31 U.S.C. § 5342 — High-risk money laundering and related

Page 499 TITLE 31—MONEY AND FINANCE § 5342 (12) DATA REGARDING FUNDING OF TER- RORISM.—Data concerning money laundering efforts related to the funding of acts of inter- national terrorism, and efforts directed at the prevention, detection, and prosecution of such funding. (c) EFFECTIVENESS REPORT.—At the time each national strategy for combating financial crimes is transmitted by the President to the Congress (other than the first transmission of any such strategy) pursuant to subsection (a), the Secretary shall submit a report containing an evaluation of the effectiveness of policies to combat money laundering and related financial crimes. (d) CONSULTATIONS.—In addition to the con- sultations required under this section with the Attorney General, in developing the national strategy for combating money laundering and related financial crimes, the Secretary shall consult with— (1) the Board of Governors of the Federal Re- serve System and other Federal banking agen- cies and the National Credit Union Adminis- tration Board; (2) State and local officials, including State and local prosecutors; (3) the Securities and Exchange Commission; (4) the Commodities and Futures Trading Commission; (5) the Director of the Office of National Drug Control Policy, with respect to money laundering and related financial crimes in- volving the proceeds of drug trafficking; (6) the Chief of the United States Postal In- spection Service; (7) to the extent appropriate, State and local officials responsible for financial institution and financial market regulation; (8) any other State or local government au- thority, to the extent appropriate; (9) any other Federal Government authority or instrumentality, to the extent appropriate; and (10) representatives of the private financial services sector, to the extent appropriate. (Added Pub. L. 105–310, § 2(a), Oct. 30, 1998, 112 Stat. 2942; amended Pub. L. 107–56, title III, § 354, Oct. 26, 2001, 115 Stat. 323; Pub. L. 108–458, title VI, § 6102(a), Dec. 17, 2004, 118 Stat. 3744.) Editorial Notes AMENDMENTS 2004—Subsec. (a)(2). Pub. L. 108–458 substituted ‘‘Au- gust 1’’ for ‘‘February 1’’ and ‘‘2003, 2005, and 2007,’’ for ‘‘and 2003,’’. 2001—Subsec. (b)(12). Pub. L. 107–56 added par. (12). § 5342. High-risk money laundering and related financial crime areas (a) FINDINGS AND PURPOSE.— (1) FINDINGS.—The Congress finds the fol- lowing: (A) Money laundering and related financial crimes frequently appear to be concentrated in particular geographic areas, financial sys- tems, industry sectors, or financial institu- tions. (B) While the Secretary has the responsi- bility to act with regard to Federal offenses which are being committed in a particular locality or are directed at a single institu- tion, because modern financial systems and institutions are interconnected to a degree which was not possible until recently, money laundering and other related finan- cial crimes are likely to have local, State, national, and international effects wherever they are committed. (2) PURPOSE AND OBJECTIVE.—It is the pur- pose of this section to provide a mechanism for designating any area where money laun- dering or a related financial crime appears to be occurring at a higher than average rate such that— (A) a comprehensive approach to the prob- lem of such crime in such area can be devel- oped, in cooperation with State and local law enforcement agencies, which utilizes the authority of the Secretary to prevent such activity; or (B) such area can be targeted for law en- forcement action. (b) ELEMENT OF NATIONAL STRATEGY.—The des- ignation of certain areas as areas in which money laundering and related financial crimes are extensive or present a substantial risk shall be an element of the national strategy developed pursuant to section 5341(b). (c) DESIGNATION OF AREAS.— (1) DESIGNATION BY SECRETARY.—The Sec- retary, after taking into consideration the fac- tors specified in subsection (d), shall designate any geographical area, industry, sector, or in- stitution in the United States in which money laundering and related financial crimes are ex- tensive or present a substantial risk as a ‘‘high-risk money laundering and related fi- nancial crimes area’’. (2) CASE-BY-CASE DETERMINATION IN CON- SULTATION WITH THE ATTORNEY GENERAL.—In addition to the factors specified in subsection (d), any designation of any area under para- graph (1) shall be made on the basis of a deter- mination by the Secretary, in consultation with the Attorney General, that the particular area, industry, sector, or institution is being victimized by, or is particularly vulnerable to, money laundering and related financial crimes. (3) SPECIFIC INITIATIVES.—Any head of a de- partment, bureau, or law enforcement agency, including any State or local prosecutor, in- volved in the detection, prevention, and sup- pression of money laundering and related fi- nancial crimes and any State or local official or prosecutor may submit— (A) a written request for the designation of any area as a high-risk money laundering and related financial crimes area; or (B) a written request for funding under section 5351 for a specific prevention or en- forcement initiative, or to determine the ex- tent of financial criminal activity, in an area. (d) FACTORS.—In considering the designation of any area as a high-risk money laundering and related financial crimes area, the Secretary shall, to the extent appropriate and in consulta- tion with the Attorney General, take into ac- count the following factors: Page 500 TITLE 31—MONEY AND FINANCE § 5351 (1) The population of the area. (2) The number of bank and nonbank finan- cial institution transactions which originate in such area or involve institutions located in such area. (3) The number of stock or commodities transactions which originate in such area or involve institutions located in such area. (4) Whether the area is a key transportation hub with any international ports or airports or an extensive highway system. (5) Whether the area is an international cen- ter for banking or commerce. (6) The extent to which financial crimes and financial crime-related activities in such area are having a harmful impact in other areas of the country. (7) The number or nature of requests for in- formation or analytical assistance which— (A) are made to the analytical component of the Department of the Treasury; and (B) originate from law enforcement or reg- ulatory authorities located in such area or involve institutions or businesses located in such area or residents of such area. (8) The volume or nature of suspicious activ- ity reports originating in the area. (9) The volume or nature of currency trans- action reports or reports of cross-border move- ments of currency or monetary instruments originating in, or transported through, the area. (10) Whether, and how often, the area has been the subject of a geographical targeting order. (11) Observed changes in trends and patterns of money laundering activity. (12) Unusual patterns, anomalies, growth, or other changes in the volume or nature of core economic statistics or indicators. (13) Statistics or indicators of unusual or un- explained volumes of cash transactions. (14) Unusual patterns, anomalies, or changes in the volume or nature of transactions con- ducted through financial institutions oper- ating within or outside the United States. (15) The extent to which State and local gov- ernments and State and local law enforcement agencies have committed resources to respond to the financial crime problem in the area and the degree to which the commitment of such resources reflects a determination by such government and agencies to address the prob- lem aggressively. (16) The extent to which a significant in- crease in the allocation of Federal resources to combat financial crimes in such area is nec- essary to provide an adequate State and local response to financial crimes and financial crime-related activities in such area. (Added Pub. L. 105–310, § 2(a), Oct. 30, 1998, 112 Stat. 2944.) Statutory Notes and Related Subsidiaries REPORT AND RECOMMENDATIONS Pub. L. 105–310, § 2(c), Oct. 30, 1998, 112 Stat. 2949, pro- vided that: ‘‘Before the end of the 5-year period begin- ning on the date the first national strategy for com- bating money laundering and related financial crimes is submitted to the Congress pursuant to section 5341(a)(1) of title 31, United States Code (as added by section 2(a) of this Act), the Secretary of the Treasury, in consultation with the Attorney General, shall sub- mit a report to the Committee on Banking and Finan- cial Services [now Committee on Financial Services] and the Committee on the Judiciary of the House of Representatives and the Committee on Banking, Hous- ing, and Urban Affairs and the Committee on the Judi- ciary of the Senate on the effectiveness of and the need for the designation of areas, under section 5342 of title 31, United States Code (as added by such section 2(a)), as high-risk money laundering and related financial crime areas, together with recommendations for such legislation as the Secretary and the Attorney General may determine to be appropriate to carry out the pur- poses of such section.’’ PART 2—FINANCIAL CRIME-FREE COMMUNITIES SUPPORT PROGRAM § 5351. Establishment of financial crime-free com- munities support program (a) ESTABLISHMENT.—The Secretary of the Treasury, in consultation with the Attorney General, shall establish a program to support local law enforcement efforts in the develop- ment and implementation of a program for the detection, prevention, and suppression of money laundering and related financial crimes. (b) PROGRAM.—In carrying out the program, the Secretary of the Treasury, in consultation with the Attorney General, shall— (1) make and track grants to grant recipi- ents; (2) provide for technical assistance and training, data collection, and dissemination of information on state-of-the-art practices that the Secretary determines to be effective in de- tecting, preventing, and suppressing money laundering and related financial crimes; and (3) provide for the general administration of the program. (c) ADMINISTRATION.—The Secretary shall ap- point an administrator to carry out the pro- gram. (d) CONTRACTING.—The Secretary may employ any necessary staff and may enter into con- tracts or agreements with Federal and State law enforcement agencies to delegate authority for the execution of grants and for such other ac- tivities necessary to carry out this chapter. (Added Pub. L. 105–310, § 2(a), Oct. 30, 1998, 112 Stat. 2946.) § 5352. Program authorization (a) GRANT ELIGIBILITY.—To be eligible to re- ceive an initial grant or a renewal grant under this part, a State or local law enforcement agen- cy or prosecutor shall meet each of the fol- lowing criteria: (1) APPLICATION.—The State or local law en- forcement agency or prosecutor shall submit an application to the Secretary in accordance with section 5353(a)(2). (2) ACCOUNTABILITY.—The State or local law enforcement agency or prosecutor shall— (A) establish a system to measure and re- port outcomes— (i) consistent with common indicators and evaluation protocols established by the Secretary, in consultation with the At- torney General; and