REFORM OF CTR EXEMPTION REQUIREMENTS TO REDUCE NUMBER AND SIZE OF REPORTS CONSISTENT WITH EFFECTIVE LAW ENFORCEMENT.

SEC. 402. REFORM OF CTR EXEMPTION REQUIREMENTS TO REDUCE NUMBER AND SIZE OF REPORTS CONSISTENT WITH EFFECTIVE LAW ENFORCEMENT. (a) In General.— Section 5313 of title 31, United States Code, is amended by adding at the end the following new subsections: “(d) Mandatory Exemptions From Reporting Requirements.— “(1) In general.— The Secretary of the Treasury shall exempt, pursuant to section 5318(a)(6), a depository institution from the reporting requirements of subsection (a) with respect to transactions between the depository institution and the following categories of entities: “(A) Another depository institution. “(B) A department or agency of the United States, any State, or any political subdivision of any State. “(C) Any entity established under the laws of the United States, any State, or any political subdivision of any State, or under an interstate compact between 2 or more States, which exercises governmental authority on behalf of the United States or any such State or political subdivision. “(D) Any business or category of business the reports on which have little or no value for law enforcement purposes. “(2) Notice of exemption.— The Secretary of the Treasury shall publish in the Federal Register at such times as the Secretary determines to be appropriate (but not less frequently than once each year) a list of all tne entities whose transactions with a depository institution are exempt under this subsection from the reporting requirements of subsection (a). “(e) Discretionary Exemptions From Reporting Requirements.— “(1) In general.— The Secretary of the Treasury may exempt, pursuant to section 5318(a)(6), a depository institution from the reporting requirements of subsection (a) with respect to transactions between the depository institution and a qualified business customer of the institution on the basis of information submitted to the Secretary by the institution in accordance with procedures which the Secretary shall establish. “(2) Qualified business customer defined.— For purposes of this subsection, the term ‘qualified business customer’ means a business which— “(A) maintains a transaction account (as defined in section 19(b)(1)(C) of the Federal Reserve Act) at the depository institution; “(B) frequently engages in transactions with the depository institution which are subject to the reporting requirements of subsection (a); and “(C) meets criteria which the Secretary determines are sufficient to ensure that the purposes of this subchapter 108 STAT. 2244are carried out without requiring a report with respect to such transactions. “(3) Criteria for exemption.— The Secretary of the Treasury shall establish, by regulation, the criteria for granting and maintaining an exemption under paragraph (1). “(4) Guidelines.— “(A) In general.— The Secretary of the Treasury shall establish guidelines for depository institutions to follow in selecting customers for an exemption under this subsection. “(B) Contents.— The guidelines may include a description of the types of businesses or an itemization of specific businesses for which no exemption will be granted under this subsection to any depository institution. “(5) Annual review.— The Secretary of the Treasury shall prescribe regulations requiring each depository institution to— “(A) review, at least once each year, the qualified business customers of such institution with respect to whom an exemption has been granted under this subsection; and “(B) upon the completion of such review, resubmit information about such customers, with such modifications as the institution determines to be appropriate, to the Secretary for the Secretary’s approval. “(6) 2-year phase-in provision.— During the 2-year period beginning on the date of enactment of the Money Laundering Suppression Act of 1994, this subsection shall be applied by the Secretary on the basis of such criteria as the Secretary determines to be appropriate to achieve an orderly implementation of the requirements of this subsection. “(f) Provisions Applicable to Mandatory and Discretionary Exemptions.— “(1) Limitation on liability of depository institutions.— No depository institution shall be subject to any penalty which may be imposed under this subchapter for the failure of the institution to file a report with respect to a transaction with a customer for whom an exemption has been granted under subsection (d) or (e) unless the institution— “(A) knowingly files false or incomplete information to the Secretary with respect to the transaction or the customer engaging in the transaction; or “(B) has reason to believe at the time the exemption is granted or the transaction is entered into that the customer or the transaction does not meet the criteria established for granting such exemption. “(2) Coordination with other provisions.— Any exemption granted by the Secretary of the Treasury under section 5318(a) in accordance with this section, and any transaction which is subject to such exemption, shall be subject to any other provision of law applicable to such exemption, including— “(A) the authority of the Secretary, under section 5318(a)(6), to revoke such exemption at any time; and “(B) any requirement to report, or any authority to require a report on, any possible violation of any law or regulation or any suspected criminal activity. “(g) Depository Institution Defined.— For purposes of this section, the term ‘depository institution’— 108 STAT. 2245 “(1) has the meaning given to such term in section 19(b)(1)(A) of the Federal Reserve Act; and “(2) includes— “(A) any branch, agency, or commercial lending company (as such terms are denned in section 1(b) of the International Banking Act of 1978); “(B) any corporation chartered under section 25A of the Federal Reserve Act; and “(C) any corporation having an agreement or undertaking with the Board of Governors of the Federal Reserve System under section 25 of the Federal Reserve Act.”. (b) Report Reduction Goal; Reports.— (1) In general.— In implementing the amendment made by subsection (a), the Secretary of the Treasury shall seek to reduce, within a reasonable period of time, the number of reports required to be filed in the aggregate by depository institutions pursuant to section 5313(a of title 31, United States Code, by at least 30 percent of the number filed during the year preceding the date of enactment of this Act. (2) Interim report.— The Secretary of the Treasury shall submit a report to the Congress not later than the end of the 180-day period beginning on the date of enactment of this Act on the progress made by the Secretary in implementing the amendment made by subsection (a). (3) Annual report.— The Secretary of the Treasury shall submit an annual report to the Congress after the end of each of the first 5 calendar years which begin after the date of enactment of this Act on the extent to which the Secretary has reduced the overall number of currency transaction reports filed with the Secretary pursuant to section 5313(a) of title 31, United States Code, consistent with the purposes of such section and effective law enforcement. (c) Streamlined Currency Transaction Reports.— The Secretary of the Treasury shall take such action as may be appropriate (1) redesign the format of reports required to be filed under section 5313(a) of title 31, United States Code, by any financial institution (as defined in section 5312(a)(2) of such title) to eliminate the need to report information which has little or no value for law enforcement purposes; and (2) reduce the time and effort required to prepare such report for filing by any such financial institution under such section.