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

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S259-2013 Actions

• Feb 12, 2013: REPORTED AND COMMITTED TO CODES
• Jan 9, 2013: REFERRED TO BANKS

S259-2013 Meetings

Banks: Feb 12, 2013

S259-2013 Votes

S259-2013 Memo

BILL NUMBER:S259

TITLE OF BILL:
An act
to amend the banking law, in
relation to clarifying the
definition of illegal money
transmission and increasing the
penalties for certain activities by
licensed and unlicensed money
transmitters; 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:
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.

S259-2013 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                     259

                         2013-2014 Regular Sessions

                              I N  SENATE

                                 (PREFILED)

                               January 9, 2013
                                 ___________

  Introduced  by  Sen.  DIAZ  --  read twice and ordered printed, and when
    printed to be committed to the Committee on Banks

  AN ACT to amend the banking law, in relation  to  clarifying  the  defi-
    nition  of illegal money transmission and increasing the penalties for
    certain activities by licensed and unlicensed money  transmitters;  to
    amend  the  penal law, in relation to the definition of money launder-
    ing; and to amend the criminal procedure law, in relation  to  timeli-
    ness of prosecutions

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. Subdivision 1 of section 650 of the banking law, as amended
  by chapter 201 of the laws of 1969, is amended to read as follows:

    1. [Any person who violates or participates in the  violation  of  any
  provisions  of this article, or who knowingly makes any incorrect state-
  ment of a material fact in any application,  report  or  statement  made
  pursuant  to  this article, or who knowingly omits to state any material
  fact necessary to  give  the  superintendent  any  information  lawfully
  required  by  him  or  refuses to permit any lawful investigation by the
  superintendent shall be guilty of a misdemeanor  and,  upon  conviction,
  shall  be fined not more than five hundred dollars or imprisoned for not
  more than six months or both, in the discretion of  the  court]A.    ANY
  PERSON  WHO  KNOWINGLY  MAKES  ANY FALSE STATEMENT, MISREPRESENTATION OR
  FALSE CERTIFICATION IN ANY  APPLICATION,  FINANCIAL  STATEMENT,  ACCOUNT
  RECORD,  CUSTOMER RECEIPT, REPORT OR OTHER DOCUMENT FILED OR REQUIRED TO
  BE MAINTAINED OR FILED UNDER THIS ARTICLE, OR WHO  KNOWINGLY  MAKES  ANY
  FALSE ENTRY OR OMITS A MATERIAL ENTRY IN ANY SUCH DOCUMENT OR REFUSES TO
  PERMIT  ANY  LAWFUL INVESTIGATION BY THE SUPERINTENDENT, SHALL BE GUILTY
  OF A CLASS E FELONY.
    B. ANY LICENSEE OR AGENT WHO:


   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD00628-01-3

 S. 259                              2

    (1) RECEIVES MONEY FOR TRANSMITTING OR  TRANSMITS  THE  SAME,  KNOWING
  SUCH  MONEY  TO BE THE PROCEEDS OF OR DERIVED FROM ANY CRIMINAL CONDUCT;
  OR
    (2) SELLS OR ISSUES NEW YORK INSTRUMENTS OR NEW YORK TRAVELER'S CHECKS
  AS  THOSE  TERMS  ARE DEFINED BY SECTION SIX HUNDRED FIFTY-THREE OF THIS
  CHAPTER, KNOWING SUCH INSTRUMENTS OR CHECKS TO  BE  PURCHASED  WITH  THE
  PROCEEDS  OF  OR DERIVED FROM ANY CRIMINAL CONDUCT, SHALL BE GUILTY OF A
  CLASS E FELONY.
    S 2. Paragraph a and subparagraphs 1, 2 and 4 of paragraph b of subdi-
  vision 2 of section 650 of the banking law, as amended by chapter 543 of
  the laws of 1990, are amended to read as follows:

    a. Any person who either (1) engages  in  the  business  of  receiving
  money  for  transmission or transmitting the same or (2) sells or issues
  New York instruments or New York traveler's checks as  those  terms  are
  defined  by  section  six hundred fifty-three of this chapter, without a
  license therefor obtained from the superintendent OR WITHOUT HAVING BEEN
  DESIGNATED OR APPOINTED AS AN AGENT OF A LICENSEE as  provided  in  this
  article, shall be guilty of a [Class A misdemeanor] CLASS D FELONY.
    (1)  knowingly receives or agrees to receive for transmission from one
  or more [individuals] PERSONS a total of ten thousand dollars or more in
  a single transaction, a total of twenty-five thousand  dollars  or  more
  during  a period of thirty days or less, or a total of two hundred fifty
  thousand dollars or more during a period of one year or less; or
    (2) knowingly sells or issues New York instruments or New York travel-
  er's checks to one or more [individuals] PERSONS totaling  ten  thousand
  dollars or more in a single transaction, a total of twenty-five thousand
  dollars  or  more  during a period of thirty days or less, or a total of
  two hundred fifty thousand dollars or more during a period of  one  year
  or less; or
    (4) knowingly sells or issues New York instruments or New York travel-
  er's  checks  as  those  terms are defined by section six hundred fifty-
  three of  this  chapter,  knowing  such  instruments  or  checks  to  be
  purchased  with  the  proceeds  of or derived from any criminal conduct;
  shall be guilty of a class [E] C felony.
    S 3. Subdivision 5 of section 470.00 of the penal law, as  amended  by
  chapter 489 of the laws of 2000, is amended to read as follows:

    5.  "Specified  criminal  conduct" means criminal conduct committed in
  this state constituting a criminal act, as  the  term  criminal  act  is
  defined  in  section 460.10 of this [chapter] TITLE, or constituting the
  crime of enterprise corruption, as defined in  section  460.20  of  this
  [chapter]  TITLE,  OR  CONSTITUTING  VIOLATIONS  OF SECTIONS SIX HUNDRED
  SEVENTY-TWO AND SIX HUNDRED SEVENTY-THREE OF THE BANKING LAW, or conduct
  committed in any other jurisdiction which is or would be specified crim-
  inal conduct if committed in this state.
    S 4. Subdivision 3 of section 30.10 of the criminal procedure  law  is
  amended by adding a new paragraph (h) to read as follows:

    (H)  A PROSECUTION FOR ANY CRIME DEFINED UNDER ARTICLE TWELVE-D, THIR-
  TEEN-B OR THIRTEEN-D OF THE BANKING LAW, OR UNDER  ARTICLE  ONE  HUNDRED
  FIFTY-FIVE,  ONE  HUNDRED SEVENTY, ONE HUNDRED SEVENTY-FIVE, ONE HUNDRED
  SEVENTY-SIX, ONE HUNDRED EIGHTY, ONE HUNDRED  EIGHTY-FIVE,  ONE  HUNDRED
  EIGHTY-SEVEN,  ONE HUNDRED NINETY, TWO HUNDRED, TWO HUNDRED TEN, OR FOUR
  HUNDRED SEVENTY OF THE PENAL LAW INSOFAR AS IT RELATES  TO  PERSONS  AND
  ENTITIES  THAT  ARE  LICENSED,  REGISTERED, OR INCORPORATED OR OTHERWISE
  FORMED PURSUANT TO THE BANKING LAW, OR  PERSONS  IN  THEIR  CAPACITY  AS
  DIRECTORS,  OFFICERS, MANAGERS, OR EMPLOYEES OR PERSONS OR ENTITIES THAT
  CONTROL, AS SUCH TERM IS DEFINED IN SECTION ONE HUNDRED FORTY-THREE-B OF

 S. 259                              3

  THE BANKING LAW WITH RESPECT TO BANKING INSTITUTIONS, ANY  SUCH  PERSONS
  OR  ENTITIES THAT ARE LICENSED, REGISTERED, OR INCORPORATED OR OTHERWISE
  FORMED PURSUANT TO THE BANKING LAW, MAY BE COMMENCED  WITHIN  TEN  YEARS
  AFTER THE COMMISSION THEREOF.
    S  5.  This act shall take effect immediately; provided, however, that
  the provisions of section four of this act shall only  apply  to  crimes
  committed after such effective date.