Code. 12 (5) SECRETARY.—The term ‘‘Secretary’’ means 13 Secretary of the Treasury. 14 (6) STATE BANK SUPERVISOR.—The term 15 ‘‘State bank supervisor’’ has the meaning given the 16 term in section 3 of the Federal Deposit Insurance 17 Act (12 U.S.C. 1813). 18 SEC. 4. SENSE OF CONGRESS. 19 It is the sense of Congress that providing vital hu- 20 manitarian and development assistance and protecting the 21 integrity of the international financial system are com- 22 plementary goals. As such, Congress supports the fol- 23 lowing: 24 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 2563 IS (1) Effective measures to stop the flow of illicit 1 funds and that promote the goals of anti-money 2 laundering and countering the financing of terrorism 3 and sanctions regimes. 4 (2) Anti-money laundering and countering the 5 financing of terrorism and sanctions policies that do 6 not hinder or delay the efforts of legitimate humani- 7 tarian organizations in providing assistance to— 8 (A) meet the needs of civilians facing hu- 9 manitarian crisis, including access to food, 10 health and medical care, shelter, and clean 11 drinking water; and 12 (B) prevent or alleviate human suffering, 13 in keeping with requirements of international 14 humanitarian law. 15 (3) Policies that ensure that incidental, inad- 16 vertent benefits that may indirectly benefit a des- 17 ignated group in the course of delivering life-saving 18 aid to civilian populations, are not the focus of the 19 Federal Government enforcement efforts. 20 (4) All laws, regulations, policies, guidance and 21 other measures that ensure the integrity of the fi- 22 nancial system through a risk-based approach. 23 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 2563 IS TITLE I—ANTI-MONEY LAUN- 1 DERING PROGRAMS AND THE 2 FINANCIAL CRIMES EN- 3 FORCEMENT NETWORK 4 SEC. 101. ESTABLISHMENT OF NATIONAL EXAM AND SU- 5 PERVISION PRIORITIES. 6 (a) DECLARATION OF PURPOSE.—Subchapter II of 7 chapter 53 of title 31, United States Code, is amended 8 by striking section 5311 and inserting the following: 9 ‘‘§ 5311. Declaration of purpose 10 ‘‘It is the purpose of this subchapter (except section 11 5315) to— 12 ‘‘(1) prevent the laundering of money and the 13 financing of terrorism through the establishment by 14 financial institutions of reasonably designed risk- 15 based programs to combat money laundering and 16 terrorist financing; 17 ‘‘(2) facilitate the tracking of money that has 18 been sourced through criminal activity or is intended 19 to promote criminal or terrorist activity; 20 ‘‘(3) protect the integrity of the financial sys- 21 tem and the security of the United States; 22 ‘‘(4) establish appropriate frameworks for infor- 23 mation sharing among financial institutions, their 24 agent and service providers, their regulatory authori- 25 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 2563 IS ties, associations of financial institutions, the Finan- 1 cial Crimes Enforcement Network, and law enforce- 2 ment authorities to identify, stop, and apprehend 3 money launderers and those who finance terrorists; 4 and 5 ‘‘(5) require certain reports or records where 6 they have a high degree of usefulness in criminal, 7 tax, or regulatory investigations or proceedings, or 8 in the conduct of intelligence or counterintelligence 9 activities, including analysis, to protect against ter- 10 rorism.’’. 11 (b) ANTI-MONEY LAUNDERING PROGRAMS.—Section 12 5318 of title 31, United States Code, is amended— 13 (1) in subsection (a)(1), by striking ‘‘subsection 14 (b)(2)’’ and inserting ‘‘subsections (b)(2) and 15 (h)(4)’’; and 16 (2) in subsection (h)— 17 (A) in paragraph (1)— 18 (i) by inserting ‘‘and terrorist financ- 19 ing’’ after ‘‘money laundering’’; and 20 (ii) by inserting ‘‘and combating the 21 financing of terrorism’’ after ‘‘anti-money 22 laundering’’; 23 (B) in paragraph (2)— 24 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 2563 IS (i) by striking ‘‘The Secretary’’ and 1 inserting the following: 2 ‘‘(A) IN GENERAL.—The Secretary’’; and 3 (ii) by adding at the end the fol- 4 lowing: 5 ‘‘(B) FACTORS.—In establishing rules, reg- 6 ulations and guidance under subparagraph (A), 7 and in supervising and examining compliance 8 with those rules, the Secretary of the Treasury, 9 and the Federal functional regulators (as de- 10 fined in section 509 of the Gramm-Leach-Bliley 11 Act (12 U.S.C. 6809)) shall take into account 12 the following: 13 ‘‘(i) Financial institutions are spend- 14 ing private dollars for a public and private 15 benefit. 16 ‘‘(ii) The extension of financial serv- 17 ices to the underbanked in the United 18 States and abroad is a policy goal of the 19 United States. 20 ‘‘(iii) Effective anti-money-laundering 21 and combating-the-financing-of-terrorism 22 programs generate significant public bene- 23 fits by preventing the flow of illicit funds 24 in the financial system and by assisting 25 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 2563 IS law enforcement with the identification and 1 prosecution of persons attempting to laun- 2 der money and other illicit activity through 3 the financial system. 4 ‘‘(iv) Anti-money-laundering and com- 5 bating-the-financing-of-terrorism programs 6 described in paragraph (1) should be rea- 7 sonably designed to assure and monitor 8 compliance with the requirements of this 9 subchapter and regulations issued here- 10 under, which should be risk based, includ- 11 ing that more financial institution atten- 12 tion and resources should be directed to- 13 ward higher risk customers and activities, 14 consistent with the risk profile of a finan- 15 cial institution, rather than lower risk cus- 16 tomers and activities.’’; and 17 (C) by adding at the end the following: 18 ‘‘(4) PRIORITIES.— 19 ‘‘(A) IN GENERAL.—Not later than 270 20 days after the date of enactment of this para- 21 graph, the Secretary of the Treasury, in con- 22 sultation with the Attorney General, Federal 23 functional regulators (as defined in section 509 24 of the Gramm-Leach-Bliley Act (12 U.S.C. 25 VerDate Sep 11 2014 22:35 Sep 29, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2563.IS S2563 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 2563 IS 6809)), relevant State fina [Text truncated for display. 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