[House Report 118-799]
[From the U.S. Government Publishing Office]
118th Congress } { Rept. 118-799
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
======================================================================
END FINANCING FOR HAMAS AND STATE SPONSORS OF TERRORISM ACT
_______
December 5, 2024.--Ordered to be printed
_______
Mr. McHenry, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 6322]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 6322) to evaluate and disrupt financing to
Hamas, and to amend title 31, United States Code, to prohibit
the exchange stabilization fund from being used to deal in
Special Drawing Rights from state sponsors of terrorism, and
for other purposes, having considered the same, reports
favorably thereon with an amendment and recommends that the
bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Related Hearings................................................. 3
Committee Consideration.......................................... 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 6
Performance Goals and Objectives................................. 6
Congressional Budget Office Estimates............................ 6
New Budget Authority, Entitlement Authority, and Tax Expenditures 7
Federal Mandates Statement....................................... 7
Advisory Committee Statement..................................... 7
Applicability to Legislative Branch.............................. 7
Earmark Identification........................................... 7
Duplication of Federal Programs.................................. 7
Section-by-Section Analysis of the Legislation................... 7
Ramseyer......................................................... 8
Minority Views................................................... 11
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 ``End Financing for Hamas and State
Sponsors of Terrorism Act''.
SEC. 2. REPORT ON FINANCING FOR HAMAS.
Not later than 180 days after the date of the enactment of this Act,
the Secretary of the Treasury shall submit 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 (which shall
be in unclassified form but may include a classified annex) that
includes--
(1) an analysis of the major sources of financing to Hamas;
(2) a description of United States and multilateral efforts
to disrupt illicit financial flows involving Hamas;
(3) an evaluation of United States efforts to undermine the
ability of Hamas to finance armed hostilities against Israel;
and
(4) an implementation plan with respect to the multilateral
strategy described in section 3.
SEC. 3. MULTILATERAL STRATEGY TO DISRUPT HAMAS FINANCING.
The Secretary of the Treasury, through participation in the G7, and
other appropriate fora, shall develop a strategy in coordination with
United States allies and partners to ensure that Hamas is incapable of
financing armed hostilities against Israel.
SEC. 4. PROHIBITION ON USE OF THE EXCHANGE STABILIZATION FUND TO
EXCHANGE SPECIAL DRAWING RIGHTS OF, OR TO BENEFIT,
STATE SPONSORS OF TERRORISM.
Section 5302 of title 31, United States Code, is amended by adding at
the end the following:
``(e) Prohibition on Use of Fund to Exchange Special Drawing Rights
of, or to Benefit, a State Sponsor of Terrorism.--The Secretary may not
use the fund to--
``(1) deal in Special Drawing Rights from any country
determined by the Secretary of State to have repeatedly
provided support for acts of international terrorism, as
designated pursuant to section 1754(c) of the National Defense
Authorization Act for Fiscal Year 2019, section 40 of the Arms
Export Control Act, or section 620A of the Foreign Assistance
Act of 1961; or
``(2) deal in Special Drawing Rights with any other country
in a manner that the Secretary finds will result in the direct
provision of funds to a country referred to in paragraph
(1).''.
Purpose and Summary
Introduced on November 9, 2023, by Representative Bryan
Steil, H.R. 6322, the End Financing to Hamas and State Sponsors
of Terrorism Act, requires the Secretary of the Department of
the Treasury (Treasury) to submit to Congress an analysis of
major financing sources to Hamas, a description of U.S. and
multilateral efforts to disrupt illicit financial flows to the
group, and an evaluation of efforts to undermine Hamas's
ability to finance armed hostilities against Israel. The bill
also requires the Secretary to develop a multilateral strategy
to ensure that Hamas is incapable of financing global terror.
Background and Need for Legislation
The October 7, 2023, terrorist attack by Hamas demonstrates
that the U.S. requires stronger multilateral efforts and
sanctions enforcement to deprive the group of resources. On
October 18, 2023, Treasury designated Hamas operatives and
financial facilitators not only in Gaza, but also in Sudan,
Turkey, Algeria, and Qatar. Previous sanctions in 2015 and 2019
had targeted financiers in Lebanon and Saudi Arabia. H.R. 6322
will help ensure that sanctions are part of a coherent strategy
to undercut Hamas's ability to wage hostilities against Israel.
Related Hearings
Pursuant to clause 3(c)(6) of rule XIII, the following
hearing was used to develop H.R. 6322: The Subcommittee on
National Security, Illicit Finance, and International Financial
Institutions of the Committee on Financial Services held a
hearing on October 25, 2023, titled ``How America and Its
Allies Can Stop Hamas, Hezbollah, and Iran from Evading
Sanctions and Financing Terror.''
Committee Consideration
The Committee on Financial Services met in open session on
November 14, 2023, and ordered H.R. 6322 to be reported
favorably to the House as amended by a recorded vote of 36 ayes
to 13 nays (Record vote no. FC-113), 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. Steil 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.
6322 was ordered reported favorably to the House as amended by
a recorded vote of 36 ayes to 13 nays (Record vote no. FC-113),
a quorum being present.
An amendment offered by Mr. Casten, no. 3, was not agreed
to by a recorded vote of 21 ayes to 27 nays (Record vote no.
FC-112).
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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. 6322 is to require
the Secretary of the Treasury to submit to Congress an analysis
of major financing sources to Hamas, a description of U.S. and
multilateral efforts to disrupt illicit financial flows to the
group, and an evaluation of efforts to undermine Hamas's
ability to finance armed hostilities against Israel.
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:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
H.R. 6322 would require the Department of the Treasury to
report to the Congress on how Hamas is financed and on efforts
by the United States and other countries to disrupt that
financing. In addition, it would require the department to
coordinate with U.S. allies to prevent Hamas from financing
attacks on Israel. Lastly, the bill would prohibit the
department from exchanging U.S. dollars for Special Drawing
Rights held by countries that support international terrorism.
(Special Drawing Rights are an international reserve asset of
the International Monetary Fund that are distributed to each
member country.)
Based on the cost of similar reports and activities, CBO
estimates that implementing H.R. 6322 would cost less than
$500,000 over the 2024-2028 period. Any spending would be
subject to the availability of appropriated funds.
The CBO staff contact for this estimate is Sunita D'Monte.
The estimate was reviewed by Christina Hawley Anthony, Deputy
Director of Budget Analysis.
Phillip L. Swagel,
Director, Congressional Budget Office.
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 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
Section 1. Short title
This Act may be cited as the ``End Financing to Hamas and
State Sponsors of Terrorism Act''.
Section 2. Report on Hamas financing
The Secretary of the Treasury is required to submit to both
the House Committee on Financial Services and the Senate
Committee on Banking, Housing, and Urban Affairs a report
comprised of the following:
1. an analysis of major financing sources to Hamas;
2. a description of existing United States and
multilateral efforts aimed to disrupt illicit financial
flows involving Hamas;
3. an evaluation of United States efforts to
undermine Hamas' ability to continue financing armed
hostilities against Israel; and
4. an implementation plan for the multilateral
strategy outlined in Section 3.
The report will be made available no later than 180 days
after the enactment date of this bill.
Section 3. Multilateral strategy to disrupt Hamas financing
The Secretary of the Treasury is to develop a strategy
ensuring Hamas is incapable of financing global terrorism and
hostilities against Israel.
This strategy will be developed by the Secretary of the
Treasury in coordination with United States allies and
partners.
Section 4. Prohibition on use of the Exchange Stabilization Fund to
exchange Special Drawing Rights of, or to benefit, State
sponsors of terrorism
Section 4 amends Section 5302 of title 31, United States
Code, by adding a section pertaining to the prohibition on use
of the IMF to exchange Special Drawing Rights by a State
sponsor of terrorism, or with the intention to benefit a State
sponsor of terrorism.
Section 4 accomplishes this by amending Section 5302 of
title 31 and adding the following:
The Secretary may not use the IMF to
exchange Special Drawing Rights from any country that
the Secretary of State has deemed to have provided
repeated support for acts of terrorism.
The Secretary may also not use the IMF to
engage in transactions with other entities that will
result in the provision of an asset to such a country.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
TITLE 31, UNITED STATES CODE
* * * * * * *
SUBTITLE IV--MONEY
* * * * * * *
CHAPTER 53--MONETARY TRANSACTIONS
* * * * * * *
SUBCHAPTER I--CREDIT AND MONETARY EXPANSION
* * * * * * *
Sec. 5302. Stabilizing exchange rates and arrangements
(a)(1) The Department of the Treasury has a stabilization
fund. The fund is available to carry out this section, section
18 of the Bretton Woods Agreement Act (22 U.S.C. 286e-3),
section 3 of the Special Drawing Rights Act (22 U.S.C. 286o),
and the Coronavirus Economic Stabilization Act of 2020, and for
investing in obligations of the United States Government those
amounts in the fund the Secretary of the Treasury, with the
approval of the President, decides are not required at the time
to carry out this section. Proceeds of sales and investments,
earnings, and interest shall be paid into the fund and are
available to carry out this section. However, the fund is not
available to pay administrative expenses.
(2) Subject to approval by the President, the fund is under
the exclusive control of the Secretary, and may not be used in
a way that direct control and custody pass from the President
and the Secretary. Decisions of the Secretary are final and may
not be reviewed by another officer or employee of the
Government.
(b) Consistent with the obligations of the Government in the
International Monetary Fund on orderly exchange arrangements
and a stable system of exchange rates, the Secretary or an
agency designated by the Secretary, with the approval of the
President, may deal in gold, foreign exchange, and other
instruments of credit and securities the Secretary considers
necessary. However, a loan or credit to a foreign entity or
government of a foreign country may be made for more than 6
months in any 12-month period only if the President gives
Congress a written statement that unique or emergency
circumstances require the loan or credit be for more than 6
months.
(c)(1) By the 30th day after the end of each month, the
Secretary shall give the Committee on Banking, Finance and
Urban Affairs of the House of Representatives and the Committee
on Banking, Housing, and Urban Affairs of the Senate a detailed
financial statement on the stabilization fund showing all
agreements made or renewed, all transactions occurring during
the month, and all projected liabilities.
(2) The Secretary shall report each year to the President and
Congress on the operation of the fund.
(d) A repayment of any part of the first subscription payment
of the Government to the International Monetary Fund,
previously paid from the stabilization fund, shall be deposited
in the Treasury as a miscellaneous receipt.
(e) Prohibition on Use of Fund to Exchange Special Drawing
Rights Of, or to Benefit, a State Sponsor of Terrorism.--The
Secretary may not use the fund to--
(1) deal in Special Drawing Rights from any country
determined by the Secretary of State to have repeatedly
provided support for acts of international terrorism,
as designated pursuant to section 1754(c) of the
National Defense Authorization Act for Fiscal Year
2019, section 40 of the Arms Export Control Act, or
section 620A of the Foreign Assistance Act of 1961; or
(2) deal in Special Drawing Rights with any other
country in a manner that the Secretary finds will
result in the direct provision of funds to a country
referred to in paragraph (1).
* * * * * * *
MINORITY VIEWS
H.R. 6322 would effectively prevent the U.S. from trading
Special Drawing Rights (SDRs), which are a reserve asset of the
International Monetary Fund (IMF), with any IMF member
countries, including developing nations and U.S. allies. This
would nullify an important tool for the U.S. to further our
national security goals and interests internationally.
SDRs are international reserve assets created by the IMF
for the benefit of member states of the IMF. Developing
countries can exchange their SDRs with other countries for
cash, that can then be used to finance government operations,
and have been a critical supplement to their balance sheets.
For example, the Biden Administration supported the largest
allocation of SDRs in IMF history, $650 billion during the
COVID-19 pandemic to ensure developing countries had additional
resources without costing the U.S. a penny.\1\
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\1\IMF, Special Drawing Rights (SDR), (Accessed Dec. 4, 2023).
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The primary purpose of the bill is prohibit that which is
already prohibited--and exchange of SDRs by Treasury with State
Sponsors of Terrorism (SSTs). This provision is absurd to think
that Treasury, which has imposed the largest and most
comprehensive set of sanctions on Iran, in addition to other
countries, would then undermine its own sanctions regime by
trading U.S. cash for SST SDRs. We would also point out that
Hamas, which was discussed in relation to this bill, also would
not be affected as it is neither a state nor an IMF member, and
therefore does not have SDRs to trade.
Most problematically, however, is that this bill would
prevent the Treasury from trading SDRs with all countries
around the world unless the Treasury makes a determination that
is impossible to make. A Treasury Department official has
explained that this provision ``is problematic from a legal
perspective in that it could effectively prevent our ability to
engage in all SDR transactions with any country, even in the
context of an IMF program that we support, because we are not
able to track with precision how every dollar exchanged in an
SDR transaction is ultimately used.''\2\ As an example, if a
country uses the U.S. dollars that it obtains from the U.S.
Treasury in an SDR swap and then uses those dollars to buy, for
example, vaccines, from a third country, the bill would require
Treasury to follow the dollars not only to the country that is
making the exchange and to the likely third country where the
vaccines might be bought, but also to any possible subsequent
countries as those currencies get spent.
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\2\Treasury Department, email to House Financial Services Committee
Minority staff, (Nov. 10, 2023).
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H.R. 6322 also requires the Treasury Secretary to issue a
report analyzing Hamas' funding sources and to develop a
multilateral strategy to disrupt Hamas' funding sources. Rep.
Casten (D-IL) offered an amendment to improve the scope of this
report by requiring Treasury to include the total amount Hamas
receives in digital assets, including through mixers. This
amendment was defeated along party lines despite bipartisan
agreement during the debate that this data point would be
helpful.
For these reasons, we oppose H.R. 6322.
Sincerely,
Maxine Waters,
Ranking Member.
Nydia M. Velazquez,
Gregory W. Meeks,
Stephen F. Lynch,
Al Green,
Emanuel Cleaver II,
Bill Foster,
Joyce Beatty,
Juan Vargas,
Sean Casten,
Ayanna Pressley,
Rashida Tlaib,
Sylvia R. Garcia,
Nikema Williams,
Members of Congress.
[all]