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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-982
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BANKING TRANSPARENCY FOR SANCTIONED PERSONS ACT OF 2018
_______
September 26, 2018.--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
[To accompany H.R. 6751]
The Committee on Financial Services, to whom was referred
the bill (H.R. 6751) to increase transparency with respect to
financial services benefitting state sponsors of terrorism,
human rights abusers, and corrupt officials, 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 ``Banking Transparency for Sanctioned
Persons Act of 2018''.
SEC. 2. REPORT ON FINANCIAL SERVICES BENEFITTING STATE SPONSORS OF
TERRORISM, HUMAN RIGHTS ABUSERS, AND CORRUPT
OFFICIALS.
(a) In General.--Not later than 180 days after the date of the
enactment of this Act, and every 180 days thereafter, the Secretary of
the Treasury shall issue a report to 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 that includes--
(1) a copy of any license issued by the Secretary in the
preceding 180 days that authorizes a financial institution to
provide financial services benefitting a state sponsor of
terrorism; and
(2) a list of any foreign financial institutions that, in the
preceding 180 days, knowingly conducted a significant
transaction or transactions, directly or indirectly, for a
sanctioned person included on the Department of the Treasury's
Specially Designated Nationals And Blocked Persons List who--
(A) is owned or controlled by, or acts on behalf of,
the government of a state sponsor of terrorism; or
(B) is designated pursuant to any of the following:
(i) Section 404 of the Russia and Moldova
Jackson-Vanik Repeal and Sergei Magnitsky Rule
of Law Accountability Act of 2012 (Public Law
112-208).
(ii) Subtitle F of title XII of the National
Defense Authorization Act for Fiscal Year 2017
(Public Law 114-328, the Global Magnitsky Human
Rights Accountability Act).
(iii) Executive Order 13818.
(b) Form of Report.--The report required under subsection (a) shall
be submitted in unclassified form but may contain a classified annex.
SEC. 3. WAIVER.
The Secretary of the Treasury may waive the requirements of section 2
with respect to a foreign financial institution described in paragraph
(2) of such section--
(1) upon receiving credible assurances that the foreign
financial institution has ceased, or will imminently cease, to
knowingly conduct any significant transaction or transactions,
directly or indirectly, for a person described in subparagraph
(A) or (B) of such paragraph (2); or
(2) upon certifying to 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 that the waiver is important to the
national interest of the United States, with an explanation of
the reasons therefor.
SEC. 4. DEFINITIONS.
For purposes of this Act:
(1) Financial institution.--The term ``financial
institution'' means a United States financial institution or a
foreign financial institution.
(2) Foreign financial institution.--The term ``foreign
financial institution'' has the meaning given that term under
section 561.308 of title 31, Code of Federal Regulations.
(3) Knowingly.--The term ``knowingly'' with respect to
conduct, a circumstance, or a result, means that a person has
actual knowledge, or should have known, of the conduct, the
circumstance, or the result.
(4) United states financial institution.--The term ``United
States financial institution'' has the meaning given the term
``U.S. financial institution'' under section 561.309 of title
31, Code of Federal Regulations.
SEC. 5. SUNSET.
The reporting requirement under this Act shall terminate on the date
that is the end of the 7-year period beginning on the date of the
enactment of this Act.
PURPOSE AND SUMMARY
On September 7, 2018, Representative Mia Love introduced
H.R. 6751, the ``Banking Transparency for Sanctioned Persons
Act of 2018''. This legislation would require the Secretary of
the Treasury to submit a semi-annual report to Congress
regarding financial services benefitting state sponsors of
terrorism and certain sanctioned persons. The Treasury
Secretary shall submit the report to Congress in an
unclassified form but the report may include a classified
annex. This report would include:
A copy of any license issued by the
Secretary that authorizes a financial institution to
provide financial services benefitting a state sponsor
of terrorism (Iran, North Korea, Syria, and Sudan); and
A list of any foreign financial institutions
that knowingly conducts significant transactions for a
person that 1) is owned or controlled, or acting on
behalf of, the government of a state sponsor of
terrorism; or 2) is sanctioned pursuant to the Sergei
Magnitsky Act (Sec. 404 of P.L. 112-208), the Global
Magnitsky Act (Subtitle F of title XII of P.L. 114-
328), or Executive Order 13818, which provide for U.S.
sanctions against human rights abusers and corrupt
foreign officials.
The Treasury Secretary may waive this bill's reporting
requirement with respect to a foreign financial institution
upon receiving credible assurances that such an institution
will no longer conduct significant transactions for the
sanctioned persons covered by the legislation. The Secretary
may also waive the requirement upon notifying Congress that a
waiver is important to the national interest, with an
explanation of the Secretary's reasoning.
BACKGROUND AND NEED FOR LEGISLATION
Under current law, the Department of the Treasury, through
its Office of Foreign Assets Control (OFAC), may issue licenses
authorizing U.S. persons to engage in transactions that would
otherwise be prohibited. Such prohibitions may be general in
nature, such as a country-level embargo, or refer narrowly to
sanctioned persons ``designated'' by Treasury.
Licenses may be issued on a variety of grounds, from
humanitarian reasons (e.g. natural disaster relief) to specific
foreign policy-related objectives. While the rationale behind
particular OFAC licenses may be met with support or opposition,
H.R. 6751 simply requires an administration to inform Congress
that certain financial services-related licenses have in fact
been approved. Without this knowledge, Congress is limited in
its ability to oversee an administration's execution of
sanctions, be they related to terrorism, human rights abuses,
or corruption.
While U.S. entities are generally prohibited from dealing
with any sanctioned person, foreign financial institutions may
be able to engage in business with such persons without
penalty, provided that the U.S. has not imposed ``secondary
sanctions'' on foreign banks. Given Congress's interest in
understanding sanctioned persons' ability to access financial
services globally, H.R. 6751 requires the Treasury Secretary to
list foreign institutions undertaking this business. The
reporting requirement also signals to foreign banks that
Congress will have insights into their dealings with serious
human rights abusers and corrupt officials, which may inform
future legislation by answering the following questions:
Are designated persons evading the
consequences of U.S. sanctions?
Could the U.S. exert diplomatic pressure
more effectively to shut off sanctioned persons' access
to financial services abroad?
Are certain foreign countries undermining
U.S. efforts to combat corruption and human rights
atrocities, or failing to adhere to their own
international obligations (e.g. United Nations Security
Council resolutions)?
If Congress or the Executive branch were to
consider secondary sanctions on foreign financial
institutions, how should those sanctions be effectively
designed, and what might the unintended consequences
be, if any?
The sanctioned persons encompassed by H.R. 6751 include
those designated for gross violations of human rights and
official acts of corruption. Particular examples include:
Ramzan Kadyrov, head of the Chechen
Republic, who has been sanctioned for involvement in
extra-judicial killings and disappearances in Russia.
Aung Kyaw Zaw, a Burmese commander whose
subordinates have been implicated in the ethnic
cleansing of Burma's Rohingya minority.
Felix Ramon Bautista Rosario, a senator from
the Dominican Republic who has reportedly engaged in
significant acts of corruption in both the Dominican
Republic and Haiti.
Hing Bun Hieng, commander of Cambodia's
Prime Minister Bodyguard Unit, who has been involved in
multiple attacks on unarmed Cambodians, including an
incident where a U.S. citizen received shrapnel wounds.
HEARINGS
The Subcommittee on Monetary Policy and Trade held the
following hearings examining matters related to H.R. 6751:
``Increasing the Effectiveness of Non-
Nuclear Sanctions against Iran,'' April 4, 2017;
``Restricting North Korea's Access to
Finance,'' July 19, 2017;
``Evaluating the Effectiveness of U.S.
Sanctions Programs,'' November 30, 2017.
COMMITTEE CONSIDERATION
The Committee on Financial Services met in open session on
September 13, 2018 and ordered H.R. 6751 to be reported
favorably to the House as amended by a recorded vote of 48 yeas
to 0 nays (recorded vote no. FC-201), a quorum being present.
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. An
amendment in the nature of a substitute offered by Mrs. Love
was adopted by voice vote, as was an amendment offered by Mrs.
Waters. A motion by Chairman Hensarling to report the bill
favorably to the House as amended was agreed to by a recorded
vote of 48 yeas to 0 nays (Record vote no. FC-201), a quorum
being present.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
The Committee has not received an estimate of new budget
authority contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to Sec.
402 of the Congressional Budget Act of 1974. In compliance with
clause 3(c)(2) of rule XIII of the Rules of the House, the
Committee opines that H.R. 6751 will not establish any new
budget or entitlement authority or create any tax expenditures.
CONGRESSIONAL BUDGET OFFICE ESTIMATES
The cost estimate prepared by the Director of the
Congressional Budget Office pursuant to Sec. 402 of the
Congressional Budget Act of 1974 was not submitted timely to
the Committee.
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 rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
This Section cites H.R. 6751 as the ``Banking Transparency
for Sanctioned Persons Act of 2018.''
Section 2. Report on financial services benefitting state sponsors of
terrorism, human rights abusers, and corrupt officials
Under this section, the Secretary of the Treasury shall,
not later than 180 days after enactment, and every 180 days
thereafter, submit a report to the Committees on Financial
Services and Foreign Affairs of the House, and the Committees
on Banking, Housing, and Urban Affairs and Foreign Relations of
the Senate, that includes the following:
A copy of any license issued by the
Secretary in the preceding 180 days that authorizes a
financial institution to provide financial services
benefitting a state sponsor of terrorism; and
A list of any foreign financial institutions
that, in the preceding 180 days, knowingly conducted a
significant transaction or transactions, directly or
indirectly, for a sanctioned person who (1) is owned or
controlled by, or acts on behalf of, the government of
a state sponsor of terrorism; or (2) is designated
pursuant to Section 404 of the Russia and Moldova
Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law
Accountability Act of 2012 (P.L. 112-208), Subtitle F
of title XII of the National Defense Authorization Act
for Fiscal Year 2017 (P.L. 114-328), or Executive Order
13818.
As amended, H.R. 6751 clarifies that this report shall be
submitted in unclassified form, but may contain a classified
annex.
Section 3. Waiver
The Secretary of the Treasury may waive the reporting
requirement under section 2 with respect to a foreign financial
institution upon receiving credible assurances that the foreign
financial institution has ceased, or will imminently cease, to
conduct significant transactions for certain sanctioned
persons. Such a waiver may also be issued by the Secretary upon
certifying to the congressional committees listed in section 2
that the waiver is important to the national interest of the
United States, with an explanation of the reasons therefor.
Section 4. Definitions
This section specifies definitions for the terms
``financial institution,'' ``foreign financial institution,''
``knowingly,'' and ``United States financial institution.''
Section 5. Sunset
This section stipulates that the legislation's reporting
requirement shall terminate seven years after the date of
enactment.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H.R. 6751 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.
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