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) neither the financial institution, director, officer,
          employee, or agent of such institution (whether or not any
          such person is still employed by the institution), nor any
          other current or former director, officer, or employee of, or
          contractor for, the financial institution or other reporting
          person, may notify any person involved in the transaction
          that the transaction has been reported; and
            (ii) no current or former officer or employee of or
          contractor for the Federal Government or of or for any State,
          local, tribal, or territorial government within the United
          States, who has any knowledge that such report was made may
          disclose to any person involved in the transaction that the
          transaction has been reported, other than as necessary to
          fulfill the official duties of such officer or employee.

          (B) Disclosures in certain employment references. - 
            (i) Rule of construction. - Notwithstanding the application
          of subparagraph (A) in any other context, subparagraph (A)
          shall not be construed as prohibiting any financial
          institution, or any director, officer, employee, or agent of
          such institution, from including information that was
          included in a report to which subparagraph (A) applies - 
              (I) in a written employment reference that is provided in
            accordance with section 18(w) of the Federal Deposit
            Insurance Act in response to a request from another
            financial institution; or
              (II) in a written termination notice or employment
            reference that is provided in accordance with the rules of
            a self-regulatory organization registered with the
            Securities and Exchange Commission or the Commodity Futures
            Trading Commission,

          except that such written reference or notice may not disclose
          that such information was also included in any such report,
          or that such report was made.
            (ii) Information not required. - Clause (i) shall not be
          construed, by itself, to create any affirmative duty to
          include any information described in clause (i) in any
          employment reference or termination notice referred to in
          clause (i).

        (3) Liability for disclosures. - 
          (A) In general. - Any financial institution that makes a
        voluntary disclosure of any possible violation of law or
        regulation to a government agency or makes a disclosure
        pursuant to this subsection or any other authority, and any
        director, officer, employee, or agent of such institution who
        makes, or requires another to make any such disclosure, shall
        not be liable to any person under any law or regulation of the
        United States, any constitution, law, or regulation of any
        State or political subdivision of any State, or under any
        contract or other legally enforceable agreement (including any
        arbitration agreement), for such disclosure or for any failure
        to provide notice of such disclosure to the person who is the
        subject of such disclosure or any other person identified in
        the disclosure.
          (B) Rule of construction. - Subparagraph (A) shall not be
        construed as creating - 
            (i) any inference that the term "person", as used in such
          subparagraph, may be construed more broadly than its ordinary
          usage so as to include any government or agency of
          government; or
            (ii) any immunity against, or otherwise affecting, any
          civil or criminal action brought by any government or agency
          of government to enforce any constitution, law, or regulation
          of such government or agency.

        (4) Single designee for reporting suspicious transactions. - 
          (A) In general. - In requiring reports under paragraph (1) of
        suspicious transactions, the Secretary of the Treasury shall
        designate, to the extent practicable and appropriate, a single
        officer or agency of the United States to whom such reports
        shall be made.
          (B) Duty of designee. - The officer or agency of the United
        States designated by the Secretary of the Treasury pursuant to
        subparagraph (A) shall refer any report of a suspicious
        transaction to any appropriate law enforcement, supervisory
        agency, or United States intelligence agency for use in the
        conduct of intelligence or counterintelligence activities,
        including analysis, to protect against international terrorism.
          (C) Coordination with other reporting requirements. -
        Subparagraph (A) shall not be construed as precluding any
        supervisory agency for any financial institution from requiring
        the financial institution to submit any information or report
        to the agency or another agency pursuant to any other
        applicable provision of law.

      (h) Anti-Money Laundering Programs. - 
        (1) In general. - In order to guard against money laundering
      through financial institutions, each financial institution shall
      establish anti-money laundering programs, including, at a minimum
      - 
          (A) the development of internal policies, procedures, and
        controls;
          (B) the designation of a compliance officer;
          (C) an ongoing employee training program; and
          (D) an independent audit function to test programs.

        (2) Regulations. - The Secretary of the Treasury, after
      consultation with the appropriate Federal functional regulator
      (as defined in section 509 of the Gramm-Leach-Bliley Act), may
      prescribe minimum standards for programs established under
      paragraph (1), and may exempt from the application of those
      standards any financial institution that is not subject to the
      provisions of the rules contained in part 103 of title 31, of the
      Code of Federal Regulations, or any successor rule thereto, for
      so long as such financial institution is not subject to the
      provisions of such rules.
        (3) Concentration accounts. - The Secretary may prescribe
      regulations under this subsection that govern maintenance of
      concentration accounts by financial institutions, in order to
      ensure that such accounts are not used to prevent association of
      the identity of an individual customer with the movement of funds
      of which the customer is the direct or beneficial owner, which
      regulations shall, at a minimum - 
          (A) prohibit financial institutions from allowing clients to
        direct transactions that move their funds into, out of, or
        through the concentration accounts of the financial
        institution;
          (B) prohibit financial institutions and their employees from
        informing customers of the existence of, or the means of
        identifying, the concentration accounts of the institution; and
          (C) require each financial institution to establish written
        procedures governing the documentation of all transactions
        involving a concentration account, which procedures shall
        ensure that, any time a transaction involving a concentration
        account commingles funds belonging to 1 or more customers, the
        identity of, and specific amount belonging to, each customer is
        documented.

      (i) Due Diligence for United States Private Banking and
    Correspondent Bank Accounts Involving Foreign Persons. - 
        (1) In general. - Each financial institution that establishes,
      maintains, administers, or manages a private banking account or a
      correspondent account in the United States for a non-United
      States person, including a foreign individual visiting the United
      States, or a representative of a non-United States person shall
      establish appropriate, specific, and, where necessary, enhanced,
      due diligence policies, procedures, and controls that are
      reasonably designed to detect and report instances of money
      laundering through those accounts.
        (2) Additional standards for certain correspondent accounts. - 
          (A) In general. - Subparagraph (B) shall apply if a
        correspondent account is requested or maintained by, or on
        behalf of, a foreign bank operating - 
            (i) under an offshore banking license; or
            (ii) under a banking license issued by a foreign country
          that has been designated - 
              (I) as noncooperative with international anti-money
            laundering principles or procedures by an intergovernmental
            group or organization of which the United States is a
            member, with which designation the United States
            representative to the group or organization concurs; or
              (II) by the Secretary of the Treasury as warranting
            special measures due to money laundering concerns.

          (B) Policies, procedures, and controls. - The enhanced due
        diligence policies, procedures, and controls required under
        paragraph (1) shall, at a minimum, ensure that the financial
        institution in the United States takes reasonable steps - 
            (i) to ascertain for any such foreign bank, the shares of
          which are not publicly traded, the identity of each of the
          owners of the foreign bank, and the nature and extent of the
          ownership interest of each such owner;
            (ii) to conduct enhanced scrutiny of such account to guard
          against money laundering and report any suspicious
          transactions under subsection (g); and
            (iii) to ascertain whether such foreign bank provides
          correspondent accounts to other foreign banks and, if so, the
          identity of those foreign banks and related due diligence
          information, as appropriate under paragraph (1).

        (3) Minimum standards for private banking accounts. - If a
      private banking account is requested or maintained by, or on
      behalf of, a non-United States person, then the due diligence
      policies, procedures, and controls required under paragraph (1)
      shall, at a minimum, ensure that the financial institution takes
      reasonable steps - 
          (A) to ascertain the identity of the nominal and beneficial
        owners of, and the source of funds deposited into, such account
        as needed to guard against money laundering and report any
        suspicious transactions under subsection (g); and
          (B) to conduct enhanced scrutiny of any such account that is
        requested or maintained by, or on behalf of, a senior foreign
        political figure, or any immediate family member or close
        associate of a senior foreign political figure, that is
        reasonably designed to detect and report transactions that may
        involve the proceeds of foreign corruption.

        (4) Definitions. - For purposes of this subsection, the
      following definitions shall apply:
          (A) Offshore banking license. - The term "offshore banking
        license" means a license to conduct banking activities which,
        as a condition of the license, prohibits the licensed entity
        from conducting banking activities with the citizens of, or
        with the local currency of, the country which issued the
        license.
          (B) Private banking account. - The term "private banking
        account" means an account (or any combination of accounts) that
        - 
            (i) requires a minimum aggregate deposits of funds or other
          assets of not less than $1,000,000;
            (ii) is established on behalf of 1 or more individuals who
          have a direct or beneficial ownership interest in the
          account; and
            (iii) is assigned to, or is administered or managed by, in
          whole or in part, an officer, employee, or agent of a
          financial institution acting as a liaison between the
          financial institution and the direct or beneficial owner of
          the account.

      (j) Prohibition on United States Correspondent Accounts With
    Foreign Shell Banks. - 
        (1) In general. - A financial institution described in
      subparagraphs (A) through (G) of section 5312(a)(2) (in this
      subsection referred to as a "covered financial institution")
      shall not establish, maintain, administer, or manage a
      correspondent account in the United States for, or on behalf of,
      a foreign bank that does not have a physical presence in any
      country.
        (2) Prevention of indirect service to foreign shell banks. - A
      covered financial institution shall take reasonable steps to
      ensure that any correspondent account established, maintained,
      administered, or managed by that covered financial institution in
      the United States for a foreign bank is not being used by that
      foreign bank to indirectly provide banking services to another
      foreign bank that does not have a physical presence in any
      country. The Secretary of the Treasury shall, by regulation,
      delineate the reasonable steps necessary to comply with this
      paragraph.
        (3) Exception. - Paragraphs (1) and (2) do not prohibit a
      covered financial institution from providing a correspondent
      account to a foreign bank, if the foreign bank - 
          (A) is an affiliate of a depository institution, credit
        union, or foreign bank that maintains a physical presence in
        the United States or a foreign country, as applicable; and
          (B) is subject to supervision by a banking authority in the
        country regulating the affiliated depository institution,
        credit union, or foreign bank described in subparagraph (A), as
        applicable.

        (4) Definitions. - For purposes of this subsection - 
          (A) the term "affiliate" means a foreign bank that is
        controlled by or is under common control with a depository
        institution, credit union, or foreign bank; and
          (B) the term "physical presence" means a place of business
        that - 
            (i) is maintained by a foreign bank;
            (ii) is located at a fixed address (other than solely an
          electronic address) in a country in which the foreign bank is
          authorized to conduct banking activities, at which location
          the foreign bank - 
              (I) employs 1 or more individuals on a full-time basis;
            and
              (II) maintains operating records related to its banking
            activities; and

            (iii) is subject to inspection by the banking authority
          which licensed the foreign bank to conduct banking
          activities.

      (k) Bank Records Related to Anti-Money Laundering Programs. - 
        (1) Definitions. - For purposes of this subsection, the
      following definitions shall apply:
          (A) Appropriate federal banking agency. - The term
        "appropriate Federal banking agency" has the same meaning as in
        section 3 of the Federal Deposit Insurance Act (12 U.S.C.
        1813).
          (B) Incorporated term. - The term "correspondent account" has
        the same meaning as in section 5318A(e)(1)(B).

        (2) 120-hour rule. - Not later than 120 hours after receiving a
      request by an appropriate Federal banking agency for information
      related to anti-money laundering compliance by a covered
      financial institution or a customer of such institution, a
      covered financial institution shall provide to the appropriate
      Federal banking agency, or make available at a location specified
      by the representative of the appropriate Federal banking agency,
      information and account documentation for any account opened,
      maintained, administered or managed in the United States by the
      covered financial institution.
        (3) Foreign bank records. - 
          (A) Summons or subpoena of records. - 
            (i) In general. - The Secretary of the Treasury or the
          Attorney General may issue a summons or subpoena to any
          foreign bank that maintains a correspondent account in the
          United States and request records related to such
          correspondent account, including records maintained outside
          of the United States relating to the deposit of funds into
          the foreign bank.
            (ii) Service of summons or subpoena. - A summons or
          subpoena referred to in clause (i) may be served on the
          foreign bank in the United States if the foreign bank has a
          representative in the United States, or in a foreign country
          pursuant to any mutual legal assistance treaty, multilateral
          agreement, or other request for international law enforcement
          assistance.

          (B) Acceptance of service. - 
            (i) Maintaining records in the united states. - Any covered
          financial institution which maintains a correspondent account
          in the United States for a foreign bank shall maintain
          records in the United States identifying the owners of such
          foreign bank and the name and address of a person who resides
          in the United States and is authorized to accept service of
          legal process for records regarding the correspondent
          account.
            (ii) Law enforcement request. - Upon receipt of a written
          request from a Federal law enforcement officer for
          information required to be maintained under this paragraph,
          the covered financial institution shall provide the
          information to the requesting officer not later than 7 days
          after receipt of the request.

          (C) Termination of correspondent relationship. - 
            (i) Termination upon receipt of notice. - A covered
          financial institution shall terminate any correspondent
          relationship with a foreign bank not later than 10 business
          days after receipt of written notice from the Secretary or
          the Attorney General (in each case, after consultation with
          the other) that the foreign bank has failed - 
              (I) to comply with a summons or subpoena issued under
            subparagraph (A); or
              (II) to initiate proceedings in a United States court
            contesting such summons or subpoena.

            (ii) Limitation on liability. - A covered financial
          institution shall not be liable to any person in any court or
          arbitration proceeding for terminating a correspondent
          relationship in accordance with this subsection.
            (iii) Failure to terminate relationship. - Failure to
          terminate a correspondent relationship in accordance with
          this subsection shall render the covered financial
          institution liable for a civil penalty of up to $10,000 per
          day until the correspondent relationship is so terminated.

      (l) Identification and Verification of Accountholders. - 
        (1) In general. - Subject to the requirements of this
      subsection, the Secretary of the Treasury shall prescribe
      regulations setting forth the minimum standards for financial
      institutions and their customers regarding the identity of the
      customer that shall apply in connection with the opening of an
      account at a financial institution.
        (2) Minimum requirements. - The regulations shall, at a
      minimum, require financial institutions to implement, and
      customers (after being given adequate notice) to comply with,
      reasonable procedures for - 
          (A) verifying the identity of any person seeking to open an
        account to the extent reasonable and practicable;
          (B) maintaining records of the information used to verify a
        person's identity, including name, address, and other
        identifying information; and
          (C) consulting lists of known or suspected terrorists or
        terrorist organizations provided to the financial institution
        by any government agency to determine whether a person seeking
        to open an account appears on any such list.

        (3) Factors to be considered. - In prescribing regulations
      under this subsection, the Secretary shall take into
      consideration the various types of accounts maintained by various
      types of financial institutions, the various methods of opening
      accounts, and the various types of identifying information
      available.
        (4) Certain financial institutions. - In the case of any
      financial institution the business of which is engaging in
      financial activities described in section 4(k) of the Bank
      Holding Company Act of 1956 (including financial activities
      subject to the jurisdiction of the Commodity Futures Trading
      Commission), the regulations prescribed by the Secretary under
      paragraph (1) shall be prescribed jointly with each Federal
      functional regulator (as defined in section 509 of the Gramm-
      Leach-Bliley Act, including the Commodity Futures Trading
      Commission) appropriate for such financial institution.
        (5) Exemptions. - The Secretary (and, in the case of any
      financial institution described in paragraph (4), any Federal
      agency described in such paragraph) may, by regulation or order,
      exempt any financial institution or type of account from the
      requirements of any regulation prescribed under this subsection
      in accordance with such standards and procedures as the Secretary
      may prescribe.
        (6) Effective date. - Final regulations prescribed under this
      subsection shall take effect before the end of the 1-year period
      beginning on the date of enactment of the International Money
      Laundering Abatement and Financial Anti-Terrorism Act of 2001.

      (m) Applicability of Rules. - Any rules promulgated pursuant to
    the authority contained in section 21 of the Federal Deposit
    Insurance Act (12 U.S.C. 1829b) shall apply, in addition to any
    other financial institution to which such rules apply, to any
    person that engages as a business in the transmission of funds,
    including any person who engages as a business in an informal money
    transfer system or any network of people who engage as a business
    in facilitating the transfer of money domestically or
    internationally outside of the conventional financial institutions
    system.
      (n) Reporting of Certain Cross-Border Transmittals of Funds. - 
        (1) In general. - Subject to paragraphs (3) and (4), the
      Secretary shall prescribe regulations requiring such financial
      institutions as the Secretary determines to be appropriate to
      report to the Financial Crimes Enforcement Network certain cross-
      border electronic transmittals of funds, if the Secretary
      determines that reporting of such transmittals is reasonably
      necessary to conduct the efforts of the Secretary against money
      laundering and terrorist financing.
        (2) Limitation on reporting requirements. - Information
      required to be reported by the regulations prescribed under
      paragraph (1) shall not exceed the information required to be
      retained by the reporting financial institution pursuant to
      section 21 of the Federal Deposit Insurance Act and the
      regulations promulgated thereunder, unless - 
          (A) the Board of Governors of the Federal Reserve System and
        the Secretary jointly determine that a particular item or items
        of information are not currently required to be retained under
        such section or such regulations; and
          (B) the Secretary determines, after consultation with the
        Board of Governors of the Federal Reserve System, that the
        reporting of such information is reasonably necessary to
        conduct the efforts of the Secretary to identify cross-border
        money laundering and terrorist financing.

        (3) Form and manner of reports. - In prescribing the
      regulations required under paragraph (1), the Secretary shall,
      subject to paragraph (2), determine the appropriate form, manner,
      content, and frequency of filing of the required reports.
        (4) Feasibility report. - 
          (A) In general. - Before prescribing the regulations required
        under paragraph (1), and as soon as is practicable after the
        date of enactment of the Intelligence Reform and Terrorism
        Prevention Act of 2004, the Secretary shall submit a report to
        the Committee on Banking, Housing, and Urban Affairs of the
        Senate and the Committee on Financial Services of the House of
        Representatives that - 
            (i) identifies the information in cross-border electronic
          transmittals of funds that may be found in particular cases
          to be reasonably necessary to conduct the efforts of the
          Secretary to identify money laundering and terrorist
          financing, and outlines the criteria to be used by the
          Secretary to select the situations in which reporting under
          this subsection may be required;
            (ii) outlines the appropriate form, manner, content, and
          frequency of filing of the reports that may be required under
          such regulations;
            (iii) identifies the technology necessary for the Financial
          Crimes Enforcement Network to receive, keep, exploit, protect
          the security of, and disseminate information from reports of
          cross-border electronic transmittals of funds to law
          enforcement and other entities engaged in efforts against
          money laundering and terrorist financing; and
            (iv) discusses the information security protections
          required by the exercise of the Secretary's authority under
          this subsection.

          (B) Consultation. - In reporting the feasibility report under
        subparagraph (A), the Secretary may consult with the Bank
        Secrecy Act Advisory Group established by the Secretary, and
        any other group considered by the Secretary to be relevant.

        (5) Regulations. - 
          (A) In general. - Subject to subparagraph (B), the
        regulations required by paragraph (1) shall be prescribed in
        final form by the Secretary, in consultation with the Board of
        Governors of the Federal Reserve System, before the end of the
        3-year period beginning on the date of enactment of the
        National Intelligence Reform Act of 2004.
          (B) Technological feasibility. - No regulations shall be
        prescribed under this subsection before the Secretary certifies
        to the Congress that the Financial Crimes Enforcement Network
        has the technological systems in place to effectively and
        efficiently receive, keep, exploit, protect the security of,
        and disseminate information from reports of cross-border
        electronic transmittals of funds to law enforcement and other
        entities engaged in efforts against money laundering and
        terrorist financing.