[House Report 118-292]
[From the U.S. Government Publishing Office]


118th Congress }                                          { Report 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-292

======================================================================
 
                TAIWAN CONFLICT DETERRENCE ACT OF 2023

                                _______
                                

December 1, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 554]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 554) to deter Chinese aggression towards Taiwan 
by requiring the Secretary of the Treasury to publish a report 
on financial institutions and accounts connected to senior 
officials of the People's Republic of China, to restrict 
financial services for certain immediate family of such 
officials, and for other purposes, having considered the same, 
reports favorably thereon with an amendment and recommends 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 ``Taiwan Conflict Deterrence Act of 
2023''.

SEC. 2. REPORT ON FINANCIAL INSTITUTIONS AND ACCOUNTS CONNECTED TO 
                    CERTAIN CHINESE GOVERNMENT OFFICIALS.

  (a) Financial Institutions Report.--
          (1) In general.--Not later than 90 days after the date that 
        the President, pursuant to section 3(c) of the Taiwan Relations 
        Act (22 U.S.C. 3302(c)), informs the Congress of a threat 
        resulting from actions of the People's Republic of China and 
        any danger to the interests of the United States arising 
        therefrom, and annually thereafter for 3 years, the Secretary 
        of the Treasury shall submit a report to the appropriate 
        Members of Congress containing the following:
                  (A) With respect to each of at least 10 natural 
                persons described under subsection (b), at least 1 of 
                whom is a natural person listed under paragraph (1) of 
                such subsection (b) and at least 1 of whom is a natural 
                person listed under paragraph (2) of such subsection 
                (b), the estimated total funds that are held in 
                financial institutions and are under direct or indirect 
                control by such natural person and a description of 
                such funds.
                  (B) A list of any financial institutions that--
                          (i) maintain an account in connection with 
                        significant funds described in subparagraph 
                        (A); or
                          (ii) otherwise provide significant financial 
                        services to a natural person covered by the 
                        report.
          (2) Briefing required.--Not later than 30 days after 
        submitting a report described under paragraph (1), the 
        Secretary of the Treasury, or a designee of the Secretary, 
        shall provide to the appropriate Members of Congress an 
        unclassified or classified briefing (as determined appropriate 
        by the Secretary) on the funds covered by the report, including 
        a description of how the funds were acquired, and any illicit 
        or corrupt means employed to acquire or use the funds.
          (3) Exemptions.--The requirements described under paragraph 
        (1) may not be applied with respect to a natural person or a 
        financial institution, as the case may be, if the President 
        determines:
                  (A) The funds described under paragraph (1)(A) were 
                primarily acquired through legal and noncorrupt means.
                  (B) The natural person has agreed to provide 
                significant cooperation to the United States for an 
                important national security purpose with respect to 
                China.
                  (C) A financial institution has agreed to--
                          (i) no longer maintain an account described 
                        under paragraph (1)(B)(i);
                          (ii) no longer provide significant financial 
                        services to a natural person covered by the 
                        report; or
                          (iii) provide significant cooperation to the 
                        United States for an important national 
                        security purpose with respect to China.
          (4) Waiver.--The President may waive any requirement 
        described under paragraph (1) with respect to a natural person 
        or a financial institution upon reporting to the appropriate 
        Members of Congress that--
                  (A) the waiver would substantially promote the 
                objective of ending the threat described under 
                paragraph (1);
                  (B) the threat described under paragraph (1) is no 
                longer present; or
                  (C) the waiver is essential to the national security 
                interests of the United States.
  (b) Natural Persons Described.--The natural persons described in this 
subsection are persons who, at the time of a report, are the following:
          (1) A member of the Politburo Standing Committee of the 
        Chinese Communist Party.
          (2) A member of the Politburo of the Chinese Communist Party 
        that is not described under paragraph (1).
          (3) A member of the Central Committee of the Chinese 
        Communist Party that--
                  (A) is none of the foregoing; and
                  (B) performs any official duty that directly or 
                indirectly affects Taiwan.
  (c) Form of Reports; Public Availability.--
          (1) Form.--The reports required under paragraphs (1) and (4) 
        of subsection (a) shall be submitted in unclassified form but 
        may contain a classified annex.
          (2) Public availability.--The Secretary of the Treasury shall 
        make the unclassified portion of the report required under 
        subsection (a)(1) available to the public on the website and 
        social media accounts of the Department of the Treasury--
                  (A) in English, Chinese, and any other language that 
                the Secretary finds appropriate; and
                  (B) in precompressed, easily downloadable versions 
                that are made available in all appropriate formats.

SEC. 3. PROHIBITION ON FINANCIAL SERVICES FOR CERTAIN IMMEDIATE FAMILY.

  (a) In General.--The Secretary of the Treasury shall prohibit a 
United States financial institution, and any person owned or controlled 
by a United States financial institution, from engaging in a 
significant transaction with--
          (1) a natural person covered by a report made under section 
        2(a); and
          (2) the immediate family of a person described under 
        paragraph (1), if the Secretary finds that such immediate 
        family benefits from funds described in the report.
  (b) Exceptions.--
          (1) Exception for intelligence, law enforcement, and national 
        security activities.--Subsection (a) shall not apply with 
        respect to any intelligence, law enforcement, or national 
        security activity of the United States.
          (2) Waiver.--The President may waive the application of 
        subsection (a) with respect to a person upon reporting to the 
        appropriate Members of Congress that--
                  (A) the waiver would substantially promote the 
                objective of ending the threat described under section 
                2(a)(1);
                  (B) the threat described under section 2(a)(1) is no 
                longer present; or
                  (C) the waiver is essential to the national security 
                interests of the United States.
          (3) Form of reports.--The reports required under paragraph 
        (2) shall be submitted in unclassified form but may contain a 
        classified annex.
          (4) Rule of construction.--
                  (A) In general.--Nothing in this section shall be 
                construed as authorizing or requiring any sanction with 
                respect to the importation of any good.
                  (B) Good defined.--In this paragraph, the term 
                ``good'' means any article, natural or manmade 
                substance, material, supply or manufactured product, 
                including inspection and test equipment, and excluding 
                technical data.
  (c) Implementation; Penalties.--
          (1) Implementation.--The President may exercise all 
        authorities provided to the President under sections 203 and 
        205 of the International Emergency Economic Powers Act (50 
        U.S.C. 1702 and 1704) to carry out this section. Not later than 
        60 days after issuing a license pursuant to this section, the 
        President shall submit a copy of the license to the appropriate 
        Members of Congress.
          (2) Penalties.--A person that violates, attempts to violate, 
        conspires to violate, or causes a violation of this section or 
        any regulation, license, or order issued to carry out this 
        section shall be subject to the penalties set forth in 
        subsections (b) and (c) of section 206 of the International 
        Emergency Economic Powers Act (50 U.S.C. 1705) to the same 
        extent as a person that commits an unlawful act described in 
        subsection (a) of that section 206.
  (d) Termination.--This section shall have no force or effect on the 
earlier of--
          (1) the date that is 30 days after the date that the 
        President reports to the appropriate Members of Congress that 
        the threat described under section 2(a)(1) is no longer 
        present; or
          (2) the date that is 25 years after the date that the 
        Secretary of the Treasury submits the final report required 
        under section 2(a)(1).

SEC. 4. DEFINITIONS.

  For purposes of this Act:
          (1) Appropriate members of congress.--The term ``appropriate 
        Members of Congress'' means the Speaker and minority leader of 
        the House of Representatives, the majority leader and minority 
        leader of the Senate, the Chairman and Ranking Member of the 
        Committee on Financial Services of the House of 
        Representatives, and the Chairman and Ranking Member of the 
        Committee on Banking, Housing, and Urban Affairs of the Senate.
          (2) Financial institution.--The term ``financial 
        institution'' means a United States financial institution or a 
        foreign financial institution.
          (3) Foreign financial institution.--The term ``foreign 
        financial institution'' has the meaning given that term in 
        section 561.308 of title 31, Code of Federal Regulations.
          (4) Funds.--The term ``funds'' has the meaning given to such 
        term by the Secretary of the Treasury.
          (5) Immediate family.--The term ``immediate family'' of any 
        natural person means the following (whether by the full or half 
        blood or by adoption):
                  (A) Such person's spouse, father, mother, children, 
                brothers, sisters, and grandchildren.
                  (B) The father, mother, brothers, and sisters of such 
                person's spouse.
                  (C) The spouse of a child, brother, or sister of such 
                person.
          (6) 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.

                          PURPOSE AND SUMMARY

    Introduced on January 26, 2023, by Representative French 
Hill, H.R. 554, the Taiwan Conflict Deterrence Act of 2023, 
would direct the Secretary of the Department of the Treasury, 
after delivery of a congressional notification pursuant to the 
Taiwan Relations Act, to submit to Congress a report 
identifying the financial institutions providing services to 
senior Chinese government officials. The bill would direct the 
Secretary to make the report public with a Chinese translation. 
In addition, the Secretary would be authorized to prohibit 
financial institutions from providing services to Chinese 
officials named in the report, as well as their immediate 
family members.

                  BACKGROUND AND NEED FOR LEGISLATION

    Under the Taiwan Relations Act, the President is directed 
to promptly inform Congress of ``any threat to the security or 
the social or economic system of the people on Taiwan and any 
danger to the interests of the United States arising 
therefrom.'' China's belligerence toward Taiwan has been on the 
rise. For example, in 2022, there were 1,737 aircraft of the 
People's Liberation Army tracked in violation of Taiwan's Air 
Defense Identification Zone, more than the previous three years 
combined. Taiwanese officials have also noted frequent Chinese 
surveillance balloon missions over the island. Director William 
Burns of the Central Intelligence Agency has testified that 
Chinese Communist Party Chairman Xi Jinping has ordered the 
military to be prepared for an invasion of Taiwan by 2027.

                                HEARING

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 554: The Committee on 
Financial Services held a hearing on February 7, 2023, titled 
``Combatting the Economic Threat from China.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
February 28, 2023, and ordered H.R. 554 to be reported 
favorably to the House as amended by a recorded vote of 41 ayes 
to 0 nays (Record vote no. FC-14), a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Mr. Hill 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 order to report legislation and amendments thereto. H.R. 
554 was ordered reported favorably to the House as amended by a 
recorded vote of 41 ayes to 0 nays (Record vote no. FC-14), a 
quorum being present.


                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c) 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 goal of H.R. 554 is to publicly 
identify financial institutions that provide services to senior 
Chinese government officials and authorize the Secretary of the 
Department of the Treasury to prohibit them from doing so in 
the future.

                 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.



   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 1973.

                       FEDERAL MANDATES STATEMENT

    Pursuant to section 423 of the Unfunded Mandates Reform 
Act, the Committee adopts as its own the estimate of the 
Federal mandates prepared by the Director of the Congressional 
Budget Office.

                      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 section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    Pursuant 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

    Pursuant to 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 a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1: Short title

    This Act may be cited as the ``Taiwan Conflict Deterrence 
Act of 2023.''

Sec. 2: Report on financial institutions and accounts connected to 
        certain Chinese government officials

    Under this section, the Secretary of the Department of the 
Treasury, after delivery of a congressional notification 
pursuant to the Taiwan Relations Act, would submit to Congress 
a report identifying the financial institutions providing 
services to senior Chinese government officials. The bill would 
direct the Secretary to make the report public with a Chinese 
translation.

Sec. 3: Prohibition on financial services for certain immediate family

    Under this section, the Secretary would be authorized to 
prohibit financial institutions from providing services to 
Chinese officials named in the report, as well as their 
immediate family members.

Sec. 4: Definitions

    This section codifies terms for (i) Appropriate Members of 
Congress, (ii) Financial Institution, (iii) Foreign Financial 
Institution, (iv) Funds, (v) Immediate Family, and (vi) United 
Sates Financial Institution.

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