[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2563 Introduced in Senate (IS)]
<DOC>
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) introduced the
following bill; which was read twice and referred to the Committee 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 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 ``Improving
Laundering Laws and Increasing Comprehensive Information Tracking of
Criminal Activity in Shell Holdings Act'' or the ``ILLICIT CASH Act''.
(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. 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 suspicious 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.
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.
(a) Findings.--Congress finds the following:
(1) The practice known as bank de-risking, whereby
financial institutions avoid rather than manage anti-money-
laundering and countering-the-financing-of-terrorism sanctions
compliance risk, has negatively impacted the ability of
nonprofit organizations to conduct lifesaving activities around
the globe.
(2) Two-thirds of nonprofit organizations based in the
United States with international activities face difficulties
with financial access, most commonly the inability to send
funds internationally through transparent, regulated financial
channels.
(3) Without access to timely and predictable banking
services, nonprofit organizations cannot carry out essential
humanitarian activities that literally can mean life or death
to affected communities.
(4) De-risking ultimately drives money into less
transparent channels through carrying of cash or use of
unlicensed or unregistered money service remitters, thus
reducing transparency and traceability, which are critical for
financial integrity, and increases the risk of money falling
into the wrong hands.
(5) Federal agencies must work to address de-risking
through establishment of guidance enabling financial
institutions to bank nonprofit organizations and promoting
focused and proportionate measures consistent with a risk-based
approach.
(6) The Federal Government should work cooperatively with
other donor states to promote a multi-stakeholder approach to
risk-sharing among governments, financial institutions, and
nonprofit organizations.
(b) Purposes.--The purposes of this Act are--
(1) to improve coordination among the agencies tasked with
administering anti-money-laundering and countering-the-
financing-of-terrorism requirements, the agencies that examine
financial institutions for compliance with those requirements,
Federal law enforcement agencies, the intelligence community,
and financial institutions;
(2) to establish beneficial ownership reporting
requirements to improve transparency concerning corporate
structures and insight into the flow of illicit funds through
such structures, discourage the use of shell corporations as a
tool to disguise illicit funds, assist law enforcement with the
pursuit of serious crimes, and protect the national security of
the United States;
(3) to modernize anti-money-laundering and counter-
financing-of-terrorism laws to adapt the government and private
sector response to new threats;
(4) to encourage technological innovation and the adoption
of new technology by financial institutions to more effectively
counter money laundering and terrorist financing; and
(5) to reinforce that the anti-money-laundering and
countering-the-financing-of-terrorism policies, procedures, and
controls of financial institutions shall be risk-based.
SEC. 3. DEFINITIONS.
In this Act:
(1) Bank secrecy act.--The term ``Bank Secrecy Act''
means--
(A) section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b);
(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
(C) subchapter II of chapter 53 of title 31, United
States Code.
(2) Federal functional regulator.--The term ``Federal
functional regulator'' has the meaning given the term in
section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).
(3) FinCEN.--The term ``FinCEN'' means the Financial Crimes
Enforcement Network of the Department of the Treasury.
(4) Financial institution.--The term ``financial
institution'' has the meaning given the term in section 5312 of
title 31, United States Code.
(5) Secretary.--The term ``Secretary'' means Secretary of
the Treasury.
(6) State bank supervisor.--The term ``State bank
supervisor'' has the meaning given the term in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
SEC. 4. SENSE OF CONGRESS.
It is the sense of Congress that providing vital humanitarian and
development assistance and protecting the integrity of the
international financial system are complementary goals. As such,
Congress supports the following:
(1) Effective measures to stop the flow of illicit funds
and that promote the goals of anti-money laundering and
countering the financing of terrorism and sanctions regimes.
(2) Anti-money laundering and countering the financing of
terrorism and sanctions policies that do not hinder or delay
the efforts of legitimate humanitarian organizations in
providing assistance to--
(A) meet the needs of civilians facing humanitarian
crisis, including access to food, health and medical
care, shelter, and clean drinking water; and
(B) prevent or alleviate human suffering, in
keeping with requirements of international humanitarian
law.
(3) Policies that ensure that incidental, inadvertent
benefits that may indirectly benefit a designated group in the
course of delivering life-saving aid to civilian populations,
are not the focus of the Federal Government enforcement
efforts.
(4) All laws, regulations, policies, guidance and other
measures that ensure the integrity of the financial system
through a risk-based approach.
TITLE I--ANTI-MONEY LAUNDERING PROGRAMS AND THE FINANCIAL CRIMES
ENFORCEMENT NETWORK
SEC. 101. ESTABLISHMENT OF NATIONAL EXAM AND SUPERVISION PRIORITIES.
(a) Declaration of Purpose.--Subchapter II of chapter 53 of title
31, United States Code, is amended by striking section 5311 and
inserting the following:
``Sec. 5311. Declaration of purpose
``It is the purpose of this subchapter (except section 5315) to--
``(1) prevent the laundering of money and the financing of
terrorism through the establishment by financial institutions
of reasonably designed risk-based programs to combat money
laundering and terrorist financing;
``(2) facilitate the tracking of money that has been
sourced through criminal activity or is intended to promote
criminal or terrorist activity;
``(3) protect the integrity of the financial system and the
security of the United States;
``(4) establish appropriate frameworks for information
sharing among financial institutions, their agent and service
providers, their regulatory authorities, associations of
financial institutions, the Financial Crimes Enforcement
Network, and law enforcement authorities to identify, stop, and
apprehend money launderers and those who finance terrorists;
and
``(5) require certain reports or records where they have a
high degree of usefulness in criminal, tax, or regulatory
investigations or proceedings, or in the conduct of
intelligence or counterintelligence activities, including
analysis, to protect against terrorism.''.
(b) Anti-Money Laundering Programs.--Section 5318 of title 31,
United States Code, is amended--
(1) in subsection (a)(1), by striking ``subsection (b)(2)''
and inserting ``subsections (b)(2) and (h)(4)''; and
(2) in subsection (h)--
(A) in paragraph (1)--
(i) by inserting ``and terrorist
financing'' after ``money laundering''; and
(ii) by inserting ``and combating the
financing of terrorism'' after ``anti-money
laundering'';
(B) in paragraph (2)--
(i) by striking ``The Secretary'' and
inserting the following:
``(A) In general.--The Secretary''; and
(ii) by adding at the end the following:
``(B) Factors.--In establishing rules, regulations
and guidance under subparagraph (A), and in supervising
and examining compliance with those rules, the
Secretary of the Treasury, and the Federal functional
regulators (as defined in section 509 of the Gramm-
Leach-Bliley Act (12 U.S.C. 6809)) shall take into
account the following:
``(i) Financial institutions are spending
private dollars for a public and private
benefit.
``(ii) The extension of financial services
to the underbanked in the United States and
abroad is a policy goal of the United States.
``(iii) Effective anti-money-laundering and
combating-the-financing-of-terrorism programs
generate significant public benefits by
preventing the flow of illicit funds in the
financial system and by assisting law
enforcement with the identification and
prosecution of persons attempting to launder
money and other illicit activity through the
financial system.
``(iv) Anti-money-laundering and combating-
the-financing-of-terrorism programs described
in paragraph (1) should be reasonably designed
to assure and monitor compliance with the
requirements of this subchapter and regulations
issued hereunder, which should be risk based,
including that more financial institution
attention and resources should be directed
toward higher risk customers and activities,
consistent with the risk profile of a financial
institution, rather than lower risk customers
and activities.''; and
(C) by adding at the end the following:
``(4) Priorities.--
``(A) In general.--Not later than 270 days after
the date of enactment of this paragraph, the Secretary
of the Treasury, in consultation with the Attorney
General, Federal functional regulators (as defined in
section 509 of the Gramm-Leach-Bliley Act (12 U.S.C.
6809)), relevant State financial regulators, national
security agencies, and the Secretary of Homeland
Security, shall establish and make public priorities
for anti-money laundering and counter terrorist
financing policy.
``(B) Updates.--Once every 4 years, the Secretary
of the Treasury shall, in consultation with the
Attorney General, Federal functional regulators (as
defined in section 509 of the Gramm-Leach-Bliley Act
(12 U.S.C. 6809)), relevant State financial regulators,
national security agencies, and the Secretary of
Homeland Security update the priorities established
under subparagraph (A).
``(C) Relation to national strategy.--The Secretary
of the Treasury shall ensure that the priorities
established under subparagraph (A) are consistent with
the national strategy for combating the financing of
terrorism and related forms of illicit finance
developed under section 261 of the Countering Russian
Influence in Europe and Eurasia Act of 2017 (Public Law
115-44; 131 Stat. 934).
``(D) Rulemaking.--Not later than 120 days after
the establishment of the priorities under subparagraph
(A), the Secretary of the Treasury acting through the
Office of Terrorism and Financial Intelligence, in
consultation with the Federal functional regulators (as
defined in section 509 of the Gramm-Leach-Bliley Act
(12 U.S.C. 6809)), and relevant State financial
regulators, shall issue regulations to carry out this
paragraph.
``(E) Supervision and examination.--The review by a
financial institution of the priorities established
under subparagraph (A) and the incorporation of those
priorities, as appropriate, into the risk-based
programs established by a financial institution to meet
obligations under this subchapter, the USA PATRIOT Act
(Public Law 107-56; 115 Stat. 272), and other anti-
money-laundering and counter-terrorist-financing laws
and regulations shall be included as a measure on which
a financial institution is supervised and examined for
compliance with those obligations.''.
(c) Financial Crimes Enforcement Network.--Section 310(b)(2) of
title 31, United States Code, is amended by adding at the end the
following:
``(K) Promulgate regulations under section
5318(h)(4)(D), to implement the government-wide anti-
money-laundering and counter-terrorist-financing
examination and supervision priorities established by
the Secretary of the Treasury under section
5318(h)(4)(A).
``(L) Communicate regularly with financial
institutions and Federal functional regulators that
examine financial institutions for compliance with
subchapter II of chapter 53 and regulations issued
thereunder and law enforcement authorities to explain
the Government's anti-money-laundering and counter-
terrorist-financing exam and supervision priorities.
``(M) Give and receive feedback to and from
financial institutions and State bank supervisors
regarding the matters addressed in subchapter II of
chapter 53 and regulations issued thereunder.
``(N) Maintain a money laundering and terrorist
financing investigations team comprised of financial
experts capable of identifying, tracking, and tracing
financial crime networks and identifying emerging
threats to conduct and support Federal civil and
criminal investigations.
``(O) Maintain an emerging technology team
comprised of technology experts to encourage the
development of and identify emerging technologies that
can assist the United States Government or financial
institutions counter money laundering and terrorist
financing.''.
SEC. 102. FINCEN COMPENSATION.
Section 310 of title 31, United States Code, is amended--
(1) by redesignating subsection (d) as subsection (h); and
(2) by inserting after subsection (c) the following:
``(d) Employee Compensation.--In fixing the compensation for
employees of FinCEN, the Secretary shall--
``(1) fix such compensation without regard to the
provisions of chapter 51 or subchapter III of chapter 53 of
title 5, United States Code; and
``(2) ensure that such compensation is comparable to the
compensation provided by the Board of Governors of the Federal
Reserve System, the Bureau of Consumer Financial Protection,
the Federal Deposit Insurance Corporation, the National Credit
Union Administration, and the Office of the Comptroller of the
Currency.''.
SEC. 103. SUBCOMMITTEE ON INNOVATION; INVESTIGATOR RESEARCH HUB.
(a) Subcommittee on Innovation.--Section 1564 of the Annunzio-Wylie
Anti-Money Laundering Act (31 U.S.C. 5311 note) is amended by adding at
the end the following:
``(d) Subcommittee on Innovation.--
``(1) In general.--There shall be within the Bank Secrecy
Act Advisory Group a subcommittee to be known as the
`Subcommittee on Innovation' to--
``(A) advise the Secretary of the Treasury
regarding means by which the Department of the
Treasury, FinCEN, and the Federal functional regulators
can most effectively encourage and support
technological innovation in the area of anti-money
laundering; and
``(B) reduce as much as is possible obstacles to
innovation that may arise from existing regulations,
guidance, and examination practices related to
compliance of financial institutions with the Bank
Secrecy Act.
``(2) Membership.--
``(A) In general.--The subcommittee established
under paragraph (1) shall consist of the
representatives of the heads of the Federal functional
regulators, a representative cross-section of financial
institutions subject to the Bank Secrecy Act, law
enforcement, and FinCEN.
``(B) Requirements.--Each agency representative
described in subparagraph (A) shall be an individual
who has demonstrated knowledge and competence
concerning the application of the Bank Secrecy Act.''.
(b) Investigator Research Hub.--Section 310 of title 31, United
States Code, as amended by section 102 of this Act, is amended by
adding after subsection (d) the following:
``(e) Investigative Experts.--
``(1) In general.--FinCEN shall hire and maintain a team of
financial experts capable of identifying, tracking, and tracing
money laundering and terrorist-financing networks in order to
conduct and support civil and criminal anti-money-laundering
and combating-the-financing-of-terrorism investigations
conducted by the United States Government, except that the
Inspector General of the Department of the Treasury shall be
responsible for hiring and maintaining those experts with
respect to audits and inspections of the access and use of data
described in subchapter II of chapter 53.
``(2) Investigative resource hub.--FinCEN shall, upon a
reasonable request from a United States Government agency,
require financial experts to, in collaboration with the
requesting agency, investigate the potential anti-money-
laundering and countering-the-financing-of-terrorism activity
that prompted the request.
``(3) Staffing.--FinCEN shall hire or retain full-time
employees, including trained investigative personnel accorded
criminal authority and experienced with subchapter II of
chapter 53 to perform the functions contemplated by this
subsection, except as provided in paragraph (1).''.
SEC. 104. ESTABLISHMENT OF FINCEN FINANCIAL INSTITUTION LIAISON.
Section 310 of title 31, United States Code, as amended by sections
102 and 103 of this Act, is amended by adding after subsection (e) the
following:
``(f) Office of the Financial Institution Liaison Established.--
There is established within FinCEN the Office of the Financial
Institution Liaison (in this subsection referred to as the `Office').
``(1) In general.--The head of the Office shall be the
Liaison, who shall--
``(A) report directly to the Director; and
``(B) be appointed by the Director, from among
individuals having experience or familiarity with anti-
money-laundering-program examinations, supervision and
enforcement, and prior employment with financial
institutions handling such matters.
``(2) Compensation.--The annual rate of pay for the Liaison
shall be equal to the highest rate of annual pay for other
senior executives who report to the Director.
``(3) Staff of office.--The Liaison, with the concurrence
of the Director, may retain or employ counsel, research staff,
and service staff, as the Liaison deems necessary to carry out
the functions, powers, and duties of the Office.
``(4) Functions of the liaison.--
``(A) In general.--The Liaison shall--
``(i) receive feedback from financial
institutions and bank examiners regarding their
examinations under the Bank Secrecy Act and
communicate that feedback to FinCEN, the
Federal functional regulators, and State bank
supervisors;
``(ii) help promote coordination and
consistency of supervisory guidance from
FinCEN, the Federal functional regulators, and
State bank supervisors regarding the Bank
Secrecy Act;
``(iii) act as a liaison between financial
institutions and their Federal functional
regulators and State bank supervisors with
respect to matters involving the Bank Secrecy
Act and regulations issued thereunder;
``(iv) establish safeguards to maintain the
confidentiality of communications between the
persons described in subparagraph (B) and the
Liaison;
``(v) analyze the potential impact on
financial institutions of proposed regulations
of FinCEN; and
``(vi) to the extent practicable, propose
to FinCEN changes in the regulations, guidance,
or orders of FinCEN and to Congress any
legislative or administrative changes that may
be appropriate to mitigate problems identified
under this paragraph.
``(B) Rule of construction.--Nothing in this
paragraph may be construed to permit the Liaison to
have authority over supervision, examination, or
enforcement processes.
``(5) Access to documents.--FinCEN shall, to the extent
practicable and consistent with appropriate safeguards for
sensitive enforcement-related, pre-decisional, or deliberative
information, ensure that the Liaison has full access to the
documents of FinCEN, as necessary to carry out the functions of
the Office.
``(6) Annual reports.--
``(A) In general.--Not later than June 30 of each
year after 2019, the Liaison shall submit to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the
House of Representatives a report on the objectives of
the Liaison for the following fiscal year and the
activities of the Liaison during the immediately
preceding fiscal year.
``(B) Contents.--Each report required under
subparagraph (A) shall include--
``(i) appropriate statistical information
and full and substantive analysis;
``(ii) information on steps that the
Liaison has taken during the reporting period
to address feedback received by financial
institutions and bank examination personnel
related to examinations under the Bank Secrecy
Act;
``(iii) recommendations for such
administrative and legislative actions as may
be appropriate to resolve problems encountered
by financial institutions or bank examination
personnel; and
``(iv) any other information, as determined
appropriate by the Liaison.
``(C) Sensitive information.--Notwithstanding
subparagraph (D), FinCEN shall review the report listed
in subparagraph (A) to ensure the report does not
disclose sensitive information.
``(D) Independence.--
``(i) In general.--Each report required
under this subsection shall be provided
directly to the Committees listed in
subparagraph (A) without any prior review or
comment from FinCEN, the Director, any Federal
functional regulator, any State bank
supervisor, or the Office of Management and
Budget.
``(ii) Rule of construction.--Nothing in
clause (i) may be construed to preclude FinCEN
or any other department or agency from
reviewing a report required under this
subsection for the sole purpose of protecting--
``(I) sensitive information
obtained by a law enforcement agency;
and
``(II) classified information.
``(E) Classified information.--No report required
under subparagraph (A) may contain classified
information.''.
SEC. 105. INTERAGENCY AML-CFT PERSONNEL ROTATION PROGRAM.
(a) Purpose.--The purpose of this section is to increase the
efficiency and effectiveness of the Federal Government by fostering
greater interagency experience among Federal Government personnel on
anti-money laundering and counter-terrorist financing matters.
(b) Definition.--In this section, the term ``AML-CFT Interagency
Community of Interest'' means a set of positions in the Federal
Government that, as designated by the Secretary, the heads of the
Federal functional regulators, the Attorney General, the Director of
the Federal Bureau of Investigation, the Secretary of Homeland
Security, the Director of National Intelligence, the Secretary of
Defense, and the heads of such other agencies as the Secretary
determines to be appropriate--
(1) spans multiple agencies of the Federal Government;
(2) has significant responsibility for substantive,
functional, or regional subject areas related to combating
money laundering or financing of terrorism and would benefit
from an integrated approach or activities across multiple
agencies; and
(3) includes positions within FinCEN, the Department of the
Treasury, the Department of Justice, the Federal Bureau of
Investigation, the Department of Homeland Security, the
Department of Defense, and, if agreed to by the heads of such
agencies, positions within any Federal functional regulator.
(c) Program Established.--
(1) In general.--Not later than 270 days after the date of
the enactment of this Act, the Secretary and representatives of
the Federal functional regulators, the Department of Justice,
the Federal Bureau of Investigation, the Department of Homeland
Security, the Department of Defense, and such other agencies as
the Secretary determines to be appropriate, shall develop and
issue an AML-CFT personnel strategy providing policies,
processes, and procedures for a program enabling the
interagency rotation of personnel among positions within the
AML-CFT Interagency Community of Interest.
(2) Requirements.--The strategy required by paragraph (1)
shall, at a minimum--
(A) identify a specific AML-CFT Interagency
Community of Interest for the purpose of carrying out
the program;
(B) designate agencies to be included or excluded
from the program;
(C) define categories of positions to be covered by
the program;
(D) establish processes by which the heads of
relevant agencies may identify--
(i) positions within an AML-CFT Interagency
Community of Interest that are available for
rotation under the program; and
(ii) individual employees who are available
to participate in rotational assignments under
the program; and
(E) establish procedures for the program,
including--
(i) any minimum or maximum periods of
service for participation in the program;
(ii) any training and educational
requirements associated with participation in
the program;
(iii) any prerequisites or requirements for
participation in the program; and
(iv) appropriate performance measures,
reporting requirements, and other
accountability devices for the evaluation of
the program.
(d) Program Requirements.--The policies, processes, and procedures
established pursuant to subsection (c) shall, at a minimum, provide
that--
(1) during each of the first 4 fiscal years after the
fiscal year in which this Act is enacted--
(A) the interagency rotation program shall be
carried out in at least 4 agencies participating in the
AML-CFT Interagency Community of Interest; and
(B) not fewer than 20 employees in the Federal
Government shall be assigned to participate in the
interagency personnel rotation program;
(2) the participation of an employee in the interagency
rotation program shall require the consent of the head of the
agency and shall be voluntary on the part of the employee;
(3) employees selected to perform interagency rotational
service are selected in a fully open and competitive manner
that is consistent with the merit system principles set forth
in paragraphs (1) and (2) of section 2301(b) of title 5, United
States Code, unless the AML-CFT Interagency Community of
Interest position is otherwise exempt under another provision
of law;
(4) an employee performing service in a position in another
agency pursuant to the program established under this section
shall be entitled to return, within a reasonable period of time
after the end of the period of service, to the position held by
the employee, or a corresponding or higher position, in the
employing agency of the employee;
(5) an employee performing interagency rotational service
shall have all the rights that would be available to the
employee if the employee were detailed or assigned under a
provision of law other than this section from the agency
employing the employee to the agency in which the position in
which the employee is serving is located; and
(6) an employee participating in the program shall receive
performance evaluations from officials of the employing agency
of the employee that are based on input from the supervisors of
the employee during the service of the employee in the program
that are--
(A) based primarily on the contribution of the
employee to the work of the agency in which the
employee performed the service; and
(B) provided the same weight in the receipt of
promotions and other rewards by the employee from the
employing agency as performance evaluations for service
in the employing agency.
(e) Selection of Individuals To Fill Senior Positions.--The head of
each agency participating in the program established pursuant to
subsection (c) shall ensure that, in selecting individuals to fill
senior positions within the AML-CFT Interagency Community of Interest,
the agency gives a strong preference to individuals who have performed
interagency rotational service within the AML-CFT Interagency Community
of Interest pursuant to such program.
SEC. 106. SUBCOMMITTEE ON PRIVACY AND CIVIL LIBERTIES.
Section 1564 of the Annunzio-Wylie Anti-Money Laundering Act (31
U.S.C. 5311 note), as amended by section 103 of this Act, is amended by
adding at the end the following:
``(e) Subcommittee on Privacy and Civil Liberties.--
``(1) In general.--There shall be within the Bank Secrecy
Act Advisory Group a subcommittee to be known as the
`Subcommittee on Privacy and Civil Liberties', to advise the
Secretary of the Treasury regarding the civil liberties and
privacy implications of regulations, guidance, information
sharing programs, and the examination for compliance with and
enforcement of the provisions of the Bank Secrecy Act.
``(2) Membership.--
``(A) In general.--The subcommittee established
under paragraph (1) shall consist of the
representatives of the heads of the Federal functional
regulators, a representative cross-section of financial
institutions subject to the Bank Secrecy Act, law
enforcement, and FinCEN.
``(B) Requirements.--Each agency representative
described in subparagraph (A) shall be an individual
who has demonstrated knowledge and competence
concerning the application of the Bank Secrecy Act and
familiarity with and expertise in applicable privacy
laws.
``(f) Definitions.--In this section:
``(1) Bank secrecy act.--the term `Bank Secrecy Act' has
the meaning given the term in section 3 of the ILLICIT CASH
Act.
``(2) Federal functional regulator.--The term `Federal
functional regulator' has the meaning given the term in section
509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).
``(3) FinCEN.--The term `FinCEN' means the Financial Crimes
Enforcement Network of the Department of the Treasury.
``(4) Financial institution.--The term `financial
institution' has the meaning given the term in section 5312 of
title 31, United States Code.''.
SEC. 107. INTERNATIONAL COORDINATION.
The Secretary shall work with the foreign counterparts of the
Secretary, including through the Financial Action Task Force, the
International Monetary Fund, the World Bank, and the United Nations, to
promote stronger anti-money laundering frameworks and enforcement of
anti-money laundering laws.
SEC. 108. STRENGTHENING FINCEN.
(a) Findings.--Congress finds the following:
(1) The mission of FinCEN is to safeguard the financial
system from illicit use, combat money laundering, and promote
national security through the collection, analysis, and
dissemination of financial intelligence and strategic use of
financial authorities.
(2) In its mission to safeguard the financial system from
the abuses of financial crime, including terrorist financing,
money laundering, and other illicit activity, the United States
should prioritize working with partners in Federal, State,
local, Tribal, and foreign law enforcement authorities.
(3) The Federal Bureau of Investigation has stated that,
since the terror attacks on September 11, 2001, ``The threat
landscape has expanded considerably, though it is important to
note that the more traditional threat posed by al Qaeda and its
affiliates is still present and active. The threat of domestic
terrorism also remains persistent overall, with actors crossing
the line from First Amendment protected rights to committing
crimes to further their political agenda.''.
(4) Although the use and trading of virtual currencies are
legal practices, some terrorists and criminals, including
international criminal organizations, seek to exploit
vulnerabilities in the global financial system and are
increasingly using emerging payment methods such as virtual
currencies to move illicit funds.
(5) In carrying out its mission, FinCEN should prioritize
all forms of terrorism and emerging methods of terrorism and
illicit finance.
(b) Strengthening FinCEN.--Section 310(b)(2) of title 31, United
States Code, is amended--
(1) in subparagraphs (C), (E), and (F), by inserting
``Tribal,'' after ``local,'' each place the term appears; and
(2) in subparagraph (C)(vi), by striking ``international''.
TITLE II--IMPROVING AML-CFT COMMUNICATION, OVERSIGHT, AND PROCESSES
SEC. 201. ANNUAL REPORTING REQUIREMENTS.
(a) Annual Report.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter, the Attorney General,
in consultation with Federal law enforcement agencies and the Director
of National Intelligence, shall, to the extent practicable at the
discretion of the Attorney General, provide to the Secretary
statistics, metrics, and other information on the use of data derived
from financial institutions reporting under this title, including--
(1) the frequency with which such data contains actionable
information that leads to further law enforcement procedures,
including the use of a subpoena, warrant, or other legal
process, or to actions taken by intelligence, defense, or
homeland security agencies;
(2) calculations of the time between when data is reported
by a financial institution and when it is used by law
enforcement, intelligence, defense, or homeland security
agencies, whether through the use of a subpoena, warrant or
other legal process, or actions;
(3) the value of the transactions associated with such
data, including whether the suspicious accounts were held by
legal entities or natural persons, and whether there are trends
and patterns in cross-border transactions to certain countries;
(4) the number of legal and natural persons identified by
such data;
(5) information on the extent to which arrests,
indictments, convictions, or criminal pleas, civil enforcement
or forfeiture actions, or actions by intelligence, defense, or
homeland security agencies result from the use of such data;
and
(6) data on the investigations carried out by State and
Federal authorities.
(b) Quinquennial Report.--Every 5 years after the date of enactment
of this Act, the report described in subsection (a) shall include a
section describing the use of data derived from financial institution
reporting under this subchapter over the previous 5 years, including
describing long-term trends and providing long-term statistics,
metrics, and other information.
(c) Trends, Patterns, and Threats.--The report described in
subsection (a) and the section described in subsection (b) shall
contain a description of retrospective trends and emerging patterns and
threats in money laundering and terrorist financing, including national
and regional trends, patterns, and threats relevant to such classes of
financial institutions that the Attorney General determines
appropriate.
(d) Use of Report Information.--The Secretary shall use the
information reported under subsections (a), (b), and (c)--
(1) to help assess the usefulness of Bank Secrecy Act
reporting to criminal and civil law enforcement and to
intelligence, defense, and homeland security agencies;
(2) to enhance feedback and communications with financial
institutions and other entities subject to Bank Secrecy Act
requirements, including through providing more detail in the
reports produced under section 314(d) of the USA PATRIOT Act
(31 U.S.C. 5311 note);
(3) to assist FinCEN in considering revisions to the
reporting requirements promulgated under section 314(d) of the
USA PATRIOT Act (31 U.S.C. 5311 note); and
(4) for any other purpose the Secretary determines is
appropriate.
SEC. 202. LAW ENFORCEMENT FEEDBACK ON SUSPICIOUS ACTIVITY REPORTS.
(a) Feedback.--The staff of FinCEN shall, to the extent
practicable, periodically solicit feedback from individuals designated
under section 5318(h)(1) of title 31, United States Code, from a
variety of financial institutions representing a cross-section of the
reporting industry to review the suspicious activity reports filed by
the financial institutions and discuss trends in suspicious activity
observed by FinCEN.
(1) Feedback required.--The staff of FinCEN shall disclose
to the persons designated under section 5318(h)(1) of title 31,
United States Code, what actions have been taken, if any, by
Federal or State criminal or civil law enforcement or by
defense or homeland security agencies with respect to the
suspicious activity reports filed by the financial institution
during the previous period.
(2) Exception for ongoing investigations.--FinCEN shall not
be required to disclose to the financial institution any
information under subsection (a)(1) that could jeopardize an
ongoing investigation or national security.
(3) Maintenance of statistics.--FinCEN shall keep records
of all such actions taken under paragraph (1) to assist with
the production of the reports described in section 201 and for
other purposes.
(b) Coordination With Federal Functional Regulators and State Bank
Supervisors.--Any meeting described in subsection (a) shall be
conducted in the presence of the Federal functional regulators or the
State bank supervisor of the financial institution and, if applicable,
during the regularly scheduled examination of the financial institution
by the Federal functional regulator or State bank supervisor.
(c) Coordination With Department of Justice.--The information
disclosed by FinCEN under subsection (a) shall include information from
the Department of Justice regarding its review and use of suspicious
activity reports filed by the financial institutions during the
previous period and any trends in suspicious activity observed by the
Department of Justice, and such information shall include information
specifically relevant to reports filed by such financial institution in
the previous period and other information tailored to such financial
institution.
SEC. 203. STREAMLINING REQUIREMENTS FOR CURRENCY TRANSACTION REPORTS
AND SUSPICIOUS ACTIVITY REPORTS.
(a) Review.--The Secretary, in consultation with the Attorney
General, Federal law enforcement agencies, the Director of National
Intelligence, the Secretary of Defense, the Secretary of Homeland
Security, the Federal functional regulators, State bank supervisors,
and other relevant stakeholders, shall undertake a formal review of the
current financial institution reporting requirements, including the
processes used to submit reports, under the Bank Secrecy Act,
regulations implementing that Act, and related guidance, and make
changes to them to reduce unnecessarily burdensome regulatory
requirements and ensure that the information provided is highly useful
to law enforcement, intelligence, or national security matters, as set
forth in section 5311 of title 31, United States Code.
(b) Contents.--The review required under subsection (a) shall
include a study of--
(1) whether the circumstances under which a financial
institution determines whether to file a continuing suspicious
activity report, including insider abuse, or the processes
followed by a financial institution in determining whether to
file a continuing suspicious activity report, or both, should
be adjusted;
(2) whether different thresholds should apply to different
categories of activities;
(3) the fields designated as critical on the suspicious
activity report form and whether the number or nature of the
fields should be adjusted;
(4) the categories, types, and characteristics of
suspicious activity reports and currency transaction reports
that are of the greatest value to, and that best support,
investigative priorities of law enforcement and national
security personnel;
(5) the increased use or expansion of exemption provisions
to reduce currency transaction reports that are of little or no
value to law enforcement efforts;
(6) the most appropriate ways to promote financial
inclusion and address the adverse consequences of financial
institutions de-risking entire categories of high-risk
relationships, including charities, embassy accounts, and money
service businesses, as defined in section 1010.100(ff) of title
31, Code of Federal Regulations, and certain groups of
correspondent banks;
(7) the current financial institution reporting
requirements under the Bank Secrecy Act and regulations and
guidance implementing that Act;
(8) whether the process for the electronic submission of
reports could be improved for both financial institutions and
law enforcement, including by allowing greater integration
between financial institution systems and the electronic filing
system to allow for automatic population of report fields and
the automatic submission of transaction data for suspicious
transactions;
(9) the appropriate confidentiality of personal
information;
(10) how to improve the cross-referencing of individuals or
entities operating at multiple financial institutions and
across international borders; and
(11) any other item the Secretary determines is
appropriate.
(c) Public Comment.--The Secretary shall solicit public comment as
part of the review contemplated in subsection (a).
(d) Report.--Not later than the end of the 1-year period beginning
on the date of the enactment of this Act, the Secretary, in
consultation with law enforcement, shall submit to Congress a report
that contains all findings and determinations made in carrying out the
review required under subsection (a) and propose rulemakings to
implement their findings.
SEC. 204. CURRENCY TRANSACTION REPORT AND SUSPICIOUS ACTIVITY REPORT
THRESHOLDS REVIEW.
(a) Review of Thresholds for Certain Currency Transaction and
Suspicious Activity Reports.--The Secretary, in consultation with the
Attorney General and the Director of National Intelligence, the
Secretary of Defense, and the Secretary of Homeland Security, shall
study and determine whether the dollar thresholds, including aggregate
thresholds, contained in sections 5313, 5331, and 5318(g) of title 31,
United States Code, including regulations issued thereunder, should be
adjusted.
(b) Considerations.--In making the determinations described in
subsection (a), the Secretary and the Attorney General shall consider--
(1) the effects on law enforcement, intelligence, defense,
and homeland security, from adjusting the thresholds;
(2) the costs likely to be incurred or saved by financial
institutions;
(3) the conformance of the United States with international
norms and standards to counter money laundering and the
financing of terrorism; and
(4) any other factor the Secretary, Director of National
Intelligence, and the Attorney General considers relevant.
(c) Public Comment.--The Secretary shall solicit public comment as
part of the review contemplated in subsection (a).
(d) Report and Rulemakings.--Not later than the end of the 1-year
period beginning on the date of enactment of this Act, the Secretary,
in consultation with the Attorney General, the intelligence community,
the Secretary of Defense, and the Secretary of Homeland Security, shall
publish a report of the findings from the review described in
subsection (a) and recommend rulemakings to implement the findings.
SEC. 205. REVIEW OF REGULATIONS AND GUIDANCE.
(a) In General.--The Secretary and the Federal functional
regulators, in consultation with Federal financial regulators, the
Federal Financial Institutions Examination Council, the Attorney
General, Federal law enforcement agencies, the Director of National
Intelligence, the Secretary of Defense, the Secretary of Homeland
Security, and the Commissioner of the Internal Revenue Service, shall
each undertake a formal review of the regulations implementing the Bank
Secrecy Act, and guidance related to that Act, to identify those
regulations and guidance that may be outdated, redundant, unnecessarily
burdensome, or otherwise do not promote a risk-based anti-money-
laundering compliance and countering-the-financing-of-terrorism regime
for financial institutions, or that do not conform with the commitments
of the United States to meet international standards to combat money
laundering, financing of terrorism, or tax evasion, and make
appropriate changes to those regulations and guidance.
(b) Public Comment.--The Secretary shall solicit public comment as
part of the review required under subsection (a).
(c) Report.--Not later than the end of the 1-year period beginning
on the date of the enactment of this Act, the Secretary, the Federal
functional regulators, the Federal Financial Institutions Examination
Council, and the Internal Revenue Service shall submit to Congress one
or more reports that contain all findings and determinations made in
carrying out the review required under subsection (a).
SEC. 206. PENALTY COORDINATION.
(a) Coordination on Penalties.--Prior to any Federal functional
regulator, FinCEN, or the Department of Justice, including any
organizational unit thereof, issuing a fine or civil money penalty,
with respect to an entity to address any actual or alleged violation of
any provision of the Bank Secrecy Act or section 8(s) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(s)) or any unsafe or unsound
practice that resulted in any such actual or alleged violation, such
Federal department or agency shall endeavor to coordinate its penalty
with all relevant Federal departments and agencies and State law
enforcement and financial regulators contemplating a penalty with
respect to the same or similar conduct and attempt to develop a
comprehensive or coordinated penalty or set of penalties to avoid
duplicative fines, penalties, and other orders or actions.
(b) Exception.--Subsection (a) shall not apply if--
(1) a Federal or State financial regulator determines that
complying with subsection (a) is impractical for safety or
soundness reasons; or
(2) a Federal law enforcement or a national security agency
determines that complying with subsection (a) is impractical
for Federal law enforcement or national security reasons or for
purposes related to the administration of the Bank Secrecy Act.
(c) Rule of Construction.--Nothing in this section shall be
construed as limiting the amount of a fine or the type of penalty that
may be issued by any Federal or State entity with authority to issue a
fine or penalty.
(d) No Rights.--Nothing in this section provides persons with any
rights or privileges, including a private right of action or an
affirmative defense, and no determination or failure to make a
determination by any Federal entity or officer under this section shall
be reviewable by a court of law.
SEC. 207. COOPERATION WITH LAW ENFORCEMENT.
(a) Safe Harbor With Respect to Keep Open Directives.--
(1) In general.--
(A) Amendment to title 31.--Subchapter II of
chapter 53 of title 31, United States Code, is amended
by adding at the end the following:
``Sec. 5333. Safe harbor with respect to keep open directives
``(a) In General.--With respect to a customer account or customer
transaction of a financial institution, if a Federal, State, Tribal, or
local law enforcement agency requests, in writing, that the financial
institution keep that account or transaction open--
``(1) the financial institution shall not be liable under
this subchapter for maintaining that account or transaction
consistent with the parameters of the request; and
``(2) no Federal or State department or agency may take any
adverse supervisory action under this subchapter with respect
to the financial institution for maintaining that account or
transaction consistent with the parameters of the request.
``(b) Rule of Construction.--Nothing in this section may be
construed--
``(1) to prevent a Federal or State department or agency
from verifying the validity of a written request described in
subsection (a) with the Federal, State, Tribal, or local law
enforcement agency making that written request; or
``(2) to relieve a financial institution from complying
with any reporting requirements, including the reporting of
suspicious transactions under section 5318(g).
``(c) Letter Termination Date.--For the purposes of this section,
any written request described in subsection (a) shall include a
termination date after which that request shall no longer apply.''.
(B) Amendment to public law 91-508.--Chapter 2 of
title I of Public Law 91-508 (12 U.S.C. 1951 et seq.)
is amended by adding at the end the following:
``Sec. 130. Safe harbor with respect to keep open directives
``(a) Definition.--In this section, the term `financial
institution' has the meaning given the term in section 123(b).
``(b) Safe Harbor.--With respect to a customer account or customer
transaction of a financial institution, if a Federal, State, Tribal, or
local law enforcement agency requests, in writing, the financial
institution to keep that account or transaction open--
``(1) the financial institution shall not be liable under
this chapter for maintaining that account or transaction
consistent with the parameters of the request; and
``(2) no Federal or State department or agency may take any
adverse supervisory action under this chapter with respect to
the financial institution for maintaining that account or
transaction consistent with the parameters of the request.
``(c) Rule of Construction.--Nothing in this section may be
construed--
``(1) as preventing a Federal or State department or agency
from verifying the validity of a written request described in
subsection (b) with the Federal, State, Tribal, or local law
enforcement agency making that written request; or
``(2) to relieve a financial institution from complying
with any reporting requirements, including the reporting of
suspicious transactions under section 5318(g) of title 31,
United States Code.
``(d) Letter Termination Date.--For the purposes of this section,
any written request described in subsection (b) shall include a
termination date after which that request shall no longer apply.''.
(2) Clerical amendments.--
(A) Title 31.--The table of contents for chapter 53
of title 31, United States Code, is amended by
inserting after the item relating to section 5332 the
following:
``5333. Safe harbor with respect to keep open directives.''.
(B) Public law 91-508.--The table of contents for
chapter 2 of title I of Public Law 91-508 (12 U.S.C.
1951 et seq.) is amended by adding at the end the
following:
``130. Safe harbor with respect to keep open directives.''.
(b) Determination of Budgetary Effects.--The budgetary effects of
this section, for the purpose of complying with the Statutory Pay-As-
You-Go Act of 2010, shall be determined by reference to the latest
statement titled ``Budgetary Effects of PAYGO Legislation'' for this
Act, submitted for printing in the Congressional Record by the Chairman
of the House Budget Committee, provided that such statement has been
submitted prior to the vote on passage.
SEC. 208. ADDITIONAL DAMAGES FOR REPEAT BANK SECRECY ACT VIOLATORS.
Section 5321 of title 31, United States Code, is amended by adding
at the end the following:
``(f) Additional Damages for Repeat Violators.--In addition to any
other fines permitted by this section and section 5322, with respect to
a person who has previously violated a provision of (or rule issued
under) this subchapter, section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b), or section 123 of Public Law 91-508, the Secretary
of the Treasury may impose an additional civil penalty against such
person for each additional such violation in an amount equal to up to
three times the profit gained or loss avoided by such person as a
result of the violation.''.
SEC. 209. ENCOURAGING INFORMATION SHARING AND PUBLIC-PRIVATE
PARTNERSHIPS.
(a) In General.--FinCEN shall convene a supervisory team of
relevant Federal agencies, private sector experts in banking, national
security and law enforcement, and other stakeholders as FinCEN deems
appropriate to examine strategies to increase public-private sector
cooperation for purposes of countering proliferation finance and
sanctions evasion.
(b) Meetings.--The supervisory team shall meet periodically to
advise on strategies to combat proliferation financing risk.
TITLE III--MODERNIZATION OF AML/CFT SYSTEM
SEC. 301. APPROVED SYSTEMS FOR IDENTIFYING SUSPICIOUS ACTIVITIES.
Section 5318(g) of title 31, United States Code, is amended by
adding at the end the following:
``(5) Considerations in imposing reporting requirements.--
``(A) In general.--In imposing any requirement to
report any suspicious transaction under this
subsection, the Secretary of the Treasury, in
consultation with appropriate representatives of State
bank supervisors and the Federal functional regulators
(as defined in 509 of the Gramm-Leach-Bliley Act (15
U.S.C. 6809)), shall address, consider, and include--
``(i) the national priorities established
by the Secretary;
``(ii) whether the reporting is likely to
have a high degree of usefulness to the Federal
law enforcement community, national security,
and the intelligence community in combating
financial crime, including the financing of
terrorism; and
``(iii) the means by or form in which the
Secretary shall receive such reporting,
including the burdens imposed by such means or
form of reporting on persons required to
provide such reporting, the efficiency of the
means by or form of reporting, and the benefits
derived by such means or form of reporting by
the Federal law enforcement community and the
intelligence community in combating financial
crime, including the financing of terrorism.
``(B) Internal controls.--Reports filed under this
subsection shall be guided by the internal controls of
the compliance program of a covered institution with
respect to the Bank Secrecy Act, including the risk
assessment processes of the covered institution that
should include a consideration of priority areas as
established by the Secretary of the Treasury pursuant
to section 5311.
``(C) Examinations.--Examinations of systems for
identifying and reporting of suspicious activities
shall consider, among other things, the quality of
information provided under this section and the
institution's consideration of priority areas as
established by the Secretary of the Treasury pursuant
to section 5311.
``(D) Bulk-form data and real-time reporting.--
``(i) Requirement to establish system.--In
considering the means by or form in which the
Secretary of the Treasury shall receive
reporting pursuant to subparagraph (A)(iii) the
Secretary of the Treasury, through the
Financial Crimes Enforcement Network, and in
consultation with appropriate representatives
of the State bank supervisors and Federal
functional regulators (as defined in 509 of the
Gramm-Leach-Bliley Act (15 U.S.C. 6809))
shall--
``(I) establish streamlined
processes to permit the filing of non-
complex categories of reports that--
``(aa) reduce burdens
imposed on persons required to
report; and
``(bb) do not diminish the
usefulness of the reporting to
Federal law enforcement
agencies and the intelligence
community in combating
financial crime, including the
financing of terrorism;
``(II) subject to clause (ii),
permit bulk data reporting for such
categories of reports and establish the
conditions under which bulk data
reporting is permitted; and
``(III) establish additional
systems and processes that allow for
such reporting.
``(ii) Standards.--The Secretary of the
Treasury--
``(I) in carrying out clause (i),
shall establish standards to ensure
that bulk data reports relate to
suspicious transactions relevant to
potential violations of law or
regulation; and
``(II) in establishing the
standards under subclause (I), may
consider transactions designed to evade
any regulation promulgated under this
subchapter, certain fund and asset
transfers with no apparent economic,
business, or lawful purpose, and any
other transaction that the Secretary
determines to be appropriate.
``(iii) Rule of construction.--Nothing in
this subparagraph may be construed as
precluding the Secretary of the Treasury from
requiring reporting as provided for in
subparagraphs (A) and (B) or notifying Federal
law enforcement with respect to any transaction
that the Secretary has determined directly
implicates a national priority established by
the Secretary.
``(6) AML technology rulemaking.--The Secretary of the
Treasury shall, in consultation with appropriate
representatives of State bank supervisors and Federal
functional regulators (as defined in section 509 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6809)), promulgate regulations to--
``(A) specify an optional regime whereby a
financial institution may submit for approval by the
Financial Crimes Enforcement Network, in consultation
with the Federal banking agencies, a tailored
comprehensive approach to monitoring transactions for
the recordkeeping and reporting requirements
established by this subchapter and other relevant laws;
``(B) standards that such an optional regime must
meet for approval, with those standards having the
primary goal of addressing anti-money-laundering-regime
priorities and other significant Bank Secrecy Act and
anti-money-laundering risks identified in a particular
financial institution's (or association of financial
institutions) risk assessment;
``(C) include in the standards described in
subparagraph (B)--
``(i) an emphasis on using innovative
approaches for transaction monitoring such as
machine learning rather than rules-based
systems;
``(ii) requirements for testing, audit,
parallel runs, and ongoing quality assurance
processes to ensure that these systems are
working effectively, including risk-based back-
testing of the regime to facilitate calibration
of relevant systems;
``(iii) requirements for appropriate data
privacy and security; and
``(iv) requirements for examination of
these systems by the appropriate Federal or
State financial regulators; and
``(D) with respect to technology and processes
designed to facilitate compliance with the Bank Secrecy
Act requirements that are not covered by subparagraph
(A), specify that financial institutions may not be
required to test new technology and processes alongside
legacy technology and processes, known as parallel
runs, in all cases, but instead--
``(i) should develop a risk-based
implementation and testing plan, in
consultation with State and Federal financial
regulators as appropriate, that accounts for
legal, data privacy, and security concerns that
includes a reasonable testing timeline;
``(ii) should identify processes and
procedures for replacing or terminating any
legacy technology and process for any
examinable technology or process; and
``(iii) after adequately testing compliance
technology, may replace or terminate any legacy
technology and processes for any examinable
technology or process.
``(7) Rule of construction.--Nothing in this subsection may
be construed to require a financial institution to alter its
risk-based approach to monitoring suspicious activities.
``(8) Definitions.--In this subsection:
``(A) Bank secrecy act.--The term `Bank Secrecy
Act' has the meaning given the term in section 3 of the
ILLICIT CASH Act.
``(B) State bank supervisor.--The term `State bank
supervisor' has the meaning given the term in section 3
of the Federal Deposit Insurance Act (12 U.S.C.
1813).''.
SEC. 302. FINANCIAL CRIMES TECH SYMPOSIUM.
(a) Purpose.--The purpose of this section is to--
(1) promote greater international collaboration in the
effort to prevent and detect financial crimes and suspicious
activities; and
(2) facilitate the investigation and adoption of new
technologies aimed at preventing and detecting financial crimes
and other illicit activities.
(b) Periodic Meetings.--The Secretary shall, in coordination with
the Subcommittee on Innovation established under subsection (d) of
section 1564 of the Annunzio-Wylie Anti-Money Laundering Act, as added
by section 103 of this Act, periodically, but not less than once every
3 years, convene a global anti-money laundering and financial crime
symposium focused on how new technology can be used to more effectively
combat financial crimes and other illicit activities.
(c) Attendees.--Attendees at the symposium convened under this
section shall include domestic and international financial regulators,
senior executives from regulated firms, technology providers, law
enforcement representatives, start ups, academic institutions, and
other representatives as the Secretary determines are appropriate.
(d) Panels.--The Secretary shall convene panels in order to review
new technologies and permit attendees to demonstrate proof of concept.
(e) Implementation and Reports.--The Secretary shall to the extent
practicable work to provide regulatory guidance regarding innovative
technologies and practices presented at the symposium, to the extent
such technologies and practices further the goals of this section.
SEC. 303. DEIDENTIFIED AML INFORMATION.
(a) Amendment to the Gramm-Leach-Bliley Act.--Title V of the Gramm-
Leach-Bliley Act (15 U.S.C. 6801 et seq.) is amended by inserting after
section 509 (15 U.S.C. 6809) the following:
``SEC. 509A. DEIDENTIFIED AML INFORMATION.
``(a) Definitions.--In this section:
``(1) Cybersecurity purpose.--The term `cybersecurity
purpose' has the meaning given the term in section 102 of the
Cybersecurity Information Sharing Act of 2015 (6 U.S.C. 1501).
``(2) Deidentified information.--The term `deidentified
information' means information obtained by a financial
institution from which any information that may be used to
identify a person has been removed and with respect to which
there is no reasonable basis to believe that the information is
nonpublic personal information.
``(3) Financial institution.--The term `financial
institution'--
``(A) has the meaning given the term in section
509; and
``(B) includes--
``(i) a subsidiary, affiliate, or other
entity within the corporate organizational
structure of a financial institution;
``(ii) a person representing or otherwise
acting as agent for a financial institution;
and
``(iii) a group or organization the
membership of which is comprised entirely of
financial institutions.
``(4) Exceptions.--The Secretary of the Treasury by rule
shall establish exceptions to paragraph (2), including setting
minimum standards for information that is ineligible for
consideration as deidentified information.
``(b) Process.--A financial institution may determine that
financial institution information is deidentified information only if--
``(1) a person with appropriate knowledge of and experience
with generally accepted statistical and scientific principles
and methods for rendering information not individually
identifiable--
``(A) applying such principles and methods,
determines that the risk is very small that the
information could be used, alone or in combination with
other reasonably available information, by an
anticipated recipient to identify a person who is a
subject of the information; and
``(B) documents the methods and results of the
analysis that justify such determination; or
``(2)(A) appropriate identifiers of the person or of
relatives, employers, or household members of the person, are
removed; and
``(B) the financial institution does not have actual
knowledge that the information could be used alone or in
combination with other information to identify a person who is
a subject of the information.
``(c) Reidentification.--A financial institution may assign a code
or other means of record identification to allow information
deidentified under this section to be reidentified by the financial
institution, provided that--
``(1) the code or other means of record identification is
not derived from or related to information about the person and
is not otherwise capable of being translated so as to identify
the person; and
``(2) the financial institution does not use or disclose
the code or other means of record identification for any other
purpose, and does not disclose the mechanism for
reidentification.
``(d) Permissible Use.--
``(1) Limited use of data.--Deidentified information sent
or received by a financial institution shall only be used--
``(A) to identify suspicious activity that may
merit the filing of a suspicious activity report under
section 5318(g) of title 31, United States Code;
``(B) for the purpose stated in section 5311 of
title 31, United States Code; or
``(C) for a cybersecurity purpose.
``(2) No further communication.--A financial institution
may not transmit or share any deidentified information except
with--
``(A) a financial institution in accordance with
this section;
``(B) the Secretary of the Treasury;
``(C) an agency or authority referenced in section
505(a) in accordance with applicable law; and
``(D) a law enforcement agency.
``(e) Enforcement.--The owner of an approved telecommunications
system shall be a `covered person' for purposes of section 505(a)(8).
``(f) Rulemaking.--No later than 1 year after the date of enactment
of this section, the Secretary of the Treasury, in consultation with
the Secretary of Homeland Security and each agency referenced in
section 505(a), shall issue regulations to carry out the amendments
made by this section.
``(g) Relation to Suspicious Activity Reports.--Nothing in this
section shall be construed to modify, limit, alter, or supersede
section 5318(g) of title 31, United States Code, or any regulation
promulgated thereunder.
``(h) Rule of Construction.--
``(1) In general.--Compliance with the provisions of this
section shall not constitute a violation of other provisions of
this title.
``(2) Transmission, receipt, and sharing of information.--A
financial institution that transmits, receives, or shares
information under this section shall not be liable to any
person under any 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 provide notice of
such disclosure, or any other person identified in the
disclosure, except where such transmission, receipt, or sharing
violates this section or regulations promulgated under this
section.''.
SEC. 304. NO ACTION LETTERS.
Section 310 of title 31, United States Code, as amended by sections
102, 103, and 104 of this Act, is amended by adding at the end the
following:
``(g) No-Action Letters With Respect to Specific Conduct.--
``(1) In general.--The Director and the Federal functional
regulators, in consultation with State bank supervisors, shall
jointly promulgate regulations and guidance to establish a
process for the issuance of a no-action letter by FinCEN and
the relevant Federal functional regulators in response to an
inquiry from a person described in paragraph (2) concerning the
application of the Bank Secrecy Act, the USA PATRIOT Act
(Public Law 107-56; 115 Stat. 272), section 8(s) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(s)), or any other anti-
money-laundering or counter-terrorism financing law (including
regulations) to specific conduct, which shall include a
statement as to whether FinCEN or any relevant Federal
functional regulator intends to take an enforcement action
against the person with respect to such conduct.
``(2) Persons covered.--A person described in this
paragraph is--
``(A) any person involved in the specific conduct
that is the subject of the no-action letter; or
``(B) any person involved in conduct that is
indistinguishable in all material aspects from the
specific conduct that is the subject of the no-action
letter.
``(3) Reliance.--A no-action letter issued under paragraph
(1) shall not bind FinCEN or any Federal functional regulator
if the person making the inquiry provided incomplete,
misleading or false information, if subsequent changes are made
to relevant statutes, regulations, or guidance, or if a penalty
was assessed or enforcement action taken before the date on
which the no-action letter was issued.
``(4) Contents.--The regulations issued under paragraph (1)
shall contain a timeline for the process used to reach a final
determination by FinCEN and the relevant Federal functional
regulators in response to a request by a person for a no-action
letter.
``(h) Definitions.--In this section:
``(1) Bank secrecy act.--the term `Bank Secrecy Act' has
the meaning given the term in section 3 of the ILLICIT CASH
Act.
``(2) Federal functional regulator.--The term `Federal
functional regulator' hast the meaning given the term in
section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).
``(3) Financial institution.--The term `financial
institution' has the meaning given the term in section 5312.
``(4) State bank supervisor.--The term `State bank
supervisor' has the meaning given the term in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).''.
SEC. 305. OECD PILOT PROGRAM ON SHARING OF SUSPICIOUS ACTIVITY REPORTS
WITHIN A FINANCIAL GROUP.
(a) In General.--
(1) Sharing with foreign branches and affiliates.--Section
5318(g) of title 31, United States Code, as amended by section
301, is amended by adding at the end the following:
``(6) OECD pilot program on sharing with foreign branches,
subsidiaries, and affiliates.--
``(A) In general.--Not later than 180 days after
the date of enactment of this paragraph, the Secretary
of the Treasury shall issue rules, subject to such
controls and restrictions as the Director of the
Financial Crimes Enforcement Network determines
appropriate, establishing the pilot program described
under subparagraph (B). In prescribing such rules, the
Secretary shall ensure that the sharing of information
described under subparagraph (B) is subject to
appropriate standards and requirements regarding data
security and the confidentiality of personally
identifiable information.
``(B) Pilot program described.--The pilot program
required under this paragraph shall--
``(i) permit any financial institution with
a reporting obligation under this subsection to
share reports (and information on such reports)
under this subsection with the institution's
foreign branches, subsidiaries, and affiliates
for the purpose of combating illicit finance
risks, notwithstanding any other provision of
law except subparagraph (C), but only if such
foreign branch, subsidiary, or affiliate is
located in a jurisdiction that is a member of
the Organisation for Economic Co-operation and
Development;
``(ii) terminate on the date that is 5
years after the date of enactment of this
paragraph, except that the Secretary of the
Treasury may extend the pilot program for up to
two years upon submitting a report to the
Committee on Financial Services of the House of
Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate that
includes--
``(I) a certification that the
extension is in the national interest
of the United States, with a detailed
explanation of the reasons therefor;
``(II) an evaluation of the
usefulness of the pilot program,
including a detailed analysis of any
illicit activity identified or
prevented as a result of the program;
and
``(III) a detailed legislative
proposal providing for a long-term
extension of the pilot program
activities, including expected
budgetary resources for the activities,
if the Secretary of the Treasury
determines that a long-term extension
is appropriate.
``(C) Prohibition involving certain
jurisdictions.--In issuing the regulations required
under subparagraph (A), the Secretary of the Treasury
may not permit a financial institution to share
information on reports under this subsection with a
foreign branch, subsidiary, or affiliate located in a
jurisdiction that--
``(i) is subject to countermeasures imposed
by the Federal Government; or
``(ii) the Secretary has determined cannot
reasonably protect the privacy and
confidentiality of such information.
``(D) Implementation updates.--Not later than 360
days after the date on which rules are issued under
subparagraph (A), and annually thereafter for 3 years,
the Secretary of the Treasury, or the Secretary's
designee, shall brief the Committee on Financial
Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate on--
``(i) the degree of any information sharing
permitted under the pilot program, and a
description of criteria used by the Secretary
to evaluate the appropriateness of the
information sharing;
``(ii) the effectiveness of the pilot
program in identifying or preventing the
violation of a United States law or regulation,
and mechanisms that may improve such
effectiveness; and
``(iii) any recommendations to amend the
design of the pilot program, or to include
specific non-Organisation for Economic Co-
operation and Development jurisdictions in the
program.
``(7) Treatment of foreign jurisdiction-originated
reports.--A report received by a financial institution from a
foreign affiliate with respect to a suspicious transaction
relevant to a possible violation of law or regulation shall be
subject to the same confidentiality requirements provided under
this subsection for a report of a suspicious transaction
described under paragraph (1).
``(8) Definition.--In this subsection, the term `affiliate'
means an entity that controls, is controlled by, or is under
common control with another entity.''.
(2) Notification prohibitions.--Section 5318(g)(2)(A) of
title 31, United States Code, is amended--
(A) in clause (i), by inserting after ``transaction
has been reported'' the following: ``or otherwise
reveal any information that would reveal that the
transaction has been reported, including materials
prepared or used by the financial institution for the
purpose of identifying and detecting potentially
suspicious activity''; and
(B) in clause (ii), by inserting after
``transaction has been reported,'' the following: ``or
otherwise reveal any information that would reveal that
the transaction has been reported, including materials
prepared or used by the financial institution for the
purpose of identifying and detecting potentially
suspicious activity,''.
(b) Rulemaking.--Not later than the end of the 1-year period
beginning on the date of enactment of this Act, the Secretary shall
issue regulations to carry out the amendments made by this section.
SEC. 306. FOREIGN EVIDENTIARY REQUESTS.
(a) Foreign Evidentiary Requests.--Section 5318(k)(3)(A) of title
31, United States Code, is amended by adding at the end the following:
``(iii) Use as evidence.--If required by a
summons or subpoena referred to in clause (i),
the foreign bank on which the summons or
subpoena was served shall produce the records
described in the summons or subpoena in a
manner that would establish their authenticity
and reliability under the Federal Rules of
Evidence.
``(iv) Anti-tip-off.--Any foreign bank upon
which a summons or subpoena referred to in
clause (i) has been served, and any director,
officer, employee, or agent of such foreign
bank, shall not voluntarily disclose to a
person not employed by the foreign bank the
fact that it received a summons or subpoena or
any of the information contained in that
summons or subpoena.''.
(b) Foreign Evidentiary Requests.--Section 5318(k)(3) of title 31,
United States Code, is amended by adding at the end the following:
``(D) Court orders and contempt.--
``(i) Court orders.--If the Secretary of
the Treasury or the Attorney General (in each
case, in consultation with the other)
determines that a foreign bank has failed to
comply with a summons or subpoena issued under
subparagraph (A), the Secretary or the Attorney
General (in each case, in consultation with the
other) may initiate proceedings in a United
States court seeking a court order to compel
compliance with such summons or subpoena.
``(ii) Contempt.--If the Secretary of the
Treasury or the Attorney General (in each case,
in consultation with the other) determines that
a foreign bank has failed to comply with a
court order described in clause (i), the
Secretary or the Attorney General (in each
case, in consultation with the other) may
petition the United States court that issued
the court order to levy a civil or criminal
contempt fine on the foreign bank.''.
SEC. 307. UPDATING WHISTLEBLOWER INCENTIVES AND PROTECTION.
(a) Whistleblower Incentives and Protection.--
(1) In general.--Section 5323 of title 31, United States
Code, is amended to read as follows:
``Sec. 5323. Whistleblower incentives and protections
``(a) Definitions.--In this section:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any judicial
or administrative action brought by the Treasury or the
Department of Justice under subchapters II and III of this
title that results in monetary sanctions exceeding $1,000,000.
``(2) Fund.--The term `Fund' means the Anti-Money
Laundering and Counter-Terrorism Financing Fund.
``(3) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative
action, means any monies, including penalties and interest,
ordered to be paid.
``(4) Original information.--The term `original
information' means information that--
``(A) is derived from the independent knowledge or
analysis of a whistleblower;
``(B) is not known to the Treasury, the Department
of Justice, or an appropriate regulator, unless the
whistleblower is the original source of the
information; and
``(C) is not exclusively derived from an allegation
made in a judicial or administrative hearing, in a
governmental report, hearing, audit, or investigation,
or from the news media, unless the whistleblower is a
source of the information.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought
by the Treasury or the Department of Justice under subchapters
II and III of this title, means any judicial action brought by
an entity that is based upon the original information provided
by a whistleblower pursuant to subsection (a) that led to the
successful enforcement of the Treasury or Department of Justice
action.
``(6) Whistleblower.--The term `whistleblower' means any
individual who provides, or 2 or more individuals acting
jointly who provide, information relating to a violation of the
laws under subchapters II and III of this title to the
Treasury, in a manner established, by rule or regulation, by
the Treasury.
``(b) Awards.--
``(1) In general.--In any covered judicial action, or
related action, the Treasury, under regulations prescribed by
the Treasury and subject to subsection (c), may pay an award or
awards to 1 or more whistleblowers who voluntarily provided
original information to the Treasury that led to the successful
enforcement of the covered judicial or administrative action,
or related action, in an aggregate amount equal to--
``(A) not less than 10 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions; and
``(B) not more than 30 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions.
``(2) Payment of awards.--Any amount paid under paragraph
(1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount
of an award made under subsection (b) shall be in the
discretion of the Treasury.
``(B) Criteria.--In determining the amount of an
award made under subsection (b), the Treasury--
``(i) shall take into consideration--
``(I) the significance of the
information provided by the
whistleblower to the success of the
covered judicial or administrative
action;
``(II) the degree of assistance
provided by the whistleblower and any
legal representative of the
whistleblower in a covered judicial or
administrative action;
``(III) the programmatic interest
of the Treasury in deterring violations
of the laws under subchapters II and
III of this title by making awards to
whistleblowers who provide information
that leads to the successful
enforcement of such laws; and
``(IV) such additional relevant
factors as the Treasury may establish
by rule or regulation; and
``(ii) shall not take into consideration
the balance of the Fund.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the
time the whistleblower acquired the original
information submitted to the Treasury, a member,
officer, or employee of--
``(i) an appropriate regulatory agency;
``(ii) the Department of Justice or the
Treasury;
``(iii) a self-regulatory organization; or
``(iv) a law enforcement organization;
``(B) to any whistleblower who is convicted of a
criminal violation related to the judicial or
administrative action for which the whistleblower
otherwise could receive an award under this section; or
``(C) to any whistleblower who fails to submit
information to the Treasury in such form as the
Treasury may, by rule, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who
makes a claim for an award under subsection (c) may be
represented by counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who
anonymously makes a claim for an award under subsection
(b) shall be represented by counsel if the
whistleblower anonymously submits the information upon
which the claim is based.
``(B) Disclosure of identity.--Prior to the payment
of an award, a whistleblower shall disclose the
identity of the whistleblower and provide such other
information as the Treasury may require, directly or
through counsel for the whistleblower.
``(e) No Contract Necessary.--No contract with the Treasury is
necessary for any whistleblower to receive an award under subsection
(b), unless otherwise required by the Treasury by rule or regulation.
``(f) Appeals.--Any determination made under this section,
including whether, to whom, or in what amount to make awards, shall be
in the discretion of the Treasury. Any such determination, except the
determination of the amount of an award if the award was made in
accordance with subsection (b), may be appealed to the appropriate
court of appeals of the United States not more than 30 days after the
determination is issued by the Treasury. The court shall review the
determination made by the Treasury in accordance with section 706 of
title 5.
``(g) Anti-Money Laundering and Counter-Terrorism Financing Fund.--
``(1) Fund established.--There is established in the
Treasury of the United States a fund to be known as the `Anti-
Money Laundering and Counter-Terrorism Financing Fund'.
``(2) Use of fund.--The Fund shall be available to the
Treasury, without further appropriation or fiscal year
limitation, for paying awards to whistleblowers as provided in
subsection (b).
``(3) Deposits and credits.--
``(A) In general.--There shall be deposited into or
credited to the Fund an amount equal to any monetary
sanction collected by the Treasury or the Department of
Justice in any judicial or administrative action for
violations of the law under subchapters II and III of
this title and all income from investments made under
paragraph (4).
``(B) Additional amounts.--If the amounts deposited
into or credited to the Fund under subparagraph (A) are
not sufficient to satisfy an award made under
subsection (b), there shall be deposited into or
credited to the Fund an amount equal to the unsatisfied
portion of the award from any monetary sanction
collected by the Treasury or the Department of Justice
in the covered judicial or administrative action on
which the award is based.
``(4) Investments.--
``(A) Amounts in fund may be invested.--The
Secretary of the Treasury may invest the portion of the
Fund that is not, in the discretion of the Secretary of
the Treasury, required to meet the current needs of the
Fund.
``(B) Eligible investments.--Investments shall be
made by the Secretary of the Treasury in obligations of
the United States or obligations that are guaranteed as
to principal and interest by the United States, with
maturities suitable to the needs of the Fund as
determined by the Treasury.
``(C) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of,
any obligations held in the Fund shall be credited to
the Fund.
``(5) Reports to congress.--Not later than October 30 of
each fiscal year, the Treasury shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
a report on--
``(A) the whistleblower award program established
under this section, including--
``(i) a description of the number of awards
granted; and
``(ii) the types of cases in which awards
were granted during the preceding fiscal year;
``(B) the balance of the Fund at the beginning of
the preceding fiscal year;
``(C) the amounts deposited into or credited to the
Fund during the preceding fiscal year;
``(D) the amount of earnings on investments made
under paragraph (4) during the preceding fiscal year;
``(E) the amount paid from the Fund during the
preceding fiscal year to whistleblowers pursuant to
subsection (b);
``(F) the balance of the Fund at the end of the
preceding fiscal year; and
``(G) a complete set of audited financial
statements, including--
``(i) a balance sheet;
``(ii) an income statement; and
``(iii) a cash flow analysis.
``(h) Confidentiality.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), the Treasury and any officer or employee of the Treasury
shall not disclose any information, including information
provided by a whistleblower to the Treasury, which could
reasonably be expected to reveal the identity of a
whistleblower, except in accordance with the provisions of
section 552a of title 5, unless and until required to be
disclosed to a defendant or respondent in connection with a
public proceeding instituted by the Treasury or any entity
described in paragraph (3).
``(2) Exempted statute.--For purposes of section 552 of
title 5, paragraph (1) shall be considered a statute described
in subsection (b)(3)(B) of such section 552.
``(3) Rule of construction.--Nothing in this section is
intended to limit, or shall be construed to limit, the ability
of the Attorney General to present such evidence to a grand
jury or to share such evidence with potential witnesses or
defendants in the course of an ongoing criminal investigation.
``(4) Availability to government agencies.--
``(A) In general.--Without the loss of its status
as confidential in the hands of the Treasury, all
information referred to in paragraph (1) may, in the
discretion of the Treasury, when determined by the
Treasury to be necessary to accomplish the purposes of
this chapter and to protect investors, be made
available to--
``(i) the Attorney General of the United
States or the Secretary of the Treasury;
``(ii) an appropriate regulatory authority;
``(iii) a self-regulatory organization;
``(iv) a State attorney general in
connection with any criminal investigation;
``(v) any appropriate State regulatory
authority;
``(vi) the Public Company Accounting
Oversight Board;
``(vii) a foreign securities authority; and
``(viii) a foreign law enforcement
authority.
``(B) Confidentiality.--
``(i) In general.--Each of the entities
described in clauses (i) through (vi) of
subparagraph (A) shall maintain such
information as confidential in accordance with
the requirements established under paragraph
(1).
``(ii) Foreign authorities.--Each of the
entities described in clauses (vii) and (viii)
of subparagraph (A) shall maintain such
information in accordance with such assurances
of confidentiality as the Treasury determines
appropriate.
``(iii) Rights retained.--Nothing in this
section shall be deemed to diminish the rights,
privileges, or remedies of any whistleblower
under any Federal or State law, or under any
collective bargaining agreement.
``(i) Provision of False Information.--A whistleblower shall not be
entitled to an award under this section if the whistleblower--
``(1) knowingly and willfully makes any false, fictitious,
or fraudulent statement or representation; or
``(2) uses any false writing or document knowing the
writing or document contains any false, fictitious, or
fraudulent statement or entry.
``(j) Rulemaking Authority.--The Treasury shall have the authority
to issue such rules and regulations as may be necessary or appropriate
to implement the provisions of this section consistent with the
purposes of this section.''.
(2) Technical and conforming amendment.--The table of
sections for chapter 53 of title 31, United States Code, is
amended by striking the item relating to section 5323 and
inserting the following:
``5323. Whistleblower incentives and protections.''.
SEC. 308. VALUE THAT SUBSTITUTES CURRENCY OR FUNDS.
(a) Definitions.--Section 5312(a)(2) of title 31, United States
Code, is amended--
(1) in subparagraph (J), by inserting ``, or a business
engaged in the exchange of currency, funds, or value that
substitutes for currency or funds'' before the semicolon at the
end; and
(2) in subparagraph (R), by striking ``funds,'' and
inserting ``currency, funds, or value that substitutes for
currency or funds,''.
(b) Registration of Money Transmitting Businesses.--Section 5330(d)
of title 31, United States Code, is amended--
(1) in paragraph (1)(A), by striking ``funds,'' and
inserting ``currency, funds, or value that substitutes for
currency or funds,''; and
(2) in paragraph (2)--
(A) by striking ``currency or funds denominated in
the currency of any country'' and inserting ``currency,
funds, or value that substitutes for currency or
funds''; and
(B) by inserting ``, including'' after ``means''.
SEC. 309. FIGHT ILLICIT NETWORKS AND DETECT TRAFFICKING.
(a) Findings.--Congress finds the following:
(1) According to the Drug Enforcement Administration 2017
National Drug Threat Assessment, transnational criminal
organizations are increasingly using virtual currencies.
(2) The Department of the Treasury has recognized that
``[t]he development of virtual currencies is an attempt to meet
a legitimate market demand. According to a Federal Reserve Bank
of Chicago economist, United States consumers want payment
options that are versatile and that provide immediate finality.
No United States payment method meets that description,
although cash may come closest. Virtual currencies can mimic
cash's immediate finality and anonymity and are more versatile
than cash for online and cross-border transactions, making
virtual currencies vulnerable for illicit transactions.''.
(3) Virtual currencies have become a prominent method to
pay for goods and services associated with illegal human
trafficking and drug trafficking, which are two of the most
detrimental and troubling illegal activities facilitated by
online marketplaces.
(4) Online marketplaces, including the dark web, have
become a prominent platform to buy, sell, and advertise for
illicit goods and services associated with human trafficking
and drug trafficking.
(5) According to the International Labour Organization, in
2016, 4,800,000 people in the world were victims of forced
sexual exploitation, and in 2014, the global profit from
commercial sexual exploitation was $99,000,000,000.
(6) In 2016, within the United States, the Centers for
Disease Control and Prevention estimated that there were 64,000
deaths related to drug overdose, and the most severe increase
in drug overdoses were those associated with fentanyl and
fentanyl analogs (synthetic opioids), which amounted to over
20,000 overdose deaths.
(7) According to the Department of the Treasury's 2015
National Money Laundering Risk Assessment, an estimated
$64,000,000,000 is generated annually from United States drug
trafficking sales.
(8) Illegal fentanyl in the United States originates
primarily from China, and it is readily available to purchase
through online marketplaces.
(b) Definition.--In this section, the term ``human trafficking''
has the meaning given the term ``severe forms of trafficking in
persons'' in section 103 of the Trafficking Victims Protection Act of
2000 (22 U.S.C. 7102).
(c) GAO Study.--The Comptroller General of the United States shall
conduct a study on how virtual currencies and online marketplaces are
used to facilitate human and drug trafficking. The study shall
consider--
(1) how online marketplaces, including the dark web, are
being used as platforms to buy, sell, or facilitate the
financing of goods or services associated with human
trafficking or drug trafficking (specifically, opioids and
synthetic opioids, including fentanyl, fentanyl analogs, and
any precursor chemicals associated with manufacturing fentanyl
or fentanyl analogs) destined for, originating from, or within
the United States;
(2) how financial payment methods, including virtual
currencies and peer-to-peer mobile payment services, are being
utilized by online marketplaces to facilitate the buying,
selling, or financing of goods and services associated with
human or drug trafficking destined for, originating from, or
within the United States;
(3) how virtual currencies are being used to facilitate the
buying, selling, or financing of goods and services associated
with human or drug trafficking, destined for, originating from,
or within the United States, when an online platform is not
otherwise involved;
(4) how illicit funds that have been transmitted online and
through virtual currencies are repatriated into the formal
banking system of the United States through money laundering or
other means;
(5) the participants (state and non-state actors)
throughout the entire supply chain that participate in or
benefit from the buying, selling, or financing of goods and
services associated with human or drug trafficking (either
through online marketplaces or virtual currencies) destined
for, originating from, or within the United States;
(6) Federal and State agency efforts to impede the buying,
selling, or financing of goods and services associated with
human or drug trafficking destined for, originating from, or
within the United States, including efforts to prevent the
proceeds from human or drug trafficking from entering the
United States banking system;
(7) how virtual currencies and their underlying
technologies can be used to detect and deter these illicit
activities; and
(8) to what extent the immutable and traceable nature of
virtual currencies can contribute to the tracking and
prosecution of illicit funding.
(d) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United States
shall submit to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives a report summarizing the results of the study required
under subsection (c), together with any recommendations for legislative
or regulatory action that would improve the efforts of Federal agencies
to impede the use of virtual currencies and online marketplaces in
facilitating human and drug trafficking.
SEC. 310. STUDY AND STRATEGY ON CHINESE MONEY LAUNDERING.
(a) Study.--The Secretary shall carry out a study on--
(1) the extent and effect of illicit finance risk relating
to the Government of the People's Republic of China and Chinese
firms; and
(2) the ways in which the increasing amount of global trade
and investment by the Government of the People's Republic of
China and Chinese firms expose the international financial
system to increased risk relating to illicit finance.
(b) Strategy To Combat Chinese Money Laundering.--Upon the
completion of the study required under subsection (a), the Secretary
shall, in consultation with such other Federal departments and agencies
as the Secretary determines appropriate, develop a strategy to combat
Chinese money-laundering activities.
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Secretary shall submit to Congress a report containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) the strategy developed under subsection (b).
SEC. 311. FINANCIAL TECHNOLOGY TASK FORCE.
(a) In General.--The Secretary shall convene a task force,
comprised of financial regulators, technology experts, national
security experts, law enforcement, and any other group the Secretary
determines is appropriate, to analyze the impact of financial
technology on financial crimes compliance, including countering
proliferation finance, human trafficking, and sanctions evasion.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, the Secretary shall submit to the Committee on Banking,
Housing, and Urban Affairs and the Committee on Foreign Relations of
the Senate and the Committee on Financial Services and the Committee on
Foreign Affairs of the House of Representatives a report containing any
findings of the task force convened under subsection (a).
SEC. 312. STUDY ON THE EFFORTS OF AUTHORITARIAN REGIMES TO EXPLOIT THE
FINANCIAL SYSTEM OF THE UNITED STATES.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Secretary and the Attorney General, in consultation
with the heads of other relevant national security, intelligence, and
law enforcement agencies, shall conduct a study and submit to Congress
a report that considers how authoritarian regimes in foreign countries
and their proxies use the financial system of the United States to--
(1) conduct political influence operations;
(2) sustain kleptocratic methods of maintaining power;
(3) export corruption;
(4) fund nongovernmental organizations, media
organizations, or academic initiatives in the United States to
advance the interests of those persons; and
(5) otherwise undermine democratic governance in the United
States and the partners and allies of the United States.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, the Secretary shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report that contains--
(1) the results of the study required under subsection (a);
and
(2) any recommendations for legislative or regulatory
action that would address exploitation of the financial system
of the United States by foreign authoritarian regimes.
SEC. 313. ADDITIONAL STUDIES.
Not later than 2 years after the date of enactment of this Act, the
Comptroller General of the United States shall conduct a study and
submit to Congress a report--
(1) evaluating the effect of anti-money-laundering and
counter-terrorism-financing requirements on individuals and
entities, including charities, embassy accounts, money-service
businesses, and correspondent banks, that have been subject to
categorical de-risking by financial institutions operating in
the United States, or otherwise have difficulty accessing or
maintaining--
(A) relationships in the United States financial
system; or
(B) certain financial services in the United
States, including opening and keeping open an account;
(2) evaluating consequences of financial institutions de-
risking entire categories of relationships with the persons
identified in paragraph (1); and
(3) identifying options for financial institutions handling
transactions or accounts for high-risk categories of clients,
and options for minimizing the negative effects of anti-money-
laundering and counter-terrorism-financing requirements on the
persons described in paragraph (1) without compromising the
effectiveness of Federal anti-money-laundering and counter-
terrorism requirements.
TITLE IV--BENEFICIAL OWNERSHIP DISCLOSURE REQUIREMENTS
SEC. 401. BENEFICIAL OWNERSHIP.
(a) In General.--Chapter 53 of title 31, United States Code, as
amended by section 207 of this Act, is amended by adding at the end the
following:
``Sec. 5334. Transparent incorporation practices
``(a) Definitions.--In this section:
``(1) Acceptable identification document.--A natural person
has an acceptable identification document if that person has a
nonexpired passport issued by the United States, a nonexpired
identification document issued by a State, local government, or
Federally recognized Indian Tribe to an individual acting for
the purpose of identification of that individual, or a
nonexpired driver's license issued by a State, or, if the
natural person does not have any such document, a nonexpired
passport issued by a foreign government.
``(2) Beneficial owner.--The term `beneficial owner'--
``(A) means, with respect to an entity, a natural
person who directly or indirectly, through any
contract, arrangement, understanding, relationship, or
otherwise--
``(i) exercises substantial control over
such entity; or
``(ii) owns 25 percent or more of the
equity interests of such entity or receives
substantial economic benefits from the assets
of such entity; and
``(B) does not include--
``(i) a minor child, as defined in the
State in which the entity is formed;
``(ii) a person acting as a nominee,
intermediary, custodian, or agent on behalf of
another person;
``(iii) a person acting solely as an
employee of a corporation or limited liability
company and whose control over or economic
benefits from the corporation or limited
liability company derives solely from the
employment status of the person;
``(iv) a person whose only interest in a
corporation or limited liability company is
through a right of inheritance; or
``(v) a creditor of a corporation or
limited liability company, unless the creditor
meets the requirements of subparagraph (A).
``(3) Director.--The term `Director' means the Director of
FinCEN.
``(4) FinCEN.--The term `FinCEN' means the Financial Crimes
Enforcement Network of the Department of the Treasury.
``(5) FinCEN identifier.--The term `FinCEN identifier'
means the unique identifying number assigned by FinCEN to a
person under this section.
``(6) Reporting company.--The term `reporting company'--
``(A) means a corporation, limited liability
company, or other similar entity that is--
``(i) created by the filing of a document
with a secretary of state or a similar office
under the law of a State or Indian tribe; or
``(ii) formed under the law of a foreign
country and registered to do business in a
State by the filing of a document with a
secretary of state or a similar office under
the law of the State; and
``(B) does not include--
``(i) an issuer--
``(I) of a class of securities
registered under section 12 of the
Securities Exchange Act of 1934 (15
U.S.C. 781); or
``(II) that is required to file
reports under section 15(d) of that Act
(15 U.S.C. 78o(d));
``(ii) a business concern constituted or
sponsored by a State, a political subdivision
of a State, under an interstate compact between
two or more States, by a department or agency
of the United States, or under the laws of the
United States;
``(iii) a depository institution (as
defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813));
``(iv) a credit union (as defined in
section 101 of the Federal Credit Union Act (12
U.S.C. 1752));
``(v) a bank holding company (as defined in
section 2 of the Bank Holding Company Act of
1956 (12 U.S.C. 1841));
``(vi) a broker or dealer (as defined in
section 3 of the Securities Exchange Act of
1934 (15 U.S.C. 78c)) that is registered under
section 15 of the Securities Exchange Act of
1934 (15 U.S.C. 78o);
``(vii) an exchange or clearing agency (as
defined in section 3 of the Securities Exchange
Act of 1934 (15 U.S.C. 78c)) that is registered
under section 6 or 17A of the Securities
Exchange Act of 1934 (15 U.S.C. 78f and 78q-1);
``(viii) an investment company (as defined
in section 3 of the Investment Company Act of
1940 (15 U.S.C. 80a-3)) or an investment
adviser (as defined in section 202(11) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-
2(11))), including an investment adviser
described in section 203(l) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-3(l)), if
the company or adviser is registered with the
Securities and Exchange Commission, or has
filed an application for registration which has
not been denied, under the Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.) or the
Investment Advisers Act of 1940 (15 U.S.C. 80b-
1 et seq.);
``(ix) an insurance company (as defined in
section 2 of the Investment Company Act of 1940
(15 U.S.C. 80a-2));
``(x) an insurance producer (as defined in
section 334 of the Gramm-Leach-Bliley Act (15
U.S.C. 6764));
``(xi) a registered entity (as defined in
section 1a of the Commodity Exchange Act (7
U.S.C. 1a)), or a futures commission merchant,
introducing broker, commodity pool operator, or
commodity trading advisor (as defined in
section 1a of the Commodity Exchange Act (7
U.S.C. 1a)) that is registered with the
Commodity Futures Trading Commission;
``(xii) a public accounting firm registered
in accordance with section 102 of the Sarbanes-
Oxley Act (15 U.S.C. 7212);
``(xiii) a public utility that provides
telecommunications services, electrical power,
natural gas, or water and sewer services,
within the United States;
``(xiv) a church, charity, nonprofit
entity, or other organization that is described
in section 501(c), 527, 4947(a)(1), or
4947(a)(2) of the Internal Revenue Code of
1986, that has not been denied tax-exempt
status, and that has not failed to file the
most recently due annual information return
with the Internal Revenue Service pursuant to
section 6033(a) of the Internal Revenue Code of
1986, if required to file such a return, for 3
consecutive years, provided however, that an
entity described in this clause shall not be
considered a corporation or limited liability
company until the period of time 180 days
immediately following the date of its denial of
tax-exempt status or failure to file its annual
information return pursuant to section 6033(a)
of the Internal Revenue Code of 1986 for 3
consecutive years;
``(xv) any business concern that--
``(I) employs more than 20
employees on a full-time basis in the
United States;
``(II) files income tax returns in
the United States demonstrating more
than $5,000,000 in gross receipts or
sales; and
``(III) has an operating presence
at a physical office within the United
States;
``(xvi) any corporation or limited
liability company formed and owned by an entity
described in clause (i), (ii), (iii), (iv),
(v), (vi), (vii), (viii), (ix), (x), (xi),
(xii), (xiii), or (xiv);
``(xvii) any pooled investment vehicle that
is operated or advised by an entity described
in clause (iii), (iv), (v), (vi), (vii),
(viii), (ix), or (x); or
``(xviii) any business concern or class of
business concerns that the Secretary of the
Treasury, with the written concurrence of the
Attorney General and the Secretary of Homeland
Security, has determined should be exempt from
the requirements of subsection (a) because
requiring beneficial ownership information from
the business concern or class of business
concerns would not serve the public interest
and would not assist law enforcement efforts to
detect, prevent, or punish terrorism, money
laundering, tax evasion, or other misconduct.
``(7) State.--The term `State' means any State,
commonwealth, territory, or possession of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, American Samoa,
Guam, or the United States Virgin Islands.
``(8) Substantial economic benefits.--
``(A) In general.--For the purposes of this
section, a person receives `substantial economic
benefits' from an entity if the person has access to 25
percent or more of the funds and assets of the entity.
``(B) Rulemaking.--The Secretary of the Treasury
shall seek to provide clarity to entities with respect
to the identification and disclosure of an individual
who receives substantial economic benefits from the
funds and assets of an entity.
``(9) Unique identifying number.--The term `unique
identifying number' with respect to a natural person or a
limited liability company with a sole member means the unique
identifying number from a nonexpired passport issued by the
United States, a nonexpired personal identification card, or a
nonexpired driver's license issued by a State.
``(b) Beneficial Ownership Reporting.--
``(1) Reporting.--
``(A) In general.--In accordance with regulations
prescribed by the Secretary of the Treasury, each
reporting company shall submit to FinCEN a report that
contains the information described in paragraph (2).
``(B) Reporting of existing entities.--In
accordance with regulations prescribed by the Secretary
of the Treasury, any reporting company that has been
formed under the laws of a State or Indian Tribe prior
to the date of enactment of this section, shall, in a
timely manner, and not later than 2 years after the
date of enactment of this section, submit to FinCEN a
report that contains the information described in
paragraph (2).
``(C) Reporting at time of incorporation.--In
accordance with regulations prescribed by the Secretary
of the Treasury, any reporting company that has been
formed under the laws of a State or Indian Tribe after
the date of enactment of this section, shall, at the
time of incorporation, submit to FinCEN a report that
contains the information described in paragraph (2).
``(D) Updated reporting for changes in beneficial
owners.--In accordance with regulations prescribed by
the Secretary of the Treasury, a reporting company
shall, in a timely manner, and not later than 90 days
after the date on which there is a change with respect
to any beneficial owner of the reporting company,
deliver to FinCEN a report that includes the
information described in paragraph (2).
``(E) Updated reporting for changes in beneficial
ownership information.--In accordance with regulations
prescribed by the Secretary of the Treasury, a
reporting company shall, in a timely manner, and not
later than 1 year after the date on which there are any
changes to the information described in paragraph (2),
deliver to FinCEN a report that includes the
information described in that paragraph.
``(F) Other requirements.--In promulgating the
regulations prescribed in subparagraphs (A) through
(E), the Secretary of the Treasury shall endeavor, to
the extent practicable--
``(i) to collect information through
existing Federal, State, and local processes
and procedures;
``(ii) to minimize burdens on reporting
companies associated with the collection of the
information described in paragraph (2) in light
of the costs placed on legitimate businesses;
``(iii) to collect such information,
including any updates in beneficial ownership,
to ensure the usefulness of beneficial
ownership information for law enforcement and
national security purposes;
``(iv) to establish partnerships with
State, local, and Tribal governmental agencies;
and
``(v) to permit any entity that is not a
reporting company to demand and receive from
FinCEN written confirmation that the entity is
not subject to the requirements of this
subsection.
``(2) Required information.--
``(A) Definition.--In this paragraph, the term
`applicant' means, with respect to a reporting company,
any individual who files an application to form a
corporation or limited liability company under the laws
of a State or Indian Tribe on behalf of the reporting
company.
``(B) Information.--In accordance with regulations
prescribed by the Secretary of the Treasury, a report
delivered under paragraph (1) shall identify each
beneficial owner of the applicable reporting company
and each applicant with respect to that reporting
company by--
``(i) full legal name;
``(ii) date of birth;
``(iii) current, as of the date on which
the report is delivered, residential or
business street address; and
``(iv) the unique identifying number with
respect to the beneficial owner from a
nonexpired passport issued by the United
States, a nonexpired personal identification
card, or a nonexpired driver's license issued
by a State.
``(3) FinCEN id numbers.--
``(A) Issuance of fincen id number.--
``(i) In general.--FinCEN shall issue a
FinCEN ID number to any individual who requests
such a number and provides FinCEN with the
information described in paragraph (2).
``(ii) Updating of information.--An
individual with a FinCEN ID number shall submit
filings with FinCEN pursuant to paragraph (1)
updating any information described in paragraph
(2).
``(B) Use of fincen id number in reporting
requirements.--Any person required to report the
information described in paragraph (2) with respect to
an individual may instead report the FinCEN ID number
of the individual.
``(C) Treatment of information submitted for fincen
id number.--For purposes of this section, any
information submitted under subparagraph (A) shall be
deemed to be beneficial ownership information.
``(4) Effective date.--The requirements of this subsection
shall take effect on the effective date of the regulations
prescribed by the Secretary of the Treasury under this
subsection, which effective date shall not be sooner than the
date that is 1 year after the date of enactment of this
section.
``(c) Retention and Disclosure of Beneficial Ownership Information
by FinCEN.--
``(1) Retention of information.--Beneficial ownership
information required under subsection (b)(2) relating to each
corporation or limited liability company formed under the laws
of the State shall be maintained by FinCEN until the end of the
5-year period beginning on the date that the corporation or
limited liability company terminates.
``(2) Disclosure.--Beneficial ownership information
reported to FinCEN pursuant to this section shall be provided
by FinCEN only upon receipt of--
``(A) a request, through appropriate protocols, by
a local, Tribal, State, or Federal law enforcement,
national security, or intelligence agency;
``(B) a request made by a Federal agency on behalf
of a law enforcement agency of another country under an
international treaty, agreement, or convention, or an
order under section 3512 of title 18 or section 1782 of
title 28, issued in response to a request for
assistance in an investigation by such foreign country,
subject to the requirement that such other country
agrees to prevent the public disclosure of such
beneficial ownership information or to use it for any
purpose other than the specified investigation, or, if
upon agreement by the Federal agency and the foreign
country, in a criminal or civil case; or
``(C) a request made by a financial institution or
any other entity or person subject to customer due
diligence requirements, with the consent of the
reporting company, to facilitate the compliance of the
financial institution or other entity or person with
customer due diligence requirements under applicable
Federal law or State law.
``(3) Appropriate protocols.--The protocols described in
paragraph (2)(A) shall--
``(A) protect the privacy of any beneficial
ownership information provided by FinCEN to a local,
Tribal, State, or Federal law enforcement, national
security, or intelligence agency;
``(B) ensure that a local, Tribal, State, or
Federal law enforcement, national security, or
intelligence agency requesting beneficial ownership
information has an existing investigatory basis for
requesting such information and that basis is not in
violation of a local, or city ordinance;
``(C) ensure that access to beneficial ownership
information is limited to authorized users at a local,
Tribal, State, or Federal law enforcement, national
security, or intelligence agency who have undergone
appropriate training, and that the identity of such
authorized users is verified through appropriate
mechanisms such as 2-factor authentication;
``(D) include an audit trail of requests for
beneficial ownership information by a local, Tribal,
State, or Federal law enforcement, national security,
or intelligence agency, including, as necessary,
information concerning queries made by authorized users
at a local, Tribal, State, or Federal law enforcement,
national security, or intelligence agency;
``(E) require that every local, Tribal, State, or
Federal law enforcement, national security, or
intelligence agency that receives beneficial ownership
information from FinCEN conducts an annual audit to
verify that the beneficial ownership information
received from FinCEN has been accessed and used
appropriately, and consistent with this paragraph; and
``(F) require FinCEN to conduct an annual audit of
every local, Tribal, State, or Federal law enforcement,
national security, or intelligence agency that has
received beneficial ownership information to ensure
that such agency has requested beneficial ownership
information and has used any beneficial ownership
information received from FinCEN appropriately and
consistent with this paragraph.
``(4) Violation.--A request under paragraph (2)(A) that
violates the protocols described in paragraph (3) shall subject
the requesting agency to criminal penalties under subsection
(g)(3).
``(5) Scope.--Information provided to a local, Tribal,
State, or Federal law enforcement, national security, or
intelligence agency under this paragraph may only be used for
law enforcement, anti-money laundering, counter-terrorism-
financing, national security, or intelligence purposes.
``(d) Agency Coordination.--
``(1) In general.--The Secretary of the Treasury shall
endeavor, to the extent practicable, to update information
described in subsection (b)(2) by working collaboratively with
other relevant Federal agencies.
``(2) Information from relevant federal agencies.--Relevant
Federal agencies, as determined by the Secretary of the
Treasury, shall, to the extent practicable, and consistent with
privacy protections, provide such required information to
FinCEN for purposes of maintaining an accurate beneficial
ownership database.
``(3) Regulations.--The Secretary of the Treasury, in
consultation with the heads of other relevant agencies, may
promulgate regulations as necessary to carry out this
subsection.
``(e) State Notification of Federal Obligations.--
``(1) In general.--Each State that receives funding under
section 5334(c) shall, not later than 2 years after the date of
enactment of this section, take the following actions:
``(A) The Secretary of State or a similar office in
each State responsible for the establishment of
entities created by the filing of a public document
with such office under the law of such State shall
periodically, including at the time of any renewal of
any license to do business in such State and in
connection with State corporate tax renewals, notify
filers of their requirements as reporting companies
under this section, including the requirement under
subparagraph (b)(1)(B), and provide them with a copy of
the reporting company form created by the Secretary
under this section or an internet link to such form.
``(B) The Secretary of State or a similar office in
each State responsible for the establishment of
entities created by the filing of a public document
with such office under the law of such State shall
update its websites, forms relating to incorporation
and physical premises to notify filers of their
requirements as reporting companies under this section,
including providing an internet link to the reporting
company form created by the Secretary under this
section.
``(2) Disclosure.--A notification under subparagraph (A) or
(B) of paragraph (1) shall explicitly state that the
notification is on behalf of the Department of the Treasury for
the purpose of supporting a nonpublic registry of business
entities in the United States.
``(f) No Bearer Share Corporations or Limited Liability
Companies.--A corporation or limited liability company formed under the
laws of a State may not issue a certificate in bearer form evidencing
either a whole or fractional interest in the corporation or limited
liability company.
``(g) Penalties.--
``(1) In general.--It shall be unlawful for any person to
affect interstate or foreign commerce by--
``(A) knowingly providing, or attempting to
provide, false or fraudulent beneficial ownership
information, including a false or fraudulent
identifying photograph, to FinCEN in accordance with
subsection (b);
``(B) willfully failing to provide complete or
updated beneficial ownership information to FinCEN in
accordance with subsection (b);
``(C) knowingly disclosing the contents of any
report filed with FinCEN pursuant to subsection (b),
except to the extent necessary to fulfill an authorized
request for beneficial ownership information; or
``(D) knowingly using, for an unauthorized purpose,
the contents of any report filed with FinCEN pursuant
to subsection (b).
``(2) Civil and criminal penalties.--
``(A) In general.--Any person who violates
subparagraph (A) or (B) of paragraph (1) shall be
liable to the United States for a civil penalty of not
more than $500 for each day that the violation
continues or has not been remedied, and the person may
be fined not more than $10,000, imprisoned for not more
than four years, or both.
``(B) Other violations.--Any person who violates
subparagraph (C) or (D) of paragraph (1) shall be
liable to the United States for a civil penalty of not
more than $500 for each violation, and the criminal
penalties provided for in section 5322 will apply to
the same extent as such criminal penalties would apply
to a violation described in section 5322.
``(C) Limitations.--Any person who negligently
violates paragraph (1) shall not be subject to civil or
criminal penalties under this paragraph.
``(D) Waiver of de minimis violations.--
``(i) Definitions.--
``(I) In general.--For purposes of
this subsection, a de minimis violation
includes any change to the information
described in paragraph (2)(B) of
subsection (b) that is due to--
``(aa) a change in an
address provided under clause
(iii) of such paragraph (2)(B);
or
``(bb) the expiration of an
identification document
provided under clause (iv) of
such paragraph (2)(B).
``(II) Assistance.--FinCEN shall
provide assistance to, and may not
impose any penalty upon, any person
seeking to remedy a de minimis
violation of paragraph (1) and come
into compliance with this section.
``(ii) Waiver.--The Secretary of the
Treasury shall waive the penalty for violating
paragraph (1) if the Secretary determines that
the violation was de minimis and the reporting
company took reasonable steps to update the
information.
``(iii) Repeated violations.--In
determining whether a violation is de minimis,
the Secretary of the Treasury may treat
repeated violations as 1 violation.
``(3) Treasury office of inspector general investigation in
the event of a cybersecurity breach.--
``(A) In general.--In the event of a cybersecurity
breach that results in substantial unauthorized access
and disclosure of sensitive beneficial ownership
information, the Inspector General of the Department of
the Treasury shall conduct an investigation into FinCEN
cybersecurity practices that, to the extent possible,
determines any vulnerabilities within FinCEN privacy
security protocols and provides recommendations for
fixing such deficiencies.
``(B) Report.--The Inspector General of the
Department of the Treasury shall submit to the
Secretary of the Treasury a report on the investigation
required under this paragraph.
``(C) Actions of the secretary.--Upon receiving a
report submitted under subparagraph (B), the Secretary
of the Treasury shall--
``(i) determine whether the Director had
any responsibility for the cybersecurity breach
or whether policies, practices, or procedures
implemented at the direction of the Director
led to the cybersecurity breach; and
``(ii) submit to Congress a written report
outlining the findings of the Secretary,
including a determination by the Secretary on
whether to retain or dismiss the individual
serving as the Director.
``(4) User complaint process.--
``(A) In general.--The Inspector General of the
Department of the Treasury, in coordination with the
Secretary of the Treasury, shall provide contact
information to receive external comments or complaints
regarding the beneficial ownership information
collection process.
``(B) Report.--The Inspector General shall submit
to Congress a periodic report summarizing external
complaints and related investigations by the Inspector
General related to the collection of beneficial
ownership information.''.
(b) Conforming Amendments.--Title 31, United States Code, is
amended--
(1) in section 5321(a)--
(A) in paragraph (1), by striking ``sections 5314
and 5315'' each place it appears and inserting
``sections 5314, 5315, and 5334''; and
(B) in paragraph (6), by inserting ``(except
section 5334)'' after ``subchapter'' each place it
appears;
(2) in section 5322, by striking ``section 5315 or 5324''
each place it appears and inserting ``section 5315, 5324, or
5334''; and
(3) in the table of contents of chapter 53 of title 31,
United States Code, as amended by section 106 of this Act, by
adding at the end the following:
``5334. Transparent incorporation practices.''.
(c) Funding Authorization.--
(1) In general.--To carry out section 5334 of title 31,
United States Code, as added by subsection (a) of this section,
during the 3-year period beginning on the date of enactment of
this Act, funds shall be made available to FinCEN and the
States to pay reasonable costs relating to compliance with the
requirements of such section.
(2) Funding sources.--Funds shall be provided to FinCEN and
the States to carry out the purposes described in paragraph (1)
from one or more of the following sources:
(A) Upon application by FinCEN or a State, and
without further appropriation, the Secretary shall make
available to FinCEN or such State unobligated balances
described in section 9703(g)(4)(B) of title 31, United
States Code, in the Department of the Treasury
Forfeiture Fund established under section 9703(a) of
title 31, United States Code.
(B) Upon application by FinCEN or a State, after
consultation with the Secretary, and without further
appropriation, the Attorney General of the United
States shall make available to FinCEN or such State
excess unobligated balances (as defined in section
524(c)(8)(D) of title 28, United States Code) in the
Department of Justice Assets Forfeiture Fund
established under section 524(c) of title 28, United
States Code.
(3) Maximum amounts.--
(A) Department of the treasury.--The Secretary may
not make available to FinCEN a total of more than
$30,000,000 and to the States a total of not more than
$5,000,000 under paragraph (2)(A).
(B) Department of justice.--The Attorney General of
the United States may not make available to FinCEN a
total of more than $10,000,000 and to the States a
total of not more than $5,000,000 under paragraph
(2)(B).
(d) Federal Contractors.--Not later than the first day of the first
full fiscal year beginning at least 1 year after the date of the
enactment of this Act, the Administrator for Federal Procurement Policy
shall revise the Federal Acquisition Regulation maintained under
section 1303(a)(1) of title 41, United States Code, to require any
contractor who is subject to the requirement to disclose beneficial
ownership information under section 5334 of title 31, United States
Code, as added by subsection (a) of this section, to provide the
information required to be disclosed under such section to the Federal
Government as part of any bid or proposal for a contract with a value
threshold in excess of the simplified acquisition threshold under
section 134 of title 41, United States Code.
(e) Revised Due Diligence Rulemaking.--Not later than 1 year after
the date of the enactment of this Act, the Secretary shall revise the
final rule titled ``Customer Due Diligence Requirements for Financial
Institutions'' (May 11, 2016; 81 Fed. Reg. 29397) to--
(1) bring the rule into conformance with this Act and the
amendments made by this Act;
(2) account for financial institutions' access to
comprehensive beneficial ownership information filed by
corporations and limited liability companies, under threat of
civil and criminal penalties, under this Act, and the
amendments made by this Act; and
(3) reduce any burdens on financial institutions that are,
in light of the enactment of this Act and the amendments made
by this Act, unnecessary or duplicative.
SEC. 402. GEOGRAPHIC TARGETING ORDER.
The Secretary shall issue a geographic targeting order, similar to
the order issued by the FinCEN on November 15, 2018, that--
(1) applies to commercial real estate to the same extent,
with the exception of not having the same thresholds, as the
order issued by FinCEN on November 15, 2018, applies to
residential real estate; and
(2) establishes a specific threshold for commercial real
estate.
SEC. 403. BENEFICIAL OWNERSHIP STUDIES.
(a) Other Legal Entities Study.--Not later than 2 years after the
date of enactment of this Act, the Comptroller General of the United
States shall conduct a study and submit to Congress a report--
(1) identifying each State that has procedures that enable
persons to form or register under the laws of the State
partnerships, trusts, or other legal entities, and the nature
of those procedures;
(2) identifying each State that requires persons seeking to
form or register partnerships, trusts, or other legal entities
under the laws of the State to provide beneficial owners (as
that term is defined in section 5334(a) of title 31, United
States Code, as added by section 401 of this Act) or
beneficiaries of such entities, and the nature of the required
information;
(3) evaluating whether the lack of available beneficial
ownership information for partnerships, trusts, or other legal
entities--
(A) raises concerns about the involvement of such
entities in terrorism, money laundering, tax evasion,
securities fraud, or other misconduct; and
(B) has impeded investigations into entities
suspected of such misconduct; and
(4) evaluating whether the failure of the United States to
require beneficial ownership information for partnerships and
trusts formed or registered in the United States has elicited
international criticism and what steps, if any, the United
States has taken or is planning to take in response.
(b) Effectiveness of Incorporation Practices Study.--Not later than
5 years after the date of enactment of this Act, the Comptroller
General of the United States shall conduct a study and submit to the
Congress a report assessing the effectiveness of incorporation
practices implemented under this Act, and the amendments made by this
Act, in--
(1) providing law enforcement agencies with prompt access
to reliable, useful, and complete beneficial ownership
information; and
(2) strengthening the capability of law enforcement
agencies to--
(A) combat incorporation abuses and civil and
criminal misconduct; and
(B) detect, prevent, or punish terrorism, money
laundering, tax evasion, or other misconduct.
(c) Using Technology To Avoid Duplicative Layers of Reporting
Obligations and Increase Accuracy of Beneficial Ownership
Information.--
(1) In general.--The Secretary, in consultation with the
Attorney General of the United States shall conduct a study to
evaluate--
(A) the feasibility of adopting FinCEN identifying
numbers or other simplified reporting methods in order
to facilitate a simplified beneficial ownership regime
for reporting companies;
(B) whether a reporting regime whereby only company
shareholders are reported within the ownership chain of
a reporting company could effectively track beneficial
ownership information and increase information to law
enforcement;
(C) the costs associated with imposing any new
verification requirements on FinCEN; and
(D) the resources necessary to implement any such
changes.
(2) Findings.--The Secretary shall present findings to the
relevant committees of jurisdiction and provide recommendations
for carrying out these findings.
TITLE V--STRENGTHENING THE ABILITY OF THE SECURITIES AND EXCHANGE
COMMISSION TO PURSUE VIOLATIONS OF THE SECURITIES LAWS
SEC. 501. SHORT TITLE.
This title may be cited as the ``Securities Fraud Enforcement and
Investor Compensation Act of 2019''.
SEC. 502. INVESTIGATIONS AND PROSECUTIONS OF VIOLATIONS OF THE
SECURITIES LAWS.
(a) In General.--Section 21(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78u(d)) is amended--
(1) in paragraph (3)--
(A) in the paragraph heading--
(i) by inserting ``Civil'' before ``Money
penalties''; and
(ii) by striking ``in civil actions'' and
inserting ``and authority to seek
disgorgement'';
(B) in subparagraph (A), by striking ``jurisdiction
to impose'' and all that follows through the period at
the end and inserting the following: ``jurisdiction
to--
``(i) impose, upon a proper showing, a civil
penalty to be paid by the person who committed such
violation; and
``(ii) require disgorgement under paragraph (7) by
the person who received any unjust enrichment as a
result of such violation.''; and
(C) in subparagraph (B)--
(i) in clause (i), in the first sentence,
by striking ``the penalty'' and inserting ``a
civil penalty imposed under subparagraph
(A)(i)'';
(ii) in clause (ii), by striking ``amount
of penalty'' and inserting ``amount of a civil
penalty imposed under subparagraph (A)(i)'';
and
(iii) in clause (iii), in the matter
preceding item (aa), by striking ``amount of
penalty for each such violation'' and inserting
``amount of a civil penalty imposed under
subparagraph (A)(i) for each violation
described in that subparagraph'';
(2) in paragraph (4), by inserting ``under paragraph (7)''
after ``funds disgorged''; and
(3) by adding at the end the following:
``(7) Disgorgement.--
``(A) In general.--In any action or proceeding brought by
the Commission under any provision of the securities laws, the
Commission may seek, and any Federal court may order,
disgorgement of any unjust enrichment that a person obtained as
a result of a violation of that provision.
``(B) Calculation.--Any disgorgement that is ordered with
respect to a person under subparagraph (A) shall be offset by
any amount of restitution that the person is ordered to pay
under paragraph (8).
``(8) Restitution.--In any proceeding brought or instituted by the
Commission under any provision of the securities laws, the Commission
may seek, and any Federal court, or, with respect to a proceeding
instituted by the Commission, the Commission, may order restitution to
an investor in the amount of the loss that the investor sustained as a
result of a violation of that provision by a person that is--
``(A) registered as, or required to be registered as, a
broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, or transfer agent; or
``(B) associated with, or, as of the date on which the
violation occurs, seeking to become associated with, an entity
described in subparagraph (A).
``(9) Limitations Periods.--
``(A) Disgorgement.--The Commission may bring a claim for
disgorgement under paragraph (7) not later than 5 years after
the date on which the person against which the claim is brought
receives any unjust enrichment as a result of the violation
that gives rise to the action or proceeding in which the
Commission seeks the claim.
``(B) Equitable remedies.--The Commission may seek a claim
for any equitable remedy, including for restitution under
paragraph (8), an injunction, or a bar, suspension, or cease
and desist order, not later than 12 years after the latest date
on which a violation that gives rise to the claim occurs.
``(C) Calculation.--For the purposes of calculating any
limitations period under this paragraph with respect to an
action or claim, any time in which the person against which the
action or claim, as applicable, is brought is outside of the
United States shall not count towards the accrual of that
period.
``(10) Rule of Construction.--Nothing in paragraph (7) or (8) may
be construed as altering any right that any private party may have to
maintain a suit for a violation of this Act.''.
(b) Applicability.--The amendments made by subsection (a) shall
apply with respect to any action or proceeding that is commenced on or
after the date of enactment of this Act.
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