Stopping Illicit Oil Shipments Act of 2023

Bill: 118-hr-6365
Sponsor: full_name: Rep. Waters, Maxine [D-CA-43]
Introduced: 2023-11-13
Policy area: Transportation and Public Works
Subjects: Congressional oversight

Customs enforcement

Government information and archives

Insurance industry and regulation

Licensing and registrations

Life, casualty, property insurance

Oil and gas

Trade restrictions
Latest action: action_date: 2023-12-19
text: Placed on the Union Calendar, Calendar No. 269.

Summaries:

tv_txt: IB Union Calendar No. 269 118th CONGRESS 1st Session H. R. 6365 [Report No. 118–330] IN THE HOUSE OF REPRESENTATIVES November 13, 2023 Ms. Waters introduced the following bill; which was referred to the Committee on Financial Services December 19, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed Strike out all after the enacting clause and insert the part printed in italic For text of introduced bill, see copy of bill as introduced on November 13, 2023 A BILL To protect against illicit oil shipments, and for other purposes.

1. Short title This Act may be cited as the Stopping Illicit Oil Shipments Act of 2023 . 2. Findings The Congress finds the following: (1) When countries are designated under economic and trade sanctions by the United States and its allies, they are largely excluded from the licit global financial system, including the movement, sale, and profit derived from their oil and gas resources. (2) For U.S. persons, American 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 classification and certification. (3) One method by which Iran and Russia frequently 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 country or by sailing under another country’s flag without 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, vessels transporting oil and gas resources from sanctioned 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. (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. 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 Terrorism and Financial Crimes shall issue rules to carry out this section. 4. Identification of vessels with illicit maritime 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 discretion of the primary insurance regulatory authority, the 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 insurance contract, a report may only be made under subsection (a) if the primary insurance regulatory authority— (1) establishes that the maritime insurance contract has been issued by an insurer subject to the authority of the primary insurance regulatory authority; (2) establishes that the maritime insurance contract satisfies the conditions established by the Undersecretary 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. 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 committees of the Congress— (1) detailing any reports received by the Undersecretary for Terrorism and Financial Crimes from a primary insurance regulatory authority under section 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 Secretary 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 expectations related to maritime sanctions evasion; and (4) describing any proposed improvements to existing authorities or resources that could be provided by Congress. (b) Exception for ongoing investigations The Secretary of the Treasury may not include information in a report required under subsection (a) related to ongoing investigations. 6. Report Not later than the end of the 180-day period beginning on the date of the enactment of this Act, the Secretary of the Treasury shall issue a report to the appropriate committees of the Congress containing recommendations for receiving determinations described under section 4 from persons other than a primary insurance regulatory authority of a State, including establishing a whistleblower program. 7. Definitions In this Act: (1) Appropriate committees of the Congress The term appropriate committees of the Congress means the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate. (2) Maritime insurance The term maritime 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 insurance, hull insurance, and protection and indemnity. (3) Registration The term registration means the process— (A) by which a vessel is formally recognized by a country’s maritime authority, resulting in the vessel’s inclusion in the national vessel registry; and (B) conferring upon a vessel the nationality 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 enforced by such registering state. (4) State The term State means any of the several States, the District of Columbia, a territory of the United States, an Indian Tribe, and a jurisdiction subject to the Compact of Free Association Act of 2003. (5) Vessel The term vessel has the meaning given such term in section 3 of title 1, United States Code.

December 19, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed

tv_txt: I 118th CONGRESS 1st Session H. R. 6365 IN THE HOUSE OF REPRESENTATIVES November 13, 2023 Ms. Waters introduced the following bill; which was referred to the Committee on Financial Services A BILL To protect against illicit oil shipments, and for other purposes.

1. Short title This Act may be cited as the Stopping Illicit Oil Shipments Act of 2023 . 2. Findings The Congress finds the following: (1) When countries are designated under economic and trade sanctions by the United States and its allies, they are largely excluded from the licit global financial system, including the movement, sale, and profit derived from their oil and gas resources. (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 classification and certification. (3) One method by which Iran and Russia frequently 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 country or by sailing under another country’s flag without 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, vessels transporting oil and gas resources from sanctioned 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. (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. 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 Terrorism and Financial Crimes shall issue rules to carry out this section. 4. Identification of vessels with illicit maritime 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 discretion of the primary insurance regulatory authority, the 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 insurance contract, a report may only be made under subsection (a) if the primary insurance regulatory authority— (1) establishes that the maritime insurance contract has been issued by an insurer subject to the authority of the primary insurance regulatory authority; (2) establishes that the maritime insurance contract satisfies the conditions established by the Undersecretary 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. 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 committees of the Congress— (1) detailing any reports received by the Undersecretary for Terrorism and Financial Crimes from a primary insurance regulatory authority under section 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 Secretary 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 expectations related to maritime sanctions evasion; and (4) describing any proposed improvements to existing authorities or resources that could be provided by Congress. (b) Exception for ongoing investigations The Secretary of the Treasury may not include information in a report required under subsection (a) related to ongoing investigations. 6. Report Not later than the end of the 180-day period beginning on the date of the enactment of this Act, the Secretary of the Treasury shall issue a report to the appropriate committees of the Congress containing recommendations for receiving determinations described under section 4 from persons other than a primary insurance regulatory authority of a State, including establishing a whistleblower program. 7. Definitions In this Act: (1) Appropriate committees of the Congress The term appropriate committees of the Congress means the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate. (2) Maritime insurance The term maritime 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 insurance, hull insurance, and protection and indemnity. (3) Registration The term registration means the process— (A) by which a vessel is formally recognized by a country’s maritime authority, resulting in the vessel’s inclusion in the national vessel registry; (B) conferring upon a vessel the nationality 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 enforced by such registering state. (4) State The term State means any of the several States, the District of Columbia, a territory of the United States, an Indian Tribe, and a jurisdiction subject to the Compact of Free Association Act of 2003. (5) Vessel The term vessel has the meaning given such term in section 3 of title 1, United States Code.