International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Title III of P.L. 107-56

Publication Date: December 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

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Abstract:

Title III, of the USA PATRIOT Act, Pub. L. 107-56, 115 Stat. 272 (2001), the "International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001," contains three subtitles that deal with: International Counter Money Laundering and Related Measures; Bank Secrecy Act Amendments and Related Improvements; and, Currency Crimes and Protection. It contains a list of 10 findings and 13 purposes, relating the scope of international money laundering to the financing of global terrorism and focusing on problems in the international banking system that have facilitated money laundering. Among the purposes of the legislation are: increasing the strength of U.S. measures to prevent, detect, and prosecute international money laundering and the financing of terrorism, to provide a national mandate for subjecting to special scrutiny foreign jurisdictions, financial institutions operating outside the United States, and classes of international transactions or types of accounts that pose particular opportunities for criminal abuse, and to ensure that all appropriate elements of the financial services industry are subject to appropriate requirements to report potential money laundering transactions to proper authorities.

The legislation contains over forty separate sections, each of which is summarized in this report. Some of them are technical in the sense that they address criminal and civil judicial or administrative proceedings; others enhance criminal penalties for various types of financial crimes. Among the provisions that have garnered the most attention are those that affect financial institutions such as the grant of authority to the Secretary of the Treasury to impose special measures, including requiring the closure of certain accounts with foreign banks. To impose these special measures, the Secretary must find that a jurisdiction, class of transactions, or institution is of "primary money laundering concern." In addition, there are provisions that specifically address and specify increased due diligence for correspondent accounts, payable-through accounts, and private banking accounts for non-U.S. persons as well as accounts with off-shore or foreign shell banks. There are requirements and standards for increased cooperation by financial institutions in responding to government requests for information and new requirements for regulations mandating standards for identifying persons opening accounts. The legislation also requires financial institutions to institute anti-money laundering programs, and the Secretary of the Treasury, within 3 months, to issue regulations setting minimum requirements.

Some of the provisions of the legislation went into effect with the President's signature. Some need no implementing regulations. Much of the legislation, however, requires implementing regulations. The full impact, therefore, will emerge over the course of time. By including many requirements for studies and reports, Congress has indicated that it is prepared to conduct fine tuning should the need arise.