Senators Chuck Grassley (R-Iowa) and Diane Feinstein (D-California) introduced on May 25, 2017 a bill, S. 1241, entitled the “Combatting Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.” Although it is of course impossible to know whether this bill ultimately will be enacted into law, the bill addresses a lengthy catalogue of important issues relevant to money laundering, AML programs, and international tax evasion.

• The bill is here.
• A general summary of the bill is here.
• A more detailed and useful summary of each section of the proposed bill is here.
• The press release for the bill is here.

Perhaps not surprisingly, the press release repeatedly states that the bill is designed to fight terrorism. No doubt – but if enacted, the bill’s terms also will apply to any sort of conduct implicated by its amendments to sections of the criminal money laundering statutes, 18 U.S.C. §§ 1957 and 1957, and the Bank Secrecy Act. Further, the press release does not explicitly mention the Panama Papers scandal.  However, given language in the bill seeking to address international tax evasion; the subpoenaing of records of foreign banks using U.S. correspondent bank accounts; the concealment of account ownership; and the concealment of the source of assets in transactions; the Panama Papers scandal looms in the background and presumably motivated much of S. 1241, just as it may have influenced the timing of the final release of the beneficial ownership regulations by FinCEN. Further, S. 1241 may be seeking to respond to mounting international criticism that the U.S. has become a haven for tax cheats and money launderers.

The proposed bill reads like a wish list of statutory amendments provided by the Department of Justice. Indeed, the press release also quotes Senator Feinstein as stating that “[o]ur bill adopts many of the recommendations made by the Justice Department to ensure that transnational criminal organizations, including terrorist groups, face consequences for laundering illicit funds, evading laws and promoting criminal activity[.]” The press release further states:

While calculating the exact scale of worldwide money laundering is impossible, estimates suggest the annual sum to be in the trillions of dollars.  Perpetrators use a variety of methods to conceal and move funds across borders and through the global financial system in an effort to evade law enforcement.  These techniques include longstanding unofficial money transferring systems, such as hawalas, and more modern tools, like prepaid access cards and digital currencies.

The Senators’ legislation modernizes criminal money laundering laws, updates counterfeiting statutes to prohibit state of the art counterfeiting methods, enhances tools to crack down on smugglers and tax cheats, and promotes transparency in the U.S. financial system.

We anticipate that follow-up blog posts will analyze certain specific amendments in more detail, and their potential implications. Given the breadth of issues covered by the bill, this post merely lists below the topics covered by the bill, by drawing from its table of contents.  The section-by-section summary noted above provides more information on each topic.

• Transportation or transhipment of blank checks in bearer form.
• Bulk cash smuggling.
• Section 1957 violations involving commingled funds and aggregated transactions.
• Charging money laundering as a course of conduct.
• Illegal money services businesses.
• Concealment money laundering.
• Freezing bank accounts of persons arrested for offenses involving the movement of money across international borders.
• Prohibiting money laundering through hawalas, other informal value transfer systems, and closely related transactions.
• Technical amendment to restore wiretap authority for certain money laundering and counterfeiting offenses.
• Making the international money laundering statute apply to tax evasion.
• Conduct in aid of counterfeiting.
• Prepaid access devices, digital currencies, or other similar instruments.
• Administrative subpoenas for money laundering cases.
• Obtaining foreign bank records from banks with United States correspondent accounts.
• Clarification of Secret Service authority to investigate money laundering.
• Prohibition on concealment of ownership of account.
• Prohibition on concealment of the source of assets in monetary transactions.

Stay tuned . . . .

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