Federal

OFAC Outreach and Engagement Capabilities Enhancement Act

Source: Congress.gov · 2,610 words in original text

What This Bill Does

This bill directs the Comptroller General of the United States to study the Office of Foreign Assets Control's outreach activities to the private sector. The study will examine whether OFAC (the government agency that administers economic sanctions) is effectively communicating with businesses about sanctions requirements. The bill also allows OFAC to potentially establish a voluntary information-sharing program between the government and private companies to improve sanctions enforcement.

Who It Affects

Financial institutions and businesses that must comply with OFAC sanctions regulations. The private sector more broadly, including nonprofits, legal and advisory firms, and technology providers. OFAC staff and leadership. Congress members on the Financial Services and Banking committees.

Key Provisions

The Comptroller General must complete a study within 360 days examining OFAC's outreach goals, strategy, audiences, resources, private sector engagements, feedback systems, privacy protections, and how outreach information supports OFAC's mission (Sec. 3(a)). OFAC must submit a briefing within 60 days after the study is completed to Congress describing how it will improve outreach activities, including how it provides information to regulated communities and protects private sector information (Sec. 3(b)). OFAC must assess whether establishing a voluntary public-private information-sharing partnership is feasible to help administer economic sanctions and protect the financial system from evasion (Sec. 3(c)). The Secretary of the Treasury may require OFAC to establish a three-year pilot program for voluntary information sharing between the government and private sector entities that comply with sanctions (Sec. 3(d)). Any information shared by private companies in the pilot program may only be used to identify activities involving potential sanctions violations and must comply with federal confidentiality requirements (Sec. 3(d)).

What Changes

If this bill becomes law, OFAC will be required to conduct a formal study of its outreach activities and report findings to Congress. OFAC leadership must brief Congress on improvements to its outreach approach. OFAC may establish a voluntary program allowing businesses to share information with the government about potential sanctions violations in exchange for receiving government guidance on sanctions compliance. Businesses participating in this voluntary program would have safeguards protecting their proprietary information from competitive misuse.

Important Definitions

"OFAC" means the Office of Foreign Assets Control (Sec. 3(e)). "Private sector entity" means a business, a nonprofit organization, a nongovernmental organization, a legal and advisory firm that supports such a business or organization, and a technology provider that supports such a business or organization (Sec. 3(e)).

I 118TH CONGRESS 1ST SESSION H. R. 1164 To require the Comptroller General of the United States to conduct a study with respect to outreach activities performed by the Office of Foreign Assets Control, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 24, 2023 Mr. LYNCH introduced the following bill; which was referred to the Committee on Foreign Affairs A BILL To require the Comptroller General of the United States to conduct a study with respect to outreach activities performed by the Office of Foreign Assets Control, 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 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘OFAC Outreach and 4 Engagement Capabilities Enhancement Act’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 1164 IH (1) The Office of Foreign Assets Control is the 1 United States Government agency responsible for 2 administering and enforcing economic sanctions pro- 3 grams, primarily against countries and groups of in- 4 dividuals, such as terrorists and narcotics traf- 5 fickers. 6 (2) All United States persons must comply with 7 OFAC regulations, including all United States citi- 8 zens and permanent resident aliens regardless of 9 where they are located, all persons and entities with- 10 in the United States, all United States incorporated 11 entities and their foreign branches. In the cases of 12 certain programs, foreign subsidiaries owned or con- 13 trolled by United States companies also must com- 14 ply. Certain programs also require foreign persons in 15 possession of United States-origin goods to comply. 16 (3) While the sanctions announcements are 17 themselves notice of the requirements placed on all 18 United States persons, OFAC conducts additional 19 outreach through its compliance office, serving as 20 OFAC’s primary liaison to the private sector and op- 21 erating OFAC’s public ‘‘hotline’’ for sanctions-re- 22 lated questions and the conduct of civil investiga- 23 tions for potential sanctions violations. 24 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 1164 IH (4) While many industries, such as large multi- 1 national financial institutions and industrial firms, 2 have sophisticated sanctions departments to manage 3 compliance with the strict-liability mandates from 4 OFAC and to enact practices to defend their busi- 5 ness’ sales and supply chains from abuse by sanc- 6 tions-designated bad actors, many smaller entities 7 and industries, do not. 8 (5) According to the U.S. Department of the 9 Treasury’s 2021 Sanctions Review, ‘‘Sanctions are 10 only as effective as their implementation, especially 11 with regard to communication and engagement. In 12 order to better calibrate the use of this tool, Treas- 13 ury needs to communicate and coordinate more ef- 14 fectively with stakeholders affected by the use of fi- 15 nancial sanctions. Treasury can build on existing 16 outreach and engagement capabilities through en- 17 hanced communication with industry, financial insti- 18 tutions, allies, civil society, and the media, as well as 19 new constituencies, particularly in the digital assets 20 space.’’. 21 (6) The Assistant Secretary for Terrorism and 22 Financial Intelligence noted in a 2022 speech to a 23 private-sector audience at the American Conference 24 Institute, ‘‘We need to redouble efforts—to make 25 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 1164 IH sure that these networks do not pass under your 1 radar and around our laws, and that when you ob- 2 tain information about them, you promptly take ac- 3 tion. This is not just a matter of compliance; it is 4 a moral imperative. The choice is between permitting 5 and preventing sanctions evasion—there is no space 6 for neutral ground here.’’. 7 (7) Examples of successful, robust Federal Gov- 8 ernment public-private sector outreach programs 9 that support the agency mission abound from the 10 law enforcement, Intelligence Community, and regu- 11 latory agencies, such as the Federal Bureau of In- 12 vestigation’s InfraGard, the Public-Private Analytic 13 Exchange Program from the Department of Home- 14 land Security and the Office of the Director of Na- 15 tional Intelligence, and the Financial Crime Enforce- 16 ment Network’s FinCEN Exchange. 17 (8) The FinCEN Exchange, from OFAC’s sis- 18 ter agency within the U.S. Department of the Treas- 19 ury, was mandated on January 1, 2021, when Con- 20 gress enacted the Anti-Money Laundering Act of 21 2020 (AML Act). Section 6103 of the AML Act es- 22 tablishes the FinCEN Exchange to facilitate a vol- 23 untary public-private information-sharing partner- 24 ship between law enforcement agencies, national se- 25 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 1164 IH curity agencies, financial institutions, and FinCEN 1 to effectively and efficiently combat money laun- 2 dering, terrorism financing, organized crime, and 3 other financial crimes, protect the financial system 4 from illicit use, and promote national security. 5 (9) The objective of FinCEN Exchange is to 6 develop, deliver, and sustain innovative public-pri- 7 vate information sharing in order to enable the pri- 8 vate sector to better identify risks and provide 9 FinCEN and law enforcement with critical informa- 10 tion to disrupt money laundering, terrorism financ- 11 ing, and other financial crimes. The program goals 12 of the exchange are to: 13 (A) Enhance communication, collaboration, 14 and partnerships among FinCEN, law enforce- 15 ment, and financial institutions. 16 (B) Support priority national security and 17 counter-illicit finance investigations and poli- 18 cies. 19 (C) Enhance the utility of suspicious activ- 20 ity reports and share feedback with the private 21 sector. 22 (D) Encourage, enable, and acknowledge a 23 focus on high-value and high-impact activities. 24 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •HR 1164 IH (E) Conduct proactive outreach to allow 1 industry to better prioritize efforts and utilize 2 existing resources. 3 SEC. 3. OFAC OUTREACH ASSESSMENT. 4 (a) GAO STUDY.— 5 (1) OUTREACH.—The Comptroller General of 6 the United States shall, not later than 360 days 7 after the date of the enactment of this section, carry 8 out a study with respect to the quality and efficacy 9 of outreach activities performed by OFAC in support 10 of the mission of OFAC on or before the date of the 11 enactment of this section. 12 (2) STUDY REQUIREMENTS.— 13 (A) IN GENERAL.—The Comptroller Gen- 14 eral of the United States shall, in carrying out 15 paragraph (1), examine each of the following 16 with respect to outreach activities performed by 17 OFAC: 18 (i) Goals and strategy. 19 (ii) Audiences. 20 (iii) Resources. 21 (iv) Number and type of engagements 22 with private sector entities. 23 (v) Feedback capabilities. 24 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •HR 1164 IH (vi) Appropriate privacy and competi- 1 tive fairness measures for information re- 2 ceived from or shared with private sector 3 entities. 4 (vii) Compliance with the Federal Ad- 5 visory Committee Act, where required. 6 (viii) How information obtained from 7 outreach activities is used by OFAC to 8 support the mission of OFAC. 9 (ix) How, if at all, outreach activities 10 help with enforcement functions. 11 (B) SURVEY OF SIMILAR PROGRAMS.—In 12 carrying out the study required under this sub- 13 section, the Comptroller General of the United 14 States shall— 15 (i) examine outreach programs admin- 16 istered by agencies with similar national 17 security and regulatory missions, including 18 outreach programs administered by similar 19 agencies, including the Financial Crimes 20 Enforcement Network; and 21 (ii) identify best practices, similarities, 22 and differences to inform the evaluation of 23 existing OFAC outreach programs. 24 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •HR 1164 IH (b) BRIEFING.—OFAC shall, not later than 60 days 1 after the date on which the Comptroller General of the 2 United States submits a study pursuant to subsection (a), 3 and after considering the results of such study, submit to 4 the Committee on Financial Services of the House of Rep- 5 resentatives and the Committee on Banking, Housing, and 6 Urban Affairs on the Senate a briefing that describes how 7 OFAC will improve its outreach activities going forward, 8 including, at the time of such briefing, in relation to 9 OFAC outreach activities, how OFAC— 10 (1) provides information to those who must 11 comply with OFAC sanctions, especially those in 12 communities and industries that are known to be 13 targeted by bad actors designated by sanctions; 14 (2) uses outreach activities to support to the 15 important mission of OFAC, with minimal redirec- 16 tion of staff and resources; 17 (3) ensures that the selection of private-sector 18 participants for outreach activities is free from fa- 19 voritism; 20 (4) ensures that private-sector information ob- 21 tained by OFAC during outreach activities is appro- 22 priately safeguarded; 23 (5) ensures that information shared at outreach 24 functions can be publicized in a manner that does 25 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •HR 1164 IH not competitively disadvantage those not selected to 1 participate in such outreach functions; 2 (6) applies Federal requirements with respect to 3 all outreach activities, including Federal Advisory 4 Committee Act requirements; 5 (7) ensures that private-sector participants not 6 use outreach activities as an opportunity to pitch 7 products or services or receive advance information 8 about OFAC or Department of the Treasury pro- 9 curement opportunities; and 10 (8) maintains compliance with OFAC ethics re- 11 quirements. 12 (c) FEASIBILITY OF VOLUNTARY EXCHANGE PRO- 13 GRAM.—OFAC shall, after reviewing the report produced 14 by the Comptroller General of the United States pursuant 15 to subsection (a) and submitting the briefing required 16 under subsection (b), access the feasibility of the establish- 17 ment of a program by OFAC designed to— 18 (1) facilitate a voluntary public-private informa- 19 tion sharing partnership among law enforcement 20 agencies, national security agencies, financial institu- 21 tions, and OFAC to effectively and efficiently admin- 22 ister and enforce economic sanctions against tar- 23 geted foreign countries and regimes, terrorists, inter- 24 national narcotics traffickers, those engaged in ac- 25 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •HR 1164 IH tivities related to the proliferation of weapons of 1 mass destruction, and other threats to the national 2 security, foreign policy, or economy of the United 3 States by promoting innovation and technical ad- 4 vances in reporting; 5 (2) protect the financial system from illicit use, 6 including evasions of existing economic sanctions 7 programs; and 8 (3) facilitate two-way information exchange be- 9 tween OFAC and persons who are required to com- 10 ply with sanctions administered and enforced by 11 OFAC, including financial institutions, business sec- 12 tors frequently affected by sanctions programs, and 13 non-government organizations and humanitarian 14 groups impacted by such sanctions programs. 15 (d) PILOT PROGRAM.— 16 (1) IN GENERAL.—The Secretary of the Treas- 17 ury may, after considering the results of the study 18 conducted by the Comptroller General of the United 19 States pursuant to subsection (a), the briefing pro- 20 vided by OFAC pursuant to subsection (b), and the 21 feasibility assessment conducted by OFAC pursuant 22 to subsection (c), require OFAC to establish a 3- 23 year pilot of a program designed to— 24 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •HR 1164 IH (A) facilitate a voluntary public-private in- 1 formation sharing partnership among law en- 2 forcement agencies, national security agencies, 3 financial institutions, and OFAC to effectively 4 and efficiently administer and enforce economic 5 sanctions against targeted foreign countries and 6 regimes, terrorists, international narcotics traf- 7 fickers, those engaged in activities related to 8 the proliferation of weapons of mass destruc- 9 tion, and other threats to the national security, 10 foreign policy, or economy of the United States 11 by promoting innovation and technical advances 12 in reporting; 13 (B) protect the financial system from illicit 14 use, including evasions of existing economic 15 sanctions programs; and 16 (C) facilitate two-way information ex- 17 change between OFAC and persons who are re- 18 quired to comply with sanctions administered 19 and enforced by OFAC, including financial in- 20 stitutions, business sectors frequently affected 21 by sanctions programs, and non-government or- 22 ganizations and humanitarian groups impacted 23 by such sanctions programs. 24 (2) INFORMATION SHARING.— 25 VerDate Sep 11 2014 22:42 Feb 24, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1164.IH H1164 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •HR 1164 IH (A) IN GENERAL.—Any information shared 1 by a private sector entity as a part of any pro- 2 gram established under paragraph (1) shall be 3 shared— 4 (i) in compliance with all other appli- 5 cable Federal laws and regulations; and 6 (ii) in such a manner as to ensure the 7 appropriate confidentiality of personal in- 8 formation. 9 (B) USE OF INFORMATION.—Information 10 received by OFAC from a private sector entity 11 as a part of any program established under 12 paragraph (1) may not be used for any purpose 13 other than identifying and reporting on activi- 14 ties that may involve the comp [Text truncated for display. 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