Relates to clarifying definitions of "illegal money transmission" and "money laundering"; and relates to penalties for unlicensed money transmitters

Summary of provisions

Section 1. Amends subdivision 1 of section 650 of the Banking Law. Deletes the existing provisions and adding new paragraphs (a) and (b) in place thereof. Paragraph (a) provides that any 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, or who refuses to permit any lawful investigation by the superintendent, is guilty of a 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 realized from criminal activity, shall be guilty of a class E felony.

Section 2. Amends section 650(2) (a) and (b) (1), (2) and (4) of the Banking Law. (1) Increases and clarifies 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) changes a reference from "individual" to "person" in order to broaden the scope of the prohibition on illegal money transmission activities, thus conforming the reference to other references in the Banking Law.

Section 3. Amends subdivision 5 of section 470.00 of the Penal Law. Includes within the definition of "specified criminal conduct" certain specified violations of the Banking Law that constitute the falsification of records or statements, or the misapplication of moneys or credit by bank personnel, thus making such violations also violations constituting the crime of money laundering.

Section 4. Amends section 30.10(3) of the Criminal Procedure Law (CPL). Adds a new paragraph (h) that conforms New York's statute of limitations time period for certain financial related crimes to the federal time period often 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, 187, 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.

Section 5. Effective Date 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 misdemeanor 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

2012: S.271 - Passed Senate/A.8531 - Referred to Banks 2011: S.271 - Passed Senate/A.8531 - Referred to Banks 2010: S.2176B - Amend and Recommit to Codes/A.258A - Enacting Clause Stricken 2009: S.2176A - Amend and Recommit to Codes/A.258 - Amend and Recommit to Banks 2007-08: A.1679 - Referred to Banks/A.258A

Justification

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 regulated 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 potentially 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 "immediately" 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 agencies would otherwise have commenced a prosecution. Federal authorities have also declined to prosecute cases that the State would have prosecuted 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 institutions.

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 entities 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.

Financial implications

None.

Effective date

Immediately, with provisions.