[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]




                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES


                             FIRST SESSION


                              JUNE 8, 2017


                           Serial No. 115-51


        Printed for the use of the Committee on Foreign Affairs

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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          AMI BERA, California
MO BROOKS, Alabama                   LOIS FRANKEL, Florida
PAUL COOK, California                TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania            JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida                ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida                 DINA TITUS, Nevada
ADAM KINZINGER, Illinois             NORMA J. TORRES, California
LEE M. ZELDIN, New York              BRADLEY SCOTT SCHNEIDER, Illinois
    Wisconsin                        TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
THOMAS A. GARRETT, Jr., Virginia

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                            C O N T E N T S



Matthew Levitt, Ph.D., director and Fromer-Wexler fellow, Stein 
  Program on Counterterrorism and Intelligence, The Washington 
  Institute for Near East Policy.................................     4
David Asher, Ph.D., member, Board of Directors, Center on 
  Sanctions and Illicit Finance, Foundation for Defense of 
  Democracies....................................................    18
Mr. Derek Maltz, executive director, Governmental Relations, Pen-
  Link, Ltd......................................................    31
Mara Karlin, Ph.D., associate professor of practice and associate 
  director of strategic studies, School for Advanced 
  International Studies, Johns Hopkins University................    42


Matthew Levitt, Ph.D.: Prepared statement........................     7
David Asher, Ph.D.: Prepared statement...........................    20
Mr. Derek Maltz: Prepared statement..............................    34
Mara Karlin, Ph.D.: Prepared statement...........................    44


Hearing notice...................................................    76
Hearing minutes..................................................    77
The Honorable Thomas A. Garrett, Jr., a Representative in 
  Congress from the Commonwealth of Virginia: Material submitted 
  for the record.................................................    79
The Honorable Theodore E. Deutch, a Representative in Congress 
  from the State of Florida: Material submitted for the record...    84
The Honorable Gerald E. Connolly, a Representative in Congress 
  from the Commonwealth of Virginia: Prepared statement..........    86
Written responses from David Asher, Ph.D., to questions submitted 
  for the record by the Honorable Christopher H. Smith, a 
  Representative in Congress from the State of New Jersey........    88
Written responses from Matthew Levitt, Ph.D., and David Asher, 
  Ph.D., to questions submitted for the record by the Honorable 
  Michael T. McCaul, a Representative in Congress from the State 
  of Texas.......................................................    89



                         THURSDAY, JUNE 8, 2017

                       House of Representatives,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 10:08 a.m., in 
room 2172, Rayburn House Office Building, Hon. Edward Royce 
(chairman of the committee) presiding.
    Chairman Royce. This hearing will come to order. This 
hearing is on attacking Hezbollah's financial network, and 
different policy options that we have. So we consider these 
additional steps needed to confront one of the top terror 
threats in the world, and that threat is Hezbollah. It is a 
terrorist group that is based in Lebanon, where it is a 
significant political force as well. If you look at the 
history, it dates back to 1982 when members of Tehran's 
Revolutionary Guard Corps' Quds Force first deployed in 
Lebanon's Beqaa Valley. And they created, armed, and funded a 
small force which became Hezbollah.
    Today, as the leading Iranian proxy, Hezbollah continues to 
be Iran's front line against Israel. Since its 2006 war with 
Israel, Hezbollah has dramatically grown its supply of rockets 
and missiles, allowing it to strike throughout Israel, with 
much greater precision and force.
    I was in Haifa in 2006, and at that point in time, there 
were 10,000 of these rockets fired out of an inventory of about 
20,000. I saw the consequence of it. There were 600 victims 
from Haifa in the trauma hospital who were being treated as a 
result of the attacks on civilian neighborhoods.
    It is 11 years since that period of time, and now, instead 
of 10,000 rockets and missiles remaining in the inventory, 
there are 110,000, and these are of increasing sophistication. 
One observer even wrote that Hezbollah is now, in his words, 
``more militarily powerful than most North Atlantic treaty 
organization members.'' One of reasons for this, by the way, is 
that many of these newer missiles Iran is working on 
developing--and I am talking about the government, Iran's 
Islamic Revolutionary Guard Corps--is working on the ability to 
make these GPS-guided missiles.
    Hezbollah is putting its military power to very effective 
use. In Syria, its fighters are key to the efforts by Iran's 
Islamic Revolutionary Guard Corps and Moscow's efforts to prop 
up the Assad regime, along with Russian troops and Iran's 
Revolutionary Guards.
    For 30 years, Hezbollah has remained Iran's proxy, and Iran 
remains Hezbollah's primary source of financial support. In 
April 2015, its leader, Hassan Nasrallah, boasted that even 
under sanctions, Iran still funded Hezbollah's terror war. And 
he anticipated that a rich--in his words, ``a rich and powerful 
Iran, which will be open to the world,'' would be able to do 
even more. The Iran nuclear agreement has made it possible for 
Iran to provide Hezbollah with a windfall. As one witness will 
testify today, Hezbollah's activities since the nuclear 
agreement have ``expanded in scope.''
    But Tehran is not Hezbollah's only source of income, 
because since its inception, Hezbollah has developed a broad 
criminal network involved in a range of illegal activities--
from drug trafficking, to cigarette smuggling, to money 
laundering, to counterfeiting. These global terrorists double 
as global criminals.
    Indeed, in February 2016, the U.S. Drug Enforcement 
Administration--in an operation led by one of the witnesses who 
is here with us today--implicated Hezbollah in a multimillion 
dollar drug traffic and money laundering network that spanned 
four continents and put cocaine ultimately on the streets of 
the United States.
    The committee is focused on the best way to attack 
Hezbollah's financial network and its tentacles across the 
globe. And in 2015, we led the way to enact the Hezbollah 
International Financing Prevention Act to target those that 
facilitate financial transactions for Hezbollah. This has 
helped put Hezbollah in the ``worst financial shape in 
decades,'' according to the top Treasury official, despite 
Iran's continued support. Part two of this legislation is 
coming, but, unfortunately, that is of little comfort to 
Israelis staring down at an arsenal of rockets that sit just 
across the border from Lebanon or the Syrians being slaughtered 
at the hands of Hezbollah operatives that are participating in 
ethnic cleansing in Syria.
    We look forward to hearing from our witnesses today on ways 
in which the United States can further tighten the grip.
    I now yield to our ranking member today, Mr. Deutch, for 
any opening comments he may have.
    Mr. Deutch. Thank you, Mr. Chairman. I would like to thank 
you and Mr. Engel for holding today's hearing on what is 
arguably one of the greatest threats to U.S. security interests 
and the interests of so many of our allies. And thanks to the 
witnesses for being here today as well.
    Hezbollah is a terrorist organization that has attempted to 
carry out, or has successfully carried out, attacks on multiple 
continents, from the bombing on in the U.S. Marine barracks in 
1983, to the bombing of a Jewish center in Argentina in 1994, 
to the bus bombings in Bulgaria in 2012. Hezbollah's reign of 
terror has no geographical boundaries.
    Perhaps most concerning in recent years has been 
Hezbollah's entry into Syria. Working on behalf of the 
murderous Assad regime, there are estimated to be 7,000 
Hezbollah fighters inside Syria. Receiving significant military 
support from Iran, Hezbollah, along with various Iranian-backed 
militias, has assisted the Assad regime in devastating attacks 
on the Syrian people.
    In turn, ISIS-affiliated retaliatory attacks have been 
launched inside Lebanon, killing innocent Lebanese civilians. 
Hezbollah's involvement in Syria has fed the emergence of the 
Russia-Iran-Assad alliance. Open source reporting now details 
the transfer of advanced weaponry from Russia to Hezbollah. It 
is reported that Hezbollah is in possession of Russian designed 
surface-to-air shoulder-mounted missiles. This is in addition 
to the precision-guided missiles it is apparently now receiving 
from Iran that will add to its arsenal of over 120,000 rockets 
capable of reaching every corner of Israel. And Hezbollah is 
now sending fighters to Iraq and to Yemen.
    Let me be clear: There can be no future in Syria where Iran 
and/or Hezbollah has a permanent, military presence. And it 
remains to be seen how this administration thinks that it can 
cooperate with Russia and Syria when Russia has so far been 
unwilling to separate itself from Iranian efforts to strengthen 
    Last month, Hezbollah's leader, Hassan Nasrallah, stated 
that the conflict had entered what he described as a new and 
critical phase in which Damascus, Moscow, Tehran, and Hezbollah 
were, and I quote, ``in more harmony politically and militarily 
than at any time.''
    Hezbollah has long received hundreds of millions of dollars 
a year from Iran. However, Hezbollah has expended its own 
financing operations to include what has become known as the 
business affairs component, a transnational criminal network 
that engages in everything from narcotrafficking to money 
laundering, to the sale of counterfeit cigarettes and goods. 
These operations have gained significant foothold in Latin 
America, in Europe, and in Africa. Increased cooperation 
between U.S. law enforcement and law enforcement entities 
around the world has resulted in significant exposure and 
breakup of many of Hezbollah's illicit financing networks. 
Project Cassandra, a DEA-led effort, which we will hear more 
about from our witnesses, exposed a massive narcotrafficking 
    International cooperation is crucial to our efforts to 
disrupt Hezbollah. And this is precisely why our allies in 
Europe must join the United States, the GCC, Canada and others 
in designating the whole of Hezbollah as a terrorist 
organization. The idea that there is separation between 
Hezbollah's military and political wings is, quite frankly, 
laughable, which is why I recently introduced a resolution 
urging that you designate Hezbollah, in its entirety, as a 
terrorist organization.
    I am proud to be joined by a bipartisan group of members in 
this effort, including members of this committee, our chairman 
emeritus Ros-Lehtinen, and Mr. Lieu, Mr. Zeldin, and Mr. 
    Congress has played a significant role in preventing funds 
from flowing to Hezbollah. In 2015, I was proud to join 
Chairman Royce in introducing and passing the Hezbollah 
International Financing Prevention Act. And I just want to note 
that when we first introduced those new sanctions, we were 
told, as we so often are warned against the perils of using 
economic sanctions, that the Lebanese banking sector would 
collapse. But through the work of this committee and outreach 
to those Lebanese banks, that has not been the case. In fact, 
Lebanon's central bank has shut down the accounts of Hezbollah 
members and affiliates. But there is more that we can do. 
Secondary sanctions, for one, proved extremely effective in our 
policy toward Iran.
    Today provides us with an opportunity to hear from our 
witnesses new policy prescriptions for cracking down on 
Hezbollah, both on the military and terrorism fronts, and ways 
to stop its funding streams.
    Mr. Chairman, before turning back over, I would ask 
unanimous consent to enter into the record a statement by the 
Anti-Defamation League supporting new legislative efforts to 
crack down on Hezbollah's funding.
    Chairman Royce. Without objection.
    Mr. Deutch. I appreciate that. I look forward to this 
committee working together, as we regularly do, in a bipartisan 
manner under your leadership, Mr. Chairman, to move forward 
with these new efforts. I thank you and I yield back.
    Mr. Connolly. Mr. Chairman, if I could just add, I have 
joined in the resolution so there are other members as well.
    Mr. Deutch. I thank my friend from Virginia.
    Chairman Royce. Thank you, Mr. Connolly.
    This morning, we are pleased to be joined be a very 
distinguished panel. We have Dr. Matt Levitt, a director at the 
Washington Institute for Near East Policy. And he previously 
served as a senior official at the Treasury Department. He has 
written extensively on Hezbollah.
    We also have Dr. David Asher. He is a member of the board 
at the Foundation for Defense of Democracies, and he has played 
a senior role in numerous economic and financial pressure 
campaigns. He was an early pioneer in tackling North Korea's 
proliferation network.
    We also have Mr. Derek Maltz with us, the executive 
director of government relations at Pen-Link. Previously, Mr. 
Maltz led the Drug Enforcement Administration's special 
operations division in actively targeting narcotics trafficking 
tied to Hezbollah.
    We have Dr. Mara Karlin, associate professor with the Johns 
Hopkins School of Advanced International Studies. She 
previously served as an aide to the Under Secretary for Policy 
at the Department of Defense with a focus on the Levant.
    So without objection, the witnesses' full prepared 
statements will be made a part of the record, and members will 
have 5 calendar days to submit any statements or questions or 
extraneous material for the record. We will start with Dr. 
Levitt, and we will ask you to summarize your remarks.


    Mr. Levitt. Thank you, Chairman, Mr. Deutch, members of the 
committee. It is a pleasure to be here to testify before you 
today, and assess our efforts and those pursued to date to 
counter Hezbollah's ability to exploit the international 
financial system to its benefit. The regional international 
threats posed by Hezbollah have only increased over time, 
underscoring the importance of denying the group the financing 
and resources critical to its ability to function.
    Hezbollah has, in fact, experienced a series of financial 
setbacks, in part because of the actions we have taken, leading 
U.S. officials to describe the group as being ``in the worst 
financial shape in decades.'' In recent months, Hezbollah has 
resorted to launching an online fundraising, crowd-sourcing 
campaign entitled Equip a Mujahid Campaign, which calls for 
donations large and small, payable all at once, or in 
installments, to equip Hezbollah fighters. It has also promoted 
a fundraising campaign on billboards and posters in Lebanon, 
promoting a program in which supporters can avoid recruitment 
into Hezbollah's militia forces for a payment of about $1,000. 
These are desperate measures for a group suffering through 
tough financial times. And yet it has enough money to do a 
great many disturbing things around the world.
    I should stress here that of the various actions we are 
suggesting, that I am suggesting and others, the idea is not to 
undermine the Lebanese economy, but to protect it from exposure 
to the criminal and money-laundering enterprises in which 
Hezbollah is deeply involved. It should, therefore, not 
surprise that after Congress passed the Hezbollah International 
Finance Prevention Act, Lebanon Central Bank issued a circular 
ordering Lebanese banks to close accounts belonging to 
individuals and institutions associated with Hezbollah. 
According to the Central Bank, hundreds of Hezbollah-linked 
accounts have since been closed.
    Now Hezbollah continues to operate in Europe, despite the 
partial ban in July 2013, and it is aggressively engaged in 
criminal enterprises and Africa and in South America. And 
despite being designated as a terrorist group by the Gulf 
Cooperation Council, Hezbollah reportedly began storing some of 
its funds outside Lebanon in response to the effects of the 
HIFPA legislation, including in places like Iraq and Dubai.
    Now, Hezbollah continues to get significant support from 
Iran, but I think today I want to focus on its global criminal 
enterprise. Now I am going to leave the business affairs 
components and other things to my colleagues. What I want to 
highlight here are some of other successes. For example, the 
extent of Hezbollah's drug connection was underscored in the 
wake of the U.S. Treasury's narcotics kingpin designation of 
the Panama based Waked Money Laundering Organization in May 
2016. This action wasn't taken under a terrorism authority, and 
the press release said nothing about Hezbollah, but when this 
particular money laundering organization was targeted, it tied 
up the illicit finances linked to various elements within the 
Iran threat network, including Hezbollah, and forced them to 
find other money laundering channels in the region. Much of 
that activity reportedly shifted to the Tri-Border Area, and to 
Paraguay in particular. Hezbollah criminal enterprises run deep 
in Africa, as evidenced most recently by the arrest in Morocco, 
Hezbollah financier Kassim Tajideen, who has since been 
extradited to the United States and indicted in Washington, DC.
    There a bunch of steps I think we can do to further actions 
we have already taken. The first is to designate additional 
Hezbollah entities as appropriate. HIFPA prescribes doing 
business with designated Hezbollah entities. So the more a 
Hezbollah entity is designated, the more impactful the 
legislation will be. This should include, but not be limited 
to, entities operating in Lebanon. For example, consider the 
list of Lebanese businesses designated with Lebanon-based IRGC 
Quds Force operative, Hasan Ebrahimi, in February.
    Targeting Hezbollah criminal enterprises in South America, 
Africa, and Europe will be very important as well. Again, think 
about the Waked money laundering organization and that success. 
And finally, in this regard, consider follow-on actions to 
existing designations where appropriate. For example, the IRGC 
official in Lebanon, Ebrahimi, was providing Hezbollah funds 
through Hezbollah's al Waad construction firm, which we had 
already designated in 2009 or this Equip a Mujahid Campaign in 
Lebanon is being run by the Islamic Resistance Support 
Organization, IRSO, which Treasury already designated back in 
    Second, we should target Hezbollah criminal support 
networks of a variety of different types. I get into those in 
my testimony.
    Third, we should consider applying secondary sanctions 
under HIFPA to financial institutions banking Hezbollah, its 
associates outside the Middle East. And here, for example, I 
think we should look at places like Balboa Bank & Trust, which 
was designated by Treasury in the context of the action taken 
against the Waked money laundering organization.
    We should revisit the question of designating Hezbollah a 
transnational criminal organization, which it absolutely is 
without question. We should resume sanctioning Iran for state 
sponsorship of terrorism.
    Again, we saw the Ebrahimi action in February, but the Quds 
Force, Mahan Air--a whole host of other low-hanging fruit, 
Iranian entities involved in Tehran's support for terrorism--
should be designated. And this, in no way, would jeopardize or 
conflict with the JCPOA Iran deal.
    And finally, we absolutely must continue to enhance 
interagency coordination and cooperation against the Iran 
threat network. That began to fall apart a little bit in the 
context of the Iran deal where some agencies wanted to push 
harder and some did not. Today there is, I think, greater 
consensus on the need to push hard on the maligned activities 
that Iran is engaged in beyond procurement, such as support for 
terrorism. And I think that there is a lot more we can do here. 
There are positive signs, on this I will conclude, for example, 
of using the global counterterrorism forum, the law enforcement 
and coordination group, both to address best practices for 
countering Hezbollah terrorist, criminal, and other terrorist 
activities that have been a great success. The State 
Department, similarly, has used the counterterrorism 
partnership fund to launch an international initiative in very 
close partnership with the Department of Justice to raise 
awareness about Iran and Hezbollah's broad range of terrorist 
and criminal activities around the world, and to help train our 
allies around the world to figure out how best to prosecute and 
deal with those activities. These types of efforts should be 
doubled down on. There is a lot more we can do. I thank you for 
the opportunity to testify before you today.
    [The prepared statement of Mr. Levitt follows:]

    Chairman Royce. Thank you. Mr. Asher.

                         OF DEMOCRACIES

    Mr. Asher. Chairman Royce, Ranking Member Deutch, and other 
members of the Foreign Affairs Committee, thanks for the 
opportunity to discuss with you the challenges we face 
countering Hezbollah's rapidly expanding global web of terror, 
crime, and insurgency, including its direct ties to the United 
    I will be brief about the challenges we face in combating 
Lebanese Hezbollah's illicit web of activities and finances, 
and begin with a little recounting of how I got involved. 
Beginning in 2008, in the summer, I had the honor of advising 
the man on my left and several others in the room at the Drug 
Enforcement Administration and the Department of Treasury, 
Special Operations Command, Department of State, and Customs 
Border Protection on developing and spearheading a unified 
strategy across law enforcement and special operations to 
pursue Hezbollah's web of activities, with the goal of 
fundamentally disrupting Hezbollah's growing involvement in 
cocaine trafficking and money laundering, including through the 
United States financial system and through our own borders.
    I am proud to say that a seamless collaborative web of 
combining a small group of U.S. agencies was established and 
leveraged to combat these activities using every agency's 
unique authority. So it is a whole-of-government approach that 
makes you proud about being part of this government. It is a 
combination of law enforcement, financial, criminal, civil, and 
regulatory authorities that led to a wide range of actions that 
you have heard about, providing a framework to deter, disrupt, 
and publicly illuminate the global illicit Hezbollah network. I 
think it was probably the most successful operational effort 
taken against Hezbollah to date by the U.S. Government after 
many years of inaction.
    Yet, in the last years of the previous administration, for 
reasons that most definitely had to do with the Iran deal and 
concerns of interfering with it, which I thought were totally 
unfounded as a former nuclear negotiator with Iran and North 
Korea, we lost much of the altitude that we had gained in our 
global effort. And many aspects--including key personnel who 
were reassigned, budgets that were slashed, and many key 
elements of the investigations that were underway--were 
undermined. And it was a bit of a tragedy and a travesty. And I 
think it was, again, very unfounded. But today, we have to deal 
with the legacy of that and how to rebuild this capability, 
knowing that you can have a nuclear deal with Iran and you can 
contain and disrupt its illicit activities and terrorist 
activities, and we really have to do both.
    But the result today is that criminal states and criminal 
terrorist organizations continue to benefit from a type of 
implicit immunity from prosecution. And Mr. Royce, you and I 
have gone over this with North Korea over the years. We still 
haven't seen the types of charges that were assembled against 
that government, even in the wake of the Sony attacks, and more 
recently, hacking of the Federal Reserve Bank in New York. 
Moreover, neither al-Qaeda nor Hezbollah has ever been 
organizationally prosecuted by the Department of Justice for 
repeatedly attacking the United States, killing thousands, or 
hundreds, of our citizens, and for being tied to a wide range 
of transnational organized crimes and violations of our laws. 
And by the way, the same is true with the Islamic State, of 
which I had the honor to be the Deputy Special Coordinator on 
the economic warfare side at the State Department a couple 
years ago.
    We have not applied Mafia-style RICO prosecutions that 
would aim to incarcerate the members of these organizations for 
life, take away their sanctuaries, strip them of their 
finances, and undermine their credibility. I, frankly, have no 
good answer why, except that I have heard from people, 
including Director Comey, that there is a sense of fear that if 
we do this, it is going to lead to reprisals.
    I personally spearheaded the targeting of a Lebanese 
Canadian bank, a $5\1/2\ billion bank that was at the heart of 
Hezbollah and Iran's finances in Lebanon. We did not receive 
retaliation as a nation for bankrupting their largest financial 
institution. I think the fears are overwrought, and I find the 
phobias surrounding prosecution of terrorists baseless, 
bizarre, and moreover, largely against the spirit in the letter 
of the laws we are sworn to uphold.
    Today, I would like to highlight that the Department of 
Justice needs to rebuild, properly fund, and expand 
capabilities and investigations against what I call the Iran 
action network, not just the threat network: Hezbollah's 
terrorist and military wing and their friends and partners in 
criminal states like Venezuela and North Korea.
    And indeed, we can discuss this if you would like. The 
level of cooperation between the Government of Venezuela, the 
Government of Iran, the Government of Syria, and Lebanese 
Hezbollah that we observed in undercover operations with which 
we personally were involved, including people in this room, was 
absolutely astonishing. The evidentiary basis to take down this 
entire global network exists. The facts are clear, and they are 
already revealed in many unsealed indictments.
    Thank you for your time and I look forward to any questions 
you have.
    [The prepared statement of Mr. Asher follows:]

    Chairman Royce. Mr. Maltz.

                   RELATIONS, PEN-LINK, LTD.

    Mr. Maltz. I would like to thank you for this opportunity 
to discuss this important topic. I retired from DEA, but I 
remain in daily contact with my colleagues and I pay close 
attention to the emerging threats to our country. I lost my 
brother Michael, U.S. Air Force para rescue early in the war 
and I am very passionate about national security and public 
safety issues. During the period I was the director of SOD, I 
had the privilege of working with numerous law enforcement 
agencies around the world, the intelligence community, and the 
Department of Defense. We had 30 agencies to include the U.K., 
Australia, Canada, NYPD, and we represented a center that was 
synchronizing efforts around the globe. I have witnessed the 
amazing results that have been achieved when agencies share 
operational intelligence and coordinate their efforts. 
Unfortunately I have also witnessed the lost opportunities that 
have been created when information wasn't shared.
    In response to September 11th, very smart people in the 
government decided to form a counter-narco terrorism center 
inside the SOD operation. And they had vision because they knew 
the nexus between drugs and terrorism and crime was very, very 
closely tied, so the coordination became really important.
    Over the years the nexus between crime and terror has 
grown. It is all about the money, they need money to operate. 
That is the bottom line. We heard from the experts that they 
are losing money, they are in bad financial shape, so drug 
trafficking is very important. We must shut down these funding 
streams, and we must use all the powerful tools of national 
power to attack this global threat. We can't investigate 
terrorism in a cocoon. The American public expects the 
government to cooperate and share information on these major 
threat investigations. And we must work very hard to break down 
the barriers that currently exist between those that 
investigate criminal groups, and those that are responsible for 
preventing terrorism. We need to develop a mutually supportive 
framework so the law enforcement actions can enhance 
intelligence community actions and vice versa, so intelligence 
community actions can enhance law enforcement actions.
    I was the head of SOD when we started this initiative back 
in 2006, 2007 looking at global trade-based money laundering 
very, very alarming to me. I was fortunate to meet Admiral 
James Stavridis, the commander of SOUTHCOM, and he showed me a 
very disturbing visual that remains in my iPhone today, a 
fireball when narco terrorists and Islamic terrorists are 
joined; that is what I saw in my observations working on 
Project Cassandra, Operation Titan for almost 10 years. It was 
alarming that this decorated admiral had the vision back in 
those days to see what was evolving in South America with the 
drug traffickers.
    Unfortunately, based on what I observed, this is what I see 
everyday in my mind, that fireball. Hezbollah, one of the worst 
terrorist organizations--killing all these Americans around the 
world--was laundering proceeds of cocaine through the Lebanese 
Canadian Bank. They were operating like a major drug cartel. 
Now, in the press, we are hearing about the Captagon all over 
Syria. And I have some other information on that we can't 
discuss today.
    Despite the limited support that our CNTOC task force 
received, we were very effective in what we were able to do. 
Project Cassandra was a long-term initiative target against a 
very significant organized crime network. We combined the 
resources and the expertise of some really, really smart people 
in the government from Treasury, CBP, and other agencies--
including Dr. Asher and the lead agent in the back, Jack Kelly, 
who was the catalyst on this operation.
    We were able to use the tools of national power to make a 
difference for our country's safety. And we went after this 
bank very hard, and we did a 311 action, we did civil actions 
with the Southern District of New York, and we actually seized 
$150 million from a bank account in Lebanon, because of really, 
really innovative and powerful laws of the United States. And 
you know what? They felt the pain because they tried to hide 
the money from us in LCB and they moved it to another bank, but 
we found it because we have some good investigators in this 
country. Thanks to the CNTOC task force, we actually ultimately 
forfeited $102 million, and it is in the U.S. asset forfeiture 
fund, so we are very proud of that.
    Investigators documented $300 million moving into the U.S. 
from Lebanon for the purchase and the shipment of these cars to 
west Africa. There were 30 businesses named in this particular 
action. Unfortunately, and sadly, there are many more 
businesses operating that were not affected because of the lack 
of information sharing.
    Although criminal law enforcement, the intelligence 
community, and others working on terrorism have come a long way 
in sharing information, there is a lot more to be done. At this 
point in this country's history, we don't need any more 
inspector general reports talking about lack of information 
sharing. We need some accountability on the people that aren't 
sharing. As state sponsorship of terrorism is fueled by drug 
trafficking, and criminal activities are on the rise, we have 
to pay more attention. The special operations division, within 
the Department of Justice, established itself as a multiagency 
coordination center that can immediately deconflict 
investigative information, coordinating operation and 
mitigating threats through its resources and its global 
    I would highly recommend that this committee and other 
Members of Congress consider enhancing the special operations 
capabilities and designate it as the transnational organized 
crime center for America. It is critical, in my view, that we 
continue to use all the powerful laws and we continue to 
enhance the laws. There must be open and collaborative efforts 
between the criminal investigations and the intelligence 
community because we are in this together. We all are going to 
face the same consequences if we don't work together. We must 
illuminate the networks with the really smart people we have in 
America. We must use every tool and have an all-tools-available 
    As the Senate report adequately and accurately depicted, 
the Lebanese Canadian Bank investigation served as a model for 
interagency success. I am excited and hopeful that the 
Department of Justice and Homeland Security under the Trump 
administration will examine operations like Project Cassandra 
and pick out the best lessons learned and let us move forward.
    Thank you for the opportunity to appear before you today. 
And I would like to discuss this important topic in any 
details. Thank you.
    [The prepared statement of Mr. Maltz follows:]

    Chairman Royce. Thank you, Mr. Maltz. Thank you for your 
    Dr. Karlin.


    Ms. Karlin. Chairman Royce, Mr. Deutch and members of the 
committee, thank you for this opportunity to appear before you 
today. Having examined Hezbollah as a national security 
policymaker and a researcher for nearly two decades, I can 
confidently say this is a critical time to assess it. To 
effectively examine Hezbollah's financing, one must consider 
the political military context, particularly the impact and 
implications of the Syria conflict. Hezbollah has both 
benefited from and suffered because of its involvement there. 
Starting with the latter, support around the region has been 
shaky, as Sunnis around the Middle East watch Hezbollah aid in 
Syria's destruction. In Lebanon, the Shia see body bags of its 
youth. With estimates of 5,000 to 10,000 Hezbollah members 
fighting in Syria, it is hemorrhaging members like never 
before. Indeed, it has bled more in Syria than in fighting 
Israel, over a much shorter period of time. Hezbollah is waging 
a counterinsurgency to prop up Assad. The American military has 
learned, over the last decade and a half, that this type of 
conflict is extremely difficult and costly in blood and in 
treasure. Notable power shifts are at play because of the Syria 
conflict. The Assad regime owes its continued existence to 
Hezbollah. Meanwhile, Hezbollah has become a regional player--
it has a substantial presence in at least four different 
countries--but is increasingly exerting Iran's mandate.
    Today, Qassem Soleimani is the decider of Hezbollah's 
future, not Hassan Nasrallah. The conflict in Syria shifted the 
dynamics between them such that Hezbollah seems willing to do 
whatever Iran wants, whenever it asks, and regardless of the 
cost. Iran is willing to fight until the last Hezbollah member 
in Syria, and it appears Hezbollah is, too; that is a problem 
for Hezbollah. Lebanon Shia are isolated, increasingly 
disillusioned by Hezbollah, but see few protectors. Many of 
those now joining Hezbollah focus on money. Indeed, one out of 
every four Lebanese Shia receives a salary from Hezbollah. 
Given this, the Lebanese Shia desperately need alternative, 
political representation and new opportunities, particularly in 
the economic sector.
    Now to be sure, Hezbollah has benefited from its 
involvement in the Syrian conflict. Ten years ago, I was most 
worried about Hezbollah's weapons, now I am more worried about 
the experience Hezbollah has gained. Before it was a capable 
military force, good at a limited number of missions. Its 
portfolio has expanded dramatically. It has become a hardened 
force, adept at facilitating Iranian power projection around 
the Middle East. It has learned to command and control a 
complicated conflict in collaboration with numerous actors. It 
has acquired substantial experience in diverse environments, 
using increasingly sophisticated weapons. And as the operating 
space in Syria becomes crowded, and the U.S. military deepens 
its direct involvement there, we could see inadvertent or 
deliberate interactions with Hezbollah.
    Now turning to Lebanon. While the situation appears quiet, 
one should not be fooled. For a country of a few million 
brimming with sizable populations of long-term Palestinian 
refugees, and more recent Syrian ones, and 18 or so different 
confessional groups, it is a miracle Lebanon exists. That is 
important to remember--the state has institutions, but they are 
fragile. They do little in the way of actual governing, and are 
often beholden to nonstate forces or external actors.
    As you all know well, Lebanon's military is a top recipient 
of U.S. security assistance. It is in U.S. interests for the 
military to fight nefarious actors whenever it is willing. 
Without U.S. support, its ability to do so is minimal. It has 
deployed throughout much of Lebanon and taken important, albeit 
insufficient, steps to counter violent actors. The Lebanese 
military is flawed, but it is nationally supported and well-
respected in a country with few institutions that can be 
described as such. It has an impeccable record of maintaining 
control over its weapons over the last decade. And, of course, 
Hezbollah does not need the Lebanese military's weapons. It has 
Tehran and Damascus for that. Hezbollah poses the most potent 
threats to Lebanon's internal security. It turned its weapons 
on the Lebanese people in 2008 and will do so again if 
    There is a memorial to the civil war at the front of 
Lebanon's ministry of defense composed of weapons collected 
from various groups melted together. You will not, however, 
find Hezbollah stockpile in that hunk of resting metal.
    As you seek to legislate further action against Hezbollah, 
I urge you to ask the following questions: To the White House, 
is the strategy focused on ISIL or does it include the Assad 
regime? To the intelligence community, how are Iran, Syria, and 
Russia adjusting their support for and/or collaboration with 
Hezbollah and Syria? What points of friction exist between them 
and Hezbollah? Can they be exploited? And what about between 
the Lebanese Shia and Hezbollah? To the State and Defense 
Departments, how are they regularly assessing their program to 
strengthen the Lebanese military? And to the Defense 
Department, how is the U.S. military accounting for the 
increased potential of U.S.-Hezbollah confrontation in and 
around Syria? Thank you very much.
    [The prepared statement of Ms. Karlin follows:]

    Chairman Royce. Thank you. If I could just ask a question 
here on, I guess a striking lesson in life, which is the zeal 
for the deal which becomes eventually a deal at any cost, how 
people get caught up on that. In April, it was reported that 
the Justice and the State Departments in the Obama 
administration denied or delayed requests from prosecutors and 
agents to lure some key Iranian fugitives to friendly countries 
so that they could be arrested for procuring material for 
Iran's nuclear program. This is something that Dr. David 
Albright spoke to before this committee, a former U.N. weapons 
inspector. He testified that out of a misplaced fear of 
negatively affecting the deal, the Obama administration also 
interfered in U.S. law enforcement efforts.
    So it is with interest to note Dr. Asher's testimony this 
morning, because in that testimony, he says: ``In narrow 
pursuit of the Iran nuclear agreement, the administration 
actively mitigated investigations and prosecutions needed to 
effectively dismantle Hezbollah in the Iran action network. 
Senior leadership presiding, directing, and overseeing various 
sections within the Department of Justice, the Department of 
Homeland Security, the Department of State, and portions of the 
U.S. intelligence community, systematically disbanded any 
action that threatened to derail the administration's policy 
agenda focused on Iran.''
    So I was going to ask Dr. Asher what details you could give 
us on that and maybe ask Mr. Maltz your opinion as well. Dr. 
    Mr. Asher. Well, I had the unfortunate experience of being 
at the State Department coming back to work on the counter ISIL 
economic warfare plan as the coordinating under General Allen, 
so I saw a lot of this happening. This was after I departed the 
Hezbollah effort, largely because it was being defunded inside 
the DOD. And so I saw a lot of this directly, you know, we had 
money flowing, pallets and pallets of money flowing to Iran. 
There was a lot of stuff. Let's recall, in fairness, the Bush 
administration stripped the Department of Justice of its 
authorities to indict the Government of North Korea, to pursue 
the North Korean nuclear program, which we had a very 
sophisticated plan to destroy.
    Chairman Royce. Another case of the zeal for the deal.
    Mr. Asher. Another case of the zeal for the deal. I 
predicted to my colleagues that by the end of the Obama 
administration, we would see the same dynamics. This is a 
bipartisan syndrome, okay? It is not, you know, blame the Obama 
administration, blame the Bush administration. There is 
something about people wanting to have a deal at almost any 
cost. And in the case of the Iran deal, there are a lot of 
things around here talking about the nuclear negotiations, but 
there is no provision, as we discussed before, in outsourcing, 
even though they built a North Korea nuclear reactor in Syria 
right under the noses, right under the Six Party talk. There 
are a lot of holes in this cheese. Law enforcement didn't have 
to be one of them. It doesn't have to be one of them. People 
respect, including in Iran and Lebanon, when laws are enforced. 
The arrest recently of Kassim Tajideen, one of the most 
important super facilitators for Iran and Hezbollah, has sent a 
shock wave through the leadership of Hezbollah and the Iranian 
regime. The fact that we have him in prison here and that maybe 
he might cooperate, I am sure that has gotten their attention.
    We had the ability, I can't comment on those two operations 
which I am aware of, that were essentially aborted, but we had 
many more that we were inhibited from acting on, for political 
reasons. We had operations that were denied overseas; we had 
funding that was cut. People were making a decision that the 
counterterrorism mission and the Iran nuclear deal was a 
central and all-important element, whereas containing Iran's 
malevolent forces was less important. I think you can do both, 
and we have to do both. I don't think it is an either/or.
    If the Iranians don't like it, too bad, they blew up our 
Embassy twice, they killed hundreds of Marines. They went after 
us in Iraq when I was working with the Special Operations Task 
Force in support of them there, and killed nearly 800 Americans 
with explosively formed projectiles designed by Hezbollah. I 
have a beef against these people, obviously. And we have the 
tools, thanks to the great work of the DEA and other law 
enforcement agencies, to take them apart financially, 
economically, politically, and strategically, using law 
enforcement which the world will respect.
    Chairman Royce. And maybe also I will ask Mr. Maltz what 
steps do we need to take? What steps does Congress need to take 
to rebuild our enforcement capabilities there?
    Mr. Maltz. Well, like I said, sir, the Special Operations 
division has a history of success. As a matter of fact, you 
were very, very supportive in the Viktor Bout case. The last 
time I was before you was when you supported the DEA on the 
extradition of Viktor Bout, so I will never forget that. Thank 
    Chairman Royce. By the way it sends a powerful message to a 
lot of other miscreants on this globe, the fact that he is 
behind bars, and thank you very much for your success on that.
    Mr. Maltz. So on that note, SOD had had this counter narco-
terrorism operation center for the purpose of coordinating 
these type of investigations. We created that to provide a 
unity of effort. That is the purpose, because we are in this 
together. You cannot separate out the terrorist aspects and the 
criminal aspects, because at the end of the day, it is what is 
in the best interest of the U.S. Government. So I compliment 
some folks in the government in the Department of Justice and 
Admiral McRaven specifically, because we organized a U.S. 
Government interagency effort on this threat. And every agency 
that came to the table agreed that Hezbollah was a priority 
against the United States. So the idea was to put all the 
resources on the table. We went down to Florida for this big 
government meeting where the Attorney General, the Department 
of Homeland Security Director, and all these other officials 
were there.
    So the idea would be, let's put the stuff on the table and 
work together. As soon as we left the meeting and as soon as 
Admiral McRaven retired, it fell apart, in my view. And I was 
the one in charge of the operation at SOD, so I could say that 
very clearly. And so for me, how the heck can you have an 
action against this organization running the Southern District 
of New York, the best in the country, and interagency did not 
come together and provide the necessary information to make it 
a more powerful action. So we had the right concept, but we 
didn't complete the deal. You know how upset I was when I saw 
The Wall Street Journal article at the end of last year? Very 
much--very accurate article. The car parks are booming in west 
Africa because the business is booming. We had a chance to 
knock them dead, and we held back because of interagency 
cooperation. So we have to end it.
    Chairman Royce. We are going to return to that issue. I 
have to go to Mr. Deutch, and thank you.
    Mr. Deutch. Thank you, Mr. Chairman. And thank you to the 
witnesses for a really excellent presentation.
    Dr. Karlin, you said that Qassem Soleimani is now the 
decider of Hezbollah's future, and you talked about using 
Hezbollah for Iranian power projection. My question is how that 
is done, and whether it is Iraq, or Yemen, Bahrain, UAE, 
Saudis, are you suggesting that Hezbollah, or can you speak to 
whether Hezbollah is more than a model for the terrorist groups 
looking to act in those countries, and is, in fact, playing an 
operational role. If so, how broadly?
    Ms. Karlin. Thank you for that question, Mr. Deutch. 
Hezbollah is the best design model Iran could have really hoped 
for in a number of ways. And I think when you look at attempts 
to build a similar force, say, Iranian support to the Houthis, 
it is just not going to be equivalent for domestic Yemeni 
reasons, among others. But, I think, for those of us who spent 
so long looking at Hezbollah, it was always a question of, if 
Iran asked Hezbollah to get involved in circumstances that 
would be really problematic domestically, what would Hezbollah 
    This was particularly thought of if there was some sort of 
entanglement between Israel and Iran, what would Hezbollah do 
if this ended up being a problem? And what we have seen is 
because Hezbollah can only play its singular role in Lebanon 
with Iran's weapons, what is happening now is existential for 
    And so this debate that used to occur doesn't occur 
anymore. Indeed, any thoughts Nasrallah might have are 
immaterial. If someone like Qassem Soleimani needs Hezbollah to 
go bleed in Syria, he doesn't really have a choice anymore, 
which is why you see not just the bleeding in Syria, which is 
obviously really problematic from a domestic and regional 
support perspective, but Hezbollah getting involved in training 
Houthis in Yemen, also not core to its interests really at all.
    It doesn't have a whole lot of options here. And we have 
seen this ability so that when we put on, say, U.S. Defense 
Department hats, one worries about Iran's conventional 
military, but it is the ability to build these violent nonstate 
actors like Hezbollah, and then deploy them in the various 
circumstances against their own interests in really problematic 
and lethal ways.
    Mr. Deutch. I appreciate that. Dr. Levitt, in 2012, a 
bipartisan group of members began sending letters to our EU 
partners, urging them to designate Hezbollah. In 2013, they 
declared Hezbollah's military wing a terrorist organization. 
And as I mentioned earlier in my comments, the U.S. and others 
don't make this distinction between political and military 
wings. What impact would a full designation from the EU have on 
Hezbollah's ability to operate on the continent? And what more 
could the U.S. be doing now to encourage the EU to declare 
Hezbollah, in its entirety, a terrorist organization?
    Mr. Levitt. Thank you for the question. When this was going 
on, my book on Hezbollah had just been finished and spent 8 
months with Georgetown University press, God bless them, till 
it came out. That gave me an opportunity to make seven, eight, 
nine different trips to Europe, Brussels and most capitals at 
the time trying to push them on this issue.
    Some of their concerns were some of the concerns you heard 
earlier about reprisals, about who are we to ban an entity that 
is duly elected in Lebanon? For many of the governments, 
however, at the end of day, their decision to ban even part of 
Hezbollah, the military and terrorist wing, had nothing to do 
with what terrorism Hezbollah had carried out around the world, 
let alone in Europe, but had everything to do with Syria. And 
so, that provided us a real opportunity.
    What the legislation in Europe does already is it gives us 
an opportunity to go to the Europeans and get them to cooperate 
with us on Hezbollah investigations related to the terrorism 
and military activities, but Hezbollah is a large movement, and 
it doesn't operate a Hezbollah terrorism incorporated. And so 
it is often very difficult to explain to the Europeans, or 
prove to the Europeans, in open source, in a way that they can 
go public with, that an entity we want to target with them is, 
in fact, related to the military and terrorist wing, and not 
just politics or social welfare. Banning all of Hezbollah would 
end that debate and discussion, and it would stop giving 
Hezbollah a pass in which it could just, through basic front 
organizations and money laundering, pretend that something is a 
legitimate actor, part of their ``legitimate side of the 
house,'' when, in fact, it is supporting, or also supporting 
the terrorist and military activities.
    If I may follow up also on the earlier question related to 
this. I don't think we can just target Hezbollah anymore. We 
need to bring this into a larger picture in targeting the Iran 
threat or the Iran action network more broadly. In particular, 
the Shia militias that are now so active in Iraq and in Syria. 
I think the likelihood that we could see some direct conflict 
between U.S. forces and these, including Hezbollah in Tanf from 
southern Syria is very, very real. And what we need to realize 
is that many of these Shia militants are not going to go back 
to being pharmacists and farmers when the immediate conflict is 
over in Iraq or in Syria.
    And that means that we are seeing, right now, right before 
our eyes, the creation of an Iranian foreign legion of people 
who can go and do things for them in an asymmetric kind of way 
that Mara was talking about. It reminds me of Hezbollah and 
Iran's proxies just a few years after the Iranian revolution, 
where Iran wanted attacks carried out against U.S. and other 
interests, say, for example, in Kuwait. And they sent Hezbollah 
operatives and they sent Iraqi Shia operatives. Some of the 
same people operating today, people like Hadeel Ammari, people 
like Abu Mahdi al-Muhandis, the very same people, these 
relationships go back 30 years. And we need to be targeting of 
course Hezbollah but not only Hezbollah. The Europeans as well.
    Chairman Royce. We will go to Ileana Ros-Lehtinen.
    Ms. Ros-Lehtinen. Thank you so much, Mr. Chairman and the 
ranking member.
    Hezbollah is one of the most dangerous and formidable 
terror organizations in the world responsible for some of 
history's most notorious terror attacks. As Dr. Karlin noted, 
Hezbollah is more than just a partner in the Iranian regime, it 
is an extension of Iran's IRGC Quds Force and it is fulfilling 
Tehran's every wish, including propping up the murderous Assad 
regime in Syria, a mission which has only increased Hezbollah's 
sophistication, its stockpile, and its capabilities. We cannot 
ignore Hezbollah's influence and control over the Lebanese 
state, and by extension, the Lebanese Armed Forces, or LAF.
    In your written testimony, Dr. Karlin, you state that the 
LAF is ``easily manipulated'' and ``only as capable as its 
political leadership permits.'' So if the LAF is easily 
manipulated, and Hezbollah has such a large influence over 
Lebanese institutions, how can we, in the U.S., reconcile U.S. 
support for the LAF? And I would like to hear the other 
witnesses respond to that, also.
    And even with some of the safeguards that are in place, are 
we not running the risk of U.S. assistance to the LAF 
indirectly helping Hezbollah?
    Ms. Karlin. Thank you for that question. If I might start 
with a little bit of history, the very first time I went to 
Lebanon was during the Syrian occupation----
    Ms. Ros-Lehtinen. Well, thank you, Dr. Karlin. I do 
appreciate history, but I only have 3 minutes. How can we 
reconcile? How can both things be true? It is, LAF is ``easily 
manipulated, it is only as capable as the political leadership 
permits'' and yet we support the LAF. It is confusing, yes?
    Ms. Karlin. Ideally, we want the Lebanese Government to be 
able to secure its territory, right, to have a monopoly on 
violence. And the more that there are violent nonstate actors 
that exist and proliferate around Lebanon, whether it is groups 
like Hezbollah, or it is groups within the refugee camps, like 
we have seen with Fatah Islam historically, the more that we 
want the Lebanese military to be capable of trying to shrink 
that operating space.
    Ms. Ros-Lehtinen. Thank you. And how about the other 
witnesses, if you care to comment?
    Mr. Levitt. The other witnesses are all pointing to me. I 
would just say that you are absolutely right, it is 
complicated. The LAF has done some very good things in taking 
the fight to the Islamic State, for example, but the LAF is 
compromised, even as it is the most basic glue that holds the 
Lebanese state together. So I think what we need to do is try 
and have as much influence with the LAF as possible, and 
understand that our expectations need to be limited, and that 
explains why, sometimes, we are very careful with what weapon 
systems we provide.
    Ms. Ros-Lehtinen. Thank you. Let me just get to one last 
question. The U.S. Government has issued an interagency report 
stating that there are links, as we have discussed, between 
cigarette smuggling and terrorist organizations, such as 
Hezbollah. Do you have any recommendations on what we can do in 
Congress or the administration should do to clamp down on this 
source of funding for Hezbollah and other terrorist groups?
    Mr. Asher. I mean, there is no doubt that we saw, in many 
cases, the cigarettes being moved away, same route, same 
facilitation networks as the cocaine. So one of the best ways 
to do this is a public-private partnership. I had a great 
opportunity when I was running the North Korea illicit 
activities initiative and actually partnered with the Secret 
Service and the Philip Morris Corporation. It actually worked. 
We let the people affected by the cigarettes underwrite some of 
the law enforcement activities and we got support from members.
    Ms. Ros-Lehtinen. So you would recommend----
    Mr. Asher. I think we can do a lot together with the 
private sector to go after this, but we need to have a joint 
task force. This is the most important element, because these 
are polymorphic crimes. It is not just cocaine smuggling or 
Captagon. They are basically doing anything they can make a 
buck on, and cigarette smuggling is definitely one of them.
    Ms. Ros-Lehtinen. Thank you.
    Any other comments?
    Mr. Maltz. I would say that, in my experience, one of the 
last cases that I was involved with at the SOD was another very 
disturbing trend, groups from Yemen operating all over the 
United States, involved with cigarette, unpacked cigarettes, K2 
and spice, EBT fraud counterfeit goods and sending millions and 
millions of dollars right back to Yemen. So we have these 
global trade-based schemes going on from America back to these 
countries. So we have to step up the efforts.
    Ms. Ros-Lehtinen. Thank you so much. Mr. Schneider?
    Chairman Royce. I think Mr. Brad Schneider is next.
    Mr. Schneider. Thank you. And I, again, want to thank the 
committee for calling this hearing, the witnesses for your 
testimony, but also for your long and dedicated work on this 
issue. We talked, in this hearing, quite a bit about the link 
between Iran and Hezbollah, Hezbollah's international activity, 
and the impact of Syria. Dr. Karlin, I think you said it very 
well, what I would look for, and I am anxious to understand 
better, is the administration's strategy for the Levant and how 
we take that on. I only have 5 minutes, so I am going to say I 
want to see it and we can talk about it later.
    I would like to bring an issue that we haven't talked about 
here, and that is Russia's involvement with Hezbollah. To what 
extent--maybe I will turn it to you, Dr. Karlin--to what extent 
have you seen Russian cooperation with Hezbollah and Syria?
    Ms. Karlin. Thank you. At a tactical and operational level 
we have seen Russian air cover for Hezbollah ground movement, 
we have seen the likelihood of joint operating centers, that is 
worrisome. What worries me a lot more is that Russia's 
military, if you follow its modernization over the years, has 
gotten pretty good. And I worry about Hezbollah learning about 
things, like how to use cyber warfare, how to use electronic 
warfare. It is worth noting, however, that strategically, this 
is a relationship of convenience. This conflict is existential 
for Hezbollah and Syria, it is not for the Russians.
    Mr. Schneider. But I know it was reported last year in the 
Daily Beast, I believe, that Russia was providing Hezbollah 
long-range tactical missiles and other material. Have you seen 
that, and is there any evidence that the relationship is going 
to outlast the Syrian conflict?
    Ms. Karlin. I have not seen evidence of that beyond those 
reports which I have also read. Russia has its own problems 
with groups like Hezbollah, which is why I still see this as a 
relationship of convenience rather than an actual partnership 
or alliance. And indeed, it is conceivable that the Russians 
will want to come to a serious negotiation on Syria way before 
Hezbollah will, because it is just not in their interest for a 
Syrian conflict to turn out any other way than Assad remaining 
in power.
    Mr. Schneider. Great, thank you. I am going to turn to Dr. 
Levitt in a little different direction. You talked a fair 
amount about the Hezbollah International Financing Prevention 
Act. Thank you for your help with that. A broader question--
what metric should we be using to determine whether or not it 
is working, and what steps we should take further to push 
    Mr. Levitt. First of all, let me thank you for your 
leadership on the Hezbollah International Financial Prevention 
Act. You were involved in this in the very, very beginning 
before many others were. I think there are so many tools here, 
that we were using some of them as you heard, and then we all 
but stopped. And in order to have a real effect, you have to 
have some continuity. There were prosecutions that were put on 
ice. There were designations that didn't happen. The fact that 
Kassim Tajideen was--we worked with the Moroccans, he was 
arrested in Morocco, he was extradited to the United States. He 
is now here in Washington, DC, in custody, been indicted. That 
I think is a very, very, positive sign, but there is a lot more 
that has to happen, across the interagency. The type of 
interagency cooperation that we have had in the past and we now 
need to have looking forward that you heard from myself and 
from my colleagues.
    I also think we lost a real opportunity under the original 
HIFPA, the decision on whether or not to designate Hezbollah as 
a transnational organized criminal enterprise was given not to 
law enforcement, but to the DNI. And that decision was largely 
politicized and didn't move forward. It really boggled the 
mind. I wrote about it at the time. There may be reasons to 
decide not to move forward with it that I would disagree with, 
but there is no question that Hezbollah operates as a 
transnational organized criminal enterprise, and to designate 
them as such would really not only tar and feather them, but 
give us even more opportunities to target them.
    Again, I think that Mara Karlin is right, that Qassem 
Soleimani is calling the shots more than anybody else. And the 
reason for that is because Hezbollah is so incredibly beholden 
to Iran for funds and weapons, and its position, which means 
that we need to be targeting not only Hezbollah operatives, but 
also the Iranian operatives and entities that are overseeing 
this relationship, which means getting comfortable with the 
idea of holding Iran's feet to the fire for its support for 
terrorism in particular, leaving the human rights and ballistic 
missiles aside, which we should be doing as well in the context 
of the Iran deal. This does not undermine or cross the Iran 
    Mr. Schneider. Thank you. I am almost out of time. So let 
me just reiterate: I agree with you. I think we have to hold 
Iran to account for its activities, not just support of 
terrorism throughout the world, but also its activities within 
the region and its human rights activities at home. And I agree 
with what you said earlier; I don't think that threatens the 
    So, again, thank you to the witnesses,
    And, with that, I yield back.
    Chairman Royce. We go to Mr. Dan Rohrabacher of California.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman, and 
thank you for your leadership on, again, another really 
important issue for the safety of our country.
    Let me ask some fundamental questions. Is Hezbollah, the 
people who make up Hezbollah, are they all Palestinians?
    Mr. Asher. No.
    Mr. Rohrabacher. Tell me what Hezbollah is made up of then.
    Mr. Levitt. Hezbollah is a Lebanese group. It is not a 
Palestinian group----
    Mr. Rohrabacher. Okay. But----
    Mr. Levitt [continuing]. Comprised primarily of Lebanese 
    Mr. Rohrabacher. I guess the reason I was asking that is 
that we know that large numbers of Palestinians went to 
Lebanon, and I assumed that that was the group that eventually 
became Hezbollah. That is not correct?
    Mr. Levitt. No. When it was founded, it got support from 
Fatah and other Palestinian groups to be sure and Imad 
Mughniyah and others. It does also see other sub-units. There 
is a Sunni sub-unit that includes some Palestinians called the 
Resistance Brigades, but that is not Hezbollah.
    Mr. Rohrabacher. So they are Lebanese?
    Mr. Levitt. Yes.
    Mr. Asher. Mr. Rohrabacher, I can assure you that Imad 
Mughniyah himself studied at the financial feet of Yasser 
Arafat, and it is an interesting--and operationally and 
financially, we have a very substantial relationship between 
Palestinian Islamic jihad financiers and Hezbollah's Islamic 
jihad organization, i.e., the terrorist wing.
    So it is a very interesting question, and they are based 
around a place called Burj al-Barajneh, which is near the 
airport. That was the historical base of the Palestinian 
Islamist jihad. It is interesting that there is so much of the 
Hezbollah terrorist and military wing activity right there, as 
    Ms. Karlin. Sir, if I might add, I have been to Burj al-
Barajneh, and it is worth noting that actually traditionally 
the relationship between Hezbollah and the Palestinians in 
Lebanon is quite fraught because the Palestinians in Lebanon 
are Sunni. Hezbollah is Shia. And when the Palestinian refugees 
came to Lebanon, they threw off a very delicate confessional 
balance. So it is a very complicated thing, sir.
    Mr. Rohrabacher. Yes, it is very complicated, and that is 
the reason why I asked that question. I have always been under 
the assumption that, yes, they were from Lebanon, but they were 
basically Palestinian refugees that are now Lebanese. So thank 
you for clarifying that.
    What is the budget for Hezbollah? Do we have an overall 
budget? Anybody?
    Mr. Levitt. No.
    Mr. Rohrabacher. No?
    Mr. Levitt. Hundreds of millions at a minimum, but I have 
seen no open-source and--I mean, no open-source numbers----
    Mr. Rohrabacher [continuing]. Do they put those hundreds of 
millions in a bank somewhere?
    Mr. Levitt. Pardon?
    Mr. Rohrabacher. Do they put those hundreds of millions in 
a bank? Do they have bank accounts, because I thought this is 
what this was all about today.
    Mr. Levitt. So, when we got inside the Lebanese Canadian 
Bank, which we did one way or another, we observed billions of 
dollars that were under the control both of the Lebanese 
Hezbollah, which we knew which accounts they were and how much 
money was in them through unclassified means, as well as 
Iranian money, and it was billions of dollars, too.
    Mr. Rohrabacher. What banks were those again?
    Mr. Asher. The Lebanese Canadian Bank, but there were many 
others that were part of a network. Everything we saw was 
larger than anyone expected.
    And the other thing was that the connection to money 
laundering and drug trafficking proceeds were much greater than 
we ever expected.
    Mr. Rohrabacher. Okay. So, if we know they have billions of 
dollars or hundreds of millions of dollars in these banks, 
can't we do something about that? Aren't we just--if nothing 
else, I mean, we could use our ability to hack into systems and 
destroy their bank accounts.
    Mr. Maltz. Sir, like I said before, we did identify $150 
million sitting in a bank, Banque Libano-Francaise, and we 
did--because of the great work in the U.S. with the Southern 
District of New York--seize $150 million. They transferred the 
money to the U.S. Marshals' account from Lebanon, and we 
forfeited $102 million.
    Mr. Rohrabacher. Congratulations on that.
    Mr. Maltz. But there is a lot more.
    Mr. Rohrabacher. Why aren't we doing more of it then? They 
are still there.
    Mr. Maltz. Well, if we get the interagency task force 
together and we enforce some accountability on the folks 
involved, then we can do a lot more.
    Mr. Rohrabacher. Okay.
    I have just a couple more seconds here. Let me just note 
that we have recently seen an attack on Iran and the Iranian 
Government. The mullahs believe the Sunni forces have attacked 
them. This may signal a ratcheting up of certain commitments by 
the United States of America. And as far as I am concerned--I 
just want to make this point and see what you think--isn't it a 
good thing for us to have the United States finally backing up 
Sunnis who will attack Hezbollah and the Shiite threat to us? 
Isn't that a good thing? And if so, maybe it is a Trump 
strategy of actually supporting one group against another, 
considering that you have two terrorist organizations.
    Mr. Levitt. Those attacks were claimed by the Islamic 
State. It is never in our interest to support a terrorist group 
like the Islamic State. We should condemn the attacks in Iran, 
    Mr. Rohrabacher. Even----
    Mr. Levitt [continuing]. We should condemn any act of 
terrorism, even as we hold Iran accountable for its sponsorship 
of terrorism.
    Mr. Rohrabacher. So that is like Joe Stalin was a horrible 
guy; we must never associate with horrible guys like that, even 
to get Hitler. And so maybe it is a good idea to have radical 
Muslim terrorists fighting each other. I will leave it at that. 
Thank you.
    Mr. Asher. I mean, having coordinated the economic warfare 
plan against the Islamic State, I would not condone an attack 
by the Islamic State, much like Matt. I would be determined to 
destroy them financially----
    Mr. Rohrabacher [continuing]. Hezbollah----
    Chairman Royce. I think we need to go to Joaquin Castro 
here from Texas for his time.
    Mr. Castro. Thank you, Chairman.
    And thank you, the witnesses, for being here today and for 
your testimony.
    Dr. Karlin, I wanted to follow up on a point that you were 
making or ask a question based on a point that you made. We 
know that Russia has assisted and helped Hezbollah. And, of 
course, we have been dealing in our Nation with the prowess of 
Russia's cyber capabilities and their abilities for cyber 
    Can you talk about your concern, if you have a concern, 
that they are sharing this information or this ability, 
capabilities, with groups like Hezbollah, and do we have an 
assessment of what Hezbollah's cyber capabilities are right now 
and terrorists groups like them?
    Ms. Karlin. Thank you for that question. I have not seen an 
unclassified assessment of Hezbollah's cyber capabilities.
    What I might say on the Russian military front, and my most 
recent job as the Deputy Assistant Secretary for Strategy and 
Force Development meant I spend a lot of time thinking about 
Russian military modernization and the trajectory that it is 
on, and it is pretty worrisome because not only do we see 
Russian investments in kind of weapons like its nuclear 
stockpile, but we also see some worrisome doctrine.
    So the Russians have what is known as the Gerasimov 
Doctrine: Escalate to deescalate. The idea is that if I punch 
you, you should punch me a whole lot harder so that I give up. 
That is a pretty dangerous doctrine to play around with, and I 
worry about Hezbollah not necessarily getting the weapons from 
Russia, but I worry about them watching how Russia uses its 
doctrine, employs its doctrine, and then maybe starting to use 
it itself, say, vis--vis Israel.
    Mr. Castro. But certainly they could be trained in some of 
these essential capabilities?
    Ms. Karlin. Oh, absolutely conceivable.
    Mr. Castro. Sure. And then it is interesting: Obviously, we 
consider Hezbollah a terrorist organization, but they also have 
some measure of political control in municipal governments in 
Lebanon, Parliament seats, which makes them almost a hybrid of 
a state actor and a nonstate actor, you know, versus ISIS, 
right, which doesn't seek to elect people, at least as far as 
we can tell, in the same way in politics.
    So let me ask you guys, what do you see them as? Do you see 
them as a state actor or as a nonstate actor? I open that up to 
the panel.
    Mr. Levitt. Thanks for the question. You are right: They 
are both. But we need to see them as a nonstate actor in terms 
of the explicitly illicit conduct that they are conducting 
around the world as a transnational criminal organization, as a 
terrorist organization, and as a militia independent of 
    They are able to do that function even as they run for 
municipal government and they run for Parliament and they hold 
ministerial positions, because we allow it. If you allow an 
organization that, independent of the country, does all these 
other things, then, also, by the way, has people run for 
office, then it can pretend to have more legitimacy than it 
    But I think Mara Karlin was right: The greatest threat to 
Lebanon, on so many levels--financial, stability--is Hezbollah. 
And I think it is in part our fault, the international 
community's fault, as Mr. Deutch suggested, for failing to see 
Hezbollah holistically as a group that, whatever else it is 
involved in, it is very much involved in a whole host of 
explicitly illicit activities, as Mara pointed out, that have 
nothing to do with the interests of Lebanon, even its interests 
as a party in Lebanon.
    So, ultimately, it is a nonstate actor that engages in some 
state activities because it benefits them to do so.
    Ms. Karlin. Mr. Castro, I couldn't agree more with Matt's 
comments. I might just add that the weaker the Lebanese state 
is, the better it is for Hezbollah.
    Mr. Asher. Just if I could add, we identified publicly in 
DEA the business affairs component of the Islamist jihad 
terrorist wing of Hezbollah, the military wing of Hezbollah, as 
at the center of the narcotrafficking, money laundering 
conspiracy that involved the Lebanese Canadian Bank, a massive 
number of cells in Europe distributing cocaine, cocaine coming 
into the United States. So there is no doubt--and I am not 
trying to say we shouldn't go after the entire organization, 
designate the entire organization--but the case that could be 
made most directly from a law enforcement perspective just 
following the facts would tie the terrorist wing under Imad 
Mughniyah, who died, and his successor and his business manager 
Adham Tabaja, who he designated, to the cocaine money 
    So there is a strategy that could be pursued where we go 
after the business affairs component of Islamist jihad, charge 
Islamist jihad for having blown up our Embassies and killed our 
people, and we leave the rest of Hezbollah sort of off to the 
side. That is an option that some prosecutors have advocated, 
but I am not sure that that is necessarily really comporting 
with the facts fully.
    Mr. Levitt. I will just add to that. This is where people 
get most uncomfortable, right? If you really dig down to the 
information, you will find time and again that the 
``political'' or ``social welfare leadership'' is involved in 
all of this illicit activity. The business affairs component 
was directly tied to Abdallah Safieddine. Safieddine is a 
political senior Hezbollah official.
    And so, for those who are uncomfortable recognizing that 
Hezbollah actually is one holistic entity, for those who are 
uncomfortable with the consequences of having to follow the 
evidence to where it leads, that may explain why some people 
are hesitant to do so. It is inexcusable. We should be 
following the evidence where it takes us, whether it is in a 
murder case or a bank robbery case or a terrorism case.
    Mr. Castro. Thank you.
    I yield back, Mr. Chairman.
    Chairman Royce. Mr. Perry.
    Mr. Perry. Thanks, Mr. Chairman.
    Thanks to the panel.
    Generally speaking, maybe it is Dr. Levitt and Dr. Asher, 
why shouldn't the U.S. Treasury Department sanction the Central 
Bank of Lebanon?
    Mr. Levitt. The simple answer is because they are actually 
very good partners. The Central Bank of Lebanon put out a 
circular making sure that the Lebanese financial system would 
enforce things like HIFPA and did a very good job of doing so.
    As Mara said before, completely destabilizing Lebanon, 
destabilizing the financial system there is not in our 
interest, and of the partners we have, they are one of the 
    Mr. Perry. Are they facilitating payments that benefit 
    Mr. Levitt. I can't answer that question in any 
specificity. Because Hezbollah has such a large footprint in 
the Lebanese economy, it is likely that that happens at some 
point. Would you, by targeting the Lebanese Central Bank, at 
the end of the day have a net benefit? No.
    Mr. Perry. Okay. Why shouldn't the Department sanction 
Iranian banks for which sanctions were lifted under the JCPOA? 
    Mr. Levitt. My colleagues keep looking at me. That is fine.
    I think that we need to be careful that banks that were 
delisted, when we look at them for relisting or we look at 
other banks, we are very, very careful and specific to make 
sure that we are doing these under the authorities that still 
exist, and they do exist. There will be people who will tell 
you that you can't redesignate an Iranian entity that was taken 
off the list, but if it was taken off a proliferation list and 
it is still today involved, for example, in sponsorship of 
terrorism, it absolutely can and should be----
    Mr. Perry. And should be, right?
    Mr. Levitt [continuing]. Considered for designation.
    Mr. Perry. Okay.
    Mr. Asher. We are legally mandated, essentially, to do 
this. That is something, from your oversight perspective, Mr. 
Perry, that you can remind people. We have a legal 
responsibility to enforce this act, and we can't willfully 
ignore the facts. I, unfortunately, have seen a lot of willful 
ignorance in my career as----
    Mr. Perry. You can't use the JCPOA to be derelict in your 
duty, right?
    Mr. Asher. That is right.
    Mr. Perry. And that is what is happening in this case----
    Mr. Asher. And it is happening.
    Mr. Perry. Considering they are intensifying international 
criminal activities, is there any reason the administration 
shouldn't consider designating Hezbollah as a transnational 
criminal organization?
    Mr. Levitt. They absolutely should. As I said in my 
testimony and get into more detail in the written testimony, we 
should revisit this immediately.
    Mr. Perry. Is there any disagreement among the panel?
    Some of the most lucrative activities happen in the TBA, 
the Tri-Border Area. Can any of you talk about the current 
measures and what additional measures should be included 
regarding their criminal syndicate activities in Latin America, 
et cetera? Anybody?
    Mr. Maltz. All I can say, sir, is that, when I was the head 
of the SOD, we saw a lot of cocaine leaving the TBA, going all 
over to the world, working closely with folks in Venezuela, 
connected to the highest levels of the government in Venezuela, 
but as far as currently, I can't give you an accurate 
assessment of what they are seeing in the TBA now.
    Mr. Perry. And what is your recommendation for continued or 
further action in that regard?
    Mr. Maltz. Again, like I have said all along, the best 
recommendation I can give to this committee: It has to start 
with information sharing. Let's stop pushing it under the rug. 
Get the experts together in a room, designate these as 
priorities. Every agency should be mandated to put the 
information on the table and then focus on the targets, and 
that is not happening.
    Mr. Asher. If I could just say, I think the most powerful 
current way for the Department of Justice to impose a huge 
legal penalty against Lebanese Hezbollah, including its 
terrorist wing, would be to actively prosecute the government 
of Nicolas Maduro and his associates, including Tareck El 
Aissami, his executive vice president, for their involvement 
and complicity and active conduct in cooperating with Hezbollah 
in narcotrafficking money laundering on an international scale.
    Mr. Perry. Okay.
    Mr. Levitt. If I can add one last thing here.
    Mr. Perry. Sure.
    Mr. Levitt. Again, under HIFPA, we can apply secondary 
sanctions--and as I described in my testimony at length, so I 
won't describe it now--we can and should be looking for 
secondary sanctions, financial institutions with which we can 
hit secondary sanctions, in particular in South America and, 
after the Waked Money Laundering Organization was shut down, we 
saw a lot of that movement interest the Tri-Border Area, 
Paraguay in particular. There are no shortage of targets.
    Mr. Perry. Okay.
    Dr. Asher, Dr. Levitt, and Mr. Maltz, and I guess Dr. 
Karlin, as well, I did some time in Iraq. I just want, if you 
can in the few moments that are remaining, to assess the role 
of Iraqi financial institutions and businesses in enabling 
Hezbollah in Iran.
    Mr. Levitt. We do know that, in the wake of the original 
HIFPA legislation, some Hezbollah money was moved out of 
Lebanon for fear that it wasn't quite as safe there as it once 
might have been, and some of it was moved, we understand, to 
places like Dubai and to Iraq.
    The first order of business is to try and pressure the 
Iraqi Government to work as closely with us as possible in ways 
that they already have, for example, on countering the Islamic 
State financing, exchange houses, et cetera. Then, short of 
that, if there are illicit banks that are still providing these 
types of services knowingly, then we should consider the 
secondary sanctions option. But that doesn't need to be our 
first choice. But we definitely need to be working further on 
the financial system as it relates to these threats.
    Mr. Asher. Very quickly, based on open-source commercial 
records, you can see a very significant movement of Hezbollah 
financial operatives tied to the business affairs component of 
Islamist jihad into Iraq in the last few years. They have 
established a whole string of businesses in the south in 
partnership with Iraqi militant groups. It is obviously part of 
some sort of strategy that they are executing for their Iranian 
    Mr. Perry. Just for clarification, in the south, do you 
mean in places like Basra and Nasiriyah?
    Mr. Asher. Yes, but also into the southern belts of Baghdad 
as well, so you see it in some of the mixed areas. They have an 
economic action plan that they are executing to infiltrate the 
Iraqi economy, with the Lebanese playing a much more 
significant role.
    Chairman Royce. We go now to Dan Donovan from New York.
    Mr. Donovan. Thank you, Mr. Chairman.
    Dr. Levitt, during your testimony, you talked about how we 
should again sanction Iran. Last year, the United States 
Government paid Iran $1.7 billion to their government. The 
official purpose of that was a payment for $400 million for a 
contract for military weapons from decades ago. The remaining 
$1.3 billion was the interest that was collected on that $400 
million while it remained in the United States. If we are going 
to sanction countries, if we are going to sanction entities, 
what kind of message do we send them when they are receiving a 
benefit for us freezing their assets in the United States, that 
$1.3 billion that they gained in interest?
    Mr. Levitt. So that action was, I believe, an unfortunate 
but a technical action in terms of the interest. Interest was 
there. Whether that had to be done or not is another discussion 
for another time. My feeling is we are where we are. That 
happened. There is no undoing that. And what we need to do, I 
believe in keeping with the Iran deal, whether you like the 
Iran deal or not, whether I like the Iran deal or not, is to 
hold Iran's feet to the fire on its continuing illicit conduct 
because that was how the deal was sold to us.
    We were told by the previous administration's officials 
time and again that we would continue to hold their feet to the 
fire on these issues. We need to. It does not violate the deal 
to do so. The problem is, because we didn't do anything, Iran 
has been emboldened. Because we didn't do anything and Iran 
went around the world, including the Governor of the Central 
Bank who came here and spoke in Washington, DC, at the Council 
on Foreign Relations and elsewhere and said the era of 
sanctions is over, people started buying that narrative. That 
narrative is false. And so the first thing we need to do is 
push back on that narrative with our European and Asian allies, 
make them understand--I hope, because we are where we are--that 
we will hold up to the letter of the Iran deal, which means 
enforcing terrorism, ballistic missile, and human rights 
    Mr. Asher. So I have on my cell phone some pictures that 
were sent to me by a financial source who is not a U.S. 
Government source. I do some work for financial institutions on 
anti-money laundering sanctions compliance, and that source 
sent me pictures of $1 billion in two pallets of shrink-wrapped 
U.S. Federal Reserve $100 bill notes that were moved through a 
European country into West Africa and into a South American 
country by Iranian agents, it appears, to set up some sort of 
port-to-port scheme, perhaps involving narcotics trafficking. 
Whether the money is the money that was given by my State 
Department colleagues, unfortunately, in my mind, or not--you 
don't see $1 billion in palletized cash with Federal Reserve 
Bank of New York symbols on them, the wrappers, every day--the 
fact is that money is being moved around for operational and 
devious reasons. I don't think it contributed whatsoever to 
creating a more peaceful relationship with the Iranian people.
    Mr. Donovan. You know, I always ask witnesses when they 
testify before us that we are lawmakers, and, you know, we 
create laws, and we have to ask experts like you, what laws 
would you like to see Congress create that would achieve the 
goals that we all have here?
    Would each of you be able to just tell me for a moment what 
you would think about a law that would prohibit a terrorist 
organization or a state terrorist organization from receiving a 
benefit from having their assets in a United States bank?
    Mr. Asher. I say I think we need to demand, sir, if you 
could and your members, colleagues, that the RICO, Racketeer 
Influenced and Corrupt Organizations Act, which terrorism is a 
predicate for RICO, be used assiduously against the major 
terrorist organizations to go after their members, their money, 
and their facilities, knowing that we can use long-arm statutes 
like we did against this Banque Libano-Francaise to go after 
their money and correspondent bank accounts here, even if we 
can't get to it in Lebanon or Iran or somewhere in the Middle 
    So RICO is an absolutely central feature. It doesn't need 
to be legislated, but you could encourage its use. It has never 
been used in a large way, other than against the FARC, and that 
was quite successful.
    Mr. Donovan. And as Dr. Levitt had said earlier, if we 
designate Hezbollah as a criminal enterprise, RICO then would 
be available to us.
    Mr. Levitt. RICO is available anyway. That would provide 
other benefits, but we could do RICO yesterday.
    Mr. Donovan. Thank you.
    Mr. Chairman, I yield back the remainder of my time.
    Chairman Royce. Mr. Garrett?
    Mr. Garrett. Thank you, Mr. Chairman.
    With the risk of--let me see how gentle I can be. I think 
we have missed the target here. As we discuss in this very 
meaningful and worthwhile hearing attacking Hezbollah's 
financial network tangentially, certainly we have discussed 
Iran, but I have a rather convoluted line chart here that I 
have done that shows Iran giving what is estimated to be, 
depending upon your source: Open source, $60 million to $200 
million a year to Hezbollah; the IRGC controlling the entire 
black economy in Iran and big, large portions of the above-
ground economy in Iran; and, just in the black economy side, 
controlling revenue between $25 billion and $50 billion a year 
and them supporting Iran. We have drug ops in Lebanon 
supporting Hezbollah, but the drug ops in Lebanon really took 
off after the Syrian civil war escalated, creating a vacuum. 
And when the LAF stopped patrolling the fields in the areas in 
the Beqaa Valley, we saw a skyrocketing production of drugs. So 
that was caused largely by Iran, who now has coopted the LAF to 
the point now where I recently read an article that said, ``The 
distinction between Hezbollah and the Lebanese state is 
    In fact, the Lebanese President is a Hezbollah ally, and 
the Lebanese were the only nation not to sign the resolution 
condemning the attacks on the Saudi consulate and Embassy in 
Iran, and so what we see here is we are talking about 
Hezbollah, but that is a branch on a tree. The tree should be 
called Iran. The roots of the tree should be called the IRGC. 
And if you want to solve the long-term problem, we need to take 
on the IRGC.
    One of these gentlemen--and I apologize because I was 
copiously taking notes, so I don't know which of you it was--
said we need to hold up to the agreement of the JCPOA, which I 
not jokingly referred to as the JCPOS--you can figure that one 
out--which means enforcing ballistic missile sanctions and, I 
quote: ``Hold up to the agreements of the JCPOA, which means 
enforcing ballistic missile sanctions.''
    I wish--and I don't know how to do this because I am new 
here--that I could have read into the record an article from, 
of all places, NPR, which points out that the JCPOA is so 
tragically flawed that the lawyers that wrote it should be 
disbarred. Let me read to you from the U.N. Security Council 
Resolution 1929, which requires ``Iran shall not undertake any 
activity related to ballistic missiles.''
    Fast forward to the JCPOA--if anybody knows this nod along 
with me--which reads: ``Iran is called upon not to undertake 
any activity regarding ballistic missiles.''
    I am not that good a lawyer, but I know the difference 
between ``shall not'' and ``called upon not to.'' And so we 
either intentionally sent really bad lawyers to negotiate a 
deal that puts Iran on a glidepath, not only to destroy 
sanctity and peace and stability in the region; we either 
intentionally did that or we hired the worst possible 
negotiators, who don't know the difference between ``may'' and 
``shall,'' which you learn as a first-year law student.
    No enmity intended toward anyone in the room and 
particularly not the lady and gentlemen on the committee--I had 
to look, Dr. Karlin, to make sure--but would you not agree that 
the root of the problem with Hezbollah is Iran and that the 
root of the problem in Iran is the IRGC and that the root of 
the IRGC is Quds, if I want to walk this dog farther down the 
    I mean, if we really want to attack the source of this, do 
we not look to the IRGC in returning peace and stability and 
functionality to Iran, whose people want it but whose people 
can't have it when the Quds Forces are willing to shoot student 
protestors in the head, right, with impunity, and the United 
States does nothing.
    I apologize. I pride myself not on doing soliloquies and 
diatribes in these things, but I am frustrated because I think 
we are mistargeting. Would any one of you gentlemen or lady, is 
the root of the Hezbollah problem not Iran?
    Mr. Asher. Absolutely.
    Mr. Garrett. And is the root of the Iran problem----
    Mr. Asher. The IRGC, of course. And I worked to build a 
plan at CENTCOM where we went after the Iranians on various 
levels for various things that they did, including the IRGC, of 
which, unfortunately, much was abandoned as we got closer to 
the JCPOA. Whether you advocate a regime change or not, we 
don't accept the regime and its activities, and there is no way 
to divorce the IRGC from the Iranian economy and from the 
Lebanese state, in effect.
    Mr. Garrett. I am a big fan of peace and stability, and I 
advocate loud and vociferously on behalf of regime change. I 
don't think it needs to be done at the point of a gun, but I do 
think that we created circumstances in the JCPOA, and we have 
not pursued our allies, particularly in Europe, who do business 
with the IRGC, and we can do this with open sources documented 
to make them pick who they want to do business with.
    Yes, sir?
    Mr. Levitt. Let me just put some meat on this bone, for 
example. The Financial Action Task Force gave Iran a year, a 
year that ends this month, to improve its behaviors on money 
laundering terror finance. Among the many things it is supposed 
to do are some very technical things and some very broad 
things. One of the things Iran has said it will not do is 
delete the cutout that it has for anything it describes as a 
resistance organization, i.e., Hezbollah. And it doesn't appear 
they are going to change that. That is this month, and we need 
to make sure that the administration makes its position very, 
very clear this is unacceptable for us because you will 
probably not get Iran off the FATF blacklist for special 
measures right now, but you will probably get them a little bit 
of an extension to see if they can do more.
    Mr. Garrett. Mr. Chairman, I am over time.
    I wanted to say, in conclusion, we can have a regime change 
if we will strictly enforce sanctions. We have never been 
willing to do that. Hopefully this administration will change 
that. Thank you.
    Chairman Royce. Thank you, Mr. Garrett.
    We go now to, I think, Mr. Ted Yoho--oh, Mr. Gerry Connolly 
is here.
    Mr. Connolly. Thank you, Mr. Chairman.
    Sorry, Ted.
    Mr. Yoho. I yield.
    Mr. Connolly. I thank my friend from Florida.
    Welcome, to the panel.
    Dr. Karlin, are you familiar with the JCPOA?
    Ms. Karlin. Yes, sir, I am.
    Mr. Connolly. Was it an all-comprehensive agreement that 
covered all of Iranian behavior and our concerns?
    Ms. Karlin. I did not work on the JCPOA as an Obama 
administration official. My understanding is that it is 
primarily focused on the nuclear piece.
    Mr. Connolly. Correct. Can you think of a treaty governing 
an adversary that was all comprehensive in history?
    Ms. Karlin. Not off the top of my head.
    Mr. Connolly. Right. So, when President Kennedy, for 
example, negotiated the first Nuclear Test Ban Treaty to ban 
atmospheric testing of nuclear weapons with then Nikita 
Khrushchev and it was widely lauded as a peaceful measure, it 
didn't address other Soviet behaviors. Is that not correct?
    Ms. Karlin. Indeed. Usually, one----
    Mr. Connolly. Right. And when one looks at the JCPOA in 
terms of metrics, based on the fact that it was designed to 
curb and, in fact, reverse aspects of the nuclear development 
program in Iran, have those metrics been met, or is it widely 
agreed that Iran has, in fact, cheated and violated the terms 
of the agreement?
    Ms. Karlin. I think it is a complicated picture, and I am 
probably not the best person to address it.
    Mr. Connolly. I don't think it is complicated. By and 
large, all of the specific metrics with respect to the Iranian 
nuclear development program have, in fact, been met, which may 
be why we are trying to----
    Mr. Asher. Could I just make one interjection?
    Mr. Connolly. Excuse me, sir. No, please. And that may be 
why we want to divert attention sometimes in this hearing to 
other aspects of the Iranian behavior that indeed are to be 
decried and, to the best of our ability, sanctioned.
    I take enormous exception to my colleague from Virginia 
asserting that maybe this administration will get serious about 
sanctions when the previous one did not. It was precisely 
because sanctions were working in the Group of 5, holding it 
together, that brought Iran to the table for the first time.
    Ms. Karlin. I couldn't agree more, sir.
    Mr. Connolly. And we don't get to rewrite history. You 
don't have to like it, but you don't get to rewrite it, and I 
think the record needed to be corrected.
    So, maybe, Dr. Levitt or Dr. Karlin, but I am intrigued by 
Hezbollah's expanding role in the Syrian civil war, 
particularly, where they have been exposed. What is your sense, 
Dr. Levitt, of the cost? I mean, they have lost thousands of 
fighters. They have lost leadership. Has it weakened Hezbollah, 
or have they been able to use the exposure in Syria to their 
advantage in terms of strengthening the organization and its 
    Mr. Levitt. And the honest answer to that question is yes.
    Mr. Connolly. Yes, it has weakened them?
    Mr. Levitt. Yes, it has weakened them, and yes, it has 
strengthened them both. I thought Mara addressed this well in 
her remarks. Hezbollah had lost more people killed and more 
people wounded in this so far fairly brief conflict than in all 
the wars with Israel. It is costing Hezbollah a tremendous 
amount of money. The fighting in Syria is still getting the 
funds, but not everything in Lebanon that Hezbollah 
traditionally does--some of the other social welfare, political 
things are not. Again, showing the ties between military 
terrorism activities and political, social welfare activities, 
it is having an impact in terms of their supporters as well as 
some people's families are getting more money than other 
people, depending on how long you fought. The fact that they 
are now having to put up banners on the streets in Lebanon 
saying, ``Well, if you don't really want to fight, you can make 
about a $1,000 donation and get out of it,'' it is like people 
are trying to get out of the forced conscription in Russia or 
Turkey back in the day.
    Mr. Connolly. Right.
    Mr. Asher. And so they are facing those types of problems. 
They have, however, had the benefit of the Islamic State rising 
to be such a threat that there has been a circling of the 
wagons in Lebanon--and elsewhere too, but we will focus on 
Lebanon--where the people say: I don't like Hezbollah, but 
Hezbollah is effectively defending me against the Islamic 
State, and so I don't have the luxury of still being angry at 
them for dragging my country, Lebanon, into the civil war.
    Mr. Connolly. Do you believe that the costs are hurting 
them back in Lebanon, either in terms of credibility, ability 
to recruit, or, for that matter, participate in whatever 
governance they participate in?
    Mr. Levitt. It is hurting them in terms of their ability to 
run their programs and their ability to recruit. There is 
dissension within the ranks among their supporters, but they 
are getting by just fine. And we need, therefore, right now to 
take the financial measures that will further undermine them.
    All of your comments on the JCPOA I understand. Under the 
JCPOA, we were told these other things were going to continue. 
It is a fact that some of these were halted a little bit 
because some people felt they didn't want to shake the deal. I 
don't mean to make a statement about the deal there.
    Now, we are where we are. Now is the opportunity to get 
back on the saddle here because we do have an opportunity to 
further exacerbate those financial tensions for Hezbollah.
    Mr. Connolly. Yes. And this is a test of a new 
administration, whether its close ties to Russia can be put to 
our advantage in terms of curbing the behavior of Hezbollah and 
the Iranian Revolutionary Guard in areas we care about: Syria 
and Iraq. And maybe it is time to now put that question to the 
new administration.
    Thank you. My time is up.
    Chairman Royce. Thank you.
    We go now to Mr. Ted Yoho.
    Mr. Yoho. Thank you, Mr. Chairman.
    And I appreciate the panel being here.
    I read an article about Hezbollah about a month ago and how 
it said that it has become a force of over 100,000 very well 
armed, very well trained, one of the top fighting forces in the 
world. And I am going to ask the panel--who wants to weigh in 
on this--was that possible before the JCPOA and the release of 
the money that Iran got, or did that benefit Hezbollah to 
become that strong of a force? Dr. Karlin?
    Ms. Karlin. Thank you for that question. That number is a 
little larger than I have heard, but the concept, I think, is 
absolutely spot on, that Hezbollah has grown. It has grown more 
capable quantitatively and qualitatively.
    But we have seen it on this trajectory for a while now. 
Back in 2010 or so, my former boss Secretary Gates noted that 
Hezbollah had more missiles and rockets than most governments 
in the world. I would say the money has been useful, but it is 
the Syria conflict that has been determinative.
    Mr. Yoho. Right. And that is where it was; it was in Syria, 
was the report I read. And they are not affiliated with a 
nation as far as a national government. They are kind of a 
proxy group, correct?
    Ms. Karlin. Hezbollah does serve in the Lebanese 
    Mr. Yoho. Okay. And then, Mr. Levitt, I want to get 
clarification. Did you say that Iran should be redesignated as 
a state sponsor of terror?
    Mr. Levitt. Iran is designated a state sponsor of terror. 
There is no redesignation then.
    Mr. Yoho. That is what I thought, and I misheard you then.
    Mr. Levitt. It was a response to a question about whether 
the context of redesignating Iranian entities that may have 
been taken off lists under the JCPOA and my argument that it 
would be in no way a violation of the JCPOA if they were 
relisted under still existing sanctions authorities like 
counterterrorism, which need to be very, very clear and show 
that evidence, that this is not simply just putting an entity 
back on the list for proliferation purposes.
    Mr. Yoho. Okay.
    And then, Dr. Asher, you had a comment you wanted to talk 
to Mr. Connolly about, and I will give you about 30 seconds if 
you want to add to it.
    Mr. Asher. So I respect Mr. Connolly's points about the 
JCPOA as a former negotiator in the Six Party Talks of North 
Korea and also working on North--Iran nuclear at one stage, but 
I am very concerned about outsourcing.
    The thing we learned with North Korea in 2002 with the Al 
Kibar agreement was that countries can outsource. In 2002, 
there was an agreement between North Korea and Syria to build 
Al Kibar, the nuclear reactor for the nuclear weapons program 
with Syria. That broke ground in October 2003, according to 
unclassified information you can get on the internet. That is 
exactly when the NIE--the CIA--or the National Intelligence 
Council said the Iranians put their weapons program on hold. 
The idea that they could have outsourced it has always bothered 
me personally as an official at the time.
    And then, in 2012, the Iranians and the North Koreans 
signed a science technology agreement that is almost exactly 
the same as what they signed with Syria between North Korea and 
Syria in 2002, and at the signing ceremony was Fereydoun 
Abbasi-Davani, the head of the Iranian nuclear weapons program. 
He just didn't show up very often to meetings. The question is, 
what is going on? And is it possible that Iran has outsourced? 
There is no provision in JCPOA over outsourcing, and it does 
worry me.
    Mr. Yoho. All right.
    And, Dr. Karlin, I want to come back to you. Is there 
continued production of heavy water in Iran, and does that come 
from nuclear activity?
    Ms. Karlin. I am not aware of that, sir.
    Mr. Yoho. All right. I believe the answer is yes. Is the 
volume beyond what the JCPOA allows for, which, again, we have 
read the reports--they are producing more than they should be--
and then is that production and value in violation of JCPOA? If 
they are doing that, would you say that was in violation?
    Ms. Karlin. If that were happening, that is beyond my 
expertise, sir.
    Mr. Yoho. Can anybody else answer that?
    All right. Mr. Maltz, I am going to go to you because the 
work you have done I find very interesting, and I don't know if 
it was you or Dr. Asher talking about the combination of the 
terrorist groups with the narcotrafficking. And do you see that 
increasing in the future?
    Mr. Maltz. Absolutely. I mean, everyone in government says 
that terrorists are increasingly turning to crime and criminal 
networks for funding because the U.S. Government and our allied 
forces have done such a great job at shutting down their 
funding streams. They need funds to operate, and one of the 
biggest things that I saw that is really disturbing is the 
corruption factor. You can't pay off a general in West Africa 
with a Visa and a Mastercard. You need a suitcase of cash.
    Mr. Yoho. Right.
    Mr. Maltz. So the cash that is being generated from drug 
trafficking, the U.N. estimated, what, about $400 billion? So 
it is just common sense that they are going to get involved in 
drug trafficking and other illicit activity to be able to carry 
out their agenda. So, yes, I am very concerned, and it is 
evolving as far, as I am concerned.
    Mr. Yoho. Do any of you believe that Hezbollah has been 
involved in the most recent Iranian kidnapping of the U.S. 
citizens or U.S. legal permanent residents? And if I don't have 
the time, Mr. Chairman, if they could submit that.
    Chairman Royce. Is that a nod yes or a nod no? Pardon?
    Mr. Levitt. I have seen no evidence to that effect.
    Mr. Yoho. Okay. Thank you.
    Chairman Royce. All right. Thank you.
    We go to Ann Wagner of Missouri. Ambassador.
    Mrs. Wagner. Thank you, Mr. Chairman, for hosting this 
    Hezbollah is obviously a constant violent threat to our 
allies and to us. The joint statement released by the U.S. and 
Saudi Arabia last month expressed the importance of supporting 
the Lebanese state in order to disarm Hezbollah. But I, along 
with many of my colleagues, are concerned that financial 
support to Lebanon may mean empowering Hezbollah.
    Dr. Asher and Mr. Maltz, kind of as a follow-on to 
Congressman Yoho's questioning, it is well known that Syrian 
women and children are at risk of being trafficked in Lebanon. 
We also know that Hezbollah generates revenue from drug 
trafficking and, allegedly, human trafficking in the Americas.
    Can you please discuss Hezbollah's involvement in human 
trafficking in Lebanon, Syria, and globally?
    Mr. Asher. I mean, I have one specific case I can't 
discuss, but I am aware of one of the top-tier targets; we call 
them super facilitators. We actually had a thing called the 
Iran-Hezbollah super facilitators initiative targeting key 
functional financiers for the Hezbollah-Iran network globally.
    And I am aware of one very significant case of Syrian 
children being trafficked all the way into West Africa by an 
individual, and it was a very painful case for us because the 
U.S. Government was well aware of it, and we did nothing. And 
it still haunts me that these poor children--and they were like 
young girls and boys--were sent to a heinous country in West 
Africa probably to their death because the guy in charge seemed 
to like torturing children. So, you know, that is one case, and 
he was definitely a Hezbollah senior functional official also 
tied to the Iranians.
    Mrs. Wagner. Disturbing, but thank you, Dr. Asher.
    Dr. Karlin, your testimony on Iran-Hezbollah relations was 
fascinating. Can Lebanon or other actors help fill a void with 
the Lebanese Shia who are dependent on Hezbollah, as your 
testimony laid out, in terms of political representation and 
economic opportunities? And could you also maybe flesh out for 
me the factors preventing these opportunities?
    Ms. Karlin. Thank you very much for that question. I am 
delighted that that was useful.
    There are ways to fill this void, particularly if you look 
at strengthening Lebanon economically.
    So what we have seen, because of the Syria conflict, is 
people who are joining Hezbollah because they don't have job 
opportunities and Hezbollah pays, obviously. So, to the extent 
you can look at microloans or other types of assistance so 
that, when you go into these areas where Hezbollah is strong, 
you actually see other entities there.
    What I find most interesting on political representation, 
ma'am, is that you do hear some alternative voices to 
Hezbollah, but in particular, over the last few years, there 
were fewer and fewer people in Lebanon defending Hezbollah, and 
that quiet is meaningful and notable.
    Mrs. Wagner. Interesting. Well, Dr. Karlin, I will just 
stay with you for a moment. On Tuesday, we witnessed U.S.-led 
air strikes near al-Tanf and on the Iranian-backed militias in 
Syria. How interconnected are Hezbollah and these militias, and 
do you believe that economic sanctions on these militias could 
help stem Hezbollah's financing?
    Ms. Karlin. Thank you for that question. I, too, am really 
concerned about what is happening right now around al-Tanf. We 
see U.S. military getting more involved here, and it is very 
conceivable something could happen with these militias or with 
    I think the Hezbollah-militia relationship is extremely 
tight. They are very much looking to one another. I defer to my 
colleagues regarding the financial piece, but my instinct is, 
if you can help weaken one, that is largely beneficial.
    Mrs. Wagner. Anyone else?
    Mr. Levitt. I will just add on two points, both of which 
are in my written testimony. One is, absolutely, we need to be 
targeting not just Hezbollah but the other Shia militias with 
which it is partnering very, very closely and, to get to some 
of the earlier questions, both of them together with Iranian 
soldiers and operatives on the ground in Syria. Al-Tanf is 
something we need to look at very, very closely. In the wake of 
that strike that you mentioned, Hezbollah issued a kind of 
veiled warning to the U.S. not to cross its--Hezbollah's--red 
lines in the area.
    Mrs. Wagner. Uh-huh.
    Mr. Levitt. And the other thing regarding Dr. Asher's 
comment on the super facilitators, I mentioned briefly in my 
oral remarks the need to target these key networks, and my 
written testimony gets into detail that we should be targeting, 
among those, the super facilitators, some of whom, I think 
including the one that Dr. Asher was referring to, are really--
they are Hezbollah people. Others are not. Others, they are not 
Hezbollah operatives. They are criminals. They are super 
facilitators who will help Hezbollah today and some other 
criminal enterprise tomorrow, but they play these mission 
critical roles, whether it is money laundering or accessing 
banks. And we should be targeting them as well, even if they 
are not card-carrying Hezbollah members, because they are 
providing mission critical, particularly logistic and 
financial, support to Hezbollah.
    Mrs. Wagner. I thank you all.
    And I thank you, Mr. Chairman. I believe I am out of time, 
and I will yield back.
    Chairman Royce. We are out of time, but thank you very 
much, Ambassador Wagner.
    We appreciate the time, the service, and the expertise of 
our witnesses here this morning. And as we have heard, there is 
much work to be done to rebuild our law enforcement 
capabilities to tackle Hezbollah, and we look forward to 
working with our witnesses as we press the administration to do 
just that.
    Thank you very much. We stand adjourned.
    [Whereupon, at 11:54 a.m., the committee was adjourned.]



                            A P P E N D I X


         Material Submitted for the Record


 Material submitted for the record by the Honorable Thomas A. Garrett, 
  Jr., a Representative in Congress from the Commonwealth of Virginia


Material submitted for the record by the Honorable Theodore E. Deutch, 
         a Representative in Congress from the State of Florida