"Bad laws are the worst sort of tyranny."
On October 26, 2001, President Bush signed into law the USA Patriot Act1 ("Act"), which was drafted as a consequence of the attacks on the World Trade Center and the Pentagon only six weeks earlier.2 The Act is divided into ten sections with perhaps the most noteworthy provisions being Title II, "Enhanced Surveillance Procedures"; Title III, "International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001"; Title IV, "Protecting the Border" -dealing with immigration issues; and Title VIII, "Strengthening the Criminal Laws Against Terrorism".3 This Note focuses on the Act's Title III anti-money laundering provisions, its impact on financial institutions, and its potential for thwarting organized crime and future terrorist activity.
The Act was rammed through Congress with "only one public hearing and little debate,"4 and was one of the "swiftest-moving bills in federal history."5 It was approved 356-66 by the House of Representatives and 98-1 by the Senate.6 Some of the more important provisions of the Act are as follows:
* Expanded federal ability to conduct electronic surveillance and nationwide search warrants. That includes roving wiretaps that allow tapping conversations of an individual no matter what phone he or she uses. And it includes wide latitude to screen computers, including e-mail messages and e-mail address books.
* FBI access to private records "to protect against international terrorism."
* Detention for as long as a week of immigrants suspected of terrorism or of supporting terrorism without their being legally charged with a crime or immigration violations. The new law also permits deportation of foreigners who raise money for terrorist groups.
* A requirement that banks find the sources of money in some large private accounts and that foreign banks detail suspect transactions.
* In an effort to appease civil libertarians, the law has a sunset provision-its major provisions expire in 2004 unless extended-and a provision that the justice Department prepare reports on how it is affecting civil liberties.7
Despite the overwhelming support the Act received from Congress, it has already come under harsh criticism by liberals and conservatives alike for unleashing unprecedented powers on government authorities that in some cases have been challenged as unconstitutional.8 The balance between national security and civil liberties has been debated for years, and it seems to have resumed prominence in the conscience of many constitutional scholars.9 To date, the Act has primarily been analyzed and challenged on constitutional grounds for its electronic surveillance provisions'" and its rules with respect to immigrants.11
Perhaps due to the outcry over the civil liberties ramifications of Titles II and IV, the Act's Title III overhaul of U.S. money laundering legislation appears to have been somewhat overlooked. Title III is known formally as the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 ("IMLA Act").12 It will have a significant impact on the way financial institutions do business, and it will similarly affect many businesses not traditionally regarded as "financial institutions."13 Banks have long been involved with the federal government in the fight against money laundering through such measures as the filing of currency transaction reports ("CTRs") and suspicious activity reports ("SARs").14 The IMLA Act not only expands the duties of banks in reporting high-risk activities, it also substantially raises the stakes for non-compliance with federal money laundering legislation and increases the scope of businesses now required to participate in anti-money laundering efforts.13
Part I of this Note provides an overview of the crime of money laundering and summarizes some of the important provisions of the IMLA Act. …