H. Rept. 114-393 - IRAN TERROR FINANCE TRANSPARENCY ACT114th Congress (2015-2016)
Committee Report
| Report Type: | House Report |
|---|---|
| Accompanies: | H.R.3662 |
| Committees: |
H. Rept. 114-393 - 114th Congress (2015-2016)
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House Report 114-393 - IRAN TERROR FINANCE TRANSPARENCY ACT
[House Report 114-393]
[From the U.S. Government Publishing Office]
114th Congress } { Rept. 114-393
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
======================================================================
IRAN TERROR FINANCE TRANSPARENCY ACT
_______
January 11, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Royce, from the Committee on Foreign Affairs, submitted the
following
R E P O R T
together with
ADDITIONAL AND DISSENTING VIEWS
[To accompany H.R. 3662]
[Including cost estimate of the Congressional Budget Office]
The Committee on Foreign Affairs, to whom was referred the
bill (H.R. 3662) to enhance congressional oversight over the
administration of sanctions against certain Iranian terrorism
financiers, and for other purposes, having considered the same,
reports favorably thereon without amendment and recommends that
the bill do pass.
TABLE OF CONTENTS
Page
Background and Purpose of Legislation............................ 2
Hearings......................................................... 4
Performance Goals and Objectives................................. 7
Committee Consideration.......................................... 7
Committee Oversight Findings..................................... 7
New Budget Authority, Tax Expenditures, and Federal Mandates..... 7
Congressional Budget Office Cost Estimate........................ 8
Directed Rule Making............................................. 10
Non-Duplication of Federal Programs.............................. 10
Congressional Accountability Act................................. 10
New Advisory Committees.......................................... 10
Earmark Identification........................................... 10
Constitutional Authority Statement............................... 10
Section-by-Section Analysis...................................... 11
Changes in Existing Law Made by the Bill, as Reported............ 12
Additional and Dissenting Views.................................. 19
Background and Purpose of Legislation
On July 14, 2015, the United States, negotiating alongside
the United Kingdom, France, Germany, Russia, and China as the
``P5+1'' reached a ``Joint Comprehensive Plan of Action''
(JCPOA) with Iran. This final agreement asserts to limit Iran's
nuclear program to peaceful purposes, in exchange for broad
relief from U.S., European Union (EU), and United Nations
sanctions. A resolution sponsored by the United States to
approve the deal and allow for the removal of U.N. sanctions
was passed by the Security Council on July 20, 2015. The
agreement's ``Adoption Day'' was marked on October 18, 2015.
The Obama administration asserted that the 90-day timeframe
allowed for review of the JCPOA by Congress under the Iran
Nuclear Agreement Review Act (P.L. 114-17) and for review by
Iran and any other legislature of the other P5+1 states. On
Adoption Day, the United States issued the provisional
presidential waivers required to implement U.S. sanctions
relief, with the waivers and associated sanctions relief to
formally take effect on ``Implementation Day.''
The Committee expects Implementation Day to take place
within the next few weeks. Once it does, the United States, the
U.N., and the EU will cease application of specific sanctions.
The U.N. Security Council will terminate the provisions of its
resolutions on Iran: 1696 (2006), 1737 (2006), 1747 (2007),
1803 (2008), 1835 (2008), 1929 (2010), and 2224 (2015).
Members of Congress have expressed concerns with the scale
of the sanctions relief offered by the U.S. and its negotiating
partners. The agreement lifts restrictions on arms sales to
Iran after 5 years, and, after 8, removes restrictions on
Iran's ballistic missiles. Experts have testified in front of
the Committee that Iran will likely use the financial windfall
gained from sanctions relief to reinforce its ``revolutionary''
regime at home while bankrolling terrorist activity in the
region, including Hamas and Hezbollah.
Iran's ballistic missile program, in particular, has
concerned Congress. Ballistic missiles are a central component
of any country's nuclear weapons program as they are the most
effective way to deliver a nuclear warhead--no country that has
not aspired to possess nuclear weapons has ever opted to
sustain a lengthy and expensive missile program. Iran's long-
range ballistic missiles provide it the ability to target
Israel as well as U.S. forces throughout the Middle East. Iran
has been undertaking extensive efforts aimed at providing their
long-range ballistic missile forces greater accuracy and range.
The 2013 interim agreement called for Iran to abide by all
U.N. Security Council resolutions--which state that ``Iran
shall not undertake any activity related to ballistic missiles
capable of delivering nuclear weapons.'' In February 2014, U.S.
negotiator Wendy Sherman testified that Iran's ballistic
missile program ``is, indeed, going to be part of something
that has to be addressed as part of a comprehensive
agreement.'' However, after the Supreme Leader called
restrictions on Iran's ballistic missiles ``a stupid, idiotic
expectation,'' Deputy Secretary of State Antony Blinken
testified that ``The scope of this agreement, if there is one,
is the nuclear program. That's what our partners have agreed
to. That is what is being negotiated. It is not a missile
agreement.''
The final agreement provides Iran with substantial relief
from sanctions on its ballistic missile program without
requiring any limits on Iran's efforts to develop this
dangerous technology. In what appears to be a last minute
concession driven by Russia and China, after 8 years the
agreement removes the ban on Iran developing ballistic missiles
potentially capable of reaching the United States. Iran has
conducted two ballistic missile tests in the wake of the deal,
both in violation of a binding U.N. Security Council
resolution. Iranian President Hassan Rouhani has recently
ordered the defense ministry to accelerate Iran's missile
program.
Iran will receive up to $150 billion in funds and or assets
held abroad. Such large-scale sanctions relief will allow the
Iranian economy to recover and fund a new generation of
terrorism and threats. The United States has designated Iran as
a State Sponsor of Terrorism since 1984. The State Department
report on international terrorism for 2013 stated that Iran
``continued its terrorist-related activity'' and describes
Iran's support for key proxies including Hezbollah, Hamas, and
the Assad regime as well as opposition militants in Bahrain and
separatists in northern Yemen who recently toppled the
country's government. Experts warn that Iran's significant
support for Shia militias fighting ISIS in Iraq risks fueling
sectarian tension. Similarly, Iran has used the Houthi advances
in Yemen as an opportunity to advance its regional objectives
by leveraging a Zaidi Shiite armed group, similar to its
relationship with Shiite Hezbollah leaders in Lebanon. It also
sees Yemen as a battlefield in its proxy war with Saudi Arabia,
a longtime competitor for regional hegemony.
Within this context, the Obama administration made a
political commitment to provide Iran relief from ``nuclear
related'' sanctions using waivers and regulatory authority. Yet
many sanctions related to Iran's nuclear program are also
related to Iran's other destabilizing activities--including its
support for international terrorism, its ballistic missile
program, and its conventional weapons programs.
U.S. sanctions are also aimed at preventing the Iranian
banks that use money laundering and other illicit financial
practices to support terrorism and Iran's other destabilizing
activities from accessing the U.S. and global financial
systems. These illicit financial practices are so pervasive in
Iran that since November 2011 the entire country has been
designated as a ``Jurisdiction of Primary Money Laundering
Concern'' by the U.S. Treasury Department.
In announcing the nuclear agreement, President Obama
stated, ``American sanctions on Iran for its support of
terrorism, its human rights abuses, its ballistic missile
program, will continue to be fully enforced.'' However, there
is nothing in U.S. law to prevent the administration from
lifting sanctions on those involved in these destructive
activities.
In fact, under the deal, the Obama administration agreed to
lift sanctions on a significant number of specific individuals,
companies, and banks, some of which are engaged in Iran's
support for terrorism and its ballistic missile program.
In response, this legislation is designed to block the
President from offering sanctions relief to an individual or
bank until certifying that such entity has not conducted a
significant transaction with a terrorist organization, the
Islamic Revolutionary Guard Corps, or in support of either
Iran's ballistic missile or its conventional weapons programs.
It also prohibits the administration from lifting Iran's
designation as a ``Jurisdiction of Primary Money Laundering
Concern'' until it certifies that the Government of Iran is no
longer supporting terrorism, pursuing weapons of mass
destruction and their means of delivery, or engaging in illicit
financial activities.
The bill applies the Congressional Review Act to provide
Congress the ability to disapprove of Iran-related changes to
the Code of Federal Regulations. Finally, it clarifies that
Iran's proxies--Hezbollah, Hamas, and the Palestinian Islamic
Jihad--are included in the definition terrorist organizations
for the purposes of financial sanctions against Iran.
Hearings
During the 114th Congress, the Committee has continued its
active oversight regarding Iran, including multiple hearings
related to the content of 3662, such as:
January 27, 2015--Full Committee: ``Iran Nuclear Negotiations
After the Second Extension: Where Are They Going?'' The
Honorable Eric S. Edelman, Distinguished Fellow, Center
for Strategic and Budgetary Assessments; Mr. John
Hannah, Senior Fellow, Foundation for Defense of
Democracies; Mr. Ray Takeyh, Senior Fellow for Middle
Eastern Studies, Council on Foreign Relations; and The
Honorable Robert Einhorn, Senior Fellow, Foreign Policy
Program, The Brookings Institution.
February 11, 2015--Subcommittee on Terrorism, Nonproliferation,
and Trade: ``State Sponsor of Terror: The Global Threat
of Iran.'' Frederick W. Kagan, Ph.D., Christopher
DeMuth Chair and Director, Critical Threats Project,
American Enterprise Institute; Mr. Ilan I. Berman, Vice
President, American Foreign Policy Council; Mr. Tony
Badran, Research Fellow, Foundation for Defense of
Democracies; and Daniel L. Byman, Ph.D., Professor,
Security Studies Program, Edmund A. Walsh School of
Foreign Service, Georgetown University.
February 26, 2015--Joint Hearing: Subcommittee on the Middle
East and North Africa and Subcommittee on Africa,
Global Health, Global Human Rights, and International
Organizations: ``The Shame of Iranian Human Rights.''
Mr. Shayan Arya, Central Committee Member,
Constitutionalist Party of Iran (Liberal Democrat); Mr.
Mohsen Sazegara, President, Research Institute on
Contemporary Iran; Mr. Anthony Vance, Director, U.S.
Baha'i Office of Public Affairs.
March 18, 2015--Joint Hearing: Subcommittee on the Middle East
and North Africa and Subcommittee on the Western
Hemisphere: ``Iran and Hezbollah in the Western
Hemisphere.'' Mr. Joseph Humire, Author; Mr. Dardo
Lopez-Dolz (former Vice Minister of Interior of Peru);
Mr. Scott Modell, Senior Advisor, The Rapidan Group;
and Mr. Michael Shifter, President, Inter-American
Dialogue.
March 19, 2015--Full Committee: ``Negotiations with Iran:
Blocking or Paving Tehran's Path to Nuclear Weapons?''
The Honorable Antony J. Blinken, Deputy Secretary of
State, U.S. Department of State; Mr. Adam J. Szubin,
Acting Under Secretary, Office of Terrorism and
Financial Intelligence, U.S. Department of the
Treasury.
March 24, 2015--Subcommittee on the Middle East and North
Africa: ``Iran's Noncompliance with Its International
Atomic Energy Agency Obligations.'' Mr. William H.
Tobey, Senior Fellow, Belfer Center for Science and
International Affairs, John F. Kennedy School of
Government, Harvard University; Ms. Rebeccah L.
Heinrichs, Fellow, George C. Marshall Institute; Mr.
David Albright, Founder and President, Institute for
Science and International Security.
April 22, 2015--Full Committee: ``Nuclear Agreement with Iran:
Can't Trust, Can We Verify?'' Mr. Charles Duelfer,
Chairman, Omnis, Inc. (former Chairman, UN Special
Commission on Iraq [UNSCOM]); The Honorable Stephen G.
Rademaker, National Security Advisor, Bipartisan Policy
Center (former Assistant Secretary, Bureau of Arms
Control & Bureau of International Security and
Nonproliferation, U.S. Department of State.); Mr. David
Albright, Founder and President, Institute for Science
and International Security.
June 2, 2015--Full Committee: ``Americans Detained in Iran.''
Mr. Ali Rezaian (brother of Jason Rezaian); Mrs.
Naghmeh Abedini (wife of Saeed Abedini); Ms. Sarah
Hekmati (sister of Amir Hekmati); Mr. Daniel Levinson
(son of Robert Levinson).
June 10, 2015--Joint Hearing: Committee on Foreign Affairs,
Subcommittee on the Middle East and North Africa and
Committee on Armed Services, Subcommittee on Strategic
Forces: ``Iran's Enduring Ballistic Missile Threat.''
Lieutenant General Michael T. Flynn, USA, Retired
(former Director, Defense Intelligence Agency); The
Honorable Robert Joseph, Ph.D., Senior Scholar,
National Institute for Public Policy (former Under
Secretary of State for Arms Control and International
Security); David A. Cooper, Ph.D., James V. Forrestal
Professor and Chair of the Department of National
Security Affairs, U.S. Naval War College; Anthony H.
Cordesman, Ph.D., Arleigh A. Burke Chair in Strategy,
Center for Strategic and International Studies.
June 16, 2015--Full Committee: ``Advancing United States'
Interests at the United Nations.'' The Honorable
Samantha Power, U.S. Permanent Representative, United
States Mission to the United Nations, U.S. Department
of State.
June 17, 2015--Subcommittee on the Middle East and North
Africa: ``The Iran, North Korea, and Syria
Nonproliferation Act: State Department's Non-
Compliance.'' Mr. Thomas Melito, Director,
International Affairs and Trade, Government
Accountability Office.
July 9, 2015--Full Committee: ``Implications of a Nuclear
Agreement with Iran (Part I).'' The Honorable Stephen
G. Rademaker, Foreign Policy Project Advisor,
Bipartisan Policy Center (former Assistant Secretary,
Bureau of Arms Control & Bureau of International
Security and Nonproliferation, U.S. Department of
State); Michael Doran, Ph.D., Senior Fellow, Hudson
Institute; Michael Makovsky, Ph.D., Chief Executive
Officer, JINSA Germunder Center Iran Task Force;
Kenneth M. Pollack, Ph.D., Senior Fellow, Center for
Middle East Policy, The Brookings Institution.
July 14, 2015--Full Committee: ``Implications of a Nuclear
Agreement with Iran (Part II).'' The Honorable Joseph
I. Lieberman, Co-Chair, Iran Task Force, Foundation for
the Defense of Democracies (former United States
Senator); General Michael V. Hayden, USAF, Retired,
Principal, Chertoff Group (former Director, Central
Intelligence Agency); The Honorable R. Nicholas Burns,
Roy and Barbara Goodman Family Professor of Diplomacy
and International Relations, Belfer Center for Science
and International Affairs, John F. Kennedy School of
Government, Harvard University (former Under Secretary
for Political Affairs, U.S. Department of State); Ray
Takeyh, Ph.D., Senior Fellow, Council on Foreign
Relations.
July 23, 2015--Full Committee: ``Implications of a Nuclear
Agreement with Iran (Part III).'' The Honorable Robert
Joseph, Ph.D., Senior Scholar, National Institute for
Public Policy (former Under Secretary of State for Arms
Control and International Security); Mr. Mark Dubowitz,
Executive Director, Foundation for the Defense of
Democracies; Mr. Ilan Goldenberg, Senior Fellow and
Director, Middle East Security Program, Center for a
New American Security.
July 28, 2015--Full Committee: ``Iran Nuclear Agreement: The
Administration's Case.'' The Honorable John F. Kerry,
Secretary of State, U.S. Department of State; The
Honorable Jacob Lew, Secretary of the Treasury, U.S.
Department of the Treasury; The Honorable Ernest Moniz,
Secretary of Energy, U.S. Department of Energy.
July 28, 2015--Joint Hearing: Subcommittee on Asia and the
Pacific, Subcommittee on Terrorism, Nonproliferation,
and Trade, and Subcommittee on the Middle East and
North Africa: ``The Iran-North Korea Strategic
Alliance.'' Mr. Ilan Berman, Vice President, American
Foreign Policy Council; Ms. Claudia Rosett, Journalist-
in-Residence, Foundation for Defense of Democracies;
Larry Niksch, Ph.D., Senior Associate, Center for
Strategic and International Studies; Jim Walsh, Ph.D.,
Research Associate, Security Studies Program,
Massachusetts Institute of Technology.
September 9, 2015--Full Committee: ``Implications of a Nuclear
Agreement with Iran (Part IV).'' General Chuck Wald,
USAF, Retired (former Deputy Commander, U.S. European
Command; Admiral William Fallon, USN, Retired (former
Commander, U.S. Central Command); Vice Admiral John
Bird, USN, Retired (former Commander, U.S. Seventh
Fleet); Mr. Leon Wieseltier, Isaiah Berlin Senior
Fellow in Culture and Policy, Foreign Policy and
Governance Studies, The Brookings Institution.
September 17, 2015--Subcommittee on the Middle East and North
Africa: ``Major Beneficiaries of the Iran Deal: IRGC
and Hezbollah.'' Emanuele Ottolenghi, Ph.D., Senior
Fellow, Foundation for Defense of Democracies; Matthew
Levitt, Ph.D., Fromer-Wexler Fellow, Director, Stein
Program on Counterterrorism and Intelligence,
Washington Institute for Near East Policy; Suzanne
Maloney, Ph.D., Interim Deputy Director, Center for
Middle East Policy, The Brookings Institution.
December 2, 2015--Full Committee: ``Iran's Islamic
Revolutionary Guard Corps: Fueling Middle East
Turmoil.'' Mr. Ali Alfoneh, Senior Fellow, Foundation
for Defense of Democracies; Mr. Scott Modell, Managing
Director, The Rapidan Group; Mr. Daniel Benjamin,
Norman E. McCulloch Jr. Director, The John Sloan Dickey
Center for International Understanding, Dartmouth
College (former Ambassador-at-Large and Coordinator for
Counterterrorism, U.S. Department of State).
Performance Goals and Objectives
This bill blocks the administration from offering sanctions
relief to any entity--a bank, business, or individual--included
in the nuclear deal until the President certifies that they
have not done business with a terrorist organization, Iran's
Islamic Revolutionary Guard Corps, or in support of either
Iran's ballistic missile or its conventional weapons programs.
Performance goals associated with these objectives include, but
are not limited to, the certification and delisting of persons
or financial institutions includes no person or financial
institution involved in Iran's support for terrorism or
ballistic missile development.
Committee Consideration
On January 7, 2015, the Foreign Affairs Committee marked up
H.R. 3662 in open session, pursuant to notice. After debate,
the bill was ordered reported favorably to the House by voice
vote, a reporting quorum being present.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of rules of
the House of Representatives, the Committee reports that
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of House Rule X, are
incorporated in the descriptive portions of this report,
particularly in the ``Background and Purpose of Legislation''
and ``Section-by-Section Analysis'' sections.
New Budget Authority, Tax Expenditures, and Federal Mandates
In compliance with clause 3(c)(2) of House Rule XIII and
the Unfunded Mandates Reform Act (P.L. 104-4), the Committee
adopts as its own the estimate of new budget authority,
entitlement authority, tax expenditure or revenues, and Federal
mandates contained in the cost estimate prepared by the
Director of the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 8, 2016.
Hon. Edward R. Royce, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3662, the Iran
Terror Finance Transparency Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Pamela
Greene, who can be reached at 226-2680.
Sincerely,
Keith Hall.
Enclosure
cc:
Honorable Eliot L. Engel
Ranking Member
H.R. 3662--Iran Terror Finance Transparency Act.
As ordered reported by the House Committee on Foreign
Affairs on January 7, 2016
SUMMARY
H.R. 3662 would amend current law to provide more
congressional oversight over U.S. economic and trade sanctions.
The bill would prohibit the President from removing certain
sanctions unless specific certifications are provided to the
Congress. In addition, H.R. 3662 would subject any changes to
Iranian sanctions to the Congressional Review Act, which allows
the Congress to review and disapprove of new agency rules.
Specifically, H.R. 3662 would require the administration to
make certain certifications before it could remove sanctioned
Iranian entities from U.S. lists of specially designated
nationals and blocked persons and would expand the prohibited
list of organizations under other sanctions. As a result of
those requirements, CBO estimates that implementing H.R. 3662
would increase administrative costs of the Treasury Department
by less than $500,000 annually, subject to the availability of
appropriations.
In addition, because of its possible effect on the removal
of sanctions on Iran, H.R. 3662 could increase both revenues
and associated direct spending. If the bill's requirement of
Presidential certification had no effect on sanctions, there
would be no budgetary effect. If, on the other hand, enacting
the bill effectively nullified the Joint Comprehensive Plan of
Action (JCPOA) related to Iran's nuclear activities, certain
sanctions would continue in effect, and additional revenues
(relative to CBO's baseline) from penalties for violations of
those sanctions would amount to about $220 million over the
2016-2025 period, CBO estimates. Most of those receipts would
be spent, so direct spending also would increase, but by less
than the revenues. On net, deficits over the 2016-2025 period
would be reduced. However, CBO has no basis for a specific
estimate of those budgetary effects because it has no basis for
projecting how the legislation might affect the timing of the
possible waiver of sanctions under the JCPOA.
Because enacting the legislation could affect direct
spending and revenues, pay-as-you-go procedures apply. CBO
estimates that enacting H.R. 3662 would not increase net direct
spending by more than $5 billion and would not increase on-
budget deficits in any of the four consecutive 10-year periods
beginning in 2026.
BASIS OF ESTIMATE
On July 14, 2015, the JCPOA was agreed to by a number of
parties, including negotiators from the United States and Iran.
That agreement provides, in part, that under certain conditions
Iran will receive relief from certain nuclear-related sanctions
imposed by the United States. The United States currently
imposes penalties for civil and criminal violations of some
sanctions that would be waived under that agreement;
collections of those amounts are recorded in the Federal budget
as additional revenues. Some of the penalties from violating
those sanctions are deposited into the United States Victims of
State Sponsored Terrorism Fund and can be spent without further
appropriation action.
Before the JCPOA is implemented, a number of actions must
be taken, including verification by the International Atomic
Energy Agency that Iran has taken certain steps related to its
nuclear activities. In order to account for uncertainty
surrounding the full implementation of the JCPOA, CBO assumes
for its baseline that there is a 50-percent chance that, under
current law, the JCPOA will be implemented and the sanctions
related to Iran's nuclear program will be waived, most likely
starting in the first half of calendar year 2016. That
assumption is consistent with how CBO would treat the
possibility of an agency implementing a notice of proposed
rulemaking.
CBO has no basis for assessing whether and to what extent
H.R. 3662 would slow the implementation of the JCPOA or whether
the potential delay in the lifting of sanctions would entirely
stop the implementation of the JCPOA. Hence, CBO has no basis
for providing a specific estimate of the increases in revenues
and direct spending that could occur under the legislation.
If H.R. 3662 delayed or halted the waiver of sanctions
under the JCPOA, CBO expects that the revenues from collections
of civil and criminal penalties would increase relative to
baseline revenues for existing sanctions because penalties
related to those sanctions would continue to be assessed and
collected during that time. Also, CBO expects that some
additional revenues might be received from penalties for
activities associated with the expanded list of organizations
with which transactions are prohibited.
In the event that the JCPOA was not implemented as a result
of this legislation, CBO estimates that revenues from civil and
criminal penalties would increase relative to the baseline,
which incorporates a 50-percent chance that the related
sanctions are waived, by roughly $220 million over the 2016-
2025 period. In that case, the associated direct spending would
also increase by a smaller amount. In total, any net increase
in revenues would exceed any direct spending effects over the
2016-2025 period.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 3662 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
ESTIMATE PREPARED BY
Federal Costs: Matthew Pickford
Federal Revenues: Pamela Greene
Impact on State, Local, and Tribal Governments: Jon Sperl
Impact on the Private Sector: Logan Smith
ESTIMATE APPROVED BY:
H. Samuel Papenfuss
Deputy Assistant Director for Budget Analysis
Directed Rule Making
Pursuant to clause 3(c) of House Rule XIII, as modified by
section 3(i) of H. Res. 5 during the 114th Congress, the
Committee notes that H.R. 3662 contains no directed rule-making
provisions.
Non-Duplication of Federal Programs
Pursuant to clause 3(c) of House Rule XIII, as modified by
section 3(g)(2) of H. Res. 5 during the 114th Congress, the
Committee states that no provision of this bill establishes or
reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Congressional Accountability Act
H.R. 3662 does not apply to terms and conditions of
employment or to access to public services or accommodations
within the legislative branch.
New Advisory Committees
H.R. 3662 does not establish or authorize any new advisory
committees.
Earmark Identification
H.R. 3662 contains no congressional earmarks, limited tax
benefits, or limited tariff benefits as described in clauses
9(e), 9(f), and 9(g) of House Rule XXI.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8 of the Constitution.
Section-by-Section Analysis
Section 1. Short Title.
This section provides that the short title of this Act is
the ``Iran Terror Finance Transparency Act.''
Section 2. Certification Requirement for Removal of Foreign Financial
Institutions, Including Iranian Financial Institutions, from
the List of Specially Designated Nationals and Blocked Persons.
As part of the Iran nuclear agreement's ``Joint
Comprehensive Plan of Action,'' the administration has
committed to lifting sanctions against a number of foreign
financial institutions. This section prohibits the President
from lifting sanctions against these financial institutions
until the President certifies to the appropriate congressional
committees that the bank or financial institution has not
conducted a significant transaction for, or on behalf of,
Iran's Revolutionary Guard Corps, a foreign terrorist
organization, or anyone sanctioned in connection with Iran's
weapons of mass destruction and ballistic missile programs.
Section 3. Certification Requirement for Removal of Certain Foreign
Persons from the List of Specially Designated Nationals and
Blocked Persons.
As part of the Joint Comprehensive Plan of Action, the
administration has committed to lifting sanctions against a
number of persons and entities. This section prohibits the
President from lifting sanctions against these persons or
entities until the President certifies to the appropriate
congressional committees that they have not conducted a
significant transaction for, or provided material support to, a
foreign terrorist organization, or anyone sanctioned in
connection with Iran's weapons of mass destruction and
ballistic missile programs.
Section 4. Certification Requirement for Removal of Designation of Iran
as a Jurisdiction of Primary Money Laundering Concern.
In November 2011, the United States designated the entire
Iranian banking sector, including the country's central bank,
as a ``primary money laundering concern.'' This provision
prohibits the President from removing the designation of Iran
as a primary money laundering concern until the President
certifies that Iran is no longer supporting terrorism, or
pursuing weapons of mass destruction or illicit financial
activities.
Section 5. Applicability of Congressional Review of Certain Agency
Rulemaking related to Iran.
This provision allows the Congress to disapprove of any
alterations to regulations governing Iran sanctions, and
requires comprehensive reporting on licenses issued by the U.S.
for activities in Iran.
Section 6. Prohibitions and Conditions with Respect to Certain Accounts
Held by Foreign Financial Institutions.
This provision adds Hezbollah, Hamas, and Palestinian
Islamic Jihad to the third-party financial sanctions contained
in the Comprehensive Iran Sanctions, Accountability, and
Divestment Act of 2010, explicitly sanctioning anyone doing
business with these organizations.
Section 7. Definitions.
This section provides definitions of several key terms used
throughout.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
COMPREHENSIVE IRAN SANCTIONS, ACCOUNTABILITY, AND DIVESTMENT ACT OF
2010
* * * * * * *
TITLE I--SANCTIONS
* * * * * * *
SEC. 104. MANDATORY SANCTIONS WITH RESPECT TO FINANCIAL INSTITUTIONS
THAT ENGAGE IN CERTAIN TRANSACTIONS.
(a) Findings.--Congress makes the following findings:
(1) The Financial Action Task Force is an
intergovernmental body whose purpose is to develop and
promote national and international policies to combat
money laundering and terrorist financing.
(2) Thirty-three countries, plus the European
Commission and the Cooperation Council for the Arab
States of the Gulf, belong to the Financial Action Task
Force. The member countries of the Financial Action
Task Force include the United States, Canada, most
countries in western Europe, Russia, the People's
Republic of China, Japan, South Korea, Argentina, and
Brazil.
(3) In 2008 the Financial Action Task Force
extended its mandate to include addressing ``new and
emerging threats such as proliferation financing'',
meaning the financing of the proliferation of weapons
of mass destruction, and published ``guidance papers''
for members to assist them in implementing various
United Nations Security Council resolutions dealing
with weapons of mass destruction, including United
Nations Security Council Resolutions 1737 (2006) and
1803 (2008), which deal specifically with proliferation
by Iran.
(4) The Financial Action Task Force has repeatedly
called on members--
(A) to advise financial institutions in
their jurisdictions to give special attention
to business relationships and transactions with
Iran, including Iranian companies and financial
institutions;
(B) to apply effective countermeasures to
protect their financial sectors from risks
relating to money laundering and financing of
terrorism that emanate from Iran;
(C) to protect against correspondent
relationships being used by Iran and Iranian
companies and financial institutions to bypass
or evade countermeasures and risk-mitigation
practices; and
(D) to take into account risks relating to
money laundering and financing of terrorism
when considering requests by Iranian financial
institutions to open branches and subsidiaries
in their jurisdictions.
(5) At a February 2010 meeting of the Financial
Action Task Force, the Task Force called on members to
apply countermeasures ``to protect the international
financial system from the ongoing and substantial money
laundering and terrorist financing (ML/TF) risks''
emanating from Iran.
(b) Sense of Congress Regarding the Imposition of Sanctions
on the Central Bank of Iran.--Congress--
(1) acknowledges the efforts of the United Nations
Security Council to impose limitations on transactions
involving Iranian financial institutions, including the
Central Bank of Iran; and
(2) urges the President, in the strongest terms, to
consider immediately using the authority of the
President to impose sanctions on the Central Bank of
Iran and any other Iranian financial institution
engaged in proliferation activities or support of
terrorist groups.
(c) Prohibitions and Conditions With Respect to Certain
Accounts Held by Foreign Financial Institutions.--
(1) In general.--Not later than 90 days after the
date of the enactment of this Act, the Secretary of the
Treasury shall prescribe regulations to prohibit, or
impose strict conditions on, the opening or maintaining
in the United States of a correspondent account or a
payable-through account by a foreign financial
institution that the Secretary finds knowingly engages
in an activity described in paragraph (2).
(2) Activities described.--A foreign financial
institution engages in an activity described in this
paragraph if the foreign financial institution--
(A) facilitates the efforts of the
Government of Iran (including efforts of Iran's
Revolutionary Guard Corps or any of its agents
or affiliates)--
(i) to acquire or develop weapons
of mass destruction or delivery systems
for weapons of mass destruction; or
(ii) to provide support for
organizations designated as foreign
terrorist organizations under section
219(a) of the Immigration and
Nationality Act (8 U.S.C. 1189(a)) or
support for acts of international
terrorism (as defined in section 14 of
the Iran Sanctions Act of 1996 (Public
Law 104-172; 50 U.S.C. 1701 note)),
including Hezbollah, Hamas, the
Palestinian Islamic Jihad, and any
affiliates or successors thereof;
(B) facilitates the activities of--
(i) a person subject to financial
sanctions pursuant to United Nations
Security Council Resolution 1737
(2006), 1747 (2007), 1803 (2008), or
1929 (2010), or any other resolution
that is agreed to by the Security
Council and imposes sanctions with
respect to Iran; or
(ii) a person acting on behalf of
or at the direction of, or owned or
controlled by, a person described in
clause (i);
(C) engages in money laundering to carry
out an activity described in subparagraph (A)
or (B);
(D) facilitates efforts by the Central Bank
of Iran or any other Iranian financial
institution to carry out an activity described
in subparagraph (A) or (B); or
(E) facilitates a significant transaction
or transactions or provides significant
financial services for--
(i) Iran's Revolutionary Guard
Corps or any of its agents or
affiliates whose property or interests
in property are blocked pursuant to the
International Emergency Economic Powers
Act (50 U.S.C. 1701 et seq.); or
(ii) a person whose property or
interests in property are blocked
pursuant to that Act in connection
with--
(I) Iran's proliferation of
weapons of mass destruction or
delivery systems for weapons of
mass destruction; or
(II) Iran's support for
international terrorism.
(3) Penalties.--The penalties provided for in
subsections (b) and (c) of section 206 of the
International Emergency Economic Powers Act (50 U.S.C.
1705) shall apply to a person that violates, attempts
to violate, conspires to violate, or causes a violation
of regulations prescribed under paragraph (1) of this
subsection to the same extent that such penalties apply
to a person that commits an unlawful act described in
section 206(a) of that Act.
(4) Determinations regarding nioc and nitc.--
(A) Determinations.--For purposes of
paragraph (2)(E), the Secretary of the Treasury
shall, not later than 45 days after the date of
the enactment of the Iran Threat Reduction and
Syria Human Rights Act of 2012--
(i) determine whether the NIOC or
the NITC is an agent or affiliate of
Iran's Revolutionary Guard Corps; and
(ii) submit to the appropriate
congressional committees a report on
the determinations made under clause
(i), together with the reasons for
those determinations.
(B) Form of report.--A report submitted
under subparagraph (A)(ii) shall be submitted
in unclassified form but may contain a
classified annex.
(C) Applicability with respect to petroleum
transactions.--
(i) Application of sanctions.--
Except as provided in clause (ii), if
the Secretary of the Treasury
determines that the NIOC or the NITC is
a person described in clause (i) or
(ii) of paragraph (2)(E), the
regulations prescribed under paragraph
(1) shall apply with respect to a
significant transaction or transactions
or significant financial services
knowingly facilitated or provided by a
foreign financial institution for the
NIOC or the NITC, as applicable, for
the purchase of petroleum or petroleum
products from Iran, only if a
determination of the President under
section 1245(d)(4)(B) of the National
Defense Authorization Act for Fiscal
Year 2012 (22 U.S.C. 8513a(d)(4)(B))
that there is a sufficient supply of
petroleum and petroleum products
produced in countries other than Iran
to permit purchasers of petroleum and
petroleum products from Iran to reduce
significantly their purchases from Iran
is in effect at the time of the
transaction or the provision of the
service.
(ii) Exception for certain
countries.--If the Secretary of the
Treasury determines that the NIOC or
the NITC is a person described in
clause (i) or (ii) of paragraph (2)(E),
the regulations prescribed under
paragraph (1) shall not apply to a
significant transaction or transactions
or significant financial services
knowingly facilitated or provided by a
foreign financial institution for the
NIOC or the NITC, as applicable, for
the purchase of petroleum or petroleum
products from Iran if an exception
under paragraph (4)(D) of section
1245(d) of the National Defense
Authorization Act for Fiscal Year 2012
(22 U.S.C. 8513a(d)) applies to the
country with primary jurisdiction over
the foreign financial institution at
the time of the transaction or the
provision of the service.
(iii) Rule of construction.--The
exceptions in clauses (i) and (ii)
shall not be construed to limit the
authority of the Secretary of the
Treasury to impose sanctions pursuant
to the regulations prescribed under
paragraph (1) for an activity described
in paragraph (2) to the extent the
activity would meet the criteria
described in that paragraph in the
absence of the involvement of the NIOC
or the NITC.
(D) Definitions.--In this paragraph:
(i) Nioc.--The term ``NIOC'' means
the National Iranian Oil Company.
(ii) Nitc.--The term ``NITC'' means
the National Iranian Tanker Company.
(d) Penalties for Domestic Financial Institutions for
Actions of Persons Owned or Controlled by Such Financial
Institutions.--
(1) In general.--Not later than 90 days after the
date of the enactment of this Act, the Secretary of the
Treasury shall prescribe regulations to prohibit any
person owned or controlled by a domestic financial
institution from knowingly engaging in a transaction or
transactions with or benefitting Iran's Revolutionary
Guard Corps or any of its agents or affiliates whose
property or interests in property are blocked pursuant
to the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq.).
(2) Penalties.--The penalties provided for in
section 206(b) of the International Emergency Economic
Powers Act (50 U.S.C. 1705(b)) shall apply to a
domestic financial institution to the same extent that
such penalties apply to a person that commits an
unlawful act described in section 206(a) of that Act
if--
(A) a person owned or controlled by the
domestic financial institution violates,
attempts to violate, conspires to violate, or
causes a violation of regulations prescribed
under paragraph (1) of this subsection; and
(B) the domestic financial institution knew
or should have known that the person violated,
attempted to violate, conspired to violate, or
caused a violation of such regulations.
(e) Requirements for Financial Institutions Maintaining
Accounts for Foreign Financial Institutions.--
(1) In general.--The Secretary of the Treasury
shall prescribe regulations to require a domestic
financial institution maintaining a correspondent
account or payable-through account in the United States
for a foreign financial institution to do one or more
of the following:
(A) Perform an audit of activities
described in subsection (c)(2) that may be
carried out by the foreign financial
institution.
(B) Report to the Department of the
Treasury with respect to transactions or other
financial services provided with respect to any
such activity.
(C) Certify, to the best of the knowledge
of the domestic financial institution, that the
foreign financial institution is not knowingly
engaging in any such activity.
(D) Establish due diligence policies,
procedures, and controls, such as the due
diligence policies, procedures, and controls
described in section 5318(i) of title 31,
United States Code, reasonably designed to
detect whether the Secretary of the Treasury
has found the foreign financial institution to
knowingly engage in any such activity.
(2) Penalties.--The penalties provided for in
sections 5321(a) and 5322 of title 31, United States
Code, shall apply to a person that violates a
regulation prescribed under paragraph (1) of this
subsection, in the same manner and to the same extent
as such penalties would apply to any person that is
otherwise subject to such section 5321(a) or 5322.
(f) Waiver.--The Secretary of the Treasury may waive the
application of a prohibition or condition imposed with respect
to a foreign financial institution pursuant to subsection (c)
or section 104A or the imposition of a penalty under subsection
(d) with respect to a domestic financial institution on and
after the date that is 30 days after the Secretary--
(1) determines that such a waiver is necessary to
the national interest of the United States; and
(2) submits to the appropriate congressional
committees a report describing the reasons for the
determination.
(g) Procedures for Judicial Review of Classified
Information.--
(1) In general.--If a finding under paragraph (1)
or (4) of subsection (c) or section 104A, a
prohibition, condition, or penalty imposed as a result
of any such finding, or a penalty imposed under
subsection (d), is based on classified information (as
defined in section 1(a) of the Classified Information
Procedures Act (18 U.S.C. App.)) and a court reviews
the finding or the imposition of the prohibition,
condition, or penalty, the Secretary of the Treasury
may submit such information to the court ex parte and
in camera.
(2) Rule of construction.--Nothing in this
subsection shall be construed to confer or imply any
right to judicial review of any finding under paragraph
(1) or (4) of subsection (c) or section 104A, any
prohibition, condition, or penalty imposed as a result
of any such finding, or any penalty imposed under
subsection (d).
(h) Consultations in Implementation of Regulations.--In
implementing this section and the regulations prescribed under
this section, the Secretary of the Treasury--
(1) shall consult with the Secretary of State; and
(2) may, in the sole discretion of the Secretary of
the Treasury, consult with such other agencies and
departments and such other interested parties as the
Secretary considers appropriate.
(i) Definitions.--
(1) In general.--In this section:
(A) Account; correspondent account;
payable-through account.--The terms
``account'', ``correspondent account'', and
``payable-through account'' have the meanings
given those terms in section 5318A of title 31,
United States Code.
(B) Agent.--The term ``agent'' includes an
entity established by a person for purposes of
conducting transactions on behalf of the person
in order to conceal the identity of the person.
(C) Financial institution.--The term
``financial institution'' means a financial
institution specified in subparagraph (A), (B),
(C), (D), (E), (F), (G), (H), (I), (J), (M), or
(Y) of section 5312(a)(2) of title 31, United
States Code.
(D) Foreign financial institution; domestic
financial institution.--The terms ``foreign
financial institution'' and ``domestic
financial institution'' shall have the meanings
of those terms as determined by the Secretary
of the Treasury.
(E) Money laundering.--The term ``money
laundering'' means the movement of illicit cash
or cash equivalent proceeds into, out of, or
through a country, or into, out of, or through
a financial institution.
(2) Other definitions.--The Secretary of the
Treasury may further define the terms used in this
section in the regulations prescribed under this
section.
* * * * * * *
Additional Views
The House Committee on Foreign Affairs has compiled an
enviable record of bipartisan legislation and oversight,
especially with regard to security matters. The Committee
embodies the spirit that ``politics should end at the water's
edge.''
So I am disappointed that the Committee has approved H.R.
3662 on a purely partisan vote. The bill was drafted and
introduced without consultation with or input from Democrats on
the Committee or in the House.
In crafting legislation and conducting oversight in this
Committee, I have made clear my views on the rogue regime in
Iran. We were wrong to allow Iran to continue enriching during
the talks that resulted in the JCPOA. This past September, I
voted against the nuclear deal and I continue to believe the
agreement is deeply flawed. I view the Iranian regime for what
it is--the world's leading state sponsor of terrorism and a
destabilizing force across the Middle East.
But Congress had an opportunity to vote on the deal, and we
lost. There weren't enough votes to override a veto or even
send a resolution of disapproval to the President. And the
agreement now has gone into effect.
Now, I think that we have to work together on bipartisan
legislation that will hold Iran's feet to the fire on its
nuclear program, and hold the regime accountable for its
support of terrorism and other nefarious activities. And also
to help our ally Israel with her legitimate security needs.
Unfortunately, the provisions of the bill would not
accomplish its stated purpose of strengthening oversight of the
Joint Comprehensive Plan of Action for Iran's nuclear program.
Instead, this is yet another attempt to undermine the deal,
rather than to ensure Iran lives up to its word. So I don't
think it serves any purpose to take up a partisan bill like
this that has the effect of killing the deal and leaving us
with no clear path forward.
Fundamentally, the bill would impose conditions on carrying
out the U.S. commitment under the JCPOA that could never be
met. No President could ever certify that a person has never
engaged in sanctionable activity, particularly the activity for
which the person was sanctioned in the first place. But without
such a certification, none of the persons specified in the
JCPOA could be removed from our sanctions list.
Therefore, I oppose the bill. There is no shortage of good
ideas of how to achieve our goals, and I am confident we can
craft an effective bill and enact it with bipartisan support.
Eliot L. Engel.
Dissenting Views
H.R. 3662 is unfortunately yet another example of
unproductive partisan politics to undermine what is now
established U.S. policy. This bill does not offer measures to
strengthen our foreign policy towards Iran. Instead of
approaching this issue in a bipartisan manner to propose
effective sanctions that communicate U.S. security policy, H.R.
3662 is a political move that threatens to overturn an
agreement that has already gone into effect. Instead, we should
be working together across the aisle to develop measures that
will improve our national security and strengthen our leverage
with Iran and other countries trying to build up their nuclear
arsenals. H.R. 3662 is a political gesture, not a bill designed
to make us any safer.
William Keating.
----------
I want to thank Chairman Royce, Ranking Member Engel, and
my distinguished colleagues on the House Foreign Affairs
Committee for all of the good work that we have done over the
last year, which was typically done in a bipartisan fashion,
respecting the order and process of our committee system. I
share the feelings of many of my colleagues, including Ranking
Member Engel, that H.R. 3662 stands out as an exception to our
bipartisan efforts. Unfortunately, the bill was not drafted in
the Foreign Affairs Committee, and no Democrats were consulted
during the drafting of the bill. It faces a certain veto by the
President. I had hoped that we could start 2016 by building on
the bipartisanship that we achieved in passing the omnibus bill
that will fund the needs of the American people. However, the
lack of bipartisanship on H.R. 3662 has resulted in a bill that
I and many of my Member colleagues are unable to support.
While I supported the Joint Comprehensive Plan of Action
(JCPOA), I appreciate that many Members have reservations about
the United States signing the JCPOA with Iran. I think we all
agree Iran is the world's leading state sponsor of terrorism
and a destabilizing force across the Middle East. As Ranking
Member Engel noted, Congress had an opportunity to vote on the
plan, and there weren't enough votes to override a veto or even
send a resolution of disapproval to the President. The JCPOA is
now being implemented and represents the best chance for a
long-term resolution that effectively addresses our nuclear
proliferation concerns. I stand ready to work with my
colleagues on bipartisan legislation that will hold the Iranian
regime accountable for its nuclear program, its support of
terrorism, and other nefarious activities. As this process
moves forward, it is important to reaffirm strong support for
our ally, Israel, and its legitimate security needs.
Alan S. Lowenthal.
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