    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                           THE ENEMY IN OUR BACKYARD:

                        EXAMINING TERROR FUNDING STREAMS

                               FROM SOUTH AMERICA

    =======================================================================

                                    HEARING

                                   BEFORE THE

                           TASK FORCE TO INVESTIGATE

                              TERRORISM FINANCING

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  JUNE 8, 2016

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 114-92

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                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                        JEB HENSARLING, Texas, Chairman

    PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking
        Vice Chairman                        Member
    PETER T. KING, New York              CAROLYN B. MALONEY, New York
    EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
    FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
    SCOTT GARRETT, New Jersey            GREGORY W. MEEKS, New York
    RANDY NEUGEBAUER, Texas              MICHAEL E. CAPUANO, Massachusetts
    STEVAN PEARCE, New Mexico            RUBEN HINOJOSA, Texas
    BILL POSEY, Florida                  WM. LACY CLAY, Missouri
    MICHAEL G. FITZPATRICK,              STEPHEN F. LYNCH, Massachusetts
        Pennsylvania                     DAVID SCOTT, Georgia
    LYNN A. WESTMORELAND, Georgia        AL GREEN, Texas
    BLAINE LUETKEMEYER, Missouri         EMANUEL CLEAVER, Missouri
    BILL HUIZENGA, Michigan              GWEN MOORE, Wisconsin
    SEAN P. DUFFY, Wisconsin             KEITH ELLISON, Minnesota
    ROBERT HURT, Virginia                ED PERLMUTTER, Colorado
    STEVE STIVERS, Ohio                  JAMES A. HIMES, Connecticut
    STEPHEN LEE FINCHER, Tennessee       JOHN C. CARNEY, Jr., Delaware
    MARLIN A. STUTZMAN, Indiana          TERRI A. SEWELL, Alabama
    MICK MULVANEY, South Carolina        BILL FOSTER, Illinois
    RANDY HULTGREN, Illinois             DANIEL T. KILDEE, Michigan
    DENNIS A. ROSS, Florida              PATRICK MURPHY, Florida
    ROBERT PITTENGER, North Carolina     JOHN K. DELANEY, Maryland
    ANN WAGNER, Missouri                 KYRSTEN SINEMA, Arizona
    ANDY BARR, Kentucky                  JOYCE BEATTY, Ohio
    KEITH J. ROTHFUS, Pennsylvania       DENNY HECK, Washington
    LUKE MESSER, Indiana                 JUAN VARGAS, California
    DAVID SCHWEIKERT, Arizona
    FRANK GUINTA, New Hampshire
    SCOTT TIPTON, Colorado
    ROGER WILLIAMS, Texas
    BRUCE POLIQUIN, Maine
    MIA LOVE, Utah
    FRENCH HILL, Arkansas
    TOM EMMER, Minnesota

                         Shannon McGahn, Staff Director
                        James H. Clinger, Chief Counsel
                 Task Force to Investigate Terrorism Financing

                 MICHAEL G. FITZPATRICK, Pennsylvania, Chairman

    ROBERT PITTENGER, North Carolina,    STEPHEN F. LYNCH, Massachusetts,
        Vice Chairman                        Ranking Member
    PETER T. KING, New York              BRAD SHERMAN, California
    STEVE STIVERS, Ohio                  GREGORY W. MEEKS, New York
    DENNIS A. ROSS, Florida              AL GREEN, Texas
    ANN WAGNER, Missouri                 KEITH ELLISON, Minnesota
    ANDY BARR, Kentucky                  JAMES A. HIMES, Connecticut
    KEITH J. ROTHFUS, Pennsylvania       BILL FOSTER, Illinois
    DAVID SCHWEIKERT, Arizona            DANIEL T. KILDEE, Michigan
    ROGER WILLIAMS, Texas                KYRSTEN SINEMA, Arizona
    BRUCE POLIQUIN, Maine
    FRENCH HILL, Arkansas

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        June 8, 2016.................................................     1
    Appendix:
        June 8, 2016.................................................    29

                                   WITNESSES
                            Wednesday, June 8, 2016

    Braun, Michael A., Co-Founder and Managing Partner, SGI Global,
      LLC............................................................     7
    Federici, Mariano, President, Financial Intelligence Unit of
      Argentina......................................................     5
    Ottolenghi, Emanuele, Senior Fellow, Center on Sanctions and
      Illicit Finance, Foundation for Defense of Democracies.........     8

                                    APPENDIX

    Prepared statements:
        Braun, Michael A.............................................    30
        Federici, Mariano............................................    40
        Ottolenghi, Emanuele.........................................    46

                           THE ENEMY IN OUR BACKYARD:

                        EXAMINING TERROR FUNDING STREAMS

                              FROM SOUTH AMERICA

                                  ----------

                            Wednesday, June 8, 2016

                 U.S. House of Representatives,
                              Task Force to Investigate
                                   Terrorism Financing,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The task force met, pursuant to notice, at 9:03 a.m., in
    room 2128, Rayburn House Office Building, Hon. Michael
    Fitzpatrick [chairman of the task force] presiding.
        Members present: Representatives Fitzpatrick, Pittenger,
    Ross, Rothfus, Schweikert, Williams, Poliquin; Lynch, Ellison,
    Himes, Foster, and Sinema.
        Chairman Fitzpatrick. The Task Force to Investigate
    Terrorism Financing will come to order. The title of today's
    task force hearing is, ``The Enemy in Our Backyard: Examining
    Terror Funding Streams from South America.''
        Without objection, the Chair is authorized to declare a
    recess of the task force at any time.
        Also, without objection, members of the full Financial
    Services Committee who are not members of the task force may
    participate in today's hearing for the purpose of making an
    opening statement or questioning the witnesses.
        The Chair now recognizes himself for 2 minutes for an
    opening statement.
        First, thank you, everyone, for joining us for the eighth
    hearing of the House Financial Services Committee's Task Force
    to Investigate Terrorism Financing. I would like to again thank
    Chairman Hensarling and Ranking Member Waters, as well as my
    colleagues here, for their unwavering support as we continue to
    investigate the threat of terror finance.
        In previous task force hearings, Latin America,
    specifically the tri-border region, has repeatedly been cited
    as an area of concern regarding anti-money laundering and
    terror finance. As chairman of this task force, we have met
    with our regional partners, as well as U.S. personnel on the
    ground in South and Central America who are working to identify
    and choke off funding to terrorist and organized criminal
    groups. While in country, including in Argentina and Paraguay,
    we investigated and engaged the efforts put forth by our
    allies, the means being employed, the efforts being made by the
    United States in the region, and whether the United States
    lawmakers need to provide new tools or engage the
    Administration to more effectively use the authority and
    resources that they already have.
        Today, with this expert panel of witnesses before us, we
    aim to continue our investigation. This hearing will examine
    how South American criminal enterprises, including those
    designated by the State Department as foreign terrorist
    organizations, fund their operations, including through the
    illicit uses of the financial system.
        At this time, I would like to recognize the task force's
    ranking member, my colleague Mr. Lynch from Massachusetts, for
    an opening statement.
        Mr. Lynch. Thank you, Mr. Chairman.
        I want to thank our witnesses for your willingness to help
    this task force with its work.
        I also want to thank Vice Chairman Pittenger, whom I
    understand was renominated in the Republican primary yesterday.
    So congratulations on that.
        I am pleased we are holding today's hearing so we can
    further examine terrorist financing streams from South America.
    Today, I would like to put particular focus on the revelations
    contained in the leaked financial documents known as the Panama
    Papers. This past April, millions of leaked documents from the
    Panama-based law firm Mossack Fonseca exposed how some of the
    world's most powerful people used a web of complex financial
    transactions, including offshore bank accounts and shell
    companies, to hide their wealth.
        According to the International Consortium of Investigative
    Journalists, ICIJ, more than 214,000 offshore entities appear
    in the leak connected to people in more than 200 countries and
    territories, including alleged drug traffickers from South
    America. In addition, the files include at least 33 people and
    companies blacklisted by the U.S. Government because of
    evidence that they have been involved in wrongdoing, such as
    doing business with Mexican drug lords or terrorist
    organizations like Hezbollah, and these revelations highlight
    the need to combat secrecy and corruption in the global
    financial system.
        In response, we on this committee have been working, along
    with some of our colleagues on the larger committee and on this
    task force, on legislation to combat corruption by foreign
    governments. Our legislation would authorize the Department of
    the Treasury to pay rewards that help identify and recover
    stolen assets linked to foreign government corruption. This is
    necessary because no existing reward program provides monetary
    incentives for identifying and recovering stolen assets linked
    solely to foreign government corruption. Individuals who come
    forward to expose this type of corruption do so at great risk
    to themselves and their families, and monetary rewards can
    provide a necessary incentive to expose corruption and provide
    financial means to provide for their well-being after the fact.
        Another common theme throughout this task force that is
    reinforced through the release of the Panama Papers is the need
    to collect information on the true ownership of these entities.
    Earlier this week, The New York Times did a terrific article
    written by Eric Lipton and Julie Creswell. I want to compliment
    them. It is a thoroughly researched and well-written article
    that demonstrates how U.S. citizens used the Mossack Fonseca
    Law Firm to create shell companies to hide their wealth
    overseas. According to that article, Mossack Fonseca had at
    least 2,400 U.S.-based clients over the past decade and set up
    at least 2,800 companies on their behalf in jurisdictions that
    specialize in helping clients hide their assets.
        Shell companies are particularly susceptible to
    exploitation by terrorists as they are often used to mask the
    identities of their beneficial owners. It is critical that the
    United States collect information on beneficial ownership in
    order to prevent criminals and terrorists from exploiting
    anonymity to conceal their illicit activity.
        Now, these constructs are principally used to avoid paying
    U.S. taxes. However, they also facilitate terrorist financing.
    I am proud to be an original cosponsor of the bipartisan
    Incorporation Transparency and Law Enforcement Assistance Act
    of 2016 sponsored by my colleague, Mrs. Maloney of New York.
    Anonymous corporations significantly hinder investigations into
    terrorist financing. By strengthening beneficial ownership
    disclosure requirements, this legislation will tighten a weak
    link in our current efforts to follow the money that is funding
    terrorist organizations around the world.
        This is an urgent national security issue, and I look
    forward to working with my colleagues on this task force and
    the House Financial Services Committee to close this loophole.
    I am pleased to hear from our witnesses today so we can better
    understand terrorist funding streams in South America,
    including the revelations from the release of the Panama
    Papers.
        I yield back the balance of my time. Thank you, Mr.
    Chairman.
        Chairman Fitzpatrick. Thank you.
        And I now recognize the vice chairman of the task force,
    Mr. Pittenger of North Carolina.
        Mr. Pittenger. Thank you, Chairman Fitzpatrick and Ranking
    Member Lynch, and the distinguished panel before us today.
        Mr. Chairman, I am particularly grateful for today's
    hearing, which will focus on the illicit finance operations in
    South America. As you know, a delegation from this task force
    recently visited Colombia, Panama, Paraguay, and Argentina to
    meet with government officials and view firsthand the problems
    that they face in South America.
        When I was in Argentina, I had the pleasure of meeting with
    one of the distinguished panelists, Mr. Mariano Federici. Mr.
    Federici is an outstanding public servant, a representative of
    the Argentinian people. Mr. Federici's role with Argentina's
    government gives me great hope and certainty of Argentina's
    serious commitment about combating illicit finance operations.
    Furthermore, I would like to highlight that Mr. Federici will
    be participating with us in a parliamentary security conference
    that I will be hosting in Vienna in 2 weeks where he will be
    able to share his work before parliamentarians from over 25
    countries.
        Thank you for your continued partnership with us on these
    issues and your willingness to participate in the forum.
        Back in October, I cohosted a similar security forum here
    in Washington with another panelist, Mr. Braun, who also
    participated.
        Mr. Braun, it is great to see you back here again in
    Washington. Thank you for your continued work and dedication to
    these issues.
        Mr. Chairman, thank you, and I yield back.
        Chairman Fitzpatrick. We now welcome our witnesses.
        Mr. Mariano Federici has been the president of the
    Financial Intelligence Unit of Argentina since January 2016. In
    this capacity, Mr. Federici directs the country's anti-money
    laundering and counterterrorist financing efforts. Previously,
    Mr. Federici was a country lawyer, regional adviser, and senior
    counsel to the International Monetary Fund in Latin America. He
    also worked as an associate for an Argentina law firm, advising
    financial institutions and companies in a wide spectrum of
    transactions and matters involving regulatory and statutory
    interpretation.
        At the start of his career, Mr. Federici worked as a clerk
    for the national criminal courts of the City of Buenos Aires.
    He was born in Buenos Aires, holds a juris doctor from the
    Catholic University of Argentina, and a master of laws in law
    and finance from the University of Virginia School of Law.
        Mr. Michael Braun is a cofounder and one of two managing
    partners at SGI Global. Mr. Braun has 33 years of extensive
    experience in Federal, State, and local law enforcement. He
    spent 24 of these years at the U.S. Drug Enforcement
    Administration where he developed the DEA's successful
    counternarcoterrorism programs, including the formative
    development of the agency's Foreign-Deployed Advisory and
    Support Teams, the FAST teams, and other programs addressing
    narcoterrorism. He is also responsible for the agency's
    extensive expansion in Afghanistan from 2004 to 2008.
        Mr. Braun retired from the DEA as Assistant Administrator
    and Chief of Operations in 2008. And when we were down in
    Central America, we ran into some former colleagues who called
    Mr. Braun an icon in law enforcement. They talked about how his
    influence and his leadership and vision continue to define the
    DEA even a decade after his retirement.
        So, sir, we thank you for your service.
        Dr. Emanuele Ottolenghi is a senior fellow at the Center on
    Sanctions and Illicit Finance at the Foundation For Defense of
    Democracies (FDD). Dr. Ottolenghi's research focuses primarily
    on Iran's Islamic Revolutionary Guard Corps, the European
    Union's Middle East policymaking, transatlantic relations, and
    the Arab-Israeli conflict, as well as Israel's domestic
    politics.
        Prior to joining the FDD, Dr. Ottolenghi headed the
    Transatlantic Institute in Brussels and taught Israel studies
    at Saint Anthony's College at Oxford University. He obtained
    his Ph.D. in political theory at the Hebrew University of
    Jerusalem and an undergraduate degree in political science at
    the University of Bologna.
        The witnesses will now be recognized for 5 minutes to give
    an oral presentation of their testimony. And without objection,
    the witnesses' written statements will be made a part of the
    record.
        Once the witnesses have finished presenting their
    testimony, each member of the task force will have 5 minutes
    within which to ask questions.
        For the witnesses, on your table there are three lights:
    green; yellow; and red. Yellow means you have 1 minute
    remaining. Red means your time is up.
        With that, Mr. Federici, you are now recognized for 5
    minutes.

          STATEMENT OF MARIANO FEDERICI, PRESIDENT, FINANCIAL
                     INTELLIGENCE UNIT OF ARGENTINA

        Mr. Federici. Thank you very much, Mr. Chairman, and
    members of the Task Force to Investigate Terrorism Financing.
        I would like to start by sharing with you that in September
    2001, I was a young lawyer working for Sullivan & Cromwell in
    New York. I was at the firm's Wall Street office when the
    attacks took place and saw the collapse of the second tower
    with my own eyes. I still vividly remember that moment, the
    frustration and the anger at the terrorists, but also the
    respect and admiration towards the people of this great Nation
    and how fast they came together to bring it back on its feet.
        It is therefore a true and special honor for me to be
    sitting at this hearing today with Representatives of the
    people, only a few months away from the 15th anniversary of
    that tragic day, to discuss how we can suppress terrorism and
    prevent such attacks from happening again. I would like to talk
    about what we found in Argentina upon taking office 4 months
    ago and our vision on how to improve things.
        We encountered a challenging situation in the area of
    financial integrity left by the people who preceded us in the
    Argentine Government. It is clear to us by now that there was a
    complete lack of political will to fight money laundering and
    terrorist financing in Argentina during the last 12 years.
    There was a lack of strategic planning which prevented the
    government from prioritizing its efforts and making an
    efficient use of public resources. This in turn led to a
    serious lack of effectiveness with a related impact on risk
    levels.
        Throughout the last 10 years, the threats to financial
    integrity increased significantly as criminals exploited the
    advantages of a sophisticated financial system with the
    vulnerabilities of an uncommitted government.
        One of the main structural vulnerabilities exploited by
    criminals in recent years was corruption. Corruption under the
    previous administration was the rule, not the exception, and
    corrupt officials were rewarded rather than punished.
        At our Financial Intelligence Unit in particular, the
    situation was also critical. The strategy was to have no
    strategy, which allowed for discretionary use of anti-money
    laundering and counterterrorist financing tools.
        We are now working at full speed in repairing the damages.
    There is a clear and strong political will to fight organized
    crime and terrorism. Our objective is to protect the financial
    system and the broader economy from the threats of money
    laundering and terrorist financing, thereby strengthening
    financial sector integrity and contributing to safety and
    security.
        Our main focus will be placed on effectiveness, as we
    believe Argentina has the necessary legal and institutional
    instruments in place to begin producing results. To achieve
    this, it is important to strengthen the role of operational
    agencies such as ours, and the government of President Macri
    has committed to a stronger Financial Intelligence Unit.
        In particular, we will be very focused on assessing
    terrorist financing risks, which we believe have been
    irresponsibly underestimated by the previous administration.
    Our plan is to begin using our CFT regime to pursue
    international terrorism cases representing a present threat to
    our system and to global peace and security.
        We are also embarking on a wide regulatory reform process
    that will allow reporting entities to adopt a risk-based
    approach to AML/CFT compliance. The reform will also contribute
    to removing existing barriers to financial inclusion and
    generate incentives to reduce the circulation of cash and the
    use of informal mechanisms.
        Over the last 5 years, the FIU issued more than 70
    regulations which imposed significant obstacles to operating in
    the Argentine financial system and economy and contributed
    little to mitigating the real risks of money laundering and
    terrorist financing. We are actually of the view that many of
    these regulations prevented people at the lowest segments of
    our society from accessing financial markets and expelled
    others to the informal economy.
        We are also planning to adopt a risk-based approach to AML/
    CFT supervision, and this is something we hope to be able to do
    with the support of the U.S. Government. This will rationalize
    the use of our limited resources and allow us to place focus on
    what is really relevant to protect the integrity of our
    financial system and broader economy.
        On the intelligence side, we are working to regain
    confidence in our domestic and foreign partners. We are
    updating our MOUs with financial intelligence units of
    strategic importance to us. We are in the process of updating
    our MOU with FinCEN following an unauthorized leak of
    information during the previous administration. We are also
    strengthening our strategic analysis capabilities.
        As we move forward in building a stronger AML/CFT framework
    in Argentina, the support from our international community, and
    particularly our main partners, such as the United States,
    becomes critical. I would like to take this opportunity to
    express my deepest appreciation to FinCEN's leadership for the
    trust deposited in us at the earliest of stages and the
    opportunity to work fast towards a reestablishment of our MOU.
    We embrace this partnership and will live up to our commitments
    to protect the information and use it only for authorized
    purposes and to our mutual benefit as nations.
        Finally, I would like to close by saying that we are not
    just interested in adhering to international standards. We are
    interested in becoming leaders in financial integrity matters
    in our region. This is because we truly believe in the value of
    financial integrity to the soundness of our financial systems
    and its significance to economic stability, safety, and
    security, which are necessary preconditions to economic growth
    and development.
        Thank you very much.
        [The prepared statement of Mr. Federici can be found on
    page 40 of the appendix.]
        Chairman Fitzpatrick. Thank you.
        Mr. Braun, you are now recognized for 5 minutes.

    STATEMENT OF MICHAEL A. BRAUN, CO-FOUNDER AND MANAGING PARTNER,
                            SGI GLOBAL, LLC

        Mr. Braun. Thank you. Good morning, Chairman Fitzpatrick,
    Ranking Member Lynch, Vice Chair Pittenger, and other
    distinguished members of the committee and the task force. I
    deeply appreciate the opportunity to appear before you today
    and to make a few comments and to help you in any way that I
    can as you move forward.
        So our success in prosecuting the global war on terror has
    successfully degraded two very important funding streams to
    terrorist organizations--those from very powerful private
    donors, as well as state sponsors. Consequently, terror
    organizations, many of them, have had to resort to other means,
    alternate means, to keep their movements alive and keep their
    operations flowing. And that is what we are really here to talk
    about today. That is why we are here today.
        I will use Hezbollah as the best example of what we are up
    against today and make three important points in that process.
        First, Hezbollah is not the same organization that they
    were 15 years ago, just 15 short years ago. In the early 2000s,
    they began moving small quantities of cocaine from the tri-
    border area of Latin America into fledgling markets at that
    time in Europe and the Middle East.
        Flash forward to 15 years later, they are now moving
    multitons of cocaine into Europe in an attempt to satisfy the
    ever-increasing demand for cocaine in Europe, in the Middle
    East, and other emerging markets. They possess a demonstrated
    ability to move, again, hundreds of tons of cocaine over that
    15-year period and move massive amounts of currency, hundreds
    of millions, perhaps billions of dollars in currency around the
    world in the most sophisticated money laundering scheme or
    schemes that we have ever witnessed. They have metastasized
    into a hydra with international connections that the likes of
    ISIL and groups like Al Qaeda could only hope to have. Those
    connections are with transnational organized crime groups, with
    terror and insurgent groups throughout the world.
        We need to build organized crime and investigative judicial
    capacity to deal with the threats that we are up against. We
    are here to talk about illicit finance today. We need to
    develop very close partnerships and even closer partnerships
    with our partner nations around the world to help them build
    judicial capacity and organized crime and terror investigative
    capacity in their countries.
        But we also need to do some work at home, because I can
    assure you that the vast majority of Federal agents in our
    country, I don't care what agency that they work for, are not
    experts in dealing with or investigating necessarily with what
    we are up against today.
        So we talk about illicit finance and the importance of
    going after the money, following the money, but in our
    obsession with following the money over the past many years,
    for some unknown reason, we seem to have missed out on one
    opportunity after another. We seem to have forgotten about the
    importance of disrupting the supply chain, about interdicting
    drugs and other contraband.
        It is important for this committee and task force to
    understand--and the American people to understand, quite
    honestly--that groups like Hezbollah, the FARC, transnational
    criminal organizations, use drugs and other contraband as an
    alternative form of currency. It is the oldest form of
    alternative currency that they utilize and it is very precious
    to each and every one of them. They trade drugs for vehicles of
    all sorts, aircraft, boats, limousines. They trade currency for
    smuggling operations, to pay for smuggling operations for
    counterfeit documents. The list goes on and on. And if we don't
    start focusing as much energy at disrupting the supply chain as
    we do at attacking illicit finance, we will never get to where
    we need to be.
        In closing, I am a career law enforcement professional, Mr.
    Chairman, as you said. I am not here to tell this committee or
    to proclaim to this committee, or anyone else for that matter,
    that a judicial approach to attacking terrorism is a panacea.
    It is certainly not. But I will tell you what it can deliver
    that no other tool in our counterterrorism toolbox can deliver.
        When real justice is meted out in a Federal courthouse
    somewhere in the United States or some other competent
    jurisdiction around the world, where we have brought a terror
    leader to justice, that message that we can deliver by
    identifying that terrorist for who he or she really is: an
    organized crime thug of international proportions that preys on
    the very weakest in our global society and someone who is not a
    freedom fighter, as so many have been indoctrinated or charmed
    into believing they are.
        Thank you for allowing me to make my comments, for being
    here today. I look forward to meeting and working with all of
    you and your staffs to help in any way I can.
        [The prepared statement of Mr. Braun can be found on page
    30 of the appendix.]
        Chairman Fitzpatrick. Thank you.
        Dr. Ottolenghi, you are now recognized for 5 minutes.

      STATEMENT OF EMANUELE OTTOLENGHI, SENIOR FELLOW, CENTER ON
       SANCTIONS AND ILLICIT FINANCE, FOUNDATION FOR DEFENSE OF
                              DEMOCRACIES

        Mr. Ottolenghi. Chairman Fitzpatrick, Vice Chairman
    Pittenger, Ranking Member Lynch, and members of the task force,
    on behalf of the Foundation for Defense of Democracies, I thank
    you for the opportunity to testify.
        In Latin America, the combination of weak governments,
    porous borders, widespread corruption in public institutions,
    and the lack of adequate legislative tools to combat terror
    finance creates an ideal environment for transnational
    organized crime.
        Drug trafficking, trade-based money laundering, and terror
    financing can no longer be treated as distinct phenomena.
    Terror organizations help drug traffickers move merchandise to
    their markets. They then launder revenues through sales of
    consumer goods, profits that fund terrorist activities.
        In Latin America, Hezbollah plays a central role in this
    new landscape thanks to a vast network of support. Hezbollah
    generates loyalty among local Shia communities by managing
    their religious and educational structures. It then leverages
    loyalty to solicit funds and use business connections to its
    own advantage, including, critically, to facilitate its
    interactions with organized crime. My written testimony
    explains how the group's religious, charitable, educational
    institutions, its clerics, its supporters' licit commercial
    activities, and its illicit finance network all overlap.
        The tri-border area of Argentina, Brazil, and Paraguay, or
    TBA, illustrates this overlap. It also shows how the absence of
    proper local legislative tools to combat terror finance has
    limited the impact of U.S. measures to counter it. The Galeria
    Page in Paraguay's Ciudad Del Este, which Treasury designated
    in 2006, merely changed its name to Galeria Uniamerica. Its
    owner, Hamzi Ahmad Barakat, continued his activities until his
    arrest in Brazil in 2013, not for terror finance, but for
    fraud. And Mohsen Bilal Wehbe, a Hezbollah cleric that Treasury
    designated in 2010, continues to operate openly in Brazil.
        Porous borders compound these problems. Trade-based money
    laundering in the TBA, a key component of the narcotraffic-
    terrorism nexus, relies on commercial goods not produced in
    Paraguay. Imported goods are re-exported through the TBA, a
    porous border at the southern end of a long, lawless frontier
    infamous for drugs and weapons trafficking.
        A recently leaked investigation into tax fraud in Ciudad
    Del Este, which local authorities have dubbed a mega-evasion
    due to its size, brings all this together. Local accountants
    issued false invoices on behalf of 285 companies registered in
    the TBA for an estimated $270 million in tax evasion.
        Authorities are focusing on a cluster of companies with
    alleged links to Hezbollah through two shareholders, Ja'afar
    Balhas and Walid Amine Sweid. Paraguay's media have documented
    their close connections to politicians and custom officials,
    suggesting these links ensure lax custom inspections. Import-
    export data for their companies show merchandise deliveries
    from China arrived by air with cargo flights operated by
    Emirates via Dakar, Senegal, and the Miami-based Centurion Air
    Cargo. Both airlines fly regularly to Ciudad Del Este.
        For example, a bill of lading that appears in my written
    testimony details delivery by air to the TBA business Ponto Com
    Megastore from Spaltec Electronics in Hong Kong. Sweid owns
    both companies, as well as Global Logistic Solutions, the Hong
    Kong-registered shipping company. In short, Sweid controlled
    every company involved in the transaction. Given the false
    invoicing, it is highly plausible that this is a trade-based
    money laundering scheme involving false shipments. This pattern
    is common to other companies under investigation, some of which
    use LLCs incorporated in Miami, rather than Hong Kong, as their
    transit point for merchandise and paperwork.
        Successive U.S. Administrations have over the years
    repeatedly designated Hezbollah financiers and financial
    networks. The TBA and other border areas in Latin America offer
    a target-rich environment for new designations.
        Additional measures should be adopted to diminish
    Hezbollah's ability to exploit structural weaknesses prevalent
    in the region that have made it possible for it to interact
    with local criminal syndicates. There should be more stringent
    controls and better monitoring of merchandise travelling to the
    TBA. Problematic shipments by air reach the TBA from two points
    of departure, Miami International Airport and Dubai via Dakar.
    The United States should institute stricter controls over
    shipments from Miami and perform more stringent and timely due
    diligence on companies shipping to the Paraguayan city.
        The same can be said over cargo arriving to the TBA from
    Dubai via Dakar. Washington should ask and work with
    authorities in both countries to exercise greater scrutiny over
    merchandise and its recipients before planes leave. Stricter
    controls could reduce illicit shipments and raise the costs for
    Hezbollah middlemen in the TBA.
        These are just some of my recommendations. I thank you for
    the opportunity to testify, and I look forward to your
    questions.
        [The prepared statement of Dr. Ottolenghi can be found on
    page 46 of the appendix.]
        Chairman Fitzpatrick. We thank the witnesses for their
    opening statements, and the Chair now recognizes himself for 5
    minutes for questions.
        Mr. Federici, 4 months is a relatively short period of
    time, but so much has happened, and we want to congratulate you
    on getting Argentina's FIU back online. I want to thank you for
    the information sharing which is now occurring between your
    country, your intelligence unit, and our Department of the
    Treasury and FinCEN. It is so important to Argentina and to the
    United States and to the region and the security.
        We are aware that a number of countries in Latin America
    don't necessarily perceive the risk of terrorism financing as a
    relevant risk in the context of their domestic relations. In
    your opinion, are these perceptions duly justified? What can
    you tell us about the perceptions of terror finance in the
    domestic context of individual nations?
        Mr. Federici. Thank you very much for your question, Mr.
    Chairman. Indeed, having worked as a regional adviser for Latin
    America and the Caribbean at the IMF for the past 10 years, I
    have had the chance to listen to discussions related to
    perceptions of risk of terrorist financing in the context of
    the GAFILAT, which is the FATF group for Latin America, and the
    CFATF, which is the same type of regional body for the
    Caribbean. And many countries in the region, unfortunately,
    express publicly their perception that the terrorist financing
    risk is not a risk pertinent to the region. It is a problem of
    the United States, it is a problem of Europe, and other parts
    of the world.
        I have always emphasized from the IMF, and I am doing it so
    now with much more strength from my public position in
    Argentina, that these type of opinions lightly thrown in
    international bodies like the ones I referred to are, to say
    the least, irresponsible if they are done without having
    previously conducted a thorough and professional terrorist
    financing risk assessment in the jurisdiction.
        There are very few countries that have completed the
    conduct of money laundering and terrorist financing risk
    assessment in their jurisdictions as the FATF Recommendation 1
    currently requires. However, many of these countries publicly
    express the opinion that terrorist financing is not a problem
    in their country.
        So I think this is related also with a confusion on what
    the risk of terrorist financing is. The fact that there may not
    be terrorist elements operating in the jurisdiction does not
    mean that you are not exposed to the risk of terrorist
    financing. The mere fact that you have a financial system
    interconnected with the rest of the world, with the global
    financial system, in and of itself exposes you to the risk of
    terrorist financing and this is a subtleness that many public
    officials in our region do not yet fully understand.
        That is why it is very important to continue to raise
    awareness on the risk of terrorist financing, and that is why
    it is very important to continue to have the United States
    support in raising awareness on these risks in the region.
        Chairman Fitzpatrick. Thank you.
        Mr. Braun, in your written statement, you mention that
    Hezbollah is hiding behind criminality in Latin America and
    other locations. Can you further elaborate or explain what you
    mean by that?
        Mr. Braun. Thank you for the question, Mr. Chairman.
        Listen, here is the way I look at the situation.
    Organizations like Hezbollah--ISIL is no different, Hamas, you
    name them--their operatives, especially working in clandestine
    ways abroad, they don't carry ID cards, they don't wear
    uniforms, they pound their chest and proclaim to be terrorists
    for some important reasons. They don't want to draw attention
    by the United States, and they don't want to draw the attention
    of many of our partner nations around the world that we work
    very, very closely with.
        So they have been dispatched. How do they operate really
    with impunity at the same time accomplishing so many of
    Hezbollah's kind of strategic global goals? And I think what it
    really comes down to in a large way more and more these days is
    their involvement in the global drug trade. They are involved
    in criminality, but at the same time they can reconnoiter at
    will. They can photograph and look at what may be very
    strategically important targets for some future events. I
    believe firmly that Hezbollah feels that prolonged asymmetric
    conflict in the Western Hemisphere and other places in the
    world, it is going to be playing out some days.
        So they have all the time in the world to engage in
    international drug trafficking and at the same time establish
    the rat lines that they need to establish to support that
    asymmetric conflict down the road. As I said, they can
    reconnoiter at will. They can make all of the nefarious
    contacts that they need to make with other terrorist
    organizations' insurgent groups, as well as transnational
    criminal organizations around the world. And in the process,
    they can generate enormous amounts of contraband revenue that
    ultimately go back to the cause and help the team.
        Chairman Fitzpatrick. Thank you.
        I now recognize the ranking member of the task force, Mr.
    Lynch, for 5 minutes.
        Mr. Lynch. Thank you, Mr. Chairman.
        Mr. Braun, let me stay right on that issue. We had a
    significant success operating against the Lebanese Canadian
    Bank. I think they were, at their peak, funding Hezbollah at
    about $200 million a month through the same procedures: drug
    trafficking; consumer products. They were selling--they had a
    used car deal there in Senegal and West Africa. They are now
    defunct. We were able to take them out through a 311 action as
    a primary money laundering concern.
        Are we missing something, though, in terms of that process?
    It seems as though as we adapt, some of these terrorist groups
    are readapting and reengineering their organizations to sort of
    escape our measures of accountability. Are there new and
    different approaches that we should be taking that address what
    this new iteration of terrorist financing is undertaking?
        Mr. Braun. Thank you for that question.
        Listen, terror organizations like Hezbollah, that is really
    now a hybrid terror organization, they are one part designated
    terrorist organization by our country and many other countries
    around the world, but they are also an enormously powerful
    transnational organized crime group that is distributing, as I
    said, hundreds of tons of cocaine and generating hundreds of
    millions of dollars in contraband revenue behind that effort
    every single year.
        It is important to understand, though too--let's go back in
    time. You can talk about the cartel. You can talk about the
    Medellin Cartel. You can talk about the Cali Cartel. Look at
    what has been playing out in Mexico for many, many decades.
        What most folks in America don't realize is what has been
    going on in Mexico with respect to drug trafficking has really
    been playing out for more than 70 years, right? And with every
    action that we take, I don't care if it is law enforcement or
    our military or our intelligence services, with every
    aggressive action that you take against these what have evolved
    into ultimately into very powerful threats, they are going to
    evolve, they are going to change their tactics, techniques, and
    procedures.
        It is going to take law enforcement a little time to figure
    out what they are doing before they can hit them again.
        Mr. Lynch. Let me sharpen my question then.
        Mr. Braun. Okay.
        Mr. Lynch. We don't have that much time. Our current
    protocol is to work through FATF and the FIUs, the financial
    intelligence units, and that has been somewhat effective in
    terms of stopping the financing, the wire transfer of resources
    from one institution to another to fund terrorist financing.
    That system is fairly effective, I think. The problem now is
    that they are going off the grid.
        Mr. Braun. Sure.
        Mr. Lynch. They are going off the grid. So those measures,
    that world that we are operating in, is not as effective as it
    once was because of these new networks that, as I say, are off
    the grid and are not subject to the formal regulatory process
    that we are adapting. They are doing consumer products now as
    separate entities. They are deep into the drug trade. There is
    a lot of cross-border smuggling of assets and bulk cash
    transfers across the border.
        Now maybe speak to the situation at the Mexican border. You
    talked about Mexico quite a bit. Is the vulnerability at the
    Mexican border a factor, is it a large factor in our ability to
    combat some of what is going on in South and Central America
    and in Mexico?
        Mr. Braun. It is part of the problem. But we have done,
    thanks to you and many of your colleagues here in the House, a
    phenomenal job at shoring up many of the gaps along the
    southwest border. We have over 20,000 Border Patrol agents now,
    most of which are down in that area interdicting drugs,
    interdicting money, et cetera. So we have done a good job
    there.
        Where we are really lacking is defense in depth, if you
    will. The Department of Defense's detection and monitoring
    assets that they had before 9/11, after 9/11 over 60 percent of
    those assets went away. They went to other parts of the world,
    rightfully where they needed to be, but for the most part they
    have never come back into theater.
        And every four-star admiral and general who has commanded
    SOUTHCOM since 9/11 has talked about this very, very troubling
    situation that they find themselves in where they are tracking
    load after load after load of suspected cocaine and probably
    loads of cash and they cannot do anything about it. They
    literally sit by and watch these targets pass on the screen.
        The one thing, though, that I believe that this committee
    can do that I believe very much needs to be done is we really
    need to tighten the noose on the beneficial ownership issue and
    lower the curtain once and for all and expose these people for
    who they are, because that is the linchpin, that is the choke
    point for all of the money laundering that has been discussed,
    and probably will continue to be discussed, that Hezbollah is
    engaged in. And you are right, the LCB was moving over $200
    million a month in Hezbollah cocaine money through that
    institution and many of its affiliated institutions and banks.
        Mr. Lynch. Thank you. I yield back.
        Chairman Fitzpatrick. The vice chairman of the task force,
    Mr. Pittenger, is recognized for 5 minutes.
        Mr. Pittenger. Thank you, Mr. Chairman.
        Mr. Federici, our objective is to assist you in any way
    possible as you emerge as a major regional leader in our
    efforts to counter illicit finance. What else can be done that
    you would like to see from the United States specifically
    related to an OTA presence that would be important? Just kindly
    give us your insights into what would help you be successful.
        Mr. Federici. Thank you very much for your question.
        I think to begin with, I have to express my appreciation
    for the support that the United States is already providing to
    our new government in Argentina. The presence of President
    Obama, I think less than 2 months ago, with the early arrival
    of President Macri was a very strong political sign of support,
    and the presence of Jennifer Shasky, FinCEN's former now
    director in Argentina a couple of days before the arrival of
    President Obama, was a very strong support to my job.
        I think that type of international and political support is
    very important, not only to motivate us to continue to work in
    the right track, but also to show a sign to the rest of the
    region and the world that we can work as partners and allies.
        I also think your support is fundamental in helping us
    raise awareness, particularly on the importance of addressing
    terrorist financing risks in our country and in our region. I
    would like to see the presence of U.S. officials more often
    coming to Argentina, helping us convey the right message in
    Buenos Aires, in the tri-border area, and I hope to be able to
    team up in partnership with our Brazilian and Paraguayan
    counterparts in those efforts as well.
        Now, we also need technical assistance, and I think that is
    where OTA's support, the Department of Treasury's OTA support,
    can be of great help. We had a first mission to conduct a
    diagnostic of the situation at the FIU and the broader AML/CFT
    system, and we are looking forward to receiving their support,
    particularly to strengthen our AML/CFT supervisory
    capabilities, because apart from being an intelligence agency,
    we are also a regulator for the entire financial system, and
    our main role is to protect financial integrity, and that is
    where I think OTA can really add value to our work.
        We also need technology. And, unfortunately, over the past
    10 years there has been little investment in technological
    resources, and this really affects our capacity to conduct
    sophisticated analysis. And I think that is where the United
    States can also help us come closer to providers and companies
    that can offer solutions to our current challenges.
        Thank you very much.
        Mr. Pittenger. Thank you. I would like you to weigh in some
    more on the tri-border area. As we went to the tri-border area,
    of course it is very open, and we did not see any presence of
    any law enforcement there, just free flow of individuals and
    traffic.
        What do you see, Mr. Braun--and all the panel can weigh in
    on this, we have about a minute-and-a-half left in my time--
    that can be done specifically to address the tri-border area?
        Mr. Braun. What it really comes down to is, if not
    ungoverned space, undergoverned space, places like the tri-
    border area. And it is important to understand, Congressman,
    that both transnational organized crime as well as terror
    organizations are attracted to those areas because they can
    thrive in those areas, they can operate with impunity, because
    of a lack of law enforcement resources and other security
    forces and really a lack of any type of meaningful judicial
    process whatsoever or, the more raw side of power, almost a
    total lack of any kind of a military or other security
    presence. So they are attracted to those areas because, again,
    they can operate with impunity in those areas.
        What I tried to touch on in my opening remarks is one thing
    that we can do is we can help our foreign counterparts, I
    believe, develop their capacity, both criminal investigative,
    organized--think of it this way, anti-organized crime capacity
    and judicial capacity to attack these threats. And I believe
    that things like task forces, international task forces, can be
    brought to bear in places like the tri-border area to help to,
    if nothing else, monitor and collect intelligence that is
    enormously important to efforts outside of that area.
        Mr. Pittenger. Thank you. My time has expired.
        Chairman Fitzpatrick. Mr. Ellison of Minnesota is
    recognized for 5 minutes.
        Mr. Ellison. Let me thank the chairman and the ranking
    member and thank our witnesses today.
        It is great to see you again, Mr. Federici, and thank you
    for the great work that you do, and all the panelists. But I
    just want to remark that I thought your comments at our recent
    trip were particularly illuminating, and I was grateful for you
    sharing your insights. So thank you.
        I won't go over what some of my colleagues already asked,
    but one of the things in front of the world and our hemisphere
    right now is that two out of three foreign terrorist
    organizations operating in Latin America, the FARC and the ELN,
    are now in a process of negotiating peace with the government.
    I think this is a good thing.
        But what is your opinion on how we are going to deal with
    some of these money laundering issues in the aftermath? I think
    that this is an important question that needs to be asked: Are
    these organizations going to be demobilized? And their support
    for terrorism and their role in international money laundering,
    how is that going to be addressed in the course of this peace?
    Could you all offer any insights you have?
        Mr. Braun. Congressman, I would say one thing, front and
    center, that, listen, I applaud Colombia's efforts to bring the
    FARC, ELN to the peace table and to bring peace to the country
    for the first time since the FARC stood up in 1964. They have
    been around for over 50 years now.
        But the most important point is, and the Colombian
    government realizes this, they know it, is if anyone thinks for
    a moment that these combatants are going to blend back into
    society, are going to take jobs at the local factory or other
    places, the vast majority of them simply won't. They have
    gotten a taste for the excitement. They have gotten a taste for
    the money, enormous amounts of money, especially the
    leaderships of those organizations, where ideology went out the
    window a long time ago after they got a taste for the money,
    and that is what absolutely motivates them to this day. So
    personally, I don't see a great deal of change.
        Mr. Ellison. Any other ideas?
        Mr. Federici?
        Mr. Federici. Sorry, Congressman, I would just like to add
    one point and try to bring the conversation back to a sort of
    broader level looking at the region, because I think that what
    is happening in Colombia with the peace process and the
    challenges that it poses are a reflection of a broader regional
    problem, namely that all of these illicit activities do occur,
    to some extent, because of the corruption, complacency, and
    complicity of sectors of public institutions and politicians in
    the region. There is a vested interest among these categories
    of public servants not to prosecute and go after these
    networks.
        Now, this is a challenge across the continent, across the
    region. And one of the things that I think can be done to
    improve the response of the international community, and
    particularly of the United States, is that if you cannot
    persuade the political classes--and the FARC will join the
    political class of Colombia if the peace process comes to
    fruition--if you cannot persuade the political classes to abide
    by the law, international standards, financial integrity, and
    prosecute criminals, what you need to do is to institute
    mechanisms of enforcement outside of their jurisdictions.
        One example that I would make here is when I was recently
    myself in the tri-border region, 2 months ago, Paraguayan
    officials showed me data about cash flows out of the country.
    More than 90 percent of funds that are wired out of Paraguay
    end up or transit through the United States financial system.
    So here you have a perfect tool to go after some of these money
    flows without the need for the cooperation of those who do not
    wish to help.
        Mr. Ellison. Thank you.
        Dr. Federici?
        Mr. Federici. Yes. I would like to go back to your question
    because I think it is a very interesting question. As part of
    the international community as well, we have begun to think
    about this because Colombia is coming up for an assessment
    against the international standard pretty soon. It is going to
    be conducted by the International Monetary Fund. And this
    question is going to be raised: How is the money that the FARC
    has been harboring in Colombia and out of Colombia going to be
    treated? Because there may be differences in treatment on what
    the Colombians decide to do with that money and what other
    countries decide to do with that money. And how compliant is an
    amnesty of the type that Colombia is contemplating with the
    international standard?
        I don't have the real, the final answer to the question
    yet. I think it deserves some thought from the international
    community as a whole. But I do have my reflection on this
    topic, which is that the money that has been flowing from the
    FARC and other terrorist organizations is money that has
    contaminated the integrity of financial systems outside of
    Colombia as well.
        And so I think we have an interest in protecting the
    integrity of our financial system, and these flows have been a
    real threat to that objective. I have in my country had to deal
    with flows related with these organizations, and to the moment
    our policy has been to treat them as terrorist funds and apply
    the necessary measures to suppress them.
        So we need to be very thoughtful of how we are going to
    treat this after the final amnesty agreements are signed, and
    it very much will depend on the letter of those agreements on
    one side and on the consensus that we manage to reach
    internationally as to how to treat these money flows.
        I do want to say that, regardless of that, I also share and
    applaud Colombia's efforts to come to peace within their
    country.
        Mr. Ellison. Mr. Chairman, may I just say--I know I am way
    over time--but I would just like to say I absolutely look at
    this as a positive thing, the peace effort, but if these
    terrorist groups turn their attention away from fighting the
    government and turn it onto just criminal behavior around the
    world, that is not necessarily a good thing.
        So I am glad all of you are thinking about it, and I
    appreciate your comments.
        Chairman Fitzpatrick. The gentleman from Texas, Mr.
    Williams, is recognized for 5 minutes.
        Mr. Williams. Thank you, Chairman Fitzpatrick.
        And thanks to all the witnesses for being here today, and
    for your testimony.
        Mr. Federici, here in the United States much of our
    immigration debate--and I am particularly sensitive to that
    issue because I represent Texas--is on border security. We
    often argue on how much to spend on Border Patrol agents,
    equipment, new technologies. Yet in your testimony you talk
    about Argentina's border and how it was completely unprotected.
    You go on to say that those working at the Financial
    Intelligence Unit were not qualified and had no understanding
    of money laundering, terrorist financing risk, and strategy. I
    think that probably makes some of us in this room, like myself,
    a little worried, especially since we know that our enemies
    would exploit our southern border if given the opportunity.
        One of the major things that these task force hearings have
    uncovered has been the importance of working with a willing and
    equal partner when it comes to combating terrorist financing.
    So, Mr. Federici, I know you talked about some of this in your
    testimony, but can you expand on what steps Argentina is taking
    within its borders to fight money laundering and how well they
    work with the United States to achieve their goals?
        Mr. Federici. Yes. Thank you very much. This is an
    excellent question, and, in fact, it is part of the tragic
    situation that we found the country in after so many years of
    disinterest for the public thing in Argentina.
        As I said, I think corruption had a lot to do with this.
    Corruption affected particularly the law enforcement agencies,
    including the border protection agencies. Law enforcement
    agencies were seriously dismantled. When we stepped in, we
    found them really badly equipped, with very poor salaries,
    untrained, and even mistreated, and with a very lack of trust
    in themselves. Of course, this led to very little capacity to
    conduct the job that the law mandates them to do.
        With regards to the border in particular, we found that
    only 17 percent of the borders were controlled by radars and a
    very limited air defense system. We found that the airplanes
    that were supposed to protect our borders were not flying, the
    ships that were supposed to protect our seas and our rivers
    were not working, and the military forces, the armed forces,
    were very badly equipped to conduct their preventative job.
        Steps are being taken. There was an increase in salaries
    for all the armed forces very recently. I don't have the exact
    figures because this is an area that is not under my
    competence, but I can provide you with the figures upon my
    return to Buenos Aires.
        This decision was made by the Ministry of Defense and the
    Ministry of Security last week.
        So a recognition, first of all, of the importance that our
    armed forces have and that our border protection forces also
    have in protecting our national security and protecting our
    country, and a recognition and a commitment expressed in
    tangible actions, like an increase in the salary, was the first
    step to do. Now we need to train them again. We need to equip
    them with the necessary resources. We need to provide the
    technology that they need to conduct the job. And we need to do
    this at the same time while thinking strategically how to use
    these resources in the most efficient way.
        I think with regards to border protection in particular, we
    need to bring to our table our neighboring countries, in
    particular Bolivia, Paraguay, and Brazil, which is where most
    of our threats related with drug trafficking and terrorist
    financing are coming from. We need to sit together and start
    working as a team again. And I think in particular related with
    the tri-border area problem and terrorist financing, as I said,
    that is an opportunity to reengage also with the support of the
    United States.
        Mr. Williams. Okay. The State Department released a report
    last year that found there was a significant amount of money in
    Argentina which was outside of government supervision, an
    estimated 25 to 40 percent of an informal economy.
        Mr. Federici. Right.
        Mr. Williams. In other words, this money isn't being taxed
    and Argentina isn't sure where the money is from. So what steps
    in Argentina are you taking to change or rein this in?
        Mr. Federici. This is also an excellent question. I think
    that is correct. Our estimates are even greater than that. We
    think an amount close to the same amount of our GDP is held
    outside of Argentina or basically outside of the radar of our
    tax authorities. And this is related to many reasons. Economic
    instability, inflation, devaluation, and political and
    institutional instability have led many Argentines, in many
    cases Argentines who have legitimately earned their income, to
    protect their wealth in safer currencies and in safer
    jurisdictions.
        The most important measure that we are taking these days to
    overcome the situation is to launch a voluntary tax compliance
    program. We have drafted a bill that is currently in the house
    of representatives in Argentina for discussion to basically
    create an incentive for Argentines holding assets abroad
    undeclared to come clean, and we think this will reduce the
    amount of undeclared cash in the economy and will also reduce
    the amount of informality.
        But I would also like to say that part of this problem has
    been the excess regulatory framework, the excess of regulatory
    pressure. To give you an example, in the area of AML/CFT, in
    the last 5 years Argentina issued more than 5 laws, more than 4
    decrees, and our FIU issued more than 70 regulations which in a
    way obstructed the functioning of the financial system and the
    economy, in many cases prevented financial inclusion, and in
    some cases even led some people to be expelled from the formal
    financial system.
        Mr. Braun. There was a proliferation of informal and
    underground channels to move that money in and out of
    Argentina. And while most of these funds were really related
    with Argentines that have legitimately earned their income and
    were seeking protection, these are also channels that I have no
    doubt could have been used, and most likely were used, by
    criminals and particularly by drug trafficking and terrorist
    financiers.
        So I think this is a problem that needs to be addressed.
    Our voluntarily tax compliance measure will tackle part of this
    problem, but we also need to have more efficient regulations
    with a risk-based approach that don't obstruct the functioning
    of the financial system and the economy and really focus on
    what is important.
        Mr. Williams. Thank you for your testimony.
        I yield back.
        Chairman Fitzpatrick. The gentleman from Illinois, Mr.
    Foster, is recognized for 5 minutes.
        Mr. Foster. Thank you, Mr. Chairman.
        And thank you to our witnesses for your participation in
    this important hearing.
        As you are probably aware, there have from time to time
    been legislative proposals in Congress to eliminate anonymous
    shell corporations in the United States. And as I understand
    it, they have been eliminated in many advanced economies.
        And so I was wondering if, Mr. Braun, or any of you, could
    comment on the importance of anonymous shell corporations in
    the United States, and drug money laundering, terrorist
    financing, international corruption, and other activities, and
    what the essential features of some legislative reforms in this
    area would be to really help us fight these.
        Mr. Braun. Thank you for the question, Congressman.
        As I said earlier, the single most important piece of
    Hezbollah's money laundering operation, or their apparatus,
    extremely sophisticated, and this holds true, certainly, for
    most of the transnational drug trafficking organizations that
    are spanning the globe today as well as many other terrorist
    organizations, is the importance of shell--the anonymity
    related to those shell corporations in those accounts.
        And anything that this committee and task force can do,
    again, to raise the veil, drop the curtain, whatever, to expose
    the beneficial owners of those corporations I believe would
    have a significant impact on the way today's very nefarious,
    very sophisticated money launderers are doing business.
        One thing for sure, it would cause them to change their
    tactics, techniques, and procedures. What law enforcement
    needs, in our country, I believe, needs to get better at is
    some real coordination with folks like you, because when those
    changes take place, those changes result in opportunities for
    law enforcement to take action, to really knock these folks off
    their heels. And then the important thing is to be on top of
    them after that.
        Mr. Foster. And are there countries that you think really
    do this right in terms of transparency of ownership?
        Mr. Ottolenghi. If I may step in, Mr. Congressman. And
    thank you for your questions.
        I think there are two things that countries can do better.
    One is, of course, disclosure, namely, the obligation to make
    the identity of beneficial owners publicly available. And the
    second is transparency, to make it easy for those interested in
    finding out to be able to disclose that information.
        The problem is that beyond these formal conditions and
    requirements, you do have to confront very informal, well-
    established systems of concealing that information. And, again,
    I go back to the investigation I mentioned that is ongoing in
    Paraguay of the--the false invoices that are at the center of
    this investigation involved people who had issued invoices for
    up to $1 million who were, in one case, a street vendor of ice
    cream in Ciudad del Este. They were unskilled workers. One of
    them was actually constrained to his bed for an endless--for
    months and hadn't been earning--they didn't even know that they
    themselves were declared as the official owners of the
    companies that were issuing the invoices.
        So, here, you had a situation from a formal point of view,
    you knew who the owners of the businesses were, but you cannot
    go beyond that formality if there is an informal system of
    criminal complicity where officials, accountants, attorneys,
    customs, and law enforcement are allowing this mechanism to go
    on.
        So, again, I think that what is important to complement
    this gap, to fill this gap, is that we have to identify those
    areas where we can intervene operating in a system that is more
    structured and more law abiding. Again, these networks rely on
    the structural weaknesses of these countries and border
    regions. But they are global networks.
        In the examples that I brought, you have false invoicing
    and shipments going from Hong Kong through Miami, Dubai, West
    Africa, into the border regions and back out into the
    international financial system. If we cannot improve standards
    of transparency in those countries, we can at least intervene
    in those points further away in the supply chain where there is
    the rule of law, there are governments that are allies and
    friendly and willing to cooperate in order to mitigate the
    consequences of the system.
        Mr. Foster. Now in the example that you just gave, where it
    went through Miami, would there typically be an anonymous U.S.
    shell corporation involved in that kind of operation?
        Mr. Ottolenghi. Thank you for the follow-up question.
    Actually, that is precisely the point. In the cases that I have
    seen, actually, you can find out who the officers are in the
    companies. You can identify enough names. For example, in the
    case of Miami, there is one individual who is a certified
    public accountant and who is incorporating companies, all of
    these companies that are involved somehow in this
    investigation.
        And he has been involved in the past at least twice in
    cases where there were convictions for fraud and terror finance
    against Hezbollah operatives here in the United States. So
    clearly, this is an individual to whom Hezbollah operatives go
    in order to incorporate companies. The information is there.
    The difficulty is to connect the dots.
        Mr. Foster. Yes. Thank you.
        Chairman Fitzpatrick. The gentleman from Maine, Mr.
    Poliquin, is recognized.
        Mr. Poliquin. Thank you, Mr. Chairman. I appreciate it very
    much.
        And thank you, gentlemen, for being here.
        Mr. Braun, if I may, Hezbollah is an entrenched
    international terrorist organization predominantly operating in
    the Middle East, or at least that's been the understanding of
    many of us who are wrestling with this whole international
    security issue.
        And now we learn from you folks, and others, that their
    tentacles now are reaching into our hemisphere and operating
    now in South America and the drug trafficking trade. And I am
    sure you folks are well aware of the fact that we have a heroin
    epidemic in this country, and it doesn't spare any location. I
    represent the great State of Maine, in particular, northern
    Maine and in other parts of our State, and we have a real
    problem up there.
        Now, we learn, Mr. Braun, that about 95 percent of the
    heroin entering this country enters our southwest border. It
    goes to our southwestern border.
        Do you have any evidence that Hezbollah, in their drug
    trafficking operations in South America, has any kind of impact
    or influence on the heroin entering this country that is now
    reaching all the way to northern Maine, is coming through our
    southwest border?
        Mr. Braun. Thank you, Congressman.
        Listen, I have been out of government now for about 7\1/2\
    years, so I don't have access to the information like I used to
    have in my old job. But what I can tell you is this, Hezbollah
    has become so proficient at not only engineering the wiring
    diagram, if you will, for what is needed to conduct their very
    effective money laundering operations, but they are now
    providing those same services to both Colombian and Mexican
    drug trafficking cartels.
        So by doing so, if nothing else, they are certainly
    facilitating what is sadly happening in Maine and all across
    our country. And I thank you for bringing that up. Because one
    thing we have to remember, folks, is we experienced over 47,000
    drug-related overdose deaths last year.
        That is 129 Americans dying every day of the week. And
    folks aren't talking about drugs these days. They have just
    absolutely turned their heads. They don't want to hear about
    it. But if we don't get this problem in check, if we don't get
    back to what we used to do, we are going to have an even worse
    situation in the decades ahead.
        Mr. Poliquin. Thank you, Mr. Braun.
        Dr. Ottolenghi, we have a terrific neighbor to our north,
    of course, the Canadians, and they are a major trading partner
    with our country. We have a 3,000-mile border. In the State of
    Maine alone the land border with Canada is about 311 miles. You
    can be in a snowmobile in the middle of the field, Doctor, and
    step off your machine, and one foot is in Canada and the other
    foot is in Maine.
        Do you worry at all, and do we have any evidence whatsoever
    that as we put more and more pressure on our southwest border
    that we may be at risk for additional activities that are
    unlawful and beyond, on our northern border?
        Mr. Ottolenghi. Thank you for your question. Again, like my
    colleague on the panel, I do not have access to intelligence
    and to classified information. I only rely on open sources. So
    my ability to answer is somewhat constrained and limited by
    what I know and by what I know I don't know.
        Having said that, I can tell you that the building blocks
    of Hezbollah's money laundering terror finance operations in
    Latin America, so the social infrastructure, the networks of
    support and their interconnectivity, which enables them to
    leverage the businesses and the so-called illicit commerce for
    their nefarious purposes, do exist also across the northern
    U.S. border with Canada. They do exist in the United States to
    be fair as well, though perhaps not to the same extent.
        And so while not being able to conclusively tell you that
    this is happening, I do see the signs of this language there.
    The difference is, I think, the strength of the financial
    system, the transparency of our corporate laws, the fact that
    you do have the rule of law functioning, that you have strong
    institutions, which are all elements lacking in the regions of
    South America where Hezbollah is more successful.
        Mr. Poliquin. Thank you, Doctor, very much.
        Mr. Federici, could you shed any light on your experience
    in your part of the world where there has been pressure put on
    one border, one international border, and it causes problems on
    another border? Can you share any light on that to help us in
    this committee?
        Mr. Federici. Yes. Thank you very much, Congressman. And
    absolutely, we are actually experiencing this as we speak
    today.
        In recent years, Argentina has become a very important
    transit country for the export of illegal drugs out from our
    borders towards--mainly towards Europe and West Africa. And I
    am talking mostly about cocaine flowing south from Bolivia and
    also from Peru and leaving our ports towards the ocean.
        And what we are seeing is that in the last 6 months that
    the new government has been in office, due to all the pressure
    that we have been putting in controlling our borders and
    controlling the drug routes that we have identified, there have
    already been changes, slight changes for the moment but changes
    in the routes that drug traffickers take. And we have been
    receiving signals from our neighboring countries, as well, that
    some of these changes are starting to affect them, particularly
    south Brazil and Uruguay are seeing an increase in movements,
    suspicious and unusual movements, that they haven't seen before
    due to the pressure that we are placing.
        This is something that is very subtle for the moment,
    because we have only been in office for less than 6 months, but
    that we believe will increase significantly as we continue to
    put pressure against these organizations. The routes and their
    flows.
        Mr. Poliquin. Thank you very much.
        Thank you, Mr. Chairman. I appreciate it.
        Chairman Fitzpatrick. The gentleman from Pennsylvania, Mr.
    Rothfus, is recognized for 5 minutes.
        Mr. Rothfus. Thank you, Mr. Chairman.
        Dr. Ottolenghi, there seems to be some dispute about the
    influence of Iran in South America. Some, including the Obama
    Administration, claim that Iran's influence in the region is
    waning; however, there are other news reports that cite
    military and intelligence officials who directly contradict
    this narrative and claim that Iran's influence is still present
    and potentially growing, particularly through both Hezbollah
    and the so-called cultural centers that are being ruled by the
    Islamic Revolutionary Guard Corps.
        Where do you fall on this issue?
        Mr. Ottolenghi. Thank you very much, sir, for your
    question. That is a very important point, and I would like to
    answer by addressing two themes: the first is Iran and its
    Latin America policy; and the second is the connection between
    Iran and Hezbollah.
        Let me turn to Iran first. I think that the assessment or
    the influence or the emphasis of Iran in Latin America is
    waning is based on the differences in approach between the
    previous president of Iran and his enthusiasm for Latin America
    and the current president who hasn't visited the region yet and
    no other officials, senior officials, of his government have
    put the same emphasis.
        However, the point about Iran's Latin America policies is
    that this is not a file that is mainly handled by the elected
    government and its ministries. It is a file that has always
    been held by the Supreme Leader's office through his own
    personal representatives to Latin America, Mr. Mohsen Rabbani,
    infamous for his role in the AMIA bombing in Buenos Aires, in
    1994, when 85 people were murdered and many more grievously
    injured.
        So that policy continues. It is expanded. It is ongoing. It
    is well-financed, sustained, and I see no signs that there is
    any change in approach. It is a policy that has been ongoing
    for over 30 years that relies on the social network--
        Mr. Rothfus. And you are saying that it is expanding?
        Mr. Ottolenghi. It is expanding, yes, sir. It is expanding
    because it is making a conscious, sustained, well-funded effort
    to actually reach out not just through the local Shia
    communities, which are mainly Syrian and Lebanese, but it is
    actually reaching out to convert non-Muslims to Shia Islam.
        Mr. Rothfus. So you have the Supreme Leader surrogates
    there, on the one hand, and then in tandem with that, you have
    Hezbollah?
        Mr. Ottolenghi. Correct. And what I see is that the
    Hezbollah clerics are mainly focusing on the Shia communities
    of Arab immigrants of Lebanese and Syrian descent. The Iranians
    are focusing on the outreach missionary effort, but they are
    combined. Most of the time they are overlapping in the same
    mosques, in the same centers. They are interacting. There is a
    stream of very senior clerics coming from both Iran and Lebanon
    to visit on a constant basis, and the Hezbollah representatives
    together with Iranian ones are constantly cooperating on this
    effort.
        And this effort, to a large extent, is geared towards
    building support, galvanizing, so to speak, the troops,
    indoctrinating and radicalizing and it is also designed as a
    facade for the financial activities, which are managed in
    coordination.
        I just want to give you one example that, to me, is very
    revealing. We have spoken a lot about the tri-border, but the
    tri-border is just one reality of many. And just along the
    Brazilian-Paraguay frontier, which is mostly lawless and
    severely underguarded and underpatrolled, you have several
    other cities that have the same characteristics of the tri-
    border area, mainly cities that are on both sides of the
    frontier with significant Shia and Lebanese communities
    involved in trade. One of the cities is called the Punta Corral
    on the Brazilian border and Pedro Juan Caballero on the
    Paraguay border. There is a very big Shia community run by--
        Mr. Rothfus. What is the population of that community? How
    many people would you say?
        Mr. Ottolenghi. The two cities combined have a little over
    200,000--
        Mr. Rothfus. How many in the Shia community?
        Mr. Ottolenghi. A few thousand, sir. A few thousand. But in
    that city, Mohsen Rabbani has a personal representative. Social
    media information from his own personal Facebook page shows
    that this individual was about 6, 8 weeks ago in Qom
    celebrating his marriage with Mohsen Rabbani in person
    officiating. Now, this is akin to having a very senior member
    of the clergy of Iran, a personal representative of the Supreme
    Leader, celebrating the marriage of a Muslim convert to Islam
    in a very remote region of South America. It tells us how
    important that connection is, and it shows the link in this
    religious social infrastructure in a critical point, place that
    is considered to be one of the highest in crime in Latin
    America currently, even worse than some of the Colombian cities
    during the height of the drug crisis, of Pedro Juan, the
    importance that the city has come to have in the design of
    Iranian policy and their interaction between Hezbollah and Iran
    in Latin America.
        Mr. Rothfus. Thank you.
        Mr. Chairman, I wish I could take more time. I didn't even
    get to any of the other issues. The Iranian connection here,
    though, I would just recommend that we might want to take
    another look at this and continue to shine that light. This is
    fascinating testimony that we are hearing today, so thank you.
        Chairman Fitzpatrick. Yes, agreed. And we may have a second
    round of questioning if we have time before the Joint Session
    of Congress.
        With that, we will recognize the gentleman from Arizona,
    Mr. Schweikert, for 5 minutes.
        Mr. Schweikert. Thank you, Mr. Chairman.
        Mr. Fererici, having been in Argentina just a couple of
    months ago, I know Members of Congress and I think much of the
    world is enthusiastic to see a country that could be such a
    powerful player on the world stage, sort of back as a player on
    the world stage. And we truly wish you and the new government
    the very best. We truly want to know how we can share
    information and actually be a good partner, because I think
    there is a level of trust of the new administration that has
    not existed in, what, 17-some years, and that is really
    important.
        I have a whole bunch of things here. But first off, do we
    fixate too much on the tri-border region?
        Mr. Federici. First of all, thank you very much for your
    comments and for having visited our country, and we really do
    need the support of our partners with the United States in
    particular. I think we share values; we share a common vision
    of the world, and I think we need to team up together to face
    the threats that affect us both as nations. So I really do
    thank you for those words, and we are counting on your support.
        I have so say that from the perspective of our countries, I
    think we fixate too little on the tri-border area. And as I
    said in my testimony, I think we need to quickly and
    professionally assess the risks to money laundering and
    terrorist financing coming out of that area and start
    developing a joint strategy among the countries that are
    affected by this problem in that part of the world and ideally
    with the support of those that have information about--better
    information about what is going on in that part of the world.
        I think personally that my country has irresponsibly
    unattended the risks extending out from that area. That is why
    we need to get back into the game. We need to re-engage our
    neighbors in that assessment and start developing a joint
    strategy together.
        Mr. Schweikert. That is not actually where I wanted to go.
    But to that point, is your counterpart in Brazil, are they
    reaching out and also working with you?
        Mr. Federici. Okay. I don't want to say something
    inappropriate speaking about another country given that I am a
    public official--
        Mr. Schweikert. You can just say you are working on it.
        Mr. Federici. But I do want to say that Brazil's role in
    helping us assess the risks in this part of the world and in
    developing a strategy is fundamental. This cannot be done
    without their engagement. That is why we need Brazil at that
    table, and we need to start working together with them.
        They are currently attending, I think, priorities that may
    be somewhat different, but in my view are also related to this
    problem, because, as we have heard, much of this problem is
    related with the lack of institutional quality, corruption that
    has allowed for these threats to grow and to develop in that
    part of the world.
        So we need to work together. We are hopeful that with the
    new focus that Argentina will put into assessing risks in that
    area and with the support that we may receive from
    international partners like the United States, we will be able
    to bring all of our neighbors to the table and start tackling
    this problem seriously.
        Mr. Schweikert. Okay. Can I pitch a sort of theory, and I
    would love your comments from all three of you on this, and
    that is whether it be from the Shia communities, whether it be
    from money laundering for drug trades, or human smuggling, or
    political corruption that there is an almost--a very complex,
    sort of, semi-formal backbone actually around the world but
    particularly coming out of Central and South America to move
    assets, move money around, and today, that network's client
    could be drug money, tomorrow it could be the cash from weapons
    sales, tomorrow, the day after, that it could be from something
    else, and that may be a constant misunderstanding we have as we
    think of we think of it as terrorism financing or drug money
    financing, that money laundering network is often the same.
        Am I being fair?
        Mr. Braun. I believe you are being fair, and again you are
    very accurate. As I said earlier, transnational organized crime
    groups as well as terror and insurgent groups around the world
    rely on the same shadow facilitators to move their agendas
    forward. In a private sector that I have been in now for 7\1/2\
    years, we call that outsourcing. All right? They use many of
    the same money laundering organizations; they use many of the
    same arms traffickers; they rely heavily on many of the same
    human smuggling groups, those who provide fictitious or
    counterfeit travel documents that is much needed. They also do
    things that are very unique like corrupting the private sector,
    strategically corrupting aspects of the private sector, as the
    transportation industry, communication industry, and the like.
        Mr. Schweikert. To that point, and Mr. Chairman, this is
    something I beg of you, even for your staff, to consider. We,
    our committee, is structured to look at terrorism financing and
    money laundering, but as we have heard testimony after
    testimony over, a year or so you have been doing this, which is
    incredibly appreciated, if you connect the dots, the very
    networks that are washing money for terrorism are the very
    networks that are, for political corruption, are washing and
    moving money for drug trafficking, who are washing money for
    human trafficking. How do we bring these different law
    enforcement mechanisms that our international partners--because
    my fear is we have too many silos out there. How do you bring
    them together and combine the intelligence that is there and
    focus? Because if the backbone that is being used to launder,
    move money is for lots of pretty evil causes, maybe we can get
    some focus here.
        And with that, Mr. Chairman, I will yield back.
        Chairman Fitzpatrick. The gentleman yields back.
        The gentleman from Florida, Mr. Ross, is recognized for 5
    minutes.
        Mr. Ross. Thank you, Mr. Chairman.
        Ever since this committee has continued its investigation
    in discovery, we have learned about a great deal of tools that
    have been utilized for intelligence purposes, data sharing, and
    otherwise identifying money laundering and terrorism finance
    networks.
        What has concerned me and continues to concern me has been
    the lack of enforcement. So what do we do with this
    information? What have we done with this information?
        And, Mr. Braun, I am particularly impressed with your
    comments and your testimony when you state that to successfully
    disrupt or defeat the threat, the information collected,
    analyzed, and imported must be actioned.
        Could you go into a little bit of detail about that?
    Because I think that is the fulcrum to where we need to go. All
    for show is great, but if we don't have some element of success
    in actually preventing what we are setting out to do, then what
    good is all this intelligence and surveillance that we are
    doing?
        Mr. Braun. Thank you, Congressman.
        I don't want to diminish in any way the important work
    that--
        Mr. Ross. And you won't. And my only concern would be,
    because I am interpreting that, as to mean there are things we
    could do better. This task force needs your recommendations as
    to what we can do to increase enforcement. We have seen an
    administration that exercises prosecutorial discretion in this
    country on Federal laws that are being broken and, yet, that
    are being just turned a blind eye to. And no matter how many
    laws and even if Brazil does what we want them to do, if there
    is no enforcement, then what good is it that we do, and how can
    we--how can we accomplish that enforcement?
        Mr. Braun. There has to be a greater deal of sharing. Our
    intel community, and to a lesser degree, our military, now that
    they have become heavily interested in counter threat finance,
    are collecting enormous amounts of data. But the problem is
    that if you are outside of a declared area of war, that is
    pretty tough to action other than with the use of a judicial
    model. And that is why I keep going back to, this is the
    responsibility of Federal law enforcement to action this work,
    but they--
        Mr. Ross. And jurisdiction?
        Mr. Braun. --flowing.
        Mr. Ross. Right. But would there not be an opportunity?
    Because you talk about having financial incentives in providing
    incentives, or providing assistance, whether it be financial or
    technical governments. Is there not a way that we can impose
    incentives to our partners that would require that in order to
    have this assistance, in order to have this technical or
    financial support, there has to be enforcement? Because
    jurisdictionally, there is only so far that the long arm of the
    United States can go. We have to rely on our partners. And
    while our partners are, of course, welcome to accept our
    assistance, if they are not using it for enforcement purposes,
    then what recourse do we have?
        Mr. Braun. With our counterparts abroad, one thing that
    could be done legislatively is if they are not willing to share
    the information that we are working with them to build capacity
    to collect--
        Mr. Ross. Right.
        Mr. Braun. --then we turn off the tap. That is what it
    comes down to.
        Mr. Ross. I appreciate that. And I think that is what it
    comes down to. I don't want to see it come down to that,
    because I think the source could be in their country. And yet,
    even if they share the intelligence with us to where it gets to
    our country, we can exercise our enforcement jurisdiction, I
    would like to see it stopped at the source.
        Mr. Federici, I am very grateful to you for being here. I
    am very impressed with what Argentina is doing. How have we
    been as a partner? Do you see us in an opportunity to provide
    these incentives? There has to be a good quid pro quo there for
    nation-building, if you will, to defeat anti--money laundering
    and antiterrorism financing. Your comments about enforcement?
        Mr. Federici. I think we are just starting to rebuild our
    trust, I think, as nations with this new government.
        Mr. Ross. Yes.
        Mr. Federici. There's been a paralysis in the relationship
    over the last few years, and I assume, and I am very sure this
    is mostly the responsibility of our previous administration
    that has been unwilling to cooperate.
        Now, I think we need to start building this new trust fast,
    because the threats are there. They are--
        Mr. Ross. They are growing exponentially, almost.
        Mr. Fererici. Exactly. What we mostly need at the moment,
    to be able to operate, and to be able to enforce these actions,
    is intelligence right now. We need high-quality intelligence on
    our hands to be able to use the tools that the law grants us to
    seize the assets of criminals, to interrupt the flows of
    potential terrorists--
        Mr. Ross. You would do that if you had the intelligence?
        Mr. Federici. I have the absolute determination to do that.
    You can count on that for sure.
        We have information that there have been flows of terrorist
    money coming out from Argentina to the hands of foreign
    terrorist fighters that have enlisted with ISIL, and we need
    more of that type of information in order to be able to put our
    hands on those flows to be able to share it internationally as
    well and to take the enforcement action that is necessary.
        Mr. Ross. I am hopeful that if that happens, we will
    exercise our rules of engagement and stop it.
        And I see that my time is up, and I will yield back. Thank
    you, Mr. Chairman.
        Chairman Fitzpatrick. The gentleman yields back.
        And we would like to thank our witnesses for their
    testimony today. We have additional questions, but there is a
    Joint Session of Congress for which we need to get in our
    seats.
        The Chair notes that some Members may have additional
    questions for this panel, which they may wish to submit in
    writing. Without objection, the hearing record will remain open
    for 5 legislative days for Members to submit written questions
    to these witnesses and to place their responses in the record.
    Also, without objection, Members will have 5 legislative days
    to submit extraneous materials to the Chair for inclusion in
    the record.
        This hearing is adjourned.
        [Whereupon, at 10:38 a.m., the hearing was adjourned.]

                                A P P E N D I X

                                  June 8, 2016

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