Mr. Speaker, I yield myself such time as I may consume. I rise in strong support of H.R. 5341, the Seasoned Customer CTR Exemption Act of 2006. This bill is similar to an amendment I authored with Congressman Renzi at the committee markup…
Mr. Speaker, I yield myself such time as I may consume.
I rise in strong support of H.R. 5341, the Seasoned Customer CTR Exemption Act of 2006. This bill is similar to an amendment I authored with Congressman Renzi at the committee markup of H.R. 3505, the regulatory relief bill that the House passed overwhelmingly in March. Because the Senate version of regulatory relief does not include this provision, we are passing it as a separate bill.
I am delighted to be a cosponsor of this bill along with my colleagues, Congressman Bachus and Ranking Member Frank. With 22 bipartisan cosponsors, it is a good example of the cooperative work of the Financial Services Committee.
This bill is intended to relieve financial institutions from unnecessary filings of currency transactions. This provision would reduce CTR filings by 70 to 90 percent for most financial institutions, saving many, many hours each year. By freeing financial institutions from filing useless CTRs, this bill enables them to concentrate on the more useful suspicious activity reports, which are those reports that financial institutions file when they believe a particular transaction of any sort or size warrants further review by law enforcement. More important, this also enables the regulators to concentrate on the important SAR filings, rather than CTRs from repeat trusted customers.
The bill would require banks to provide a one-time notice to FinCEN, the lead money laundering agency, of a proposed exemption for a particular well-known customer, and to describe the customer's relationship with the bank as the grounds for such exemption if FinCEN feels that the customer should not be in the reports or CTRs.
At present, a CTR must be filed for every single transaction of over $10,000, which results in more than 13 million CTRs being filed annually. Many of these CTRs, particularly those from business customers well known to the banks, are of absolutely no use to law enforcement. It is a waste of the bank's time and of law enforcement's time to file and to review them.
The CTR filings that distract both the banks and regulators from using their resources to find terrorists and money launderers are counterproductive. To relieve this problem, this bill instructs the Secretary of the Treasury to prescribe regulations that exempt a depository institution from filing a CTR if the transaction is with a seasoned customer, that is, a business which has kept a deposit account at the bank for a year and is engaged in multiple currency transactions subject to the CTR requirements.
The idea was first proposed by the Internal Revenue Department, and also in the GAO report that my colleague has cited in his remarks; and it was also proposed by the Treasury Department and law enforcement for exactly
this reason. FinCEN Director Bill Fox strongly endorsed this seasoned customer exemption saying, and I quote, ``This change will make the exemption more effective, while still ensuring that currency transaction reporting identification, critical to identifying criminal financial activity, is made available to law enforcement.''
The banking regulators also expressed strong support for this proposal. OCC and OTS both agreed with FinCEN that the CTR filing process had become counterproductive in terms of national security because so many CTRs are filed that important data is lost in the haystack.
In the new Bank Secrecy Act provisions, we asked our financial institutions to take a front-line position in the war on money laundering and terrorist financing and we need to give them the ability to use their resources to their best advantage.
As a Representative of New York City, which is both an important financial center of the United States and a city that is very concerned about terrorism, I am concerned not only about giving the regulators the proper tools which they need, but I am also concerned that burdens are not placed on financial institutions that are redundant, particularly for midsized and smaller banks.
I know the vast majority of my colleagues on both sides of the aisle share this concern, and we worked hard together to pass carefully balanced legislation addressing it, so I urge my colleagues to continue that effort and vote for this underlying bill.
I rise in support of H.R. 5341, the Seasoned Customer CTR Exemption Act of 2006.
This bill is a reiteration of the amendment I offered with Congressman Renzi at the Committee markup of H.R. 3505, the reg relief bill that the House passed by a 415 to 2 vote in March. Because the Senate version of reg relief does not include this provision, we are passing it as a separate bill. I am delighted to cosponsor this bill with my colleague Congressman Bachus. With 22 bipartisan cosponsors, it is a good example of the bipartisan work of the Financial Services Committee.
This bill is intended to relieve banks from unnecessary filings of Currency Transaction reports, or CTRs. At present, a CTR must be filed for every single transaction over $10,000, which results in more than 13 million CTRs being filed annually. Many of these CTRs, particularly those from business customers well known to their banks, are of no use to law enforcement. It is a waste of the banks' time to file them and a waste of law enforcement time to review them. CTR filings that distract both the banks and regulators from using their resources to find terrorists and money launderers are counterproductive.
To relieve this problem, this bill instructs the Secretary of the Treasury to prescribe regulations that exempt a depository institution from filing a CTR if the transaction is with a ``seasoned'' customer, that is, a business which has kept a deposit account at the bank for a year and has engaged in multiple currency transactions subject to the CTR requirements.
This provision would reduce CTR filings by 70 to 90 percent for most banks, saving banks many hours each year.
By freeing banks from filing useless CTRs, this bill enables them to concentrate on the more useful Suspicious Activity Reports, which are those reports bank file when they believe a particular transaction of any sort or size warrants further review by law enforcement.
More important, this also enables the regulators to concentrate on the important SAR filings rather than CTRs from repeat customers.
The bill would require banks to provide a one-time notice to FinCEN, the lead money laundering agency, of a proposed exemption for a particular well-known customer, and to describe the customer's relationship with the bank as the grounds for such exemption. If FinCEN feels that the customer should not be exempted, then it can reject the proposed exemption. And the exemption can be revoked by FinCEN at any time. The government remains in complete control of the exemption process.
Indeed, this measure was proposed by the Treasury Department and law enforcement for exactly this reason. FinCEN Director Bill Fox strongly endorsed this seasoned customer exemption, stating that: ``This change will make the exemption more effective while still ensuring that currency transaction reporting information critical to identifying criminal financial activity is made available to law enforcement.''
The banking regulators also expressed strong support for this proposal. OCC and OTS both agreed with FinCEN that the CTR filing process had become counterproductive in terms of national security because so many CTRs are filed that important data is lost in the haystack.
In the new Bank Secrecy Act provisions, we asked our financial institutions to take a frontline position in the war on money laundering and terrorist financing. We need to give them the ability to use their resources to best advantage.
As a representative of New York City, the financial center of the United States, I am particularly concerned about the burdens the Bank Secrecy Act puts on our financial institutions, particularly those that are not megainstitutions but are mid-size and smaller.
I know the vast majority of my colleagues on both sides of the aisle share this concern and we worked hard together to pass carefully balanced legislation addressing it.
I urge my colleagues to continue that effort and vote for this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, there are no further speakers on our side of the aisle, and I yield back the balance of my time.