[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]








                       STOPPING THE MONEY FLOW: 
                       THE WAR ON TERROR FINANCE

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

                             JOINT HEARING

                               BEFORE THE

         SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS

                                AND THE

           SUBCOMMITTEE ON EMERGING THREATS AND CAPABILITIES

                                 OF THE

                      COMMITTEE ON ARMED SERVICES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 9, 2016

                               __________

               Serial No. 114-188    H.A.S.C. No. 114-125

     (Committee on Foreign Affairs)  (Committee on Armed Services)

                               __________

    Printed for the use of the Committee on Foreign Affairs and the 
                      Committee on Armed Services


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       BRIAN HIGGINS, New York
MATT SALMON, Arizona                 KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
PAUL COOK, California                ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas            GRACE MENG, New York
SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

         Subcommittee on Terrorism, Nonproliferation, and Trade

                        TED POE, Texas, Chairman
JOE WILSON, South Carolina           WILLIAM KEATING, Massachusetts
DARRELL E. ISSA, California          BRAD SHERMAN, California
PAUL COOK, California                BRIAN HIGGINS, New York
SCOTT PERRY, Pennsylvania            JOAQUIN CASTRO, Texas
REID J. RIBBLE, Wisconsin            ROBIN L. KELLY, Illinois
LEE M. ZELDIN, New York
                      COMMITTEE ON ARMED SERVICES

             WILLIAM M. ``MAC'' THORNBERRY, Texas, Chairman

WALTER B. JONES, North Carolina      ADAM SMITH, Washington
J. RANDY FORBES, Virginia            LORETTA SANCHEZ, California
JEFF MILLER, Florida                 ROBERT A. BRADY, Pennsylvania
JOE WILSON, South Carolina           SUSAN A. DAVIS, California
FRANK A. LoBIONDO, New Jersey        JAMES R. LANGEVIN, Rhode Island
ROB BISHOP, Utah                     RICK LARSEN, Washington
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN KLINE, Minnesota                MADELEINE Z. BORDALLO, Guam
MIKE ROGERS, Alabama                 JOE COURTNEY, Connecticut
TRENT FRANKS, Arizona                NIKI TSONGAS, Massachusetts
BILL SHUSTER, Pennsylvania           JOHN GARAMENDI, California
K. MICHAEL CONAWAY, Texas            HENRY C. ``HANK'' JOHNSON, Jr., 
DOUG LAMBORN, Colorado                   Georgia
ROBERT J. WITTMAN, Virginia          JACKIE SPEIER, California
DUNCAN HUNTER, California            JOAQUIN CASTRO, Texas
JOHN FLEMING, Louisiana              TAMMY DUCKWORTH, Illinois
MIKE COFFMAN, Colorado               SCOTT H. PETERS, California
CHRISTOPHER P. GIBSON, New York      MARC A. VEASEY, Texas
VICKY HARTZLER, Missouri             TULSI GABBARD, Hawaii
JOSEPH J. HECK, Nevada               TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia                BETO O'ROURKE, Texas
MO BROOKS, Alabama                   DONALD NORCROSS, New Jersey
RICHARD B. NUGENT, Florida           RUBEN GALLEGO, Arizona
PAUL COOK, California                MARK TAKAI, Hawaii
JIM BRIDENSTINE, Oklahoma            GWEN GRAHAM, Florida
BRAD R. WENSTRUP, Ohio               BRAD ASHFORD, Nebraska
JACKIE WALORSKI, Indiana             SETH MOULTON, Massachusetts
BRADLEY BYRNE, Alabama               PETE AGUILAR, California
SAM GRAVES, Missouri
RYAN K. ZINKE, Montana
ELISE M. STEFANIK, New York
MARTHA McSALLY, Arizona
STEPHEN KNIGHT, California
THOMAS MacARTHUR, New Jersey
STEVE RUSSELL, Oklahoma

                  Robert L. Simmons II, Staff Director
                                 ------                                

           SUBCOMMITTEE ON EMERGING THREATS AND CAPABILITIES

                  JOE WILSON, South Carolina, Chairman

JOHN KLINE, Minnesota                JAMES R. LANGEVIN, Rhode Island
BILL SHUSTER, Pennsylvania           JIM COOPER, Tennessee
DUNCAN HUNTER, California            JOHN GARAMENDI, California
RICHARD B. NUGENT, Florida           JOAQUIN CASTRO, Texas
RYAN K. ZINKE, Montana               MARC A. VEASEY, Texas
TRENT FRANKS, Arizona, Vice Chair    DONALD NORCROSS, New Jersey
DOUG LAMBORN, Colorado               BRAD ASHFORD, Nebraska
MO BROOKS, Alabama                   PETE AGUILAR, California
BRADLEY BYRNE, Alabama
ELISE M. STEFANIK, New York
                Peter Villano, Professional Staff Member
              Lindsay Kavanaugh, Professional Staff Member
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
                            C O N T E N T S

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                                                                   Page

                               WITNESSES

The Honorable Daniel Glaser, Assistant Secretary for Terrorist 
  Financing, U.S. Department of the Treasury.....................     6
Mr. Andrew Keller, Deputy Assistant Secretary for Counter Threat 
  Finance and Sanctions, Bureau of Economic and Business Affairs, 
  U.S. Department of State.......................................    18
Ms. Theresa Whelan, Acting Assistant Secretary for Special 
  Operations/Low Intensity Conflict, U.S. Department of Defense..    30
Mr. William Woody, Chief of Law Enforcement, U.S. Fish and 
  Wildlife Service...............................................    39

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Daniel Glaser: Prepared statement..................     9
Mr. Andrew Keller: Prepared statement............................    20
Ms. Theresa Whelan: Prepared statement...........................    32
Mr. William Woody: Prepared statement............................    41

                                APPENDIX

Hearing notice...................................................    62
Hearing minutes..................................................    63
Mr. William Woody: Material submitted for the record.............    64
Written responses from the Honorable Daniel Glaser to questions 
  submitted for the record by:
  The Honorable Ted Poe, a Representative in Congress from the 
    State of Texas, and chairman, Subcommittee on Terrorism, 
    Nonproliferation, and Trade..................................    72
  The Honorable William Keating, a Representative in Congress 
    from the Commonwealth of Massachusetts.......................    76
  The Honorable Scott Perry, a Representative in Congress from 
    the Commonwealth of Pennsylvania.............................    77
Written responses from Mr. Andrew Keller to questions submitted 
  for the record by:
  The Honorable Ted Poe..........................................    78
  The Honorable William Keating..................................    88
  The Honorable Paul Cook, a Representative in Congress from the 
    State of California..........................................    89
  The Honorable Scott Perry......................................    91
Written responses from Ms. Theresa Whelan to questions submitted 
  for the record by:
  The Honorable James E. Langevin, a Representative in Congress 
    from the State of Rhode Island...............................    93
  The Honorable Doug Lamborn, a Representative in Congress from 
    the State of Colorado........................................    95
Written responses from Mr. William Woody to questions submitted 
  for the record by the Honorable Ted Poe and the Honorable James 
  E. Langevin....................................................    98
 
                       STOPPING THE MONEY FLOW: 
                       THE WAR ON TERROR FINANCE

                              ----------                              


                         THURSDAY, JUNE 9, 2016

                     House of Representatives,    

        Subcommittee on Terrorism, Nonproliferation, and Trade,

                     Committee on Foreign Affairs,

           Subcommittee on Emerging Threats and Capabilities,

                      Committee on Armed Services,

                            Washington, DC.

    The subcommittees met, pursuant to notice, at 2:10 p.m., in 
room 2118, Rayburn House Office Building, Hon. Ted Poe 
(chairman of the Subcommittee on Terrorism, Nonproliferation, 
and Trade) presiding.
    Mr. Poe. The subcommittees will come to order.
    Without objection, all members may have 5 days to submit 
statements, questions, and extraneous materials for the record, 
subject to the length limitation and the rules.
    I recognize myself for the opening statement.
    Time and time again, we are reminded of the massive damage 
that terrorists cause even with just a little money. Today, 
terrorist groups have more money than some small countries. 
ISIS is the richest terrorist organization in world history, 
bringing in over $1 billion in 2014 alone.
    Drawing on these funds, ISIS has managed to stage terrorist 
attacks throughout the world and kill thousands of people. ISIS 
is not alone. Terrorists raise billions annually to carry out 
their bloody agendas. This is precisely why our Government 
agencies have been tasked with stemming the flow of money to 
terrorist groups. When we can separate the terrorists from 
their money, lives can be saved.
    According to the Treasury Department, the underlying 
vulnerabilities within the U.S. financial system today ``remain 
largely the same as those identified in 2005.'' Terrorists are 
still able to park and move cash through financial systems.
    Part of the problem is that the United States still does 
not have a comprehensive strategy across all American agencies 
to combat terrorist financing. Policies and priorities differ 
from one agency to the next in a seemingly ad hoc fashion. In 
fact, there isn't even a clear method by which our various 
agencies can coordinate their efforts. Agencies working on 
counterterrorist finance had previously coordinated through the 
Terrorist Financing Working Group. However, this working group 
has been on a hiatus for some time and agencies are forced to 
coordinate informally.
    Another tool to counter terrorist financing that hasn't 
been used: Designation of domestic charities. According to the 
Treasury Department's Web site, the United States has not 
blacklisted any charities since the February 2009 designation 
of the Tamil Foundation. There are also nonconcrete metrics in 
place to measure the effectiveness of counterterrorist finance 
efforts, making it difficult to determine the need and 
appropriate tools required for a successful strategy.
    For instance, the counter-ISIL finance cell was established 
in late 2014 to work on intelligence collection and operations 
to cut off ISIS' financing. The administration says that the 
cell has significantly improved our understanding of ISIS' 
financial activity. This is a start, but what are the cell's 
metrics of success? What are its goals, and how do we know if 
it is doing a good job?
    Beyond its own government efforts, we still have a long way 
to go when it comes to collaborating with our international 
partners to counter terror finance, to ensure our efforts are 
not fragmented, and that our respective skills and intelligence 
are leveraged correctly.
    Sometimes our international partners seem to be doing 
exactly the opposite of what our policy is. According to U.S. 
Government figures, terrorist groups earned over $165 million 
between 2000 and 2014 from governments that make ransom 
payments. To better understand the significance of this 
troubling trend, Treasury Under Secretary David Cohen said in 
2012 that kidnapping for ransom has become so lucrative for 
terrorists that it is today's most significant source of 
terrorist financing.
    Denying terrorists ransom payments is not just a U.S. 
policy. It is the international standard champion by the 
Financial Action Task Force, the Counter-ISIL Financing Group, 
and the United Nations.
    International noncompliance with antiterror financing 
standards does not just end there. According to a Financial 
Action Task Force report, almost every country in the world has 
enacted antiterror financing laws, but only 33 of the 194 
countries surveyed have actually reported any convictions using 
these laws.
    The laws are worthless unless they are put into action. We 
must do more to get our partners to implement these laws so 
that they will have already passed in their respective nations.
    Our international partners can also do more to stop the 
flow of money from private donors to terrorist groups. Between 
2013 and 2014, ISIS received $40 million from donors in Saudi 
Arabia, Qatar, and Kuwait. All those countries have terror 
financing laws on the books, but the money still flows across 
their borders to ISIS.
    The more we can improve on both our internal coordination 
and our international cooperation, the less money terrorists 
can have. We need more information. We need to have more 
information, and we know both wildlife trafficking and trade-
based money laundering are sources for revenue for terrorists 
as well. We simply have not collected the necessary 
intelligence, however, and done the required analysis to 
understand these sources.
    Going after sources of revenue for terrorists can be a 
powerful tool to render them powerless. Terrorists need money 
to pay their fighters, buy their weapons, and pull off the 
attacks. If we can work to deny them the money, that means we 
are a big step closer to defeating terrorists worldwide.
    I will now yield to the gentleman from South Carolina to 
make his opening statement.
    Mr. Wilson. Thank you, Judge Poe, and thank you for 
recommending this hearing on such an important topic. And I am 
pleased that we are reviewing this subject in a joint hearing 
of the two subcommittees.
    Since I sit on your subcommittee in addition to chairing 
the Emerging Threats, I consider this a very efficient use of 
time. I would also like to thank Ranking Member Jim Langevin 
and Ranking Member Bill Keating for their contributions and 
participation today.
    We welcome our panel of experts from this interagency team 
for today's hearing. I would especially like to welcome back 
Secretary Theresa Whelan from the Department of Defense. 
Secretary Whelan has appeared before the Armed Services 
Committee many times, as well as the subcommittee. She brings a 
wealth of knowledge and experience on important issues within 
her portfolio.
    And I am pleased to have the opportunity today to talk 
about the topic of countering terrorist financing with our 
colleagues from the Terrorism, Nonproliferation, and Trade 
Subcommittee. I am honored to be the chairman of the Emerging 
Threats and Capabilities Subcommittee as we oversee some of the 
most forward-looking, cutting edge, and in-demand aspects of 
the Department of Defense.
    As we consider this important topic today of countering 
terrorist financing, I think we should keep in mind two 
important frames of reference. First, countering the finances 
of terrorist groups remains a relatively new area of focus for 
the United States Government and interagency in particular.
    Although the attacks of September 11 serves as the most 
recent forcing function, the subsequent wars of Afghanistan and 
Iraq showed us that the unabated financing of terrorists and 
insurgence groups can prolong conflicts and frustrate our 
national security objectives putting American families at risk.
    The more recent rise of ISIL, or Daesh, with nearly $1 
billion in annual revenue proves again, for our enemies, cash 
remains king.
    Second, we should continually keep in mind how difficult 
this problem set is. Eliminating and countering the finances of 
illicit and terrorist networks that operate in ever changing 
and clandestine manner is very difficult work. I encourage each 
of the colleagues today to ask questions of our witnesses on 
how they are resourced in this important fight to stem the flow 
of dollars to our enemies.
    I again would like to thank Judge Poe for holding this 
joint hearing between the two subcommittees. I look forward to 
hearing from our distinguished panel of witnesses today.
    And with that, I yield back the balance of my time.
    Mr. Poe. I thank the chairman of the Armed Services 
Emerging Threats and Capabilities Subcommittee.
    I yield to the gentleman from Massachusetts, Mr. Bill 
Keating, for his opening statement, the ranking member of the 
Terrorism Subcommittee.
    Mr. Keating. Well, thank you, Chairman Poe, for conducting 
the afternoon's hearing, and I appreciate your concern for 
terrorist financing and your leadership on continuing this 
conversation both within Congress and externally. I would also 
like to thank Chairman Wilson and Ranking Member Langevin of 
the Armed Services Subcommittee on Emerging Threats and 
Capabilities for their shared focus and work on this subject as 
well.
    And of course, I appreciate the time of our witnesses who 
have joined from the Department of State, Treasury, Defense, 
and Interior to discuss this critical topic. Your ongoing 
attention and commitment to countering terrorist financing is 
the bedrock of our coordinated effort to stop the money flow, 
as the title of today's hearing suggests.
    I also think it should be said strongly and with great 
appreciation for the work that is done by our men and women 
that are serving so well in the military. Just within the last 
4 weeks, I was honored to join them aboard the aircraft carrier 
Harry S. Truman and see their mission in interrupting financing 
as well in a direct military sense. Their success at destroying 
cash depots and interrupting oil supply has been extraordinary, 
and their service should be recognized in this hearing as well.
    But as we know, terrorist financing has to be resolved at 
many levels in terms of trying to attack it, and it is a 
complicated, intricate, nuanced, and clandestine effort, making 
it difficult to identify, follow, and to stop. Organized groups 
such as ISIL rely on diversified revenue streams ranging from 
pirated oil fields and extortion to imposition of taxes on 
areas that it controls, to seizures, and to the sale of looted 
antiquities.
    Our concern doesn't end with the trafficking of foreign 
terrorist organizations, however. Organized crime syndicates 
also fund illicit activities through a variety of subversive 
efforts. Wildlife trafficking, for example, is estimated to 
generate billions of dollars for organized crime enterprises. 
It has also been reported that these groups are using human and 
organ trafficking as well as--for a revenue source, in addition 
to illicitly smuggling tobacco and tobacco products.
    Not only do such black market dealings contribute to an 
illegal economy, but they fuel instability and they undermine 
global security. This is not to say the U.S. has not had 
success. Just this week, the U.S. Fish and Wildlife Service led 
efforts to institute a near total ban on domestic, commercial 
trade of elephant ivory, which aims at reducing the 
opportunities for wildlife traffickers to trade illegal ivory 
under the guise of legal products.
    Over a 3-year period, an estimated 100,000 elephants were 
killed for their ivory, which is an average of approximately 
one every 15 minutes. These animals--ivory generates millions 
of dollars in illegal funds.
    Separately, last month, the President signed into law 
legislation that imposes tough new import restrictions on 
antiquities that attract trafficking out of Syria. I was proud 
to play a leading role in advancing H.R. 1493, along with the 
support of the Foreign Affairs Committee Chairman Ed Royce, 
Ranking Member Engel, and Chairman Judge Poe.
    These successes, however, should not allow us to become 
complacent. While identifying and stopping traditional 
financing methods, such as hawala and hawala trade-based money 
laundering, the cash couriers are important. Agencies must look 
at new and emerging ways through which organizations are able 
to generate funds.
    Virtual currency platforms and digital finance allows 
organized crime and terrorist groups to commit crimes 
anonymously. Digital currencies could facilitate money 
laundering, alleviating the need for criminal infrastructures 
at their base.
    With respect to terrorism, anonymous marketplaces on the 
Internet allow the sale of illegal goods and services and risk 
the convergence of terrorism and organized crime. We must 
utilize all the resources at our disposal to target every 
terrorist organized crime funding entity no matter where it 
comes from.
    I look forward to hearing from today's witnesses on these 
subjects, as well as working with our international allies to 
end and prevent terrorist organizations from generating this 
type of illicit money.
    Thank you, and I yield back.
    Mr. Poe. I thank the gentleman from Massachusetts.
    I recognize the ranking member of the Emerging Threats and 
Capabilities Subcommittee, Mr. James Langevin of Rhode Island, 
for 5 minutes for his opening statement.
    Mr. Langevin. Thank you, Mr. Chairman. I want to thank you 
and Chairman Wilson and Ranking Member Keating for convening 
this hearing, and I especially want to thank our witnesses for 
being here today.
    In particular, I want to welcome Secretary Whelan here who 
has been before our subcommittee many times. I appreciate your 
presence, to all of you, and look forward to your testimony.
    So I am pleased to join my Foreign Affairs Committee 
colleagues on the topic of countering threat financing. The 
combined force of our committees on this issue is paramount 
because effective CTF requires the collaboration and 
synchronization of a multitude of U.S. Government agencies. 
Holding this joint hearing will provide us an opportunity to 
understand CTF efforts and strategies in a holistic manner and 
what we can do to enhance its overall effectiveness.
    Threat financing activities comes in many forms, from, as 
my colleagues have touched on already, from illicit drug 
trafficking, to wildlife poaching, to ISIL's alarming oil 
revenues. And understanding such activities and the associated 
organizations and networks, of course, is the first step, 
including the alternative financing through traditional 
financial institutions, as Mr. Keating had talked about, 
understanding the role that that is playing.
    The Department of Defense plays a key role in this endeavor 
by providing threat finance intelligence, or TFI, to enhance 
our understanding of the challenges before us. Today, I look 
forward to hearing more about how such information is shared 
amongst agencies in a timely manner and used to produce 
synchronized goals and efforts to disrupt, degrade, and destroy 
such financing.
    I also look forward to hearing from DOD and other agencies 
about the progress that has been made when it comes to 
institutionalizing CTF. This collaboration in Afghanistan 
resulted in many successes, and it is imperative we have a 
grasp on how such lessons learned are being leveraged.
    With respect to the DOD, has progress been made on gaps 
identified in the recent capabilities-based assessment, such as 
CTF integration into joint plans and joint doctrine? How are we 
measuring the effectiveness of these efforts?
    And finally, I hope today will provide insight into ongoing 
U.S. Government efforts in countering ISIL's oil revenue and 
the challenges we face on this front, as well as overall 
challenges with CTF that our committees could be helpful in 
providing solutions to when working with agencies.
    So with that, I thank again our witnesses for being here. 
And thank you, Mr. Chairman. I would yield back.
    Mr. Poe. I thank the gentleman from Rhode Island.
    Without objection, all members may have 5 days to submit 
statements, questions, and extraneous material for the record 
subject to the length limitation in the rules.
    I will introduce the witnesses and give them time for 
opening statements.
    Mr. Daniel Glaser is the assistant secretary for terrorist 
financing in the Treasury Department's Office of Terrorism and 
Financial Intelligence. Mr. Andrew Keller is the deputy 
assistant secretary for counterthreat finance and sanctions in 
the State Department's Bureau of Economic and Business Affairs. 
Ms. Theresa Whelan serves as the principal deputy assistant 
secretary for defense for special operations, low intensity 
conflict. She is a career member of the Senior Executive 
Service and has worked for 27 years in the defense intelligence 
area. Mr. William Woody is the chief of the Office of Law 
Enforcement of the U.S. Fish and Wildlife Service.
    Without objection, the witnesses' prepared statements will 
be made part of the record.
    I ask the witnesses please keep your remarks to no more 
than 5 minutes. If you hear the gavel, that means you have got 
to stop. So 5 minutes, and we will start with you, Mr. Glaser. 
You may present your opening statement.

 STATEMENT OF THE HONORABLE DANIEL GLASER, ASSISTANT SECRETARY 
    FOR TERRORIST FINANCING, U.S. DEPARTMENT OF THE TREASURY

    Mr. Glaser. Chairman Poe, Chairman Wilson, Ranking Members 
Keating and Langevin, thank you for inviting me to testify on 
our efforts to combat terrorist financing. Disrupting the flow 
of funds to terrorists and terrorist organizations is an 
integral part of our broader strategy to combat terrorism. 
Treasury is in a unique position to advance these efforts.
    At its core, combating terrorist financing consists of two 
interrelated objectives. First, cutting terrorists off from 
their sources of revenue so they cannot make money; second, 
denying them access to the international financial system so 
they cannot use the money they have.
    We accomplish these goals by improving financial 
transparency globally so that terrorists cannot anonymously 
raise, move, and use funds without detection, and then 
identifying, disrupting, and dismantling the networks 
supporting terrorist organizations.
    We have a range of tools available to us to do so. 
Financial measures, such as targeted sanctions and section 311 
of the USA PATRIOT Act, law enforcement actions, and engagement 
with foreign partners in the private sector. The combined 
effect of these efforts is to create an international financial 
system that is a hostile environment for terrorist financing.
    I would like to briefly summarize our efforts to disrupt 
the financial networks of three prominent terrorist 
organizations: ISIL, al-Qaeda, and Hezbollah. I will speak 
first to ISIL, the vast majority of whose revenue, estimated at 
almost $1 billion in 2015, is derived internally from a 
combination of oil sales and extortion of the population and 
commercial activity under its control. The fact that these 
sources of revenue are derived from ISIL's control of territory 
has meant that military action has been an important component 
of our response.
    Under Operation Title Wave II, the coalition directly 
targeted ISIL's entire oil supply chain and destroyed tens of 
millions and possibly more than $100 million of ISIL's bulk 
cash. Our response, however, has been broader than military 
action. For example, the Government of Iraq decided in August 
2015 to ban the distribution of government salaries into ISIL-
held areas, thereby eliminating ISIL's ability to tax these 
substantial funds. Additionally, we have worked closely with 
the Central Bank of Iraq to secure Iraq's financial system from 
access by ISIL.
    Turning now to al-Qaeda. Al-Qaeda remains a critical threat 
to the United States, and we continue to aggressively target 
the organization around the world. Al-Qaeda has historically 
received funds from within Gulf countries, safe haven in 
Afghanistan and Pakistan, and now is increasingly present in 
Yemen and Syria. We have made significant progress targeting 
al-Qaeda's financing in concert with our partners 
internationally. However, the terrorist financing risk 
emanating from the Gulf remains a priority.
    Collectively, Gulf countries have pursued a wide range of 
actions, including implementing targeted financial measures and 
prosecuting terrorists for financing al-Qaeda, but considerable 
work remains to be done to ensure that terrorist financiers are 
unable to raise and move funds within Gulf countries. And we 
are committed to working with our partners in the region to see 
that this is done.
    Our efforts have not been limited solely to the Gulf. 
Treasury has continued to work toward disrupting and 
dismantling terrorist financial networks in Afghanistan and 
Pakistan as well. We have aggressively used Treasury tools to 
limit al-Qaeda funding streams, designating over 140 
individuals affiliated with al-Qaeda and other terrorist 
organizations throughout Afghanistan and Pakistan.
    It is important to remember, however, that before al-
Qaeda's attack on 9/11, Hezbollah had killed more Americans 
than any other terrorist organization in history, and it 
continues to plot terrorist attacks around the world. Hezbollah 
receives the majority of its funding, hundreds of millions of 
dollars, from Iran, as well as millions of dollars from a 
global network of supporters and businesses.
    Our approach has focused on targeting Hezbollah both within 
Lebanon, constraining it financially through extensive 
cooperation with Lebanese authorities and banks, and globally, 
by targeting its procurement agents and financiers in Europe, 
Latin America, East Asia, and the Middle East.
    Identifying and sanctioning Hezbollah's Iranian sponsors 
and enabling law enforcement and foreign partner actions, our 
toolkit to impose targeted measures against Hezbollah was 
recently expanded with the passage of Hizballah International 
Financing Prevention Act of 2015, or HIFPA. HIFPA represents a 
continuation of our policy to financially weaken Hezbollah. 
Foremost in ensuring our implementation of HIFPA is our close 
collaboration with the Central Bank of Lebanon and private 
Lebanese financial institutions, which are adhering to this 
legislation--which are adhering to this legislation to 
Hezbollah's great consternation.
    We intend to implement HIFPA robustly in a manner that is 
consistent with preserving the strength and health of the 
Lebanese financial system and that does not target any specific 
community or sect. Our implementation intends to target one 
group and one group only: Hezbollah, the organization, its 
members, the entities it owns and controls.
    While new terrorist financing challenges will surely 
emerge, Treasury and its interagency partners will continue to 
employ a range of measures to identify, disrupt, and dismantle 
terrorist financial networks and work to identify and close 
loopholes that terrorists and other illicit actors can use to 
access the international financial system.
    Thank you for the opportunity to testify today, and I would 
be happy to answer any questions you might have.
    [The prepared statement of Mr. Glaser follows:]
    
    
    
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    Mr. Poe. Thank you, Mr. Glaser.
    Mr. Keller, you have 5 minutes.

STATEMENT OF MR. ANDREW KELLER, DEPUTY ASSISTANT SECRETARY FOR 
 COUNTER THREAT FINANCE AND SANCTIONS, BUREAU OF ECONOMIC AND 
           BUSINESS AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Keller. Chairman Poe, Chairman Wilson, Ranking Member 
Keating, Ranking Member Langevin, distinguished members of the 
committees, thank you for the opportunity to speak here today 
about the State Department's counterterrorism finance efforts.
    Counterterrorism finance is a top priority for the 
Department of State, and we have a wide variety of tools to 
disrupt terrorist financial networks. It is a complex and 
dynamic threat and one that requires the U.S. Government to 
utilize the full range of its resources and authorities.
    My office at the State Department helps coordinate policy 
and liaise with our interagency partners, including the 
Departments of Treasury and Defense, to achieve our 
counterterrorism goals. We also work closely with the State 
Department's counterterrorism bureau and the Department of 
Treasury on counterterrorism finance sanctions to ensure that 
our sanctions promote broader U.S. foreign policy interests.
    The fight against ISIL is one of the top national security 
priorities, and it is my principal counterterrorism focus. That 
is where I will focus my remarks today.
    As you highlighted, Chairman Poe, ISIL's revenues in 2014 
and 2015 made it the richest terrorist group in the world, yet 
as a result of U.S. and coalition efforts, ISIL's revenues are 
on a downward trajectory, which has impacted its operations in 
Iraq and Syria. I would like to provide two examples.
    ISIL has cut salary payments to its fighters in Raqqa and 
Mosul by 50 percent, leaving many ISIL fighters to defect. And 
ISIL has increasingly resorted to arbitrary tax increases and 
outright theft to make up the funding gap, further undermining 
its claims to legitimacy.
    While we are encouraged by these indications of financial 
stress, we are fully aware that there is still much work to do 
to further weaken ISIL on the financial front. Our most 
effective method of disrupting ISIL's revenues to date has been 
U.S. and coalition strikes against their oil and gas supply 
chain and cash storage sites. These efforts have reduced ISIL's 
oil revenues by up to one-third and destroyed tens and 
potentially hundreds of millions of dollars' worth of cash.
    Kinetic efforts have complemented diplomatic efforts aimed 
at ISIL's finances. The U.S. Government helped establish and 
now coleads an international working group dedicated to counter 
ISIL finance, and we have negotiated multiple U.N. Security 
Council resolutions to increase financial pressure on ISIL. In 
particular, I would highlight Security Council Resolution 2199, 
which imposes obligations on all countries to take steps to 
combat ISIL financing, particularly in the areas of oil, 
antiquities, and kidnapping for ransom.
    The Department of State also conducts bilateral diplomatic 
engagement with key countries in the Middle East and around the 
world. Our Embassies consistently engage foreign government 
officials on specific terrorism finance matters, promote 
counterterrorism finance tools more generally, and encourage 
implementation of domestic and international legal framework to 
combat terrorism.
    In an effort to address the systemic gaps in the 
international system that terrorists and other criminals 
exploit to raise and transfer funds, the State Department also 
allocates significant funding to build the capacity of partner 
countries to counter terrorist financing. The Bureau of 
Counterterrorism is helping partner nations build their 
capacity to investigate and prosecute illicit financial 
transactions, while the State Department Bureau of 
International Narcotics and Law Enforcement funds programs to 
help countries identify how they can improve their antimoney 
laundering and counterterrorism finance regulations.
    With regard to trafficking in antiquities, the Department 
of State has also led outreach to prominent antiquities 
dealers, auction houses, and museum administrators. We have 
offered up to $5 million worth of reward money for information 
leading to the disruption of ISIL's trafficking in antiquities 
through our Rewards for Justice program, and we have funded 
government and civil society training program to help protect 
antiquities in Iraq, Syria, and Libya.
    Terrorism finance is a multifaceted and dynamic problem, 
and ISIL has proven to be a resilient foe. As our efforts 
targeting ISIL financing demonstrate, counterterrorism finance 
is a top property priority for our State Department and our 
interagency partners. We will continue to use every tool 
available to maintain the growing effectiveness of our economic 
campaign.
    Thank you very much, and I look forward to your questions.
    [The prepared statement of Mr. Keller follows:]
    
    
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    Mr. Poe. Thank you, Mr. Keller.
    Ms. Whelan.

STATEMENT OF MS. THERESA WHELAN, ACTING ASSISTANT SECRETARY FOR 
 SPECIAL OPERATIONS/LOW INTENSITY CONFLICT, U.S. DEPARTMENT OF 
                            DEFENSE

    Ms. Whelan. Chairman Wilson, Chairman Poe, Ranking Member 
Langevin, Ranking Member Keating, and other distinguished 
members of the subcommittees, I appreciate the opportunity to 
share information with you about the Department of Defense's 
counterthreat finance capability.
    DOD's counter-threat finance, or CTF, supports both 
military operations and U.S. Government partners, including our 
law enforcement colleagues. DOD CTF identifies and exploits the 
financial vulnerabilities of terrorists and transnational 
criminals.
    Over a decade ago, we built a small but effective CTF 
capability within the Department through our counternarcotics 
authorities and appropriations. Counternarcotics is an 
appropriate source of authority and resources, given that the 
drug trade remains the world's most lucrative criminal 
enterprise.
    Funds from the illegal drug trade are often associated with 
other illicit criminal enterprises, insurgencies, and terrorist 
organizations, including the Taliban in Afghanistan; the 
Revolutionary Armed Forces of Colombia, the FARC; and Lebanese 
Hezbollah.
    Today, DOD has dedicated CTF teams at its combatant 
commands, at the National Guard Bureau, and at intelligence 
components. The CTF teams analyze financial intelligence, 
integrate intelligence in operations, and coordinate and 
execute CTF activities within the Department and with and in 
support of U.S. interagency partners.
    DOD is not the lead U.S. agency for conducting CTF, but DOD 
employs unique analytic capabilities to assist other partners 
in accomplishing the overall CTF mission. For example, DOD 
analysts help support our Department of Treasury colleagues' 
efforts to develop designations against individuals and 
organizations engaged in illicit finance.
    DOD CTF analysts help to identify vulnerabilities and to 
create a comprehensive analysis for U.S. Government partners to 
target an adversary's financial structure. CTF has proven to be 
a cost-effective tool against threatening forces and 
transnational criminal organizations, whether through law 
enforcement actions, designations, sanctions, or, as in the 
case of ISIL, through military actions against economic and 
financial targets.
    DOD CTF supports the Department of State and the Department 
of Treasury, which are the coleads for the U.S. Government's 
effort to disrupt ISIL's finances. Over the past several 
months, ISIL has lost financial capability and revenue. 
Coalition military operations informed by CTF have struck 
nearly two dozen ISIL bulk cash storage sites and multiple 
targets affiliated with ISIL's illicit oil industry. Recent 
estimates indicate ISIL's oil production has decreased by up to 
30 percent, and their ability to generate revenue has been 
reduced by at least as much.
    In order for DOD CTF to continue supporting these and 
future successes on the battlefield and in law enforcement and 
diplomacy, we must ensure that our CTF capability is well 
grounded in our Department's policy planning doctrine and 
training and education. For example, last October, the deputy 
secretary of Defense recertified DOD's directive on 
counterthreat finance policy through 2020. We also are working 
to ensure that DOD plans and joint doctrine include CTF where 
appropriate.
    Congress' support for the DOD counterdrug authorities and 
counterdrug funding underpins our CTF program success. Thanks 
to congressional support, executive branch partnership, and our 
talented DOD CTF personnel who work quietly behind the scenes, 
DOD CTF continues to provide a cost-effective capability 
against international terrorists and criminal adversaries that 
threaten our Nation, its citizens, and our allies.
    Thank you for this opportunity to share with you the 
information about DOD's counterthreat finance program, and I 
welcome your comments and questions.
    [The prepared statement of Ms. Whelan follows:]
    
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    Mr. Poe. Thank you, Ms. Whelan.
    Mr. Woody.

STATEMENT OF MR. WILLIAM WOODY, CHIEF OF LAW ENFORCEMENT, U.S. 
                   FISH AND WILDLIFE SERVICE

    Mr. Woody. Good afternoon, Chairman Poe, Chairman Wilson, 
Ranking Member Keating, Ranking Member Langevin, and members of 
the subcommittees. I am William Woody. I am chief of law 
enforcement for the U.S. Fish and Wildlife Service, and I 
appreciate the opportunity to testify before you today.
    Wildlife trafficking is a multibillion dollar illegal trade 
fueled by demand and enabled by corruption, limited legal 
authorities, and law enforcement capacity. Globally, organized 
criminal groups have seized upon wildlife trafficking as a low 
risk, high reward, and have made illegal wildlife trafficking a 
crisis.
    Our special agents and inspectors have specifically 
documented transnational organizations involved in trafficking 
of endangered species. We have documented Eastern European and 
Russian organized crime in the caviar trade, Irish organized 
crime in the rhino horn trade, Mexican drug organizations in 
the totoaba trade, African gangs in the elephant ivory poaching 
and smuggling, and Asian criminal groups in timber trafficking. 
I would like to draw your attention now to the slides. Of 
course, the slides won't come up.
    Mr. Poe. Is that the slide you are looking for?
    Mr. Woody. That is the slide I am looking for. Thank you, 
sir.
    Mr. Poe. Who are those guys?
    Mr. Woody. This photo represents criminals arrested 
nationwide for trafficking in rhino horn, elephant ivory, 
totoaba, and narwhal tusks. A number of these individuals were 
arrested in our investigation named Operation Crash, which is 
focused on rhino horn trafficking. To date, Operation Crash has 
resulted in 41 arrests, 30 convictions, and the wildlife and 
their proceeds seized in this case have a street value in 
excess of $75 million. In addition to crimes against wildlife, 
the defendants have also been charged with money laundering, 
tax evasion, falsifying documents, mail fraud, and bribery.
    Photo 2, please. Jimmy and Felix Kha were convicted of a 
number of crimes related to international trafficking of rhino 
horn. During these investigations, our agents conducted a 
financial analysis of Kha's business, the Win Lee Corporation. 
Records revealed that large deposits were being made into bank 
accounts from others who became targets of the investigation as 
well. The documented foreign wire transfers confirmed foreign 
nationals involved in rhino horn trafficking here in the U.S. 
By the use of FinCEN records, our agents were able to 
substantiate money laundering activity in a scheme involving 
use of gold as currency and use of safety deposit boxes.
    Photo 3, please. The Kha and their businesses were 
sentenced to pay over $1 million in fines and penalties and 
restitution, and in addition, forfeited over $2 million in 
assets, including gold, cash, jewelry, and vehicles.
    Photo 4, please. This photo shows two Chinese nationals who 
had bribed a Customs official at the Dar es Salaam airport in 
Tanzania. They were able to smuggle eight suitcases full of 
ivory out of Tanzania destined for Hong Kong.
    Photo 5, please. This photo shows the content of the 
suitcases that were intercepted and seized in Switzerland while 
in transit. Our regional U.S. Fish and Wildlife Service attache 
was able to assist Tanzania authorities in their investigation 
and collection of forensic examination of the evidence seized.
    Photo 6. To illustrate the current illegal wildlife trade 
in the U.S., this photo shows elephant ivory and narwhal tusks 
forfeited by an antiques dealer who was sentenced in Federal 
court in New York for the unlawful import and sale of ivory in 
2016.
    Photo 7. This photo is a sample of various elephant tusks, 
ivory carvings that have been interdicted and seized at the 
U.S. mail international sorting facility in Miami during the 
course of an ongoing multiagency enforcement operation. This 
operation alone has identified nearly 90 individuals and 
businesses and involves over 250 smuggling incidents in which 
elephant ivory was smuggled from the U.S. to China.
    Next photo, please. This photo depicts over 200 swim 
bladders that were seized in a California residence drying and 
awaiting shipment. In 2014 and 2015, CBP, ICE, and Fish and 
Wildlife Service agents seized over 530 totoaba swim bladders 
that were smuggled into the U.S. Totoaba is an endangered fish 
found only in the Gulf of California whose swim bladder is 
highly prized as a delicacy. Eleven individuals smuggling 
totoaba have been arrested. During an interview with one of 
those smugglers, he stated that on one occasion, five totoaba 
swim bladders were sold for $50,000 to a recipient in Hong 
Kong.
    While we have made great strides recently to address 
wildlife trafficking, there is still much work to be done. 
Wildlife trafficking persists at unsustainable levels and the 
role of sophisticated, highly organized criminal networks may 
present an opportunity to support and fund insurgent or 
terrorist activities and makes even more an urgent threat to 
the wildlife communities and global security.
    I thank you for the opportunity today to present testimony, 
and I appreciate the subcommittees' support in our efforts to 
combat wildlife trafficking. And I would be pleased to answer 
any questions you may have. Thank you.
    [The prepared statement of Mr. Woody follows:]
    
    
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    Mr. Poe. I thank all of you for your testimony before the 
subcommittees.
    The members of the subcommittees will have votes shortly, 
but we will take turns asking questions until the votes begin, 
and then we will resume 15 minutes after the last vote.
    I recognize myself for some questions.
    I have been making a list of the things you have commented 
on on how the bad guys get money, and let me go through those, 
and then I want you to add those that I missed.
    First of all, cash from rich donors, individual donors in 
foreign countries, they just send cash to the terrorist groups; 
the black market of goods, tobacco, for example, as the ranking 
member mentioned; the trafficking of people, the sale of people 
as sex slaves; ransom payments; bank robberies; oil on the 
black market; antiquities; drug trafficking; ISIS tax people in 
their areas if they are not loyal to ISIS, if they are 
Christians or some other Muslim faith are taxed; this 
disturbing news about wildlife trafficking; and then you have 
state sponsor of terror, Iran who gives money to Hezbollah 
wherever they are in the world.
    Did I leave out any? You all are awful quiet. I mean, this 
is disturbing news here. I am not going to be critical of what 
we have done. I just want to try to see if we can move forward 
and stop the money flow.
    Mr. Woody, your testimony is compelling. My understanding 
is if something doesn't happen pretty soon, elephants in Africa 
and the rhinos are going to be extinct. Is that correct?
    Mr. Woody. That would be correct, sir.
    Mr. Poe. The elephant tusks end up eventually--most of 
them, not all--end up in China. Is that correct?
    Mr. Woody. That is correct, a good majority of them do.
    Mr. Poe. And rhino horns are ground for their powder, and 
they end up in Vietnam.
    Mr. Woody. They end up in Vietnam, in China. They also use 
them for libation cups for different carvings as well too.
    Mr. Poe. All right. And what about foreign charities or 
charities working in the United States as a foreign--or as a 
charity, do they raise money for terrorist groups? Any of you 
want to weigh in on that?
    Mr. Glaser. Yes, charities raise money for terrorist 
groups.
    Mr. Poe. Like what charities? You have any names? You can 
name names in----
    Mr. Glaser. No, I would be happy to name names. I don't 
have the names at the tip of my tongue, but as recently as 
March 31 of this year, we designated two charities in Pakistan 
and Afghanistan who are actively involved in terrorist 
financing.
    Mr. Poe. Okay. What about domestic charities in the United 
States?
    Mr. Glaser. There have been domestic charities that have 
been designated and prosecuted for terrorist financing. Holy 
Land Foundation is probably the largest example of that.
    Mr. Poe. Okay. The Holy Land Foundation. All right. Let me 
ask you this. How do we get all you all and the folks in law 
enforcement working to share information, intelligence about 
what is being done worldwide on financing terror groups? 
Because my understanding is everybody is kind of doing their 
own thing. I am not saying they are doing a bad job. They are 
just doing their own thing without coordination with other 
American agencies and then foreign governments.
    Ms. Whelan, you want to weigh in on that?
    Ms. Whelan. Yes, sir. I think--well, I know from the 
Department of Defense's standpoint, we actually provide a great 
deal of support to our partners at Treasury and in law 
enforcement with our CTF teams and liaison officers. So we are 
in sort of regular contact with them on a day-to-day basis 
working together to share information.
    We have a number of enterprises within the Washington area 
in which we gather together to share information, situational 
awareness. So I think while there is always room for 
improvement, I think we have a pretty good basis right now of 
information sharing, certainly we feel, between the Department 
of Defense and the----
    Mr. Poe. But are we doing enough? Are we doing enough? I am 
not critical of what we are doing. I am just asking are we 
doing enough? Because of all of these different ways that the 
bad guys, outlaws raise money, how can we move forward to do 
even a better job? You got some ideas?
    Ms. Whelan. Well, I think we can just expand on what we are 
currently doing, and we are getting better at it. Certainly, 
there is resource constraints in terms of people and in terms 
of intelligence collection assets, but we are definitely 
improving our coordination. I think we have made a lot of 
progress in just the last couple of years.
    Mr. Poe. All right. I will have additional questions I will 
submit for the record for you all to answer.
    I will recognize the chairman of the subcommittee, Mr. 
Wilson from South Carolina.
    Mr. Wilson. Thank you, Judge Poe, and thank you for your 
obvious passion about this issue and making a difference.
    And Secretary Whelan, in your testimony, you discuss how 
the Department of Defense is working to institutionalize 
counterthreat finance capabilities across the force and within 
the services. Can you provide some additional examples of how 
you are doing this? And additionally, are you seeing demand for 
counterthreat finance experts continue, and if so, how are you 
managing that while other resources across the Department 
continue to diminish? And finally, is the counterthreat finance 
a high enough priority for commanders to pay attention and 
dedicate resources to so that we can properly institutionalize 
lessons learned?
    Ms. Whelan. Thank you for the question, Mr. Chairman.
    Yes, we actually, number one, the first part is we are 
progressively institutionalizing counterthreat finance within 
the Department, and it is--it has gained tremendous amount of 
traction, particularly in the combatant commands. But a couple 
of things, additional things we are doing beyond the DOD 
directive that I mentioned in my testimony, we are including 
CTF in our professional military education courses.
    In fact, the National Guard Bureau has been very helpful to 
us in developing courses for CTF, for personnel within the U.S. 
military. Additionally, the services are now, as they manage 
their personnel, they are looking for people with CTF skill 
sets so that they can provide them. There is a demand signal 
from the COCOMs, particularly CENTCOM, and it has a very 
significant and robust CTF effort. I was just down in Tampa 2 
weeks ago and met with that team.
    So this has definitely got traction within the Department. 
I don't see that it will lose traction. We have integrated it 
into our program planning and budget process, and we are also 
working with the COCOMs to integrate CTF into planning and 
doctrine. So I believe that we do, obviously, have resource 
constraints in terms of personnel available to devote to this, 
and as I mentioned briefly, the intelligence assets that we 
have to devote to this. But within the constraints that we are 
currently working under, I think that everyone is putting 
forward 100 percent effort to do more on the CTF front.
    Mr. Wilson. Well, we certainly look forward to working with 
you on that.
    And, Chief Woody, you have really gotten the attention of 
Judge Poe. He was extraordinarily intrigued by this particular 
picture. If you can explain it one more time, and then how is 
it that Fish and Wildlife is coordinating with law enforcement 
efforts across the United States to stop the global financing?
    Mr. Woody. Okay. You want me to explain the picture again?
    Mr. Wilson. Yeah, one more time, please.
    Mr. Woody. It is--those are totoaba fish bladders. Totoaba 
is a fish that is found in Sea of Cortez, and they dry the 
totoaba bladders out. Totoaba bladders sell, they make a soup 
called maw, and totoaba bladders, they do sell for $10,000 and 
higher on those.
    So that is--in that particular picture there, ICE was 
working a case in conjunction with Fish and Wildlife Service. 
Really what that is, that is a drop house, and they were moving 
the totoaba bladders up into the U.S. They were being dried in 
that house and they were awaiting shipment to another--they 
were making a shipment to Asia and move them there. So to 
coordinate----
    Mr. Wilson. And one inquiry. You said Sea of Cortez. Where 
is that?
    Mr. Woody. Or in Gulf of Mexico. Not the Gulf of Mexico. 
Sea of Cortez, California, off the coast of Baja.
    Mr. Wilson. Okay. But Colonel Cook is very familiar with 
this, so he will let us know.
    Mr. Woody. Okay. Very good.
    Mr. Wilson. That is very serious.
    Mr. Woody. And then the other thing, coordinating. We 
have--with the executive order on wildlife trafficking, I have 
to say in the last 3 years, all the people sitting at this 
table, they all have people that sit on the wildlife task 
force. And we have coordinated, through the United States and 
throughout the world, on setting up a whole number of different 
things that we have never really been at with wildlife before. 
For example, with U.S. Fish and Wildlife Service, we are now 
establishing attache positions throughout the world.
    Currently, we have just put five people out in the regions 
that tie into State Department's wildlife enforcement networks. 
We put five attaches out. We are planning to put another four 
out this year. They work very closely in the regions with the 
governments in different regions working on wildlife 
trafficking issues: Everything from the finance, to the 
trafficking, to the lab work that they need done as well.
    Mr. Wilson. Thank you very much.
    Mr. Poe. I thank the gentleman from South Carolina.
    The committees will be in recess until 15 minutes after the 
last vote starts, and we will resume with the questions from 
Mr. Keating from Massachusetts.
    The subcommittees are in recess.
    [Recess.]
    Mr. Poe. The subcommittees will come to order.
    The chair recognizes the ranking member of the Terrorism 
Subcommittee, Mr. Bill Keating from Massachusetts, for his 
questions.
    Mr. Keating. Thank you, Mr. Chairman.
    I am curious. There has been cooperation with the United 
States and the EU in terms of the so-called SWIFT agreement, 
which is Society for Worldwide Interbank Financial 
Telecommunication. And I wanted to know, we have heard that 
there is concern from the European front that privacy issues 
might present problems with them cooperating on that. Could any 
of you comment on that being compromised by their concerns and, 
if there are going to be any alterations in that, whether that 
is going to be something we should be concerned about?
    Anyone?
    Mr. Glaser. Thank you for the question, Congressman.
    We have very close cooperation, as you stated, with the 
Europeans on our SWIFT program----
    Mr. Poe. Could you talk a little louder?
    Mr. Glaser. I am sorry.
    Mr. Poe. We are 5 miles away from you up here, so would you 
talk louder? Thank you.
    Mr. Glaser. I apologize, Congressman.
    We do have very close cooperation with the Europeans on the 
SWIFT program, and privacy issues are frequently brought up as 
part of that conversation. But we have always managed to work 
through those issues, and our cooperation with the Europeans 
remains very strong on that program.
    Mr. Keating. All right.
    As the chairman and I were discussing during the break, we 
are both struck by the fact that there is $80 billion annually 
that comes directly from illicit tobacco trade. It is now equal 
to cocaine trade in terms of illicit.
    Is there anything being done to curb that illegal trade? 
What is being done? Is that being used by any groups as well?
    Mr. Glaser again.
    Mr. Glaser. Well, I don't have anything specifically to say 
about illicit tobacco trade. I am sure it is a source of 
organized crime proceeds. I have not seen any indication that 
it is a significant source of terrorist financing proceeds. 
Certainly, our anti-money-laundering regulatory and criminal 
regime would cover any proceeds of that----
    Mr. Keating. Would you think the same for human 
trafficking, as well? That is something you don't hear about, 
but is there any way these groups are getting any kind of 
funds, indirectly or directly, from human trafficking?
    Mr. Glaser. Well, I do believe ISIL does derive proceeds 
from human trafficking. I would say it is more in the order of 
criminal networks that are involved in human trafficking that 
operate in ISIL territory and that ISIL would tax or charge 
fees for allowing them to participate in that activity.
    Mr. Keating. There has been a lot of focus with ISIL on use 
of cyber networks for propaganda and recruitment, but, also, 
the virtual currency exchange platforms are something of a 
concern, as well. Because it is public knowledge now that those 
involved in the Paris attack used prepaid cards to rent hotel 
rooms the night before the attack. We also have concerns with 
Bitcoin and other financing mechanisms.
    Is that something you see as a new challenge or a challenge 
that you have already seen and are trying to address?
    Mr. Glaser. Certainly, the use of virtual currency--
Bitcoin, prepaid cards, things like that--are emerging 
challenges for us. We have revised our anti-money-laundering 
regulations to require a certain amount of transparency with 
respect to how those financial products operate.
    The European Union has not done so yet. I have actually 
traveled to Brussels to have detailed discussions with them on 
this issue, and they are looking at a variety of reforms that 
they could make, actually very, very similar to the types of 
steps that we have taken.
    It is true that there are examples of terrorist 
organizations, including ISIL, using these types of products, 
but I have to say, I don't think that it represents a systemic 
threat at this time. I think there are other ways that these 
organizations use to move funds that are far more significant 
for them.
    Mr. Keating. Yeah.
    Mr. Keller, in particular, you know, Turkey was recently 
taken off the Financial Action Task Force gray list, which is 
used to describe jurisdictions with deficiencies when it comes 
to counterterrorism financing, because it passed new terror 
finance laws.
    But there are experts out there telling us that Turkey's 
implementation of its terror finance laws have been poor. Do 
you agree with that assessment? And, if so, what is the State 
Department doing to encourage Turkey to substantively go after 
terror financing in that regard?
    Mr. Keller. Thank you for the question, Congressman.
    I would start off by saying we work closely with Turkey on 
a variety of fronts. They are a member of our Counter-ISIL 
Finance Working Group. Through recent high-level engagements, 
we now have a border security group that is working on border 
security and aviation.
    We are pleased that they have come off the FATF gray list. 
I think that is a positive step. I think it is fair to say that 
they are not necessarily perfect; no country is. But we 
continue to work with them to try to encourage them to 
implement their laws and basically strengthen their efforts on 
counterterrorism and anti-money-laundering.
    I think it is also important to recognize that Turkey 
itself has been victimized by ISIL terrorism. And so they have 
a strong incentive and are active in trying to eliminate ISIL 
facilitation networks in their country.
    Mr. Keating. Yeah.
    Mr. Keller. And I would invite any of the other panelists--
--
    Mr. Keating. Well, I think--thank you, Mr. Keller. I think 
my time is up, and I yield back.
    Mr. Poe. I thank the gentleman from Massachusetts.
    The chair recognizes the ranking member, Mr. Langevin from 
Rhode Island, for his questions.
    Mr. Langevin. Thank you, Mr. Chairman.
    I want to thank all of our witnesses again for your 
testimony here today.
    So I would like to go back to the discussion we were having 
earlier about lessons learned. So we have touched on how each 
agency, specifically DOD, is institutionalizing counter-threat 
financing. I am also interested in understanding how CTF is 
being institutionalized across the whole of government through 
defined roles, responsibilities, and organizational constructs, 
allowing for more synchronized efforts at a more strategic 
level.
    So, in Afghanistan, CTF was successful. Were there lessons 
learned here?
    Mr. Glaser. Thank you for the question, Congressman.
    So, just to speak about how the Treasury Department is 
organized for a moment and then to speak more broadly about the 
United States Government, the Treasury Department is actually 
unique among all finance ministries in the world in that we 
have one office, run by an under secretary at the Treasury 
Department, that brings together all of the expertise, all the 
resources, all the tools, all the authorities, all the contacts 
that we have as a finance ministry and puts them for the 
singular purpose of advancing U.S. national security, using 
financial tools to advance U.S. national security.
    We are the only finance ministry in the world with our own 
all-source intelligence office. We have a sanctions 
implementation office, we have my office, which is a policy 
office, and we have a financial intelligence unit, FinCEN, all 
under one roof. And it gives us a huge range of unique 
expertise and unique capabilities that we have to put at the 
disposal of the United States Government.
    I do think that we are actually quite well-coordinated 
across the United States Government. As I said in my opening 
statement, there are two components of our efforts against 
terrorist financing. The first component is the systemic 
component, the regulatory component, making sure that the 
international financial system and our financial system is 
transparent and is well-regulated and that it does not provide 
opportunities for terrorist groups, organized crime groups, or 
drug trafficking groups or any other group--Iran, rogue 
regimes--to gain access to the financial system.
    That is largely an effort of coordination among the 
Treasury Department, among regulators, among law enforcement. 
And we have a number of groups that allow us to do that. Most 
importantly--and, I should say, in partnership with the private 
sector. And we have groups like the Bank Secrecy Act Advisory 
Group for that. We had an anti-money-laundering task force, 
along with the regulators. There are a number of groups that 
allow us to coordinate on that.
    The second part is the targeted part, the operational part 
of identifying and undermining terrorist organizations. And, 
again, I feel the government is well-coordinated on that. The 
National Counterterrorism Center within the intelligence 
community organizes intelligence analysis with respect to 
terrorism broadly. My counterpart within Treasury, the head of 
our intelligence office, Leslie Ireland, Assistant Secretary 
for Intelligence Analysis, is also the intelligence community's 
mission manager for illicit finance.
    And then, on an organization-by-organization basis, whether 
it is Hezbollah, whether it is ISIL, whether it is al-Qaeda, 
there is any number of coordination processes that are run by 
the NFC that allow us all to get together and make that sure 
that we are well-coordinated on the issue.
    Mr. Langevin. Okay. Thank you.
    Mr. Keller?
    Mr. Keller. I think I would simply add to that that, 
whether I look to my right to Assistant Secretary Glaser or to 
my left to Assistant Secretary Whelan, I think the counter-ISIL 
effort is a very good example of the coordination that we do on 
a daily basis.
    Our teams work together basically nonstop. The goal of the 
effort is to have a synchronized and sustained and aggressive 
campaign to counter ISIL's finances, using basically all 
available national resources, whether they are coming on the 
kinetic side through DOD and CENTCOM, whether they are on the 
diplomatic side with the State Department, and working very 
closely with Treasury in diplomatic engagement multilaterally 
and bilaterally, or a range of other tools, including the State 
Department's capacity-building programs.
    I would just note that those programs, I think, are some of 
the most effective things that we can do overall, in that they 
are trying to drive systemic change. So, for example, Ranking 
Member Keating had mentioned cigarette smuggling earlier. These 
programs aren't necessarily targeted at cigarette smuggling or 
wildlife trafficking or whatnot. They are targeted overall at 
building investigatory capacity, prosecutorial capacity, 
judicial capacity. We work with customs agencies in other 
countries to try to strengthen all of it. And it can have a 
positive effect on our counterterrorism efforts, as well.
    Mr. Langevin. Okay. Thank you.
    My time has expired, so I will ask Secretary Whelan and Mr. 
Woody to respond, if you would, in writing.
    And, Secretary Whelan, for the record, I have a question 
for you, which is: How is intel shared in a timely manner so 
that all agencies are working within an updated intel picture? 
So, if I had more time, I would get your answer, but my time 
has expired.
    I will yield back.
    Mr. Poe. I thank the gentleman from Rhode Island.
    Ms. Whelan, submit the answer to that question to both 
committee chairs, the full committee chairs, and that will be 
dispersed to everyone, including the gentleman from Rhode 
Island.
    The chair recognizes Colonel Cook--I started to say former 
Marine, but there is no such thing as a former Marine--from 
California.
    Mr. Cook. Thank you, Judge. You are absolutely correct.
    Mr. Keller, if I were President of the United States, 
heaven forbid, but if I said to you, what do you think, one, 
two, or three, are the top countries, state-sponsored aid, 
financial aid, to ISIS or ISIL or Daesh, whatever you want to 
call them, who would you name, one, two, or three? Just 
briefly.
    Mr. Keller. Congressman, I----
    Mr. Cook. Real brief.
    Mr. Keller. I think--I understand the concern about----
    Mr. Cook. No, no. Just in your opinion, your opinion, I am 
asking you as the President of the United States, one, two, or 
three, who do you think they are?
    Mr. Keller. It is a fair question. I don't really have an 
answer----
    Mr. Cook. Okay. Okay.
    Mr. Keller [continuing]. Because we are not seeing----
    Mr. Cook. Okay.
    Then let's go back to what you were commenting on about 
Turkey. And I have a different impression of Turkey because of 
Erdogan. I have some issues with the--I understand the war 
against the PKK, but I am also concerned about what they are 
doing to the rest of the Kurds, which is one of our allies 
against ISIS.
    And it is almost like, are we overlooking that, that some 
people--particularly with Erdogan leaning toward the Muslim 
Brotherhood. Could you address that briefly? Real briefly. I am 
running out of time.
    Mr. Keller. I appreciate the question. I am going to have 
to take that one back. As I mentioned, my focus in this area is 
specifically on the counter-ISIL financial front. So I would 
like to take your question back to our Turkey experts----
    Mr. Cook. Okay.
    Then let me move on to Hamas. Is Hamas helping them out 
with financing, ISIS?
    Mr. Keller. Not that I am aware of, sir.
    Mr. Cook. So there is--okay.
    Mr. Glaser, did you want to comment on that, about the 
situation in Turkey, where, you know, a number of months ago, 
there were--that they were, you know, helping out with the oil 
and everything like that with ISIS. Any comments on that at all 
in the intel sector?
    Mr. Glaser. I think that Turkey has stepped up its efforts 
on the counter-smuggling side. I do think Turkey, as was 
discussed earlier, has work to do on its financial system in 
terms of implementing its terrorist financing laws and making 
sure that its financial system is not available to ISIL.
    Mr. Cook. Yeah. You don't want to answer my question about 
one, two, or three?
    Mr. Glaser. I don't think----
    Mr. Cook. And I am just a dumb Marine, so I have to ask 
simple answers.
    Mr. Glaser. No, I will answer your question directly.
    I do not think ISIL receives state sponsorship--I do not 
think ISIL receives state sponsorship from any country. I think 
Iran is the number-one state-sponsor of terrorism in the world, 
and they sponsor Hezbollah. I do not think----
    Mr. Cook. No, I agree with you on that.
    Mr. Glaser [continuing]. ISIL receives state sponsorship.
    Mr. Cook. Okay. And you are not worried about states such 
as Qatar or some of the Gulf states at all that are involved 
with states that are sponsoring ISIS?
    Mr. Glaser. I do not think Qatar is a state sponsor of 
ISIS, no.
    Mr. Cook. Okay. Thank you.
    I yield back.
    Mr. Poe. I thank the gentleman from California.
    Without objection, the chair will recognize Ms. Gabbard 
from Hawaii, who is a member of both full committees, unless 
there is objection.
    Without objection, you are recognized for 5 minutes.
    Ms. Gabbard. Thank you very much, Mr. Chairman.
    Mr. Keller and, both, Mr. Glaser, you have talked about how 
Turkey has stepped up and that they are doing more. Can you 
give us more specifics on what that is?
    Because, like many of my colleagues, we have concerns about 
the leadership in Turkey, what they have done directly and 
indirectly, what they have not done, more importantly, as well 
as the informal economy that we know ISIS is using to both 
smuggle cash and other things to boost their revenue.
    Mr. Glaser. Thank you for the question.
    With respect to Turkey, in terms of the things that I think 
that they are doing well, I think that Turkey has stepped up 
its counter-smuggling efforts along the border. And I think 
that they have done that significantly, and I think it has had 
an impact.
    Ms. Gabbard. Can you give some specifics about stepping up 
from nothing to what, or from here to there, and some specifics 
on the border, as well, especially the area of the border that 
remains open?
    Mr. Glaser. I am going to have to get back to you with----
    Ms. Gabbard. Because it is just, I am trying to get some 
context here, because Mr. Keller said Turkey is not perfect, 
but perfect is a pretty high bar. So I am trying to figure 
out----
    Mr. Glaser. Right. Well, I think the areas where I would 
say Turkey has a lot of work to do is in taking steps to deny 
ISIL access to its financial system, to its financial 
institutions. We have an active information exchange program 
with the Turks. We are in close communication with them to make 
sure that they understand what we understand with respect to 
the access that terrorist organizations may have to certain 
institutions, and I think it is important for Turkey to follow 
up on that information.
    Mr. Keller. I would agree with Assistant Secretary Glaser's 
assessment.
    I would also note specifically on the oil front, it is our 
assessment that ISIL is not smuggling or selling oil to Turkey 
or to individuals in Turkey, that the oil that is being 
produced in ISIL-controlled territory is being sold and 
consumed in ISIL-controlled territory.
    Ms. Gabbard. And is that something that has changed as of 
late, or were the reports that that was occurring completely 
false?
    Mr. Keller. I would say that is something that we have been 
able to get a much clearer picture of as of--well, I don't want 
to say ``as of late,'' but some of the most helpful information 
and insightful information we were able to glean on this issue 
came from the Abu Sayyaf raid last year. He was the emir for 
oil and gas and antiquities who was killed by U.S. Special 
Forces.
    And they were able to recover a treasure trove of 
information, including on ISIL's oil activities. And the 
picture that we were able to develop from that information 
helped us assess that the oil was being consumed within ISIL-
controlled territory and not being smuggled into Turkey.
    Ms. Gabbard. Are there other operations or things happening 
in this informal market or smuggling other than oil that you 
are aware of?
    Mr. Keller. I think it is possible that antiquities are 
being smuggled out through basically the neighboring countries 
to Iraq and Syria, Turkey being one of them.
    Ms. Gabbard. Okay.
    Thank you, Mr. Chairman.
    Thank you.
    Mr. Poe. The gentlelady yields back the time.
    The chair recognizes the gentleman from Pennsylvania, Mr. 
Perry, for 5 minutes and his questions.
    Mr. Perry. Thank you, Mr. Chairman.
    Secretary Glaser, what is the current policy of the 
administration regarding U.S. dollars in Iran or--U.S. dollars 
are hard currency, right? You would characterize that as hard 
currency?
    Mr. Glaser. Yes.
    Mr. Perry. And what is the current policy regarding hard 
currency, particularly U.S. dollars, in Iran?
    Mr. Glaser. You cannot engage in dollar transactions with 
Iran.
    Mr. Perry. All right. So we are trying to ensure that they 
don't get hard currency, particularly U.S. dollars, right?
    I am sure you are aware that the Iranians' Guardian Council 
just approved the military budget for 2016-2017, which 
increased their military budget by 90 percent, including $1.7 
billion transferred by the U.S. Treasury in January, which 
allegedly has nothing to do with the prisoner swap that 
happened--or, correction, a U.S. hostage swap that happened 
literally at the same time.
    I am just wondering, that transfer of $1.7 billion, what 
currency was that? What was that currency that was transferred?
    Mr. Glaser. I would have to go back and find the answer out 
to that for you.
    Mr. Perry. $1.7 billion. You have no idea?
    Mr. Glaser. No, I do not know. I do not know what currency 
was----
    Mr. Perry. All right. All right. If you would, please, for 
the record, I would like the answer to that.
    You know, the fact that it went directly to the military, 
to the Iranian military, at this point, looking at ISIS taking 
the American equipment left in Iraq, which, you know, paid for 
with American tax dollars, is it fair for me to answer my 
constituents who say to me, haven't we now funded both sides of 
this war, is it fair to say we have in some sense? I mean, it 
is not a ``gotcha'' question, but, I mean, literally, haven't 
we essentially funded both sides of this war?
    Mr. Glaser. No, I don't think that would be a fair thing to 
say. I----
    Mr. Perry. Why not?
    Mr. Glaser [continuing]. Think that we are doing everything 
that we can to attack ISIL's finances. I think----
    Mr. Perry. Wait, wait, wait. ISIS has American-paid-for 
equipment, military equipment paid for by the American 
taxpayers, right? So they are on one side of the operation.
    And we just gave $1.7 billion to Iran in some currency; we 
don't know right now what that is, at least you don't know. And 
they sent it directly to the military, increased their military 
spending this year by 90 percent. That is on the other side.
    How is this not the American taxpayer being on both sides 
of this fight?
    Mr. Glaser. So ISIL got its hands on a lot of U.S. military 
equipment----
    Mr. Perry. Right.
    Mr. Glaser [continuing]. When they won battles in an 
ongoing war. I don't think it would be accurate to say that the 
United States is providing ISIL military equipment. I think----
    Mr. Perry. Well, it wasn't the Russians.
    Mr. Glaser [continuing]. It would be accurate----
    Mr. Perry. It wasn't the Chinese.
    Mr. Glaser [continuing]. To say the United States is----
    Mr. Perry. It is not the Mexicans.
    Mr. Glaser [continuing]. Actively engaged in military 
operations against ISIL.
    Mr. Perry. Let me ask you, with this $1.7 billion payment 
to Iran essentially at the very same time five U.S. hostages 
were sent home and the perception from Americans that it was 
payment in ransom and, as stated by Iran, that it was paid 
for--they called them spies, not hostages--doesn't this 
undermine our policy that we would hope other nations would 
take to not pay ransoms? How do we have the moral authority to 
request that they not pay ransom when it appears to anybody who 
is looking that we have paid $1.7 billion to Iran for five 
hostages?
    Mr. Glaser. Yes, I understand the question. The fact of the 
matter is that that was not a ransom paid for hostages. We have 
been very consistent in our policy of no payment of ransom for 
hostages. And this is something that we have worked very 
closely with countries on around the world to ensure that there 
is a global agreement, a global consensus that payment of 
ransom for hostages is not an appropriate response to----
    Mr. Perry. So if we pay and we get hostages at the same 
time and we just say we didn't, then that equates to it not 
being that? Essentially, suspend reality and just say, well, it 
is two different things.
    I mean, that is rhetorical. I apologize.
    Mr. Keller, hawala. If you can tell us anything you know 
about what we are doing about hawala being used for illicit 
purposes, particularly to fund terrorism, what you are doing, 
and if you have any ideas for how the U.S. Congress can help in 
that effort.
    Mr. Keller. Thank you, Congressman.
    I think in the counter-ISIL context, for example, one of 
the most important things that we have been trying to do all 
along is make sure that ISIL is cut off from the financial 
system, whether it is a formal financial system or informal 
financial system.
    I think through a lot of good work, including from our 
Treasury Department, early on, they worked very closely with 
the Iraqis to cut off banks that were in ISIL-controlled 
territory from the international financial system. In addition, 
we have been working with the Iraqis to cut off money exchange 
houses and more informal operations that are engaged in hawala-
type activities that are in ISIL-controlled territory from 
their ability to participate in----
    Mr. Perry. But it is not just ISIL-related. Hawala is used 
for various measures by numerous countries, not just ISIL and 
not just Iraq. So is there anything that the Congress can do in 
that regard that we haven't done already?
    Mr. Keller. Well, sir, I think you are exactly right, that 
it is not just ISIL-related. And I can tell you--if you indulge 
me, I will tell you one other thing that the State Department 
is doing, which I mentioned earlier, which are these capacity-
building programs that increase the capacity for other 
countries on anti-money-laundering and counterterrorism finance 
programs, whether it is in their judiciary or prosecutorial 
services.
    These are things that can be very helpful--and we also work 
with the treasury departments around the world. These are 
things that can be very helpful as far as helping them----
    Mr. Perry. One final question in that vein, if the chairman 
will indulge me. Do you have any way to quantify when you say 
they can be helpful? So the American people are going to pay a 
certain amount to aid these other countries. How do we quantify 
the results? How do we quantify what we paid for and what we 
got? Is there any way?
    Mr. Keller. That is a great question, Congressman. I would 
like to take that back and get you an answer in writing, and I 
will discuss that with----
    Mr. Perry. I look forward to your response.
    Mr. Chairman, I yield.
    Mr. Poe. The gentleman yields back his time.
    Without objection, the document that Mr. Woody provided to 
both committees will be made part of the record.
    And, also, there may be more questions from other members 
of the committee. As soon as you receive those questions, we 
would want answers in 2 weeks.
    And I would encourage members to file those questions by 
tomorrow.
    And I want to thank the Armed Services Committee and the 
Subcommittee on Emerging Threats and Capabilities, Mr. Wilson 
from South Carolina, and the ranking member, Mr. Langevin from 
Rhode Island, for this joint subcommittee hearing.
    And the subcommittees are adjourned.
    [Whereupon, at 4:15 p.m., the subcommittees were 
adjourned.]

                                     

                                     

                            A P P E N D I X

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                   Material Submitted for the Record
                   
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 Material submitted for the record by Mr. William Woody, Chief of Law 
              Enforcement, U.S. Fish and Wildlife Service


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