[House Report 115-984]
[From the U.S. Government Publishing Office]


115th Congress   }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                     {      115-984

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



 
                  FINANCIAL TECHNOLOGY PROTECTION ACT

                                _______
                                

 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. 5036]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
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, having considered the same, report favorably 
thereon with amendments and recommend that the bill as amended 
do pass.
    The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

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 TO COMBAT TERRORISM 
                    AND ILLICIT FINANCING.

  (a) Establishment.--There is established the Independent Financial 
Technology Task Force to Combat Terrorism and Illicit Financing (the 
``Task Force''), which shall consist of--
          (1) the Secretary of the Treasury, who shall serve as the 
        head of the Task Force;
          (2) the Attorney General;
          (3) the Director of National Intelligence;
          (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, 
        in consultation with the members of the Task Force described 
        under paragraphs (2) through (6), to represent the private 
        sector (including the banking industry, nonprofit groups, and 
        think tanks), with at least 2 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, without further appropriation or fiscal year limitation--
          (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 and Financial Intelligence 
        Program.

SEC. 5. FINTECH LEADERSHIP IN INNOVATION AND FINANCIAL INTELLIGENCE 
                    PROGRAM.

  (a) Establishment.--There is established a program to be known as the 
``Fintech Leadership in Innovation and Financial Intelligence 
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. PREVENTING ROGUE AND FOREIGN ACTORS FROM EVADING SANCTIONS.

  (a) Report and Strategy With Respect to Digital Currencies and Other 
Related Emerging Technologies.--
          (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the President, acting through the 
        Secretary of Treasury and in consultation with the Attorney 
        General, the Secretary of State, the Secretary of Homeland 
        Security, the Director of National Intelligence, the Director 
        of the Office of Management and Budget, and the appropriate 
        Federal banking agencies and Federal functional regulators, 
        shall--
                  (A) submit to the appropriate congressional 
                committees a report that identifies and describes the 
                potential uses of digital currencies and other related 
                emerging technologies by states, non-state actors, and 
                foreign terrorist organizations to evade sanctions, 
                finance terrorism, or launder monetary instruments, and 
                threaten United States national security; and
                  (B) develop and submit to the appropriate 
                congressional committees a strategy to mitigate and 
                prevent such illicit use of digital currencies and 
                other related emerging technologies.
          (2) Form; public availability.--
                  (A) Form.--The report and strategy required under 
                paragraph (1) shall be submitted in unclassified form, 
                but may contain a classified annex.
                  (B) Public availability.--The unclassified portion of 
                such report and strategy shall be made available to the 
                public and posted on the internet website of the 
                Department of Treasury--
                          (i) in pre-compressed, easily downloadable 
                        versions that are made available in all 
                        appropriate formats; and
                          (ii) in machine-readable format, if 
                        applicable.
          (3) Sources of information.--In preparing the report and 
        strategy required under paragraph (1), the President may 
        utilize any credible publication, database, web-based resource, 
        and any credible information compiled by any government agency, 
        nongovernmental organization, or other entity that is made 
        available to the President.
  (b) Briefing.--Not later than 2 years after the date of the enactment 
of this Act, the Secretary of the Treasury shall brief the appropriate 
congressional committees on the implementation of the strategy required 
under subsection (a).

SEC. 7. DEFINITIONS.

  For purposes of this Act:
          (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                  (A) the Committee on Financial Services, the 
                Committee on the Judiciary, the Permanent Select 
                Committee on Intelligence, and the Committee on Foreign 
                Affairs of the House of Representatives; and
                  (B) the Committee on Banking, Housing, and Urban 
                Affairs, the Committee on Homeland Security and 
                Governmental Affairs, the Committee on the Judiciary, 
                the Select Committee on Intelligence, and the Committee 
                on Foreign Relations of the Senate.
          (2) Appropriate federal banking agencies.--The term 
        ``appropriate Federal banking agencies'' has the meaning given 
        the term in section 3 of the Federal Deposit Insurance Act (12 
        U.S.C. 1813).
          (3) 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.
          (4) 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.
          (5) Federal functional regulator.--The term ``Federal 
        functional regulator'' has the meaning given that term in 
        section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).
          (6) Foreign terrorist organization.--The term ``foreign 
        terrorist organization'' means an organization that is 
        designated as a foreign terrorist organization under section 
        219 of the Immigration and Nationality Act (8 U.S.C. 1189).
          (7) 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).

    Amend the title so as to read:
    A bill to establish an Independent Financial Technology 
Task Force to Combat Terrorism and Illicit Financing, to 
provide rewards for information leading to convictions related 
to terrorist use of digital currencies, to establish a Fintech 
Leadership in Innovation and Financial Intelligence Program to 
encourage the development of tools and programs to combat 
terrorist and illicit use of digital currencies, and for other 
purposes.

                          PURPOSE AND SUMMARY

    On February 15, 2018 Representative Ted Budd introduced 
H.R. 5036, the ``Financial Technology Protection Act''. The 
legislation would establish an Independent Financial Technology 
Task Force to improve coordination between the private and 
public sectors to research and develop legislative and 
regulatory proposals to decrease terrorist and illicit use of 
new financial technologies, including digital currencies. This 
bill includes a Sense of Congress that, ``the Federal 
Government should prioritize the investigation of terrorist and 
illicit use of new financial technology, including digital 
currencies.'' The bill would also require the Secretary of the 
Treasury, in consultation with the Attorney General, to 
establish a fund, not to exceed $450,000, to pay a reward to 
any person who provides information leading to the conviction 
of an individual involved with terrorist use of digital 
currencies; and a ``FinTech'' Leadership in Innovation Program 
to provide grants for the development of the tools and programs 
to detect terrorist and illicit use of digital currencies.

                  BACKGROUND AND NEED FOR LEGISLATION

    The goal of H.R. 5036 is to enable experts in the private 
sector and the government to research and report to Congress on 
how best to counter the illicit use of digital currencies.
    Advances in technology and the widespread use of the 
Internet and mobile communication devices have helped fuel the 
growth in financial technology products and services. Digital 
currencies in particular can make for speedier, more secure, 
more cost-efficient, disintermediated, cross-border settlements 
of transactions. However, the national security implications of 
digital currency technology have increasingly been the subject 
of much debate. The rise of digital currency in the financial 
technology space has prompted expansive discussion about the 
nexus between the use of these systems and financial crime. The 
legislation is timely and as one witness noted in their June 7, 
2017 testimony before the Subcommittee on Terrorism and Illicit 
Finance, ``Unfortunately, this also means that, like the 
internet, it is open to bad actors who take advantage of it. 
Criminals certainly use it today, and we have begun to see some 
nascent interest from terrorist groups.''\1\
---------------------------------------------------------------------------
    \1\Testimony of Jerry Brito, Executive Director of Coin Center, 
before the Committee on Financial Services, Subcommittee on Terrorism 
and Illicit Finance on ``Financial Innovation and National Security 
Implications'', June 8, 2017, available at https://
financialservices.house.gov/uploadedfiles/hhrg-115-ba01-wstate-jbrito-
20170608.pdf.
---------------------------------------------------------------------------
    There have been a handful of instances in which terrorists 
have used digital currencies to raise funds, such as through 
solicited online donations using digital currencies. Criminal 
organizations are exploiting the pseudo-anonymity of some 
digital currencies through ransomware attacks and payment 
facilitation via online dark web forums like Alpha Bay and Silk 
Road. According to a report on the potential of terrorist use 
of digital currencies by the Center for a New American 
Security, however, ``Currently there is no more than anecdotal 
evidence that terrorist groups have used virtual currencies to 
support themselves.''\2\
---------------------------------------------------------------------------
    \2\Zachary K. Goldman et al., Terrorist Use of Virtual Currencies: 
Containing the Potential Threat, Center for a New American Security, 
May 2017, at page 2, available at https://www.cnas.org/publications/
reports/terrorist-use-of-virtual-currencies.
---------------------------------------------------------------------------
    The Royal United Services Institute (RUSI), the United 
Kingdom's leading defense and security think tank, released a 
paper in March 2017 about the nexus between digital currencies 
and financial crime following the European Union's 5th Anti-
Money Laundering (AML) Directive. RUSI outlines that anonymity/
pseudonymity; rapid international transaction settlement; and 
decentralization and contained environments are the main 
factors providing a number of financial crime risks from 
digital currencies. The Center for a New American Security 
(CNAS) also released a similar paper in May 2017 putting 
context around anecdotal evidence that terrorist groups have 
used digital currencies. The use of digital currencies by 
``lone wolf'' terrorists is a ``much bigger potential threat'' 
according to CNAS because of the small scales of funding needed 
to execute attacks.
    According to the RAND Corporation, ``there is ample 
evidence that organized non-state actors--especially 
cybercriminals--use existing digital currencies.'' One of the 
most common criminal uses of digital currencies, particularly 
with Bitcoin, is in cases of ransomware, ``where cybercriminals 
encrypt a victim's data and only release it upon payment in a 
VC [virtual currency].'' The WannaCry ransomware attack on May 
15, 2017, where over 200,000 computers across 150 countries 
were affected, reportedly only netted the hackers $50,000 in 
Bitcoin due to the rapid intervention of a security researcher 
in the United Kingdom. Had every victim met the hackers' 
initial demands, the losses could have exceeded $60,000,000. 
Another common criminal use of digital currencies is for the 
purchase of illicit goods and drugs via online services on so-
called ``dark net'' forums including Silk Road and AlphaBay. 
Taken down in 2013, the Silk Road facilitated Bitcoin 
transactions, primarily for drugs, but also for stolen goods, 
forged documents, and hacking services. When a larger dark net 
marketplace, AlphaBay, was shut down in July 2017, the site had 
transactions exceeding $1 billion in Bitcoin and other virtual 
currencies.
    As new financial products and technologies, including 
digital currency, continue to change, legislation is necessary 
so that those currencies are not used by illicit actors and 
terrorist organizations to escape a money trail. H.R. 5036 
achieves this important objective.

                                HEARINGS

    The Committee on Financial Services Subcommittee on 
Terrorism and Illicit Finance held a hearing examining matters 
relating to H.R. 5036 on June 8, 2017 and June 20, 2018.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
July 24, 2018 and ordered H.R. 5036 to be reported favorably to 
the House as amended by a recorded vote of 57 yeas to 0 nays 
(recorded vote no. FC-197), a quorum being present. [Before the 
motion to report was offered, the Committee adopted an 
amendment in the nature of a substitute offered by Mr. Budd by 
voice vote.]

                            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. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House as amended. The motion 
was agreed to by a recorded vote of 57 yeas to 0 nays (Record 
vote no. FC-197), 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

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 5036 
will protect the use of digital currencies by providing for an 
Independent Financial Technology Task Force to Combat Terrorism 
and Illicit Financing, Rewards for Innovation Related to 
Terrorist Use of Digital Currencies, a FinTech Leadership in 
Innovation and Financial Intelligence Program, and a Report and 
Strategy with Respect to Digital Currencies and Other Related 
Emerging Technologies.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 6, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5036, the 
Financial Technology Protection Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 5036--Financial Technology Protection Act

    H.R. 5036 would establish within the Department of the 
Treasury an Independent Financial Technology Task Force. The 
task force members would include six representatives from 
federal agencies, and six from the private sector with 
experience in financial technology. The task force would 
research and develop legislative and regulatory proposals to 
reduce the illicit use of financial technologies. The bill also 
would fund a whistle blower rewards program and a grant program 
aimed at curbing the use of digital currencies by terrorists.
    Based on the cost of similar task forces, CBO estimates 
that implementing H.R. 5036 would require four employees 
annually at a total average annual cost of $300,000, plus 
additional expenses for overhead, supplies, and the expenses of 
nonfederal task force members. In total, CBO estimates that the 
task force would cost about $700,000 annually, or about $4 
million over the 2018-2023 period.
    Individuals using digital currencies for terrorist purposes 
are subject to fines and the forfeiture of property or assets. 
Those proceeds are recorded on the budget as revenues and can 
be spent without further appropriation. Under the bill, those 
revenues could be used by the task force to reward any person 
who provides information leading to the conviction of an 
individual involved with the terrorist use of digital 
currencies and to fund a grant program to develop tools and 
programs to detect the illicit use of digital currencies. 
Because those funds can already be spent under current law, CBO 
estimates that there would be no significant effect on direct 
spending.
    Because enacting the bill would affect direct spending, 
pay-as-you-go procedures apply. Enacting the bill would not 
affect revenues.
    CBO estimates that enacting H.R. 5036 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    H.R. 5036 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was reviewed by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                       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. 5036 as the ``Financial Technology 
Protection Act.''

Section 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.

Section 3. Independent financial technology task force to combat 
        terrorism and illicit financing

    The Task Force has the goal of improving coordination 
between the private and public sectors to research and develop 
legislative and regulatory proposals to decrease terrorist and 
illicit use of new financial technologies, including digital 
currencies. The Task Force is required to report to Congress 
its findings and determinations not later than one year after 
the enactment date of this Act.
    The Task Force is comprised of the Secretary of the 
Treasury, the Attorney General, the Director of National 
Intelligence, the Director of the Financial Crimes Enforcement 
Network (FinCEN), the Director of the Secret Service, the 
Director of the Federal Bureau of Investigation (FBI), and six 
individuals from the private sector appointed by the Secretary 
of the Treasury, in consultation with members of the Task 
Force, at least two of which must have experience in the 
financial technology industry.
    The Task Force shall conduct independent research on 
terrorist and illicit use of new financial technologies, 
including digital currencies, and develop legislative and 
regulatory proposals to improve counter-terrorist and counter-
illicit financing efforts.

Section 4. Rewards for information related to terrorist use of digital 
        currencies

    The Secretary of the Treasury, in consultation with the 
Attorney General, to establish a fund, not to exceed $450,000, 
to pay a reward to any person who provides information leading 
to the conviction of an individual involved with terrorist use 
of digital currencies. 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, without further appropriation or fiscal year 
limitation--use such amounts to pay rewards under this section 
related to such conviction; and with respect to any such 
amounts remaining after payments are made, deposit such amounts 
in the FinTech Leadership in Innovation and Financial 
Intelligence Program.

Section 5. FinTech leadership in innovation and financial intelligence 
        program

    The Secretary of the Treasury shall make grants for the 
development of tools and programs to detect terrorist and 
illicit use of digital currencies. 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.
    The Secretary may make grants to carry out pilot programs 
using such tools, the development of test cases using such 
tools, and research related to such tools. In making grants, 
the Secretary shall give preference to technology that is 
nonproprietary or that is community commons-based; computer 
code that is developed and released on an open source basis; 
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 tools and incentives that are on decentralized 
platforms.
    Any new technology developed with a grant 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). Tools and programs developed with a grant 
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. Tools and programs developed 
with a grant shall be freely accessible and usable by the 
public. This requirement may be fulfilled by publicly availing 
application programming interfaces or software development 
kits.

Section 6. Preventing rogue and foreign actors from evading sanctions

    Not later than 180 days after the date of the enactment of 
this Act, the President, acting through the Secretary of 
Treasury and in consultation with the Attorney General, the 
Secretary of State, the Secretary of Homeland Security, the 
Director of National Intelligence, the Director of the Office 
of Management and Budget, and the appropriate Federal banking 
agencies and Federal functional regulators, shall submit to the 
appropriate congressional committees a report that identifies 
and describes the potential uses of digital currencies and 
other related emerging technologies by states, non-state 
actors, and foreign terrorist organizations to evade sanctions, 
finance terrorism, or launder monetary instruments, and 
threaten United States national security; and develop and 
submit to the appropriate congressional committees a strategy 
to mitigate and prevent such illicit use of digital currencies 
and other related emerging technologies. The report and 
strategy shall be submitted in unclassified form, but may 
contain a classified annex. The unclassified portion of such 
report and strategy shall be made available to the public and 
posted on the internet website of the Department of Treasury.
    Not later than two years after the date of the enactment of 
this Act, the Secretary of the Treasury shall brief the 
appropriate congressional committees on the implementation of 
the strategy.

Section 6. Definitions

    The term ``appropriate congressional committees'' means the 
Committee on Financial Services, the Committee on the 
Judiciary, the Permanent Select Committee on Intelligence, and 
the Committee on Foreign Affairs of the House of 
Representatives; and the Committee on Banking, Housing, and 
Urban Affairs, the Committee on Homeland Security and 
Governmental Affairs, the Committee on the Judiciary, the 
Select Committee on Intelligence, and the Committee on Foreign 
Relations of the Senate.
    The term ``appropriate Federal banking agencies'' has the 
meaning given the term in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813). The term ``Bank Secrecy Act'' 
means section 21 of the Federal Deposit Insurance Act; chapter 
2 of title I of Public Law 91-508; and subchapter II of chapter 
53 of title 31, United States Code. The term ``digital 
currency'' means a digital representation of value that is used 
as a medium of exchange, unit of account, or store of value; 
and is not established legal tender, whether or not denominated 
in established legal tender; and does not include 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 
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.
    The term ``Federal functional regulator'' has the meaning 
given that term in section 509 of the Gramm-Leach-Bliley Act 
(15 U.S.C. 6809). The term ``foreign terrorist organization'' 
means an organization that is designated as a foreign terrorist 
organization under section 219 of the Immigration and 
Nationality Act (8 U.S.C. 1189). 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).

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.R. 5036 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]