Financial Technology Protection Act

I 117TH CONGRESS 1ST SESSION H. R. 296 To establish an Independent Financial Technology Task Force to Combat Terrorism and Illicit Financing, to provide rewards for information lead- ing to convictions related to terrorist use of digital currencies, to establish a Fintech Leadership in Innovation and Financial Intelligence Program to encourage the development of tools and programs to combat terrorist and illicit use of digital currencies, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 13, 2021 Mr. BUDD (for himself, Mr. DAVIDSON, Mr. LYNCH, Mr. DONALDS, and Mr. SOTO) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the Budget, 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 establish an Independent Financial Technology Task Force to Combat Terrorism and Illicit Financing, to provide rewards for information leading to convictions related to terrorist use of digital currencies, to establish a Fintech Leadership in Innovation and Financial Intel- ligence Program to encourage the development of tools and programs to combat terrorist and illicit use of digital currencies, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 296 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Financial Technology 2 Protection Act’’. 3 SEC. 2. SENSE OF CONGRESS. 4 It is the sense of Congress that the Federal Govern- 5 ment should prioritize the investigation of terrorist and 6 illicit use of new financial technology, including digital 7 currencies. 8 SEC. 3. INDEPENDENT FINANCIAL TECHNOLOGY TASK 9 FORCE TO COMBAT TERRORISM AND ILLICIT 10 FINANCING. 11 (a) ESTABLISHMENT.—There is established the Inde- 12 pendent Financial Technology Task Force to Combat Ter- 13 rorism and Illicit Financing (the ‘‘Task Force’’), which 14 shall consist of— 15 (1) the Secretary of the Treasury, who shall 16 serve as the head of the Task Force; 17 (2) the Attorney General; 18 (3) the Director of National Intelligence; 19 (4) the Director of the Financial Crimes En- 20 forcement Network; 21 (5) the Director of the Secret Service; 22 (6) the Director of the Federal Bureau of In- 23 vestigation; and 24 (7) 6 individuals appointed by the Secretary of 25 the Treasury, in consultation with the members of 26 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 296 IH the Task Force described under paragraphs (2) 1 through (6), to represent the private sector (includ- 2 ing the banking industry, nonprofit groups, and 3 think tanks), with at least two of such individuals 4 having experience in the Fintech industry. 5 (b) DUTIES.—The Task Force shall— 6 (1) conduct independent research on terrorist 7 and illicit use of new financial technologies, includ- 8 ing digital currencies; and 9 (2) develop legislative and regulatory proposals 10 to improve counter-terrorist and counter-illicit fi- 11 nancing efforts. 12 (c) ANNUAL CONGRESSIONAL REPORT.—Not later 13 than 1 year after the date of the enactment of this Act, 14 and annually thereafter, the Task Force shall issue a re- 15 port to the Congress containing the findings and deter- 16 minations made by the Task Force in the previous year 17 and any legislative and regulatory proposals developed by 18 the Task Force. 19 SEC. 4. REWARDS FOR INFORMATION RELATED TO TER- 20 RORIST USE OF DIGITAL CURRENCIES. 21 (a) IN GENERAL.—The Secretary of the Treasury, in 22 consultation with the Attorney General, shall establish a 23 fund to pay a reward, not to exceed $450,000, to any per- 24 son who provides information leading to the conviction of 25 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 296 IH an individual involved with terrorist use of digital cur- 1 rencies. 2 (b) USE OF FINES AND FORFEITURES.—With re- 3 spect to fines and forfeitures related to the conviction of 4 an individual involved with terrorist use of digital cur- 5 rencies, the Secretary of the Treasury shall, subject to the 6 availability of appropriations made in advance— 7 (1) use such amounts to pay rewards under this 8 section related to such conviction; and 9 (2) with respect to any such amounts remaining 10 after payments are made under paragraph (1), de- 11 posit such amounts in the Fintech Leadership in In- 12 novation and Financial Intelligence Program. 13 SEC. 5. FINTECH LEADERSHIP IN INNOVATION AND FINAN- 14 CIAL INTELLIGENCE PROGRAM. 15 (a) ESTABLISHMENT.—There is established a pro- 16 gram to be known as the ‘‘Fintech Leadership in Innova- 17 tion and Financial Intelligence Program’’, which shall be 18 funded as provided under section 4(b)(2). 19 (b) INNOVATION GRANTS.— 20 (1) IN GENERAL.—The Secretary of the Treas- 21 ury shall make grants for the development of tools 22 and programs to detect terrorist and illicit use of 23 digital currencies. 24 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 296 IH (2) ELIGIBLE RECIPIENTS.—The Secretary may 1 make grants under this subsection to entities located 2 in the United States, including academic institu- 3 tions, companies, nonprofit institutions, individuals, 4 and any other entities located in the United States 5 that the Secretary determines appropriate. 6 (3) ELIGIBLE PROJECTS.—With respect to tools 7 and programs described under paragraph (1), in ad- 8 dition to grants for the development of such tools 9 and programs, the Secretary may make grants 10 under this subsection to carry out pilot programs 11 using such tools, the development of test cases using 12 such tools, and research related to such tools. 13 (4) PREFERENCES.—In making grants under 14 this subsection, the Secretary shall give preference 15 to— 16 (A) technology that is nonproprietary or 17 that is community commons-based; 18 (B) computer code that is developed and 19 released on an open source basis; 20 (C) tools that are proactive (such as meet- 21 ing regulatory requirements under ‘‘know your 22 customer’’ and anti-money laundering require- 23 ments for any entity that has to comply with 24 U.S. Government regulations) vs. reactive (such 25 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 296 IH as aiding law enforcement organizations in 1 catching illegal activity after the fact); and 2 (D) tools and incentives that are on decen- 3 tralized platforms. 4 (5) OTHER REQUIREMENTS.— 5 (A) USE OF EXISTING GLOBAL STAND- 6 ARDS.—Any new technology developed with a 7 grant made under this subsection shall be based 8 on existing global standards, such as those de- 9 veloped by the Internet Engineering Task Force 10 (IETF) and the World Wide Web Consortium 11 (W3C). 12 (B) SUPPORTING EXISTING LAWS OR REG- 13 ULATIONS.—Tools and programs developed with 14 a grant made under this subsection shall be in 15 support of existing laws or regulations, includ- 16 ing the Bank Secrecy Act, and make efforts to 17 balance privacy and anti-money laundering con- 18 cerns. 19 (C) OPEN ACCESS REQUIREMENT.—Tools 20 and programs developed with a grant made 21 under this subsection shall be freely accessible 22 and usable by the public. This requirement may 23 be fulfilled by publicly availing application pro- 24 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 296 IH gramming interfaces or software development 1 kits. 2 SEC. 6. PREVENTING ROGUE AND FOREIGN ACTORS FROM 3 EVADING SANCTIONS. 4 (a) REPORT AND STRATEGY WITH RESPECT TO DIG- 5 ITAL CURRENCIES AND OTHER RELATED EMERGING 6 TECHNOLOGIES.— 7 (1) IN GENERAL.—Not later than 180 days 8 after the date of the enactment of this Act, the 9 President, acting through the Secretary of Treasury 10 and in consultation with the Attorney General, the 11 Secretary of State, the Secretary of Homeland Secu- 12 rity, the Director of National Intelligence, the Direc- 13 tor of the Office of Management and Budget, and 14 the appropriate Federal banking agencies and Fed- 15 eral functional regulators, shall— 16 (A) submit to the appropriate congres- 17 sional committees a report that identifies and 18 describes the potential uses of digital currencies 19 and other related emerging technologies by 20 states, non-state actors, and foreign terrorist 21 organizations to evade sanctions, finance ter- 22 rorism, or launder monetary instruments, and 23 threaten United States national security; and 24 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 296 IH (B) develop and submit to the appropriate 1 congressional committees a strategy to mitigate 2 and prevent such illicit use of digital currencies 3 and other related emerging technologies. 4 (2) FORM; PUBLIC AVAILABILITY.— 5 (A) FORM.—The report and strategy re- 6 quired under paragraph (1) shall be submitted 7 in unclassified form, but may contain a classi- 8 fied annex. 9 (B) PUBLIC AVAILABILITY.—The unclassi- 10 fied portion of such report and strategy shall be 11 made available to the public and posted on the 12 internet website of the Department of Treas- 13 ury— 14 (i) in pre-compressed, easily down- 15 loadable versions that are made available 16 in all appropriate formats; and 17 (ii) in machine-readable format, if ap- 18 plicable. 19 (3) SOURCES OF INFORMATION.—In preparing 20 the report and strategy required under paragraph 21 (1), the President may utilize any credible publica- 22 tion, database, web-based resource, and any credible 23 information compiled by any government agency, 24 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 296 IH nongovernmental organization, or other entity that 1 is made available to the President. 2 (b) BRIEFING.—Not later than 2 years after the date 3 of the enactment of this Act, the Secretary of the Treasury 4 shall brief the appropriate congressional committees on 5 the implementation of the strategy required under sub- 6 section (a). 7 SEC. 7. DETERMINATION OF BUDGETARY EFFECTS. 8 The budgetary effects of this Act, for the purpose of 9 complying with the Statutory Pay-As-You-Go Act of 2010, 10 shall be determined by reference to the latest statement 11 titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 12 Act, submitted for printing in the Congressional Record 13 by the Chairman of the House Budget Committee, pro- 14 vided that such statement has been submitted prior to the 15 vote on passage. 16 SEC. 8. DEFINITIONS. 17 For purposes of this Act: 18 (1) APPROPRIATE CONGRESSIONAL COMMIT- 19 TEES.—The term ‘‘appropriate congressional com- 20 mittees’’ means— 21 (A) the Committee on Financial Services, 22 the Committee on the Judiciary, the Permanent 23 Select Committee on Intelligence, and the Com- 24 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 296 IH mittee on Foreign Affairs of the House of Rep- 1 resentatives; and 2 (B) the Committee on Banking, Housing, 3 and Urban Affairs, the Committee on Home- 4 land Security and Governmental Affairs, the 5 Committee on the Judiciary, the Select Com- 6 mittee on Intelligence, and the Committee on 7 Foreign Relations of the Senate. 8 (2) APPROPRIATE FEDERAL BANKING AGEN- 9 CIES.—The term ‘‘appropriate Federal banking 10 agencies’’ has the meaning given the term in section 11 3 of the Federal Deposit Insurance Act (12 U.S.C. 12 1813). 13 (3) BANK SECRECY ACT.—The term ‘‘Bank Se- 14 crecy Act’’ means— 15 (A) section 21 of the Federal Deposit In- 16 surance Act; 17 (B) chapter 2 of title I of Public Law 91– 18 508; and 19 (C) subchapter II of chapter 53 of title 31, 20 United States Code. 21 (4) DIGITAL CURRENCY.—The term ‘‘digital 22 currency’’— 23 (A) means a digital representation of value 24 that— 25 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 296 IH (i) is used as a medium of exchange, 1 unit of account, or store of value; and 2 (ii) is not established legal tender, 3 whether or not denominated in established 4 legal tender; and 5 (B) does not include— 6 (i) a transaction in which a merchant 7 grants, as part of an affinity or rewards 8 program, value that cannot be taken from 9 or exchanged with the merchant for legal 10 tender, bank credit, or digital currency; or 11 (ii) a digital representation of value 12 issued by or on behalf of a publisher and 13 used solely within an online game, game 14 platform, or family of games sold by the 15 same publisher or offered on the same 16 game platform. 17 (5) FEDERAL FUNCTIONAL REGULATOR.—The 18 term ‘‘Federal functional regulator’’ has the mean- 19 ing given that term in section 509 of the Gramm- 20 Leach-Bliley Act (15 U.S.C. 6809). 21 (6) FOREIGN TERRORIST ORGANIZATION.—The 22 term ‘‘foreign terrorist organization’’ means an or- 23 ganization that is designated as a foreign terrorist 24 VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 296 IH organization under section 219 of the Immigration 1 and Nationality Act (8 U.S.C. 1189). 2 (7) TERRORIST.—The term ‘‘terrorist’’ includes 3 a person carrying out domestic terrorism or inter- 4 national terrorism (as such terms are defined, re- 5 spectively, under section 2331 of title 18, United 6 States Code). 7 Æ VerDate Sep 11 2014 05:16 Feb 06, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\H296.IH H296 kjohnson on DSK79L0C42PROD with BILLS