sale, and profit derived from their oil and gas re-
sources. 
(2) For U.S. persons, U.S. maritime sanctions, 
including on nations like Iran, Russia, and North 
Korea, restrict the financing of vessels and cargo, 
insurance and re-insurance, companies using vessels 
to transport their goods, shipowners, charterers, and 
those providing maritime services such as classifica-
tion and certification. 
(3) One method by which Iran and Russia fre-
quently attempt to evade these U.S. sanctions on oil 
is to ‘‘false flag’’, which means to avoid sanctions 
scrutiny by registering a vessel in a permissive coun-
try or by sailing under another country’s flag with-
out communicating this to the country whose flag is 
being used. 
(4) According to Foreign Policy, approximately 
two million barrels of oil from sanctioned countries, 
including Iran and Russia, are transported under 
false flags every day. 
(5) In order to evade a sanctions regime, ves-
sels transporting oil and gas resources from sanc-
tioned countries must carry insurance policies to 
allow them to dock at a port, unload their goods, or 
use a port’s services, such as refueling. 
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(6) The veracity of a vessel’s flag is subject to 
examination by port authorities, but verification by 
the port and service providers does not always occur. 
(7) Given the lack of comprehensive checks on 
the veracity of flags, this Act will force a change in 
behavior within the maritime shipping industry by 
limiting the availability of insurance products to 
those not verifying flag registration and providing a 
direct route for the Office of Foreign Assets Control 
(‘‘OFAC’’) to gain possibly actionable information 
that could lead to OFAC enforcement actions as well 
as additional targets for sanctions designations. 
SEC. 3. MATERIAL MISREPRESENTATION. 
(a) IN GENERAL.—In maritime insurance contracts, 
failure to verify a vessel’s registration shall be deemed a 
material misrepresentation by the policyholder. 
(b) RULEMAKING.—The Undersecretary for Ter-
rorism and Financial Crimes shall issue rules to carry out 
this section. 
SEC. 4. IDENTIFICATION OF VESSELS WITH ILLICIT MARI-
TIME INSURANCE. 
(a) IN GENERAL.—The primary insurance regulatory 
authority of a State may report to the Undersecretary for 
Terrorism and Financial Crimes when, in the sole discre-
tion of the primary insurance regulatory authority, the 
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primary insurance regulatory authority has determined 
that the conditions exist for a maritime insurance contract 
to be voidable pursuant to section 3. 
(b) LIMITATIONS.—With respect to a maritime insur-
ance contract, a report may only be made under subsection 
(a) if the primary insurance regulatory authority— 
(1) establishes that the maritime insurance con-
tract has been issued by an insurer subject to the 
authority of the primary insurance regulatory au-
thority; 
(2) establishes that the maritime insurance con-
tract satisfies the conditions established by the Un-
dersecretary for Terrorism and Financial Crimes to 
be voidable pursuant to section 3; and 
(3) possesses, to the satisfaction of the primary 
insurance regulatory authority, clear and compelling 
credible factual evidence that a policyholder has 
failed to verify the registration of a vessel. 
SEC. 5. REPORT. 
(a) IN GENERAL.—Not later than the end of the 180- 
day period beginning on the date of the enactment of this 
Act, and annually thereafter for 5 years, the Secretary of 
the Treasury shall issue a report to the appropriate com-
mittees of the Congress— 
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(1) detailing any reports received by the Under-
secretary for Terrorism and Financial Crimes from 
a primary insurance regulatory authority under sec-
tion 4; 
(2) detailing any steps taken by the Secretary 
of the Treasury on the receipt of that information; 
(3) describing of activities taken by the Sec-
retary of the Treasury, including meetings and 
advisories, to engage with the maritime community, 
foreign governments, and civil society to improve 
outreach and understanding of the compliance ex-
pectations related to maritime sanctions evasion; and 
(4) describing any proposed improvements to 
existing authorities or resources that could be pro-
vided by Congress. 
(b) EXCEPTION FOR ONGOING INVESTIGATIONS.— 
The Secretary of the Treasury may not include informa-
tion in a report required under subsection (a) related to 
ongoing investigations. 
SEC. 6. REPORT. 
Not later than the end of the 180-day period begin-
ning on the date of the enactment of this Act, the Sec-
retary of the Treasury shall issue a report to the appro-
priate committees of the Congress containing rec-
ommendations for receiving determinations described 
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under section 4 from persons other than a primary insur-
ance regulatory authority of a State, including estab-
lishing a whistleblower program. 
SEC. 7. DEFINITIONS. 
In this Act: 
(1) APPROPRIATE COMMITTEES OF THE CON-
GRESS.—The term ‘‘appropriate committees of the 
Congress’’ means the Committee on Financial Serv-
ices of the House of Representatives and the Com-
mittee on Banking, Housing, and Urban Affairs of 
the Senate. 
(2) MARITIME INSURANCE.—The term ‘‘mari-
time insurance’’— 
(A) means insurance coverage for physical 
loss or damage of vessels, cargo, terminals, and 
any transport by which the cargo is transferred, 
acquired, or held between the points of origin 
and the final destination; and 
(B) includes cargo insurance, freight insur-
ance, hull insurance, and protection and indem-
nity. 
(3) REGISTRATION.—The term ‘‘registration’’ 
means the process— 
(A) by which a vessel is formally recog-
nized by a country’s maritime authority, result-
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ing in the vessel’s inclusion in the national ves-
sel registry; 
(B) conferring upon a vessel the nation-
ality of the registering state; 
(C) entailing the right to fly the flag of 
such registering state; and 
(D) subjecting a vessel to the responsibility 
to adhere to maritime laws and regulations en-
forced by such registering state. 
(4) STATE.—The term ‘‘State’’ means any of 
the several States, the District of Columbia, a terri-
tory of the United States, an Indian Tribe, and a ju-
risdiction subject to the Compact of Free Associa-
tion Act of 2003. 
(5) VESSEL.—The term ‘‘vessel’’ has the mean-
ing given such term in section 3 of title 1, United 
States Code. 
Æ 
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