H. Rept. 115-453 - IRANIAN LEADERSHIP ASSET TRANSPARENCY ACT115th Congress (2017-2018)
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115th Congress } { Rept. 115-453
HOUSE OF REPRESENTATIVES
1st Session } { Part 1
======================================================================
IRANIAN LEADERSHIP ASSET TRANSPARENCY ACT
_______
December 7, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1638]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 1638) to require the Secretary of the Treasury
to submit a report to the appropriate congressional committees
on the estimated total assets under direct or indirect control
by certain senior Iranian leaders and other figures, and for
other purposes, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Iranian Leadership Asset Transparency
Act''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Iran is characterized by high levels of official and
institutional corruption, and substantial involvement by Iran's
security forces, particularly the Islamic Revolutionary Guard
Corps (IRGC), in the economy.
(2) Many members of Iran's senior political and military
leadership have acquired significant personal and institutional
wealth by using their positions to secure control of
significant portions of Iran's national economy.
(3) Sanctions relief provided through the Joint Comprehensive
Plan of Action has resulted in the removal of many Iranian
entities that are tied to governmental corruption from the list
of entities sanctioned by the United States.
(4) The Department of Treasury in 2011 designated the Islamic
Republic of Iran's financial sector as a jurisdiction of
primary money laundering concern under section 311 of the USA
PATRIOT Act, stating ``Treasury has for the first time
identified the entire Iranian financial sector; including
Iran's Central Bank, private Iranian banks, and branches, and
subsidiaries of Iranian banks operating outside of Iran as
posing illicit finance risks for the global financial
system.''.
(5) Iran continues to be listed by the Financial Action Task
Force (FATF) among the ``Non-Cooperative Countries or
Territories''--countries which it perceived to be non-
cooperative in the global fight against terror finance and
money laundering.
(6) Iran and North Korea are the only countries listed by the
FATF as ``Non-Cooperative Countries or Territories'' against
which FATF countries should take measures.
(7) The Transparency International index of perceived public
corruption ranks Iran 130th out of 168 countries surveyed.
(8) The State Department identified Iran as a ``major money-
laundering country'' in its International Narcotics Control
Strategy Report (INCSR) for 2016.
(9) The State Department currently identifies Iran, along
with Sudan and Syria, as a state sponsor of terrorism, ``having
repeatedly provided support for acts of international
terrorism''.
(10) The State Department's ``Country Reports on Terrorism'',
published last in July 2017, noted that ``Iran continued to
sponsor terrorist groups around the world, principally through
its Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).
These groups included Lebanese Hizballah, several Iraqi Shia
militant groups, Hamas, and Palestine Islamic Jihad. Iran,
Hizballah, and other Shia militia continued to provide support
to the Asad regime, dramatically bolstering its capabilities,
prolonging the civil war in Syria, and worsening the human
rights and refugee crisis there.''.
(11) The Iranian Government's tolerance of corruption and
nepotism in business limits opportunities for foreign and
domestic investment, particularly given the significant
involvement of the IRGC in many sectors of Iran's economy.
(12) The IRGC and the leadership-controlled bonyads
(foundations) control an estimated one-third of Iran's total
economy, including large portions of Iran's telecommunications,
construction, and airport and port operations. These operations
give the IRGC and bonyads vast funds to support terrorist
organizations such as Hezbollah and Hamas.
(13) By gaining control of major economic sectors, the IRGC
and bonyads have also served to further disadvantage the
average Iranian.
SEC. 3. REPORT REQUIREMENT RELATING TO ASSETS OF IRANIAN LEADERS AND
CERTAIN SENIOR POLITICAL FIGURES.
(a) In General.--Not later than 270 days after the date of enactment
of this Act, and annually thereafter (or more frequently if the
Secretary of the Treasury determines it appropriate based on new
information received by the Secretary) for the following 2 years, the
Secretary of the Treasury shall, in furtherance of the Secretary's
efforts to prevent the financing of terrorism, money laundering, or
related illicit finance and to make financial institutions' required
compliance with remaining sanctions more easily understood, submit a
report to the appropriate congressional committees containing--
(1) the estimated total funds or assets held in accounts at
U.S. and foreign financial institutions that are under direct
or indirect control by each natural person described in
subsection (b) and a description of such assets;
(2) an identification of any equity stake such natural person
has in an entity on the Department of the Treasury's list of
Specially Designated Nationals or in any other sanctioned
entity;
(3) a description of how such funds or assets or equity
interests were acquired, and how they have been used or
employed;
(4) a description of any new methods or techniques used to
evade anti-money laundering and related laws, including
recommendations to improve techniques to combat illicit uses of
the U.S. financial system by each natural person described in
subsection (b);
(5) recommendations for how U.S. economic sanctions against
Iran may be revised to prevent the funds or assets described
under this subsection from being used by the natural persons
described in subsection (b) to contribute to the continued
development, testing, and procurement of ballistic missile
technology by Iran;
(6) a description of how the Department of the Treasury
assesses the impact and effectiveness of U.S. economic
sanctions programs against Iran; and
(7) recommendations for improving the ability of the
Department of the Treasury to rapidly and effectively develop,
implement, and enforce additional economic sanctions against
Iran if so ordered by the President under the International
Emergency Economic Powers Act or other corresponding
legislation.
(b) Persons Described.--The natural persons described in this
subsection are the following:
(1) The Supreme Leader of Iran.
(2) The President of Iran.
(3) Members of the Council of Guardians.
(4) Members of the Expediency Council.
(5) The Minister of Intelligence and Security.
(6) The Commander and the Deputy Commander of the IRGC.
(7) The Commander and the Deputy Commander of the IRGC Ground
Forces.
(8) The Commander and the Deputy Commander of the IRGC
Aerospace Force.
(9) The Commander and the Deputy Commander of the IRGC Navy.
(10) The Commander of the Basij-e-Mostaz'afin.
(11) The Commander of the Qods Force.
(12) The Commander in Chief of the Police Force.
(13) The head of the IRGC Joint Staff.
(14) The Commander of the IRGC Intelligence.
(15) The head of the IRGC Imam Hussein University.
(16) The Supreme Leader's Representative at the IRGC.
(17) The Chief Executive Officer and the Chairman of the IRGC
Cooperative Foundation.
(18) The Commander of the Khatam-al-Anbia Construction Head
Quarter.
(19) The Chief Executive Officer of the Basij Cooperative
Foundation.
(20) The head of the Political Bureau of the IRGC.
(21) The head of the Atomic Energy Organization of Iran.
(c) Form of Report; Public Availability.--
(1) Form.--The report required under subsection (a) shall be
submitted in unclassified form but may contain a classified
annex.
(2) Public availability.--The unclassified portion of such
report shall be made available to the public and posted on the
website of the Department of the Treasury--
(A) in English, Farsi, Arabic, and Azeri; and
(B) in precompressed, easily downloadable versions
that are made available in all appropriate formats.
(d) Sources of Information.--In preparing a report described under
subsection (a), the Secretary of the Treasury may use any credible
publication, database, web-based resource, public information compiled
by any government agency, and any information collected or compiled by
a nongovernmental organization or other entity provided to or made
available to the Secretary, that the Secretary finds credible.
(e) Definitions.--For purposes of this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means the Committees
on Financial Services and Foreign Affairs of the House of
Representatives and the Committees on Banking, Housing, and
Urban Affairs and Foreign Relations of the Senate.
(2) Funds.--The term ``funds'' means--
(A) cash;
(B) equity;
(C) any other intangible asset whose value is derived
from a contractual claim, including bank deposits,
bonds, stocks, a security as defined in section 2(a) of
the Securities Act of 1933 (15 U.S.C. 77b(a)), or a
security or an equity security as defined in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)); and
(D) anything else that the Secretary determines
appropriate.
SEC. 4. SENSE OF CONGRESS.
It is the sense of Congress that in preparing the reports required
under section 3, the Secretary of the Treasury should consider
acquiring information from sources that--
(1) collect and, if necessary, translate high-veracity,
official records; or
(2) provide search and analysis tools that enable law
enforcement to have new insights into commercial and financial
relationships.
PURPOSE AND SUMMARY
On March 20, 2017, Representative Bruce Poliquin introduced
H.R. 1638, the ``Iranian Leadership Asset Transparency Act''
which requires the Secretary of the Treasury to report to
Congress on the assets held by Iran's most senior political,
military and business leaders, and on the probable sources and
uses of the assets. The legislation would require the Treasury
Department to publish a public version of the report on its
website, in English and in the major languages used within
Iran. A classified version, if necessary, would be available to
Congress. The legislation also contains a ``Sense of Congress''
that urges the Secretary of the Treasury to seek information
for the report from sources that would search and, if
necessary, translate publicly available ``high-veracity
official records'' overseas, and provide methods to search and
analyze such data in ways that are useful to law enforcement.
BACKGROUND AND NEED FOR LEGISLATION
The goal of H.R. 1638 is to assist in efforts to stop money
laundering, the financing of terror, and related illicit
finance, by making it easier to identify and understand the
sources and uses of vast sums of money controlled by top
political and military leaders of Iran.
According to the non-governmental organization (NGO)
Transparency International, Iran's economy is characterized by
high levels of official and institutional corruption, and by
substantial involvement in the economy of Iran's security
forces, particularly the Islamic Revolutionary Guard Corps
(IRGC). Many members of Iran's senior political and military
leadership have acquired significant personal and institutional
wealth by using their positions to secure control of major
portions of the Iranian economy.
Sanctions relief provided through the Joint Comprehensive
Plan of Action (JCPOA) resulted in the removal of many Iranian
entities that are tied to government corruption from the list
of entities sanctioned by the United States, although many
remain sanctioned and the Trump Administration has, in recent
months, levied a number of new sanctions on Iranian individuals
and entities.
However, the Transparency International index of perceived
public corruption is higher than ever, and the State Department
has identified Iran as a country of `primary concern' for money
laundering. Separately, the U.S. Department of State has
identified Iran as a country that has ``repeatedly provided
support for acts of international terrorism,'' and in its June
2016 ``country report'' noted the country ``continues to
sponsor terrorist groups around the world, principally through
its Islamic Revolutionary Guard Corps-Qods Force (IRGC).''
The Iranian government's tolerance of corruption in
business limits opportunities for individual Iranians to
improve their lot in life, particularly given the significant
involvement of the IRGC in many sectors of the Iranian economy.
The `bonyads' (foundations) controlled by top Iranian political
and military leaders control an estimated one-third of the
total economy, including large portions of the
telecommunications, construction, airport and seaport sectors,
which gives the IRGC and its leaders vast funds to support
terrorism, and terrorist proxies such as Hezbollah, at a time
when the average Iranian citizen earns about $15,000 a year.
The ``Iranian Leadership Asset Transparency Act'' requires
the Treasury Department to list the known assets of senior
Iranian officials in a form that is easily understandable and
accessible to individual Iranians, as well as to those in the
financial or business sector who might be concerned about
inadvertently doing business with a corrupt Iranian entity. Any
reports prepared under H.R. 1638 would be available in a form
that would be accessible to the average Iranian so that they
might better understand the nature of their nation's economy.
HEARINGS
The Committee on Financial Services Subcommittee on
Monetary Policy and Trade held a hearing examining matters
relating to H.R. 1638 on April 4, 2017.
COMMITTEE CONSIDERATION
The Committee on Financial Services met in open session on
November 14, 2017, and ordered H.R. 1638 to be reported
favorably to the House, as amended, by a recorded vote of 43
yeas to 16 nays (Record vote no. FC-96), a quorum being
present. Before the motion to report was offered, the Committee
adopted an amendment in the nature of a substitute offered by
Mr. Poliquin, by voice vote.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the House, as amended. The motion
was agreed to by a recorded vote of 43 yeas to 16 nays (Record
vote no. FC-96), a quorum being present.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 1638
will assist in the combatting of money laundering, the
financing of terror, and related illicit finance by providing
for a public report of the assets held by, and the sources and
uses of massive funds controlled by, the top political and
military leaders of Iran.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATES
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, December 1, 2017.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1638, the Iranian
Leadership Asset Transparency Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Mark P. Hadley
(For Keith Hall, Director).
Enclosure.
H.R. 1638--Iranian Leadership Asset Transparency Act
H.R. 1638 would require the Department of the Treasury to
report to the Congress on the financial assets held by specific
Iranian political and military leaders in 2018 and 2019. The
reports would describe how their assets were acquired and any
unclassified portions of those reports would be posted on the
Treasury's website in multiple languages. The bill would
require the department to provide recommendations on improving
the effectiveness of financial sanctions against Iran.
CBO is not aware of any comprehensive, detailed information
regarding the financial assets of Iranian leaders. If such
information is collected by the Office of Foreign Asset Control
or the Office of Intelligence and Analysis in the Department of
Treasury, or by any other federal agency, CBO expects it would
probably be classified. Less comprehensive information about
the assets of those Iranian leaders may be available in the
public domain but we have not found it. However, based on the
costs of similar reporting efforts, CBO estimates that the cost
of compiling any information on the subject would total less
than $500,000 in 2018 and 2019; such spending would be subject
to the availability of appropriated funds. Costs could be
substantially higher if this type of financial information is
not currently collected by the federal government.
Enacting H.R. 1638 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply. CBO
estimates that enacting H.R. 1638 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2028.
H.R. 1638 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995.
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
EARMARK IDENTIFICATION
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
DUPLICATION OF FEDERAL PROGRAMS
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
DISCLOSURE OF DIRECTED RULEMAKING
Pursuant to section 3(i) of H. Res. 5, (115th Congress),
the following statement is made concerning directed
rulemakings: The Committee estimates that the bill requires no
directed rulemakings within the meaning of such section.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
This section cites H.R. 1638 as the ``Iranian Leadership
Asset Transparency Act''.
Section 2. Findings
This section finds that Iran is perceived to be one of the
most corrupt societies in the world, that a handful of top
military and political leaders control at least a third of the
country's wealth while the average Iranian earns about $15,000
a year, and that the corrupt leadership of the country probably
uses portions of its wealth to foment unrest at least through
the Mideast if not worldwide.
Section 3. Report requirement relating to assets of Iranian leaders and
certain senior political figures
This section requires the Treasury Secretary to report to
Congress on the assets, and the sources and uses of such
assets, held by Iran's top political and military leaders. It
lists the senior leaders by title, and requires that a non-
classified version of such a report be posted on the Treasury
Department's website in English and translated into the top
three languages spoken in Iran.
Section 4. Sense of Congress
This section expresses the sense of Congress that in
preparing the report described in Section 3, the Secretary
should consider acquiring information from sources that collect
and if necessary translate ``high-veracity official records''
and make such data available in ways that can be searched and
analyzed by law enforcement.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H.R. 1638 does not repeal or amend any section of a
statute. Therefore, the Office of Legislative Counsel did not
prepare the report contemplated by Clause 3(e)(1)(B) of Rule
XIII of the House of Representatives.
MINORITY VIEWS
H.R. 1638, the Iranian Leadership Asset Transparency Act,
would require the Secretary of the Treasury to report to
Congress on the estimated total assets under direct or indirect
control of certain senior Iranian leaders and other figures,
along with a description of how these assets were acquired and
are employed, regardless of whether such individuals are
subject to U.S. sanctions.
Although increasing transparency into corrupt regimes is a
laudable goal, H.R. 1638 would not promote U.S. national
security interests. First, the level of scrutiny that would be
needed to produce a credible report would place a very real
strain on the Treasury Department, diverting significant
resources away from Treasury investigators who are tasked with
targeting sanctionable conduct, implementing existing sanctions
on Iran, and uncovering illicit conduct across the globe,
including, importantly, efforts to identify the web of business
interests that continue to enable North Korea to evade U.S. and
international sanctions. Moreover, the bill's requirement to
report on ``any equity stake'' natural persons have in certain
entities exceeds the commonly used metric of ``controlling
equity interest'' for identifying meaningful ownership
interests and, thus, would add substantially to the resource
burden associated with the report with little added value.
The bill's required report would have little use as a
compliance tool, given that much of the most important parts of
the report would be classified, which notably undercuts the
argument advanced by supporters that the legislation would help
make ``financial institutions'' required compliance with
remaining sanctions more easily understood.'' In fact, the
creation of such a list that is not tied to any prohibition or
legal action would more likely create confusion among OFAC's
regulated public, and also mislead companies to believe that
the Treasury list replaces the due diligence efforts that they
should otherwise be doing prior to engaging in business in
Iran.
Moreover, because the report would be largely classified,
the bill would do little to draw the Iranian public's attention
to the corruption and unjust enrichment of their leaders,
despite claims by the bill's proponents. And, any unclassified
portion would inevitably be rejected as U.S. propaganda by both
the Iranian regime and by its people as a predictable attack on
the country's government by the United States.
The true intent of the legislation is to gin up prospects
of reputational risks for companies that might seek to do
legitimate business with Iran. For this reason, the bill would
be a strategic mistake. The report would undoubtedly be seized
upon by Iran as an intentional effort to discourage
international investment in Iran, which would be viewed by
Iran--and likely by the major world powers who joined us in the
JCPOA as well--as a violation of the expressed U.S. commitment
under the nuclear deal not to interfere with the full
realization of the relief provided to Iran under the accord. In
fact, when the House considered nearly identical legislation
last Congress, the Obama White House issued a veto threat,
noting, in part, the negative impact the measure could have on
the ``continued viability'' of the JCPOA.
In light of the bill's limited practical utility; its
failure to meet its own stated objectives; its diversion of
critical resources away from Treasury investigations; the
report's lack of usefulness as a compliance tool; and the
negative impact the legislation would have on the continued
viability of the nuclear deal, which to date is widely viewed
as a success, we oppose this bill.
Maxine Waters.
Michael E. Capuano.
Vicente Gonzalez.
Joyce Beatty.
Wm. Lacy Clay.
Daniel T. Kildee.
Keith Ellison.
Al Green.
Gregory W. Meeks.