    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                      ARTIFICIAL INTELLIGENCE AND CRIMINAL
                        EXPLOITATION: A NEW ERA OF RISK

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

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON CRIME AND FEDERAL
                             GOVERNMENT SURVEILLANCE

                                     OF THE

                           COMMITTEE ON THE JUDICIARY

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                            WEDNESDAY, JULY 16, 2025

                                   __________

                               Serial No. 119-31

                                   __________

             Printed for the use of the Committee on the Judiciary

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                   Available via: http://judiciary.house.gov

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    61-182                    WASHINGTON : 2025

                           COMMITTEE ON THE JUDICIARY

                            JIM JORDAN, Ohio, Chair

    DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking
    ANDY BIGGS, Arizona                      Member
    TOM McCLINTOCK, California           JERROLD NADLER, New York
    THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California
    THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee
    CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,
    SCOTT FITZGERALD, Wisconsin              Georgia
    BEN CLINE, Virginia                  ERIC SWALWELL, California
    LANCE GOODEN, Texas                  TED LIEU, California
    JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington
    TROY E. NEHLS, Texas                 J. LUIS CORREA, California
    BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania
    KEVIN KILEY, California              JOE NEGUSE, Colorado
    HARRIET M. HAGEMAN, Wyoming          LUCY McBATH, Georgia
    LAUREL M. LEE, Florida               DEBORAH K. ROSS, North Carolina
    WESLEY HUNT, Texas                   BECCA BALINT, Vermont
    RUSSELL FRY, South Carolina          JESUS G. ``CHUY'' GARCIA, Illinois
    GLENN GROTHMAN, Wisconsin            SYDNEY KAMLAGER-DOVE, California
    BRAD KNOTT, North Carolina           JARED MOSKOWITZ, Florida
    MARK HARRIS, North Carolina          DANIEL S. GOLDMAN, New York
    ROBERT F. ONDER, Jr., Missouri       JASMINE CROCKETT, Texas
    DEREK SCHMIDT, Kansas
    BRANDON GILL, Texas
    MICHAEL BAUMGARTNER, Washington

                                     ------

                       SUBCOMMITTEE ON CRIME AND FEDERAL
                            GOVERNMENT SURVEILLANCE

                           ANDY BIGGS, Arizona, Chair

    TOM TIFFANY, Wisconsin               LUCY McBATH, Georgia, Ranking
    TROY NEHLS, Texas                        Member
    BARRY MOORE, Alabama                 JARED MOSKOWITZ, Florida
    KEVIN KILEY, California              DAN GOLDMAN, New York
    LAUREL LEE, Florida                  STEVE COHEN, Tennessee
    BRAD KNOTT, North Carolina           ERIC SWALWELL, California

                   CHRISTOPHER HIXON, Majority Staff Director
                      JULIE TAGEN, Minority Staff Director

                                C O N T E N T S

                                  ----------

                            Wednesday, July 16, 2025

                               OPENING STATEMENTS

                                                                       Page
    The Honorable Andy Biggs, Chair of the Subcommittee on Crime and
      Federal Government Surveillance from the State of Arizona......     1
    The Honorable Lucy McBath, Ranking Member of the Subcommittee on
      Crime and Federal Government Surveillance from the State of
      Georgia........................................................     3

                                   WITNESSES

    Dr. Andrew S. Bowne, Professor, George Washington University
      Oral Testimony.................................................     5
      Prepared Testimony.............................................     8
    Zara Perumal, Chief Technology Officer, Overwatch Data
      Oral Testimony.................................................    24
      Prepared Testimony.............................................    26
    Cody Venzke, Senior Policy Counsel, National Political Advocacy
      Division, American Civil Liberties Union
      Oral Testimony.................................................    40
      Prepared Testimony.............................................    42
    Ari Redbord, Global Head of Policy, TRM Labs
      Oral Testimony.................................................    72
      Prepared Testimony.............................................    74

              LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING

    All materials submitted by the Subcommittee on Crime and Federal
      Government Surveillance, for the record........................   104

    Materials submitted by the Honorable Lucy McBath, a Member of the
      Committee on the Judiciary from the State of Georgia, for the
      record
        A letter to Speaker Mike Johnson, Minority Leader Hakeem
            Jeffries, Majority Leader John Thune, and Minority Leader
            Chuck Schumer, from the National Association of Attorneys
            General, May 16, 2025
        An article entitled, ``Inside Congress Live,'' Jun. 27, 2025,
            Politico
        A testimony from Barry Friedman, Jacob D. Fuchsberg Professor
            of Law and Affiliated Professor of Politics, Faculty
            Director, Policing Project, New York University School of
            Law, Jul. 16, 2025
        A letter to the Honorable Andy Biggs, Chair of the
            Subcommittee on Crime and Federal Government Surveillance
            from the State of Arizona, and the Honorable Lucy McBath,
            Ranking Member of the Subcommittee on Crime and Federal
            Government Surveillance from the State of Georgia, from
            PublicCitizen, Jul. 16, 2025
        A testimony from Keith Kupferschmid, Chief Executive Officer,
            Copyright Alliance, Jul. 16, 2025
    An article entitled, ``The countdown to artificial
      superintelligence begins: Grok 4 just took us several steps
      closer to the point of no return,'' Jul. 12, 2025, The Blaze,
      submitted by the Honorable Andy Biggs, Chair of the
      Subcommittee on Crime and Federal Government Surveillance from
      the State of Arizona, for the record

                                    APPENDIX

    A statement from the Honorable Jamie Raskin, Ranking Member of
      the Committee on the Judiciary from the State of Maryland, Jul.
      16, 2025, for the record

                      ARTIFICIAL INTELLIGENCE AND CRIMINAL
                        EXPLOITATION: A NEW ERA OF RISK

                                  ----------

                            Wednesday, July 16, 2025

                            House of Representatives

           Subcommittee on Crime and Federal Government Surveillance

                           Committee on the Judiciary

                                 Washington, DC

        The Subcommittee met, pursuant to notice, at 10 a.m., in
    Room 2141, Rayburn House Office Building, the Hon. Andy Biggs
    [Chair of the Subcommittee] presiding.
        Members present: Representatives Biggs, Kiley, Lee, Knott,
    and McBath.
        Also present: Representative Raskin.
        Mr. Biggs. The Subcommittee will come to order. Without
    objection, the Chair is authorized to declare a recess at any
    time. We welcome everyone to today's hearing on Artificial
    Intelligence and Criminal Exploitation.
        I now recognize the gentlewoman from Florida, Ms. Lee, to
    lead us in the Pledge of Allegiance.
        All. I pledge allegiance to the Flag of the United States
    of America, and to the Republic for which it stands, one
    Nation, under God, indivisible, with liberty and justice for
    all.
        Mr. Biggs. Thank you. I now recognize myself for an opening
    statement. I appreciate everyone being here today, our
    witnesses, and those in the audience. This is an important
    hearing which focuses on artificial intelligence and how it is
    being exploited by criminals. The conceptual roots of AI can be
    traced to British mathematician Alan Turing when the 1930s
    theorized about a machine being capable of performing any
    computable task. Today, AI is best understood as a branch of
    computer science that leverages large scale data processing,
    algorithmic modeling, and modern hardware to enable machines to
    perform tasks typically requiring human cognition.
        Unfortunately, like most technical innovations, the
    criminal element has begun to use AI to enhance their elicit
    activities. The AI-enabled threats continue to evolve as bad
    actors use AI technology in a wide spectrum of criminal
    enterprises. From deepfake scams and synthetic identity fraud
    to financial crimes and child sexual abuse material, CSAM, the
    landscape continues to evolve at a rapid pace as AI provides
    users with enhanced capabilities. The AI-based or AI-driven
    threats and schemes can cost businesses millions of dollars a
    year including both prevention and falling prey to them. In one
    case, fraudsters used AI to clone a CEO's voice and authorized
    a wire transfer. Among corporations that experienced a rise in
    deepfake incidents, 75 percent of deepfakes impersonated a CEO
    or another C suite executive.
        Generative AI enables the criminal exploitation of victims'
    emotional vulnerabilities through tactics such as sextortion,
    pig-butchering scams, phishing, and elder fraud. Senior
    citizens are increasingly targeted through voice phishing scams
    where an AI-generated replica of a grandchild or military
    officer claims to need urgent funds. In one case, a Colorado
    mother received a call from what sounded like her daughter
    pleading for help. The voice was AI generated, closed from a
    short, online clip and used to demand ransom. The voice was
    indiscernible to the mother who wired $1,000 to scammers in
    Mexico.
        AI is also fueling a rise in sextortion and synthetic CSAM.
    New AI tools can generate highly realistic, but entirely
    fabricated explicit images often used to extort minors or
    damage reputations. Some sextortion scams exploit the trust
    associated with platforms like Apple's iMessage by
    impersonating classmates or romantic interests via recognizable
    blue bubble interfaces. Criminals now deploy apps like Muah to
    fabricate child abuse images at scale. Stanford University
    researchers have uncovered evidence that generative models were
    trained on real exploitative content.
        Terrorist groups now utilize AI to target, recruit, and
    indoctrinate vulnerable individuals. Generative AI provides a
    degree of separation, allowing actual terrorists to maintain
    anonymity in their public facing recruiting practices.
    Generative AI also allows terrorists to produce propaganda,
    fake news stories, and emotionally resonant messages tailored
    to specific psychological profiles.
        Reports of generative artificial intelligence enabled scams
    between May 2024-May 2025 rose by 456 percent. The use of
    exploi-
    tive generative AI allows criminals to produce human-like text,
    code, images, and videos allowing criminals to use the
    technology for further criminal activity such as creating more
    realistic phishing lures or generating deepfakes for extortion.
        On average, phishing attacks cost $4.9 million per breach.
    On the other hand, AI is increasingly integrated into police
    investigations offering new tools and capabilities for law
    enforcement agencies into the backdrop of rapidly expanding
    digital data sources and increasing demands on law enforcement
    agencies. AI provides a more adaptable and comprehensible
    approach to solving crimes, compared to traditional methods
    leveraging data analytics, machine learning, and pattern
    recognition to enhance investigations and assist with
    administrative tasks. This is also potentially a problem, as
    well, as we seek to balance curbing AI with our civil rights.
        AI can also help process large volumes of data, identify
    patterns, and generate actionable insights, and in turn, these
    applications can improve efficiency, accuracy, and resource
    allocation with investigative processes. However, to fully
    benefit from AI applications, law enforcement entities need
    reliable data, human oversight, while also tackling issues
    related to privacy, bias, and ethical considerations.
    Addressing the continued misuse of AI will require a varied
    approach while also raising public awareness about the risks
    associated with AI-generated content.
        Law enforcement agencies must engage openly with community
    stakeholders, legal experts, and the public to communicate the
    intended uses, benefits, and limitations of AI technologies.
    The collaborative effort to both prevents the misuse of AI
    while encouraging lawful application is required to effectively
    navigate this evolving landscape.
        I am excited about today's hearing. I think this is the
    first of its kind. I believe it will be only the first of its
    kind as we consider AI and its continued expansion of influence
    on our lives. I am looking for a very substantive discussion--I
    anticipate a substantive discussion that we are going to have
    today and with that, I yield back and recognize now our Ranking
    Member, Ms. McBath, for her opening statement.
        Ms. McBath. Well, thank you so much, Mr. Chair, and thank
    you to our witnesses today. Thank you so much for taking
    moments out of your day to come before us. Thank you for
    convening this hearing to discuss AI-enabled crime, efforts to
    detect and combat such crime, and how law enforcement deploys
    AI tools.
        Like so many new technologies, AI is not inherently good or
    bad. The AI-enabled tools can find patterns, sort through vast
    amounts of information, and may even help law enforcement solve
    their crimes. In the wrong hands, the same tools can be used to
    commit financial fraud, breach national security systems, and
    to harm our children. When used by law enforcement, this
    technology has the potential to empower our investigators,
    while also carrying the risk of serious errors with life-
    changing consequences. That is why it is critical that we
    proceed thoughtfully and put appropriate guardrails in place so
    that everyone in our criminal justice system that is using AI-
    enabled tools, they are using them responsibly, not to the
    detriment of law-abiding members of our community.
        You have already seen what can go wrong when those
    safeguards are missing. A woman and her family experienced the
    dangers of using AI enabled facial recognition technology.
    Detroit police used a facial recognition tool in an attempt to
    identify a carjacking suspect using an image from a
    surveillance camera. The tool matched the surveillance image
    with a picture of Porcha Woodruff, a nursing school student.
    One morning, as Ms. Woodruff was getting her two children ready
    for school, the police knocked on her door and they told her
    that she was under arrest for carjacking. She knew right away
    there must be some kind of mistake, and she gestured at her
    body as she spoke to law enforcement to point out the obvious,
    she hoped, to law enforcement that she was eight months
    pregnant. Though the police had not been looking for a visibly
    pregnant woman, they still handcuffed Ms. Woodruff, took her
    away from her crying children, held her for 11 hours, searched
    her phone, and they charged her. After her release, she went
    straight to the hospital and was treated for dehydration. The
    charges were dismissed a month later.
        This case is especially troubling because facial
    recognition tools have been shown to perform worse on Black
    individuals, increasing the risk of misidentification and
    contributing to over criminalization. AI is only as good as the
    data is it trained on and when that data is biased, it
    exacerbates racial disparity, long embedded in our criminal
    justice system, and an inaccurate tool is dangerous for every
    single one of us. Not one of us is immune to these mistakes.
        Thankfully, and in due part to cases like this one, the
    city of Detroit has adopted new rules to direct the use of
    facial recognition technology within its police department, and
    they are simply not alone. Many cities and states have put
    sensible guardrails in place to limit potentially harmful uses
    of AI. That is why it was alarming when some of my Republican
    colleagues recently attempted to pass a moratorium on State and
    local AI regulations in the big ugly bill, a move that
    generated bipartisan opposition so much that 40 State Attorney
    Generals and 17 Republican Governors, including the Governor of
    my State, Georgia, wrote letters to the Senate in opposition to
    the proposed moratorium. The Governors warned that, and I am
    quoting them, ``People will be at risk until basic rules
    ensuring safety and fairness can go into effect.''
        As you will see behind me, Sarah Huckabee Sanders, the
    Republican Governor of Arkansas and former press secretary to
    President Trump, took to Twitter to quote,

            I stand with the Majority of GOP Governors against stripping
            States of the right to protect our people from the worst abuses
            of AI. The U.S. must win the fight against China on AI and
            everything else, but we won't if we sacrifice the health,
            safety, and prosperity of our people.

        While this most recent proposal was ultimately stripped
    from the bill by a 99 to one vote of the Senate, the Republican
    Chair of the House Energy and Commerce Committee has already
    vowed to continue to pursue a moratorium, even while
    acknowledging that Federal regulations on AI are still light
    years away.
        I stand with those seeking to protect the health and the
    safety and civil rights of our communities from the abuses of
    AI and I hope that we can come together and follow the lead of
    the States to explore what those guardrails should look like
    and put them in place.
        I look forward to learning more from our experts here
    today. Hearing from you is going to be extremely critical for
    us on this very important issue.
        Before I yield, Mr. Chair, I ask unanimous consent to enter
    into the record two letters. The first is a letter from 17
    Republican Governors in opposition to a moratorium on State and
    local regulation on AI; and the second, a letter from 40 State
    Attorneys General, both Republicans and Democrats, in
    opposition to a moratorium on State and local regulation of AI.
        Mr. Biggs. Without objection.
        Ms. McBath. I yield.
        Mr. Biggs. The gentlelady yields. Without objection, all
    other opening statements will be included in the record. We
    will now introduce today's witnesses, and we are very grateful
    for our witnesses.
        Dr. Andrew Bowne.
        Dr. Bowne. Bowne.
        Mr. Biggs. Bowne, OK. Dr. Bowne is a Professorial Lecturer
    in Law at the George Washington University Law School where he
    teaches courses on artificial intelligence law and policy. He
    has served in the United States Air Force Judge Advocate
    General Corps since 2010 and previously serves as the Chief
    Legal Counsel of the Department of the Air Force Artificial
    Intelligence Accelerator at the Massachusetts Institute of
    Technology.
        Thank you, Doctor, for being with us today.
        Ms. Zara Perumal is the Co-Founder and Chief Technology
    Officer of Overwatch Data, an artificial intelligence company
    focused on threat intelligence and cybercrime tactics on the
    dark web. Prior to founding Overwatch Data, she worked at
    Google on matters involving machine learning and cyber security
    threats.
        Thank you for you being us today, Ms. Perumal.
        Mr. Ari Redbord is the Global Head of Policy at TRM Labs, a
    company focused on preventing illicit financial activity. He
    previously served as Senior Advisor to the Deputy Secretary and
    Under Secretary for Terrorism and Financial Intelligence at the
    U.S. Treasury. Prior to Treasury, he was an Assistant U.S.
    Attorney where he focused on terrorism, espionage, financial,
    child exploitation, and human trafficking cases.
        Thank you, Mr. Redbord, for being with us today.
        Mr. Cody Venzke is a Senior Policy Counsel in ACLU's
    National Political Advocacy Department where his work focuses
    on surveillance, privacy, and technology. Specifically, he
    works on matters related to artificial intelligence, privacy,
    children's privacy, and civic uses of data.
        Thanks, Mr. Venzke, for being with us today.
        We appreciate all of you being here and now ask that you
    please rise so you can be sworn in.
        Would you please raise your right hand? Do you swear or
    affirm under penalty of perjury that the testimony that you are
    about to give is true and correct to the best of your
    knowledge, information, and belief so help you God?
        Let the record reflect the witnesses have answered in the
    affirmative and thank you, you may be seated. Please know that
    your written testimony will be entered into the record in its
    entirety. Accordingly, we ask that your testimony be summarized
    in five minutes and what is going to happen, just so you know,
    is about 15 seconds before the end, you will start hearing
    this, something like that, and then at the magic moment, I will
    start getting a little bit louder, but it will kind of help you
    wrap up on time, so we can work this out. We are so grateful
    that you are here.
        Mr. Bowne, you may begin with your five minutes.

                      STATEMENT OF ANDREW S. BOWNE

        Dr. Bowne. Thank you, Mr. Chair, Ranking Member, and the
    distinguished Members of the Subcommittee. Thank you for the
    opportunity to testify to the intersection of artificial
    intelligence and criminal exploitation.
        My name is Andrew Bowne. I serve as a Professorial Lecturer
    at the George Washington University Law School where I teach
    courses on AI law and policy. I have served in the United
    States Air Force Judge Advocate Generals Corps since 2010
    including assignments as a prosecutor, a staff Judge Advocate
    General Counsel Air Force installation, and as you heard, a
    Chief Legal Counsel for the Air Force's AI Accelerator at MIT.
        I do appear today in my personal capacity. The views I
    present are my own and do not necessarily reflect those of the
    Department of Defense, the Department of the Air Force, or the
    Judge Advocate Generals Corps.
        AI is both a catalyzing and transformative technology
    enabler, a solver of traditional processes, but also creates
    entirely new ones. When a task AI is used for is criminal or
    harmful, the nature of AI becomes a threat multiplier. The AI
    systems now automate decisions, model environments, and infer
    actions of unprecedented speed, and scale. While they are
    designed to benefit society, their dual-use nature means they
    could also facilitate exploitation, fraud, and abuse. Even AI
    systems designed with legitimate use in mind can create harm if
    not carefully designed and deployed with safety, ethics, and
    accountability built in.
        Today, I would like to briefly highlight how AI enables
    criminal activity, the gaps in current criminal law, and
    proactive steps Congress might take. First, how AI enables
    criminal activity. I am seeing really three categories of AI
    developments that are of particular concern in this area:
    Computer vision, generative adversarial networks, or GANS, and
    large language models, or LLMS.
        Computer vision systems which interpret visual data are
    used to automate surveillance, identify targets, and even
    harvest personal data from breached documents for identity
    threat and fraud or enable real time threat detection for
    public safety that can be repurposed to stalk or blackmail
    individuals with chilling efficiency. GANs are capable of
    generating synthetic images, videos, and audio that are known
    in public discourse as deepfakes. These tools allow the
    impersonation of public officials and private citizens alike.
    Multiple watchdogs and law enforcement agencies that have been
    conducted longitudinal analysis on AI generated child sexual
    abuse material or CSAM are reporting rapid rises in the number
    of generated images shared online. Perhaps more concerning is
    that the increased capabilities of sophistication of generative
    AI models enable them to produce very realistic images.
        Generative AI tools are also used for sextortion, grooming,
    and emotional coercion, often targeting children. Large
    language models like those powering chatbots revolutionizing
    phishing, fraud, and social engineering involve misinformation.
    They engage victims and extend realistic conversations, target
    elderly people and vulnerable people in scams or overwhelming
    financial institutions of thousands of tailored loan
    applications. They are also used to generate malicious code,
    making cybercrime accessible to individuals with no technical
    background. In short, deepfakes, AI generated CSAM, and
    automated fraud are not theoretical threats. They are real,
    growing, and causing harm now. The barrier to entry to using AI
    to perpetuate or perpetrate is low. Anyone with a few seconds
    of your voice or image can create convincing synthetic content
    without coding or expensive hardware. The tools are cheap,
    accessible, and often unregulated.
        Tragically, gaps in current Federal criminal law allow bad
    actors to use AI to profit at the expense of others, prey on
    the vulnerable or create mistrust with impunity. While there
    are statutes for wire fraud and child sexual abuse material,
    they do apply to many of the AI-enabled crimes, there are
    several significant gaps.
        More alarming still are emerging threats such as autonomous
    criminal activity, cross-board AI enabled crime, and
    algorithmic market manipulation in which criminal liability is
    unclear or altogether absent.
        There are a variety of strategies that the Committee, as
    well as Congress, can consider, including criminal law reform.
    They could define new offenses from malicious use of AI,
    particularly deepfakes and AI CSAM. They could also provide
    sentencing enhancements for crimes aggravated by the use of AI
    tools when those tools augment the scale or impact of the harm
    or make it more resource intensive to investigate and
    prosecute.
        You could also look at enabling AI safety and transparency
    requirements and in conclusion AI is a revolutionary enabler
    but does not self-regulate. The bad actors who choose to
    exploit the law must be ready. Thank you, Mr. Chair, for the
    time.
        [The prepared statement of Mr. Bowne follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Biggs. Thank you, Dr. Bowne, and we have your written
    testimony, which is more expansive, so I remind everybody we
    have that, so appreciate that.
        Ms. Perumal, we give you your five minutes now.

                       STATEMENT OF ZARA PERUMAL

        Ms. Perumal. Chair Biggs, Ranking Member McBath, and the
    Members of the Committee, thank you so much for the opportunity
    to testify today and for creating this forum to discuss how AI
    is changing the landscape of cybercrime. I am honored to share
    my perspective on how technology is making these threats more
    accessible, more personalized, and more difficult to detect.
        My name is Zara Perumal. I am the Co-Founder and CTO of
    OverWatch Data, a cyber threat intelligence company that use AI
    to identify and analyze emerging threats in the cybercrime and
    fraud ecosystems. Through our work, we see every day how AI is
    used to both prevent and also to facilitate criminal activity.
        I would like to focus my remarks today on how we see AI
    changing the threat landscape and what we can do about it
    through both education and innovation. AI is a powerful,
    general-purpose tool with a broad range of applications for
    criminal activity and for a broad range of threat actors. It
    can be used to learn how to commit crimes, to write code and
    craft realistic scam text messages, generate audio or voice
    clones, and of course, create deepfake images or videos.
        Across this wide range of malicious use, three trends stand
    out.
        First, AI is reducing the barriers to entry for
    cybercrimes. Users can ask a chatbot including ones explicitly
    designed for fraud how to commit crimes. They can learn the
    technical skills they need to carry them out and they can also
    use it to make their attacks more convincing and more
    effective.
        Second, it is challenging businesses by subverting identity
    verification systems. AI can be used to generate a photo for a
    fake persona or profile. It can then be used to generate high
    quality synthetic fake IDs and then if they are asked to verify
    their identity, they can join a video called swap bare face
    with their fake photo and verify their access to that business.
    This is a problem not just for the specific business that is
    being targeted, but it is a problem because it gives them a
    foothold from which they can hide their identity for the future
    next online crime that they will carry out.
        Third, we see is the crimes that are becoming far more
    personalized. For example, voice clones are used to target the
    elderly by calling a grandparent and what sounds like their
    grandchild's voice and claiming to be in the hospital and in
    need and in need of money. Employment scams prey on young
    adults who are looking for their first job. One of the most
    disturbing cases is the nudifying apps which often target
    children. They turn ordinary photos into fake sexually explicit
    images which are then used to bully, harass, and extort
    victims, in some cases driving them to suicide. This abuse is
    carried out to children, both by their classmates and by remote
    criminals.
        There is a lot of harm. There is a lot that is changing,
    but there is also a lot we can do.
        First, education awareness can prevent and deter many of
    these harms. These crimes work because people don't expect
    them. If we invest in education across schools, workplaces, and
    communities, we can make these crimes less effective and more
    costly to carry out.
        Second, we have an opportunity to combat this with
    innovation. The same technology that is enabling these crimes,
    can also be used to detect scams, find malware, and destruct
    cybercrimes. By supporting innovation and strengthening public/
    private partnerships, we can shift the technical advantage to
    the defenders.
        While AI enables crime to be more accessible, more
    personalized, and harder to detect, I remain optimistic. With
    the right investment in education and innovation, we can engage
    our whole society in building a future where AI expands access
    to opportunities, strengthens safety, and helps people spend
    more time on what matters.
        On a personal note, it is very exciting to me to see that
    Congress is addressing this issue and putting a spotlight on
    it. Thank you and I look forward to your questions.
        [The prepared statement of Ms. Perumal follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Biggs. Thank you very much.
        Mr. Venske, you are recognized for your five minutes.

                        STATEMENT OF CODY VENZKE

        Mr. Venzke. Chair Biggs, Ranking Member McBath, and the
    Members of the Subcommittee, thank you for the opportunity to
    testify today on behalf of the American Civil Liberties Union.
        I will address two issues this morning: First, it is
    crucial that our response to criminal uses of artificial
    intelligence adhere to the Constitution, civil rights, and
    civil liberties. Second, efforts by Congress and the
    administration must not inadvertently open the door for AI
    abuses such as through a moratorium on State regulation of AI
    or continuing consolidation of Federal data. With appropriate
    measures, Congress can ensure that AI is safe, effective, and
    consistent with our rights and liberties.
        First, Congress' measures to address criminal AI must
    comport with the Constitution, civil liberties, civil rights,
    and privacy. For example, traditional First Amendment
    activities do not lose their protection simply because
    artificial intelligence was used. Editorial content moderation
    using AI is not categorically exempted from the First
    Amendment's protections. Neither is commentary on politicians
    or candidates for office. Speech about politicians and
    candidates, in particular, lies at the heart of the First
    Amendment and enjoys special protection. Consequently, courts
    have readily and correctly overturned laws prescribing false
    speech about politicians and candidates. The emergence and use
    of AI does not change the core foundational Constitutional
    precepts.
        Likewise, privacy concerns may arise from obligations
    imposed on platforms that host and distribute AI systems.
    Requirements or incentives to search users' communications, to
    restrict their publication of models, code, and data, to
    monitor a report their online activity or to prohibit or
    undermine encryption, all increase governmental surveillance
    and, in some circumstances may violate the Fourth Amendment. As
    the Committee considers legislation addressing criminal uses of
    AI, we urge you to ensure that speech, privacy, and other
    important civil liberties are protected.
        Second, the recently rejected AI moratorium would have
    dramatically increased the risk of AI harms including criminal
    and fraudulent activity. Similarly, the consolidation of
    Federal data is creating enormous risk of AI harms. The
    moratorium that was included in versions of the reconciliation
    package was sweeping, preempting State laws and local
    regulations that regulate AI for 10 years. Although the
    moratorium included limited exemptions for some generally
    applicable laws, serious questions about the scope and
    workability of those exemptions remain. For example, dozens of
    States have passed laws regulating deepfake, nonconsensual
    intimate imagery often by amending existing statutes to clarify
    their application to generative AI.
        Similarly, Tennessee's ELVIS Act extends legal protection
    to a person's voice including a simulation of the voice. It is
    not clear if such laws with their express application or clear
    intent to apply to AI qualify as generally applicable.
    Moreover, in many instances addressing AI's harm requires
    legislating specifically on AI. Establishment of an AI
    moratorium will jeopardize these efforts giving bad actors a
    blank check. As Ranking Member McBath recognized, 17 Republican
    Governors and members of both parties in both chambers of
    Congress oppose the moratorium before Congress stripped it from
    the reconciliation package in a 99 to one vote in the Senate.
        The more immediate concern, consolidation of Federal data
    creates a platform for super charged AI driven surveillance.
    While data consolidation sharing could potentially improve
    governmental operations and limited circumstances, efficiency
    should not be elevated over robust protection of our privacy,
    otherwise consolidation could risk the creation of vast and
    unaccountable surveillance platform, capable of tracking
    citizens' activities, movements, and associations. Such a
    platform would be readily analyzable by large language models,
    machine learning, and other AI systems such as black box
    fleecing algorithms used by Federal law enforcement to ingest
    governmental data and predict who is likely to commit crimes.
        Data consolidation could lead to biometric information
    gathered by Federal law enforcement or during air travel, being
    readily accessible by other agencies. Records related to
    firearms might be accessible across the Federal Government and
    IRS data reflecting contributions to organizations like the
    ACLU, the NAACP, the NRA, or The Heritage Foundation could be
    accessible to Federal law enforcement without meaningful
    process. It is essential for Congress to block the reaction of
    centralized government dossiers on each of us.
        Thank you for the opportunity to testify before this
    Subcommittee and I look forward to your questions.
        [The prepared statement of Mr. Venzke follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Biggs. Thank you, Mr. Venzke.
        Now, Mr. Redbord, you are recognized for five minutes.

                        STATEMENT OF ARI REDBORD

        Mr. Redbord. Chair Biggs, Ranking Member McBath, the
    Members of the Subcommittee, my name is Ari Redbord and it is
    an honor to appear before you today on behalf of TRM Labs,
    where we work every day with law enforcement, financial
    institutions, and national security agencies to detect,
    investigate, and prevent illicit activity in the digital asset
    ecosystem.
        Before joining TRM I spent about 11 years as a Federal
    prosecutor at the U.S. Department of Justice and later as an
    official in the U.S. Treasury Department's Office of Terrorism
    and Financial Intelligence.
        In those roles and now at TRM I've seen one truth borne out
    time and time again: Criminals are often the earliest adopters
    of transformative technology. They were among the first to
    weaponize automobiles to move illicit goods across State lines,
    adopt pagers and cell phones to coordinate narcotics networks,
    utilize encrypted messaging apps to evade surveillance, and
    exploit cryptocurrencies to steal and transfer illicit proceeds
    at the speed of the internet. Now they are embracing artificial
    intelligence.
        We are rapidly approaching a world in which the bottleneck
    for crime is no longer human coordination, but computational
    power. When the marginal cost of launching a scam, phishing
    campaign, or extortion attempt approaches zero, the volume of
    attacks, and their complexity will increase exponentially.
        We are not just seeing more of the same. We are seeing new
    types of threats that weren't possible before AI, novel fraud
    typologies, hyper-personalized scams, deepfake extortion, and
    autonomous laundering. The entire criminal ecosystem is
    shifting. That is why today's hearing matters.
        We must recognize that in the same way criminals are
    leveraging AI to disrupt and deceive law enforcement and
    national security agencies must be empowered to use AI to
    defend and respond. This is not optional. It is foundational to
    preserve public trust and the social contract itself. If
    adversaries are deploying large-scale AI-enabled crime with
    impunity, and if the public no longer feels that government can
    protect them, we risk a breakdown of that trust. The
    consequences are not just individual harms; they are systemic
    national security-level threats to our institutions and civic
    cohesion.
        At TRM we see this shift every day. Through Chainabuse, our
    public scam reporting platform, we've tracked a 456-percent
    rise in AI-enabled scams, which often use deepfake technology,
    just in the last year. Ransomware actors are using AI to draft
    realistic phishing emails, identify vulnerable targets, and
    deploy malware that adapts to evade detection.
        On the laundering side we are seeing bad actors use AI to
    automate and accelerate illicit money flows. We are also seeing
    fully autonomous fraud agents scraping personal data, launching
    scam campaigns, and even coordinating laundering operations.
    The most disturbing, we're seeing AI used to generate synthetic
    child sexual abuse material, fake, but deeply harmful content
    traded online and weaponized in sextortion schemes.
        The solution to the criminal abuse of AI is not to ban or
    stifle the technology; it is to use it and use it wisely. We
    must stay a step ahead of illicit actors by leveraging the same
    innovations they use for bad, for good.
        At TRM we integrate AI at every layer of our platform to
    combat crime using machine learning models and behavioral
    analytics to flag complex obfuscation techniques, trace illicit
    cryptocurrency transactions in real time, and identify emerging
    criminal typologies.
        We are developing and deploying AI-powered defense agents
    at scale to map illicit networks, triage threats, and surface
    early warning signs. These operational tools are already being
    used in the field to help global law enforcement agencies move
    faster, trace complex laundering schemes, and target the
    highest-risk activity, often stopping criminal networks in
    their tracks before they can cause further harm.
        The future of crime will be defined by AI, but so will the
    future of enforcement. With the right investment,
    collaboration, and technology we can meet this moment. Thank
    you again for the opportunity to testify and I look forward to
    your questions.
        [The prepared statement of Mr. Redbord follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Biggs. Thank you so much. I appreciate all of you and
    your testimony and very, very interesting. I hope we can get to
    some deep substance on it today.
        I now recognize the gentleman from North Carolina, Mr.
    Knott, for five minutes.
        Mr. Knott. Thank you, Mr. Chair.
        To the witnesses, thank you for coming to testify today.
    This is sort of a novel topic, but as each of you have stated
    clearly, this is a very important topic and development around
    the blockchain technology, AI technology, it is something that
    it is only going to become more prevalent and more dominant in
    just about every area of our life. That is true here in
    America; that is true overseas. It is going to be one of those
    paramount moments that is going to be formative. Where were you
    before? Where were you after?
        To that end, as a former prosecutor myself, when I was
    prosecuting, I came on at the very end of the AI-free crime. I
    started to see how blockchain and cryptocurrencies and
    artificial intelligence was infiltrating every area of the
    criminal world.
        To that end, Mr. Redbord, as the use of AI and blockchain
    technology becomes more common and it becomes more integrated
    in every avenue, there is obviously access from domestic actors
    that are criminal and international actors. There is really no
    border that is recognized. How does that impact the criminal
    infrastructure as it were when you look at domestic versus
    international crime and that relationship?
        Mr. Redbord. Thank you so much for the question. Yes, I
    feel like you would uniquely understand this as a former AUSA
    as well. We both prosecuted cases in a world where there were
    networks of shell companies and hawalas in high-value art and
    real eState used to launder funds. Today, as criminal actors
    are looking to blockchains and cryptocurrencies we can trace
    every transaction on an open public ledger, right? There's no
    more bulk cash smuggling. There's TRM to track and trace the
    flow of funds.
        I think what we see right now is this really interesting
    convergence between AI crime, as we're going to discuss today,
    and crypto. Really primarily crypto is often the means of value
    transfer in these different crimes, right? You see these
    deepfake scams where they are scams trying to get
    cryptocurrency from investors or users. They are ransomware
    actors who are supercharging attacks where cryptocurrency is
    the payment.
        The significant difference now as we're investigating
    crimes as prosecutors and law enforcement is that we can trace
    and track every one of those payments on open public ledgers
    which allow us to do financial crime investigation, really,
    better than we've ever done it before.
        Mr. Knott. Is there the ability as you see it to pinpoint
    with specificity criminal activity and, I would say more
    importantly, going back to the trust that we need in law
    enforcement, pinpointing criminal actors? Because it is such a
    foggy space for many people. Can you pinpoint the actual
    criminal as opposed to just criminal activity?
        Mr. Redbord. It's a great question, and absolutely in many
    circumstances. What we're doing essentially at TRM is we're
    taking that raw blockchain data, right, those alphanumeric
    addresses, those crypto wallets, and we're associating them
    with real world entities. Oftentimes it's terrorist financiers,
    ransomware actors, and sanctions, for example. That allows law
    enforcement to then take that data and track and trace the flow
    of funds to build out networks.
        Mr. Knott. Is there--
        Mr. Redbord. Cartels are a great example of that today. I'm
    sorry.
        Mr. Knott. Is there a risk that cartels, terrorist states
    could use legitimate constructs on the blockchain that are
    developed here in the United States for their own benefit,
    therefore taking advantage of a legitimate structure or a
    legitimate software that is developed here?
        Mr. Redbord. Absolutely. The real challenge for regulators
    and policymakers is how to ensure that lawful users have access
    to those types of tools and yet stop bad actors from using
    them. To me the answer the U.S. Treasury Department over the
    last few years has done a pretty good job on this--target the
    bad actors: The North Korean cyber criminals, the ransomware
    actors, and the scammers, as opposed to necessarily the lawful
    services that they're using.
        Mr. Knott. Is there a risk if we are too zealous in the
    prosecution? As a prosecutor I am all for strong law
    enforcement, but if we are too aggressive on the front end as
    this technology is developing, could we stifle domestic
    innovation here at home if we are too aggressive in
    prosecuting?
        Mr. Redbord. Absolutely. It is critical that we continue to
    focus on the bad actors in this space which will allow the
    lawful ecosystem to grow as opposed to the lawful services that
    are being used by bad actors. Absolutely, really the key to all
    of this is to stop bad actors from leveraging the technology to
    allow this industry and this technology to grow.
        Mr. Knott. Then briefly, what can we do in Congress to
    ensure that law enforcement has the resources to target the bad
    actors with specificity?
        Mr. Redbord. That's exactly right. Today what we really
    have across the U.S. Government is a cadre of law enforcement
    agents that are really true experts, power users of blockchain
    intelligence tools. What we really need is that cadre to grow
    significantly. As bad actors are leveraging AI, as they're
    leveraging blockchain technology, every Federal agent should
    have access to tools and the training necessary to sort of meet
    this new moment from a technology perspective.
        Mr. Knott. Sir, thank you.
        Mr. Redbord. Thank you.
        Mr. Knott. Other Members, I ran out of time, Mr. Chair. I
    yield back.
        Mr. Biggs. Thank you. Without objection, I propose that we
    have a second round of questions. Seeing none, we will proceed
    in that fashion.
        Now, I recognize the Ranking Member, Ms. McBath.
        Ms. McBath. Thank you, Mr. Chair. I just have to say that--
    and just in listening to each and every one of the witnesses, I
    am just really amazed at the depth of the use, criminal usage
    of AI. Really thank you so much for what you brought to the
    table today, but I do want to talk a little bit about facial
    recognition.
        The Detroit Police Department reportedly conducted 129
    facial recognition searches in 2020, and all on African
    American people. The following year 95.6 percent of the
    searches targeted Black people.
        Mr. Venzke, how does the use of AI-enabled facial
    recognition comply with the Fourth Amendment's equal protection
    principles?
        Mr. Venzke. It raises serious concerns. As far as I know
    there's not been a clear holding that equal protection
    principles are violated by the use of facial recognition
    technology, but it certainly raises those concerns because of
    the disproportionate impact we've seen that technology have on
    protected classes, particularly as you said, Black people, and
    in particular Black men.
        We've also engaged in civil rights litigation to defend
    individuals who have been wrongly identified by facial
    recognition technology. To a large extent this is a matter of
    process, ensuring that police departments have appropriate
    processes in place so that there isn't reliance solely on an
    identification made by facial recognition technology to bring
    in a suspect that there isn't bias in lineups and things of
    that nature.
        Because of the certain threats that we've seen here and the
    ways that the technology can struggle in real world conditions
    we have long stood by that there needs to be a moratorium for
    law enforcement uses of facial recognition Thank you.
        Ms. McBath. Thank you for that. This is just so interesting
    you should say that because even on my phone I have facial
    recognition and sometimes it says I don't recognize you and I
    am like, well, you know who I am. Of course, there are still
    problems with AI and the technology still needs to be advanced.
        Mr. Venzke, I am going to ask you another question: What
    warrant requirements and limitations should be applied for
    facial recognition tools when they are used by law enforcement?
        Mr. Venzke. Well, as I said, our overall stance is that law
    enforcement should not be deploying the technology at all
    because of the underlying foundational issues of how it can
    struggle with a variety of protected classes and correctly
    identifying people, especially in real world conditions where
    lighting may not be ideal or the surveillance footage may be
    grainy. That can result in someone who's 8 months pregnant
    being apprehended for a crime where there clearly was not a
    pregnant person involved.
        The use of facial recognition technology may not
    necessarily implicate the Fourth Amendment, but as I said, it
    raises very serious concerns about perpetual surveillance, the
    ability of the Federal Government to identify individuals in
    public spaces going about their daily lives without any
    recourse, without any judicial oversight. That is ultimately a
    policy question for legislators, city councils, and Congress to
    step up and regulate.
        Ms. McBath. Thank you for that. Dr. Bowne, in your
    experience have you find that AI-enabled tools used by law
    enforcement are tested and evaluated before they are deployed
    to ensure that they are safe and effective?
        Dr. Bowne. In my experience in law enforcement, as a
    prosecutor, recently as a supervising prosector the tools that
    are being used are certainly going to depend on the
    jurisdiction that's using them. States, counties, certainly
    Federal Government, from my experience in the Department of the
    Air Force, law enforcement organizations that are starting to
    use these tools are relatively new users.
        In the Air Force any AI tool is supposed to go through
    rigorous testing and evaluation standards to ensure that it
    results in a certain quantified reliability. That's very
    challenging to do with some of these tools, particularly when
    you're talking about edge cases like African American men when
    they are not found frequently in data sets. Those questions are
    being asked.
        I don't see in my experience the type of rigorous standards
    established across the board by regulators. Until that happens
    law enforcement is going to try to keep up. It's tempting to do
    that, but there's likely to be some gaps there.
        Ms. McBath. Thank you.
        Mr. Biggs. Thank you. The gentlelady yields. I now
    recognize the gentlelady from Florida, Ms. Lee, for five
    minutes.
        Ms. Lee. Thank you, Mr. Chair.
        Welcome to our witnesses today. As a Member of the House's
    Bipartisan Task Force on Artificial Intelligence I had the
    opportunity to work with Members on both sides of the aisle to
    discuss a national approach to artificial intelligence that
    would encourage innovation, strengthen our global leadership,
    and also confront serious threats including those like you have
    been discussing here today that involve criminal misuse of this
    technology.
        Today's hearing, among other things, highlights one of the
    most urgent of those threats, which is the exploitation of
    children through AI, from synthetic child abuse materials to
    predatory chatbots, to real time location spoofing, we are
    seeing criminals use AI to expand both the scale and
    sophistication of their crimes. AI can also, we know, be part
    of the solution. In cases like Operation Renewed Hope AI helped
    Federal agents identify and rescue minor victims who might
    otherwise have never been found.
        One of the things that we are interested in doing is
    ensuring that law enforcement, child protection, nonprofits,
    and trusted partners in the private sector have access to
    effective responsible AI tools and the legal clarity to use
    them. It is about stopping criminals, saving lives, protecting
    children, and ensuring that we are doing our part to help
    technology be a force for good.
        On that subject, Ms. Perumal, I would like to followup with
    you. I would like to know what would you recommend Congress
    prioritize, to better equip law enforcement with the tools they
    need to stay ahead of AI-enabled threats?
        Ms. Perumal. Thank you so much for the question. I think a
    few things come to mind. One is strengthening public and
    private partnerships. The more that we have the opportunity to
    share information across industry and government, and the
    threats we're seeing, it is incredibly helpful.
        Making it easier to share technology and share the
    innovation--frankly, it can sometimes be difficult, especially
    as small business are trying to figure out how to share that
    technology, which makes a delay. As you have a new way that we
    can maybe find something like trafficking or better detect AI-
    generated harm, it can be difficult to then deploy that. I
    think anything that is to improve that public-private
    partnership would be incredibly helpful.
        Ms. Lee. Are there specific legislative or funding
    priorities that you or your clients have identified that you
    think would be impactful?
        Ms. Perumal. Yes, few things that we see with our clients.
    One is there's a big challenge to identity in terms of online
    identity. The AI-generated agents can more explicitly scrape,
    use websites for fraud. Then on the other side you also see
    things like ID fraud where people are using this to hide their
    identity and commit online crimes.
        That's an area that the industry is generally trying to
    adapt and respond to because that's how so much of fraud and
    scams and extortion has been carried out.
        Another thing that comes to mind is to the earlier point on
    innovation, if it's easier to share and collaborate, that would
    be incredibly helpful for us in the private sector.
        Ms. Lee. I would like to go back to you, Mr. Redbord. You
    said something in your remarks that I thought was really
    interesting, that AI is also the future of enforcement. I
    believe your words were invest, collaborate, and we can be more
    effective.
        I would like to hear in your view what are the most urgent
    risks posed by AI to national security and public safety and
    what would you like to add about what we can be doing in
    Congress?
        Mr. Redbord. Absolutely. Thank you for the question. Really
    what we see AI doing today is supercharging criminal activity
    that we've seen exist for some time. Now, you don't need
    ransomware affiliates because you can have AI agents that are
    automatically deploying malware. We're seeing cyber-attacks at
    scale by Norther Korea and other types of cyber actors. Then
    we're seeing the laundering of the funds that are stolen move
    faster than ever before.
        As I mentioned in my testimony we've seen a 456-percent
    increase from last year in scam activity involving AI. We have
    to move as fast as the criminals. When we think about these
    issues at TRM, it's how can we move faster? How can we us AI
    the same way they're moving funds to track and trace those
    funds to ultimately seize them back?
        It's--when you ask, it's the tools and the training to
    ensure that every single law enforcement and national security
    professional have access to the same tools that many cyber
    criminals are using today, and obviously the funding necessary
    to support that as well as the training.
        Ms. Lee. Thank you. Mr. Chair, I yield back.
        Mr. Biggs. The gentlelady yields back. I recognize myself
    for five minutes. I appreciate the testimony that we have had.
        I had a different line of questions for the next round, but
    things you have said in your testimony and what I have heard in
    the first round makes me want to ask some specific areas.
        You don't have a lot of time to respond, so I am going to
    ask because I want a quick response from every one of you.
        One of you mentioned the ELVIS Act in Tennessee, which
    prohibits the simulation of Elvis' voice, basically. That is
    how that generated. What about any other person? I am thinking
    what if there is a deepfake of any other public figure and you
    have that person say something that is pernicious, something
    that is bad, something that is politically inflammatory,
    whatever, do we have laws in place that would prohibit that or
    it's just the Wild, Wild West?
        We will start with you, Mr. Redbord.
        Mr. Redbord. Slightly more broadly, I would say that we
    have laws in place that absolutely cover a lot of these areas,
    but we are going to need to add AI to a lot of them. When I
    think about these issues, for example, when you talk about
    these types of scam activity that are being supercharged by AI,
    we have wire fraud statutes to address them.
        Mr. Biggs. Right, right. We will get into that, too, but I
    am talking specific. This is a specific case. Let's say you
    have a public figure and you have them say something that is
    totally outrageous, it is totally deepfaked. You can't tell.
    The average person can't tell. If that person was--if that
    language is attributed to that person elsewhere, you might have
    libel. You might have civil claim of libel or defamation of
    character, something like that. Does that in your opinion exist
    when someone manipulates a deepfake to do something like that?
        Mr. Redbord. It would require adding additive measures to
    what we have today.
        Mr. Biggs. Mr. Venzke?
        Mr. Venzke. That sort of speech lies at the core of the
    First Amendment's protections. It's a commentary on
    politicians. For example, when the--
        Mr. Biggs. If it is not commentary on politicians. Let's
    say with maliciousness. Maliciousness? With malice. That is the
    word I am looking for. With malice you say that Andy Biggs said
    X, Y, this. It is just horrible. You put it in The New York
    Times and you did it because you wanted to harm me.
        Mr. Venzke. If you take, for example, the Republican
    National Committee's deepfake about President Biden announcing
    a draft for Ukraine, that is commentary on public events. Of
    course, existing exceptions to the First Amendment still apply
    to AI. That means--
        Mr. Biggs. That is what I want to get at. That is what I
    wanted to hear from you, whether something like a defamation,
    like--
        Mr. Venzke. Yes, defamation is subject to--
        Mr. Biggs. --which is why I specifically used The New
    York Times.
        Mr. Venzke. That's exactly right.
        Mr. Biggs. Ms. Perumal, same question?
        Ms. Perumal. Yes, I am not super familiar with the legal
    side, so I can talk more the technology, but I do see that it
    is challenging, detection on it.
        Mr. Biggs. Right. Thanks. Dr. Bowne?
        Dr. Bowne. There's this inherent friction that we see. I
    agree with both Mr. Redbord and Mr. Venzke, that what you
    described, sir, is likely protected under the First Amendment.
    You have--
        Mr. Biggs. Unless there is malice.
        Dr. Bowne. With malice. Now, there's legal protection
    certainly from a civil right of action if it were to be--
        Mr. Biggs. Let's not to interrupt. I don't want to be rude
    to interrupt, but I do want to interrupt. What my question is--
    let's expand it. A true deepfake is so persuasive you can't
    tell the difference side-by-side of me over here and the
    deepfake. We have had examples of parents and grandparents.
    They can't tell the difference between the deepfake and the
    voice of the kid. They look the same. They act the same. They
    are remarkable. Now, do I have protection, for instance, from
    someone doing that?
        This is going to lead into the CSAM, which I was hoping I
    would have enough time to get to that, because it is the same
    type of deal where you see CSAM, which is so persuasive and
    sick and disgusting. That is all AI-generated. You mentioned
    the one of the Ukraine thing. What remedy does someone have
    when they are a victim of this kind of generative AI?
        Dr. Bowne. Mr. Chair, if it were to fall under the statute
    of like wire fraud--so you look at the intent of what's behind
    it. Those are protections there. If it's to create
    misinformation, you certainly articulated the challenge and the
    potential harm, that may not be outside of the law. There are
    gaps in protection when you're facilitating particularly
    harmful activity using deepfakes.
        Mr. Biggs. Yes, thank you. We will be talking about that in
    the future.
        That ends the first round of questioning and now for the
    second round of questioning I recognize the gentleman from
    North Carolina, Mr. Knott.
        Mr. Knott. Thank you, Mr. Chair. I have got to say I am
    happy to have a second round so soon. I wished more Members
    would show up because this is important, but selfishly I am
    enjoying the conversation.
        All of you have basically indicated what was stated either
    directly or indirectly that computational power and ability
    will dictate sort of the new criminal landscape. Obviously, AI
    will supercharge this. The landscape is going to be forever
    changed. I want to ask each of you, how far are we from having
    autonomous criminal behavior?
        Doctor, start with you. Go in order down the line.
        Dr. Bowne. Those are fantastic questions.
        Mr. Knott. Thank you.
        Dr. Bowne. My assessment is we're there. We have plenty of
    autonomously certainly, from a bad actor that is using AI and
    using the autonomous features of those models to perpetuate
    crimes we're certainly there. The scale, the sophistication,
    and the speed that are created by using AI-enabled models,
    certainly, from committing scams at scale, targeting
    personally, finding cyber vulnerabilities, that is all
    happening already.
        Ms. Perumal. Yes, I agree. We're definitely seeing that
    now. It's the beginning of what's happening. It's being used
    for more simple crimes. We see different uses. You might think
    of simple bots that text people and send us these annoying scam
    text messages. Those are using AI and automate by pulling
    breached or leaked data about you. Then, similarly with
    computer-use agents, they're starting to be filling out forms.
    There's a large opportunity for those to get much more
    sophisticated.
        Mr. Venzke. Relatedly on the civil side, we're seeing rapid
    advancement of artificial intelligence that's used to make
    decisions about who can get a loan, who has access to house,
    and things of that nature. Often in many cases that will output
    a score that humans are largely deferring to. Artificial
    intelligence has reached the point where it is having an
    outsized effect on our lives, not just because of criminal
    activity, but because it affects so many important sectors as
    well.
        Mr. Knott. Yes.
        Mr. Redbord. Thank you for the question. We are there
    today, but AI is not dominating criminal activity. That's in
    large part why this hearing is so important at this moment, to
    start having this conversation. This is really why at TRM over
    the last year or so we have focused a lot of our attention.
    Particularly how can we build AI tools that enable us to move
    faster? Because while we're not there yet, we're getting very,
    very close.
        Mr. Knott. What is going to be required to make it
    responsive to the threat?
        Mr. Redbord. That's exactly right.
        Mr. Knott. What will be required? I am asking, like--
        Mr. Redbord. Oh, sorry.
        Mr. Knott. --in terms of capacity, in terms of private
    sector investment, in terms of public investment? Give me a
    broad picture of what's going to be needed.
        Mr. Redbord. It's all of it. I know public-private
    partnerships were talked about. It's often this sort of this
    right way as something to discuss. Really what it has to be is
    the private sector building the tools that government can
    ultimately leverage to move as fast as the cyber criminals.
        Mr. Knott. In your opinion is the law lagging this new
    frontier or are the existing criminal laws sufficient to
    protect the marketplace and victims like Mr. Biggs talked
    about?
        Mr. Redbord. It'll absolutely be a combination of both. It
    will be important when you talk about CSAM, which I know we'll
    focus on, on ensuring that the Federal sentencing guidelines
    meet the AI moment for that. We will have a need for AI-
    specific laws, but I will say that a lot of the laws we have
    today: Wire fraud, bank fraud, those types of laws, these types
    of disinformation investigations, certainly will include AI.
        Mr. Knott. Jurisdictionally how do you see AI factoring
    into content actions, vehicles designed overseas that penetrate
    into the American market? How do we protect against that in a
    jurisprudence sense?
        Mr. Redbord. It's a challenge. The nature of crypto, the
    nature of AI, and the nature of technology, is global and
    cross-border. In large part we want to make sure that the
    innovation is happening here. That's why it's so important that
    as we have these conversations we're walking that line between
    stopping bad actors but not stifling innovation in this
    critical moment. Just like the internet was born and created in
    the United States we need to ensure that is true for AI
    technology as well.
        Mr. Venzke. If I may add to that representative, as we
    think about ways that existing legal frameworks need to adapt
    to this rapidly evolving challenge, a multijurisdictional
    approach is the right approach, not just at the Federal level,
    but also internationally, and of course with States. We've
    talked a little bit about the moratorium that was included in
    versions of the reconciliation package. The House did exempt
    criminal laws. Often, in many cases, civil penalties will be a
    necessary complement, for example, in addressing nonconsensual
    imagery at high schools--
        Mr. Knott. One more question for the panel really quick.
    What can parents do to protect their children from this type of
    landscape?
        Dr. Bowne. As a parent myself, education on the risk is
    certainly important. That's something that the public sector
    can lead on, law enforcement can lead on, similar to drugs and
    tobacco. The risk of AI, whether it's for scams, whether it's
    for CSAM, whatever harms, they really impact children as well.
        Ms. Perumal. I definitely agree. Especially for the CSAM
    harms, giving their children awareness that something like this
    might happen to you, it might have nothing to do with anything
    you did and here's how you can reach out. Sharing that
    awareness because they target the fact that people feel shame
    when they have no reason to. I think that would be really
    helpful.
        Mr. Knott. Thank you.
        Mr. Venzke. As a former teacher parents are an integral
    part in helping kids navigate the world, and education and
    talking with kids about the new risks that are emerging are
    critical.
        Mr. Knott. Thank you.
        Mr. Redbord. Education is absolutely critical. As a parent
    of middle school and high school-aged kids I appreciate this.
    One more point that I do think is important here though is that
    we need to ensure that they also know how to leverage it, not
    that they're just afraid of it.
        Mr. Knott. Sure.
        Mr. Redbord. Their success in large part and in the rest of
    their life will depend on their ability to leverage and engage
    with this technology. It's absolutely so critical that on the
    one hand we protect them against the bad harms, but also ensure
    that they're really able to use it and leverage it.
        Mr. Knott. Absolutely. Thank you. Mr. Chair, I yield back.
        Mr. Biggs. Thank you. The gentleman yields. We now
    recognize now the Ranking Member, Ms. McBath.
        Ms. McBath. Thank you, Mr. Chair. Once again, as you can
    see, we are quite alarmed as to what we are hearing today, so
    thank you very much.
        I want to go back and touch on what the Chair was just
    asking, the question that he asked about. In specific, I would
    just--each of you, if you can just tell us in a nutshell that
    you are expressing to us that there are gaps. There are gaps in
    legislation. There are gaps in things that we need to do here
    in Congress to make sure that there are protections that are
    enforcing and preventing these kinds of deepfakes and all that
    we are talking about today.
        Can you give us an idea? Tell us what kinds of legislation
    are going to be extremely important for us to put in place to
    prevent these kinds of gaps that you just expressed to us that
    there are today?
        Dr. Bowne, could you start, please?
        Dr. Bowne. Yes, ma'am. One of the gaps may be closed soon.
    H.R. 1283, which was introduced by this Committee would amend
    Title 18 of the U.S.C. 2252(a), which is the statute that
    covers child pornography and CSAM. The bill is intended to
    amend that statute to include AI-generated CSAM within the
    definition and coverage under that criminal statute. There is
    the Title 18, the criminal statutes that may need to be amended
    both in content on what is covered, what is criminalized, but
    also potentially in the sentencing guidelines, as Mr. Redbord
    mentioned.
        Then, as the Chair explained and in his question there is a
    gap as well on the civil side that there might not be a cause
    of action for that noncriminal, because even that amendment
    that's proposed in H.R. 1283 still has to be constitutional.
    There are First Amendment protections even on things that would
    normally be objectionable.
        Ms. McBath. OK. Thank you. Mr. Redbord, please?
        Mr. Redbord. Thank you very much. I provided about five
    suggestions in my written testimony, but I'll just focus on one
    for purposes of this answer.
        It is absolutely critical that agencies at every level have
    access to modern investigative capabilities including the
    blockchain analytics platforms integrated with AI, media
    authentication tools, as we talked about, and AI-enabled
    investigative tools. Congress should allocate dedicated funding
    to these tools along with specialized training programs.
        Ms. McBath. Thank you. Mr. Venzke?
        Mr. Venzke. I think awareness of, first, where existing law
    can apply to criminal activity is critical in navigating this
    space. For example, 2258(a) has been extended and prosecutions
    have been brought for simulated CSAM material created regarding
    a specific identifiable child using AI technology. I agree with
    Mr. Redbord that education, providing training, defense, and
    funding for critical infrastructure for schools and others to
    educate students and other vulnerable populations about the
    threats of AI will be key, and to shore up their own
    cybersecurity infrastructure.
        Ms. McBath. Mr. Venzke, I want to go back to something that
    you did touch on though. You did touch on the moratorium on
    State and local AI, which actually failed. That last attempt
    failed. The Republican Chair of the House Energy and Commerce
    Committee has already vowed to continue to pursue it even as
    they acknowledge that Federal legislation setting standards on
    AI is still years away.
        As we work to develop that legislation what principles or
    proposals should we consider?
        Mr. Venzke. One thing I would look to, and Representative
    Lee already referenced it, was the House AI Task Force final
    report from the last Congress. That was a thoughtful sort of
    compendium of the various issues around AI regulation at the
    Federal level. It recognized that preemption particularly is a
    sensitive issue. It doesn't need to be all or nothing, that
    there is a range of tools that can be used in adjusting what is
    the appropriate area for preemption? What is the program amount
    of preemption to ensure that States have significant latitude
    to address these harms in a timely manner, which of course is
    beneficial for Congress as this Committee looks at what works
    and what does not.
        Ms. McBath. OK. Thank you. One last question. Dr. Bowne,
    how can public agencies use the procurement process to ensure
    that the AI systems they want to acquire are safe and
    effective?
        Dr. Bowne. They certainly articulate what the problem is
    and what the need to create a demand signal for private
    industries, for R&D, for academia to do the research that is
    needed. The procurement system is a fantastic way for Federal
    agencies or State agencies to ensure that the standards are
    being met and that the capabilities are there and are being
    focused on in the development and the research in the public
    sector--or in the private sector and in academia.
        Ms. McBath. Thank you. Mr. Chair, I have a unanimous
    consent request to enter into the record, a statement from
    Barry Friedman, Faculty Director of the Policing Project at New
    York University School of Law, dated July 16, 2025. Also,
    entering into the record a statement for record dated July 16,
    2025, from Public Citizen regarding the growing threat of
    criminal exploitation through AI. Last, but not least, a
    unanimous consent to enter into the record a statement from
    Keith Kupferschmid, Chief Executive Officer of the Copyright
    Alliance, dated June 13, 2025.
        [The information referred to follows:]
        Mr. Biggs. Without objection.
        Ms. McBath. Thank you. I yield.
        Mr. Biggs. Thank you. The Chair now recognizes the
    gentleman from California, Mr. Kiley, for his five minutes.
        Mr. Kiley. Thank you, Mr. Chair, for calling this hearing.
    It is a hugely important topic. We have often seen this arms
    race develop between criminals and law enforcement when it
    comes to the use of technology where criminals innovate and law
    enforcement has to innovate in turn. It is a matter of just
    trying to sort of keep up.
        With AI it is a totally different ball game in the sense
    that the development of new capabilities is happening so
    quickly, and the nature of those capabilities is often emergent
    and surprises even the people who train the systems. The ways
    in which they are being applied is equally unpredictable.
        To me it seems that integrating AI into law enforcement
    operations, is not just a tool at this point; it is absolutely
    essential. It is a tremendous challenge and requires a lot of
    expertise. It seems to me that we need to be thinking very
    seriously about how we can have coordination and how we can
    make cutting-edge tools available to law enforcement across the
    country.
        I wanted to ask both Mr. Redbord and Ms. Perumal, if I am
    saying that correctly, about your thoughts on this. I know that
    you have a law enforcement background. I know that you actually
    worked at Google, and I believe it was just a couple days ago
    that Google announced that its cybersecurity AI platform for
    the first time detected and defeated a software vulnerability
    in the wild that was known to malevolent actors. Maybe if you
    could both address the role of the public and private sector in
    meeting this challenge.
        Mr. Redbord. Thank you so much for the question. It's
    absolutely critical that the public and private sector work
    together on this as the question noted.
        Look, every Federal law enforcement agency in the U.S.
    today is using tools like TRM to track and trace the flow of
    funds, to automate tracing when it comes to cryptocurrency, to
    leverage AI tools in that respect. The reality is that it's
    still a handful of investigators that have this expertise and
    training.
        As we move from crime on city streets to crime on
    blockchains and in cyberspace we're going to need every agent
    and investigator, not just Federal, but State and local to have
    access to these types of tools and training. As you mentioned,
    cyber criminals are now using this more and more and will
    eventually be using this at scale. Every agent investigator who
    is investigating these cases, tracking them, needs to be moving
    as quickly. I would say tools and training primarily.
        Then the other piece is really true public-private
    partnership where FBI and IRS-CI and HSI and others are working
    closely with the private sector to share information to move as
    quickly as possible.
        Mr. Kiley. Thanks very much.
        Ms. Perumal. Thank you for the question. I love that you're
    following the vulnerability discovery. That's awesome.
        To your point the criminal ecosystem is using this to scale
    their offense. We have to use it to scale our defense and make
    that more effective if we're going to keep up. There's a lot of
    ways we can do that, from better detecting malware, to better
    understanding the tools and tactics they're using, better
    detecting the scam messages. If we can enable, as I said, the
    public-private partnerships, which we keep repeating and if we
    can make it easier and much faster to adapt as the criminal
    ecosystems adapts, that makes us a lot more effective.
        There are so many opportunities. Even if you think about
    all the reports of scams that maybe we already have access to
    or law enforcement has access to, if we can just go through
    that data and find the trends, using AI to speed up and scale
    investigations is a way that we can really keep pace with the
    criminal ecosystem.
        Mr. Redbord. One more thing I would add to that,
    historically, I was a prosecutor for a long time, we
    investigate specific cases, right? There's an instance of crime
    and we need to investigate that specific case. What this
    technology really allows us to do is build out networks, to
    understand crime typologies, to understand where the threat
    actors are, and how they are engaging and what they would
    potentially do next. Really, it's an extraordinary moment when
    it comes to not just law enforcement, but how to disrupt
    adversaries from a national security perspective.
        What this technology--and I think you got to this in your
    question--really enables is not just the one-off harm that's
    been done to an individual, but how do we build out networks of
    cartels, fentanyl dealers, and scam networks in Southeast Asia
    and elsewhere? This technology I guess connected to blockchain
    intelligence, really allows us to do a lot of that today.
        Mr. Kiley. Interesting. You can address crime much more
    systematically in a more efficient way and more preemptively?
        Mr. Redbord. We even see that today in the actions that are
    coming from the U.S. Treasury and Department of Justice where
    they're going after networks. They're doing civil forfeitures.
    There was a very large civil forfeiture complaint filed about 2
    weeks by the U.S. Attorney's Office in D.C., against $225
    million involved in pig butchering scams. It was a network.
    We're seeing them use it today.
        Mr. Kiley. Very interesting. Thanks very much. Mr. Chair,
    it seems there is a role perhaps for us to play in supporting
    these public-private partnerships and in facilitating the
    training and access to this knowledge and these resources in
    law enforcement across the country. I yield back.
        Mr. Biggs. Thank you. The gentleman yields back. I am going
    to recognize myself for my last five minutes here. I would
    suggest that as we started off, I said this would be the first
    of its kind. I meant that we are going to have to keep pushing
    this.
        A week--let's see, maybe a week ago Elon Musk announced
    Grok 4. He talked about artificial intelligence and Grok 4 is
    going to have the intelligence--it already has beyond a Ph.D.,
    engineering, science, genius, et cetera, an artificial super
    intelligence.
        We've touched on it lightly here today using different
    terms, but my question is at what point do we no longer see
    computational decisionmaking with a human first mover and you
    have an algorithmically iterative process that essentially--and
    we are there in some extent now, but we are not totally there
    because human interaction is still the first mover. At some
    point it won't be a human that is the first mover anymore; it
    will be the algorithm itself.
        How long before we get there? How do we get there and
    prevent the crime and provide the deterrence that is necessary?
    For the hypothetical I give you, how long before adjudicating
    whether there is probable cause or not for a search warrant or
    an arrest warrant is merely algorithmically sustained as
    opposed to having a human make that determination?
        With that bizarre question but acknowledging that we are
    actually moving so rapidly that we probably thought by 2050 you
    would be getting to artificial super intelligence, but it looks
    like maybe before 2030 you are going to be in artificial super
    intelligence.
        Dr. Bowne? Then we will go down the whole panel.
        Dr. Bowne. Thank you, Mr. Chair. Certainly, a thought-
    provoking exercise. I am glad we are still at the point where
    it is an exercise, and not reality, but I recognize that we may
    not be far from there.
        Before we get to artificial general intelligence, or before
    we get to certainly artificial super intelligence--and those
    are still theoretical and not a foregone conclusion--there is
    this very powerful and very rapidly increasing agentic AI.
        Mr. Biggs. Yes.
        Dr. Bowne. We start to see some of what you describe
    already taking place at, admittedly, lesser extent than what we
    would if it were true AGI or ASI. We still have algorithms that
    are making decisions on behalf of humans that are able to do so
    at speed and often at a skill that it certainly makes it
    difficult for the human agent to observe and to be a part of.
    It really depends on how much trust, how much authority we
    provide those agents, and what those models are; they fine-
    tuned to limit that?
        I do believe, as you said, Mr. Chair, this is the first of
    hopefully many having some of those industries, some of those
    private sector companies describe that so that this
    Subcommittee and Congress can ensure that they are able to
    predict and know, and set up those guard rails if necessary to
    limit what you're concerned about.
        Mr. Biggs. Ms. Perumal? Since we only have a minute left,
    each of you get 20 seconds.
        Ms. Perumal. Thank you. Very interesting question. We see
    AI agents making simple decisions today. For more complex
    decisions, as the models can do more complex reasoning in the
    next few years, it really should come down to how important is
    the decision, and then what transparency and explainability we
    can get from the model and how much human oversight is
    necessary? It really depends on how risky that individual
    decision is where we should hopefully see it overlap on these
    autonomous decisions.
        Mr. Venzke. I'm going to build directly on that. The role
    of AI is a choice. Laws passed in Texas, the National Security
    Memorandum that governs national security uses AI, say that
    certain things are off limits for artificial intelligence.
        You mentioned probable cause. That strikes me as a core
    foundational tenet of due process that should probably be truly
    a human activity. That is the choice that we make of who will
    be--what will be human, what will be AI, and where will humans
    be in the loop?
        Mr. Redbord. I've never seen anything move as fast as this
    moved in my lifetime. While I don't have a great answer for how
    long, it's certainly coming. If I could leave this Committee
    with anything today, it's that we need to move as quickly
    building the tools, working with this body to provide the right
    laws there. As an old school prosecutor, I'm happy with judges
    still making decisions around probable cause, but I do think we
    really need to ensure that we are using the tools defensively
    to meet this moment.
        Mr. Biggs. Great. Thank you all for being here. My time is
    expired. There is so much more to cover about this. Like I say
    it is just the first, and hopefully we will get back together
    soon and continue this.
        Please feel free to contact me or the Ranking Member. I
    assume that is OK. She says that is OK. Because we want to have
    a dialog and see where there are holes, where there are gaps.
    Let us know. We want to do stuff that is preventive without
    being constrained, if that is possible. Thank you.
        With that, we are adjourned.
        [Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]

        All materials submitted for the record by Members of the
    Subcommittee on Crime and Federal Government Surveillance can
    be found at: https://docs.house.gov/Committee/Calendar/ByEvent
    .aspx?EventID=118467.

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