Bill Summary
The "Transparent Incorporation Practices Act" outlines the requirements for beneficial ownership reporting for corporations and limited liability companies formed in the US. It also establishes the Civil Liberties and Privacy Council and provides for studies and reports on beneficial ownership information and de-risking. It includes provisions for whistleblower protections, the return of profits and bonuses for Bank Secrecy Act violators, and the establishment of Innovation Labs and Councils. It also amends laws related to discretionary surplus funds and currency transaction and suspicious activity reports.
Possible Impacts
1. The legislation requires corporations and limited liability companies to report information about their beneficial owners, which may include individuals who have an ownership interest or receive economic benefits from the entity. This will affect the transparency and accountability of these entities and help law enforcement agencies prevent misconduct.
2. The legislation establishes a pilot program for financial institutions to share suspicious activity reports with their foreign branches, subsidiaries, and affiliates in order to combat illicit finance risks. This will enhance collaboration and information sharing among financial institutions and help identify and prevent money laundering and terrorism financing threats.
3. The legislation authorizes the appropriation of funds for technical assistance to promote compliance with international standards and best practices related to anti-money laundering and countering the financing of terrorism. This will help strengthen anti-money laundering frameworks and enforcement efforts, both domestically and internationally.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2513 Referred in Senate (RFS)]
<DOC>
116th CONGRESS
1st Session
H. R. 2513
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 23, 2019
Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
AN ACT
To ensure that persons who form corporations or limited liability
companies in the United States disclose the beneficial owners of those
corporations or limited liability companies, in order to prevent
wrongdoers from exploiting United States corporations and limited
liability companies for criminal gain, to assist law enforcement in
detecting, preventing, and punishing terrorism, money laundering, and
other misconduct involving United States corporations and limited
liability companies, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
DIVISION A--CORPORATE TRANSPARENCY ACT OF 2019
SECTION 1. SHORT TITLE.
(a) In General.--This Act may be cited as the ``Corporate
Transparency Act of 2019''.
(b) References to This Act.--In this division--
(1) any reference to ``this Act'' shall be deemed a
reference to ``this division''; and
(2) except as otherwise expressly provided, any reference
to a section or other provision shall be deemed a reference to
that section or other provision of this division.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Nearly 2,000,000 corporations and limited liability
companies are being formed under the laws of the States each
year.
(2) Very few States require information about the
beneficial owners of the corporations and limited liability
companies formed under their laws.
(3) A person forming a corporation or limited liability
company within the United States typically provides less
information at the time of incorporation than is needed to
obtain a bank account or driver's license and typically does
not name a single beneficial owner.
(4) Criminals have exploited State formation procedures to
conceal their identities when forming corporations or limited
liability companies in the United States, and have then used
the newly created entities to commit crimes affecting
interstate and international commerce such as terrorism,
proliferation financing, drug and human trafficking, money
laundering, tax evasion, counterfeiting, piracy, securities
fraud, financial fraud, and acts of foreign corruption.
(5) Law enforcement efforts to investigate corporations and
limited liability companies suspected of committing crimes have
been impeded by the lack of available beneficial ownership
information, as documented in reports and testimony by
officials from the Department of Justice, the Department of
Homeland Security, the Department of the Treasury, and the
Government Accountability Office, and others.
(6) In July 2006, the leading international antimoney
laundering standard-setting body, the Financial Action Task
Force on Money Laundering (in this section referred to as the
``FATF''), of which the United States is a member, issued a
report that criticizes the United States for failing to comply
with a FATF standard on the need to collect beneficial
ownership information and urged the United States to correct
this deficiency by July 2008. In December 2016, FATF issued
another evaluation of the United States, which found that
little progress has been made over the last ten years to
address this problem. It identified the ``lack of timely access
to adequate, accurate and current beneficial ownership
information'' as a fundamental gap in United States efforts to
combat money laundering and terrorist finance.
(7) In response to the 2006 FATF report, the United States
has urged the States to obtain beneficial ownership information
for the corporations and limited liability companies formed
under the laws of such States.
(8) In contrast to practices in the United States, all 28
countries in the European Union are required to have corporate
registries that include beneficial ownership information.
(9) To reduce the vulnerability of the United States to
wrongdoing by United States corporations and limited liability
companies with hidden owners, to protect interstate and
international commerce from criminals misusing United States
corporations and limited liability companies, to strengthen law
enforcement investigations of suspect corporations and limited
liability companies, to set a clear, universal standard for
State incorporation practices, and to bring the United States
into compliance with international anti-money laundering
standards, Federal legislation is needed to require the
collection of beneficial ownership information for the
corporations and limited liability companies formed under the
laws of such States.
SEC. 3. TRANSPARENT INCORPORATION PRACTICES.
(a) In General.--
(1) Amendment to the bank secrecy act.--Chapter 53 of title
31, United States Code, is amended by inserting after section
5332 the following new section:
``Sec. 5333 Transparent incorporation practices
``(a) Reporting Requirements.--
``(1) Beneficial ownership reporting.--
``(A) In general.--Each applicant to form a
corporation or limited liability company under the laws
of a State or Indian Tribe shall file a report with
FinCEN containing a list of the beneficial owners of
the corporation or limited liability company that--
``(i) except as provided in paragraphs (3)
and (4), and subject to paragraph (2),
identifies each beneficial owner by--
``(I) full legal name;
``(II) date of birth;
``(III) current residential or
business street address; and
``(IV) a unique identifying number
from a non-expired passport issued by
the United States, a non-expired
personal identification card, or a non-
expired driver's license issued by a
State; and
``(ii) if the applicant is not a beneficial
owner, also provides the identification
information described in clause (i) relating to
such applicant.
``(B) Updated information.--Each corporation or
limited liability company formed under the laws of a
State or Indian Tribe shall--
``(i) submit to FinCEN an annual filing
containing a list of--
``(I) the current beneficial owners
of the corporation or limited liability
company and the information described
in subparagraph (A) for each such
beneficial owner; and
``(II) any changes in the
beneficial owners of the corporation or
limited liability company during the
previous year; and
``(ii) pursuant to any rule issued by the
Secretary of the Treasury under subparagraph
(C), update the list of the beneficial owners
of the corporation or limited liability company
within the time period prescribed by such rule.
``(C) Rulemaking on updating information.--Not
later than 9 months after the completion of the study
required under section 4(a)(1) of the Corporate
Transparency Act of 2019, the Secretary of the Treasury
shall consider the findings of such study and, if the
Secretary determines it to be necessary or appropriate,
issue a rule requiring corporations and limited
liability companies to update the list of the
beneficial owners of the corporation or limited
liability company within a specified amount of time
after the date of any change in the list of beneficial
owners or the information required to be provided
relating to each beneficial owner.
``(D) State notification.--Each State in which a
corporation or limited liability company is being
formed shall notify each applicant of the requirements
listed in subparagraphs (A) and (B).
``(2) Certain beneficial owners.--If an applicant to form a
corporation or limited liability company or a beneficial owner,
or similar agent of a corporation or limited liability company
who is required to provide identification information under
this subsection, does not have a nonexpired passport issued by
the United States, a nonexpired personal identification card,
or a non-expired driver's license issued by a State, each such
person shall provide to FinCEN the full legal name, current
residential or business street address, a unique identifying
number from a non-expired passport issued by a foreign
government, and a legible and credible copy of the pages of a
non-expired passport issued by the government of a foreign
country bearing a photograph, date of birth, and unique
identifying information for each beneficial owner, and each
application described in paragraph (1)(A) and each update
described in paragraph (1)(B) shall include a written
certification by a person residing in the State or Indian
country under the jurisdiction of the Indian Tribe forming the
entity that the applicant, corporation, or limited liability
company--
``(A) has obtained for each such beneficial owner,
a current residential or business street address and a
legible and credible copy of the pages of a non-expired
passport issued by the government of a foreign country
bearing a photograph, date of birth, and unique
identifying information for the person;
``(B) has verified the full legal name, address,
and identity of each such person;
``(C) will provide the information described in
subparagraph (A) and the proof of verification
described in subparagraph (B) upon request of FinCEN;
and
``(D) will retain the information and proof of
verification under this paragraph until the end of the
5-year period beginning on the date that the
corporation or limited liability company terminates
under the laws of the State or Indian Tribe.
``(3) Exempt entities.--
``(A) In general.--With respect to an applicant to
form a corporation or limited liability company under
the laws of a State or Indian Tribe, if such entity is
described in subparagraph (C) or (D) of subsection
(d)(4) and will be exempt from the beneficial ownership
disclosure requirements under this subsection, such
applicant, or a prospective officer, director, or
similar agent of the applicant, shall file a written
certification with FinCEN--
``(i) identifying the specific provision of
subsection (d)(4) under which the entity
proposed to be formed would be exempt from the
beneficial ownership disclosure requirements
under paragraphs (1) and (2);
``(ii) stating that the entity proposed to
be formed meets the requirements for an entity
described under such provision of subsection
(d)(4); and
``(iii) providing identification
information for the applicant or prospective
officer, director, or similar agent making the
certification in the same manner as provided
under paragraph (1) or (2).
``(B) Existing corporations or limited liability
companies.--On and after the date that is 2 years after
the final regulations are issued to carry out this
section, a corporation or limited liability company
formed under the laws of the State or Indian Tribe
before such date shall be subject to the requirements
of this subsection unless an officer, director, or
similar agent of the entity submits to FinCEN a written
certification--
``(i) identifying the specific provision of
subsection (d)(4) under which the entity is
exempt from the requirements under paragraphs
(1) and (2);
``(ii) stating that the entity meets the
requirements for an entity described under such
provision of subsection (d)(4); and
``(iii) providing identification
information for the officer, director, or
similar agent making the certification in the
same manner as provided under paragraph (1) or
(2).
``(C) Exempt entities having ownership interest.--
If an entity described in subparagraph (C) or (D) of
subsection (d)(4) has or will have an ownership
interest in a corporation or limited liability company
formed or to be formed under the laws of a State or
Indian Tribe, the applicant, corporation, or limited
liability company in which the entity has or will have
the ownership interest shall provide the information
required under this subsection relating to the entity,
except that the entity shall not be required to provide
information regarding any natural person who has an
ownership interest in, exercises substantial control
over, or receives substantial economic benefits from
the entity.
``(4) FinCEN id numbers.--
``(A) Issuance of fincen id number.--
``(i) In general.--FinCEN shall issue a
FinCEN ID number to any individual who requests
such a number and provides FinCEN with the
information described under subclauses (I)
through (IV) of paragraph (1)(A)(i).
``(ii) Updating of information.--An
individual with a FinCEN ID number shall submit
an annual filing with FinCEN updating any
information described under subclauses (I)
through (IV) of paragraph (1)(A)(i).
``(B) Use of fincen id number in reporting
requirements.--Any person required to report the
information described under paragraph (1)(A)(i) with
respect to an individual may instead report the FinCEN
ID number of the individual.
``(C) Treatment of information submitted for fincen
id number.--For purposes of this section, any
information submitted under subparagraph (A) shall be
deemed to be beneficial ownership information.
``(5) Retention and disclosure of beneficial ownership
information by fincen.--
``(A) Retention of information.--Beneficial
ownership information relating to each corporation or
limited liability company formed under the laws of the
State or Indian Tribe shall be maintained by FinCEN
until the end of the 5-year period (or such other
period of time as the Secretary of the Treasury may, by
rule, determine) beginning on the date that the
corporation or limited liability company terminates.
``(B) Disclosure of information.--Beneficial
ownership information reported to FinCEN pursuant to
this section shall be provided by FinCEN only upon
receipt of--
``(i) subject to subparagraph (C), a
request, through appropriate protocols, by a
local, Tribal, State, or Federal law
enforcement agency;
``(ii) a request made by a Federal agency
on behalf of a law enforcement agency of
another country under an international treaty,
agreement, or convention, or an order under
section 3512 of title 18 or section 1782 of
title 28; or
``(iii) a request made by a financial
institution, with customer consent, as part of
the institution's compliance with due diligence
requirements imposed under the Bank Secrecy
Act, the USA PATRIOT Act, or other applicable
Federal, State, or Tribal law.
``(C) Appropriate protocols.--
``(i) Privacy.--The protocols described in
subparagraph (B)(i) shall--
``(I) protect the privacy of any
beneficial ownership information
provided by FinCEN to a local, Tribal,
State, or Federal law enforcement
agency;
``(II) ensure that a local, Tribal,
State, or Federal law enforcement
agency requesting beneficial ownership
information has an existing
investigatory basis for requesting such
information;
``(III) ensure that access to
beneficial ownership information is
limited to authorized users at a local,
Tribal, State, or Federal law
enforcement agency who have undergone
appropriate training, and refresher
training no less than every two years,
and that the identity of such
authorized users is verified through
appropriate mechanisms, such as two-
factor authentication;
``(IV) include an audit trail of
requests for beneficial ownership
information by a local, Tribal, State,
or Federal law enforcement agency,
including, as necessary, information
concerning queries made by authorized
users at a local, Tribal, State, or
Federal law enforcement agency;
``(V) require that every local,
Tribal, State, or Federal law
enforcement agency that receives
beneficial ownership information from
FinCEN conducts an annual audit to
verify that the beneficial ownership
information received from FinCEN has
been accessed and used appropriately,
and consistent with this paragraph; and
``(VI) require FinCEN to conduct an
annual audit of every local, Tribal,
State, or Federal law enforcement
agency that has received beneficial
ownership information to ensure that
such agency has requested beneficial
ownership information, and has used any
beneficial ownership information
received from FinCEN, appropriately,
and consistent with this paragraph.
``(ii) Limitation on use.--Beneficial
ownership information provided to a local,
Tribal, State, or Federal law enforcement
agency under this paragraph may only be used
for law enforcement, national security, or
intelligence purposes.
``(D) Access procedures.--FinCEN shall establish
stringent procedures for the protection and proper use
of beneficial ownership information disclosed pursuant
to subparagraph (B), including procedures to ensure
such information is not being inappropriately accessed
or misused by law enforcement agencies.
``(E) Report to congress.--FinCEN shall issue an
annual report to Congress stating--
``(i) the number of times law enforcement
agencies and financial institutions have
accessed beneficial ownership information
pursuant to subparagraph (B);
``(ii) the number of times beneficial
ownership information reported to FinCEN
pursuant to this section was inappropriately
accessed, and by whom; and
``(iii) the number of times beneficial
ownership information was disclosed under
subparagraph (B) pursuant to a subpoena.
``(F) Disclosure of non-pii data.--Notwithstanding
subparagraph (B), FinCEN may issue guidance and
otherwise make materials available to financial
institutions and the public using beneficial ownership
information reported pursuant to this section if such
information is aggregated in a manner that removes all
personally identifiable information. For purposes of
this subparagraph, `personally identifiable
information' includes information that would allow for
the identification of a particular corporation or
limited liability company.
``(b) No Bearer Share Corporations or Limited Liability
Companies.--A corporation or limited liability company formed under the
laws of a State or Indian Tribe may not issue a certificate in bearer
form evidencing either a whole or fractional interest in the
corporation or limited liability company.
``(c) Penalties.--
``(1) In general.--It shall be unlawful for any person to
affect interstate or foreign commerce by--
``(A) knowingly providing, or attempting to
provide, false or fraudulent beneficial ownership
information, including a false or fraudulent
identifying photograph, to FinCEN in accordance with
this section;
``(B) willfully failing to provide complete or
updated beneficial ownership information to FinCEN in
accordance with this section; or
``(C) knowingly disclosing the existence of a
subpoena or other request for beneficial ownership
information reported pursuant to this section, except--
``(i) to the extent necessary to fulfill
the authorized request; or
``(ii) as authorized by the entity that
issued the subpoena, or other request.
``(2) Civil and criminal penalties.--Any person who
violates paragraph (1)--
``(A) shall be liable to the United States for a
civil penalty of not more than $10,000; and
``(B) may be fined under title 18, United States
Code, imprisoned for not more than 3 years, or both.
``(3) Limitation.--Any person who negligently violates
paragraph (1) shall not be subject to civil or criminal
penalties under paragraph (2).
``(4) Waiver.--The Secretary of the Treasury may waive the
penalty for violating paragraph (1) if the Secretary determines
that the violation was due to reasonable cause and was not due
to willful neglect.
``(5) Criminal penalty for the misuse or unauthorized
disclosure of beneficial ownership information.--The criminal
penalties provided for under section 5322 shall apply to a
violation of this section to the same extent as such criminal
penalties apply to a violation described in section 5322, if
the violation of this section consists of the misuse or
unauthorized disclosure of beneficial ownership information.
``(d) Definitions.--For the purposes of this section:
``(1) Applicant.--The term `applicant' means any natural
person who files an application to form a corporation or
limited liability company under the laws of a State or Indian
Tribe.
``(2) Bank secrecy act.--The term `Bank Secrecy Act'
means--
``(A) section 21 of the Federal Deposit Insurance
Act;
``(B) chapter 2 of title I of Public Law 91-508;
and
``(C) this subchapter.
``(3) Beneficial owner.--
``(A) In general.--Except as provided in
subparagraph (B), the term `beneficial owner' means a
natural person who, directly or indirectly, through any
contract, arrangement, understanding, relationship, or
otherwise--
``(i) exercises substantial control over a
corporation or limited liability company;
``(ii) owns 25 percent or more of the
equity interests of a corporation or limited
liability company; or
``(iii) receives substantial economic
benefits from the assets of a corporation or
limited liability company.
``(B) Exceptions.--The term `beneficial owner'
shall not include--
``(i) a minor child, as defined in the
State or Indian Tribe in which the entity is
formed;
``(ii) a person acting as a nominee,
intermediary, custodian, or agent on behalf of
another person;
``(iii) a person acting solely as an
employee of a corporation or limited liability
company and whose control over or economic
benefits from the corporation or limited
liability company derives solely from the
employment status of the person;
``(iv) a person whose only interest in a
corporation or limited liability company is
through a right of inheritance; or
``(v) a creditor of a corporation or
limited liability company, unless the creditor
also meets the requirements of subparagraph
(A).
``(C) Substantial economic benefits defined.--
``(i) In general.--For purposes of
subparagraph (A)(ii), a natural person receives
substantial economic benefits from the assets
of a corporation or limited liability company
if the person has an entitlement to more than a
specified percentage of the funds or assets of
the corporation or limited liability company,
which the Secretary of the Treasury shall, by
rule, establish.
``(ii) Rulemaking criteria.--In
establishing the percentage under clause (i),
the Secretary of the Treasury shall seek to--
``(I) provide clarity to
corporations and limited liability
companies with respect to the
identification and disclosure of a
natural person who receives substantial
economic benefits from the assets of a
corporation or limited liability
company; and
``(II) identify those natural
persons who, as a result of the
substantial economic benefits they
receive from the assets of a
corporation or limited liability
company, exercise a dominant influence
over such corporation or limited
liability company.
``(4) Corporation; limited liability company.--The terms
`corporation' and `limited liability company'--
``(A) have the meanings given such terms under the
laws of the applicable State or Indian Tribe;
``(B) include any non-United States entity eligible
for registration or registered to do business as a
corporation or limited liability company under the laws
of the applicable State or Indian Tribe;
``(C) do not include any entity that is--
``(i) a business concern that is an issuer
of a class of securities registered under
section 12 of the Securities Exchange Act of
1934 (15 U.S.C. 781) or that is required to
file reports under section 15(d) of that Act
(15 U.S.C. 78o(d));
``(ii) a business concern constituted,
sponsored, or chartered by a State or Indian
Tribe, a political subdivision of a State or
Indian Tribe, under an interstate compact
between two or more States, by a department or
agency of the United States, or under the laws
of the United States;
``(iii) a depository institution (as
defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813));
``(iv) a credit union (as defined in
section 101 of the Federal Credit Union Act (12
U.S.C. 1752));
``(v) a bank holding company (as defined in
section 2 of the Bank Holding Company Act of
1956 (12 U.S.C. 1841)) or a savings and loan
holding company (as defined in section 10(a) of
the Home Owners' Loan Act (12 U.S.C. 1467a(a));
``(vi) a broker or dealer (as defined in
section 3 of the Securities Exchange Act of
1934 (15 U.S.C. 78c)) that is registered under
section 15 of the Securities Exchange Act of
1934 (15 U.S.C. 78o);
``(vii) an exchange or clearing agency (as
defined in section 3 of the Securities Exchange
Act of 1934 (15 U.S.C. 78c)) that is registered
under section 6 or 17A of the Securities
Exchange Act of 1934 (15 U.S.C. 78f and 78q-1);
``(viii) an investment company (as defined
in section 3 of the Investment Company Act of
1940 (15 U.S.C. 80a-3)) or an investment
adviser (as defined in section 202(11) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-
2(11))), if the company or adviser is
registered with the Securities and Exchange
Commission, has filed an application for
registration which has not been denied, under
the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.) or the Investment Adviser Act of
1940 (15 U.S.C. 80b-1 et seq.), or is an
investment adviser described under section
203(l) of the Investment Advisers Act of 1940
(15 U.S.C. 80b-3(l));
``(ix) an insurance company (as defined in
section 2 of the Investment Company Act of 1940
(15 U.S.C. 80a-2));
``(x) a registered entity (as defined in
section 1a of the Commodity Exchange Act (7
U.S.C. 1a)), or a futures commission merchant,
introducing broker, commodity pool operator, or
commodity trading advisor (as defined in
section 1a of the Commodity Exchange Act (7
U.S.C. 1a)) that is registered with the
Commodity Futures Trading Commission;
``(xi) a public accounting firm registered
in accordance with section 102 of the Sarbanes-
Oxley Act (15 U.S.C. 7212) or an entity
controlling, controlled by, or under common
control of such a firm;
``(xii) a public utility that provides
telecommunications service, electrical power,
natural gas, or water and sewer services,
within the United States;
``(xiii) a church, charity, nonprofit
entity, or other organization that is described
in section 501(c), 527, or 4947(a)(1) of the
Internal Revenue Code of 1986, that has not
been denied tax exempt status, and that has
filed the most recently due annual information
return with the Internal Revenue Service, if
required to file such a return;
``(xiv) a financial market utility
designated by the Financial Stability Oversight
Council under section 804 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act;
``(xv) an insurance producer (as defined in
section 334 of the Gramm-Leach-Bliley Act);
``(xvi) any pooled investment vehicle that
is operated or advised by a person described in
clause (iii), (iv), (v), (vi), (viii), (ix), or
(xi);
``(xvii) any business concern that--
``(I) employs more than 20
employees on a full-time basis in the
United States;
``(II) files income tax returns in
the United States demonstrating more
than $5,000,000 in gross receipts or
sales; and
``(III) has an operating presence
at a physical office within the United
States; or
``(xviii) any corporation or limited
liability company formed and owned by an entity
described in this clause or in clause (i),
(ii), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi), (xii), (xiii), (xiv), (xv), or
(xvi); and
``(D) do not include any individual business
concern or class of business concerns which the
Secretary of the Treasury and the Attorney General of
the United States have jointly determined, by rule of
otherwise, to be exempt from the requirements of
subsection (a), if the Secretary and the Attorney
General jointly determine that requiring beneficial
ownership information from the business concern would
not serve the public interest and would not assist law
enforcement efforts to detect, prevent, or prosecute
terrorism, money laundering, tax evasion, or other
misconduct.
``(5) Fincen.--The term `FinCEN' means the Financial Crimes
Enforcement Network of the Department of the Treasury.
``(6) Indian country.--The term `Indian country' has the
meaning given that term in section 1151 of title 18.
``(7) Indian tribe.--The term `Indian Tribe' has the
meaning given that term under section 102 of the Federally
Recognized Indian Tribe List Act of 1994.
``(8) Personal identification card.--The term `personal
identification card' means an identification document issued by
a State, Indian Tribe, or local government to an individual
solely for the purpose of identification of that individual.
``(9) State.--The term `State' means any State,
commonwealth, territory, or possession of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, American Samoa,
Guam, or the United States Virgin Islands.''.
(2) Rulemaking.--
(A) In general.--Not later than 1 year after the
date of enactment of this Act, the Secretary of the
Treasury shall issue regulations to carry out this Act
and the amendments made by this Act, including, to the
extent necessary, to clarify the definitions in section
5333(d) of title 31, United States Code.
(B) Revision of final rule.--Not later than 1 year
after the date of enactment of this Act, the Secretary
of the Treasury shall revise the final rule titled
``Customer Due Diligence Requirements for Financial
Institutions'' (May 11, 2016; 81 Fed. Reg. 29397) to--
(i) bring the rule into conformance with
this Act and the amendments made by this Act;
(ii) account for financial institutions'
access to comprehensive beneficial ownership
information filed by corporations and limited
liability companies, under threat of civil and
criminal penalties, under this Act and the
amendments made by this Act; and
(iii) reduce any burdens on financial
institutions that are, in light of the
enactment of this Act and the amendments made
by this Act, unnecessary or duplicative.
(3) Conforming amendments.--Title 31, United States Code,
is amended--
(A) in section 5321(a)--
(i) in paragraph (1), by striking
``sections 5314 and 5315'' each place it
appears and inserting ``sections 5314, 5315,
and 5333''; and
(ii) in paragraph (6), by inserting
``(except section 5333)'' after ``subchapter''
each place it appears; and
(B) in section 5322, by striking ``section 5315 or
5324'' each place it appears and inserting ``section
5315, 5324, or 5333''.
(4) Table of contents.--The table of contents of chapter 53
of title 31, United States Code, is amended by inserting after
the item relating to section 5332 the following:
``5333. Transparent incorporation practices.''.
(b) Authorization of Appropriations.--There is authorized to be
appropriated $20,000,000 for each of fiscal years 2020 and 2021 to the
Financial Crimes Enforcement Network to carry out this Act and the
amendments made by this Act.
(c) Federal Contractors.--Not later than the first day of the first
full fiscal year beginning at least 1 year after the date of the
enactment of this Act, the Administrator for Federal Procurement Policy
shall revise the Federal Acquisition Regulation maintained under
section 1303(a)(1) of title 41, United States Code, to require any
contractor or subcontractor who is subject to the requirement to
disclose beneficial ownership information under section 5333 of title
31, United States Code, to provide the information required to be
disclosed under such section to the Federal Government as part of any
bid or proposal for a contract with a value threshold in excess of the
simplified acquisition threshold under section 134 of title 41, United
States Code.
SEC. 4. STUDIES AND REPORTS.
(a) Updating of Beneficial Ownership Information.--
(1) Study.--The Secretary of the Treasury, in consultation
with the Attorney General of the United States, shall conduct a
study to evaluate--
(A) the necessity of a requirement for corporations
and limited liability companies to update the list of
their beneficial owners within a specified amount of
time after the date of any change in the list of
beneficial owners or the information required to be
provided relating to each beneficial owner, taking into
account the annual filings required under section
5333(a)(1)(B)(i) of title 31, United States Code, and
the information contained in such annual filings; and
(B) the burden that a requirement to update the
list of beneficial owners within a specified period of
time after a change in such list of beneficial owners
would impose on corporations and limited liability
companies.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall
submit a report on the study required under paragraph (1) to
the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate.
(3) Public comment.--The Secretary of the Treasury shall
seek and consider public input, comments, and data in order to
conduct the study required under subparagraph paragraph (1).
(b) Other Legal Entities.--Not later than 2 years after the date of
enactment of this Act, the Comptroller General of the United States
shall conduct a study and submit to the Congress a report--
(1) identifying each State or Indian Tribe that has
procedures that enable persons to form or register under the
laws of the State or Indian Tribe partnerships, trusts, or
other legal entities, and the nature of those procedures;
(2) identifying each State or Indian Tribe that requires
persons seeking to form or register partnerships, trusts, or
other legal entities under the laws of the State or Indian
Tribe to provide information about the beneficial owners (as
that term is defined in section 5333(d)(1) of title 31, United
States Code, as added by this Act) or beneficiaries of such
entities, and the nature of the required information;
(3) evaluating whether the lack of available beneficial
ownership information for partnerships, trusts, or other legal
entities--
(A) raises concerns about the involvement of such
entities in terrorism, money laundering, tax evasion,
securities fraud, or other misconduct;
(B) has impeded investigations into entities
suspected of such misconduct; and
(C) increases the costs to financial institutions
of complying with due diligence requirements imposed
under the Bank Secrecy Act, the USA PATRIOT Act, or
other applicable Federal, State, or Tribal law; and
(4) evaluating whether the failure of the United States to
require beneficial ownership information for partnerships and
trusts formed or registered in the United States has elicited
international criticism and what steps, if any, the United
States has taken or is planning to take in response.
(c) Effectiveness of Incorporation Practices.--Not later than 5
years after the date of enactment of this Act, the Comptroller General
of the United States shall conduct a study and submit to the Congress a
report assessing the effectiveness of incorporation practices
implemented under this Act and the amendments made by this Act in--
(1) providing law enforcement agencies with prompt access
to reliable, useful, and complete beneficial ownership
information; and
(2) strengthening the capability of law enforcement
agencies to combat incorporation abuses, civil and criminal
misconduct, and detect, prevent, or punish terrorism, money
laundering, tax evasion, or other misconduct.
(d) Annual Report on Beneficial Ownership Information.--
(1) Report.--The Secretary of the Treasury shall issue an
annual report to the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate with respect to the beneficial
ownership information collected pursuant to section 5333 of
title 31, United States Code, that contains--
(A) aggregate data on the number of beneficial
owners per reporting corporation or limited liability
company;
(B) the industries or type of business of each
reporting corporation or limited liability company; and
(C) the locations of the beneficial owners.
(2) Privacy.--In issuing reports under paragraph (1), the
Secretary shall not reveal the identities of beneficial owners
or names of the reporting corporations or limited liability
companies.
SEC. 5. DEFINITIONS.
In this Act, the terms ``Bank Secrecy Act'', ``beneficial owner'',
``corporation'', and ``limited liability company'' have the meaning
given those terms, respectively, under section 5333(d) of title 31,
United States Code.
DIVISION B--COUNTER ACT OF 2019
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Coordinating
Oversight, Upgrading and Innovating Technology, and Examiner Reform Act
of 2019'' or the ``COUNTER Act of 2019''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
DIVISION B--COUNTER ACT OF 2019
Sec. 1. Short title; table of contents.
Sec. 2. Bank Secrecy Act definition.
TITLE I--STRENGTHENING TREASURY
Sec. 101. Improving the definition and purpose of the Bank Secrecy Act.
Sec. 102. Special hiring authority.
Sec. 103. Civil Liberties and Privacy Officer.
Sec. 104. Civil Liberties and Privacy Council.
Sec. 105. International coordination.
Sec. 106. Treasury Attaches Program.
Sec. 107. Increasing technical assistance for international
cooperation.
Sec. 108. FinCEN Domestic Liaisons.
Sec. 109. FinCEN Exchange.
Sec. 110. Study and strategy on trade-based money laundering.
Sec. 111. Study and strategy on de-risking.
Sec. 112. AML examination authority delegation study.
Sec. 113. Study and strategy on Chinese money laundering.
TITLE II--IMPROVING AML/CFT OVERSIGHT
Sec. 201. Pilot program on sharing of suspicious activity reports
within a financial group.
Sec. 202. Sharing of compliance resources.
Sec. 203. GAO Study on feedback loops.
Sec. 204. FinCEN study on BSA value.
Sec. 205. Sharing of threat pattern and trend information.
Sec. 206. Modernization and upgrading whistleblower protections.
Sec. 207. Certain violators barred from serving on boards of United
States financial institutions.
Sec. 208. Additional damages for repeat Bank Secrecy Act violators.
Sec. 209. Justice annual report on deferred and non-prosecution
agreements.
Sec. 210. Return of profits and bonuses.
Sec. 211. Application of Bank Secrecy Act to dealers in antiquities.
Sec. 212. Geographic targeting order.
Sec. 213. Study and revisions to currency transaction reports and
suspicious activity reports.
Sec. 214. Streamlining requirements for currency transaction reports
and suspicious activity reports.
TITLE III--MODERNIZING THE AML SYSTEM
Sec. 301. Encouraging innovation in BSA compliance.
Sec. 302. Innovation Labs.
Sec. 303. Innovation Council.
Sec. 304. Testing methods rulemaking.
Sec. 305. FinCEN study on use of emerging technologies.
Sec. 306. Discretionary surplus funds.
(c) References to This Act.--In this division--
(1) any reference to ``this Act'' shall be deemed a
reference to ``this division''; and
(2) except as otherwise expressly provided, any reference
to a section or other provision shall be deemed a reference to
that section or other provision of this division.
SEC. 2. BANK SECRECY ACT DEFINITION.
Section 5312(a) of title 31, United States Code, is amended by
adding at the end the following:
``(7) Bank secrecy act.--The term `Bank Secrecy act'
means--
``(A) section 21 of the Federal Deposit Insurance
Act;
``(B) chapter 2 of title I of Public Law 91-508;
and
``(C) this subchapter.''.
TITLE I--STRENGTHENING TREASURY
SEC. 101. IMPROVING THE DEFINITION AND PURPOSE OF THE BANK SECRECY ACT.
Section 5311 of title 31, United States Code, is amended--
(1) by inserting ``to protect our national security, to
safeguard the integrity of the international financial system,
and'' before ``to require''; and
(2) by inserting ``to law enforcement and'' before ``in
criminal''.
SEC. 102. SPECIAL HIRING AUTHORITY.
(a) In General.--Section 310 of title 31, United States Code, is
amended--
(1) by redesignating subsection (d) as subsection (g); and
(2) by inserting after subsection (c) the following:
``(d) Special Hiring Authority.--
``(1) In general.--The Secretary of the Treasury may
appoint, without regard to the provisions of sections 3309
through 3318 of title 5, candidates directly to positions in
the competitive service (as defined in section 2102 of that
title) in FinCEN.
``(2) Primary responsibilities.--The primary responsibility
of candidates appointed pursuant to paragraph (1) shall be to
provide substantive support in support of the duties described
in subparagraphs (A), (B), (E), and (F) of subsection
(b)(2).''.
(b) Report.--Not later than 360 days after the date of enactment of
this Act, and every year thereafter for 7 years, the Director of the
Financial Crimes Enforcement Network shall submit a report to the
Committee on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate that
includes--
(1) the number of new employees hired since the preceding
report through the authorities described under section 310(d)
of title 31, United States Code, along with position titles and
associated pay grades for such hires; and
(2) a copy of any Federal Government survey of staff
perspectives at the Office of Terrorism and Financial
Intelligence, including findings regarding the Office and the
Financial Crimes Enforcement Network from the most recently
administered Federal Employee Viewpoint Survey.
SEC. 103. CIVIL LIBERTIES AND PRIVACY OFFICER.
(a) Appointment of Officers.--Not later than the end of the 3-month
period beginning on the date of enactment of this Act, a Civil
Liberties and Privacy Officer shall be appointed, from among
individuals who are attorneys with expertise in data privacy laws--
(1) within each Federal functional regulator, by the head
of the Federal functional regulator;
(2) within the Financial Crimes Enforcement Network, by the
Secretary of the Treasury; and
(3) within the Internal Revenue Service Small Business and
Self-Employed Tax Center, by the Secretary of the Treasury.
(b) Duties.--Each Civil Liberties and Privacy Officer shall, with
respect to the applicable regulator, Network, or Center within which
the Officer is located--
(1) be consulted each time Bank Secrecy Act or anti-money
laundering regulations affecting civil liberties or privacy are
developed or reviewed;
(2) be consulted on information-sharing programs, including
those that provide access to personally identifiable
information;
(3) ensure coordination and clarity between anti-money
laundering, civil liberties, and privacy regulations;
(4) contribute to the evaluation and regulation of new
technologies that may strengthen data privacy and the
protection of personally identifiable information collected by
each Federal functional regulator; and
(5) develop metrics of program success.
(c) Definitions.--For purposes of this section:
(1) Bank secrecy act.--The term ``Bank Secrecy Act'' has
the meaning given that term under section 5312 of title 31,
United States Code.
(2) Federal functional regulator.--The term ``Federal
functional regulator'' means the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the National Credit
Union Administration, the Securities and Exchange Commission,
and the Commodity Futures Trading Commission.
SEC. 104. CIVIL LIBERTIES AND PRIVACY COUNCIL.
(a) Establishment.--There is established the Civil Liberties and
Privacy Council (hereinafter in this section referred to as the
``Council''), which shall consist of the Civil Liberties and Privacy
Officers appointed pursuant to section 103.
(b) Chair.--The Director of the Financial Crimes Enforcement
Network shall serve as the Chair of the Council.
(c) Duty.--The members of the Council shall coordinate on
activities related to their duties as Civil Liberties Privacy Officers,
but may not supplant the individual agency determinations on civil
liberties and privacy.
(d) Meetings.--The meetings of the Council--
(1) shall be at the call of the Chair, but in no case may
the Council meet less than quarterly;
(2) may include open and partially closed sessions, as
determined necessary by the Council; and
(3) shall include participation by public and private
entities and law enforcement agencies.
(e) Report.--The Chair of the Council shall issue an annual report
to the Congress on the program and policy activities, including the
success of programs as measured by metrics of program success developed
pursuant to section 103(b)(5), of the Council during the previous year
and any legislative recommendations that the Council may have.
(f) Nonapplicability of FACA.--The Federal Advisory Committee Act
(5 U.S.C. App.) shall not apply to the Council.
SEC. 105. INTERNATIONAL COORDINATION.
(a) In General.--The Secretary of the Treasury shall work with the
Secretary's foreign counterparts, including through the Financial
Action Task Force, the International Monetary Fund, the World Bank, the
Egmont Group of Financial Intelligence Units, the Organisation for
Economic Co-operation and Development, and the United Nations, to
promote stronger anti-money laundering frameworks and enforcement of
anti-money laundering laws.
(b) Cooperation Goal.--In carrying out subsection (a), the
Secretary of the Treasury may work directly with foreign counterparts
and other organizations where the goal of cooperation can best be met.
(c) International Monetary Fund.--
(1) Support for capacity of the international monetary fund
to prevent money laundering and financing of terrorism.--Title
XVI of the International Financial Institutions Act (22 U.S.C.
262p et seq.) is amended by adding at the end the following:
``SEC. 1629. SUPPORT FOR CAPACITY OF THE INTERNATIONAL MONETARY FUND TO
PREVENT MONEY LAUNDERING AND FINANCING OF TERRORISM.
``The Secretary of the Treasury shall instruct the United States
Executive Director at the International Monetary Fund to support the
increased use of the administrative budget of the Fund for technical
assistance that strengthens the capacity of Fund members to prevent
money laundering and the financing of terrorism.''.
(2) National advisory council report to congress.--The
Chairman of the National Advisory Council on International
Monetary and Financial Policies shall include in the report
required by section 1701 of the International Financial
Institutions Act (22 U.S.C. 262r) a description of--
(A) the activities of the International Monetary
Fund in the most recently completed fiscal year to
provide technical assistance that strengthens the
capacity of Fund members to prevent money laundering
and the financing of terrorism, and the effectiveness
of the assistance; and
(B) the efficacy of efforts by the United States to
support such technical assistance through the use of
the Fund's administrative budget, and the level of such
support.
(3) Sunset.--Effective on the date that is the end of the
4-year period beginning on the date of enactment of this Act,
section 1629 of the International Financial Institutions Act,
as added by paragraph (1), is repealed.
SEC. 106. TREASURY ATTACHES PROGRAM.
(a) In General.--Title 31, United States Code, is amended by
inserting after section 315 the following:
``Sec. 316. Treasury Attaches Program
``(a) In General.--There is established the Treasury Attaches
Program, under which the Secretary of the Treasury shall appoint
employees of the Department of the Treasury, after nomination by the
Director of the Financial Crimes Enforcement Network (`FinCEN'), as a
Treasury attache, who shall--
``(1) be knowledgeable about the Bank Secrecy Act and anti-
money laundering issues;
``(2) be co-located in a United States embassy;
``(3) perform outreach with respect to Bank Secrecy Act and
anti-money laundering issues;
``(4) establish and maintain relationships with foreign
counterparts, including employees of ministries of finance,
central banks, and other relevant official entities;
``(5) conduct outreach to local and foreign financial
institutions and other commercial actors, including--
``(A) information exchanges through FinCEN and
FinCEN programs; and
``(B) soliciting buy-in and cooperation for the
implementation of--
``(i) United States and multilateral
sanctions; and
``(ii) international standards on anti-
money laundering and the countering of the
financing of terrorism; and
``(6) perform such other actions as the Secretary
determines appropriate.
``(b) Number of Attaches.--The number of Treasury attaches
appointed under this section at any one time shall be not fewer than 6
more employees than the number of employees of the Department of the
Treasury serving as Treasury attaches on March 1, 2019.
``(c) Compensation.--Each Treasury attache appointed under this
section and located at a United States embassy shall receive
compensation at the higher of--
``(1) the rate of compensation provided to a Foreign
Service officer at a comparable career level serving at the
same embassy; or
``(2) the rate of compensation the Treasury attache would
otherwise have received, absent the application of this
subsection.
``(d) Bank Secrecy Act Defined.--In this section, the term `Bank
Secrecy Act' has the meaning given that term under section 5312.''.
(b) Clerical Amendment.--The table of contents for chapter 3 of
title 31, United States Code, is amended by inserting after the item
relating to section 315 the following:
``316. Treasury Attaches Program.''.
SEC. 107. INCREASING TECHNICAL ASSISTANCE FOR INTERNATIONAL
COOPERATION.
(a) In General.--There is authorized to be appropriated for each of
fiscal years 2020 through 2024 to the Secretary of the Treasury for
purposes of providing technical assistance that promotes compliance
with international standards and best practices, including in
particular those aimed at the establishment of effective anti-money
laundering and countering the financing of terrorism regimes, in an
amount equal to twice the amount authorized for such purpose for fiscal
year 2019.
(b) Activity and Evaluation Report.--Not later than 360 days after
enactment of this Act, and every year thereafter for five years, the
Secretary of the Treasury shall issue a report to the Congress on the
assistance (as described under subsection (a)) of the Office of
Technical Assistance of the Department of the Treasury containing--
(1) a narrative detailing the strategic goals of the Office
in the previous year, with an explanation of how technical
assistance provided in the previous year advances the goals;
(2) a description of technical assistance provided by the
Office in the previous year, including the objectives and
delivery methods of the assistance;
(3) a list of beneficiaries and providers (other than
Office staff) of the technical assistance;
(4) a description of how technical assistance provided by
the Office complements, duplicates, or otherwise affects or is
affected by technical assistance provided by the international
financial institutions (as defined under section 1701(c) of the
International Financial Institutions Act); and
(5) a copy of any Federal Government survey of staff
perspectives at the Office of Technical Assistance, including
any findings regarding the Office from the most recently
administered Federal Employee Viewpoint Survey.
SEC. 108. FINCEN DOMESTIC LIAISONS.
Section 310 of title 31, United States Code, as amended by section
102, is further amended by inserting after subsection (d) the
following:
``(e) FinCEN Domestic Liaisons.--
``(1) In general.--The Director of FinCEN shall appoint at
least 6 senior FinCEN employees as FinCEN Domestic Liaisons,
who shall--
``(A) each be assigned to focus on a specific
region of the United States;
``(B) be located at an office in such region (or
co-located at an office of the Board of Governors of
the Federal Reserve System in such region); and
``(C) perform outreach to BSA officers at financial
institutions (including non-bank financial
institutions) and persons who are not financial
institutions, especially with respect to actions taken
by FinCEN that require specific actions by, or have
specific effects on, such institutions or persons, as
determined by the Director.
``(2) Definitions.--In this subsection:
``(A) BSA officer.--The term `BSA officer' means an
employee of a financial institution whose primary job
responsibility involves compliance with the Bank
Secrecy Act, as such term is defined under section
5312.
``(B) Financial institution.--The term `financial
institution' has the meaning given that term under
section 5312.''.
SEC. 109. FINCEN EXCHANGE.
Section 310 of title 31, United States Code, as amended by section
108, is further amended by inserting after subsection (e) the
following:
``(f) FinCEN Exchange.--
``(1) Establishment.--The FinCEN Exchange is hereby
established within FinCEN, which shall consist of the FinCEN
Exchange program of FinCEN in existence on the day before the
date of enactment of this paragraph.
``(2) Purpose.--The FinCEN Exchange shall facilitate a
voluntary public-private information sharing partnership among
law enforcement, financial institutions, and FinCEN to--
``(A) effectively and efficiently combat money
laundering, terrorism financing, organized crime, and
other financial crimes;
``(B) protect the financial system from illicit
use; and
``(C) promote national security.
``(3) Report.--
``(A) In general.--Not later than one year after
the date of enactment of this subsection, and annually
thereafter for the next five years, the Secretary of
the Treasury shall submit to the Committee on Financial
Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the
Senate a report containing--
``(i) an analysis of the efforts undertaken
by the FinCEN Exchange and the results of such
efforts;
``(ii) an analysis of the extent and
effectiveness of the FinCEN Exchange, including
any benefits realized by law enforcement from
partnership with financial institutions; and
``(iii) any legislative, administrative, or
other recommendations the Secretary may have to
strengthen FinCEN Exchange efforts.
``(B) Classified annex.--Each report under
subparagraph (A) may include a classified annex.
``(4) Information sharing requirement.--Information shared
pursuant to this subsection shall be shared in compliance with
all other applicable Federal laws and regulations.
``(5) Rule of construction.--Nothing under this subsection
may be construed to create new information sharing authorities
related to the Bank Secrecy Act (as such term is defined under
section 5312 of title 31, United States Code).
``(6) Financial institution defined.--In this subsection,
the term `financial institution' has the meaning given that
term under section 5312.''.
SEC. 110. STUDY AND STRATEGY ON TRADE-BASED MONEY LAUNDERING.
(a) Study.--The Secretary of the Treasury shall carry out a study,
in consultation with appropriate private sector stakeholders and
Federal departments and agencies, on trade-based money laundering.
(b) Report.--Not later than the end of the 1-year period beginning
on the date of the enactment of this Act, the Secretary shall issue a
report to the Congress containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) proposed strategies to combat trade-based money
laundering.
(c) Classified Annex.--The report required under this section may
include a classified annex.
(d) Contracting Authority.--The Secretary may contract with a
private third-party to carry out the study required under this section.
The authority of the Secretary to enter into contracts under this
subsection shall be in effect for each fiscal year only to the extent
and in the amounts as are provided in advance in appropriations Acts.
SEC. 111. STUDY AND STRATEGY ON DE-RISKING.
(a) Review.--The Secretary of the Treasury, in consultation with
appropriate private sector stakeholders, examiners, and the Federal
functional regulators (as defined under section 103) and other relevant
stakeholders, shall undertake a formal review of--
(1) any adverse consequences of financial institutions de-
risking entire categories of relationships, including
charities, embassy accounts, money services businesses (as
defined under section 1010.100(ff) of title 31, Code of Federal
Regulations) and their agents, countries, international and
domestic regions, and respondent banks;
(2) the reasons why financial institutions are engaging in
de-risking;
(3) the association with and effects of de-risking on money
laundering and financial crime actors and activities;
(4) the most appropriate ways to promote financial
inclusion, particularly with respect to developing countries,
while maintaining compliance with the Bank Secrecy Act,
including an assessment of policy options to--
(A) more effectively tailor Federal actions and
penalties to the size of foreign financial institutions
and any capacity limitations of foreign governments;
and
(B) reduce compliance costs that may lead to the
adverse consequences described in paragraph (1);
(5) formal and informal feedback provided by examiners that
may have led to de-risking;
(6) the relationship between resources dedicated to
compliance and overall sophistication of compliance efforts at
entities that may be experiencing de-risking versus those that
have not experienced de-risking; and
(7) any best practices from the private sector that
facilitate correspondent bank relationships.
(b) De-risking Strategy.--The Secretary shall develop a strategy to
reduce de-risking and adverse consequences related to de-risking.
(c) Report.--Not later than the end of the 1-year period beginning
on the date of the enactment of this Act, the Secretary, in
consultation with the Federal functional regulators and other relevant
stakeholders, shall issue a report to the Congress containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) the strategy developed pursuant to subsection (b).
(d) Definitions.--In this section:
(1) De-risking.--The term ``de-risking'' means the
wholesale closing of accounts or limiting of financial services
for a category of customer due to unsubstantiated risk as it
relates to compliance with the Bank Secrecy Act.
(2) BSA terms.--The terms ``Bank Secrecy Act'' and
``financial institution'' have the meaning given those terms,
respectively, under section 5312 off title 31, United States
Code.
SEC. 112. AML EXAMINATION AUTHORITY DELEGATION STUDY.
(a) Study.--The Secretary of the Treasury shall carry out a study
on the Secretary's delegation of examination authority under the Bank
Secrecy Act, including--
(1) an evaluation of the efficacy of the delegation,
especially with respect to the mission of the Bank Secrecy Act;
(2) whether the delegated agencies have appropriate
resources to perform their delegated responsibilities; and
(3) whether the examiners in delegated agencies have
sufficient training and support to perform their
responsibilities.
(b) Report.--Not later than one year after the date of enactment of
this Act, the Secretary of the Treasury shall submit to the Committee
on Financial Services of the House of Representatives and the Committee
on Banking, Housing, and Urban Affairs of the Senate a report
containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) recommendations to improve the efficacy of delegation
authority, including the potential for de-delegation of any or
all such authority where it may be appropriate.
(c) Bank Secrecy Act Defined.--The term ``Bank Secrecy Act'' has
the meaning given that term under section 5312 off title 31, United
States Code.
SEC. 113. STUDY AND STRATEGY ON CHINESE MONEY LAUNDERING.
(a) Study.--The Secretary of the Treasury shall carry out a study
on the extent and effect of Chinese money laundering activities in the
United States, including territories and possessions of the United
States, and worldwide.
(b) Strategy to Combat Chinese Money Laundering.--Upon the
completion of the study required under subsection (a), the Secretary
shall, in consultation with such other Federal departments and agencies
as the Secretary determines appropriate, develop a strategy to combat
Chinese money laundering activities.
(c) Report.--Not later than the end of the 1-year period beginning
on the date of enactment of this Act, the Secretary of the Treasury
shall issue a report to Congress containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a); and
(2) the strategy developed under subsection (b).
TITLE II--IMPROVING AML/CFT OVERSIGHT
SEC. 201. PILOT PROGRAM ON SHARING OF SUSPICIOUS ACTIVITY REPORTS
WITHIN A FINANCIAL GROUP.
(a) In General.--
(1) Sharing with foreign branches and affiliates.--Section
5318(g) of title 31, United States Code, is amended by adding
at the end the following:
``(5) Pilot program on sharing with foreign branches,
subsidiaries, and affiliates.--
``(A) In general.--The Secretary of the Treasury
shall issue rules establishing the pilot program
described under subparagraph (B), subject to such
controls and restrictions as the Director of the
Financial Crimes Enforcement Network determines
appropriate, including controls and restrictions
regarding participation by financial institutions and
jurisdictions in the pilot program. In prescribing such
rules, the Secretary shall ensure that the sharing of
information described under such subparagraph (B) is
subject to appropriate standards and requirements
regarding data security and the confidentiality of
personally identifiable information.
``(B) Pilot program described.--The pilot program
required under this paragraph shall--
``(i) permit a financial institution with a
reporting obligation under this subsection to
share reports (and information on such reports)
under this subsection with the institution's
foreign branches, subsidiaries, and affiliates
for the purpose of combating illicit finance
risks, notwithstanding any other provision of
law except subparagraphs (A) and (C);
``(ii) terminate on the date that is five
years after the date of enactment of this
paragraph, except that the Secretary may extend
the pilot program for up to two years upon
submitting a report to the Committee on
Financial Services of the House of
Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate that
includes--
``(I) a certification that the
extension is in the national interest
of the United States, with a detailed
explanation of the reasons therefor;
``(II) an evaluation of the
usefulness of the pilot program,
including a detailed analysis of any
illicit activity identified or
prevented as a result of the program;
and
``(III) a detailed legislative
proposal providing for a long-term
extension of the pilot program
activities, including expected
budgetary resources for the activities,
if the Secretary determines that a
long-term extension is appropriate.
``(C) Prohibition involving certain
jurisdictions.--In issuing the regulations required
under subparagraph (A), the Secretary may not permit a
financial institution to share information on reports
under this subsection with a foreign branch,
subsidiary, or affiliate located in--
``(i) the People's Republic of China;
``(ii) the Russian Federation; or
``(iii) a jurisdiction that--
``(I) is subject to countermeasures
imposed by the Federal Government;
``(II) is a state sponsor of
terrorism; or
``(III) the Secretary has
determined cannot reasonably protect
the privacy and confidentiality of such
information or would otherwise use such
information in a manner that is not
consistent with the national interest
of the United States.
``(D) Implementation updates.--Not later than 360
days after the date rules are issued under subparagraph
(A), and annually thereafter for three years, the
Secretary, or the Secretary's designee, shall brief the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate on--
``(i) the degree of any information sharing
permitted under the pilot program, and a
description of criteria used by the Secretary
to evaluate the appropriateness of the
information sharing;
``(ii) the effectiveness of the pilot
program in identifying or preventing the
violation of a United States law or regulation,
and mechanisms that may improve such
effectiveness; and
``(iii) any recommendations to amend the
design of the pilot program.
``(E) Rule of construction.--Nothing in this
paragraph shall be construed as limiting the
Secretary's authority under provisions of law other
than this paragraph to establish other permissible
purposes or methods for a financial institution sharing
reports (and information on such reports) under this
subsection with the institution's foreign headquarters
or with other branches of the same institution.
``(F) Notice of use of other authority.--If the
Secretary, pursuant to any authority other than that
provided under this paragraph, permits a financial
institution to share information on reports under this
subsection with a foreign branch, subsidiary, or
affiliate located in a foreign jurisdiction, the
Secretary shall notify the Committee on Financial
Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of
such permission and the applicable foreign
jurisdiction.
``(6) Treatment of foreign jurisdiction-originated
reports.--A report received by a financial institution from a
foreign affiliate with respect to a suspicious transaction
relevant to a possible violation of law or regulation shall be
subject to the same confidentiality requirements provided under
this subsection for a report of a suspicious transaction
described under paragraph (1).''.
(2) Notification prohibitions.--Section 5318(g)(2)(A) of
title 31, United States Code, is amended--
(A) in clause (i), by inserting after ``transaction
has been reported'' the following: ``or otherwise
reveal any information that would reveal that the
transaction has been reported''; and
(B) in clause (ii), by inserting after
``transaction has been reported,'' the following: ``or
otherwise reveal any information that would reveal that
the transaction has been reported,''.
(b) Rulemaking.--Not later than the end of the 360-day period
beginning on the date of enactment of this Act, the Secretary of the
Treasury shall issue regulations to carry out the amendments made by
this section.
SEC. 202. SHARING OF COMPLIANCE RESOURCES.
(a) In General.--Section 5318 of title 31, United States Code, is
amended by adding at the end the following:
``(o) Sharing of Compliance Resources.--
``(1) Sharing permitted.--Two or more financial
institutions may enter into collaborative arrangements in order
to more efficiently comply with the requirements of this
subchapter.
``(2) Outreach.--The Secretary of the Treasury and the
appropriate supervising agencies shall carry out an outreach
program to provide financial institutions with information,
including best practices, with respect to the sharing of
resources described under paragraph (1).''.
(b) Rule of Construction.--The amendment made by subsection (a) may
not be construed to require financial institutions to share resources.
SEC. 203. GAO STUDY ON FEEDBACK LOOPS.
(a) Study.--The Comptroller General of the United States shall
carry out a study on--
(1) best practices within the United States Government for
providing feedback (``feedback loop'') to relevant parties
(including regulated private entities) on the usage and
usefulness of personally identifiable information (``PII''),
sensitive-but-unclassified (``SBU'') data, or similar
information provided by such parties to Government users of
such information and data (including law enforcement or
regulators); and
(2) any practices or standards inside or outside the United
States for providing feedback through sensitive information and
public-private partnership information sharing efforts,
specifically related to efforts to combat money laundering and
other forms of illicit finance.
(b) Report.--Not later than the end of the 18-month period
beginning on the date of the enactment of this Act, the Comptroller
General shall issue 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 containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a);
(2) with respect to each of paragraphs (1) and (2) of
subsection (a), any best practices or significant concerns
identified by the Comptroller General, and their applicability
to public-private partnerships and feedback loops with respect
to U.S. efforts to combat money laundering and other forms of
illicit finance; and
(3) recommendations to reduce or eliminate any unnecessary
Government collection of the information described under
subsection (a)(1).
SEC. 204. FINCEN STUDY ON BSA VALUE.
(a) Study.--The Director of the Financial Crimes Enforcement
Network shall carry out a study on Bank Secrecy Act value.
(b) Report.--Not later than the end of the 30-day period beginning
on the date the study under subsection (a) is completed, the Director
shall issue a report to the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate containing all findings and determinations
made in carrying out the study required under this section.
(c) Classified Annex.--The report required under this section may
include a classified annex, if the Director determines it appropriate.
(d) Bank Secrecy Act Defined.--For purposes of this section, the
term ``Bank Secrecy Act'' has the meaning given that term under section
5312 of title 31, United States Code.
SEC. 205. SHARING OF THREAT PATTERN AND TREND INFORMATION.
Section 5318(g) of title 31, United States Code, as amended by
section 201(a)(1), is further amended by adding at the end the
following:
``(7) Sharing of threat pattern and trend information.--
``(A) SAR activity review.--The Director of the
Financial Crimes Enforcement Network shall restart
publication of the `SAR Activity Review - Trends, Tips
& Issues', on not less than a semi-annual basis, to
provide meaningful information about the preparation,
use, and value of reports filed under this subsection
by financial institutions, as well as other reports
filed by financial institutions under the Bank Secrecy
Act.
``(B) Inclusion of typologies.--In each publication
described under subparagraph (A), the Director shall
provide financial institutions with typologies,
including data that can be adapted in algorithms
(including for artificial intelligence and machine
learning programs) where appropriate, on emerging money
laundering and counter terror financing threat patterns
and trends.
``(C) Typology defined.--For purposes of this
paragraph, the term `typology' means the various
techniques used to launder money or finance
terrorism.''.
SEC. 206. MODERNIZATION AND UPGRADING WHISTLEBLOWER PROTECTIONS.
(a) Rewards.--Section 5323(d) of title 31, United States Code, is
amended to read as follows:
``(d) Source of Rewards.--For the purposes of paying a reward under
this section, the Secretary may, subject to amounts made available in
advance by appropriation Acts, use criminal fine, civil penalty, or
forfeiture amounts recovered based on the original information with
respect to which the reward is being paid.''.
(b) Whistleblower Incentives.--Chapter 53 of title 31, United
States Code, is amended--
(1) by inserting after section 5323 the following:
``Sec. 5323A. Whistleblower incentives
``(a) Definitions.--In this section:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any judicial
or administrative action brought by FinCEN under the Bank
Secrecy Act that results in monetary sanctions exceeding
$1,000,000.
``(2) FinCEN.--The term `FinCEN' means the Financial Crimes
Enforcement Network.
``(3) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative
action, means--
``(A) any monies, including penalties,
disgorgement, and interest, ordered to be paid; and
``(B) any monies deposited into a disgorgement fund
as a result of such action or any settlement of such
action.
``(4) Original information.--The term `original
information' means information that--
``(A) is derived from the independent knowledge or
analysis of a whistleblower;
``(B) is not known to FinCEN from any other source,
unless the whistleblower is the original source of the
information; and
``(C) is not exclusively derived from an allegation
made in a judicial or administrative hearing, in a
governmental report, hearing, audit, or investigation,
or from the news media, unless the whistleblower is a
source of the information.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought
by FinCEN, means any judicial or administrative action that is
based upon original information provided by a whistleblower
that led to the successful enforcement of the action.
``(6) Secretary.--The term `Secretary' means the Secretary
of the Treasury.
``(7) Whistleblower.--The term `whistleblower' means any
individual who provides, or 2 or more individuals acting
jointly who provide, information relating to a violation of
laws enforced by FinCEN, in a manner established, by rule or
regulation, by FinCEN.
``(b) Awards.--
``(1) In general.--In any covered judicial or
administrative action, or related action, the Secretary, under
such rules as the Secretary may issue and subject to subsection
(c), shall pay an award or awards to 1 or more whistleblowers
who voluntarily provided original information to FinCEN that
led to the successful enforcement of the covered judicial or
administrative action, or related action, in an aggregate
amount equal to not more than 30 percent, in total, of what has
been collected of the monetary sanctions imposed in the action.
``(2) Source of awards.--For the purposes of paying any
award under paragraph (1), the Secretary may, subject to
amounts made available in advance by appropriation Acts, use
monetary sanction amounts recovered based on the original
information with respect to which the award is being paid.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount
of an award made under subsection (b) shall be in the
discretion of the Secretary.
``(B) Criteria.--In responding to a disclosure and
determining the amount of an award made, FinCEN staff
shall meet with the whistleblower to discuss evidence
disclosed and rebuttals to the disclosure, and shall
take into consideration--
``(i) the significance of the information
provided by the whistleblower to the success of
the covered judicial or administrative action;
``(ii) the degree of assistance provided by
the whistleblower and any legal representative
of the whistleblower in a covered judicial or
administrative action;
``(iii) the mission of FinCEN in deterring
violations of the law by making awards to
whistleblowers who provide information that
lead to the successful enforcement of such
laws; and
``(iv) such additional relevant factors as
the Secretary may establish by rule.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the
time the whistleblower acquired the original
information submitted to FinCEN, a member, officer, or
employee of--
``(i) an appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a self-regulatory organization; or
``(iv) a law enforcement organization;
``(B) to any whistleblower who is convicted of a
criminal violation, or who the Secretary has a
reasonable basis to believe committed a criminal
violation, related to the judicial or administrative
action for which the whistleblower otherwise could
receive an award under this section;
``(C) to any whistleblower who gains the
information through the performance of an audit of
financial statements required under the Bank Secrecy
Act and for whom such submission would be contrary to
its requirements; or
``(D) to any whistleblower who fails to submit
information to FinCEN in such form as the Secretary
may, by rule, require.
``(3) Statement of reasons.--For any decision granting or
denying an award, the Secretary shall provide to the
whistleblower a statement of reasons that includes findings of
fact and conclusions of law for all material issues.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who
makes a claim for an award under subsection (b) may be
represented by counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who
anonymously makes a claim for an award under subsection
(b) shall be represented by counsel if the
whistleblower anonymously submits the information upon
which the claim is based.
``(B) Disclosure of identity.--Prior to the payment
of an award, a whistleblower shall disclose their
identity and provide such other information as the
Secretary may require, directly or through counsel for
the whistleblower.
``(e) Appeals.--Any determination made under this section,
including whether, to whom, or in what amount to make awards, shall be
in the discretion of the Secretary. Any such determination, except the
determination of the amount of an award if the award was made in
accordance with subsection (b), may be appealed to the appropriate
court of appeals of the United States not more than 30 days after the
determination is issued by the Secretary. The court shall review the
determination made by the Secretary in accordance with section 706 of
title 5.
``(f) Employee Protections.--The Secretary of the Treasury shall
issue regulations protecting a whistleblower from retaliation, which
shall be as close as practicable to the employee protections provided
for under section 1057 of the Consumer Financial Protection Act of
2010.''; and
(2) in the table of contents for such chapter, by inserting
after the item relating to section 5323 the following new item:
``5323A. Whistleblower incentives.''.
SEC. 207. CERTAIN VIOLATORS BARRED FROM SERVING ON BOARDS OF UNITED
STATES FINANCIAL INSTITUTIONS.
Section 5321 of title 31, United States Code, is amended by adding
at the end the following:
``(f) Certain Violators Barred From Serving on Boards of United
States Financial Institutions.--
``(1) In general.--An individual found to have committed an
egregious violation of a provision of (or rule issued under)
the Bank Secrecy Act shall be barred from serving on the board
of directors of a United States financial institution for a 10-
year period beginning on the date of such finding.
``(2) Egregious violation defined.--With respect to an
individual, the term `egregious violation' means--
``(A) a felony criminal violation for which the
individual was convicted; and
``(B) a civil violation where the individual
willfully committed such violation and the violation
facilitated money laundering or the financing of
terrorism.''.
SEC. 208. ADDITIONAL DAMAGES FOR REPEAT BANK SECRECY ACT VIOLATORS.
(a) In General.--Section 5321 of title 31, United States Code, as
amended by section 208, is further amended by adding at the end the
following:
``(g) Additional Damages for Repeat Violators.--In addition to any
other fines permitted by this section and section 5322, with respect to
a person who has previously been convicted of a criminal provision of
(or rule issued under) the Bank Secrecy Act or who has admitted, as
part of a deferred- or non-prosecution agreement, to having previously
committed a violation of a criminal provision of (or rule issued under)
the Bank Secrecy Act, the Secretary may impose an additional civil
penalty against such person for each additional such violation in an
amount equal to up three times the profit gained or loss avoided by
such person as a result of the violation.''.
(b) Prospective Application of Amendment.--For purposes of
determining whether a person has committed a previous violation under
section 5321(g) of title 31, United States Code, such determination
shall only include violations occurring after the date of enactment of
this Act.
SEC. 209. JUSTICE ANNUAL REPORT ON DEFERRED AND NON-PROSECUTION
AGREEMENTS.
(a) Annual Report.--The Attorney General shall issue an annual
report, every year for the five years beginning on the date of
enactment of this Act, to the Committees on Financial Services and the
Judiciary of the House of Representatives and the Committees on
Banking, Housing, and Urban Affairs and the Judiciary of the Senate
containing--
(1) a list of deferred prosecution agreements and non-
prosecution agreements that the Attorney General has entered
into during the previous year with any person with respect to a
violation or suspected violation of the Bank Secrecy Act;
(2) the justification for entering into each such
agreement;
(3) the list of factors that were taken into account in
determining that the Attorney General should enter into each
such agreement; and
(4) the extent of coordination the Attorney General
conducted with the Financial Crimes Enforcement Network prior
to entering into each such agreement.
(b) Classified Annex.--Each report under subsection (a) may include
a classified annex.
(c) Bank Secrecy Act Defined.--For purposes of this section, the
term ``Bank Secrecy Act'' has the meaning given that term under section
5312 of title 31, United States Code.
SEC. 210. RETURN OF PROFITS AND BONUSES.
(a) In General.--Section 5322 of title 31, United States Code, is
amended by adding at the end the following:
``(e) Return of Profits and Bonuses.--A person convicted of
violating a provision of (or rule issued under) the Bank Secrecy Act
shall--
``(1) in addition to any other fine under this section, be
fined in an amount equal to the profit gained by such person by
reason of such violation, as determined by the court; and
``(2) if such person is an individual who was a partner,
director, officer, or employee of a financial institution at
the time the violation occurred, repay to such financial
institution any bonus paid to such individual during the
Federal fiscal year in which the violation occurred or the
Federal fiscal year after which the violation occurred.''.
(b) Rule of Construction.--The amendment made by subsection (a) may
not be construed to prohibit a financial institution from requiring the
repayment of a bonus paid to a partner, director, officer, or employee
if the financial institution determines that the partner, director,
officer, or employee engaged in unethical, but non-criminal,
activities.
SEC. 211. APPLICATION OF BANK SECRECY ACT TO DEALERS IN ANTIQUITIES.
(a) In General.--Section 5312(a)(2) of title 31, United States
Code, is amended--
(1) in subparagraph (Y), by striking ``or'' at the end;
(2) by redesignating subparagraph (Z) as subparagraph (AA);
and
(3) by inserting after subsection (Y) the following:
``(Z) a person trading or acting as an intermediary
in the trade of antiquities, including an advisor,
consultant or any other person who engages as a
business in the solicitation of the sale of
antiquities; or''.
(b) Study on the Facilitation of Money Laundering and Terror
Finance Through the Trade of Works of Art or Antiquities.--
(1) Study.--The Secretary of the Treasury, in coordination
with Federal Bureau of Investigation, the Attorney General, and
Homeland Security Investigations, shall perform a study on the
facilitation of money laundering and terror finance through the
trade of works of art or antiquities, including an analysis
of--
(A) the extent to which the facilitation of money
laundering and terror finance through the trade of
works of art or antiquities may enter or affect the
financial system of the United States, including any
qualitative data or statistics;
(B) whether thresholds and definitions should apply
in determining which entities to regulate;
(C) an evaluation of which markets, by size, entity
type, domestic or international geographical locations,
or otherwise, should be subject to regulations, but
only to the extent such markets are not already
required to report on the trade of works of art or
antiquities to the Federal Government;
(D) an evaluation of whether certain exemptions
should apply; and
(E) any other points of study or analysis the
Secretary determines necessary or appropriate.
(2) Report.--Not later than the end of the 180-day period
beginning on the date of the enactment of this Act, the
Secretary of the Treasury shall issue a report to the Committee
on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate
containing all findings and determinations made in carrying out
the study required under paragraph (1).
(c) Rulemaking.--Not later than the end of the 180-day period
beginning on the date the Secretary issues the report required under
subsection (b)(2), the Secretary shall issue regulations to carry out
the amendments made by subsection (a).
SEC. 212. GEOGRAPHIC TARGETING ORDER.
The Secretary of the Treasury shall issue a geographic targeting
order, similar to the order issued by the Financial Crimes Enforcement
Network on November 15, 2018, that--
(1) applies to commercial real estate to the same extent,
with the exception of having the same thresholds, as the order
issued by FinCEN on November 15, 2018, applies to residential
real estate; and
(2) establishes a specific threshold for commercial real
estate.
SEC. 213. STUDY AND REVISIONS TO CURRENCY TRANSACTION REPORTS AND
SUSPICIOUS ACTIVITY REPORTS.
(a) Currency Transaction Reports.--
(1) CTR indexed for inflation.--
(A) In general.--Every 5 years after the date of
enactment of this Act, the Secretary of the Treasury
shall revise regulations issued with respect to section
5313 of title 31, United States Code, to update each
$10,000 threshold amount in such regulation to reflect
the change in the Consumer Price Index for All Urban
Consumers published by the Department of Labor, rounded
to the nearest $100. For purposes of calculating the
change described in the previous sentence, the
Secretary shall use $10,000 as the base amount and the
date of enactment of this Act as the base date.
(B) Exception.--Notwithstanding subparagraph (A),
the Secretary may make appropriate adjustments to the
threshold amounts described under subparagraph (A) in
high-risk areas (e.g., High Intensity Financial Crime
Areas or HIFCAs), if the Secretary has demonstrable
evidence that shows a threshold raise would increase
serious crimes, such as trafficking, or endanger
national security.
(2) GAO ctr study.--
(A) Study.--The Comptroller General of the United
States shall carry out a study of currency transaction
reports. Such study shall include--
(i) a review (carried out in consultation
with the Secretary of the Treasury, the
Financial Crimes Enforcement Network, the
United States Attorney General, the State
Attorneys General, and State, Tribal, and local
law enforcement) of the effectiveness of the
current currency transaction reporting regime;
(ii) an analysis of the importance of
currency transaction reports to law
enforcement; and
(iii) an analysis of the effects of raising
the currency transaction report threshold.
(B) Report.--Not later than the end of the 1-year
period beginning on the date of enactment of this Act,
the Comptroller General shall issue a report to the
Secretary of the Treasury and the Congress containing--
(i) all findings and determinations made in
carrying out the study required under
subparagraph (A); and
(ii) recommendations for improving the
current currency transaction reporting regime.
(b) Modified SARs Study and Design.--
(1) Study.--The Director of the Financial Crimes
Enforcement Network shall carry out a study, in consultation
with industry stakeholders (including money services
businesses, community banks, and credit unions), regulators,
and law enforcement, of the design of a modified suspicious
activity report form for certain customers and activities. Such
study shall include--
(A) an examination of appropriate optimal SARs
thresholds to determine the level at which a modified
SARs form could be employed;
(B) an evaluation of which customers or
transactions would be appropriate for a modified SAR,
including--
(i) seasoned business customers;
(ii) financial technology (Fintech) firms;
(iii) structuring transactions; and
(iv) any other customer or transaction that
may be appropriate for a modified SAR; and
(C) an analysis of the most effective methods to
reduce the regulatory burden imposed on financial
institutions in complying with the Bank Secrecy Act,
including an analysis of the effect of--
(i) modifying thresholds;
(ii) shortening forms;
(iii) combining Bank Secrecy Act forms;
(iv) filing reports in periodic batches;
and
(v) any other method that may reduce the
regulatory burden.
(2) Study considerations.--In carrying out the study
required under paragraph (1), the Director shall seek to
balance law enforcement priorities, regulatory burdens
experienced by financial institutions, and the requirement for
reports to have a ``high degree of usefulness to law
enforcement'' under the Bank Secrecy Act.
(3) Report.--Not later than the end of the 1-year period
beginning on the date of enactment of this Act, the Director
shall issue a report to Congress containing--
(A) all findings and determinations made in
carrying out the study required under subsection (a);
and
(B) sample designs of modified SARs forms based on
the study results.
(4) Contracting authority.--The Director may contract with
a private third-party to carry out the study required under
this subsection. The authority of the Director to enter into
contracts under this paragraph shall be in effect for each
fiscal year only to the extent and in the amounts as are
provided in advance in appropriations Acts.
(c) Definitions.--For purposes of this section:
(1) Bank secrecy act.--The term ``Bank Secrecy Act'' has
the meaning given that term under section 5312 of title 31,
United States Code.
(2) Regulatory burden.--The term ``regulatory burden''
means the man-hours to complete filings, cost of data
collection and analysis, and other considerations of chapter 35
of title 44, United States Code (commonly referred to as the
Paperwork Reduction Act).
(3) SAR; suspicious activity report.--The term ``SAR'' and
``suspicious activity report'' mean a report of a suspicious
transaction under section 5318(g) of title 31, United States
Code.
(4) Seasoned business customer.--The term ``seasoned
business customer'', shall have such meaning as the Secretary
of the Treasury shall prescribe, which shall include any person
that--
(A) is incorporated or organized under the laws of
the United States or any State, or is registered as,
licensed by, or otherwise eligible to do business
within the United States, a State, or political
subdivision of a State;
(B) has maintained an account with a financial
institution for a length of time as determined by the
Secretary; and
(C) meet such other requirements as the Secretary
may determine necessary or appropriate.
SEC. 214. STREAMLINING REQUIREMENTS FOR CURRENCY TRANSACTION REPORTS
AND SUSPICIOUS ACTIVITY REPORTS.
(a) Review.--The Secretary of the Treasury (in consultation with
Federal law enforcement agencies, the Director of National
Intelligence, and the Federal functional regulators and in consultation
with other relevant stakeholders) shall undertake a formal review of
the current financial institution reporting requirements under the Bank
Secrecy Act and its implementing regulations and propose changes to
further reduce regulatory burdens, and ensure that the information
provided is of a ``high degree of usefulness'' to law enforcement, as
set forth under section 5311 of title 31, United States Code.
(b) Contents.--The review required under subsection (a) shall
include a study of--
(1) whether the timeframe for filing a suspicious activity
report should be increased from 30 days;
(2) whether or not currency transaction report and
suspicious activity report thresholds should be tied to
inflation or otherwise periodically be adjusted;
(3) whether the circumstances under which a financial
institution determines whether to file a ``continuing
suspicious activity report'', or the processes followed by a
financial institution in determining whether to file a
``continuing suspicious activity report'' (or both) can be
narrowed;
(4) analyzing the fields designated as ``critical'' on the
suspicious activity report form and whether the number of
fields should be reduced;
(5) the increased use of exemption provisions to reduce
currency transaction reports that are of little or no value to
law enforcement efforts;
(6) the current financial institution reporting
requirements under the Bank Secrecy Act and its implementing
regulations and guidance; and
(7) such other items as the Secretary determines
appropriate.
(c) Report.--Not later than the end of the one year period
beginning on the date of the enactment of this Act, the Secretary of
the Treasury, in consultation with law enforcement and persons subject
to Bank Secrecy Act requirements, shall issue a report to the Congress
containing all findings and determinations made in carrying out the
review required under subsection (a).
(d) Definitions.--For purposes of this section:
(1) Federal functional regulator.--The term ``Federal
functional regulator'' has the meaning given that term under
section 103.
(2) Other terms.--The terms ``Bank Secrecy Act'' and
``financial institution'' have the meaning given those terms,
respectively, under section 5312 of title 31, United States
Code.
TITLE III--MODERNIZING THE AML SYSTEM
SEC. 301. ENCOURAGING INNOVATION IN BSA COMPLIANCE.
Section 5318 of title 31, United States Code, as amended by section
202, is further amended by adding at the end the following:
``(p) Encouraging Innovation in Compliance.--
``(1) In general.--The Federal functional regulators shall
encourage financial institutions to consider, evaluate, and,
where appropriate, responsibly implement innovative approaches
to meet the requirements of this subchapter, including through
the use of innovation pilot programs.
``(2) Exemptive relief.--The Secretary, pursuant to
subsection (a), may provide exemptions from the requirements of
this subchapter if the Secretary determines such exemptions are
necessary to facilitate the testing and potential use of new
technologies and other innovations.
``(3) Rule of construction.--This subsection may not be
construed to require financial institutions to consider,
evaluate, or implement innovative approaches to meet the
requirements of the Bank Secrecy Act.
``(4) Federal functional regulator defined.--In this
subsection, the term `Federal functional regulator' means the
Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the National Credit Union Administration, the
Securities and Exchange Commission, and the Commodity Futures
Trading Commission.''.
SEC. 302. INNOVATION LABS.
(a) In General.--Subchapter II of chapter 53 of title 31, United
States Code, is amended by adding at the end the following:
``Sec. 5333. Innovation Labs
``(a) Establishment.--There is established within the Department of
the Treasury and each Federal functional regulator an Innovation Lab.
``(b) Director.--The head of each Innovation Lab shall be a
Director, to be appointed by the Secretary of the Treasury or the head
of the Federal functional regulator, as applicable.
``(c) Duties.--The duties of the Innovation Lab shall be--
``(1) to provide outreach to law enforcement agencies,
financial institutions, and other persons (including vendors
and technology companies) with respect to innovation and new
technologies that may be used to comply with the requirements
of the Bank Secrecy Act;
``(2) to support the implementation of responsible
innovation and new technology, in a manner that complies with
the requirements of the Bank Secrecy Act;
``(3) to explore opportunities for public-private
partnerships; and
``(4) to develop metrics of success.
``(d) FinCEN Lab.--The Innovation Lab established under subsection
(a) within the Department of the Treasury shall be a lab within the
Financial Crimes Enforcement Network.
``(e) Federal Functional Regulator Defined.--In this subsection,
the term `Federal functional regulator' means the Board of Governors of
the Federal Reserve System, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the National Credit Union
Administration, the Securities and Exchange Commission, and the
Commodity Futures Trading Commission.''.
(b) Clerical Amendment.--The table of contents for subchapter II of
chapter 53 of title 31, United States Code, is amended by adding at the
end the following:
``5333. Innovation Labs.''.
SEC. 303. INNOVATION COUNCIL.
(a) In General.--Subchapter II of chapter 53 of Title 31, United
States Code, as amended by section 302, is further amended by adding at
the end the following:
``Sec. 5334. Innovation Council
``(a) Establishment.--There is established the Innovation Council
(hereinafter in this section referred to as the `Council'), which shall
consist of each Director of an Innovation Lab established under section
5334 and the Director of the Financial Crimes Enforcement Network.
``(b) Chair.--The Director of the Innovation Lab of the Department
of the Treasury shall serve as the Chair of the Council.
``(c) Duty.--The members of the Council shall coordinate on
activities related to innovation under the Bank Secrecy Act, but may
not supplant individual agency determinations on innovation.
``(d) Meetings.--The meetings of the Council--
``(1) shall be at the call of the Chair, but in no case may
the Council meet less than semi-annually;
``(2) may include open and closed sessions, as determined
necessary by the Council; and
``(3) shall include participation by public and private
entities and law enforcement agencies.
``(e) Report.--The Council shall issue an annual report, for each
of the 7 years beginning on the date of enactment of this section, to
the Secretary of the Treasury on the activities of the Council during
the previous year, including the success of programs as measured by
metrics of success developed pursuant to section 5334(c)(4), and any
regulatory or legislative recommendations that the Council may have.''.
(b) Clerical Amendment.--The table of contents for subchapter II of
chapter 53 of title 31, United States Code, is amended by adding the
end the following:
``5334. Innovation Council.''.
SEC. 304. TESTING METHODS RULEMAKING.
(a) In General.--Section 5318 of title 31, United States Code, as
amended by section 301, is further amended by adding at the end the
following:
``(q) Testing.--
``(1) In general.--The Secretary of the Treasury, in
consultation with the head of each agency to which the
Secretary has delegated duties or powers under subsection (a),
shall issue a rule to specify--
``(A) with respect to technology and related
technology-internal processes (`new technology')
designed to facilitate compliance with the Bank Secrecy
Act requirements, the standards by which financial
institutions are to test new technology; and
``(B) in what instances or under what circumstance
and criteria a financial institution may replace or
terminate legacy technology and processes for any
examinable technology or process without the
replacement or termination being determined an
examination deficiency.
``(2) Standards.--The standards described under paragraph
(1) may include--
``(A) an emphasis on using innovative approaches,
such as machine learning, rather than rules-based
systems;
``(B) risk-based back-testing of the regime to
facilitate calibration of relevant systems;
``(C) requirements for appropriate data privacy and
security; and
``(D) a requirement that the algorithms used by the
regime be disclosed to the Financial Crimes Enforcement
Network, upon request.
``(3) Confidentiality of algorithms.--If a financial
institution or any director, officer, employee, or agent of any
financial institution, voluntarily or pursuant to this
subsection or any other authority, discloses the institution's
algorithms to a Government agency, such algorithms and any
materials associated with the creation of such algorithms shall
be considered confidential and not subject to public
disclosure.''.
(b) Update of Manual.--The Financial Institutions Examination
Council shall ensure--
(1) that any manual prepared by the Council is updated to
reflect the rulemaking required by the amendment made by
subsection (a); and
(2) that financial institutions are not penalized for the
decisions based on such rulemaking to replace or terminate
technology used for compliance with the Bank Secrecy Act (as
defined under section 5312 of title 31, United States Code) or
other anti-money laundering laws.
SEC. 305. FINCEN STUDY ON USE OF EMERGING TECHNOLOGIES.
(a) Study.--
(1) In general.--The Director of the Financial Crimes
Enforcement Network (``FinCEN'') shall carry out a study on--
(A) the status of implementation and internal use
of emerging technologies, including artificial
intelligence (``AI''), digital identity technologies,
blockchain technologies, and other innovative
technologies within FinCEN;
(B) whether AI, digital identity technologies,
blockchain technologies, and other innovative
technologies can be further leveraged to make FinCEN's
data analysis more efficient and effective; and
(C) how FinCEN could better utilize AI, digital
identity technologies, blockchain technologies, and
other innovative technologies to more actively analyze
and disseminate the information it collects and stores
to provide investigative leads to Federal, State,
Tribal, and local law enforcement, and other Federal
agencies (collective, ``Agencies''), and better support
its ongoing investigations when referring a case to the
Agencies.
(2) Inclusion of gto data.--The study required under this
subsection shall include data collected through the Geographic
Targeting Orders (``GTO'') program.
(3) Consultation.--In conducting the study required under
this subsection, FinCEN shall consult with the Directors of the
Innovations Labs established in section 302.
(b) Report.--Not later than the end of the 6-month period beginning
on the date of the enactment of this Act, the Director shall issue 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 containing--
(1) all findings and determinations made in carrying out
the study required under subsection (a);
(2) with respect to each of subparagraphs (A), (B) and (C)
of subsection (a)(1), any best practices or significant
concerns identified by the Director, and their applicability to
AI, digital identity technologies, blockchain technologies, and
other innovative technologies with respect to U.S. efforts to
combat money laundering and other forms of illicit finance; and
(3) any policy recommendations that could facilitate and
improve communication and coordination between the private
sector, FinCEN, and Agencies through the implementation of
innovative approaches, in order to meet their Bank Secrecy Act
(as defined under section 5312 of title 31, United States Code)
and anti-money laundering compliance obligations.
SEC. 306. DISCRETIONARY SURPLUS FUNDS.
(a) In General.--Section 7(a)(3)(A) of the Federal Reserve Act (12
U.S.C. 289(a)(3)(A)) is amended by striking ``$6,825,000,000'' and
inserting ``$6,798,000,000''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on September 30, 2029.
Passed the House of Representatives October 22, 2019.
Attest:
CHERYL L. JOHNSON,
Clerk.