[Congressional Record Volume 164, Number 159 (Wednesday, September 26, 2018)]
[House]
[Pages H9060-H9063]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  FINANCIAL TECHNOLOGY PROTECTION ACT

  Mr. TIPTON. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 5036) to establish an Independent Financial Technology Task 
Force, to provide rewards for information leading to convictions 
related to terrorist use of digital currencies, to establish a FinTech 
Leadership in Innovation Program to encourage the development of tools 
and programs to combat terrorist and illicit use of digital currencies, 
and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 5036

       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 ``Financial Technology 
     Protection Act''.

     SEC. 2. SENSE OF CONGRESS.

       It is the sense of Congress that the Federal Government 
     should prioritize the investigation of terrorist and illicit 
     use of new financial technology, including digital 
     currencies.

     SEC. 3. INDEPENDENT FINANCIAL TECHNOLOGY TASK FORCE.

       (a) Establishment.--There is established the Independent 
     Financial Technology Task Force (the ``Task Force''), which 
     shall consist of--

[[Page H9061]]

       (1) the Secretary of the Treasury, who shall serve as the 
     head of the Task Force;
       (2) the Attorney General;
       (3) the Director of the Central Intelligence Agency;
       (4) the Director of the Financial Crimes Enforcement 
     Network;
       (5) the Director of the Secret Service;
       (6) the Director of the Federal Bureau of Investigation; 
     and
       (7) 6 individuals appointed by the Secretary of the 
     Treasury to represent the private sector (including the 
     banking industry, nonprofit groups, and think tanks), with at 
     least 1 of such individuals having experience in the Fintech 
     industry.
       (b) Duties.--The Task Force shall--
       (1) conduct independent research on terrorist and illicit 
     use of new financial technologies, including digital 
     currencies; and
       (2) develop legislative and regulatory proposals to improve 
     counter-terrorist and counter-illicit financing efforts.
       (c) Annual Congressional Report.--Not later than 1 year 
     after the date of the enactment of this Act, and annually 
     thereafter, the Task Force shall issue a report to the 
     Congress containing the findings and determinations made by 
     the Task Force in the previous year and any legislative and 
     regulatory proposals developed by the Task Force.

     SEC. 4. REWARDS FOR INFORMATION RELATED TO TERRORIST USE OF 
                   DIGITAL CURRENCIES.

       (a) In General.--The Secretary of the Treasury, in 
     consultation with the Attorney General, shall establish a 
     fund to pay a reward, not to exceed $450,000, to any person 
     who provides information leading to the conviction of an 
     individual involved with terrorist use of digital currencies.
       (b) Use of Fines and Forfeitures.--With respect to fines 
     and forfeitures related to the conviction of an individual 
     involved with terrorist use of digital currencies, the 
     Secretary of the Treasury shall, subject to the availability 
     of appropriations made in advance--
       (1) use such amounts to pay rewards under this section 
     related to such conviction; and
       (2) with respect to any such amounts remaining after 
     payments are made under paragraphs (1) and (2), deposit such 
     amounts in the FinTech Leadership in Innovation Program.

     SEC. 5. FINTECH LEADERSHIP IN INNOVATION PROGRAM.

       (a) Establishment.--There is established a program to be 
     known as the ``FinTech Leadership in Innovation Program'', 
     which shall be funded as provided under section 4(b)(2).
       (b) Innovation Grants.--
       (1) In general.--The Secretary of the Treasury shall make 
     grants for the development of tools and programs to detect 
     terrorist and illicit use of digital currencies.
       (2) Eligible recipients.--The Secretary may make grants 
     under this subsection to entities located in the United 
     States, including academic institutions, companies, nonprofit 
     institutions, individuals, and any other entities locating in 
     the United States that the Secretary determines appropriate.
       (3) Eligible projects.--With respect to tools and programs 
     described under paragraph (1), in addition to grants for the 
     development of such tools and programs, the Secretary may 
     make grants under this subsection to carry out pilot programs 
     using such tools, the development of test cases using such 
     tools, and research related to such tools.
       (4) Preferences.--In making grants under this subsection, 
     the Secretary shall give preference to--
       (A) technology that is nonproprietary or that is community 
     commons-based;
       (B) computer code that is developed and released on an open 
     source basis;
       (C) tools that are proactive (such as meeting regulatory 
     requirements under ``know your customer'' and anti-money 
     laundering requirements for any entity that has to comply 
     with U.S. Government regulations) vs. reactive (such as 
     aiding law enforcement organizations in catching illegal 
     activity after the fact); and
       (D) tools and incentives that are on decentralized 
     platforms.
       (5) Other requirements.--
       (A) Use of existing global standards.--Any new technology 
     developed with a grant made under this subsection shall be 
     based on existing global standards, such as those developed 
     by the Internet Engineering Task Force (IETF) and the World 
     Wide Web Consortium (W3C).
       (B) Supporting existing laws or regulations.--Tools and 
     programs developed with a grant made under this subsection 
     shall be in support of existing laws or regulations, 
     including the Bank Secrecy Act, and make efforts to balance 
     privacy and anti-money laundering concerns.
       (C) Open access requirement.--Tools and programs developed 
     with a grant made under this subsection shall be freely 
     accessible and usable by the public. This requirement may be 
     fulfilled by publicly availing application programming 
     interfaces or software development kits.

     SEC. 6. DEFINITIONS.

       For purposes of this Act:
       (1) Bank secrecy act.--The term ``Bank Secrecy Act'' 
     means--
       (A) section 21 of the Federal Deposit Insurance Act;
       (B) chapter 2 of title I of Public Law 91-508; and
       (C) subchapter II of chapter 53 of title 31, United States 
     Code.
       (2) Digital currency.--The term ``digital currency''--
       (A) means a digital representation of value that--
       (i) is used as a medium of exchange, unit of account, or 
     store of value; and
       (ii) is not established legal tender, whether or not 
     denominated in established legal tender; and
       (B) does not include--
       (i) a transaction in which a merchant grants, as part of an 
     affinity or rewards program, value that cannot be taken from 
     or exchanged with the merchant for legal tender, bank credit, 
     or digital currency; or
       (ii) a digital representation of value issued by or on 
     behalf of a publisher and used solely within an online game, 
     game platform, or family of games sold by the same publisher 
     or offered on the same game platform.
       (3) Terrorist.--The term ``terrorist'' includes a person 
     carrying out domestic terrorism or international terrorism 
     (as such terms are defined, respectively, under section 2331 
     of title 18, United States Code).
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Colorado (Mr. Tipton) and the gentleman from Nevada (Mr. Kihuen) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Colorado.


                             General Leave

  Mr. TIPTON. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days in which to revise and extend their remarks and 
include extraneous material on this bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Colorado?
  There was no objection.
  Mr. TIPTON. Mr. Speaker, I yield 5 minutes to the gentleman from 
North Carolina (Mr. Budd).
  Mr. BUDD. Mr. Speaker, I thank the gentleman from Colorado for 
yielding. I also want to thank Chairman Hensarling for his dedicated 
leadership of his committee. I appreciate all he did to bring my 
legislation, H.R. 5036, to the floor. I also want to thank the 
gentleman from Massachusetts (Mr. Lynch), my co-lead on the bill, for 
his efforts, his experience, and his knowledge. It only made the bill 
better, so I appreciated working with him.
  Mr. Speaker, I rise today in strong support of my bipartisan 
legislation, the Financial Technology Protection Act.
  We all know that illicit financing networks are the lynchpin of any 
terrorist group's, criminal organization's, or rogue state's 
operations. As we move into an increasingly digital world, criminals 
and terrorists will start to use these new technologies that are 
available to them. That presents a problem.
  That problem is that we know that criminals use digital currencies 
through dark net markets to criminalize and to monetize cyber attacks. 
There is documented evidence that terrorists are increasingly using 
these currencies.

                              {time}  1800

  The RAND Corporation has some good supporting evidence on this. The 
bottom line is that the Federal Government has to be one step ahead of 
the illicit actors in this new space without threatening technological 
innovation, and that is what H.R. 5036 will do.
  Specifically, my legislation will do the following things to help 
make sure the United States stays ahead of this problem: First, it 
establishes the Independent Financial Technology Task Force to Combat 
Terrorism and Illicit Financing, whose goal is to improve coordination 
between private and public sectors on digital currency terror strategy 
and to combat illicit use. From my perspective, industry and the 
Federal Government should be coming together to find best practices and 
solutions to stop this new terrorist funding threat.
  Secondly, H.R. 5036 includes language from H.R. 5227, the Preventing 
Rogue and Foreign Actors From Evading Sanctions Act, which was 
introduced by my friend Mark Meadows of North Carolina. This language 
directs the Treasury Department to develop a strategy that identifies 
and describes the potential uses of virtual currencies and other 
emerging technologies by states, nonstate actors, and terrorist 
organizations to evade sanctions, finance terrorism, or launder 
monetary instruments and threaten the United States' national security.
  Again, the development of a national strategy to combat illicit use 
strikes me as common sense; therefore, we are

[[Page H9062]]

excited to have it included in the bill and to have Mr. Meadows' 
support as well.
  Also, the Budd-Lynch legislation establishes a targeted rewards 
program for information leading to the capture of terrorists or illicit 
actors involved with terror digital currency networks. The government 
should be encouraging individuals with knowledge of illicit use of 
virtual currencies to come forward through the offerings of rewards for 
successful convictions.
  Finally, and perhaps most importantly, H.R. 5036 establishes the 
Fintech Leadership in Innovation and Financial Intelligence Program, 
which will be used for grants and rewards in the Fintech space for 
ideas and programs to combat terrorist use of digital currencies.
  These technologies would be open access and open source. Experts in 
the private sector can track illicit use of these currencies and 
perhaps do a better job of leveraging their talent to create tools and 
programs through the Fintech Leadership and Financial Intelligence 
Program. We need to give them the ability to try, and that is what this 
bill does.
  Here is the bottom line, Mr. Speaker. H.R. 5036 is legislation that 
sparks private-sector innovation to deal with terror and illicit 
financing when it comes to virtual currencies. I think that Congress 
should be promoting programs and technologies that give industry the 
tools they need to save their technology and industry from illicit use 
and, hopefully, save them from further regulation down the road.
  Mr. Speaker, I urge adoption of the bill.
  Mr. KIHUEN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, H.R. 5036, the Financial Technology Protection Act, 
would strengthen our efforts to deter terrorist and illicit uses of 
financial technology. Although financial technology has potential 
benefits to the economy, there are pressing concerns about the digital 
currencies facilitating terrorist financing and money laundering.
  For example, in August 2015, a Virginia man was sentenced to prison 
for providing material to support terrorists and admitted to using 
Twitter to advise others on how to use bitcoin to mask terror 
financing. Also, in July 2018, Special Counsel Robert Mueller indicted 
12 Russian intelligence officers for hacking into the Democratic 
National Committee during the 2016 presidential election. The hackers 
used cryptocurrency to purchase the servers and other equipment 
necessary for the email breaches and used bitcoin to help fund their 
activities.
  This bill would establish a public-private sector task force, a grant 
program, and a reward program to counter such terrorist or illicit uses 
of digital currencies. Also, it would require the government to 
identify how state and nonstate actors and foreign terrorist 
organizations evade sanctions, finance terrorism, or launder money 
using these currencies.
  Mr. Speaker, I thank Congressman Budd and Congressman Lynch for 
introducing this bipartisan legislation. I urge my colleagues to 
support it, and I reserve the balance of my time.
  Mr. TIPTON. Mr. Speaker, I reserve the balance of my time.
  Mr. KIHUEN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. Lynch).
  Mr. LYNCH. Mr. Speaker, I rise in support of H.R. 5036, the Financial 
Technology Protection Act. Before I begin, I would like to thank the 
Financial Services Committee Chair Hensarling and Ranking Member Waters 
for their support in helping to guide this bill through the committee 
process. I am very pleased that this legislation was passed through the 
committee unanimously when it was marked up back in July.
  I would also like to thank my colleague from North Carolina, Mr. 
Budd, for his good work on this important legislation. This has truly 
been a bipartisan effort.
  Mr. Speaker, by a strange coincidence, I was actually elected in the 
Democratic primary in Massachusetts on September 11, 2001, the day of 
the attacks on the United States in New York, the Pentagon, and in 
western Pennsylvania. Since my arrival here in Washington and 
throughout my time in Congress, I have taken an active interest in 
cutting off the flow of funding to terrorists and other illicit actors.
  I am very pleased to say that many of my colleagues, Democratic and 
Republican, have likewise approached this work with the deliberate and 
relentless sense of purpose that has lifted us above the petty 
squabbling that sometimes causes us to fall short of the high 
expectations of the American people.
  Over the years, this work has taken me dozens of times to many 
countries in the Middle East, to Amman, Jordan, a major banking center, 
where members of our committee urged and assisted that nation to 
establish its first financial intelligence unit. It must, of course, be 
noted that we had the robust and earnest cooperation of King Abdullah 
of Jordan in that effort. He is someone who, I believe, has, over the 
years, been the greatest friend that freedom-loving people have in the 
Arab world.

  Members of this committee also worked to expand geographic targeting 
orders to help the Financial Crimes Enforcement Network crack down on 
money laundering as part of the Countering America's Adversaries 
Through Sanctions Act.
  Similarly, in Afghanistan, Morocco, Tunisia, and throughout the 
Persian Gulf, our committee has coaxed and guided our international 
neighbors to adopt methods that secure the legitimate banking system 
from terrorists and criminal exploitation.
  From this work it has recently become clear to Mr. Budd and myself 
that terrorists and criminal actors are increasingly relying on digital 
currencies, including bitcoin, to fund their illicit activities.
  For example, in August of 2015, a Virginia man was sentenced to 11 
years in prison for providing material support to ISIS. He admitted to 
using Twitter to provide instructions on how to use bitcoin to mask the 
transfer of funds to that terrorist group. Also, in December of 2017, a 
woman in New York was indicted for bank fraud and money laundering for 
supporting terrorists. She is alleged to have spent about $62,000 in 
digital currency to engage in a pattern of financial activity designed 
to ultimately benefit ISIS.
  I am very pleased that the legislation before us today helps address 
this emerging threat in multiple ways.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. KIHUEN. Mr. Speaker, I yield the gentleman from Massachusetts 
such time as he may consume.
  Mr. LYNCH. As my friend, Mr. Budd, has noted, this bill establishes a 
public-private sector task force to research terrorist and criminal 
uses of new financial technologies, including digital currencies, and 
then develops countermeasures to thwart such terrorist and illicit 
uses.
  The bill also establishes a fund to pay rewards to people who provide 
information leading to the conviction of an individual involved with 
terrorist use of digital currencies.
  Finally, the bill creates a grant program for the development of 
tools and pilot programs to detect terrorist and illicit use of digital 
currencies.
  Mr. Speaker, in closing, I thank the chairman and ranking member, as 
well as my Republican cosponsor, the gentleman from North Carolina (Mr. 
Budd) and urge my colleagues on both sides of the aisle to support this 
important legislation.
  Mr. TIPTON. Mr. Speaker, I have no further requests for time on this 
legislation, and I reserve the balance of my time.
  Mr. KIHUEN. Mr. Speaker, I support the bill; I urge my colleagues to 
support it as well; and I yield back the balance of my time.
  Mr. TIPTON. Mr. Speaker, I yield myself the balance of my time.
  I thank my colleagues from both sides of the aisle for bringing 
forward this legislation to better protect our consumers and our 
neighbors from illicit financial activity and I urge passage, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Colorado (Mr. Tipton) that the House suspend the rules 
and pass the bill, H.R. 5036, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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