Digital Asset Sanctions Compliance Enhancement Act of 2022
Bill: S.3867 | Sponsor: Sen. Warren, Elizabeth (D-MA)
Policy area: Finance and Financial Sector

Summary:
Digital Asset Sanctions Compliance Enhancement Act of 2022
This bill allows additional sanctions against Russia and creates specified reporting requirements regarding digital assets.
Specifically, the President must periodically identify foreign persons who facilitate evasion of Russian sanctions using digital assets. The bill authorizes sanctions against such persons.
The bill requires a U.S. taxpayer engaged in offshore digital asset transactions greater than $10,000 to file an annual Report of Foreign Bank and Financial Accounts with the Financial Crimes Enforcement Network.
The bill allows the Department of the Treasury to prohibit U.S. digital asset trading platforms and transaction facilitators from transacting with Russian digital asset addresses. Additionally, Treasury must report on its progress in implementing the bill and must annually identify foreign digital asset trading platforms that are a high risk for sanctions evasion, money laundering, and other illicit activities.

To impose sanctions with respect to the use of cryptocurrency to 
 facilitate transactions by Russian persons subject to sanctions, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Digital Asset Sanctions Compliance 
Enhancement Act of 2022''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Appropriate congressional committees and leadership.--
        The term ``appropriate congressional committees and 
        leadership'' means--
                    (A) the Committee on Banking, Housing, and Urban 
                Affairs, the Committee on Foreign Relations, and the 
                majority and minority leaders of the Senate; and
                    (B) the Committee on Financial Services, the 
                Committee on Foreign Affairs, and the speaker, the 
                majority leader, and the minority leader of the House 
                of Representatives.
            (2) Digital assets.--The term ``digital assets'' means any 
        digital representation of value, financial assets and 
        instruments, or claims that are used to make payments or 
        investments, or to transmit or exchange funds or the equivalent 
        thereof, that are issued or represented in digital form through 
        the use of distributed ledger technology.
            (3) Digital asset trading platform.--The term ``digital 
        asset trading platform'' means a person, or group of persons, 
        that operates as an exchange or other trading facility for the 
        purchase, sale, lending, or borrowing of digital assets.
            (4) Digital asset transaction facilitator.--The term 
        ``digital asset transaction facilitator'' means--
                    (A) any person, or group of persons, that 
                significantly and materially facilitates the purchase, 
                sale, lending, borrowing, exchange, custody, holding, 
                validation, or creation of digital assets on the 
                account of others, including any communication 
                protocol, decentralized finance technology, smart 
                contract, or other software, including open-source 
                computer code--
                            (i) deployed through the use of distributed 
                        ledger or any similar technology; and
                            (ii) that provides a mechanism for multiple 
                        users to purchase, sell, lend, borrow, or trade 
                        digital assets; and
                    (B) any person, or group of persons, that the 
                Secretary of the Treasury otherwise determines to be 
                significantly and materially facilitating digital 
                assets transactions in violation of sanctions.
            (5) Foreign person.--The term ``foreign person'' means an 
        individual or entity that is not a United States person.
            (6) United states person.--The term ``United States 
        person'' means--
                    (A) an individual who is a United States citizen or 
                an alien lawfully admitted for permanent residence to 
                the United States; or
                    (B) an entity organized under the laws of the 
                United States or any jurisdiction within the United 
                States, including a foreign branch of such an entity.

SEC. 3. IMPOSITION OF SANCTIONS WITH RESPECT TO THE USE OF DIGITAL 
              ASSETS TO FACILITATE TRANSACTIONS BY RUSSIAN PERSONS 
              SUBJECT TO SANCTIONS.

    (a) Report Required.--Not later than 90 days after the date of the 
enactment of this Act, and periodically thereafter as necessary, the 
President shall submit to Congress a report identifying any foreign 
person that--
            (1) operates a digital asset trading platform or is a 
        digital asset transaction facilitator; and
            (2)(A) has significantly and materially assisted, 
        sponsored, or provided financial, material, or technological 
        support for, or goods or services to or in support of any 
        person with respect to which sanctions have been imposed by the 
        United States relating to the Russian Federation, including by 
        facilitating transactions that evade such sanctions; or
            (B) is owned or controlled by, or acting or purporting to 
        act for or on behalf of any person with respect to which 
        sanctions have been imposed by the United States relating to 
        the Russian Federation.
    (b) Imposition of Sanctions.--The President may exercise all of the 
powers granted to the President under the International Emergency 
Economic Powers Act (50 U.S.C. 1701 et seq.) to the extent necessary to 
block and prohibit all transactions in property and interests in 
property of a foreign person identified in a report submitted under 
subsection (a) if such property and interests in property are in the 
United States, come within the United States, or are or come within the 
possession or control of a United States person.
    (c) Implementation; Penalties.--
            (1) Implementation.--The President may exercise all 
        authorities provided under sections 203 and 205 of the 
        International Emergency Economic Powers Act (50 U.S.C. 1702 and 
        1704) to carry out this section.
            (2) Penalties.--A person that violates, attempts to 
        violate, conspires to violate, or causes a violation of this 
        section or any regulation, license, or order issued to carry 
        out this section shall be subject to the penalties set forth in 
        subsections (b) and (c) of section 206 of the International 
        Emergency Economic Powers Act (50 U.S.C. 1705) to the same 
        extent as a person that commits an unlawful act described in 
        subsection (a) of that section.
    (d) National Security Waiver.--The President may waive the 
imposition of sanctions under this section with respect to a person if 
the President--
            (1) determines that such a waiver is in the national 
        security interests of the United States; and
            (2) submits to Congress a notification of the waiver and 
        the reasons for the waiver.
    (e) Exceptions.--
            (1) Exception for intelligence activities.--This section 
        shall not apply with respect to activities subject to the 
        reporting requirements under title V of the National Security 
        Act of 1947 (50 U.S.C. 3091 et seq.) or any authorized 
        intelligence activities of the United States.
            (2) Exception relating to importation of goods.--
                    (A) In general.--The authority to block and 
                prohibit all transactions in all property and interests 
                in property under subsection (b) shall not include the 
                authority or a requirement to impose sanctions on the 
                importation of goods.
                    (B) Good.--In this paragraph, the term ``good'' 
                means any article, natural or manmade substance, 
                material, supply or manufactured product, including 
                inspection and test equipment, and excluding technical 
                data.

SEC. 4. DISCRETIONARY PROHIBITION OF TRANSACTIONS.

    The Secretary of the Treasury may require that no digital asset 
trading platform or digital asset transaction facilitator that does 
business in the United States transact with, or fulfill transactions 
of, digital asset addresses that are known to be, or could reasonably 
be known to be, affiliated with persons headquartered or domiciled in 
the Russian Federation if the Secretary--
            (1) determines that exercising such authority is important 
        to the national interest of the United States; and
            (2) not later than 90 days after exercising the authority 
        described in paragraph (1), submits to the appropriate 
        congressional committees and leadership a report on the basis 
        for any determination under that paragraph.

SEC. 5. TRANSACTION REPORTING.

    Not later than 120 days after the date of enactment of this Act, 
the Financial Crimes Enforcement Network shall require United States 
persons engaged in a transaction with a value greater than $10,000 in 
digital assets through 1 or more accounts outside of the United States 
to file a report described in section 1010.350 of title 31, Code of 
Federal Regulations, using the form described in that section, in 
accordance with section 5314 of title 31, United States Code.

SEC. 6. REPORTS.

    (a) In General.--Not later than 120 days after the date of 
enactment of this Act, the Secretary of the Treasury shall submit to 
the appropriate congressional committees and leadership a report on the 
progress of the Department of the Treasury in carrying out this Act, 
including any resources needed by the Department to improve 
implementation and progress in coordinating with governments of 
countries that are allies or partners of the United States.
    (b) Other Reports.--Not later than 120 days after the date of 
enactment of this Act, and every year thereafter, the Secretary of the 
Treasury shall submit to the appropriate congressional committees and 
leadership and make publicly available a report identifying the digital 
asset trading platforms that the Office of Foreign Assets Control of 
the Department of the Treasury determines to be high risk for sanctions 
evasion, money laundering, or other illicit activities. Any exchange 
included in the report may petition the Office of Foreign Assets 
Control for removal, which shall be granted upon demonstrating that the 
exchange is taking steps sufficient to comply with applicable United 
States law.
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