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Hill’s bill protects banks working with law enforcement during criminal investigations

U.S. Rep. French Hill (R-AR) on Jan. 24 sponsored a bipartisan bill that 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 the congressional record summary.

The Cooperate with Law Enforcement Agencies and Watch Act of 2019, H.R. 758, which Rep. Hill introduced with U.S. Rep. Bill Foster (D-IL), would strengthen protections for financial institutions that are called upon by law enforcement for help during criminal investigations.

“H.R. 758 is a common sense solution that allows financial institutions and law enforcement to better cooperate in order to prosecute bad actors wanting to use the American financial system for their criminal acts,” Rep. Hill said last week.

Currently, financial institutions operate under June 2007 guidance issued by the U.S. Financial Crimes Enforcement Network of the U.S. Treasury Department. The guidance basically states that a financial institution 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 stating the purpose of the request that a financial institution maintain a particular account and for how long.

Such requests are 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 are not 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 this 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,” said Rep. Hill, noting that H.R. 758 would protect financial institutions against any backlash from regulatory agencies.

The congressman in 2018 introduced similar legislation, H.R. 5783, which received overwhelming approval by members in the U.S. House of Representatives with a vote of 379-4 last June. But the measure stalled in two U.S. Senate committees.

“More than ever, financial institutions have the potential to play a pivotal role in helping law enforcement bring criminals to justice. However, due to outdated regulations, banks that cooperate with law enforcement agencies risk being penalized by regulators while assisting with an ongoing criminal investigation,” said Rep. Hill.

The reintroduced H.R. 758 has been referred to the U.S. House Financial Services Committee for consideration.