Financial Technology Protection Act of 2023

II 118TH CONGRESS 1ST SESSION S. 1340 To establish an Independent Financial Technology Working Group to Combat Terrorism and Illicit Financing, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 27, 2023 Mr. BUDD (for himself and Mrs. GILLIBRAND) introduced the following bill; which was read twice and referred to the Committee on Banking, Hous- ing, and Urban Affairs A BILL To establish an Independent Financial Technology Working Group to Combat Terrorism and Illicit Financing, 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 ‘‘Financial Technology 4 Protection Act of 2023’’. 5 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1340 IS SEC. 2. INDEPENDENT FINANCIAL TECHNOLOGY WORKING 1 GROUP TO COMBAT TERRORISM AND ILLICIT 2 FINANCING. 3 (a) ESTABLISHMENT.—There is established the Inde- 4 pendent Financial Technology Working Group to Combat 5 Terrorism and Illicit Financing (in this section referred 6 to as the ‘‘Working Group’’), which shall consist of the 7 following: 8 (1) The Secretary of the Treasury, acting 9 through the Under Secretary for Terrorism and Fi- 10 nancial Intelligence, who shall serve as the chair of 11 the Working Group. 12 (2) A senior-level representative from each of 13 the following: 14 (A) Each of the following components of 15 the Department of the Treasury: 16 (i) The Financial Crimes Enforcement 17 Network. 18 (ii) The Internal Revenue Service. 19 (iii) The Office of Foreign Assets 20 Control. 21 (B) The Department of Justice and each 22 of the following components of the Department: 23 (i) The Federal Bureau of Investiga- 24 tion. 25 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1340 IS (ii) The Drug Enforcement Adminis- 1 tration. 2 (C) The Department of Homeland Security 3 and the United States Secret Service. 4 (D) The Department of State. 5 (E) The Central Intelligence Agency. 6 (3) Five individuals appointed by the Under 7 Secretary for Terrorism and Financial Intelligence 8 to represent the following: 9 (A) Financial technology companies. 10 (B) Blockchain intelligence companies. 11 (C) Financial institutions. 12 (D) Institutions or organizations engaged 13 in research. 14 (b) DUTIES.—The Working Group shall— 15 (1) conduct research on terrorist and illicit use 16 of new financial technologies, including digital as- 17 sets; and 18 (2) develop legislative and regulatory proposals 19 to improve anti-money laundering, counter-terrorist, 20 and other counter-illicit financing efforts in the 21 United States. 22 (c) REPORTS.— 23 (1) IN GENERAL.—Not later than one year 24 after the date of the enactment of this Act, and an- 25 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1340 IS nually for the 3 years thereafter, the Working Group 1 shall submit to the Secretary of the Treasury, the 2 heads of each agency represented in the Working 3 Group pursuant to subsection (a)(2), and the appro- 4 priate congressional committees a report containing 5 the findings and determinations made by the Work- 6 ing Group in the previous year and any legislative 7 and regulatory proposals developed by the Working 8 Group. 9 (2) FINAL REPORT.—Before the date on which 10 the Working Group terminates under subsection 11 (e)(1), the Working Group shall submit to the ap- 12 propriate congressional committees a final report de- 13 tailing the findings, recommendations, and activities 14 of the Working Group. 15 (d) TRAVEL EXPENSES.—Members of the Working 16 Group shall serve without pay, but shall receive travel ex- 17 penses in accordance with sections 5702 and 5703 of title 18 5, United States Code. 19 (e) SUNSET.— 20 (1) IN GENERAL.—The Working Group shall, 21 subject to paragraph (3), terminate on the date that 22 is 4 years after the date of the enactment of this 23 Act. 24 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1340 IS (2) EXPIRATION AND RETURN OF APPRO- 1 PRIATED FUNDS.—On the date on which the Work- 2 ing Group terminates under paragraph (1)— 3 (A) all authorities granted to the Working 4 Group under this section shall expire, subject to 5 paragraph (3); and 6 (B) any funds appropriated for the Work- 7 ing Group that are available for obligation as of 8 that date shall be returned to the Treasury. 9 (3) AUTHORITY TO WIND UP ACTIVITIES.—The 10 termination of the Working Group under paragraph 11 (1) and the expiration of authorities under para- 12 graph (2) shall not affect any investigations, re- 13 search, or other activities of the Working Group on- 14 going as of the date on which the Working Group 15 terminates under paragraph (1). Such investigations, 16 research, and activities may continue until their 17 completion. 18 SEC. 3. PREVENTING ROGUE AND FOREIGN ACTORS FROM 19 EVADING SANCTIONS. 20 (a) REPORT AND STRATEGY WITH RESPECT TO DIG- 21 ITAL ASSETS AND OTHER RELATED EMERGING TECH- 22 NOLOGIES.— 23 (1) IN GENERAL.—Not later than 180 days 24 after the date of the enactment of this Act, the 25 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1340 IS President, acting through the Secretary of the 1 Treasury and in consultation with the head of each 2 agency represented on the Independent Financial 3 Technology Working Group to Combat Terrorism 4 and Illicit Financing pursuant to section 2(a)(2), 5 shall submit to the appropriate congressional com- 6 mittees a report that describes— 7 (A) the potential uses of digital assets and 8 other related emerging technologies by states, 9 non-state actors, foreign terrorist organizations, 10 and other terrorist groups to evade sanctions, 11 finance terrorism, or launder monetary instru- 12 ments, and threaten United States national se- 13 curity; and 14 (B) a strategy how the United States will 15 mitigate and prevent the illicit use of digital as- 16 sets and other related emerging technologies. 17 (2) FORM OF REPORT; PUBLIC AVAILABILITY.— 18 (A) IN GENERAL.—The report required by 19 paragraph (1) shall be submitted in unclassified 20 form, but may include a classified annex. 21 (B) PUBLIC AVAILABILITY.—The unclassi- 22 fied portion of each report required by para- 23 graph (1) shall be made available to the public 24 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1340 IS and posted on a publicly accessible website of 1 the Department of the Treasury— 2 (i) in precompressed, easily 3 downloadable versions, in all appropriate 4 formats; and 5 (ii) in machine-readable format, if ap- 6 plicable. 7 (3) SOURCES OF INFORMATION.—In preparing 8 the reports required by paragraph (1), the President 9 may utilize any credible publication, database, or 10 web-based resource, and any credible information 11 compiled by any government agency, nongovern- 12 mental organization, or other entity that is made 13 available to the President. 14 (b) BRIEFING.—Not later than 2 years after the date 15 of the enactment of this Act, the Secretary of the Treasury 16 shall brief the appropriate congressional committees on 17 the implementation of the strategy required by subsection 18 (a)(2). 19 SEC. 4. DEFINITIONS. 20 In this Act: 21 (1) APPROPRIATE CONGRESSIONAL COMMIT- 22 TEES.—The term ‘‘appropriate congressional com- 23 mittees’’ means— 24 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1340 IS (A) the Committee on Banking, Housing, 1 and Urban Affairs, the Committee on Finance, 2 the Committee on Foreign Relations, the Com- 3 mittee on Homeland Security and Govern- 4 mental Affairs, the Committee on the Judiciary, 5 and the Select Committee on Intelligence of the 6 Senate; and 7 (B) the Committee on Financial Services, 8 the Committee on Foreign Affairs, the Com- 9 mittee on Homeland Security, the Committee 10 on the Judiciary, the Committee on Way and 11 Means, and the Permanent Select Committee 12 on Intelligence of the House of Representatives. 13 (2) BLOCKCHAIN INTELLIGENCE COMPANY.— 14 The term ‘‘blockchain intelligence company’’ means 15 any business providing software, research, or other 16 services (such as blockchain tracing tools, 17 geofencing, transaction screening, the collection of 18 business data, and sanctions screening) that— 19 (A) support private and public sector in- 20 vestigations and risk management activities; 21 and 22 (B) involve cryptographically secured dis- 23 tributed ledgers or any similar technology or 24 implementation. 25 VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1340 IS (3) DIGITAL ASSET.—The term ‘‘digital asset’’ 1 means any digital representation of value that is re- 2 corded on a cryptographically secured digital ledger 3 or any similar technology. 4 (4) FOREIGN TERRORIST ORGANIZATION.—The 5 term ‘‘foreign terrorist organization’’ means an or- 6 ganization that is designated as a foreign terrorist 7 organization under section 219 of the Immigration 8 and Nationality Act (8 U.S.C. 1189). 9 (5) ILLICIT USE.—The term ‘‘illicit use’’ in- 10 cludes fraud, darknet marketplace transactions, 11 money laundering, the purchase and sale of illicit 12 goods, sanctions evasion, theft of funds, funding of 13 illegal activities, transactions related to child sexual 14 abuse material, and any other financial transaction 15 involving the proceeds of specified unlawful activity 16 (as defined in section 1956(c) of title 18, United 17 States Code). 18 (6) TERRORIST.—The term ‘‘terrorist’’ includes 19 a person carrying out domestic terrorism or inter- 20 national terrorism (as such terms are defined, re- 21 spectively, under section 2331 of title 18, United 22 States Code). 23 Æ VerDate Sep 11 2014 00:42 May 04, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S1340.IS S1340 kjohnson on DSK79L0C42PROD with BILLS