Congressman Hinojosa introduces bill to combat money laundering

Congressman Hinojosa introduces bill to combat money laundering
Thursday, December 12, 2013 - 7:42pm

Congressman Rubén Hinojosa (D-TX-15) introduced H.R. 3700, the "Building Community Financial Institutions' Capacity to Combat Money Laundering Act".

This legislation will utilize a portion of the Bank Secrecy Act (BSA) fines to help mitigate burdensome training and technology costs and to build community banks' capacity to combat money laundering. Through this legislation, fines collected from institutions that run afoul of the Bank Secrecy Act will be used in part to improve our community banks' ability to fight money laundering on the front lines.

"This legislation is designed to strengthen BSA compliance and to assist community banks in directing more of their resources toward their customers and their communities," said U.S. Rep. Hinojosa. "Our community banks are a much needed and welcomed business in our cities and towns. They create jobs and offer financial assistance to their customers, including small businesses owners. They are very important to our local economies."

In 2012, HSBC Bank was levied a $1.9 billion fine by U.S. bank regulators for violating the Bank Secrecy Act. Ensuring that U.S. banks are not complicit in criminal activity and holding them accountable for lapses in safeguards against money laundering should be a top priority for Congress and financial regulators.

Financial regulators have recently raised their expectations with regard to Bank Secrecy Act compliance. Significant costs for training, consulting, computer programs, and auditing are all part of a proper BSA-Anti-Money-Laundering (BSA-AML) compliance plan. While large banks, acting as economies of scale, may be able to absorb these costs, our community banks, which are complying with the BSA-AML, are under a great strain.

‘‘Building Community Financial Institutions' Capacity to Combat Money Laundering Act’’.

  • The Act will amend Subchapter II of chapter 53 of title 31 U.S.C. to create a BSA Compliance Fund within the U.S. Treasury.
  • The Fund will be financed using 25 percent of all civil money penalties imposed on domestic financial institutions pursuant to the Bank Secrecy Act.
  • Community financial institutions (banks and credit unions) with less than $10 billion in assets are eligible to apply for grants.
  • Secretary of Treasury distributes grants on a competitive basis. Applications will include BSA Compliance Improvement Plan and costs.
  • Grants will be $200,000 or 75% of BSA Compliance Improvement Plan costs, whichever is the lesser.
  • Institutions that serve high unemployment counties will be given priority.
  • Given that grants are for capacity building and not for recurring costs, program will sunset October 2018, with remaining funds deposited into General Fund.
  • Administrative costs for program are capped at 4 percent of funds in the Fund.

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