[Senate Hearing 117-286]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 117-286

 
       NOMINATIONS OF BRIAN EDDIE NELSON AND ELIZABETH ROSENBERG

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

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                            NOMINATIONS OF:

BRIAN EDDIE NELSON, OF CALIFORNIA, TO BE UNDER SECRETARY FOR TERRORISM 
            AND FINANCIAL CRIMES, DEPARTMENT OF THE TREASURY

                               __________

    ELIZABETH ROSENBERG, OF VERMONT, TO BE ASSISTANT SECRETARY FOR 
            TERRORIST FINANCING, DEPARTMENT OF THE TREASURY

                               __________

                             JUNE 22, 2021

                               __________

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             U.S. GOVERNMENT PUBLISHING OFFICE 
47-808PDF           WASHINGTON : 2022                
                
                


            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                       Elisha Tuku, Chief Counsel

                        Jan Singelmann, Counsel

                 Dan Sullivan, Republican Chief Counsel

                 John Crews, Republican Policy Director

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                         TUESDAY, JUNE 22, 2021

                                                                   Page

Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    28

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     2
        Prepared statement.......................................    28
    Senator Leahy................................................
        Prepared statement.......................................    29

                                NOMINEES

Brian Eddie Nelson, of California, to be Under Secretary for 
  Terrorism and Financial Crimes, Department of the Treasury.....     5
    Prepared statement...........................................    30
    Biographical sketch of nominee...............................    32
    Responses to written questions of:
        Chairman Brown...........................................   119
        Senator Toomey...........................................   123
        Senator Menendez.........................................   140
        Senator Van Hollen.......................................   144
        Senator Cortez Masto.....................................   146
Elizabeth Rosenberg, of Vermont, to be Assistant Secretary for 
  Terrorist Financing, Department of the Treasury................     7
    Prepared statement...........................................    47
    Biographical sketch of nominee...............................    48
        Chairman Brown...........................................   147
        Senator Toomey...........................................   149
        Senator Menendez.........................................   170
        Senator Van Hollen.......................................   174
        Senator Cortez Masto.....................................   176

              Additional Material Supplied for the Record

Letters submitted in support of Nominee Brian Eddie Nelson.......   178
``Monero Emerges as Crypto of Choice for Cybercriminals'', 
  Financial Times, 6/22/21.......................................   185
China Openly Violating U.S. Sanctions on Iranian Oil, Chart......   190

                                 (iii)


       NOMINATIONS OF BRIAN EDDIE NELSON AND ELIZABETH ROSENBERG

                              ----------                              


                         TUESDAY, JUNE 22, 2021

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10:05 a.m., in room 538, Dirksen 
Senate Office Building, Hon. Sherrod Brown, Chairman of the 
Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Senate Committee on Banking, Housing, 
and Urban Affairs will come to order.
    Thank you all for joining us. This hearing will consider 
President Biden's nominations for two key Treasury roles 
charged with combating domestic and international terrorism and 
financial crimes. Brian Nelson, to be Treasury--the Under 
Secretary for Terrorism and Financial Crimes, welcome. And, 
Elizabeth Rosenberg, to be Assistant Secretary for Terrorist 
Financing, welcome.
    Welcome to your family and friends who are hearing watching 
remotely. Mr. Nelson will introduce his parents, coming from 
California, in a moment. Thank you for all your work serving 
the public, for your willingness to serve in these critical 
roles.
    I welcome Senator Leahy, who has arrived, and Senator 
Padilla, who will arrive shortly. I want to thank them for 
taking time to introduce our nominees.
    Both of the nominees have substantial experience relevant 
to their critical national security positions to which they 
have been nominated. If confirmed, both would take on these 
jobs at a critical time for protecting our country's national 
security as we work to rebuild alliances abroad while threats 
of domestic terrorism are on the rise at home. The FBI director 
testified recently that racially motivated, antigovernment 
extremists are likely to be the biggest domestic threat this 
year and in 2022.
    The Treasury's Office of Terrorism and Financial 
Intelligence is one of the cornerstones of our country's 
efforts to combat terrorist financing at home and around the 
world. The offices these two nominees would lead are charged 
with protecting our financial system from terrorists and other 
criminals and with combating rogue nations, WMD proliferators, 
money launderers, drug kingpins, and others who threaten our 
national security.
    Mr. Nelson brings a strong record of public service and 
from our discussions I think will be a tough, assertive 
enforcer of our Nation's sanction laws against rogue States, 
money launderers, terrorists and narcotraffickers. Mr. Nelson 
clerked for two Federal judges and served at the National 
Security Division of the Department of Justice. He worked 
extensively on countering terrorism, illicit finance, and other 
crimes. He went to work for the California Department of 
Justice, where he served as special assistant attorney general, 
then as general counsel, to then-Attorney General Kamala 
Harris.
    Mr. Nelson, we look forward to your testimony and to an 
ongoing collaboration with the Committee following what I hope 
will be a quick confirmation process.
    Elizabeth Rosenberg is a senior leader familiar to Members, 
many Members, of this Committee from her testimony in the past. 
President Biden has nominated her to serve as Assistant 
Secretary for Terrorist Financing. Growing up in Middlebury, 
Vermont, hence, Senator Leahy's attendance. She got her 
education in my home State, Oberlin College, where I was her 
congressperson for her time at Oberlin. And she served in a 
number of senior roles in the Treasury Department, working on 
anti- money laundering sanctions and counterterrorist financing 
policy. She currently serves as senior advisor to the deputy 
secretary of the Treasury and has distinguished herself 
throughout her career in policy debates on terrorism, illicit 
finance, proliferation finance and sanctions.
    If confirmed, she will be responsible for formulating and 
coordinating the counterterrorist financing, anti- money 
laundering efforts of the department, and overseeing the Office 
of Terrorist Financing and Financial Crimes. Her substantial 
experiences makes Ms. Rosenberg uniquely qualified to take on 
this important role.
    Ms. Rosenberg, we welcome you back to the Committee. We 
hope your nomination will move through the Committee quickly as 
well.
    We look forward to testimony from both of you this morning.
    Senator Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman.
    Mr. Nelson and Ms. Rosenberg, welcome to both of you. You 
have been nominated for senior and important national security 
roles at the Treasury, as you know. If confirmed, you will 
directly influence the Biden administration's policies toward 
China, Russia, North Korea, dangerous non-State actors, and 
certainly, not least, Iran.
    So I want to stress today that we need strong leadership at 
Treasury and sometimes that means being willing to push back, 
including on the White House or the State Department, if the 
policies they are pursuing actually undermine America's 
national security. An example of this that I want to talk about 
this morning is the Administration's Iran policy. It is very, 
very concerning.
    And let me be clear. There are Republicans, including 
myself, that would work with the Administration on the nuclear 
deal with Iran but not the JCPOA. Now we have reached out to 
the Administration on this, and we have been met with silence.
    But the most enduring U.S. policy toward Iran would be one 
that is bipartisan. The JCPOA's history demonstrates that. The 
Obama administration entered the JCPOA with no Republican 
support and bipartisan opposition. Not coincidentally, when 
President Trump came into office, he left the deal.
    If the Biden administration reenters the JCPOA, with 
unanimous Republican opposition and bipartisan opposition, for 
a second time, how is that likely to end under the next 
Republican administration? But instead of taking a bipartisan 
approach, the Administration seems to be racing to offer 
sanctions relief to an Iranian regime that, in the words of its 
own chief diplomat, is dominated by the Islamic Revolutionary 
Guard Corps, a terrorist organization that is responsible for 
the deaths of hundreds of Americans.
    And what is it that the Administration hopes to receive in 
return for the sanctions relief? First, it says returning to 
the JCPOA will put Iran's nuclear program back in the box, and 
second, the Administration hopes that the Iranians will agree 
to negotiate a longer and stronger deal after we have given 
away all our leverage in the form of sanctions relief. Both of 
these ideas are unrealistic.
    It is hard to say that Iran's nuclear program was ever 
really in the box. The JCPOA required Iran to disclose the 
entirety of its past nuclear activities, for instance. Yet, 
when confronted with evidence of undisclosed nuclear activity 
at several sites, Iran has refused to offer any explanation 
whatsoever. And the IAEA is now on record that it cannot even 
attest to the peaceful nature of Iran's nuclear program. And 
furthermore, within a few years, key parts of the JCPOA that 
ostensibly limit certain elements of Iran's nuclear program are 
going to expire. So this box offered by the JCPOA is more like 
a wet paper bag.
    Then there is the notion that once the Administration lifts 
sanctions on Iran then Iran will enter into negotiations for a 
longer and stronger deal. It is completely unreasonable to 
believe that Iran will grant concessions to the West after the 
United States gives up its primary form of leverage on Iran, 
which is sanctions. And that is especially true given that the 
new Iranian president, a hardliner who ordered the 
extrajudicial killings of thousands of political prisoners in 
1988 and who is currently under U.S. sanctions, has stated 
clearly he opposes even talking with the U.S. about limiting 
Iran's ballistic missile program and its support for terrorist 
groups.
    Now I recognize that neither of you are going to be able to 
dictate the Administration's policy with respect to the JCPOA, 
but the status of U.S. sanctions against Iran are at the heart 
of these negotiations. And, if confirmed, you both will play 
critical roles in enforcing U.S. sanctions around the world 
that are an essential and vital part of our foreign policy as 
such. I think you need to defend the process by which, and the 
people through whom, we implement these sanctions.
    Now unfortunately, last month, an unnamed senior State 
Department official--but this is on the State Department's web 
site--suggested to reporters that sanctions imposed by the 
Trump administration against Iranian entities for terrorist 
activities were done illegally and without any evidentiary 
basis. This is a reckless and dangerous comment. And I mention 
this because it opens up our entire sanctions regime to legal 
challenges when a senior State Department official says they 
were imposed illegally. This is a clear instance where your 
leadership can make a big difference. In the absence of 
compelling evidence to the contrary, you should publically make 
clear that no terrorism sanctions imposed under the previous 
Administration were done illegitimately.
    So, Mr. Chairman, Iran is one of many of our national 
security challenges facing our Nation. It is one in which the 
witnesses today will have an important role.
    In this hearing, I hope to hear from both of you candid and 
straightforward views on these and other issues. And, if 
confirmed, it is critical that you swiftly take up Treasury's 
important work to advance this important national security 
interest. Thank you.
    Chairman Brown. Thank you, Senator Toomey.
    I want to welcome Senators Leahy and Padilla to today's 
hearing, each of whom wanted to be here in person to introduce 
the nominees from their States, with whom they have had a 
strong relationship and, in Senator Leahy's case, a long, 
longstanding relationship.
    Senator Padilla will introduce Mr. Nelson. Then Senator 
Leahy will introduce Ms. Rosenberg. If the Senators need to 
leave after their introductions, they may certainly, if they 
need to. They may want to stay for the openings; that is OK as 
well. Once they are finished with the introductions, the 
nominees will be sworn in and will deliver their opening 
statements.
    Senator Padilla, you may begin.
    Senator Padilla. Thank you, Chairman Brown and Ranking 
Member Toomey, for the opportunity to introduce Mr. Brian 
Nelson from the great State of California as President Biden's 
nominee for Terrorism--excuse me, to be the Under Secretary for 
Terrorism and Financial Intelligence at the Department of 
Treasury. The Office of Terrorism and Financial Intelligence 
upholds the integrity of our financial system and protections 
our Nation from security threats.
    President Biden has committed to tackling corruption as an 
economic and national security priority, and he has set an 
ambitious agenda to curb illicit finance, improve 
accountability, and strengthen international partnerships to 
combat bad actors. Mr. Nelson is the right person to lead the 
Treasury Department's efforts to carry out these critical 
objectives.
    Mr. Nelson is a dedicated public servant. Before joining 
the Organizing Committee for the 2028 Olympic and Paralympic 
Games in Los Angeles, he served in a senior role in the 
California Department of Justice. There, he led efforts to 
thwart human traffickers, crack down on transnational criminal 
organizations, and partnered with other States and foreign 
Nations to prevent criminal activity. Mr. Nelson has also 
served in the United States Department of Justice, where he was 
the National Security Division's Deputy Chief of Staff, and in 
that role he oversaw the division's work to ensure foreign 
investments do not have adverse law enforcement, national 
security, or public safety implications.
    Mr. Nelson will bring his expertise and dedication to the 
Treasury Department's critical work of protecting our financial 
system. I strongly support Mr. Nelson's nomination, and I urge 
you to do the same. Thank you.
    Chairman Brown. Thank you, Senator Padilla.
    Senator Leahy, welcome.
    Senator Leahy. Thank you very much, Mr. Chairman. I am glad 
you are having the hearing, but I also appreciate the 
opportunity to introduce Elizabeth Rosenberg, who is here right 
beside me. Her husband is sitting directly behind me. She is 
the President's nominee to be the next Assistant Secretary of 
the Treasury for Terrorist Financing, Financial Crimes.
    As you can imagine, I am proud she is from Middlebury, 
Vermont. And she graduated Phi Beta Kappa from Oberlin College. 
I think in the Phi Beta Kappa from Oberlin she was anticipating 
the fact that she would appear before you 20 years later as 
chair. She obtained her master's degree from New York 
University.
    I am always glad to be with another Vermonter, but this one 
is extraordinary. She serves as counselor to the deputy 
secretary of the Treasury. She guides and oversees the 
development of major policy, previously served as senior fellow 
and director of the Energy, Economics, and Security Program at 
the Center for a New American Security.
    You have all this, and I am going to put the--my whole 
statement in the record so you can go on with this. But, you 
know, she speaks multiple languages, widely published. She has 
testified before this Committee before as an expert.
    What often is not mentioned, her first position in 
Government was as a Senate page back in 1994. I had nominated 
her for that. She watched the floor debates. She watched how we 
incorporate constituent feedback.
    And I would like to think, Ms. Rosenberg, that it helped 
light that fire, not that you really needed to have anything 
lighted.
    But she will be, if confirmed, responsible for guiding 
anti- money laundering, anticorruption. I could go on forever. 
This is one of the most amazing people I have seen over my 
years representing our State of Vermont, and I strongly support 
her, and I will certainly be doing everything possible to move 
her confirmation on the floor.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Leahy.
    Would the witnesses please rise and raise their right 
hands? Do you swear or affirm that the testimony you are about 
to give is the truth, the whole truth and nothing but the 
truth, so help you, God. Do you agree to appear and testify 
before any duly constituted committee of the Senate?
    Mr. Nelson. I do.
    Ms. Rosenberg. I do.
    Chairman Brown. Thank you. Please be seated.
    Mr. Nelson, you may begin your testimony.

  TESTIMONY OF BRIAN EDDIE NELSON, OF CALIFORNIA, TO BE UNDER 
SECRETARY FOR TERRORISM AND FINANCIAL CRIMES, DEPARTMENT OF THE 
                            TREASURY

    Mr. Nelson. Here we go. Chairman Brown, Ranking Member 
Toomey, and Members of the Committee, it is privilege to come 
before you today as President Biden's nominee for Under 
Secretary of the Treasury for Terrorism and Financial Crimes. 
Thank you to Senator Padilla for his generous introduction. I 
also want to thank President Biden, Vice President Harris, and 
Secretary Yellen for placing their confidence in me.
    I am joined today by my parents, Eddie and Carol, and they 
have been loving role models for me and my brother. I also want 
to especially thank my wife, Lane, for her support and shared 
commitment to public service. I am so proud of her service 
through this pandemic as the chief executive of our home city, 
which is why she is unable to join me here today. She is also 
my partner in raising our wonderful son, 7-year-old Drew.
    Respect for service has guided my family across 
generations. In 1906, my great grandfather became the first 
African-American letter carrier of a small Mississippi town. 
His life was threatened for integrating the postal service, but 
his courage inspired a commitment to civic pursuits that spread 
among his seven children and endures today.
    My grandfather, Waymon Eddie Nelson, went on to serve in 
both World War II and the Korean War, and my father also served 
in the military before becoming an air traffic controller.
    My mother's father, Thomas George Lyle, also spent much of 
his professional life as a letter carrier, and he motivated his 
children to pursue rich, community-oriented lives. His 
daughters found--his daughters found careers in public 
education, and his youngest, my mother, was a special 
education, elementary school teacher for her career.
    My parents' careers were stressful and demanding, but they 
approached their roles with dedication, proud of the 
contributions they made to our broader community. If I am 
confirmed, I will undertake the responsibilities of the under 
secretary with that same dedication.
    I am keenly aware of the critical responsibilities 
associated with the role of under secretary. I am humbled by 
this nomination to lead Treasury's efforts to disrupt and sever 
lines of financial support for threats to our national 
security, domestically and around the globe, and to strengthen 
the integrity of the U.S. financial system. The work of 
Treasury's dedicated and skilled intelligence and enforcement 
personnel is on the front lines of our effort to protect the 
American homeland and American interests against terrorists, 
criminals, and other malign actors, including cybercriminals 
perpetrating ransomware attacks. If confirmed, I look forward 
to working with these dedicated men and women and in 
collaboration with others across our Government, our private 
sector, and with our foreign partners in this effort.
    Over my career, I have had the privilege to support the 
country's national security mission in the public, private, and 
nonprofit sectors. Earlier in my career, I served as a special 
counsel and then as deputy chief of staff of the National 
Security Division of the U.S. Department of Justice. One of my 
core responsibilities was to oversee the economic national 
security work of the division's Foreign Investment Review 
staff, which participates in the Treasury-led Committee on 
Foreign Investment in the United States. In that work, I came 
to understand the critical role of economic and financial tools 
in supporting our national security.
    Following my leadership at the Justice Department, I held 
senior roles in the California Department of Justice, including 
as policy chief. As policy chief, I led and executed efforts to 
combat transnational criminal organizations, dismantle human 
trafficking networks, and build State and international 
partnerships to stop money laundering and cybercrimes. I worked 
directly with my Mexican counterparts and other leaders in the 
Mexican Government to coordinate these efforts.
    Most recently, I served as a senior executive on the 
Organizing Committee for the 2028 Olympic and Paralympic Games 
in Los Angeles. In this role, I currently direct the efforts to 
make the 2028 Games secure across all levels of Government. 
This has been an extensive planning and coordination effort 
because we anticipate it will be the largest peacetime event in 
world history.
    If confirmed, I look forward to working with Members of 
this Committee on a bipartisan basis to advance our shared 
interests in supporting and empowering the talented group of 
national security professionals who are safeguarding our 
financial system against illicit use and combating terrorist 
facilitators, proliferators, and others who seek to harm the 
United States.
    Thank you very much for your time and consideration, and I 
look forward to your questions.
    Chairman Brown. Thank you, Mr. Nelson.
    Ms. Rosenberg, you are recognized. Thank you.

 TESTIMONY OF ELIZABETH ROSENBERG, OF VERMONT, TO BE ASSISTANT 
 SECRETARY FOR TERRORIST FINANCING, DEPARTMENT OF THE TREASURY

    Ms. Rosenberg. Chairman Brown, Ranking Member Toomey, and 
Members of the Committee, it is a privilege to appear before 
you today. I am grateful to the Committee for consideration of 
my nomination. And I would like to thank President Biden, Vice 
President Harris, Secretary Yellen, and Deputy Secretary 
Adeyemo for placing their confidence in me. In addition, I 
would like to thank Senator Leahy for his very kind 
introduction.
    On a personal note, I would like to thank my family for 
their invaluable support: my children, Sophie, Annie, and Alex, 
and my husband, Jonathan, who is here with me today and whose 
love, help, and encouragement makes it possible for me to be in 
the position to undertake the responsibilities associated with 
the role for which I have been nominated.
    I would also like to acknowledge my brother, Eli, as well 
as my parents, Jean and David Rosenberg, none of whom were able 
to join me here today but who were my first teachers of foreign 
policy, economics, and the necessity of working for democracy, 
peace, and human rights. Also, my grandmother, Eleanor Gibson, 
and my great aunt, Emily Jack, who, as dedicated professionals 
at a time when it was rare for women to be in their lines of 
work, were powerful examples of diligence and courage to 
contribute to scientific advancement and to national security.
    In coming before the Committee today, I am aware of the 
significant responsibilities of the assistant secretary for 
terrorist financing, leading the office that formulates and 
coordinates counterterrorist financing and anti- money 
laundering efforts of the Department of the Treasury. This work 
requires close collaboration with Congress, across the 
Executive branch, and with foreign counterparts, the private 
sector, and civil society. It directly supports U.S. goals of 
strengthening the integrity of our financial system and 
facilitating a robust economic recovery. The work serves to 
protect financial institutions and systems of monetary exchange 
from illicit finance and abuse by terrorists, criminals, 
kleptocrats, and those who threaten our peace and security. It 
also directly and immediately advances core U.S. foreign policy 
interests, including as related to Russia, China, Iran, North 
Korea, and other security threats.
    The intertwined nature of U.S. economic strength and 
national security requires a creative, rigorous, and targeted 
approach and the use of economic instruments to advance U.S. 
interests. Now, in an era when Treasury's financial tools are 
often looked to as a first resort to combat threats, and when 
the United States faces significant international competition, 
a carefully calibrated, strategic approach to anti- money 
laundering and the use of financial measures is more important 
than ever, and so too is a commitment to work with allies and 
partners in advancing this critical work.
    Since 2009, when I joined the office I have now been 
nominated to lead, I dedicated myself to advancing anti- money 
laundering and counterterrorist financing policy and crafting 
targeted strategies for the use of sanctions. I am grateful for 
the opportunities I have had to learn from the policy pioneers 
of the contemporary U.S. approach to anti- money laundering and 
counterterrorist financing efforts. They include Democrats and 
Republicans, former senior officials at the Department of the 
Treasury, and congressional leaders, many of whom have served 
and do serve on this Committee. They also include the 
hardworking, expert Treasury career staff.
    Leading the economics and national security program at the 
Center for a New American Security for 8 years, I benefited 
from exposure to a wide array of stakeholder perspectives on 
anti- money laundering, illicit finance, and sanctions policy, 
including and beyond the U.S. Government. I engaged with 
representatives from civil society, the private sector, and the 
diplomatic community to learn their views on these policy 
issues.
    I have been honored to testify before Congress and brief 
bipartisan groups of members and congressional staff on anti- 
money laundering, sanctions, and national security policy on 
several occasions. And, if confirmed, I intend to continue this 
collaborative engagement with Congress to advance our shared 
economic and security interests.
    In closing, I want to once again thank the Committee for 
its consideration of my nomination, and I would be pleased to 
answer any questions you may have.
    Chairman Brown. Thank you, Ms. Rosenberg.
    Mr. Nelson, no question about your qualifications or your 
experience or your knowledge on human trafficking, money 
laundering, terrorism, other issues, but share with us your 
priorities and your vision for TFI on sanctions and countering 
money laundering, on terrorism financing.
    Mr. Nelson. Thank you for that question, Mr. Chairman, and 
thank you for the time and the frank conversation this week.
    You know, my vision for TFI is really informed by a couple 
of things. One, I think recognizing that there has not been a 
confirmed leader of TFI for almost 2 years now. So really, I 
think the first piece of action is to get to work advocating 
for the tools that we have, that TFI has, and to your point, 
Senator Toomey, making sure that we are advocating for the 
voices and the work of the dedicated professionals that are 
doing that work and that that is seen and felt throughout the 
interagency with our foreign partners and obviously with this 
Committee and Congress.
    Two, my real introduction into how impactful the tool of 
countering the financing of terrorism came at the National 
Security Division. And when I arrived at NSD, it was at--it was 
really at a time when, in 2009, we were seeing terrorist plots 
that were being directed by foreign terrorist organizations 
like al Qaeda here in the United States. And what we saw and 
what I observed over the two-and-a-half years that I was there 
is that that opportunity for these foreign terrorists 
organizations to direct terrorist plots in the United States, 
in our homeland, was significantly degraded, and the reason for 
that was because of the execution of the countering of 
financing terrorism that TFI led. And I know that that work has 
saved American lives, and I know how important it is to execute 
against that tool.
    So one of the very first things that I will want to do is 
participate in the ongoing sanctions review that is being led 
by the Treasury secretary and the deputy Treasury secretary to 
make sure that we are making that tool, that incredibly 
powerful tool of our foreign policy and national security, as 
effective and targeted as possible while managing and 
mitigating unintended consequences.
    The second piece of my experience that I think relates 
directly to my vision and my priority for TFI comes from the 
California Department of Justice. And when I was the policy 
chief in the California Department of Justice we did a review 
of the threat posed to us by transnational criminal 
organizations. In the context of that review, what we assessed 
is one of the reasons transnational criminal organizations were 
so interested in California was for many of the reasons that 
they are interested in and are using our financial systems, 
which is big and open and global.
    So really looking at the preventive tools and advancing our 
preventive tools, anti- money laundering and other tools, much 
like TFI, to really harden our systems in California is 
something I worked on. And that, obviously in the context of 
the Anti- Money Laundering Act and its implementation, is 
something that I want to prioritize and work hard with the 
leaders at FinCEN to land well.
    So I will--I will stop there. Obviously, there are a lot of 
subject matter and substantive issues I would want to tackle as 
the under secretary if I am so fortunate to be confirmed, but 
those are----
    Chairman Brown. Thank you for Mr. Nelson.
    Ms. Rosenberg, near the end of the last Congress, we passed 
the bipartisan Anti- Money Laundering Act and Corporate 
Transparency Act to strong support from Senator Crapo, then the 
chair of this Committee and the support of this whole 
Committee. Which of the many new requirements of the new law, 
in addition to establishing--two questions I have for you. 
Which of the new requirements in addition to establishing the 
beneficial ownership database, should be our top priority? And 
second question, what should be the Treasury's priorities to 
implement the law most efficiently and effectively?
    Ms. Rosenberg. Thank you for that question. Here we go. 
There are a variety of--I would like to recognize the 
leadership from this Committee and from many others in Congress 
who brought forward that piece of legislation, which 
meaningfully strengthened the anti- money laundering legal 
basis for our country and also empowers those individuals who 
implement and enforce it.
    There are a variety of very significant provisions, as you 
all know, within that law that have the effect of--the 
complementary of significantly strengthening the overall AML 
regime. I would like to point to the fact that Secretary Yellen 
has particularly--has given particular focus and attention to 
the beneficial ownership database and the activities associated 
with setting that up, including the rulemaking, the technology, 
the procurement, the staffing. And if I am confirmed, I would 
look forward to supporting that effort.
    With regard to your second question, and Treasury is the 
prioritization there, of course, the requirements associated 
with this piece of legislation are meaningful and require 
resources and support in order to execute them. That is an area 
that Secretary Yellen and Deputy Secretary Adeyemo have called 
out, particularly looking forward to appropriately resourcing 
those provisions in order to be able to carry them out to the 
full extent, and that is something I would seek to support if 
confirmed.
    Chairman Brown. Thank you.
    Senator Toomey.
    Senator Toomey. Thank you, Mr. Chairman.
    Ms. Rosenberg, in 2016, you wrote, ``Using sanctions to 
address non-nuclear concerns with Iran is distinct from 
oversight of the nuclear deal.'' Now we had a nice conversation 
last week, and I recall I think you confirmed that that is 
still your view, but I would like to get it on record and out 
in the open here.
    And I think this is a yes-or-no question; I certainly hope 
so. And that is: Do you still maintain and agree that terrorism 
sanctions on Iranian entities are not inherently inconsistent 
with the JCPOA?
    Ms. Rosenberg. Senator, thank you for the question and 
thank you also for taking the time to speak with me prior to 
this hearing. I support the position that the United States 
must hold Iran accountable for its support for terrorism and 
its destabilization in the region. That is something that can 
occur outside of any nuclear deal should the United States 
reenter it.
    Senator Toomey. OK. So I would take that as a ``yes.''
    Mr. Nelson, you stress the importance of fighting 
terrorism. So really, I would ask you to provide hopefully a 
yes-or-no answer to the same question. Do you agree that 
terrorism sanctions on Iranian entities are not inherently 
inconsistent with the JCPOA?
    Mr. Nelson. I do.
    Senator Toomey. Thank you. Now earlier, when I made my 
remarks, I highlighted a recent statement from an unnamed 
``senior State department official,'' suggesting that terrorism 
sanctions imposed by the previous Administration were done 
illegally and without any evidentiary basis.
    So first, for Ms. Rosenberg, I know you are a counselor to 
the deputy secretary of Treasury now. Again, I think this is a 
simple yes-or-no question. Are you personally aware of any 
evidence that those sanctions were imposed illegitimately?
    Ms. Rosenberg. No, Senator, I am not.
    Senator Toomey. OK. That being the case, I would be very 
grateful if you would commit to within, say, 7 days of your 
confirmation, if you could confirm that these sanctions were in 
fact imposed legitimately.
    And, Mr. Nelson, I would ask you to join in that effort.
    I just think it is extremely important when somebody 
maligns the character of the expert Treasury staff that went 
through the proper procedure, went through the process, and 
came to this conclusion, their work should not be maligned this 
way, and I think your voices are important to affirm that.
    Next point, Nord Stream 2 AG is a company owned and 
operated by Russia's largest State-owned oil and gas company, 
Gazprom. Now according to its own web site, Nord Stream 2 AG is 
responsible, ``for planning, construction, and subsequent 
operation of the Nord Stream 2 pipeline.''
    Now the State Department has reported that Nord Stream 2 AG 
is using a Russian pipe-laying contractor. And I will 
mispronounce the name, but I will call it Koksokhimtrans. And 
they are using this contractor, essentially a subcontractor, on 
this project. Now it is notable because Koksokhimtrans was 
sanctioned by the U.S. Treasury in 2016 for its involvement in 
Russia's invasion of Crimea.
    Now all of this is important because under Section 228 of 
CAATSA Nord Stream 2 AG has to be sanctioned if it is 
facilitating a significant transaction with a sanctioned 
entity, and it clearly appears to be doing exactly that with 
Koksokhimtrans.
    So, Ms. Rosenberg, my question for you--I know you are 
leading a systemic review of the Treasury sanction. Can you 
explain to us why Nord Stream 2 AG has not been sanctioned 
under CAATSA despite the clear language of that legislation 
requiring it?
    Ms. Rosenberg. Thank you for the opportunity to speak to 
this issue, and I would like to recognize the leadership from 
this Committee that brought forward legislation, including 
authorities that you are referencing here and CAATSA, as well 
as other ones related to Nord Stream 2. I share a deep concern 
about Russia's potential to destabilize energy security in 
Europe and particularly to target Ukraine if there is a 
cessation of natural gas there facilitated by additional 
support--additional flow of gas through the Nord Stream 
pipeline.
    I am not in the position to have examined the facts and 
circumstances about whether there is a--the institute--the 
entity that you have named would meet criteria or threshold for 
designation, but if I am confirmed, I would--I can commit to 
you that I would look into that and would gladly come and 
follow up with you about that question.
    Senator Toomey. So I guess it is my same point as last 
time. I would appreciate if you would reply in writing, if both 
of you would reply to this question, because my reading of the 
statute is very straightforward; it requires the sanctioning. 
The sanction can then subsequently be waived, but there is a 
process that we need to go through. And it involves Congress, 
and it is important.
    I do have one other quick question, Mr. Chairman, if I 
could, and that is in recent months Iranian oil shipments to 
China has, by all accounts, gone through the roof. It could be 
approximately 600,000 barrels per day at this point. By all 
accounts, China has been openly violating U.S. law with 
impunity because they are importing illicit Iranian oil.
    So my question to both of you: First, do you acknowledge 
that it is a problem to have China flagrantly violating our 
sanctions law? And, is it not the case that if adversaries 
perceive that the U.S. is unwilling to enforce our own 
sanctions, then they are going to violate the sanctions?
    Mr. Nelson. Senator, obviously, I am not in the Government. 
I would welcome the opportunity, if I am confirmed, to be 
briefed on this incredibly important issue, but predicate, 
assuming there are violations, then I would--I would agree we 
need to act appropriately.
    Ms. Rosenberg. Senator, I would certainly agree that 
violating U.S. sanctions law is a problem and something that if 
I were to be confirmed would be something I would look into and 
seek to address, furthermore, that the credibility and strength 
of U.S. sanctions depends on their effective implementation and 
enforcement.
    Senator Toomey. Well, thank you very much, Mr. Chairman. 
Thanks for your indulgence.
    And I am going to send both of you a QFR in writing about a 
recent Financial Action Task Force guidance involving 
cryptocurrencies and personal digital assets.
    So thank you, Mr. Chairman.
    Chairman Brown. Thank you.
    Senator Menendez, from New Jersey, is recognized.
    Senator Menendez. Thank you, Mr. Chair.
    Congratulations to both of your nominations.
    In my other role as the chairman of the Senate Foreign 
Relations Committee, the question of sanctions is one of the 
critical tools that we use in our foreign policy in order to 
get countries who are violating the international order to 
observe it or to get in line with it or to create consequences 
for those who are unwilling to get in line with it. And it is 
one of the few peaceful diplomacy tools that we have. Other 
countries, like Russia, use their military to engage in their 
foreign policy advocacy. We do not do that as a democracy.
    So your two positions are incredibly important, and I have 
to be honest with you. With me personally, how you respond is 
going to be critical to my support for your nominations because 
this is one of the critical areas that I think is important and 
I think is lacking. So I give you that as a framework warning.
    And I will have more questions that this 5 minutes allows 
me to. So I will submit some of them for the record. I would 
ask you to be significant in your answers. If I get the typical 
answer I get in a QFR, it will not garner my support. So I 
would like to see substantive answers.
    With that as a framework, CAATSA, which I helped write, 
remains the law of the land and provides a congressionally 
mandated sanctions framework on Russia. The Trump 
administration ignored many of its mandatory--underline 
``mandatory''--provisions, much to the consternation of many of 
us in the Senate. And I would just remind you that this 
legislation passed 98-2. So if a simple yes or no would do, do 
I have each of your commitment that you will fully implement 
all mandatory provisions of the law?
    Mr. Nelson. Yes.
    Ms. Rosenberg. Yes, Senator.
    Senator Menendez. Now I believe that pressure on Russia's 
oligarchs could have an impact on the Kremlin's decisionmaking 
calculus and have supported blocking sanctions on them in close 
coordination with our European allies. Do I have your 
commitment to fully review the list of sanctions targets 
proposed by Alexei Navalny's organization earlier this year?
    Mr. Nelson. Yes. And thank you for your long leadership in 
that area.
    Ms. Rosenberg. Yes, Senator. And I would welcome the 
opportunity, if confirmed, to look broadly at potential 
sanctions targets, individuals, entities that may be eligible 
for such designation.
    Senator Menendez. Now the Trump administration negotiated a 
memorandum of understanding that eased sanctions on Russia 
oligarch Oleg Deripaska. I was opposed to the easing of those 
sanctions, but it is critically important that all terms of 
this agreement be fully met by Deripaska. So again, yes or no, 
if he does not abide by its terms, would you support the 
reimposition of sanctions on him?
    Mr. Nelson. If confirmed, yes, I will look at that and to 
your point, yes, if he is not abiding by the terms.
    Ms. Rosenberg. Yes, Senator, I will certainly look into 
this and consider any available and appropriate measures to 
address the threats that he----
    Senator Menendez. OK. I appreciate you both looking into 
it. My specific question is the reimposition of sanctions if he 
does not meet the terms. Here is our problem, and I want to 
echo what the Ranking Member said. China is--I can tell you. 
You may not know, or you may know but figured you cannot have 
to deal with until you get confirmed. China is fully violating 
our sanctions. Over a billion dollars.
    So when we send a global message that it is OK to go ahead 
and violate U.S. sanctions, then every other country will. And 
so we neuter the one foreign policy tool that we have of 
peaceful diplomacy. It is not acceptable, not to mention that 
it violates congressional will, specifically. Specifically. It 
is not a--it is not a ``may.'' It is a ``shall.'' So there is a 
reason we put ``shall.''
    And yes, sometimes there are waivers, and that is up to the 
Administration to do that. But it starts off with a ``shall.''
    Let me ask you this. How would you approach--there is--you 
know. My understanding there are soon to be completed 
negotiations on the Iran nuclear deal. If the United States 
reaches an agreement with Iran on its nuclear program, how 
would you approach the sanctions on the Central Bank of Iran 
that the Trump administration imposed?
    For example, there are those who would advocate just 
lifting the sanctions as part of a deal in its totality. But is 
it not possible to consider specific licenses in which the 
central bank does not get a total wash but actually would have 
specific licenses to do certain things that are otherwise 
sanctionable?
    Mr. Nelson. Senator, thank you for that question. I am 
obviously not in the Government yet, but again, I am happy to 
look at that and would be very happy to continue to talk to you 
about what good strategies are both to protect the overall 
sanctity of our sanctions program and their effectiveness, 
which again appreciating your long leadership in this area, and 
specifically on how to address the Iranian central bank.
    Senator Menendez. Is it not possible--and I will close on 
this, Mr. Chairman--to consider a specific license versus an 
overall lifting? I mean as a procedural matter, forgetting 
about the policy or whether the Administration will tell you to 
do that or not.
    Mr. Nelson. Well, you know, as you know, we do have the 
authority to provide licenses under certain circumstances. So I 
would need to talk with OFAC leadership about the specifics.
    Senator Menendez. Ms. Rosenberg, can you just answer that 
one question?
    Ms. Rosenberg. Senator, I appreciate the creativity and 
insight that you open here in thinking about various tools that 
the U.S. Government may have in seeking to hold Iran 
accountable. I believe that is an option.
    Senator Menendez. Yes. I am going to have very specific 
questions. Again, I want to urge you--I would like to be 
supportive, but your views on these are going to really dictate 
my support. Thank you very much.
    Chairman Brown. Thanks.
    Senator Hagerty, of Tennessee, is recognized for 5 minutes.
    Senator Hagerty. Thank you. Thank you, Mr. Chairman; thank 
you, Ranking Member Toomey, for holding this hearing.
    And congratulations to the two of you for your nomination.
    I would just like to note at the start that America's 
financial markets are the envy of the world. We work very hard 
to create the most liquid, the most efficient, the greatest 
provider of low cost capital in the world. And it is a 
privilege to access the American capital markets, and those 
that would act against U.S. interest should clearly be denied 
that privilege. That is the important role that the two of you 
are undertaking today.
    And I want to echo Senator Menendez's comments. This is a 
critical tool of diplomacy that the two of you are going to be 
in a position to exercise.
    I think, both Mr. Nelson and Ms. Rosenberg, if you are 
confirmed, I think we will have opportunity to work closely 
together on matters of national security, on safeguarding our 
financial system, and constricting our enemies' access to a 
financial life blood that they may use to our detriment.
    I would like to come back and follow up on something that 
Ranking Member Toomey highlighted, and that is very reckless 
commentary by a member of the State Department, the Biden 
administration State Department, back in April, that the 
sanctions that were issued by the Trump administration were 
illegitimate somehow. Let me tell you I worked my heart out in 
the last Administration to impose sanctions on Iran, to get 
Japan to stop buying Iranian oil. Iran is the largest State 
sponsor of terror in the world.
    I want to ask both of you, first Mr. Nelson, then Ms. 
Rosenberg, do you think that those sanctions were illegitimate?
    Mr. Nelson. Thank you. Thank you, Senator, and thank you 
for the meeting and the time and the frank conversation. I am 
not in the Government now, but I can speak from my experience 
when I was at the National Security Division, working with the 
dedicated career staff at Treasury. And I have every reason to 
believe that they are not only incredible public servants but 
incredibly diligent in their work, and that was my experience 
of them. And I would have no reason to question the evidentiary 
basis of any of the packages, sanction packages, that they 
produce.
    And I would also just want to note that it would be really 
a wonderful opportunity to continue to think about and work 
together on how we can combat and address, through our 
sanctions programs and other tools, Iran's ongoing facilitation 
of terrorism, their support for terrorist proxies and other 
malign acts. And I would welcome the opportunity to work on 
those issues with you.
    Senator Hagerty. Thank you, Mr. Nelson.
    Ms. Rosenberg.
    Ms. Rosenberg. Thank you, Senator, for the opportunity to 
share with you my views that the dedicated, excellent staff at 
Treasury, who work on targeting, investigations, licensing, 
enforcement, have conducted themselves in an--in an excellent 
fashion and have implemented their sanctions in this portfolio 
and in others with great integrity.
    Senator Hagerty. Well, beyond impinging the character of 
those who did this hard work, as Senator Toomey underlined, it 
also runs the risk when we have this sort of reckless comments 
coming from State Department officials, or any other officials 
in the Administration--when they comment that our sanctions are 
somehow illegitimate or illegal, it exposes our entire 
sanctions framework to legal challenge, which again would be 
very much to the detriment of U.S. Government activities and 
our efforts to impose sanctions, again a great diplomatic tool, 
as highlighted by Senator Menendez. So I appreciate the fact 
that you agree with me that that was a reckless statement and 
that you would act accordingly to uphold that.
    I would also like to ask both of you, first Mr. Nelson, 
then Ms. Rosenberg, if you would commit to total transparency 
with this Committee about the Biden administration's financial 
dealings with our adversaries, and here I am thinking about the 
pallets of cash that we saw going to Iran. Mr. Nelson.
    Mr. Nelson. Thank you for that question, Senator. You 
look--I think the Committee's oversight responsibility is 
incredibly important, and I would--I would communicate about 
that and every other issue within its jurisdiction as 
appropriate to the extent that I can.
    Senator Hagerty. Thank you.
    Ms. Rosenberg. Senator, I can commit to transparency, and 
full and frank exchange, with this Committee if confirmed.
    Senator Hagerty. Thank you.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator.
    Senator Cortez Masto, from Nevada, is recognized for 5 
minutes.
    Senator Cortez Masto. Thank you, Mr. Chairman.
    Congratulations to both nominees. Welcome. Congratulations 
and welcome to your families as well.
    Let me start with cryptocurrency fraud, to both of you. As 
you well know, money laundering, tax evasion, terrorist 
financing, and fraud follow these privately created and managed 
currencies. If confirmed, how will you work with Federal 
regulators to limit the damage done by cryptoheists? And, Mr. 
Nelson, let me start with you.
    Mr. Nelson. Thank you for that question, Senator Masto. 
Obviously, this is a--this is an issue that was of--has been of 
great concern for some time now, and it is reflected in the new 
Anti- Money Laundering Act that this Committee really 
championed. And if I am confirmed, I will prioritize 
implementing the pieces of that piece of legislation, including 
new regulations around cryptocurrency. I think that legislation 
provided new authorities or clarified the law that 
cryptocurrencies, or currency in whatever form, be it virtual 
or fiat, is covered by the Bank--the Bank Secrecy Act, which is 
a powerful tool to allow FinCEN to ensure that, again, no 
matter the form of the currency that they have the tools to 
regulate.
    And I think the other really powerful piece of that 
legislation is that it reflected a balancing of regulating to 
prevent virtual currency and other types of new technology from 
undermining our anti- money laundering system while also being 
respectful of the fact that we need to support responsible 
innovation and preserve that here in the United States and not 
see that market and opportunity leave the country. So again, I 
know this is a space that FinCEN and the leadership at FinCEN 
have been active in for a long time, and additionally, it is--
will be the work of TFFC and others within TFI to really rally 
our global partners so that we have one consistent standard 
across the world.
    Senator Cortez Masto. Thank you.
    Ms. Rosenberg.
    Ms. Rosenberg. Thank you. You have mentioned these crypto 
heists, this threat which hurts people, and it hurts 
institutions. And if confirmed, I would welcome the opportunity 
to examine our AML/CFT regime which, as Mr. Nelson points out, 
applies to currency and financial institutions regardless of 
whether they are brick and mortar or if they are of this new 
and emerging fashion of technologies such as you have 
referenced. That is work that must be undertaken in close 
collaboration with those of--those colleagues of the AML 
professionals and leaders in our Government, who work on 
financial stability and on consumer protection. And I would 
seek to, if confirmed, ensure that the regulatory regime that 
applies to cryptocurrency, for example, is appropriate and 
consistent across these various areas of regulation.
    Senator Cortez Masto. And do either one of you see work 
with international law enforcement, with other Nations, to 
address this issue as well, and could you talk about that?
    Ms. Rosenberg. Absolutely, Senator. Something that TFFC, 
the office that I am nominated to lead, is very important in 
doing is coordinating with international counterparts and 
seeking to support, assist, and educate counterpart 
jurisdictions, financial regulators, and leaders to implement 
the appropriate laws and controls. And frankly, without that 
kind of collaboration and without other countries having the 
appropriate regulatory framework, it is all too easy for 
criminals to avoid U.S. jurisdiction and conduct their 
illegitimate and criminal activity from another jurisdiction. 
So that kind of international coordination is absolutely 
essential to understanding and getting after the risk that 
exists with cryptocurrencies.
    Senator Cortez Masto. Thank you.
    Mr. Nelson, anything further?
    Mr. Nelson. No. Just, you know, one other note is thinking 
about it in the context of the new cybersecurity tools the 
President, through his Executive order, and there will be 
opportunities to work with law enforcement and take actions 
with those tools as well. So.
    Senator Cortez Masto. Thank you. And you both touched on 
this, and we have been talking about this. But I was able to 
work with my colleagues, Senators Cassidy, Moran, Sinema, 
Warren, on the Financial Crimes Enforcement Network Improvement 
Act, and that was included in the Anti- Money Laundering Act. 
And this bill gives FinCEN the authority to work with Tribal 
governments, to monitor digital currency and investigate 
financial issues related to domestic terrorism. It is new tools 
for FinCEN, and I am hopeful that recognizing these new tools 
that we are also ensuring that FinCEN is carrying out those and 
implementing that law.
    So please--and this is a follow-up, and I am out of time, 
but I want to make sure that we are--FinCEN is partnering with 
our Tribal governments to address possible criminal or 
terrorist financing. As you well know, Mr. Nelson, we have seen 
this type of activity domestically, and this is what is really 
driving the work around this for me with respect to FinCEN.
    So my time is up. We will submit--I will submit additional 
questions. But thank you again, and congratulations on your 
nominations.
    Mr. Nelson. Thank you, Senator.
    Chairman Brown. Thank you, Senator Cortez Masto.
    Senator Lummis, from Wyoming, is recognized for 5 minutes.
    Senator Lummis. Thank you, Mr. Chairman.
    Mr. Nelson, I want to concentrate on cryptocurrency, too, 
and draw your attention to the recent Colonial Pipeline 
ransomware saga. Our law enforcement agencies were able to 
recover about 85 percent of the digital assets paid as 
ransomware within 2 weeks of the initial breach. One of the 
reasons that we were able to accomplish this was through the 
use of digital asset analytics providers, like Chainalysis, 
Elliptic, and Cyber Trace, which are highly effective in 
harnessing data available on distributed ledgers. Research from 
one of those firms highlights that illicit activity in the 
digital assets spaces has decreased from 2 percent in 2019 to 
0.34 percent in 2020, which is much less than the amount of 
illicit cash activity each year.
    So my question to you, Mr. Nelson, is: Is not the Colonial 
Pipeline ransomware saga and other recent prosecutions 
demonstrative of how far the investigatory tools of law 
enforcement have come in the digital assets space?
    Mr. Nelson. Thank you. Thank you for that very salient 
question at this moment. I am not in the Government, so I am 
not--I do not know exactly what tools FinCEN has at their 
disposal today. I do know that they are actively engaged on 
this question with--through their Bank Secrecy Act advisory 
group, where they engage with industry about tools to help 
support their AML/CFT mission. And I can commit to you that, if 
confirmed, I will be briefed on understanding what tools FinCEN 
does have, and will be very happy to come back to you and 
continue to discuss that with you, and ensure that they are 
aware of all of the tools that area available out in the 
marketplace.
    Senator Lummis. Thanks, Mr. Nelson. It seems to me like we 
would still be working on recovering this money if it was done 
by wire transfer or other traditional payment rails. So there 
are real advancements in this space of which many people, I 
think, are unaware.
    Mr. Nelson, I want to urge you and my colleagues to 
remember that all digital assets are not alike. It is pretty 
straightforward to investigators in digital assets like Bitcoin 
to comply with AML/BSA laws, for example. However, it is very 
difficult for users of Monero, for example, to comply with the 
law. The Monero white paper even states that other digital 
assets have ``critical flaws''--they call them ``flaws''--in 
that they leave a highly visible trail of transactions on a 
blockchain, which Monero does not do.
    So I would draw the Committee's attention to an article in 
the Financial Times today that states that criminals are 
increasing moving away from digital assets like Bitcoin, 
Ethereum, and Cardano, and increasingly toward assets that have 
privacy enhancing features, like Monero.
    Mr. Chairman, I ask for unanimous consent that this article 
from the Financial Times be entered into the record.
    Chairman Brown. Without objection, so ordered.
    Senator Lummis. Thank you, Mr. Chairman.
    So, Mr. Nelson, do you have any thoughts on how we should 
treat digital assets that comply with our Bank Secrecy Act and 
anti- money laundering laws and our sanctions laws versus those 
that cannot comply with the law?
    Mr. Nelson. Thank you for that question, and if confirmed, 
I will--I will commit absolutely to studying the issue and 
engaging with FinCEN leadership on this question. You know, I 
think philosophically the way I would approach it is to be less 
focused on the technology but focused on crimes and criminals 
and using the tools that we have at TFI to drive out the crimes 
and the criminals and creating, obviously, space for 
appropriate use of our systems.
    Senator Lummis. Thank you, Mr. Nelson. And, one last quick 
question. Can you talk a bit about your views on how 
responsible innovation can maintain U.S. economic leadership in 
the world? I refer specifically to China being in the final 
stages of developing its central bank digital currency and the 
European Union announcing the European Payments Initiative of 
2020. We can be a global financial innovation leader, but it is 
privilege, not a right. So thanks for your comments and 
congratulations on your nomination.
    Mr. Nelson. Thank you. I look forward to working with you, 
if confirmed.
    Senator Lummis. Thank you.
    Chairman Brown. Senator Warren, working on her birthday, 
from Massachusetts.
    Senator Warren. Thank you, Mr. Chairman.
    And congratulations to both of you on your nominations. 
Good to see you here today.
    Money laundering is a massive problem in our financial 
system. According to the United Nations, as much as $2 trillion 
is laundered globally each year. This is dirty money that 
criminal networks, scammers, corrupt oligarchs move through the 
banking system to evade the law.
    Now last year, Congress took an important step in reforming 
our anti- money laundering rules and gave the Treasury 
Department significant new authorities to crack down on illicit 
finance, including requiring companies to disclose their true 
owners so that bad actors cannot hide behind the anonymity and 
funnel money through the country. You both are going to be in 
charge of writing the regulations to implement these changes. 
So I would like to start off by asking you, Ms. Rosenberg, what 
specifically will you do to ensure that Treasury and FinCEN are 
writing the strongest possible rules to stop illicit finance?
    Ms. Rosenberg. Thank you very much for the question. If 
confirmed, I would seek to be an active partner for colleagues 
at the Financial Crimes Enforcement Network, working on writing 
the rules. They have several very significant issues to 
consider, and on which they have sought feedback from some of 
the people who have written this law and other stakeholders, 
concerning the definition requirements for who files----
    Senator Warren. Yes.
    Ms. Rosenberg. ----or who has access. And I would seek to 
be a strong partner in trying to get to the strongest, best 
piece of regulation possible.
    Senator Warren. Good. I like hearing this. You know, I 
think these steps are critical to making sure that the 
information that is provided by these companies is clear, 
comprehensive and easily accessible, but collecting this 
information is just part of the puzzle. Last year, documents 
obtained by BuzzFeed and the International Consortium of 
Investigative Journalists, known as the ``FinCEN Files,'' 
showed the extent to which giant banks have helped criminals 
launder money, evade sanctions, and commit other financial 
crimes.
    Let us take HSBC, for example. After admitting in 2012 to 
allowing drug cartels to launder hundreds of millions of 
dollars through its branches, HSBC then helped another customer 
involved in a massive Ponzi scheme move the money it scammed 
from people even though there was evidence that the customer 
was engaged in illicit activity.
    Mr. Nelson, was HSBC or any of its executives ever indicted 
by the Federal Government for these misdeeds.
    Mr. Nelson. Not that I am aware of.
    Senator Warren. Nope, they were not. HSBC paid a fine and 
was put on probation, which did not stop it from continuing to 
help criminals launder money.
    So, Mr. Nelson, let me ask you, do you support using every 
tool possible to hold financial institutions accountable, 
including criminal prosecutions for corporate executives?
    Mr. Nelson. I do, Senator, and as you know--thank you for 
that question and thank you for your leadership in this area. 
And I have some experience of it from my work in California on 
mortgage service fraud. So I am very familiar with the 
structure and historically how difficult it is--has been to 
prosecute executives of servicing and other financial 
institutions.
    I would note, you know, really from a Treasury perspective 
the front line is the supervisors and the examiners and making 
sure that they are well resourced. You and this Committee have 
provided a new tool and a much more significant whistleblower 
provision, and I think that will be really powerful to the 
extent we are able to make a case for willful violation of the 
Bank Secrecy Act. Obviously, the criminal prosecutions are 
possible under current law, but I know your--you and others are 
seeking to add new tools to allow that process.
    Senator Warren. Good.
    Mr. Nelson. I thank you for your leadership.
    Senator Warren. I really appreciate that. I think it is 
very important. I like your approach to this.
    You know, my Ending Too Big To Jail Act would go further, 
and it would require bank executives to certify that no fraud 
is occurring on their watch and then be held personally liable 
if that turns out not to be the case. It would also overhaul 
the use of deferred prosecution agreements that allow banks to 
avoid criminal penalties, and it would give FinCEN the ability 
to investigate criminal activity at banks on their own without 
having to rely on DOJ. If we want to put an end to money 
laundering, strong rules are not good enough. We need strong 
enforcement, and we need penalties with teeth to ensure that we 
have real reform and real accountability at the biggest 
financial institutions.
    I look forward to supporting both of you and look forward 
to working with you on this.
    Thank you, Mr. Chairman.
    Chairman Brown. Senator Tillis is recognized for 5 minutes, 
from North Carolina.
    Senator Tillis. Thank you, Mr. Chairman.
    Mr. Nelson, Ms. Rosenberg, thank you for being here and 
congratulations on your nominations.
    Ms. Rosenberg, I know--I believe--and I know some other 
members have asked you this question, but that you support 
reentering the Iran nuclear deal. And I think you may have gone 
so far as to write an article that was titled on the broader 
issue of dealing with Iran, that the maximum pressure on Iran 
will not work.
    But since we implemented the maximum pressure campaign, if 
my statistics are correct, over two million barrels a day of 
Iranian oil were kept off the market, and over 30 countries who 
were regular buyers are no longer importing Iranian oil. And 
the IMF reports this campaign brought Iran's foreign reserves 
to just about $4 billion.
    As a State sponsor of terror, as a country that has just 
had another sham election, do you believe that we should apply 
pressure to Iran, just not through the JCPOA, and why?
    Ms. Rosenberg. Senator, thank you for the question. I have 
long been concerned about the threats that Iran presents to the 
United States and U.S. interest, and I very much appreciate 
that that is something that is a concern for many Members of 
this Committee and for Congress more generally. I, if I am 
lucky enough to be confirmed into this position, the position 
for which I have been nominated, would welcome the opportunity 
to think critically about the right policies, including 
sanctions, to hold Iran accountable for its support for 
terrorism, its regional destabilization, its concerning nuclear 
activity.
    The Biden-Harris administration has said that it will 
reenter the Iran deal, remove sanctions, if Iran makes good on 
its nuclear concessions, and furthermore, that it will seek to 
hold Iran accountable for its support for terrorism. That is 
something I would, if confirmed, welcome the opportunity to 
work with you on, to fully understand your concerns and create 
a strong policy for our Government.
    Senator Tillis. Thank you. I see Mr. Nelson nodding. You 
generally agree with Ms. Rosenberg's response?
    Mr. Nelson. I am not in the Government, but I generally 
agree.
    Senator Tillis. Good. I can conserve my time. I have got 
something that I am very interested in talking with you, Ms. 
Rosenberg, about. You have, in the past, talked about the 
export of LNG as a key strategic weapon to counter Russia's 
revenue making. Now we have Nord Stream 2 back online.
    I met with several Ambassadors from that part of the world 
for dinner last night, and there was an interesting discussion, 
and one of their responses led me to believe that you have not 
really given us much choice.
    I mean, we could be an exporter, a major exporter, of 
energy in this country, but with the cancellation of pipelines, 
the limits on what we are able to extract out of the United 
States, really makes even a policy--I am curious to see if you 
still believe that we should have exports, significant exports, 
of LNG to particular friendly countries. But do you still 
believe that that should be a priority, one, and how do we 
balance that against the Administration's really attack on 
domestic energy production since he has been in office for the 
last 6 months?
    Ms. Rosenberg. Thank you for the question. I have long been 
interested on a personal level in energy security and 
responsible stewardship of U.S. natural resources and, if 
confirmed into the position for which I am nominated, would be 
in the position to focus on anti- money laundering and 
sanctions policies, and would defer the setting of policy with 
regard to natural resource stewardship and natural gas to my 
colleagues in other agencies, Interior, Energy, with 
responsibility for that.
    But I can appreciate the concerns that you have raised, 
particular with regard to Russia natural gas, Russia's 
potential to threaten energy security in Europe, and would, if 
confirmed, like to work with you and other Members of the 
Committee on that set of issues.
    Senator Tillis. OK. And just back to the Iran deal, when we 
talk about going back to the Iran deal, are we talking about 
the deal that prior Administration exited or something that 
looks different? And if it is something that looks different, 
would you think that it would be prudent for us to consider it 
rising to a level of a treaty so that it has enduring value 
versus only as good as the next Administration?
    Ms. Rosenberg. Thank you for the question. I am not party 
to the negotiations----
    Senator Tillis. Yes.
    Ms. Rosenberg. ----that are occurring. So I, unfortunately, 
cannot speak to the parameters or the provisions, how it may be 
similar or dissimilar to the previous JCPOA, if it is agreed. 
But I--well, I know our time is short. I will--I could keep it 
there.
    Senator Tillis. Yes, I have got a couple questions for the 
record. Mr. Nelson, I am sorry I did not get to any questions 
for you. But again, congratulations to all and your families on 
this honor, and I wish you the very best.
    Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Tillis.
    Senator Ossoff, from Georgia, is recognized for 5 minutes.
    Senator Ossoff. Thank you, Mr. Chairman, and thank you to 
our panelists. Congratulations on your nominations.
    I would like to as you both about the commitment that you 
can make as prospective leaders of OTFI to comply with requests 
for information from Congress. In addition to serving on the 
Banking Committee, I chair the Homeland Security Committee's 
Permanent Subcommittee on Investigations, and this 
Subcommittee, also known as PSI, has a long and productive 
history of working closely with the Treasury Department to 
investigate money laundering, sanctions evasion, and financial 
crime. And the Subcommittee often relies heavily on documents 
like Suspicious Activity Reports, or SARs, filed with FinCEN to 
do that work.
    Unfortunately, in a recent review of the Permanent 
Subcommittee's efforts, I learned that at times in recent years 
the production of documents that Treasury typically provides to 
the Subcommittee swiftly and within days, instead, began to 
take months for the completion and production of those 
materials. And at one point Treasury officials even questioned 
the Subcommittee's need for, and ability to properly handle, 
SARs and intervene with private banks to try to block their 
compliance with subpoenas issued by the Subcommittee. Much of 
that has been ironed out, and luckily, a lot of progress was 
made in restoring the trusting and prompt and responsive 
working relationship between the Department and particularly 
OTFI and the Permanent Subcommittee on Investigations.
    My question for each of you is: Will you commit to working 
with me and the staff of the Permanent Subcommittee on 
Investigations, as well as the Banking Committee, to ensure 
that documents requested by PSI are swiftly and appropriately 
provided by the Treasury Department so that we can do our 
important oversight work? I will start with you, please, Ms. 
Rosenberg.
    Ms. Rosenberg. Yes, Senator, I can commit to doing so.
    Senator Ossoff. Thank you.
    Mr. Nelson. Thank you, Senator. Absolutely.
    Senator Ossoff. Thank you, Mr. Nelson. Appreciate that.
    Ms. Rosenberg, regarding ransomware and the Anti- Money 
Laundering Act of 2020, curious whether you believe that the 
new authorities provided to Treasury by that legislation can be 
used to counter this proliferating ransomware threat. 
Oftentimes, the threat actor in a ransomware attack is 
financially motivated. So how could the Anti- Money Laundering 
Act, or perhaps other Federal statutes that would authorize 
your components', should you be confirmed, operations, help 
shift the risk-reward balance against ransomware attackers?
    Ms. Rosenberg. Thank you, Senator, for the question. And 
just to take a step back and recognize the danger that, and 
disruption that, ransomware attacks present to so many 
communities, to institutions. Certain recent events have made 
it central as a news focus, but it also has existed and is a 
serious problem for smaller organizations and communities.
    Treasury has a number of authorities and important roles to 
play when it comes to identifying and going after the attackers 
who conduct these ransomware attacks. There are provisions of 
the new Anti- Money Laundering Act that would serve to 
strengthen some of those Treasury capabilities, but Treasury's 
opportunities to work in this space are even beyond some of 
those new provisions. They involve working closely with law 
enforcement to track the financial footprints of ransomware 
attackers, working with financial institutions to ensure that 
they have appropriate information so that they can file 
appropriate Suspicious Activity Reports when there is a 
ransomware payment made. And, if confirmed, I would welcome the 
opportunity to work on this terrible and disruptive set of 
criminal activity.
    Senator Ossoff. Thank you, Ms. Rosenberg. Appreciated. And 
indeed, just in the State of Georgia, March 2018, the city of 
Atlanta suffered a crippling ransomware attack. Just this past 
Thursday, a large hospital system in Savannah, Georgia, St. 
Joseph's/Candler, was attacked. Of course, the recent high 
profile attack on Colonial Pipeline, which is headquartered in 
Georgia as well. So will you commit, Ms. Rosenberg, to working 
with my office, with local leaders in Georgia, with the 
Permanent Subcommittee on Investigations as well, to help 
address these cybersecurity threats in Georgia and nationwide?
    Ms. Rosenberg. Certainly, Senator, I would be honored to do 
so if confirmed.
    Senator Ossoff. Thank you. And with my short remaining 
time, Mr. Nelson, could you please comment on the authorities 
that the Anti- Money Laundering Act provides with respect to 
improving transparency in corporate ownership, determining the 
beneficiary owners of shell companies, and helping to see into 
some of the complex financial networks that can be used to 
obscure financial flows, whether within the United States or 
internationally?
    Mr. Nelson. Yes, I will--I will try to comment very 
briefly. But as you--as you know, Senator, the Anti- Money 
Laundering Act provides that Treasury, through FinCEN, will 
develop a registry for beneficial ownership and that plan needs 
to be in place by January of next year in order to receive 
information about the beneficial ownership of entities at 
creation. So I am looking forward, if confirmed, to 
prioritizing getting that--getting that registry in place and 
supporting FinCEN in meeting those deadlines and supporting the 
need for additional resources in order to execute against those 
important requirements that will bring tremendous additional 
transparency to our financial system.
    Senator Ossoff. Thank you both for willing to serve.
    I yield back, Mr. Chair.
    Chairman Brown. Thank you, Senator Ossoff.
    Senator Daines, from Montana, is recognized for 5 minutes.
    Senator Daines. Chairman, thank you.
    I want to welcome our two witnesses, and I really 
appreciate the opportunity to discuss some of these issues that 
affect the security of our Nation. You have a couple of very 
important jobs, if confirmed.
    Like many States, Montana has been adversely affected by 
the flow of illegal drugs coming across our southern border. 
Recent media reporting has shed light how China has facilitated 
drug traffic in the U.S., including the recent conviction of 
Tao Liu, who laundered money for the Sinaloa Cartel, which 
actually operates in Montana. I was with our law enforcement 
leaders in Montana on Friday. We literally are holding Mexican 
cartel members in jails in Montana at times over the last few 
months.
    Mr. Nelson, to the extent that you can discuss in an 
unclassified setting, can you expound upon Chinese money 
laundering efforts here in the United States and what actions 
you will take to curb its influence?
    Mr. Nelson. Thank you very much for that question, Senator. 
In certainly, my experience in the California Department of 
Justice, we dealt significantly with the challenges of a number 
of transnational criminal organizations but in particularly the 
Sinaloa Cartel, which was the biggest one operating in the 
State of California. And what we found there, too, what you are 
finding in Montana, is the role of Chinese intermediaries. And 
at the end of last year, end of 2020, the Treasury Department 
put out a report on illicit finance and illicit finance in the 
United States, and they actually highlighted exactly the 
example that you have given.
    So I think part of the strategy needs to be the threat 
assessment, which we now have, and the recommendation of tools 
that will be helpful in interdicting that type of money 
laundering. And the report that the Treasury Department and the 
Federal Government put out about strategies to attack illicit 
finance in our system noted the importance of the new 
beneficial ownership tool that the--through this Committee, we 
are now--or if I am so confirmed, would be support in getting 
in place by the beginning of next year. So there are a number 
of recommendations in the report, and I am happy to, if 
confirmed, discuss those with you and additional opportunities 
to address the problem that you have identified.
    Senator Daines. Thank you, Mr. Nelson. I want to shift 
gears and talk about Iran. I think Senator Tillis brought that 
up here a moment ago as well. A defiant Iran has continued its 
pursuit of obtaining a nuclear weapon in spite of multiple 
Presidents' efforts over the past several Administrations, but 
for Iran, often at the expense of its own citizens.
    For both witnesses, under the JCPOA, do you believe the 
United States has the right to sanction entities that engage in 
illicit activities even if those entities receive sanctions 
relief under the agreement? For example, should the Central 
Bank of Iran get a free pass for its financing of terrorism 
simply because it received relief under the JCPOA? Ms. 
Rosenberg, we will start with you on that.
    Ms. Rosenberg. I appreciate you opening this question, 
which is so significant to our national security. The United 
States has a role and, indeed, responsibility to push back on 
the threats to our national security presented by Iran, 
particularly its support for terrorism, its regional 
destabilization. And advancing those U.S. interests in that 
regard and seeking to hold Iran accountable is something that 
existed alongside and outside of the Iran nuclear deal 
previously and can and should occur outside of the Iran nuclear 
deal if the United States enters back into it and it is, in 
some fashion, reconstituted. If confirmed, I would welcome the 
opportunity to hold Iran accountable through various strategies 
and authorities for its support for terrorism.
    Senator Daines. Thank you, Ms. Rosenberg.
    Mr. Nelson.
    Mr. Nelson. I do not--I do not have anything to add to 
that.
    Senator Daines. All right. That is fine. I have got another 
question I want to ask anyway, so that is great.
    The American people recently felt the effects of cybercrime 
on our food and oil supplies caused by Russian-backed 
transnational criminal organizations. I strongly believe that 
deterring such behavior will take more than just robust 
cyberdefenses. Mr. Nelson, what measures will you take to deter 
cybercrimes and to punish those who commit them?
    Mr. Nelson. I thank you so much for that question, and this 
will obviously be a priority, to immediately be briefed on the 
programs as they relate to Russia that are currently in place, 
the new authorities. As you know, there was recently an 
Executive order in response to the SolarWinds attack, which 
will provide new opportunities to push back against that type 
of Russian malicious activity. And I commit to you that I will 
robustly use the tools of TFI to do exactly that.
    Senator Daines. I am out of time, Mr. Chairman. I will 
respect the time of the Chairman here. So, thank you.
    Chairman Brown. Thank you, Senator Daines.
    Senator Van Hollen, from Maryland, is recognized.
    Senator Van Hollen. Thank you, Mr. Chairman, Ranking Member 
Toomey.
    And to both of you, congratulations on your nominations and 
to your families. And I had a chance to speak with both Mr. 
Nelson and Ms. Rosenberg yesterday. Thank you for that 
opportunity. And I just want to follow up on a couple things 
because I know the Biden administration is undertaking a review 
of our sanctions policy and strategy broadly. But you both 
agree, I believe, that it is incumbent upon the Treasury 
Department to enforce existing sanction law as is, right?
    Ms. Rosenberg. Yes, Senator.
    Mr. Nelson. Yes.
    Senator Van Hollen. And I raise that because just about a 
year ago, July last year actually, Senator Toomey and I 
introduced a bill that was passed, called the Hong Kong 
Accountability Autonomy Act, which called upon the Executive 
branch to identify officials who were complicit in undermining 
democracy and human rights in Hong Kong. I think we were both 
pleased to see the Biden administration sanction 24 officials 
under that legislation.
    The legislation also requires that any financial 
institutions that are facilitating those individuals be 
sanctioned. To date, that has not happened, and maybe it is 
because we have been unable to identify those financial 
institutions. But Senator Toomey and I have written to the 
Treasury Department and asked for a classified briefing on 
that, and I do look forward, if you are confirmed--and I 
support your confirmation--to follow up on the capabilities we 
have for tracking those institutions.
    In a similar vein, we passed something called the BRINK 
Act, the Otto Warmbier BRINK Act. Senator Toomey, myself, the 
Chairman, Senator Brown, all very involved in passing that 
legislation, which requires mandatory secondary sanctions 
against financial institutions or other firms we identify that 
are violating the sanctions with respect to the North Korea.
    And in March of this year, the United Nations, a panel, put 
together a report indicating there are big holes in the 
sanctions regime and that there is lots of leakage here, and 
yet, we have not seen the Treasury Department impose secondary 
sanctions.
    And so one question is: How is it that the, you know, U.N. 
has identified and been able to make the conclusion we have big 
leakage in our sanctions regime, and yet, the Department of 
Treasury has not yet imposed those secondary sanctions? Do you 
have an explanation for that, and if you do not, I look forward 
to hearing it if and when I hope you are confirmed? Either of 
you. What would be the cause of that, starting with Mr. Nelson?
    Mr. Nelson. No. Thank you for the question and thank you 
for meeting with us and the opportunity to have a frank 
conversation. I would--I would welcome the opportunity to be 
briefed on the intelligence, if confirmed, and come back to you 
to continue to discuss this with you and, obviously, 
recognizing that secondary sanctions are and can be a really 
powerful tool that we have at our--at our disposal. So I 
appreciate your leadership on that and would welcome, if 
confirmed, to be able to continue to talk with you about that.
    Senator Van Hollen. Thank you.
    Ms. Rosenberg.
    Ms. Rosenberg. Thank you, Senator, and I would like to 
recognize your leadership on North Korea as well as a number of 
other significant sanctions authorities that the Treasury 
Department has. The BRINK Act provides authorities to address 
North Korean threats, and there are other important statutes 
there related to nonproliferation, for example, that may also 
be well suited to addressing the particular threats that North 
Korea presents. And I am familiar with the panel of expert 
report you just mentioned from the United Nations, and 
unfortunately, they have documented a variety of ways in which 
North Korea moves around international and U.S. sanctions.
    If confirmed, I would welcome the opportunity to speak 
further with you about the BRINK Act, its authorities, and 
other appropriate authorities to address North Korea and 
proliferation and threats to U.S. interest.
    Senator Van Hollen. Yes, I appreciate that. There just 
seems to be a disconnect, right, between the fact that this 
U.N. panel of experts, that does not necessarily have access to 
all of our intelligence capabilities, can identify big gaps in 
the sanctions regime, and yet, we have not yet imposed 
secondary sanctions. I understand there are certain standards 
we have to apply in terms of due diligence and due process 
before we ultimately apply sanctions, but still, there seems to 
be a big gap there. I look forward to working with both of you 
on that.
    And I have some other questions which I will submit for the 
record. Thank you.
    Chairman Brown. Thank you, Senator Van Hollen.
    Thank you to both witnesses for being here and providing 
testimony and your candor in answering these questions. I think 
it was a useful discussion for all of us. It is clear there is 
much more to be done by these nominees to protect our national 
security. I hope to move forward quickly on your nominations 
when we return in July.
    For Senators who wish to submit questions for the record, 
given the upcoming Fourth of July holiday recess and State work 
period, those questions are due this Friday, June 25th to 
expedite moving forward the nominees.
    The nominees, we would like your responses by Thursday, 
July 1st, if you would note that. Thank you for your testimony 
today.
    With that, the hearing is adjourned.
    [Whereupon, at 11:32 a.m., the hearing was adjourned.]
    [Prepared statements, biographical sketches of nominees, 
responses to written questions, and additional material 
supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    Today we will consider President Biden's nominations for two key 
Treasury roles charged with combatting domestic and international 
terrorism and financial crimes: Brian Nelson, to be Treasury 
Undersecretary for Terrorism and Financial Crimes, and Elizabeth 
Rosenberg, to be Assistant Secretary for Terrorist Financing.
    Welcome to you both, and to your family and friends who are here 
and watching remotely. Thank you for all of your work serving the 
public, and for your willingness to serve in these critical roles. I 
also welcome Senator Leahy and Senator Padilla to the Committee, and 
thank them for taking time to introduce our nominees today.
    Both of today's nominees have substantial experience relevant to 
the critical national security positions to which they have been 
nominated. If confirmed, both would take on these jobs at a crucial 
time for protecting our country's national security, as we work to 
rebuild alliances abroad, while threats of domestic terrorism are on 
the rise at home.
    The FBI Director testified recently that racially motivated and 
antigovernment extremists are likely to be the biggest domestic threat 
this year and in 2022.
    Treasury's Office of Terrorism and Financial Intelligence is one of 
the cornerstones of our country's efforts to combat terrorist 
financing, at home and around the world.
    The offices these two nominees would lead are charged with 
protecting our financial system from terrorists and other criminals, 
and with combating rogue nations, WMD proliferators, money launderers, 
drug kingpins, and others who threaten our national security.
    Mr. Nelson brings a strong record of public service, and from our 
discussions I think will be a tough, assertive enforcer of our Nation's 
sanctions laws against rogue states, money launderers, terrorists, and 
narcotraffickers.
    Mr. Nelson clerked for two distinguished Federal judges and served 
at the National Security Division of the Department of Justice. He 
worked extensively on countering terrorism, illicit finance, and other 
crimes.
    He went to work for the California Department of Justice, where he 
served as Special Assistant Attorney General and then as General 
Counsel to then-Attorney General, now Vice-President Kamala Harris.
    Mr. Nelson, we look forward to your testimony, and to an ongoing 
collaboration with the Committee following what I hope will be a quick 
confirmation process.
    Elizabeth Rosenberg is a senior leader familiar to many Members of 
the Committee from her testimony before us. President Biden has 
nominated her to serve as Assistant Secretary for Terrorist Financing. 
Ms. Rosenberg got her education in my home State, at Oberlin College, 
and has served in a number of senior roles in the Treasury Department 
working on anti- money laundering, sanctions, and counterterrorist 
financing policy.
    She currently serves as a senior advisor to the Deputy Secretary of 
the Treasury, and has distinguished herself throughout her career in 
policy debates on terrorism, illicit finance, proliferation finance, 
and sanctions.
    If confirmed, she will be responsible for formulating and 
coordinating the counterterrorist financing and anti- money laundering 
efforts of the Department, and overseeing the Office of Terrorist 
Financing and Financial Crimes.
    Her substantial experience makes Ms. Rosenberg uniquely qualified 
to take on this important role.
    Ms. Rosenberg, we welcome you back to the Committee, and hope your 
nomination will move through the Committee quickly as well.
    We look forward to both nominees' testimony this morning.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Mr. Chairman, thank you.
    Mr. Nelson and Ms. Rosenberg, welcome to you both. You have been 
nominated for senior national security roles at Treasury. If confirmed, 
you will directly influence the Biden administration's policies towards 
China, Russia, Iran, North Korea, and dangerous non-State actors.
    I want to stress we need strong leadership at Treasury that's 
willing to push back on the White House or the State Department if they 
try to advance policies that actually undermine America's national 
security. For instance, the Administration's Iran policy is extremely 
concerning. Let me be clear: There are Republicans, including myself, 
that would work with the Administration on a nuclear deal with Iran--
but not the JCPOA. We have reached out to the Administration on this--
only to be met with silence.
    The most enduring U.S. policy towards Iran would be one that is 
bipartisan. The JCPOA's history demonstrates that. The Obama 
administration entered the JCPOA with no Republican support. As a 
result, when President Trump came into office he left the deal. If the 
Biden administration enters the JCPOA with no Republican support, for a 
second time, how is that likely to end under the next Republican 
administration? And how will it look to the world when we leave the 
JCPOA for a second time?
    Instead of taking a bipartisan approach, the Biden administration 
is blindly racing to offer sanctions relief to an Iranian regime that, 
in the words of its own chief diplomat, is dominated by the Islamic 
Revolutionary Guard Corps--a terrorist organization that is responsible 
for the deaths of hundreds of Americans.
    What does the Administration hope to receive in return for this 
sanctions relief? First--it says returning to the JCPOA will put Iran's 
nuclear program ``back in the box.'' Second--the Administration hopes 
the Iranians will agree to negotiate a ``longer and stronger'' deal--
after we've given away all of our leverage in the form of sanctions 
relief. Both of these ideas are unrealistic.
    Let's dispense with the notion that reentering the JCPOA puts 
Iran's nuclear program ``back in the box.'' It's difficult to say 
whether Iran's nuclear program was ever entirely ``in the box.'' The 
JCPOA required Iran to disclose the entirety of its past nuclear 
activities. Yet when confronted with evidence of undisclosed nuclear 
activities at several sites, Iran has refused to offer any explanation. 
As a result, the IAEA--the world's nuclear watchdog--is now on the 
record that it can't even attest to the peaceful nature of Iran's 
nuclear program.
    Furthermore, within a few years, key parts of the JCPOA that 
ostensibly limit certain elements of Iran's nuclear program will 
expire.
    So ``the box'' offered by the JCPOA is more like a wet paper bag.
    Then there's this notion that once the Administration lifts 
sanctions on Iran, Iran will enter into negotiations for a ``longer and 
stronger deal.'' It's completely unreasonable to believe Iran will 
grant concessions to the West after the United States gives up its 
primary form of leverage on Iran--which is sanctions.
    That's especially true given that the new Iranian president has 
made clear he opposes talks with the U.S. on limiting Iran's ballistic 
missile program and its support for terrorist groups. This is 
unsurprising. He's a hardliner who ordered the extrajudicial killings 
of thousands of political prisoners in 1988. And he's currently 
sanctioned by the U.S. for being part of the inner circle of Iran's 
Supreme Leader.
    I recognize that you will not be able to dictate the 
Administration's policy with respect to the JCPOA. But the status of 
U.S. sanctions against Iran are at the heart of these negotiations. If 
confirmed, you will both play critical roles in enforcing U.S. 
sanctions around the world that are an essential and vital part of our 
foreign policy. As such, you need to defend the process by which--and 
the people through whom--we implement these sanctions.
    Unfortunately, last month an unnamed ``senior State Department 
official'' suggested to reporters that sanctions imposed by the Trump 
administration were done illegally and without any evidentiary basis. 
Specifically, this ``senior official'' said, and I quote:
    ``The Trump administration deliberately and avowedly imposed 
sanctions by invoking labels--terrorism labels and other labels even 
though it was done purely for the purpose of preventing. a return to 
the. JCPOA. We have to go through every sanction to make sure whether. 
they were legitimately or not legitimately imposed.''
    This reckless comment is dangerous because it opens up sanctions to 
legal challenges.
    This is a clear instance where your leadership matters. In the 
absence of compelling evidence to the contrary, you should publicly 
make clear that no terrorism sanctions imposed under the previous 
Administration were done illegitimately.
    Iran is among many of national security challenges facing our 
Nation. In this hearing, I hope to hear from you both candid and 
straightforward views on these and other issues. If confirmed, it's 
critical that you swiftly take up Treasury's important work to advance 
our national security interests.
                                 ______
                                 
              PREPARED STATEMENT OF SENATOR PATRICK LEAHY
    Thank you Mr. Chairman, and thank you for providing me the 
opportunity to introduce Elizabeth Rosenberg, President Biden's nominee 
to be the next Assistant Secretary of the Treasury for Terrorist 
Financing and Financial Crimes.
    Ms. Rosenberg is from Middlebury, Vermont, and graduated Phi Beta 
Kappa from Oberlin College. She obtained her Masters Degree from New 
York University.
    I am always glad to be in the company of a fellow Vermonter, but 
even more so when I have the opportunity to introduce a person from my 
State who has so clearly excelled in her field of expertise.
    Ms. Rosenberg currently serves as a Counselor to the Deputy 
Secretary of the Treasury, where she guides and oversees the 
development of major policy regulation and enforcement matters related 
to national security.
    She previously served as a Senior Fellow and Director of the 
Energy, Economics and Security Program at the Center for a New American 
Security; a Senior Advisor to both the Under Secretary for Terrorism 
and Financial Intelligence and the Assistant Secretary for Terrorist 
Financing and Financial Crime; and a journalist covering energy policy 
in the Senate.
    If that were not enough, she speaks multiple languages, is widely 
published, and has previously testified as an expert before this 
Committee.
    But perhaps the most memorable position that she has held, at least 
to me, is when Ms. Rosenberg served as a Senate Page for my office back 
in 1994. That experience--watching floor debates and the business of 
incorporating constituent feedback into legislation--launched her 
career in public service, and she has been on an upward trajectory ever 
since.
    If confirmed as Assistant Secretary of the Treasury for Terrorist 
Financing and Financial Crime, Ms. Rosenberg will be responsible for 
guiding anti- money laundering, countercorruption, and sanctions policy 
for the Biden-Harris administration.
    It is an immensely important role, as everyone here knows, and for 
which she is extraordinarily qualified.
    I congratulate Elizabeth and appreciate her willingness to continue 
to serve the American people.
    Thank you Mr. Chairman.
                                 ______
                                 
                PREPARED STATEMENT OF BRIAN EDDIE NELSON
To Be Under Secretary for Terrorism and Financial Crimes, Department of 
                              the Treasury
                             June 22, 2021
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee, it is a privilege to come before you today as President 
Biden's nominee for Under Secretary of the Treasury for Terrorism and 
Financial Crimes.
    Thank you, Senator Padilla, for your generous introduction. I also 
want to thank President Biden, Vice President Harris, and Secretary 
Yellen for placing their confidence in me.
    I am joined today by my parents, Eddie and Carol, who have been 
loving role models for me and my brother. I also want to especially 
thank my wife, Lane, for her support and shared commitment to public 
service. I am so proud of her service through the pandemic as the chief 
executive of our home city, which is why she is unable to join me this 
morning. She is also my partner in raising our wonderful 7-year-old 
son, Drew.
    Respect for service has guided my family across generations. In 
1906, my great-grandfather became the first African-American letter 
carrier of a small Mississippi town. His life was threatened for 
integrating the postal service, but his courage inspired a commitment 
to civic pursuits that spread among his children and endures today. My 
grandfather went on to serve in both World War II and the Korean War, 
and my father also served in the military before becoming an air 
traffic controller.
    My mother's father also spent much of his professional life as a 
letter carrier, and he motivated his children to pursue rich, 
community-oriented lives. His daughters found careers in public 
education and his youngest, my mother, was a special education 
elementary school teacher.
    My parents' careers were stressful and demanding, but they 
approached their roles with dedication, proud of their contributions to 
our broader community. If I am confirmed, I will undertake the 
responsibilities of the Under Secretary with that same dedication.
    I am keenly aware of the critical responsibilities associated with 
the role of Under Secretary. I am humbled by this nomination to lead 
Treasury's effort to disrupt and sever lines of financial support for 
threats to our national security domestically and around the globe, and 
to strengthen the integrity of the U.S. financial system. The work of 
Treasury's dedicated and skilled intelligence and enforcement personnel 
is on the front lines of our effort to protect the homeland and 
American interests against terrorists, criminals, and other malign 
actors, including cybercriminals perpetrating ransomware attacks. If 
confirmed, I look forward to working with these dedicated men and 
women, and in collaboration with others across our Government, our 
private sector and with our foreign partners in this effort.
    Over my career, I have had the privilege to support the country's 
national security mission in the public, private, and nonprofit 
sectors. Early in my career, I served as a special counsel and then as 
deputy chief of staff of the National Security Division of the U.S. 
Department of Justice. One of my core responsibilities was to oversee 
the economic national-security work of the Division's Foreign 
Investment Review Staff, which participates in the Treasury-led 
Committee on Foreign Investment in the United States. In that work, I 
came to understand the critical role of economic and financial tools in 
supporting our national security.
    Following my leadership at the Justice Department, I held senior 
roles in the California Department of Justice, including policy chief. 
As policy chief, I led and executed efforts to combat transnational 
criminal organizations, dismantle human trafficking networks, and build 
State and international partnerships to stop money laundering and 
cybercrimes. I worked directly with my Mexican counterparts and other 
leaders in the Mexican Government to coordinate these efforts.
    Most recently, I have served as a senior executive on the 
organizing committee for the 2028 Olympic and Paralympic Games in Los 
Angeles. In this role, I currently direct the effort to make the 2028 
Games secure, across all levels of Government. This has been an 
extensive planning and coordination effort, because we anticipate this 
will be the largest peacetime assembly in world history.
    If confirmed, I look forward to working with Members of this 
Committee, on a bipartisan basis, to advance our shared interest in 
supporting and empowering the talented group of national-security 
professionals who are safeguarding our financial system against illicit 
use and combatting terrorist facilitators, proliferators, and others 
who seek to harm the United States.
    Thank you very much for your time and consideration, and I look 
forward to your questions.

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               PREPARED STATEMENT OF ELIZABETH ROSENBERG
 To Be Assistant Secretary for Terrorist Financing, Department of the 
                                Treasury
                             June 22, 2021
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee, it is a privilege to appear before you today. I am grateful 
to the Committee for considering my nomination. I would like to thank 
President Biden, Vice President Harris, Secretary Yellen, and Deputy 
Secretary Adeyemo for placing their confidence in me. In addition, I 
would like to thank Senator Leahy for his kind introduction.
    On a personal note, I would like to thank my family for their 
invaluable support: My children Sophie, Annie, and Alex, and my 
husband, Jonathan, whose love, help, and encouragement makes it 
possible to be in the position to undertake the responsibilities 
associated with the role for which I have been nominated.
    I would also like to acknowledge my brother, Eli, as well as my 
parents, Jean and David Rosenberg, who were my first teachers of 
foreign policy, economics, and the necessity of working for democracy, 
peace, and human rights. Also, my grandmother Eleanor Gibson and great 
aunt Emily Jack who, as dedicated professionals at a time when it was 
rare for women to be in their lines of work, were powerful examples of 
diligence and courage to contribute to scientific advancement and 
national security.
    In coming before the Committee today, I am keenly aware of the 
significant responsibilities of the Assistant Secretary for Terrorist 
Financing, leading the office that formulates and coordinates 
counterterrorist financing and anti- money laundering efforts of the 
Department of the Treasury. This work requires close collaboration with 
Congress, across the Executive branch, and with foreign counterparts, 
the private sector, and civil society. It directly supports U.S. goals 
of strengthening the integrity of our financial system and facilitating 
a robust economic recovery. The work serves to protect financial 
institutions and systems of monetary exchange from illicit finance and 
abuse by terrorists, criminals, kleptocrats, and those who threaten 
peace and security. It also directly and immediately advances core U.S. 
foreign policy interests, including as related to Russia, China, Iran, 
North Korea, and other security threats.
    The intertwined nature of U.S. economic strength and national 
security requires a creative, rigorous, and targeted approach in the 
use of economic instruments to advance U.S. interests. Now, in an era 
when Treasury's financial tools are often looked to as a first resort 
to combat threats, and when the United States faces significant 
international competition, a carefully calibrated, strategic approach 
to anti- money laundering and the use of financial measures is more 
important than ever. So too is a commitment to work with allies and 
partners in advancing this critical work.
    Since 2009, when I first joined the office I have now been 
nominated to lead, I have dedicated myself to advancing anti- money 
laundering and counterterrorist financing policy and crafting targeted 
strategies for the use of sanctions.
    I am grateful for the opportunities I have had to learn from the 
policy pioneers of the contemporary U.S. approach to anti- money 
laundering and counterterrorist financing efforts. They include 
Democrats and Republicans, former senior officials at the Department of 
the Treasury and Congressional leaders, many of whom have served on 
this Committee. They also include the hard working, expert Treasury 
career staff.
    Leading the economics and national security program at the Center 
for a New American Security for 8 years, I benefited from exposure to a 
wide array of stakeholder perspectives on anti- money laundering, 
illicit finance, and sanctions policy including and beyond the U.S. 
Government. I engaged with representatives from civil society, the 
private sector, and the diplomatic community on these policy issues.
    I have been honored to testify before Congress and brief bipartisan 
groups of Members and Congressional staff on anti- money laundering, 
sanctions, and national security policy on several occasions. If 
confirmed, I intend to continue this collaborative engagement with 
Congress to advance our shared economic and security interests.
    In closing, I want to once again thank the Committee for its 
consideration of my nomination. I would be pleased to answer any 
questions you may have.

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        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                    FROM BRIAN EDDIE NELSON

Q.1. Fighting Domestic Terrorism--As mentioned in my opening 
statement at the hearing, the FBI Director testified recently 
that racially motivated and antigovernment extremists are 
likely to be the biggest domestic threat over the next few 
years. The Biden administration recently rolled out a new 
strategy to counter domestic terrorism. The strategy calls for 
greater scrutiny of public social media posts and better 
coordination among law enforcement and national security 
agencies. How should Treasury work with other law enforcement 
agencies like the FBI and Homeland Security to better fight 
domestic terrorism, while protecting people's civil rights and 
liberties? Is there anything more Congress should be doing now 
to better assist TFI in protecting us from these threats?

A.1. As noted in the National Strategy for Countering Domestic 
Terrorism, the Intelligence Community assesses that domestic 
violent extremists (DVEs) who are motivated by a range of 
ideologies and galvanized by recent political and societal 
events in the United States pose an elevated threat to the 
United States in 2021. Enduring DVE motivations pertaining to 
biases against minority populations and perceived Government 
overreach will almost certainly continue to drive DVE 
radicalization and mobilization to violence.
    If confirmed, I pledge Treasury will continue to: (i) 
explore, in coordination with law enforcement and other 
interagency partners, ways to enhance the identification and 
analysis of financial activity associated with domestic 
terrorists and their foreign counterparts; (ii) enhance 
engagement with financial institutions on domestic terrorist 
financing, including through existing provisions of the Bank 
Secrecy Act; (iii) coordinate with the Department of State, 
other interagency partners, and with our foreign allies to 
assess whether additional foreign entities linked to domestic 
terrorism can be designated as Specially Designated Global 
Terrorists, or Foreign Terrorist Organizations; (iv) in 
coordination with interagency partners, continue to support law 
enforcement action against domestic terrorists and their 
foreign supporters through the provision of financial 
intelligence, information, and analysis; and (v) across these 
efforts, work to ensure that Americans' civil liberties and 
constitutional rights continue to be protected.
    Additionally, I understand that Treasury is working with 
our foreign partners bilaterally and through the Financial 
Action Task Force to better identify cross-border financial 
activity associated with racially or ethnically motivated 
violent extremists. If confirmed, I will prioritize this 
critical work to counter domestic terrorism and working with 
Congress to assess whether there are additional ways the Office 
of Terrorism and Financial Intelligence (TFI) can support the 
national strategy to counter domestic terrorism.

Q.2. Anti- Money Laundering Act/Corporate Transparency Act--
Most of the requirements of the new Anti- Money Laundering Act 
will be implemented by Treasury. In April, FinCEN issued an 
Advance Notice of Proposed Rulemaking, soliciting comments on 
the reporting regulation and the shape and function of the new 
beneficial ownership database. Will you commit to work to issue 
the Final Rule on beneficial ownership information collection 
by January 1st of next year?

A.2. Yes, if confirmed, I will strive to meet the deadlines 
Congress set in the Anti- Money Laundering Act of 2020.

Q.3. Anti-Corruption and Anti-Kleptocracy Initiative--On June 
3, 2021, President Biden issued a formal national security 
memorandum on ``Establishing the Fight Against Corruption as a 
Core United States National Security Interest''. The memo 
requires collaboration between Federal agencies and establishes 
a whole-of-Government approach to fighting global corruption 
and kleptocracy to further the national security interests of 
the United States. Should you be confirmed, what role do you 
see your office playing in this important fight against 
international corruption, broadly and specifically?

A.3. As President Biden made clear in the National Security 
Study Memorandum you reference, countering corruption is a core 
national security interest of the United States. If confirmed, 
I will make this among my highest priorities and ensure that 
TFI uses a wide range of tools to tackle this global problem.
    First, Treasury's efforts against money laundering aim to 
make it more difficult for corrupt actors and their enablers to 
use the U.S. and global financial system to launder and conceal 
ill-gotten gains. Implementing the new beneficial ownership 
reporting regime established by the Anti- Money Laundering Act 
of 2020 (AMLA) will be a critical component of this effort, 
enabling the collection and dissemination of important 
information to law enforcement and financial institutions about 
the ownership of shell companies and other corporate vehicles 
that can be used to hide and launder illicit proceeds. In 
addition to implementing the AMLA, TFI's anti- money laundering 
efforts include FinCEN advisories to financial institutions to 
assist them in complying with their Bank Secrecy Act (BSA) 
obligations by identifying typologies and red flags, as well as 
the recently published Anti- Money Laundering and Countering 
the Financing of Terrorism (AML/CFT) National Priorities. These 
have included indicators of corruption, including corruption 
that enables human rights abuses. If confirmed, I will 
encourage these and other efforts against money laundering that 
facilitates corruption.
    The Office of Foreign Assets Control's (OFAC) sanctions 
authorities are another important tool against global 
corruption. If confirmed, I would ensure that OFAC continues to 
use financial sanctions to hold corrupt actors accountable, 
whether through Global Magnitsky (GloMag) sanctions, or other 
sanctions authorities. The United States has used GloMag 
authorities to target corruption and serious human rights 
abuses wherever they occur around the world, including Africa, 
Asia, Central America, Europe, and the Middle East. Earlier 
this month, I understand that Treasury took its largest GloMag 
action to date, sanctioning three Bulgarian individuals for 
their extensive roles in corruption in Bulgaria as well as 
their networks encompassing 64 entities. If confirmed, I will 
seek to capitalize on the momentum of this action to encourage 
like-minded countries to create anticorruption authorities in 
their sanctions programs and take similar actions.
    In addition, TFI plays an important role in highlighting 
global corruption and kleptocracy on the international stage. 
Through dialogue in various multilateral fora (e.g., the recent 
G7 Summit) and engagement and information sharing with like-
minded countries, civil society, and the private sector, TFI 
can expose and target corrupt individuals and institutions; 
make our financial systems more transparent and resistant to 
corruption; and promote democratic and regulatory reforms to 
address financial and economic risks, vulnerabilities, and 
deficiencies that can enable human rights abuse and corruption.
    Specifically, TFI's Office of Terrorist Financing and 
Financial Crimes (TFFC) leads the U.S. delegation to the 
Financial Action Task Force, and, if confirmed, I will use that 
forum and others to ensure that TFI continues to actively 
engage with our foreign partners to effectively implement 
relevant international standards, including the Financial 
Action Task Force recommendations, as a key means to combat 
corruption.
    I am also aware that TFI is establishing a pilot 
Kleptocracy Assets Recovery Rewards program that will provide 
payments to individuals for information leading to the 
identification and recovery of stolen assets linked to foreign 
Government corruption held in U.S financial institutions. If 
confirmed, I will endeavor to make this program a success.

Q.4. TFI Structure--The prior Administration placed an emphasis 
on having all TFI components bring their unique equities and 
tools together to address anti- money laundering and 
counterterrorism as a whole-of-TFI effort involving 
approximately 900 employees. Do you agree with this approach?
    How would you continue to strengthen TFI in this way?

A.4. Yes, I agree with that approach. The critical work of 
safeguarding the U.S. financial system from abuse, and bringing 
malign actors that threaten the national security of the United 
States to account for their activities, is best performed when 
TFI works together effectively across its components, with each 
bringing key technical expertise and institutional memory to 
the execution of TFI's core mission. If confirmed, I look 
forward to working with these dedicated men and women.

Q.5. Human Trafficking--I understand that as part of your work 
in the California Office of Attorney General you lead several 
multistate and multinational projects to address human 
trafficking, and that you are fiercely committed to this 
mission. And several years ago, Congress changed the law to 
make clear that illicit finance related to human trafficking 
was to be a core part of TFI's mission.
    Would you please briefly summarize for the Committee your 
work in this area and, based on that, describe what you see as 
the best tools within TFI to combat human trafficking. Also, 
how might TFI better work with the States to address the issue?

A.5. At the California Office of the Attorney General, we 
prioritized the fight against human trafficking by 
comprehensively evaluating that threat and then working closely 
with key partners--including law enforcement, victim service 
providers, nonprofit organizations, and technology companies--
to combat human trafficking in a coordinated manner. A key 
finding from that intelligence-gathering and comprehensive 
report was the need to work more closely with our Mexican law 
enforcement counterparts. To that end, I directly negotiated 
with Mexican law enforcement officials to implement a Mexico 
Attorney General-California Attorney General accord to expand 
prosecutions and secure convictions of criminals who engage in 
the trafficking of human beings. We also successfully sought 
new enforcement tools, including asset forfeiture authorities 
for items used to facilitate human trafficking involving a 
commercial sex act where the victim is under 18 years of age; 
and new transparency legislation authorizing law enforcement 
agencies to seek a court order preventing the concealment of 
property implicated in a human trafficking prosecution.
    If confirmed, I would seek to take much the same 
intelligence-driven and coordinated approach to this critical 
effort to combat human trafficking, leveraging TFI's wide range 
of tools, and coordinating with interagency and foreign 
Government partners, as outlined in the Administration's 
National Action Plan to Combat Human Trafficking, as part of a 
coordinated whole-of-Government approach.
    As I briefly mentioned during the hearing, I believe a 
threat assessment is a necessary first step in combating 
illicit finance threats, including human trafficking. 
Treasury's publication of such reports as the National Money 
Laundering Risk Assessment (NMLRA) and the National Strategy 
for Combating Terrorist and Other Illicit Financing can 
highlight the grave threat that human trafficking poses not 
only to the safety and security of trafficked victims and the 
rule of law, but also to the U.S. financial system and the 
global financial system more broadly. If confirmed, I would 
emphasize the role and impact of such reports in identifying 
evolving threats, particularly given TFI's Office of Terrorist 
Financing and Financial Crimes (TFFC) leads Treasury's efforts 
in drafting and coordinating this report.
    I pledge to continue TFI's efforts to address this critical 
issue, to include conducting risk assessments; collecting, 
analyzing, and sharing financial intelligence and data to 
identify human traffickers and their networks; engaging with 
foreign partners to promote effective anti- money laundering 
and countering the financing of terrorism (AML/CFT) regimes; 
disrupting and disabling the financial underpinnings of these 
networks through sanctions and other authorities; and 
supporting law enforcement investigations that can lead to 
accountability and justice.
    I would work to apply financial sanctions, where 
appropriate, utilizing a range of sanctions programs that can 
target human trafficking, including country-specific sanctions 
programs, Global Magnitsky sanctions, the Transnational 
Criminal Organizations program, and the Counter Narcotics 
program. These programs also target activities that typically 
occur alongside human trafficking, such as narcotics 
trafficking, serious human rights abuse and corruption, 
malicious cyberenabled activities, terrorism, and transnational 
organized crime. I would also ensure financial intelligence 
obtained from Bank Secrecy Act reporting is provided to law 
enforcement at the Federal, State, local, and tribal level. I 
would encourage additional trainings, such as the event TFFC, 
in coordination with DHS and DOJ, held in April for the gaming 
industry to raise human trafficking awareness for frontline 
workers who may interact with victims and illustrate how the 
perpetrators of human trafficking can use the casino industry 
to launder their illicit proceeds. I will also continue 
engagements with foreign partners, the private sector, and 
civil society as well as in multilateral forums to raise 
awareness about the illicit finance threats associated with 
human trafficking. TFI officials can highlight how effective 
AML/CFT regimes can help identify and mitigate these risks in 
speaking opportunities with key audiences.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                    FROM BRIAN EDDIE NELSON

Q.1. Congressional Oversight--Please provide your philosophy on 
how the Office of Terrorism Financing and Financial 
Intelligence (TFI) at the Department of the Treasury (Treasury) 
will approach and respond to Congressional information requests 
(both for documentary information and oral testimony), if you 
are confirmed.

A.1. I recognize that Congress plays an important oversight 
role regarding Executive branch activities. If confirmed, I 
pledge to work through the accommodations process to comply 
with Congressional requests for information consistent with the 
constitutional and statutory obligations of the Executive 
branch.

Q.2. If confirmed, do you intend to respond to information 
requests differently depending on who is making the 
Congressional information request (whether it's the Chair of 
the Congressional Committee, the Ranking Member, or another 
Member of Congress)? Please answer ``yes'' or ``no.'' If your 
answer is ``yes,'' please explain.

A.2. I recognize that Congress plays an important oversight 
role regarding Executive branch activities, and I pledge to 
thoughtfully consider all Congressional information requests, 
recognizing the importance of transparency in Government. If 
confirmed, I pledge to work through the accommodations process 
to comply with Congressional requests for information 
consistent with the constitutional and statutory obligations of 
the Executive branch.

Q.3. Will you commit that, if confirmed, you will respond in a 
timely manner and fully comply with all information requests 
from me? Please answer ``yes'' or ``no.'' If your answer is 
``no,'' please explain.

A.3. I recognize that Congress plays an important oversight 
role regarding Executive branch activities, and I pledge to 
thoughtfully consider all Congressional information requests 
including from any Member, recognizing the importance of 
transparency in Government. If confirmed, I pledge to work 
through the accommodations process to comply with Congressional 
requests for information consistent with the constitutional and 
statutory obligations of the Executive branch.

Q.4. Will you commit that, if confirmed, you will make yourself 
and any other TFI employee expeditiously available to provide 
oral testimony (including but not limited to briefings, 
hearings, and transcribed interviews) to the Committee on any 
matter within its jurisdiction, upon the request of either the 
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If 
your answer is ``no,'' please explain why.

A.4. I recognize that oral testimony plays an important role in 
Congress' oversight responsibilities regarding Executive branch 
activities. If confirmed, I commit to brief or testify 
regarding Congressional requests consistent with the 
constitutional and statutory obligations of the Executive 
branch.

Q.5. The Joint Comprehensive Plan of Action (JCPOA)--On April 
21, 2021, an unnamed senior State Department Official suggested 
that during the Trump administration some sanctions, including 
terrorism sanctions, on Iranian entities were ``not 
legitimately imposed.'' \1\ Do you agree that such accusations 
undermine the integrity of the U.S. sanctions regime and 
disparage the career civil servants at Treasury who compile the 
evidentiary packages for such sanctions? Please answer ``yes'' 
or ``no.'' If your answer is ``no,'' please explain.
---------------------------------------------------------------------------
     \1\ United States Department of State, ``Briefing With Senior 
State Department Official on Recent U.S. Engagement in Vienna Regarding 
the JCPOA'' (April 21, 2021), https://www.state.gov/briefing-with-
senior-state-departmentofficial-on-recent-u-s-engagement-in-vienna-
regarding-the-jcpoa-2/.

A.5. I have confidence in the diligence and dedication of 
Treasury's career civil servants, including the civil servants 
in the Office of Terrorism and Financial Intelligence. If 
---------------------------------------------------------------------------
confirmed, I will look into this matter.

Q.6. If confirmed, will you commit to transmitting to me, in 
writing, no later than seven days after which you are 
confirmed, a determination on whether terrorism sanctions were 
imposed illegitimately by the Trump administration?

A.6. If confirmed, I will commit to expeditiously looking into 
the matter regarding the terrorism sanctions imposed on Iranian 
entities.

Q.7. Iran has not answered the International Atomic Energy 
Agency's (IAEA) questions regarding why nuclear particles have 
been found at undisclosed Iranian sites. As a result, the 
nuclear watchdog recently warned it is now impossible to 
confirm Iran is not seeking a nuclear weapon. \2\
---------------------------------------------------------------------------
     \2\ International Atomic Energy Agency, ``IAEA Director General's 
Introductory Statement to the Board of Governors'' (June 7, 2021), 
https://www.iaea.org/iaea-director-generals-introductory-statement-to-
the-board-of-governors-7-june-2021.
---------------------------------------------------------------------------
    Do you believe Iran should account for the existence of 
these nuclear particles before the United States rejoins the 
Iran nuclear deal and offers sanctions relief?

A.7. I believe Iran should only enjoy sanctions relief under 
the JCPOA if it takes the appropriate steps to resume 
compliance with its nuclear commitments under the JCPOA. Iran 
must also adhere to its nuclear obligations outside of the 
JCPOA. If confirmed, I will work to ensure that Treasury 
continues its important work to enforce U.S. sanctions and 
combat Iran's support for terrorism, abuse of human rights, 
Weapons of Mass Destruction (WMD) proliferation and ballistic 
missile development, as well as the regime's destabilizing 
activities in the region.

Q.8. What is your view of the JCPOA and the sanctions relief it 
provided Iran and will provide Iran if the United States 
rejoins it?

A.8. If confirmed, I would support the Biden-Harris 
administration's national security and foreign policy decisions 
regarding the JCPOA in these vitally important matters.

Q.9. If the United States returns to the JCPOA, do you agree 
that non-nuclear sanctions on Iran, such as terrorism 
sanctions, should be maintained?

A.9. Yes. Treasury's sanctions programs address a wide range of 
malign activities, including terrorism, and if confirmed, I 
commit to vigorously enforcing U.S. sanctions.

Q.10. Will you commit to keeping in place U.S. sanctions on the 
Central Bank of Iran and other Iranian entities designated for 
supporting terrorism and the development of weapons of mass 
destruction (WMD) unless there is credible information that 
those entities have ceased engaging in the activity for which 
they were sanctioned? Will you commit to briefing this 
Committee and providing relevant information about changes in 
these entities' activities if they are delisted?

A.10. As senior members of the Biden-Harris administration have 
said, if Iran implements its nuclear commitments under the 
JCPOA, the U.S. would implement its commitments under the JCPOA 
to lift sanctions. Furthermore, I will commit to keeping 
Congress informed regarding Treasury's actions.

Q.11. Yes or no, do you agree that Iran's Islamic Revolutionary 
Guard Corps (IRGC) is a terrorist organization?

A.11. Yes, Iran's Islamic Revolutionary Guard Corps (IRGC) was 
designated as a Foreign Terrorist Organization (FTO) by the 
Secretary of State pursuant to section 219 of the Immigration 
and Nationality Act (INA) on April 15, 2019. On October 13, 
2017, Treasury designated the IRGC pursuant to the global 
counterterrorism Executive Order (E.O.) 13224 and consistent 
with the Countering America's Adversaries Through Sanctions 
Act.

Q.12. Are you committed to strict enforcement of sanctions 
against the IRGC and its subsidiaries and affiliates, 
including, but not limited to the National Iranian Oil Company?

A.12. U.S. sanctions depend on their effective implementation 
and enforcement. If confirmed, I will work to ensure that all 
economic sanctions are vigorously enforced.

Q.13. If a return to compliance with the JCPOA does occur, will 
you commit to continuing to prevent Iran from gaining any 
access to the U.S. financial system, including through so 
called ``U-turn'' transactions?

A.13. I will support the Biden-Harris administration and the 
President's national security and foreign policy decisions 
regarding the JCPOA, and will work to protect the integrity of 
the U.S. financial system.

Q.14. If a U.S. return to the JCPOA is not achieved, what role 
do you believe conduct-based sanctions can play in persuading 
the Iranian regime to change its malign behavior?

A.14. I believe sanctions will remain a powerful tool to 
incentivize the Iranian regime to change its behavior. If 
confirmed, I would seek to amplify the effects of our sanctions 
through coordination with U.S. allies and partners. As 
Secretary Yellen said, U.S. sanctions are more likely to compel 
changes in behavior and disrupt threatening activities when 
pursued in concert with our allies--carrying a more forceful 
economic impact by disrupting access to the international 
financial system--and sending a stronger message to malign 
actors by virtue of our solidarity.

Q.15. The United States imposed sanctions on Iran's new 
president, Ebrahim Raisi, in 2019, pursuant to E.O. 13876. The 
order authorizes sanctions against the Supreme Leader of Iran, 
the Office of the Supreme Leader, any official appointed by 
him, and anyone conducting transactions with them. In 
particular, the order authorizes sanctions on foreign financial 
institutions that knowingly facilitate or conduct a significant 
transaction with any individual or entity designated pursuant 
to that E.O. These sanctions are not nuclear related and, thus, 
are consistent with the JCPOA.
    What would be the conditions under which Treasury would 
lift or waive sanctions on Ebrahim Raisi?
    Will you commit to consulting with me and the entire 
Committee before any potential waiving or lifting of sanctions 
on Ebrahim Raisi?

A.15. If confirmed, I would study the relevant legal 
authorities and available intelligence and can commit to 
briefing Congress on this topic.

Q.16. Iranian Funding for Terrorism--What is your assessment of 
the impact sanctions relief under a U.S. return to the JCPOA 
will have on Iran's funding of terror groups, such as 
Hezbollah, Hamas, Palestinian Islamic Jihad, and Kata'ib 
Hizballah (KH)?

A.16. As Secretary of State Blinken has said, an Iran with a 
nuclear weapon or the ability to produce one in very short 
order is an Iran that is going to act with even greater 
impunity when it comes to support for terrorist groups and for 
destabilizing activities in the region. If confirmed, I will 
not hesitate to use counterterrorism authorities to target 
Iran's support to Hizballah and HAMAS, or any other designated 
terrorist group.

Q.17. Would you agree that if the Iranian regime spent less 
money supporting terrorists and lining their own pockets, they 
could afford to purchase vaccines or pay the country's U.N. 
dues?

A.17. Treasury's Iran sanctions program is intended to reduce 
the Iranian regime's funding of its support for terrorism, its 
nuclear program, and its other malign activities in the region.
    I agree that financial systems should never be used to 
support terrorists or line the pockets of corrupt officials, 
and if confirmed, I will lead Treasury's important work to 
fight corruption, human rights abuses, and the funding of 
terrorism.

Q.18. Do you agree that every dollar of U.S. sanctions relief 
provided to Iran, frees up another dollar that Tehran can spend 
on illicit activities?

A.18. As Secretary of State Blinken has said, an Iran with a 
nuclear weapon or the ability to produce one in very short 
order is an Iran that's going to act with even greater impunity 
when it comes to support for terrorist groups and for 
destabilizing activities in the region. I believe Treasury's 
sanctions are thoughtfully designed to create clear incentives 
to end malign behavior and illicit activity.

Q.19. China--According to leading ship tracking websites and 
the International Energy Agency (IEA), China has managed to 
import over 100 million barrels of oil from Iran since January 
2021, \3\ in violation of U.S. sanctions on Iranian oil. \4\ By 
a conservative estimate, that is approximately $5 billion in 
illicit revenues accruing to the regime in the space of 6 
months. China purchased five times more oil in March 2021 than 
in the first 9 months of 2020, according to the IEA. The Biden 
administration has not sanctioned a single Chinese 
transgressor.
---------------------------------------------------------------------------
     \3\ Benoit Faucon, ``Iran Boosts Oil Exports Amid Nuclear Deal 
Talks'', Wall Street Journal (April 15, 2021), https://www.wsj.com/
articles/iran-boosts-oil-exports-amid-nuclear-deal-talks-11618497634.
     \4\ See the Iran Freedom and Counter-Proliferation Act of 2012 
(P.L. 112-239) and Section 1245 of the Fiscal Year 2012 National 
Defense Authorization Act (P.L. 112-81).
---------------------------------------------------------------------------
    Do you believe that China's ongoing violation of our 
sanctions regime is a problem? Please answer ``yes'' or ``no.'' 
If your answer is ``no,'' please explain.
    What specific steps would you take, if confirmed, to 
staunch the flow of Iranian oil to China and properly enforce 
U.S. sanctions?
    Do you agree that if U.S. adversaries perceive the United 
States to be unwilling or unable to enforce U.S. sanctions, 
then they will be more likely to violate sanctions?

A.19. Yes, I am concerned by all reports of alleged sanctions 
evasion. U.S. sanctions depend on their effective 
implementation and enforcement. Since the passage and 
implementation of the Comprehensive Iran Sanctions, 
Accountability, And Divestment Act in 2010, successive 
Administrations have demonstrated a willingness to sanction 
Chinese targets for conducting sanctionable transactions 
related to Iran. If confirmed, I will also work to ensure that 
the Treasury Department is focused on any efforts to evade 
sanctions and abuse the international banking system, working 
closely with colleagues in the Treasury Department and 
throughout the interagency.

Q.20. Open source ship tracking websites have identified 
suspected vessels and entities involved in transporting Iranian 
oil to China since January 2021 (see UANI attached report). If 
confirmed, will you investigate these entities and apply 
sanctions to them if they have indeed violated U.S. law?
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



A.20. If confirmed, I pledge to review the facts and 
circumstances identified in this report and to promptly address 
any violations of U.S. law.

Q.21. China has long been one of the worst violators of U.S. 
sanctions. If confirmed, how would you go about seeking better 
cooperation from China on sanction matters?

A.21. If confirmed, I will be clear-eyed regarding where we can 
seek cooperation with China and where our interests diverge. 
Our sanctions play a crucial role in upholding international 
standards and norms, countering terrorism and the proliferation 
of weapons of mass destruction, and other national security 
interests. I am committed to using the full breadth of 
Treasury's tools and authorities to implement U.S. sanctions 
and where necessary to hold China accountable for violations.

Q.22. China is aggressively moving to develop and deploy a 
central bank digital currency (CBDC), which could potentially 
undercut the power of U.S. sanctions. What specific steps would 
you take at Treasury to prevent a Chinese CBDC from undermining 
U.S. sanctions?

A.22. If confirmed, I look forward to studying China's 
development of a central bank digital currency (CBDC), and to 
carefully consider the possible impacts of Chinese CBDC on U.S. 
sanctions.

Q.23. China has established a joint venture with the SWIFT 
network, which could facilitate the integration of a Chinese 
CBDC with existing international payments standards. \5\ What 
steps do you believe should be taken to ensure the United 
States retains its international economic leverage and 
leadership as the dominant international trade currency?
---------------------------------------------------------------------------
     \5\ ``UPDATE 1-SWIFT Sets up JV With China's Central Bank'', 
Reuters (February 21, 2021), https://www.reuters.com/article/china-
swift-pboc/update-1-swift-sets-up-jv-with-chinas-central-
bankidUSL1N2KA0MS.

A.23. If confirmed, I will commit to using Treasury's existing 
tools and authorities, and if necessary, seeking new tools and 
authorities, as appropriate, to ensure the United States 
retains its economic leverage and leadership. I am committed to 
strengthening the antimoney laundering/countering the financing 
of terrorism (AML/CFT) regimes of countries around the world, 
including working with relevant multilateral organizations to 
ensure proper standards and mechanisms are instituted and 
effectively implemented to promote an environment that best 
---------------------------------------------------------------------------
supports our national security and economic prosperity.

Q.24. Sanctioning NordStream II AG--Nord Stream II AG is the 
company responsible ``for planning, construction and subsequent 
operation of the Nord Stream 2 Pipeline.'' \6\ The State 
Department--in its most recent Protecting Europe's Energy 
Security Act (PEESA) report to Congress \7\--reported that Nord 
Stream II AG is using the Russian pipe-laying contractor LLC 
Koksokhimtrans for this project. \8\
---------------------------------------------------------------------------
     \6\ ``Shareholder and Financial Investors'', Nord Stream 2, 
https://www.nord-stream2.com/company/shareholder-andfinancial-
investors/.
     \7\ See ``Report to Congress and Waiver With Respect to Certain 
Persons Identified on the PEESA Report'', May 19, 2021.
     \8\ Title LXXV of Public Law 116-92, as amended by section 1242 of 
the William M. (Mac) Thornberry National Defense Authorization Act for 
Fiscal Year 2021 (P.L.116-283).
---------------------------------------------------------------------------
    Notably, in 2016, LLC Koksokhimtrans was sanctioned under 
E.O. 13685 for its involvement in Russia's invasion of Crimea 
and its connections to another sanctioned entity, the Russian 
shipping company, Sovfracht-Sovmortrans Group. \9\ Under 
Section 228 of Countering America's Adversaries Through 
Sanctions Act (CAATSA), which passed the Senate 98 to 2, Nord 
Stream II AG must be sanctioned if it is facilitating a 
significant transaction with a sanctioned entity, such as LLC 
Koksokhimtrans.
---------------------------------------------------------------------------
     \9\ ``LLC Koksokhimtrans''. Specially Designated Nationals and 
Blocked Persons List, U.S. Department of the Treasury, Office of 
Foreign Assets Control (May 20 2021) https://
sanctionssearch.ofac.treas.gov/Details.aspx?id=20290; ``Treasury 
Sanctions Individuals and Entities for Sanctions Evasion and Activities 
Related to the Conflict in Ukraine''. U.S. Department of the Treasury, 
September 1, 2016. https://www.treasury.gov/press-center/press-
releases/pages/jl5048.aspx.
---------------------------------------------------------------------------
    Furthermore, the State Department's most recent PEESA 
report also identified LLC Mortransservice, a company that 
reportedly acquired another one of the vessels identified in 
the PEESA report. \10\ LLC Mortransservice appears to be the 
successor to ZAO `Mortransservis' a similarly named company 
established by the Sovfracht-Sovmortrans Group. \11\ The 
Sovfracht-Sovmortrans Group was sanctioned under E.O. 13685 for 
its operations in Crimea. \12\
---------------------------------------------------------------------------
     \10\ ``Nord Stream 2: Russia Is Trying To Circumvent Sanctions 
Against the Project''. Foreign Intelligence Service of Ukraine, March 
28, 2021. https://szru.gov.ua/en/news-media/news/nord-stream-2-russia-
is-trying-to-circumventsanctions-against-the-project; see also ``Ein 
Rennen gegen die Zeit und die USA'', Suddeutsche Zeitung, February 23, 
2021, https://www.sueddeutsche.de/politik/nord-stream-2-usa-russland-
gaspipeline-1.5215746.
     \11\ ``ZAO `Mortransservis' ''. Comfex, 2021. https://comfex.ru/
1027700360522; ``JSC `Sovmortrans' ''. Comfex, 2021. https://comfex.ru/
1027739349076; ``Kompanii grupiy'', Sovfrakht. Accessed May 2021. 
http://www.sovfracht.ru/group-companies/; ``Gruppa Kompaniy `Sovfrakht-
Sovmortrans' prinyala uchastiye v TransRossi 2012''. Argumenti I Fakti, 
May 2, 2012. https://pskov.aif.ru/money/realty/767137.
     \12\ ``Sovfracht-Sovmortrans Group'', Specially Designated 
Nationals and Blocked Persons List, U.S. Department of the Treasury, 
Office of Foreign Assets Control, May 20, 2021. https://
sanctionssearch.ofac.treas.gov/Details.aspx?id=20288; ``Treasury 
Sanctions Individuals and Entities for Sanctions Evasion and Activities 
Related to the Conflict in Ukraine''. U.S. Department of the Treasury, 
September 1, 2016. https://www.treasury.gov/press-center/press-
releases/pages/jl5048.aspx.
---------------------------------------------------------------------------
    With the identification of LLC Koksokhimtrans and LLC 
Mortransservice in the most recent PEESA report, it appears 
Nord Stream II AG has conducted significant transactions with 
previously sanctioned entities, making the legal connection 
that warrants Nord Stream II AG to be sanctioned pursuant to 
CAATSA 228. If confirmed, will you commit to getting back to me 
within 7 days of you being confirmed on whether Nord Stream II 
AG should be sanctioned under CAATSA 228?
    If confirmed, will you commit to getting back to me within 
seven days of you being confirmed on whether any foreign 
persons or entities affiliated with LLC Mortransservice, LLC 
Koksokhimtrans and ZAO ``Mortransservis'' have been involved in 
sanctions evasion efforts in connection with the Sovfracht-
Sovmortrans Group or the Nord Stream 2 project?

A.24. If confirmed, I commit to looking into these very 
important questions and working with our interagency partners 
to respond to the Committee's questions on these subjects 
expeditiously.

Q.25. General Sanctions Enforcement--The Biden administration 
has emphasized the importance and strength of multilateral 
sanctions. What steps will you take to engage our partners in 
the European Union and elsewhere to harmonize sanctions 
regimes?

A.25. If confirmed, I commit to prioritizing the 
Administration's efforts to work with our allies and partners, 
including through the issuance of coordinated sanctions actions 
with our allies as multilateral actions in order to amplify the 
financial and diplomatic impact of our economic authorities. In 
addition, this type of close coordination can help ensure our 
sanctions are calibrated to avoid unintended consequences on 
our allies and partners. As we have seen in recent months, the 
EU, United States, and other partners have taken multiple 
coordinated sanctions actions in relation to Belarus, most 
recently on June 21, 2021. If confirmed, I would also seek to 
increase our coordination across other programs. I would plan 
to prioritize the sharing of information as early as possible 
with allies and partners to help coordinate actions. In 
addition to working with the EU, I also look forward to working 
closely with strong allies like the United Kingdom, Canada, and 
Australia.

Q.26. Sanctions on Hamas and Palestinian Terror Groups--If 
confirmed, what steps will you take to identify and sanction 
material supporters of Hamas, Hezbollah, and Palestinian 
Islamic Jihad, which are all U.S. designated terrorist groups?

A.26. If confirmed, I commit to using Treasury's 
counterterrorism sanctions and enforcement authorities to 
identify and dismantle the financial networks of terrorists and 
their supporters as well as others who seek to perpetrate harm 
against the United States and its allies.

Q.27. In 2018, Congress unanimously passed the Sanctioning the 
Use of Civilians as Defenseless Shields Act in 2018 (Shields 
Act) (P.L.115-348). The law mandates sanctions on members of 
Hamas and Hezbollah that order, control, or otherwise direct 
the use of civilians to shield military objectives from attack. 
No sanctions have been applied pursuant to this law despite 
compelling evidence of the use of human shields by both 
Hezbollah and Hamas. \13\ Will you commit to prioritize 
implementation of the Shields Act?
---------------------------------------------------------------------------
     \13\ Orde Kittrie, ``Time To Act on Human Shields'', Foundation 
for Defense of Democracies (October 15, 2020), https://www.fdd.org/
2020/10/15/time-to-act-on-human-shields/.

A.27. I categorically denounce the use of civilians to shield 
military objectives. If confirmed, I commit to reviewing 
Treasury's use of its sanctions authorities, including the 
---------------------------------------------------------------------------
Shields Act, to address this human rights violation.

Q.28. Cryptocurrency--There has been a surge in cryptocurrency 
donations to Hamas since the start of its armed conflict with 
Israel in May 2021. \14\ Other terrorist groups and sanctioned 
actors are using digital currencies to circumvent sanctions and 
the international banking system. If confirmed, what will you 
do to ensure Treasury utilizes emerging technologies to combat 
the use of digital currencies to evade sanctions?
---------------------------------------------------------------------------
     \14\ Benoit Faucon, Ian Talley, and Summer Said, ``Israel-Gaza 
Conflict Spurs Bitcoin Donations to Hamas'', Wall Street Journal (June 
2, 2021), https://www.wsj.com/articles/israel-gaza-conflict-spurs-
bitcoin-donationsto-hamas-11622633400.

A.28. Malign actors cannot be permitted to utilize 
cryptocurrency or digital assets as a means to evade sanctions 
and violate U.S. law. If confirmed, I will examine Treasury's 
tools and authorities to combat this illicit activity and to 
ensure that Treasury staff, including sanctions investigators, 
are fully equipped to deal with the challenges posed by the use 
of cryptocurrency and digital assets to evade sanctions and 
---------------------------------------------------------------------------
finance terrorism.

Q.29. Recent FATF guidance could require entities that never 
take custody of or control another person's digital assets 
(that is, noncustodial entities) to register as Virtual Asset 
Service Providers (VASPs). In the United States, this would 
mean a noncustodial entity would have to register as a money 
service business (MSB). Contrary to FATF's guidance, Financial 
Crimes Enforcement Network (FinCEN) has standing guidance that 
noncustodial entities, such as cryptocurrency miners and 
software wallet providers, do not have to register as an MSB. 
Do you agree with standing FinCEN guidance, which states that 
certain noncustodial entities never having control over another 
person's digital assets are not required to register as an MSB?

A.29. In June 2019 under the U.S. Presidency of the FATF, the 
FATF revised its standards to explicitly require virtual asset 
service providers (VASPs) to implement the full range of 
preventive measures for AML/CFT and issued guidance to aid 
jurisdictions with swiftly implementing laws and regulations 
for this sector using a risk-based approach. I understand the 
FATF currently is updating the 2019 guidance and engaged in a 
public consultation in March to seek private sector input and 
feedback for purposes of issuing updated guidance later this 
year. If confirmed, I pledge to review the updated FATF 
guidance as well as FinCEN's guidance on this important topic.

Q.30. Anti- Money Laundering (AML)--William M. (Mac) Thornberry 
National Defense Authorization Act for Fiscal Year 2021 
(P.L.116-283) Section 6403(d)(1)(C) of the Anti- Money 
Laundering Act of 2020 (AMLA), dictates that FinCEN should 
``reduce any burdens on financial institutions . . . that are, 
in light of the enactment of [the AMLA] and the amendments made 
by [the AMLA], unnecessary or duplicative.'' \15\
---------------------------------------------------------------------------
     \15\ H.R.6395--William M. (Mac) Thornberry National Defense 
Authorization Act for Fiscal Year 2021 (P.L. 116-283).
---------------------------------------------------------------------------
    Do you commit to eliminate any Customer Due Diligence (CDD) 
requirements imposed on financial institutions that are now 
unnecessary or duplicative in light of the enactment of the 
AMLA?

A.30. The AMLA creates a new reporting regime that requires 
reporting companies to report beneficial ownership information 
directly to FinCEN, and that provides for disclosure of this 
reported information to financial institutions to assist them 
in performing their required due diligence. The AMLA further 
directs Treasury to revise the existing CDD rule to bring the 
rule into conformance with the AMLA, account for the access of 
financial institutions to beneficial ownership information 
under the new reporting regime, and reduce unnecessary or 
duplicative burdens. I understand that Treasury personnel, to 
include FinCEN, are hard at work on the thoughtful 
implementation of these and other provisions of the AMLA. If 
confirmed, I will ensure that Treasury's AMLA implementation 
pays careful attention to the directions Congress provided in 
the AMLA, including the direction to reduce unnecessary or 
duplicative burdens.

Q.31. What existing requirements on financial institutions can 
be reduced because they are unnecessary or duplicative in light 
of the enactment of the AMLA?

A.31. Treasury, including FinCEN, is at the beginning of the 
process of developing the regulatory framework to implement the 
AMLA's reporting regime. As noted above, implementation of the 
AMLA will ultimately include a consideration of existing 
requirements in the CDD rule, with a focus on reducing 
unnecessary or duplicative burdens on financial institutions.

Q.32. Under the AMLA, businesses are now required to report 
beneficial ownership information directly to FinCEN.
    As a result, should financial institutions still be 
required to continue to collect and report to FinCEN beneficial 
information on businesses?

A.32. Financial institutions collect beneficial ownership 
information as part of satisfying their customer due diligence 
obligations; my understanding is that they do not currently 
report beneficial ownership information to FinCEN. As noted 
above, implementation of the AMLA will ultimately include a 
consideration of existing requirements in the CDD rule, with a 
focus on reducing unnecessary or duplicative burdens on 
financial institutions.

Q.33. If FinCEN continues to require financial institutions to 
collect and report to FinCEN beneficial ownership information 
on businesses, should the CDD rule be replaced with a risk-
based collection standard?

A.33. As noted above, implementation of the AMLA will 
ultimately include a consideration of existing requirements in 
the CDD rule. I anticipate that such a review could consider 
modifications or alternatives to the current rule.

Q.34. Will you commit to review whether the CDD rule is still 
necessary given that businesses are now required to report 
beneficial ownership information directly to FinCEN?

A.34. Yes. As noted above, the AMLA directs Treasury to revise 
the existing CDD rule to bring the rule into conformance with 
the AMLA, account for the access of financial institutions to 
beneficial ownership information under the new reporting 
regime, and reduce unnecessary or duplicative burdens. I intend 
to carry out this obligation.

Q.35. AMLA exempts from beneficial ownership information 
reporting by nonprofit organizations (nonprofits) along with 
dozens of other exemptions from reporting requirement. Previous 
iterations of proposed--but not enacted--beneficial ownership 
legislation required exempt entities to provide some 
identifying information as a condition of receiving an 
exemption from reporting requirements. However, AMLA, as 
enacted, contains no such requirement. In fact, AMLA's 
exemptions are self-executing and do not require exempt 
entities to provide any information to receive an exemption.
    FinCEN's Advance Notice of Proposed Rulemaking (ANPRM) \16\ 
implementing AMLA asks for public comment on what information 
nonprofits should be required to file to receive an exemption 
from AMLA's beneficial ownership reporting requirements. This 
question suggests that FinCEN is considering issuing a rule 
that requires nonprofits to provide information to receive an 
exemption, which is inconsistent with the legislative text and 
history of AMLA. The concerns that animated many members of 
Congress to oppose any requirement for exempt entities to 
provide identifying information related to the potential for 
confidential information to be leaked or otherwise made public. 
Unfortunately, such concerns have been validated by the recent 
unlawful leaks of confidential taxpayer information from the 
IRS. Notably, the IRS is required to use privacy safeguards 
more stringent than those AMLA requires of FinCEN for data 
related to beneficial ownership.
---------------------------------------------------------------------------
     \16\ Beneficial Ownership Information Reporting Requirements, 86 
FR 17557.
---------------------------------------------------------------------------
    In light of AMLA's text and legislative history and 
Treasury's repeated inability to safeguard Americans' 
confidential information, will you ensure that FinCEN's AMLA 
rule does not require nonprofits to provide information to 
FinCEN in order to receive an exemption from beneficial 
ownership information reporting requirements?

A.35. I understand that the ANPRM sought comment from the 
public on numerous preliminary questions regarding 
implementation of the beneficial ownership reporting 
requirements. If confirmed, I commit to carefully considering 
the public comments, and to ensuring that any collection of 
information is consistent with applicable law. I also 
appreciate the importance of safeguarding confidential 
information and will ensure that privacy and information 
security are considered throughout Treasury's implementation of 
the AMLA.

Q.36. Enacted in July 2020 with unanimous bipartisan support, 
the Hong Kong Autonomy Act (HKAA) (P.L. 116-49) is an essential 
tool in holding individuals and foreign banks accountable when 
they assist Beijing in violating China's obligations to Hong 
Kong under the Joint Declaration and Basic Law. HKAA requires 
sanctions on entities that materially contribute to the erosion 
of Hong Kong's autonomy, and foreign banks conducting 
significant transactions with those entities. On March 16, 
2021, the Biden administration identified 24 previously 
sanctioned officials undermining Hong Kong's freedoms pursuant 
to Section 5(a) of the HKAA, yet it failed to identify any 
foreign financial institutions (FFIs) doing business with 
persons identified under Section 5(a).
    If confirmed, will you commit to prioritizing the 
investigation of foreign financial institutions (FFIs) doing 
business with the individuals sanctioned under HKAA?

A.36. Yes, if confirmed, I will commit to identify FFIs who may 
be doing business with individuals sanctioned under the HKAA.

Q.37. If confirmed, will you commit to notifying me in writing, 
within 30 days of your confirmation, why no foreign financial 
institutions that have been doing business with persons 
identified under Section 5(a) have been identified thus far?

A.37. If confirmed, I will commit to looking into why no 
foreign financial institutions that have been doing business 
with persons identified under Section 5(a) have been identified 
thus far. I will also commit to keeping Congress informed of 
Treasury's actions in a timely manner.

Q.38. On June 24, Senator Chris Van Hollen (D-MD) and I sent a 
letter to President Biden urging his Administration to use the 
HKAA to identify and sanction entities materially contributing 
to the Chinese Communist Party's assault on Apple Daily, the 
last prodemocracy newspaper in Hong Kong, and its founder Jimmy 
Lai. \17\ Last month, Reuters reported that Hong Kong Security 
Secretary John Lee ordered HSBC and Citibank's respective Hong 
Kong branches to freeze Jimmy Lai's accounts--they appear to 
have complied. \18\ After 500 policemen raided Apple Daily's 
offices in June, \19\ Hong Kong's Security Bureau ordered banks 
to freeze the newspaper's assets, leading to its closure. \20\
---------------------------------------------------------------------------
     \17\ Senator Pat Toomey, Letter to President Joseph R. Biden 
Concerning Apple Daily Closure, 24 June 2021, https://
www.banking.senate.gov/imo/media/doc/toomey-van-hollen-letter-to-
pres.biden.pdf.
     \18\ ``Exclusive: Hong Kong Security Secretary Threatened Bank Not 
To Conduct Account Transactions With Li Zhiying by Going to Jail 
(Translated via Google)''. Reuters (China), 27 May 2021, https://
cn.reuters.com/article/exclusive-hk-0527-thur-idCNKCS2D80P8.
     \19\ Munroe, Tony. ``HK's Apple Daily Raided by 500 Officers Over 
National Security Law''. Reuters, 17 June 2021, www.reuters.com/world/
asia-pacific/hong-kongs-apple-daily-newspaper-says-police-arrest-five-
directors-2021-06-16/.
     \20\ Ho, Kelly. ``Hong Kong's Apple Daily May Halt Publication 
This Sat, Pending Fri Board Meeting''. Hong Kong Free Press, 21 June 
2021, https://hongkongfp.com/2021/06/21/breaking-hong-kongs-apple-
daily-mayhaltpublication-this-sat-pending-fri-board-meeting/.
---------------------------------------------------------------------------
    Section 5 of the HKAA requires the Administration to 
identify foreign entities that are ``materially contributing'' 
to the ``inability of the people of Hong Kong to enjoy the 
freedom of assembly, speech, press, or independent rule of 
law.'' It seems very likely that the breathtaking crackdown on 
Jimmy Lai and Apple Daily involves numerous foreign persons to 
whom Section 5 of the HKAA applies.
    If confirmed, will you commit to investigating and 
identifying any entities to whom Section 5 of the HKAA applies, 
specifically those involved in the suppression of Apple Daily 
and Jimmy Lai?

A.38. Yes, if confirmed I will commit to looking into the 
crackdown on Jimmy Lai and Apple Daily and fulfilling 
Treasury's responsibilities under Section 5 of the HKAA.

Q.39. It is our understanding that the orders to the 
aforementioned banks were issued in an extrajudicial manner, by 
a single official outside of the court system, and without any 
criminal charges or subpoenas. In light of the clampdown on 
Apple Daily, and the events that have unfolded in the year 
since China imposed a national security law on Hong Kong, do 
you believe the rule of law still exists in Hong Kong?

A.39. I am deeply concerned by reports of recent events 
including the clampdown on Apple Daily, as well as the events 
over the past year to erode the autonomy of Hong Kong and 
repress its people. I believe China should abide by the rule of 
law and support freedoms enshrined in the Basic Law of Hong 
Kong.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
            SENATOR MENENDEZ FROM BRIAN EDDIE NELSON

Q.1. In recent months, the Miami Herald has published 
investigations on how the Cuban regime has used a wide range 
shell companies in Europe and Asia to circumvent U.S. 
sanctions.
    I have written to the Secretary asking for the Treasury 
Department to investigate the Cuban regime's sanctions evasion 
maneuvers, as they also have implications for the efficacy of 
all of our sanctions frameworks.
    How will you address these actions by the Cuban regime?

A.1. I share your concern with these reports of sanctions 
evasion by Cuban State actors, and the possible use of shell 
companies abroad to circumvent U.S. sanctions. If confirmed, I 
commit to looking into these reports and pledge to work with 
Treasury staff to effectively enforce violations of our 
sanctions programs, and to continue working with Congress to 
support the Cuban people.

Q.2. In the last month, Nicaragua's Ortega regime has arrested 
four presidential candidates and over a dozen prominent leaders 
from the private sector and civil society. We have not seen an 
authoritarian crackdown of this nature in our hemisphere in 
decades. My RENACER Act requires a more strategic use of U.S. 
sanctions to address Ortega's dismantling of democracy and 
calls for the U.S. to use its financial tools to investigate 
the kleptocracy perpetrated by Ortega and his family.
    If confirmed, what specific steps would you take to address 
the situation in Nicaragua?

A.2. I condemn authoritarian actions, including human rights 
violations. If confirmed, I pledge to work in close 
coordination with the State Department to hold Daniel Ortega 
and his allies accountable, and to promote a return to 
democratic processes in Nicaragua.

Q.3. Where do you assess the U.S. has leverage to impose 
sanctions on Burma that can actually move the needle of the 
juntas calculations?
    How critical is it that we have cooperation from regional 
partners, including Singapore and Thailand, for success?

A.3. As President Biden stated when signing a new Executive 
order in response to the February coup in Burma, the assault on 
Burma's transition to democracy remains an issue of deep 
bipartisan concern, and the United States has been in close 
contact with our allies and partners around the world, 
particularly in the Indo-Pacific region, driving vigorous 
diplomatic outreach to help coordinate an international 
response. If confirmed, I will vigorously enforce U.S. 
sanctions to ensure Burma's military junta is held accountable 
for its actions while avoiding unintended impacts to the people 
of Burma.

Q.4. In 2018, the Treasury Department for the first time 
identified and published digital currency addresses associated 
with two sanctioned individuals based in Iran who helped 
exchange Bitcoin for Iranian cybercriminals that used 
ransomware to extort millions of dollars from over 200 victims.
    How do you assess the impact of the growth of 
cryptocurrencies on our sanctions regimes? How do we make sure 
increased use of cryptocurrencies don't undermine our use of 
sanctions to affect foreign policy goals?

A.4. Malign actors and rogue regimes cannot be permitted to 
utilize cryptocurrency or digital assets as a means to evade 
sanctions and violate U.S. law. OFAC has imposed sanctions on a 
wide range of entities and individuals known to abuse 
cryptocurrencies, including ransomware perpetrators and 
facilitators, Chinese fentanyl vendors, Chinese crypto 
launderers, North Korean State actors, Russian nationals 
stealing digital currency from U.S. and international victims, 
as well as Russian State actors abusing cryptocurrency to 
benefit a Russian troll farm. Where appropriate and available, 
OFAC will continue to list digital currency addresses on its 
Specially Designated Nationals and Blocked Persons List, or 
``SDN List''. Inclusion of these identifiers enables the 
private sector to, among other things, more easily screen for 
and prevent digital currency payments associated with 
sanctioned persons.
    If confirmed, I will examine Treasury's tools and 
authorities to combat this illicit activity and to ensure that 
Treasury staff, including sanctions investigators, are fully 
equipped to deal with the challenges posed by cryptocurrency 
and digital assets to evade sanctions and finance terrorism. 
Further, I will work closely with Secretary Yellen, the Federal 
Reserve Board, and other Federal banking and securities 
regulators, including the Securities and Exchange Commission 
and the Commodities Futures Trading Commission, as well as 
Congress, on how to implement an effective regulatory framework 
for these and other innovations in financial technology.

Q.5. Given China's growing power in international financial 
markets, what adjustments do you think are needed to how we 
think about sanctions with regards to the PRC so that we don't 
end up reading short term sanctions success for China's 
creation of alternate international financial architecture that 
render the sanctions toolkit ineffective over the longer term?

A.5. As Deputy Secretary Adeyemo has noted, competition with 
China and Chinese statecraft is one of the central challenges 
that the United States and its allies and partners face in the 
21st century. If confirmed, I will commit to ensuring that 
Treasury's sanctions policies are aligned to promote U.S. 
economic and financial preeminence and the attendant power of 
U.S. sanctions.
    When addressing major foreign policy and national security 
challenges such as these, we must leverage a broad range of 
tools. Increasingly prominent among these tools are economic 
sanctions, the aggressive use of which has resulted in notable 
successes, but has also created anticipated and unanticipated 
challenges. I believe the United States must be judicious in 
the use of its sanctions to limit and mitigate unintended 
consequences. To do this, we must thoroughly analyze not only 
the ramifications of individual actions, but also these 
actions' collective impact on the continued effectiveness of 
the sanctions tool, including to the U.S. dollar's status as 
the reserve currency of choice. If confirmed, I will work with 
experts across Treasury as part of the ongoing sanctions review 
process to identify potential areas for improvement in the 
deployment of our sanctions and to mitigate against the 
creation of alternative international financial architectures 
that could erode the effectiveness of our sanctions.

Q.6. CAATSA section 228 requires secondary sanctions on any 
entity that does business with a Specially Designated National.
    Do I have your commitment that you will work to fully 
implement this provision?

A.6. Yes, if confirmed, I commit to working to implement 
Section 228 of the Countering America's Adversaries Through 
Sanctions Act (CAATSA) (P.L. 115-44).

Q.7. A sanctions regime is intended as a tool, not end-point, 
for broader policy objectives.
    Given that the Biden administration's North Korea policy 
review suggests a different approach to dealing with the DPRK 
than the Trump administration's feckless and failed effort, are 
there changes to the sanctions regime--tighter or loser or 
simply different--that you'd recommend so that sanctions and 
diplomacy are fully complimentary?

A.7. I am deeply concerned by reports of North Korea's nuclear 
and ballistic missile capabilities, along with widespread 
systemic human rights abuses. If confirmed, I will carefully 
review available options to address these threats, including 
diplomacy and pressure options, and will not hesitate to use 
Treasury authorities to target malign actors and address 
sanctions evasion wherever appropriate. We will continue to 
work closely with regional partners to address these threats.

Q.8. Venezuela's Maduro regime is involved in a wide range of 
criminal activities: from alleged crimes against humanity to 
drug trafficking to a massive campaign of corruption and 
kleptocracy. The U.S. has responded with a range of reciprocal 
actions to deter Maduro's actions.
    If confirmed, how will you advocate that the U.S. use its 
sanctions as leverage in order curb the Maduro regime's 
criminal activities and forge a diplomatic breakthrough that 
leads to new elections in Venezuela?

A.8. The power and integrity of the U.S. Government's sanctions 
derive not only from the ability to sanction actors when 
appropriate, but to lift sanctions in a manner consistent with 
the law when a program's goals are met. If confirmed, I will 
ensure that Treasury will be prepared to implement sanctions 
consistent with the Administration's foreign policy goals to 
restore core democratic processes and institutions in 
Venezuela. If confirmed, I will not hesitate to explore 
additional targeted actions should the regime demonstrate that 
it is not acting in good faith.

Q.9. The Maduro regime has facilitated a massive expansion of 
illicit gold mining in Venezuela, which includes trafficking 
routes to Turkey and the Middle East, and has led to widespread 
environmental devastation in Venezuela.
    What steps will you take to address Maduro's illicit gold 
trade?

A.9. I am very concerned regarding reports of human rights 
abuses, widespread environmental devastation, and other 
security threats stemming from illicit gold mining in 
Venezuela. If confirmed, I will work with our interagency 
partners to investigate reports of illicit gold mining 
activities, and to explore sanctions and using the full suite 
of our economic authorities and diplomatic leverage should the 
evidence indicate that such actions will be both feasible and 
impactful. Under E.O. 13850, Treasury has the ability to 
sanction any person determined by the Secretary of the 
Treasury, in consultation with the Secretary of State, to 
operate in the gold sector of the Venezuelan economy.

Q.10. New Jersey and 47 other States have passed legislation 
authorizing some form of cannabis for regulated medical or 
adult-use purposes. But we all know that businesses that serve 
this market have found themselves shut out of the banking 
system and forced to operate exclusively in cash, often 
depriving them of banking products and creating serious public 
safety risks in our communities.
    The SAFE Banking Act, which I cosponsored, would fix this 
problem by allowing banks to provide financial services to 
cannabis businesses. I also introduced the CLAIM Act, which 
would ensure that legal marijuana and related businesses have 
access to comprehensive and affordable insurance coverage.
    Would allowing State-regulated marijuana businesses to 
access financial services reduce the public safety risk and 
allow these legal businesses to operate like other businesses?

A.10. This is an important and complex issue, given the current 
treatment of marijuana under Federal law. If confirmed, I 
commit to evaluating information regarding the operation of 
State-regulated marijuana-related businesses (MRBs), and 
working with Congress to address this issue in a way that helps 
to ensure public safety and equitable access to financial 
services.

Q.11. Is congressional action needed so that businesses that 
serve State-regulated marijuana markets can have access to 
financial services?

A.11. Given the current treatment of marijuana under Federal 
law, the decision to provide services to an MRB is a risk-based 
decision that each financial institution must independently 
assess under its risk-based approach to Bank Secrecy Act 
compliance.

Q.12. In 2013, the Obama administration authorized U.S. 
companies to apply for Treasury Department licenses to engage 
in the agriculture, telecommunications, and energy sectors in 
areas of Syria outside of President Bashar al-Assad's control. 
Just last month, Treasury's Office of Foreign Assets Control 
revoked the license of U.S. company Delta Crescent Energy, who 
had been working with the Autonomous Administration of North 
and East Syria (AANES) to refine and secure oil export 
contracts. State Department officials stated this decision was 
undertaken because the United States is in Syria, ``for the 
people, not for the oil.'' However, in the absence of this 
partnership, it seems likely that oil generated in Northeast 
Syria will ultimately benefit the Syrian regime and its 
external backers (Russia), undermining the broader intent of 
the U.S. Syria sanctions regime.
    Please clarify the rationale behind this decision within 
the context of broader U.S. Syria policy.
    How will the Administration ensure that the product of 
Syria's oil fields benefit neither ISIS, Russia, nor the Assad 
regime (including through sales to middlemen who sell back to 
the regime), and that the AANES has a means of selfsustainment 
that does not benefit the regime?

A.12. I support the Administration's foreign policy priorities 
in Syria. If confirmed, I will work to ensure vigorous 
enforcement of Treasury's Syria-related sanctions authorities, 
including those that prevent the flow of funds to the Assad 
regime.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR VAN HOLLEN FROM BRIAN EDDIE NELSON

Q.1. From the Microsoft hack, to Solar Winds, Colonial 
Pipeline, JBS (the world's largest meat supplier), and many 
others, it's clear that malicious cyberattacks are on the rise 
and have no signs of abating. Some of these may be profit-
motivated economic espionage or theft, while others have a 
national security or intelligence gathering purpose.
    Given this landscape, what role should sanctions play in 
imposing consequences on cybercriminals, and should the U.S. 
Government increase the use of sanctions on these criminals?

A.1. Malicious cyberattacks are a threat to our national 
security. Sanctions are a very powerful tool to respond to 
unusual and extraordinary threats to the national security, 
foreign policy, or economy of the United States that originate 
in whole or in substantial part outside the U.S. Depending on 
facts and circumstances, sanctions can be one of several tools 
that the U.S. Government can use with the goal of imposing 
costs on those engaged in malicious cyberactivity and deterring 
this malign behavior. Treasury has designated numerous 
malicious cyberactors under its cyber-related sanctions program 
and other sanctions programs, including perpetrators of 
ransomware attacks and those who facilitate ransomware 
transactions. If confirmed, I commit to continuing to find 
effective ways to use all appropriate tools, including 
sanctions, to take impactful action against cybercriminals.

Q.2. Do you believe sanctions for malicious cyberattacks might 
have real deterrence value? If not, what benefit might they 
provide?

A.2. Sanctions can be powerful tools to place restrictions on 
designated persons and entities and deter malign behavior. 
Sanctions are particularly effective when deployed in 
coordination with other U.S. Government efforts and in 
coordination with sanctions and nonsanctions actions by allied 
and partner Governments. For instance, in September 2020, 
Treasury targeted cybercriminals that used sophisticated 
schemes to steal account holders' passwords and steal the 
balances of the victims' virtual currency accounts. 
Simultaneously with the imposition of sanctions by Treasury, 
DOJ unsealed an indictment against the targeted cybercriminals, 
sought the civil and criminal forfeiture of assets traceable to 
the alleged crimes, and the United States Secret Service seized 
millions of dollars in stolen virtual currency and U.S. 
dollars. Multipronged actions like this send a clear message to 
all cybercriminals that the U.S. Government will take 
aggressive action to disrupt their malicious cyberactivities, 
to hold them accountable, and to protect the international 
financial system.

Q.3. Do difficulties in attributing the activities of 
individuals to Nation-States make cybersanctions less 
effective? Are there ways to overcome this evidentiary hurdle?

A.3. Treasury's sanctions programs targeting significant 
malicious cyberenabled activities, whether by individuals or 
State actors, is an important and valuable tool. If confirmed, 
I commit to continuing Treasury's close collaboration with law 
enforcement, the intelligence community, and others to ensure 
that OFAC continues to have access to relevant, available 
information to assess opportunities for action. Treasury has an 
important role to play in the whole-of-Government effort 
against malicious cyberactivities and protecting our financial 
system from such threats.

Q.4. How might cybersanctions be coupled with other actions, 
including other forms of economic pressure, in order to develop 
a comprehensive and cohesive strategy toward the Nation-States 
and/or organizations being targeted?

A.4. The growing threats posed by malicious cyberactivity call 
for a whole-of-Government effort to respond to such threats, 
including raising awareness about cybersecurity and resilience 
measures for the private sector. Where appropriate, sanctions 
should be considered, in addition to other authorities granted 
to Treasury. In certain cases, bilateral engagement may be an 
effective step in persuading allied and partner Governments to 
take action against cybercriminals or their associated networks 
of supporters and facilitators. The whole-of-Government 
response to the SolarWinds incident was a compelling example of 
the U.S. Government using a wide range of tools, including 
imposing new sanctions against Russian entities to impose costs 
on the Russian Government for its actions against U.S. 
interests.

Q.5. Relatedly, many cyberattacks today come in the form of 
ransomware and other cyberattacks involving the use of 
cryptocurrency. North Korea, for example, has engaged in 
cybercrime to launder and steal billions in cryptocurrency in 
an effort to generate income (and evade sanctions) in ways that 
are harder to trace and subject to less Government oversight 
than the traditional banking sector.
    One important aspect of combatting illicit financing 
threats is transparency, and ensuring we have the information 
that we need to go over bad actors. The ability for criminals 
to engage in regulatory arbitrage by using foreign 
cryptocurrency exchanges that are not subject to the same anti- 
money laundering obligations as those in the U.S. is troubling. 
Are there ways that we might be able to reduce this type of 
regulatory arbitrage?

A.5. I appreciate this concern. I recognize that the potential 
to send virtual assets nearly instantaneously and irrevocably 
across borders can increase illicit finance risks. For this 
reason, under the U.S. Presidency of the FATF, the FATF in June 
2019 amended its standards to explicitly require virtual asset 
service providers (VASPs) to implement the full range of 
preventive measures for AML/CFT and issued guidance to aid 
jurisdictions with swiftly implementing laws and regulations 
for this sector using a risk-based approach.
    Many jurisdictions continue to make progress in 
implementing these requirements, but gaps in global 
implementation exist, which enable the continued misuse of 
virtual assets through jurisdictional arbitrage. More remains 
to be done to address this concern, and if confirmed, I look 
forward to continuing this important work.
    If confirmed, I will ensure that Treasury actively 
encourages all jurisdictions to implement the FATF standards 
and work with the private sector to promote compliance with the 
international requirements. Treasury will also work with like-
minded jurisdictions to ensure this is a multilateral push for 
global implementation.

Q.6. Do you think our current sanctions and AML regimes broad 
enough to effectively target bad actors when they engage in 
illicit activities through cryptocurrency? Are there ways that 
we might want to modernize our regimes to fully encompass these 
types of transactions?

A.6. The U.S. sanctions regime prohibits certain transactions 
involving property in which any foreign country or a national 
thereof has any interest. Such transactions subject to 
regulation may include convertible virtual currency, such as a 
cryptocurrency, in addition to those in traditional fiat 
currency. Similarly, Treasury administers a technology-neutral 
AML regulatory framework. If confirmed, I look forward to 
continuing this important work to deter illicit activities 
involving cryptocurrency.
    As you know, cryptocurrencies can allow greater anonymity 
and pseudonymity than the traditional financial system in 
holding and transacting funds, and they simultaneously can 
enable the transfer of large amounts of value cross-border 
irrevocably and almost instantly. Cryptocurrencies can also 
permit the transmission of value by users without reliance on a 
financial intermediary on which AML/CFT obligations are placed. 
These features can present novel challenges. For example, bad 
actors can use different methods to obscure the traceability on 
such public blockchains, and the underlying protocols 
supporting such blockchains may change over time. Furthermore, 
there are certain cryptocurrencies that by their design are not 
transparent.
    Thoughtful regulation requires a balancing between benefits 
and risks. If confirmed, I will continue Treasury's important 
work to continue to refine the sanctions and AML regimes to 
keep pace with new threats, including illicit typologies 
associated with cryptocurrencies and other emerging financial 
technology. If confirmed, I would work closely with this 
Committee and TFI personnel to ensure that evolution carefully 
balances risk mitigation against the costs and other burdens 
imposed on industry and innovation.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
          SENATOR CORTEZ MASTO FROM BRIAN EDDIE NELSON

Q.1. We only recently begun to develop machine learning 
technologies. What have you learned about machine learning and 
artificial intelligence's abilities and limitations to 
contribute to financial regulatory enforcement?

A.1. I believe it is essential for TFI to evaluate and where 
appropriate, incorporate new technologies, including machine 
learning technologies, into its financial regulatory 
enforcement mission. For example, machine learning could help 
address the challenge of digesting and analyzing large amounts 
of information. The Secretary recently discussed machine 
learning and artificial intelligence during a Treasury 
organized and hosted Financial Innovation Roundtable in 
February 2021, and I share her view of the importance of 
responsible innovation, both in the private and public sector.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                    FROM ELIZABETH ROSENBERG

Q.1. Fighting Domestic Terrorism--As mentioned in my opening 
statement at the hearing, the FBI Director testified recently 
that racially motivated and antigovernment extremists are 
likely to be the biggest domestic threat over the next few 
years. Last week, the Biden administration rolled out a new 
strategy to counter domestic terrorism. The strategy calls for 
greater scrutiny of public social media posts and better 
coordination among law enforcement and national security 
agencies. How should Treasury work with other law enforcement 
agencies like the FBI and Homeland Security to better fight 
domestic terrorism, while protecting people's civil rights and 
liberties? Is there anything more Congress should be doing now 
to better assist TFI in protecting us from these threats?

A.1. As noted in the National Strategy for Countering Domestic 
Terrorism, the Intelligence Community assesses that domestic 
violent extremists (DVEs) who are motivated by a range of 
ideologies and galvanized by recent political and societal 
events in the United States pose an elevated threat to the 
United States in 2021. Enduring DVE motivations pertaining to 
biases against minority populations and perceived Government 
overreach will almost certainly continue to drive DVE 
radicalization and mobilization to violence. If confirmed, I 
pledge Treasury will continue to: (i) explore, in coordination 
with law enforcement and other interagency partners, ways to 
enhance the identification and analysis of financial activity 
associated with domestic terrorists and their foreign 
counterparts; (ii) enhance engagement with financial 
institutions on domestic terrorist financing, including through 
existing provisions of the Bank Secrecy Act (BSA); (iii) 
coordinate with the Department of State, other interagency 
partners, and with our foreign allies to assess whether 
additional foreign entities linked to domestic terrorism can be 
designated as Specially Designated Global Terrorists, or 
Foreign Terrorist Organizations; (iv) in coordination with 
interagency partners, continue to support law enforcement 
action against domestic terrorists and their foreign supporters 
through the provision of financial intelligence, information, 
and analysis; and (v) across these efforts, work to ensure that 
Americans' civil liberties and constitutional rights continue 
to be protected. Beyond these forms of domestic collaboration, 
Treasury, as Head of the U.S. Delegation to the Financial 
Action Task Force (FATF) through the Office of Terrorist 
Financing and Financial Crimes (TFFC), works with foreign 
partners, and otherwise works bilaterally to identify cross-
border financial activity associated with racially or 
ethnically motivated violent extremists and adopt appropriate 
counter measures to address this activity.

Q.2. Effectiveness of Sanctions--Critics have long questioned 
the effectiveness of sanctions. In your prior policy role at 
the Center for New American Security, you developed an approach 
to harnessing and measuring the effectiveness of sanctions. How 
would you address these critics, how can we accomplish the 
goals of sanctions more effectively, and how might the Treasury 
Department, and specifically the Office of Terrorist Financing 
and Financial Crimes, develop metrics to better track the value 
and effectiveness of sanctions?

A.2. Sanctions are most effective when they are based on all-
source intelligence and economic analysis, used in furtherance 
of a clearly communicated and specific policy objective, and 
when they are part of a comprehensive diplomatic and security 
strategy. Also, they are most effective when applied 
multilaterally, easily understood and enforceable, and have 
clearly defined and communicated options for escalation and 
wind down once the policy objective is met.
    However, when these measures are not used in a focused and 
systematic manner, they can fail to impose meaningful economic, 
political, or other costs on a target and enrich adversaries. 
An arbitrary use of sanctions risks harming American workers, 
businesses, and competitiveness, as well as imposing unintended 
costs on U.S. allies and other third parties. These actions 
weaken U.S. credibility and may confuse allies, adversaries, 
and members of the private sector and civil society. These 
factors also weaken the United States' ability to use economic 
deterrence to further U.S. national security, foreign policy, 
and economic policy goals.
    If confirmed, I would lead the TFFC office in collaborating 
closely with the Office of Foreign Assets Control (OFAC) to 
define an evaluative process to examine the effectiveness of 
sanctions, leveraging expertise from other offices of Treasury, 
including the Office of Intelligence and Analysis (OIA) and the 
Office of International Affairs (IA), as well as with other 
interagency partners.

Q.3. TFI Structure--You previously worked in TFI as a Senior 
Advisor to the Under Secretary, and you currently work at 
Treasury as Senior Counsel to the Deputy Secretary. Based on 
this work and your longstanding knowledge of the various 
components and roles within TFI, do you have any 
recommendations on restructuring or streamlining TFI in order 
to enable the Office to utilize its tools more efficiently and 
effectively?

A.3. I first joined the office I have now been nominated to 
lead in 2009. Since that time, I have developed a deep 
appreciation of, and learned tremendously from, the expertise 
and experience of the professionals in the various components 
of the Office of Terrorism and Financial Intelligence (TFI). 
There are unique roles and responsibilities throughout the 
organization, and many forms of impressive complementary work 
in service of national security. Most recently, through my work 
as Counselor to the Deputy Secretary, I have come to appreciate 
the ways in which TFI has changed over the years, with new 
anti- money laundering and sanctions authorities, and an 
increasingly significant role to play in the execution of U.S. 
national security. In the context of the Deputy Secretary's 
sanctions review and in other engagements, the many talented 
staff members at Treasury, and others, have offered valuable 
ideas about ways to streamline the work of TFI and capture 
efficiencies, modernizing uses of data and information 
technology, ensuring that engagements and information sharing 
with financial institutions and other regulated entities can be 
as productive as possible, and that Treasury has robust 
partnerships with the law enforcement and intelligence 
communities, as well as foreign partners, for the purposes of 
enforcement and advancing policy interests. If confirmed, I 
would welcome the opportunity to implement some of these good 
ideas, in accordance with the views of Treasury's senior 
leadership and in close partnership with TFI's other component 
heads.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                    FROM ELIZABETH ROSENBERG

Q.1. Congressional Oversight--Please provide your philosophy on 
how the Office of Terrorism Financing and Financial 
Intelligence (TFI) at the Department of the Treasury (Treasury) 
will approach and respond to Congressional information requests 
(both for documentary information and oral testimony), if you 
are confirmed.

A.1. I recognize that Congress plays an important oversight 
role regarding Executive branch activities. If confirmed, I 
pledge to work through the accommodations process to comply 
with Congressional requests for information consistent with the 
constitutional and statutory obligations of the Executive 
branch.

Q.2. If confirmed, do you intend to respond to information 
requests differently depending on who is making the 
Congressional information request (whether it's the Chair of 
the Congressional Committee, the Ranking Member, or another 
Member of Congress)? Please answer ``yes'' or ``no.'' If your 
answer is ``yes,'' please explain.

A.2. I recognize that Congress plays an important oversight 
role regarding Executive branch activities, and I pledge to 
thoughtfully consider all Congressional information requests, 
recognizing the importance of transparency in Government. If 
confirmed, I pledge to work through the accommodations process 
to comply with Congressional requests for information 
consistent with the constitutional and statutory obligations of 
the Executive branch.

Q.3. Will you commit that, if confirmed, you will respond in a 
timely manner and fully comply with all information requests 
from me? Please answer ``yes'' or ``no.'' If your answer is 
``no,'' please explain.

A.3. I recognize that Congress plays an important oversight 
role regarding Executive branch activities, and I pledge to 
thoughtfully consider all Congressional information requests 
including from any Member, recognizing the importance of 
transparency in Government. If confirmed, I pledge to work 
through the accommodations process to comply with Congressional 
requests for information consistent with the constitutional and 
statutory obligations of the Executive branch.

Q.4. Will you commit that, if confirmed, you will make yourself 
and any other TFI employee expeditiously available to provide 
oral testimony (including but not limited to briefings, 
hearings, and transcribed interviews) to the Committee on any 
matter within its jurisdiction, upon the request of either the 
Chairman or Ranking Member? Please answer ``yes'' or ``no.'' If 
your answer is ``no,'' please explain why.

A.4. I recognize that oral testimony plays an important role in 
Congress' oversight responsibilities regarding Executive branch 
activities. If confirmed, I commit to brief or testify 
regarding Congressional requests consistent with the 
constitutional and statutory obligations of the Executive 
branch.

Q.5. On June 10, 2021, I wrote a letter to Treasury Secretary 
Yellen requesting records related to the Biden administration's 
efforts to reenter the Joint Comprehensive Plan of Action 
(JCPOA), by June 25, 2021. \1\ I have yet to receive a 
response. When will Treasury respond and comply with my 
request?
---------------------------------------------------------------------------
     \1\ Senator Pat Toomey, Letter to Secretary Yellen Concerning 
JCPOA Reentry (June 10, 2021), https://www.banking.senate.gov/imo/
media/doc/toomey-letter-to-treasury-on-jcpao-reentry.pdf.

A.5. If confirmed, I am happy to look into the status of the 
---------------------------------------------------------------------------
Department's response to this letter.

Q.6. The Joint Comprehensive Plan of Action (JCPOA)--On April 
21, 2021, an unnamed senior State Department Official suggested 
that during the Trump administration some sanctions, including 
terrorism sanctions, on Iranian entities were ``not 
legitimately imposed.'' \2\ Do you agree that such accusations 
undermine the integrity of the U.S. sanctions regime and 
disparage the career civil servants at Treasury who compile the 
evidentiary packages for such sanctions? Please answer ``yes'' 
or ``no.'' If your answer is ``no,'' please explain.
---------------------------------------------------------------------------
     \2\ United States Department of State, ``Briefing With Senior 
State Department Official on Recent U.S. Engagement in Vienna Regarding 
the JCPOA'' (April 21, 2021), https://www.state.gov/briefing-with-
senior-state-departmentofficial-on-recent-u-s-engagement-in-vienna-
regarding-the-jcpoa-2/.

A.6. Based on my experience working at the Treasury Department 
from 2009-2013, and as a Counselor in the current 
Administration, I have confidence in the diligence and 
dedication of Treasury's career civil servants in the Office of 
Terrorism and Financial Intelligence and no reason to question 
the evidentiary basis of the designations. If confirmed, I will 
look into this matter and would actively work to ensure that 
staff have the resources and support necessary to continue with 
---------------------------------------------------------------------------
their excellent work.

Q.7. If confirmed, will you commit to transmitting to me, in 
writing, no later than seven days after which you are 
confirmed, a determination on whether terrorism sanctions were 
imposed illegitimately by the Trump administration?

A.7. If confirmed, I will commit to expeditiously looking into 
the matter regarding the terrorism sanctions imposed on Iranian 
entities.

Q.8. Iran has not answered the International Atomic Energy 
Agency's (IAEA) questions regarding why nuclear particles have 
been found at undisclosed Iranian sites. As a result, the 
nuclear watchdog recently warned it is now impossible to 
confirm Iran is not seeking a nuclear weapon. \3\
---------------------------------------------------------------------------
     \3\ International Atomic Energy Agency, ``IAEA Director General's 
Introductory Statement to the Board of Governors'' (June 7, 2021), 
https://www.iaea.org/iaea-director-generals-introductory-statement-to-
the-board-of-governors-7-june-2021.
---------------------------------------------------------------------------
    Do you believe Iran should account for the existence of 
these nuclear particles before the United States rejoins the 
Iran nuclear deal and offers sanctions relief?

A.8. I defer to the State Department regarding these vitally 
important matters and the terms of any Iran nuclear deal. 
Broadly speaking, I believe Iran should only enjoy sanctions 
relief if it takes the appropriate steps to resume compliance 
with its nuclear commitments under the JCPOA. If confirmed, I 
will work to ensure that Treasury continues its important work 
to enforce U.S. sanctions and combat Iran's support for 
terrorism, abuse of human rights, Weapons of Mass Destruction 
(WMD) proliferation and ballistic missile development, as well 
as the regime's destabilizing activities in the region.

Q.9. What is your view of the JCPOA and the sanctions relief it 
provided Iran and will provide Iran if the United States 
rejoins it?

A.9. I have in the past and continue to support nuclear arms 
control. As senior members of the Biden-Harris administration 
have said, if Iran implements its nuclear commitments under the 
JCPOA, the U.S. would implement its own commitments under the 
JCPOA to lift sanctions. The U.S. would nevertheless retain a 
broad range of sanctions, including hundreds of sanctions 
imposed by the previous Administration, to deal with Iran's 
threats to regional stability, support for terrorism, human 
rights abuses, among other threatening activities.

Q.10. If the United States returns to the JCPOA, do you agree 
that non-nuclear sanctions on Iran, such as terrorism 
sanctions, should be maintained?

A.10. As senior members of the Biden-Harris administration have 
said, if Iran implements its nuclear commitments under the 
JCPOA, the U.S. would implement its commitments under the JCPOA 
to lift sanctions. However, even under the terms of the JCPOA, 
Treasury would retain the right to impose sanctions related to 
Iranian support for terrorism, human rights abuses, WMD 
proliferation and ballistic missile development, as well as the 
regime's destabilizing activities in the region. If confirmed, 
I will ensure that Treasury continues to enforce strong U.S. 
sanctions.

Q.11. You are currently working at Treasury as Counselor to 
Treasury Deputy Secretary Wally Adeyemo. In that role, you have 
been conducting a review of Treasury's sanctions program.
    Do you have any evidence that the Central Bank of Iran has 
ceased activities connected to financing terrorism, including 
its connections to the Islamic Revolutionary Guard Corps 
(IRGC)?
    Do you have any evidence that the National Iranian Oil 
Company has cut off all ties to the IRGC and eliminated all 
concerns that led to its terrorism designation under Executive 
Order 13224?
    Do you have any evidence that the National Iranian Tanker 
Company has cut off all ties to the IRGC and eliminated all 
concerns that led to its terrorism designation under Executive 
Order 13224?
    Does the Financial Crimes Enforcement Network's (FinCEN) 
Section 311 finding that Iran's central bank is a primary 
jurisdiction of money laundering concern remain valid today?

A.11. Deputy Secretary Adeyemo is leading a review of U.S. use 
of economic and financial sanctions, and I work with him in 
this effort. The Treasury sanctions review is not focused on 
individual sanctions programs, individual designations, or on 
an intelligence review related to the application of sanctions. 
Rather, it is a relatively high-level examination of sanctions 
successes, opportunities for change or improvements, and steps 
for adjusting implementation across all sanctions programs. It 
is designed to identify ways to ensure that sanctions can most 
effectively advance the national security, foreign policy, and 
economic aims of the United States.

Q.12. Will you commit to keeping in place U.S. sanctions on the 
Central Bank of Iran and other Iranian entities designated for 
supporting terrorism and the development of weapons of mass 
destruction (WMD) unless there is credible information that 
those entities have ceased engaging in the activity for which 
they were sanctioned? Will you commit to briefing this 
Committee and providing relevant information about changes in 
these entities' activities if they are delisted?

A.12. As senior members of the Biden-Harris administration have 
said, if Iran implements its nuclear commitments under the 
JCPOA, the U.S. would implement its commitments under the JCPOA 
to lift sanctions. If confirmed, I will commit to keeping 
Congress informed regarding Treasury's actions.

Q.13. Yes or no, do you agree that Iran's IRGC is a terrorist 
organization?

A.13. Yes, Iran's Islamic Revolutionary Guards Corps (IRGC) was 
designated as a Foreign Terrorist Organization (FTO) by the 
Secretary of State pursuant to section 219 of the Immigration 
and Nationality Act (INA) on April 15, 2019. On October 13, 
2017, Treasury designated the IRGC pursuant to the global 
counterterrorism Executive Order (E.O.) 13224 and consistent 
with the Countering America's Adversaries Through Sanctions 
Act.

Q.14. Are you committed to strict enforcement of sanctions 
against the IRGC and its subsidiaries and affiliates, 
including, but not limited to the National Iranian Oil Company?

A.14. U.S. sanctions depend on their effective implementation 
and enforcement. If confirmed, I will work to ensure that all 
economic sanctions are vigorously enforced.

Q.15. If a return to compliance with the JCPOA does occur, will 
you commit to continuing to prevent Iran from gaining any 
access to the U.S. financial system, including through so 
called ``U-turn'' transactions?

A.15. I will support the Biden-Harris administration and the 
President's foreign policy decisions regarding the JCPOA, and 
will work to protect the integrity of the U.S. financial 
system.

Q.16. If a U.S. return to the JCPOA is not achieved, what role 
do you believe conduct-based sanctions can play in persuading 
the Iranian regime to change its malign behavior?

A.16. I believe sanctions will remain a powerful tool to 
incentivize the Iranian regime to change its behavior. If 
confirmed, I would seek to amplify the effects of U.S. 
sanctions through coordination with allies and partners. As 
Secretary Yellen said, U.S. sanctions are more likely to compel 
changes in behavior and disrupt threatening activities when 
pursued in concert with our allies--carrying a more forceful 
economic impact by disrupting access to the international 
financial system--and sending a stronger message to malign 
actors by virtue of our solidarity.

Q.17. Do you agree with the Financial Action Task Force's 
(FATF) call for countermeasures against Iran given the 
country's failure to enact the Palermo and Terrorist Financing 
Conventions in line with the FATF Standards? \4\
---------------------------------------------------------------------------
     \4\ Financial Action Task Force, Outcomes FATF Plenary, 19-21 
February 2020 (February 2020), https://www.fatfgafi.org/publications/
fatfgeneral/documents/outcomes-fatf-plenary-february-2020.html.

A.17. I recognize that the FATF has called for countermeasures 
on Iran to be reimposed after Iran failed to implement the 
commitments it made to the FATF to improve its legal framework 
to combat money laundering and terrorist financing. I agree 
that Iran must ratify the Palermo and Terrorist Financing 
---------------------------------------------------------------------------
Conventions in line with the FATF standards.

Q.18. The United States imposed sanctions on Iran's new 
president, Ebrahim Raisi, in 2019, pursuant to Executive Order 
13876. The order authorizes sanctions against the Supreme 
Leader of Iran, the Office of the Supreme Leader, any official 
appointed by him, and anyone conducting transactions with them. 
In particular, the order authorizes sanctions on foreign 
financial institutions that knowingly facilitate or conduct a 
significant transaction with any individual or entity 
designated pursuant to that Executive order. These sanctions 
are not nuclear-related and, thus, are consistent with the 
JCPOA.
    What would be the conditions under which Treasury would 
lift or waive sanctions on Ebrahim Raisi?
    Will you commit to consulting with me and the entire 
Committee before any potential waiving or lifting of sanctions 
on Ebrahim Raisi?

A.18. If confirmed, I would study the relevant legal 
authorities and available intelligence and can commit to 
briefing the Committee on this topic.

Q.19. Recent Iran Sanctions Relief--Treasury has reportedly 
recently provided a specific license allowing the release of 
$16 million in frozen Iranian funds from a South Korean bank. 
\5\ Specific licenses provide an exception to a sanction by 
which an otherwise prohibited transaction can occur. How many 
specific licenses related to Iran has the Biden administration 
issued since January 2021?
---------------------------------------------------------------------------
     \5\ Michelle Nichols, ``Iran Regains U.N. Vote After U.S. Enables 
U.N. Payment'', Reuters (June 11, 2021), https://www.reuters.com/world/
asia-pacific/iran-regains-un-vote-after-us-enables-un-payment-2021-06-
11/.

A.19. I understand from Treasury staff that according to a 
preliminary review of records for licenses issued under OFAC's 
Iran Transactions and Sanctions Regulations (ITSR), OFAC has 
identified approximately 145 specific licenses issued during 
the Biden administration. This number matches the pace of 
licenses issued under the Iran program in the previous 
Administration.
    These licenses include the authorization for a $16 million 
payment of U.N. dues. OFAC's policy across most sanctions 
programs is to authorize the official business of the U.N., 
including the payment of dues. This is true in other 
comprehensive sanctions programs, including DPRK and Syria--
both which have similar general licenses. This is longstanding 
and not new. On two separate occasions earlier this year, 
including under the previous Administration, the U.S. 
Government took additional action to ensure that payment 
mechanisms were available for Iran's U.N. dues.

Q.20. Iranian Funding for Terrorism--What is your assessment of 
the impact sanctions relief under a U.S. return to the JCPOA 
will have on Iran's funding of terror groups, such as 
Hezbollah, Hamas, Palestinian Islamic Jihad, and Kata'ib 
Hizballah (KH)?

A.20. As Secretary of State Blinken has said, an Iran with a 
nuclear weapon or the ability to produce one in very short 
order is an Iran that is going to act with even greater 
impunity when it comes to support for terrorist groups and for 
destabilizing activities in the region. If confirmed, I will 
not hesitate to use counterterrorism authorities to target 
Iran's support to Hizballah and HAMAS, or any other designated 
terrorist group.

Q.21. Would you agree that if the Iranian regime spent less 
money supporting terrorists and lining their own pockets, they 
could afford to purchase vaccines or pay the country's U.N. 
dues?

A.21. Treasury's Iran sanctions program is intended to deprive 
the Iranian regime from funding for terrorism, its nuclear 
program, and its other threatening activities in the region. If 
confirmed I will look into the Iranian regime's fundraising and 
budgetary expenditure and will help lead Treasury's important 
work to counter Iran's corruption, human rights abuses, and the 
funding of terrorism.

Q.22. Do you agree that every dollar of U.S. sanctions relief 
provided to Iran, frees up another dollar that Tehran can spend 
on illicit activities?

A.22. Iran presents an array of threats to U.S. interests and 
U.S. sanctions seek to deprive the Iranian regime of money it 
can use to engage in its threatening behavior. Furthermore, as 
Secretary of State Blinken has said, an Iran with a nuclear 
weapon or the ability to produce one in very short order is an 
Iran that's going to act with even greater impunity when it 
comes to support for terrorist groups and for destabilizing 
activities in the region. If confirmed, I will look into the 
Iranian regime's fundraising and budget expenditure, consulting 
with Treasury and interagency colleagues, and can commit to 
discussing this with the Committee.

Q.23. China--According to leading ship tracking websites and 
the International Energy Agency (IEA), China has managed to 
import over 100 million barrels of oil from Iran since January 
2021, \6\ in violation of U.S. sanctions on Iranian oil. \7\ By 
a conservative estimate, that is approximately $5 billion in 
illicit revenues accruing to the regime in the space of 6 
months. China purchased five times more oil in March 2021 than 
in the first 9 months of 2020, according to the IEA. The Biden 
administration has not sanctioned a single Chinese 
transgressor.
---------------------------------------------------------------------------
     \6\ Benoit Faucon, ``Iran Boosts Oil Exports Amid Nuclear Deal 
Talks'', Wall Street Journal (April 15, 2021), https://www.wsj.com/
articles/iran-boosts-oil-exports-amid-nuclear-deal-talks-11618497634.
     \7\ See the Iran Freedom and Counter-Proliferation Act of 2012 
(P.L. 112-239) and Section 1245 of the Fiscal Year 2012 National 
Defense Authorization Act (P.L. 112-81).
---------------------------------------------------------------------------
    Do you believe that China's ongoing violation of our 
sanctions regime is a problem? Please answer ``yes'' or ``no.'' 
If your answer is ``no,'' please explain.
    Why have Chinese violators not been sanctioned?
    What specific steps would you take, if confirmed, to 
staunch the flow of Iranian oil to China and properly enforce 
U.S. sanctions?
    Do you agree that if U.S. adversaries perceive the United 
States to be unwilling or unable to enforce U.S. sanctions, 
then they will be more likely to violate sanctions?

A.23. Yes, I am concerned by all reports of alleged sanctions 
evasion. U.S. sanctions depend on their effective 
implementation and enforcement. Since the passage and 
implementation of the Comprehensive Iran Sanctions, 
Accountability, and Divestment Act in 2010, successive 
Administrations have demonstrated a willingness to sanction 
Chinese targets for conducting sanctionable transactions 
related to Iran. If confirmed, I will also work to ensure that 
the Treasury Department is focused on any efforts to evade 
sanctions and abuse the international banking system, working 
closely with colleagues in the Treasury Department and 
throughout the interagency.

Q.24. Open source ship tracking websites have identified 
suspected vessels and entities involved in transporting Iranian 
oil to China since January 2021 (see UANI attached report). If 
confirmed, will you investigate these entities and apply 
sanctions to them if they have indeed violated U.S. law?

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


A.24. If confirmed, I pledge to review the facts and 
circumstances identified in this report and to promptly address 
any violations of U.S. law.

Q.25. China has long been one of the worst violators of U.S. 
sanctions. If confirmed, how would you go about seeking better 
cooperation from China on sanction matters?

A.25. If confirmed, I will be clear-eyed regarding where we can 
seek cooperation with China and where our interests diverge. 
Our sanctions play a crucial role in upholding international 
standards and norms, countering terrorism and the proliferation 
of weapons of mass destruction, and other national security 
interests. I am committed to using the full breadth of 
Treasury's tools and authorities to implement U.S. sanctions 
and where necessary to hold China accountable for violations.

Q.26. China is aggressively moving to develop and deploy a 
central bank digital currency (CBDC), which could potentially 
undercut the power of U.S. sanctions. What specific steps would 
you take at Treasury to prevent a Chinese CBDC from undermining 
U.S. sanctions?

A.26. If confirmed, I look forward to studying China's 
development of a central bank digital currency (CBDC) and to 
carefully consider the possible impacts of a Chinese CBDC on 
U.S. sanctions.

Q.27. China has established a joint venture with the SWIFT 
network, which could facilitate the integration of a Chinese 
CBDC with existing international payments standards. \8\ What 
steps do you believe should be taken to ensure the United 
States retains its international economic leverage and 
leadership as the dominant international trade currency?
---------------------------------------------------------------------------
     \8\ ``UPDATE 1-SWIFT Sets up JV With China's Central Bank'', 
Reuters (February 21, 2021), https://www.reuters.com/article/china-
swift-pboc/update-1-swift-sets-up-jv-with-chinas-central-
bankidUSL1N2KA0MS.

A.27. If confirmed, I will commit to working closely with 
colleagues in Treasury's Offices of International Affairs, 
Domestic Finance, and Economic Policy to ensure that the 
agency's policies are aligned to promoting growth and robust 
U.S. markets, financial institutions, and trade, all of which 
are central to U.S. economic and financial preeminence and the 
attendant power of U.S. sanctions. If confirmed, I will commit 
to using Treasury's existing tools and authorities, and if 
necessary seek new tools and authorities, to ensure the United 
States retains its economic leverage and leadership. I am 
committed to strengthening the anti- money laundering/
countering the financing of terrorism (AML/CFT) regimes of 
countries around the world, including working with relevant 
multilateral organizations, to ensure proper standards and 
mechanisms are instituted and effectively implemented to 
promote an environment that best supports our national security 
---------------------------------------------------------------------------
and economic prosperity.

Q.28. Sanctioning NordStream II AG--Nord Stream II AG is the 
company responsible ``for planning, construction and subsequent 
operation of the Nord Stream 2 Pipeline.'' \9\ The State 
Department--in its most recent Protecting Europe's Energy 
Security Act (PEESA) report to Congress \10\--reported that 
Nord Stream II AG is using the Russian pipe-laying contractor 
LLC Koksokhimtrans for this project. \11\ Notably, in 2016, LLC 
Koksokhimtrans was sanctioned under Executive Order 13685 for 
its involvement in Russia's invasion of Crimea and its 
connections to another sanctioned entity, the Russian shipping 
company, Sovfracht-Sovmortrans Group. \12\ Under Section 228 of 
Countering America's Adversaries Through Sanctions Act 
(CAATSA), which passed the Senate 98 to 2, Nord Stream II AG 
must be sanctioned if it is facilitating a significant 
transaction with a sanctioned entity, such as LLC 
Koksokhimtrans.
---------------------------------------------------------------------------
     \9\ ``Shareholder and Financial Investors'', Nord Stream 2, 
https://www.nord-stream2.com/company/shareholder-andfinancial-
investors/.
     \10\ See ``Report to Congress and Waiver With Respect to Certain 
Persons Identified on the PEESA Report'', May 19, 2021.
     \11\ Title LXXV of Public Law 116-92, as amended by section 1242 
of the William M. (Mac) Thornberry National Defense Authorization Act 
for Fiscal Year 2021 (P.L. 116-283).
     \12\ ``LLC Koksokhimtrans''. Specially Designated Nationals and 
Blocked Persons List, U.S. Department of the Treasury, Office of 
Foreign Assets Control (May 20 2021) https://
sanctionssearch.ofac.treas.gov/Details.aspx?id=20290; ``Treasury 
Sanctions Individuals and Entities for Sanctions Evasion and Activities 
Related to the Conflict in Ukraine''. U.S. Department of the Treasury 
(September 1, 2016), https://www.treasury.gov/press-center/press-
releases/pages/jl5048.aspx.
---------------------------------------------------------------------------
    Furthermore, the State Department's most recent PEESA 
report also identified LLC Mortransservice, a company that 
reportedly acquired another one of the vessels identified in 
the PEESA report. \13\ LLC Mortransservice appears to be the 
successor to ZAO ``Mortransservis'' a similarly named company 
established by the Sovfracht-Sovmortrans Group. \14\ The 
Sovfracht-Sovmortrans Group was sanctioned under Executive 
Order 13685 for its operations in Crimea. \15\
---------------------------------------------------------------------------
     \13\ ``Nord Stream 2: Russia Is Trying To Circumvent Sanctions 
Against the Project''. Foreign Intelligence Service of Ukraine, March 
28, 2021. https://szru.gov.ua/en/news-media/news/nord-stream-2-russia-
is-trying-to-circumventsanctions-against-the-project; see also ``Ein 
Rennen gegen die Zeit und die USA'', Suddeutsche Zeitung, February 23 
2021, https://www.sueddeutsche.de/politik/nord-stream-2-usa-russland-
gaspipeline-1.5215746.
     \14\ ``ZAO `Mortransservis' '', Comfex, 2021. https://comfex.ru/
1027700360522; ``JSC `Sovmortrans' '', Comfex, 2021. https://comfex.ru/
1027739349076; ``Kompanii grupiy,'' Sovfrakht. Accessed May 2021. 
http://www.sovfracht.ru/group-companies/; ``Gruppa Kompaniy `Sovfrakht-
Sovmortrans' prinyala uchastiye v TransRossi 2012'', Argumenti I Fakti, 
May 2, 2012. https://pskov.aif.ru/money/realty/767137.
     \15\ ``Sovfracht-Sovmortrans Group'', Specially Designated 
Nationals and Blocked Persons List, U.S. Department of the Treasury, 
Office of Foreign Assets Control, May 20, 2021. https://
sanctionssearch.ofac.treas.gov/Details.aspx?id=20288; ``Treasury 
Sanctions Individuals and Entities for Sanctions Evasion and Activities 
Related to the Conflict in Ukraine'', U.S. Department of the Treasury, 
September 1, 2016. https://www.treasury.gov/press-center/press-
releases/pages/jl5048.aspx.
---------------------------------------------------------------------------
    With the identification of LLC Koksokhimtrans and LLC 
Mortransservice in the most recent PEESA report, it appears 
Nord Stream II AG has conducted significant transactions with 
previously sanctioned entities, making the legal connection 
that warrants sanctioning Nord Stream II AG pursuant to Section 
228 of CAATSA. Given your current position at Treasury, can you 
please explain why Nord Stream II AG has not been sanctioned 
under CAATSA?
    If confirmed, will you commit to notifying me, within seven 
days of your confirmation, on whether any foreign persons or 
entities affiliated with LLC Mortransservice, LLC 
Koksokhimtrans and ZAO ``MORTRANSSERVIS'' have been involved in 
sanctions evasion efforts in connection with the Sovfracht-
Sovmortrans Group or the Nord Stream 2 Pipeline project?

A.28. If confirmed, I commit to looking into these important 
questions and working with interagency partners to respond to 
the Committee's questions on these subjects expeditiously.

Q.29. General Sanctions Enforcement--The Biden administration 
has emphasized the importance and strength of multilateral 
sanctions. What steps will you take to engage our partners in 
the European Union and elsewhere to harmonize sanctions 
regimes?

A.29. If confirmed, I commit to prioritizing the 
Administration's efforts to work with allies and partners, 
including through the issuance of coordinated sanctions actions 
with allies, to amplify the financial and diplomatic impact of 
our economic authorities. In addition, this type of close 
coordination can help ensure our sanctions are calibrated to 
avoid unintended consequences on our allies and partners. As we 
have seen in recent months, the EU, United States, and other 
partners have taken multiple coordinated sanctions actions in 
relation to Belarus, most recently on June 21, 2021. If 
confirmed, I would also seek to increase our coordination 
across other programs. I would plan to prioritize the sharing 
of information as early as possible with allies and partners to 
help coordinate actions. In addition to working with the EU, I 
also look forward to working closely with close allies like the 
United Kingdom, Canada, and Australia.

Q.30. Based on your work on Treasury's sanctions review, which 
sanctions programs and targets should Treasury be allocating 
more resources to in order to build more sanction designation 
packages?

A.30. The Treasury sanctions review is not focused on a 
particular sanctions program or set of designations, but rather 
on identifying broad successes, opportunities for change or 
improvements, and steps for adapting implementation across all 
sanctions programs. This will help to ensure that sanctions are 
relevant, rigorous, and fit to purpose, advancing the national 
security and foreign policy aims of the United States. The 
sanctions review is considering questions of most advantageous 
disposition of resources to maximize effectiveness and provide 
a solid foundation for the use of sanctions over decades to 
come. The review is not yet completed, and the review team has 
not yet drawn final conclusions to these questions. If 
confirmed, after the conclusion of the review, I look forward 
to discussing your questions.

Q.31. Sanctions on Hamas and Palestinian Terror Groups--If 
confirmed, what steps will you take to identify and sanction 
material supporters of Hamas, Hezbollah, and Palestinian 
Islamic Jihad, which are all U.S. designated terrorist groups?

A.31. If confirmed, I commit to using Treasury's 
counterterrorism sanctions and enforcement authorities to 
identify and dismantle the financial networks of terrorists and 
their supporters as well as others who seek to perpetuate harm 
against the United States and its allies. Treasury has key 
means to identify and disrupt the financial networks of 
terrorists and, if confirmed, I would seek to meaningfully 
advance this work.

Q.32. In 2018, Congress unanimously passed the Sanctioning the 
Use of Civilians as Defenseless Shields Act in 2018 (Shields 
Act) (P.L. 115-348). The law mandates sanctions on members of 
Hamas and Hezbollah that order, control, or otherwise direct 
the use of civilians to shield military objectives from attack. 
No sanctions have been applied pursuant to this law despite 
compelling evidence of the use of human-shields by both 
Hezbollah and Hamas. \16\ Will you commit to prioritize 
implementation of the Shields Act?
---------------------------------------------------------------------------
     \16\ Orde Kittrie, ``Time To Act on Human Shields, Foundation for 
Defense of Democracies'', (October 15, 2020), https://www.fdd.org/2020/
10/15/time-to-act-on-human-shields/.

A.32. I categorically denounce the use of civilians to shield 
military objectives. If confirmed, I commit to reviewing 
Treasury's use of sanctions authorities, including the Shields 
---------------------------------------------------------------------------
Act, to address this human rights violation.

Q.33. Cryptocurrency--There has been a surge in cryptocurrency 
donations to Hamas since the start of its armed conflict with 
Israel in May 2021. \17\ Other terrorist groups and sanctioned 
actors are using digital currencies to circumvent sanctions and 
the international banking system. If confirmed, what will you 
do to ensure Treasury utilizes emerging technologies to combat 
the use of digital currencies to evade sanctions?
---------------------------------------------------------------------------
     \17\ Benoit Faucon, Ian Talley, and Summer Said, ``Israel-Gaza 
Conflict Spurs Bitcoin Donations to Hamas'', Wall Street Journal (June 
2, 2021), https://www.wsj.com/articles/israel-gaza-conflict-spurs-
bitcoin-donationsto-hamas-11622633400.

A.33. Users of cryptocurrency or other digital assets cannot be 
permitted to evade sanctions and violate U.S. law. If 
confirmed, I will examine Treasury's tools and authorities to 
combat this illicit activity and to ensure that Treasury staff, 
including sanctions investigators, are fully equipped to deal 
with challenges posed by the use of cryptocurrency and digital 
---------------------------------------------------------------------------
assets to evade sanctions and finance terrorism.

Q.34. Recent FATF guidance could require entities that never 
take custody of or control another person's digital assets 
(that is, noncustodial entities) to register as Virtual Asset 
Service Providers (VASPs). In the United States, this would 
mean a noncustodial entity would have to register as a money 
service business (MSB). Contrary to FATF's guidance, FinCEN has 
standing guidance that noncustodial entities, such as 
cryptocurrency miners and software wallet providers, do not 
have to register as an MSB. Do you agree with standing FinCEN 
guidance, which states that certain noncustodial entities never 
having control over another person's digital assets are not 
required to register as an MSB?

A.34. In June 2019 under the U.S. Presidency of the FATF, the 
FATF revised its standards to explicitly require virtual asset 
service providers (VASPs) to implement the full range of 
preventive measures for AML/CFT and issued guidance to aid 
jurisdictions with swiftly implementing laws and regulations 
for this sector using a risk-based approach. I understand the 
FATF currently is updating the 2019 guidance and engaged in a 
public consultation in March to seek private sector input and 
feedback for purposes of issuing updated guidance later this 
year. If confirmed, I pledge to review the updated FATF 
guidance as well as FinCEN's guidance on this important topic.

Q.35. You coauthored an opinion piece that stated, ``Bitcoin is 
a terrorist's dream come true.'' \18\ We recently saw how the 
traceable nature of Bitcoin benefited law enforcement that were 
able to recover Bitcoin ransom paid as part of the Colonial 
Pipeline cyberattack.
---------------------------------------------------------------------------
     \18\ Edoardo Saravalle, Elizabeth Rosenberg, ``Bitcoin Can Help 
Terrorists Secretly Fund Their Deadly Attacks'' (January 9, 2018), Fox 
News https://www.foxnews.com/opinion/bitcoin-can-help-terrorists-
secretly-fund-their-deadly-attacks.
---------------------------------------------------------------------------
    Does Bitcoin have any characteristics that do not make it 
``a terrorist's dream come true''?

A.35. As with most new technologies, Bitcoin presents positives 
and negatives for AML/CFT purposes. The Bitcoin blockchain can 
enable peer-to-peer transactions that do not involve financial 
institutions currently subject to AML/CFT obligations. The 
information the Government obtains through compliance with 
those obligations by financial institutions is extremely 
important in mitigating illicit finance risk. Creating 
potential risks, virtual currencies in general, including 
Bitcoin, can be used in ways that allow greater anonymity than 
the traditional financial system, and they simultaneously offer 
the potential to almost instantly and irrevocably transfer 
large amounts of value, including in cross-border transactions. 
On the other hand, Bitcoin can often be traced as the public 
blockchain provides a permanent and immutable record of 
transactions that investigators can access to trace the 
movement of Bitcoin. Analytical activities that can attribute 
Bitcoin to users by examining the blockchain, including with 
relevant additional digital information, can help to understand 
illicit uses.
    There are many efforts made by criminals to obscure 
transactions on the public blockchain, such as the use of 
Bitcoin mixing services. Further, the underlying protocols 
supporting Bitcoin are subject to change and over time may 
offer increased anonymity. So, as with any technology, the 
challenge for policymakers and regulators is to consider how to 
encourage responsible innovation and technological benefits to 
efficiency, inclusion, and cost management, while mitigating 
the risks. Moreover, regulators are challenged to develop 
technology neutral rules in a very dynamic technology 
ecosystem.

Q.36. What benefits, if any, do you think Bitcoin provides to 
consumers and individuals?

A.36. I defer to colleagues for a definitive view on the 
economic benefits and consumer considerations associated with 
Bitcoin. As a general matter, however, I see that virtual 
currencies can provide benefits to consumers, including the 
potential to reduce transaction costs, give consumers more 
choice and control of their finances, reduce inefficiencies in 
financial exchange, and increase financial inclusion. I believe 
that Treasury should continue to support responsible financial 
innovation and ensure it does not come at the expense of 
increased illicit finance risks.

Q.37. You coauthored a report that states ``[t]he U.S. 
Government, in concert with private sector actors where 
appropriate, should take all necessary steps to position the 
country as a leader in the financial technology space. This 
will serve to make and keep the United States competitive in 
what will be a strategically important area of economic 
activity.'' \19\
---------------------------------------------------------------------------
     \19\ Peter Harrell, Elizabeth Rosenberg, ``Economic Dominance, 
Financial Technology, and the Future of U.S. Economic Coercion, Center 
for a New American Security'' (April 29, 2019) p. 36, https://
www.cnas.org/publications/reports/economic-dominance-financial-
technology-and-the-future-of-u-seconomic-coercion.
---------------------------------------------------------------------------
    How will developing blockchain and other financial 
technologies in the United States help us remain economically 
competitive?

A.37. Blockchain platforms, being just one type of distributed 
ledger technology, have the potential to reduce costs and 
provide other benefits by creating efficiencies and reducing 
back-end operational costs that are associated with clearing 
and settling transactions. Financial technology companies and 
traditional banks worldwide have already implemented blockchain 
solutions of various kinds. Competition will continue across 
many dimensions, including developments that improve the 
experience for intermediaries and end users, including the 
utility of services offered, speed, cost, ease of use, and 
privacy features.
    Through public-private sector partnerships and encouraging 
responsible innovation, the United States can remain 
competitive in the use of emerging technology. If confirmed, I 
will, along with colleagues and the dedicated Treasury career 
staff, continue to support responsible innovation and engage in 
discussions with the private sector to understand the 
strategies being deployed by the private sector to compete on a 
global scale. I am aware that the experts at Treasury aim to 
approach policy in this area with a degree of flexibility to 
allow for organic innovation, regulatory certainty, and strong 
risk mitigation.

Q.38. How will developing blockchain and other financial 
technologies in the United States help us improve our 
capabilities to track and deter illicit activities?

A.38. Depending on how it is implemented, blockchain technology 
can increase the overall transparency of transactions in some 
cases, including by creating a permanent virtual ``paper 
trail,'' and can improve regulatory reporting and monitoring. 
In the context of illicit finance, blockchain technology can be 
viewed as an obstacle for criminals who want to remain 
anonymous and disguise the original source of funds. We have 
already seen numerous instances where law enforcement and 
regulators successfully conducted blockchain analytics to 
``follow the money'' and either stop or impose costs on illicit 
actors. However, blockchain technology alone will not prevent 
fraud, money laundering, or the financing of terrorism, 
especially given the pseudonymity and sometimes anonymity 
enhanced features already programmed into many existing 
blockchains. In addition, use of the blockchain can reduce or 
eliminate the involvement of financial institutions that have 
traditionally been the implementers of AML/CFT obligations in 
transactions. The technology has costs and benefits and the key 
factor for Treasury is to maintain an appropriate policy 
posture to maximize its benefits and mitigate its risks.

Q.39. Anti- Money Laundering (AML)--William M. (Mac) Thornberry 
National Defense Authorization Act for Fiscal Year 2021 
(P.L.116-283) Section 6403(d)(1)(C) of the Anti- Money 
Laundering Act of 2020 (AMLA), dictates that FinCEN should 
``reduce any burdens on financial institutions . . . that are, 
in light of the enactment of [the AMLA] and the amendments made 
by [the AMLA], unnecessary or duplicative.'' \20\
---------------------------------------------------------------------------
     \20\ H.R.6395--William M. (Mac) Thornberry National Defense 
Authorization Act for Fiscal Year 2021 (P.L. 116-283).
---------------------------------------------------------------------------
    Do you commit to eliminate any Customer Due Diligence (CDD) 
requirements imposed on financial institutions that are now 
unnecessary or duplicative in light of the enactment of the 
AMLA?

A.39. The AMLA creates a new reporting regime that requires 
reporting companies to provide beneficial ownership information 
to FinCEN and that provides for disclosure of this information 
to financial institutions to assist them in performing their 
required due diligence. The AMLA further directs Treasury to 
revise the existing CDD rule to bring the rule into conformance 
with the AMLA, account for the access of financial institutions 
to beneficial ownership information under the new reporting 
regime, and reduce unnecessary or duplicative burdens. I know 
that Treasury personnel are hard at work implementing these and 
other provisions of the AMLA. If confirmed, I will support my 
colleagues in implementation of AMLA requirements, including 
revising the CDD rule, mindful of the direction to reduce 
unnecessary or duplicative burdens.

Q.40. What existing requirements on financial institutions can 
be reduced because they are unnecessary or duplicative in light 
of the enactment of the AMLA?

A.40. Treasury is at the beginning of the process of developing 
the regulatory framework to implement the AMLA's reporting 
regime. As noted above, implementation of the AMLA will 
ultimately include a consideration of existing requirements in 
the CDD rule, with a focus on reducing unnecessary or 
duplicative burdens on financial institutions.

Q.41. Under the AMLA, businesses are now required to report 
beneficial ownership information directly to FinCEN.
    As a result, should financial institutions still be 
required to continue to collect and report to FinCEN beneficial 
information on businesses?

A.41. Presently, financial institutions collect beneficial 
ownership information as part of satisfying their customer due 
diligence obligations. They do not currently report beneficial 
ownership information to FinCEN. As noted above, implementation 
of the AMLA will ultimately include a consideration of existing 
requirements in the CDD rule, with a focus on reducing 
unnecessary or duplicative burdens on financial institutions.

Q.42. If FinCEN continues to require financial institutions to 
collect and report to FinCEN beneficial ownership information 
on businesses, should the CDD rule be replaced with a risk-
based collection standard?

A.42. As noted above, implementation of the AMLA will 
ultimately include a consideration of existing requirements in 
the CDD rule. This review will examine any needed revisions to 
the current rule.

Q.43. Will you commit to review whether the CDD rule is still 
necessary given that businesses are now required to report 
beneficial ownership information directly to FinCEN?

A.43. Yes. As noted above, the AMLA directs Treasury to revise 
the existing CDD rule, accounting for the access of financial 
institutions to beneficial ownership information under the new 
reporting regime, and reducing unnecessary or duplicative 
burdens. If confirmed, I can commit to reviewing the CDD rule.

Q.44. AMLA exempts from beneficial ownership information 
reporting by nonprofit organizations (nonprofits) along with 
dozens of other exemptions from reporting requirement. Previous 
iterations of proposed--but not enacted--beneficial ownership 
legislation required exempt entities to provide some 
identifying information as a condition of receiving an 
exemption from reporting requirements. However, AMLA, as 
enacted, contains no such requirement. In fact, AMLA's 
exemptions are self-executing and do not require exempt 
entities to provide any information to receive an exemption.
    FinCEN's Advance Notice of Proposed Rulemaking (ANPRM) \21\ 
implementing AMLA asks for public comment on what information 
nonprofits should be required to file to receive an exemption 
from AMLA's beneficial ownership reporting requirements. This 
question suggests that FinCEN is considering issuing a rule 
that requires nonprofits to provide information to receive an 
exemption, which is inconsistent with the legislative text and 
history of AMLA. The concerns that animated many members of 
Congress to oppose any requirement for exempt entities to 
provide identifying information related to the potential for 
confidential information to be leaked or otherwise made public. 
Unfortunately, such concerns have been validated by the recent 
unlawful leaks of confidential taxpayer information from the 
IRS. Notably, the IRS is required to use privacy safeguards 
more stringent than those AMLA requires of FinCEN for data 
related to beneficial ownership.
---------------------------------------------------------------------------
     \21\ Beneficial Ownership Information Reporting Requirements, 86 
FR 17557.
---------------------------------------------------------------------------
    In light of AMLA's text and legislative history and 
Treasury's repeated inability to safeguard Americans' 
confidential information, will you ensure that FinCEN's AMLA 
rule does not require nonprofits to provide information to 
FinCEN in order to receive an exemption from beneficial 
ownership information reporting requirements?

A.44. The ANPRM sought comments from the public on numerous 
questions regarding implementation of the beneficial ownership 
reporting requirements. If confirmed, I can commit to carefully 
considering the public comments, and to working with Treasury 
staff to ensure that any collection of information is 
consistent with applicable law. I also appreciate the 
importance of safeguarding confidential information and will 
ensure that privacy and information security are considered 
throughout Treasury's implementation of the AMLA.

Q.45. Enacted in July 2020 with unanimous bipartisan support, 
the Hong Kong Autonomy Act (HKAA) (P.L. 116-49) is an essential 
tool in holding individuals and foreign banks accountable when 
they assist Beijing in violating China's obligations to Hong 
Kong under the Joint Declaration and Basic Law. HKAA requires 
sanctions on entities that materially contribute to the erosion 
of Hong Kong's autonomy, and foreign banks conducting 
significant transactions with those entities. On March 16, 
2021, the Biden administration identified 24 previously 
sanctioned officials undermining Hong Kong's freedoms pursuant 
to Section 5(a) of the HKAA, yet it failed to identify any 
foreign financial institutions (FFIs) doing business with 
persons identified under Section 5(a).
    If confirmed, will you commit to prioritizing the 
investigation of foreign financial institutions (FFIs) doing 
business with the individuals sanctioned under HKAA?

A.45. Yes, if confirmed I will commit to supporting Treasury's 
efforts to identify FFIs that may be doing business with 
individuals sanctioned under the HKAA.

Q.46. If confirmed, will you commit to notifying me in writing, 
within 30 days of your confirmation, why no foreign financial 
institutions that have been doing business with persons 
identified under Section 5(a) have been identified thus far?

A.46. If confirmed, I will commit to support Treasury's efforts 
to look into why no foreign financial institutions that have 
been doing business with persons identified under Section 5(a) 
have been identified thus far, and will support Treasury's 
effort keep Congress informed of Treasury's actions in a timely 
manner.

Q.47. On June 24, Senator Chris Van Hollen (D-MD) and I sent a 
letter to President Biden urging his Administration to use the 
HKAA to identify and sanction entities materially contributing 
to the Chinese Communist Party's assault on Apple Daily, the 
last pro-democracy newspaper in Hong Kong, and its founder 
Jimmy Lai. \22\ Last month, Reuters reported that Hong Kong 
Security Secretary John Lee ordered HSBC and Citibank's 
respective Hong Kong branches to freeze Jimmy Lai's accounts-
they appear to have complied. \23\ After 500 policemen raided 
Apple Daily's offices in June, \24\ Hong Kong's Security Bureau 
ordered banks to freeze the newspaper's assets, leading to its 
closure. \25\ Section 5 of the HKAA requires the Administration 
to identify foreign entities that are ``materially 
contributing'' to the ``inability of the people of Hong Kong to 
enjoy the freedom of assembly, speech, press, or independent 
rule of law.'' It seems very likely that the breathtaking 
crackdown on Jimmy Lai and Apple Daily involves numerous 
foreign persons to whom Section 5 of the HKAA applies.
---------------------------------------------------------------------------
     \22\ Senator Pat Toomey, Letter to President Joseph R. Biden 
Concerning Apple Daily Closure, 24 June 2021, https://
www.banking.senate.gov/imo/media/doc/toomey-van-hollen-letter-to-
pres.biden.pdf.
     \23\ ``Exclusive: Hong Kong Security Secretary Threatened Bank Not 
To Conduct Account Transactions With Li Zhiying by Going to Jail 
(Translated via Google)''. Reuters (China), 27 May 2021, https://
cn.reuters.com/article/exclusive-hk-0527-thur-idCNKCS2D80P8.
     \24\ Munroe, Tony. ``HK's Apple Daily Raided by 500 Officers Over 
National Security Law''. Reuters, 17 June 2021, www.reuters.com/world/
asia-pacific/hong-kongs-apple-daily-newspaper-says-police-arrest-five-
directors-2021-06-16/.
     \25\ Ho, Kelly. ``Hong Kong's Apple Daily May Halt Publication 
This Sat, Pending Fri Board Meeting''. Hong Kong Free Press, 21 June 
2021, https://hongkongfp.com/2021/06/21/breaking-hong-kongs-apple-
daily-mayhaltpublication-this-sat-pending-fri-board-meeting/.
---------------------------------------------------------------------------
    If confirmed, will you commit to investigating and 
identifying any entities to whom Section 5 of the HKAA applies, 
specifically those involved in the suppression of Apple Daily 
and Jimmy Lai?

A.47. Yes, if confirmed I will commit my support to Treasury's 
efforts to look into the crackdown on Jimmy Lai and Apple Daily 
and fulfill Treasury's responsibilities under Section 5 of the 
HKAA.

Q.48. It is our understanding that the orders to the 
aforementioned banks were issued in an extrajudicial manner, by 
a single official outside of the court system, and without any 
criminal charges or subpoenas. In light of the clampdown on 
Apple Daily, and the events that have unfolded in the year 
since China imposed a national security law on Hong Kong, do 
you believe the rule of law still exists in Hong Kong?

A.48. I am deeply concerned by reports of recent events, 
including the clampdown on Apple Daily, as well as the events 
over the past year to erode the autonomy of Hong Kong and 
repress its people. I believe China should abide by the rule of 
law and support freedoms enshrined in the Basic Law of Hong 
Kong.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR MENENDEZ FROM ELIZABETH ROSENBERG

Q.1. If the United States reaches an agreement with Iran on its 
nuclear program, what sanctions do you assess would have to be 
lifted?

A.1. The Administration, through a negotiating team led by the 
State Department, is currently negotiating the steps the United 
States would need to take if it were to resume its commitments 
and if Iran were to meet its commitments, under the Joint 
Comprehensive Plan of Action (JCPOA). I believe Iran should 
only receive sanctions relief under the JCPOA if it takes the 
appropriate steps to resume compliance with its nuclear 
commitments under the JCPOA. Even under the terms of the JCPOA, 
Treasury would retain the right to impose sanctions related to 
Iranian support for terrorism, human rights abuses, WMD 
proliferation and ballistic missile development, as well as the 
regime's destabilizing activities in the region. If confirmed, 
I will work with the Office of Foreign Assets Control (OFAC) to 
ensure that Treasury continues to administer and enforce our 
sanctions to apply pressure on Iran and others as appropriate.

Q.2. China is flouting international sanctions on Iran by 
continuing to purchase increasing amounts of Iranian oil. What 
more can we be doing to ensure compliance with international 
and U.S. sanctions on Iran?

A.2. I am concerned with sanctions evasions generally and 
believe that sanctions must be clearly implemented and enforced 
to be effective. I note that Treasury has a track record of 
examining and seeking to counter evasion of Iran sanctions, 
including when it comes to China. This was true in the run up 
to the JCPOA and in the last several years since the United 
States reimposed sanctions lifted under the JCPOA and built 
upon them with others.
    If confirmed, I will look into this issue, examining 
available intelligence and open-source information, discussing 
this with Treasury and interagency partners. I will 
furthermore, if confirmed, carefully consider the options 
available to address sanctions evasion, including looking at 
the various authorities that may be available to address this 
important issue. I can commit to working diligently to ensure 
that the Treasury Department is focused on any Iranian efforts 
to evade sanctions and abuse the international banking system 
and pursuing strategies to work with international partners to 
ensure that efforts to countersanctions evasion are as 
effective as possible.

Q.3. I understand you are leading Treasury Department review of 
U.S. sanctions.
    What is the role of the State Department in that review?
    I believe that sanctions are a tool of foreign policy. Do 
you agree?
    If you are confirmed, do you commit to work closely and 
cooperatively with the State Department to ensure that 
sanctions are aligned with and advancing U.S. foreign policy?

A.3. Deputy Secretary Adeyemo is leading a review of the use of 
economic and financial sanctions. I am working to support this 
effort, along with a team of Treasury staff. This Treasury-led 
review is focused on identifying successes, opportunities for 
change or improvements, and steps for adapting implementation, 
so that sanctions are relevant, rigorous, and fit to purpose, 
effectively advancing the national security, foreign policy, 
and economic aims of the United States.
    Treasury's sanctions review involves engagements with a 
range of stakeholders, including from multiple bureaus and 
offices of the State Department and its leadership. The State 
Department has always been, and will continue to be, a key 
partner for the Treasury Department in the development and 
implementation of sanctions.
    Economic and financial sanctions are one of several tools 
that the U.S. Government may use to address a range of foreign 
policy, national security, and economic challenges. The use of 
sanctions, as well as other economic tools, are most 
effectively employed in the context of a broader U.S. 
Government strategy and as complements to other forms of 
statecraft. Their impact is also magnified when complementary 
actions are undertaken by allies and partners.
    If confirmed, I can commit to working with my State 
Department colleagues to ensure that sanctions are impactful, 
effective, and work in support of our foreign policy, national 
security, and economic interests.

Q.4. CAATSA section 228 requires secondary sanctions on any 
entity that does business with a Specially Designated National.
    Do I have your commitment that you will work to fully 
implement this provision?

A.4. Yes, if confirmed, I commit to working to implement 
Section 228 of the Countering America's Adversaries Through 
Sanctions Act (CAATSA) (P.L. 115-44).

Q.5. A sanctions regime is intended as a tool, not end-point, 
for broader policy objectives.
    Given that the Biden administration's North Korea policy 
review suggests a different approach to dealing with the DPRK 
than the Trump administration's feckless and failed effort, are 
there changes to the sanctions regime--tighter or loser or 
simply different--that you'd recommend so that sanctions and 
diplomacy are fully complimentary?

A.5. I am deeply concerned by reports of North Korea's nuclear 
and ballistic missile activity, along with widespread systemic 
human rights abuses. If confirmed, I will work with my Treasury 
colleagues and others in the Administration to examine the 
intelligence, consider and pursue a range of options to address 
these threats, including diplomacy and targeted pressure 
measures, and will not hesitate to use Treasury authorities to 
target sanctions evasion wherever appropriate. Furthermore, if 
confirmed, I will, along with other interagency partners, seek 
to coordinate closely with regional partners to address these 
threats.

Q.6. Venezuela's Maduro regime is involved in a wide range of 
criminal activities: from alleged crimes against humanity to 
drug trafficking to a massive campaign of corruption and 
kleptocracy. The U.S. has responded with a range of reciprocal 
actions to deter Maduro's actions.
    If confirmed, how will you advocate that the U.S. use its 
sanctions as leverage in order curb the Maduro regime's 
criminal activities and forge a diplomatic breakthrough that 
leads to new elections in Venezuela?

A.6. The power and integrity of the U.S. Government's sanctions 
derive not only from the ability to sanction actors when 
appropriate, calling out their threats, criminality, and the 
detriment they may pose to U.S. interests, but also to lift 
sanctions in a manner consistent with the law when a program's 
goals are met. If confirmed, I will ensure that Treasury will 
be prepared to implement sanctions consistent with the 
Administration's foreign policy goals to restore core 
democratic processes and institutions in Venezuela. In 
addition, if confirmed, I will not hesitate to explore 
additional targeted actions should the regime demonstrate that 
it is not acting in good faith and continues to engage in 
criminal, suppressive, and threatening actions.

Q.7. The Maduro regime has facilitated a massive expansion of 
illicit gold mining in Venezuela, which includes trafficking 
routes to Turkey and the Middle East, and has led to widespread 
environmental devastation in Venezuela.
    What steps will you take to address Maduro's illicit gold 
trade?

A.7. I am very concerned regarding reports of human rights 
abuses, widespread environmental devastation, and other 
security threats stemming from illicit gold mining in 
Venezuela. If confirmed, I will look into this matter to 
understand the intelligence, and will work with interagency 
partners to investigate reports of illicit gold mining 
activities and explore using the full suite of economic 
authorities and diplomatic leverage should the evidence 
indicate that such actions will be both feasible and impactful.
    Under Executive Order 13850, Treasury has the ability to 
sanction any person determined by the Secretary of the 
Treasury, in consultation with the Secretary of State, to 
operate in the gold sector of the Venezuelan economy.

Q.8. New Jersey and 47 other States have passed legislation 
authorizing some form of cannabis for regulated medical or 
adult-use purposes. But we all know that businesses that serve 
this market have found themselves shut out of the banking 
system and forced to operate exclusively in cash, often 
depriving them of banking products and creating serious public 
safety risks in our communities.
    The SAFE Banking Act, which I cosponsored, would fix this 
problem by allowing banks to provide financial services to 
cannabis businesses. I also introduced the CLAIM Act, which 
would ensure that legal marijuana and related businesses have 
access to comprehensive and affordable insurance coverage.
    Would allowing State-regulated marijuana businesses to 
access financial services reduce the public safety risk and 
allow these legal businesses to operate like other businesses?

A.8. This is an important and complex issue, given the current 
treatment of marijuana under Federal law. If confirmed, I 
commit to working with my colleagues to evaluate information 
regarding the operation of State-regulated marijuana-related 
businesses (MRBs), and working with Congress to address this 
issue in a way that helps to ensure public safety and equitable 
access to financial services.

Q.9. Is Congressional action needed so that businesses that 
serve State-regulated marijuana markets can have access to 
financial services?

A.9. Given the current treatment of marijuana under Federal 
law, the decision to provide services to an MSB is a risk-based 
decision that each financial institution must independently 
assess under its risk-based approach to Bank Secrecy Act 
compliance.

Q.10. In 2013, the Obama administration authorized U.S. 
companies to apply for Treasury Department licenses to engage 
in the agriculture, telecommunications, and energy sectors in 
areas of Syria outside of President Bashar al-Assad's control. 
Just last month, Treasury's Office of Foreign Assets Control 
revoked the license of U.S. company Delta Crescent Energy, who 
had been working with the Autonomous Administration of North 
and East Syria (AANES) to refine and secure oil export 
contracts. State Department officials stated this decision was 
undertaken because the United States is in Syria, ``for the 
people, not for the oil.'' However, in the absence of this 
partnership, it seems likely that oil generated in Northeast 
Syria will ultimately benefit the Syrian regime and its 
external backers (Russia), undermining the broader intent of 
the U.S. Syria sanctions regime.
    Please clarify the rationale behind this decision within 
the context of broader U.S. Syria policy.
    How will the Administration ensure that the product of 
Syria's oil fields benefit neither ISIS, Russia, nor the Assad 
regime (including through sales to middlemen who sell back to 
the regime), and that the AANES has a means of selfsustainment 
that does not benefit the regime?

A.10. I support the Administration's foreign policy priorities 
in Syria. If confirmed, I will work to ensure vigorous 
enforcement of Treasury's Syria-related sanctions authorities, 
including those that prevent the flow of funds to the Assad 
regime. If confirmed, I will focus on the Syria sanctions 
program and look into the array of current sanctions and legal 
guidance for this program, and will be available to discuss 
this issue further.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
          SENATOR VAN HOLLEN FROM ELIZABETH ROSENBERG

Q.1. From the Microsoft hack, to Solar Winds, Colonial 
Pipeline, JBS (the world's largest meat supplier), and many 
others, it's clear that malicious cyberattacks are on the rise 
and have no signs of abating. Some of these may be profit-
motivated economic espionage or theft, while others have a 
national security or intelligence gathering purpose.
    Given this landscape, what role should sanctions play in 
imposing consequences on cybercriminals, and should the U.S. 
Government increase the use of sanctions on these criminals?

A.1. Malicious cyberattacks are a threat to our national 
security. Sanctions are a very powerful tool to respond to 
unusual and extraordinary threats to the national security, 
foreign policy, or economy of the United States that originate 
in whole or in substantial part outside the U.S. Depending on 
facts and circumstances, sanctions can be one of several tools 
that the U.S. Government can use with the goal of imposing 
costs on those engaged in malicious cyberactivity and deterring 
this malign behavior. Treasury has designated numerous 
malicious cyberactors under its cyber-related sanctions program 
and other sanctions programs, including perpetrators of 
ransomware attacks and those who facilitate ransomware 
transactions. If confirmed, I commit to continuing to find 
effective ways to use all appropriate tools, including 
sanctions, to take impactful action against cybercriminals.

Q.2. Do you believe sanctions for malicious cyberattacks might 
have real deterrence value? If not, what benefit might they 
provide?

A.2. Sanctions can be powerful tools to place restrictions on 
designated persons and entities and deter malign behavior. 
Sanctions are particularly effective when deployed in 
coordination with other U.S. Government efforts and in 
coordination with sanctions and nonsanctions actions by allied 
and partner Governments. For instance, in September 2020, 
Treasury targeted cybercriminals that used sophisticated 
schemes to steal account holders' passwords and steal the 
balances of the victims' virtual currency accounts. 
Simultaneously with the imposition of sanctions by Treasury, 
DOJ unsealed an indictment against the targeted cybercriminals, 
sought the civil and criminal forfeiture of assets traceable to 
the alleged crimes, and the United States Secret Service seized 
millions of dollars in stolen virtual currency and U.S. 
dollars. Multipronged actions like this send a clear message to 
all cybercriminals that the U.S. Government will take 
aggressive action to disrupt their malicious cyberactivities, 
to hold them accountable, and to protect the international 
financial system.

Q.3. Do difficulties in attributing the activities of 
individuals to Nation-States make cybersanctions less 
effective? Are there ways to overcome this evidentiary hurdle?

A.3. Treasury's sanctions programs targeting significant 
malicious cyberenabled activities, whether by individuals or 
State actors, is an important and valuable tool. If confirmed, 
I commit to continuing Treasury's close collaboration with law 
enforcement, the intelligence community, and others to ensure 
that OFAC continues to have access to relevant, available 
information to assess opportunities for action. Treasury has an 
important role to play in the whole-of-Government effort 
against malicious cyberactivities and protecting our financial 
system from such threats.

Q.4. How might cybersanctions be coupled with other actions, 
including other forms of economic pressure, in order to develop 
a comprehensive and cohesive strategy toward the Nation-States 
and/or organizations being targeted?

A.4. The growing threats posed by malicious cyberactivity call 
for a whole-of-Government effort to respond to such threats, 
including raising awareness about cybersecurity and resilience 
measures for the private sector. Where appropriate, sanctions 
should be considered, in addition to other authorities granted 
to Treasury. In certain cases, bilateral engagement may be an 
effective step in persuading allied and partner Governments to 
take action against cybercriminals or their associated networks 
of supporters and facilitators. The whole-of-Government 
response to the SolarWinds incident was a compelling example of 
the U.S. Government using a wide range of tools, including 
imposing new sanctions against Russian entities to impose costs 
on the Russian Government for its actions against U.S. 
interests.

Q.5. Relatedly, many cyberattacks today come in the form of 
ransomware and other cyberattacks involving the use of 
cryptocurrency. North Korea, for example, has engaged in 
cybercrime to launder and steal billions in cryptocurrency in 
an effort to generate income (and evade sanctions) in ways that 
are harder to trace and subject to less Government oversight 
than the traditional banking sector.
    One important aspect of combatting illicit financing 
threats is transparency, and ensuring we have the information 
that we need to go over bad actors. The ability for criminals 
to engage in regulatory arbitrage by using foreign 
cryptocurrency exchanges that are not subject to the same anti- 
money laundering obligations as those in the U.S. is troubling. 
Are there ways that we might be able to reduce this type of 
regulatory arbitrage?

A.5. I appreciate this concern. I recognize that the potential 
to send virtual assets nearly instantaneously and irrevocably 
across borders can increase illicit finance risks. For this 
reason, under the U.S. Presidency of the FATF, the FATF in June 
2019 amended its standards to explicitly require virtual asset 
service providers (VASPs) to implement the full range of 
preventive measures for AML/CFT and issued guidance to aid 
jurisdictions with swiftly implementing laws and regulations 
for this sector using a risk-based approach.
    Many jurisdictions continue to make progress in 
implementing these requirements, but gaps in global 
implementation exist, which enable the continued misuse of 
virtual assets through jurisdictional arbitrage. More remains 
to be done to address this concern, and if confirmed, I look 
forward to continuing this important work.
    If confirmed, the office I will lead--the office of 
Terrorist Financing and Financial Crimes (TFFC)--serves as the 
head of the U.S. delegation to the FATF, and I will ensure that 
Treasury redoubles its efforts at the FATF to push countries to 
implement these standards effectively to reduce opportunities 
for regulatory arbitrage. Outside the FATF, Treasury's Office 
of Terrorism and Financial Intelligence, including TFFC and 
FinCEN, will continue work with jurisdictions and the private 
sector to promote compliance with the international 
requirements. Treasury will also work with like-minded 
jurisdictions to ensure this is a multilateral push for global 
implementation.

Q.6. Do you think our current sanctions and AML regimes broad 
enough to effectively target bad actors when they engage in 
illicit activities through cryptocurrency? Are there ways that 
we might want to modernize our regimes to fully encompass these 
types of transactions?

A.6. The U.S. sanctions regime prohibits certain transactions 
involving property in which any foreign country or a national 
thereof has any interest. Such transactions subject to 
regulation may include convertible virtual currency, such as a 
cryptocurrency, in addition to those in traditional fiat 
currency. Similarly, Treasury administers a technology-neutral 
AML regulatory framework. If confirmed, I look forward to 
continuing this important work to deter illicit activities 
involving cryptocurrency.
    As you know, cryptocurrencies can allow greater anonymity 
and pseudonymity than the traditional financial system in 
holding and transacting funds, and they simultaneously can 
enable the transfer of large amounts of value cross-border 
irrevocably and almost instantly. Cryptocurrencies can also 
permit the transmission of value by users without reliance on a 
financial intermediary on which AML/CFT obligations are placed. 
These features can present novel challenges. For example, bad 
actors can use different methods to obscure the traceability on 
such public blockchains, and the underlying protocols 
supporting such blockchains may change over time. Furthermore, 
there are certain cryptocurrencies that by their design are not 
transparent.
    Thoughtful regulation requires a balancing between benefits 
and risks. If confirmed, I will continue Treasury's important 
work to continue to refine the sanctions and AML regimes to 
keep pace with new threats, including illicit typologies 
associated with cryptocurrencies and other emerging financial 
technology. If confirmed, I would work closely with this 
Committee and TFI personnel to ensure that evolution carefully 
balances risk mitigation against the costs and other burdens 
imposed on industry and innovation.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
         SENATOR CORTEZ MASTO FROM ELIZABETH ROSENBERG

Q.1. When you were at the Treasury Department working to 
formulate anti- money laundering and counterterrorist and 
counterproliferation financing policy, we were just beginning 
to develop machine learning technologies. What have you learned 
about machine learning and artificial intelligence's abilities 
and limitations to contribute to financial regulatory 
enforcement?

A.1. Innovative technology like machine learning and AI is 
important, and I believe that Treasury actively seeks to 
fosters innovation in the private sector and makes use of it 
within the Department to improve the effectiveness and 
efficiency of the U.S. financial regulatory and supervisory 
system. At the same time, this innovation must not come at the 
expense of financial transparency that we need to safeguard the 
integrity of our financial system and our national security. I 
am aware that Treasury has, over a number of years, advocated 
for responsible innovation and the need to monitor emerging 
risks to ensure that new technology does not create loopholes 
or vulnerabilities that criminals can exploit for money 
laundering, terrorist financing, or other illicit finance 
risks. I believe that it is essential for TFI to evaluate and 
where appropriate, incorporate new technologies, including 
machine learning technologies, into its financial regulatory 
enforcement mission. For example, machine learning could help 
address the challenge of digesting and analyzing large amounts 
of financial information. Secretary Yellen recently discussed 
machine learning and artificial intelligence during a Treasury 
organized and hosted Financial Innovation Roundtable in 
February 2021 and I share her view of the importance of 
responsible innovation, both in the private and public sector.
              Additional Material Supplied for the Record
       LETTERS SUBMITTED IN SUPPORT OF NOMINEE BRIAN EDDIE NELSON
       
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      CHINA OPENLY VIOLATING U.S. SANCTIONS ON IRANIAN OIL, CHART
      
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