[House Report 115-982]
[From the U.S. Government Publishing Office]


115th Congress    }                                   {        Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                   {       115-982

======================================================================



 
        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.

                                  [all]