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S. 1731 (112th): Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2011


The text of the bill below is as of Oct 18, 2011 (Introduced). The bill was not enacted into law.


II

112th CONGRESS

1st Session

S. 1731

IN THE SENATE OF THE UNITED STATES

October 18, 2011

(for himself and Mrs. Feinstein) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

A BILL

To improve the prohibitions on money laundering, and for other purposes.

1.

Short title, table of contents

(a)

Short title

This Act may be cited as the Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2011.

(b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title, table of contents.

Sec. 2. Specified unlawful activity.

Sec. 3. Interstate transportation of criminal proceeds and reverse money laundering.

Sec. 4. Transportation or transhipment of blank checks in bearer form.

Sec. 5. Bulk cash smuggling.

Sec. 6. Section 1957 violations involving commingled funds and structured transactions.

Sec. 7. Charging money laundering as a course of conduct.

Sec. 8. Illegal money transmitting businesses.

Sec. 9. Knowledge that property is from the proceeds of a specific felony.

Sec. 10. Extraterritorial jurisdiction.

Sec. 11. Freezing bank accounts of persons arrested for offenses involving the movement of money across international borders.

Sec. 12. Making the international money laundering statute apply to tax evasion.

Sec. 13. Prohibiting money laundering through hawalas, other informal value transfer systems, and closely related transactions.

Sec. 14. Technical amendment to restore wiretap authority for certain money laundering and counterfeiting offenses.

Sec. 15. Conduct in aid of counterfeiting.

Sec. 16. Prepaid access devices, digital currencies, or other similar instruments.

Sec. 17. Procedure for issuing subpoenas in money laundering cases.

Sec. 18. Danger pay allowance.

Sec. 19. United States Secret Service use of proceeds derived from criminal investigations.

Sec. 20. Authority of Secret Service to arrest persons in violation of money laundering laws.

Sec. 21. Law enforcement regulations and cooperation.

Sec. 22. Rule of construction.

2.

Specified unlawful activity

Section 1956(c)(7) of title 18, United States Code, is amended to read as follows:

(7)

the term specified unlawful activity means any act or activity constituting an offense in violation of the laws of the United States punishable by imprisonment for a term exceeding 1 year;

.

3.

Interstate transportation of criminal proceeds and reverse money laundering

(a)

In general

Section 1957(a) of title 18, United States Code, is amended to read as follows:

(a)
(1)

Whoever, in any of the circumstances set forth in subsection (d)—

(A)

knowingly conducts or attempts to conduct a monetary transaction involving the proceeds of some form of unlawful activity that is of a value greater than $10,000 and is derived from specified unlawful activity; or

(B)

conducts or attempts to conduct a monetary transaction involving property of a value greater than $10,000, with the intent to promote the carrying on of specified unlawful activity,

shall be punished as provided in subsection (b).
(2)

Whoever, in any of the circumstances set forth in subsection (d), transports, attempts to transport, or conspires to transport more than $10,000 in currency, monetary instruments in bearer form, or precious metals and jewels in interstate commerce—

(A)

knowing that the property being transported was derived from some form of unlawful activity; or

(B)

knowing that the property being transported was intended to be used to promote some form of unlawful activity,

shall be punished as provided in subsection (b).

.

(b)

Penalty

Section 1957(b) of title 18, United States Code, is amended—

(1)

in paragraph (1), by striking paragraph (2) and inserting paragraphs (2) and (3); and

(2)

by adding at the end the following:

(3)

The maximum period of incarceration for a person convicted of an offense under subsection (a)(1)(B) shall not exceed the statutory maximum for the offense being promoted.

.

(c)

Conforming amendment

Section 1957(f) of title 18, United States Code, is amended—

(1)

in paragraph (2), by striking ; and and by inserting a semicolon;

(2)

in paragraph (3), by striking the period and inserting ; and; and

(3)

by adding at the end the following:

(4)

the term conducts has the meaning given that term in section 1956 of this title.

.

(d)

Statutory heading

Section 1957 of title 18, United States Code, is amended, in the section heading, by inserting or in support of criminal activity after specified unlawful activity.

(e)

Chapter analysis

The item relating to section 1957 in the table of sections for chapter 95 of title 18, United States Code, is amended to read as follows:

1957. Conducting monetary transactions in property derived from specified unlawful activity or in support of criminal activity.

.

4.

Transportation or transhipment of blank checks in bearer form

Section 5316 of title 31, United States Code, is amended by adding at the end the following:

(e)

Monetary instruments with amount left blank

For purposes of this section, a monetary instrument in bearer form that has the amount left blank, such that the amount could be filled in by the bearer, shall be considered to have a value in excess of $10,000 if the instrument was drawn on an account that contained or was intended to contain more than $10,000 at the time the instrument was transported or the time period it was negotiated or was intended to be negotiated.

.

5.

Bulk cash smuggling

Section 5332(b) of title 31, United States Code, is amended—

(1)

in paragraph (1), by striking 5 years and inserting 10 years;

(2)

by redesignating paragraphs (2), (3), and (4), as paragraphs (3), (4), and (5), respectively; and

(3)

by inserting after paragraph (1) the following:

(2)

Fine

(A)

In general

Whoever violates this section shall be fined under title 18.

(B)

Enhanced fine for aggravated cases

Whoever violates this section while violating another law of the United States, other than section 5316 or 5324(c), or as a part of a pattern of any unlawful activity, including a violation of section 5316 or 5324(c), shall be fined twice the amount provided in subsection (b)(3) or (c)(3) of section 3571 of title 18.

.

6.

Section 1957 violations involving commingled funds and structured transactions

Section 1957 of title 18, United States Code, is amended by adding at the end the following:

(g)

The Government may satisfy the $10,000 requirement in subsection (a)(1) by showing that—

(1)

the monetary transaction involved the transfer, withdrawal, encumbrance, or other disposition of more than $10,000 from an account in which more than $10,000 in proceeds of specified unlawful activity was commingled with other funds; or

(2)

the defendant conducted a series of monetary transactions in amounts under $10,000 that exceeded $10,000 in the aggregate and that were closely related to each other in terms of such factors as time, the identity of the parties involved, the nature or purpose of the transactions or the manner in which they were conducted.

.

7.

Charging money laundering as a course of conduct

(a)

In general

Section 1956 of title 18, United States Code, is amended by adding at the end the following:

(j)

Multiple violations

Multiple violations of this section that are part of the same scheme or continuing course of conduct may be charged, at the election of the Government, in a single count in an indictment or information.

.

(b)

Conspiracies

Section 1956(h) of title 18, United States Code, is amended by striking or section 1957 and inserting , section 1957, or section 1960.

8.

Illegal money transmitting businesses

(a)

Money transmitting business defined

Section 1960(b)(2) of title 18, United States Code, is amended to read as follows:

(2)

the term money transmitting business means any business other than the United States Postal Service, which provides check cashing, currency exchange, money transmitting or remittance services, or issues, sells, or redeems money orders, travelers’ checks, prepaid access devices, digital currencies, or other similar instruments, or any other person or association of persons, formal or informal, engaging as a business in transporting, transferring, exchanging, or transmitting currency or funds in any form, including any person or association of persons, formal or informal, engaging as a business in any informal money transfer system, monetary value represented in digital electronic format, or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system.

.

(b)

General intent requirement

Section 1960(b)(1)(B) of title 18, United States Code, is amended by inserting the following before the semicolon: , whether or not the defendant knew that the operation was required to comply with such registration requirements.

(c)

Technical amendments

Section 1960 of title 18, United States Code, is amended—

(1)

in the section heading, by striking unlicensed and inserting illegal;

(2)

in subsection (a), by striking unlicensed and inserting illegal;

(3)

in subsection (b)(1), by striking unlicensed and inserting illegal; and

(4)

in subsection (b)(1)(C), by inserting , exchange, after transportation.

9.

Knowledge that property is from the proceeds of a specific felony

(a)

Proceeds of A felony

Section 1956(c)(1) of title 18, United States Code, is amended by inserting , and regardless of whether or not the person knew that the activity constituted a felony before the semicolon at the end.

(b)

Intent To conceal or disguise

Section 1956(a) of title 18, United States Code, is amended—

(1)

in paragraph (1)(B), by striking knowing that and all that follows through Federal law, and inserting the following:

(B)

knowing that the transaction—

(i)

conceals or disguises, or is intended to conceal or disguise, the nature, source, location, ownership, or control of the proceeds of some form of unlawful activity; or

(ii)

avoids, or is intended to avoid, a transaction reporting requirement under State or Federal law,

; and

(2)

in paragraph (2)(B), by striking knowing that and all that follows through Federal law, and inserting the following:

(B)

knowing that the monetary instrument or funds involved in the transportation, transmission, or transfer represent the proceeds of some form of unlawful activity, and knowing that such transportation, transmission, or transfer—

(i)

conceals or disguises, or is intended to conceal or disguise, the nature, source, location, ownership, or control of the proceeds of some form of unlawful activity; or

(ii)

avoids, or is intended to avoid, a transaction reporting requirement under State or Federal law,

.

10.

Extraterritorial jurisdiction

Section 1956(f)(1) of title 18, United States Code, is amended by inserting or has an effect in the United States after conduct occurs in part in the United States.

11.

Freezing bank accounts of persons arrested for offenses involving the movement of money across international borders

Section 981(b) of title 18, United States Code, is amended by adding at the end the following:

(5)
(A)

If a person is arrested or charged in connection with an offense described in subparagraph (C) involving the movement of funds into or out of the United States, the Attorney General may apply to any Federal judge or magistrate judge in the district in which the arrest is made or where the charges are filed for an ex parte order restraining any account held by the person arrested or charged for not more than 30 days, except that such 30-day time period may be extended for good cause shown at a hearing conducted in the manner provided in Rule 43(e) of the Federal Rules of Civil Procedure. The court may receive and consider evidence and information submitted by the Government that would be inadmissible under the Federal Rules of Evidence.

(B)

The application for the restraining order referred to in subparagraph (A) shall—

(i)

identify the offense for which the person has been arrested or charged;

(ii)

identify the location and description of the accounts to be restrained; and

(iii)

state that the restraining order is needed to prevent the removal of the funds in the account by the person arrested or charged, or by others associated with such person, during the time needed by the Government to conduct such investigation as may be necessary to establish whether there is probable cause to believe that the funds in the accounts are subject to forfeiture in connection with the commission of any criminal offense.

(C)

A restraining order may be issued pursuant to subparagraph (A) if a person is arrested or charged with any offense for which forfeiture is authorized under this title, title 31, or the Controlled Substances Act.

(D)

For purposes of this section—

(i)

the term account includes any safe deposit box and any account (as defined in paragraphs (1) and (2) of section 5318A(e) of title 31) at any financial institution; and

(ii)

the term account held by the person arrested or charged includes an account held in the name of such person, and any account over which such person has effective control as a signatory or otherwise.

(E)

Restraint pursuant to this paragraph shall not be deemed a seizure for purposes of subsection 983(a) of this title.

(F)

A restraining order issued pursuant to this paragraph may be executed in any district in which the subject account is found, or transmitted to the central authority of any foreign State for service in accordance with any treaty or other international agreement.

.

12.

Making the international money laundering statute apply to tax evasion

Section 1956(a)(2)(A) of title 18, United States Code, is amended by—

(1)

inserting (i) before with the intent to promote; and

(2)

adding at the end the following:

(ii)

with the intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or

.

13.

Prohibiting money laundering through hawalas, other informal value transfer systems, and closely related transactions

The matter following section 1956(a)(1)(B)(ii) of title 18, United States Code, is amended by striking For purposes of this paragraph, a financial transaction and inserting For purposes of this paragraph and section 1957, a financial transaction or a monetary transaction.

14.

Technical amendment to restore wiretap authority for certain money laundering and counterfeiting offenses

(a)

Currency reporting offenses

Section 2516(1)(g) of title 18, United States Code, is amended by striking or section 5324 of title 31, United States Code (relating to structuring transactions to evade reporting requirement prohibited and inserting or sections 5324 and 5332 of title 31, United States Code (relating to structuring financial transactions and bulk cash smuggling).

(b)

Money laundering

Section 2516(1)(c) of title 18, United States Code, is amended by inserting section 1960 (relating to illegal money transmitting businesses), before section 659.

(c)

Counterfeiting

Section 2516(1)(d) of title 18, United States Code, is amended by striking or 473 and inserting 473, 474, or 474A,.

15.

Conduct in aid of counterfeiting

(a)

In general

Section 474(a) of title 18, United States Code, is amended by inserting after the paragraph beginning Whoever has in his control, custody, or possession any plate the following:

Whoever, with intent to defraud, has custody, control, or possession of any material, tool, machinery, or other equipment that can be used to make, alter, forge, or counterfeit any obligation or other security of the United States or any part of such obligation or security, except under the authority of the Secretary of the Treasury; or

.

(b)

Foreign obligations and securities

Section 481 of title 18, United States Code, is amended by inserting after the paragraph beginning Whoever, with intent to defraud the following:

Whoever, with intent to defraud, has custody, control, or possession of any material, tool, machinery, or other equipment that can be used to make, alter, forge, or counterfeit any obligation or other security of any foreign government, bank, or corporation; or

.

(c)

Counterfeit acts

Section 470 of title 18, United States Code, is amended by striking or 474 and inserting 474, or 474A.

(d)

Strengthening deterrents to counterfeiting

Section 474A of title 18, United States Code is amended—

(1)

in subsection (a), by inserting , custody, after control;

(2)

in subsection (b)—

(A)

by inserting , custody, after control; and

(B)

by striking any essentially identical feature or device adapted to the making of any such obligation or security, and inserting any material or other thing made after or in similitude of any such deterrent,; and

(3)

by adding at the end the following:

(d)

Whoever has in his control, custody, or possession any obligation or security of the United States or any foreign government from which the ink or other distinctive counterfeit deterrent has been completely or partially removed, except under the authority of the Secretary of the Treasury, is guilty of a class B felony.

.

16.

Prepaid access devices, digital currencies, or other similar instruments

(a)

In general

Section 5312(a) of title 31, United States Code, is amended—

(1)

by striking paragraph (1)(K) and inserting the following:

(K)

an issuer, redeemer, or cashier or travelers’ checks, checks, money orders, prepaid access devices, digital currencies, or other similar instruments;

;

(2)

in paragraph (3)(C), by inserting prepaid access devices, after delivery,; and

(3)

by adding at the end the following:

(7)

prepaid access device means an electronic device or vehicle, such as a card, plate, code, number, electronic serial number, mobile identification number, personal identification number, or other instrument that provides a portal to funds or the value of funds that have been paid in advance and can be retrievable and transferable at some point in the future.

.

(b)

GAO report

Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States shall submit to Congress a report on—

(1)

the impact the amendments made by subsection (a) has had on law enforcement, the prepaid access industry, and consumers; and

(2)

the implementation and enforcement by the Department of Treasury of the final rule on Definitions and Other Regulations Relating to Prepaid Access (76 Fed. Reg. 45403), issued July 26, 2011.

(c)

Customs and Border Protection strategy for prepaid access devices

Not later than 18 months after the date of enactment of this Act, the Secretary of Homeland Security, in consultation with the Commission of the U.S. Customs and Border Protection, shall submit to Congress a report detailing a strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States. The report shall include an assessment of infrastructure needs to carry out the strategy detailed in the report.

17.

Procedure for issuing subpoenas in money laundering cases

(a)

In general

Section 986 of title 18, United States Code, is amended by adding at the end the following:

(e)

Procedure for issuing subpoenas

The Attorney General, the Secretary of the Treasury, or the Secretary of Homeland Security may issue a subpoena in any investigation of a violation of sections 1956, 1957 or 1960, or sections 5316, 5324, 5331 or 5332 of title 31, United States Code, in the manner set forth under section 3486.

.

(b)

Grand Jury and Trial Subpoenas

Section 5318(k)(3)(A) of title 31, United States Code, is amended—

(1)

in clause (i)—

(A)

by striking related to such correspondent account; and

(B)

by striking or the Attorney General and inserting , the Attorney General, or the Secretary of Homeland Security; and

(2)

by adding at the end the following:

(iii)

Grand jury or trial subpoena

In addition to a subpoena issued by the Attorney General, Secretary of the Treasury, or the Secretary of Homeland Security under clause (i), a subpoena under clause (i) includes a grand jury or trial subpoena requested by the Government.

.

(c)

Fair Credit Reporting Act Amendment

Section 604(a)(1) of the Fair Credit Reporting Act (15 U.S.C. 1681b(a)(1)) is amended—

(1)

by striking or; and

(2)

by inserting before the period the following: , or a subpoena issued under section 5318 of title 31 or section 3486 of title 18, United States Code.

(d)

Obstruction of Justice

Section 1510(b)(3)(B) of title 18, United States Code, is amended—

(1)

in the matter before clause (i), by striking or a Department of Justice Subpoena (issued under section 3486 of title 18) and inserting , a subpoena issued under section 3486 of title 18, or an order or subpoena issued pursuant to section 3512 of title 18, section 5318 of title 31, or section 1782 of title 28,; and

(2)

in clause (i), by inserting , 1960, or an offense against a foreign nation constituting specified unlawful activity under section 1956, or a foreign offense for which enforcement of a foreign forfeiture judgment could be brought under section 2467 of title 28 after 1957.

(e)

Right to Financial Privacy Act

Section 1120(b)(1)(A) of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3420(b)(1)(A)) is amended by striking—

(1)

or 1957 and inserting , 1957, or 1960; and

(2)

by striking and 5324 and inserting , 5322, 5324, 5331, and 5332.

18.

Danger pay allowance

Section 151 of the Foreign Relations Authorization Act, Fiscal Years 1990 and 1991 (5 U.S.C. 5928 note), is amended by striking Drug Enforcement Administration or Federal Bureau of Investigation and inserting Drug Enforcement Administration, Federal Bureau of Investigation, Immigration and Customs Enforcement, Customs and Border Protection, or United States Secret Service.

19.

United States Secret Service use of proceeds derived from criminal investigations

(a)

In general

With respect to any undercover investigative operation of the United States Secret Service (hereafter referred to in this section as the Secret Service) that is necessary for the detection and prosecution of crimes against the United States—–

(1)

sums appropriated for the Secret Service, including unobligated balances available from prior fiscal years, may be used for purchasing property, buildings, and other facilities, and for leasing space, within the United States, the District of Columbia, and the territories and possessions of the United States, without regard to sections 1341 and 3324 of title 31, United States Code, section 8111 of title 40, sections 3732(a) and 3741 of the Revised Statutes of the United States (41 U.S.C. 11(a) and 22), and sections 304(a) and 305 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(a) and 255);

(2)

sums appropriated for the Secret Service, including unobligated balances available from prior fiscal years, may be used to establish or to acquire proprietary corporations or business entities as part of such undercover operation, and to operate such corporations or business entities on a commercial basis, without regard to sections 9102 and 9103 of title 31, United States Code;

(3)

sums appropriated for the Secret Service, including unobligated balances available from prior fiscal years and the proceeds from such undercover operation, may be deposited in banks or other financial institutions, without regard to section 648 of title 18, and section 3302 of title 31, United States Code; and

(4)

proceeds from such undercover operation may be used to offset necessary and reasonable expenses incurred in such operation, without regard to section 3302 of title 31, United States Code.

(b)

Written certification

The authority set forth in subsection (a) may be exercised only upon the written certification of the Director of the Secret Service or his designee that any action authorized by any paragraph of such subsection is necessary for the conduct of an undercover investigative operation. Such certification shall continue in effect for the duration of such operation, without regard to fiscal years.

(c)

Deposit of proceeds in treasury

As soon as practicable after the proceeds from an undercover investigative operation with respect to which an action is authorized and carried out under paragraphs (3) and (4) of subsection (a) are no longer necessary for the conduct of such operation, such proceeds or the balance of such proceeds remaining at the time shall be deposited in the Treasury of the United States as miscellaneous receipts.

(d)

Reporting and deposit of proceeds upon disposition of certain business entities

If a corporation or business entity established or acquired as part of an undercover investigative operation under paragraph (2) of subsection (a) with a net value of over $50,000 is to be liquidated, sold, or otherwise disposed of, the Secret Service, as much in advance as the Director or designee determines is practicable, shall report the circumstance to the Secretary of Homeland Security. The proceeds of the liquidation, sale, or other disposition, after obligations are met, shall be deposited in the Treasury of the United States as miscellaneous receipts.

(e)

Financial audits and reports

(1)

Audits

The Secret Service shall conduct detailed financial audits of closed undercover investigative operations for which a written certification was made pursuant to subsection (b) on a quarterly basis and shall report the results of the audits in writing to the Secretary of Homeland Security.

(2)

Reports

The Secretary of Homeland Security shall annually submit to the Committees on Appropriations of the Senate and House of Representatives, at the time that the President's budget is submitted under section 1105(a) of title 31, a summary of such audits.

20.

Authority of Secret Service to arrest persons in violation of money laundering laws

Section 3056(b)(3) of title 18, United States Code, is amended—

(1)

by inserting money laundering, structured transactions, after devices; and

(2)

by striking federally insured.

21.

Law enforcement regulations and cooperation

Not later than 1 year following the date of enactment of this Act, the Attorney General, Secretary of Treasury, and Secretary of Homeland Security, in consultation with the Director of National Intelligence, shall coordinate to—

(1)

promulgate regulations as necessary to implement the provisions of this Act; and

(2)

issue other informal guidelines with respect to money laundering, terrorist financing, counterfeiting, and other matters related to the provisions of this Act, including—

(A)

investigative guidelines; and

(B)

memorandum of understanding in regards to investigations and investigative authorities.

22.

Rule of construction

Nothing in this Act, or any amendment made by this Act, shall be construed to apply to the authorized law enforcement, protective, or intelligence activities of the United States or of an intelligence agency of the United States.