Financial Technology Protection Act

IIB 116TH CONGRESS 1ST SESSION H. R. 56 IN THE SENATE OF THE UNITED STATES JANUARY 29, 2019 Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs AN ACT 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. VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 2 HR 56 RFS 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 ‘‘Financial Technology 4 Protection Act’’. 5 SEC. 2. SENSE OF CONGRESS. 6 It is the sense of Congress that the Federal Govern- 7 ment should prioritize the investigation of terrorist and 8 illicit use of new financial technology, including digital 9 currencies. 10 SEC. 3. INDEPENDENT FINANCIAL TECHNOLOGY TASK 11 FORCE TO COMBAT TERRORISM AND ILLICIT 12 FINANCING. 13 (a) ESTABLISHMENT.—There is established the Inde- 14 pendent Financial Technology Task Force to Combat Ter- 15 rorism and Illicit Financing (the ‘‘Task Force’’), which 16 shall consist of— 17 (1) the Secretary of the Treasury, who shall 18 serve as the head of the Task Force; 19 (2) the Attorney General; 20 (3) the Director of National Intelligence; 21 (4) the Director of the Financial Crimes En- 22 forcement Network; 23 (5) the Director of the Secret Service; 24 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 3 HR 56 RFS (6) the Director of the Federal Bureau of In- 1 vestigation; and 2 (7) 6 individuals appointed by the Secretary of 3 the Treasury, in consultation with the members of 4 the Task Force described under paragraphs (2) 5 through (6), to represent the private sector (includ- 6 ing the banking industry, nonprofit groups, and 7 think tanks), with at least 2 of such individuals hav- 8 ing experience in the Fintech industry. 9 (b) DUTIES.—The Task Force shall— 10 (1) conduct independent research on terrorist 11 and illicit use of new financial technologies, includ- 12 ing digital currencies; and 13 (2) develop legislative and regulatory proposals 14 to improve counter-terrorist and counter-illicit fi- 15 nancing efforts. 16 (c) ANNUAL CONGRESSIONAL REPORT.—Not later 17 than 1 year after the date of the enactment of this Act, 18 and annually thereafter, the Task Force shall issue a re- 19 port to the Congress containing the findings and deter- 20 minations made by the Task Force in the previous year 21 and any legislative and regulatory proposals developed by 22 the Task Force. 23 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 4 HR 56 RFS SEC. 4. REWARDS FOR INFORMATION RELATED TO TER- 1 RORIST USE OF DIGITAL CURRENCIES. 2 (a) IN GENERAL.—The Secretary of the Treasury, in 3 consultation with the Attorney General, shall establish a 4 fund to pay a reward, not to exceed $450,000, to any per- 5 son who provides information leading to the conviction of 6 an individual involved with terrorist use of digital cur- 7 rencies. 8 (b) USE OF FINES AND FORFEITURES.—With re- 9 spect to fines and forfeitures related to the conviction of 10 an individual involved with terrorist use of digital cur- 11 rencies, the Secretary of the Treasury shall, subject to the 12 availability of appropriations made in advance— 13 (1) use such amounts to pay rewards under this 14 section related to such conviction; and 15 (2) with respect to any such amounts remaining 16 after payments are made under paragraphs (1) and 17 (2), deposit such amounts in the Fintech Leadership 18 in Innovation and Financial Intelligence Program. 19 SEC. 5. FINTECH LEADERSHIP IN INNOVATION AND FINAN- 20 CIAL INTELLIGENCE PROGRAM. 21 (a) ESTABLISHMENT.—There is established a pro- 22 gram to be known as the ‘‘Fintech Leadership in Innova- 23 tion and Financial Intelligence Program’’, which shall be 24 funded as provided under section 4(b)(2). 25 (b) INNOVATION GRANTS.— 26 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 5 HR 56 RFS (1) IN GENERAL.—The Secretary of the Treas- 1 ury shall make grants for the development of tools 2 and programs to detect terrorist and illicit use of 3 digital currencies. 4 (2) ELIGIBLE RECIPIENTS.—The Secretary may 5 make grants under this subsection to entities located 6 in the United States, including academic institu- 7 tions, companies, nonprofit institutions, individuals, 8 and any other entities located in the United States 9 that the Secretary determines appropriate. 10 (3) ELIGIBLE PROJECTS.—With respect to tools 11 and programs described under paragraph (1), in ad- 12 dition to grants for the development of such tools 13 and programs, the Secretary may make grants 14 under this subsection to carry out pilot programs 15 using such tools, the development of test cases using 16 such tools, and research related to such tools. 17 (4) PREFERENCES.—In making grants under 18 this subsection, the Secretary shall give preference 19 to— 20 (A) technology that is nonproprietary or 21 that is community commons-based; 22 (B) computer code that is developed and 23 released on an open source basis; 24 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 6 HR 56 RFS (C) tools that are proactive (such as meet- 1 ing regulatory requirements under ‘‘know your 2 customer’’ and anti-money laundering require- 3 ments for any entity that has to comply with 4 U.S. Government regulations) vs. reactive (such 5 as aiding law enforcement organizations in 6 catching illegal activity after the fact); and 7 (D) tools and incentives that are on decen- 8 tralized platforms. 9 (5) OTHER REQUIREMENTS.— 10 (A) USE OF EXISTING GLOBAL STAND- 11 ARDS.—Any new technology developed with a 12 grant made under this subsection shall be based 13 on existing global standards, such as those de- 14 veloped by the Internet Engineering Task Force 15 (IETF) and the World Wide Web Consortium 16 (W3C). 17 (B) SUPPORTING EXISTING LAWS OR REG- 18 ULATIONS.—Tools and programs developed with 19 a grant made under this subsection shall be in 20 support of existing laws or regulations, includ- 21 ing the Bank Secrecy Act, and make efforts to 22 balance privacy and anti-money laundering con- 23 cerns. 24 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 7 HR 56 RFS (C) OPEN ACCESS REQUIREMENT.—Tools 1 and programs developed with a grant made 2 under this subsection shall be freely accessible 3 and usable by the public. This requirement may 4 be fulfilled by publicly availing application pro- 5 gramming interfaces or software development 6 kits. 7 SEC. 6. PREVENTING ROGUE AND FOREIGN ACTORS FROM 8 EVADING SANCTIONS. 9 (a) REPORT AND STRATEGY WITH RESPECT TO DIG- 10 ITAL CURRENCIES AND OTHER RELATED EMERGING 11 TECHNOLOGIES.— 12 (1) IN GENERAL.—Not later than 180 days 13 after the date of the enactment of this Act, the 14 President, acting through the Secretary of Treasury 15 and in consultation with the Attorney General, the 16 Secretary of State, the Secretary of Homeland Secu- 17 rity, the Director of National Intelligence, the Direc- 18 tor of the Office of Management and Budget, and 19 the appropriate Federal banking agencies and Fed- 20 eral functional regulators, shall— 21 (A) submit to the appropriate congres- 22 sional committees a report that identifies and 23 describes the potential uses of digital currencies 24 and other related emerging technologies by 25 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 8 HR 56 RFS states, non-state actors, and foreign terrorist 1 organizations to evade sanctions, finance ter- 2 rorism, or launder monetary instruments, and 3 threaten United States national security; and 4 (B) develop and submit to the appropriate 5 congressional committees a strategy to mitigate 6 and prevent such illicit use of digital currencies 7 and other related emerging technologies. 8 (2) FORM; PUBLIC AVAILABILITY.— 9 (A) FORM.—The report and strategy re- 10 quired under paragraph (1) shall be submitted 11 in unclassified form, but may contain a classi- 12 fied annex. 13 (B) PUBLIC AVAILABILITY.—The unclassi- 14 fied portion of such report and strategy shall be 15 made available to the public and posted on the 16 internet website of the Department of Treas- 17 ury— 18 (i) in pre-compressed, easily 19 downloadable versions that are made avail- 20 able in all appropriate formats; and 21 (ii) in machine-readable format, if ap- 22 plicable. 23 (3) SOURCES OF INFORMATION.—In preparing 24 the report and strategy required under paragraph 25 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 9 HR 56 RFS (1), the President may utilize any credible publica- 1 tion, database, web-based resource, and any credible 2 information compiled by any government agency, 3 nongovernmental organization, or other entity that 4 is made available to the President. 5 (b) BRIEFING.—Not later than 2 years after the date 6 of the enactment of this Act, the Secretary of the Treasury 7 shall brief the appropriate congressional committees on 8 the implementation of the strategy required under sub- 9 section (a). 10 SEC. 7. DETERMINATION OF BUDGETARY EFFECTS. 11 The budgetary effects of this Act, for the purpose of 12 complying with the Statutory Pay-As-You-Go Act of 2010, 13 shall be determined by reference to the latest statement 14 titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 15 Act, submitted for printing in the Congressional Record 16 by the Chairman of the House Budget Committee, pro- 17 vided that such statement has been submitted prior to the 18 vote on passage. 19 SEC. 8. DEFINITIONS. 20 For purposes of this Act: 21 (1) APPROPRIATE CONGRESSIONAL COMMIT- 22 TEES.—The term ‘‘appropriate congressional com- 23 mittees’’ means— 24 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 10 HR 56 RFS (A) the Committee on Financial Services, 1 the Committee on the Judiciary, the Permanent 2 Select Committee on Intelligence, and the Com- 3 mittee on Foreign Affairs of the House of Rep- 4 resentatives; and 5 (B) the Committee on Banking, Housing, 6 and Urban Affairs, the Committee on Home- 7 land Security and Governmental Affairs, the 8 Committee on the Judiciary, the Select Com- 9 mittee on Intelligence, and the Committee on 10 Foreign Relations of the Senate. 11 (2) APPROPRIATE FEDERAL BANKING AGEN- 12 CIES.—The term ‘‘appropriate Federal banking 13 agencies’’ has the meaning given the term in section 14 3 of the Federal Deposit Insurance Act (12 U.S.C. 15 1813). 16 (3) BANK SECRECY ACT.—The term ‘‘Bank Se- 17 crecy Act’’ means— 18 (A) section 21 of the Federal Deposit In- 19 surance Act; 20 (B) chapter 2 of title I of Public Law 91– 21 508; and 22 (C) subchapter II of chapter 53 of title 31, 23 United States Code. 24 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 11 HR 56 RFS (4) DIGITAL CURRENCY.—The term ‘‘digital 1 currency’’— 2 (A) means a digital representation of value 3 that— 4 (i) is used as a medium of exchange, 5 unit of account, or store of value; and 6 (ii) is not established legal tender, 7 whether or not denominated in established 8 legal tender; and 9 (B) does not include— 10 (i) a transaction in which a merchant 11 grants, as part of an affinity or rewards 12 program, value that cannot be taken from 13 or exchanged with the merchant for legal 14 tender, bank credit, or digital currency; or 15 (ii) a digital representation of value 16 issued by or on behalf of a publisher and 17 used solely within an online game, game 18 platform, or family of games sold by the 19 same publisher or offered on the same 20 game platform. 21 (5) FEDERAL FUNCTIONAL REGULATOR.—The 22 term ‘‘Federal functional regulator’’ has the mean- 23 ing given that term in section 509 of the Gramm- 24 Leach-Bliley Act (15 U.S.C. 6809). 25 VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS 12 HR 56 RFS (6) FOREIGN TERRORIST ORGANIZATION.—The 1 term ‘‘foreign terrorist organization’’ means an or- 2 ganization that is designated as a foreign terrorist 3 organization under section 219 of the Immigration 4 and Nationality Act (8 U.S.C. 1189). 5 (7) TERRORIST.—The term ‘‘terrorist’’ includes 6 a person carrying out domestic terrorism or inter- 7 national terrorism (as such terms are defined, re- 8 spectively, under section 2331 of title 18, United 9 States Code). 10 Passed the House of Representatives January 28, 2019. Attest: KAREN L. HAAS, Clerk. VerDate Sep 11 2014 22:40 Jan 29, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H56.RFS H56 kjohnson on DSK79L0C42 with BILLS