[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6365 Reported in House (RH)]
<DOC>
Union Calendar No. 269
118th CONGRESS
1st Session
H. R. 6365
[Report No. 118-330]
To protect against illicit oil shipments, and for other purposes.
_______________________________________________________________________
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.
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 ``Stopping Illicit Oil Shipments Act
of 2023''.
SEC. 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.
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 Terrorism and Financial
Crimes shall issue rules to carry out this section.
SEC. 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.
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 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.
SEC. 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.
SEC. 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.
Union Calendar No. 269
118th CONGRESS
1st Session
H. R. 6365
[Report No. 118-330]
_______________________________________________________________________
A BILL
To protect against illicit oil shipments, and for other purposes.
_______________________________________________________________________
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