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Bipartisan legislation offered by U.S. Rep. French Hill (R-AR) to provide a safe harbor for financial institutions that maintain a customer account at the request of a federal or state law enforcement agency received overwhelming U.S. House approval on June 25 with a 379-4 vote.

Rep. Hill, the Majority Whip of the U.S. House Financial Services Committee, specifically seeks to strengthen protections for financial institutions that are called upon by law enforcement for help during criminal investigations and on May 11 introduced the Cooperate with Law Enforcement Agencies and Watch Act of 2018, H.R. 5783. U.S. Rep. Bill Foster (D-IL) signed on as the original cosponsor.

“My common-sense bill promotes a partnership without repercussions between local financial institutions and law enforcement agencies as they monitor cash flows associated with criminal investigations,” Rep. Hill said on the House floor advocating for H.R. 5783. “This is yet another way the House is working to protect Americans within communities across America.”

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 in what’s commonly known as a Keep Open Letter, which allows banks to keep open certain accounts so law enforcement can monitor any suspected illegal activity. The duration for such requests aren’t to exceed six months, although an agency or federal department may re-submit requests to hold accounts open longer, according to the guidance.

“As a former community banker, I have dealt with the conflict of wanting to help law enforcement agencies when receiving what’s called a Keep Open Letter, while not being able to do so because of the need to also comply with my regulatory responsibilities regarding the rules on setting out how banks must open and close a suspected account by a regulator,” Rep. Hill said on the House floor prior to the vote. Hill’s legislation would solve the problem of a Keep Open Letter potentially leading to banks not complying with their Anti-Money Laundering and Bank Secrecy Act compliance requirements.

H.R. 5783, he said, would permit banks to keep accounts open at the request of law enforcement without being penalized by regulators, while also supporting law enforcement agencies and reducing money laundering, drug running, terrorism financing and other illegal activities through the nation’s banking system.

“Banks would no longer be liable for maintaining accounts at the request of law enforcement agencies for criminal investigation purposes,” Rep. Hill said.

Additionally, H.R. 5783 would not allow law enforcement agencies or federal departments to take an adverse supervisory action against a financial institution with respect to maintaining the account consistent with such a request, according to the summary in the congressional record.
H.R. 5783 now heads to the U.S. Senate for consideration.