The bill requires the Treasury Department to report on and prohibit financial services to Chinese officials and their families if China threatens Taiwan.
Lisa McClain
Representative
MI-9
The Taiwan Conflict Deterrence Act of 2025 aims to deter potential aggression from China by requiring the Secretary of the Treasury to report on the assets held by Chinese government officials and their families, and restricts U.S. financial institutions from engaging in significant transactions with these individuals and their immediate families. The President may waive certain requirements or prohibitions if it is deemed necessary for national security or to resolve the threat from China. The Act defines key terms such as "financial institution" and "immediate family" to ensure clarity in its implementation. The act will terminate 30 days after the president reports to Congress that the threat is no longer present, or 25 years after the final report is submitted.
New Bill Targets Chinese Officials' Finances to Deter Taiwan Conflict: Mandates Reports, Restricts Transactions
This bill, the Taiwan Conflict Deterrence Act of 2025, sets up a system to track and potentially restrict the finances of certain Chinese government-connected individuals if the President determines China poses a threat to Taiwan under the Taiwan Relations Act. The core idea is to create financial pressure as a deterrent. Within 90 days of such a determination, the Treasury Secretary would need to report to Congress on the estimated funds held by at least 10 specified individuals and list the financial institutions involved, followed by annual reports for three years (Sec. 2).
Following the Money Trail
The first major action mandated by this bill is information gathering. Section 2 requires the Treasury Department to identify and estimate the total funds held, directly or indirectly, by specific individuals linked to the Chinese government. This isn't just about bank accounts; the definition of "funds" is left to the Treasury Secretary (Sec. 4), potentially covering a wide range of assets. The report must name the financial institutions – both U.S. and foreign – holding these assets. This information isn't staying behind closed doors; an unclassified version must be posted publicly on the Treasury's website in English, Chinese, and potentially other languages (Sec. 2). There's also a requirement for a follow-up briefing to Congress detailing how these funds were acquired, including potentially illicit means.
Cutting Off Access: Financial Restrictions
Beyond reporting, the bill moves to restrict access to the financial system. Section 3 prohibits U.S. financial institutions from conducting "significant transactions" with the individuals named in the Treasury report. Crucially, this ban extends to their "immediate family" members if they are benefiting from the reported funds. "Immediate family" is broadly defined to include spouses, parents, children, siblings, grandchildren, and various in-laws (Sec. 4). This aims to prevent targeted individuals from simply moving assets to relatives. Enforcement would leverage powers from the International Emergency Economic Powers Act (IEEPA), carrying potential penalties for non-compliance (Sec. 3).
Waivers, Exemptions, and the Long View
Both the reporting and transaction ban have off-ramps. The President can grant exemptions or waivers for several reasons outlined in Sections 2 and 3. These include situations where funds were acquired legally, if an individual or institution cooperates with the U.S. on national security matters related to China, if a waiver helps end the threat from China, if the threat ceases to exist, or if it's deemed vital for U.S. national security. This national security waiver authority is broad. Notably, the bill clarifies that these financial restrictions do not authorize sanctions on importing goods (Sec. 3). The transaction prohibition itself has a sunset clause: it terminates 30 days after the President certifies the threat is gone, or 25 years after the final report, whichever comes first (Sec. 3).
What This Means on the Ground
If triggered, this legislation puts U.S. financial institutions on notice, requiring them to potentially identify and block transactions for a specific list of individuals and their families. The public reporting requirement aims for transparency and potentially adds reputational pressure. While intended as a deterrent against conflict, the practical effects involve complex financial tracking and could significantly impact U.S.-China relations. The broad definition of "immediate family" and the reliance on presidential waivers for exceptions introduce variables that could shape how strictly these measures are applied in a real-world scenario.