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Hot Topics: USA PATRIOT Act--Title III

Last update: February 14, 2003

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International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001- Sunsets this Act after the first day of FY 2005 if Congress enacts a specified joint resolution to that effect.

Subtitle A: International Counter Money Laundering and Related Measures - Amends Federal law governing monetary transactions to prescribe procedural guidelines under which the Secretary of the Treasury (the Secretary) may require domestic financial institutions and agencies to take specified measures if the Secretary finds that reasonable grounds exist for concluding that jurisdictions, financia1 institutions, types of accounts, or transactions operating outside or within the United States, are of primary money laundering concern. Includes mandatory disclosure of specified information relating to certain correspondent accounts.

(Sec. 312) Mandates establishment of due diligence mechanisms to detect and report money laundering transactions through private banking accounts and correspondent accounts.

(Sec. 313) Prohibits U.S. correspondent accounts with foreign shell banks.

(Sec. 314) Instructs the Secretary to adopt regulations to encourage further cooperation among financial institutions, their regulatory authorities, and law enforcement authorities, with the specific purpose of encouraging regulatory authorities and law enforcement authorities to share with financial institutions information regarding individuals, entities, and organizations engaged in or reasonably suspected (based on credible evidence) of engaging in terrorist acts or money laundering activities. Authorizes such regulations to create procedures for cooperation and information sharing on matters specifically related to the finances of terrorist groups as well as their relationships with international narcotics traffickers.

Requires the Secretary to distribute annually to financial institutions a detailed analysis identifying patterns of suspicious activity and other investigative insights derived from suspicious activity reports and investigations by Federal, State, and local law enforcement agencies.

(Sec. 315) Amends Federal criminal law to include foreign corruption offenses as money laundering crimes.

(Sec. 316) Establishes the right of property owners to contest confiscation of property under law relating to confiscation of assets of suspected terrorists.

(Sec. 317) Establishes Federal jurisdiction over: (1) foreign money launderers (including their assets held in the United States); and (2) money that is laundered through a foreign bank.

(Sec. 319) Authorizes the forfeiture of money laundering funds from interbank accounts. Requires a covered financial institution, upon request of the appropriate Federal banking agency, to make available within 120 hours all pertinent information related to anti-money laundering compliance by the institution or its customer. Grants the Secretary summons and subpoena powers over foreign banks that maintain a correspondent bank in the United States. Requires a covered financial institution to terminate within ten business days any correspondent relationship with a foreign bank after receipt of written notice that the foreign bank has failed to comply with certain judicial proceedings. Sets forth civil penalties for failure to terminate such relationship.

(Sec. 321) Subjects to record and report requirements for monetary instrument transactions: (1) any credit union; and (2) any futures commission merchant, commodity trading advisor, and commodity pool operator registered, or required to register, under the Commodity Exchange Act.

(Sec. 323) Authorizes Federal application for restraining orders to preserve the availability of property subject to a foreign forfeiture or confiscation judgment.

(Sec. 325) Authorizes the Secretary to issue regulations to ensure that concentration accounts of financial institutions are not used to prevent association of the identity of an individual customer with the movement of funds of which the customer is the direct or beneficial owner.

(Sec. 326) Directs the Secretary to issue regulations prescribing minimum standards for financial institutions regarding customer identity in connection with the opening of accounts.

Requires the Secretary to report to Congress on: (1) the most timely and effective way to require foreign nationals to provide domestic financial institutions and agencies with appropriate and accurate information; (2) whether to require foreign nationals to obtain an identification number (similar to a Social Security or tax identification number) before opening an account with a domestic financial institution; and (3) a system for domestic financial institutions and agencies to review Government agency information to verify the identities of such foreign nationals.

(Sec. 327) Amends the Bank Holding Company Act of 1956 and the Federal Deposit Insurance Act to require consideration of the effectiveness of a company or companies in combating money laundering during reviews of proposed bank shares acquisitions or mergers.

(Sec. 328) Directs the Secretary take reasonable steps to encourage foreign governments to require the inclusion of the name of the originator in wire transfer instructions sent to the United States and other countries, with the information to remain with the transfer from its origination until the point of disbursement. Requires annual progress reports to specified congressional committees.

(Sec. 329) Prescribes criminal penalties for Federal officials or employees who seek or accept bribes in connection with administration of this title.

(Sec. 330) Urges U.S. negotiations for international cooperation in investigations of money laundering, financial crimes, and the finances of terrorist groups, including record sharing by foreign banks with U.S. law enforcement officials and domestic financial institution supervisors.

Subtitle B: Bank Secrecy Act Amendments and Related Improvements - Amends Federal law known as the Bank Secrecy Act to revise requirements for civil liability immunity for voluntary financial institution disclosure of suspicious activities. Authorizes the inclusion of suspicions of illegal activity in written employment references.

(Sec. 352) Authorizes the Secretary to exempt from minimum standards for anti-money laundering programs any financial institution not subject to certain regulations governing financial recordkeeping and reporting of currency and foreign transactions.

(Sec. 353) Establishes civil penalties for violations of geographic targeting orders and structuring transactions to evade certain recordkeeping requirements. Lengthens the effective period of geographic targeting orders from 60 to 180 days.

(Sec. 355) Amends the Federal Deposit Insurance Act to permit written employment references to contain suspicions of involvement in illegal activity.

(Sec. 356) Instructs the Secretary to: (1) promulgate regulations requiring registered securities brokers and dealers, futures commission merchants, commodity trading advisors, and commodity pool operators, to file reports of suspicious financial transactions; (2) report to Congress on the role of the Internal Revenue Service in the administration of the Bank Secrecy Act; and (3) share monetary instruments transactions records upon request of a U.S. intelligence agency for use in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.

(Sec. 358) Amends the Right to Financial Privacy Act to permit the transfer of financial records to other agencies or departments upon certification that the records are relevant to intelligence or counterintelligence activities related to international terrorism.

Amends the Fair Credit Reporting Act to require a consumer reporting agency to furnish all information in a consumer's file to a government agency upon certification that the records are relevant to intelligence or counterintelligence activities related to international terrorism.

(Sec. 359) Subjects to mandatory records and reports on monetary instruments transactions any licensed sender of money or any other person who engages as a business in the transmission of funds, including through an informal value transfer banking system or network (e.g., hawala) of people facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system.

(Sec. 360) Authorizes the Secretary to instruct the United States Executive Director of each international financial institution to use his or her voice and vote to: (1) support the use of funds for a country (and its institutions) which contributes to U.S. efforts against international terrorism; and (2) require an auditing of disbursements to ensure that no funds are paid to persons who commit or support terrorism.

(Sec. 361) Makes the existing Financial Crimes Enforcement Network a bureau in the Department of the Treasury.

(Sec. 362) Directs the Secretary to establish a highly secure network in the Network that allows financial institutions to file certain reports and receive alerts and other information regarding suspicious activities warranting immediate and enhanced scrutiny.

(Sec. 363) Increases to $1 million the maximum civil penalties (currently $10,000) and criminal fines (currently $250,000) for money laundering. Sets a minimum civil penalty and criminal fine of double the amount of the illegal transaction.

(Sec. 364) Amends the Federal Reserve Act to provide for uniform protection authority for Federal Reserve facilities, including law enforcement officers authorized to carry firearms and make warrantless arrests.

(Sec. 365) Amends Federal law to require reports relating to coins and currency of more than $10,000 received in a nonfinancial trade or business.

(Sec. 366) Directs the Secretary to study and report to Congress on: (1) the possible expansion of the currency transaction reporting requirements exemption system; and (2) methods for improving financial institution utilization of the system as a way of reducing the submission of currency transaction reports that have little or no value for law enforcement purposes.

Subtitle C: Currency Crimes - Establishes as a bulk cash smuggling felony the knowing concealment and attempted transport (or transfer) across U.S. borders of currency and monetary instruments in excess of $10,000, with intent to evade specified currency reporting requirements.

(Sec. 372) Changes from discretionary to mandatory a court's authority to order, as part of a criminal sentence, forfeiture of all property involved in certain currency reporting offenses. Leaves a court discretion to order civil forfeitures in money laundering cases.

(Sec. 373) Amends the Federal criminal code to revise the prohibition of unlicensed (currently, illegal) money transmitting businesses.

(Sec. 374) Increases the criminal penalties for counterfeiting domestic and foreign currency and obligations.

(Sec. 376) Amends the Federal criminal code to extend the prohibition against the laundering of money instruments to specified proceeds of terrorism.

(Sec. 377) Grants the United States extraterritorial jurisdiction where: (1) an offense committed outside the United States involves an access device issued, owned, managed, or controlled by a financial institution, account issuer, credit card system member, or other entity within U.S. jurisdiction; and (2) the person committing the offense transports, delivers, conveys, transfers to or through, or otherwise stores, secrets, or holds within U.S. jurisdiction any article used to assist in the commission of the offense or the proceeds of such offense or property derived from it.

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