H.R. 5664 — Introduced in House

I 115th CONGRESS 2d Session H. R. 5664 IN THE HOUSE OF REPRESENTATIVES April 27, 2018Miss Rice of New York (for herself and Mr. King of New York) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Permanent Select Committee on Intelligence (Permanent Select), for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To require a report on the possible exploitation of virtual currencies by terrorist actors, to authorize a competition program to identify regulatory solutions and develop technology with respect to counter terror threat financing, and for other purposes. 1. Short title This Act may be cited as the Stop Terrorist Use of Virtual Currencies Act. 2. Findings The Congress finds the following: (1) Virtual currencies (VC) provide low-cost, high-speed means for verified transactions. (2) When used positively, VCs unite disparate financial markets and provide a convenient means for a number of constituencies, including the economically marginalized, to conduct transactions cheaply across large geographic expanses. (3) Simultaneously, to the extent regulatory frameworks are premised on institution-based transactions, VCs could be exploited by terrorists and cybercriminals to fund untraceable operations. (4) According to the Center for New American Security (CNAS), if VCs become sufficiently liquid and easily convertible, and terrorist groups acquire technical infrastructure needed to support VC activity at a significant scale, VCs could pose a highly dangerous threat to the United States and its partners. (5) The Committee on Financial Services issued a report entitled, Stopping Terror Finance: Securing the U.S. Financial Sector in December, 2016, which includes numerous recommendations to enhance a whole-of-government approach towards counter terrorist financing. 3. Sense of Congress It is the Sense of Congress that— (1) to the extent current statutes require financial institutions to serve as the first line of defense against illicit activity in the global financial system, and that VCs specifically bypass such institutions, the United States needs to adapt its financial regulatory framework to ensure adequate supervision of financial activity; (2) the President should develop principles to prioritize counter terrorist financing among other forms of illicit financial activity and provide recommendations to Congress to address this threat; (3) such principles should include a focus on innovation and public-private partnership; and (4) the Financial Crimes Enforcement Network (FinCEN) should consider issuing more guidance and facilitating the establishment of institutions pursuant to sections 314(a) and 314(b) of the USA PATRIOT Act to facilitate greater information flow within and among global banks. 4. Report The President, acting through the Secretary of the Treasury and the Director of National Intelligence, shall report on the possible exploitation of virtual currencies by terrorist actors. Such report shall include the following elements: (1) Recommendations to update the regulatory oversight structure regarding virtual currencies to address transactions that bypass financial institutions, including banks, Money Services Businesses (MSB), and other financial institutions subject to regulation. (2) Assessment of current efforts by Federal departments and agencies to study and collect intelligence against the terror finance threat and money laundering methodologies. (3) Identification of gaps between Federal and State regulations which could be exploited for illicit funding. 5. Innovation competition (a) Authorization In order to facilitate public-private partnership to develop and enhance illicit finance prevention systems, the Secretary of the Treasury may establish a program (referred to in this section as the competition) to be known as the Competition for Innovation in Combating Illicit Terrorist Financing. (b) Activities supported The Competition may carry out, through the provision of grants or an annual reward, the following activities: (1) Collaborative research Provide grants, for not more than two years, to engage students, entrepreneurs, and financial experts to identify regulatory solutions with respect to the exploitation of VCs by terrorists and other criminals. (2) Competition Establish an annual competition for a reward of not more than $500,000 to any individual, team, or nongovernmental entity that develops technologies to facilitate counter terror threat financing, particularly that addresses the use of VCs or emerging financial technology. (c) Management (1) In general The Secretary of Treasury, in consultation with the Director of National Intelligence, shall promulgate guidelines for review of grant applications to the Competition. (2) Requirements The guidelines required under this subsection shall address, at a minimum, the following: (A) Criteria by which grants shall be selected. (B) Policies to ensure that grants are in furtherance of United States security objectives. (d) Acceptance of funds from outside sources The Competition may accept funds from outside sources, including foreign governments, nongovernmental organizations, and private business entities and, without further appropriation, use such funds to carry out the purpose of the Competition. (e) Rule of construction Nothing in this Act may be construed to make any grant recipient an agent or establishment of the United States Government.