this is something should also be concerned about, particularly if the money is coming from corrupt governments abroad who are coming to seek financial state haven within the united states market. ms. waters: 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 in mexico. the world -- that were known to launder drug money. i do not think they had a registration on hand for one of the officials at that time, i think it was a brother of one of the presidents of mexico who had large sums of money in this bank and of course, the same thing was true with the brothers from nigeria who had all of their money in our banks. while i'm interested in this real estate aspect of it, you

did mention, you brought out your customer problems with our banks and i think that given that the statute that i referenced allowed only temporary exemptions, do you believe it is time that those involved in these type of real estate transactions should be required to implement u.s. anti-money laundering programs? >> asthings such as the virtual word we need to think about this in order to preclude dirty money from entering the system. anything that moves in terms of hiding money criminals and terrorists are very good at trying to circumvent our measures. ms. waters: i suppose you are aware of the extensive article that was done about the time

warner center and it is absolutely startling to take a look at the purchase of those properties and who is buying them and how it operates. i think that this information is very instructive. and it should cause us to want to take a closer look about what we do about these kind of real estate transactions. thank you. i held back. mr. williams: i have two questions. in her testimony this morning you spoke about how countries like iran who has been able to gain access to international markets through countries in latin america. would you help this committee further understand what implications terrorists or

criminal groups are operated -- allowed to operate in latin america have on this country. mr. farah: if you look at the way it is documented, where you have iranian banks setting up and operating or in the case of ecuador where the president of ecuador authorized a small state owned bank to become a a channel for iranian money and authorize it explicitly they were going to have communications encrypted and the key would be held in the iranian embassy, that is a little unusual for a normal banking structure. the problem in this setting is that when you have a state sanctioning those activities no

one will investigate them and that gives us the point of the -- absolute impunity of the state provides. once you have the state that is willing to use criminal groups or terrorist organizations is part of their state sanctioned policy as opposed to what we see perhaps in mexico where they want a judge who will not condemn them, they want a border guard who will let them cross, they want a policeman who will let things go by. the new construct is stay protected and state driven. that is a fundamental shift and that opens the door for what we see has blood doing in the region and what you see spain doing in the region which is having unfettered access to financial institutions in way that would not be possible without direct participation. mr. williams: what was the

number you said that used cars were going out, was it $1 billion? dr. asher: it might be. mr. williams: where are these cars being purchased? dr. asher: thousands of people the customs has denied thousands of these for people from lebanon. it is unfortunate for our relationship with lebanon. people are being told, go by cars and the just do it. they will get a big cut because it is drug money. they do not care how much money they made on the transaction they just want the car. without the car, they cannot launder the money. you see a lot of car lots in virginia or baltimore, you go there and you see no one in the car lot. ask yourself who is running the

racket? they season the kit -- the cars and they are off to west africa to car lots. mr. williams: did you say the cars are -- mr. dr. asher: they know how to beat the system. they are really brilliant. mr. williams: how are they being paid for? cash? dr. asher: the banks are involved. this is an issue. i do not want to blame our bankers. our bankers are trying hard to enforce anti-money laundering. what we need to do is we need to target the lebanese who are sending -- setting them up and we need to look at the typology. this is a money laundering

typology for terror and it shall be banned until he can be proven otherwise it is not involved with terrorism. mr. williams: how are they being used? dr. asher: being driven around nigeria by poor people who want a cheap car. there is nothing wrong with the cars themselves. what is wrong as they are buying it as part of a money laundering scheme. mr. williams: i am in the car business and i want to talk to you later. mr. sherman: much of our u.s. government is doing outstanding job. some agencies are not. i have got an example that may beat the ones of our witnesses. the example where giving money to terrorism -- terrorists is not only easy, it is tax-deductible. in 2009 i brought to the attention the irs and -- an

organization called the [indiscernible] give us our money and it will give it to beaver palestinian -- vivia palestinia. they give it to has blood. -- hezbollah. they use it as a fund-raising device. the irs does not like us, give it -- give us money, we will give it to hamas. someone who looks at a list can give it to the ifco. so, i think just the fact that we make it a little easy for the terrorists, we make it text deductible.

-- tax-deductible. ordinary americans want to send money to their relatives. would it make sense for the u.s. to green list of licensed organizations where you know if you give them the money, the money will go to an individual relative? there is always the possibility that your relative has been seduced by terrorist propaganda and gives some of the money to terrorists, but at least if the money gets to the relative, does it make sense for the u.s. government to give americans and avenue where they can feel relatively safe? mr. barrett: somalia is a good example. many somalians rely on a minute

-- we met tenses -- remittances to feed their families. many are made through informal systems. you noticed the other day that after the attacks in kenya the kenyan government wants to shut down some of these remittance services because they are funding terrorism. there was a huge outcry because it would mean so many somalis are disadvantaged. what needs to be done is bring these informal systems into a more formal structure rather than banning them and trying to push them out. one of the problems with face now is formal banks are unwilling to offer banking services because they fear the regulations and so on.

france what various countries have done is they have issued new currency. replacing old banknotes with new banknotes. this is incredibly inconvenient for criminals and corrupt politicians say, and baghdad just as it would invalidate the banknotes stolen at the muzzle regional bank by isis -- mosul regional bank by isis. i have heard various reports. dr. asher: they were alleged to have stolen $5 million worth. whether that was in gold or banknotes, i do not know. >> you would think the iraqi government would at least know the golden currency in its bank before their american armed

troops turned tail and ran and left the money for isis. but it goes beyond that. the government is paying salaries to bureaucrats in mosul and that money is freely taken by isis. it is my understanding and i would like mr. barrett or any other witness, that the iraqi government is sending electricity into mosul free and then isis gets to collect from the utility users and i get conflicting arguments -- i will not use the propaganda, spin from our government, half the time our government and the iraqi government are boasting they are making it impossible for isis to provide good governance and the other half of the time they are saying we are -- we care about the people

governed by isis and want to make sure their lives are comfortable. finally, there is the oil that the professor spoke about. the oil wells, it is hard to -- we can bomb the oil wells. have we chosen to not do that because we want to make sure that muzzle -- motorists are not convenient -- inconvenienced? >> after you found the oil wells this is the bigger question of infrastructure. they are taking a look at the supply chain. >> we did not hesitate to bomb factories in france in 1941 and 1942. i yield back.

mr. pollock when -- poloquin: i am a little bit concerned today as we go down this path, now all of a sudden we see a marriage between organized crime and terrorism. also as a source of funding to terrorism. all this are getting increasingly alarmed about the savagery we see over the middle east in particular, dealing with these organizations. i would like to follow-up with mr. lynch's question dealing with the negotiations especially with respect to a nuclear deal with iran and if in fact

sanctions are lifted that are currently imposed on iran, freeing up 125, 1 hundred $50 billion of cash to that country what might that do with respect to the increased marriage between organized crime and terrorist funding. could you walk us through, what would happen next? prof. realuyo: one of the objections of the sanctions, the sanctions brought the iranians to the negotiation table. the iranian economy is so suffocated now because of the sanctions. one of what they would like is there would be an automatic

lifting of the sanctions. it is hard to put back in place the genie that is out of the bottle. the bigger issue is that you have now a global sanctions regime and the u.s. issues sanctions as well as the eu and other countries. once you actually have countries who are hoping to do business with iran, not necessary -- necessarily the u.s., it would be hard to apply what are these snow called snapback sanctions. more importantly you will see this, they will be able to enter into the global economy list of the as well as illicitly. iran is a state sponsor of terrorism as declared by the state department. it is one of the biggest godfathers and patrons of hezbollah. we have not raised today, it is supplying the foreign fighters for assad regime in syria. it is so complex and convoluted

that if we look at it from an economic point of view, other countries would like to do trade with iran or get access to the oil that iran produces. once you list the tentative measures of the sanction it is hard to backtrack and reimpose them. >> assuming the sanctions were to be lifted and as you stated iran is a sponsor of terrorism throughout the middle east. what would be the mechanics, what would we see if you involve the international banking community with respect to how the lifting of those sanctions might facilitate organized crime interconnecting with terrorism activities and how might the iranian regime be involved specifically to facilitate that? prof. realyuo: if we look at it

from a physical trade piece their ability to think about importing or exporting components that could be used for other nuclear aspirations. in terms of the bank itself, when i was working at goldman sachs, there are several who are anticipating not necessarily u.s. institutions but other global financial actors who are going to see this and sees the opportunity to increase their ability to access iran. once iran lines its coffers with more money they will be able to use that money particularly since there is not a lot of difference between the state and private sector and that is the thing we fear. i spent time taking look at how iran and its actors in the region in latin america could destabilize other parts of the world with its nefarious agenda.

mr. poliquin: i yelled back. -- yield back. >> i am concerned about following the money. what is called super notes. mr. green: 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 is the reserve currency or most of the world. and there is a war for currency supremacy. my concern or maybe i should not be and i will you tell me is whether or not these super notes flowing in and out of our country and other countries can post some sort of threat to security in this country in the

long run. i do understand that we told our currency -- the diameter stillwe tooled our currency. there are others who can play a role in devaluing and creating mistrust in our currency. does anyone care to respond? speaker: i guess i can comment. it is -- it has been a very costly endeavor. we have had to redesign our currency twice because of the north korean counterfeiting of our currency. i do not know of -- if they have succeeded in counterfeiting the

latest iteration of the $50 bill and the $100 bill. i appreciate your interest and concern. it has cost us hundreds of millions of dollars to redesign the currency over the years. north korea did spur on several huge bank runs overseas. in taiwan, we had over $5 million in bank runs -- 500 million in bank runs. the amount of money in the regime that has garnered from super note circulation is probably not as high as some people think that the damage they have done is considerable and the damage they could do, if they can counterfeit the security features on the new notes, it would be pretty incredible technologically. they have been good up to now. have managed to do it for different times with notes. we know that they are printing their notes and our notes, they are making their version of our

notes on their printing presses. north korea is using its absolute best capabilities here. it is a concern. if the department -- the department of treasury is on top of it. the issue is, why did north korea get it prosecuted? fbi has incredible investigation it ends north korea super note activity. the japanese terrorist groups from the 1970's, just wild stuff featured in articles and things. president bush who i had the honor to serve decided that it was too controversial and we could not press charges against the kim regime at the simon -- same time we were negotiating with them. i was involved in trying to press charges. i did not understand the reason not to do that. the north koreans knew damn well

what they were doing. someone needs to be accountable. someone could make a case, the statute of limitations probably does not expire against state sponsored terrorism. mr. green: i appreciate your answer. i have one other question for you. this one relates to knockoffs. i want to move to a more pedestrian level, if i may. we see a lot of it on the street . the question is, to what extent are these knockoffs related to either networks of criminal activity, not just individual, but the possibility of being linked to terrorism. >> the largest export is counterfeit cigarettes. out of government controlled

factories. they are making up to $700 billion in the u.s. it is coming through china. is it benefiting the regime? absolutely. is it benefiting the most stackable elements? and we have proven it in court repeatedly. you should be concerned. mr. green: thank you. i yield back. mr. rothfus: you pointed out that there is financial institutions that act is proxies, moving money around as

if it originated in their systems. can you explain how iran was able to evade international sanctions and what the u.s. is trying to do, clearly unsuccessfully, to prevent this? speaker: there are two different cases that was set up as the venezuelan bank but all the directors were iranian. it was eventually when i and some others dug up the documents showing that the directorships were all iranian citizens and he was operating as a subsidiary of an iranian bank, not as a ballot ban -- not as a bank.

the other cases the case of ecuador were we were able to get the records, investigative journalists in the region and i was able to supplement it with some other stuff, got the records of a meeting between the president and president ahmadinejad. we do not have the debate whether this was really not. ahmadinejad asked for a bank and he said i have a bank for you. a national bank that was virtually nonfunctional but still existed as a tank. -- a bank. the president sent the resident of the central bank of ecuador to iran with the delegation to don't -- to negotiate with him they would have correspondent relationships. they stopped in russia and opened an account in one of the few -- one of the russian banks that maintains correspondent banking relationships with iran

so you can have interbank transfers without registering. then they negotiate with iranian banks. this -- there are communications saying that these are sanctioned banks, is it ok and the ecuadorian government says go ahead. mr. office -- rothfus: are there other [indiscernible] mr. farah: the first question was if a joint task force would be good. what we're looking at now is state-run banking systems where we have multiple banks in central america that are growing exponentially with no rational explanation.

we have banks in panama doing the same thing. mr. rothfus: would any actions we take would be moot with respect to sanctions of iran's banks? mr. farah: once the sanctions are lifted, the snapback is not going to be very rapid or nearly as forceful as the initial sanction. mr. rothfus: one of these was to maintain [inaudible] and especially designated nationals. i contended that the sanctions regime is justified completely on the fact they have been exporting terror for decades

responsible for hundreds of american deaths since 1980. go back to the rescue attempt and the people we lost their and good -- they go through the list of what they have been doing including the killing of hundreds of our soldiers i and -- in iraq. that alone justifies the sanctions with regard -- without regard to the nuclear program. if you could address if you think if we lift the sanctions would we see more financing? prof. realuyo: it is one of the things that have limited them from supporting hezbollah. you can alleviate a lot of the economic stress of the country that is a state sponsor and it isa a question of we have been able to make their pockets smaller. and what are they going to use

with the income they will have once they reenter the global marketplace, and there are more than other countries that are interested in doing business. that is the downside of globalization which i wrote about in my testimony. we have benefited tremendously. unfortunately, the terrorist and criminals are taking the same advantage. mr. rothful: my time has expired. mr. hill: thank you. dr. asher, reflect for me that when we put pressure on developed countries and through the financial process, through the patriot act, we squeeze legitimate users and illegitimate users out of those marketplaces. we have had an important tool,

whether it is finding noriega's acids are other players around the world. what can we do in that arena? can we expand the process, can we amend it, is there a process we can use with other countries we do not have a full treaty with western can you expand on that? dr. asher: we have not utilized the process of forfeiture that effectively. it is something i have advocated against, the use of rico, which has huge transnational residents against terrorist organizations as organized criminal entities. that is a specified unlawful act. under the law. if you engage in more than two

sua's that are allowed under rico, you are engaged in a criminal conspiracy that can be prosecuted and the thing about rico is you can charge anyone. if you are in isil or al qaeda, a lot of people want to brag about it, you're charged. it is an interesting tool. you can moreover go after their money. we find that there is a foundation in a far-flung land, even a country that does not have a mlab with us. we found $150 million of the proceeds in a bank that they put their money in, it was hezbollah's mind. we have a law that allows substitute assets to be confiscated where the u.s. government can reach those assets area did -- assets.

we were able to free some money in the corresponding bank, it was proceeds of the department of justice and forfeit money without going to lebanon. even where we do not have it we have legal tools that can be useful. we have got to deprave financial assets from our adversaries' pockets. mr. hill: you have seen maybe a best practice where through either forced disclosure of legitimate charities to warn potential donors that they have a record of that acting through a report with the irs or a u.s.

charity or is there a way to formalize a restate -- receipt of remittances in a foreign country like somalia, that might be a better way to monitor those flows, your further opinion on that? there are regulations that have developed over the years in this country and in the u.k. as well which i think require the registration of charities and the auditing of their accounts with much more detailed scrutiny than there has been in the past and that is having a real effect . i think there are many fewer charities which can be found to be funding terrorism and jurisdiction where the law is applied properly and fully. on remittances, too, there is a

mistake often made that [indiscernible] is prepared to turn up blind eye to transactions but i wanted -- [indiscernible] it is based on trust rather than eight purely commercial basis. mr. hill: i yield back. mr. barr: thank you for calling this important hearing and exploring and learning more about the dangerous exes between terrorism and criminal organizations. i am interested in whether there are organizations that have

partnered with terrorist organizations. we have heard about drug cartels but to what extent are us-based criminal organizations affiliated with islamic terrorist organizations like hezbollah, like isil, for anyone? speaker: there are times that you see criminal organizations overlapping in the drug trade with has below activities. i am not aware of any systemic or systematic or larger scale u.s. criminal organizations. that is the line that most people will not christ's -- will not cross because the price would be high for them and they are aware of that. criminal organizations are

largely very rational actors and the price would be -- they do not need those groups, i am not aware of that on any significant scale. mr. barr: maybe a salazar cartel , it is basically public escobar's empire that is moving on. they are earning a lot of income here. in both cases, there is definitely a partnership going on with lebanese has blocked especially the darker side of hezbollah. some day it will get prosecuted in criminal court. the confluence between these cartels and in criminal states like venezuela and organizations

like lebanese hezbollah is almost out of control. we know from your testimony and -- in previous hearings that the sources of isil funds are predominantly in oil and the looting of the banks from mosul and kidnappings and ransom and the like. to what extent does the state participate in the international system, banking, and what could american policymakers do to disrupt the islamic states access to financial institutions? speaker: that is an excellent question and one that is puzzling. the fact of the matter is most of the money is in a self

generating community. insofar as money is coming from the outside it does seem to come in in cash rather than anything else. increasingly, we will see this sort of transfer of money through the internet which is becoming more common elsewhere. so people who want to make donations will be able to send it to a bank probably in turkey or parts of syria and iraq but it will be cashed in and brought in over the border. there will be some sort of interaction. festive the best way is to gather intelligence and do with

them. the cash will come into that territory in physical form rather than electronic form. mr. barr: if any of you can offer an opinion on what is the single most important policy change that this congress would enact that would disrupt terrorist access to criminal organizations, is there any one recommendation that you would highlight? speaker: the bank secrecy act needs to be fully revised. there is way too much money being spent on unsuccessful attempts to limit terrorism financing of crime and we are not focused on the most important thing. there is a huge [indiscernible] i am one of the guys who pioneered this stuff. it is not working.

we could do a much better job with less cost if we focus on the problem actors. there is not that many drug cartels in the world. we need to be told who is in the cartel and we need some sort of watchlist. the airlines know why do we tell the banks of they are banking with some terrorists? mr. schweikert: there are so many things we want to know. can i walk through a scenario because i am trying to understand flows and discounts. how does he get the cash back across the border, is it

converting it to gold, is it carrying suitcases of cash? how are they getting it to central america first? what would your opinion be? then i will ask if they end up in ecuador. what are they being charged what is the cost of money laundering? walk me through a couple of these steps. >> thank you. a lot of the money goes back in bulk cash and a lot of it goes back and wire transfers and bank transfers into central america. the cost is generally about 17% to 22%. there are banks in central america where if you deposit over a certain amount of money in the neighborhood of $3 million or $4 million in pay 17%, they will provide you with a history of justification of that money. they will create your tax records and employment records. that money is untraceable.

some of the wonderful services that banks are operating. mr. schweikert: how much will that benefit some of the leaders? let;'s's say i paid 22% to wash cocaine money. the government has created a charter to allow me to have access to this bank. what does the government take off of that? mr. farah: you see the vice president of guatemala resigned. she was involved in a lucrative scheme where there were some banks involved and largely to avoid customs taxes. because it is criminalized, it becomes a state operation. they end up paying a lot. i do not know the exact percentages. in some cases the government

will take up to half of what comes out of there. you look at some of the cases that have been prosecuted like the former president in guatemala who racked up multi-hundred millions of dollars and the former president in el salvador who was charged with $200 million, another former president whose own party investigation showed he had made $450 million. mr. schweikert: do we have investigations in panama in regards to certain issues? mr. farah: there are. what david asher said is true. you have a lot of good, smart people operating in severe resource constraints and when i -- you have the case of a 311 designation that collapsed. they had three branches operating in panama. in that branch we had $2 billion

of a venezuelan oil company and brushes organized crime and china's organized crime. when you talk to the authority they do not have the resources to reach out and do all that stuff. it is great information, we would like to help, we have three people to look at 45 cases and a lot get dropped. mr. schweikert: three weeks ago i was in panama and sat down with a parliamentarian from one of the countries you mentioned and he swears that he actually sat there and watched the check from ultimately iran being deposited, and has tried to speak about it publicly and has made very little progress. dr. asher, walk me through. i am trying to get my head around how formalized this is. we had a hearing that talked

about venezuela. there was almost a shopping list of your price for if you are washing $100 you pay this and here's how it breaks out. is it almost that formalized? dr. asher: it is a crime being carried out as an active policy to benefit the leaders of that regime. no surprise there is money and the oil accounts. how do you get money from the u.s.? congressman barr was asking how do you get the money from the u.s.? there is way too many cases where you see the oil companies for countries like venezuela showing up in law enforcement cases. you heard of cigttgo, who knows? when you read the cases they seem to pop up. there has to be something going on with the use of formalized transactions and trade with a

lot of these states and it is concerning from my think tank perspective that we are doing. leslie lytle to try to police it because they are being according to the privileges of government, even if they are engaged in criminal activity. mr. schweikert: we would love to see some of the charting to understand the movement between bad actors in government, bad actors in his this, and just plain old that actors and see that flowchart. chairman: we will proceed to a second round of questions. we recognize mr. pitzer -- pit tinger. mr. pittinger: what

happens with the proceeds of those settlement funds and to those funds be used for counterterrorism efforts? and how could we designate that who would like to take that, it is an open question. prof. realuyo: the u.s. marshals manage the assets. it has been popularized by movies that go after the dea and cartels. it has been divided between the different agencies that were involved. and that actual operation. it is an interesting u.s. models that we are exporting to other partner nations who are looking at asset forfeiture as a useful tool. there are two things they see in mexico that the cartel leaders are worried about. ask tradition to a solitary cell without a cell phone and the actual expropriation of their funds that their children will

live less of a luxurious life than themselves. in the actual seizure of the funds and the fines and laundering money, there should be a portion dedicated to helping those who have an involved in uncovering and investigating and prosecuting these crimes. you have heard so much about how within the u.s. government there are fantastic experts and analysts who are doing this but because of the shortages of financial and at one point human resources and unfortunately, the fact that many of our best experts are leaving and going to the private sector, we need to really work on capacity building within the u.s. government for combating terrorism, and corruption particularly through that financial mode. mr. pittinger: it seems to me

that advancing our counterterrorism efforts would be important. dr. asher: i wonder, whatever happened to the money, it is a great question. we had these several billion dollar pots that are used but far too little that are able to be used proactively. this is a controversial issue on the hill. i respect the members' apparent -- opinions. the use of money as a tool to do sting operations as they exist is indispensable. we have to put money on the table for law enforcement. undercover operations are critical. there is a tiny amount allowed to be used for any sort of proactive approach which

paralyzes the effectiveness of our law enforcement organization. against them. it is not just the asset forfeiture funds themselves not being used for increasing asset forfeiture it is how they are being used. i think we got to get more aggressive like we were in the 1980's and the 1990's against the cartels. a lot of people are getting shot in the streets of miami. mr. pittenger: thank you. i yield back. mr. hill: i wanted to follow-up. there are so many members are concerned about the iranian negotiations that are underway between the administration and iran create when we had our last hearing, so many of us were shocked at the magnitude of money that would flow back to iran for the proposed treaty to be successful.

$50 billion signing bonus and the freeing up of cash in the accounts that had been frozen and then the flow as was noted by the professor of future trade capability. in your role of interdicting terror financing and stopping the expansion of terrorism, how would you rank that $120 billion that may flow to iran if this treaty proceeds? if one is of low importance to our national security and the ability to stop expansion of terror finance and 10 is critical or important, how would you rank the freeing up of that $120 billion? we will start with dr. asher. dr. asher: i do not think it is 10. it may be five. it may be three.

the big thing is iran's revolutionary regime and its externalization of the regime which is a top policy, when we went to the six party talks, we should have been focused not just on the fact that they were exporting a nuclear reactor to syria, the north korean regime was not agreeing to negotiate as its destiny as a -- a regime. maybe there is something going on where they will change that. i hope so. that is -- they are intimately opposed to us. there is a national ideology and state. -- at stake. speaker: it will identify the best interest according to the interest of the international community. if iran had more money it might

fund actors that the u.s. and its allies would not like to see that are funded. iran is providing a huge amount of money to syria to pop up the assad regime. it is paying for various militia in iraq which on the other hand are probably the most effective forces against isil. the main way of making sure that that additional money will not be used in ways that we would not like is to try to bring iran much more into the international community so the identify their interests along with everyone else being the outlier that is trying to [inaudible] that comes back to conflicts -- comp looks questions. >> one of the late prosecutors

was the one who pointed out to me when we were talking about iran in latin america, have you ever read the constitution and i said no. and he said, read the preamble. it is state policy to expand using the revolutionary armed guard of spreading jihad around the world. that is written into the constitution. i agree with david. there is a fundamental nature of the iranian regime as something that allowing fungible money into their system will almost inevitably point toward much more aggressive action outside including terrorism. that is their core underlying belief which they acknowledge and write about extensively. prof. realuyo: it is of great concern. a lot of our error allies are much more focused on iranian

expansionism and more importantly, they talk about the revival of the persian empire. you are seeing the influence of iran in four major capitals. our allies are -- some of our allies are concerned about being a shia circle. it is not a question of a state-sponsored. it is a question of iranian hegemony which is so complex because of the religious angle and the historical rivalries. it is not something we are covering in the press because we are focused on the iran nuclear deal. we are not looking at the geopolitical aspirations of iran. chairman: the chair recognizes mr. meeks. mr. maeeeks: i have been

listening in my office to your testimony. my focus has been on this committee, what we can do in congress to make sure that we do not allow others to facilitate money laundering. mr. asher, i guess it will ask you the first question. in your testimony you mentioned that congress should amend the bank secrecy act to facilitate anti-money laundering datasharing among banks. there is a general concern among americans about personal information being widely available. to a range of institutions with little knowledge about how that information is being used. i was wondering if you could elaborate on this conflict and

how congress should proceed with the bank secrecy act well also preserving the individuals human rights to privacy -- that is the debate we have going on right now. dr. asher: the bank secrecy act is not passed to protect [indiscernible] i am concerned about information, personal information being divulged. the cat is out of the bag. the amount of data that someone like experience would have about any of us is ridiculous. it is ironic that banks are reticent to share data with other banks even though it is allowed under the u.s. patriot act. you can share -- ranks can share data with each other but they

cannot pool it. if they could do the visa or mastercard processing of data, you could see massive schemes that could be stopped by banks at a relatively low cost areat -- a relatively low cost. and thery are setting up a money laundering network that no one can see that. showing -- sharing the data would not only reduce costs, it would improve effectiveness. they would still be obliged not to share that data with anyone outside official channels. it is not going to get divulged any more than it is so i am not that concerned. economies of scale this help in trying to stop things are occurring. it also can bring down costs. a consortium could be in a position to receive watchlist

data, even classified data and we need to consider providing that. we provide it to our airlines and shipping lines. if we think there is a maersk shipping container full of weapons coming into the united states, we will tell them, there is a container, you have to inspect it. we tell the bank that they are doing business with hezbollah. we do not need to publicly approach these issues and tell the terrorists we're looking at them. i do not think it will lead to anymore divulging of private information. it might be much more effective. >> let me jump to mr. barrett.

you stated that corruption along with other governments maybe you can elaborate on rock -- what role the financial services committee with our oversight authority of international monetary organizations, what role can we play in better insuring governance and nation struggling with terrorist organizations. >> what you're doing is right. as corrupt officials, lack of the rule of law is such a driver of terrorism in these areas were essentially people are completely dissatisfied with what is provided by government the more you can sanction those individuals as government leaders and others involved in the corrupt practices, and in the financial skulduggery that

goes on. in the general criminal world the less dissatisfied people will be if they see justice being served at least in another jurisdiction, even if not in their own, this will be very encouraging for them. it has a knock on effect on the terrorist problem. >> i would like to thank the witnesses for their testimony and time here today and for the significance you have shared with the task force. we all appreciate that. i ask our witnesses to please respond is probably as you are able. without objection, this hearing is adjourned. >> a live look on the u.s. senate floor, where senators are

now voting on a handful of amendments to the trade bill that members have been debating. senators are trying to move the bill forward to final passage, but no deal has yet been announced. also pending in the senate, a couple measures related to the patriot act and nsa surveillance , as well as the highway trust fund bill. members are trying to finish up work before recessing for the memorial day holiday. senate leaders have been talking about coming in tomorrow for a rare saturday session to complete work. we will keep you updated about that great watch live coverage of the senate on our companion network, c-span2. fbi director james komi says one of the most urgent threats facing the u.s. is isis equipment via social media. his comments came during a talk on cyber security issues at georgetown law school's third annual cyber security law institute.

>> you are now coming up on two years as director of the fbi. if you could talk about the biggest threats that are facing the fbi today. >> i think the biggest, most urgent threat is the one that's isil presents, especially coming at us through social media. either to travel to the caliphate, or kill where they are. this is a place where terrorism and cyber merge. they are pushing this poison through twitter and other vehicles, trying to motivate people, and moving them to encrypted platforms to communicate with them to try to give them instructions. the threat we face has morphed it is a chaotic spiderweb through social media increasingly invisible to us because the operational

communications are happening in an encrypted channel. that consumes most of our days, trying to -- i do not think it is an impossible task. we spent a lot of time on it. >> we have got nationstates and criminals and other actors that present various cyber threats to the country. can you talk about the fbi strategy for addressing the threats that face the country? >> yeah. i think i have been mocked for this metaphor, but i think of it as an evil layer cake. [laughter] i'm staying with it. at the top layer of the cake our nation state actors. the next layer down his terrorist use of cyber as a vector, and organized criminal syndicates the big online marketplaces for criminal cyber tools. the rest of the cake is all manner of creeps and fraudsters

and stalkers and pedophiles. given how big that cake is, the bureau has tried to focus our resources where we think our footprint around the world and our abilities can make the biggest impact. we are try to focus our resources on the nation state actors, the large criminal syndicates and the terrorists. we are trying to deploy differently as part of that focus. normally the bureau when it assigns work asks this question, where did it happen? it makes sense to ask that when you talk about a bank robbery or an explosion of a bomb, but it is a question that actually starts to lose meaning when you talk about a threat moving at the speed of light, where the particular location or manifestation of a threat or intrusion may not be all that meaningful. what we are trying to do is instead of assigning the work based on some notion that it happened in ohio or it happened in florida is figure out where

is the talent in our organization. we have divided up the nationstate threat, the terrorist threat to the internet, and the major criminal threat into various slices and we are assigning it where we think the chops are in the bureau. little rock may be assigned a threat that is manifesting someplace else in the country through an intrusion. we are assigning a threat where the talent is, and then we allow up to four other offices to help, and then we do air traffic control from headquarters. that is a big change for us. we are trying to approach all of the cyber with an attitude of humility. we are trying to understand that we may not have it right. let's try this, and get feedback, and then iterate. we're trying to impose costs. we all share a sense that

criminals and spies and anybody coming at us through the internet thinks of it as a freebie. when our mind's eye, it is the equivalent of kicking in your front door, walking out with your tv set or your very identity. we have to try to impose costs on those of the keyboards. we're working very hard to deploy resources around the world so we can lock some people up and send a message, this is not a freebie. we are trying to name and shame. you have seen as doing that. and do things like impose economic sanctions to make clear to nationstates and criminal actors that there are costs associated with this behavior. there's a bunch of other elements to our strategy. we have got to get better with the private sector. we have to help state and local law enforcement. they are crying out for assistance in raising their digital literacy. the good old days, you could work a crime scene, do a search warrant and find paper.

the idiots would have written a composition notebook that shorty gets this much, and joe gets this much. you had to take it and photocopy it i knew were good to go. now any detective finds pda's, thumb drives, laptops, digital literacy is required to do all of the work the criminal investigators do, and we don't have time to get to a whole lot of this, so we have to help our brothers and sisters in local state and law-enforcement get the training they need to be digitally literate and respond and investigate. all of our lives are on the line. all the threats to our lives whether to our children or money or infrastructure, is now online. all of us have to work together to raise the digital literacy of investigations. >> you mention the private sector. some of the questions you will hear and discussions are concerns from the private sector that if i report an incident to the fbi, i'm going to lose

control of this incident and what i need to do to protect my company. i'm going to face some type of regulatory action if i report this to the fbi. don't know what is going to happen if i report this to law enforcement agencies. can you talk about how the fbi approaches the private sector when they report incidents of cyber security compromise? >> those are good questions that i asked myself as general counsel. what will happen if we give this theft to the government? you will lose control of the information. but we treated as what it is, which is evidence gathered in the course of a criminal investigation, so it is subject to all manner of controls as part of our investigation. but there's no doubt there is incremental risk in sharing information with the government if you have been a victim. i happen to think the benefits dramatically outweigh the risks are and we have proven time and

again most prominently recently in sony, that cooperating with us early is in the coming's interest, and that we treat the information carefully and protect it. we have statutory obligations to protect information. we are frequently using a grand jury, subpoena. we also understand we don't want to create disincentives for people to share information with us. that said, if it turns out there is something awful revealed in information somebody gives us they are going to lose control of that. that strikes me as a corner case. if someone invades your home and harms your children, you will call the police and they will investigate. there may be circumstances where people worry about calling the police because they are running a meth lab in their house. those are corner cases. most enterprises in this country are not running meth labs in their houses. and so it goes very smoothly.

we rarely need content of communications. we almost never need memos of the content of e-mails. you need the digital dust and fingerprints, the indicators, the ones who show us who was this and how did they come in what was their vector of attack, what can we learn from it, how can we attribute it, which is all stuff that is removed from content that people worry about. >> we talk a lot about the private sector. in fact, i understand many thousands of notifications are done by the fbi every year where you knock at the door and somebody doesn't know -- you are alerting them to that. any thoughts on how the private sector can better prepare itself , and what it can do to prepare so if the fbi does knock on the door they have an incident they can be prepared for the incident and to protect their company? >> the predicate for your

question is right. we have gotten a whole lot better. in the last few years i would point to an inflection point, 2012, when so many financial institutions were getting hit by denial of service attacks. at that moment we started getting material better at pushing information out quickly to the private sector. in my view, we are still not good enough, but we have gotten better at pushing out we call/reports, share indicators, and there is a great movement inside the bureau and government as a whole, a knockdown classifications. again, the companies don't need to know the sources and methods that led to us figuring out these would be indicators. it is the flip side of what we are talking about earlier. we are getting much better at that. the challenge for us is we have to figure out a way to move it

machine speed and that is a challenge for a bunch of different reasons we can talk about. my advice to companies is, which i think companies get now if you have to invest in it. you have to have a world-class event from a officer, you have to equip him or her to buy the right stuff, whether that is consultants, software, hardware you have to invest in it. you invested for years in badges, gates, and guards to protect your parking lot, your building, and neglected the basic hygiene of information security. i will not talk about particular companies, but we discovered that people have a network that is utterly on segmented. somebody comes in one corner they can wander through the entire place. people don't have good logs. we can't actually help them figure out what was x-filled from their systems and the basic hygiene is well known, it's easy to find people.

it is easy to find people who can explain to you, here is how you protect your house. my advice to them is that. once we knock on a door and tell people we have actually seen this thing, we think there is an intrusion going on, i don't have any constructive suggestions for cooperation. the cooperation is outstanding because people are grateful, and they also want to find what is going on inside their enterprise. >> you have a unique perspective, having been general counsel to very prominent companies, lockheed and bridgewater associates, now is the director of the fbi and a former u.s. attorney in the southern district of new york. having been a general counsel and occupying high level positions in the government, what do you see the role of general counsel inside a company

is? >> they are mostly a obstructionist weenies. [laughter] i was. it is one of the reasons why we as a country -- and congress is making good progress on this -- have to offer clarity to those gc's. the chief information security officers think about the world the way we do, security professionals. the general consuls are worrying about things like liability. what will happen if it leaks? will this be used against us in a competition? what happens to that? is there incentive not to reveal things because my competitors are not revealing them? those are the gc questions -- i used to ask them myself. i think congress has to give comfort to those general

counsel's to remove those concerns from the information sharing pipeline, and they are well underway. that is fairly easy to fix harder to fix will be -- develop will be machine speed sharing and hardest of all is the cultural impediments that i attribute to the post-snowden wind. there's a lot of people who don't want to be seen with us. media out why the 7-eleven in the dark. i do not want to be seen as cooperating with the government. that is hard to get back. that requires time and lots of conversations to explain to people well, no, here is what we do, here are our authorities. there is a wind still blowing in the wake of that that is a cultural impediment to sharing that is part of -- one of the impediments to effective cooperation. >> that raises the issue of what

you have spoken about in terms of the fbi referring to what is called "going dark." what can be done to address the issue? >> what i mean by that is increasingly communications at rest, sitting on a device or in motion, are encrypted. the device or communication is encrypted. therefore, unavailable to us even with a court order. showing probable cause to a judge in a criminal case or intelligence case that the content of a particular device or communication stream should be collected pursuant to our statutory authority and the judge approves, increasingly we are finding ourselves unable to read what we find or unable to open a device. that is a serious concern.

encryption is a good thing. i think there are tremendous societal benefits to encryption. it is one of the reasons the fbi tells people to lock your cars you should encrypt things that are important to you to make it harder for thieves to take them. we have a collision going on in this country that is getting closer and closer to an actual head-on, which is our important interest in privacy, which i am passionate about, and are important interest in public safety. the logic of universal encryption is inexorable, that our authority under the fourth amendment, an amendment that i think is critical to order of liberty, to with the right predication and oversight to obtain information is going to become increasingly relevant. as all of our lives become digital, the logic of encryption -- all of our lives will be covered by strong encryption. therefore, all of our lives -- i

know there are no criminals here, but including the lives of criminals and terrorists and spies, will be in a place that is utterly unavailable to court ordered process. that to a democracy should be very concerning. i think we need to have a conversation about it or it -- it. how do we strike the right balance? privacy matters tremendously. public safety matters to everybody. fair-minded people have to recognize there are tremendous benefits to a society for encryption. there are term costs to a society from universal strong encryption, and how do we think about that. a group of tech companies and prominent folks wrote a letter to the president yesterday. i found it depressing. their letter contains no acknowledgment that there are societal costs to universal encryption. i recognize the challenges facing our tech companies, competitive and regulatory

challenges, overseas, all kinds of challenges. i recognize the benefits of encryption. i think fair-minded people also have to recognize the costs associated with that. i read this letter and think these folks do not see what i see or they are not fair-minded grade either one of those things is depressing to me. i do not think a democracy should drift to a place were suddenly your law enforcement people say we actually can't access any information. we've got to have a conversation long before the logic of storing encryption takes us to that place. smart, reasonable people will disagree mightily. technical people say it is too hard. my reaction to that is, too hard? too hard for the people we have in this country to figure something out? i think we ought to have a conversation. >> speaking of authorities and having a conversation, section 2115 of the patriot act expires

on june 1, in about 10 days. there is a legislative process going on right now. we do not know what the outcome will be. i wonder if you could talk about the impact on the fbi and what the consequences, if any, would be if you were to lose section 215 authority, which is often talked about in the context of a metadata program great i understand it is used by the fbi more broadly in a variety of ways. >> significant impact. i am trying to make sure we talk about -- a lot of the focus on 215 is on the nsa's metadata database, should that be with the nsa, held by individual telephony providers and access by the nsa and that is an important discussion. that is a useful tool to the fbi. it is a conversation i care about. there are critical tools to the fbi that will sunset on june 1.

the first is section 215 is the vehicle through which the nsa database was assembled great we use section 215 in individual cases, in very important circumstances, fewer than 200 times a year we go to the pfizer court in a particular case and get particular records that are important to a counterintelligence investigation or counterterrorism investigation. if we lose that authority, that is a big problem. we will find ourselves in circumstances where we cannot use a grand jury subpoena or a national security letter, unable to obtain information with the court's approval that i think everybody wants us to be able to obtain in individual cases, so that is a problem. the roving wiretap authority will expire on june 1. this is an authority we have had in criminal cases since the early mid 1980's, where if a drug dealer or criminal is

dropping phones repeatedly, the judge can give us authority to intercept that individual's communications so matter what device they are on so we don't have to go back and start the process each time they dump a phone. the patriot act extended that authority to international terrorism investigations and counterintelligence investigations. that is not a controversial thing. that will go away june 1 unless it is reauthorized. there is one other provision that matters, and that is the so-called lone wolf provision. that is, if we can establish probable cause that someone in this country is up to no-good there is probable cause to believe they are an international terrorist of some sort but we can't prove what particular organization they are hooked up with, this provision would allow us -- the judge would allow the interception even if you can't say, they are al qaeda, no they are aqap. that is important authority.

these three will go away june 1. i don't want them to get lost in the conversation about metadata. >> i want to return to your evil layer cake where you started out for a minute in terms of the threats facing the country in the cyber security area. at the top of that layer cake you talked about a sophisticated nationstate. are you concerned about trends in terms of cyber security proliferating down that layer cake to people like isil? now we have had the sony attack coming to the shores of the united states. are you concerned about sophisticated malware proliferating through that layer cake and are you seeing evidence of that? >> i'm definitely concerned about it. terrorists want bombs. logic tells me that terrorists -- i would have said two years

ago are going to wake up to, and in two years i have seen them starting to wake up to the idea that as hard as we have made it to get into this country physically, they can get in as a photon at the speed of light and so yes, i am concerned. don't see it yet, destructive malware in the hands of these terrorists, but it makes too much sense that it is a tool that they will eventually turn to. i see them already starting to explore things that are concerning, critical infrastructure. the logic of it tells me it is coming. of course i am worried about it. >> do you see an interest among some of these groups in obtaining these types of tools? >> yes. >> in terms of information sharing, we talked about -- you mentioned the fbi is working to get flash messages out quicker. a variety of information sharing

programs across the government -- what types of information sharing programs did the fbi have, and what should companies consider joining in terms of information sharing that would be useful for them and the government? >> our primary information sharing vehicles are through two programs, one called the mystic security alliance council, which is made up of the security folks from the biggest private enterprises. we run that with dhs. something which focuses primarily on cyber threats and physical security threats to large enterprises. let me back up on that. we have fbi offices in every community in this country. we have 56 field offices, 400 resident agencies. we are every place. if you run an enterprise, you

should make sure you know someone from the fbi, one of our cyber squads or leadership, wherever you are. i have told all of my field commanders, make sure you know folks. as low-tech as it seems, the best communication, the best notification is often a phone call saying, i think we have a problem. wholly apart from the organizations i will talk about you should know people in your local fbi office. we can sometimes be intimidating because we are behind law doors. -- locked doors. their mandate is to get to know you. you will knock on a door that will open. what we are trying to do as part of infraguard's pilot something. we are piloting something we call the malware investigator, which is this.

inside the fbi we have long had a database of all of the marrow -- malware we have ever seen. our investigators when working on a case will query it and see if the piece they are encountering has been seen someplace else and what is known about it, and connect dots. we are trying to make that resource available to the private sector starting with the trusted partners in infragard and allow them to connect directly to the malware investigator database and input their own malware samples and get a result within seconds or minutes that says this has been seen in los angeles. it connects to this thing. to help them start to connect dots. we think that is in their interest and our interest because we will have more dots to connect. we have started that. that is through infragard. if you are a number, i hope you'll ask about that and see if your enterprise will participate in that. >> that is potentially

transformational. any timeline on rolling that out? director comey: it is out now. i forget the number. we have got hundreds of companies participating. it allows the chief information security officer -- it has to be somebody we know. we want trustworthy people hooking up to the database. we give them an online password, and they can connect to it and query the database. my vision is that should continue to grow. it should be able to scale without limits. we have to make sure we know the people continuing to connect to it. >> given the fact that our digital lives are central, you have a lot of departments. your thoughts of departments of the government covering different areas of different missions, we have the department of homeland security, critical infrastructure programs, the national cyber center they run and the secret service

responding to payment card data breaches of the department of defense concerned about a variety of other agencies. talk a little about how you and the f.b.i. coordinate with the other agencies dealing with the private sector and the variety of programs out there. director comey: it has been a central feature of work in the government over the last decade. the coordination has gotten dramatically different. when i left in 2005, i visualized it as four-year-old soccer. i have five children, so i watch a lot of four-year-old soccer. everybody knows the ball is a cool thing, so they follow it in a big clump. 10 years ago, cyber was the cool thing, so everybody was following it to we have gotten to a place where we are probably

college-level soccer. we get the importance of positioning and lanes in passing and defense and offense. it's not good enough because the adversary is playing at world cup speed, but we have gotten a lot better. among the things that have helped us get there is the task forces located outside of d.c. called the national cyber investigative joint force, where 20 agencies sit together and the deconflict. talk about major intrusions we are seeing. visualize it together. and figure out, who should do what about this? here is how i conceive of the responsibilities. here is how i hold it in my head. if i imagine the country is a neighborhood, my job is to deal

with people breaking into your homes and stealing your stuff and looking to harm your families. i patrol that neighborhood respond to 911 calls to try to , catch the bad guys, to try and make the neighborhood safer. d.h.s.'s responsibility is to think in a systemic way about how we make a safer neighborhood. how do we make the entire neighborhood a safer place? is it better lighting? better signage? is it safer parks and patrolling? we are in the same space trolling the neighborhood with different focuses. the secret service has the responsibility similar to mine. their focus is on banks and financial institutions in the neighborhoods. they are responding to burglaries and worried about who is scoping out banks.

we have gotten better at talking to each other and understanding we are both in the neighborhood with important things to do. in the secret service, we have made great progress in working together over the last few years. there is so much work to be done it makes sense to work together. d.h.s. and the f.b.i., i think we have a better understanding of each other and our roles. we are patrolling the neighborhood ensuring what we see in a much better way. n.s.a. has a responsibility for the neighborhood. n.s.a.'s responsibility is trying to figure out who is trying to come on and off the island to commit the burglaries. we need their visibility. a critical part of protecting the neighborhood systemically and stopping break-ins is wanting to know who is going to land on the island. that is the three players who

touch the neighborhood. one of the ways we accomplished more effective patrolling is sitting together. as low-tech as it seems, sitting together. all of you who have worked in the government know it is hard to hate up close. you can think the f.b.i., what a bunch of jerks they are. except for the guy or gal in the next cubicle, they are ok. if you get enough of that, you start to blend people together. you have different missions, but they come to appreciate each other. we have spent a decade blending in that way. we still have got a ways to go. sometimes we bumped a little bit trying to understand our missions. it is the exception now where 10 years ago it was the four-year-old soccer. >> that covers the domestic side.

many of the threats are coming from the international perspective and require cooperation from other nations for the f.b.i. to be able to apprehend criminals or take other actions. how are you finding cooperation with international partners, particularly where gangs and other threats are imitating from? director comey: in the main, extraordinarily good. other nations understand the cyber threat blows away conceptions of border and that all of us are next-door neighbors on the internet. what i find when i travel, i have been to 20 foreign partners and have had many visitors. all of those conversations are people saying, we have got to figure this out. the keyboards may be in my company and the victims in america. that is not good for any of us spend let's figure this out.

what they are hungry for is training, equipment, and information. we are trying to deploy more analysts and more cyber special agents. put them in those countries where the police and domestic national security apparatuses are hungry to stop the threat. i visited romania recently. one thing ceausescu investigated in with technical information. you have people with great technical jobs and then a lot of unemployment. people easily susceptible to criminal groups. the romanians are hungry to stamp that out. they don't want romania to be known as a source of criminal activity. we are trying to equipped with them the less equipped them with information and training -- we are trying to equip them with information and training to respond. there are nations around the world who are not so enthusiastic about working with us to try and stop cyber criminals and thieves within

their borders, but they are the exception. that is one of the good news stories of the last decade. the internal cooperation and the international cooperation. this is a feature of every conversation i have with a foreign counterpart. >> how is that any post-snowden world? director comey: they see it as they should, as a huge part of it, overwhelming is criminal activity. it is stealing innovation, identity, money, increasingly threats to children. all of our children play online. that is where people who want to her children go. it's about pedophiles and fraudsters and stalkers and

money launderers all in that space, so there is common cause. whatever frictions there might be in other areas there is , common cause. we even have productive conversations with the chinese about criminals trying to stop , criminals using the connections between our countries. everybody sees it as we can agree nobody wants children harmed. nobody wants money stolen. >> while we are talking about misperceptions, what do you hear from the private sector that frustrate you or that you would want to correct? what are the big misunderstandings you hear from time to time? director comey: i don't hear a lot of misunderstandings with respect to the bureau. i often hear frustration our country is not doing enough to stop nationstate theft of international property.

-- intellectual property. i hear that frustration a lot. i have been involved in conversations that our government is focused and concerned about. as i said earlier trying to move , us towards a place where the norms of behavior would not encompass that kind of thing. some of the imposing of costs and shaming with criminal charges is part of the effort. it is a frustration i hear from private enterprise. it is real. there is not an easy answer to that. >> the administration has taken some steps in terms of trade sanctions. you have the f.b.i. involved in criminal indictments of people who participate in cyber security incidents. are there additional actions we can take? director comey: there are a variety that private folks often raise.

thank goodness i'm able to avoid the conversation because it is not the f.b.i.'s thing. oftentimes, i have private companies say maybe we should go up the pipe and smakcck people. i say that would be a crime. don't do that. there is frustration that is palpable. there isn't an easy answer to that. >> you're talking about the private sector taking action against those seeking to steal their data. you're saying that is not something you recommend. director comey: for a variety of reasons. i was not being facetious. your access to someone else's system without authorization would violate our laws. it also would potentially have all kinds of unforeseen consequences. it is hard enough for government actors to act in cyberspace in a way where you can predict knock on effects.

if we had self-help all over the place, that would be a disaster. >> let's talk about legislation. we talked about some of the things in the news. the patriot act issues surrounding encryption. one thing that hasn't gotten a lot of attention is there is information sharing legislation passed by the house of representatives. it's passed out of the senate intelligence committee and seems to have strong support in favor of congress coming together and passing this information sharing legislation to encourage sharing of information. any thoughts on whether we are going to see a bill? director comey: i don't know what the prospects are for legislation. it makes good sense to me. it makes good sense to me to offer the general counsel's that level of comfort. i see events running over the general counsel anyway in the sense people understand the imperative for sharing information.

i think the legislation is important and necessary. it is less necessary than it was two years ago because people get it now. anyone who didn't get it thinks, -- anyone who did not get it gets it after sony. whatever the concerns might be about how the government is going to use this, given that i will be sharing it with the f.b.i. during a criminal investigation and given what is in it for me, the concerns are noted. but that being said, the legislation gives a belt to the suspenders. >> it has more of a cultural impact than perhaps addressing antitrust concerns and things? director comey: i don't want to belittle it. general counsel has legitimate questions about what is our exposure. i am just saying people's sense of the threat has changed so

much in the last two years that those concerns don't dominate in the way they might have to years -- two years ago. that is what i mean by legislation is going to fix the problem. not as important as 24 months ago. now people say i get that there is marginal risk sharing with the government. we are going to share it with the government and get the help we need. >> there is such a demand in the private sector for qualified cyber professionals. you are competing with the private sector and can offer things the f.b.i. can't in terms of salary and other things. how is the f.b.i. doing on resources? director comey: we are doing ok, but it is a continual challenge. the advantage i have the value proposition is so different against the private sector. they're almost isn't really a competition. if people are interested in

money, i can't help you at all. if you're interested in a life of meaning, i can help you with that. the people we are attracting are people who don't really care about the dough. in a real sense, my competitors are less people throwing buckets of dough and more the rest of the government. i need to beat n.s.a. d.h.s., and c.i.a. i don't want to talk about how i am approaching you so they don't find out. >> it is a competition. director comey: i'm not telling you, but the good news is so far one of my worries is how am i going to do with retention. we have hired a lot of cyber talent. so far extraordinarily well. our retention is better. we have very low turnover to begin within the f.b.i.. for cyber talent, it is running lower than normal turnover.

i think people get into the mission and say, look at what is going on. look at what i can do. i am 27 years old. look at what they let me do. i think that is an advantage we have. i often wonder whether we will need to revisit the way the bureau thinks about retention. our normal proposition is, come work with us. you will never leave. we once said we were like a roach motel. come work with us. you will get addicted to this. i wonder if at some point we don't want to get to a place where people come for us in five years and then go do something else but learn things and then come back to us, whether we will get better with that kind of turnover, but it's still early. the answer is, we are competing mostly with the rest of the government. so far we are doing ok.

>> i have a question submitted from the audience concerning snowden, and the question is whether or not the f.b.i. is still pursuing mr. snowden given the decision in the second circuit and the possible changes and reviews by the administration. director comey: yes. [laughter] [applause] director comey: it's not much of a pursuit. we know where he is. i don't to say much about it because i think he should have the opportunity to appear and meet charges. i think it is the fairest criminal justice system in the world. i think he should have the opportunity. people talk about his revelation of the metadata which will

result in staying the way it was for the data being held by the companies which will make us more effective. my view of it is, you have to see the entire corpus of his work, before you start rendering judgment about what you think of the person. i think it is a serious criminal charges have been brought. they are pending. we think he ought to come and appear. >> finally, at these conferences talking about the cyber threats and proliferation of them. the many different actors out there. how difficult a problem it is. from the private sector, sometimes it can seem hopeless in terms of fighting back. are there good news and progress that we are making? is it overlooked by people in the daily drumbeat of revelations of stolen data and stolen intellectual properties.

do you feel like we are making progress in a way that we're going to be able to beat back the threat? director comey: i think there is good news. i would not say it overwhelms the bad. the good news i would identify are i think the private enterprise is getting its act together in ways that are going to make it harder for them to have their doors kicked in and everything stolen. i also think we are getting more effective at imposing costs. we as a community of nations are getting much better at taking down and arresting criminal actors and sending a message that this is not a freebie. there is a long parade of cases. you are starting to see more of it. i do not think the criminal see this as easy. i think that is a piece of good news. it is still early days.

the private sector is investing in it. we are getting better at talking to each other. on the other side of the oceans, we are imposing real costs. i see early days of changed behavior. >> do you see improvement in cyber deterrence? director comey: yes, especially on the criminal side. i do think there is a sense of fear. we have laid hands on russian actors on honeymoons or vacations around the world. that sends a chill through the criminal world. they have shrunk the world but we are shrinking it back. we are human, but holy cow are we dogged. it is never going to go away. we will find you eventually. you will travel someplace. people say you indicted these five chinese military actors

stealing this stuff from the united states but they are in , china. sure. but it is a small world. everybody wants to go visit their children or see disney world, or get a foreign education. as the world gets smaller, our opportunities to impose real costs on people increase. >> with that, i think we can bring it to a close. thank you so much for appearing and your time. [applause] [captions copyright national cable satellite corp. 2014] >> a quick look at the senate chamber live on our companion network. members have been voting on amendments to the trade bill trying to move the bill toward final passage.

also pending is the highway trust fund bill and the senate needs to come up with a deal on n.s.a. surveillance programs set to expire at the end of the month. "the hill" writing about that. the wildcard is senator rand paul that has bragged in an e-mail the senate would have to work this weekend if they tended to "ram through another last-minute deal to shred our constitution." we will keep you updated about the possible saturday session as senators try to finish work before the memorial day recess. on wednesday, the house and senate affairs committee held a joint hearing to receive reports from a number of veterans service organizations. jeff miller heads the house veterans affairs committee. on the senate side, the georgia republican.

>> good morning. this hearing will come to order. we will hear from our distinguished guests as they present their legislative priorities. in the interest of time, after hearing from the chairman who is on his way and ranking member rice and ranking member blumenthal, i would like to ask all other committee members to waive their opening statements. there will be an opportunity for remarks during the question and answer period following today's testimony. our witnesses today will include the national president for the paralyzed veterans of america the commander of vets, colonel robert veteran retired deputy director of governmental relations for the military officers association of america. patrick little, national commander of the military order of the purple heart.

the national president of vietnam veterans of america. the director of government relations for blinded veterans association. the founder and c.e.o. of iraq and afghanistan veterans of america and sergeant major gene overstreet president of the noncommissioned officers association. the witnesses and organizations they represent serve a necessary and admirable role to ensure the men and women of our armed forces have the care, benefits, and opportunities they deserve when they come home. i'm thankful for the dedication and noble service of each of the organizations represented today and their representatives especially those who have worn the uniform themselves. our returning war fighters deserve the very best. i am honored in my position as chairman of the house committee on veterans affairs to work alongside these groups to make sure that is what they get. i would like to personally welcome everyone who has made

the trip your from the great state of florida. if you what, raise your hand if you are from the sunshine state. it feels just like home. want to welcome the numbers of each auxiliary. thank you for your work behind the scenes to benefit veterans, families, and survivors. each organization has its own legislative priorities. everyone in this room has a common goal, to ensure the present and future veterans of this great nation are afforded the best possible care for the selfless service they have provided. over the past year, we have uncovered severe problems in the department that have required tremendous efforts from groups like yours and our committees to improve access to care and dismantle the diseased culture in the department that has

allowed certain employees to escape accountability. we have made great strides to meet these goals together. there is still a great deal of work that remains to be done. recently, i introduced three important pieces of legislation that would improve accountability in v.a. h.r. 473 would make important changes affecting employees. it would give the secretary authority to reduce retirement pay if they are convicted of a felony related to their work performance, ensuring they are not being rewarded for their misdeeds. similarly, the performance evaluation program would be reformed to prevent bad acts from being covered up by the undeserved receipt of high reviews. this bill would prohibit employees from being placed on administrative leave for more

than 14 days which would prevent v.a. from placing an employee on open ended vacation as a reward for bad behavior instead of removing them from federal service. next h.r. 571 retaliation prevention act would improve the process for whistleblowers in the department to report waste fraud, and abuse to correct problems at the lowest level in the agency possible. perhaps more importantly, this bill would strengthen and expand accountability of supervisors who would seek to retaliate against conscientious employees who report wrongdoing. also, it would require v.a. to undertake more comprehensive training to ensure employees are well aware of their rights and methods to report wrongdoing and supervisors know there are serious consequences from

engaging in retaliation. it has already amassed substantial support from good government groups. in addition to these bills last month, introduced h.r. 1994, the v.a. accountability act of 2015 which would give the secretary the ability to remove any v.a. employee based on performance or misconduct any similar process that found -- that was found in the act signed into law last summer. also built into this bill are protections to ensure this process is not apply to whistleblowers an extension of nonmedical probationary periods and a requirement that g.a.o. conduct a study of v.a. time, space, and resources related to labor union activity. i encourage those of you here today to please research the legislation because we would welcome your support of these

crucial pieces of legislation. i look forward to hearing from each of you today and the groups you represent. i now yield five minutes to the senator from georgia, the chairman of the senate veterans affairs committee, my good friend, mr. eisen. senator? senator eisen: i was not awol. [laughter] i'm going to do laps because i was late. i apologize. i will follow up briefly on what chairman miller said. we are delighted to have your today. we appreciate what you do to support veterans. we have a lot of challenges at the v.a. we have committed ourselves to see to it we are not just caretakers of the status quo but that we are instigators of improvement in the v.a. we think v.a. health care is important. we want veterans health care to work.

we want the veterans to have the best health care they can get. we want to see the expenditure of the taxpayers money is more sound. what happened in denver should never happen again. every time you overstep on one hospital, you understand in another. we want to make sure the v.a. is investing in the men and women who risk their lives. we appreciate your representation of veterans today and look forward to hearing your testimony. chairman miller: i yield to the ranking member on the house side. senator rice: i want to thank all the witnesses. i would like to echo everything they said. in the interest of time, i will hold my remarks and reserve the balance of my time. thank you, mr. chairman. chairman miller: mr. blumenthal for five minutes. senator blumenthal: thank you for your leadership on this committee.