Sen. Catherine Cortez Masto, D-Nev., is calling on the Federal Election Commission to require campaigns to send illegal campaign contributions to the U.S. Treasury instead of refunding the money to the original donor.
Cortez Masto's call for the new FEC rule comes after numerous foreign donors and companies have been caught making illegal campaign donations. Under current rules, the donors have to pay a fine but can get their funds returned in full if a campaign chooses to return them.
"Requiring the disgorgement of illegally contributed funds to the U.S. Treasury—rather than their return to donors—will create material consequences that will help deter illegal behavior," Cortez Masto wrote to the FEC in a letter dated Tuesday and first reviewed by CNBC.
Cortez Masto points to an instance when Barry Zekelman, a Canada-based steel industry magnate, illegally helped funnel $1.75 million in his company's money to a pro-Trump super PAC, America First Action, according to the commission. The billionaire was fined $975,000, a sum entities controlled by Zekelman will pay, according to The New York Times.
The contributions came in 2018 from a Pennsylvania-based subsidiary of Zekelman's company called Wheatland Tube. The FEC said the funds were an illegal donation made by a foreign national.
Still, as Cortez Masto points out, the fine could have limited impact on Zekelman as the illegal contribution was expected to be refunded in full.
A representative for America First Action told CNBC that the $1.75 million donation "was refunded." The PAC representative later showed CNBC an FEC filing that confirms Wheatland Tube received the $1.75 million refund last year.
An attorney for Zekelman did not immediately respond to a request to comment.
The FEC said it was accepting public comments on possible rule changes around the return of illegal campaign contributions, and would publish the feedback when the comment period ends.
Though Cortez Masto does not mention cryptocurrency exchange FTX or its co-founder Sam Bankman-Fried in her letter, his contributions to campaigns could come under the same scrutiny by the FEC if it enacted such a rule.
Federal authorities previously charged Bankman-Fried with using what they said was tens of millions of dollars of misappropriated customer funds to make illegal political donations to both Democratic and Republican candidates.