some of those are strong and friendly some of our week in and day changeover time. is there any other bilateral relationship does not include the normal diplomatic relationship other than united states and cuba? >> this is the onl you guys are the experts. >> no sir. >> this is the only bilateral relationships? i'm not aware of any war between. nations and the americas hour to concentrate now between nations. am i right about that? >> you are correct. c and the only civil war and their securityci challenges obviously of many kinds because we are 35 nations in a billion people but the only civil war in the region now has the war between the colombian government and farc and the smaller

terrorist organization currently subject to negotiation that cuba is hosting for the u.s. is playing a role company and thepe government, correct? >> that's correct and we are notconflic accompanying that have the special envoy nowt >> and it's also the longest-running civil conflict in the hemisphere.my >> i don't want to get ahead of myself but if that negotiation works out positively and we are then, we have the ability of the two continents all wa americans without work, without civil war and without war between nations that would be pretty unusual in the history of these two continents wooden it? >> it would be an historic achievement. c and it would be pretty unusual wars were civil wars in asia wars are civil wars intw asia and sadly wars are civil wars in europe.trde you talked in your opening testimony that thing greasing theeements trade in the americas the

majority of the american trade agreements agreements are with the nations in the americas. there's more trade between be the eight nations and the americas. there has been a move in the last 30 years from governments in an autocratic or military toward democracy. not that there aren't problem children. we are human beings after all and there will be challenges. you each have spent your entire professional careers working in the western hemisphere is what you have devoted your professional lives to.es tell us what it means to the united states of america to potentially be the anchor and a leading nation in two continents with no war, no civil war tra o complete diplomaticf relations and an ever-increasing trade of interdependence. talk about what that means to the united states of america. c senator i think those are incredibly important point information one of the things that i see in this hemisphere is

not only the hemisphere'sp importance to the united states and to our people daily whether it's trade familial ties, the growing influence in culture that wewh share and the way ins which the values in this hemisphere are the same as ours but i also see this as a modelore w with so many flaws that still have to bei overcome andstemsh challenges that we all face and inequalities of systems and democracies even where they exist. but remember that in the transition from military to civilian government truth commissions and the process of that was first done in this hemisphere with argentina, a model that then south africa looked at an eastern european european countries look bad in others have looked at in the arab world now.

remembering also that the terrible adjustment of the 90s on macroeconomic issues werer things that this hemisphere wentst through first and now with the free trade agreements the broadening of those economic changes to be greater social inclusion and ensure that everybody is included in those benefits is taking root here first so i think it isn't just what we do for ourselves it's what we are then able to dopar elsewhere including workinger with these partners increasingly capable on global issues that matter to us from climate change to the middle east toeepe a peacekeeping where required per-capita is the largest contributor of peacekeepers in the world so i think it's not just a phenomenon that we will be proud ofutsi here but one that is in fact projecting outside. >> if i could add rief league as

we look at the globe and see demanding and in some instances frightening security challenges to have a strategic enclave inhey're our own hemisphere where we are fighting no wars facing no significant insurgencies are terrorist groups and are able to have commerce both in manufacturing and services but also in political dialogue is a remarkable thing and a remarkable accomplishment and to have examples of societies that have moved with authoritarian government to democracy have moved from closed economies to open economies as i have notedar is a confidence builder for other countries around the world who are facing similar challenges because our hemisphere has shown that democracy is not the status quo power structure, it's not about preserving privilege that it's about addressing profound social problems and doing so in ae peaceful way and the transformative way. so i think we have a remarkable

platform in the western hemisphere for which to engage the rest of the world and as thegl assistant secretary noted and asways i noted in my testimony this is a region is moving from isolation to global engagement and in many it ways one of the mostelatns interesting stories of the first half of the 21st century is not going to be inter-american relations, is going to be how america relates to the rest of the world and the fact that wet have four of our free trading partners being part of the transpacific partnership in looking for ways to transform their own economies by reaching across the pacific and asia and doing so as democratic countries that support open markets that support free trade and support the international institutions that regulatelish trade is a dramatic accomplishment and willsign have an impact on the larger economies and south america thatof have yet to sign up for these larger agreements. so we are at a moment of strategic momentum and if we are able to show that this

hemisphere can function atmospherically around establishing priorities and building approaches to those priorities and if we can show that there are dialogue we can present a consolidated face to the rest of the world we will have done something remarkable. c i think the witnesses for their testimony in thank you mr. chairman. c senator flake. c thank84 s you mr. chairman and i want to thank the chairman and ranking minority member for scheduling this hearing.in its u sperryse informed up obviously in an area where there's much interest here but i want to thank the witnesses and i want to thank them particularly for explaining that this new policy is not a reward for goodly behaviorh on behalf of the cuban government. obviously there are concerns huge concerns in terms of human rights that need to be addressed but i appreciate the clear-eyed vision of that that the administration holds and if you

could just explain ms. jacobsen is it easier to have those discussions with regard to human rights or perhaps negotiating for fugitives from american justice if we have diplomatic relations or have a better relationship in better contact on the situation as it has been? >> it's only possible within a policy of engagement but those were things he really couldn't do before. c thank you and that's important in this discussion. we often think is this a guarantee this greater engagement that any improvements will be in the offing assumes that we have a good policy now that is yielding benefits and we haven't and we haven't her about 50 years now and now at least there's a possibility that we might be able to make some improvements and see increased

freedom for the cuban people so i applaud the administration for taking this position and for pursuing this. let's turn to travel for a minute. it was said before that when people travel some do stay in the hotels owned by the government and therefore revenue will flow the government. but as significant as was mentioned by senator boxer that companies like air bnb have gone into cuba now and this is a company that has a web site that books travel mostly bed-and-breakfast for people in their private homes and i was just looking at while we were here. if you just scroll down they have now i understand more than 2000 listings in cuba. to get it perspective it took them months or i'm sorry years and some of their other markets like san francisco to get up to a thousand listings. you have 2000 listings and this

is just a think of thousands over 50 days so it's very significant and for the most part are virtually all of these listings are people in their homes, people who will benefit from visits by americans and others and that there is less of a chance or less of that money certainly will flow through the government. nobody denies that increase travel will increase revenue that goes to the cuban government but at what cost to the cuban government? i have always felt if we live some of our restrictions the cuban government may seek to impose some of their own because obviously they want the revenue that they fear what else freedom that might come with increased travel but i've often often also said if someone is going to limit my travelers should the economist. that's what they do.

not our own government here that is not our purview and that is not our prerogative to limit the travel on americans. so with regard to cuban american travel i think it's significant the president lifted some restrictions a few years ago. ms. jacobsen or ambassador shannon can you tell us what has happened in that regard in terms of increased travel over the last couple of years with the policy changing with regard to cuban american travel? >> thank you senator very much. i think it's clear in the regulatory changes that the administration has made over the last few years to increase the ability for families to see each other for cuban-americans to go to cuba as well as the changes most recently in december there have been many more cuban-americans traveling. there have been certainly it's been critical to us to ensure that remittance amount go up and

they did quite dramatically in this most recent regulatory change because in many ways they have been the capital that has founded some of the most important are emergence and will almost certainly continue to do so including some of these private homes that are serving on air bnb. people who want to run their own businesses who are allowed to in areas that the cuban government will permit but don't have the resources to do so and can be helped by folks in the united states. c thank you. as one who has traveled frequently to cuba over the past 15 years i can tell you for several years it was tough to see any change or progress because the cuban government seemed that they were loosening controls when they needed to and tightening them again but traveling there over the past cup of years has been that

significant difference and i think it's because of the increase travel particularly by cuban-americans that you see the entrepreneurship that has been allowed but will likely continue now much tougher to turn in reverse. that's certainly the feeling that those of us who have traveled down more recently have gotten and i think that will increase with increased american travel. like i said before there are no guarantees that anything will happen but change is more likely to occur with increased contact on the u.s.. let me touch on diplomatic relations and the appointment ultimately have an ambassador to cuba. how will that help with regard to those who do business legally americans who do business legally under the new regulations and increased number of americans who travel? what then if it's will while they have if we have full diplomatic elation that we don't have now?

>> obviously our intersection in cuba provide some services in but both of those areas but i would say having a u.s. ambassador having old diplomatic relations is always much better in terms of being able to engage with governments at the highest level the -- the representative of a president and two abdicate u.s. businesses that can operate legally abdicating against competitors being able to support americans while they are there great it's also critical to us that we have sufficient staff to be able to support the influx of people and americans who are going to cuba so we can provide those services. we can only do that with full diplomatic relations. c thank you and in closing i want to thank you ranking minority member for mentioning the freedom to travel as a sponsorship of the majority on this committee and look forward to pushing it forward so thank

you mr. chairman. c thanks for your interest in this issue. senator udall. c thank you very much mr. mr. president. appreciate you holding this hearing you and senator cardin doing it in such a balance way. i'm honored senator flake to be on your to travel bill. i think one of the things that is so important is opening cuba up to travel and there couldn't be better ambassadors than our citizens going down to cuba and visiting what we we are all about in terms of democracy and human rights in those kinds of very very important values. i at the beginning just want to say i very much support this policy of normalization. i think we are turning the page on a failed policy that's been going on since the early 1960s. we are moving to empowering the cuban people, empowering cuba

not a nurse and i really welcome this new chapter of normalized relations. it was mentioned earlier and you were asked several questions and i really appreciate you both being here and all your hard work over the years in this area about the private sector and i have looked for reports on what's happening down there and i think it's fascinating in terms of the growth, the dramatic growth in the year. a 2013 brookings report and probably more because that's an old report is looking at close to a million classified private sector. you have 500,000 legally registered as self-employed and another 570,000 farmers who own or lease private plots working in corporatists which i think is mentioned in your testimony. there's an organic sector that's also working there organic

farming and organic marketing. in addition to that there's another estimated from this report 600,000 to 1 million who are labeled in the private sector but they are considered illegal by the cuban government so there is also a sector there that is growing so you have these two large sectors which could be in the range of 2 million i think that is what when we travel down there when we engage down there when our commerce these are the folks that we are helping. these are the folks we are helping grow. these are the folks we are empowering and i think that's a very good thing. now one of the areas that i think is critically important and is increasing our agriculture interaction with

cuba so i'm also proud to be on in addition to senator flake senator heitkamp has a bill to increase international sales. this week i'm introducing the cuba digital and communications advancement out also known as the cuba data act with senator flake senator durbin and senator andy. the goal of this legislation is very simple. give u.s. telecommunications companies the opening certainty they need to invest in health cuba open to the world and give the cubans the tools they need to engage in a 21st century economy and to share information and communicate more efficiently with each other and with the world. secretary jacobson both you and the president emphasized access to the internet is one of the cornerstones to the new cuba policy. for those who have not been to cuba is one of the least wired countries in the western hemisphere. things we take for granted such

as e-mail and the phone are basically nonexistent and cuba. what are the major challenges cubans are facing to access the internet and what can u.s. companies in congress due to open up cuba to the global internet? >> thank you so much senator and thank you so much for your interest in this and the conversations we have had. i think obviously a huge part of the obstacles to the cuban people right now are sheer access to internet connected devices whether its computers or whether its smartphones. when i have access that access is expensive. it's almost prohibitive even when the costs came down recently for the public access to internet. it was still extremely expensive for most cubans it was about a half a month wage and so what we are talking about, and then there's the question of whether

everything is accessible once you get on the web and whether there are things that are blocked. so there are huge challenges for the average cuban. i think that there is a combination of reasons for that but the cuban government fundamentally has to make decisions and we obviously want to encourage in every way possible information and access to the internet made easier, cheaper available and open for the cuban people. that will take a fur will take her for i.d. of decisions by the government that we are encouraging them to take by encouraging american businesses to have those conversations with them and those are the means to do so. >> the goal as i think you said in your testimony madam secretary of the cuban government is to have internet access for 50% of its population by 2020 so they have stated this

goal and said we are trying to move their. this is the goal that the u.n. has made for developing countries around the world. is this goal achievable by cuba and that the united states telecom companies were allowed to invest in cuba how long would it take to wire? >> that's a great question senator and i'm not the best tax expert i will tell you that tech companies that i speak to have conversations deeper with cuba or about cuba believe it's absolutely possible and in terms of how long it would take a lot depends on what the cubans decide to do and what kind of infrastructure they put in. >> thank you very much for those answers and mr. chairman just a final comment i know that all of the things that have been mentioned here that are problems that we don't agree with challenges and cuba and we just have different goals to try to get those things changed.

as a last note i would like to express my support for the extradition of charlie hill extradition of criminals i think is an important part of any normal relations between countries. charlie hill who allegedly murdered the new mexico police officer and hijack a plane must be brought to justice. another state department shares the subjective and i hope we can continue to make this a priority until we get it done. thank you mr. chairman. >> thank you. my sense is there may be additional questions and i will defer my time for others who may wish to ask additional questions. >> just a couple points i wanted to touch him. this internet thing is important. i have talked about it extensively in the past. as i listened to some of these conversations are thinkers to this perception is somehow the reason there is no internet infrastructure in cuba is because the u.s. hasn't gone to build it. the cuban government have a joint venture for many years and

by the way the telecom company in cuba is run by the cuban government and it's a holding held by the holding company run by some of our old castro. the bottom line is virtually every telecom company in the world and there are dozens of advanced telecom companies in the world that are not within the territory of united states have had access to the cuban market and they have not been allowed to build out or drop out of joint ventures. the bottom line is the fact that american infrastructure will be allowed to command is not main cubans will allowed and here's why. they don't want the cuban people to have access to the internet. in china they have something called the great firewall. they have access to the internet. china has nationally owned and private companies within china that offer telekinetic asian infrastructure and get the people of china don't have access to the internet the way you and i understand it because the government places filters upon it. this is a government that won't allow you to bring in certain

books. this is the government that won't even allow you to read certain newspapers and this idea that they are going to somehow allow at&t and verizon to say yes come in and build this infrastructure unfettered access to the game people is absurd. we can pass all the laws we want want. the cuban government is going to place filters and you have to work their telecommunications company in a joint venture to build infrastructure on the island. as far as the travel is concerned air bnb, that's fantastic that they are building this up. here's the point, number one even private operators bed-and-breakfast whatever you want to call them still pay an exorbitant fee to the government for the right to provide that service so they than game to that system to get their hands on money. that being said the vast majority people that travel to cuba will not be staying at one of these facilities. they will be staying at tourist destinations were tours are

brought in the experience that facility and then they leave in the money is going to the cuban military. i per discussion about vietnam and china. we have full travel to china and vietnam. they are not anymore democratic in the world and when all this started so that proves my point that economic openings do not lead to evidence of china and vietnam but here's my point about the cuban military. in addition to the fact the castro regime stole 6000 properties owned by u.s. citizens or u.s. companies of which $0 have been compensated this is the cuban military that has four senior officials, three senior officials indicted for the murder of four floridians indicted in u.s. courts. that's the cuban military. this is the cuban military outthink smuggle weapons to north korea without consequence. they were caught in u.n. sanctions and u.s. sanctions. this is not just a cuban military this is a cuban

military that uses access to funds to carry out the grotesque activities so when we talk about travel to cuba business with cuba let's be clear. we are not doing good business with the cuban people. this is a small part of their economy. the fast and enormous part of americans travel there and that includes professional code tells journalist diplomats and everyday american citizens you will stay in a government-run facility and every dollar you spend their wind up in the hands of the cuban military. that sponsors terrorism by smuggling arms to north korea that has senior officials indicted for the murder of americans over international airspace and the cuban military that uses every access it has to enrich themselves and repress the cuban people. there is no economic opening to cuba. there's an economic opening to chiesa which is the cuban military holding company. >> senator cardin.

>> very briefly and i will yield to senator menendez. just in regards to some response here there are 2 million cell phone users in cuba. when i was in china they do lock full access to the internet although the u.s. embassy site on air quality is one of the most frequently visited sites by china nationals and is the only reliable information they can get about air quality. our engagement will bring faster connectivity and more quality connectivity to the people of cuba. i am convinced of that. the technology is there a senator rubio points out. it's a matter of making it available in the people of cuba will demand that and let me also point out in regards to deliver todd at deliver todd at provides for licensing authority by the administration which is common in these types of administration so there are certain authorities included in

the act and i look forward to a robust discussion. mr. chairman i would yield my time to senator menendez. >> mr. chairman i see senator markey is here so i will just wait. >> senator markey. >> thank you mr. chairman very much. welcome and thank you for all of the good work which you have done. over the years there has been clearly and isolation of our country that cuba has had to live with and i very much appreciate this administration's attempts to normalize. i think it's important and it's a step in the right direction and the actions we are taking are beginning to make it possible for us to envision a day where we truly have

normalized relations with cuba but it's not going to happen overnight and clearly cuba itself has to deal with the behavioral changes that are not going to come easy. but that said i think the process has opened and i think we are heading in the right direction. i know senator udall has already talked about this but i think it's important to focus on it and that is the relationship that exists between information and freedom and i think there is without question a huge cultural compatibility that we have with cuba. otherwise the red socks would not be paying all this money to be signing cuban players right now. they obviously have mastered that part of our culture and hopefully we will be able using better relationships to be able

to broaden that even further. talking about the internet and talking about telecommunications can you outline just a little bit for me? i may have missed a detail that you gave to senator udall but what is your hope in terms of the transfer of the sale of telecommunications technology into the cuban marketplace? .. harder, cellphone or computers not just donated but sold it and services provide the information such as the phone card to recently

signed a contract for other forms of telecommunications work but it is true takes the decision by the government to move forward in the telecom sector is certainly true american companies are able to participate for the cuban government has already said it wants two-room modernize if and when they do. and encouraging them to do so. i think that as others have said, we think that the cuban people want that as well. >> well i think that the more that we have american tourists down there, the more that we have occult rational exchange and students in cuba, the more normal lied to that extent is the more likely that the

cuban people, cuban students will be saying to themselves why can't we have that technology? and it is a resistance by the way that existed in our own country that did not want to move to the digital revolution. cable and telephone companies did not move to it. there was no home that had that until we changed the laws. we pretty much had to have the companies. we were going nowhere. the same thing is true for cell phones. it was the size of a brick and cost 50 cents a minute. we did not have one. so wealthy businessman gordon gekko in wall street had one. not ordinary people. and in 2001 in africa only 12 million people had cell phones. wireless devices. today it is $800 million. so we moved from the devices to the devices rapidly in america. and they are doing that in africa as well. and more in that of the

culture of the individual countries it will change the culture it changes the business relationship. it will change the entrepreneurial spirit of the country. we can see that in the country after country over africa. this is not uniformed. and no question about it. you can see it where it works. it works big time. so i this i that the same thing will be true. in cuba. and that the more that we can move the devices in. is the more that the people in the country will demand access to. so they are not the last country without access to the modern technologies. i think that we are going to see the traumatic telescoping of change that's we are hoping that will happen in that country. so that is why of all of the sectors that is why the radio and tv were always focused upon by the reagan

administration. they understood the importance of this and the openings which you're talking about here. kind of puts it in the mine of many cuban or narry citizens. why not. why not us? so what is the level of the negotiation or discussion that is going on in terms of these telecommunications technologies. who were we speaking to. who makes the decision inside of cuba? >> thank you senator. we had -- basically there is two tracks if you will. one is the government that is beginning of the conversations with the cuban government about the tell communications and the other obviously are many many private sector conversations with the cuban government to which we are not a party but we obviously know about that they are taking place.

the government side, we had our ambassador for the international communications policy. and danny sepulveda who was in havana, about two monthsing a right now. nafs the first time that we had that kind of a conversation with the cuban government at an official level meeting both with their telecommunications ministry as well as their

telecom provide near is state run. to talk about sort of what kind of infrastructure that they are interested in and how we have done the thing in the united states in techlz the regulation and the access issues. as well as obviously many, many u.s. companies that have had conversations with the cuban government. and they are beginning to think about the solicitation that's they have put out and proposals of their own telecom sector. the quickly that we can move into the direction. the quicker society changes. this happened all over the world. they will not be immune to it. thank you. with that objection i want to enter into the record on behalf of the senator that wrote me a letter to him dated february 18th. from the u.s. coast guard. if there is no objection i will put it into the record. clarifying a few issues. tell communications and cuban governments may not allow this. it is up to them. they may not allow it, it is true. they will allow that they will allow. and we have had a policy for decades. did not yield the results that we want. and the question isn't just this policy or policy in a perfect world but this policy compared to the nonengagement that we had before. we know what nonengagement yielded and so the cuban government may or may not keep their promise to you know make sure that other % of the cuban people are wired by a certain time. we have no control of that. or in national interests. you know. it is likely, it will occur than under the former policy that we had. and with regard to the

statement that of made whenever an american travel traveler goes to cuba, every dollar end up with a cuban government. and that simply is not the case. that may be said by those that have not traveled to cuba recently. but many americans travel to cuba. and it is true. you can't travel to cuba without some revenue going to the government. that is certain but the notion that every dollar that is spent ends up in the hands of the cuban military is simply not the case. you have but goning entrepreneurship that is attempt to the fact that some money will flow to ordinary cuban people. and that is particularly the case with the travel of the cuban-americans in the last couple of years. i will mention that when that policy was announced a

couple of years ago, the cuban-americans will travel not just once every three years but as often as they would like. and they were increased. there was talk here in congress about the reversing of that. and well you cannot have that. it is not good. not good for the cuban people. and america. and i will tell that you there is no serious talked to. about reversing that. and because why? when americans get more freedom, we will tend to enjoy that. and we will tend to want more. and i would suggest that a year from now, the notion that we would reverse this policy that has allowed more americans to travel to cuba than to help the cuban people have access to more technology and more capital more values. more contact with americans, will seem as absurd as

reversing the changes that were made with cuban-american travel just a couple of years ago. so i applaud you for what you are doing. i look forward to working with the administration as this policy unfolds. >> thank you senator. >> thank you mr. chairman. i will ask you. when a cuban-american visits a relative in cuba. the only place really to buy something is the dollar store isn't that true? if you want to get something? there is more in the stores to buy. yeah. >> by the way who owns dollar stores? >> state run. >> the government. >> so when i if i want to send something to a relative in cuba. the cuban government will take a slice, right? they do. but relatives want their part of that anyway. the cuban government gets a slice? yes. let's not deny that the cuban government is enriched

by the resources which is why it is been the number one foreign policy objective. now, let's talk about what full diplomatic relations are. you will be having that

discussion tomorrow as i understand what my colleague said. normalized relations are and after the summit of the americas and talks to restore the diplomatic relations were hung up because the castro regime will not able to grant unrestricted to diplomats or secure shipments to the future embassy and unwilling to let us have a number of staff that was necessary to operate a future embassy and unwilling to remove the military presence around a future embassy. i will ask you would the state department actually

agree to establish the embassy in havana if all of our diplomats are not able to travel freely throughout cuba? in terms of notifications of governments and many countries in the world that range from 24 hours to ten days. so, we are going to do everything possible to make sure that we have the least restrictions possible but >> we will accept restrictions that all of our diplomats in the embassy will be able to travel throughout the country? we will make sure that the embassy is on a par with the way that we operate in other places that are restrictive in environments. would you agree to the conditions of which we cannot send secure shipments to supply a future embassy without the regime rifling through them?

>> i am not going to unnecessarily lay out all of the negoti

on behalf of all recorded history for the cuban government are we agree with every statement of the past with a we have to look at is what the requirements are under the law which talk about the rejection of international terrorism, which they have made and the lack of any support or any evidence for support. >> so they can partially lie

to you but not fully lie? >> senator we have differences in what we they believe they have ever supported. >> they sent you letter and the state department quoted that specific section that if you buy in it, that section of the letter that you buy into. let me ask you that?

ãwhen more people have access to the internet even if the government tries to prevent them from seeing

things that they do not want them to, they are remarkably inventive in finding ways to do so. again so let me ask you this. if we have the assurance that's the state department and the united states government will take all possible steps to ensure that the cuban people have access to circumnavigation technologies to be able to get around regime censorship? we are going to say that we want the u.s. companies to go to develop this instruck thank you in cuba. we can have this technology so that the cuban people are truly free. to see any site they want to see. >> i certainly hope that the majority of the vast majority of all of the cuban people will be able to have complete access to the internet. >> hope is not a policy. achievement. i am asking if we are going to license companies under the libertad act to put

infrastructure in cuba to make a condition of the license that they have circumnavigation technology so that senator mark and everybody who wants access to the internet for the cuban people which i also want we have a common cause on that will get access to the internet. what is so difficult about insisting on this technology? >> i do not know that we can do that i know >> is there any condition that we want as a condition of sale? >> i also >> i wrote at that section of the law. when i was in the house of the representatives. i know what it says. >> okay >> you can put conditions on it. i hope to hear back from you whether will you insist on that, as an ability to have u.s. companies if we want access to the cuban people to have access as i do. to have the deals go through and to make it the most effective way that more on the island can have access. a deal without the full

access to the internet is a deal -- to an end without access to the critical information that we think can had help to liberate the cuban people. thank you mr. chairman. any other questions? >> i want to thank the committee again. i know there is diverse use this proposed new policy. actually a policy that is implemented. i want to thank the pinls witnesses for being mere. and if you would, the record will be open without objection to the close of the business on thursday. to answer promptly. i would appreciate it. thank you for our service to the country. with that we are adjourned.

julia tyler, the first photographed first lady. an a harrison leticia tyler and julia tyler this sunday night 8:00 p.m. eastern on

c-span's original series first ladies. influence and image. examining the public and the private lives of the women that filled the position of first lady and their influence on the presidency. from marlth a washington to michelle obama sundays 8:00 p.m. eastern on american history tv on c-span 3. and as the compliment to the series, c-span's new book first ladies presidential historians on the lives of 4 5 iconic american women. it is available as a hardcover or an e-book through your favorite bookstore or online book seller. >> on thursday the house financial services committee looked at the efforts to combat terrorist groups and the committee heard recommendation force trans-national organized crime and cutting off ill usity oil sales money laundering this. is two hours.

>> terrorism financing combat will come to order. the task force is dangerous nexus terrorism crime and corruption. and to declare recess of the task force at any time. and those that would have five legislative days for materials to the chair. in the record. without objection the members of the full committee may participate in the day's hearing for the purpose of making an open statement and questioning the witness. and for three minutes and an opening statement. and i would like to rank members for those in

establishing and reaffirming the committee's commitment to using the role of the threat of terrorism as well as colleagues here today that will work tone sure the success. in the last hearing that demonstrated the scope of terrorism arm the world and evolved in the face avenue strong american response. the united states has seen some success in shutting the groups out of the international financial system, like squeezing a balloon, this is lent itself to the creation of more suffocate and diverse fudged for terrorist organizations, groups have become entwined with the trans-national syndicates and involving into the role themselves and engaging in criminal activities that yield more profits and relying on the state sponsorship and great pocket donors, ranking from. and not limited to corruption. and drug trafficking. human smuggling. and extortion. place the methods on top of

the other nontraditional means discussed in the last hearing it. is easy to see that the terrorist organizations are better financed than predecessor as decade ago. the day's terrorist groups and trans-national syndicates thrive in insecure regions of the world and the terror organization left side contribute to the regional instability and internal conflict and organized crime exploits environment force financial gain and corruptive influence. to witness the impact of the dangerous union, the united states has to simply look to the tri border area this. is relatively lawless region along the fronties of argentina, brazil. paraguay. and it has become a base for hizbollah's ill usity activities to fund terrorist operations in the middle east and around the world. hizbollah has engaged in several activities mention and though through them has succeeded in raising a substantial amount of money to bankroll their actions.

in fact according to the 2009 rand corporation reports had hizbollah has netted around $20,000,000 a year in this area alone. it is this type of connection that the intersection between terrorism. crime. corruption that the day's hearing will focus on including current techniques that are used by the groups effectiveness of the current u.s. policy and combating them and where the tactics will be improved. groups like hizbollah, and islamic state and boko haram to no longer simply be considered terrorist groups and they have evolved into suffocated global criminal conglomerates and in order to combat such a volume tile threat. the u.s. policy will evolve as well. that is the purpose for the formation of the bipartisan task force. this is my hope that the day's dialogue with the diverse group of members and the expert panel of the witnesses joining us leads to us the better understanding of the challenges facing us and

shapes our discussion of long-term solutions moving forward. this time, would i like to recognize the task force as ranking member and my colleague mr. lynch from massachusetts. thank you mr. chairman. i want to thank the chairman and miss water force their work on this as well as their own and vice chairman. and of course. our panelist this is morning. thank you for helping the committee for the work. the day's task force on the terrorism finance hearing will exam initial the nexus with terrorism, crime and corruption. and hearing is particularly timely and the director of the national intelligence james clapper. identified terrorism and trans-national organized crime as among the top eight global threats to security when you testified this past february for the u.s. senate committee of armed services. according to director clapper. the transe national criminal groups thrive in the highly insecure regions of the world where terrorist groups

that contribute to instability and conflict. while trans-national organized crime groups exploit the environments for financial gain and corruptive influence. and one example of this can be found in venezuela. earlier this week the "wall street journal" reported that the u.s. drug enforcement agency. and prosecutors in new york and miami are investigating the multiple many high level venezuela officials including venezuela's national assembly president on suspicion that they may have turned the country into a global hub of cocaine, and trafficking and money launder, the investigation is the response to the explosion of the drug trafficking and that oil rich country. u.s. officials say. and i bring up the example of venezuela. douglas has prepared remarks for the day's hearing to discuss how a block of countries will operate jointly as a political project with the under lying goal of harming the united states and as a joint criminal enterprise.

the countries are creating a liances across the globe and hizbollah and the drug trade seems to be a huge source of the revenue propelling this. the u.s. department of treasury's asset control sank shonled the corrupt venezuela government officials pursuant to the kingpin designation act. for acting for and on behalf of the revolutionary armed forces of columbia. and that is the narco terrorist organization that is often a direct support of the narcotics and arms trafficking activities. this crime and terrorism. may not only play out in venezuela but another part of the world. and reported by the state department april 2014. and country reports on terrorism. and the region that the chairman has identified is

reflectivive the interrelationship of criminal activity. terrorism and financing. according to the report. the tribe border area of argentine ark brazil and paraguay continued to be an important regional nexus of arms and narcotics and human trafficking counterfeiting the pirated goods and money laundering. social for terrorist organizations. i hope that the hearing will shed light on the pervasive nests threats that i look forward to hearing for witnesses so that we can exam initial the issues and potential solutions further. i thank you for kurt see. i yield to the balance of my time. >> i would like to rob the committee remember thank you thank you. for the leadership and the vision and the task force for ranking members. clear leadership. and this would be very important and meaningful

hearing. understanding the link between terrorism and crime understanding the efforts to deter the terrorism financing. and with drug lords and the benefits. how they are working with the trans-national criminals to move through the financial system. and the same routes for the day. that were used for years in the past. not means previously. but cyber warfare. should we be preparing for, for today. and the bigger question is what are we going to do to stop it? there are strong concerns that we do not have the capabilities in the intelligence and effective in the goals. the kush effective nests cooperation of the flow of money to terrorists. and i look forward to hearing from the witnesses on the issues and continuing

a task force to counterterrorism financialing. thank you mr. chairman. i yield back there. is arranging member of the committee for one minute. thank you very much. mr. chairman. i applaud the bipartisan efforts surrounding the task force and they will serve well to guard against key threats to the national security. today the task force will explore the dangerous new trends. the growing convergence of terrorism and crime. as terrorist organizations motivated and criminal enterprises generally by greed have been thought to operate from the testimony from witnesses for the day. this is no longer the normal. criminal groups means that the ill usity network. is a local and regional concern have global security. and i'mcations. while all of them approach

and necessary. certainly necessary to tackle the issues. effectively. i am hopeful that this task force can serve as a catalyst for these issue that's fall squarely into our jurisdiction. and for the careful review of the current and money laundering. and terrorism by regime to start out i yield back the balance of my time. the chairman from arkansas for one minute. i am honored to be apart of the task force, and the thanks to the leadership for the thanes national profit number one. how they interact with foreign terrorist organizations and driven by the ideology. when you combine them you have toxic soup. squary examples as note this had morning of the relationship of criminal activity and terrorist organizations and interact throughout the world.

i am looking forward to the morning with the fine panel of witnesses to learning more about that and finding out how we can interject that process and stop it. i appreciate it. i yield back mrchlt chairman. thank you. the chair will recognize the woman from arizona. for one minute. ranking member lynch and and security and global security. and the terrorist networks have developed new ways for deadly operations and to threaten america. and terrorists leverage criminal network to keep the country safe to be a step ahead of them cutting funding off and stopping their efforts. the state is one of the most well financed terrorist groups. 2014 they generated a million dollars per day predominantly into the sale of smuggled oil that is why recently there is an amendment that is was accent today direct the secretary of defense and coordination with the secretary of state and the sectretary of the

treasury to pursue efforts for the oil are revenues and necessary efforts. andal the same archeological sites raising the possibility that they will destroy or sell priceless artifacts to fund militant violence. i look forward to my colleagues on both sides of the aisle to find solution that's will strengthen america's security. i yield back. >> we now welcome our witnesses selena who is professor of practice at the william jay perry center for hells fear defense studies in the national defense study. and professional is a former u.s. dip machlt and international bank we are goldman sachs. and u.s. foreign policy adviser under the clinton and the bush administration. and professor of international security affairs. in the national defense georgetown. george washington. and joint special operations universities. as the state department director of counterterrorism finance programs professor

realio managed a foreign assistance programch to safeguard against terrorist financing. the professor is a graduate of the harvard business school. john hopkins of advanced studies and georgetown university school of foreign service. dr. david asher is a junction senior fellow for the center of the new american security and serves on the board of advisers on sanctions and finance in the defensive democracy. dr. asher has centcom and dea. and and injustice. and the top counter threat. and dr. asher conceived up and the highest profile and money lawnering. and dr. asher organized and

ran to noekt national security council and department of state. he received his doctorate in international relations from the university of oxford. a senior vice president of the group and fellow in the new american foundation in washington. royal united services for london and studies of islamabad. from march 2004. the coordinator of the monitoring team in the united nations in new york. in 2005 he helped to establish what became the united nations counterterrorism implementation task force following the adoption of the global strategy to counterterrorism for 2006. before joining the united nations he worked for the british government both at home and overseas. douglas is currently

president of the llc. senior nonresident associate in the center of the strat egyptic and interest national studies. assessment and strategy center. it is a security challenge. and for the two decades before consoling. a foreign correspondent and investigative reporter for the "washington post." and covering the civil wars and central america. and ellisity diamond trade by charles taylor. radical islam and terrorism financing and the witnesses will be recognized for five minutes to give the oral presentation of their testimony without objection the witnesses written statements will be made apart of the record and following their oral remarks. when they finish their testimony. each of the task forces will

have five minutes of which to have asked their questions. on the table, for the witness there's are three lights green go. yellow out of time. red means stop. and the microphone we are told is sensitive. please make sure you are speaking into it with that you are now recognized for five minutes. we thank you for your attention here. members of the task force for the opportunity to appear before you today. and to testify on the dangerous nexus of the terrorism crime and corruption that threatens the u.s. national security at home and abroad. and actively capitalizing on the weak governments and corrupt shonl. the town the security. prosperity around the world.

terrorism crime and corruption. ellisity networks threatened four key missiones to provide security. promote prosperity. and safeguard the rule of law and makes sure that the government will represent the rival the people. and enableres to realize the revenue objectives. leadership, and personnel. and ellisity activities. logistics and communications, weapons and technology. corruption and financing. and following the money trail this is instrumental to disrupt and dismantle the networks. and law enforcement operations. like the iraq and afghan threat bills. public designations in capacity building programs. as a result of the efforts the al-qaeda operatives

complained about the lack of funding for terrorism operatives that they could no longer lawner profits through banks. and measures to combat the terrorism and crime have unexpectedly rooted out corruption at the highest level of government. terrorism crime and corruption have existed since the dawn of time and have gone global with records of profits and violence. in many cases terrorist and games are better arm and funded than the government services and security force that's are responsible for confronting them. we are witnessing a dangerous convergence of terrorism and crime that threatens our national security. convergence is the process of coming together to have one interest purpose or goal. certain groups are demonstrating a hybrid terror crime behavior like the network of afghanistan. farc in colombia. and isil. all eyes are with isis and brutal beheadings and

advances. and foreign fighter. and an example of convergence with the profit seeking criminal activity. and and the agenda. and as you know it will derive income from oil sales and additional fund from extortion kidnapping and stolen antiquities and human trafficking. one of the nine efforts of the u.s. strategies is to disrupt finances. it is focus on the revenue streams and financial systems. and targeting the leaders and fascilitators with sanctions and they have conducted airstrikes and supply networks in syria and iraq. and as of may 8th. 1 52 tarring vets been damaged or destroyed according to the u.s. central command.

s have conduct a daring raid against kristy siefkin and the senior leader in the chief financial officer of ice ill. that illustrates the growing importance of the isis finances and how valuable intelligence collected in the target site could be to attack the networks. to counter we will further leverage that international power and i propose a five following measures. in you can one. increase the resources to the government agencies to having and prosecute terrorism crime and corruption. and number two, retain the afghan threat financial cell and establish those we merging threats like isis. to coordinate all agencies. and dedicate a percentage of the fines from sanctions and money lawnering to directly support the counter threat financial programs. lastly to promote the public

sector to serve as eyes and ears to protect financial crimes. conclusion we have to understand our number that's confront us and denying access to enablers and the flow of funding to groups like isis. and with various proactive agencies to effectively combat crime and corruption in the world. it is a critical tool we have to take advantage of. thank you for your time and attention. you are now recognized for five minutes. and this is an important issue. and the heart of the matter. money is the war. and and experiences that i

have been involved working in terrorism and financing and doing financial operations with drug cartels and governments weapons proliferation experts. and 2007. and the drug enforcement administration that despite is an awesome organization and has done incredible well above and beyond. and united states itself has become the largest money laundering for terrorism in the world. and the lebanese canadian bank and under the command and control of hizbollah and element within hizbollah. and it is tied to terrorism. and jihad organization. and embassy. 1980s and killed hundreds of

americans. that organization is the internal security organization to control the security apparatus and that reaches into the united states of america itself. to garner profit and engage in influence. engaging in something that we would have the criminal resistance. ie using a $808 billion lebanese banking system. the third largest offshore center for dollars in the world i believe. the united states has dozens of banks with the correspondent relationships with lebanon. three years ago. and lebanese canadian bank. and under the control. and and to advise on. and intercover informants

and others to penetrate this all in the public eye. and speaking based on the classified information. and this bank was vying primarily, used cars. in the united states. and in europe. textiles of asia as part of the massive money lawnering scheme along with the outfit that pablo escobar himself set up in the 80s and 90es to run the medellin drug cartel this. is all in opec treasury department document to find on the web. so with buying as much as a billion dollars a year. and used cars. in the united states. cars that were generating almost no profits actually. exported the cars to west africa where the money was co-mingled with the trafficking proceeds and coming out of europe and the world that we live in is complicated. drugs were flowing. and the money was couriered

to the united states and used cars here. and making its way into the lebanese canadian bank the center of the hizbollah money laundering empire. it remains the largest term sports team in the world for a terrorist group. and 2010 the d.a. began to construct the take down strategy that i helped to devise on. i will not get into the details. we organized the lebanese canadian bank. the patriot act that cut off the united states. bankrupt in three weeks. thank you very much. we designate that had before the medellin drug cartel that was in the center of the thing in virginia for lawnering for a billion dollars a year. and now indicted for the

relationship. the lebanese canadian bank as well. and wanted for an arrest. that car parked in west africa and designated those. and never did that before. so it was a huge success. i am here to tell that you today, unfortunately, there are more from the united states itself. to west african car parts and had he's bowl than when we made the designation of 2011 and 2012678 the policy is a great success of interagency cooperation. international corporation. and the bush administration and this administration has done to try to make a dent of this. unfortunately it did not succeed. we want to discuss the measure that's will help to advance that success. thank you. and thank you.

can you turn your microphone on please? vice chairman lynch. and services committee. and to the issue of perennial concern. and along with other forms of violent crime lacks a profit motive. and any terrorist attack costs money. and is reasonable to assume that for the less money that the terrorist group has available. that the less able it will be to mountain attack. and if it does so limited finances will result in limited impact. the terrorism of course. by an asymetric and suspects of all financially. and and a cheap attack and devastating impact. for example, the last al qaeda attack of the western

country occurred in my country. on july 72005. four individuals associated with al-qaeda. transport system in london. and estimated that it will cost less than 8,000 pounds. and and related to terrorism and other criminalality. for three years since the university. and a reasonable credit rating and multiple bank accounts. and contractors and a 10,000 pound personal loan. and drawn as accounts so

very difficult to detect. to those the low costs and that of the financial activities associated with it. and the devastating impact of the united kingdom and beyond the cost of the u.k. economy estimate today be 2 billion pounds in the rest of 2005 alone. so even the unsuccessful attack. that can have a huge impact and thinks of the costs that originated in the united kingdom. the 2006 plot to blow up airlines that are travelling to north america. the additional security checks are the result that costs billions of dollars. the point that i am trying to make is that terrorism is not expensive to be

effective in the primary objective to make people afraid or force governmentes to react. the second point is that terrorists will fund operations into legal means and illegal means. and legal means may include the nations or the self financing of the london bombings. legal means that may include income of traditional means by terrorist groups to control taxing incomes and selling natural resources and so on. and whereas legal means of course may include kidnap for ransom and other things we have heard about. if is my belief that though terrorists have few times to raise money there. is no preferred means. they do what ever is easiest and most effective them. will raise the money according to the tune sxichlt aiming all the while of course to minimize effort and risk while maximizing a return. and it complicates the terrorism by used by terrorists that is not

criminally tainted before it collected. they will establish the bases and control territory and toot areas are ones that criminals use for their own sipments drugs and other contraband and things like that. and there is crime and criminal gang. in my view they are likely to take a cut from the the criminal gangs than to join the raquets or to compete with them. terrorists and criminals that operate for profit are not natural bedfellows and the criminals see them as dangerous for themselves and also in that they are likely to bring attention from the authorities. and less likely to agree to turn a blind eye to terrorism.

people have no sympathy and may attack or portray them if there was approve knit doing so. so there is association with terrorism and criminalality this. is not necessarily a straight forward and no even universal. thank you. thank you very much for the opportunity to testify about the dangerous nix among the terrorism crime and corruption. i will focus my remarks on latin america where we are seeing the converge ends of three factors in new and dangerous forms. they are the core of what i believe is the significant strategic fit for the united states. i describe the emerging tier for the security to priority. as criminalized states. the states that actively

other will use the organized crime that the state craft would rely on active to its fund themselves. with terrorist organizations. and venezuela. and when have you the political project the joint political project among multiple nations harming the united states as well as operating the criminal enterprise. and in the states to impede activities. and protected terrorism for stable vierpz that businesses crave. and margins of the state. seeking to co-op small pieces of the machinery. the groups will concentrate

at the state on levels. within the stable environment. options will become available from the sale of weapons and the use of the national aircraft register stories and the use of banking structures and the national airlines and shipping lines. to move the large quantities and accurate sdifgs diplomatic passports and other identification forms. and resonating that could not be confined to venezuela and concert with allies and ecuador. bolivia. argentina set out to redefine the political landscape. latin america. and the current government are also alive with the movement. and the alliance has been successful. unfortunately what the policies have brought in internally are the massive corruption and vie rising violence and a collapse of intuitions and under the

strategic level. russia and russian organized crime and mexican drug cartels and criminal organizations and revolutionary forces that would by that european union and drug trafficking organization is supported by the boulevard and nations a matter of state policy. and a relationship with the state and nonstate actors will provide numerous benefits to both. farc and hizbollah will gain access to the nations without fear of reprisal and access to routes for exporting cocaine to the united states and europe. and using the same routes to export quantities of suffocated weapons and communications equipment. and return the government will offer state protection and republicans rewards of the financial ben fists the individuals and institutions derived from the cocaine trade. iranian banks have been bard from the western financial

system. and access for the immaterial national markets of bolivia financial institution that's will act as approximate sees and moving through iranian money to originate in their own banking structures. and the significant new evidence of the criminalization of the states. the first recent investigation by the brazilian magazine showing the help of venezuela tried to help iran's nuclear program and international sanctions and the "wall street journal" has a long list of senior venezuela administration officials being investigated for drug trafficking, recent book chavez boomerang described detail the numerous eyewitnesses cocaine dealings in the highest level of the venezuela government and contacts with hizbollah and farc operatives in angtion meetings and the highest

level:. at our 1st hearing of this task force we had testimony.

it was mentioned here today the testimony i will ask a question that the professor could response to. i would like to hear the response the thoughts of each of the panel witnesses. whether or not a concept similar if replicated in latin america could that be an effective means to combat terror criminal hybrid franchises that operate their in latin america? >> one of the lessons learned unfortunately from our experiences has been that enter agency and law-enforcement collaborative fugitive cells have been successful. in terms of latin america, it depends upon the

different groups. a lot of activities are drug trafficking related as well as human trafficking related and we have to figure out which would be the most suited. a concept of creating a task force. the joint the joint terrorism task force established by the fbi are a model that has been studied by many academics as well as other ways to leverage the know-how and resources. one other one is an effective one the joint interagency task force based in florida. it's an interagency program with uniformed services. the full-time officers mother countries.

the primary mission is countering illicit trafficking. they used to be just drug trafficking. they are encountering precursor chemicals as well as alien smuggling. how we can use these lessons learned and applied. >> my experience at 1st absolutely spot on. i do feel that you need almost an untouchable approach to this stuff. stuff. you need a group of people in charge to you after the money. and have global authority of rome. and has blood today china than anywhere else. in my testimony, massive amount. we have identified. guess what?

people are so accepting billions of dollars a year from places like lebanon. we need a top-down approach. we know based on over at evidence that has been presented in court that this is going on. why is it still happening? when you approach -- way you are interested in is important. threat specific. has blocked, al qaeda, why have we not applied the rico courage -- rico charge. we have more than enough countries in the world that endorse terrorism. >> of the issue of trade -based money-laundering what is your assessment of

current policy? >> ineffective. and it is not the lack of effort. everyone i have worked with that i i have had the honor and pleasure to work with. great people awareness of the issues that we never had before. the financial networks are a means to tackle the whole network. it is revolution but it is not working. more has blood money than there was in 2011. we need to approach these things more like organized criminal rackets. terrorism almost honors these people. we need to impose opec penalties with much greater. if. >> at this time i will recognize ranking member lynch for five minutes.

>> i want to i want to thank the witnesses. i've had a chance to read your testimony. for a while with the lebanese canadian bank we had great success using section 311 sanctions and identifying them as primary money-laundering concerns. not just us but the financial community. it saw them as toxic command everyone backed away. it shut them out of the legitimate, you know, banking system especially the united states. would this work if we expanded everyone want 311 to go after, say, you know, the auto dealers and west africa that are operating? if we, you know if we continue to use that the 11

type five mechanism, would that be enough to choke off the funding? >> we need to look at imposing section 311 against the actual nation. it is a temporary measure. they are going to provide mutual support for terrorists organizations. of course we have section 311. they can be lifted easily to protect our nation from money-laundering. there is massive money-laundering going on and definitely going to a terrorist organization and the military wing of the and are engaged in activities

against our interests in the middle east. east. we do not have these laws on the books for nothing. i believe an enforcement approach is imperative. imperative. we cannot force the bank to be the enforcer of the law. we need law enforcement to get into gear. they are complicated. it can be done. >> let me stop you there. we have a problem coming up the agreement that the administration is trying to pursue iran. we have sanctions against iran and a number of banks that have previously worked with them on nonproliferation issues and

those are major sanctions. the iran sanctions act iran syrian section act and the president is negotiating taking away those sanctions dropping those sanctions in return for assurances and verification that iran is no longer pursuing -- not actively pursuing a military nuclear program. on the on the other hand we have a whole set of sanctions based upon the work that you have been doing, which is -- iran has been financing has block, islamic jihad. they even gave money to al qaeda. sanctions of allow the economy to grow. what is to stop them from continuing that activity with respect to the work of the islamic revolutionary guard is perpetrating directly supportive of

illicit activity the criminal activity. >> moral and human outrage are recent. at the end of the day the terrorism record stands -- for those of us that worked in the war in iraq we had more involvement in attacks then suddenly any other nation state. i was senior advisor to the united states government. i worked on the dark side you side, you after their finances. we have to have a hybrid approach, but on terrorism we must draw the line. >> is it your understanding that those sanctions things that are targeted toward --

the criminal activity those should remain where they should not it should not be part of the -- >> the record stands. >> right. >> the chair now recognizes the vice chairman. >> thank you. the effectiveness of our enter into communication and coordination as it relates to stopping the financing of terrorism, specifically u.s. customs and their full access of data would limit access. do you believe that we should be looking more seriously and better coordination particularly as it relates to trade -based financing. should we be looking and targeting this type of cooperation?

>> is awesome organization. everyone everyone deserves to take a look. they do not get nearly enough credit. they try to stop more terrorism than any other organization. they are good they are good at receiving data. their ability to take data and use it would be very proper and to the greater good because so much of trade -based money-laundering is going on these customs receipts that occur you ask for something. they are not linked together. you mentioned section 311 and how effective it was. we saw how important it was

willing to north korea. do you believe that this is a central focus that we should have in terms of trying to force some of these institutions cannot be able to exist back do you think there are other institutions that clearly we are in a classified an unclassified briefing from but should that be a focus of our effort? >> the most powerful leader in financial warfare. something that must be utilized not everyday but periodically. it is it is an incredible course tool and nothing like cutting someone off from the united states financial system. it is not our job to offer access to terrorist groups and criminals to our financial system. 311 offers an option.

>> in your testimony you talked. could you compare isis? my senses that there sense is that they are using the same routes and mechanisms and, perhaps, the same people. we have not succeeded in stopping this. not only have we dealt with this but what should we be doing to stop it? >> it is an interesting question. of course, the program was a huge agreement by the international community through the security council and 91 with saddam hussein, with the government and did allow a certain amount of export of oil in order to be able to allow the iraqi government to fees people. that that was open to many abuses and was, indeed have used.

the the scale on which saddam hussein was operating as a government is different from the scale on which this current regime operates. this program $50 billion worth of oil the islamic state is selling up to $2 million a week. a hundred million per year. also whereas the export oil under saddam hussein was authorized, it was done in a regular way. the islamic state is done on a small scale homegrown refineries it may take it to turkey, kurdish areas even the syrian government. most of it is sold and consumed within the area controlled by the islamic state itself which makes it harder for outside powers to control the possibly turkey generally speaking.

>> professor you mentioned some about the transport and sale of oil. minimize that and what else can we be doing. >> the decision specifically to target the oil infrastructure they feed the economy as well as the movement of people away to family life. having worked on wall street this is not entering global of like minds.

a lot of it is person in the turkey but it is driven by those looking for a cheaper gasoline. >> correction. thank you. >> i would like to continue discussion. i am interested in pursuing closing money-laundering loopholes. and this is i suppose question for mrs. willow. an investigation recently conducted by the new york times confirmed the ease by which anonymous foreign billionaires can purchase real estate with you

questions asked. half of residential properties in the united states and now purchased anonymously through show companies. closing as basic questions. anti- money-laundering compliance programs. the patriot act allows them to temporarily exempt entities in a requirement to establish anti- money-laundering programs. persons involves the listed closings and settlements. the believe large cash purchases of luxury real estate -- they need to be addressed. >> that has been a question. since the wake of september 11 other

businesses could be used to wander money and move funds have an illicit nature. so to actually try to enforce a broadening of the coverage who will be required to know your customer and take a look at things such as was said. i do a lot of work and in mexico is a huge issue of the photo. more importantly real estate. notary public's were critical in order to transact purchases of sale and be required to do reporting and due diligence on the clients and do something we might feel that you should consider here. a a lot of the flow of money in real estate here is also suspected of tax evasion of their home jurisdiction which is something that we should be concerned about particularly if the money is

coming from corrupt government abroad covering have coming to seek financial safe. >> several years ago i became interested in money-laundering because we discovered that one of our national banks have purchased the lot of the small banks mexico. they discovered that our banks were not following a know your customer policy. large sums of money the same thing was true with the brothers from nigeria and well of course am interested in this real estate aspect of it you

mentioned them brought up: no your customer problems. i think that given that the statute referenced a lot only temporary exemptions do you believe it is time that those involved in these types of transactions type of transactions should be required to implement us anti- money-laundering programs? >> that is what we're trying to take a look at. as new ways of moving and potentially wondering money or financing terrorism is all we need to think about legislation that keeps up with these innovations in order to preclude dirty money from entering the system. thank you for your interest on this topic but anything that moves in terms of hiding money couples criminals and terrorists are good at trying to circumvent our measures. >> i i suppose you are aware of the extensive article that was done about the time warner center and it's

absolutely startling to take a look at the purchase of those properties is buying them and have it all operates. i think that this information is very instructive. i yield back. >> the chair recognizes the gentleman from texas. in your testimony you spoke about her countries like iran they have been able to gain access that international markets terrorist groups are supported and loved operate.

>> if you look at the way iran has penetrated the financial systems of the states, particularly when i have documented we have ryan makes setting up and operating as venezuelan banks or in the case of ecuador for the president authorized small state on banks to become a channel for iranian money and authorized it explicitly going to have their communications encrypted and encryption key would be held at the iranian embassy which is a little unusual for normal banking structure the problem unfettered

access in ways that would not be possible without direct state participation. >> thank you. let me visit with you. the used cars going out of

this. a very dollars. >> where and who are buying these cars? auctions, dealers individuals, where are these cars being purchased? >> at auction typically. the typically. the money is coming out of lebanon. thousands and thousands of people. it is an unfortunate think that there are people coming here were being told to go by cars. a big cut on the payment. they don't care how much money can be made without the card they can a lot of money. a lot of car lots in the state of virginia or baltimore. you never see anyone in the car lot. they set their they are off

on a boat to west africa the car lots owned -- >> the $2500 to five. >> a lot of below the $2,500 customs threshold. they do not come into our statistical database. >> they know how to beat the system. >> yes. the brilliant. >> again and how are they being paid for? >> typically it is wire transfer. banks are involved and this is an issue. i do not want to blame our bankers. the giving onerous responsibilities to do so. we need to target the lebanese source of the money this pathology is a money-laundering pathology and shall be bound until

proven otherwise not involved with terrorism. >> again however being used? >> driven around nigeria by relatively poor people who want a cheaper. there is nothing wrong with the car. what is your is they are buying them as part of a money-laundering scheme. >> i i am in the car business is why i asked. >> the chair recognizes the california. it's. >> much of our governments doing outstanding job. some agencies. i have an example that maybe those of our witnesses were given money to two years is not only easy text the. in 2,009 are brought to the attention of an irs 5 o 1 c 3 organization.

give us give us the money and we will give it to the the palestinian. you opposed to give it to months. it took them four years to take it seriously. october 2013 the organization put on his website the irs report as to why it should lose its tax-exempt status and use that as a fundraising device. today someone looks at the list of organizations can give it to the isu. so i think just the fact that we make it easy for terrorists, i got you beat. they make a tax-deductible.

remittances a lot of ordinary americans want to send money to relatives. would it make sense to me most licensed organizations where you know if you give them money it will go to an individual small. there is the possibility of relative has been seduced by terrorist propaganda and give the money to terrorists, but the money gets to the ability of an american. does it make sense for the us to give americans where they can feel relatively safe. >> i address that? >> yes. >> somalia is a good example many somalians rely on remittances.

of course there are not operating banks. you notice the other day the kenyan to wanted to shut down some of the services. funding. funding terrorism, but there is a huge outcry international. so many were disadvantaged. your question is absolutely right. what is to be done is to bring these informal systems and do a formal structure rather than banning them in trying to push them out. formal banks unwilling to offer banking services because they fear regulations and so on. >> i want to move on to another issue isis and the iraqi government. one of the best ways isis has financed the season currency. various countries