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116th Congress    }                                  {   Rept. 116-104
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                  {          Part 1

======================================================================



 
                        SAFE BANKING ACT OF 2019

                                _______
                                

  June 5, 2019.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Ms. Maxine Waters of California, from the Committee on Financial 
                   Services, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1595]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1595) to create protections for depository 
institutions that provide financial services to cannabis-
related legitimate businesses and service providers for such 
businesses, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     8
Background and Need for Legislation..............................     8
Section-by-Section Analysis......................................     9
Hearings.........................................................    13
Committee Consideration..........................................    13
Committee Votes..................................................    14
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................    21
Statement of Performance Goals and Objectives....................    21
New Budget Authority and CBO Cost Estimate.......................    21
Committee Cost Estimate..........................................    26
Unfunded Mandate Statement.......................................    26
Advisory Committee...............................................    27
Committee Correspondence.........................................    28
Application of Law to the Legislative Branch.....................    30
Earmark Statement................................................    30
Duplication of Federal Programs..................................    30
Changes to Existing Law..........................................    30

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; PURPOSE.

  (a) Short Title.--This Act may be cited as the ``Secure And Fair 
Enforcement Banking Act of 2019'' or the ``SAFE Banking Act of 2019''.
  (b) Purpose.--The purpose of this Act is to increase public safety by 
ensuring access to financial services to cannabis-related legitimate 
businesses and service providers and reducing the amount of cash at 
such businesses.

SEC. 2. SAFE HARBOR FOR DEPOSITORY INSTITUTIONS.

  (a) In General.--A Federal banking regulator may not--
                  (1) terminate or limit the deposit insurance or share 
                insurance of a depository institution under the Federal 
                Deposit Insurance Act (12 U.S.C. 1811 et seq.), the 
                Federal Credit Union Act (12 U.S.C. 1751 et seq.), or 
                take any other adverse action against a depository 
                institution under section 8 of the Federal Deposit 
                Insurance Act (12 U.S.C. 1818) solely because the 
                depository institution provides or has provided 
                financial services to a cannabis-related legitimate 
                business or service provider;
                  (2) prohibit, penalize, or otherwise discourage a 
                depository institution from providing financial 
                services to a cannabis-related legitimate business or 
                service provider or to a State, political subdivision 
                of a State, or Indian Tribe that exercises jurisdiction 
                over cannabis-related legitimate businesses;
                  (3) recommend, incentivize, or encourage a depository 
                institution not to offer financial services to an 
                account holder, or to downgrade or cancel the financial 
                services offered to an account holder solely because--
                          (A) the account holder is a cannabis-related 
                        legitimate business or service provider, or is 
                        an employee, owner, or operator of a cannabis-
                        related legitimate business or service 
                        provider;
                          (B) the account holder later becomes an 
                        employee, owner, or operator of a cannabis-
                        related legitimate business or service 
                        provider; or
                          (C) the depository institution was not aware 
                        that the account holder is an employee, owner, 
                        or operator of a cannabis-related legitimate 
                        business or service provider;
                  (4) take any adverse or corrective supervisory action 
                on a loan made to--
                          (A) a cannabis-related legitimate business or 
                        service provider, solely because the business 
                        is a cannabis-related legitimate business or 
                        service provider;
                          (B) an employee, owner, or operator of a 
                        cannabis-related legitimate business or service 
                        provider, solely because the employee, owner, 
                        or operator is employed by, owns, or operates a 
                        cannabis-related legitimate business or service 
                        provider, as applicable; or
                          (C) an owner or operator of real estate or 
                        equipment that is leased to a cannabis-related 
                        legitimate business or service provider, solely 
                        because the owner or operator of the real 
                        estate or equipment leased the equipment or 
                        real estate to a cannabis-related legitimate 
                        business or service provider, as applicable; or
                  (5) prohibit or penalize a depository institution (or 
                entity performing a financial service for or in 
                association with a depository institution) for, or 
                otherwise discourage a depository institution (or 
                entity performing a financial service for or in 
                association with a depository institution) from, 
                engaging in a financial service for a cannabis-related 
                legitimate business or service provider.
  (b) Safe Harbor Applicable to De Novo Institutions.--Subsection (a) 
shall apply to an institution applying for a depository institution 
charter to the same extent as such subsection applies to a depository 
institution.

SEC. 3. PROTECTIONS FOR ANCILLARY BUSINESSES.

  For purposes of sections 1956 and 1957 of title 18, United States 
Code, and all other provisions of Federal law, the proceeds from a 
transaction conducted by a cannabis-related legitimate business or 
service provider shall not be considered as proceeds from an unlawful 
activity solely because the transaction was conducted by a cannabis-
related legitimate business or service provider, as applicable.

SEC. 4. PROTECTIONS UNDER FEDERAL LAW.

  (a) In General.--With respect to providing a financial service to a 
cannabis-related legitimate business or service provider within a 
State, political subdivision of a State, or Indian country that allows 
the cultivation, production, manufacture, sale, transportation, 
display, dispensing, distribution, or purchase of cannabis pursuant to 
a law or regulation of such State, political subdivision, or Indian 
Tribe that has jurisdiction over the Indian country, as applicable, a 
depository institution, entity performing a financial service for or in 
association with a depository institution, or insurer that provides a 
financial service to a cannabis-related legitimate business or service 
provider, and the officers, directors, and employees of that depository 
institution, entity, or insurer may not be held liable pursuant to any 
Federal law or regulation--
          (1) solely for providing such a financial service; or
          (2) for further investing any income derived from such a 
        financial service.
  (b) Protections for Federal Reserve Banks.--With respect to providing 
a service to a depository institution that provides a financial service 
to a cannabis-related legitimate business or service provider (where 
such financial service is provided within a State, political 
subdivision of a State, or Indian country that allows the cultivation, 
production, manufacture, sale, transportation, display, dispensing, 
distribution, or purchase of cannabis pursuant to a law or regulation 
of such State, political subdivision, or Indian Tribe that has 
jurisdiction over the Indian country, as applicable), a Federal reserve 
bank, and the officers, directors, and employees of the Federal reserve 
bank, may not be held liable pursuant to any Federal law or 
regulation--
          (1) solely for providing such a service; or
          (2) for further investing any income derived from such a 
        service.
  (c) Forfeiture.--
          (1) Depository institutions.--A depository institution that 
        has a legal interest in the collateral for a loan or another 
        financial service provided to an owner, employee, or operator 
        of a cannabis-related legitimate business or service provider, 
        or to an owner or operator of real estate or equipment that is 
        leased or sold to a cannabis-related legitimate business or 
        service provider, shall not be subject to criminal, civil, or 
        administrative forfeiture of that legal interest pursuant to 
        any Federal law for providing such loan or other financial 
        service.
          (2) Federal reserve banks.--A Federal reserve bank that has a 
        legal interest in the collateral for a loan or another 
        financial service provided to an owner, employee, or operator 
        of a depository institution that provides a financial services 
        to a cannabis-related legitimate business or service provider, 
        or to an owner or operator of real estate or equipment that is 
        leased or sold to such a depository institution, shall not be 
        subject to criminal, civil, or administrative forfeiture of 
        that legal interest pursuant to any Federal law for providing 
        such loan or other financial service.

SEC. 5. RULE OF CONSTRUCTION.

  Nothing in this Act shall require a depository institution, entity 
performing a financial service for or in association with a depository 
institution, or insurer to provide financial services to a cannabis-
related legitimate business or service provider.

SEC. 6. REQUIREMENTS FOR FILING SUSPICIOUS ACTIVITY REPORTS.

  Section 5318(g) of title 31, United States Code, is amended by adding 
at the end the following:
          ``(5) Requirements for cannabis-related legitimate 
        businesses.--
                  ``(A) In general.--With respect to a financial 
                institution or any director, officer, employee, or 
                agent of a financial institution that reports a 
                suspicious transaction pursuant to this subsection, if 
                the reason for the report relates to a cannabis-related 
                legitimate business or service provider, the report 
                shall comply with appropriate guidance issued by the 
                Financial Crimes Enforcement Network. The Secretary 
                shall ensure that the guidance is consistent with the 
                purpose and intent of the SAFE Banking Act of 2019 and 
                does not significantly inhibit the provision of 
                financial services to a cannabis-related legitimate 
                business or service provider in a State, political 
                subdivision of a State, or Indian country that has 
                allowed the cultivation, production, manufacture, 
                transportation, display, dispensing, distribution, 
                sale, or purchase of cannabis pursuant to law or 
                regulation of such State, political subdivision, or 
                Indian Tribe that has jurisdiction over the Indian 
                country.
                  ``(B) Definitions.--For purposes of this paragraph:
                          ``(i) Cannabis.--The term `cannabis' has the 
                        meaning given the term `marihuana' in section 
                        102 of the Controlled Substances Act (21 U.S.C. 
                        802).
                          ``(ii) Cannabis-related legitimate 
                        business.--The term `cannabis-related 
                        legitimate business' has the meaning given that 
                        term in section 11 of the SAFE Banking Act of 
                        2019.
                          ``(iii) Indian country.--The term `Indian 
                        country' has the meaning given that term in 
                        section 1151 of title 18.
                          ``(iv) Indian tribe.--The term `Indian Tribe' 
                        has the meaning given that term in section 102 
                        of the Federally Recognized Indian Tribe List 
                        Act of 1994 (25 U.S.C. 479a).
                          ``(v) Financial service.--The term `financial 
                        service' has the meaning given that term in 
                        section 11 of the SAFE Banking Act of 2019.
                          ``(vi) Service provider.--The term `service 
                        provider' has the meaning given that term in 
                        section 11 of the SAFE Banking Act of 2019.
                          ``(vii) State.--The term `State' means each 
                        of the several States, the District of 
                        Columbia, Puerto Rico, and any territory or 
                        possession of the United States.''.

SEC. 7. GUIDANCE AND EXAMINATION PROCEDURES.

  Not later than 180 days after the date of enactment of this Act, the 
Financial Institutions Examination Council shall develop uniform 
guidance and examination procedures for depository institutions that 
provide financial services to cannabis-related legitimate businesses 
and service providers.

SEC. 8. ANNUAL DIVERSITY AND INCLUSION REPORT.

  The Federal banking regulators shall issue an annual report to 
Congress containing--
          (1) information and data on the availability of access to 
        financial services for minority-owned and women-owned cannabis-
        related legitimate businesses; and
          (2) any regulatory or legislative recommendations for 
        expanding access to financial services for minority-owned and 
        women-owned cannabis-related legitimate businesses.

SEC. 9. GAO STUDY ON DIVERSITY AND INCLUSION.

  (a) Study.--The Comptroller General of the United States shall carry 
out a study on the barriers to marketplace entry, including in the 
licensing process, and the access to financial services for potential 
and existing minority-owned and women-owned cannabis-related legitimate 
businesses.
  (b) Report.--The Comptroller General shall issue a report to the 
Congress--
          (1) containing all findings and determinations made in 
        carrying out the study required under subsection (a); and
          (2) containing any regulatory or legislative recommendations 
        for removing barriers to marketplace entry, including in the 
        licensing process, and expanding access to financial services 
        for potential and existing minority-owned and women-owned 
        cannabis-related legitimate businesses.

SEC. 10. GAO STUDY ON EFFECTIVENESS OF CERTAIN REPORTS ON FINDING 
                    CERTAIN PERSONS.

  Not later than 2 years after the date of the enactment of this Act, 
the Comptroller General of the United States shall carry out a study on 
the effectiveness of reports on suspicious transactions filed pursuant 
to section 5318(g) of title 31, United States Code, at finding 
individuals or organizations suspected or known to be engaged with 
transnational criminal organizations and whether any such engagement 
exists in a State, political subdivision, or Indian Tribe that has 
jurisdiction over Indian country that allows the cultivation, 
production, manufacture, sale, transportation, display, dispensing, 
distribution, or purchase of cannabis. The study shall examine reports 
on suspicious transactions as follows:
          (1) During the period of 2014 until the date of the enactment 
        of this Act, reports relating to marijuana-related businesses.
          (2) During the 1-year period after date of the enactment of 
        this Act, reports relating to cannabis-related legitimate 
        businesses.

SEC. 11. DEFINITIONS.

  In this Act:
          (1) Business of insurance.--The term ``business of 
        insurance'' has the meaning given such term in section 1002 of 
        the Dodd-Frank Wall Street Reform and Consumer Protection Act 
        (12 U.S.C. 5481).
          (2) Cannabis.--The term ``cannabis'' has the meaning given 
        the term ``marihuana'' in section 102 of the Controlled 
        Substances Act (21 U.S.C. 802).
          (3) Cannabis product.--The term ``cannabis product'' means 
        any article which contains cannabis, including an article which 
        is a concentrate, an edible, a tincture, a cannabis-infused 
        product, or a topical.
          (4) Cannabis-related legitimate business.--The term 
        ``cannabis-related legitimate business'' means a manufacturer, 
        producer, or any person or company that--
                  (A) engages in any activity described in subparagraph 
                (B) pursuant to a law established by a State or a 
                political subdivision of a State, as determined by such 
                State or political subdivision; and
                  (B) participates in any business or organized 
                activity that involves handling cannabis or cannabis 
                products, including cultivating, producing, 
                manufacturing, selling, transporting, displaying, 
                dispensing, distributing, or purchasing cannabis or 
                cannabis products.
          (5) Depository institution.--The term ``depository 
        institution'' means--
                  (A) a depository institution as defined in section 
                3(c) of the Federal Deposit Insurance Act (12 U.S.C. 
                1813(c));
                  (B) a Federal credit union as defined in section 101 
                of the Federal Credit Union Act (12 U.S.C. 1752); or
                  (C) a State credit union as defined in section 101 of 
                the Federal Credit Union Act (12 U.S.C. 1752).
          (6) Federal banking regulator.--The term ``Federal banking 
        regulator'' means each of the Board of Governors of the Federal 
        Reserve System, the Bureau of Consumer Financial Protection, 
        the Federal Deposit Insurance Corporation, the Financial Crimes 
        Enforcement Network, the Office of Foreign Asset Control, the 
        Office of the Comptroller of the Currency, the National Credit 
        Union Administration, the Department of the Treasury, or any 
        Federal agency or department that regulates banking or 
        financial services, as determined by the Secretary of the 
        Treasury.
          (7) Financial service.--The term ``financial service''--
                  (A) means a financial product or service, as defined 
                in section 1002 of the Dodd-Frank Wall Street Reform 
                and Consumer Protection Act (12 U.S.C. 5481);
                  (B) includes the business of insurance;
                  (C) includes, whether performed directly or 
                indirectly, the authorizing, processing, clearing, 
                settling, billing, transferring for deposit, 
                transmitting, delivering, instructing to be delivered, 
                reconciling, collecting, or otherwise effectuating or 
                facilitating of payments or funds, where such payments 
                or funds are made or transferred by any means, 
                including by the use of credit cards, debit cards, 
                other payment cards, or other access devices, accounts, 
                original or substitute checks, or electronic funds 
                transfers;
                  (D) includes acting as a money transmitting business 
                which directly or indirectly makes use of a depository 
                institution in connection with effectuating or 
                facilitating a payment for a cannabis-related 
                legitimate business or service provider in compliance 
                with section 5330 of title 31, United States Code, and 
                any applicable State law; and
                  (E) includes acting as an armored car service for 
                processing and depositing with a depository institution 
                or the Board of Governors of the Federal Reserve System 
                with respect to any monetary instruments (as defined 
                under section 1956(c)(5) of title 18, United States 
                Code.
          (8) Indian country.--The term ``Indian country'' has the 
        meaning given that term in section 1151 of title 18.
          (9) Indian tribe.--The term ``Indian Tribe'' has the meaning 
        given that term in section 102 of the Federally Recognized 
        Indian Tribe List Act of 1994 (25 U.S.C. 479a).
          (10) Insurer.--The term ``insurer'' has the meaning given 
        that term under section 313(r) of title 31, United States Code.
          (11) Manufacturer.--The term ``manufacturer'' means a person 
        who manufactures, compounds, converts, processes, prepares, or 
        packages cannabis or cannabis products.
          (12) Producer.--The term ``producer'' means a person who 
        plants, cultivates, harvests, or in any way facilitates the 
        natural growth of cannabis.
          (13) Service provider.--The term ``service provider''--
                  (A) means a business, organization, or other person 
                that--
                          (i) sells goods or services to a cannabis-
                        related legitimate business; or
                          (ii) provides any business services, 
                        including the sale or lease of real or any 
                        other property, legal or other licensed 
                        services, or any other ancillary service, 
                        relating to cannabis; and
                  (B) does not include a business, organization, or 
                other person that participates in any business or 
                organized activity that involves handling cannabis or 
                cannabis products, including cultivating, producing, 
                manufacturing, selling, transporting, displaying, 
                dispensing, distributing, or purchasing cannabis or 
                cannabis products.
          (14) State.--The term ``State'' means each of the several 
        States, the District of Columbia, Puerto Rico, and any 
        territory or possession of the United States.

                          Purpose and Summary

    On March 7, 2019, Reps. Ed Perlmutter (D-CO), Denny Heck 
(D-WA), Warren Davidson (R-OH-08) and Steve Stivers (R-OH-15) 
introduced H.R. 1595, the ``Secure and Fair Enforcement (SAFE) 
Banking Act of 2019,'' which would allow cannabis-related 
legitimate businesses, along with their service providers, to 
access banking services and products, as well as insurance. 
Furthermore, the SAFE Banking Act seeks to harmonize federal 
and state law by prohibiting federal banking regulators from 
engaging in certain actions against financial institutions, 
such as discouraging, prohibiting, or penalizing depository 
institutions that serve cannabis-related legitimate businesses. 
Additionally, any depository institution or employee of the 
institution would be exempt from federal prosecution or 
investigation solely for providing banking services to a 
cannabis-related legitimate business. The legislation provides 
a safe harbor for financial institutions to offer their 
products and services to cannabis-related legitimate businesses 
and adds protections for ancillary businesses, specifies how 
businesses on tribal land could qualify for the safe harbor 
provision, and requires the Federal Financial Institutions 
Examination Council (FFIEC) to develop uniform guidance and 
exam procedures to help financial institutions lawfully serve 
cannabis-related legitimate businesses. In addition, the SAFE 
Banking Act requires reports to Congress on access to financial 
services and barriers to marketplace entry for potential and 
existing minority-owned and women-owned cannabis-related 
legitimate businesses.

                  Background and Need for Legislation

    Today, 47 states, the District of Columbia, and four U.S. 
territories have passed laws and adopted policies allowing for 
some cultivation, sale, distribution, and possession of 
cannabis for adult recreational or medical purposes, including 
cannabidiol--all of which are in conflict with the Controlled 
Substances Act of 1970 (CSA).\1\ Cannabis is currently 
considered illegal under this Act, and therefore, financial 
institutions providing banking services to legitimate cannabis 
businesses licensed under state law are subject to criminal 
prosecution and civil and regulatory action. Since state and 
federal law are in conflict on this issue, legal and legitimate 
cannabis businesses are forced to operate on a cash-only basis 
creating a serious public safety risk for employees, 
businesses, and communities, as well as providing an 
opportunity for tax evasion, money laundering and other white-
collar crimes.
---------------------------------------------------------------------------
    \1\21 U.S.C. 801 et.seq.
---------------------------------------------------------------------------
    In response to ongoing state cannabis legalization efforts, 
both the Department of Justice (DOJ) and the U.S. Department of 
Treasury's Financial Crimes Enforcement Network (FinCEN) have 
issued various memos and guidance on cannabis banking. For 
example, in an August 29, 2013 memorandum, former Deputy 
Attorney General James Cole stated that while marijuana remains 
an illegal substance under the CSA, DOJ would focus its 
resources on the ``most significant threats in the most 
effective, consistent, and rational way.'' The memo outlined 
eight enforcement priorities for DOJ, including preventing the 
distribution of marijuana to minors; preventing revenue from 
the sale of marijuana from going to criminal enterprises, 
gangs, and cartels; and preventing state-authorized marijuana 
activity from being used as a cover or pretext for the 
trafficking of other illegal drugs or other illegal 
activity.\2\ In a February 14, 2014 memorandum, Deputy Attorney 
General Cole further reiterated these enforcement priorities, 
specifically as they relate to the prosecution of marijuana-
related financial crimes. The memo directed the U.S. Attorneys 
that ``in determining whether to charge individuals or 
institutions with . . . [certain financial] offenses based on 
marijuana-related violations of the CSA, prosecutors should 
apply the eight enforcement priorities described in the August 
29 guidance.''\3\
---------------------------------------------------------------------------
    \2\``Guidance Regarding Marijuana Enforcement,'' U.S. Department of 
Justice, August 29, 2013, available at: https://www.justice.gov/iso/
opa/resources/3052013829132756857467.pdf.
    \3\``Guidance Regarding Marijuana Related Financial Crimes,'' U.S. 
Department of Justice, February 14, 2014, available at: https://
dfi.wa.gov/documents/banks/dept-of-justice-memo.pdf.
---------------------------------------------------------------------------
    FinCEN issued its own guidance with respect to cannabis-
related financial crimes on February 14, 2014.\4\ This guidance 
provides a roadmap for financial institutions seeking to comply 
with suspicious activity reporting requirements when providing 
financial services to state authorized cannabis-related 
legitimate businesses, while also alerting FinCEN to 
transactions that might trigger federal enforcement priorities. 
Specifically, the FinCEN guidance states that:
---------------------------------------------------------------------------
    \4\``BSA Expectations Regarding Marijuana-Related Business,'' U.S. 
Department of the Treasury, Financial Crimes Enforcement Network, FIN-
2014-G001, February 14, 2014, available at: https://www.fincen.gov/
sites/default/files/shared/FIN-2014-G001.pdf.

          ``[b]ecause federal law prohibits the distribution 
        and sale of marijuana, financial transactions involving 
        a marijuana-related business would generally involve 
        funds derived from illegal activity. Therefore, a 
        financial institution is required to file a SAR on 
        activity involving a marijuana-related business 
        (including those duly licensed under state law) in 
        accordance with this guidance and [FinCEN 
---------------------------------------------------------------------------
        regulations].''

    FinCEN advised financial institutions that, in providing 
services to a cannabis-related business, they must file one of 
three types of special SARs:
          1. Cannabis Limited SAR: The cannabis limited SAR is 
        seen to be appropriate when the bank determines, after 
        the exercise of due diligence, that a customer is not 
        engaged in any activities that violate state law or 
        implicate the investigation and prosecution priorities 
        in the Cole Memorandum;\5\
---------------------------------------------------------------------------
    \5\``Guidance Regarding Marijuana Enforcement,'' U.S. Department of 
Justice, August 29, 2013, available at: https://www.justice.gov/iso/
opa/resources/3052013829132756857467.pdf.
---------------------------------------------------------------------------
          2. Cannabis Priority SAR: A cannabis priority SAR 
        must be filed when the financial institution believes a 
        customer is engaged in activities that implicate DOJ's 
        investigation and prosecution priorities; and,
          3. Cannabis Termination SAR: A financial institution 
        is instructed to file a cannabis termination SAR when 
        it finds it necessary to sever its relationship with a 
        customer to maintain an effective anti-money laundering 
        program.
    FinCEN also provides examples of ``red flags'' that may 
indicate that a cannabis priority SAR is appropriate. On 
January 4, 2018, then Attorney General Jeff Sessions issued a 
new DOJ memo on marijuana enforcement, effectively rescinding 
the memoranda written by former Deputy Attorney General Cole on 
the topic. However, after Reps. Perlmutter, Heck, Young and 
other Members of Congress wrote a letter urging FinCEN to 
maintain their 2014 guidance, the Treasury Department responded 
that the FinCEN guidance would remain in place.
    Notwithstanding the FinCEN guidance remaining valid, many 
financial institutions remain reluctant to serve cannabis-
related legitimate businesses, and many of those businesses 
continue to have little to no access to traditional banking 
services. As a result, many of these businesses operate as 
purely cash businesses, unable to accept credit cards, deposit 
their profits or write checks to pay employees or taxes. As 
such, cannabis-related legitimate businesses have been 
described as a ``soft target'' for being robbed and assaulted, 
having their stores broken into, and having cash and cannabis 
products stolen. For example, Travis Mason, a security guard 
and former Marine, was killed in 2016 during a robbery at 
dispensary in Aurora, Colorado.\6\ Additionally, employees are 
often paid in cash, creating soft targets for criminals. 
Furthermore, there are related challenges experienced by 
ancillary businesses that provide various products and services 
to cannabis-related businesses, such as electricians, plumbers, 
insurance providers, and landlords. Even though these 
businesses do not work directly with cannabis, maintaining a 
checking account or utilize payment processors can prove 
challenging.\7\
---------------------------------------------------------------------------
    \6\Tom McGhee and Kieran Nicholson, ``Slain pot dispensary security 
guard dreamed of becoming a police officer,'' The Denver Post (June 20, 
2016), https://www.denverpost.com/2016/06/20/green-heart-marijuana-
dispensary-security-guard-killed/.
    \7\Testimony of Gregory S. Deckard, President, CEO and Chairman, 
State Bank Northwest, on behalf of Independent Community Bankers of 
America, before the Subcommittee on Consumer Protection and Financial 
Institutions hearing entitled, ``Challenges and Solutions: Access to 
Banking Services for Cannabis-Related Businesses,'' (Feb. 13, 2019), 
https://financialservices.house.gov/calendar/
eventsingle.aspx?EventID=402094. Also see Tina Reed, ``When your 
business is serving cannabis companies, just keeping a bank account is 
tricky,'' Washington Business Journal (Apr. 18, 2017), https://
www.bizjournals.com/washington/news/2017/04/18/when-your-business-is-
serving-cannabis-companies.html.
---------------------------------------------------------------------------
    The SAFE Banking Act would address this conflict by 
clarifying that state-authorized and regulated cannabis 
businesses, along with their service providers, may access the 
banking system, in part by creating a safe harbor for banks and 
credit unions to provide such services to these businesses. 
With access to banking services, cannabis-related legitimate 
businesses would no longer need to operate as a cash only 
business, which could promote public safety and improve the 
efficiency of collecting taxes and fees from these businesses. 
The legislative framework builds upon existing guidance from 
FinCEN and it preserves the banks' and credit unions' 
regulatory responsibilities to, among other things, know their 
customers and avoid illicit money laundering. Additionally, the 
legislation maintains prudential banking regulators' existing 
authority to use their supervisory and enforcement toolkit to 
monitor and address safety and soundness concerns for 
depository institutions.
    On February 13, 2019, the Subcommittee on Consumer 
Protection and Financial Institutions held a hearing during 
which the legislation was considered. Executives from members 
of the Credit Union National Association and Independent 
Community Bankers of America spoke in support of the bill. 
Neill Franklin, a retired police officer explained how cannabis 
businesses operating solely with cash, ``leave legitimate 
businesses vulnerable to theft, robbery, and the violence that 
accompany those crimes.'' Corey Barnette, an owner of a D.C.-
based cannabis dispensary, described how the lack of access to 
banking services has served as a barrier to entry and ``hits 
especially hard to small and minority-owned business 
operators.'' The California State Treasurer, Fiona Ma, 
discussed her state's exploration of a range of local options 
in recent years while noting they found that, ``the only truly 
durable solution was for the federal government to act.''
    In a May 8, 2019, letter supporting the SAFE Banking Act, a 
bipartisan group of 38 State and territory Attorneys General 
wrote, ``[R]egardless of how individual policymakers feel about 
states permitting the use of medical or recreational marijuana, 
the reality of the situation requires federal rules that permit 
a sensible banking regime for legal businesses.''\8\ 
Additionally, in testimony before the Committee on February 6, 
2018, Treasury Secretary Steven Mnuchin stated, ``[W]e do want 
to find a solution to make sure that businesses that have large 
access to cash have a way to get them into a depository 
institution for it to be safe,'' in response to a question from 
Rep. Perlmutter on cannabis and banking.\9\
---------------------------------------------------------------------------
    \8\National Association of Attorneys General, ``AGs Urge Congress 
to Pass the SAFE Banking Act,'' (May 8, 2019), https://www.naag.org/
naag/media/naag-news/ags-urge-congress-to-pass-the-safe-banking-
act.php.
    \9\Transcript of Committee on Financial Services hearing entitled, 
``The Annual Report of the Financial Stability Oversight Council,'' 
(Feb. 6, 2018), https://www.govinfo.gov/content/pkg/CHRG-115hhrg31345/
html/CHRG-115hhrg31345.htm.
---------------------------------------------------------------------------
    The SAFE Banking Act is supported by the National 
Association of Attorneys General (NAAG), the Credit Union 
National Association (CUNA), the Independent Community Bankers 
Association (ICBA), the America Bankers Association (ABA), the 
Mid-size Bank Coalition of America (MBCA), the Electronic 
Transaction Association (ETA), the Law Enforcement Action 
Partnership (LEAP), The Real Estate Roundtable (RER), the Safe 
and Responsible Banking Alliance (SARBA), the American Land 
Title Association (ALTA), the American Property Casualty 
Insurance Association (APCIA), The Council of Insurance Agents 
and Brokers (CIAB), Reinsurance Association of America (RAA), 
the Independent Insurance Agents and Brokers of America (Big 
``I''), the Wholesale and Specialty Insurance Association 
(WSIA), the Rural County Representatives of California (RCRC), 
The Brink's Company, the National Cannabis Industry Association 
(NCIA), the National Cannabis Roundtable (NCR), the Minority 
Cannabis Business Association (MCBA), and the Cannabis Trade 
Federation (CTF). Additionally, 25 State and territory 
financial regulators\10\ and 17 State Treasurers have endorsed 
the legislation.\11\
---------------------------------------------------------------------------
    \10\Pennsylvania Secretary of Banking and Securities, ``State 
Regulators Appeal to Congress on Marijuana Banking Fix,'' (Apr. 15, 
2019), https://www.media.pa.gov/pages/banking_details.aspx?newsid=279.
    \11\Rep. Ed Perlmutter Press Release, ``Nation's Attorneys General, 
Treasurers Support and Urge Passage of SAFE Banking,'' (May 8, 2019), 
https://perlmutter.house.gov/news/documentsingle.aspx?DocumentID=4500.
---------------------------------------------------------------------------

                      Section-by-Section Analysis


Section 1. Short title; purpose

    Subsection (a) provides that the short title of the act is 
the ``Secure and Fair Enforcement (SAFE) Banking Act of 2019,''
    Subsection (b) provides that the purpose is to improve 
public safety by ensuring access to financial service to 
cannabis-related legitimate businesses and service providers 
and reducing the amount of cash at such businesses. This 
subsection is intended to make a clear statement to regulators 
that the changes they make to implement the bill should be 
geared toward expanding access to basic banking services for 
such businesses.

Section 2. Safe harbor for depository institutions

    This section creates a multi-pronged safe harbor to ensure 
that regulators cannot prohibit, penalize or otherwise 
discourage banks or credit unions from serving cannabis-related 
legitimate businesses solely because they are cannabis-related 
legitimate businesses. This safe harbor extends to depository 
institutions that serve ancillary businesses that provide 
products and services or otherwise interact with cannabis-
related legitimate businesses.
    Subsection (a) provides that the safe harbor has five 
components: (1) regulators cannot close a bank or credit union 
by pulling its charter or its deposit/share insurance, because 
it serves cannabis-related legitimate businesses or ancillary 
businesses; (2) regulators cannot impose lesser penalties (i.e. 
short of closing the institution) to discourage depository 
institutions from serving cannabis-related legitimate 
businesses or ancillary businesses or state, local and tribal 
governments that regulate and tax cannabis-related legitimate 
businesses; (3) regulators cannot provide incentives to not 
serve cannabis-related legitimate businesses; (4) regulators 
cannot take any adverse or corrective supervisory action on 
loans made to cannabis-related legitimate businesses, ancillary 
businesses, or people associated with cannabis-related 
legitimate businesses, solely because the loan involves--
directly or indirectly--a cannabis-related legitimate 
businesses; and (5) regulators cannot prohibit, penalize or 
otherwise discourage depository institutions, or any entity 
performing a financial service (e.g. insurance companies, 
payment processors, armored car services, etc.) for or in 
association with a depository institution to cannabis-related 
legitimate businesses or ancillary businesses.
    Subsection (b) provides that the safe harbor in the section 
applies to any entity that applies for a depository institution 
charter, and such application cannot be denied solely on the 
basis that the depository institution would serve a cannabis-
related legitimate business.
    Furthermore, the Committee emphasizes that the safe harbor 
in this section, or any other provisions of this Act, does not 
diminish prudential regulators ability to supervise depository 
institutions for safety and soundness. The Committee also 
emphasizes that the safe harbor in this section, and other 
provisions of this Act, are intended to cover all persons 
affiliated with a legitimate, state-regulated cannabis business 
or ancillary businesses, including employees, owners and 
operators of the business.

Section 3. Protections for ancillary businesses

    This section creates a safe harbor from 18 USC 1956 
(Laundering of financial instruments) and 18 USC 1957 (Engaging 
in monetary transactions derived from specified unlawful 
activities) for transactions with a cannabis-related legitimate 
business and any entity handling such proceeds regardless of 
whether or not they transact directly with the cannabis-related 
legitimate business. Because Federal law criminalizes cannabis, 
entities that conduct business with cannabis-related legitimate 
business are handling the proceeds of criminal activity and are 
exposed to federal criminal and civil legal risks under money 
laundering, racketeering and other laws. In theory, the 
criminal and civil legal risks follow the money to businesses 
who may be two and three degrees removed from the cannabis-
related legitimate business. The Committee emphasizes that this 
section's protection for ancillary businesses is intended to 
cover not only proceeds that come from a cannabis-related 
legitimate business, but also other businesses or persons who 
give money to such a business (e.g. someone who subleases 
space).

Section 4. Protections under Federal law

    Subsection (a) of this section creates a safe harbor for 
banks, credit unions, money transmitters, payment processors 
and insurance companies serving cannabis-related legitimate 
businesses and ancillary businesses. Unlike section two, which 
is a safe harbor from regulatory action, this subsection is a 
safe harbor from criminal or civil penalties.
    Subsection (b) protects Federal reserve banks from 
consequences under federal law for serving banks and credit 
unions that have cannabis-related legitimate business accounts. 
Federal Reserve Banks play an essential role in the payment 
system, and this provision was added to help facilitate 
electronic transactions.
    Subsection (c) limits the ability to use asset forfeiture 
laws to seize property of people who own or work at cannabis-
related legitimate business or ancillary businesses. This 
provision will protect owners, operators and employees' ability 
to get mortgages, car loans, etc.

Section 5. Rule of construction

    This section underscores the Committee's intent that the 
legislation does not in any manner mandate a depository 
institution, insurer or any other entity to provide a financial 
service or product to a cannabis-related legitimate business.

Section 6. Requirement for filing suspicious activity reports

    This section amends section 5381(g) of title 31 (part of 
the Bank Secrecy Act) by adding a new paragraph that requires 
banks and credit unions serving cannabis-related legitimate 
businesses to comply with FinCEN's guidance on cannabis 
banking. The provision added by this subsection also requires 
FinCEN to ensure that its guidance, and any new guidance that 
it may issue, be consistent with the purpose of this bill, 
expanding access to banking and reducing the prevalence of 
cash. The provision also contains relevant definitions drawn 
from section 10 of this Act.

Section 7. Guidance and examination procedures

    This section provides that not later than 180 days after 
the enactment of this Act, the federal banking regulators, 
acting through the Federal Institutions Examination Council, 
are required to develop uniform guidance and examination for 
relevant depositary institutions. This section is designed to 
address any fragmentation between federal regulators to ensure 
they engage with depository institutions to help clarify how 
such institutions can serve cannabis-related legitimate 
businesses and ancillary businesses, if they choose to do so.

Section 8. Annual diversity and inclusion report

    This section provides that the federal banking regulators 
are to report each year on the access to banking services and 
barriers to entry for minority- and women-owned cannabis-
related legitimate businesses and recommend solutions on how to 
improve access to banking services and reduce barriers to 
entry.

Section 9. GAO study on diversity and inclusion

    This section provides that the Government Accountability 
Office (GAO) is to conduct a study on minorities' and women's 
access to owning cannabis-related legitimate businesses as well 
as on the access to banking services for those businesses and 
provide recommendations on how to improve representation in 
both.

Section 10. GAO study on effectiveness of certain reports

    This section provides that not later than two years after 
enactment of this Act, the GAO shall carry out a study on the 
effectiveness of SARs filed in finding individuals or 
organizations suspected or known to be engaged with 
transnational criminal organizations in a State or related 
jurisdiction that allows, among other things, the cultivation 
of cannabis. The Committee emphasizes the language about 
``whether any such engagement exists'' in this section to 
ensure that GAO does not prejudge any correlation between 
State-authorized and regulated cannabis-related legitimate 
businesses, and unrelated individuals or organizations known to 
be engaged with transnational criminal organizations.

Section 11. Definitions

    This section provides for definitions of certain terms used 
in the Act.
    Paragraph (1) defines the business of insurance.
    Paragraph (2) defines Cannabis.
    Paragraph (3) defines Cannabis Product.
    Paragraph (4) defines Cannabis-Related Legitimate Business. 
The Committee intends that this term covers all state-regulated 
cannabis businesses. The Committee intends that the scope of 
this provision includes any grower, processor and dispensary, 
and it would also cover cannabis testing labs in states that 
set up and regulate those. These businesses must be operating 
pursuant to state law, so any criminal drug cartel of any type 
will fail to qualify. The determination of whether the 
businesses are operating pursuant to state law is delegated to 
the states, so businesses that lose their license or run afoul 
of their state cannabis regulator will also fall out of the 
definition.
    Paragraph (5) defines Depositary Institutions.
    Paragraph (6) defines ``Federal Banking Regulator'' broadly 
to include not just NCUA, FDIC, OCC and Fed but also CFPB and 
FinCEN because Sections 2(5) and 4(a) deal with payment 
processors and money transmitters who are not directly 
regulated by the four prudential banking regulators.
    Paragraph (7). The definition for ``Financial Service'' 
mostly uses the definition from the Consumer Financial 
Protection Act, so it covers all manner of traditional banking 
services (e.g. checking and savings accounts, loans) but not 
capital markets activity. In addition, we specify that payment 
processing and armored car services are included in this 
definition to make sure the bill covers those necessary 
services.
    Paragraphs (8), (9), (10), (11) and (12), define Indian 
Country, Indian Tribe, Insurer, Manufacturer and Producer, 
respectively.
    Paragraph (13) defines Service Provider, and addresses 
ancillary businesses related to this Act. This definition 
covers any business, organization or other person that provides 
goods or services to a cannabis-related legitimate business, 
but we exclude anyone who physically handles cannabis. Any 
businesses that handles cannabis will have to qualify as a 
``Cannabis Related Legitimate Business,'' or CRLB. The 
principal distinction between CRLBs and Service Providers is 
that CRLBs have to be operating pursuant to state law, but 
service providers are not.
    Paragraph (14) defines ``State'' to include the District of 
Columbia, Puerto Rico, and any territory or possession of the 
United States.

                                Hearings

    For the purposes of section 103(i) of H. Res. 6 for the 
116th Congress, the Committee on Financial Services' 
Subcommittee on Consumer Protection and Financial Institutions 
held a hearing to consider H.R. 1595 entitled ``Challenges and 
Solutions: Access to Banking Services for Cannabis-Related 
Businesses'' on February 13, 2019. Testifying on the first 
panel was the Honorable Ed Perlmutter, Member of Congress, who 
serves as one of the coauthors of the SAFE Banking Act. 
Testifying on the second panel was: Honorable Fiona Ma, 
California State Treasurer; Maj. Neill Franklin(Ret.), 
Baltimore City & Maryland State Police Departments, and 
Executive Director, Law Enforcement Action Partnership (LEAP); 
Ms. Rachel Pross, Chief Risk Officer, MAPS Credit Union, on 
behalf of Credit Union National Association (CUNA); Mr. Gregory 
Deckard, President, CEO and Chairman, State Bank Northwest, on 
behalf of Independent Community Bankers of America (ICBA); Mr. 
Corey Barnette, Owner, District Growers Cultivation Center & 
Metropolitan Wellness Center; and Mr. Jonathan Talcott, 
Chairman, Smart Approaches to Marijuana (SAM).

                        Committee Consideration

    The Committee on Financial Services met in open session on 
March 26-28, 2019 and ordered H.R. 1595 to be reported 
favorably to the House with an amendment in the nature of a 
substitute by a recorded vote of 45 yeas and 15 nays, a quorum 
being present. A number of amendments were adopted by voice 
vote, including an amendment by Representative Porter related 
to ensuring that an entity applying to be a depositary 
institution should be afforded the protection of the Act 
(section 2(b)) and an amendment by Representative Stivers that 
expanded the protections of the Act to insurer and insurance 
services.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following roll call votes occurred during the Committee's 
consideration of H.R. 1595:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the descriptive portions of this report.

             Statement of Performance Goals and Objectives

    Pursuant to clause (3)(c) of rule XIII of the Rules of the 
House of Representatives, the goals of H.R. 1595 is to align 
federal and state laws on the issue of cannabis banking and 
reduce public safety risk for communities.

                 New Budget Authority and CBO Estimate

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974, and pursuant to clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee has received the following estimate for 
H.R. 1595 from the Director of the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 24, 2019.
Hon. Maxine Waters,
Chairwoman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Madam Chairwoman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1595, the SAFE 
Banking Act of 2019.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    The bill would:
         Prevent the Federal Deposit Insurance 
        Corporation (FDIC) and the National Credit Union 
        Administration (NCUA) from taking action against banks 
        or credit unions that serve cannabis-related businesses
         Prevent those regulators from limiting access 
        to financial institutions by cannabis-related 
        businesses
         Require the Financial Crimes Enforcement 
        Network (FinCEN) and the Federal Financial Institutions 
        Examination Council (FFIEC) to issue guidance for 
        institutions that provide services to cannabis-related 
        businesses
         Require reporting by financial regulators and 
        the Government Accountability Office
         Impose or increase the cost of private-sector 
        mandates on financial institutions and remove a private 
        right of action against financial institutions
    Estimated budgetary effects would primarily stem from:
         Increases in insurance premiums collected by 
        the FDIC and in capital deposits collected by the NCUA
         Increases in losses from the FDIC's Deposit 
        Insurance Fund and from the NCUA's Share Insurance Fund
    Areas of significant uncertainty include:
         The terms of the guidance issued by FinCEN and 
        FFIEC
         Responses of financial institutions and 
        cannabis-related businesses
         Changes in reporting on existing insured 
        deposits from cannabis-related businesses
         The amount of new insured deposits that would 
        result from the bill's enactment

Bill Summary

    H.R. 1595 would prevent federal entities from taking action 
against financial institutions or insurers that serve cannabis-
related businesses and service providers that engage in 
activity that is legal under state laws.\1\ It also would 
prohibit federal regulators from limiting access to deposit 
insurance or financial services solely because of an account 
holder's connection to a cannabis-related business. The bill 
would direct the Financial Crimes Enforcement Network and the 
Federal Financial Institutions Examination Council (a formal 
interagency body whose members include the Federal Deposit 
Insurance Corporation, the National Credit Union 
Administration, the Office of the Comptroller of the Currency 
(OCC), and the Board of Governors of the Federal Reserve 
System) to issue guidance and examination procedures to 
financial institutions. In addition H.R. 1595 would require 
federal banking regulators and the Government Accountability 
Office (GAO) to report on the outcomes of the legislation.
---------------------------------------------------------------------------
    \1\Under H.R. 1595, those entities are manufacturers, producers, or 
any person or company that participates in handling, cultivating, 
producing, manufacturing, selling, transporting, displaying, 
dispensing, distributing, or purchasing cannabis or cannabis products. 
Service providers include businesses, organizations, and people who 
sell goods or services to cannabis-related businesses. For this 
estimate, cannabis-related business includes service providers.
---------------------------------------------------------------------------

Estimated Federal Cost

    The estimated budgetary effect of H.R. 1595 is shown in 
Table 1. The costs of the legislation fall within budget 
function 370 (commerce and housing credit).

Basis of Estimate

    This cost estimate is based on analyses underlying CBO's 
May 2019 baseline budget projections for federal financial 
resolution programs. That baseline incorporates estimated costs 
of future failures of financial institutions that are 
calculated using a weighted probability of various outcomes. 
For this estimate, CBO assumes that H.R. 1595 will be enacted 
near the end of fiscal year 2019.
    Under guidance issued by FinCEN, H.R. 1595 would change 
federal policies governing services currently offered to 
cannabis-related businesses by banks and credit unions.\2\ CBO 
anticipates that as a result of the bill's enactment, financial 
institutions would accept additional deposits from cannabis-
related businesses. In doing so, those deposits would increase 
federal liability for failed financial institutions, thereby 
increasing resolution costs relative to CBO's current-law 
baseline.
---------------------------------------------------------------------------
    \2\There were 438 banks and 113 credit unions offering such 
services as of December 2018.

                                                   TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 1595
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                      2019   2020   2021   2022    2023    2024   2025   2026   2027   2028   2029  2019-2024  2019-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Increases or Decreases (-) in Direct Spendinga
 
Insured Deposits:
  Estimated Budget Authority.......................      0      0      0      -2      -1      *      *      *      *      *      *        -3         -4
  Estimated Outlays................................      0      0      0      -2      -1      *      *      *      *      *      *        -3         -4
Administrative Costs:
  Estimated Budget Authority.......................      0      *      *       *       *      *      *      *      *      *      *         1          1
  Estimated Outlays................................      0      *      *       *       *      *      *      *      *      *      *         1          1
  Total:
    Estimated Budget Authority.....................      0      *      *      -2       *      *      *      *      *      *      *        -2         -3
    Estimated Outlays..............................      0      *      *      -2       *      *      *      *      *      *      *        -2         -3
 
                                                                  Decreases in Revenues
 
Estimated Revenues.................................      0      *      *       *       *      *      *      *      *      *      *         *         -1
 
                                Net Increase or Decrease (-) in the Deficit From Changes in Direct Spending and Revenues
 
Effect on the Deficit..............................      0      *      *      -2       *      *      *      *      *      *      *        -2         -2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Components may not sum to totals because of rounding; * = between -$500,000 and $500,000.
aImplementing H.R. 1595 also would increase spending subject to appropriation by less than $500,000.

Direct Spending

    The bill's budgetary effects would stem primarily from the 
small increase in deposits insured by the FDIC through its 
Deposit Insurance Fund (DIF) and by the NCUA through its Share 
Insurance Fund (SIF). Spending by each fund for resolution 
costs is recorded in the budget as direct spending. Those costs 
would be offset by additional premiums charged by the FDIC and 
capital deposits paid to the NCUA, which are recorded in the 
budget as reductions in direct spending.
    Insured Deposits. Under H.R. 1595, depository institutions; 
entities or insurers associated with depository institutions; 
and officers, directors, or employees of those entities would 
not be subject to federal liability solely for providing 
services to a cannabis-related business. The bill also would 
eliminate penalties for investing any income derived from such 
financial services and would disallow criminal, civil, or 
administrative forfeiture of collateral for loan or other 
financial services provided to cannabis-related businesses.
    Because of changes that would be made by the bill, CBO 
expects that enacting H.R. 1595 would increase insured deposits 
by bolstering legal certainty for institutions that provide 
affected services and estimates that beginning in 2022 insured 
deposits at banks would increase by about $1.2 billion and at 
credit unions by about $200 million. Those amounts would rise 
to $2.1 billion and $350 million, respectively, by 2029.\3\ In 
total, CBO estimates, future direct spending for resolving bank 
failures would increase by $5 million.
---------------------------------------------------------------------------
    \3\Those amounts equal an increase of about 1 basis point in 
insured deposits relative to CBO's current baseline for each program. A 
basis point is one one-hundredth of a percentage point.
---------------------------------------------------------------------------
    However, those costs would be offset by assessments levied 
on insured financial institutions; those assessments would 
total $9 million, CBO estimates. As a result, CBO estimates, 
H.R. 1595 would decrease net direct spending by $4 million over 
the 2019-2029 period.
    Administrative Costs. H.R. 1595 would require the FFIEC to 
develop uniform guidance and examination procedures for 
depository institutions that provide financial services to 
cannabis-related businesses and to report annually on 
recommendations regarding access to those services--in 
particular by minority- or women-owned businesses.
    Using information from several federal banking regulators, 
CBO estimates that enacting those provisions would increase 
direct spending by about $3 million over the 2019-2029 period. 
However, the OCC and the NCUA are authorized to collect 
premiums and fees from the institutions they regulate to cover 
direct spending costs. Because those collections are recorded 
in the budget as offsets to direct spending, CBO estimates, 
that the net increase in direct spending would be $1 million 
over the 2019-2029 period.

Revenues

    Costs incurred by the Federal Reserve to implement the bill 
would reduce remittances to the Treasury, which are recorded in 
the budget as revenues. CBO estimates that enacting the bill 
would decrease those revenues by $1 million over the 2019-2029 
period.

Spending Subject to Appropriation

    H.R. 1595 would require several federal banking regulators 
that are funded through annual appropriations to issue guidance 
and contribute to producing the FFIEC's annual report. CBO 
estimates that implementing that provision would cost less than 
$500,000 over the 2019-2024 period; any spending would be 
subject to the availability of appropriated funds.
    H.R. 1595 also would require GAO to study barriers to 
market entry and financial services for potential or existing 
minority- or women-owned cannabis-related businesses and to 
publish studies on the effectiveness of report filings of 
suspicious transactions. CBO estimates that those requirements 
would cost less than $500,000 annually over the 2020-2024 
period.

Uncertainty

    This cost estimate has several noteworthy areas of 
uncertainty:
         The guidance provided by the FinCEN and the 
        FFIEC could be stricter or more lenient than current 
        guidance, which would directly affect the decisions of 
        financial institutions and cannabis-related businesses 
        offering or seeking financial services. Those decisions 
        would affect the amount of new insured deposits.
         The limited data on the amount of cannabis-
        related deposits in financial institutions--including 
        amounts from activity that may not be classified as 
        such--could mean that new insured deposits could be 
        greater or smaller than estimated.
         If changes in insured deposits are higher or 
        lower than CBO estimated, costs for the DIF and the SIF 
        could be higher or lower depending on the amount of 
        premium collections and capital deposits and on changes 
        in the resolution costs for financial institutions.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those procedures are shown in Table 2.

                                             TABLE 2.--CBO'S ESTIMATE OF PAY-AS-YOU-GO EFFECTS OF H.R. 1595
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2019    2020    2021    2022    2023    2024    2025    2026    2027    2028    2029   2019-2024  2019-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Net Decrease in the Deficit
 
Statutory Pay-As-You-Go Effect............       0       0       0      -2       0       0       0       0       0       0       0        -2         -2
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term deficits: CBO estimates that enacting 
H.R. 1595 would not increase on-budget deficits by more than $5 
billion in any of the four consecutive 10-year periods 
beginning in 2030.
    Mandates: H.R. 1595 contains private-sector mandates as 
defined in the Unfunded Mandates Reform Act. However, CBO 
cannot determine whether those mandates would exceed the 2019 
threshold of $164 million, adjusted annually for inflation.
    Under current law, banks and credit unions may offer 
services to cannabis-related businesses under FinCEN's 
guidance. If new uniform guidance and examination procedures 
from FinCEN and the FFIEC under H.R. 1595 are more stringent 
than current regulations, the costs of a private-sector mandate 
on financial institutions would increase. That cost would be 
the additional expenses incurred by those institutions. CBO 
cannot anticipate the differences from current law under the 
new guidelines and thus cannot determine whether the costs 
would exceed the private-sector threshold.
    H.R. 1595 would impose an additional mandate by removing a 
private right of action. The bill would limit a plaintiff's 
right to file suit against a financial or depository 
institution that provides certain services to cannabis-related 
businesses. The cost of the mandate would be the forgone net 
value of awards and settlements that would have been granted 
for such claims in the absence of the bill. Because CBO cannot 
estimate either the number of precluded lawsuits or the amount 
of potential forgone settlements, we cannot determine whether 
the mandate's cost would exceed the annual private-sector 
threshold.
    Finally, if federal banking regulators increased fees or 
premiums to offset the costs of implementing the bill, the cost 
of an existing private-sector mandate to pay those fees also 
would increase. Using information from federal banking 
regulators, CBO estimates that the increase would total about 
$2 million over the 2019-2024 period.
    Estimate prepared by: Federal Costs: Stephen Rabent; 
Mandates: Rachel Austin.
    Estimate reviewed by: Kim Cawley, Chief, Natural and 
Physical Resources; Susan Willie, Chief, Mandates Unit; H. 
Samuel Papenfuss, Deputy Assistant Director for Budget 
Analysis.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 1595. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act, which is 
attached.

                       Unfunded Mandate Statement

    Pursuant to Section 423 of the Congressional Budget and 
Impoundment Control Act (as amended The Committee adopts as its 
own the estimate of federal mandates regarding H.R. 1595, as 
amended, prepared by the Director of the Congressional Budget 
Office.

                           Advisory Committee

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                Application of Law to Legislative Branch

    Pursuant to section 102(b)(3) of the Congressional 
Accountability Act, Pub. L. No. 104 1, H.R. 1595, as amended, 
does not apply to terms and conditions of employment or to 
access to public services or accommodations within the 
legislative branch.

                           Earmark Statement

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 1595 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as described in clauses 9(e), 9(f), and 9(g) of rule 
XXI.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of H.R. 1595 establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
federal program, a program that was included in any report from 
the Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance.

          Changes in Existing Law Made by the Bill as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, H.R. 1595, as reported, are shown as follows:

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                      TITLE 31, UNITED STATES CODE



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SUBTITLE IV--MONEY

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CHAPTER 53--MONETARY TRANSACTIONS

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SUBCHAPTER II--RECORDS AND REPORTS ON MONETARY INSTRUMENTS TRANSACTIONS

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Sec. 5318. Compliance, exemptions, and summons authority

  (a) General Powers of Secretary.--The Secretary of the 
Treasury may (except under section 5315 of this title and 
regulations prescribed under section 5315)--
          (1) except as provided in subsection (b)(2), delegate 
        duties and powers under this subchapter to an 
        appropriate supervising agency and the United States 
        Postal Service;
          (2) require a class of domestic financial 
        institutions or nonfinancial trades or businesses to 
        maintain appropriate procedures to ensure compliance 
        with this subchapter and regulations prescribed under 
        this subchapter or to guard against money laundering;
          (3) examine any books, papers, records, or other data 
        of domestic financial institutions or nonfinancial 
        trades or businesses relevant to the recordkeeping or 
        reporting requirements of this subchapter;
          (4) summon a financial institution or nonfinancial 
        trade or business, an officer or employee of a 
        financial institution or nonfinancial trade or business 
        (including a former officer or employee), or any person 
        having possession, custody, or care of the reports and 
        records required under this subchapter, to appear 
        before the Secretary of the Treasury or his delegate at 
        a time and place named in the summons and to produce 
        such books, papers, records, or other data, and to give 
        testimony, under oath, as may be relevant or material 
        to an investigation described in subsection (b);
          (5) exempt from the requirements of this subchapter 
        any class of transactions within any State if the 
        Secretary determines that--
                  (A) under the laws of such State, that class 
                of transactions is subject to requirements 
                substantially similar to those imposed under 
                this subchapter; and
                  (B) there is adequate provision for the 
                enforcement of such requirements;
          (6) rely on examinations conducted by a State 
        supervisory agency of a category of financial 
        institution, if the Secretary determines that--
                  (A) the category of financial institution is 
                required to comply with this subchapter and 
                regulations prescribed under this subchapter; 
                or
                  (B) the State supervisory agency examines the 
                category of financial institution for 
                compliance with this subchapter and regulations 
                prescribed under this subchapter; and
          (7) prescribe an appropriate exemption from a 
        requirement under this subchapter and regulations 
        prescribed under this subchapter. The Secretary may 
        revoke an exemption under this paragraph or paragraph 
        (5) by actually or constructively notifying the parties 
        affected. A revocation is effective during judicial 
        review.
  (b) Limitations on Summons Power.--
          (1) Scope of power.--The Secretary of the Treasury 
        may take any action described in paragraph (3) or (4) 
        of subsection (a) only in connection with 
        investigations for the purpose of civil enforcement of 
        violations of this subchapter, section 21 of the 
        Federal Deposit Insurance Act, section 411 of the 
        National Housing Act, or chapter 2 of Public Law 91-508 
        (12 U.S.C. 1951 et seq.) or any regulation under any 
        such provision.
          (2) Authority to issue.--A summons may be issued 
        under subsection (a)(4) only by, or with the approval 
        of, the Secretary of the Treasury or a supervisory 
        level delegate of the Secretary of the Treasury.
  (c) Administrative Aspects of Summons.--
          (1) Production at designated site.--A summons issued 
        pursuant to this section may require that books, 
        papers, records, or other data stored or maintained at 
        any place be produced at any designated location in any 
        State or in any territory or other place subject to the 
        jurisdiction of the United States not more than 500 
        miles distant from any place where the financial 
        institution or nonfinancial trade or business operates 
        or conducts business in the United States.
          (2) Fees and travel expenses.--Persons summoned under 
        this section shall be paid the same fees and mileage 
        for travel in the United States that are paid witnesses 
        in the courts of the United States.
          (3) No liability for expenses.--The United States 
        shall not be liable for any expense, other than an 
        expense described in paragraph (2), incurred in 
        connection with the production of books, papers, 
        records, or other data under this section.
  (d) Service of Summons.--Service of a summons issued under 
this section may be by registered mail or in such other manner 
calculated to give actual notice as the Secretary may prescribe 
by regulation.
  (e) Contumacy or Refusal.--
          (1) Referral to attorney general.--In case of 
        contumacy by a person issued a summons under paragraph 
        (3) or (4) of subsection (a) or a refusal by such 
        person to obey such summons, the Secretary of the 
        Treasury shall refer the matter to the Attorney 
        General.
          (2) Jurisdiction of court.--The Attorney General may 
        invoke the aid of any court of the United States within 
        the jurisdiction of which--
                  (A) the investigation which gave rise to the 
                summons is being or has been carried on;
                  (B) the person summoned is an inhabitant; or
                  (C) the person summoned carries on business 
                or may be found,
        to compel compliance with the summons.
          (3) Court order.--The court may issue an order 
        requiring the person summoned to appear before the 
        Secretary or his delegate to produce books, papers, 
        records, and other data, to give testimony as may be 
        necessary to explain how such material was compiled and 
        maintained, and to pay the costs of the proceeding.
          (4) Failure to comply with order.--Any failure to 
        obey the order of the court may be punished by the 
        court as a contempt thereof.
          (5) Service of process.--All process in any case 
        under this subsection may be served in any judicial 
        district in which such person may be found.
  (f) Written and Signed Statement Required.--No person shall 
qualify for an exemption under subsection (a)(5) 1 
unless the relevant financial institution or nonfinancial trade 
or business prepares and maintains a statement which--
          (1) describes in detail the reasons why such person 
        is qualified for such exemption; and
          (2) contains the signature of such person.
  (g) Reporting of Suspicious Transactions.--
          (1) In general.--The Secretary may require any 
        financial institution, and any director, officer, 
        employee, or agent of any financial institution, to 
        report any suspicious transaction relevant to a 
        possible violation of law or regulation.
          (2) Notification prohibited.--
                  (A) In general.--If a financial institution 
                or any director, officer, employee, or agent of 
                any financial institution, voluntarily or 
                pursuant to this section or any other 
                authority, reports a suspicious transaction to 
                a government agency--
                          (i) neither the financial 
                        institution, director, officer, 
                        employee, or agent of such institution 
                        (whether or not any such person is 
                        still employed by the institution), nor 
                        any other current or former director, 
                        officer, or employee of, or contractor 
                        for, the financial institution or other 
                        reporting person, may notify any person 
                        involved in the transaction that the 
                        transaction has been reported; and
                          (ii) no current or former officer or 
                        employee of or contractor for the 
                        Federal Government or of or for any 
                        State, local, tribal, or territorial 
                        government within the United States, 
                        who has any knowledge that such report 
                        was made may disclose to any person 
                        involved in the transaction that the 
                        transaction has been reported, other 
                        than as necessary to fulfill the 
                        official duties of such officer or 
                        employee.
                  (B) Disclosures in certain employment 
                references.--
                          (i) Rule of construction.--
                        Notwithstanding the application of 
                        subparagraph (A) in any other context, 
                        subparagraph (A) shall not be construed 
                        as prohibiting any financial 
                        institution, or any director, officer, 
                        employee, or agent of such institution, 
                        from including information that was 
                        included in a report to which 
                        subparagraph (A) applies--
                                  (I) in a written employment 
                                reference that is provided in 
                                accordance with section 18(w) 
                                of the Federal Deposit 
                                Insurance Act in response to a 
                                request from another financial 
                                institution; or
                                  (II) in a written termination 
                                notice or employment reference 
                                that is provided in accordance 
                                with the rules of a self-
                                regulatory organization 
                                registered with the Securities 
                                and Exchange Commission or the 
                                Commodity Futures Trading 
                                Commission,
                 except that such written reference or notice 
                may not disclose that such information was also 
                included in any such report, or that such 
                report was made.
                          (ii) Information not required.--
                        Clause (i) shall not be construed, by 
                        itself, to create any affirmative duty 
                        to include any information described in 
                        clause (i) in any employment reference 
                        or termination notice referred to in 
                        clause (i).
          (3) Liability for disclosures.--
                  (A) In general.--Any financial institution 
                that makes a voluntary disclosure of any 
                possible violation of law or regulation to a 
                government agency or makes a disclosure 
                pursuant to this subsection or any other 
                authority, and any director, officer, employee, 
                or agent of such institution who makes, or 
                requires another to make any such disclosure, 
                shall not be liable to any person under any law 
                or regulation of the United States, any 
                constitution, law, or regulation of any State 
                or political subdivision of any State, 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 to 
                the person who is the subject of such 
                disclosure or any other person identified in 
                the disclosure.
                  (B) Rule of construction.--Subparagraph (A) 
                shall not be construed as creating--
                          (i) any inference that the term 
                        ``person'', as used in such 
                        subparagraph, may be construed more 
                        broadly than its ordinary usage so as 
                        to include any government or agency of 
                        government; or
                          (ii) any immunity against, or 
                        otherwise affecting, any civil or 
                        criminal action brought by any 
                        government or agency of government to 
                        enforce any constitution, law, or 
                        regulation of such government or 
                        agency.
          (4) Single designee for reporting suspicious 
        transactions.--
                  (A) In general.--In requiring reports under 
                paragraph (1) of suspicious transactions, the 
                Secretary of the Treasury shall designate, to 
                the extent practicable and appropriate, a 
                single officer or agency of the United States 
                to whom such reports shall be made.
                  (B) Duty of designee.--The officer or agency 
                of the United States designated by the 
                Secretary of the Treasury pursuant to 
                subparagraph (A) shall refer any report of a 
                suspicious transaction to any appropriate law 
                enforcement, supervisory agency, or United 
                States intelligence agency for use in the 
                conduct of intelligence or counterintelligence 
                activities, including analysis, to protect 
                against international terrorism.
                  (C) Coordination with other reporting 
                requirements.--Subparagraph (A) shall not be 
                construed as precluding any supervisory agency 
                for any financial institution from requiring 
                the financial institution to submit any 
                information or report to the agency or another 
                agency pursuant to any other applicable 
                provision of law.
          (5) Requirements for cannabis-related legitimate 
        businesses.--
                  (A) In general.--With respect to a financial 
                institution or any director, officer, employee, 
                or agent of a financial institution that 
                reports a suspicious transaction pursuant to 
                this subsection, if the reason for the report 
                relates to a cannabis-related legitimate 
                business or service provider, the report shall 
                comply with appropriate guidance issued by the 
                Financial Crimes Enforcement Network. The 
                Secretary shall ensure that the guidance is 
                consistent with the purpose and intent of the 
                SAFE Banking Act of 2019 and does not 
                significantly inhibit the provision of 
                financial services to a cannabis-related 
                legitimate business or service provider in a 
                State, political subdivision of a State, or 
                Indian country that has allowed the 
                cultivation, production, manufacture, 
                transportation, display, dispensing, 
                distribution, sale, or purchase of cannabis 
                pursuant to law or regulation of such State, 
                political subdivision, or Indian Tribe that has 
                jurisdiction over the Indian country.
                  (B) Definitions.--For purposes of this 
                paragraph:
                          (i) Cannabis.--The term ``cannabis'' 
                        has the meaning given the term 
                        ``marihuana'' in section 102 of the 
                        Controlled Substances Act (21 U.S.C. 
                        802).
                          (ii) Cannabis-related legitimate 
                        business.--The term ``cannabis-related 
                        legitimate business'' has the meaning 
                        given that term in section 11 of the 
                        SAFE Banking Act of 2019.
                          (iii) Indian country.--The term 
                        ``Indian country'' has the meaning 
                        given that term in section 1151 of 
                        title 18.
                          (iv) Indian tribe.--The term ``Indian 
                        Tribe'' has the meaning given that term 
                        in section 102 of the Federally 
                        Recognized Indian Tribe List Act of 
                        1994 (25 U.S.C. 479a).
                          (v) Financial service.--The term 
                        ``financial service'' has the meaning 
                        given that term in section 11 of the 
                        SAFE Banking Act of 2019.
                          (vi) Service provider.--The term 
                        ``service provider'' has the meaning 
                        given that term in section 11 of the 
                        SAFE Banking Act of 2019.
                          (vii) State.--The term ``State'' 
                        means each of the several States, the 
                        District of Columbia, Puerto Rico, and 
                        any territory or possession of the 
                        United States.
  (h) Anti-Money Laundering Programs.--
          (1) In general.--In order to guard against money 
        laundering through financial institutions, each 
        financial institution shall establish anti-money 
        laundering programs, including, at a minimum--
                  (A) the development of internal policies, 
                procedures, and controls;
                  (B) the designation of a compliance officer;
                  (C) an ongoing employee training program; and
                  (D) an independent audit function to test 
                programs.
          (2) Regulations.--The Secretary of the Treasury, 
        after consultation with the appropriate Federal 
        functional regulator (as defined in section 509 of the 
        Gramm-Leach-Bliley Act), may prescribe minimum 
        standards for programs established under paragraph (1), 
        and may exempt from the application of those standards 
        any financial institution that is not subject to the 
        provisions of the rules contained in part 103 of title 
        31, of the Code of Federal Regulations, or any 
        successor rule thereto, for so long as such financial 
        institution is not subject to the provisions of such 
        rules.
          (3) Concentration accounts.--The Secretary may 
        prescribe regulations under this subsection that govern 
        maintenance of concentration accounts by financial 
        institutions, in order to ensure that such accounts are 
        not used to prevent association of the identity of an 
        individual customer with the movement of funds of which 
        the customer is the direct or beneficial owner, which 
        regulations shall, at a minimum--
                  (A) prohibit financial institutions from 
                allowing clients to direct transactions that 
                move their funds into, out of, or through the 
                concentration accounts of the financial 
                institution;
                  (B) prohibit financial institutions and their 
                employees from informing customers of the 
                existence of, or the means of identifying, the 
                concentration accounts of the institution; and
                  (C) require each financial institution to 
                establish written procedures governing the 
                documentation of all transactions involving a 
                concentration account, which procedures shall 
                ensure that, any time a transaction involving a 
                concentration account commingles funds 
                belonging to 1 or more customers, the identity 
                of, and specific amount belonging to, each 
                customer is documented.
  (i) Due Diligence for United States Private Banking and 
Correspondent Bank Accounts Involving Foreign Persons.--
          (1) In general.--Each financial institution that 
        establishes, maintains, administers, or manages a 
        private banking account or a correspondent account in 
        the United States for a non-United States person, 
        including a foreign individual visiting the United 
        States, or a representative of a non-United States 
        person shall establish appropriate, specific, and, 
        where necessary, enhanced, due diligence policies, 
        procedures, and controls that are reasonably designed 
        to detect and report instances of money laundering 
        through those accounts.
          (2) Additional standards for certain correspondent 
        accounts.--
                  (A) In general.--Subparagraph (B) shall apply 
                if a correspondent account is requested or 
                maintained by, or on behalf of, a foreign bank 
                operating--
                          (i) under an offshore banking 
                        license; or
                          (ii) under a banking license issued 
                        by a foreign country that has been 
                        designated--
                                  (I) as noncooperative with 
                                international anti-money 
                                laundering principles or 
                                procedures by an 
                                intergovernmental group or 
                                organization of which the 
                                United States is a member, with 
                                which designation the United 
                                States representative to the 
                                group or organization concurs; 
                                or
                                  (II) by the Secretary of the 
                                Treasury as warranting special 
                                measures due to money 
                                laundering concerns.
                  (B) Policies, procedures, and controls.--The 
                enhanced due diligence policies, procedures, 
                and controls required under paragraph (1) 
                shall, at a minimum, ensure that the financial 
                institution in the United States takes 
                reasonable steps--
                          (i) to ascertain for any such foreign 
                        bank, the shares of which are not 
                        publicly traded, the identity of each 
                        of the owners of the foreign bank, and 
                        the nature and extent of the ownership 
                        interest of each such owner;
                          (ii) to conduct enhanced scrutiny of 
                        such account to guard against money 
                        laundering and report any suspicious 
                        transactions under subsection (g); and
                          (iii) to ascertain whether such 
                        foreign bank provides correspondent 
                        accounts to other foreign banks and, if 
                        so, the identity of those foreign banks 
                        and related due diligence information, 
                        as appropriate under paragraph (1).
          (3) Minimum standards for private banking accounts.--
        If a private banking account is requested or maintained 
        by, or on behalf of, a non-United States person, then 
        the due diligence policies, procedures, and controls 
        required under paragraph (1) shall, at a minimum, 
        ensure that the financial institution takes reasonable 
        steps--
                  (A) to ascertain the identity of the nominal 
                and beneficial owners of, and the source of 
                funds deposited into, such account as needed to 
                guard against money laundering and report any 
                suspicious transactions under subsection (g); 
                and
                  (B) to conduct enhanced scrutiny of any such 
                account that is requested or maintained by, or 
                on behalf of, a senior foreign political 
                figure, or any immediate family member or close 
                associate of a senior foreign political figure, 
                that is reasonably designed to detect and 
                report transactions that may involve the 
                proceeds of foreign corruption.
          (4) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Offshore banking license.--The term 
                ``offshore banking license'' means a license to 
                conduct banking activities which, as a 
                condition of the license, prohibits the 
                licensed entity from conducting banking 
                activities with the citizens of, or with the 
                local currency of, the country which issued the 
                license.
                  (B) Private banking account.--The term 
                ``private banking account'' means an account 
                (or any combination of accounts) that--
                          (i) requires a minimum aggregate 
                        deposits of funds or other assets of 
                        not less than $1,000,000;
                          (ii) is established on behalf of 1 or 
                        more individuals who have a direct or 
                        beneficial ownership interest in the 
                        account; and
                          (iii) is assigned to, or is 
                        administered or managed by, in whole or 
                        in part, an officer, employee, or agent 
                        of a financial institution acting as a 
                        liaison between the financial 
                        institution and the direct or 
                        beneficial owner of the account.
  (j) Prohibition on United States Correspondent Accounts With 
Foreign Shell Banks.--
          (1) In general.--A financial institution described in 
        subparagraphs (A) through (G) of section 5312(a)(2) (in 
        this subsection referred to as a ``covered financial 
        institution'') shall not establish, maintain, 
        administer, or manage a correspondent account in the 
        United States for, or on behalf of, a foreign bank that 
        does not have a physical presence in any country.
          (2) Prevention of indirect service to foreign shell 
        banks.--A covered financial institution shall take 
        reasonable steps to ensure that any correspondent 
        account established, maintained, administered, or 
        managed by that covered financial institution in the 
        United States for a foreign bank is not being used by 
        that foreign bank to indirectly provide banking 
        services to another foreign bank that does not have a 
        physical presence in any country. The Secretary of the 
        Treasury shall, by regulation, delineate the reasonable 
        steps necessary to comply with this paragraph.
          (3) Exception.--Paragraphs (1) and (2) do not 
        prohibit a covered financial institution from providing 
        a correspondent account to a foreign bank, if the 
        foreign bank--
                  (A) is an affiliate of a depository 
                institution, credit union, or foreign bank that 
                maintains a physical presence in the United 
                States or a foreign country, as applicable; and
                  (B) is subject to supervision by a banking 
                authority in the country regulating the 
                affiliated depository institution, credit 
                union, or foreign bank described in 
                subparagraph (A), as applicable.
          (4) Definitions.--For purposes of this subsection--
                  (A) the term ``affiliate'' means a foreign 
                bank that is controlled by or is under common 
                control with a depository institution, credit 
                union, or foreign bank; and
                  (B) the term ``physical presence'' means a 
                place of business that--
                          (i) is maintained by a foreign bank;
                          (ii) is located at a fixed address 
                        (other than solely an electronic 
                        address) in a country in which the 
                        foreign bank is authorized to conduct 
                        banking activities, at which location 
                        the foreign bank--
                                  (I) employs 1 or more 
                                individuals on a full-time 
                                basis; and
                                  (II) maintains operating 
                                records related to its banking 
                                activities; and
                          (iii) is subject to inspection by the 
                        banking authority which licensed the 
                        foreign bank to conduct banking 
                        activities.
  (k) Bank Records Related to Anti-Money Laundering Programs.--
          (1) Definitions.--For purposes of this subsection, 
        the following definitions shall apply:
                  (A) Appropriate federal banking agency.--The 
                term ``appropriate Federal banking agency'' has 
                the same meaning as in section 3 of the Federal 
                Deposit Insurance Act (12 U.S.C. 1813).
                  (B) Incorporated term.--The term 
                ``correspondent account'' has the same meaning 
                as in section 5318A(e)(1)(B).
          (2) 120-hour rule.--Not later than 120 hours after 
        receiving a request by an appropriate Federal banking 
        agency for information related to anti-money laundering 
        compliance by a covered financial institution or a 
        customer of such institution, a covered financial 
        institution shall provide to the appropriate Federal 
        banking agency, or make available at a location 
        specified by the representative of the appropriate 
        Federal banking agency, information and account 
        documentation for any account opened, maintained, 
        administered or managed in the United States by the 
        covered financial institution.
          (3) Foreign bank records.--
                  (A) Summons or subpoena of records.--
                          (i) In general.--The Secretary of the 
                        Treasury or the Attorney General may 
                        issue a summons or subpoena to any 
                        foreign bank that maintains a 
                        correspondent account in the United 
                        States and request records related to 
                        such correspondent account, including 
                        records maintained outside of the 
                        United States relating to the deposit 
                        of funds into the foreign bank.
                          (ii) Service of summons or 
                        subpoena.--A summons or subpoena 
                        referred to in clause (i) may be served 
                        on the foreign bank in the United 
                        States if the foreign bank has a 
                        representative in the United States, or 
                        in a foreign country pursuant to any 
                        mutual legal assistance treaty, 
                        multilateral agreement, or other 
                        request for international law 
                        enforcement assistance.
                  (B) Acceptance of service.--
                          (i) Maintaining records in the united 
                        states.--Any covered financial 
                        institution which maintains a 
                        correspondent account in the United 
                        States for a foreign bank shall 
                        maintain records in the United States 
                        identifying the owners of such foreign 
                        bank and the name and address of a 
                        person who resides in the United States 
                        and is authorized to accept service of 
                        legal process for records regarding the 
                        correspondent account.
                          (ii) Law enforcement request.--Upon 
                        receipt of a written request from a 
                        Federal law enforcement officer for 
                        information required to be maintained 
                        under this paragraph, the covered 
                        financial institution shall provide the 
                        information to the requesting officer 
                        not later than 7 days after receipt of 
                        the request.
                  (C) Termination of correspondent 
                relationship.--
                          (i) Termination upon receipt of 
                        notice.--A covered financial 
                        institution shall terminate any 
                        correspondent relationship with a 
                        foreign bank not later than 10 business 
                        days after receipt of written notice 
                        from the Secretary or the Attorney 
                        General (in each case, after 
                        consultation with the other) that the 
                        foreign bank has failed--
                                  (I) to comply with a summons 
                                or subpoena issued under 
                                subparagraph (A); or
                                  (II) to initiate proceedings 
                                in a United States court 
                                contesting such summons or 
                                subpoena.
                          (ii) Limitation on liability.--A 
                        covered financial institution shall not 
                        be liable to any person in any court or 
                        arbitration proceeding for terminating 
                        a correspondent relationship in 
                        accordance with this subsection.
                          (iii) Failure to terminate 
                        relationship.--Failure to terminate a 
                        correspondent relationship in 
                        accordance with this subsection shall 
                        render the covered financial 
                        institution liable for a civil penalty 
                        of up to $10,000 per day until the 
                        correspondent relationship is so 
                        terminated.
  (l) Identification and Verification of Accountholders.--
          (1) In general.--Subject to the requirements of this 
        subsection, the Secretary of the Treasury shall 
        prescribe regulations setting forth the minimum 
        standards for financial institutions and their 
        customers regarding the identity of the customer that 
        shall apply in connection with the opening of an 
        account at a financial institution.
          (2) Minimum requirements.--The regulations shall, at 
        a minimum, require financial institutions to implement, 
        and customers (after being given adequate notice) to 
        comply with, reasonable procedures for--
                  (A) verifying the identity of any person 
                seeking to open an account to the extent 
                reasonable and practicable;
                  (B) maintaining records of the information 
                used to verify a person's identity, including 
                name, address, and other identifying 
                information; and
                  (C) consulting lists of known or suspected 
                terrorists or terrorist organizations provided 
                to the financial institution by any government 
                agency to determine whether a person seeking to 
                open an account appears on any such list.
          (3) Factors to be considered.--In prescribing 
        regulations under this subsection, the Secretary shall 
        take into consideration the various types of accounts 
        maintained by various types of financial institutions, 
        the various methods of opening accounts, and the 
        various types of identifying information available.
          (4) Certain financial institutions.--In the case of 
        any financial institution the business of which is 
        engaging in financial activities described in section 
        4(k) of the Bank Holding Company Act of 1956 (including 
        financial activities subject to the jurisdiction of the 
        Commodity Futures Trading Commission), the regulations 
        prescribed by the Secretary under paragraph (1) shall 
        be prescribed jointly with each Federal functional 
        regulator (as defined in section 509 of the Gramm-
        Leach-Bliley Act, including the Commodity Futures 
        Trading Commission) appropriate for such financial 
        institution.
          (5) Exemptions.--The Secretary (and, in the case of 
        any financial institution described in paragraph (4), 
        any Federal agency described in such paragraph) may, by 
        regulation or order, exempt any financial institution 
        or type of account from the requirements of any 
        regulation prescribed under this subsection in 
        accordance with such standards and procedures as the 
        Secretary may prescribe.
          (6) Effective date.--Final regulations prescribed 
        under this subsection shall take effect before the end 
        of the 1-year period beginning on the date of enactment 
        of the International Money Laundering Abatement and 
        Financial Anti-Terrorism Act of 2001.
  (m) Applicability of Rules.--Any rules promulgated pursuant 
to the authority contained in section 21 of the Federal Deposit 
Insurance Act (12 U.S.C. 1829b) shall apply, in addition to any 
other financial institution to which such rules apply, to any 
person that engages as a business in the transmission of funds, 
including any person who engages as a business in an informal 
money transfer system or any network of people who engage as a 
business in facilitating the transfer of money domestically or 
internationally outside of the conventional financial 
institutions system.
  (n) Reporting of Certain Cross-Border Transmittals of 
Funds.--
          (1) In general.--Subject to paragraphs (3) and (4), 
        the Secretary shall prescribe regulations requiring 
        such financial institutions as the Secretary determines 
        to be appropriate to report to the Financial Crimes 
        Enforcement Network certain cross-border electronic 
        transmittals of funds, if the Secretary determines that 
        reporting of such transmittals is reasonably necessary 
        to conduct the efforts of the Secretary against money 
        laundering and terrorist financing.
          (2) Limitation on reporting requirements.--
        Information required to be reported by the regulations 
        prescribed under paragraph (1) shall not exceed the 
        information required to be retained by the reporting 
        financial institution pursuant to section 21 of the 
        Federal Deposit Insurance Act and the regulations 
        promulgated thereunder, unless--
                  (A) the Board of Governors of the Federal 
                Reserve System and the Secretary jointly 
                determine that a particular item or items of 
                information are not currently required to be 
                retained under such section or such 
                regulations; and
                  (B) the Secretary determines, after 
                consultation with the Board of Governors of the 
                Federal Reserve System, that the reporting of 
                such information is reasonably necessary to 
                conduct the efforts of the Secretary to 
                identify cross-border money laundering and 
                terrorist financing.
          (3) Form and manner of reports.--In prescribing the 
        regulations required under paragraph (1), the Secretary 
        shall, subject to paragraph (2), determine the 
        appropriate form, manner, content, and frequency of 
        filing of the required reports.
          (4) Feasibility report.--
                  (A) In general.--Before prescribing the 
                regulations required under paragraph (1), and 
                as soon as is practicable after the date of 
                enactment of the Intelligence Reform and 
                Terrorism Prevention Act of 2004, the Secretary 
                shall submit a report to the Committee on 
                Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services 
                of the House of Representatives that--
                          (i) identifies the information in 
                        cross-border electronic transmittals of 
                        funds that may be found in particular 
                        cases to be reasonably necessary to 
                        conduct the efforts of the Secretary to 
                        identify money laundering and terrorist 
                        financing, and outlines the criteria to 
                        be used by the Secretary to select the 
                        situations in which reporting under 
                        this subsection may be required;
                          (ii) outlines the appropriate form, 
                        manner, content, and frequency of 
                        filing of the reports that may be 
                        required under such regulations;
                          (iii) identifies the technology 
                        necessary for the Financial Crimes 
                        Enforcement Network to receive, keep, 
                        exploit, protect the security of, and 
                        disseminate information from reports of 
                        cross-border electronic transmittals of 
                        funds to law enforcement and other 
                        entities engaged in efforts against 
                        money laundering and terrorist 
                        financing; and
                          (iv) discusses the information 
                        security protections required by the 
                        exercise of the Secretary's authority 
                        under this subsection.
                  (B) Consultation.--In reporting the 
                feasibility report under subparagraph (A), the 
                Secretary may consult with the Bank Secrecy Act 
                Advisory Group established by the Secretary, 
                and any other group considered by the Secretary 
                to be relevant.
          (5) Regulations.--
                  (A) In general.--Subject to subparagraph (B), 
                the regulations required by paragraph (1) shall 
                be prescribed in final form by the Secretary, 
                in consultation with the Board of Governors of 
                the Federal Reserve System, before the end of 
                the 3-year period beginning on the date of 
                enactment of the National Intelligence Reform 
                Act of 2004.
                  (B) Technological feasibility.--No 
                regulations shall be prescribed under this 
                subsection before the Secretary certifies to 
                the Congress that the Financial Crimes 
                Enforcement Network has the technological 
                systems in place to effectively and efficiently 
                receive, keep, exploit, protect the security 
                of, and disseminate information from reports of 
                cross-border electronic transmittals of funds 
                to law enforcement and other entities engaged 
                in efforts against money laundering and 
                terrorist financing.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 1595, the SAFE Banking Act, attempts to create a safe 
harbor for financial institutions to provide financial services 
to cannabis-related-businesses. The legislation fails to 
account for the fact that marijuana is classified by the 
federal government as a Schedule I drug under the Controlled 
Substances Act (21 U.S.C. Sec.  811). Therefore, regardless of 
enactment of H.R. 1595, marijuana will remain an illegal drug 
at the federal level and a high-risk business for any financial 
institution that decides to bank related businesses.
    The SAFE Banking Act fails to contemplate serious questions 
regarding the security of the U.S. financial system. Further, 
it fails to comprehensively address how federal financial 
regulators will enforce banking statutes and regulations, if at 
all. Prior to the markup of H.R. 1595, Ranking Member Patrick 
McHenry and Consumer Protection and Financial Institutions 
Subcommittee (CPFI) Ranking Member Blaine Luetkemeyer sent a 
letter to Chairwoman Waters and CPFI Chairman Meeks. The letter 
posed a series of important questions regarding the impact 
enactment of the legislation would have on compliance and 
enforcement of the Bank Secrecy Act, Currency Transaction 
Reports, Suspicious Activity Reports, anti-money laundering 
regulations, and Know Your Customer rules. The letter also 
posed questions on the implications for insurance companies, 
individual and institutional investors of cannabis-related 
businesses, and coordination between federal, state, and local 
law enforcement. To date, that letter remains unanswered.
    Section 7 of H.R. 1595 outlines guidance and examination 
procedures for federal bank regulators. The bill mandates that 
not less than 180 days after the enactment of the legislation, 
federal regulators shall develop uniform guidance and 
examination procedures for institutions that provide financial 
services to cannabis-related-businesses. Committee Republicans 
believe that this window fails to give sufficient time for all 
regulators to negotiate and agree on a uniform guidance 
procedure. Should the safe harbor go into effect before new 
rules are adopted, Committee Republicans are concerned the 
existing regulatory regime will be insufficient to address the 
new paradigm, leaving our financial institutions and system 
vulnerable. A reasonable amendment was offered to ensure 
federal regulators had completed joint rulemakings before the 
safe harbor went into place. That amendment, along with others 
offered by Committee Republicans, was defeated.
    Committee Republicans point to the dichotomy between the 
privileges granted to cannabis-related businesses in H.R. 1595 
and the treatment of licensed businesses operating in 
accordance with federal law that were driven out of the banking 
system under Operation Choke Point. Amendments were offered to 
extend the protections provided under H.R. 1595 to federally-
licensed businesses that could interact with cannabis-related-
businesses, but was deemed non-germane by the Democrats.
    Despite the many unanswered questions surrounding H.R. 
1595, Democrats held only one hearing on the issue before 
advancing the legislation. There seems to have been little to 
no coordination with federal financial regulators or other 
Congressional Committees that have jurisdiction over cannabis 
or the Controlled Substances Act. To that end, Committee 
Republicans remain concerned by the expedited timeframe to move 
such far-reaching and controversial legislation after 
conducting such little due diligence. Had further hearings and 
discussions taken place, the final version of H.R. 1595 could 
have possibly addressed a number of Republican concerns that 
pertained to implementation, national security, and the 
security of our financial system.
                                   Ted Budd.
                                   Sean P. Duffy.
                                   Roger Williams.
                                   John W. Rose.
                                   Lee Zeldin.
                                   Andy Barr.
                                   Frank D. Lucas.
                                   Ann Wagner.
                                   Bill Huizenga.
                                   Blaine Luetkemeyer.
                                   Bill Posey.
                                   Patrick T. McHenry.

                                  [all]