31 U.S.C. § 5318 : US Code - Section 5318: Compliance, exemptions, and summons authority

Search 31 U.S.C. § 5318 : US Code - Section 5318: Compliance, exemptions, and summons authority

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