Rep. French Hill
U.S. Rep. French Hill (R-AR), the Majority Whip of the U.S. House Financial Services Committee, wants to strengthen protections for financial institutions that are called upon by law enforcement for help during criminal investigations.
Rep. Hill on May 11 introduced the Cooperate with Law Enforcement Agencies and Watch Act, H.R. 5783, which would provide a safe harbor for financial institutions that maintain a customer account at the request of a federal or state law enforcement agency, according to a summary from Rep. Hill’s office. U.S. Rep. Bill Foster (D-IL) signed on as the original cosponsor of H.R. 5783.
“This is another way Congress is giving our law enforcement the tools they need to prosecute bad actors wanting to use the American financial system for their criminal acts and to keep Americans safer,” Rep. Hill said.
Currently, financial institutions operate under June 2007 guidance issued by the U.S. Financial Crimes Enforcement Network of the U.S. Treasury Department. The two-page guidance basically states that financial institutions should ask for written requests signed by a supervisor of the state or local law enforcement agency or from an attorney within a state or local prosecutor’s office.
The requests should state the purpose the agency requests that a financial institution maintain a particular account and for how long. Commonly known as a Keep Open Letter, the duration for such requests aren’t to exceed six months, although an agency may re-submit requests to hold accounts open longer, according to the guidance.
“Ultimately, the decision to maintain or close an account should be made by a financial institution in accordance with its own standards and guidelines,” according to the guidance. “Although there is no requirement that a financial institution maintain a particular account relationship, financial institutions should be mindful that complying with such a request may further law enforcement efforts to combat money laundering, terrorist financing, and other crimes.”
The guidance also states that if a financial institution chooses to maintain such an account, it’s still required to comply with all applicable Bank Secrecy Act recordkeeping and reporting requirements, such as filing Suspicious Activity Reports, even if the bank is keeping an account open or maintaining a customer relationship at the request of law enforcement.
At the same time, if the financial institution is aware – through a subpoena, 314(a) request, National Security Letter, or similar communication – that an account is under investigation, the guidance recommends that it notify law enforcement before making decisions regarding the status of an account.
“As a former community banker, I have dealt with the conflict of wanting to help law enforcement agencies when receiving a Keep Open Letter, while not being able to because of the need to comply with the requirements set forth by a regulator,” Rep. Hill said.
“That is why I am pleased to introduce this common sense bill,” he said, “which enables partnerships without repercussions between law enforcement agencies and our local financial institutions by allowing law enforcement to monitor cash flows associated with criminal investigations at a financial institution.”
H.R. 5783 has been referred to the House Financial Services Committee for consideration.