H.R. 1023 — RIFA Act

This section establishes the short title as the “Reporting on Investments in Foreign Adversaries Act” or the “RIFA Act.”

This section establishes a new investment disclosure reporting requirement for specified institutions under Part B of title I of the Higher Education Act of 1965 (20 U.S.C. 1011 et seq.). A specified institution must file a report with the Secretary of Education on each July 31 following any calendar year in which it purchases, sells, or holds, directly or indirectly through any chain of ownership, one or more investments of concern. The report must cover the preceding calendar year and include: (1) a list of investments of concern purchased, sold, or held; (2) the aggregate fair market value of all investments of concern held at year-end; (3) the combined value of all investments of concern sold during the year, measured at the time of sale; and (4) the combined value of all capital gains from those sales. This section also directs the Secretary, after consultation with the Secretary of the Treasury and the Securities and Exchange Commission, to establish procedures for treating certain pooled investments. As background, regulated investment companies, exchange-traded funds, and other pooled investments can hold multiple underlying assets on behalf of investors. Under this section, a specified institution’s interest in such a pooled investment is treated as an investment of concern if the pooled investment holds an investment of concern, unless the Secretary certifies that the pooled investment does not hold an investment of concern. This section further provides that assets held by a related organization, as defined in section 4968(d)(2) of the Internal Revenue Code of 1986, are treated as held by the specified institution, subject to limits that prevent the same assets from being counted for more than 1 specified institution and exclude assets not intended or available for the institution’s use or benefit unless the organization is controlled by, or described in section 509(a)(3) with respect to, the institution. This section defines the fair market value of debt as the principal amount of the debt, authorizes the Secretary to issue regulations or other guidance to carry out the section, and requires each reporting institution to designate and maintain a compliance officer who is a current employee or legally authorized agent and who personally certifies compliance with the reporting requirements. This section also requires the Secretary to establish and maintain, beginning not later than May 31 of the calendar year following enactment of the RIFA Act, a searchable public database on a Department website containing all reports submitted under this section in electronic and downloadable format, with reports added within 30 days of receipt. Finally, this section creates enforcement procedures under which the Secretary, acting through the Department’s General Counsel, must investigate possible violations and request that the Attorney General bring a civil action to compel compliance when an institution knowingly or willfully fails to comply.