§5342 — Title 31 Money and Finance | U.S. Code

Summary

The law requires the Secretary of the Treasury to name any U.S. place, industry, sector, or financial institution as a high‑risk area when money laundering or related financial crimes are widespread or pose a serious risk. That label must be part of the national strategy to fight these crimes. The goal is to let the Treasury work with state and local law enforcement to make a full plan to prevent the crimes or to focus law enforcement action where it is needed. Before making a designation, the Secretary must consult with the Attorney General and consider 16 listed factors. These include things like population, the number of bank or market transactions tied to the area, international ports or major transport hubs, whether it is a center for banking or commerce, suspicious activity and currency reports, requests for analytical help from local authorities, past targeting orders, sudden changes in local economic or transaction patterns, unexplained cash activity, and whether state and local governments have committed resources or need substantial extra federal help. Federal, state, or local law enforcement leaders and prosecutors may send written requests for a designation or for funding to study or fight the problem.

Title 31, §5342

Money and Finance — Source: USLM XML via OLRC

(a)(1)The Congress finds the following:

(A)Money laundering and related financial crimes frequently appear to be concentrated in particular geographic areas, financial systems, industry sectors, or financial institutions.

(B)While the Secretary has the responsibility to act with regard to Federal offenses which are being committed in a particular locality or are directed at a single institution, because modern financial systems and institutions are interconnected to a degree which was not possible until recently, money laundering and other related financial crimes are likely to have local, State, national, and international effects wherever they are committed.

(2)It is the purpose of this section to provide a mechanism for designating any area where money laundering or a related financial crime appears to be occurring at a higher than average rate such that—

(A)a comprehensive approach to the problem of such crime in such area can be developed, 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 enforcement action.

(b)The designation 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)(1)The Secretary, after taking into consideration the factors specified in subsection (d), shall designate any geographical area, industry, sector, or institution in the United States in which money laundering and related financial crimes are extensive or present a substantial risk as a “high-risk money laundering and related financial crimes area”.

(2)In addition to the factors specified in subsection (d), any designation of any area under paragraph (1) shall be made on the basis of a determination 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)Any head of a department, bureau, or law enforcement agency, including any State or local prosecutor, involved in the detection, prevention, and suppression of money laundering and related financial 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 enforcement initiative, or to determine the extent of financial criminal activity, in an area.

(d)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 consultation with the Attorney General, take into account the following factors:

(1)The population of the area.

(2)The number of bank and nonbank financial 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 center 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 information or analytical assistance which—

(A)are made to the analytical component of the Department of the Treasury; and

(B)originate from law enforcement or regulatory 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 activity reports originating in the area.

(9)The volume or nature of currency transaction reports or reports of cross-border movements 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 unexplained volumes of cash transactions.

(14)Unusual patterns, anomalies, or changes in the volume or nature of transactions conducted through financial institutions operating within or outside the United States.

(15)The extent to which State and local governments 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 problem aggressively.

(16)The extent to which a significant increase in the allocation of Federal resources to combat financial crimes in such area is necessary to provide an adequate State and local response to financial crimes and financial crime-related activities in such area.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Report and Recommendations Pub. L. 105–310, § 2(c), Oct. 30, 1998, 112 Stat. 2949, provided that: “Before the end of the 5-year period beginning on the date the first national strategy for combating 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 submit a report to the Committee on Banking and Financial Services [now Committee on Financial Services] and the Committee on the Judiciary of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs and the Committee on the Judiciary 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 purposes of such section.”

§5342 High-risk Money Laundering and Related Financial Crime Areas

Summary

Title 31, §5342

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Citations & Metadata