1-1  By:  Cuellar of Webb (Senate Sponsor - Whitmire)       H.B. No. 354
    1-2        (In the Senate - Received from the House April 26, 1993;
    1-3  April 27, 1993, read first time and referred to Committee on
    1-4  Criminal Justice; May 12, 1993, reported adversely, with favorable
    1-5  Committee Substitute by the following vote:  Yeas 4, Nays 0;
    1-6  May 12, 1993, sent to printer.)
    1-7                            COMMITTEE VOTE
    1-8                          Yea     Nay      PNV      Absent 
    1-9        Whitmire           x                               
   1-10        Brown              x                               
   1-11        Nelson                                         x   
   1-12        Sibley                                         x   
   1-13        Sims               x                               
   1-14        Turner                                         x   
   1-15        West               x                               
   1-16  COMMITTEE SUBSTITUTE FOR H.B. No. 354                 By:  Whitmire
   1-17                         A BILL TO BE ENTITLED
   1-18                                AN ACT
   1-19  relating to the reporting of certain financial transactions, to the
   1-20  creation of offenses relating to certain financial transactions,
   1-21  and to the creation of the attorney general law enforcement
   1-22  account; making an appropriation.
   1-23        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-24        SECTION 1.  The legislature finds that the banking industry
   1-25  and other financial institutions may be strong allies in the fight
   1-26  against money laundering and that filing certain financial
   1-27  transaction reports required by law does not in itself imply
   1-28  knowledge of an illegal money laundering activity.
   1-29        SECTION 2.  Title 7, Penal Code, is amended by adding Chapter
   1-30  34 to read as follows:
   1-31                     CHAPTER 34.  MONEY LAUNDERING
   1-32        Sec. 34.01.  DEFINITIONS.  In this chapter:
   1-33              (1)  "Criminal activity" means any offense, including
   1-34  any preparatory offense, that is:
   1-35                    (A)  classified as a felony under the laws of
   1-36  this state or the United States; or
   1-37                    (B)  punishable by confinement for more than one
   1-38  year under the laws of another state.
   1-39              (2)  "Funds" includes:
   1-40                    (A)  coin or paper money of the United States or
   1-41  any other country that is designated as legal tender and that
   1-42  circulates and is customarily used and accepted as a medium of
   1-43  exchange in the country of issue;
   1-44                    (B)  United States silver certificates, United
   1-45  States Treasury notes, and Federal Reserve System notes; and
   1-46                    (C)  official foreign bank notes that are
   1-47  customarily used and accepted as a medium of exchange in a foreign
   1-48  country and foreign bank drafts.
   1-49              (3)  "Peace officer" means a person who is elected,
   1-50  appointed, or employed by a governmental entity and who is a peace
   1-51  officer under Article 2.12, Code of Criminal Procedure, or other
   1-52  law.
   1-53              (4)  "Proceeds" means funds acquired or derived
   1-54  directly or indirectly from, produced through, or realized through
   1-55  an act.
   1-56        Sec. 34.02.  MONEY LAUNDERING.  (a)  A person commits an
   1-57  offense if the person knowingly:
   1-58              (1)  acquires or maintains an interest in, receives,
   1-59  conceals, possesses, transfers, or transports the proceeds of
   1-60  criminal activity;
   1-61              (2)  conducts, supervises, or facilitates a transaction
   1-62  involving the proceeds of criminal activity; or
   1-63              (3)  invests, expends, or receives, or offers to
   1-64  invest, expend, or receive, the proceeds of criminal activity or
   1-65  funds that the person believes are the proceeds of criminal
   1-66  activity.
   1-67        (b)  For purposes of Subsection (a)(3) of this section, a
   1-68  person is presumed to believe that funds are the proceeds of
    2-1  criminal activity if a peace officer or a person acting at the
    2-2  direction of a peace officer represents to the person that the
    2-3  funds are proceeds of criminal activity, regardless of whether the
    2-4  peace officer or person acting at the peace officer's direction
    2-5  discloses the person's status as a peace officer or that the person
    2-6  is acting at the direction of a peace officer.
    2-7        (c)  It is a defense to prosecution under this section that
    2-8  the person acted with intent to facilitate the lawful seizure,
    2-9  forfeiture, or disposition of funds or other legitimate law
   2-10  enforcement purpose pursuant to the laws of this state or the
   2-11  United States.
   2-12        (d)  It is a defense to prosecution under this section that
   2-13  the transaction was necessary to preserve a person's right to
   2-14  representation as guaranteed by the Sixth Amendment of the United
   2-15  States Constitution and by Article 1, Section 10, of the Texas
   2-16  Constitution or that the funds were received as bona fide legal
   2-17  fees by a licensed attorney and at the time of their receipt, the
   2-18  attorney did not have actual knowledge that the funds were derived
   2-19  from criminal activity.
   2-20        (e)  An offense under this section is:
   2-21              (1)  a felony of the third degree if the value of the
   2-22  funds is $3,000 or more but less than $20,000;
   2-23              (2)  a felony of the second degree if the value of the
   2-24  funds is $20,000 or more but less than $100,000; or
   2-25              (3)  a felony of the first degree if the value of the
   2-26  funds is $100,000 or more.
   2-27        Sec. 34.03.  ASSISTANCE BY ATTORNEY GENERAL.  The attorney
   2-28  general, if requested to do so by a prosecuting attorney, may
   2-29  assist in the prosecution of an offense under this chapter.
   2-30        SECTION 3.  Section 71.02, Penal Code, is amended to read as
   2-31  follows:
   2-32        Sec. 71.02.  ENGAGING IN ORGANIZED CRIMINAL ACTIVITY.  (a)  A
   2-33  person commits an offense if, with the intent to establish,
   2-34  maintain, or participate in a combination or in the profits of a
   2-35  combination or as a member of a criminal street gang, he commits or
   2-36  conspires to commit one or more of the following:
   2-37              (1)  murder, capital murder, arson, aggravated robbery,
   2-38  robbery, burglary, theft, aggravated kidnapping, kidnapping,
   2-39  aggravated assault, aggravated sexual assault, sexual assault, or
   2-40  forgery;
   2-41              (2)  any felony gambling offense;
   2-42              (3)  promotion of prostitution, aggravated promotion of
   2-43  prostitution, or compelling prostitution;
   2-44              (4)  unlawful manufacture, transportation, repair, or
   2-45  sale of firearms or prohibited weapons;
   2-46              (5)  unlawful manufacture, delivery, dispensation, or
   2-47  distribution of a controlled substance or dangerous drug, or
   2-48  unlawful possession of a controlled substance or dangerous drug
   2-49  through forgery, fraud, misrepresentation, or deception;
   2-50              (6)  any unlawful wholesale promotion or possession of
   2-51  any obscene material or obscene device with the intent to wholesale
   2-52  promote the same;
   2-53              (7)  any unlawful employment, authorization, or
   2-54  inducing of a child younger than 17 years of age in an obscene
   2-55  sexual performance;
   2-56              (8)  any felony offense under Chapter 32, Penal Code;
   2-57  <or>
   2-58              (9)  any offense under Chapter 36, Penal Code; or
   2-59              (10)  any offense under Chapter 34, Penal Code.
   2-60        (b)  Except as provided in Subsection (c) of this section, an
   2-61  offense under this section is one category higher than the most
   2-62  serious offense listed in Subdivisions (1) through (10) <(9)> of
   2-63  Subsection (a) of this section that was committed, and if the most
   2-64  serious offense is a Class A misdemeanor, the offense is a felony
   2-65  of the third degree, except that if the most serious offense is a
   2-66  felony of the first degree, the offense is a felony of the first
   2-67  degree.
   2-68        (c)  Conspiring to commit an offense under this section is of
   2-69  the same degree as the most serious offense listed in Subdivisions
   2-70  (1) through (10) <(9)> of Subsection (a) of this section that the
    3-1  person conspired to commit.
    3-2        SECTION 4.  Sections 71.05(a) and (c), Penal Code, are
    3-3  amended to read as follows:
    3-4        (a)  It is an affirmative defense to prosecution under
    3-5  Section 71.02 of this code that under circumstances manifesting a
    3-6  voluntary and complete renunciation of his criminal objective the
    3-7  actor withdrew from the combination before commission of an offense
    3-8  listed in Subdivisions (1) through (7) or Subdivision (10) of
    3-9  Subsection (a) of Section 71.02 of this code and took further
   3-10  affirmative action that prevented the commission of the offense.
   3-11        (c)  Evidence that the defendant withdrew from the
   3-12  combination before commission of an offense listed in Subdivisions
   3-13  (1) through (7) or Subdivision (10) of Subsection (a) of Section
   3-14  71.02 of this code and made substantial effort to prevent the
   3-15  commission of an offense listed in Subdivisions (1) through (7) or
   3-16  Subdivision (10) of Subsection (a) of Section 71.02 of this code
   3-17  shall be admissible as mitigation at the hearing on punishment if
   3-18  he has been found guilty under Section 71.02 of this code, and in
   3-19  the event of a finding of renunciation under this subsection, the
   3-20  punishment shall be one grade lower than that provided under
   3-21  Section 71.02 of this code.
   3-22        SECTION 5.  Subdivision (2), Article 59.01, Code of Criminal
   3-23  Procedure, is amended to read as follows:
   3-24              (2)  "Contraband" means property of any nature,
   3-25  including real, personal, tangible, or intangible, that is:
   3-26                    (A)  used in the commission of:
   3-27                          (i)  any first or second degree felony
   3-28  under the Penal Code;
   3-29                          (ii)  any felony under Chapters 29, 30, 31,
   3-30  or 32, Penal Code; or
   3-31                          (iii)  any felony under The Securities Act
   3-32  (Article 581-1 et seq., Vernon's Texas Civil Statutes);
   3-33                    (B)  used or intended to be used in the
   3-34  commission of:
   3-35                          (i)  any felony under Chapter 481, Health
   3-36  and Safety Code (Texas Controlled Substances Act);
   3-37                          (ii)  any felony under Chapter 483, Health
   3-38  and Safety Code; <or>
   3-39                          (iii)  a felony under Article 350, Revised
   3-40  Statutes;
   3-41                          (iv)  any felony under Chapter 34, Penal
   3-42  Code; or
   3-43                          (v)  any felony under The Sale of Checks
   3-44  Act (Article 489d, Vernon's Texas Civil Statutes);
   3-45                    (C)  the proceeds gained from the commission of a
   3-46  felony listed in Paragraph (A) or (B) of this subdivision; or
   3-47                    (D)  acquired with proceeds gained from the
   3-48  commission of a felony listed in Paragraph (A) or (B) of this
   3-49  subdivision.
   3-50        SECTION 6.  Title 16, Revised Statutes, is amended by adding
   3-51  Article 351 to read as follows:
   3-52        Art. 351.  FINANCIAL TRANSACTION REPORTING REQUIREMENTS
   3-53        Sec. 1.  CURRENCY AND FOREIGN TRANSACTIONS--CRIMINAL REFERRAL
   3-54  FORM REPORTING REQUIREMENTS.  (a)  Except as provided by Subsection
   3-55  (b) of this section, a financial institution in this state that is
   3-56  required to file a report under the Currency and Foreign
   3-57  Transactions Reporting Act (31 U.S.C. Section 5311 et seq.), 31
   3-58  C.F.R. Part 103, or 12 C.F.R. Section 21.11, and their subsequent
   3-59  amendments, shall file a duplicate copy of the report with the
   3-60  attorney general.
   3-61        (b)  A financial institution that timely files a report
   3-62  required by this section with the appropriate federal agency as
   3-63  required by federal law is considered to be in compliance with this
   3-64  section unless the attorney general:
   3-65              (1)  notifies the financial institution that the
   3-66  required report is not one that is regularly and comprehensively
   3-67  transmitted by the federal agency to the attorney general following
   3-68  the attorney general's request to that agency;
   3-69              (2)  requests that the financial institution provide
   3-70  the attorney general with a duplicate copy of the report; and
    4-1              (3)  reimburses the financial institution the actual
    4-2  cost of duplicating and delivering the report or 25 cents per page,
    4-3  whichever is less.
    4-4        (c)  In this section, "financial institution" has the meaning
    4-5  assigned by 31 U.S.C. Section 5312 and its subsequent amendments.
    4-6        Sec. 2.  CASH RECEIPTS OF MORE THAN $10,000 REPORTING
    4-7  REQUIREMENT.  (a)  Except as provided by Subsection (b) of this
    4-8  section, a person engaged in a trade or business who, in the course
    4-9  of the trade or business, receives more than $10,000 in one
   4-10  transaction or in two or more related transactions and who is
   4-11  required to file a return under Section 6050I, Internal Revenue
   4-12  Code of 1986 (26 U.S.C. Section 6050I), or 26 C.F.R. Section
   4-13  1.6050I, and their subsequent amendments, shall file a duplicate
   4-14  copy of the return with the attorney general.
   4-15        (b)  A person who timely files a return required by this
   4-16  section with the appropriate federal agency as required by federal
   4-17  law is considered to be in compliance with this section unless the
   4-18  attorney general:
   4-19              (1)  notifies the person that the required return is
   4-20  not one that is regularly and comprehensively transmitted by the
   4-21  federal agency to the attorney general; and
   4-22              (2)  requests that the person provide the attorney
   4-23  general with a duplicate copy of the return.
   4-24        Sec. 3.  USE OF REPORTED INFORMATION.  The attorney general
   4-25  may report any possible violation indicated by analysis of a report
   4-26  or return required by this article or information obtained under
   4-27  this article to an appropriate law enforcement agency for use in
   4-28  the proper discharge of the agency's official duties.
   4-29        Sec. 4.  FAILURE TO COMPLY WITH REPORTING REQUIREMENTS;
   4-30  CRIMINAL OFFENSE; PENALTY.  (a)  A person commits an offense if the
   4-31  person:
   4-32              (1)  is requested by the attorney general to submit
   4-33  information required by Section 1 or 2 of this article to the
   4-34  attorney general; and
   4-35              (2)  knowingly fails to provide the requested
   4-36  information to the attorney general before the 30th day after the
   4-37  date of the request.
   4-38        (b)  An offense under this section is a Class A misdemeanor.
   4-39        Sec. 5.  SUPPRESSION OF PHYSICAL EVIDENCE; CRIMINAL OFFENSE;
   4-40  PENALTY.  (a)  A person commits an offense if the person knowingly
   4-41  suppresses physical evidence connected with information contained
   4-42  in a report or return required by this article through concealment,
   4-43  alteration, or destruction.
   4-44        (b)  An offense under this section is a Class A misdemeanor.
   4-45        Sec. 6.  NOTIFICATION TO TARGET OF CRIMINAL INVESTIGATION;
   4-46  CRIMINAL OFFENSE; PENALTY.  (a)  A person commits an offense if the
   4-47  person:
   4-48              (1)  is required to submit a report or return under
   4-49  this article; and
   4-50              (2)  knowingly notifies an individual who is the target
   4-51  of criminal investigation involving an offense under Chapter 34,
   4-52  Penal Code, that:
   4-53                    (A)  the attorney general has requested the
   4-54  person to provide information required by this article related to
   4-55  the targeted individual; or
   4-56                    (B)  the individual may be subject to impending
   4-57  criminal prosecution.
   4-58        (b)  An offense under this section is a Class A misdemeanor.
   4-59        SECTION 7.  Section 402.005, Government Code, is amended to
   4-60  read as follows:
   4-61        Sec. 402.005.  ACCEPTANCE OF GIFTS, GRANTS, AND FORFEITED
   4-62  ASSETS; CREATION OF SPECIAL ACCOUNT <MONEY>.  (a)  The attorney
   4-63  general may not accept or use money offered by an individual, firm,
   4-64  partnership, corporation, or association for investigating or
   4-65  prosecuting a matter.
   4-66        (b)  The attorney general law enforcement account is created
   4-67  as a dedicated account in the general revenue fund in the state
   4-68  treasury.  The account shall consist of law enforcement-related
   4-69  gifts and grants, and forfeited assets, and shall be administered
   4-70  by the attorney general.
    5-1        (c)  The attorney general may accept gifts and grants on
    5-2  behalf of the state for purposes related to law enforcement duties
    5-3  performed by the attorney general, unless the acceptance is
    5-4  prohibited under Subsection (a) or other law.  Money received under
    5-5  this subsection shall be deposited in the law enforcement account
    5-6  established pursuant to Subsection (b) and may be appropriated only
    5-7  for the purpose for which the money was given.
    5-8        SECTION 8.  All moneys deposited to the credit of the
    5-9  attorney general law enforcement account, and all interest accruing
   5-10  from the deposit of that money, are appropriated to the Office of
   5-11  the Attorney General for the fiscal biennium ending August 31,
   5-12  1995, for the purposes provided by Section 402.005, Government
   5-13  Code, as amended by this Act.
   5-14        SECTION 9.  This Act takes effect September 1, 1993.
   5-15        SECTION 10.  The importance of this legislation and the
   5-16  crowded condition of the calendars in both houses create an
   5-17  emergency and an imperative public necessity that the
   5-18  constitutional rule requiring bills to be read on three several
   5-19  days in each house be suspended, and this rule is hereby suspended.
   5-20                               * * * * *
   5-21                                                         Austin,
   5-22  Texas
   5-23                                                         May 12, 1993
   5-24  Hon. Bob Bullock
   5-25  President of the Senate
   5-26  Sir:
   5-27  We, your Committee on Criminal Justice to which was referred H.B.
   5-28  No. 354, have had the same under consideration, and I am instructed
   5-29  to report it back to the Senate with the recommendation that it do
   5-30  not pass, but that the Committee Substitute adopted in lieu thereof
   5-31  do pass and be printed.
   5-32                                                         Whitmire,
   5-33  Chairman
   5-34                               * * * * *
   5-35                               WITNESSES
   5-36                                                  FOR   AGAINST  ON
   5-37  ___________________________________________________________________
   5-38  Name:  Robert Koppe, Jr.                         x
   5-39  Representing:  Financial Crimes Enforcement
   5-40  City:  Arlington
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   5-42  Name:  Don Clemmer                               x
   5-43  Representing:  Office of the Atty General
   5-44  City:  Austin
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   5-46  Name:  Jose M. Garza                             x
   5-47  Representing:  Tx Dept of Public Safety
   5-48  City:  Austin
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   5-50  Name:  Brian Kelley Johnson                      x
   5-51  Representing:  Harris County DA's Office
   5-52  City:  Houston
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   5-54  Name:  Mike Scott                                              x
   5-55  Representing:  TX DPS-Narcotics Division
   5-56  City:  Austin
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