[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6365 Reported in House (RH)]

<DOC>





                                                 Union Calendar No. 269
118th CONGRESS
  1st Session
                                H. R. 6365

                          [Report No. 118-330]

   To protect against illicit oil shipments, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 13, 2023

  Ms. Waters introduced the following bill; which was referred to the 
                    Committee on Financial Services

                           December 19, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           November 13, 2023]


_______________________________________________________________________

                                 A BILL


 
   To protect against illicit oil shipments, and for other purposes.


 


    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stopping Illicit Oil Shipments Act 
of 2023''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) When countries are designated under economic and trade 
        sanctions by the United States and its allies, they are largely 
        excluded from the licit global financial system, including the 
        movement, sale, and profit derived from their oil and gas 
        resources.
            (2) For U.S. persons, American maritime sanctions, 
        including on nations like Iran, Russia, and North Korea, 
        restrict the financing of vessels and cargo, insurance and re-
        insurance, companies using vessels to transport their goods, 
        shipowners, charterers, and those providing maritime services 
        such as classification and certification.
            (3) One method by which Iran and Russia frequently attempt 
        to evade these U.S. sanctions on oil is to ``false flag'', 
        which means to avoid sanctions scrutiny by registering a vessel 
        in a permissive country or by sailing under another country's 
        flag without communicating this to the country whose flag is 
        being used.
            (4) According to Foreign Policy, approximately two million 
        barrels of oil from sanctioned countries, including Iran and 
        Russia, are transported under false flags every day.
            (5) In order to evade a sanctions regime, vessels 
        transporting oil and gas resources from sanctioned countries 
        must carry insurance policies to allow them to dock at a port, 
        unload their goods, or use a port's services, such as 
        refueling.
            (6) The veracity of a vessel's flag is subject to 
        examination by port authorities, but verification by the port 
        and service providers does not always occur.
            (7) Given the lack of comprehensive checks on the veracity 
        of flags, this Act will force a change in behavior within the 
        maritime shipping industry by limiting the availability of 
        insurance products to those not verifying flag registration and 
        providing a direct route for the Office of Foreign Assets 
        Control (``OFAC'') to gain possibly actionable information that 
        could lead to OFAC enforcement actions as well as additional 
        targets for sanctions designations.

SEC. 3. MATERIAL MISREPRESENTATION.

    (a) In General.--In maritime insurance contracts, failure to verify 
a vessel's registration shall be deemed a material misrepresentation by 
the policyholder.
    (b) Rulemaking.--The Undersecretary for Terrorism and Financial 
Crimes shall issue rules to carry out this section.

SEC. 4. IDENTIFICATION OF VESSELS WITH ILLICIT MARITIME INSURANCE.

    (a) In General.--The primary insurance regulatory authority of a 
State may report to the Undersecretary for Terrorism and Financial 
Crimes when, in the sole discretion of the primary insurance regulatory 
authority, the primary insurance regulatory authority has determined 
that the conditions exist for a maritime insurance contract to be 
voidable pursuant to section 3.
    (b) Limitations.--With respect to a maritime insurance contract, a 
report may only be made under subsection (a) if the primary insurance 
regulatory authority--
            (1) establishes that the maritime insurance contract has 
        been issued by an insurer subject to the authority of the 
        primary insurance regulatory authority;
            (2) establishes that the maritime insurance contract 
        satisfies the conditions established by the Undersecretary for 
        Terrorism and Financial Crimes to be voidable pursuant to 
        section 3; and
            (3) possesses, to the satisfaction of the primary insurance 
        regulatory authority, clear and compelling credible factual 
        evidence that a policyholder has failed to verify the 
        registration of a vessel.

SEC. 5. REPORT.

    (a) In General.--Not later than the end of the 180-day period 
beginning on the date of the enactment of this Act, and annually 
thereafter for 5 years, the Secretary of the Treasury shall issue a 
report to the appropriate committees of the Congress--
            (1) detailing any reports received by the Undersecretary 
        for Terrorism and Financial Crimes from a primary insurance 
        regulatory authority under section 4;
            (2) detailing any steps taken by the Secretary of the 
        Treasury on the receipt of that information;
            (3) describing of activities taken by the Secretary of the 
        Treasury, including meetings and advisories, to engage with the 
        maritime community, foreign governments, and civil society to 
        improve outreach and understanding of the compliance 
        expectations related to maritime sanctions evasion; and
            (4) describing any proposed improvements to existing 
        authorities or resources that could be provided by Congress.
    (b) Exception for Ongoing Investigations.--The Secretary of the 
Treasury may not include information in a report required under 
subsection (a) related to ongoing investigations.

SEC. 6. REPORT.

    Not later than the end of the 180-day period beginning on the date 
of the enactment of this Act, the Secretary of the Treasury shall issue 
a report to the appropriate committees of the Congress containing 
recommendations for receiving determinations described under section 4 
from persons other than a primary insurance regulatory authority of a 
State, including establishing a whistleblower program.

SEC. 7. DEFINITIONS.

    In this Act:
            (1) Appropriate committees of the congress.--The term 
        ``appropriate committees of the Congress'' means the Committee 
        on Financial Services of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs of the Senate.
            (2) Maritime insurance.--The term ``maritime insurance''--
                    (A) means insurance coverage for physical loss or 
                damage of vessels, cargo, terminals, and any transport 
                by which the cargo is transferred, acquired, or held 
                between the points of origin and the final destination; 
                and
                    (B) includes cargo insurance, freight insurance, 
                hull insurance, and protection and indemnity.
            (3) Registration.--The term ``registration'' means the 
        process--
                    (A) by which a vessel is formally recognized by a 
                country's maritime authority, resulting in the vessel's 
                inclusion in the national vessel registry; and
                    (B) conferring upon a vessel the nationality of the 
                registering state;
                    (C) entailing the right to fly the flag of such 
                registering state; and
                    (D) subjecting a vessel to the responsibility to 
                adhere to maritime laws and regulations enforced by 
                such registering state.
            (4) State.--The term ``State'' means any of the several 
        States, the District of Columbia, a territory of the United 
        States, an Indian Tribe, and a jurisdiction subject to the 
        Compact of Free Association Act of 2003.
            (5) Vessel.--The term ``vessel'' has the meaning given such 
        term in section 3 of title 1, United States Code.
                                                 Union Calendar No. 269

118th CONGRESS

  1st Session

                               H. R. 6365

                          [Report No. 118-330]

_______________________________________________________________________

                                 A BILL

   To protect against illicit oil shipments, and for other purposes.

_______________________________________________________________________

                           December 19, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed