H. Rept. 115-781 - FIGHT ILLICIT NETWORKS AND DETECT TRAFFICKING ACT115th Congress (2017-2018)
Committee Report
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115th Congress } { Rept. 115-781
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
======================================================================
FIGHT ILLICIT NETWORKS AND DETECT TRAFFICKING ACT
_______
June 25, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 6069]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 6069) to require the Comptroller General of the
United States to carry out a study on how virtual currencies
and online marketplaces are used to buy, sell, or facilitate
the financing of goods or services associated with sex
trafficking or drug trafficking, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fight Illicit Networks and Detect
Trafficking Act'' or the ``FIND Trafficking Act''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) According to the Drug Enforcement Administration (DEA)
2017 National Drug Threat Assessment, transnational criminal
organizations are increasingly using virtual currencies.
(2) The Treasury Department has recognized that: ``The
development of virtual currencies is an attempt to meet a
legitimate market demand. According to a Federal Reserve Bank
of Chicago economist, U.S. consumers want payment options that
are versatile and that provide immediate finality. No U.S.
payment method meets that description, although cash may come
closest. Virtual currencies can mimic cash's immediate finality
and anonymity and are more versatile than cash for online and
cross-border transactions, making virtual currencies vulnerable
for illicit transactions.''.
(3) Virtual currencies have become a prominent method to pay
for goods and services associated with illegal sex trafficking
and drug trafficking, which are two of the most detrimental and
troubling illegal activities facilitated by online
marketplaces.
(4) Online marketplaces, including the darkweb, have become a
prominent platform to buy, sell, and advertise for illicit
goods and services associated with sex trafficking and drug
trafficking.
(5) According to the International Labour Organization, in
2016, 4.8 million people in the world were victims of forced
sexual exploitation, and in 2014, the global profit from
commercial sexual exploitation was $99 billion.
(6) In 2016, within the United States, the Center for Disease
Control estimated that there were 64,000 deaths related to drug
overdose, and the most severe increase in drug overdoses were
those associated with fentanyl and fentanyl analogs (synthetic
opioids), which amounted to over 20,000 overdose deaths.
(7) According to the U.S. Department of the Treasury 2015
National Money Laundering Risk Assessment, an estimated $64
billion is generated annually from U.S. drug trafficking sales.
(8) Illegal fentanyl in the United States originates
primarily from China, and it is readily available to purchase
through online marketplaces.
SEC. 3. GAO STUDY.
(a) Study Required.--The Comptroller General of the United States
shall conduct a study on how virtual currencies and online marketplaces
are used to facilitate sex and drug trafficking. The study shall
consider--
(1) how online marketplaces, including the darkweb, are being
used as platforms to buy, sell, or facilitate the financing of
goods or services associated with sex trafficking or drug
trafficking (specifically, opioids and synthetic opioids,
including fentanyl, fentanyl analogs, and any precursor
chemicals associated with manufacturing fentanyl or fentanyl
analogs) destined for, originating from, or within the United
States;
(2) how financial payment methods, including virtual
currencies and peer-to-peer mobile payment services, are being
utilized by online marketplaces to facilitate the buying,
selling, or financing of goods and services associated with sex
or drug trafficking destined for, originating from, or within
the United States;
(3) how virtual currencies are being used to facilitate the
buying, selling, or financing of goods and services associated
with sex or drug trafficking, destined for, originating from,
or within the United States, when an online platform is not
otherwise involved;
(4) how illicit funds that have been transmitted online and
through virtual currencies are repatriated into the formal
banking system of the United States through money laundering or
other means;
(5) the participants (state and non-state actors) throughout
the entire supply chain that participate in or benefit from the
buying, selling, or financing of goods and services associated
with sex or drug trafficking (either through online
marketplaces or virtual currencies) destined for, originating
from, or within the United States;
(6) Federal and State agency efforts to impede the buying,
selling, or financing of goods and services associated with sex
or drug trafficking destined for, originating from, or within
the United States, including efforts to prevent the proceeds
from sex or drug trafficking from entering the United States
banking system;
(7) how virtual currencies and their underlying technologies
can be used to detect and deter these illicit activities; and
(8) to what extent can the immutable and traceable nature of
virtual currencies contribute to the tracking and prosecution
of illicit funding.
(b) Scope.--For the purposes of the study required under subsection
(a), the term ``sex trafficking'' means the recruitment, harboring,
transportation, provision, obtaining, patronizing, or soliciting of a
person for the purpose of a commercial sex act that is induced by
force, fraud, or coercion, or in which the person induced to perform
such act has not attained 18 years of age.
(c) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United States
shall submit to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives a report summarizing the results of the study required
under subsection (a), together with any recommendations for legislative
or regulatory action that would improve the efforts of Federal agencies
to impede the use of virtual currencies and online marketplaces in
facilitating sex and drug trafficking.
PURPOSE AND SUMMARY
On June 12, 2018, Representative Juan Vargas introduced
H.R. 6069, the ``Fight Illicit Networks and Detect Trafficking
Act'' or the ``FIND Trafficking'' Act. The legislation would
require the Comptroller General of the United States to carry
out a study on how virtual currencies and online marketplaces
are used to buy, sell, or facilitate the financing of goods or
services associated with sex trafficking or drug trafficking.
Not later than one year after enactment, the legislation would
require the Comptroller General to submit the report to the
Committee on Banking, Housing, and Urban Affairs and the
Committee on Financial Services a report that summarizes the
result of the study and include recommendations for legislative
or regulatory action that would improve the efforts of Federal
agencies to impede the use of virtual currencies and online
marketplaces in facilitating sex and drug trafficking.
BACKGROUND AND NEED FOR LEGISLATION
The goal of H.R. 6069 is to have the Government
Accountability Office (GAO) study and report to Congress on how
virtual currencies and online marketplaces are used to buy,
sell, or facilitate the financing of goods or services
associated with sex trafficking and drug trafficking. The GAO
study must also include any legislative or regulatory actions
that would improve the efforts of Federal agencies to impede
the use of virtual currencies and online marketplaces in
facilitating sex trafficking and drug trafficking. H.R. 6069
compliments the work of the President's Commission on Combating
Drug Addiction and the Opioid Crisis, which issued its final
report on November 1, 2017. The report noted the Administration
``will employ tools to disrupt the flow of illicit drugs into
our country, and reduce drug trafficking domestically.'' The
final report recommended to the President that, ``federal law
enforcement agencies expressly target Drug Trafficking
Organizations and other individuals who produce and sell
counterfeit pills, including through the internet.''
The study will also include a review of how the Dark Net is
used to facilitate illicit activity, including the buying and
selling of opioids, and how virtual currencies and peer-to-peer
mobile payment services are exploited. The study will also
review how illicit funds are repatriated into the formal
banking system of the United States through money laundering
According to the Drug Enforcement Administration's (DEA)
2017 National Drug Threat Assessment, transnational criminal
organizations are increasingly using virtual currencies.
Although virtual currencies can be used for legal purchases,
they have become a preferred financial payment method for
criminals.
Virtual currencies also have become a prominent method to
pay for goods and services associated with illegal sex
trafficking and drug trafficking, which are two of the most
detrimental and troubling illegal activities facilitated by
online marketplaces.
Online marketplaces, including the dark web, have become a
prominent platform to buy, sell, and advertise for illicit
goods and services associated with sex trafficking and drug
trafficking. According to the International Labour
Organization, in 2016, 4.8 million people in the world were
victims of forced sexual exploitation, and in 2014, the global
profit from commercial sexual exploitation was $99 billion.
In 2016, within the United States, the Center for Disease
Control estimated that there were 64,000 deaths related to drug
overdose, and the most severe increase in drug overdoses were
those associated with fentanyl and fentanyl analogs (synthetic
opioids), which amounted to over 20,000 overdose deaths.
According to the U.S. Department of the Treasury's 2015
National Money Laundering Risk Assessment, an estimated $64
billion is generated annually from U.S. drug trafficking sales.
Illegal fentanyl in the United States originates primarily from
China, and it is readily available to purchase through online
marketplaces.
HEARINGS
The Committee on Financial Services, Subcommittee on
Terrorism and Illicit Finance held a hearing examining matters
relating to H.R. 6069 on June 8, 2017; March 15, 2018; and
March 20, 2018.
COMMITTEE CONSIDERATION
The Committee on Financial Services met in open session on
June 14, 2018, and ordered H.R. 6069 to be reported favorably
to the House as amended by a recorded vote of 53 yeas to 0 nays
(recorded vote no. FC-187), a quorum being present. Before the
motion to report was offered, the Committee adopted an
amendment offered by Mr. Emmer by voice vote.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the House as amended. The motion
was agreed to by a recorded vote of 53 yeas to 0 nays (Record
vote no. FC-187), a quorum being present.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
PERFORMANCE GOALS AND OBJECTIVES
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATES
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 22, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 6069, the FIND
Trafficking Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 6069--FIND Trafficking Act
H.R. 6069 would direct the Government Accountability Office
(GAO) to prepare a study for the Congress within one year on
how virtual currencies and online marketplaces are used to
facilitate sex and drug trafficking. The study would include
recommendations for federal actions.
Based on the costs of similar studies, CBO estimates that
it would cost less than $500,000 over the 2019-2020 period for
GAO to compete the study; any spending would be subject to the
availability of appropriated funds.
Enacting H.R. 6069 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting H.R. 6069 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 6069 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was reviewed by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995.
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
EARMARK IDENTIFICATION
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
DUPLICATION OF FEDERAL PROGRAMS
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
DISCLOSURE OF DIRECTED RULEMAKING
Pursuant to section 3(i) of H. Res. 5, (115th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
This section cites H.R. 6069 as the ```Fight Illicit
Networks and Detect Trafficking Act'' or the ``FIND Trafficking
Act.''
Section 2. Findings
The Congress finds the following:
(1) According to the Drug Enforcement Administration (DEA)
2017 National Drug Threat Assessment, transnational criminal
organizations are increasingly using virtual currencies.
(2) The Treasury Department has recognized that: ``The
development of virtual currencies is an attempt to meet a
legitimate market demand. According to a Federal Reserve Bank
of Chicago economist, U.S. consumers want payment options that
are versatile and that provide immediate finality. No U.S.
payment method meets that description, although cash may come
closest. Virtual currencies can mimic cash's immediate finality
and anonymity and are more versatile than cash for online and
cross-border transactions, making virtual currencies vulnerable
for illicit transactions.''
(3) Virtual currencies have become a prominent method to
pay for goods and services associated with illegal sex
trafficking and drug trafficking, which are two of the most
detrimental and troubling illegal activities facilitated by
online marketplaces.
(4) Online marketplaces, including the darkweb, have become
a prominent platform to buy, sell, and advertise for illicit
goods and services associated with sex trafficking and drug
trafficking.
(5) According to the International Labour Organization, in
2016, 4.8 million people in the world were victims of forced
sexual exploitation, and in 2014, the global profit from
commercial sexual exploitation was $99 billion.
(6) In 2016, within the United States, the Center for
Disease Control estimated that there were 64,000 deaths related
to drug overdose, and the most severe increase in drug
overdoses were those associated with fentanyl and fentanyl
analogs (synthetic opioids), which amounted to over 20,000
overdose deaths.
(7) According to the U.S. Department of the Treasury 2015
National Money Laundering Risk Assessment, an estimated $64
billion is generated 8 annually from U.S. drug trafficking
sales.
(8) Illegal fentanyl in the United States originates
primarily from China, and it is readily available to purchase
through online marketplaces.
Section 3. GAO Study
The GAO study shall include a review of:
(1) How online marketplaces, including the darkweb, are
being used as platforms to buy, sell, or facilitate the
financing of goods or services associated with sex trafficking
or drug trafficking (specifically, opioids and synthetic
opioids, including fentanyl, fentanyl analogs, and any
precursor chemicals associated with manufacturing fentanyl or
fentanyl analogs) destined for, originating from, or within the
United States;
(2) How financial payment methods, including virtual
currencies and peer-to-peer mobile payment services, are being
utilized by online marketplaces to facilitate the buying,
selling, or financing of goods and services associated with sex
or drug trafficking destined for, originating from, or within
the United States;
(3) How virtual currencies are being used to facilitate the
buying, selling, or financing of goods and services associated
with sex or drug trafficking, destined for, originating from,
or within the United States, when an online platform is not
otherwise involved;
(4) How illicit funds that have been transmitted online and
through virtual currencies are repatriated into the formal
banking system of the United States through money laundering or
other means;
(5) The participants (state and non-state actors)
throughout the entire supply chain that participate in or
benefit from the buying, selling, or financing of goods and
services associated with sex or drug trafficking (either
through online marketplaces or virtual currencies) destined
for, originating from, or within the United States;
(6) Federal and State agency efforts to impede the buying,
selling, or financing of goods and services associated with sex
or drug trafficking destined for, originating from, or within
the United States, including efforts to prevent the proceeds
from sex or drug trafficking from entering the United States
banking system;
(7) How virtual currencies and their underlying
technologies can be used to detect and deter these illicit
activities; and (8) To what extent can the immutable and
traceable nature of virtual currencies contribute to the
tracking and prosecution of illicit funding.
For the purposes of the study required, the term ``sex
trafficking'' means the recruitment, harboring, transportation,
provision, obtaining, patronizing, or soliciting of a person
for the purpose of a commercial sex act that is induced by
force, fraud, or coercion, or in which the person induced to
perform such act has not attained 18 years of age.
Not later than 1 year after the date of enactment of this
Act, the Comptroller General of the United States shall submit
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives a report summarizing the results of the study
required, together with any recommendations for legislative or
regulatory action that would improve the efforts of Federal
agencies to impede the use of virtual currencies and online
marketplaces in facilitating sex and drug trafficking.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H.R. 6069 does not repeal or amend any section of a
statute. Therefore, the Office of Legislative Counsel did not
prepare the report contemplated by Clause 3(e)(1)(B) of rule
XIII of the House of Representatives.
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