House Passes Bill to Aid Probes of Terrorist Financing
The House on Jan. 12 passed a bill aimed at helping the Treasury Department find terrorists, Russian oligarchs and corrupt government officials.
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The proposed “OFAC Licensure for Investigators Act,” which the House approved by voice vote, would require the Office of Foreign Assets Control to create a pilot program to allow private-sector entities, such as blockchain analytics firms and financial intelligence units within banks, to conduct “nominal” financial transactions with sanctioned entities to further an investigation. Such transactions, which are not expected to exceed $10, would allow investigators to see where the money goes, supporters of the legislation said on the House floor on Jan. 10.
“This bill would enhance the tools in Treasury’s arsenal to go after sanctioned individuals and entities while also holding them accountable in their financial activities,” House Financial Services Committee Chairman Patrick McHenry, R-N.C., said. The bill “would allow, for example, blockchain analytics firms to work with OFAC to trace wallets controlled by bad actors. The power of blockchain lies within its immutable ledger that cannot be altered and allows analysis firms to see the movement of value every step along the way.”
Rep. Joyce Beatty of Ohio, top Democrat on the Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions, said that investigative firms are currently “limited in how far they can see into a bad actor’s operations. One of those limitations is due to sanctions, which appropriately prevent parties from engaging with sanctioned targets."
As a result, analytics firms, large bank intelligence units, and other "good guys have to stop their investigations upon finding evidence that suggests that a wallet or account or address may be associated with a sanctioned individual or entity,” Beatty said. The House bill would remove that roadblock, allowing “investigators to apply to OFAC for permission to get a step further and engage with sanctioned persons under certain conditions to gain more visibility into opaque networks and practices.”
To ensure “robust oversight,” the bill would require recipients licensed under the pilot program to report to OFAC monthly on their findings, Beatty said. To facilitate congressional oversight, McHenry said the bill would require OFAC to keep lawmakers informed about the pilot program's activities.
The House vote came about two months after the Financial Services Committee approved the bill by a 50-0 vote. Beatty introduced the bill with Rep. Zachary Nunn, R-Iowa, who also sits on the committee.
Asked about the bill’s prospects in the Senate, a committee spokesperson referred the question to Beatty’s office. A Beatty spokesperson did not immediately respond to a request for comment.