[House Report 113-543]
[From the U.S. Government Publishing Office]


113th Congress                                            Rept. 113-543
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
        HEZBOLLAH INTERNATIONAL FINANCING PREVENTION ACT OF 2014

                                _______
                                

 July 22, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

           Mr. Royce, from the Committee on Foreign Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4411]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Foreign Affairs, to whom was referred the 
bill (H.R. 4411) to prevent Hezbollah and associated entities 
from gaining access to international financial and other 
institutions, and for other purposes, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
The Amendment....................................................     1
Summary and Purpose..............................................     8
Background and Need for Legislation..............................     8
Hearings.........................................................    11
Committee Consideration..........................................    12
Committee Oversight Findings.....................................    12
New Budget Authority, Tax Expenditures, and Federal Mandates.....    12
Congressional Budget Office Cost Estimate........................    12
Directed Rule Making.............................................    13
Non-Duplication of Federal Programs..............................    13
Performance Goals and Objectives.................................    14
Congressional Accountability Act.................................    14
New Advisory Committees..........................................    14
Earmark Identification...........................................    14
Letters of Jurisdiction..........................................    15
Section-by-Section Analysis......................................    19

                             The Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Hezbollah 
International Financing Prevention Act of 2014''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Statement of policy.

 TITLE I--PREVENTION OF ACCESS BY HEZBOLLAH TO INTERNATIONAL FINANCIAL 
                         AND OTHER INSTITUTIONS

Sec. 101. Report on imposition of sanctions on certain satellite 
providers that carry al-Manar TV.
Sec. 102. Sanctions with respect to financial institutions that engage 
in certain transactions.

TITLE II--REPORTS ON DESIGNATION OF HEZBOLLAH AS A SIGNIFICANT FOREIGN 
     NARCOTICS TRAFFICKER AND A SIGNIFICANT TRANSNATIONAL CRIMINAL 
                              ORGANIZATION

Sec. 201. Report on designation of Hezbollah as a significant foreign 
narcotics trafficker.
Sec. 202. Report on designation of Hezbollah as a significant 
transnational criminal organization.
Sec. 203. Report on Hezbollah's involvement in the trade of conflict 
diamonds.
Sec. 204. Rewards for justice and Hezbollah's fundraising, financing, 
and money laundering activities.
Sec. 205. Report on activities of foreign governments to disrupt global 
logistics networks and fundraising, financing, and money laundering 
activities of Hezbollah.
Sec. 206. Appropriate congressional committees defined.

                  TITLE III--MISCELLANEOUS PROVISIONS

Sec. 301. Rule of construction.
Sec. 302. Regulatory authority.
Sec. 303. Termination.

SEC. 2. STATEMENT OF POLICY.

  It shall be the policy of the United States to--
          (1) prevent Hezbollah's global logistics and financial 
        network from operating in order to curtail funding of its 
        domestic and international activities; and
          (2) utilize all available diplomatic, legislative, and 
        executive avenues to combat the global criminal activities of 
        Hezbollah as a means to block that organization's ability to 
        fund its global terrorist activities.

 TITLE I--PREVENTION OF ACCESS BY HEZBOLLAH TO INTERNATIONAL FINANCIAL 
                         AND OTHER INSTITUTIONS

SEC. 101. REPORT ON IMPOSITION OF SANCTIONS ON CERTAIN SATELLITE 
                    PROVIDERS THAT CARRY AL-MANAR TV.

  (a) In General.--Not later than 30 days after the date of the 
enactment of this Act, the President shall submit to the Committee on 
Foreign Affairs of the House of Representatives and the Committee on 
Foreign Relations of the Senate a report that includes--
          (1) a list of all satellite, broadcast, Internet, or other 
        providers that knowingly provides material support to al-Manar 
        TV, and any affiliates or successors thereof; and
          (2) with respect to all providers included on the list 
        pursuant to paragraph (1)--
                  (A) an identification of those providers that have 
                been sanctioned pursuant to Executive Order 13224 
                (September 23, 2001); and
                  (B) an identification of those providers that have 
                not been sanctioned pursuant to Executive Order 13224 
                and, with respect to each such provider, the reason why 
                sanctions have not been imposed.
  (b) Form.--The report required by subsection (a) shall be submitted 
in unclassified form to the greatest extent possible, and may contain a 
classified annex.

SEC. 102. SANCTIONS WITH RESPECT TO FINANCIAL INSTITUTIONS THAT ENGAGE 
                    IN CERTAIN TRANSACTIONS.

  (a) Prohibitions and Conditions With Respect to Certain Accounts Held 
by Foreign Financial Institutions.--
          (1) In general.--Not later than 120 days after the date of 
        the enactment of this Act, the Secretary of the Treasury, with 
        the concurrence of the Secretary of State and in consultation 
        with the heads of other applicable departments and agencies, 
        shall prohibit, or impose strict conditions on, the opening or 
        maintaining in the United States of a correspondent account or 
        a payable-through account by a foreign financial institution 
        that the Secretary determines, on or after the date of the 
        enactment of this Act, engages in an activity described in 
        paragraph (2).
          (2) Activities described.--A foreign financial institution 
        engages in an activity described in this paragraph if the 
        foreign financial institution--
                  (A) knowingly facilitates a significant transaction 
                or transactions for Hezbollah;
                  (B) knowingly facilitates a significant transaction 
                or transactions of a person designated for acting on 
                behalf of or at the direction of, or owned or 
                controlled by, Hezbollah;
                  (C) knowingly engages in money laundering to carry 
                out an activity described in subparagraph (A) or (B);
                  (D) knowingly facilitates a significant transaction 
                or transactions or provides significant financial 
                services to carry out an activity described in 
                subparagraph (A), (B), or (C), including--
                          (i) facilitating a significant transaction or 
                        transactions; or
                          (ii) providing significant financial services 
                        that involve a transaction of covered goods; or
                  (E)(i) knowingly facilitates, or participates or 
                assists in, an activity described in subparagraph (A), 
                (B), (C), or (D), including by acting on behalf of, at 
                the direction of, or as an intermediary for, or 
                otherwise assisting, another person with respect to the 
                activity described in any such subparagraph;
                  (ii) knowingly attempts or conspires to facilitate or 
                participate in an activity described in subparagraph 
                (A), (B), (C), or (D); or
                  (iii) is owned or controlled by a foreign financial 
                institution that the Secretary finds knowingly engages 
                in an activity described in subparagraph (A), (B), (C), 
                or (D).
          (3) Penalties.--The penalties provided for in subsections (b) 
        and (c) of section 206 of the International Emergency Economic 
        Powers Act (50 U.S.C. 1705) shall apply to a person that 
        violates, attempts to violate, conspires to violate, or causes 
        a violation of regulations prescribed under paragraph (1) of 
        this subsection to the same extent that such penalties apply to 
        a person that commits an unlawful act described in section 
        206(a) of that Act.
          (4) Regulations.--The Secretary of the Treasury shall 
        prescribe and implement regulations to carry out this 
        subsection.
  (b) Waiver.--
          (1) In general.--The Secretary of the Treasury, with the 
        concurrence of the Secretary of State and in consultation with 
        the heads of other applicable departments and agencies, may 
        waive, on a case-by-case basis, the application of a 
        prohibition or condition imposed with respect to a foreign 
        financial institution pursuant to subsection (a) for a period 
        of not more than 180 days, and may renew that waiver for 
        additional periods of not more than 180 days, on and after the 
        date that the Secretary of the Treasury, with the concurrence 
        of the Secretary of State--
                  (A) determines that such a waiver is vital to the 
                national security interests of the United States; and
                  (B) submits to the appropriate congressional 
                committees a report describing the reasons for the 
                determination.
          (2) Form.--The report required by subparagraph (1) shall be 
        submitted in unclassified form, but may contain a classified 
        annex.
  (c) Provisions Relating to Foreign Financial Institutions.--
          (1) Report.--Not later than 45 days after the date of the 
        enactment of this Act, and every 180 days thereafter, the 
        Secretary of the Treasury shall submit to the appropriate 
        congressional committees a report that--
                  (A) identifies each foreign central bank that the 
                Secretary determines engages in one or more activities 
                described in subsection (a)(2)(D); and
                  (B) provides a detailed description of each such 
                activity.
          (2) Special rule to allow for termination of sanctionable 
        activity.--The Secretary of the Treasury shall not be required 
        to apply sanctions to a foreign financial institution described 
        in subsection (a) if the Secretary of the Treasury, with the 
        concurrence of the Secretary of State and in consultation with 
        the heads of other applicable departments and agencies, 
        certifies in writing to the appropriate congressional 
        committees that--
                  (A) the foreign financial institution--
                          (i) is no longer engaging in the activity 
                        described in subsection (a)(2); or
                          (ii) has taken and is continuing to take 
                        significant verifiable steps toward terminating 
                        the activity described in subsection (a)(2); 
                        and
                  (B) the Secretary has received reliable assurances 
                from the government with primary jurisdiction over the 
                foreign financial institution that the foreign 
                financial institution will not engage in any activity 
                described in subsection (a)(2) in the future.
  (d) Definitions.--
          (1) In general.--In this section:
                  (A) Account; correspondent account; payable-through 
                account.--The terms ``account'', ``correspondent 
                account'', and ``payable-through account'' have the 
                meanings given those terms in section 5318A of title 
                31, United States Code.
                  (B) Agent.--The term ``agent'' includes an entity 
                established by a person for purposes of conducting 
                transactions on behalf of the person in order to 
                conceal the identity of the person.
                  (C) Appropriate congressional committees.--The term 
                ``appropriate congressional committees'' means--
                          (i) the Committee on Foreign Affairs and the 
                        Committee on Financial Services of the House of 
                        Representatives; and
                          (ii) the Committee on Foreign Relations and 
                        the Committee on Banking, Housing, and Urban 
                        Affairs of the Senate.
                  (D) Covered goods.--The term ``covered goods'' has 
                the meaning given the term in section 1027.100 of title 
                31, Code of Federal Regulations.
                  (E) Financial institution.--The term ``financial 
                institution'' means a financial institution specified 
                in subparagraph (A), (B), (C), (D), (E), (F), (G), (H), 
                (I), (J), (K), (M), (N), (P), (R), (T), (Y), or (Z) of 
                section 5312(a)(2) of title 31, United States Code.
                  (F) Foreign financial institution; domestic financial 
                institution.--
                          (i) Foreign financial institution.--The term 
                        ``foreign financial institution'' has the 
                        meaning of such term in section 1010.605 of 
                        title 31, Code of Federal Regulations, and 
                        includes a foreign central bank.
                          (ii) Domestic financial institution.--The 
                        term ``domestic financial institution'' has the 
                        meaning of such term as determined by the 
                        Secretary of the Treasury.
                  (G) Hezbollah.--The term ``Hezbollah'' means--
                          (i) any person--
                                  (I) the property of or interests in 
                                property of which are blocked pursuant 
                                to the International Emergency Economic 
                                Powers Act (50 U.S.C. 1701 et seq.); 
                                and
                                  (II) who is identified on the list of 
                                specially designated nationals and 
                                blocked persons maintained by the 
                                Office of Foreign Asset Control of the 
                                Department of the Treasury as an agent, 
                                instrumentality, or affiliate of 
                                Hezbollah; and
                          (ii) the entity designated by the Secretary 
                        of State as a foreign terrorist organization 
                        pursuant to section 219 of the Immigration and 
                        Nationality Act (8 U.S.C. 1189).
                  (H) Money laundering.--The term ``money laundering'' 
                means any of the activities described in paragraph (1), 
                (2), or (3) of section 1956(a) of title 18, United 
                States Code, with respect to which penalties may be 
                imposed pursuant to such section.
          (2) Other definitions.--The Secretary of the Treasury may 
        further define the terms used in this section in the 
        regulations prescribed under this section.

TITLE II--REPORTS ON DESIGNATION OF HEZBOLLAH AS A SIGNIFICANT FOREIGN 
     NARCOTICS TRAFFICKER AND A SIGNIFICANT TRANSNATIONAL CRIMINAL 
                              ORGANIZATION

SEC. 201. REPORT ON DESIGNATION OF HEZBOLLAH AS A SIGNIFICANT FOREIGN 
                    NARCOTICS TRAFFICKER.

  (a) Findings.--Congress makes the following findings:
          (1) In 2008, after the two year Operation Titan run by the 
        U.S. Drug Enforcement Administration and Colombian authorities 
        dismantled an international narcotics ring that smuggled 
        cocaine into the United States, Europe, and the Middle East, 
        and was run by Chekry Harb, also known as ``Taliban''. 
        According to lead prosecutor for the special prosecutor's 
        office in Bogota, Gladys Sanchez, ``The profits from the sales 
        of drugs went to finance Hezbollah.''.
          (2) In 2011, the Department of the Treasury blacklisted the 
        Lebanese Canadian Bank as a primary money laundering concern, 
        alleging that it is part of a drug trafficking network that 
        profited Hezbollah by moving approximately $200,000,000 per 
        month.
          (3) In April 2013, when the Department of the Treasury 
        blacklisted two Lebanese exchange houses, Kassem Rmeiti & Co. 
        and Halawi Exchange Co., for laundering drug profits for 
        Hezbollah, it stated that Hezbollah was operating like ``an 
        international drug cartel,'' adding that the ``Halawi Exchange, 
        through its network of established international exchange 
        houses, initiated wire transfers from its bank accounts to the 
        United States without using the Lebanese banking system in 
        order to avoid scrutiny associated with Treasury's designations 
        of Hassan Ayash Exchange, Elissa Exchange, and its Lebanese 
        Canadian Bank Section 311 Action. . .Money was then wire 
        transferred via Halawi's banking relationships indirectly to 
        the United States through countries that included China, 
        Singapore, and the UAE, which were perceived to receive less 
        scrutiny by the U.S. Government.''.
          (4) The Department of Justice reported that 29 of the 63 
        organizations on its FY 2010 Consolidated Priority Organization 
        Targets list, which includes the most significant international 
        drug trafficking organizations (DTOs) threatening the United 
        States, were associated with terrorist groups, and noted with 
        concern Hezbollah's international drug and criminal activities.
  (b) Sense of Congress.--It is the sense of Congress that--
          (1) Hezbollah meets the criteria for designation as a 
        significant foreign narcotics trafficker as set forth in the 
        Foreign Narcotics Kingpin Designation Act (21 U.S.C. 1901 et 
        seq.); and
          (2) the President should so designate Hezbollah as a 
        significant foreign narcotics trafficker.
  (c) Report.--
          (1) Report required.--Not later than 120 days after the date 
        of the enactment of this Act, the President shall submit to the 
        appropriate congressional committees--
                  (A) a detailed report on whether the Hezbollah meets 
                the criteria for designation under the Foreign 
                Narcotics Kingpin Designation Act (21 U.S.C. 1901 et 
                seq.) as a significant foreign narcotics trafficker; 
                and
                  (B) if the President determines that Hezbollah does 
                not meet the criteria for designation under the Foreign 
                Narcotics Kingpin Designation Act as a significant 
                foreign narcotics trafficker, a detailed justification 
                as to which criteria have not been met.
          (2) Form.--The report required by paragraph (1) shall be 
        submitted in unclassified form, but may include a classified 
        annex.

SEC. 202. REPORT ON DESIGNATION OF HEZBOLLAH AS A SIGNIFICANT 
                    TRANSNATIONAL CRIMINAL ORGANIZATION.

  (a) Findings.--Congress makes the following findings:
          (1) Hezbollah is engaged array of illicit activities, from 
        counterfeiting currencies, passport documents, to stolen 
        automobile rings and other illicit activities.
          (2) In 2002, authorities in Charlotte, North Carolina 
        arrested members of a cell run by Mohammed and Chawki Hamoud 
        and convicted them on various charges, including funding the 
        activities of Hezbollah from proceeds of interstate cigarette 
        smuggling and money laundering.
          (3) In 2006 the Department of the Treasury designated 
        operations of Assad Barakat, treasurer for Hezbollah, as 
        providing material support for a foreign terrorist organization 
        and noted that Barakat had engaged in mafia-style shakedowns 
        and ``threatened TBA (triborder area) shopkeepers who are 
        sympathetic to Hezbollah's cause with having family members in 
        Lebanon placed on a `Hezbollah blacklist' if they did not pay 
        their quota to Hezbollah'' and also was ``involved in a 
        counterfeiting ring that distributes fake U.S. dollars and 
        generates cash to fund Hezbollah operations''.
          (4) In 2009, Paraguayan authorities arrested Moussa Hamdan 
        and three other individuals for selling fraudulent passports 
        and trafficking in counterfeit money and sporting goods, 
        illegally obtained consumer electronics and automobiles and 
        then using the proceeds to buy arms for Hezbollah.
          (5) In October 2011, a group of businessmen pled guilty to 
        attempting to ship electronics to a shopping center in South 
        America that the Department of the Treasury had designated as a 
        Hezbollah front.
          (6) A June 2014 ``threat assessment'' report by Canada's 
        Integrated Terrorism Assessment Centre indicated that Hezbollah 
        members in Canada are involved in organized crime.
  (b) Sense of Congress.--It is the sense of Congress that--
          (1) Hezbollah meets the criteria for designation as a 
        significant transnational criminal organization under Executive 
        Order 13581 (76 Fed. Reg. 44757); and
          (2) the President should so designate Hezbollah as a 
        significant transnational criminal organization.
  (c) Report.--
          (1) Report required.--Not later than 120 days after the date 
        of the enactment of this Act, the President shall submit to the 
        appropriate committees of Congress--
                  (A) a detailed report on whether the Hezbollah meets 
                the criteria for designation as a significant 
                transnational criminal organization under Executive 
                Order 13581 (76 Fed. Reg. 44757); and
                  (B) if the President determines that Hezbollah does 
                not meet the criteria for designation as a significant 
                transnational criminal organization under Executive 
                Order 13581, a detailed justification as to which 
                criteria have not been met.
          (2) Form.--The report required by paragraph (1) shall be 
        submitted in unclassified form, but may include a classified 
        annex.

SEC. 203. REPORT ON HEZBOLLAH'S INVOLVEMENT IN THE TRADE OF CONFLICT 
                    DIAMONDS.

  (a) In General.--Not later than 120 days after the date of the 
enactment of this Act, the Secretary of State shall submit to the 
Committee on Foreign Affairs and the Committee on Ways and Means of the 
House of Representatives and the Committee on Foreign Relations of the 
Senate a report detailing Hezbollah's involvement in the trade in rough 
diamonds outside of the Kimberley Process Certification Scheme.
  (b) Form.--The report required by subsection (a) shall be submitted 
in unclassified form, but may contain a classified annex.

SEC. 204. REWARDS FOR JUSTICE AND HEZBOLLAH'S FUNDRAISING, FINANCING, 
                    AND MONEY LAUNDERING ACTIVITIES.

  (a) Report.--Not later than 90 days after the date of the enactment 
of this Act, the Secretary of State shall submit to the appropriate 
congressional committees a report that details actions taken by the 
Department of State through the Department of State rewards program (22 
U.S.C. 2708) to obtain information on fundraising, financing, and money 
laundering activities of Hezbollah and its agents and affiliates.
  (b) Briefing.--Not later than 90 days after the date of the enactment 
of this Act, and annually thereafter, the Secretary of State shall 
provide a briefing to the appropriate congressional committees on the 
status of the actions described in subsection (a).
  (c) Appropriate Congressional Committees Defined.--In this section, 
the term ``appropriate congressional committees'' means the Committee 
on Foreign Affairs of the House of Representatives and the Committee on 
Foreign Relations of the Senate.

SEC. 205. REPORT ON ACTIVITIES OF FOREIGN GOVERNMENTS TO DISRUPT GLOBAL 
                    LOGISTICS NETWORKS AND FUNDRAISING, FINANCING, AND 
                    MONEY LAUNDERING ACTIVITIES OF HEZBOLLAH.

  (a) Report.--
          (1) In general.--Not later than 90 days after the date of the 
        enactment of this Act, the President shall submit to the 
        appropriate congressional committees a report that includes--
                  (A) a list of countries that support Hezbollah, or in 
                which Hezbollah maintains important portions of its 
                global logistics networks;
                  (B) with respect to each country on the list required 
                by subparagraph (A)--
                          (i) an assessment of whether the government 
                        of the country is taking adequate measures to 
                        disrupt the global logistics networks of 
                        Hezbollah within the territory of the country; 
                        and
                          (ii) in the case of a country the government 
                        of which is not taking adequate measures to 
                        disrupt those networks--
                                  (I) an assessment of the reasons that 
                                government is not taking adequate 
                                measures to disrupt those networks; and
                                  (II) a description of measures being 
                                taken by the United States Government 
                                to encourage that government to improve 
                                measures to disrupt those networks;
                  (C) a list of countries in which Hezbollah, or any of 
                its agents or affiliates, conducts significant 
                fundraising, financing, or money laundering activities;
                  (D) with respect to each country on the list required 
                by subparagraph (C)--
                          (i) an assessment of whether the government 
                        of the country is taking adequate measures to 
                        disrupt the fundraising, financing, or money 
                        laundering activities of Hezbollah and its 
                        agents and affiliates within the territory of 
                        the country; and
                          (ii) in the case of a country the government 
                        of which is not taking adequate measures to 
                        disrupt those activities--
                                  (I) an assessment of the reasons that 
                                government is not taking adequate 
                                measures to disrupt those activities; 
                                and
                                  (II) a description of measures being 
                                taken by the United States Government 
                                to encourage the government of that 
                                country to improve measures to disrupt 
                                those activities; and
                  (E) a list of methods that Hezbollah, or any of its 
                agents or affiliates, utilizes to raise or transfer 
                funds, including trade-based money laundering, the use 
                of foreign exchange houses, and free-trade zones.
          (2) Form.--The report required by paragraph (1) shall be 
        submitted in unclassified form to the greatest extent possible, 
        and may contain a classified annex.
          (3) Global logistics networks of hezbollah.--In this 
        subsection, the term ``global logistics networks of 
        Hezbollah'', ``global logistics networks'', or ``networks'' 
        means financial, material, or technological support for, or 
        financial or other services in support of, Hezbollah.
  (b) Briefing on Hezbollah's Assets and Activities Related to 
Fundraising, Financing, and Money Laundering Worldwide.--Not later than 
90 days after the date of the enactment of this Act, and every 180 days 
thereafter, the Secretary of State, the Secretary of the Treasury, and 
the heads of other applicable Federal departments and agencies (or 
their designees) shall provide to the appropriate congressional 
committees a briefing on the disposition of Hezbollah's assets and 
activities related to fundraising, financing, and money laundering 
worldwide.
  (c) Appropriate Congressional Committees Defined.--In this section, 
the term ``appropriate congressional committees'' means--
          (1) the Committee on Foreign Affairs, the Committee on 
        Financial Services, and the Permanent Select Committee on 
        Intelligence of the House of Representatives; and
          (2) the Committee on Foreign Relations, the Committee on 
        Banking, Housing, and Urban Affairs, and the Select Committee 
        on Intelligence of the Senate.

SEC. 206. APPROPRIATE CONGRESSIONAL COMMITTEES DEFINED.

  Except as otherwise provided, in this title, the term ``appropriate 
congressional committees'' means--
          (1) the Committee on Foreign Affairs, the Committee on 
        Financial Services, and the Committee on the Judiciary of the 
        House of Representatives; and
          (2) the Committee on Foreign Relations, the Committee on 
        Finance, and the Committee on the Judiciary of the Senate.

                  TITLE III--MISCELLANEOUS PROVISIONS

SEC. 301. RULE OF CONSTRUCTION.

  Nothing in this Act or any amendment made by this Act shall apply to 
the authorized intelligence activities of the United States.

SEC. 302. REGULATORY AUTHORITY.

  (a) In General.--The President shall, not later than 90 days after 
the date of the enactment of this Act, promulgate regulations as 
necessary for the implementation of this Act and the amendments made by 
this Act.
  (b) Notification to Congress.--Not less than 10 days prior to the 
promulgation of regulations under subsection (a), the President shall 
notify the appropriate congressional committees (as defined in section 
204) of the proposed regulations and the provisions of this Act and the 
amendments made by this Act that the regulations are implementing.

SEC. 303. TERMINATION.

  This Act shall cease to be in effect beginning 30 days after the date 
on which the President certifies to Congress that Hezbollah--
          (1) is no longer designated as a foreign terrorist 
        organization pursuant to section 219 of the Immigration and 
        Nationality Act (8 U.S.C. 1189);
          (2) is no longer listed in the Annex to Executive Order 13224 
        (September 23, 2001; relating to blocking property and 
        prohibiting transactions with persons who commit, threaten to 
        commit, or support terrorism); and
          (3) poses no significant threat to United States national 
        security, interests, or allies.

                          Summary and Purpose

    The 2013 State Department Country Report on Terrorism 
states that ``since 2012, the United States has . . . seen a 
resurgence of activity by Iran's Islamic Revolutionary Guard 
Corps' Qods force, the Iranian Ministry of Intelligence and 
Security, and Tehran's ally [Hezbollah].'' While Hezbollah has 
been designated pursuant to multiple executive orders and 
provisions of law, this legislation specifically targets the 
organization's international financial and logistics networks, 
including its efforts to raise funds utilizing illicit means. 
These support networks not only provide funding and logistics 
for the terrorist group, but also a platform to conduct 
terrorist attacks. The intent of this legislation is to 
increase the aggregate risk associated with knowingly aiding 
Hezbollah's international operations. This bipartisan 
legislation will broaden financial sector sanctions against 
Hezbollah. It forces other critical decisions on Hezbollah 
designations and targets its media appendages used for 
recruitment and financing that have been designated by the 
United States as Specially Designated Terrorist Organizations. 
It also contains robust reporting requirements that will serve 
to focus the Administration's information gathering on 
Hezbollah's global logistics and financial network. In doing 
so, it provides a comprehensive framework for addressing 
Hezbollah's support network, and fulfills the objective of the 
legislation, which is to prevent Hezbollah's global logistics 
and financial network from operating in order to curtail the 
funding of its international activities.

                  Background and Need for Legislation

Hezbollah Financing and Logistics Networks
    Hezbollah is conducting a wide range of international 
activities aimed at financing the organization, and providing 
for its vital logistics networks. In addition to receiving 
direct support from state sponsors, the organization is also 
engaged in an array of illicit activities--such as 
counterfeiting currencies, arms smuggling and narcotics 
trafficking.
    In the past it was estimated that Hezbollah received as 
much as $200 million annually from Iran, and received material 
support from Syria as well. However, multiple reports indicate 
that those amounts have decreased in recent years, due to 
sanctions against Iran.
    To offset the decreased financial support from Iran and 
others, and also as a means of gaining greater financial 
autonomy, Hezbollah has expanded its illicit international 
activities. Over time, these activities have become 
increasingly sophisticated and lucrative. Some of them are even 
taking place here in the United States. For example, in 2002, a 
number of Hezbollah members were convicted of running a 
cigarette smuggling ring in Charlotte, North Carolina that 
provided funding for the group.
    This kind of activity provides Hezbollah operatives a 
platform which could be used to conduct attacks against U.S. 
targets. In fact, the U.S. Attorney for the Western District of 
North Carolina, Anne M. Tompkins, who took part in prosecuting 
this case, noted that one of the operatives convicted in this 
case:

        ''was a student and member of Hezbollah as a youth in 
        his home country and came to the United States on a 
        Hezbollah-driven mission. He loyally accomplished his 
        mission by creating a criminal enterprise which 
        accumulated millions of dollars in profits, purchased 
        businesses in the U.S., preached radical Muslim 
        fundamentalism as he led a clandestine terrorist cell 
        in Charlotte, raised funds for the cause, and saw that 
        the funds were delivered to Hezbollah leadership in 
        Lebanon. His guilty verdicts rendered by the jury were 
        upheld by the Supreme Court of the United States. 
        During his time of imprisonment while he was awaiting 
        trial, he ordered the murder of the then prosecuting 
        attorney and the bombing of Charlotte's Federal 
        courthouse. He continues to this day to pose no less a 
        threat to our country and our citizens''

    In 2009, four individuals in Philadelphia were charged with 
attempting to provide Hezbollah with funding and weapons. The 
indictment alleges that they attempted to export machine guns 
from the U.S. to the Port of Latakia, Syria, and that one of 
the accused reportedly boasted that the Islamic Republic of 
Iran manufactured high-quality counterfeit U.S. dollars for 
Hezbollah. The indictment also alleges that they sold an 
informant counterfeit money, the proceeds of which they 
reportedly planned to send to Hezbollah leaders.
    Hezbollah's efforts remain global. Prior to an interrupted 
attack, it was reported that Hezbollah used Bangkok as a 
platform for logistics, money laundering and drug trafficking. 
Authorities have tracked such illegal activities to countries 
from West Africa to Latin America, in addition to the United 
States.
    In January 2011, the Department of Treasury identified 
Hezbollah operative Ayman Joumma, along with nearly two dozen 
individual businesses, as being involved in a massive narcotics 
smuggling and money laundering scheme. According to the Drug 
Enforcement Administration, Joumma laundered as much as $200 
million a month from the sale of cocaine in Europe and the 
Middle East through operations located in the Middle East, West 
Africa, and Latin America using money-exchange houses and bulk 
cash smuggling. Joumma's network laundered money through 
Lebanese Canadian Bank accounts, which he used to execute 
sophisticated trade-based money laundering schemes involving 
used cars and other goods. In April 2013, Treasury designated 
the Halawi Exchange Co. for facilitating the shipment of over 
$200 million of used cars into the West African country of 
Benin as part of a drug-money laundering scheme, with ties to 
both Hezbollah and Latin American drug cartels. Concerns remain 
regarding Hezbollah's use of Benin as a center for the 
lucrative smuggling of used or stolen automobiles. When 
Treasury blacklisted the two Lebanese exchange houses, they 
noted the international nature of the operation, stating that 
the ``Halawi Exchange, through its network of established 
international exchange houses, initiated wire transfers from 
its bank accounts to the United States without using the 
Lebanese banking system in order to avoid scrutiny associated 
with Treasury's designations of Hassan Ayash Exchange, Elissa 
Exchange, and its Lebanese Canadian Bank Section 311 Action . . 
. Money was then wire transferred via Halawi's banking 
relationships indirectly to the United States through countries 
that included China, Singapore, and the UAE, which were 
perceived to receive less scrutiny by the U.S. Government.''
    There are many other examples of Hezbollah's international 
efforts to finance their illicit activities using criminal 
enterprises, in addition to the funding they continue to 
receive from their state sponsors. Successive Administrations 
have made strong efforts to counter Hezbollah's activities, but 
more remains to be accomplished.
Need for Legislation
    The United States Government holds Hezbollah responsible 
for the largest number of American deaths by a terrorist 
organization prior to the attacks of September 11, 2001. These 
include the bombing of the United States Embassy in Beirut in 
April 1983, and the bombing of the United States Marine 
barracks in Beirut in October 1983. Hezbollah was also behind 
kidnappings in Beirut throughout the 1980s, international 
airline hijackings originating in Europe and elsewhere, and 
efforts to target US military personnel in Saudi Arabia.
    In addition, Hezbollah reportedly provided funds and 
weapons to Iraqi militias, which targeted American personnel 
during Operation Iraqi Freedom. Based on information obtained 
following the capture senior Hezbollah operative Ali Musa 
Daqduq, it appears that the January 20, 2007 attack on the 
Joint Coordination Center in Karbala, which resulted in the 
death of four American soldiers, was planned with the help of 
the Iranian Quds Force and Hezbollah.
    Hezbollah's capabilities have increased exponentially since 
its inception, and its operations have expanded well outside of 
the Middle East. Hezbollah-initiated killings and bombings have 
occurred in Europe, Asia and Latin America. In 2012, Hezbollah 
carried out a bus bombing in Bulgaria and plotted an attack in 
Cyprus, leading to the European Union's designation of 
Hezbollah's ``military wing'' as a terrorist organization. 
Furthermore, Hezbollah continues to fight on behalf of the 
Assad regime in Syria's brutal civil war, which has resulted in 
the deaths of well over one hundred thousand people.
    Despite its significant capabilities, Hezbollah remains 
vulnerable to financial sanctions. The Hezbollah International 
Financing Prevention Act of 2014 builds on the existing 
sanctions regime by placing Hezbollah's sources of financing 
under additional scrutiny. In addition to targeting Hezbollah's 
diverse financial network, the Act also requires the U.S. 
government to report on Hezbollah's global logistics networks 
and its transnational organized criminal enterprises, including 
drug smuggling. By requiring such reporting, this legislation 
seeks to focus additional resources on existing intelligence 
gaps regarding Hezbollah, and provide a platform for the United 
States to improve coordination and cooperation with allies and 
other responsible countries in confronting the increasing 
threat posed by Hezbollah.

                                Hearings

    During the present Congress, the committee has continued 
its active oversight regarding Hezbollah, including multiple 
hearings related to the content of H.R. 4411, such as:

          July 16, 2014, full committee hearing on ``Iran's 
        Destabilizing Role in the Middle East'' (Mr. Scott 
        Modell, Senior Associate, Burke Chair in Strategy, 
        Center for Strategic and International Studies; Mr. Ray 
        Takeyh, Senior Fellow for Middle Eastern Studies, 
        Middle East Program, Council on Foreign Relations; 
        Natan B. Sachs, Ph.D., Fellow, Saban Center for Middle 
        East Policy, the Brookings Institution);

          April 8, 2014, subcommittee hearing on ``Lebanon's 
        Security Challenges and U.S. Interests'' (Mr. Lawrence 
        Silverman, Deputy Assistant Secretary, Bureau of Near 
        Eastern Affairs, U.S. Department of State; Matthew 
        Spence, Ph.D., Deputy Assistant Secretary of Defense 
        for Middle East Policy, U.S. Department of Defense);

          March 4, 2014, subcommittee hearing on ``Iran's 
        Support for Terrorism Worldwide'' (The Honorable Pete 
        Hoekstra, Shillman Senior Fellow, The Investigative 
        Project on Terrorism, Former Chairman of the U.S. House 
        Permanent Select Committee on Intelligence; Matthew 
        Levitt, Ph.D., Director and Fromer-Wexler Fellow, Stein 
        Program on Counterterrorism and Intelligence, The 
        Washington Institute for Near East Policy; Mr. J. 
        Matthew McInnis, Resident Fellow, American Enterprise 
        Institute);

          November 20, 2013, subcommittee hearing on 
        ``Terrorist Groups in Syria'' (Mr. Brian Michael 
        Jenkins, Senior Adviser to the President, RAND 
        Corporation; Mr. Phillip Smyth, Middle East Research 
        Analyst, University of Maryland; Mr. Barak Barfi, 
        Research Fellow, The New America Foundation; Mr. Andrew 
        J. Tabler, Senior Fellow, The Washington Institute for 
        Near East Policy);

          August 1, 2013, subcommittee hearing on ``Examining 
        the State Department's Report on Iranian Presence in 
        the Western Hemisphere 19 Years After AMIA Attack'' 
        (Matthew Levitt, Ph.D., Director and Senior Fellow, 
        Stein Program on Counterterrorism and Intelligence, The 
        Washington Institute for Near East Policy; Mr. Michael 
        A. Braun, Co-Founder and Managing Partner, Spectre 
        Group International, LLC, Former Chief of Operations, 
        Drug Enforcement Administration; Mr. Eric Farnsworth, 
        Vice President; Council of the Americas and Americas 
        Society);

          July 31, 2013, subcommittee hearing ``The Iran-Syria 
        Nexus and Its Implications for the Region'' (The 
        Honorable John Bolton, Senior Fellow, American 
        Enterprise Institute, Former United States Permanent 
        Representative to the United Nations; Mr. Mark 
        Dubowitz, Executive Director, Foundation for Defense of 
        Democracies; Daniel Brumberg, Ph.D., Senior Program 
        Officer, Center for Conflict Management, United States 
        Institute of Peace);

          March 20, 2013, subcommittee hearing ``Hezbollah's 
        Strategic Shift: A Global Terrorist Threat'' (Mr. Will 
        Fulton, Iran Analyst, Critical Threats Project, 
        American Enterprise Institute; Matthew Levitt, Ph.D., 
        Director, Stein Program on Counterterrorism and 
        Intelligence, The Washington Institute for Near East 
        Policy; The Honorable Roger Noriega, Founder and 
        Managing Director, Vision Americas LLC, Former 
        Assistant Secretary of State for Western Hemisphere 
        Affairs and Former Ambassador to the Organization of 
        American States).

                        Committee Consideration

    On June 26, 2014, the Foreign Affairs Committee marked up 
the bill, H.R. 4411, pursuant to notice, in open session. An 
amendment in the nature of a substitute was offered by the 
Chairman, along with 2 other amendments, both of which were 
considered en bloc. The bill, as amended, was agreed to by 
voice vote.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of House Rule XIII, the 
committee reports that the findings and recommendations of the 
committee, based on oversight activities under clause 2(b)(1) 
of House Rule X, are incorporated in the descriptive portions 
of this report, particularly the ``Summary and Purpose,'' 
``Background and Need for Legislation,'' and ``Section-by-
Section Analysis'' sections.

      New Budget Authority, Tax Expenditures, and Federal Mandates

    In compliance with clause 3(c)(2) of House Rule XIII and 
the Unfunded Mandates Reform Act (P.L. 104-4), the committee 
adopts as its own the estimate of new budget authority, 
entitlement authority, tax expenditure or revenues, and Federal 
mandates 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 Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 11, 2014.

Hon. Edward R. Royce, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4411, the 
Hezbollah International Financing Prevention Act of 2014.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte, who can be reached at 226-2840.
            Sincerely,
                                      Douglas W. Elmendorf.
Enclosure

cc:
        Honorable Eliot L. Engel
        Ranking Member
H.R. 4411--Hezbollah International Financing Prevention Act of 2014.
    As ordered reported by the House Committee on Foreign 
Affairs on June 26, 2014.
    H.R. 4411 would impose sanctions on foreign financial 
institutions that facilitate transactions or money laundering 
on behalf of Hezbollah--a terrorist organization--or its 
agents. It would require several reports and briefings on 
Hezbollah and the Administration's efforts to deter its 
activities. CBO estimates that implementing the bill would cost 
$3 million over the 2015-2019 period, assuming appropriation of 
the necessary amounts. Pay-as-you-go procedures apply to this 
legislation because it would affect direct spending and 
revenues; however, CBO estimates that those effects would not 
be significant.
    Provisions of H.R. 4411 would increase the administrative 
costs of several departments, primarily the Department of the 
Treasury and the Department of State. Based on information from 
the Administration, CBO estimates that implementing the bill 
would cost $1 million in 2015 and less than $500,000 each year 
over the 2016-2019 period.
    Because the bill would expand the types of prohibited 
activities involving Hezbollah that are subject to civil and 
criminal penalties under current law, it could increase 
revenues and direct spending from the collection of those 
penalties; however, CBO estimates that the net budgetary effect 
of any additional penalties would be negligible for each year.
    H.R. 4411 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments. H.R. 4411 
would impose a private-sector mandate, as defined in UMRA, on 
financial institutions by prohibiting them from opening or 
maintaining certain types of financial accounts for entities 
that are knowingly affiliated with Hezbollah. The cost of the 
mandate would be the forgone income from opening or maintaining 
such accounts. Because there are already existing sanctions in 
place against Hezbollah and the number of entities that are 
knowingly affiliated with Hezbollah is probably small, CBO 
expects that the cost of the mandate would fall below the 
annual threshold established in UMRA ($152 million in 2014, 
adjusted annually for inflation).
    The CBO staff contacts for this estimate are Sunita 
D'Monte, Pamela Greene, and Matthew Pickford (for federal 
costs) and Marin Burnett (for the private-sector impact). This 
estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                          Directed Rule Making

    Pursuant to clause 3(c) of House Rule XIII, as modified by 
section 3(k) of H. Res. 5 during the 113th Congress, the 
committee notes that the reported text of the bill contains two 
directed rule-making provisions: Section 102(a)(4) and section 
302.

                  Non-Duplication of Federal Programs

    Pursuant to clause 3(c) of House Rule XIII, as modified by 
section 3(j)(2) of H.Res. 5 during the 113th Congress, the 
committee states that no provision of this bill establishes or 
reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                    Performance Goals and Objectives

    The objective of this legislation is to broaden financial 
sector sanctions against Hezbollah, force other critical 
designations regarding that terrorist organization, and target 
its media appendages, which aid in Hezbollah's financing and 
logistics networks. The overriding goal is to prevent 
Hezbollah's global logistics and financial network from 
operating, in order to curtail the funding of its international 
activities. Performance goals associated with these objectives 
include, but are not limited to, the following:

         LA verifiable decrease in Hezbollah's ability 
        to fundraise or otherwise transfer funds through 
        foreign financial institutions, or businesses operating 
        as financial institutions.
         LA verifiable decrease in Hezbollah's ability 
        to carry out operations against targets 
        internationally.
         LAn increase in U.S. Government and allied 
        action taken against Hezbollah's illicit networks.

                    Congressional Accountability Act

    H.R. 4411 does not apply to terms and conditions of 
employment or to access to public services or accommodations 
within the legislative branch.

                        New Advisory Committees

    H.R. 4411 does not establish or authorize any new advisory 
committees.

                         Earmark Identification

    H.R. 4411 contains no congressional earmarks, limited tax 
benefits, or limited tariff benefits as described in clauses 
9(e), 9(f), and 9(g) of House Rule XXI.

                        Letters of Jurisdiction


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                      Section-by-Section Analysis

    Section 1; Short Title. The Hezbollah International 
Financing Prevention Act of 2014
    Section 2. Findings and Statement of Policy.

 TITLE I--PREVENTION OF ACCESS BY HEZBOLLAH TO INTERNATIONAL FINANCIAL 
                         AND OTHER INSTITUTIONS

    Section 101. Imposition of Sanctions on Certain Satellite 
Providers that Carry al-Manar TV. Al-Manar (the beacon) is the 
official television station of Hezbollah. It is the propaganda 
arm of a listed terrorist organization, complicit in the full 
range of Hezbollah's activities. Al-Manar, the Lebanese 
Communication Group, and the Lebanese Media Group have been 
designated as Specially-Designated Global Terrorists (SDGT)--a 
designation authorized under Executive Order 13224. EO 13224 
prohibits persons from taking measures ``to assist in, sponsor, 
or provide financial, material, or technological support for, 
or financial or other services to or in support of, such acts 
of terrorism or those persons listed in the Annex to this order 
or determined to be subject to this order.'' The broadcast of 
al-Manar by satellite providers constitute the provision of 
``financial or other services'' at the very least. As a result, 
this provision forces the Administration to supply Congress 
with a list of such providers, and justify why they have not 
been designated for providing material support to a terrorist 
organization.
    Section 102. Sanctions with Respect to Financial 
Institutions that Engage in Certain Transactions. This 
provision provides the Administration the ability to 
relentlessly pursue foreign banks, including foreign Central 
Banks, knowingly engage in business with entities facilitating 
Hezbollah's activities. The provision would require the 
Secretary of the Treasury to prohibit from or impose severe 
limitations on U.S. correspondent banking for foreign financial 
institutions, if that institution knowingly engages in certain 
financial transactions to aid Hezbollah. The Act contains a 
waiver if the President determines that exercising this waiver 
is vital to the national security interests of the United 
States. It also contains a special rule to allow foreign 
financial institutions to wind down or cease all such 
operations if they are knowingly engaged in sanctionable 
behavior, in order to avoid sanctions.

TITLE II--DESIGNATION OF HEZBOLLAH AS A MAJOR DRUG SMUGGLING ENTERPRISE 
               AND A TRANSNATIONAL CRIMINAL ORGANIZATION

    Section 201: Designation of Hezbollah as Significant 
Foreign Narcotics Traffickers. Also referred to as the 
``Kingpin Designation,'' this provision requires the President 
to submit a report to Congress within 30 days of enactment 
determining whether Hezbollah meets the criteria of 
``Kingpin,'' under the Foreign Narcotics Kingpin Designation 
Act; and if it does not, what criteria has not been met. The 
effects of this designation would be two-fold: first, it would 
undermine Hezbollah's attempts to brand itself as a charitable 
and political organization in Europe, an image that is upheld 
by some and has assisted in Hezbollah's ability to raise funds 
through charitable donations; and second, it would equip U.S. 
law enforcement agencies with the tools they need to pursue 
Hezbollah operatives around the world, even in those countries 
which do not currently designate all, or any, parts of 
Hezbollah as a terrorist organization.
    Section 202: Designation of Hezbollah as a Transnational 
Criminal Organization. Similar to a ``Kingpin Designation'' 
this provision requires the President to submit a report to 
Congress within 30 days of enactment with a determination as to 
whether Hezbollah meets the criteria set forth in Executive 
Order 13581 as a Transnational Criminal Organization (TCO). The 
designation of Hezbollah as a TCO would further empower U.S. 
law enforcement agencies to counter Hezbollah's other criminal 
enterprises, such as money laundering, counterfeit goods and 
pharmaceuticals, and other illicit operations from which it 
funds its terrorist activities.
    Section 203: Report on Hezbollah's Involvement in the Trade 
of Conflict Diamonds. Given Hezbollah's past and current 
criminal activities and global footprint, the provision 
requires a report from the Secretary of State detailing 
Hezbollah's involvement in the trade of conflict diamonds--
those outside of the Kimberley Process Certification Scheme.
    Section 204: Rewards for Justice and Hezbollah's 
Fundraising, Financing, and Money Laundering Activities. This 
provision requires the Administration to submit a one-time 
report that details actions taken by the State Department 
through its rewards program (known as ``Rewards for Justice'') 
to obtain information on Hezbollah's fundraising, financing and 
money laundering networks. It also requires the State 
Department to provide annual briefings to Congress on these 
efforts.
    Section 205: Report on Activities of Foreign Governments to 
Disrupt Global Logistics Networks and Fundraising, Financing, 
and Money Laundering Activities of Hezbollah. The purpose of 
the report in this section is to provide a comprehensive 
overview of countries that support Hezbollah, or in which 
Hezbollah maintains important portions of its global logistics 
networks. It requires a list of countries in which Hezbollah 
conducts significant fundraising, financing or money 
laundering. This includes those governments that are not taking 
adequate efforts to disrupt Hezbollah's networks. It also 
includes transnational means to conduct these activities, to 
include the use of trade based money laundering networks. 
Finally, the provision requires the Administration to provide 
briefings to the appropriate congressional committees every six 
months on the disposition of Hezbollah's assets and financing 
activities worldwide.
    Sec. 206. Appropriate Congressional Committees Defined. It 
includes the Committee on Foreign Affairs, the Committee on 
Financial Services, and the Committee on the Judiciary of the 
House of Representatives; and the Committee on Foreign 
Relations, the Committee on Finance, and the Committee on the 
Judiciary of the Senate.

                  TITLE III--MISCELLANEOUS PROVISIONS

    Section 301. Rule of Construction. This provision states 
that nothing in this Act or any amendment made by this Act 
shall apply to the authorized intelligence activities of the 
United States.
    Section 302. Regulatory Authority. This section provides 
for the promulgation of regulations, and the notification to 
Congress of such regulations.
    Section 303. Termination. This provides for a termination 
authority if the President certifies that Hezbollah is no 
longer designated as a terrorist organization, and poses no 
significant threat to the United States or our allies.