Digital Asset Market Clarity Act

(a) Short title. This section may be cited as the Preventing Illicit Finance Through Partnership Act.

(b) Definitions. In this section:

(1) Bank. The term bank has the meaning given the term in section 1010.100 of title 31, Code of Federal Regulations (or any corresponding similar regulation).

(2) Certified or recognized information-sharing or interdiction network. The term certified or recognized information-sharing or interdiction network means a real-time, secure, public-private mechanism that—

(A) facilitates the detection, interdiction, and prevention of illicit finance violations through rapid information exchange between government and regulated entities; and

(B) is—

(i) certified by the Secretary of the Treasury for the purpose of supporting interdiction and investigative actions consistent with law enforcement or regulatory authorities; or

(ii) recognized by the Secretary of the Treasury as an existing (as of the day before the date of enactment of this Act), effective public-private partnership network that meets standards for security, accountability, and participation that are equivalent to the standards that would be required by the Secretary of the Treasury for certification under clause (i).

(3) Covered agency. The term covered agency means—

(A) the Department of Justice, including the Federal Bureau of Investigation and the Drug Enforcement Administration;

(B) the Department of the Treasury, including the Financial Crimes Enforcement Network, the Internal Revenue Service, and the Office of Foreign Assets Control; and

(C) the Department of Homeland Security.

(4) Designated private sector entity. The term designated private sector entity means a private sector entity designated under subsection (d).

(5) Director. The term Director means the Director of the Financial Crimes Enforcement Network.

(6) Illicit finance violation. The term illicit finance violation means the illicit use of digital assets.

(7) Illicit use. The term illicit use includes fraud, money laundering, terrorist financing, the purchase and sale of illicit goods, trafficking of fentanyl (including fentanyl precursors and trade in other illicit drugs), sanctions evasion, theft of funds, funding of illegal activities, transactions relating to child sexual abuse material or elder fraud abuse, and any other financial transaction involving the proceeds of specified unlawful activity, as defined in section 1956(c) of title 18, United States Code.

(8) Money services business. The term money services business has the meaning given the term in section 1010.100 of title 31, Code of Federal Regulations (or any corresponding similar regulation).

(c) Establishment of program. The Secretary of the Treasury shall establish a pilot program under which covered agencies and designated private sector entities securely share information focused on potential illicit finance violations and threats and emerging risks relating to illicit finance violations.

(d) Designation of private sector entities

(1) Required action

(A) Initial companies. Not later than 90 days after the date of enactment of this Act, the Director and the Secretary shall designate 10 private sector entities that are money services businesses, 10 private sector entities that are digital commodity brokers, digital commodity dealers, or digital commodity exchanges, and 10 private sector entities that are banks to participate in the pilot program established under subsection (c), if such entities agree and volunteer to participate in the program.

(B) Biannual review. Not less frequently than once every 6 months, the Director shall review and, as appropriate, replace the private sector entities designated under this paragraph.

(C) Rule of construction. Nothing in this section may be construed as—

(i) requiring an entity to participate in the pilot program established under this section; or

(ii) enabling the Director to select an entity to participate in the pilot program without the consent of such entity.

(2) Optional designation. In addition to the 30 private sector entities designated under paragraph (1), the Director may designate—

(A) 1 or more information sharing and analysis centers to participate in the pilot program;

(B) 1 or more participants in a certified or recognized information sharing or interdiction network; or

(C) 1 or more private sector entities, as appropriate, relating to a particular type of illicit activity.

(e) Information sharing with private sector entities. A covered agency that initiates an investigation into a potential illicit finance violation, or identifies a threat or emerging risk relating to an illicit finance violation, may share with any designated private sector entity such information about the investigation, threat, or emerging risk as the covered agency determines is appropriate.

(f) Use of information by private sector entities. Information received by a designated private sector entity under this section may not be used for any purpose other than identifying and reporting on activities that may involve illicit finance violations or threats and emerging risks relating to illicit finance violations, unless otherwise prescribed by regulation or permitted by the covered agency sharing the information.

(g) Means of sharing information. The covered agencies and designated private sector entities may share information about potential illicit finance violations, or threats and emerging risks relating to illicit finance violations, with each other—

(1) through a portal established by the Secretary of the Treasury or a similar mechanism determined appropriate by the Secretary of the Treasury;

(2) through secure email;

(3) at monthly meetings, which shall be facilitated by the Secretary of the Treasury; or

(4) through a certified or recognized information-sharing or interdiction network.

(h) Limitation on liability. A designated private sector entity that transmits, receives, or shares information for the purposes of identifying and reporting activities that may constitute illicit finance violations, or threats and emerging risks relating to illicit finance violations, shall not be liable to any person for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in such disclosure.

(i) Sunset. The pilot program established under subsection (c) shall terminate on the date that is 5 years after the date of enactment of this Act, unless made permanent through notice and comment rulemaking by the Department of the Treasury.