Assembly Bill A258

                                BILL NUMBER:A258

TITLE OF BILL:  An act to amend the banking law, in relation to clarify-
ing the definition of illegal money transmission and increasing the
penalties for certain activities by licensed and unlicensed money trans-
mitters; to amend the penal law, in relation to the definition of money
laundering; and to amend the criminal procedure law, in relation to
timeliness of prosecutions

PURPOSE OF THE BILL:

To provide for the effective prosecution of criminal actions by persons
or entities whose intended purpose may be the laundering of money
through legal money transmission instruments.

SUMMARY OF PROVISIONS:

Bill section 1 amends subdivision 1 of section 650 of the Banking Law by
deleting the existing provisions and adding new paragraphs (a) and (b)
in place thereof. Paragraph (a) provides that any person, whether a
licensee or a non-licensed person, who knowingly falsifies or makes a
misrepresentation in any type of document that is required to be filed
or maintained under article 13-B, is guilty of class E felony. Paragraph
(b) provides that any licensee or agent that receives moneys for the
purpose of transmitting such funds or sells or issues money transmission
instruments or travelers checks, knowing that such moneys were derived
              

from, or such instruments or checks were purchased with, proceeds real-
ized from criminal activity, shall be guilty of a class E felony.

Bill section 2 amends section 650(2)(a) and (b)(1), (2) and (4) of the
Banking Law to (1) increase and clarify the application of penalties for
certain violations by persons who are not licensed or acting in the
capacity of an agent for a licensee, and (2) to change a reference from
"individual" to "person" in order to broaden the scope of the prohibi-
tion on illegal money transmission activities, thus conforming the
reference to other references in the Banking Law.

Bill section 3 amends subdivision 5 of section 470.05 of the Penal Law
to include within the definition of "specified criminal conduct" certain
specified violations of the Banking Law that constitute the falsifica-
tion of records or statements, or the misapplication of moneys or credit
by bank personnel, thus making such violations also violations consti-
tuting the crime of money laundering.

Bill section 4 amends section 30.10(3) of the Criminal Procedure Law
(CPL) by adding a new paragraph (g) that conforms New York's statute of
limitations time period for certain financial-related crimes to the
federal time period of ten years. Such crimes are those defined under
Articles 12-D, 13-B and 13-D of the Banking Law or under Articles 155,
170, 175, 176, 180, 185, 190, 200, 210 and 470 of the Penal Law, insofar
as they relate to persons and entities under the supervision of the
Banking Department. The amendment pertains to crimes committed by

persons or entities that are licensed, chartered or registered by the
Department, or by their employees, officers, managers, directors, or
those persons or entities having a controlling interest in those parties
regulated by the Department.

Bill section 5 provides for an immediate effective date except with
respect to crimes committed that would be subject to the provisions of
section 30.10(3) of CPL as amended.

EXISTING LAW:

Persons who violate any provisions of article 13-B of the Banking Law or
who knowingly make an incorrect statement upon a required document or
omit any required information or refuse to permit a lawful investigation
by the Superintendent may be charged with a misdemeanor. Persons who
engage in the business of money transmission without a license under
certain specified circumstances may be charged with a class A misdemea-
nor and those persons who knowingly sell money transmission instruments
purchased with proceeds realized from criminal activity with a class E
felony.

Presently, neither the Banking Law nor the General Construction Law
defines the term "individual." Otherwise, the Banking Law consistently
employs the term "person" to refer to a natural person or other entity.
In addition, the provisions of sections 650(2)(b)(1) and (2) are
intended to thwart and punish money laundering by a natural person or
other entity. In addition, the penalties under section 650(a) and (b)
pertain to unlicensed persons and so-called undesignated agents engaged
in illegal money transmission activities.

Presently, certain violations of the Banking Law are not referenced in
the Penal Law as activities constituting the crime of money laundering.

Section 30.10 of the Criminal Procedure Law provides for a five-year
Statute of Limitations for virtually all felonies, including crimes
related to financial institutions or transactions. Identical crimes
defined in federal law have a ten-year term.

PRIOR LEGISLATIVE HISTORY:

2007-2008 - A1679 01/09/08 - Referred to Banks

STATEMENT IN SUPPORT:

The revision of the definitions of certain violations involving illegal
money transmission activities and also referencing certain Banking Law
violations as the crime of money laundering, are intended to permit the
effective prosecution of any form of illegal money transmission within a
licensed or chartered entity that is permitted to engage in legitimate
money transmission activities.

These revisions also differentiate those violations and applicable
penalties to persons licensed or engaging in such activities in a regu-
lated context from violations and the applicable penalties by persons
not licensed or engaging in such activity within a regulated context.

Further, the referencing of such illegal activities as the crime of
money laundering under the Penal Law permits the prosecution of such
activities in keeping with the activities' intended purpose, thus poten-
tially resulting in the application of more severe penalties.

The Statute of Limitations relating to financial crimes should be
extended from five to ten years for several reasons. First, financial
crimes are often extremely complex and can take years to investigate
before a criminal proceeding is commenced. Moreover, many crimes are not
discovered until several years after they have occurred - sometimes
after the state limitations statute has run or is about to run - in
spite of New York banking regulations that require every organization
that is organized, licensed or registered under the Banking Law "imme-
diately" to report a variety of misconduct events, criminal or not.

Finally, the federal Statute of Limitations for financial Crimes is ten
years. The Banking Department and State criminal enforcement agencies
have previously had to rely on Federal authorities to investigate and
prosecute cases involving banking institutions with respect to which the
Banking Department was the primary regulator and State enforcement agen-
cies would otherwise have commenced a prosecution. Federal authorities
have also declined to prosecute cases that the State would have prose-
cuted were it not for the Statute of Limitations issues.

Parity in the Statute of Limitations would give the Banking Department
and State enforcement agencies increased flexibility in investigating
and prosecuting cases and would also reinforce the Banking Department's
stature as a primary regulator of New York financial services insti-
tutions.

The application of the ten-year limitation, however, applies only to
such crimes committed by persons or entities licensed, chartered or
registered by the Banking Department, or persons, who in their capacity
as directors, officers, managers, or employees of, or persons or enti-
ties that have a controlling interest in, such licensed, chartered, or
registered parties. The definition of controlling interest, as it
applies to persons or entities licensed, chartered, or registered by the
Department, is the definition applicable to banking organizations as
stated in section 143-b of the Banking Law.

BUDGET IMPLICATIONS:

None.

EFFECTIVE DATE:

Immediately.