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 theirlaundering 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 have issued new currency replacing all make notes with new banknotes. this is incredibly inconvenient for criminals and corrupt politicians just as it would invalidate the banknotes stolen at the regional bank by isis. does anyone have a good estimate as to the value of the notes?

i have had various reports. >> it is hard to say. alleged to have sold $500 million. >> you would hope the iraqi government would at least no the gold currency in his bank before the american troops ran and left the money for crisis but it goes beyond that. the is paying salaries to bureaucrats and the money is taken. it is my understanding and i don't know the iraqi government is sending electricity free end three and a isis gets to collect from the utility users.

i get conflicting arguments spent from our government half the time the iraqi of our boasting make it possible to get governments. they care about the people and want to make sure their lives are comfortable. finally, there is the real for spoke about. oil wells. it it is hard to five we can bomb the oil wells. the chosen to the chosen to not do that because we want to make sure. >> hopefully take back that territory in a legal manner.

>> just like any business. >> i no we're bombing the refineries. i asked about the oil wells. we did not think. >> the chair now recognizes the german from maine performance. >> thank you for being here today in dealing with this new dimension chose. a encourage everyone to continue to do good work and make sure we do everything possible. the flow to stop the flow of funds to terrorist groups the threat,. i am concerned. we we see a marriage between organized crime and

terrorism. i no all of us this country being increasingly alarmed by the savagery that we see over in the middle east in particular. like to follow up with the stooges question doing the administration's negotiations currently with respect to a nuclear deal with iran and if in fact sanctions are lifted the currently imposed on iran 2500 _-dash. what might that do with respect to the increased marriage between organized crime and terrorist funding in particular could you through your knowledge you have a background in international making and security? what would happen next? >> the concerns of how it

might turn out to one of the objections the sanctions brought the iranians to the negotiating table. that is clear. the economy is so suffocated the scenarios they would like his immediately upon signature of the agreement that it would be an automatic lifting of the sanctions. it is hard it is hard to put the genie back in the bottle you have now a global sanctions regime. the us, eu and other countries have issued sanctions. once you have countries who are hoping to do business with the opening of the lifting of the sanctions it will be hard to apply these so-called snapback sanctions more importantly, there will

enter into the global economy. and, as we all know, iran is a state sponsor of terrorism but more importantly it is a patron of hezbollah. actually supply and the fighters for the aside regime. so complex and convoluted. other countries would like to do trade with iran want access to the oil. oil. once you with the punitive measures it is hard to backtrack. >> let's drill down want if we can. assuming sanctions were lifted, and as you state, iran is a sponsor of terrorism syria, somalia yemen what would be the mechanics of what you see if you call international banking community with

respect to how the lifting of sanctions might facilitate organized crime, interconnecting with terrorism activities and how might the uranian regime be involved specifically to facilitate that. >> more importantly financial sections. globally. more importantly from trade piece the ability to think about import and export components that could be used for other nuclear aspirations we did a time of compliance there are several for anticipating.

we spent time taking a look at how actors in the region and latin latin america can also destabilize other parts of the world. thank you. >> and now recognize the digital man from texas for five minutes. >> thank you. i am concerned about the notion we should follow my. i am concerned about following the counterfeit money. these -- this currency is so finely tuned that sometimes it is difficult to be detected but for some sort of special technology.

as you know, the dollar's reserve currency of most of that is unlawful crisis is. my concern you should not be on these superheroes going in and out of our country to countries can pose a threat:. i understand that we retooled our currency i am concerned about _ _ _ it's

like to terrorist organizations that can play able to evaluating creating mistrust and currency. >> having overseen it, i guess it is a costly endeavor. the national level, counterfeit currency. i do not know that they have succeeded counterfeiting the latest iteration of $1500 bill. i appreciate your interest and concern. it is cost hundreds of millions of dollars. they did spoke on several huge bank runs. you know, the amount of money the regime has garnered is probably not as high as some think the

damage they have done is considerable. the damage they could do and if they could counterfeit the security measures of knew notes, it would be pretty incredible technologically. they are pretty good now. we know they are essentially putting their notes and our notes on printing presses. they are using their absolute best ability. the department of the treasury is on top. why did north korea not prosecuted? the fbi had an incredible investigation north korean supernova activity 1970s. it was wild stuff which is vanity fair future.

kim regime. i was involved in trying to press charges. expire. >> if i may i appreciate your answer. i have one of the question will lead to knock off's. i want to move to a pedestrian level. we see a lot of them on the street. the question is to what extent are these networks of

criminal activities and also the possibility of being linked to terrorism. >> the largest export for north korea is counterfeit cigarettes go north korea government controlled criminal a run factories. making babies misses $712 billion a year in revenue trafficked all over the united states frequently appear as coming out of china, but they are actually coming through china. does it benefit the regime? absolutely. are they they tied and the transnational organized crime? 100 percent certain. you should be concerned. >> thank you. i yield back. >> the chair now recognizes

my colleague from pennsylvania for five minutes. >> thank you, mr. chairman. >> you.out in your testimony that iran is banks are largely barred from the western financial system benefit from access to the international financial for financial market through venezuela, ecuador bolivia and financial institutions which act as proxies by moving iranian money has if it originated in their own unsanctioned financial systems. can you explain -- explained in a practical manner how they eluded international sanctions regime jam with the to what the us has tried to do clearly unsuccessfully to provide this? >> thank you. there are two specific cases one is the banco to show which was set up as a venezuelan banks but the directors were iranian command it was eventually when i and others dug out the initial documents all

in one incident -- citizens. asus to have subsidiary orion bank. the treasury department sanctions them, and they are now functioning as a much smaller level. they still have the iranian influence. the case of american ecuador were able to get records to investigative journalists in the region. those of us of the other stuff. >> ahmadinejad asked him for a bank. he said i have one. national bank that was virtually nonfunctional at the time of existed as a

bank. after they reached that agreement he said the president of the central bank of ecuador to iran to negotiate which bank with whom you have a correspondent relationship. they stopped in russia and the account a russian make that maintains correspondent peggy relationships. you can have your bank transfer without registering. a good and negotiate. israel sanctions banks. go ahead. >> absolutely. we are seeing now you have literally billions of unexplained dollars regular correspondent relationships multiple things that are not

let these canadian bank tape thing. those joint task force would be good. they are looking at different things. what we're looking at now the state groundbreaking systems. multiple banks growing exponentially no rational explanation. thanks in panama are doing exactly the same thing. >> with any measures that we take the baby by a lifting of sanctions with respect to the uranian banks? >> i think that it would make it much more difficult. it's the sanctions are lifted the snapback will not be rapid. >> let me bring the professor and for 2nd. one of the measures they you identified the counter these

networks was to maintain a vigorous -- transnational criminal organization campaigns, and designated nationals. i have contended that the sanctions regime in place today is justified completely on the fact that they have been exporting terror for decades responsible for hundreds of american deaths since 1980. go back to the rescue attempt and the people was there. they go through the list of what they have been doing, including the killing of hundreds of soldiers in iraq. that alone justifies the regime without regard to nuclear program. my question if you could address that if we lift the sanctions only see more terror financing?

>> one of the things that has limited them from supporting hezbollah. it will need to have alleviate the economic stress. it's actually a question we have not been able to make their pockets my life. the global sanctions regime. and all the income will have lots reactor the global marketplace. financial as was the important export and trade. that is the downside of globalization which are more about. we about. we benefited tremendously. unfortunately the terrorists and criminals are taking advantage. >> having my time has expired. thank you for your testimony. >> we recognize the german from arkansas for five minutes.

>> thank you mr. chairman. reflect for me. when we put pressure on developed countries and through the financial process and the patriot act always these legitimate users of those marketplaces. has been a big important tool. noriega's assets of the players around. what can we do in that arena? and we expand the process? amended? is there are many program we could use? you expand upon that? >> it is an interesting question. we have not been utilized outside of the world of straight have heard trafficking the process of

asset forfeiture effectively something i have advocated against the use of rico a huge transnational with us organized criminal entities. terrorism is a specified unlawful act. so if you engage in more than two you are engaged in a conspiracy that can be prosecuted. the thing about rico you can charge anyone. a lot of want to buy. you are charged. but you can moreover go after their money. if there is a foundation and a far-flung land the country that does not honor the 1st lebanon for example we found

$150 million of the proceeds for sale basically a big big obama. they put their money in there. well, under our law code section 118 k. the us government. it did not have one they were to freeze the money. proceeds. of course, we should use them strategically more effectively, it will be exponentially more effective but where we do not have it we have legal tools that can be useful. we have to deprive financial assets were adversaries

pockets. >> is there a a formalized model that you can see in this charitable every we have seen maybe a best practice where through either force disclosure of legitimate charity toward potential donors that they have a record of bad acting us charity or is there a way to formalize the receipt of remittances in a a foreign country like somalia that my work your way to better monitor flows? >> you are right. public awareness is to have enormously important. the public has a responsibility to know how charities will spend money. they are regulations which have developed over the years best practices in

this country, the united kingdom as well which require registration of charities and the auditing of their accounts with much more detailed scrutiny. and that is having a real effect. fewer charities which can be found to be funding terrorism in jurisdictions where the law is applied properly and fully. and on remittances there is a mistake made the cut is somehow prepared to turn a blind eye to transactions no space might otherwise stop but they must know the customers even more because just based entirely on trust rather than a purely commercial basis. >> i yield back. >> the chair now recognizes the gentleman from kentucky five minutes. >> thank you for calling this important hearing and exploring and learning more about the dangerous nexus

between terrorism and organizations. i am particularly interested in whether or not there is substantial evidence of us-based organizations that have partnered with islamic terrorist organizations. what is the extent of the nexus? we have heard about international drug cartels but to what extent are american based us-based criminal organizations affiliated with islamic terrorist organizations like hezbollah?

a larger scale us criminal organization. the press would be very very high. organizations are largely rational actors. the price the price they pay being that i am a profit the don't need those groups. i am not aware of that. >> just briefly the similar drug cartel is not based in the united states. it derives a lot of income from the united states. pablo escobar's empire massive amounts of cocaine.

in both cases there is definitely a partnership going on. especially the darker side. in my work personally i can attest to that. we have seen it. prosecuting criminal court. the the major cartels and states will start his great job pointing out organizations like hezbollah are out of control. >> let me turn to ice is for a moment. you know from your testimony the sources of isis funds are predominantly oil to the interests and the like. access and participate in the international financial system.

>> is an excellent question and one that is puzzling. the caste -based economy and the self generating economy. the territories occupied by ice. but i think increasingly we see the transfer of money through the internet which is becoming more common elsewhere. people want to make donations can send it to a bank in turkey parts of the countries of syria and iraq.

there will be some sort of interaction. section 311 comes -- is the best tool available to the united states to disrupt those backing activities? >> the best tool as they gather intelligence on how that is happening in the individual cases as they come up. if i could approach will be difficult when you look at the variety that may be available and the fact that predominantly the cash flow the single most important policy change of this congress.

>> i think i think the bank secrecy act is to be fully realized. unsuccessful attempts to eliminate terrorism financing. as a huge overregulation of the financial system. ..

>>

>> there are banks live in central america if you deposit over a certain amount of the 17% they will give you a history of justification for all records and is one of the full services. >> how much of that is government leaders? >> of the white? prettify adjusted 22% of the cocaine money coming back into the country that government has created a charter to allow me to have access what is the government taking?

to read the of vice president with the decorative scheme where there were some banks involved end it becomes the state's operations i don't know the exact percentage but the government officials will take up to half. with data guatemalans who wrapped up multi hundreds of millions of dollars into is charged with 200 million and to some party investigation and shows he made $450 million. >> than in regards to

certain issues? >> i think fed is true we have some good smart people with severe resource constraints. just like the 311 designation they have three branches operating in panama. we had at least $2 million of organized crime. so they simply don't have the resources to reach out. we have three people to look and 45 cases. >> i was in panama from the countries that you mentioned and he swears he watched the

checks being deposited. and tried to do speak publicly and has made little progress. >> trying to get my a head and around we have a hearing that talks about venezuela with your price with the u.s. currency you pay this sore this day and this is however breaks out. >> is called a criminal states carry as a active national policy. no surprise there is money in the oil accounts. of disaster there had to get the money from the u.s.?

but to show those movement of funds. i have no idea if any of these are involved but things pop up there has to be something going on with a formalized transactions and trade ended is concerning from knifing tape perspective that we do little to police it because even if they are engaged in criminal activity. >> thank you for letting me go over. rebuff to see the movement to treat bad actors and governments and also just plain bad actors to see that flow chart.

>> thank you gentleman we will proceed to a second round of questions that the member wishes to be recognized. >> i appreciate the courtesy. when there is a settlement with the bank to be conclusive in money-laundering what happens to the proceeds of the settlement funds? could they be used for counterterrorism efforts and how could reach designate that? >> u.s. marshal saugh manage the assets then there's the actual seizure it is more popularized through movies with said dea to go after cartels but among those agencies involved in the actual operation is it

interesting u.s. model to export to other partner nations as forfeiture as useful model. they are rated but extradition to a solitary cell without a cell phone and the actual expropriation of funds per dry have actually advocated the actual seizure of those funds when they are levied to those that are violating the known the sanctions regimes and laundering money there should be apportioned dedicated to helping who uncover m prosecute these crimes we have heard how the government has experts but because of these shortages

and the fact the best experts are going to the private sector we need to work on capacity building the resources were critical talking hundreds of millions of dollars with the allocation of funds this seems to be advancing those counterterrorism efforts. >> we contributed a few hundred million dollars and i wonder what happens? it is a great question. yes we have these pots better used but not enough to be used proactively it is controversial issue here on the hill with this fiasco is something that we will

regret but the use of money as the two will as a racist so we have to put money on the table. with its credibility. with the tiny amount with said effectiveness committed against them. with that fact of forfeiture is how they are years. we have to give it much more aggressive leader is people are getting shot in the streets of queeney. >> i yield back. >> i just want to follow up

their members that are so concerned of the iranian negotiations underway between the it ministration and iran. for the last hearing we were shocked at the magnitude of money flowing back for the proposed treaty to be successful with the $50 million signing bonus a and cash in the accounts that were frozen in the flow was noted. is in your role of financing how would you rank them wanted to $20 billion if the treaty proceeds?

if it is of low importunes to national security then how would you to view bring of the $120 billion? give me a number. >> 85 or maybe three. that externalization reaches of a top priority as a policy. we should have been focused not there is the nuclear reactor cheers syria. >> bill whole orientation is against our business. maybe there's something going on to change that but

those that are opposed to us as a state. >> iran operates in its best interest and good identify in different ways according to the context of the international community around they may find actors that the allies would not like to see that are funded like iran with a huge amount of money to syria but is the militia of iraq is the most effective forces against i says. the main way to make sure that additional money will not be used in ways that we like is to bring iran into

the international community along side ever ready else that is the allied air and then to be with us sectarianism and mindy and others. and then talking about a rand of latin america i was as heavy red iran's constitution? he said read the preamble. it is up policy to expand using the armed guard to spread jihad that is written into the constitution. so i agree there is a fundamental nature to be something that allows fungible money into their

system will almost inevitably .2 much more aggressive action because that is the core underlying believe. >> is as great concern here refocus on the nuclear deal where the allies have much more focused on the iranian makes kitchen isn't and talk about the revival of our persian empire we have seen the four major capitals and many of the gulf states allies are worried about becoming into the shi'ah circle. in the bond in syria and what you're seeing with yemen. as a state sponsor it is about iranian hegemony that

is so complex because of that historical vibrant -- rivalry rigo icarian the press as much not looking at that you political aspirations. >> the chair recognizes the gentleman from new york. >> i have been listening attentively in my office. let me ask a few questions because my focus on this committee is what we can do in congress to make sure we're not allowing the internet and others to facilitate money-laundering so i will ask you the first question so with your

testimony mention should day amend the data sharing among banks? the issue we recently had to vote there is a general concern about personal information to be widely available with little knowledge with how that is used so could you elaborate how congress should proceed well-preserved inky human rights privacy? >> secrecy actually was not passed with privacy but to stop money-laundering. i am concerned with that person liberation in to be

divulged but the cat is out of the bag that is almost ridiculous the information they may have about us but the basics are reticent even though it is allowed under the patriot fact banks can share e-mail but they cannot pull it if you could do the visa or mastercard you will see massive schemes that could be stopped by baying said a relatively low cost because you'll see you open-ended account at this stage gore this city and they set up the money-laundering network program so sharing that data would not only to medically to do cost but improve

effectiveness the still not be obliged there were just share with these other so for that to be divulged any more than it is but the economy of scale does help to stop things from occurring and also brings down cost but they could be in a position to have classified data dash u.s. government we need to consider providing that we did to airlines and shipping lines if we have a container of weapons we will say there is you have to inspect it they're doing business with drug traffickers or hezbollah? we don't need to publicly approach these issues.

>> that debate is going on. >> is a healthy debate but i am thinking of will lead to any more -- than is already if anything it may be much more effective. >> trying to figure out what we can do as a committee because you say in your testimony a that corruption particularly with the delivery of justice the most significant driver of terrorism so what role does the financial-services committee with their oversight authority will roll can replay to better insure the occurrence struggling with terrorist organizations?

>> i think what you're doing is right because criminality is said judge driver of terrorism in these areas where the sense of the the people are dissatisfied with what is provided as government leaders are involved in that financial skulduggery then the less dissatisfied people would be if they receive justice served in another jurisdiction it is very encouraging. >> think to the witnesses for their testimony in their time here today and your expertise.

without objection all members will have five legislative days to submit additional questions i asked witnesses to please respond as