[House Report 118-328]
[From the U.S. Government Publishing Office]


118th Congress }                                                {  Report
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                                { 118-328

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



 
              EXPOSING CHINA'S SUPPORT FOR THE TALIBAN ACT

                                _______
                                

 December 19, 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. 4765]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4765) to require the Secretary of the Treasury 
to carry out a study on Chinese support for Afghan illicit 
finance, 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 ``Exposing China's Support for the 
Taliban Act''.

SEC. 2. STUDY ON CHINESE SUPPORT FOR AFGHAN ILLICIT FINANCE.

  (a) Findings.--Congress finds the following:
          (1) Though China and Afghanistan share only a small land 
        border, when it comes to illicit financial activity between the 
        two countries, China has a demonstrated history of 
        permissiveness regarding trafficking and money laundering that 
        could support both the Taliban and its associates.
          (2) A 2014 Financial Action Task Force report titled, 
        ``Financial Flows Linked to the Production and Trafficking of 
        Afghan Opiates'' found evidence of import/export companies 
        registered in China that were transferring funds to 
        Afghanistan, likely as part of trade-based money laundering 
        schemes centered around illicit opium production and 
        trafficking, which, per the United Nations Office on Drugs and 
        Crime (UNODC), is one of the Taliban's main sources of income.
          (3) Since the U.S. withdrawal from Afghanistan in August 
        2021, China has announced its willingness to lend financial 
        support and legitimacy to the Taliban-led government in 
        Afghanistan, including Afghan Interior Minister, Sirajuddin 
        Haqqani, a member of the U.S.-sanctions designated Foreign 
        Terrorist Organization, the Haqqani Network.
          (4) China's permissive policies regarding Afghan illicit 
        finance run counter to the strategic interests of the United 
        States with respect to countering trafficking and preventing 
        terrorist groups from accessing the international financial 
        system.
          (5) China's role as a critical source of financial 
        wherewithal for the Taliban and its associates to process and 
        implement drug and other illicit-activity transactions warrants 
        further study as these actions pose a threat both to the safety 
        and security of the people of Afghanistan and the international 
        community.
          (6) Congress needs to better understand how China could 
        leverage its relationships and resources within Afghanistan and 
        how these activities could directly or indirectly provide 
        financial support to terrorist organizations, including the 
        Taliban and its associates.
  (b) Study.--
          (1) Requirement.--Not later than one year after the date of 
        the enactment of this Act, the Secretary of the Treasury shall 
        provide to the Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, and 
        Urban Affairs of the Senate a report on the financial 
        activities of the Government of China and Chinese entities in 
        connection with the finances of Afghanistan and the Taliban.
          (2) Matters included.--The report under paragraph (1) shall 
        include the following:
                  (A) An assessment of the activities undertaken by the 
                Government of China and Chinese-registered companies to 
                support illicit financial networks in Afghanistan, 
                particularly such networks involved in narcotics 
                trafficking, illicit financial transactions, official 
                corruption, natural resources exploitation, and 
                terrorist networks.
                  (B) An assessment of financial, commercial, and 
                economic activities undertaken by the Government of 
                China and Chinese companies in Afghanistan to support 
                Chinese policies counter to American strategic 
                interests.
                  (C) Any recommendations to Congress regarding 
                legislative or regulatory improvements necessary to 
                support the identification and disruption of Chinese-
                supported illicit financial networks in Afghanistan.
          (3) Form.--The report under paragraph (1) may include a 
        classified annex.

                          PURPOSE AND SUMMARY

    Introduced on July 20, 2023, by Representative Stephen 
Lynch, H.R. 4765, the Exposing China's Support for the Taliban 
Act, requires the Department of the Treasury (Treasury) to 
carry out a study and brief Congress on the financial 
activities of China and Chinese entities in connection with the 
finances of Afghanistan and the Taliban, including activities 
that support illicit financial networks. This bill was 
introduced in the 117th Congress as an amendment to the FY2023 
NDAA and the America COMPETES Act, and as a standalone bill, 
H.R. 6524.

                  BACKGROUND AND NEED FOR LEGISLATION

    China and Afghanistan share a small land border. However, 
there is a significant amount of illicit financial activity, 
including trafficking and money laundering, between the two 
countries. China, in particular, has allowed these with 
activities to support both the Taliban and its associates.
    A 2014 Financial Action Task Force report titled, 
``Financial Flows Linked to the Production and Trafficking of 
Afghan Opiates'' found evidence of import/export companies 
registered in China that were transferring funds to 
Afghanistan. These companies are likely part of trade-based 
money laundering schemes centered around illicit opium 
production and trafficking. The United Nations Office on Drugs 
and Crime (UNODC) has identified this as one of the Taliban's 
main sources of income.
    Subsequent to the U.S. withdrawal from Afghanistan in 
August 2021, China has lent its financial support and 
legitimized the Taliban-led government in Afghanistan. This 
includes recognizing Afghan Interior Minister, Sirajuddin 
Haqqani, who is a member of the U.S.-sanctions designated 
Foreign Terrorist Organization, the Haqqani Network. China's 
permissive policies regarding Afghan illicit finance are 
counter to the strategic interests of the United States with 
respect to countering trafficking and preventing terrorist 
groups from accessing the international financial system.
    China plays a critical role for the Taliban--allowing them 
and their associates to process and implement drug and other 
illicit transactions. This relationship warrants further study 
as these actions pose a threat both to the safety and security 
of the people of Afghanistan and the international community. 
H.R. 4765 will help Congress better understand China's role in 
leveraging its relationships and resources within Afghanistan 
and how these activities could provide financial support to 
terrorist organizations, including the Taliban and its 
associates.

                                HEARING

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 4765: The Subcommittee on 
National Security, Illicit Finance, and International Financial 
Institutions of the Committee on Financial Services held a 
hearing on April 27, 2023, titled ``Oversight of the Financial 
Crimes Enforcement Network (FinCEN) and the Office of Terrorism 
and Financial Intelligence (TFI).

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
July 26, 2023, and ordered H.R. 4765 to be reported favorably 
to the House as amended by a recorded vote of 49 ayes to 0 nays 
(Record vote no. FC-80), 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. Lynch 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. 
4765 was ordered reported favorably to the House as amended by 
a recorded vote of 49 ayes to 0 nays (Record vote no. FC-80), 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. 4765 is for Treasury 
to carry out a study and brief Congress on the financial 
activities of China and Chinese entities in connection with the 
finances of Afghanistan and the Taliban, including activities 
that support illicit financial networks.

                 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

    Pursuant to 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 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

Section 1. Short title

    This Act may be cited as the ``Exposing China's Support for 
the Taliban Act''.

Section 2. Study on Chinese support for Afghan illicit finance

    Section 2 provides findings regarding the financial 
activities between China and Chinese entities in connection 
with the finances of Afghanistan and the Taliban, including 
activities that support illicit financial networks. Section 2 
further requires the U.S. Treasury Department to carry out a 
study and brief Congress on the financial activities of China 
and Chinese entities in connection with the finances of 
Afghanistan and the Taliban within one year of enactment of 
this Act.