[Congressional Record Volume 169, Number 123 (Tuesday, July 18, 2023)]
[Senate]
[Pages S3068-S3069]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  SA 890. Mr. RUBIO submitted an amendment intended to be proposed by 
him to the bill S. 2226, to authorize appropriations for fiscal year 
2024 for military activities of the Department of Defense, for military 
construction, and for defense activities of the Department of Energy, 
to prescribe military personnel strengths for such fiscal year, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. AMERICAN FINANCIAL MARKETS INTEGRITY AND SECURITY.

       (a) Short Title.--This section may be cited as the 
     ``American Financial Markets Integrity and Security Act''.
       (b) Prohibitions Relating to Certain Communist Chinese 
     Military Companies.--
       (1) Definitions.--In this subsection:
       (A) Commission.--The term ``Commission'' means the 
     Securities and Exchange Commission.
       (B) Control; insurance company.--The terms ``control'' and 
     ``insurance company'' have the meanings given the terms in 
     section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 
     80a-2(a)).
       (C) Covered entity.--
       (i) In general.--The term ``covered entity'' means any of 
     the following:

       (I) An entity on the list of specially designated nationals 
     and blocked persons maintained by the Office of Foreign 
     Assets Control of the Department of the Treasury (commonly 
     referred to as the ``SDN list'').
       (II) An entity on the Non-SDN Chinese Military-Industrial 
     Complex Companies List--

       (aa) established pursuant to Executive Order 13959 (50 
     U.S.C. 1701 note; relating to addressing the threat from 
     securities investments that finance Communist Chinese 
     military companies), as amended before, on, or after the date 
     of enactment of this Act; and
       (bb) maintained by the Office of Foreign Assets Control of 
     the Department of the Treasury.

       (III) A Chinese military company on the list required under 
     section 1260H of the William M. (Mac) Thornberry National 
     Defense Authorization Act for Fiscal Year 2021 (Public Law 
     116-283; 10 U.S.C. 113 note).
       (IV) An entity on the entity list maintained by the Bureau 
     of Industry and Security of the Department of Commerce and 
     set forth in Supplement No. 4 to part 744 of title 15, Code 
     of Federal Regulations.
       (V) Any entity that is a parent, subsidiary, or affiliate 
     of, or an entity controlled by, an entity described in any of 
     clauses (i) through (iv).

       (ii) Grace period.--For the purposes of this section and 
     the amendments made by this section, an entity shall be 
     considered to be a covered entity beginning on the date that 
     is 1 year after the date on which the entity first qualifies 
     under the applicable provision of clause (i).
       (D) Exchange; security.--The terms ``exchange'' and 
     ``security'' have the meanings given those terms in section 
     3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c(a)).
       (2) Prohibitions.--
       (A) Listing on exchange.--Beginning on the date that is 1 
     year after the date of enactment of this Act, the Commission 
     shall prohibit a covered entity from offering to sell or 
     selling on an exchange (or through any other method that is 
     within the jurisdiction of the Commission to regulate, 
     including through the method of trading that is commonly 
     referred to as the ``over-the-counter'' trading of 
     securities) securities issued by the covered entity, 
     including pursuant to an exemption to section 5 of the 
     Securities Act of 1933 (15 U.S.C. 77e).
       (B) Investments; limitation on actions.--
       (i) In general.--The Investment Company Act of 1940 (15 
     U.S.C. 80a-1 et seq.) is amended--

       (I) in section 12(d) (15 U.S.C. 80a-12(d)), by adding at 
     the end the following:

       ``(4)(A) It shall be unlawful for any investment company, 
     or any person that would be an investment company but for the 
     application of paragraph (1) or (7) of section 3(c), to 
     invest in a covered entity.
       ``(B) In this paragraph, the term `covered entity' has the 
     meaning given the term in subsection (b)(1) of the American 
     Financial Markets Integrity and Security Act.''; and

       (II) in section 13(c)(1) (15 U.S.C. 80a-13(c)(1))--

       (aa) in subparagraph (A), by striking ``or'' at the end;
       (bb) in subparagraph (B), by striking the period at the end 
     and inserting ``or''; and
       (cc) by adding at the end the following:
       ``(C) are covered entities, as that term is defined in 
     section 12(d)(4)(B).''.
       (ii) Effective date.--The amendments made by clause (i) 
     shall take effect on the date that is 1 year after the date 
     of enactment of this Act.
       (C) Federal funds.--
       (i) In general.--Except as provided in clause (ii), on and 
     after the date that is 180 days after the date of enactment 
     of this Act, no Federal funds may be used to enter into, 
     extend, or renew a contract or purchasing agreement with a 
     covered entity.
       (ii) Waiver.--The head of a Federal agency may issue a 
     national security waiver to the prohibition in clause (i) for 
     a period of not more than 2 years with respect to a covered 
     entity if the agency head submits to Congress a notification 
     that includes--

       (I) a written justification for the waiver; and
       (II) a plan for a phase-out of the goods or services 
     provided by the covered entity.

       (D) Investments by insurance companies.--
       (i) In general.--On and after the date of enactment of this 
     Act, an insurance company may not invest in a covered entity.
       (ii) Certification of compliance.--

       (I) In general.--Each insurance company shall, on an annual 
     basis, submit to the Secretary of the Treasury a 
     certification of compliance with clause (i).
       (II) Responsibilities of the secretary.--The Secretary of 
     the Treasury shall create a form for the submission required 
     under subclause (I) in such a manner that minimizes the 
     reporting burden on an insurance company making the 
     submission.

       (iii) Sharing information.--The Secretary of the Treasury, 
     acting through the Federal Insurance Office, shall share the 
     information received under clause (ii) and coordinate 
     verification of compliance with State insurance offices.
       (3) Qualified trusts, etc.--
       (A) In general.--Subsection (a) of section 401 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     paragraph (39) the following new paragraph:
       ``(40) Prohibited investments.--A trust which is part of a 
     plan shall not be treated as a qualified trust under this 
     subsection unless the plan provides that no part of the 
     plan's assets will be invested in any covered entity (as 
     defined in section 12(d)(4)(B) of the Investment Company Act 
     of 1940).''.
       (B) IRAs.--Paragraph (3) of section 408(a) of such Code is 
     amended by striking ``contracts'' and inserting ``contracts 
     or in any covered entity (as defined in section 12(d)(6)(B) 
     of the Investment Company Act of 1940)''.
       (C) Fiduciary duty.--Section 404 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104) is amended by 
     adding at the end the following new subsection:
       ``(f) Prohibited Investments.--No fiduciary shall cause any 
     assets of a plan to be invested in any covered entity (as 
     defined in section 12(d)(4)(B) of the Investment Company Act 
     of 1940 (15 U.S.C. 80a-12(d)(4)(B))).''.
       (D) Effective date.--
       (i) In general.--Except as provided in clause (ii), the 
     amendments made by this paragraph shall apply to plan years 
     beginning after the date which is 180 days after the date of 
     the enactment of this Act.
       (ii) Plan amendments.--If clause (iii) applies to any 
     retirement plan or contract amendment--

       (I) such plan or contract shall not fail to be treated as 
     being operated in accordance with the terms of the plan 
     during the period described in clause (iii)(II) solely 
     because the plan operates in accordance with the amendments 
     made by this subsection, and
       (II) except as provided by the Secretary of the Treasury 
     (or the Secretary's delegate), such plan or contract shall 
     not fail to meet the requirements of the Internal Revenue 
     Code of 1986 or the Employee Retirement Income Security Act 
     of 1974 by reason of such amendment.

       (iii) Amendments to which clause applies.--

       (I) In general.--This clause shall apply to any amendment 
     to any plan or annuity contract which--

       (aa) is made pursuant to the provisions of this paragraph, 
     and
       (bb) is made on or before the last day of the first plan 
     year beginning on or after the date which is 2 years after 
     the date of the enactment of this Act (4 years after such 
     date of enactment, in the case of a governmental plan).

       (II) Conditions.--This clause shall not apply to any 
     amendment unless--

       (aa) during the period beginning on the date which is 180 
     days after the date of the enactment of this Act, and ending 
     on the date described in subclause (I)(bb) (or, if earlier, 
     the date the plan or contract amendment is adopted), the plan 
     or contract is operated as if such plan or contract amendment 
     were in effect, and
       (bb) such plan or contract amendment applies retroactively 
     for such period.
       (iv) Subsequent amendments.--Rules similar to the rules of 
     clauses (ii) and (iii) shall apply in the case of any 
     amendment to any plan or annuity contract made pursuant to 
     any update of the list of Communist Chinese military 
     companies required by section 1237(b) of the Strom Thurmond 
     National Defense Authorization Act for Fiscal Year 1999 
     (Public Law 105-261; 50 U.S.C. 1701 note) which is made after 
     the effective date of the amendments made by this paragraph.
       (c) Modification of Requirements for List of Communist 
     Chinese Military Companies.--Section 1237(b) of the Strom 
     Thurmond National Defense Authorization Act for Fiscal Year 
     1999 (Public Law 105-261; 50 U.S.C. 1701 note) is amended--
       (1) by striking paragraph (2) and inserting the following:
       ``(2) Revisions to the list.--
       ``(A) Additions.--The Secretary of Defense, the Secretary 
     of Commerce, or the Director of National Intelligence may add 
     a person to the list required by paragraph (1) at any time.
       ``(B) Removals.--A person may be removed from the list 
     required by paragraph (1) if the

[[Page S3069]]

     Secretary of Defense, the Secretary of Commerce, and the 
     Director of National Intelligence agree to remove the person 
     from the list.
       ``(C) Submission of updates to congress.--Not later than 
     February 1 of each year, the Secretary of Defense shall 
     submit a version of the list required in paragraph (1), 
     updated to include any additions or removals under this 
     paragraph, to the committees and officers specified in 
     paragraph (1).'';
       (2) by striking paragraph (3) and inserting the following:
       ``(3) Consultation.--In carrying out paragraphs (1) and 
     (2), the Secretary of Defense, the Secretary of Commerce, and 
     the Director of National Intelligence shall consult with each 
     other, the Attorney General, and the Director of the Federal 
     Bureau of Investigation.''; and
       (3) in paragraph (4), in the matter preceding subparagraph 
     (A), by striking ``making the determination required by 
     paragraph (1) and of carrying out paragraph (2)'' and 
     inserting ``this section''.
       (d) Analysis of Financial Ambitions of the Government of 
     the People's Republic of China.--
       (1) Analysis required.--The Director of the Office of 
     Commercial and Economic Analysis of the Air Force shall 
     conduct an analysis of--
       (A) the strategic importance to the Government of the 
     People's Republic of China of inflows of United States 
     dollars through capital markets to the People's Republic of 
     China;
       (B) the methods by which that Government seeks to manage 
     such inflows;
       (C) how the inclusion of the securities of Chinese entities 
     in stock or bond indexes affects such inflows and serves the 
     financial ambitions of that Government; and
       (D) how the listing of the securities of Chinese entities 
     on exchanges in the United States assists in--
       (i) meeting the strategic goals of that Government, 
     including defense, surveillance, and intelligence goals; and
       (ii) the fusion of the civilian and military components of 
     that Government.
       (2) Submission to congress.--The Director of the Office of 
     Commercial and Economic Analysis of the Air Force shall 
     submit to Congress a report--
       (A) setting forth the results of the analysis conducted 
     under paragraph (1); and
       (B) based on that analysis, making recommendations for best 
     practices to mitigate any national security and economic 
     risks to the United States relating to the financial 
     ambitions of the Government of the People's Republic of 
     China.
                                 ______