[Pages S3068-S3069]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 890. Mr. RUBIO submitted an amendment intended to be proposed by
him to the bill S. 2226, to authorize appropriations for fiscal year
2024 for military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:
At the appropriate place, insert the following:
SEC. ___. AMERICAN FINANCIAL MARKETS INTEGRITY AND SECURITY.
(a) Short Title.--This section may be cited as the
``American Financial Markets Integrity and Security Act''.
(b) Prohibitions Relating to Certain Communist Chinese
Military Companies.--
(1) Definitions.--In this subsection:
(A) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(B) Control; insurance company.--The terms ``control'' and
``insurance company'' have the meanings given the terms in
section 2(a) of the Investment Company Act of 1940 (15 U.S.C.
80a-2(a)).
(C) Covered entity.--
(i) In general.--The term ``covered entity'' means any of
the following:
(I) An entity on the list of specially designated nationals
and blocked persons maintained by the Office of Foreign
Assets Control of the Department of the Treasury (commonly
referred to as the ``SDN list'').
(II) An entity on the Non-SDN Chinese Military-Industrial
Complex Companies List--
(aa) established pursuant to Executive Order 13959 (50
U.S.C. 1701 note; relating to addressing the threat from
securities investments that finance Communist Chinese
military companies), as amended before, on, or after the date
of enactment of this Act; and
(bb) maintained by the Office of Foreign Assets Control of
the Department of the Treasury.
(III) A Chinese military company on the list required under
section 1260H of the William M. (Mac) Thornberry National
Defense Authorization Act for Fiscal Year 2021 (Public Law
116-283; 10 U.S.C. 113 note).
(IV) An entity on the entity list maintained by the Bureau
of Industry and Security of the Department of Commerce and
set forth in Supplement No. 4 to part 744 of title 15, Code
of Federal Regulations.
(V) Any entity that is a parent, subsidiary, or affiliate
of, or an entity controlled by, an entity described in any of
clauses (i) through (iv).
(ii) Grace period.--For the purposes of this section and
the amendments made by this section, an entity shall be
considered to be a covered entity beginning on the date that
is 1 year after the date on which the entity first qualifies
under the applicable provision of clause (i).
(D) Exchange; security.--The terms ``exchange'' and
``security'' have the meanings given those terms in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).
(2) Prohibitions.--
(A) Listing on exchange.--Beginning on the date that is 1
year after the date of enactment of this Act, the Commission
shall prohibit a covered entity from offering to sell or
selling on an exchange (or through any other method that is
within the jurisdiction of the Commission to regulate,
including through the method of trading that is commonly
referred to as the ``over-the-counter'' trading of
securities) securities issued by the covered entity,
including pursuant to an exemption to section 5 of the
Securities Act of 1933 (15 U.S.C. 77e).
(B) Investments; limitation on actions.--
(i) In general.--The Investment Company Act of 1940 (15
U.S.C. 80a-1 et seq.) is amended--
(I) in section 12(d) (15 U.S.C. 80a-12(d)), by adding at
the end the following:
``(4)(A) It shall be unlawful for any investment company,
or any person that would be an investment company but for the
application of paragraph (1) or (7) of section 3(c), to
invest in a covered entity.
``(B) In this paragraph, the term `covered entity' has the
meaning given the term in subsection (b)(1) of the American
Financial Markets Integrity and Security Act.''; and
(II) in section 13(c)(1) (15 U.S.C. 80a-13(c)(1))--
(aa) in subparagraph (A), by striking ``or'' at the end;
(bb) in subparagraph (B), by striking the period at the end
and inserting ``or''; and
(cc) by adding at the end the following:
``(C) are covered entities, as that term is defined in
section 12(d)(4)(B).''.
(ii) Effective date.--The amendments made by clause (i)
shall take effect on the date that is 1 year after the date
of enactment of this Act.
(C) Federal funds.--
(i) In general.--Except as provided in clause (ii), on and
after the date that is 180 days after the date of enactment
of this Act, no Federal funds may be used to enter into,
extend, or renew a contract or purchasing agreement with a
covered entity.
(ii) Waiver.--The head of a Federal agency may issue a
national security waiver to the prohibition in clause (i) for
a period of not more than 2 years with respect to a covered
entity if the agency head submits to Congress a notification
that includes--
(I) a written justification for the waiver; and
(II) a plan for a phase-out of the goods or services
provided by the covered entity.
(D) Investments by insurance companies.--
(i) In general.--On and after the date of enactment of this
Act, an insurance company may not invest in a covered entity.
(ii) Certification of compliance.--
(I) In general.--Each insurance company shall, on an annual
basis, submit to the Secretary of the Treasury a
certification of compliance with clause (i).
(II) Responsibilities of the secretary.--The Secretary of
the Treasury shall create a form for the submission required
under subclause (I) in such a manner that minimizes the
reporting burden on an insurance company making the
submission.
(iii) Sharing information.--The Secretary of the Treasury,
acting through the Federal Insurance Office, shall share the
information received under clause (ii) and coordinate
verification of compliance with State insurance offices.
(3) Qualified trusts, etc.--
(A) In general.--Subsection (a) of section 401 of the
Internal Revenue Code of 1986 is amended by inserting after
paragraph (39) the following new paragraph:
``(40) Prohibited investments.--A trust which is part of a
plan shall not be treated as a qualified trust under this
subsection unless the plan provides that no part of the
plan's assets will be invested in any covered entity (as
defined in section 12(d)(4)(B) of the Investment Company Act
of 1940).''.
(B) IRAs.--Paragraph (3) of section 408(a) of such Code is
amended by striking ``contracts'' and inserting ``contracts
or in any covered entity (as defined in section 12(d)(6)(B)
of the Investment Company Act of 1940)''.
(C) Fiduciary duty.--Section 404 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104) is amended by
adding at the end the following new subsection:
``(f) Prohibited Investments.--No fiduciary shall cause any
assets of a plan to be invested in any covered entity (as
defined in section 12(d)(4)(B) of the Investment Company Act
of 1940 (15 U.S.C. 80a-12(d)(4)(B))).''.
(D) Effective date.--
(i) In general.--Except as provided in clause (ii), the
amendments made by this paragraph shall apply to plan years
beginning after the date which is 180 days after the date of
the enactment of this Act.
(ii) Plan amendments.--If clause (iii) applies to any
retirement plan or contract amendment--
(I) such plan or contract shall not fail to be treated as
being operated in accordance with the terms of the plan
during the period described in clause (iii)(II) solely
because the plan operates in accordance with the amendments
made by this subsection, and
(II) except as provided by the Secretary of the Treasury
(or the Secretary's delegate), such plan or contract shall
not fail to meet the requirements of the Internal Revenue
Code of 1986 or the Employee Retirement Income Security Act
of 1974 by reason of such amendment.
(iii) Amendments to which clause applies.--
(I) In general.--This clause shall apply to any amendment
to any plan or annuity contract which--
(aa) is made pursuant to the provisions of this paragraph,
and
(bb) is made on or before the last day of the first plan
year beginning on or after the date which is 2 years after
the date of the enactment of this Act (4 years after such
date of enactment, in the case of a governmental plan).
(II) Conditions.--This clause shall not apply to any
amendment unless--
(aa) during the period beginning on the date which is 180
days after the date of the enactment of this Act, and ending
on the date described in subclause (I)(bb) (or, if earlier,
the date the plan or contract amendment is adopted), the plan
or contract is operated as if such plan or contract amendment
were in effect, and
(bb) such plan or contract amendment applies retroactively
for such period.
(iv) Subsequent amendments.--Rules similar to the rules of
clauses (ii) and (iii) shall apply in the case of any
amendment to any plan or annuity contract made pursuant to
any update of the list of Communist Chinese military
companies required by section 1237(b) of the Strom Thurmond
National Defense Authorization Act for Fiscal Year 1999
(Public Law 105-261; 50 U.S.C. 1701 note) which is made after
the effective date of the amendments made by this paragraph.
(c) Modification of Requirements for List of Communist
Chinese Military Companies.--Section 1237(b) of the Strom
Thurmond National Defense Authorization Act for Fiscal Year
1999 (Public Law 105-261; 50 U.S.C. 1701 note) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) Revisions to the list.--
``(A) Additions.--The Secretary of Defense, the Secretary
of Commerce, or the Director of National Intelligence may add
a person to the list required by paragraph (1) at any time.
``(B) Removals.--A person may be removed from the list
required by paragraph (1) if the
[[Page S3069]]
Secretary of Defense, the Secretary of Commerce, and the
Director of National Intelligence agree to remove the person
from the list.
``(C) Submission of updates to congress.--Not later than
February 1 of each year, the Secretary of Defense shall
submit a version of the list required in paragraph (1),
updated to include any additions or removals under this
paragraph, to the committees and officers specified in
paragraph (1).'';
(2) by striking paragraph (3) and inserting the following:
``(3) Consultation.--In carrying out paragraphs (1) and
(2), the Secretary of Defense, the Secretary of Commerce, and
the Director of National Intelligence shall consult with each
other, the Attorney General, and the Director of the Federal
Bureau of Investigation.''; and
(3) in paragraph (4), in the matter preceding subparagraph
(A), by striking ``making the determination required by
paragraph (1) and of carrying out paragraph (2)'' and
inserting ``this section''.
(d) Analysis of Financial Ambitions of the Government of
the People's Republic of China.--
(1) Analysis required.--The Director of the Office of
Commercial and Economic Analysis of the Air Force shall
conduct an analysis of--
(A) the strategic importance to the Government of the
People's Republic of China of inflows of United States
dollars through capital markets to the People's Republic of
China;
(B) the methods by which that Government seeks to manage
such inflows;
(C) how the inclusion of the securities of Chinese entities
in stock or bond indexes affects such inflows and serves the
financial ambitions of that Government; and
(D) how the listing of the securities of Chinese entities
on exchanges in the United States assists in--
(i) meeting the strategic goals of that Government,
including defense, surveillance, and intelligence goals; and
(ii) the fusion of the civilian and military components of
that Government.
(2) Submission to congress.--The Director of the Office of
Commercial and Economic Analysis of the Air Force shall
submit to Congress a report--
(A) setting forth the results of the analysis conducted
under paragraph (1); and
(B) based on that analysis, making recommendations for best
practices to mitigate any national security and economic
risks to the United States relating to the financial
ambitions of the Government of the People's Republic of
China.
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