[House Report 118-328]
[From the U.S. Government Publishing Office]
118th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 118-328
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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.