[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
STOPPING THE MONEY FLOW:
THE WAR ON TERROR FINANCE
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JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE
OF THE
COMMITTEE ON FOREIGN AFFAIRS
AND THE
SUBCOMMITTEE ON EMERGING THREATS AND CAPABILITIES
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
JUNE 9, 2016
__________
Serial No. 114-188 H.A.S.C. No. 114-125
(Committee on Foreign Affairs) (Committee on Armed Services)
__________
Printed for the use of the Committee on Foreign Affairs and the
Committee on Armed Services
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
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______
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida BRAD SHERMAN, California
DANA ROHRABACHER, California GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio ALBIO SIRES, New Jersey
JOE WILSON, South Carolina GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida
TED POE, Texas BRIAN HIGGINS, New York
MATT SALMON, Arizona KAREN BASS, California
DARRELL E. ISSA, California WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina ALAN GRAYSON, Florida
MO BROOKS, Alabama AMI BERA, California
PAUL COOK, California ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas GRACE MENG, New York
SCOTT PERRY, Pennsylvania LOIS FRANKEL, Florida
RON DeSANTIS, Florida TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina JOAQUIN CASTRO, Texas
TED S. YOHO, Florida ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
------
Subcommittee on Terrorism, Nonproliferation, and Trade
TED POE, Texas, Chairman
JOE WILSON, South Carolina WILLIAM KEATING, Massachusetts
DARRELL E. ISSA, California BRAD SHERMAN, California
PAUL COOK, California BRIAN HIGGINS, New York
SCOTT PERRY, Pennsylvania JOAQUIN CASTRO, Texas
REID J. RIBBLE, Wisconsin ROBIN L. KELLY, Illinois
LEE M. ZELDIN, New York
COMMITTEE ON ARMED SERVICES
WILLIAM M. ``MAC'' THORNBERRY, Texas, Chairman
WALTER B. JONES, North Carolina ADAM SMITH, Washington
J. RANDY FORBES, Virginia LORETTA SANCHEZ, California
JEFF MILLER, Florida ROBERT A. BRADY, Pennsylvania
JOE WILSON, South Carolina SUSAN A. DAVIS, California
FRANK A. LoBIONDO, New Jersey JAMES R. LANGEVIN, Rhode Island
ROB BISHOP, Utah RICK LARSEN, Washington
MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee
JOHN KLINE, Minnesota MADELEINE Z. BORDALLO, Guam
MIKE ROGERS, Alabama JOE COURTNEY, Connecticut
TRENT FRANKS, Arizona NIKI TSONGAS, Massachusetts
BILL SHUSTER, Pennsylvania JOHN GARAMENDI, California
K. MICHAEL CONAWAY, Texas HENRY C. ``HANK'' JOHNSON, Jr.,
DOUG LAMBORN, Colorado Georgia
ROBERT J. WITTMAN, Virginia JACKIE SPEIER, California
DUNCAN HUNTER, California JOAQUIN CASTRO, Texas
JOHN FLEMING, Louisiana TAMMY DUCKWORTH, Illinois
MIKE COFFMAN, Colorado SCOTT H. PETERS, California
CHRISTOPHER P. GIBSON, New York MARC A. VEASEY, Texas
VICKY HARTZLER, Missouri TULSI GABBARD, Hawaii
JOSEPH J. HECK, Nevada TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia BETO O'ROURKE, Texas
MO BROOKS, Alabama DONALD NORCROSS, New Jersey
RICHARD B. NUGENT, Florida RUBEN GALLEGO, Arizona
PAUL COOK, California MARK TAKAI, Hawaii
JIM BRIDENSTINE, Oklahoma GWEN GRAHAM, Florida
BRAD R. WENSTRUP, Ohio BRAD ASHFORD, Nebraska
JACKIE WALORSKI, Indiana SETH MOULTON, Massachusetts
BRADLEY BYRNE, Alabama PETE AGUILAR, California
SAM GRAVES, Missouri
RYAN K. ZINKE, Montana
ELISE M. STEFANIK, New York
MARTHA McSALLY, Arizona
STEPHEN KNIGHT, California
THOMAS MacARTHUR, New Jersey
STEVE RUSSELL, Oklahoma
Robert L. Simmons II, Staff Director
------
SUBCOMMITTEE ON EMERGING THREATS AND CAPABILITIES
JOE WILSON, South Carolina, Chairman
JOHN KLINE, Minnesota JAMES R. LANGEVIN, Rhode Island
BILL SHUSTER, Pennsylvania JIM COOPER, Tennessee
DUNCAN HUNTER, California JOHN GARAMENDI, California
RICHARD B. NUGENT, Florida JOAQUIN CASTRO, Texas
RYAN K. ZINKE, Montana MARC A. VEASEY, Texas
TRENT FRANKS, Arizona, Vice Chair DONALD NORCROSS, New Jersey
DOUG LAMBORN, Colorado BRAD ASHFORD, Nebraska
MO BROOKS, Alabama PETE AGUILAR, California
BRADLEY BYRNE, Alabama
ELISE M. STEFANIK, New York
Peter Villano, Professional Staff Member
Lindsay Kavanaugh, Professional Staff Member
C O N T E N T S
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Page
WITNESSES
The Honorable Daniel Glaser, Assistant Secretary for Terrorist
Financing, U.S. Department of the Treasury..................... 6
Mr. Andrew Keller, Deputy Assistant Secretary for Counter Threat
Finance and Sanctions, Bureau of Economic and Business Affairs,
U.S. Department of State....................................... 18
Ms. Theresa Whelan, Acting Assistant Secretary for Special
Operations/Low Intensity Conflict, U.S. Department of Defense.. 30
Mr. William Woody, Chief of Law Enforcement, U.S. Fish and
Wildlife Service............................................... 39
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Daniel Glaser: Prepared statement.................. 9
Mr. Andrew Keller: Prepared statement............................ 20
Ms. Theresa Whelan: Prepared statement........................... 32
Mr. William Woody: Prepared statement............................ 41
APPENDIX
Hearing notice................................................... 62
Hearing minutes.................................................. 63
Mr. William Woody: Material submitted for the record............. 64
Written responses from the Honorable Daniel Glaser to questions
submitted for the record by:
The Honorable Ted Poe, a Representative in Congress from the
State of Texas, and chairman, Subcommittee on Terrorism,
Nonproliferation, and Trade.................................. 72
The Honorable William Keating, a Representative in Congress
from the Commonwealth of Massachusetts....................... 76
The Honorable Scott Perry, a Representative in Congress from
the Commonwealth of Pennsylvania............................. 77
Written responses from Mr. Andrew Keller to questions submitted
for the record by:
The Honorable Ted Poe.......................................... 78
The Honorable William Keating.................................. 88
The Honorable Paul Cook, a Representative in Congress from the
State of California.......................................... 89
The Honorable Scott Perry...................................... 91
Written responses from Ms. Theresa Whelan to questions submitted
for the record by:
The Honorable James E. Langevin, a Representative in Congress
from the State of Rhode Island............................... 93
The Honorable Doug Lamborn, a Representative in Congress from
the State of Colorado........................................ 95
Written responses from Mr. William Woody to questions submitted
for the record by the Honorable Ted Poe and the Honorable James
E. Langevin.................................................... 98
STOPPING THE MONEY FLOW:
THE WAR ON TERROR FINANCE
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THURSDAY, JUNE 9, 2016
House of Representatives,
Subcommittee on Terrorism, Nonproliferation, and Trade,
Committee on Foreign Affairs,
Subcommittee on Emerging Threats and Capabilities,
Committee on Armed Services,
Washington, DC.
The subcommittees met, pursuant to notice, at 2:10 p.m., in
room 2118, Rayburn House Office Building, Hon. Ted Poe
(chairman of the Subcommittee on Terrorism, Nonproliferation,
and Trade) presiding.
Mr. Poe. The subcommittees will come to order.
Without objection, all members may have 5 days to submit
statements, questions, and extraneous materials for the record,
subject to the length limitation and the rules.
I recognize myself for the opening statement.
Time and time again, we are reminded of the massive damage
that terrorists cause even with just a little money. Today,
terrorist groups have more money than some small countries.
ISIS is the richest terrorist organization in world history,
bringing in over $1 billion in 2014 alone.
Drawing on these funds, ISIS has managed to stage terrorist
attacks throughout the world and kill thousands of people. ISIS
is not alone. Terrorists raise billions annually to carry out
their bloody agendas. This is precisely why our Government
agencies have been tasked with stemming the flow of money to
terrorist groups. When we can separate the terrorists from
their money, lives can be saved.
According to the Treasury Department, the underlying
vulnerabilities within the U.S. financial system today ``remain
largely the same as those identified in 2005.'' Terrorists are
still able to park and move cash through financial systems.
Part of the problem is that the United States still does
not have a comprehensive strategy across all American agencies
to combat terrorist financing. Policies and priorities differ
from one agency to the next in a seemingly ad hoc fashion. In
fact, there isn't even a clear method by which our various
agencies can coordinate their efforts. Agencies working on
counterterrorist finance had previously coordinated through the
Terrorist Financing Working Group. However, this working group
has been on a hiatus for some time and agencies are forced to
coordinate informally.
Another tool to counter terrorist financing that hasn't
been used: Designation of domestic charities. According to the
Treasury Department's Web site, the United States has not
blacklisted any charities since the February 2009 designation
of the Tamil Foundation. There are also nonconcrete metrics in
place to measure the effectiveness of counterterrorist finance
efforts, making it difficult to determine the need and
appropriate tools required for a successful strategy.
For instance, the counter-ISIL finance cell was established
in late 2014 to work on intelligence collection and operations
to cut off ISIS' financing. The administration says that the
cell has significantly improved our understanding of ISIS'
financial activity. This is a start, but what are the cell's
metrics of success? What are its goals, and how do we know if
it is doing a good job?
Beyond its own government efforts, we still have a long way
to go when it comes to collaborating with our international
partners to counter terror finance, to ensure our efforts are
not fragmented, and that our respective skills and intelligence
are leveraged correctly.
Sometimes our international partners seem to be doing
exactly the opposite of what our policy is. According to U.S.
Government figures, terrorist groups earned over $165 million
between 2000 and 2014 from governments that make ransom
payments. To better understand the significance of this
troubling trend, Treasury Under Secretary David Cohen said in
2012 that kidnapping for ransom has become so lucrative for
terrorists that it is today's most significant source of
terrorist financing.
Denying terrorists ransom payments is not just a U.S.
policy. It is the international standard champion by the
Financial Action Task Force, the Counter-ISIL Financing Group,
and the United Nations.
International noncompliance with antiterror financing
standards does not just end there. According to a Financial
Action Task Force report, almost every country in the world has
enacted antiterror financing laws, but only 33 of the 194
countries surveyed have actually reported any convictions using
these laws.
The laws are worthless unless they are put into action. We
must do more to get our partners to implement these laws so
that they will have already passed in their respective nations.
Our international partners can also do more to stop the
flow of money from private donors to terrorist groups. Between
2013 and 2014, ISIS received $40 million from donors in Saudi
Arabia, Qatar, and Kuwait. All those countries have terror
financing laws on the books, but the money still flows across
their borders to ISIS.
The more we can improve on both our internal coordination
and our international cooperation, the less money terrorists
can have. We need more information. We need to have more
information, and we know both wildlife trafficking and trade-
based money laundering are sources for revenue for terrorists
as well. We simply have not collected the necessary
intelligence, however, and done the required analysis to
understand these sources.
Going after sources of revenue for terrorists can be a
powerful tool to render them powerless. Terrorists need money
to pay their fighters, buy their weapons, and pull off the
attacks. If we can work to deny them the money, that means we
are a big step closer to defeating terrorists worldwide.
I will now yield to the gentleman from South Carolina to
make his opening statement.
Mr. Wilson. Thank you, Judge Poe, and thank you for
recommending this hearing on such an important topic. And I am
pleased that we are reviewing this subject in a joint hearing
of the two subcommittees.
Since I sit on your subcommittee in addition to chairing
the Emerging Threats, I consider this a very efficient use of
time. I would also like to thank Ranking Member Jim Langevin
and Ranking Member Bill Keating for their contributions and
participation today.
We welcome our panel of experts from this interagency team
for today's hearing. I would especially like to welcome back
Secretary Theresa Whelan from the Department of Defense.
Secretary Whelan has appeared before the Armed Services
Committee many times, as well as the subcommittee. She brings a
wealth of knowledge and experience on important issues within
her portfolio.
And I am pleased to have the opportunity today to talk
about the topic of countering terrorist financing with our
colleagues from the Terrorism, Nonproliferation, and Trade
Subcommittee. I am honored to be the chairman of the Emerging
Threats and Capabilities Subcommittee as we oversee some of the
most forward-looking, cutting edge, and in-demand aspects of
the Department of Defense.
As we consider this important topic today of countering
terrorist financing, I think we should keep in mind two
important frames of reference. First, countering the finances
of terrorist groups remains a relatively new area of focus for
the United States Government and interagency in particular.
Although the attacks of September 11 serves as the most
recent forcing function, the subsequent wars of Afghanistan and
Iraq showed us that the unabated financing of terrorists and
insurgence groups can prolong conflicts and frustrate our
national security objectives putting American families at risk.
The more recent rise of ISIL, or Daesh, with nearly $1
billion in annual revenue proves again, for our enemies, cash
remains king.
Second, we should continually keep in mind how difficult
this problem set is. Eliminating and countering the finances of
illicit and terrorist networks that operate in ever changing
and clandestine manner is very difficult work. I encourage each
of the colleagues today to ask questions of our witnesses on
how they are resourced in this important fight to stem the flow
of dollars to our enemies.
I again would like to thank Judge Poe for holding this
joint hearing between the two subcommittees. I look forward to
hearing from our distinguished panel of witnesses today.
And with that, I yield back the balance of my time.
Mr. Poe. I thank the chairman of the Armed Services
Emerging Threats and Capabilities Subcommittee.
I yield to the gentleman from Massachusetts, Mr. Bill
Keating, for his opening statement, the ranking member of the
Terrorism Subcommittee.
Mr. Keating. Well, thank you, Chairman Poe, for conducting
the afternoon's hearing, and I appreciate your concern for
terrorist financing and your leadership on continuing this
conversation both within Congress and externally. I would also
like to thank Chairman Wilson and Ranking Member Langevin of
the Armed Services Subcommittee on Emerging Threats and
Capabilities for their shared focus and work on this subject as
well.
And of course, I appreciate the time of our witnesses who
have joined from the Department of State, Treasury, Defense,
and Interior to discuss this critical topic. Your ongoing
attention and commitment to countering terrorist financing is
the bedrock of our coordinated effort to stop the money flow,
as the title of today's hearing suggests.
I also think it should be said strongly and with great
appreciation for the work that is done by our men and women
that are serving so well in the military. Just within the last
4 weeks, I was honored to join them aboard the aircraft carrier
Harry S. Truman and see their mission in interrupting financing
as well in a direct military sense. Their success at destroying
cash depots and interrupting oil supply has been extraordinary,
and their service should be recognized in this hearing as well.
But as we know, terrorist financing has to be resolved at
many levels in terms of trying to attack it, and it is a
complicated, intricate, nuanced, and clandestine effort, making
it difficult to identify, follow, and to stop. Organized groups
such as ISIL rely on diversified revenue streams ranging from
pirated oil fields and extortion to imposition of taxes on
areas that it controls, to seizures, and to the sale of looted
antiquities.
Our concern doesn't end with the trafficking of foreign
terrorist organizations, however. Organized crime syndicates
also fund illicit activities through a variety of subversive
efforts. Wildlife trafficking, for example, is estimated to
generate billions of dollars for organized crime enterprises.
It has also been reported that these groups are using human and
organ trafficking as well as--for a revenue source, in addition
to illicitly smuggling tobacco and tobacco products.
Not only do such black market dealings contribute to an
illegal economy, but they fuel instability and they undermine
global security. This is not to say the U.S. has not had
success. Just this week, the U.S. Fish and Wildlife Service led
efforts to institute a near total ban on domestic, commercial
trade of elephant ivory, which aims at reducing the
opportunities for wildlife traffickers to trade illegal ivory
under the guise of legal products.
Over a 3-year period, an estimated 100,000 elephants were
killed for their ivory, which is an average of approximately
one every 15 minutes. These animals--ivory generates millions
of dollars in illegal funds.
Separately, last month, the President signed into law
legislation that imposes tough new import restrictions on
antiquities that attract trafficking out of Syria. I was proud
to play a leading role in advancing H.R. 1493, along with the
support of the Foreign Affairs Committee Chairman Ed Royce,
Ranking Member Engel, and Chairman Judge Poe.
These successes, however, should not allow us to become
complacent. While identifying and stopping traditional
financing methods, such as hawala and hawala trade-based money
laundering, the cash couriers are important. Agencies must look
at new and emerging ways through which organizations are able
to generate funds.
Virtual currency platforms and digital finance allows
organized crime and terrorist groups to commit crimes
anonymously. Digital currencies could facilitate money
laundering, alleviating the need for criminal infrastructures
at their base.
With respect to terrorism, anonymous marketplaces on the
Internet allow the sale of illegal goods and services and risk
the convergence of terrorism and organized crime. We must
utilize all the resources at our disposal to target every
terrorist organized crime funding entity no matter where it
comes from.
I look forward to hearing from today's witnesses on these
subjects, as well as working with our international allies to
end and prevent terrorist organizations from generating this
type of illicit money.
Thank you, and I yield back.
Mr. Poe. I thank the gentleman from Massachusetts.
I recognize the ranking member of the Emerging Threats and
Capabilities Subcommittee, Mr. James Langevin of Rhode Island,
for 5 minutes for his opening statement.
Mr. Langevin. Thank you, Mr. Chairman. I want to thank you
and Chairman Wilson and Ranking Member Keating for convening
this hearing, and I especially want to thank our witnesses for
being here today.
In particular, I want to welcome Secretary Whelan here who
has been before our subcommittee many times. I appreciate your
presence, to all of you, and look forward to your testimony.
So I am pleased to join my Foreign Affairs Committee
colleagues on the topic of countering threat financing. The
combined force of our committees on this issue is paramount
because effective CTF requires the collaboration and
synchronization of a multitude of U.S. Government agencies.
Holding this joint hearing will provide us an opportunity to
understand CTF efforts and strategies in a holistic manner and
what we can do to enhance its overall effectiveness.
Threat financing activities comes in many forms, from, as
my colleagues have touched on already, from illicit drug
trafficking, to wildlife poaching, to ISIL's alarming oil
revenues. And understanding such activities and the associated
organizations and networks, of course, is the first step,
including the alternative financing through traditional
financial institutions, as Mr. Keating had talked about,
understanding the role that that is playing.
The Department of Defense plays a key role in this endeavor
by providing threat finance intelligence, or TFI, to enhance
our understanding of the challenges before us. Today, I look
forward to hearing more about how such information is shared
amongst agencies in a timely manner and used to produce
synchronized goals and efforts to disrupt, degrade, and destroy
such financing.
I also look forward to hearing from DOD and other agencies
about the progress that has been made when it comes to
institutionalizing CTF. This collaboration in Afghanistan
resulted in many successes, and it is imperative we have a
grasp on how such lessons learned are being leveraged.
With respect to the DOD, has progress been made on gaps
identified in the recent capabilities-based assessment, such as
CTF integration into joint plans and joint doctrine? How are we
measuring the effectiveness of these efforts?
And finally, I hope today will provide insight into ongoing
U.S. Government efforts in countering ISIL's oil revenue and
the challenges we face on this front, as well as overall
challenges with CTF that our committees could be helpful in
providing solutions to when working with agencies.
So with that, I thank again our witnesses for being here.
And thank you, Mr. Chairman. I would yield back.
Mr. Poe. I thank the gentleman from Rhode Island.
Without objection, all members may have 5 days to submit
statements, questions, and extraneous material for the record
subject to the length limitation in the rules.
I will introduce the witnesses and give them time for
opening statements.
Mr. Daniel Glaser is the assistant secretary for terrorist
financing in the Treasury Department's Office of Terrorism and
Financial Intelligence. Mr. Andrew Keller is the deputy
assistant secretary for counterthreat finance and sanctions in
the State Department's Bureau of Economic and Business Affairs.
Ms. Theresa Whelan serves as the principal deputy assistant
secretary for defense for special operations, low intensity
conflict. She is a career member of the Senior Executive
Service and has worked for 27 years in the defense intelligence
area. Mr. William Woody is the chief of the Office of Law
Enforcement of the U.S. Fish and Wildlife Service.
Without objection, the witnesses' prepared statements will
be made part of the record.
I ask the witnesses please keep your remarks to no more
than 5 minutes. If you hear the gavel, that means you have got
to stop. So 5 minutes, and we will start with you, Mr. Glaser.
You may present your opening statement.
STATEMENT OF THE HONORABLE DANIEL GLASER, ASSISTANT SECRETARY
FOR TERRORIST FINANCING, U.S. DEPARTMENT OF THE TREASURY
Mr. Glaser. Chairman Poe, Chairman Wilson, Ranking Members
Keating and Langevin, thank you for inviting me to testify on
our efforts to combat terrorist financing. Disrupting the flow
of funds to terrorists and terrorist organizations is an
integral part of our broader strategy to combat terrorism.
Treasury is in a unique position to advance these efforts.
At its core, combating terrorist financing consists of two
interrelated objectives. First, cutting terrorists off from
their sources of revenue so they cannot make money; second,
denying them access to the international financial system so
they cannot use the money they have.
We accomplish these goals by improving financial
transparency globally so that terrorists cannot anonymously
raise, move, and use funds without detection, and then
identifying, disrupting, and dismantling the networks
supporting terrorist organizations.
We have a range of tools available to us to do so.
Financial measures, such as targeted sanctions and section 311
of the USA PATRIOT Act, law enforcement actions, and engagement
with foreign partners in the private sector. The combined
effect of these efforts is to create an international financial
system that is a hostile environment for terrorist financing.
I would like to briefly summarize our efforts to disrupt
the financial networks of three prominent terrorist
organizations: ISIL, al-Qaeda, and Hezbollah. I will speak
first to ISIL, the vast majority of whose revenue, estimated at
almost $1 billion in 2015, is derived internally from a
combination of oil sales and extortion of the population and
commercial activity under its control. The fact that these
sources of revenue are derived from ISIL's control of territory
has meant that military action has been an important component
of our response.
Under Operation Title Wave II, the coalition directly
targeted ISIL's entire oil supply chain and destroyed tens of
millions and possibly more than $100 million of ISIL's bulk
cash. Our response, however, has been broader than military
action. For example, the Government of Iraq decided in August
2015 to ban the distribution of government salaries into ISIL-
held areas, thereby eliminating ISIL's ability to tax these
substantial funds. Additionally, we have worked closely with
the Central Bank of Iraq to secure Iraq's financial system from
access by ISIL.
Turning now to al-Qaeda. Al-Qaeda remains a critical threat
to the United States, and we continue to aggressively target
the organization around the world. Al-Qaeda has historically
received funds from within Gulf countries, safe haven in
Afghanistan and Pakistan, and now is increasingly present in
Yemen and Syria. We have made significant progress targeting
al-Qaeda's financing in concert with our partners
internationally. However, the terrorist financing risk
emanating from the Gulf remains a priority.
Collectively, Gulf countries have pursued a wide range of
actions, including implementing targeted financial measures and
prosecuting terrorists for financing al-Qaeda, but considerable
work remains to be done to ensure that terrorist financiers are
unable to raise and move funds within Gulf countries. And we
are committed to working with our partners in the region to see
that this is done.
Our efforts have not been limited solely to the Gulf.
Treasury has continued to work toward disrupting and
dismantling terrorist financial networks in Afghanistan and
Pakistan as well. We have aggressively used Treasury tools to
limit al-Qaeda funding streams, designating over 140
individuals affiliated with al-Qaeda and other terrorist
organizations throughout Afghanistan and Pakistan.
It is important to remember, however, that before al-
Qaeda's attack on 9/11, Hezbollah had killed more Americans
than any other terrorist organization in history, and it
continues to plot terrorist attacks around the world. Hezbollah
receives the majority of its funding, hundreds of millions of
dollars, from Iran, as well as millions of dollars from a
global network of supporters and businesses.
Our approach has focused on targeting Hezbollah both within
Lebanon, constraining it financially through extensive
cooperation with Lebanese authorities and banks, and globally,
by targeting its procurement agents and financiers in Europe,
Latin America, East Asia, and the Middle East.
Identifying and sanctioning Hezbollah's Iranian sponsors
and enabling law enforcement and foreign partner actions, our
toolkit to impose targeted measures against Hezbollah was
recently expanded with the passage of Hizballah International
Financing Prevention Act of 2015, or HIFPA. HIFPA represents a
continuation of our policy to financially weaken Hezbollah.
Foremost in ensuring our implementation of HIFPA is our close
collaboration with the Central Bank of Lebanon and private
Lebanese financial institutions, which are adhering to this
legislation--which are adhering to this legislation to
Hezbollah's great consternation.
We intend to implement HIFPA robustly in a manner that is
consistent with preserving the strength and health of the
Lebanese financial system and that does not target any specific
community or sect. Our implementation intends to target one
group and one group only: Hezbollah, the organization, its
members, the entities it owns and controls.
While new terrorist financing challenges will surely
emerge, Treasury and its interagency partners will continue to
employ a range of measures to identify, disrupt, and dismantle
terrorist financial networks and work to identify and close
loopholes that terrorists and other illicit actors can use to
access the international financial system.
Thank you for the opportunity to testify today, and I would
be happy to answer any questions you might have.
[The prepared statement of Mr. Glaser follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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Mr. Poe. Thank you, Mr. Glaser.
Mr. Keller, you have 5 minutes.
STATEMENT OF MR. ANDREW KELLER, DEPUTY ASSISTANT SECRETARY FOR
COUNTER THREAT FINANCE AND SANCTIONS, BUREAU OF ECONOMIC AND
BUSINESS AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. Keller. Chairman Poe, Chairman Wilson, Ranking Member
Keating, Ranking Member Langevin, distinguished members of the
committees, thank you for the opportunity to speak here today
about the State Department's counterterrorism finance efforts.
Counterterrorism finance is a top priority for the
Department of State, and we have a wide variety of tools to
disrupt terrorist financial networks. It is a complex and
dynamic threat and one that requires the U.S. Government to
utilize the full range of its resources and authorities.
My office at the State Department helps coordinate policy
and liaise with our interagency partners, including the
Departments of Treasury and Defense, to achieve our
counterterrorism goals. We also work closely with the State
Department's counterterrorism bureau and the Department of
Treasury on counterterrorism finance sanctions to ensure that
our sanctions promote broader U.S. foreign policy interests.
The fight against ISIL is one of the top national security
priorities, and it is my principal counterterrorism focus. That
is where I will focus my remarks today.
As you highlighted, Chairman Poe, ISIL's revenues in 2014
and 2015 made it the richest terrorist group in the world, yet
as a result of U.S. and coalition efforts, ISIL's revenues are
on a downward trajectory, which has impacted its operations in
Iraq and Syria. I would like to provide two examples.
ISIL has cut salary payments to its fighters in Raqqa and
Mosul by 50 percent, leaving many ISIL fighters to defect. And
ISIL has increasingly resorted to arbitrary tax increases and
outright theft to make up the funding gap, further undermining
its claims to legitimacy.
While we are encouraged by these indications of financial
stress, we are fully aware that there is still much work to do
to further weaken ISIL on the financial front. Our most
effective method of disrupting ISIL's revenues to date has been
U.S. and coalition strikes against their oil and gas supply
chain and cash storage sites. These efforts have reduced ISIL's
oil revenues by up to one-third and destroyed tens and
potentially hundreds of millions of dollars' worth of cash.
Kinetic efforts have complemented diplomatic efforts aimed
at ISIL's finances. The U.S. Government helped establish and
now coleads an international working group dedicated to counter
ISIL finance, and we have negotiated multiple U.N. Security
Council resolutions to increase financial pressure on ISIL. In
particular, I would highlight Security Council Resolution 2199,
which imposes obligations on all countries to take steps to
combat ISIL financing, particularly in the areas of oil,
antiquities, and kidnapping for ransom.
The Department of State also conducts bilateral diplomatic
engagement with key countries in the Middle East and around the
world. Our Embassies consistently engage foreign government
officials on specific terrorism finance matters, promote
counterterrorism finance tools more generally, and encourage
implementation of domestic and international legal framework to
combat terrorism.
In an effort to address the systemic gaps in the
international system that terrorists and other criminals
exploit to raise and transfer funds, the State Department also
allocates significant funding to build the capacity of partner
countries to counter terrorist financing. The Bureau of
Counterterrorism is helping partner nations build their
capacity to investigate and prosecute illicit financial
transactions, while the State Department Bureau of
International Narcotics and Law Enforcement funds programs to
help countries identify how they can improve their antimoney
laundering and counterterrorism finance regulations.
With regard to trafficking in antiquities, the Department
of State has also led outreach to prominent antiquities
dealers, auction houses, and museum administrators. We have
offered up to $5 million worth of reward money for information
leading to the disruption of ISIL's trafficking in antiquities
through our Rewards for Justice program, and we have funded
government and civil society training program to help protect
antiquities in Iraq, Syria, and Libya.
Terrorism finance is a multifaceted and dynamic problem,
and ISIL has proven to be a resilient foe. As our efforts
targeting ISIL financing demonstrate, counterterrorism finance
is a top property priority for our State Department and our
interagency partners. We will continue to use every tool
available to maintain the growing effectiveness of our economic
campaign.
Thank you very much, and I look forward to your questions.
[The prepared statement of Mr. Keller follows:]
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Mr. Poe. Thank you, Mr. Keller.
Ms. Whelan.
STATEMENT OF MS. THERESA WHELAN, ACTING ASSISTANT SECRETARY FOR
SPECIAL OPERATIONS/LOW INTENSITY CONFLICT, U.S. DEPARTMENT OF
DEFENSE
Ms. Whelan. Chairman Wilson, Chairman Poe, Ranking Member
Langevin, Ranking Member Keating, and other distinguished
members of the subcommittees, I appreciate the opportunity to
share information with you about the Department of Defense's
counterthreat finance capability.
DOD's counter-threat finance, or CTF, supports both
military operations and U.S. Government partners, including our
law enforcement colleagues. DOD CTF identifies and exploits the
financial vulnerabilities of terrorists and transnational
criminals.
Over a decade ago, we built a small but effective CTF
capability within the Department through our counternarcotics
authorities and appropriations. Counternarcotics is an
appropriate source of authority and resources, given that the
drug trade remains the world's most lucrative criminal
enterprise.
Funds from the illegal drug trade are often associated with
other illicit criminal enterprises, insurgencies, and terrorist
organizations, including the Taliban in Afghanistan; the
Revolutionary Armed Forces of Colombia, the FARC; and Lebanese
Hezbollah.
Today, DOD has dedicated CTF teams at its combatant
commands, at the National Guard Bureau, and at intelligence
components. The CTF teams analyze financial intelligence,
integrate intelligence in operations, and coordinate and
execute CTF activities within the Department and with and in
support of U.S. interagency partners.
DOD is not the lead U.S. agency for conducting CTF, but DOD
employs unique analytic capabilities to assist other partners
in accomplishing the overall CTF mission. For example, DOD
analysts help support our Department of Treasury colleagues'
efforts to develop designations against individuals and
organizations engaged in illicit finance.
DOD CTF analysts help to identify vulnerabilities and to
create a comprehensive analysis for U.S. Government partners to
target an adversary's financial structure. CTF has proven to be
a cost-effective tool against threatening forces and
transnational criminal organizations, whether through law
enforcement actions, designations, sanctions, or, as in the
case of ISIL, through military actions against economic and
financial targets.
DOD CTF supports the Department of State and the Department
of Treasury, which are the coleads for the U.S. Government's
effort to disrupt ISIL's finances. Over the past several
months, ISIL has lost financial capability and revenue.
Coalition military operations informed by CTF have struck
nearly two dozen ISIL bulk cash storage sites and multiple
targets affiliated with ISIL's illicit oil industry. Recent
estimates indicate ISIL's oil production has decreased by up to
30 percent, and their ability to generate revenue has been
reduced by at least as much.
In order for DOD CTF to continue supporting these and
future successes on the battlefield and in law enforcement and
diplomacy, we must ensure that our CTF capability is well
grounded in our Department's policy planning doctrine and
training and education. For example, last October, the deputy
secretary of Defense recertified DOD's directive on
counterthreat finance policy through 2020. We also are working
to ensure that DOD plans and joint doctrine include CTF where
appropriate.
Congress' support for the DOD counterdrug authorities and
counterdrug funding underpins our CTF program success. Thanks
to congressional support, executive branch partnership, and our
talented DOD CTF personnel who work quietly behind the scenes,
DOD CTF continues to provide a cost-effective capability
against international terrorists and criminal adversaries that
threaten our Nation, its citizens, and our allies.
Thank you for this opportunity to share with you the
information about DOD's counterthreat finance program, and I
welcome your comments and questions.
[The prepared statement of Ms. Whelan follows:]
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Mr. Poe. Thank you, Ms. Whelan.
Mr. Woody.
STATEMENT OF MR. WILLIAM WOODY, CHIEF OF LAW ENFORCEMENT, U.S.
FISH AND WILDLIFE SERVICE
Mr. Woody. Good afternoon, Chairman Poe, Chairman Wilson,
Ranking Member Keating, Ranking Member Langevin, and members of
the subcommittees. I am William Woody. I am chief of law
enforcement for the U.S. Fish and Wildlife Service, and I
appreciate the opportunity to testify before you today.
Wildlife trafficking is a multibillion dollar illegal trade
fueled by demand and enabled by corruption, limited legal
authorities, and law enforcement capacity. Globally, organized
criminal groups have seized upon wildlife trafficking as a low
risk, high reward, and have made illegal wildlife trafficking a
crisis.
Our special agents and inspectors have specifically
documented transnational organizations involved in trafficking
of endangered species. We have documented Eastern European and
Russian organized crime in the caviar trade, Irish organized
crime in the rhino horn trade, Mexican drug organizations in
the totoaba trade, African gangs in the elephant ivory poaching
and smuggling, and Asian criminal groups in timber trafficking.
I would like to draw your attention now to the slides. Of
course, the slides won't come up.
Mr. Poe. Is that the slide you are looking for?
Mr. Woody. That is the slide I am looking for. Thank you,
sir.
Mr. Poe. Who are those guys?
Mr. Woody. This photo represents criminals arrested
nationwide for trafficking in rhino horn, elephant ivory,
totoaba, and narwhal tusks. A number of these individuals were
arrested in our investigation named Operation Crash, which is
focused on rhino horn trafficking. To date, Operation Crash has
resulted in 41 arrests, 30 convictions, and the wildlife and
their proceeds seized in this case have a street value in
excess of $75 million. In addition to crimes against wildlife,
the defendants have also been charged with money laundering,
tax evasion, falsifying documents, mail fraud, and bribery.
Photo 2, please. Jimmy and Felix Kha were convicted of a
number of crimes related to international trafficking of rhino
horn. During these investigations, our agents conducted a
financial analysis of Kha's business, the Win Lee Corporation.
Records revealed that large deposits were being made into bank
accounts from others who became targets of the investigation as
well. The documented foreign wire transfers confirmed foreign
nationals involved in rhino horn trafficking here in the U.S.
By the use of FinCEN records, our agents were able to
substantiate money laundering activity in a scheme involving
use of gold as currency and use of safety deposit boxes.
Photo 3, please. The Kha and their businesses were
sentenced to pay over $1 million in fines and penalties and
restitution, and in addition, forfeited over $2 million in
assets, including gold, cash, jewelry, and vehicles.
Photo 4, please. This photo shows two Chinese nationals who
had bribed a Customs official at the Dar es Salaam airport in
Tanzania. They were able to smuggle eight suitcases full of
ivory out of Tanzania destined for Hong Kong.
Photo 5, please. This photo shows the content of the
suitcases that were intercepted and seized in Switzerland while
in transit. Our regional U.S. Fish and Wildlife Service attache
was able to assist Tanzania authorities in their investigation
and collection of forensic examination of the evidence seized.
Photo 6. To illustrate the current illegal wildlife trade
in the U.S., this photo shows elephant ivory and narwhal tusks
forfeited by an antiques dealer who was sentenced in Federal
court in New York for the unlawful import and sale of ivory in
2016.
Photo 7. This photo is a sample of various elephant tusks,
ivory carvings that have been interdicted and seized at the
U.S. mail international sorting facility in Miami during the
course of an ongoing multiagency enforcement operation. This
operation alone has identified nearly 90 individuals and
businesses and involves over 250 smuggling incidents in which
elephant ivory was smuggled from the U.S. to China.
Next photo, please. This photo depicts over 200 swim
bladders that were seized in a California residence drying and
awaiting shipment. In 2014 and 2015, CBP, ICE, and Fish and
Wildlife Service agents seized over 530 totoaba swim bladders
that were smuggled into the U.S. Totoaba is an endangered fish
found only in the Gulf of California whose swim bladder is
highly prized as a delicacy. Eleven individuals smuggling
totoaba have been arrested. During an interview with one of
those smugglers, he stated that on one occasion, five totoaba
swim bladders were sold for $50,000 to a recipient in Hong
Kong.
While we have made great strides recently to address
wildlife trafficking, there is still much work to be done.
Wildlife trafficking persists at unsustainable levels and the
role of sophisticated, highly organized criminal networks may
present an opportunity to support and fund insurgent or
terrorist activities and makes even more an urgent threat to
the wildlife communities and global security.
I thank you for the opportunity today to present testimony,
and I appreciate the subcommittees' support in our efforts to
combat wildlife trafficking. And I would be pleased to answer
any questions you may have. Thank you.
[The prepared statement of Mr. Woody follows:]
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----------
Mr. Poe. I thank all of you for your testimony before the
subcommittees.
The members of the subcommittees will have votes shortly,
but we will take turns asking questions until the votes begin,
and then we will resume 15 minutes after the last vote.
I recognize myself for some questions.
I have been making a list of the things you have commented
on on how the bad guys get money, and let me go through those,
and then I want you to add those that I missed.
First of all, cash from rich donors, individual donors in
foreign countries, they just send cash to the terrorist groups;
the black market of goods, tobacco, for example, as the ranking
member mentioned; the trafficking of people, the sale of people
as sex slaves; ransom payments; bank robberies; oil on the
black market; antiquities; drug trafficking; ISIS tax people in
their areas if they are not loyal to ISIS, if they are
Christians or some other Muslim faith are taxed; this
disturbing news about wildlife trafficking; and then you have
state sponsor of terror, Iran who gives money to Hezbollah
wherever they are in the world.
Did I leave out any? You all are awful quiet. I mean, this
is disturbing news here. I am not going to be critical of what
we have done. I just want to try to see if we can move forward
and stop the money flow.
Mr. Woody, your testimony is compelling. My understanding
is if something doesn't happen pretty soon, elephants in Africa
and the rhinos are going to be extinct. Is that correct?
Mr. Woody. That would be correct, sir.
Mr. Poe. The elephant tusks end up eventually--most of
them, not all--end up in China. Is that correct?
Mr. Woody. That is correct, a good majority of them do.
Mr. Poe. And rhino horns are ground for their powder, and
they end up in Vietnam.
Mr. Woody. They end up in Vietnam, in China. They also use
them for libation cups for different carvings as well too.
Mr. Poe. All right. And what about foreign charities or
charities working in the United States as a foreign--or as a
charity, do they raise money for terrorist groups? Any of you
want to weigh in on that?
Mr. Glaser. Yes, charities raise money for terrorist
groups.
Mr. Poe. Like what charities? You have any names? You can
name names in----
Mr. Glaser. No, I would be happy to name names. I don't
have the names at the tip of my tongue, but as recently as
March 31 of this year, we designated two charities in Pakistan
and Afghanistan who are actively involved in terrorist
financing.
Mr. Poe. Okay. What about domestic charities in the United
States?
Mr. Glaser. There have been domestic charities that have
been designated and prosecuted for terrorist financing. Holy
Land Foundation is probably the largest example of that.
Mr. Poe. Okay. The Holy Land Foundation. All right. Let me
ask you this. How do we get all you all and the folks in law
enforcement working to share information, intelligence about
what is being done worldwide on financing terror groups?
Because my understanding is everybody is kind of doing their
own thing. I am not saying they are doing a bad job. They are
just doing their own thing without coordination with other
American agencies and then foreign governments.
Ms. Whelan, you want to weigh in on that?
Ms. Whelan. Yes, sir. I think--well, I know from the
Department of Defense's standpoint, we actually provide a great
deal of support to our partners at Treasury and in law
enforcement with our CTF teams and liaison officers. So we are
in sort of regular contact with them on a day-to-day basis
working together to share information.
We have a number of enterprises within the Washington area
in which we gather together to share information, situational
awareness. So I think while there is always room for
improvement, I think we have a pretty good basis right now of
information sharing, certainly we feel, between the Department
of Defense and the----
Mr. Poe. But are we doing enough? Are we doing enough? I am
not critical of what we are doing. I am just asking are we
doing enough? Because of all of these different ways that the
bad guys, outlaws raise money, how can we move forward to do
even a better job? You got some ideas?
Ms. Whelan. Well, I think we can just expand on what we are
currently doing, and we are getting better at it. Certainly,
there is resource constraints in terms of people and in terms
of intelligence collection assets, but we are definitely
improving our coordination. I think we have made a lot of
progress in just the last couple of years.
Mr. Poe. All right. I will have additional questions I will
submit for the record for you all to answer.
I will recognize the chairman of the subcommittee, Mr.
Wilson from South Carolina.
Mr. Wilson. Thank you, Judge Poe, and thank you for your
obvious passion about this issue and making a difference.
And Secretary Whelan, in your testimony, you discuss how
the Department of Defense is working to institutionalize
counterthreat finance capabilities across the force and within
the services. Can you provide some additional examples of how
you are doing this? And additionally, are you seeing demand for
counterthreat finance experts continue, and if so, how are you
managing that while other resources across the Department
continue to diminish? And finally, is the counterthreat finance
a high enough priority for commanders to pay attention and
dedicate resources to so that we can properly institutionalize
lessons learned?
Ms. Whelan. Thank you for the question, Mr. Chairman.
Yes, we actually, number one, the first part is we are
progressively institutionalizing counterthreat finance within
the Department, and it is--it has gained tremendous amount of
traction, particularly in the combatant commands. But a couple
of things, additional things we are doing beyond the DOD
directive that I mentioned in my testimony, we are including
CTF in our professional military education courses.
In fact, the National Guard Bureau has been very helpful to
us in developing courses for CTF, for personnel within the U.S.
military. Additionally, the services are now, as they manage
their personnel, they are looking for people with CTF skill
sets so that they can provide them. There is a demand signal
from the COCOMs, particularly CENTCOM, and it has a very
significant and robust CTF effort. I was just down in Tampa 2
weeks ago and met with that team.
So this has definitely got traction within the Department.
I don't see that it will lose traction. We have integrated it
into our program planning and budget process, and we are also
working with the COCOMs to integrate CTF into planning and
doctrine. So I believe that we do, obviously, have resource
constraints in terms of personnel available to devote to this,
and as I mentioned briefly, the intelligence assets that we
have to devote to this. But within the constraints that we are
currently working under, I think that everyone is putting
forward 100 percent effort to do more on the CTF front.
Mr. Wilson. Well, we certainly look forward to working with
you on that.
And, Chief Woody, you have really gotten the attention of
Judge Poe. He was extraordinarily intrigued by this particular
picture. If you can explain it one more time, and then how is
it that Fish and Wildlife is coordinating with law enforcement
efforts across the United States to stop the global financing?
Mr. Woody. Okay. You want me to explain the picture again?
Mr. Wilson. Yeah, one more time, please.
Mr. Woody. It is--those are totoaba fish bladders. Totoaba
is a fish that is found in Sea of Cortez, and they dry the
totoaba bladders out. Totoaba bladders sell, they make a soup
called maw, and totoaba bladders, they do sell for $10,000 and
higher on those.
So that is--in that particular picture there, ICE was
working a case in conjunction with Fish and Wildlife Service.
Really what that is, that is a drop house, and they were moving
the totoaba bladders up into the U.S. They were being dried in
that house and they were awaiting shipment to another--they
were making a shipment to Asia and move them there. So to
coordinate----
Mr. Wilson. And one inquiry. You said Sea of Cortez. Where
is that?
Mr. Woody. Or in Gulf of Mexico. Not the Gulf of Mexico.
Sea of Cortez, California, off the coast of Baja.
Mr. Wilson. Okay. But Colonel Cook is very familiar with
this, so he will let us know.
Mr. Woody. Okay. Very good.
Mr. Wilson. That is very serious.
Mr. Woody. And then the other thing, coordinating. We
have--with the executive order on wildlife trafficking, I have
to say in the last 3 years, all the people sitting at this
table, they all have people that sit on the wildlife task
force. And we have coordinated, through the United States and
throughout the world, on setting up a whole number of different
things that we have never really been at with wildlife before.
For example, with U.S. Fish and Wildlife Service, we are now
establishing attache positions throughout the world.
Currently, we have just put five people out in the regions
that tie into State Department's wildlife enforcement networks.
We put five attaches out. We are planning to put another four
out this year. They work very closely in the regions with the
governments in different regions working on wildlife
trafficking issues: Everything from the finance, to the
trafficking, to the lab work that they need done as well.
Mr. Wilson. Thank you very much.
Mr. Poe. I thank the gentleman from South Carolina.
The committees will be in recess until 15 minutes after the
last vote starts, and we will resume with the questions from
Mr. Keating from Massachusetts.
The subcommittees are in recess.
[Recess.]
Mr. Poe. The subcommittees will come to order.
The chair recognizes the ranking member of the Terrorism
Subcommittee, Mr. Bill Keating from Massachusetts, for his
questions.
Mr. Keating. Thank you, Mr. Chairman.
I am curious. There has been cooperation with the United
States and the EU in terms of the so-called SWIFT agreement,
which is Society for Worldwide Interbank Financial
Telecommunication. And I wanted to know, we have heard that
there is concern from the European front that privacy issues
might present problems with them cooperating on that. Could any
of you comment on that being compromised by their concerns and,
if there are going to be any alterations in that, whether that
is going to be something we should be concerned about?
Anyone?
Mr. Glaser. Thank you for the question, Congressman.
We have very close cooperation, as you stated, with the
Europeans on our SWIFT program----
Mr. Poe. Could you talk a little louder?
Mr. Glaser. I am sorry.
Mr. Poe. We are 5 miles away from you up here, so would you
talk louder? Thank you.
Mr. Glaser. I apologize, Congressman.
We do have very close cooperation with the Europeans on the
SWIFT program, and privacy issues are frequently brought up as
part of that conversation. But we have always managed to work
through those issues, and our cooperation with the Europeans
remains very strong on that program.
Mr. Keating. All right.
As the chairman and I were discussing during the break, we
are both struck by the fact that there is $80 billion annually
that comes directly from illicit tobacco trade. It is now equal
to cocaine trade in terms of illicit.
Is there anything being done to curb that illegal trade?
What is being done? Is that being used by any groups as well?
Mr. Glaser again.
Mr. Glaser. Well, I don't have anything specifically to say
about illicit tobacco trade. I am sure it is a source of
organized crime proceeds. I have not seen any indication that
it is a significant source of terrorist financing proceeds.
Certainly, our anti-money-laundering regulatory and criminal
regime would cover any proceeds of that----
Mr. Keating. Would you think the same for human
trafficking, as well? That is something you don't hear about,
but is there any way these groups are getting any kind of
funds, indirectly or directly, from human trafficking?
Mr. Glaser. Well, I do believe ISIL does derive proceeds
from human trafficking. I would say it is more in the order of
criminal networks that are involved in human trafficking that
operate in ISIL territory and that ISIL would tax or charge
fees for allowing them to participate in that activity.
Mr. Keating. There has been a lot of focus with ISIL on use
of cyber networks for propaganda and recruitment, but, also,
the virtual currency exchange platforms are something of a
concern, as well. Because it is public knowledge now that those
involved in the Paris attack used prepaid cards to rent hotel
rooms the night before the attack. We also have concerns with
Bitcoin and other financing mechanisms.
Is that something you see as a new challenge or a challenge
that you have already seen and are trying to address?
Mr. Glaser. Certainly, the use of virtual currency--
Bitcoin, prepaid cards, things like that--are emerging
challenges for us. We have revised our anti-money-laundering
regulations to require a certain amount of transparency with
respect to how those financial products operate.
The European Union has not done so yet. I have actually
traveled to Brussels to have detailed discussions with them on
this issue, and they are looking at a variety of reforms that
they could make, actually very, very similar to the types of
steps that we have taken.
It is true that there are examples of terrorist
organizations, including ISIL, using these types of products,
but I have to say, I don't think that it represents a systemic
threat at this time. I think there are other ways that these
organizations use to move funds that are far more significant
for them.
Mr. Keating. Yeah.
Mr. Keller, in particular, you know, Turkey was recently
taken off the Financial Action Task Force gray list, which is
used to describe jurisdictions with deficiencies when it comes
to counterterrorism financing, because it passed new terror
finance laws.
But there are experts out there telling us that Turkey's
implementation of its terror finance laws have been poor. Do
you agree with that assessment? And, if so, what is the State
Department doing to encourage Turkey to substantively go after
terror financing in that regard?
Mr. Keller. Thank you for the question, Congressman.
I would start off by saying we work closely with Turkey on
a variety of fronts. They are a member of our Counter-ISIL
Finance Working Group. Through recent high-level engagements,
we now have a border security group that is working on border
security and aviation.
We are pleased that they have come off the FATF gray list.
I think that is a positive step. I think it is fair to say that
they are not necessarily perfect; no country is. But we
continue to work with them to try to encourage them to
implement their laws and basically strengthen their efforts on
counterterrorism and anti-money-laundering.
I think it is also important to recognize that Turkey
itself has been victimized by ISIL terrorism. And so they have
a strong incentive and are active in trying to eliminate ISIL
facilitation networks in their country.
Mr. Keating. Yeah.
Mr. Keller. And I would invite any of the other panelists--
--
Mr. Keating. Well, I think--thank you, Mr. Keller. I think
my time is up, and I yield back.
Mr. Poe. I thank the gentleman from Massachusetts.
The chair recognizes the ranking member, Mr. Langevin from
Rhode Island, for his questions.
Mr. Langevin. Thank you, Mr. Chairman.
I want to thank all of our witnesses again for your
testimony here today.
So I would like to go back to the discussion we were having
earlier about lessons learned. So we have touched on how each
agency, specifically DOD, is institutionalizing counter-threat
financing. I am also interested in understanding how CTF is
being institutionalized across the whole of government through
defined roles, responsibilities, and organizational constructs,
allowing for more synchronized efforts at a more strategic
level.
So, in Afghanistan, CTF was successful. Were there lessons
learned here?
Mr. Glaser. Thank you for the question, Congressman.
So, just to speak about how the Treasury Department is
organized for a moment and then to speak more broadly about the
United States Government, the Treasury Department is actually
unique among all finance ministries in the world in that we
have one office, run by an under secretary at the Treasury
Department, that brings together all of the expertise, all the
resources, all the tools, all the authorities, all the contacts
that we have as a finance ministry and puts them for the
singular purpose of advancing U.S. national security, using
financial tools to advance U.S. national security.
We are the only finance ministry in the world with our own
all-source intelligence office. We have a sanctions
implementation office, we have my office, which is a policy
office, and we have a financial intelligence unit, FinCEN, all
under one roof. And it gives us a huge range of unique
expertise and unique capabilities that we have to put at the
disposal of the United States Government.
I do think that we are actually quite well-coordinated
across the United States Government. As I said in my opening
statement, there are two components of our efforts against
terrorist financing. The first component is the systemic
component, the regulatory component, making sure that the
international financial system and our financial system is
transparent and is well-regulated and that it does not provide
opportunities for terrorist groups, organized crime groups, or
drug trafficking groups or any other group--Iran, rogue
regimes--to gain access to the financial system.
That is largely an effort of coordination among the
Treasury Department, among regulators, among law enforcement.
And we have a number of groups that allow us to do that. Most
importantly--and, I should say, in partnership with the private
sector. And we have groups like the Bank Secrecy Act Advisory
Group for that. We had an anti-money-laundering task force,
along with the regulators. There are a number of groups that
allow us to coordinate on that.
The second part is the targeted part, the operational part
of identifying and undermining terrorist organizations. And,
again, I feel the government is well-coordinated on that. The
National Counterterrorism Center within the intelligence
community organizes intelligence analysis with respect to
terrorism broadly. My counterpart within Treasury, the head of
our intelligence office, Leslie Ireland, Assistant Secretary
for Intelligence Analysis, is also the intelligence community's
mission manager for illicit finance.
And then, on an organization-by-organization basis, whether
it is Hezbollah, whether it is ISIL, whether it is al-Qaeda,
there is any number of coordination processes that are run by
the NFC that allow us all to get together and make that sure
that we are well-coordinated on the issue.
Mr. Langevin. Okay. Thank you.
Mr. Keller?
Mr. Keller. I think I would simply add to that that,
whether I look to my right to Assistant Secretary Glaser or to
my left to Assistant Secretary Whelan, I think the counter-ISIL
effort is a very good example of the coordination that we do on
a daily basis.
Our teams work together basically nonstop. The goal of the
effort is to have a synchronized and sustained and aggressive
campaign to counter ISIL's finances, using basically all
available national resources, whether they are coming on the
kinetic side through DOD and CENTCOM, whether they are on the
diplomatic side with the State Department, and working very
closely with Treasury in diplomatic engagement multilaterally
and bilaterally, or a range of other tools, including the State
Department's capacity-building programs.
I would just note that those programs, I think, are some of
the most effective things that we can do overall, in that they
are trying to drive systemic change. So, for example, Ranking
Member Keating had mentioned cigarette smuggling earlier. These
programs aren't necessarily targeted at cigarette smuggling or
wildlife trafficking or whatnot. They are targeted overall at
building investigatory capacity, prosecutorial capacity,
judicial capacity. We work with customs agencies in other
countries to try to strengthen all of it. And it can have a
positive effect on our counterterrorism efforts, as well.
Mr. Langevin. Okay. Thank you.
My time has expired, so I will ask Secretary Whelan and Mr.
Woody to respond, if you would, in writing.
And, Secretary Whelan, for the record, I have a question
for you, which is: How is intel shared in a timely manner so
that all agencies are working within an updated intel picture?
So, if I had more time, I would get your answer, but my time
has expired.
I will yield back.
Mr. Poe. I thank the gentleman from Rhode Island.
Ms. Whelan, submit the answer to that question to both
committee chairs, the full committee chairs, and that will be
dispersed to everyone, including the gentleman from Rhode
Island.
The chair recognizes Colonel Cook--I started to say former
Marine, but there is no such thing as a former Marine--from
California.
Mr. Cook. Thank you, Judge. You are absolutely correct.
Mr. Keller, if I were President of the United States,
heaven forbid, but if I said to you, what do you think, one,
two, or three, are the top countries, state-sponsored aid,
financial aid, to ISIS or ISIL or Daesh, whatever you want to
call them, who would you name, one, two, or three? Just
briefly.
Mr. Keller. Congressman, I----
Mr. Cook. Real brief.
Mr. Keller. I think--I understand the concern about----
Mr. Cook. No, no. Just in your opinion, your opinion, I am
asking you as the President of the United States, one, two, or
three, who do you think they are?
Mr. Keller. It is a fair question. I don't really have an
answer----
Mr. Cook. Okay. Okay.
Mr. Keller [continuing]. Because we are not seeing----
Mr. Cook. Okay.
Then let's go back to what you were commenting on about
Turkey. And I have a different impression of Turkey because of
Erdogan. I have some issues with the--I understand the war
against the PKK, but I am also concerned about what they are
doing to the rest of the Kurds, which is one of our allies
against ISIS.
And it is almost like, are we overlooking that, that some
people--particularly with Erdogan leaning toward the Muslim
Brotherhood. Could you address that briefly? Real briefly. I am
running out of time.
Mr. Keller. I appreciate the question. I am going to have
to take that one back. As I mentioned, my focus in this area is
specifically on the counter-ISIL financial front. So I would
like to take your question back to our Turkey experts----
Mr. Cook. Okay.
Then let me move on to Hamas. Is Hamas helping them out
with financing, ISIS?
Mr. Keller. Not that I am aware of, sir.
Mr. Cook. So there is--okay.
Mr. Glaser, did you want to comment on that, about the
situation in Turkey, where, you know, a number of months ago,
there were--that they were, you know, helping out with the oil
and everything like that with ISIS. Any comments on that at all
in the intel sector?
Mr. Glaser. I think that Turkey has stepped up its efforts
on the counter-smuggling side. I do think Turkey, as was
discussed earlier, has work to do on its financial system in
terms of implementing its terrorist financing laws and making
sure that its financial system is not available to ISIL.
Mr. Cook. Yeah. You don't want to answer my question about
one, two, or three?
Mr. Glaser. I don't think----
Mr. Cook. And I am just a dumb Marine, so I have to ask
simple answers.
Mr. Glaser. No, I will answer your question directly.
I do not think ISIL receives state sponsorship--I do not
think ISIL receives state sponsorship from any country. I think
Iran is the number-one state-sponsor of terrorism in the world,
and they sponsor Hezbollah. I do not think----
Mr. Cook. No, I agree with you on that.
Mr. Glaser [continuing]. ISIL receives state sponsorship.
Mr. Cook. Okay. And you are not worried about states such
as Qatar or some of the Gulf states at all that are involved
with states that are sponsoring ISIS?
Mr. Glaser. I do not think Qatar is a state sponsor of
ISIS, no.
Mr. Cook. Okay. Thank you.
I yield back.
Mr. Poe. I thank the gentleman from California.
Without objection, the chair will recognize Ms. Gabbard
from Hawaii, who is a member of both full committees, unless
there is objection.
Without objection, you are recognized for 5 minutes.
Ms. Gabbard. Thank you very much, Mr. Chairman.
Mr. Keller and, both, Mr. Glaser, you have talked about how
Turkey has stepped up and that they are doing more. Can you
give us more specifics on what that is?
Because, like many of my colleagues, we have concerns about
the leadership in Turkey, what they have done directly and
indirectly, what they have not done, more importantly, as well
as the informal economy that we know ISIS is using to both
smuggle cash and other things to boost their revenue.
Mr. Glaser. Thank you for the question.
With respect to Turkey, in terms of the things that I think
that they are doing well, I think that Turkey has stepped up
its counter-smuggling efforts along the border. And I think
that they have done that significantly, and I think it has had
an impact.
Ms. Gabbard. Can you give some specifics about stepping up
from nothing to what, or from here to there, and some specifics
on the border, as well, especially the area of the border that
remains open?
Mr. Glaser. I am going to have to get back to you with----
Ms. Gabbard. Because it is just, I am trying to get some
context here, because Mr. Keller said Turkey is not perfect,
but perfect is a pretty high bar. So I am trying to figure
out----
Mr. Glaser. Right. Well, I think the areas where I would
say Turkey has a lot of work to do is in taking steps to deny
ISIL access to its financial system, to its financial
institutions. We have an active information exchange program
with the Turks. We are in close communication with them to make
sure that they understand what we understand with respect to
the access that terrorist organizations may have to certain
institutions, and I think it is important for Turkey to follow
up on that information.
Mr. Keller. I would agree with Assistant Secretary Glaser's
assessment.
I would also note specifically on the oil front, it is our
assessment that ISIL is not smuggling or selling oil to Turkey
or to individuals in Turkey, that the oil that is being
produced in ISIL-controlled territory is being sold and
consumed in ISIL-controlled territory.
Ms. Gabbard. And is that something that has changed as of
late, or were the reports that that was occurring completely
false?
Mr. Keller. I would say that is something that we have been
able to get a much clearer picture of as of--well, I don't want
to say ``as of late,'' but some of the most helpful information
and insightful information we were able to glean on this issue
came from the Abu Sayyaf raid last year. He was the emir for
oil and gas and antiquities who was killed by U.S. Special
Forces.
And they were able to recover a treasure trove of
information, including on ISIL's oil activities. And the
picture that we were able to develop from that information
helped us assess that the oil was being consumed within ISIL-
controlled territory and not being smuggled into Turkey.
Ms. Gabbard. Are there other operations or things happening
in this informal market or smuggling other than oil that you
are aware of?
Mr. Keller. I think it is possible that antiquities are
being smuggled out through basically the neighboring countries
to Iraq and Syria, Turkey being one of them.
Ms. Gabbard. Okay.
Thank you, Mr. Chairman.
Thank you.
Mr. Poe. The gentlelady yields back the time.
The chair recognizes the gentleman from Pennsylvania, Mr.
Perry, for 5 minutes and his questions.
Mr. Perry. Thank you, Mr. Chairman.
Secretary Glaser, what is the current policy of the
administration regarding U.S. dollars in Iran or--U.S. dollars
are hard currency, right? You would characterize that as hard
currency?
Mr. Glaser. Yes.
Mr. Perry. And what is the current policy regarding hard
currency, particularly U.S. dollars, in Iran?
Mr. Glaser. You cannot engage in dollar transactions with
Iran.
Mr. Perry. All right. So we are trying to ensure that they
don't get hard currency, particularly U.S. dollars, right?
I am sure you are aware that the Iranians' Guardian Council
just approved the military budget for 2016-2017, which
increased their military budget by 90 percent, including $1.7
billion transferred by the U.S. Treasury in January, which
allegedly has nothing to do with the prisoner swap that
happened--or, correction, a U.S. hostage swap that happened
literally at the same time.
I am just wondering, that transfer of $1.7 billion, what
currency was that? What was that currency that was transferred?
Mr. Glaser. I would have to go back and find the answer out
to that for you.
Mr. Perry. $1.7 billion. You have no idea?
Mr. Glaser. No, I do not know. I do not know what currency
was----
Mr. Perry. All right. All right. If you would, please, for
the record, I would like the answer to that.
You know, the fact that it went directly to the military,
to the Iranian military, at this point, looking at ISIS taking
the American equipment left in Iraq, which, you know, paid for
with American tax dollars, is it fair for me to answer my
constituents who say to me, haven't we now funded both sides of
this war, is it fair to say we have in some sense? I mean, it
is not a ``gotcha'' question, but, I mean, literally, haven't
we essentially funded both sides of this war?
Mr. Glaser. No, I don't think that would be a fair thing to
say. I----
Mr. Perry. Why not?
Mr. Glaser [continuing]. Think that we are doing everything
that we can to attack ISIL's finances. I think----
Mr. Perry. Wait, wait, wait. ISIS has American-paid-for
equipment, military equipment paid for by the American
taxpayers, right? So they are on one side of the operation.
And we just gave $1.7 billion to Iran in some currency; we
don't know right now what that is, at least you don't know. And
they sent it directly to the military, increased their military
spending this year by 90 percent. That is on the other side.
How is this not the American taxpayer being on both sides
of this fight?
Mr. Glaser. So ISIL got its hands on a lot of U.S. military
equipment----
Mr. Perry. Right.
Mr. Glaser [continuing]. When they won battles in an
ongoing war. I don't think it would be accurate to say that the
United States is providing ISIL military equipment. I think----
Mr. Perry. Well, it wasn't the Russians.
Mr. Glaser [continuing]. It would be accurate----
Mr. Perry. It wasn't the Chinese.
Mr. Glaser [continuing]. To say the United States is----
Mr. Perry. It is not the Mexicans.
Mr. Glaser [continuing]. Actively engaged in military
operations against ISIL.
Mr. Perry. Let me ask you, with this $1.7 billion payment
to Iran essentially at the very same time five U.S. hostages
were sent home and the perception from Americans that it was
payment in ransom and, as stated by Iran, that it was paid
for--they called them spies, not hostages--doesn't this
undermine our policy that we would hope other nations would
take to not pay ransoms? How do we have the moral authority to
request that they not pay ransom when it appears to anybody who
is looking that we have paid $1.7 billion to Iran for five
hostages?
Mr. Glaser. Yes, I understand the question. The fact of the
matter is that that was not a ransom paid for hostages. We have
been very consistent in our policy of no payment of ransom for
hostages. And this is something that we have worked very
closely with countries on around the world to ensure that there
is a global agreement, a global consensus that payment of
ransom for hostages is not an appropriate response to----
Mr. Perry. So if we pay and we get hostages at the same
time and we just say we didn't, then that equates to it not
being that? Essentially, suspend reality and just say, well, it
is two different things.
I mean, that is rhetorical. I apologize.
Mr. Keller, hawala. If you can tell us anything you know
about what we are doing about hawala being used for illicit
purposes, particularly to fund terrorism, what you are doing,
and if you have any ideas for how the U.S. Congress can help in
that effort.
Mr. Keller. Thank you, Congressman.
I think in the counter-ISIL context, for example, one of
the most important things that we have been trying to do all
along is make sure that ISIL is cut off from the financial
system, whether it is a formal financial system or informal
financial system.
I think through a lot of good work, including from our
Treasury Department, early on, they worked very closely with
the Iraqis to cut off banks that were in ISIL-controlled
territory from the international financial system. In addition,
we have been working with the Iraqis to cut off money exchange
houses and more informal operations that are engaged in hawala-
type activities that are in ISIL-controlled territory from
their ability to participate in----
Mr. Perry. But it is not just ISIL-related. Hawala is used
for various measures by numerous countries, not just ISIL and
not just Iraq. So is there anything that the Congress can do in
that regard that we haven't done already?
Mr. Keller. Well, sir, I think you are exactly right, that
it is not just ISIL-related. And I can tell you--if you indulge
me, I will tell you one other thing that the State Department
is doing, which I mentioned earlier, which are these capacity-
building programs that increase the capacity for other
countries on anti-money-laundering and counterterrorism finance
programs, whether it is in their judiciary or prosecutorial
services.
These are things that can be very helpful--and we also work
with the treasury departments around the world. These are
things that can be very helpful as far as helping them----
Mr. Perry. One final question in that vein, if the chairman
will indulge me. Do you have any way to quantify when you say
they can be helpful? So the American people are going to pay a
certain amount to aid these other countries. How do we quantify
the results? How do we quantify what we paid for and what we
got? Is there any way?
Mr. Keller. That is a great question, Congressman. I would
like to take that back and get you an answer in writing, and I
will discuss that with----
Mr. Perry. I look forward to your response.
Mr. Chairman, I yield.
Mr. Poe. The gentleman yields back his time.
Without objection, the document that Mr. Woody provided to
both committees will be made part of the record.
And, also, there may be more questions from other members
of the committee. As soon as you receive those questions, we
would want answers in 2 weeks.
And I would encourage members to file those questions by
tomorrow.
And I want to thank the Armed Services Committee and the
Subcommittee on Emerging Threats and Capabilities, Mr. Wilson
from South Carolina, and the ranking member, Mr. Langevin from
Rhode Island, for this joint subcommittee hearing.
And the subcommittees are adjourned.
[Whereupon, at 4:15 p.m., the subcommittees were
adjourned.]
A P P E N D I X
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Material Submitted for the Record
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Material submitted for the record by Mr. William Woody, Chief of Law
Enforcement, U.S. Fish and Wildlife Service
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