[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
EXPLORING THE FINANCIAL NEXUS
OF TERRORISM, DRUG TRAFFICKING,
AND ORGANIZED CRIME
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TERRORISM
AND ILLICIT FINANCE
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
MARCH 20, 2018
__________
Printed for the use of the Committee on Financial Services
Serial No. 115-82
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
31-416 WASHINGTON : 2018
HOUSE COMMITTEE ON FINANCIAL SERVICES
JEB HENSARLING, Texas, Chairman
PATRICK T. McHENRY, North Carolina, MAXINE WATERS, California, Ranking
Vice Chairman Member
PETER T. KING, New York CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma BRAD SHERMAN, California
STEVAN PEARCE, New Mexico GREGORY W. MEEKS, New York
BILL POSEY, Florida MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin DAVID SCOTT, Georgia
STEVE STIVERS, Ohio AL GREEN, Texas
RANDY HULTGREN, Illinois EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina KEITH ELLISON, Minnesota
ANN WAGNER, Missouri ED PERLMUTTER, Colorado
ANDY BARR, Kentucky JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania BILL FOSTER, Illinois
LUKE MESSER, Indiana DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine JOYCE BEATTY, Ohio
MIA LOVE, Utah DENNY HECK, Washington
FRENCH HILL, Arkansas JUAN VARGAS, California
TOM EMMER, Minnesota JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana
Shannon McGahn, Staff Director
Subcommittee on Terrorism and Illicit Finance
STEVAN PEARCE, New Mexico Chairman
ROBERT PITTENGER, North Carolina, ED PERLMUTTER, Colorado, Ranking
Vice Chairman Member
KEITH J. ROTHFUS, Pennsylvania CAROLYN B. MALONEY, New York
LUKE MESSER, Indiana JAMES A. HIMES, Connecticut
SCOTT TIPTON, Colorado BILL FOSTER, Illinois
ROGER WILLIAMS, Texas DANIEL T. KILDEE, Michigan
BRUCE POLIQUIN, Maine JOHN K. DELANEY, Maryland
MIA LOVE, Utah KYRSTEN SINEMA, Arizona
FRENCH HILL, Arkansas JUAN VARGAS, California
TOM EMMER, Minnesota JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York RUBEN KIHUEN, Nevada
WARREN DAVIDSON, Ohio STEPHEN F. LYNCH, Massachusetts
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
C O N T E N T S
----------
Page
Hearing held on:
March 20, 2018............................................... 1
Appendix:
March 20, 2018............................................... 23
WITNESSES
Tuesday, March 20, 2018
Humire, Joseph, Executive Director, Center for a Secure Free
Society........................................................ 5
Maltz, Derek, Executive Director, Government Relations, Pen-Link,
Ltd............................................................ 7
Realuyo, Celina B., Professor, Practice of National Security
Affairs, William J. Perry Center for Hemispheric Defense
Studies, National Defense University........................... 9
Shelley, Louise, Professor, Schar School of Policy and
Government, George Mason University............................ 11
APPENDIX
Additional Material Submitted for the Record
Pittenger, Hon. Robert:
Written responses to questions for the record submitted to
Joseph Humire.............................................. 24
Written responses to questions for the record submitted to
Derek Maltz................................................ 29
Written responses to questions for the record submitted to
Louise
Shelley.................................................... 32
EXPLORING THE FINANCIAL NEXUS
OF TERRORISM, DRUG TRAFFICKING,
AND ORGANIZED CRIME
----------
Tuesday, March 20, 2018
U.S. House of Representatives,
Subcommittee on Terrorism
and Illicit Finance,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 2 p.m., in
room 2128 Rayburn House Office Building, Hon. Stevan Pearce
[chairman of the subcommittee] presiding.
Members present: Representatives Pearce, Pittenger,
Rothfus, Tipton, Hill, Emmer, Zeldin, Davidson, Budd,
Perlmutter, Maloney, Himes, Foster, Kildee, Vargas, Gottheimer,
and Kihuen.
Chairman Pearce. The subcommittee will come to order.
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time.
Members of the full committee who are not members of the
Subcommittee on Terrorism and Illicit Finance may participate
in today's hearing, and all members will have 5 legislative
days within which to submit extraneous materials to the Chair
for inclusion in the record.
This hearing is entitled, ``Exploring the Financial Nexus
of Terrorism, Drug Trafficking, and Organized Crime.'' I now
recognize myself for 2-1/2 minutes to give an opening
statement.
I want to thank everyone for joining us today. Today's
hearing will examine the nexus of terrorism, drug trafficking,
and organized crime to better understand how powerful criminal
organizations exploit the U.S. financial system for their
illicit gain.
Transnational criminal organizations, or TCOs, operate on a
global scale, crossing international boundaries to further
their pursuit of power, influence, and profits.
The United Nations Office on Drugs and Crime estimates that
TCOs generate a total of $870 billion in revenue annually.
This is done through accessing global supply chains across
the land, sea, air, and cyber domains to move goods, people,
services, money, and data.
The massive profits also ensure that these criminal groups
are powerful enough to influence the political, judicial, and
law enforcement branches of the more vulnerable countries,
providing them the protection to continue their illegal schemes
and further expand their influence.
Terror groups and criminal organizations as well continue
to merge as terrorists increasingly turn to transnational
criminals to gain logistical and financial support for their
activities.
This is startling simply because it allows previously
localized fanatics a platform to spread their radical
propaganda on an international scale.
We must remain vigilant in our ongoing efforts to dissuade
these groups, and in that vein I want to thank Mr. Kustoff for
his bill, the National Strategy for Combating the Financing of
Transnational Criminal Organizations Act.
This legislation would require the development of a
national strategy to combat TCOs and their financial support
networks.
It passed out of the House earlier this month and I hope
with continued support that it will be signed into law. Today's
hearing is an opportunity to dissect the connection of the
transnational crime, terrorism, and corruption.
I hope our members will take this opportunity to learn from
our witnesses how organized crime and terrorist groups fund
their operations as well as pose a significant risk to our
national security through their illicit schemes.
I would appreciate any comments from our witnesses on the
biggest risk TCOs are posing to our country and how Congress
can assist law enforcement in disrupting their operations.
Again, I would like to thank our witnesses for being here
today and look forward to their expert testimony on these very
important issues.
I would now recognize the gentleman from Colorado, Mr.
Perlmutter, for 2-1/2 minutes.
Mr. Perlmutter. I thank the Chair, and I want to thank him
and the committee. We have had some interesting hearings on
subjects similar to this as well as some briefings and I want
to thank the panel for coming and visiting with us today.
According to the United Nations Office on Drugs and Crime,
trafficking in illegal drugs is the largest source of revenue
for transnational organized crime groups accounting for
approximately half of all revenue generated by the groups.
This means traffickers and cartels are profiting while
Americans suffer the consequences of illegal drug use. The
opioid epidemic stretches from coast to coast and devastates
the lives of individuals and families every day.
In 2016, there were over 42,000 related deaths in the
United States and in Colorado where I am from, 942 people died
from opioid overdoses.
We have also seen the devastation of other drugs in our
communities like heroin, methamphetamine, fentanyl, and many,
many more.
As we address this public health crisis here at home, we
must simultaneously be working to shut down the organizations
and illicit trade activities responsible for the availability
of these drugs.
We need to make sure law enforcement has the tools they
need to shine light on these activities and work with our
international partners to stop the flow of drugs and cash into
the country.
Recently, criminals have incorporated new technologies such
as crypto currencies, drones, and other methods in their drug
trafficking efforts to evade detection, which creates complex
challenges for law enforcement, and I look forward to the
testimony we will hear from you today to help us answer some of
these difficult questions.
And with that, I yield back to the Chair.
Chairman Pearce. The gentleman yields back.
The Chair now recognizes the gentleman from North Carolina,
Mr. Pittenger, for 2-1/2 minutes.
Mr. Pittenger. Thank you, Mr. Chairman and Ranking Member
Perlmutter, for holding the hearing today.
I'd also like to thank our distinguished panelists for
lending their expertise to our subcommittee this afternoon.
The nexus between terrorist organizations and criminal
enterprises poses a grave threat to U.S. national security. We
know Hezbollah and other terrorist organizations are actively
partnering with Latin American drug cartels in order to raise
money to finance their terrorist activities around the globe.
The tri-border region of Argentina, Brazil, and Paraguay in
particular are a key focal point for drug trafficking, money
laundering, and other cross-border criminal endeavors.
To that end, the Western Hemisphere must be seen as a front
line in the fight against terror. While this is often an under-
the-radar issue, it is critical that Congress better understand
the dynamics of this threat and the methods by which terrorists
and criminal organizations operate within this region.
I visited South America numerous times and have hosted two
parliamentary intelligence security forums in Buenos Aires,
Argentina.
The forums had brought together over 200 participants from
15 countries across Latin America with a collaborative
discussion on efforts to address terrorism financing,
cybersecurity, intelligence, and other relevant issues.
What I have found is very willing interested parties with
those who are very much lacking on our technology capabilities
as well as an infrastructure for judicial reform.
Whether it's through international organizations, bilateral
partnerships, or other efforts within our Government and
private sector, we need to carefully and thoroughly examine
this threat and determine what additional tools and resources
are needed to target and cut off this plentiful source of
financing for terrorist organizations.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Chairman Pearce. The gentleman yields back.
Today, we welcome the testimony of our four witnesses.
Ms. Celina Realuyo has been Professor of Practice at the
William J. Perry Center for Hemispheric Defense Studies at the
National Defense University since 2007.
Professor Realuyo has over 2 decades of international
experience in the public, private, and academic sectors. From
2002 to 2006, Professor Realuyo served as the State Department
Director of Counterterrorism Finance Programs. She also Co-
chaired the U.S. Interagency Terrorist Financing Working Group.
Previously, Ms. Realuyo was a private banker in London with
Goldman Sachs, International. She also had a distinguished
career as a U.S. Foreign Service officer.
Professor Realuyo holds an MBA from Harvard Business
School, an MA from Johns Hopkins University School of Advanced
International Studies, and a BS from Georgetown University
School of Foreign Affairs.
Mr. Derek Maltz is currently the Executive Director of
Governmental Relations at Pen-Link, Limited. Mr. Maltz
previously served as Senior Executive in the Federal law
enforcement as the Director of the Special Operations Division
(SOD) of the Drug Enforcement Administration (DEA) in the U.S.
Department of Justice (DOJ).
Mr. Maltz was instrumental in expanding SOD and the DOJ's
Transnational Organized Crime Operational Center. He formally
established the Counter Narco-terrorism Operations Center
within SOD with a focus on global money laundering and terror
financing.
Most notably, as head of DEA's special operations, Mr.
Maltz oversaw Project Cassandra, a DEA-led effort launched in
2008 to undercut Hezbollah funding from illicit drug sources
for 9 years, ending in July 2014.
This Special Operations Division successfully coordinated
several significant operations against drug cartels, including
the capture of Chapo Guzman in Mexico and initiated a multi-
agency money laundering project resulting in the identification
of a Lebanese-Canadian bank as a facilitator involved with an
international trade-based money laundering scheme supported by
Hezbollah.
Mr. Maltz holds a Bachelor of Science degree in accounting
from Syracuse University.
Mr. Humire is the Executive Director of the Center for a
Secure Free Society where he specializes in transnational
threats in the Western Hemisphere.
Prior to this, Mr. Humire served in the U.S. Marine Corps
with combat tours in Iraq and a multinational training
exercise, UNITAS, in Latin America and the Caribbean.
After leaving the military, Mr. Humira attended George
Mason University where he studied global affairs and economics
and began building the Center for a Secure Free Society's
global network of more than 100 security scholars in close to
30 countries as the Director of Institute Relations at the
Atlas Economic Research Foundation.
Mr. Humire's first book is entitled, ``Iran's Strategic
Penetration of Latin America.'' More recently, he published a
monograph titled, ``After Nisman: How the Death of a Prosecutor
Revealed Iran's Growing Influence in the Americas.''
Dr. Louise Shelley is the Omer L. and Nancy Hirst Endowed
Chair and a university Professor at George Mason University.
She is at the Schar School of Policy and Government and directs
the Terrorism, Transnational Crime, and Corruption Center, or
TraCCC, that she founded.
Dr. Shelley is the leading expert on the relationship among
terrorism, organized crime, and corruption as well as human
trafficking, transnational crime, and terrorism. Some of her
recent books include, ``Dirty Entanglements: Corruption, Crime,
and Terrorism'' and ``Human Trafficking: A Global
Perspective.''
From 1995 to 2014, Dr. Shelley ran programs in Russia,
Ukraine, and Georgia--the leading specialist on the problems of
organized crime and corruption.
Dr. Shelley received an undergraduate degree cum laude from
Cornell University in penology and Russian literature. She
holds an MA in criminology from the University of Pennsylvania.
She also studied at the Law Faculty of Moscow State
University on IREX and Fulbright Fellowships and holds a Ph.D.
in sociology from the University of Pennsylvania.
Each of you is going to be recognized for 5 minutes to give
an oral presentation of your testimony. Without objection, each
of your written statements will be made part of the record.
Mr. Humire, you're recognized for 5 minutes.
STATEMENT OF MR. JOSEPH HUMIRE
Mr. Humire. Thank you, Chairman.
Chairman Pearce, Vice Chairman Pittenger, Ranking Member
Perlmutter, Congressman Rothfus, and distinguished members of
the subcommittee, good afternoon and thank you for your
leadership and for inviting me here before you today.
I'd like to begin by repeating an old refrain often heard
in the military, which is amateurs talk strategy but
professionals talk logistics.
What this means is that if you want to tackle the heart of
the threat networks, you have to attack the logistics.
Essentially, you have to go after the financial flows.
The hearing today and all the work of the subcommittee is
instrumental in emphasizing this point. After all, it's the
illicit financial networks that are sustaining a convergence of
threats to the United States and our allies abroad.
Not too long ago, conventional wisdom held that criminals
and terrorists do not cooperate on a large scale because they
have different goals and motivations. One is motivated by greed
and the other by God.
Today, after overwhelming empirical evidence, we know
that's not true. The crime-terror convergence is real, it's
growing, and it poses a significant threat to U.S. national
security.
Let me offer one statistic to reinforce this point. A 2014
report by the Combating Terrorism Center showed that in a
sample of 2,700 known criminals and terrorists in more than 122
countries, 98 percent--let me repeat that--98 percent are
connected through an all-channel network.
This is very powerful evidence of the crime-terror
convergence. But when we talk about the convergence, there is
no other organization on our foreign terrorist organization
list that embodies the nexus of terrorism and transnational
organized crime than Lebanese Hezbollah.
A bombshell article from Politico published last year
renewed a policy debate on possibly designating Hezbollah as a
transnational criminal organization.
I fully support this designation and would like to
emphasize at least two important benefits it could bring.
First, it delegitimizes Hezbollah in the hearts and minds of
many Lebanese expats and the broader Shi'a community worldwide
who see Hezbollah as a resistance movement with clear
principles and ideology.
By labeling Hezbollah a transnational criminal
organization, we damage their reputation, which in turn hinders
their ability to recruit members or raise funds.
Number two, the second benefit is even more significant
because a transnational criminal organization designation of
Hezbollah shines a light on its criminal activity that could
prompt our global partners to place Hezbollah under greater
scrutiny in their own countries.
This is the key to making our sanctions effective. If we
are to leverage our sanctions against Hezbollah and maximize
our effectiveness then we have to encourage our global partners
to investigate and prosecute Hezbollah in their own countries
using their own legal frameworks and their own designation
list.
The question of legal frameworks is vitally important in
Latin America where Hezbollah has built a growing crime terror
empire.
Many of our partners in this region do not have proper
legal frameworks to combat Islamic terrorism and none have
recognized Hezbollah as a foreign terrorist organization.
In my written testimony, I highlight one prominent
counterterrorism case of an alleged Hezbollah operative in
Peru.
The reason I highlight this case is because it represents
the glaring antiterrorism legal vacuum that Hezbollah has taken
advantage of for decades in Latin America.
In this particular case in Peru, had the accused Lebanese
national confessed to being a member of the Shining Path, an
old Marxist-Leninist domestic terror group, he would probably
be sentenced to 25 years in prison.
But because he confessed for working for Hezbollah, he was
almost set free. This is exactly the kind of counterterrorism
miscommunication that leads to future terrorist attacks.
Designating Hezbollah as a TCO will encourage our regional
partners in South America to place greater attention to the
Lebanese terror group, to clamp down on its ever-growing
business structure, particularly in the tri-border area, or
TBA.
The TBA is a historic crime terror hub in the southern part
of South America where Argentina, Paraguay, and Brazil meet.
In this area, OFAC has sanctioned 11 individual members or
facilitators of Hezbollah dating back to 2004. As part of an
upcoming SFS report, my researchers have identified at least 18
new companies opened by these same sanctioned individual
Hezbollah members in recent years, irrespective of our
sanctions.
Local authorities have not stopped these sanctioned
individuals from operating in their country, even though it's
widely known they work for or on behalf of Hezbollah.
This underscores my central point, that whatever we do
unilaterally here in the United States will be insufficient
unless we can help our partners and allies in Latin America or
elsewhere establish proper legal authorities and frameworks to
deal with the crime terror convergence.
If not, then our financial authorities and sanctions are
destined to a truncated strategy of whack-a-mole, constantly
chasing front companies and cutouts.
In closing, designating Hezbollah as a transnational
criminal organization and helping the Latin American partners
improve their anti-terrorism legal frameworks will end amateur
hour and position the U.S. to lead the fight on dismantling the
logistical networks of the crime terror convergence.
Thank you, Mr. Chairman.
Chairman Pearce. Thank you, sir.
Mr. Maltz, now you're recognized for 5 minutes.
STATEMENT OF MR. DEREK MALTZ
Mr. Maltz. Chairman Pearce and distinguished members of the
committee, I would like to thank you for this opportunity to
speak on these very important topics.
I was fortunate to be the agent in charge of DEA's Special
Operations Division for almost 10 years before I retired,
working with personnel from 30 agencies--law enforcement,
intelligence community, Department of Defense.
We had a daily battle trying to synchronize the efforts
between the numerous agencies, especially as we lost
capabilities to infiltrate the communications of the bad guys
through encryption and advanced technology.
I have always been a huge advocate of working in one unity
of effort. Unfortunately, most of the time, when criminal cases
connect through terror investigations, we lose cooperation
right here in our back yards.
They don't always follow the money trail in these
investigations to the terror groups because of the lack of
cooperation. It's unacceptable 16 years after 9/11, with all
the inspector general reviews and the information-sharing
failures, that this continues.
The agencies need to cooperate and share. The leaders must
be in the process of stopping this madness for all of us.
I lost my brother Michael, U.S. para rescue, in the war and
I am very passionate about national security and public safety
issues.
It's nothing new. We need strong leadership here. We need--
on this topic of crime and terror, we've been talking about
this for too many years.
We need some more action instead of Beltway meetings to
debate who's right, who's wrong. We all know what the answer
is. Terrorists are increasingly turning to crime and criminal
networks for their funding. We all know that. This has been
stated numerous times.
The most public example is we speak about Project Cassandra
and we see how Hezbollah is operating like a worldwide drug
cartel, moving millions of dollars and tons of cocaine all over
the world.
I am thankful for Attorney General Jeff Sessions and his
bold leadership in recognizing the serious gaps in our efforts
here in the U.S., and he formed the Hezbollah Financing Narco-
Terrorism Task Force headed by a great prosecutor from New
York, John Cronan.
Forming a task force is great. We need complete sharing,
though. Proactive investigations, high-level indictments,
extraditions, with powerful U.S. Treasury actions is going to
really do a lot to help us go after this problem.
I remain optimistic because Mr. Cronan came from the
Southern District of New York. It was that district in 2010
that broke down the walls of international terrorism and drug
trafficking.
It's the only place--I think Eastern District of Virginia
wound up doing it as well. We need to learn from that
successful model. Break down the walls.
This was bold leadership. I was recently testing--I was
recently reading testimony on international terrorism and drug
trafficking from a 1985 joint Senate hearing.
It was surprising but very--it wasn't very surprising but
very disappointing that Honorable Strom Thurmond 33 years ago
said terrorists need money to carry out their heinous
activities and there is increasing evidence that these groups
are involved with the illicit drug trade.
He went on to say how the terrorists are able to use the
drug trade in two ways. Drugs erode our health, morals, and
economy when the proceeds are used to finance the terrorists'
activities that are directed at this country and our citizens.
That's 33 years ago. Fifteen years ago after 9/11, FBI
Assistant Director Steven McCraw told the Senate Judiciary
Committee how terrorism and crime are inextricably linked.
Terrorism and crime have no borders and labeled
international drug trafficking and terrorism a dangerous mix.
He also indicated that terrorist acts, crime, and foreign
intelligence activities are no longer distinct activities but,
rather, profound fluid enterprises that through their very
existence have a reverberating impact on national security.
I thank Mr. McCraw on his important words. But my question
is why are we still talking about this. OK. This is ridiculous
now.
The agencies are loaded with all these dedicated
experienced people. They have tools. They have capabilities.
Now we need them to come together. In response to September
11th, the DEA, along with the FBI and the attorney general
formed a special coordination unit at the Special Operations
Division right here in Chantilly.
It's known as the CNTOC today. The leaders recognize the
dangerous nexus between drug trafficking and terrorism so they
knew they needed a unit.
However, as we approach the fifth anniversary of the Boston
bombing, we realize that it failed once again because we are
not cooperating.
So what are we going to do? We can't investigate terrorism
in a cocoon, especially going after sophisticated transnational
groups like Hezbollah, al-Qaida, and these other groups.
We must shut down funding streams from a variety of crimes.
It's not just drug trafficking. You guys know. It's cyber
crime. It's alien smuggling. It's diamond smuggling.
All right. So there must be true team effort between law
enforcement and the intelligence community. Hezbollah is one of
the worst terrorist organizations in the world and Project
Cassandra outlines some really disturbing trends--$200 million
a month moving through a network where they're selling used
cars right from our back yard in America, right in our
districts--all your districts.
Even though we identified this scheme, we actually seized
$150 million. We forfeited $102 million but the problem was we
just touched the surface because we couldn't get all the
agencies together.
So we've come a long way in information sharing but we need
your help. We need the leadership's help in this country.
If the Government refuses to share with each other, they've
got to be held accountable. If people are not sharing, they
have to be held accountable.
The Special Operations Division is a good platform to get
this interagency task force going. It's proven its reliability
over the years. I would highly recommend some additional
resources with the right expertise.
The worst thing we need in this country right now is
another center. Forget it. Don't even think about it. Let's get
what we have and make it work.
SOD should be working closely with the FBI's JTTF (Joint
Terrorism Task Force). We should provide them the resources so
we can carry out President Trump's Executive Order to go after
transnational crime and violent crime.
We don't need any more centers. But we also need financial
institutions to be held accountable. There has to be zero
tolerance in this country for terror financing.
I know I went a little bit long. I am very passionate about
this. I could talk all day.
So thank you very much.
Chairman Pearce. Thank you, Mr. Maltz.
Ms. Realuyo, you're recognized now for 5 minutes.
STATEMENT OF MS. CELINA REALUYO
Ms. Realuyo. Thank you, Chairman Pearce, Vice Chairman
Pittenger, Ranking Member Perlmutter, and the distinguished
members of the subcommittee for this opportunity to appear
before you today to testify on U.S. efforts to counter
convergence of terrorism and crime with the financial
instrument of national power.
We face threats from revisionist states, aspiring nuclear
powers, global terrorism, transnational organized crime, and
cyber instructions that have made national security more
daunting than ever before.
The complexity of these threats requires nimble, multi-
disciplinary, and international approaches. Over the past year,
the Trump Administration has issued strategies and policies to
address terrorism and transnational organized crime that
threaten U.S. interests at home and abroad.
They recognized financing as one of the most critical of
enablers for terrorism, crime, and corruption, and includes
specific financial and economic measures that seek to better
detect, dismantle, and deter these illicit networks.
We see this dangerous crime convergence, which my
colleagues have spoken about, where groups are sharing
operating areas, intelligence tactics, and resources that
threaten nation states.
ISIS perhaps best exemplifies a criminalized state engaged
in extortion, oil smuggling, human trafficking, and antiquities
looting that has made it the richest terrorist group in the
world and in history as of 2015.
ISIS has been largely defeated in Iraq and Syria by
deliberately attacking its leadership and, moreover, its
financing.
However, last week's arrest of a Cuban national in Colombia
has actually seen--who's plotted a terrorist attack in the name
of ISIS against American diplomats at a restaurant in Bogota,
Colombia reminds us that this threat of ISIS-inspired
operations remains around the world.
Besides ISIS, the best known cases of convergence involve
the narco insurgencies in Afghanistan and Colombia that have
lasted for decades.
This past year, I am disappointed to say, that opium
production in Afghanistan and coca production in Colombia have
reached alarming record levels that affect the stability not
just of the world but here in the United States.
The Trump Administration has demonstrated a genuine
commitment to get tough on crime and pursue illicit networks.
In February of last year, one of the first Executive Orders
issued by the White House was one enforcing Federal law with
respect to transnational criminal organizations and preventing
international trafficking, which reinforces the 2011 CTOC
strategy.
The new national security strategy includes the mission to
defeat jihadist terrorists and dismantle transnational criminal
organizations with all instruments of national power in order
to promote our Nation's security and prosperity.
It underscores the use of financial measures such as
following the money trail and sanctions to stem the flow of
funding to terrorists, criminals, and rogue states.
The Administration has aggressively sanctioned Iran, North
Korea, Russia, and Venezuela in order to isolate these rogue
states.
Perhaps the best example of the effectiveness of sanctions
is the recent case of North Korea. Increased diplomatic
pressure, credible threat of military action, and severe
economic sanctions imposed by us and our partner allies have
radically changed the behavior of North Korea.
Kim Jong-Un's unexpected invitation to meet with President
Trump face to face and his pledge to suspend nuclear testing
while allowing for U.S.-South Korea militaries exercises
continue to plan.
It's an interesting way in which economic sanctions
actually complement our efforts on the diplomatic and the
military fronts.
We hope that stricter sanctions against the Venezuelan
regime, led by President Maduro and his vice president, who
have been sanctioned by the U.S., including yesterday's very
timely Executive Order against their virtual currency called
the petro will similarly change the behavior of Venezuela and
bring back democracy to that country. It is quite critical to
the security of this hemisphere.
Venezuelan officials are actively involved in international
drug trafficking and money laundering and are known to
collaborate with extra-regional actors like Iran and Hezbollah,
incorporating them into their own criminal networks.
U.S. policymakers should continue applying sanctions
against key Venezuelan officials whose criminal activities help
sustain this authoritarian regime and perpetuate the
humanitarian crisis that we are now seeing devolve.
As I've advocated in the past before this committee, we
should continue to, first, employ the financial instrument of
national power more deliberately into every one of our U.S.
strategies.
Second, bolster domestic and international financial
intelligence and information sharing in order to counter threat
financing.
Third, dedicate more human, financial, and technological
resources to those responsible for pursuing terrorist financing
and financial crimes.
I agree with Derek Maltz in that we have a proliferation of
centers that actually just must be reinforced and collaborate
in a more fulsome manner.
Fourth, better understand the actual drivers of the illicit
economy. Anticipate how new financial innovations such as
crypto currencies could be used by future terrorist financiers
and money laundering.
And last, we must call upon the private sector and the
civic sectors to be a part of this fight against illicit
financing.
And with that, I think that we've seen now how we can
actually use economic sanctions in a way to complement many of
our other much more kinetic and more aggressive approaches,
whether it's against rogue states, criminal networks such as
the Mexican cartels, or transnational terrorist groups
including al-Qaida and its affiliates as well as ISIS.
Thank you, Mr. Chairman and committee members, for your
time and attention.
Chairman Pearce. Thank you, Ms. Realuyo.
Dr. Shelley, you are recognized now for 5 minutes.
STATEMENT OF DR. LOUISE SHELLEY
Dr. Shelley. Thank you. It's a great honor to address
Chairman Pearce, Vice Chair Pittenger, Minority Committee
Member Perlmutter, and the rest of the committee.
My statement is a little different from my fellow panelists
in that I am trying to provide a little bit more global
perspective. I seek to balance the drugs that you mentioned in
your opening remarks as 50 percent of the financing with the
other 50 percent that we also need to be looking at. These
sources are becoming of increasing importance.
In late 2014, the Security Council of the United Nations
adopted Resolution 2195 that identified the crimes that support
terrorism.
Of these, they indicate that trafficking of arms, persons,
drugs, artifacts, illicit trade in natural resources including
gold and other precious metals and stones, minerals, wildlife,
charcoal, and oil support terrorism.
Most of these have been mentioned at least peripherally by
the witnesses that have preceded me.
While much transnational crime exists today apart from
terrorism, there's almost no terrorism that exists today
without funding from transnational crime and we need to think
of these transnational terrorists as diversified businessmen.
They function with a logic that is often used by legitimate
business so that when the risk increases in the drug trade or
the profits can be greater in some other area, they diversify.
That is why we need to look at the diversified portfolio of
terrorists.
What the U.N. Security Council did not mention was the role
of counterfeits. Counterfeits are now probably the most
lucrative form of transnational crime. Profits from them exceed
that from drugs.
And if we go back to the original bombing of the World
Trade Center in 1993, it's believed that counterfeit t-shirts
were part of the funding source for that initial attack on the
United States.
So we have the role of counterfeits and the role of
cigarettes that are major funding sources that are not
recognized in the Security Council but that deserve much more
attention.
And terrorists also choose to fund many of their activities
through least policed forms of criminal activity. So while we
are chasing them on drugs--and I think that there can be more
done on drugs--50 percent of their revenues are now coming from
other areas of activity such as antiquities trade, petty fraud,
low-level intellectual property crime because those are areas
that are not commanding much law enforcement attention.
Terrorists also use crime as a weapon and I call that dual-
use crime in that they're deriving profits from it but they
also degrade political stability in communities through this
activity.
So that by trading in drugs they keep people subservient or
incapacitate communities. When they kidnap women and girls, as
has been done with the Yazidis or Boko Haram, they're
devastating communities and making them less resistant to their
activities. This criminal activity can also help destroy
communities.
I think we need to be looking at the problems of drug
trafficking not only out of Colombia, where it remains a
significant problem, but looking at it out of Afghanistan where
there is less territorial control by the central government and
the Taliban is reasserting itself. We need to look at the
northern route from Afghanistan through Russia and the southern
route that goes through Iran into Turkey.
And we also see Boko Haram and AQIM in Africa being
involved in this drug trade as well as D-Company, which is a
hybrid crime terror organization operating out of Pakistan.
And we need to think also about how fentanyl, which is so
potent that it can kill people who are transporting it, may be
used as a weapon of terrorists in the future and not just as a
form of deriving revenue.
Antiquities trade remains a recurring problem, but as ISIS
is losing territory it's a possibility that al-Nusra is also
gaining profits from it.
We need to think about the illicit cigarette trade not just
here but in North Africa, in the tri-border area where
Hezbollah is involved, and in other areas.
Terrorists are also involved in energy markets. We've seen
this with ISIS but also we've seen this in Nigeria and we've
seen this also in the carbon credit markets of Europe in which
there were Pakistani-involved groups that were operating out of
Afghanistan that were involved in hijacking this market.
And last, we need to look at their role in environmental
crime, which is an enormous profit source for terrorists, in
deforestation, in fishing, and in many other areas in which
profits can be turned.
So we need to be looking at this in the financial streams
and focus in on public-private partnerships and a whole of
society approach, not just one of a whole of Government.
Thank you.
Chairman Pearce. Thank you, Dr. Shelley.
We'll now go into a round of questions. The Chair would now
recognize himself for 5 minutes.
Dr. Shelley, can you flesh out just a little bit when you
said that terrorists are now moving into the clean energy using
the carbon credits or whatever? Can you flesh that out just a
bit?
Dr. Shelley. Certainly. A few years ago, the Europeans
established a carbon market without proper oversight and at
that point there were both criminals and terrorists who hacked
into markets and stole credits and then proceeded to trade them
with using the VAT (value-added tax) sales and selling them
with VAT and then getting VAT refunds.
Chairman Pearce. OK.
Dr. Shelley. When our troops were operating in Pakistan--I
mean, in Afghanistan--they found evidence of some of the
terrorists profiting from this enormous carbon credit fraud,
especially that linked with Italy, and the costs of this were
approximately--for that part of it alone about a billion euros.
This crime cost the European community $5 billion. But the
terrorist part of it is only about a billion.
Chairman Pearce. OK. Thank you.
Dr. Realuyo, you have--according to briefings that we've
recently received that ISIS is not getting nearly as much money
through the sale of oil, at one point that was probably the
largest source of revenue. What is your independent assessment
of that source of revenue?
Ms. Realuyo. It's actually quite similar, and perhaps the
most interesting part of our campaign against ISIS was the
deliberate use of financial targeting, which we had not used in
previous campaigns by really going after the entire supply
chain minus the wells in terms of attacking the refinery and
the income-generating piece for ISIS.
We had taken a look and, more importantly, other
independent analysts had taken a look at a decline in ISIS
finances by 80 percent from January 2015 until last summer, and
we do believe that this dramatically contributed to bringing
ISIS to its knees and its inability to pay its foreign
fighters, which actually then led to tremendous gains on the
military campaign--
Chairman Pearce. And you would believe that the gains in
the campaign are because they can't--that ISIS can't sustain
the payments to the people--they were buying their loyalty,
paying them to do jobs and--
Ms. Realuyo. That's correct.
Chairman Pearce. --they don't have that flexibility now?
Ms. Realuyo. And the other thing is that in terms of how
much they made money, about a third came from oil and then a
third came from extortion, and as the Iraqis and the Syrians
got--
Chairman Pearce. As they lose the territory they lose
access to extortion, too.
Ms. Realuyo. --they lose the territory, they can't--
Chairman Pearce. OK. That sounds reasonable.
Mr. Maltz, you were a head of Project Cassandra and you
described thoroughly the breakdown in cooperation between
agencies. Is that what caused Cassandra to sort of fall on its
face is the lack of cooperation or was there more involved in
that?
Mr. Maltz. Sir, there was a lot more involved. Certainly,
there was a breakdown in cooperation and coordination.
But, obviously, there were other things that were going on
at the time. There were other initiatives, other priorities for
other agencies.
And so I am not privy to all of those other details, but
there were things like, for an example, a terrorist like Ali
Fayed, who's sitting in prison in the Czech Republic who gets
to walk out and go home to Lebanon instead of being brought
back here to face justice, pursuant to the rule of law.
So there's things that happened during Project Cassandra.
But it's a very complicated question for me to answer in this
short period of time.
Chairman Pearce. So you said that you need our help to
cause the walls to break down. Describe a little bit more from
an agent's point of view what the walls look like. In other
words--
Mr. Maltz. OK. A real example would be, right off the bat,
since we are coming up to the fifth anniversary of the Boston
bombing, when the Russians provided information to our FBI on
this terrorist, why wouldn't they tap into my center for
information?
What's the answer to that? Not because they didn't want to
share, because the system doesn't call for that. But we have
all this criminal intelligence sitting at the Special
Operations Division that could have helped our JTTF investigate
this guy Tamerlan for his criminal activities.
Chairman Pearce. But we shouldn't have to pass a law to get
the--can't the agency simply say--
Mr. Maltz. Of course. Exactly. That's why when people say
we need more authorities, we need more tools, a lot of this has
to do with we just need some basic cooperation and start
holding people accountable, and that's where we have failed.
Chairman Pearce. Thank you, sir. Appreciate that. My time
has expired.
The Chair would now recognize the gentleman from Colorado,
Mr. Perlmutter, for 5 minutes.
Mr. Perlmutter. Thanks, Mr. Chair, and Mr. Hill has
interest in the counterfeiting, which I thought was an
interesting comment from you, Dr. Shelley, and I will let him
focus on that.
But I want to talk about something--we mentioned Venezuela
and ISIS and al-Qaida and Hezbollah and North Korea, and Ms.
Realuyo, you mentioned sort of rogue states and I want to turn
everybody's attention to Russia for a second.
We have sanctions against them for a variety of things. But
really, there wasn't much testimony--I haven't heard yet--from
the panel about the Russian Mafia, the role that they play, the
role that the country may play.
So Dr. Shelley, I will start with you and just, if you
could, you have some testimony in your--in your written remarks
about Russia. If you would talk to us a little bit about what
role you think the Russian Mafia is playing in all of this.
Dr. Shelley. Thank you for the question.
When I mentioned the northern route that's coming out of
Afghanistan, that is a route that is very much controlled by
Russian organized crime.
In the beginning, in the early 1990's, Russian organized
crime was focused primarily on the privatization of state
resources. But as all the drugs began to come out of
Afghanistan, they got very, very heavily involved in the drug
trade and they are prominent international actors in this.
In fact, Celina and I, before the hearing, were talking
about how she was seeing Russians in Colombia. So they're
working on their international networks into Latin America.
Also, there was a major political leader in central Russia,
from Kalmykia, Mr. Ilyumzhinov, who was sanctioned by the U.S.
Government for his support of Syria and of ISIS. He was a
criminalized political leader, a supporter of terrorism, and
kleptocrat who ran the international chess confederation.
And so you have this unusual confederation of political
leaders and terrorist groups as with Mr. Ilyumzhinov. I talked
about how we need to use sanctions not just on the national
level but on local--regional leaders, like former Kalmykia
leader, and we need to be focusing not just on drug trafficking
in Latin America but what is going on in Afghanistan and the
expanding northern route.
Mr. Perlmutter. OK. Ms. Realuyo, you want to add to that?
Ms. Realuyo. Well, last week it was pretty interesting to
see how, in pursuant to the Countering America's Adversaries
Through Sanctions Act, we had a series of sanctions imposed
relating, like, to election meddling as well as this threat to
the electricity and energy grid and I am hopeful that we are
going to see more sanctions as the investigation as to who is
behind the election meddling and other types of pieces. That's
the political part.
I think Louise and I have been working quite--for several
years taking a look at the tentacles of the Russian Mafia,
which we believe are now working hand in hand with the Mexican
cartels in order to get cocaine, which we anticipate is five to
six times the price in Moscow versus Miami.
So what we've seen is the globalization that's given us as
international citizens access to cheaper goods and services and
information. Unfortunately, it's also benefiting what I call
the dark side of globalization.
And we've also seen--I've just come back from Colombia on
Sunday night and I am very disturbed by the news that we've
seen from the Colombians that they're starting to arrest many
dozens of Mexicans related to the cartels and we are--part of
my study now is to understand better how the Mexican cartels
are actually buying up and trying to control the back end of
the supply chain as the FARC (Revolutionary Armed Forces of
Colombia) transition and, more importantly, leave vacant
spaces.
Someone's got to be moving and producing, refining, and,
more importantly, moving that cocaine. And sadly, as you know,
some of that cocaine is actually landing on the streets of the
United States.
Mr. Perlmutter. Thank you.
Mr. Maltz, in your position with the DEA, again, just my
focus is more on sort of the Russian connection to all of this
drug trafficking and just illicit finance around the world, any
experience that you had or any comments you'd like to make?
Mr. Maltz. My experience was limited when it dealt with
Russia. I know, though, from Afghanistan we had a lot of heroin
going into that region and, obviously, the Russian organized
crime networks, like, globally and the cyber crime that's out
there, but that's not my area of expertise, sir.
Mr. Perlmutter. OK. Sir?
Mr. Humire. The Russian Mafia is rampant in Latin America.
They're pretty much present in just about every country.
They're involved in every aspect of organized crime.
They've been growing. But there's an increasing convergence
taking place not just with criminals and terrorists--and I will
speak specifically in Latin America--there's also a convergence
between criminal networks, terrorist networks, and rogue state
actors.
The Department of Defense has a framework that they use
called the four-plus-one where they talk about the biggest
threats--transnational threats facing our country.
The four biggest state actors--Russia, China, Iran, and
North Korea--and the plus-one is violent--transnational violent
extremism.
You can apply that framework to Latin America, a four-plus-
one framework where you have four anti-American actor states
that are working against our interests, which would be
Venezuela, Bolivia, Nicaragua, and Cuba, and then the plus-one
would be transnational organized crime.
These two frameworks are unifying themselves and
increasingly working together. Russia, China, Iran are working
through these networks.
Mr. Perlmutter. And my time has expired. I appreciate
everybody's answer. Thank you.
Chairman Pearce. The gentleman's time has expired.
The Chair now recognizes the gentleman from North Carolina,
Mr. Pittenger, for 5 minutes.
Mr. Pittenger. Thank you, Mr. Chairman. Thanks, each of
you, again.
As it relates to our successful efforts in South America,
how dependent are we upon our collaboration with foreign
governments and how capable are they? Another part of that
question was OTA.
Has OTA been effective and helpful to these countries to
assess their financial capabilities, their collaboration with
us, and the--with FIUs as well?
So Mr. Humire, if we could start with you.
Mr. Humire. Thank you, Congressman, for the question.
We are absolutely critically dependent on our host nation
partners in Latin America or elsewhere, anywhere in the world,
to be able to enforce a lot of the things that are happening in
terms of sanctions and other designations that happen here in
the United States.
I mentioned in my testimony there's been 11 individuals
that we've sanctioned that are related or affiliated to
Hezbollah in the tri-border area--a historic fundraising hub
for that terrorist group.
These 11 individuals--most of them are still on the streets
today. They've opened a slew of companies. We've identified at
least 18 companies that they've opened since 2004 and the
Brazilian, Paraguayan, and Argentinian authorities are aware of
this.
And it's not that they don't want to do anything about
that, but they don't always have the proper legal frameworks to
go after them.
In Latin America, there is no designation or legal
authority to go after foreign terrorist organizations. They
have a lot to go with domestic terror organizations and most of
the anti-terror laws that were created were designed for that.
But if you're a Hezbollah, al-Qaida, ISIS, you're not
considered a terrorist until you get involved in a criminal
act, and until they catch you in a criminal act they let you
kind of work--operate freely in that country.
Until that's fixed, the terrorists are going to continue to
use those vacuums to be able to move throughout the region.
So it's very--it's very important--I think one of our
biggest challenges, and to that end, I think there's a critical
opportunity in this part of the world to increase partnerships.
I know, Congressman, you have been there plenty of times in
your work at building this network. Argentina, Peru, Guatemala,
Brazil, Ecuador, Panama are all countries critical to this
fight and these are countries that I would say maybe half a
decade ago wouldn't be considered U.S. partners, at least some
of these.
But the political winds have changed and that creates a
tremendous opportunity for us here in the United States.
Mr. Pittenger. Mr. Maltz.
Mr. Maltz. So to answer your question, I could say that
when I was at SOD for about 10 years, Colombia, as an example,
was one of our greatest partners.
And so with Project Cassandra, just to make it clear, when
that case first started it was because of the money launderers
in the United States that were sending money back to--around
the world but it was Colombia that opened up the investigation
for us and identified the Middle Eastern presence.
So we had all these Lebanese guys that were inside of
Colombia and they were moving millions and millions of dollars
and tons of cocaine but it was the Colombian national police
investigation that led to us identifying this global network.
So we can't downplay the level of significance with the
cooperation in Colombia alone.
You know, as far as the extraditions out of Colombia, we
know the power of extraditions. That's what we are trying to do
in Mexico.
You know, like, if we judicialize our efforts and we
collect evidence and we prosecute people and we extradite them,
that's going to be a home run for the communities all over
Latin America.
So we use Colombia as a success model. You know, we try to
actually go out and educate other countries. But they're very
limited.
So as one quick story, just to give you an idea, when we
were doing our trade-based money laundering case, all the calls
were in Arabic. The Colombians didn't even have translators to
actually listen to the calls that they were intercepting.
So the U.S. had to work with them and kind of help. But so
yes, they have some limited capabilities but they're advancing
and are working very closely with us.
Mr. Pittenger. Thank you.
Ms. Realuyo. Just to complement--not just extraditions. Our
export of the concept of asset forfeiture has now been adopted
by many of our Latin American partners including Mexico and
Colombia.
I was just in Colombia last week and met with the Bank of
the Republica, which is their version of Central Bank, and
they're using asset forfeiture now to recuperate the assets of
the FARC, which will be actually used to pay the distribution
for the victimizations fund.
Mr. Pittenger. Do you believe the FARC agreement is--
Ms. Realuyo. Yes.
Mr. Pittenger. --a valid agreement and is workable?
Ms. Realuyo. It is, but it has to still be implemented, and
then a bigger question is as the groups there start to morph,
someone is going to take the place of the FARC.
Mr. Pittenger. Sure.
Ms. Realuyo. As you will remember, the FARC actually took
the place of the Medellin and Cali cartels. So we are trying to
figure out what that evolution of mafias are going to be,
coming forward, because someone's going to be--have to be
moving those amazing amounts of cocaine that are being
produced.
The other one that's--
Mr. Pittenger. They're not spraying it anymore?
Ms. Realuyo. No. That's right. That's why.
And then the other piece is--and we are seeing there's
going to be a change in government. August 7th there will be a
new president of Colombia and hopefully they'll be revisiting
that issue, and President Trump will be going to Colombia on
April 15th and both issues, cocaine trafficking and Venezuela,
will be, we anticipate, the top topics.
Mr. Pittenger. My time has expired. Sorry, Ms. Shelley.
Chairman Pearce. All right. The gentleman's time has
expired.
The Chair now recognizes the gentleman from Michigan, Mr.
Kildee, for 5 minutes.
Mr. Kildee. Thank you, Mr. Chairman. Thanks for holding
this hearing, the Ranking Member as well for his leadership on
his question.
And so I will try to be brief because I know we've got
votes. As everyone on this committee is aware, this opioid
epidemic is killing us. Rural communities, urban communities,
800 people a week dying from opioid-related overdoses.
No sign that it's curtailing at all, and this epidemic is
perpetuated by lots of things, particularly synthetic opioids
like fentanyl, often supplied by foreign-based cartels.
And so I was curious--Dr. Shelley in particular but others
could answer if they would like after you--you state that due
to the strong potency of fentanyl and thinking about
carfentanyl in particular, used as a terrorist tool.
Number one, is that just frightening speculation or is
there some evidence that that's a possibility? And second, can
you paint a picture as to what that might look like for this
country?
Dr. Shelley. It's not just speculation. To do my research I
talk to people who actually work in the system, and some of
them have talked about the problems of how people who are just
handling fentanyl that's coming through the mail are sometimes
harmed. The lessons of what this product can do are evident to
people who are as innovative as the terrorists and their
criminal facilitators.
What is really distinctive about our drug problem in the
U.S. is that, despite all of the trafficking of heroin into
Europe, we are having so many dying in the U.S. as opposed to
in western Europe. The cause of American deaths is that the
fentanyl being mixed with the heroin, and that's our particular
drug problem that's killing so many people.
And I think we need to be much more flexible in approaching
this problem. We haven't talked enough probably in our hearing
today about the online marketplaces that are facilitating the
sale of drugs and that is part of the American problem with
fentanyl.
Mr. Kildee. In those cases, if I may interrupt, these
substances are coming in through our legal ports of entry.
They're not being tossed over a wall, right?
We are talking about the 52 legal ports of entry which not
only might be the source for fentanyl but for the vast majority
of the illicit drugs that come into this country.
I only say that because there's so much debate right now
about the impact that a wall on the southern border might have
on drug trafficking. The truth of the matter is much of this is
coming in through the United States mail, for goodness sakes.
Dr. Shelley. Exactly. It's coming through mail services,
mail--the U.S. Postal Service, and we had a conference.
If you're interested, I am happy to share with you a
conference we had in mid-October at George Mason on the opioid
crisis and had people from the Postal Service and others
looking at this issue and how much it is not a border issue but
something that needs much more data analytics and much more
ability to identify packages and flows that could help stop
some of this trade.
Mr. Kildee. Would the panel generally agree even if we were
able to somehow affect what the President has essentially
referred to as sealing the southern border that that would not
eliminate the problem of illicit drug trafficking coming into
the United States and in fact they would just find another
pathway?
Is that generally accepted logic? Any members of the panel.
Ms. Realuyo. Except that the Mexican cartels have their
hands--they're knee deep in both the heroin and--
Mr. Kildee. They don't have the ability to use any of the
other delivery systems that would--that have typically been
used as well? I guess that's the point.
Ms. Realuyo. We do, but we understand that the fentanyl is
also coming into the Mexican ports and in May--on May 15th at
National Defense University, my organization is partnering with
ONDCP to take a look at the entire chain, first, raising
awareness to reduce the actual consumption here in the U.S.
And we are actually inviting our Mexican counterparts who
are now starting to see consumption on their side of the border
to actually address all of the different components of the
supply chain, and then raise awareness, including some Members
of Congress, because it's such a burning issue in every one of
our districts.
And the bigger question that we have is how the
distributors here in the U.S. are actually mixing fentanyl with
heroin and with cocaine, and the complaints--it's kind of
interesting that the cartel leaders are complaining that the
local distributors here--the objective is to make them addicts,
not to actually kill the consumer.
It's kind of in a weird way kind of interesting is their
perception, because they're--as referring to what Louise is
saying, these are entrepreneurs and businessmen and women who
are all about the profit, and a dead user is not of interest to
the Mexican cartels.
Mr. Kildee. Well, I thank the panel. My time has expired
and I thank the Chairman and Ranking Member for holding this
hearing. Thank you.
I yield back.
Chairman Pearce. Gentleman's time has expired. The members
are advised that we have a vote going on and we've got 8
minutes and 43 seconds left.
I could take one more of the questioners. I guess my
question to members is do you want to come back afterwards to
ask questions.
OK. So we'll just take Mr. Rothfus and we'll let you ask
questions. Then we'll adjourn the hearing after that.
Mr. Rothfus. Thank you, Mr. Chairman.
Mr. Maltz, the 2017 political article on how the previous
Administration wilfully ignored Hezbollah's massive global drug
trafficking operation was shocking, especially given
Hezbollah's anti-U.S. conduct, even in the Western Hemisphere.
Can you describe the extent of Hezbollah's involvement with
the Colombian drug trade?
Mr. Maltz. Well, in that case, we saw multi tons of cocaine
leaving South America, going to Africa, drugs being distributed
worldwide, moneys being collected, put on Middle Eastern
flights, carried into Beirut, guarded by Hezbollah, moneys
coming back through the exchange houses into banks in Lebanon,
back to America to buy used cars.
Cars are sold--sent on Hezbollah shipping lines back to
west Africa to resell. In that case, the one thing that is
still shocking to me as a taxpayer is that we collectively in
the interagency identified about 300 businesses in our
neighborhoods. We only attached 30 to our action because we
could not get the cooperation across the Government agencies.
So there's hundreds of businesses still operating in our
country because we were never able to shut them down. So $200
million a month going through this scheme just by one kingpin,
Ayman Joumaa, is pretty significant.
Mr. Rothfus. Besides Colombia, are there other Central and
South American nations that you can identify that are
facilitating or tolerating Hezbollah's presence in their
countries?
Mr. Maltz. Well, of course, all over the tri-border. But
Venezuela was the control--command and control hub for all the
multi-ton shipments.
The problem was that the government was so corrupt that the
highest levels of the government where we had guys indicted but
they walked out of jail and they went back to their countries.
Mr. Rothfus. So are they tolerating them more because of
the kickbacks, the money, or--
Mr. Maltz. It's all about the money.
Mr. Rothfus. So no ideological thing--this is all just
money driven?
Mr. Maltz. In my opinion, it was about the money. General
Carvajal was in charge of their security at the airport. So
when multi-ton quantities of cocaine were leaving to go
worldwide it was all about the money and--
Mr. Rothfus. What do we--what do we know about any links
between Hezbollah and any of the Mexican cartels? There was
reference to Los Zetas in the Politico piece.
Mr. Maltz. Well, in that particular case, the Eastern
District of Virginia did an indictment on Ayman Joumaa and they
alleged in the indictment that the cocaine proceeds that were
being laundered by Ayman Joumaa were from the Los Zetas cartel.
What I will tell you is a DEA undercover agent went to
Guatemala and picked up $20 million in suitcases in cash from
the cartel because they were sitting on $100 million and they
needed money to be laundered.
So real--$20 million in three deliveries in Guatemala. So
yes, there's a lot of money involved.
Mr. Rothfus. Do you think we've lost anything over the last
year and a half as a result of the actions of the prior
Administration with respect to Cassandra?
Mr. Maltz. I am sorry. That question--
Mr. Rothfus. Have we lost anything? Have we lost ground?
Have we--
Mr. Maltz. Well, anytime--
Mr. Rothfus. --by not aggressively pursuing this at the
time.
Mr. Maltz. OK. So I am going to answer this really
directly. Ali Fayed wanted the head of an American back in
Czech Republic and we let him walk out and go back to Lebanon.
So yes, we've lost a lot of intelligence for our U.S.
Government agencies.
It would have been nice to debrief Walid Makled or General
Carvajal to see what's going on in these different countries.
But they walked out. They're gone.
Mr. Rothfus. Mr. Humire, you noted in your testimony the
convergence of criminals, terrorists, and organized crime can
be traced back to the 1990's.
But those interactions were mostly transactional back then.
Now it appears that those interactions have metastasized into a
very dangerous global network.
What are the largest transnational criminal threats facing
the United States today?
Mr. Humire. Congressman, what I mentioned earlier was the
convergence that extends just beyond the illicit actors or the
non-state actors.
I believe there's now a convergence with rogue state
actors, and the state actors provide cover, concealment, and
state support.
In the case of Venezuela, we've seen the Venezuelan
government providing documentation--passports, birth
certificates, national IDs--to members of terrorist groups, the
Lebanese Hezbollah probably the most prominent.
But I want to touch on your earlier point, Congressman,
about the collaboration between Hezbollah and Colombia. It's
very historic and it's very extensive.
The AMIA bombing, which we all are familiar with--1994
attack in Buenos Aires that killed 84 people--that attack--the
explosives for that attack were trans shipped from the Middle
East to Colombia to Argentina and were trans shipped by the
FARC.
The Hezbollah operative that was--is a Colombian Lebanese
national that operated in the tri-border area in Colombia that
was the logistical man that carried about that attack, Samuel
Salman el-Reda, is one of the chief operators in the top
hierarchy of the command today in the IJO--International Jihad
Organization--of Hezbollah.
So there's a long, extensive collaboration between Latin
American cartels, transnational criminal organizations and
Hezbollah particularly but other terrorist groups.
Mr. Rothfus. My time has about expired. I just want to
thank each of the panelists for being here and for your work in
this area that is so critical to our national security and to
the drug issue that all of our communities are facing.
So thank you.
Chairman Pearce. Gentleman's time has expired.
I would like to thank our witnesses for their testimony
today.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
This hearing is adjourned.
[Whereupon, at 3:26 p.m., the committee was adjourned.]
A P P E N D I X
March 20, 2018
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