I 118th CONGRESS 1st Session H. R. 1164 IN THE HOUSE OF REPRESENTATIVES February 24, 2023 Mr. Lynch introduced the following bill; which was referred to the Committee on Foreign Affairs A BILL To require the Comptroller General of the United States to conduct a study with respect to outreach activities performed by the Office of Foreign Assets Control, and for other purposes.

1. Short title This Act may be cited as the OFAC Outreach and Engagement Capabilities Enhancement Act . 2. Findings Congress finds the following: (1) The Office of Foreign Assets Control is the United States Government agency responsible for administering and enforcing economic sanctions programs, primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. (2) All United States persons must comply with OFAC regulations, including all United States citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all United States incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled by United States companies also must comply. Certain programs also require foreign persons in possession of United States-origin goods to comply. (3) While the sanctions announcements are themselves notice of the requirements placed on all United States persons, OFAC conducts additional outreach through its compliance office, serving as OFAC’s primary liaison to the private sector and operating OFAC’s public hotline for sanctions-related questions and the conduct of civil investigations for potential sanctions violations. (4) While many industries, such as large multinational financial institutions and industrial firms, have sophisticated sanctions departments to manage compliance with the strict-liability mandates from OFAC and to enact practices to defend their business’ sales and supply chains from abuse by sanctions-designated bad actors, many smaller entities and industries, do not. (5) According to the U.S. Department of the Treasury’s 2021 Sanctions Review, Sanctions are only as effective as their implementation, especially with regard to communication and engagement. In order to better calibrate the use of this tool, Treasury needs to communicate and coordinate more effectively with stakeholders affected by the use of financial sanctions. Treasury can build on existing outreach and engagement capabilities through enhanced communication with industry, financial institutions, allies, civil society, and the media, as well as new constituencies, particularly in the digital assets space. . (6) The Assistant Secretary for Terrorism and Financial Intelligence noted in a 2022 speech to a private-sector audience at the American Conference Institute, We need to redouble efforts—to make sure that these networks do not pass under your radar and around our laws, and that when you obtain information about them, you promptly take action. This is not just a matter of compliance; it is a moral imperative. The choice is between permitting and preventing sanctions evasion—there is no space for neutral ground here. . (7) Examples of successful, robust Federal Government public-private sector outreach programs that support the agency mission abound from the law enforcement, Intelligence Community, and regulatory agencies, such as the Federal Bureau of Investigation’s InfraGard, the Public-Private Analytic Exchange Program from the Department of Homeland Security and the Office of the Director of National Intelligence, and the Financial Crime Enforcement Network’s FinCEN Exchange. (8) The FinCEN Exchange, from OFAC’s sister agency within the U.S. Department of the Treasury, was mandated on January 1, 2021, when Congress enacted the Anti-Money Laundering Act of 2020 (AML Act). Section 6103 of the AML Act establishes the FinCEN Exchange to facilitate a voluntary public-private information-sharing partnership between law enforcement agencies, national security agencies, financial institutions, and FinCEN to effectively and efficiently combat money laundering, terrorism financing, organized crime, and other financial crimes, protect the financial system from illicit use, and promote national security. (9) The objective of FinCEN Exchange is to develop, deliver, and sustain innovative public-private information sharing in order to enable the private sector to better identify risks and provide FinCEN and law enforcement with critical information to disrupt money laundering, terrorism financing, and other financial crimes. The program goals of the exchange are to: (A) Enhance communication, collaboration, and partnerships among FinCEN, law enforcement, and financial institutions. (B) Support priority national security and counter-illicit finance investigations and policies. (C) Enhance the utility of suspicious activity reports and share feedback with the private sector. (D) Encourage, enable, and acknowledge a focus on high-value and high-impact activities. (E) Conduct proactive outreach to allow industry to better prioritize efforts and utilize existing resources. 3. OFAC outreach assessment (a) GAO Study (1) Outreach The Comptroller General of the United States shall, not later than 360 days after the date of the enactment of this section, carry out a study with respect to the quality and efficacy of outreach activities performed by OFAC in support of the mission of OFAC on or before the date of the enactment of this section. (2) Study requirements (A) In general The Comptroller General of the United States shall, in carrying out paragraph (1), examine each of the following with respect to outreach activities performed by OFAC: (i) Goals and strategy. (ii) Audiences. (iii) Resources. (iv) Number and type of engagements with private sector entities. (v) Feedback capabilities. (vi) Appropriate privacy and competitive fairness measures for information received from or shared with private sector entities. (vii) Compliance with the Federal Advisory Committee Act, where required. (viii) How information obtained from outreach activities is used by OFAC to support the mission of OFAC. (ix) How, if at all, outreach activities help with enforcement functions. (B) Survey of similar programs In carrying out the study required under this subsection, the Comptroller General of the United States shall— (i) examine outreach programs administered by agencies with similar national security and regulatory missions, including outreach programs administered by similar agencies, including the Financial Crimes Enforcement Network; and (ii) identify best practices, similarities, and differences to inform the evaluation of existing OFAC outreach programs. (b) Briefing OFAC shall, not later than 60 days after the date on which the Comptroller General of the United States submits a study pursuant to subsection (a), and after considering the results of such study, submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs on the Senate a briefing that describes how OFAC will improve its outreach activities going forward, including, at the time of such briefing, in relation to OFAC outreach activities, how OFAC— (1) provides information to those who must comply with OFAC sanctions, especially those in communities and industries that are known to be targeted by bad actors designated by sanctions; (2) uses outreach activities to support to the important mission of OFAC, with minimal redirection of staff and resources; (3) ensures that the selection of private-sector participants for outreach activities is free from favoritism; (4) ensures that private-sector information obtained by OFAC during outreach activities is appropriately safeguarded; (5) ensures that information shared at outreach functions can be publicized in a manner that does not competitively disadvantage those not selected to participate in such outreach functions; (6) applies Federal requirements with respect to all outreach activities, including Federal Advisory Committee Act requirements; (7) ensures that private-sector participants not use outreach activities as an opportunity to pitch products or services or receive advance information about OFAC or Department of the Treasury procurement opportunities; and (8) maintains compliance with OFAC ethics requirements. (c) Feasibility of voluntary exchange program OFAC shall, after reviewing the report produced by the Comptroller General of the United States pursuant to subsection (a) and submitting the briefing required under subsection (b), access the feasibility of the establishment of a program by OFAC designed to— (1) facilitate a voluntary public-private information sharing partnership among law enforcement agencies, national security agencies, financial institutions, and OFAC to effectively and efficiently administer and enforce economic sanctions against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States by promoting innovation and technical advances in reporting; (2) protect the financial system from illicit use, including evasions of existing economic sanctions programs; and (3) facilitate two-way information exchange between OFAC and persons who are required to comply with sanctions administered and enforced by OFAC, including financial institutions, business sectors frequently affected by sanctions programs, and non-government organizations and humanitarian groups impacted by such sanctions programs. (d) Pilot Program (1) In general The Secretary of the Treasury may, after considering the results of the study conducted by the Comptroller General of the United States pursuant to subsection (a), the briefing provided by OFAC pursuant to subsection (b), and the feasibility assessment conducted by OFAC pursuant to subsection (c), require OFAC to establish a 3-year pilot of a program designed to— (A) facilitate a voluntary public-private information sharing partnership among law enforcement agencies, national security agencies, financial institutions, and OFAC to effectively and efficiently administer and enforce economic sanctions against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States by promoting innovation and technical advances in reporting; (B) protect the financial system from illicit use, including evasions of existing economic sanctions programs; and (C) facilitate two-way information exchange between OFAC and persons who are required to comply with sanctions administered and enforced by OFAC, including financial institutions, business sectors frequently affected by sanctions programs, and non-government organizations and humanitarian groups impacted by such sanctions programs. (2) Information sharing (A) In general Any information shared by a private sector entity as a part of any program established under paragraph (1) shall be shared— (i) in compliance with all other applicable Federal laws and regulations; and (ii) in such a manner as to ensure the appropriate confidentiality of personal information. (B) Use of information Information received by OFAC from a private sector entity as a part of any program established under paragraph (1) may not be used for any purpose other than identifying and reporting on activities that may involve the compliance with United States sanctions requirements. (C) Rule of construction Nothing in this subsection may be construed to create new information sharing authorities or requirements relating to sanctions laws. (3) Report If a program is established under paragraph (1), OFAC shall, annual submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate that describes the activities of such program. (e) Definitions In this Act: (1) OFAC The term OFAC means the Office of Foreign Assets Control. (2) Private sector The term private sector entity means a business, a nonprofit organization, a nongovernmental organization, a legal and or advisory firm that supports such a business or organization, and a technology provider that supports such a business or organization.