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S. 358: Stop Terrorist Operational Resources and Money Act

The text of the bill below is as of Feb 13, 2017 (Introduced).


II

115th CONGRESS

1st Session

S. 358

IN THE SENATE OF THE UNITED STATES

February 13, 2017

(for himself, Mr. Isakson, Mr. Rubio, and Ms. Warren) introduced the following bill; which was read twice and referred to the Committee on Foreign Relations

A BILL

To establish a designation for jurisdictions permissive to terrorism financing, to build the capacity of partner nations to investigate, prosecute, and hold accountable terrorist financiers, to impose restrictions on foreign financial institutions that provide financial services for terrorist organizations, and for other purposes.

1.

Short title

This Act may be cited as the Stop Terrorist Operational Resources and Money Act.

2.

Findings; sense of Congress

(a)

Findings

Congress makes the following findings:

(1)

According to testimony by the Director of National Intelligence before the Committee on Armed Services of the Senate on February 9, 2016, ISIL, with its self-described caliphate in Syria and Iraq, its affiliates and emerging affiliates in other countries, and its increasing ability to direct and inspire attacks against a wide range of targets around the world, has been identified as the preeminent terrorist threat to the United States.

(2)

On February 2, 2015, General John Allen, who was then serving as the Special Presidential Envoy for the Global Coalition to Counter ISIL—

(A)

stated that the United States cannot defeat ISIL through military efforts alone; and

(B)

highlighted the need to deprive the group of access to financial resources.

(3)

The United States and its partners have committed to curtailing ISIL’s financial resources through—

(A)

United Nations Security Council Resolution 2170, adopted August 15, 2014;

(B)

Arab League Resolution 7804, adopted September 7, 2014;

(C)

the Jeddah Communique, published September 11, 2014;

(D)

United Nations Security Council Resolution 2199, adopted February 12, 2015;

(E)

the statement of the International Syria Support Group of November 14, 2015;

(F)

United Nations Security Council Resolution 2249, adopted November 20, 2015; and

(G)

United Nations Security Council Resolution 2253, adopted December 17, 2015.

(4)

Matthew Levitt of the Washington Institute has reported that ISIL exploits many revenue streams in addition to oil revenue and charitable donations. In a November 18, 2015, article, Mr. Levitt states [ISIL] steals livestock; sells foreign fighter passports; taxes minorities and farmers and truckers; runs a sophisticated extortion racket; kidnaps civilians for ransom payments; loots antiquities; and much more..

(5)

The United States and 35 other countries and multinational organizations have acted in concert through the Counter-ISIL Finance Group—

(A)

to cut off ISIL from the international financial system;

(B)

to counter the extortion and exploitation by ISIL of economic assets and resources;

(C)

to deny funding for ISIL from abroad; and

(D)

to prevent ISIL from providing financial or material support to foreign affiliates.

(6)

These actions have included—

(A)

Coalition airstrikes on oil facilities, which reduced ISIL oil revenue by 30 percent between November 2015 and January 2016;

(B)

the designation of 30 ISIL-linked senior leaders and financiers in 2015, which inhibited their use of the international financial system and limited the ability of ISIL to access revenue; and

(C)

the unanimous adoption, on February 12, 2015, of United Nations Security Council Resolution 2199, which—

(i)

warned that ISIL and other extremist groups were trafficking cultural heritage items from Iraq and Syria to fund their recruitment efforts and carry out terrorist attacks; and

(ii)

called on all United Nations member states to prevent such trafficking.

(7)

The Financial Action Task Force, an intergovernmental body established in 1989 to combat money laundering and terrorist financing, has issued 40 recommendations to serve as global standards—

(A)

to protect the integrity of the international financial system; and

(B)

to enhance international cooperation on anti-money laundering and combating the financing of terrorism measures.

(8)

On April 15, 2016, finance ministers from the Group of Twenty (G20) called on the FATF to strengthen its work on identifying and tackling loopholes and deficiencies that remain in the financial system and ensure that the FATF standards are effective and comprehensive, and fully implemented..

(9)

The February 2015 FATF report entitled Financing of the Terrorist Organisation Islamic State in Iraq and the Levant highlighted the use of money and value transfer services (referred to in this paragraph as MVTS), which avoid the banking system by relying on trust-based relationships with other MVTS providers to order payment or receipt of hard currency over email, fax, or phone.

(b)

Sense of Congress

It is the sense of Congress that—

(1)

it is in the interest of peace and stability for regional members of the Global Coalition to Counter ISIL to continue their commitment to, and increase their involvement in, addressing the threat posed by ISIL;

(2)

all Coalition partners should prioritize action against the financial and facilitation networks to deprive ISIL of revenue as a key line of effort in degrading and ultimately defeating ISIL;

(3)

the Department of Justice, the Department of State, and the Department of the Treasury should appropriately increase their efforts—

(A)

to build the capacity of partner nations to investigate, prosecute, and hold accountable terrorist financiers;

(B)

to exchange relevant information regarding investigations of terrorist financiers and facilitators operating in violation of United States sanctions; and

(C)

to build the capacity to request extradition, as appropriate;

(4)

countries in regions in which ISIL has a presence should, as appropriate, regulate and shut down informal exchange houses used by foreign fighters to funnel funds in and out of territory held by ISIL;

(5)

Turkey and other countries in the region should take steps to ensure that fighters, hard currency, energy resources, cultural heritage items, agricultural commodities, and other goods bound to or coming from ISIL are prevented from crossing its border; and

(6)

the President, acting through the Secretary of the Treasury, and in consultation with the Attorney General and the Secretary of Homeland Security, should update the National Money Laundering Strategy required under section 5341 of title 31, United States Code, which has not been updated since 2007.

3.

Definitions

In this Act:

(1)

Act of international terrorism

The term act of international terrorism has the meaning given the term in section 14 of the Iran Sanctions Act of 1996 (50 U.S.C. 1701 note).

(2)

Appropriate congressional committees

The term appropriate congressional committees means—

(A)

the Committee on Foreign Relations of the Senate;

(B)

the Committee on Banking, Housing, and Urban Affairs of the Senate;

(C)

the Committee on Appropriations of the Senate;

(D)

the Committee on Foreign Affairs of the House of Representatives;

(E)

the Committee on Financial Services of the House of Representatives; and

(F)

the Committee on Appropriations of the House of Representatives.

(3)

Classified information

The term classified information has the meaning given the term in section 1(a) of the Classified Information Procedures Act (18 U.S.C. App.).

(4)

Coalition

The term Coalition means the Global Coalition to Counter ISIL.

(5)

FATF

The term FATF means the Financial Action Task Force.

(6)

Foreign terrorist organization

The term foreign terrorist organization means an organization designated by the Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General, as a foreign terrorist organization under section 219(a) of the Immigration and Nationality Act (8 U.S.C. 1189(a)).

(7)

ISIL

The term ISIL means the Islamic State of Iraq and the Levant.

4.

Jurisdictions of terrorism financing concern

(a)

Designation

(1)

In general

The President may designate a country as a Jurisdiction of Terrorism Financing Concern if the President determines that government officials of the country know, or should know, that activities take place within the jurisdiction of the country that substantially finance the operations of, or acts of international terrorism by, one or more foreign terrorist organizations.

(2)

Determination of substantially finance

In making a determination under paragraph (1), the President shall evaluate criteria, which may include—

(A)

the extent to which funds, goods, materiel, and other assets transferred into, out of, or through the country are used, or intended to be used, to finance the operations of, or acts of international terrorism by, foreign terrorist organizations;

(B)

the adequacy of the laws and regulations of the country to prevent transfers described in subparagraph (A) compared to the recommendations of the Financial Action Task Force and other appropriate international standards; or

(C)

the unwillingness or demonstrated inability of the government of the country—

(i)

to prevent the use of its jurisdiction for activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations; and

(ii)

to investigate, prosecute, and hold accountable individuals and entities that participate in activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations.

(b)

Report

(1)

In general

Upon designating a country as a Jurisdiction of Terrorism Financing Concern under subsection (a), the President shall submit a report to the appropriate congressional committees that—

(A)

identifies the country that has been so designated; and

(B)

sets forth the information upon which the President relied to make such designation, including the criteria described in subsection (a)(2).

(2)

Form

The report required under paragraph (1) shall be submitted in an unclassified form, but may include a classified annex.

(c)

Presidential actions with respect to countries designated as jurisdictions of terrorism financing concern

(1)

In general

Not later than 90 days after each report is submitted under subsection (b) with respect to a country designated as a Jurisdiction of Terrorism Financing Concern, the President shall carry out one or more of the actions described in subparagraphs (A) through (G) of paragraph (2).

(2)

Description of presidential actions

Except as provided in subsections (d) and (e), the actions described in this paragraph are—

(A)

absent the permission of the relevant congressional committees, with an additional 60 days of notification beyond the period that would otherwise apply to such a license or grant, ordering the heads of the appropriate United States agencies not to issue any specific licenses and not to grant any other specific authority (or a specified number of authorities) to export any goods, services, or technology worth more than $5,000,000 over a 12-month period to the government of a country designated under subsection (a)(1) under—

(i)

the Export Administration Act of 1979 (50 U.S.C. 4601 et seq.);

(ii)

the Arms Export Control Act (22 U.S.C. 2751 et seq.);

(iii)

the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.); or

(iv)

any other statute that requires the prior review and approval of the United States Government as a condition for the export or reexport of goods, services, or technology;

(B)

withdrawing, limiting, or suspending United States development assistance to the foreign government;

(C)

withdrawing, limiting, or suspending United States security assistance to the foreign government;

(D)

directing the Export-Import Bank of the United States, the Overseas Private Investment Corporation, or the Trade and Development Agency not to approve the issuance of any (or a specified number of) guarantees, insurance, extensions of credit, or participation in the extension of credit with respect to the foreign government;

(E)

consistent with section 701 of the International Financial Institutions Act of 1977 (22 U.S.C. 262(d)), directing the United States executive directors of international financial institutions to oppose and vote against loans primarily benefiting the foreign government;

(F)

prohibiting any United States financial institution from making loans or providing credits totaling more than $10,000,000 in any 12-month period to the foreign government; and

(G)

prohibiting the United States Government from procuring, or entering into any contract for the procurement of, any goods, services, or technology from the foreign government.

(d)

Substitution of agreements

(1)

In general

Instead of carrying out an action under subsection (c), the President may conclude an agreement with the government of a country designated under subsection (a)(1). The existence of an agreement under this subsection with a foreign government may be considered by the President before making any determination under subsection (a)(1) or carrying out an action under subsection (c).

(2)

Agreements

Subject to paragraph (3), the President may enter into an agreement with a foreign government that obligates the foreign government to more effectively counter activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations, including engaging in government-to-government activities that may include—

(A)

cooperation between United States departments and agencies and their foreign government counterparts—

(i)

to update the foreign government’s laws and regulations relating to the prevention of activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations;

(ii)

to strengthen cooperation among agencies of the foreign government and with the United States to facilitate the enforcement of the laws and regulations pertaining to activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations; and

(iii)

to promote information exchanges among agencies of the foreign government and with the United States; and

(B)

training officials of the foreign government to prevent activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations—

(i)

to facilitate the legitimate use of the financial system of the country; and

(ii)

to prevent terrorists from abusing the financial system of the country to sustain their activities.

(3)

Congressional notification

(A)

In general

Not later than 30 days before an agreement under this subsection is scheduled to take effect, the President shall notify the appropriate congressional committees of the terms of such agreement.

(B)

Form

The notification required under subparagraph (A) shall be submitted in an unclassified form, but may include a classified annex.

(C)

Nullification

An agreement under this subsection that has not yet taken effect may be nullified by the enactment of a joint resolution of Congress.

(4)

Certification to congress

(A)

In general

Except as provided in subparagraph (C), not later than 1 year after the effective date of an agreement with a foreign government under paragraph (2), and not less frequently than annually thereafter, for as long as such agreement is in effect, the President shall certify to the appropriate congressional committees that the foreign government—

(i)

is in compliance with the terms of the agreement; and

(ii)

is cooperating with the United States Government to remediate the deficiencies that led to its designation under subsection (a).

(B)

Form

The certification required under subparagraph (A) shall be submitted in an unclassified form, but may include a classified annex.

(C)

Absence of certification

If the President is unable to make the certification required under subparagraph (A), the President, not later than 90 days after the date on which the certification is due, shall carry out one or more of the actions described in subparagraphs (A) through (G) of subsection (c)(2).

(5)

Statutory construction

Nothing in this subsection may be construed to authorize the United States to enter into an agreement covering matters outside the scope of activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations.

(e)

Exceptions

Any action taken under this section may not prohibit or restrict the provision of medicine, medical equipment or supplies, food, or other humanitarian assistance to a foreign country.

(f)

Termination of designation

A designation made under subsection (a) with respect to a country shall terminate on the earlier of—

(1)

the date on which the President certifies to the appropriate congressional committees that the government of such country has taken substantial and verifiable steps to prevent substantial activities that finance the operations of, or acts of international terrorism by, foreign terrorist organizations within its jurisdiction;

(2)

the date on which the President certifies to the appropriate congressional committees that the foreign government has fulfilled its obligations under an agreement under subsection (d), unless such action is expressly reauthorized by law; or

(3)

the date on which the President—

(A)

certifies to the appropriate congressional committees that termination of the designation is in the national security interests of the United States; and

(B)

submits a report to the appropriate congressional committees that describes the reason for such determination.

(g)

Termination of presidential actions and agreements

Any action taken under subsection (c) with respect to a country, and any agreement with a foreign government entered into under subsection (d), shall terminate on the date on which the President makes a certification under subsection (f).

(h)

Preclusion of judicial review

No court shall have jurisdiction to review any Presidential determination or agency action under this Act or any amendment made by this Act.

5.

Assistance for countering terrorism finance

(a)

Findings

Congress makes the following findings:

(1)

In many nations in which financial markets and institutions are misused to finance the operations of, or acts of international terrorism by, foreign terrorist organizations, there are not adequate laws or regulations, or the enforcement of such laws or regulations, to effectively prevent such misuse.

(2)

In providing foreign assistance, the United States should prioritize—

(A)

the promotion and development of laws and regulations that prevent misuse of financial markets and institutions to finance the operations of, or acts of international terrorism by, foreign terrorist organizations; and

(B)

the enhancement of enforcement capabilities of such laws and regulations.

(b)

Allocation of funds for countering terrorism financing

Section 129(b) of the Foreign Assistance Act of 1961 (22 U.S.C. 2151aa(b)) is amended—

(1)

in paragraph (1), by inserting and to counter financial crimes and material support to terrorism after private sector growth; and

(2)

in paragraph (2)—

(A)

in subparagraph (D), by striking and at the end;

(B)

in subparagraph (E), by striking the period at the end and inserting ; and; and

(C)

by adding at the end the following:

(F)

the capability to investigate, prosecute, and hold accountable individuals and entities that finance the operations of, or acts of international terrorism by, groups designated by the Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General, as foreign terrorist organizations under section 219(a) of the Immigration and Nationality Act (8 U.S.C. 1189(a)).

.

6.

Secondary sanctions on financial institutions

(a)

Prohibitions and conditions with respect to certain accounts held by foreign financial institutions

(1)

In general

Not later than 120 days after the date of the enactment of this Act, the President shall prescribe regulations to prohibit, or impose strict conditions on, the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that the President determines, on or after such date of enactment, engages in an activity described in paragraph (2).

(2)

Activities described

A foreign financial institution engages in an activity described in this paragraph by—

(A)

knowingly facilitating a significant transaction or transactions for ISIL or its affiliates;

(B)

knowingly facilitating a significant transaction or transactions of a person identified on the list of specially designated nationals and blocked persons maintained by the Office of Foreign Assets Control of the Department of the Treasury if the property and interests in property of such person are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) for acting on behalf of, acting at the direction of, or being owned or controlled by, ISIL or its affiliates;

(C)

knowingly engaging in money laundering to carry out an activity described in subparagraph (A) or (B); or

(D)

knowingly facilitating a significant transaction or transactions or providing significant financial services to carry out an activity described in subparagraph (A), (B), or (C).

(3)

Penalties

The penalties under subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) shall apply to a person who violates, attempts to violate, conspires to violate, or causes a violation of regulations prescribed under this subsection to the same extent that such penalties apply to a person who commits an unlawful act described in subsection (a) of such section 206.

(4)

Procedures for judicial review of classified information

(A)

In general

The President may submit classified information to a court ex parte and in camera if—

(i)

a finding under this subsection, or a prohibition, condition, or penalty imposed as a result of any such finding, is based on such information; and

(ii)

the court reviews the finding or the imposition of the prohibition, condition, or penalty.

(B)

Rule of construction

Nothing in this paragraph may be construed to confer or imply any right to judicial review of any finding under this subsection or any prohibition, condition, or penalty imposed as a result of any such finding.

(b)

Waiver

(1)

In general

The President may waive, on a case-by-case basis, the application of a prohibition or condition imposed with respect to a foreign financial institution pursuant to subsection (a) for a period of not more than 180 days, and may renew such waiver for additional periods of not more than 180 days, on and after the date on which the President—

(A)

determines that such a waiver is in the national security interests of the United States; and

(B)

submits a report to the appropriate congressional committees that describes the reasons for such determination.

(2)

Form

The report required under paragraph (1)(B) shall be submitted in unclassified form, but may contain a classified annex.

(c)

Special rule To allow for termination of sanctionable activity

The President shall not be required to apply sanctions to a foreign financial institution described in subsection (a) if the President certifies in writing to the appropriate congressional committees that—

(1)

the foreign financial institution—

(A)

is no longer engaging in the activity described in subsection (a)(2); or

(B)

has taken and is continuing to take significant verifiable steps toward terminating the activity described in that subsection; and

(2)

the President has received reliable assurances from the government with primary jurisdiction over the foreign financial institution that the foreign financial institution will not engage in any activity described in subsection (a)(2) in the future.

(d)

Definitions

In this section:

(1)

Account; correspondent account; payable-through account

The terms account, correspondent account, and payable-through account have the meanings given such terms in section 5318A(e) of title 31, United States Code.

(2)

Financial institution

The term financial institution means a financial institution described in subparagraph (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K), (M), (N), (P), (R), (T), (Y), or (Z) of section 5312(a)(2) of title 31, United States Code.

(3)

Foreign financial institution

The term foreign financial institution has the meaning given such term in section 1010.605 of title 31, Code of Federal Regulations.

(4)

ISIL

The term ISIL means—

(A)

the entity known as the Islamic State of Iraq and the Levant and designated by the Secretary of State as a foreign terrorist organization pursuant to section 219(a) of the Immigration and Nationality Act (8 U.S.C. 1189(a)); or

(B)

any person—

(i)

the property or interests in property of which are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.); and

(ii)

who is identified on the specially designated nationals list as an agent, instrumentality, or affiliate of the entity described in subparagraph (A).

(5)

Money laundering

The term money laundering includes the movement of illicit cash or cash equivalent proceeds into, out of, or through a country or a financial institution.

(6)

Specially designated nationals list

The term specially designated nationals list means the list of specially designated nationals and blocked persons maintained by the Office of Foreign Assets Control of the Department of the Treasury.

7.

Inclusion of financing activities in reports on terrorism

Section 140 of the Foreign Relations Authorization Act, Fiscal Years 1988 and 1989 (22 U.S.C. 2656f) is amended—

(1)

in subsection (a)(1)—

(A)

in subparagraph (A)(iii), by striking and at the end;

(B)

in subparagraph (B), by adding and at the end; and

(C)

by adding at the end the following:

(C)

detailed assessments with respect to each foreign country in which activities that finance the operations of, or acts of international terrorism by, groups designated by the Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General, as foreign terrorist organizations under section 219(a) of the Immigration and Nationality Act (8 U.S.C. 1189(a)) are taking place;

; and

(2)

in subsection (b)—

(A)

in paragraph (1)(C)(iv), by adding and at the end;

(B)

by redesignating paragraphs (3) and (4) (as added by section 701(a)(2)(C) of the Intelligence Authorization Act for Fiscal Year 2005 (Public Law 108–487)) as paragraphs (7) and (8), respectively;

(C)

by redesignating paragraphs (3), (4), and (5) as paragraphs (4), (5), and (6), respectively;

(D)

by inserting after paragraph (2) the following:

(3)

with respect to subsection (a)(1)(C)—

(A)

activities within the jurisdiction of the foreign government that substantially finance the operations of, or acts of international terrorism by, groups designated by the Secretary of State, in consultation with the Secretary of the Treasury and the Attorney General, as foreign terrorist organizations under section 219(a) of the Immigration and Nationality Act (8 U.S.C. 1189(a));

(B)

deficiencies in the laws and regulations of the country in prohibiting such activities;

(C)

the extent and effectiveness of efforts to enforce such laws and regulations; and

(D)

where possible, the systemic source of the foreign government’s inability to prevent the activities described in subparagraph (A);

;

(E)

in paragraph (5)(D), as redesignated, by striking and at the end; and

(F)

in paragraph (6), as redesignated, by striking the period at the end and inserting a semicolon.