79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–905 

IMPROVING STRATEGIES TO COUNTER WEAPONS 

PROLIFERATION ACT 

AUGUST 24, 2018.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 6332] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 6332) to require the Director of the Financial Crimes Enforcement Network to submit a report to Congress on the way in 

which data collected pursuant to title 31 is being used, and for 

other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do pass. 

PURPOSE AND SUMMARY

On July 12, 2018, Representative Scott Tipton introduced H.R. 

6332, the ‘‘Improving Strategies to Counter Weapons Proliferation 

Act.’’ The legislation would require the Financial Crime Enforcement Network (FinCEN) to report to Congress annually for five 

years on the intelligence products it generates from Bank Secrecy 

Act (BSA) filings on proliferation finance transactions moving 

through the U.S. financial system; its collaboration with law enforcement agencies, the Intelligence Community, and foreign financial intelligence units; and on its advisory reports issued to financial institutions to make maximum use of BSA data. 

BACKGROUND AND NEED FOR LEGISLATION

H.R. 6332 amends Section 310 of title 31, United States Code, to 

require the Director of the Financial Crime Enforcement Network 

(FinCEN) to report to Congress annually for five years on the financing of weapons proliferation and to provide guidance to financial institutions on how to best identify procurement patterns and 


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implement these identifiers into their anti-money laundering and 

‘‘Know Your Customer’’ processes like they do with other illicit and 

terror finance. 

Countering the financing of weapons proliferation is a key foundation of U.S. counter-proliferation efforts. The Financial Action 

Task Force (FATF) encourages financial entities to check customers 

against sanctions lists to avoid any assistance in the financing of 

weapons proliferation activities. As the U.S. assumed the presidency of FATF in July 2018, there is an opportunity to provide 

more leadership to the financial industry to help identify and 

counter the financing of weapons proliferation. 

Proliferation finance generally receives less attention than other 

illicit finance threats such as money laundering and terror financing. It is often difficult for government authorities or financial institutions to identify the financing of weapons proliferation. The 

networks of procurement agents involved may be complex and often 

involve ‘‘front’’ companies which operate in a number of different 

jurisdictions. The goods and materials involved are, for the most 

part, standard industrial or occasionally dual-use items. The latter, 

although subject to export controls, still may be hard to identify. 

For due diligence, most financial institutions rely on screening both 

transactions and customers against lists of sanctioned individuals 

or entities. Governments and regulators generally require nothing 

more of financial institutions. 

Publicly available material about the characteristics of the financing of weapons proliferation, or documented methodologies, 

has also been relatively sparse. The most comprehensive study of 

typologies of the financing of proliferation to date was published by 

the FATF in 2008, which included case studies and a list of 20 possible indicators, including, for example, transactions connected with 

designated individuals or entities or with countries of proliferation 

concern. These case studies involve classic and established financial mechanisms—wire transfers, trade finance products, cash, 

checks, and, in a few cases, credit cards. 

Financing schemes fund illicit weapons proliferation. These operations cannot continue if the Federal government can frustrate or 

more importantly end these financing opportunities. H.R. 6332 will 

help to further these goals by studying what specific activities may 

indicate engagement in proliferation financing and deny bad actors 

with the ability to take advantage of the global financial system. 

HEARINGS

The Committee on Financial Services Subcommittee on Terrorism and Illicit Finance held a hearing examining matters relating to H.R. 6332 on July 12, 2018. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

July 24, 2018 and ordered H.R. 6332 to be reported favorably to the 

House without amendment by a recorded vote of 56 yeas to 0 nays 

(recorded vote no. FC–198), a quorum being present. 


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COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House without. The motion was agreed to by a recorded vote of 56 yeas to 0 nays (Record vote no. FC–198), a 

quorum being present. 


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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 6332 will provide a focus on the financing of weapons proliferation by providing 

for a report to Congress on FinCEN’s intelligence products relating 

to the financing of proliferation financing, how FinCEN collaborates with other agencies and foreign partners, and FinCEN’s advisory notices to financial institutions. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues 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 ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 2, 2018. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 6332, the Improving 

Strategies to Counter Weapons Proliferation Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Mark Grabowicz. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

H.R. 6332—Improving Strategies to Counter Weapons Proliferation 

Act 

H.R. 6332 would require the Financial Crimes Enforcement Network (FinCEN) in the Department of the Treasury to submit an 

annual report to the Congress on FinCEN products and other agency activities that address the financing of weapons production and 


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distribution. Based on the cost of similar reports, CBO estimates 

that implementing the bill would cost less than $500,000 annually; 

such spending would be subject to the availability of appropriated 

funds. 

Enacting H.R. 6332 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

CBO estimates that enacting H.R. 6332 would not increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2029. 

H.R. 6332 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act. 

The CBO staff contact for this estimate is Mark Grabowicz. The 

estimate was reviewed by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 


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DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rule makings: The 

Committee estimates that the bill requires no directed rule makings within the meaning of such section. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This Section cites H.R. 6332 as the ‘‘Improving Strategies to 

Counter Weapons Proliferation Act.’’ 

Section 2. Financial crimes enforcement network reporting requirement 

Section 310 of title 31, United States Code, is amended by adding 

at the end the following: 

‘‘(e) REPORTS RELATING TO USE OF COLLECTED DATA.’’ 

Not later than 1 year after the date of enactment of this subsection and every year thereafter, the Director shall submit to the 

Committee on Financial Services of the House of Representatives 

and the Committee on Banking, Housing, and Urban Affairs of the 

Senate a report on intelligence products created by FinCEN on finance transactions for the proliferation of weapons from filings 

submitted pursuant to subchapter II of chapter 53; FinCEN’s efforts to collaborate with law enforcement agencies, the intelligence 

community, and foreign financial intelligence units to maximize the 

use of data that is collected pursuant to subchapter II of chapter 

53; and advisory notices issued to financial institutions (as defined 

under section 5312(a)) on financial activity related to the proliferation of weapons. 

Any part of the report that involves information that is properly 

classified under criteria established by the President shall be submitted to the Congress separately in a classified annex. 

No report is required after the end of the 5-year period beginning 

on the date of enactment. 

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 (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

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 italic 

and existing law in which no change is proposed is shown in 

roman): 

TITLE 31, UNITED STATES CODE 

* * * * * * * 


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SUBTITLE I—GENERAL 

* * * * * * * 

CHAPTER 3—DEPARTMENT OF THE TREASURY 

* * * * * * * 

SUBCHAPTER I—ORGANIZATION 

* * * * * * * 

§ 310. Financial Crimes Enforcement Network 

(a) IN GENERAL.—The Financial Crimes Enforcement Network 

established by order of the Secretary of the Treasury (Treasury 

Order Numbered 105-08, in this section referred to as ‘‘FinCEN’’) 

on April 25, 1990, shall be a bureau in the Department of the 

Treasury. 

(b) DIRECTOR.— 

(1) APPOINTMENT.—The head of FinCEN shall be the Director, who shall be appointed by the Secretary of the Treasury. 

(2) DUTIES AND POWERS.—The duties and powers of the Director are as follows: 

(A) Advise and make recommendations on matters relating to financial intelligence, financial criminal activities, 

and other financial activities to the Under Secretary of the 

Treasury for Enforcement. 

(B) Maintain a government-wide data access service, 

with access, in accordance with applicable legal requirements, to the following: 

(i) Information collected by the Department of the 

Treasury, including report information filed under 

subchapter II of chapter 53 of this title (such as reports on cash transactions, foreign financial agency 

transactions and relationships, foreign currency transactions, exporting and importing monetary instruments, and suspicious activities), chapter 2 of title I of 

Public Law 91-508, and section 21 of the Federal Deposit Insurance Act. 

(ii) Information regarding national and international 

currency flows. 

(iii) Other records and data maintained by other 

Federal, State, local, and foreign agencies, including financial and other records developed in specific cases. 

(iv) Other privately and publicly available information. 

(C) Analyze and disseminate the available data in accordance with applicable legal requirements and policies 

and guidelines established by the Secretary of the Treasury and the Under Secretary of the Treasury for Enforcement to— 

(i) identify possible criminal activity to appropriate 

Federal, State, local, and foreign law enforcement 

agencies; 


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(ii) support ongoing criminal financial investigations 

and prosecutions and related proceedings, including 

civil and criminal tax and forfeiture proceedings; 

(iii) identify possible instances of noncompliance 

with subchapter II of chapter 53 of this title, chapter 

2 of title I of Public Law 91-508, and section 21 of the 

Federal Deposit Insurance Act to Federal agencies 

with statutory responsibility for enforcing compliance 

with such provisions and other appropriate Federal 

regulatory agencies; 

(iv) evaluate and recommend possible uses of special 

currency reporting requirements under section 5326; 

(v) determine emerging trends and methods in 

money laundering and other financial crimes; 

(vi) support the conduct of intelligence or counterintelligence activities, including analysis, to protect 

against international terrorism; and 

(vii) support government initiatives against money 

laundering. 

(D) Establish and maintain a financial crimes communications center to furnish law enforcement authorities 

with intelligence information related to emerging or ongoing investigations and undercover operations. 

(E) Furnish research, analytical, and informational services to financial institutions, appropriate Federal regulatory agencies with regard to financial institutions, and 

appropriate Federal, State, local, and foreign law enforcement authorities, in accordance with policies and guidelines established by the Secretary of the Treasury or the 

Under Secretary of the Treasury for Enforcement, in the 

interest of detection, prevention, and prosecution of terrorism, organized crime, money laundering, and other financial crimes. 

(F) Assist Federal, State, local, and foreign law enforcement and regulatory authorities in combatting the use of 

informal, nonbank networks and payment and barter system mechanisms that permit the transfer of funds or the 

equivalent of funds without records and without compliance with criminal and tax laws. 

(G) Provide computer and data support and data analysis to the Secretary of the Treasury for tracking and controlling foreign assets. 

(H) Coordinate with financial intelligence units in other 

countries on anti-terrorism and anti-money laundering initiatives, and similar efforts. 

(I) Administer the requirements of subchapter II of chapter 53 of this title, chapter 2 of title I of Public Law 91- 

508, and section 21 of the Federal Deposit Insurance Act, 

to the extent delegated such authority by the Secretary of 

the Treasury. 

(J) Such other duties and powers as the Secretary of the 

Treasury may delegate or prescribe. 

(c) REQUIREMENTS RELATING TO MAINTENANCE AND USE OF DATA

BANKS.—The Secretary of the Treasury shall establish and maintain operating procedures with respect to the government-wide 


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data access service and the financial crimes communications center 

maintained by FinCEN which provide— 

(1) for the coordinated and efficient transmittal of information to, entry of information into, and withdrawal of information from, the data maintenance system maintained by 

FinCEN, including— 

(A) the submission of reports through the Internet or 

other secure network, whenever possible; 

(B) the cataloguing of information in a manner that facilitates rapid retrieval by law enforcement personnel of 

meaningful data; and 

(C) a procedure that provides for a prompt initial review 

of suspicious activity reports and other reports, or such 

other means as the Secretary may provide, to identify information that warrants immediate action; and 

(2) in accordance with section 552a of title 5 and the Right 

to Financial Privacy Act of 1978, appropriate standards and 

guidelines for determining— 

(A) who is to be given access to the information maintained by FinCEN; 

(B) what limits are to be imposed on the use of such information; and 

(C) how information about activities or relationships 

which involve or are closely associated with the exercise of 

constitutional rights is to be screened out of the data 

maintenance system. 

(d) AUTHORIZATION OF APPROPRIATIONS.— (1) IN GENERAL.—There are authorized to be appropriated for FinCEN $100,419,000 for fiscal year 2011 and such sums as 

may be necessary for each of the fiscal years 2012 and 2013. 

(2) AUTHORIZATION FOR FUNDING KEY TECHNOLOGICAL IMPROVEMENTS IN MISSION-CRITICAL FINCEN SYSTEMS.—There 

are authorized to be appropriated for fiscal year 2005 the following amounts, which are authorized to remain available 

until expended: 

(A) BSA DIRECT.—For technological improvements to 

provide authorized law enforcement and financial regulatory agencies with Web-based access to FinCEN data, to 

fully develop and implement the highly secure network required under section 362 of Public Law 107-56 to expedite 

the filing of, and reduce the filing costs for, financial institution reports, including suspicious activity reports, collected by FinCEN under chapter 53 and related provisions 

of law, and enable FinCEN to immediately alert financial 

institutions about suspicious activities that warrant immediate and enhanced scrutiny, and to provide and upgrade 

advanced information-sharing technologies to materially 

improve the Government’s ability to exploit the information in the FinCEN data banks, $16,500,000. 

(B) ADVANCED ANALYTICAL TECHNOLOGIES.—To provide 

advanced analytical tools needed to ensure that the data 

collected by FinCEN under chapter 53 and related provisions of law are utilized fully and appropriately in safeguarding financial institutions and supporting the war on 

terrorism, $5,000,000. 


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(C) DATA NETWORKING MODERNIZATION.—To improve the 

telecommunications infrastructure to support the improved 

capabilities of the FinCEN systems, $3,000,000. 

(D) ENHANCED COMPLIANCE CAPABILITY.—To improve the 

effectiveness of the Office of Compliance in FinCEN, 

$3,000,000. 

(E) DETECTION AND PREVENTION OF FINANCIAL CRIMES

AND TERRORISM.—To provide development of, and training 

in the use of, technology to detect and prevent financial 

crimes and terrorism within and without the United 

States, $8,000,000. 

(e) REPORTS RELATING TO USE OF COLLECTED DATA.— (1) IN GENERAL.—Not later than 1 year after the date of enactment of this subsection and every year thereafter, the Director shall submit to the Committee on Financial Services of the 

House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report on— 

(A) intelligence products created by FinCEN on finance 

transactions for the proliferation of weapons from filings 

submitted pursuant to subchapter II of chapter 53; 

(B) FinCEN’s efforts to collaborate with law enforcement 

agencies, the intelligence community, and foreign financial 

intelligence units to maximize the use of data that is collected pursuant to subchapter II of chapter 53; and 

(C) advisory notices issued to financial institutions (as 

defined under section 5312(a)) on financial activity related 

to the proliferation of weapons. 

(2) SEPARATE PRESENTATION OF CLASSIFIED MATERIAL.—Any 

part of the report under paragraph (1) that involves information that is properly classified under criteria established by the 

President shall be submitted to the Congress separately in a 

classified annex. 

(3) SUNSET.—No report is required under this subsection 

after the end of the 5-year period beginning on the date of enactment of this subsection. 

* * * * * * * 

Æ 


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