H.R. 5490, Dismantle Foreign Scam Syndicates Act

H.R. 5490 would authorize the President to impose sanctions on foreign persons who own, control, or otherwise support a significant scam-compound operation. Scam compounds are physical installations where significant transnational criminal organizations carry out cyber-enabled fraud operations, frequently using the forced labor of victims of human trafficking.

Additionally, the bill would require the Administration to establish a task force to develop a strategy to reduce or eliminate fraud undertaken at scam compounds, implement that strategy, and report annually to the Congress on the foreign persons who have been sanctioned under the bill’s provisions and on other information related to scam compounds. The bill also would direct the task force to consult regularly with the Congress about the implementation of the strategy to address scam compounds. Finally, the bill would authorize the Department of State to provide support services to victims of human trafficking within scam compounds.

Direct Spending and Revenues

The Administration has existing authority to sanction foreign persons who are part of transnational criminal organizations. If the enactment of H.R. 5490 leads the Administration to broaden the application of those sanctions, additional persons would be subject to sanctions. More people would be denied visas by the Department of State, resulting in an insignificant decrease in revenues from fees. Although most visa fees are retained by the Department of State and spent, some collections are deposited into the Treasury as revenues. Denying foreign nationals entry into the United States also would reduce direct spending on federal benefits (emergency Medicaid or federal subsidies for health insurance, for example) for which those people might otherwise be eligible.

In addition, if sanctions were applied more broadly under the bill, more transactions involving certain assets either in the United States or under the control of people or entities in the United States would be blocked. People who violate those sanctions would be subject to civil or criminal monetary penalties. Those penalties are recorded as revenues, and a portion can be spent without further appropriation.

On the basis of data about similar sanctions, CBO estimates that any additional sanctions imposed under the bill would affect a small number of people. Thus, enacting H.R. 5490 would increase revenues and direct spending by insignificant amounts, and would, on net, reduce deficits by less than $500,000 over the 2026-2035 period.

Spending Subject to Appropriation

Using information about the cost of reports and task forces similar to those required by the bill, CBO estimates that implementing H.R. 5490 would cost less than $500,000 each year and total $1 million over the 2026-2030 period. Such spending would be subject to the availability of appropriated funds. The Department of State currently provides support to victims of human trafficking; thus, the authorization to provide such support to those victims at scam centers would not affect the budget.

Mandates

H.R. 5490 would impose a private-sector mandate as defined in the Unfunded Mandates Reform Act (UMRA) by expanding the scope of authority for the Administration to regulate transactions between entities in the United States and foreign entities that would be subject to sanctions under the bill. That expansion would result in additional burdens on individuals and entities, such as banks, in the United States that are required to monitor and report on foreign transactions and to block access to certain assets owned by sanctioned entities. It also would prohibit transactions between entities in the United States and sanctioned parties that otherwise would be permitted under current law.

The cost of the mandate would be any income or profit lost as a result of the bill’s enactment. CBO expects that because a small number of people or entities would be affected, the loss of income from any incremental increase in restrictions imposed by the bill would be small as well. CBO estimates that the cost of the mandate would fall well below the annual threshold established in UMRA for private-sector mandates ($206 million in 2025, adjusted annually for inflation).

H.R. 5490 contains no intergovernmental mandates as defined in UMRA.

The CBO staff contacts for this estimate are David Rafferty (for federal effects) and Lucy Marret (for mandates). The estimate was reviewed by Christina Hawley Anthony, Deputy Director of Budget Analysis.