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HFSC March Markup

House Financial Services Committee

Markup

Thursday, March 17, 2022

Topline

  • All five bills passed, with four bills passing by voice vote and the Nowhere to Hide Oligarchs’ Assets Act passing 26-23 with Democratic Rep. Himes opposing.
  • The Nowhere to Hide Oligarchs’ Assets Act was the only bill to garner significant opposition, mainly from Republicans, especially Ranking Member McHenry, who disapproved of expanding FinCEN’s authority and expressed displeasure with FinCEN having not recently testified before the Committee.

Bills Considered

  • H.R. 7066, the “Russia and Belarus Financial Sanctions Act”
  • H.R. 6891, the “Isolate Russian Government Officials Act”
  • H.R. 7080, the “Nowhere to Hide Oligarchs’ Assets Act”
  • H.R. 7081, the “Ukraine Comprehensive Debt Repayment Relief Act”
  • H.R. 6899, the “Russia and Belarus SDR Exchange Prohibition Act”

Opening Statements
Chairman Maxine Waters (D-Calif.)

In her opening statement, Waters touted President Biden’s sanctions against Russia, their effects on the Russian economy, and the five bills being considered at the Markup.

Ranking Member Patrick McHenry (R-N.C.)

In his opening remarks, McHenry emphasized the need to act and called four of the five bills thoughtful and suggested a difference of opinion on the Nowhere to Hide Oligarchs’ Assets Act, saying there is consensus on the other four bills.

H.R. 7066, the “Russia and Belarus Financial Sanctions Act”

Rep. Brad Sherman (D-Calif.) introduced his bill and Amendment in the Nature of a Substitute (ANS), which would require United States financial institutions to ensure entities and persons owned or controlled by the institution comply with financial sanctions on the Russian Federation and the Republic of Belarus to the same extent as the institution itself. He said the bill will signal bipartisan unity against Russia and that we must use our most important weapon against Russia, our U.S. financial system. He emphasized the bill’s effect on subsidiaries that have not stopped doing business in Russia and Belarus. He also mentioned a Senate bill giving the Administration authority to prevent crypto companies from providing services to Russia-based crypto wallets and stated his intention to introduce the House companion. Waters expressed support for Sherman’s bill.

The Amendment in the Nature of a Substitute was agreed to and reported favorably to the House by a voice vote.

H.R. 6891, the “Isolate Russian Government Officials Act”

Rep. Ann Wagner (R-Mo.) introduced his bill and his Amendment in the Nature of a Substitute, which would seek to exclude Russian government officials from attendance at G-20 proceedings, and other international fora. Wagner said taking part in these group proceedings should be out of the question for a country that has ended decades of peace in Europe. She also said the G-20 should take action against Russia. She added that China is watching our response and that the U.S. should signal to China what would happen should China follow Russia’s playbook. Waters expressed support for the bill.

The Amendment in the Nature of a Substitute was agreed to and reported favorably to the House by a voice vote.

H.R. 7080, the “Nowhere to Hide Oligarchs’ Assets”

Waters introduced her bill and Amendment in the Nature of a Substitute, which would remove the geographic limitation to Geographic Targeting Order (GTO) authority, allowing the Financial Crimes Enforcement Network (FinCEN) to request information nationwide and expand existing recordkeeping and reporting requirements to also cover transactions with foreign nonfinancial trades or businesses, enabling FinCEN to obtain information concerning Russian oligarch-controlled shell companies or other legal entities. Waters said loopholes used by Russian oligarchs must be closed, and FinCEN’s tools to do so must be strengthened. Reps. Alma Adams (D-N.C.), Sylvia Garcia (D-Texas), and Juan Vargas (D-Calif.) spoke in support of the bill.

McHenry expressed opposition to the bill and pushed back against expanding the powers of FinCEN, citing FinCEN’s failure to testify before Congress since last expanding its authority. He said the bill would allow FinCEN to keep sensitive information on the personal transfers of Americans, citing an investigation by Sen. Ron Wyden (D-Ore.). Waters responded to McHenry by explaining FinCEN’s current authority and how FinCEN has limited ability to track the activity of shell companies, which limits its ability to pursue Russian oligarchs. She added that the bill does not change who is required to maintain certain records and that the reported information is standard information collected in the regular course of business. McHenry again addressed FinCEN’s failure to brief Congress and called FinCEN an unreliable agency that should not be given additional authority. Waters said she will quickly organize a classified briefing with FinCEN if the Committee can address Republicans’ issues with the bill and bring it to the floor. McHenry countered by expressing skepticism for giving FinCEN additional authority and said that promising a classified briefing would not satisfy his concerns with the bill.

Rep. French Hill (R-Ark.) expressed opposition to the bill, characterized the bill as making FinCEN’s GTO authority unlimited, and highlighted an incomplete FinCEN rule on this issue. McHenry added that if a wider scope is desired, the Administration must sanction additional oligarchs and that American citizens are being targeted by the bill. Rep. Warren Davidson (R-Ohio) also opposed the bill and characterized it as the financial version of the Patriot Act that builds a police state and a blank check to a government agency. Rep. Blaine Luetkemeyer (R-Mo.) aligned himself with Hill and Davidson’s remarks and expressed support for efforts to improve the bill and the need to narrow its scope. Rep. Bill Huizenga (R-Mich.) said there should be an expansion of the sanctions list by the Administration.

Waters asked Hill if he would be more inclined to support the bill if it had a limited timeframe and if he would work with Waters on amending the bill before sending it to the floor. Hill said the bill should have a sunset, address the issue of who is being targeted, and require the naming of names. Waters said she is interested in working together to satisfy Hill’s concern about the bill.

Rep. Jim Himes (D-Conn.) countered McHenry’s assertion that FinCEN has not subjected itself to oversight but expressed concern that the bill would give FinCEN clear authority to make a national request for record keeping and expressed appreciation for Republicans making that point.

The Amendment in the Nature of a Substitute was agreed to and reported favorably to the House by a recorded vote of 26-23.

H.R. 7081, the “Ukraine Comprehensive Debt Repayment Relief Act”

Rep. Jesus “Chuy” Garcia (D-Ill.) introduced his bill and Amendment in the Nature of a Substitute (ANS), which would direct the Department of Treasury to use the voice, vote and influence of the U.S. at the International Monetary Fund (IMF), the World Bank, and other relevant multilateral development banks to advocate for immediately suspending all debt service payments owed to the institution by Ukraine and direct the Treasury Secretary to commence immediate efforts with other official bilateral creditors and commercial creditor groups to pursue similar comprehensive debt payment relief for Ukraine. Garcia outlined Ukraine’s debt, including tens of millions of dollars of surcharges to the IMF for other amounts owed to the IMF, calling it absurd. Waters expressed support for the bill. Rep. Joyce Beatty (R-Ohio) spoke in support of the bill, discussed the plight of refugees, and said the Minority staff helped improve the bill through the ANS. McHenry commended Beatty for addressing this issue and discussed discrimination against refugees. Davidson cautioned that if Russia is successful in Ukraine, there may be a need to leverage Ukrainian debt over Putin, and he commended Beatty for her efforts to support refugees.

The Amendment in the Nature of a Substitute was agreed to and reported favorably to the House by a voice vote.

H.R. 6899, the “Russia and Belarus SDR Exchange Prohibition Act”

Rep. French Hill (R-Ark.) introduced his bill and his Amendment in the Nature of a Substitute, which would deprive Russia and Belarus of emergency liquidity by calling for the U.S. and relevant IMF member countries to prevent Russia and Belarus from exchanging Special Drawing Rights for hard currency. Hill said Russia’s SDRs remain available to Putin and that we must work with the IMF to block Russia’s SDR path. He then ended by critiquing President Biden’s previous approval of SDRs. Waters expressed support for the bill, and Rep. Bryan Steil (R-Wis.) characterized Russia’s expenditure on its military as a $60 billion elephant in the room funded by western consumption of Russian oil and gas.

The Amendment in the Nature of a Substitute was agreed to and reported favorably to the House by a voice vote.

For more information on this hearing, please click here.

For an archive of past SIFMA hearing coverage, please click here.