The United States Congress found that money laundering "provides the financial fuel that permits transnational criminal enterprises to conduct and expand their operations to the detriment of the safety and security of American citizens" and that it is critical to the financing of global terrorism and terrorist attacks.
Findings (4) and (5) state that: certain jurisdictions outside of the United States that offer `offshore' banking and related facilities designed to provide anonymity, coupled with weak financial supervisory and enforcement regimes, provide essential tools to disguise ownership and movement of criminal funds, derived from, or used to commit, offenses ranging from narcotics trafficking, terrorism, arms smuggling, and trafficking in human beings, to financial frauds that prey on law-abiding citizens... [T]ransactions involving such offshore jurisdictions make it difficult for law enforcement officials and regulators to follow the trail of money earned by criminals, organized international criminal enterprises, and global terrorist organizations [1]Congress in particular noted that correspondent accounts are vulnerable to use by money launderers as it is easier to obscure the identities of the owners of such accounts than with other types of bank accounts, and that private banking services can be susceptible to manipulation by money launderers.
Congress also found that: United States anti-money laundering efforts are impeded by outmoded and inadequate statutory provisions that make investigations, prosecutions, and forfeitures more difficult, particularly in cases in which money laundering involves foreign persons, foreign banks, or foreign countries[2]and the ability to mount effective counter-measures to international money launderers requires national, as well as bilateral and multilateral action, using tools specially designed for that effort[3]The purposes of the title are defined in section 302.
The title would terminate if Congress enacted a joint resolution with the text after the resolving clause being: That provisions of the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, and the amendments made thereby, shall no longer have the force of law.However, in 2005 no such joint resolution was made, and the title remains in effect to this day.
Section 327 makes it harder for bank holding companies or banks to merge or consolidate with another bank holding company if they have not got a good track record in combating money laundering activities, and also makes it harder for insured depository institutions to merge with non-insured depository institutions if the insured depository institution has a bad track record in combating money laundering activities.
To deal with problems of identifying those who undertake money laundering activities, section 326 of the subtitle was designed to make it harder to mask the identity of individuals or groups who perform transactions or open accounts in the United States.
Under this section, the Secretary of the Treasury was given the task of prescribing regulations that set forth the minimum standards that financial institutions must undertake to verify the identity of customers who open accounts.
[6] The minimum requirements under the section require financial institutions to establish procedures to take reasonable and practicable measures to verify the identity of those applying for an account with the institution;[7] maintain records of the information used to verify a person's identity, including name, address, and other identifying information;[8] and to consult 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.
These include making a financial transaction in the U.S. in order to commit a crime of violence;[11] the bribery of public officials and fraudulent dealing with public funds; the smuggling or illegal export of controlled munitions;[12] the importation or bringing in of any firearm or ammunition not authorised by the U.S. Attorney General[13] and the smuggling of any item controlled under the Export Administration Regulations.
[14] It also includes any offense where the U.S. would be obligated under a mutual treaty with a foreign nation to extradite a person, or where the U.S. would need to submit a case against a person for prosecution due to the treaty; the importation of falsely classified goods;[15] computer crime;[16] and any felony violation of the Foreign Agents Registration Act of 1938.
Section 320 allows the forfeiture of any property within the jurisdiction of the United States that was gained as the result of an offense against a foreign nation that involves the manufacture, importation, sale, or distribution of a controlled substance.
[17] Section 323 amended the means by which a foreign nation may seek to have a forfeiture or judgement notification enforced by a district court of the United States [18] by adding a new paragraph that specifies how the U.S. government may apply for a restraining order[19] to preserve the availability of property which is subject to a foreign forfeiture or confiscation judgement.
[20] A large emphasis is also placed on the ability of a foreign court to follow due process when considering an application for a forfeiture or confiscation judgement to be registered and enforced in the U.S.[21] Section 328 requires the Secretary of Treasury to take all reasonable steps to encourage foreign governments to require the inclusion of the name of the originator in wire transfer instructions sent to the United States and other countries, with the information to remain with the transfer from its origination until the point of disbursement.
Under section 330 the Secretary is also ordered to encourage international cooperation in investigations of money laundering, financial crimes, and the finances of terrorist groups.
[23] The Federal Deposit Insurance Act was amended by section 355 to allow written employment references to contain suspicions of involvement in illegal activity in response to a request from another financial institution, but makes clear that it does not require the disclosure or shield from liability anyone who makes a disclosure that is found to have been made with malicious intent.
[25] Section 355 also specified that a report be produced jointly by the Secretary of Treasury, the Board of Governors of the Federal Reserve System, and the Securities and Exchange Commission with recommendations for effective regulations to apply the requirements of the BSA with regards to investment companies.
However, the report did find that law enforcement and regulatory communities should undertake a comprehensive program to enhance their knowledge concerning the range of mechanisms used in informal value transfer systems in order to better understand them and to determine whether they think that any additional legislation is needed.
The study found that businesses were filing unnecessary reports for several reasons, and made various recommendations that might alleviate the problem.
[33] The BSA specifies that "the President, acting through the Secretary and in consultation with the Attorney General, shall develop a national strategy for combating money laundering and related financial crimes.".
The legislation also requires the secure network to send alerts and other information in relation to suspicious activities to financial institutions.
According to the testimony of Dennis Lormel, Chief of the Terrorist Financing Operations Section of the FBI's Counterterrorism Division, the USA Patriot Act Communication System was developed by FinCEN from such requirements.
Law enforcement personnel are authorised to carry firearms and to make arrests for felonies committed while on the grounds or within the buildings of the Board or a reserve bank.
[46] The stated purposes of the BSA,[47] Section 123(a) of Public Law 91-508[48] and Section 21(a) of the Federal Deposit Insurance Act[49] were amended to allow reports or records to be provided to agencies who conduct intelligence or counterintelligence activities, including analysis, in order to protect against international terrorism.
[52] None of the special procedures spelt out in the Financial Privacy Act under section 1114 apply to U.S. government authorities who conduct investigations or intelligence or counter-intelligence activities in relation to domestic or international terrorism.
Under section 371 of the Patriot Act, Congress found that currency reporting under the Bank Secrecy Act (BSA) was significant in forcing money launders to avoid traditional financial institutions to launder money and had forced them to use cash-based businesses to avoid traditional financial institutions.
In fact, bulk currency was found to have become the most popular form of money laundering for moving large amounts of cash in an evasive manner.
Therefore, a new section[59] was appended to the BSA that made it a criminal offense to evade currency reporting by concealing more than US$10,000 on any person or through any luggage, merchandise or other container that moves into or out of the U.S..
This section was used to prosecute Yehuda Abraham for helping to arrange money transfers for British arms dealer Hermant Lakhani, who was arrested in August 2003 after being caught in a government sting.
[64] Due to section 374 of the Patriot Act, the definition of domestic counterfeiting now encompasses analog, digital, or electronic image reproductions and the penalties are set out in various parts of the U.S.
Previously, penalties for counterfeiting the bonds, certificates, obligations, or other securities of a foreign nation were a maximum five years of imprisonment.