[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                       HOW AMERICA AND ITS ALLIES
                       CAN STOP HAMAS, HEZBOLLAH,
                         AND IRAN FROM EVADING.
                     SANCTIONS AND FINANCING TERROR

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

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                          ILLICIT FINANCE, AND
                  INTERNATIONAL FINANCIAL INSTITUTIONS


                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 25, 2023

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 118-51
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                __________

                   U.S. GOVERNMENT PUBLISHING OFFICE                    
54-316 PDF                  WASHINGTON : 2024                    
          
-----------------------------------------------------------------------------------     

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

               PATRICK McHENRY, North Carolina, Chairman

FRANK D. LUCAS, Oklahoma             MAXINE WATERS, California, Ranking 
PETE SESSIONS, Texas                     Member
BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
ROGER WILLIAMS, Texas                AL GREEN, Texas
FRENCH HILL, Arkansas, Vice          EMANUEL CLEAVER, Missouri
    Chairman                         JIM A. HIMES, Connecticut
TOM EMMER, Minnesota                 BILL FOSTER, Illinois
BARRY LOUDERMILK, Georgia            JOYCE BEATTY, Ohio
ALEXANDER X. MOONEY, West Virginia   JUAN VARGAS, California
WARREN DAVIDSON, Ohio                JOSH GOTTHEIMER, New Jersey
JOHN ROSE, Tennessee                 VICENTE GONZALEZ, Texas
BRYAN STEIL, Wisconsin               SEAN CASTEN, Illinois
WILLIAM TIMMONS, South Carolina      AYANNA PRESSLEY, Massachusetts
RALPH NORMAN, South Carolina         STEVEN HORSFORD, Nevada
DAN MEUSER, Pennsylvania             RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
ANDREW GARBARINO, New York           SYLVIA GARCIA, Texas
YOUNG KIM, California                NIKEMA WILLIAMS, Georgia
BYRON DONALDS, Florida               WILEY NICKEL, North Carolina
MIKE FLOOD, Nebraska                 BRITTANY PETTERSEN, Colorado
MIKE LAWLER, New York
ZACH NUNN, Iowa
MONICA DE LA CRUZ, Texas
ERIN HOUCHIN, Indiana
ANDY OGLES, Tennessee

                     Matt Hoffmann, Staff Director
          Subcommittee on National Security, Illicit Finance, 
                and International Financial Institutions

                 BLAINE LUETKEMEYER, Missouri, Chairman

ANDY BARR, Kentucky                  JOYCE BEATTY, Ohio, Ranking Member
ROGER WILLIAMS, Texas                VICENTE GONZALEZ, Texas
BARRY LOUDERMILK, Georgia            WILEY NICKEL, North Carolina
DAN MEUSER, Pennsylvania             BRITTANY PETTERSEN, Colorado
YOUNG KIM, California, Vice          BILL FOSTER, Illinois
    Chairwoman                       JUAN VARGAS, California
ZACH NUNN, Iowa                      JOSH GOTTHEIMER, New Jersey
MONICA DE LA CRUZ, Texas
ANDY OGLES, Tennessee
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    October 25, 2023.............................................     1
Appendix:
    October 25, 2023.............................................    43

                               WITNESSES
                      Wednesday, October 25, 2023

Brodsky, Jason M., Policy Director, United Against Nuclear Iran 
  (UANI).........................................................     5
Goldberg, Richard, Senior Advisor, Foundation for Defense of 
  Democracies (FDD)..............................................     6
Levitt, Matthew, Fromer-Wexler Senior Fellow, the Washington 
  Institute for Near East Policy.................................    12
Noronha, Gabriel, Fellow, Gemunder Center for Defense and 
  Strategy, the Jewish Institute for National Security of America 
  (JINSA)........................................................     8
Zarazinski, Adam, Chief Executive Officer, Inca Digital..........    10

                                APPENDIX

Prepared statements:
    Brodsky, Jason M.............................................    44
    Goldberg, Richard............................................    49
    Levitt, Matthew..............................................    60
    Noronha, Gabriel.............................................    78
    Zarazinski, Adam.............................................    94

              Additional Material Submitted for the Record

Huizenga, Hon. Bill:
    Report to Congress on Renewal of Iraq's Sanctions Waiver for 
      Electricity Payments.......................................   104
Kim, Hon. Young:
    Chainalysis insert, ``Correcting the Record: Inaccurate 
      Methodologies for Estimating Cryptocurrency's Role in 
      Terrorism Financing,'' dated October 18, 2023..............   108
    Elliptic insert, ``Setting the record straight on crypto 
      crowdfunding by Hamas,'' dated October 25, 2023............   116
    TRM Insights insert, ``In Wake of Attack on Israel, 
      Understanding How Hamas Uses Crypto,'' dated October 10, 
      2023.......................................................   119
Brodsky, Jason:
    Written responses to questions for the record from 
      Representative Waters......................................   128
Goldberg, Richard:
    Written responses to questions for the record from 
      Representative Gottheimer..................................   130
    Written responses to questions for the record from 
      Representative Waters......................................   131
Levitt, Matthew:
    Written responses to questions for the record from 
      Representative Gottheimer..................................   132
    Written responses to questions for the record from 
      Representative Waters......................................   132
Noronha, Gabriel:
    Written responses to questions for the record from 
      Representative Waters......................................   133
Zarazinski, Adam:
    Written responses to questions for the record from 
      Representative Waters......................................   135

 
                       HOW AMERICA AND ITS ALLIES
                       CAN STOP HAMAS, HEZBOLLAH,
                         AND IRAN FROM EVADING
                     SANCTIONS AND FINANCING TERROR

                              ----------                              


                      Wednesday, October 25, 2023

             U.S. House of Representatives,
                 Subcommittee on National Security,
                               Illicit Finance, and
              International Financial Institutions,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 3:05 p.m., in 
room 2128, Rayburn House Office Building, Hon. Blaine 
Luetkemeyer [chairman of the subcommittee] presiding.
    Members present: Representatives Luetkemeyer, Barr, 
Williams of Texas, Loudermilk, Meuser, Kim, Nunn, De La Cruz; 
Beatty, Nickel, Pettersen, Foster, Vargas, and Gottheimer.
    Ex officio present: Representative Waters.
    Also present: Representatives Huizenga and Casten.
    Chairman Luetkemeyer. The Subcommittee on National 
Security, Illicit Finance, and International Financial 
Institutions will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    As I discussed with the witnesses, we are going to be 
voting here supposedly between 3:35 and 3:50, so what we would 
like to do is perhaps get the testimonies out of the way and 
perhaps the first couple of questioners, and then we will 
adjourn until we get our vote--I think it is a single vote at 
this point--done, and then come back and finish with your 
discussions. And we will see what we can do.
    Today's hearing is entitled, ``How America and Its Allies 
Can Stop Hamas, Hezbollah, and Iran From Evading Sanctions and 
Financing Terror.''
    Whoa. That is a long title to this hearing. But anyway, we 
have to do better than that, guys.
    I now recognize myself for an opening statement of 5 
minutes.
    First, I thank all of the witnesses for taking time out of 
your busy schedules to be here with us today.
    A little over 2 weeks ago, a terrorist attack was underway 
that would claim the lives of more than 1,400 innocent people 
and injure another 4,500. Many of these were women, children--
even babies--and the elderly, and at least 32 of those who were 
killed were American.
    Eyewitness accounts of these heinous acts were gut-
wrenching. And it was no surprise when Hamas quickly released a 
video claiming responsibility.
    Their behavior on October 7th confirmed that they are not a 
military organization, but rather, terrorists of the most-
barbaric kind. To complicate matters, as Israel was trying to 
defend itself on the southern border, the Lebanese terror 
organization, Hezbollah, sent rockets and infiltrators across 
Israel's northern border.
    What do Hamas and Hezbollah have in common? Among other 
things, they share the same sponsor: Iran. In the attack's 
aftermath, highly-credible news reports, notably The Wall 
Street Journal, asserted Iranian complicity in the Hamas 
attacks. Although the Biden Administration, followed by Iran 
and others, sought to discredit these claims, it could not deny 
that these two proxy organizations get most of their financial 
backing from Tehran.
    How does Iran fund these and other terrorist groups, and 
what can the United States do to stop it? The United States 
began imposing sanctions on Iran shortly after revolutionaries 
seized the U.S. Embassy in Tehran in 1979. Over the years, as 
Iran continued to support terrorism and international chaos, 
the sanctions regime responded and grew into the largest and 
most-complex imposed on any country in the world.
    But in 2015, the Obama Administration negotiated a deal 
that was supposedly intended to stop Iran's nuclear program, 
known as the Joint Comprehensive Plan of Action (JCPOA). The 
JCPOA relaxed many of the tough and effective sanctions that 
the U.S. took years to implement, freeing up billions of 
dollars for the regime and reviving its economy.
    In May of 2018, the Trump Administration appropriately 
withdrew from the agreement, and initiated a maximum pressure 
campaign which reimposed many of the sanctions. This maximum 
pressure campaign had crippling effects on the Iranian regime. 
Iran's official reserves fell from an average of $70 billion in 
2017, to $4 billion in 2020. Its economy was on the brink of 
collapse. This naturally reduced their ability to finance not 
just missile and nuclear programs, but also, terrorist groups 
like Hamas.
    Unfortunately, the current Administration reversed course 
in hopes of reviving the JCPOA, issuing sanctions, waivers, or 
just turning a blind eye to illicit activities that fund the 
terrorist Islamic Iranian State, most importantly, oil 
shipments.
    Also controversially, last August President Biden agreed to 
an understanding with Iran to swap five American hostages for 
five Iranian criminals. But a one-for-one swap wasn't enough 
for Iran, so their president tacked on $6 billion in frozen 
funds, moved from South Korea and Qatar, for Iranian use. That 
money is supposed to be used for humanitarian goods but because 
money is fungible, Iran will, as in the past, probably use 
these funds to import food or medicine it would otherwise have 
to buy with scarce, hard currency and use the hard currency 
they save to fund terrorism.
    To address this terrible error in judgment, last week I 
introduced the Iran Sanctions Accountability Act. If enacted, 
this bill would deploy responsible, due diligence standards 
that would close loopholes and require the President to attach 
requirements to humanitarian aid to prevent funds from directly 
or indirectly supporting illicit acts, including terrorism.
    As I said last week, we cannot blindly trust the Iranian 
Government or any other adversary regime to act responsibly 
with funds which we unfroze or provided for humanitarian aid. 
It is both naive and irresponsible to neglect oversight of U.S. 
dollars once they have left our accounts.
    This hearing is the first of a series of hearings this 
subcommittee will have regarding Iran's role in financing this 
war against Israel, and really, against human decency. Again, 
thank you to the witnesses for being here today to address this 
sensitive and complicated topic. We look forward to your 
analysis and recommendations.
    With that, the Chair now recognizes the ranking member of 
the subcommittee, the gentlewoman from Ohio, Mrs. Beatty, for 4 
minutes for an opening statement.
    Mrs. Beatty. Good afternoon.
    And thank you, Mr. Chairman, for holding this hearing.
    And thank to you our witnesses for not only appearing here 
today, but indulging us as we may have to recess.
    On October 7th, Hamas carried out a devastating surprise 
attack that we all witnessed on Israel, inciting a conflict 
that has led to the tragic loss of thousands of Israeli and 
Palestinian lives, including children and families.
    Let me be clear. We unequivocally condemn those vicious 
terrorist attacks against innocent civilians, and support 
Israel's right to protect and defend itself in the face of 
these atrocities. This horrific attack, which undoubtedly took 
years to finance and plan, underscores the importance of 
identifying and disrupting funding streams for terrorist 
organizations such as Hamas, the Palestinian Islamic Jihad, and 
Hezbollah. It is quite literally a matter of life and death.
    While the largest source of Hamas financing is direct state 
sponsorship from Iran and other countries, the terrorist group 
also generates vast sums of revenue from its global portfolio 
of investments, taxation at border crossings, extortion, and 
racketeering, as well as crowdfunding and charitable donations.
    For decades, Treasury's Office of Terrorism and Financial 
Intelligence (TFI), which includes the Office of Foreign Assets 
Control (OFAC), has endeavored to disrupt Hamas' financing 
operations, and in the wake of the recent attacks, has taken 
immediate steps to further target key Hamas operatives and 
financial facilitators.
    Treasury has utilized several national security tools, such 
as including primary and secondary sanctions, strengthening 
Anti-Money Laundering (AML) and Combating the Financing of 
Terrorism (CFT) frameworks in vulnerable jurisdictions, and 
partnering with regional allies in the private sector for 
information-sharing and coalition-building.
    At the same time, Treasury is also working hard to bolster 
the United States' AML and CFT regimes to prevent bad actors 
from using the financial system to launder money and engage in 
other illicit activities.
    The Biden Administration has employed a multilateral 
approach to U.S. national security, overseeing the most-
significant set of comprehensive sanctions against Iran, while 
Committee Democrats have led the way to eliminate 
vulnerabilities in our financial system with the Anti-Money 
Laundering Act and the Corporate Transparency Act.
    While some of my colleagues on the other side seek to blame 
the Biden Administration for the horrific attack on Israel, the 
fact remains that for the first 2\1/2\ weeks of this conflict, 
the House of Representatives was without a Speaker due to the 
pointless civil war that Republicans were going through, 
rendering Congress unable to respond to this crisis.
    Now, my colleagues have managed to appoint a Speaker that 
we just did on the House Floor, and I look forward to getting 
back to the business of the American people, to protect our 
national security and to provide much-needed aid to our allies.
    Also today, many will want to talk about the $6 billion--
they will want to talk about how those dollars were used to 
fund Iran. I can tell you, because I met with our Deputy 
Treasurer, that that is not true. Those dollars have not been 
requested.
    Mr. Chairman, I yield back.
    Chairman Luetkemeyer. The gentlelady yields back.
    The chairman and the ranking member of the full Financial 
Services Committee each have a minute reserved, but neither of 
them are here, so we will proceed to our witnesses.
    Today, we welcome the testimony of: Mr. Jason Brodsky, the 
policy director of United Against Nuclear Iran; Mr. Richard 
Goldberg, a senior advisor at the Foundation for Defense of 
Democracies; Mr. Gabriel Noronha, a fellow at the Gemunder 
Center for Defense and Strategy at the Jewish Institute for 
National Security of America--that is about as long as the name 
of our committee hearing today; Mr. Adam Zarazinski, the chief 
executive officer of Inca Digital; and Dr. Matthew Levitt, the 
director of the Reinhardt Program on Counterterrorism and 
Intelligence and a Fromer-Wexler senior fellow.
    We thank each of you for taking the time to be here today. 
Each of you will be recognized for 5 minutes to give an oral 
presentation of your testimony. And without objection, each of 
your written statements will be made a part of the record.
    Just a little quick housekeeping note, your microphones 
will only pick up your voice if you put it very close to you. 
Those are the little boxes that you can pull toward you. I 
would ask that you pull that box toward you so when you have 
the microphone straight in front of you, you can speak into 
it--the acoustics in here are very bad--and so we can all hear.
    We have our stenographers over here. If they can't hear 
what you are saying, they have some problems, and we get a lot 
of garbled stuff when they get done. So, please make sure they 
hear exactly what you say.
    And with that, Mr. Brodsky, you are recognized for 5 
minutes for your oral remarks.

STATEMENT OF JASON M. BRODSKY, POLICY DIRECTOR, UNITED AGAINST 
                      NUCLEAR IRAN (UANI)

    Mr. Brodsky. Chairman Luetkemeyer, Ranking Member Beatty, 
and members of the subcommittee, thank you for the opportunity 
to testify today.
    As we sit here, our ally, Israel, is reeling from the 
deadliest attack against the Jewish community since the 
Holocaust. Babies beheaded, elderly women burned alive, and 
Holocaust survivors taken hostage are only a small sampling of 
the atrocities that Hamas terrorists, armed and funded by the 
Islamic Republic of Iran, have inflicted on Israel.
    The ties between Hamas and Tehran, and its proxies like 
Hezbollah in Lebanon, have deepened over decades, involving 
intelligence cooperation, arms proliferation, funding, and 
training. Hamas and Iran have also established a deep 
structural coordination apparatus. The head of the Islamic 
Revolutionary Guard Corps' (IRGC's) Quds Force's Palestinian 
Office in Lebanon, Mohammad Saeed Izadi, presides over this 
enterprise.
    At the very least, in my assessment, Iran's regime had 
foreknowledge of the October 7th operation, given its 
sophistication and the length of time it took to prepare the 
attack. Some Hamas leaders suggested it may have taken as long 
as 2 years to plan the assault, not to mention the increase in 
the Islamic Republic's funding of Hamas over the last year.
    An Israeli security source told Reuters recently that Iran 
raised its funding for Hamas' military ring over the last year 
from $100 million to around $350 million per year. An attack of 
this scale and sophistication may explain why.
    Hamas and the Islamic Republic of Iran had a shared 
interest in the October 7th attack on Israel. The attack 
complicated the normalization process that was underway between 
Israel and Saudi Arabia. Tehran and its partner, Hamas, also 
perceived Israel as weakening from within, a prophecy that 
Iranian leaders have long proclaimed, due to the polarized 
debate over judicial reform in Israel. This increased the Axis 
of Resistance's risk readiness, with the October 7th tragedy 
as, ``Exhibit A.''
    What to do? First, the United States must fully enforce 
U.S. sanctions on Iran. United Against Nuclear Iran estimates 
that Iran has generated approximately $80 billion in revenue 
from oil sales since the Biden Administration took office in 
2021, despite U.S. sanctions remaining on the books. Many of 
these purchases have come from China.
    UANI has deep expertise in this area. Our tanker tracking 
resulted in the U.S. Department of Justice's first-ever 
criminal resolution involving a company that violated sanctions 
by facilitating the illicit sale and transport of Iranian oil 
aboard the Suez Rajan in September 2023.
    This laxness is a policy choice by the U.S. Government. The 
last such sanctions enforcement announcement by the Treasury 
Department was in March 2023. Such an influx in funding to 
Tehran may explain the publicly-reported increases in Iranian 
funding to Hamas over the last year.
    Second, UANI has compiled a list of foreign vessels it 
suspects of involvement in the illicit transfer of Iranian 
crude oil and/or petroleum products. UANI's list has grown to 
353 vessels. This suspected ghost armada, which is distinct 
from but complements Iran's own NITC fleet, has skirted U.S. 
sanctions, and exploited regulatory loopholes to ship millions 
of barrels of Iranian oil. It is time for the U.S. Government 
to fully sanction these vessels, their owners, and their 
operators.
    Third, the U.S. Government should expand and maintain the 
current U.S. counterterrorism sanctions architecture on key 
Iranian entities and individuals. Sanctions on Iran's Central 
Bank and National Iranian Oil Company under Executive Order 
13224 should be maintained, irrespective of any diplomacy with 
the Islamic Republic on the nuclear file.
    The Biden Administration should also lead an international 
campaign to recruit as many countries around the world as 
possible to sanction the IRGC as a terrorist organization, just 
as the United States did in 2019.
    Fourth, the United States needs to fundamentally reassess 
its relations with Qatar following the October 7th attack on 
Israel. In 2022, the U.S. designated Qatar as a major non-NATO 
ally. Qatar has subsidized Hamas' rule in Gaza.
    The U.S. Treasury Department also recently sanctioned a 
Hamas operative based in Qatar who has transferred tens of 
millions of dollars to Hamas, including to its military wing. 
He also has connections to the Islamic Republic of Iran, not to 
mention Qatar harboring, in five-star accommodations, the Hamas 
leader, Ismail Haniyeh, and his predecessor, Khaled Mashal, the 
highest religious authority of Hamas, who has blessed terrorist 
attacks, and others.
    In recent years, Qatar has also hosted the commander of the 
IRGC's Navy, a U.S. Specially Designated Global Terrorist, at a 
defense expo, as well as Mohsen Rezaei, who was wanted by 
Argentina for his role in the bombing in 1994 of a Jewish 
community center in Buenos Aires.
    Fifth, sanctions alone will not effectively counter the 
Islamic Republic. Sanctions need to be paired with a credible 
military threat. Iran's regime knows the United States has the 
ability to cripple its military, but it doubts Washington has 
the will to do so. This is what is shaping the IRGC's current 
calculus and drive for escalation against Israel.
    This is why UANI is supportive of Congress and the Biden 
Administration crafting an Authorization for Use of Military 
Force (AUMF) against the Islamic Republic and its proxies and 
partners.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Brodsky can be found on page 
44 of the appendix.]
    Chairman Luetkemeyer. Thank you, Mr. Brodsky.
    Mr. Goldberg, you are recognized for 5 minutes.

 STATEMENT OF RICHARD GOLDBERG, SENIOR ADVISOR, FOUNDATION FOR 
                  DEFENSE OF DEMOCRACIES (FDD)

    Mr. Goldberg. Thank you, Mr. Chairman, and Madam Ranking 
Member as well. It is an honor to be here, but I wish it was 
under better circumstances.
    As I reflect on what we have all been through in watching 
what has happened in Israel and this incredible massacre that 
we watched, this horrific, horrific event, as Jason just said, 
the largest massacre of Jews since the Holocaust, we think 
about all the assumptions that we have carried with us.
    And Madam Ranking Member, let me just say I am not here for 
a blame game. I have written extensively on these issues. I 
have criticized the Administration. I believe strongly in 
certain policies. But what I believe today is, this is a moment 
to reset assumptions. And those are not my words. A Democratic 
Member of Congress who sat on a panel with me last week at FDD 
said it is time to reset our assumptions.
    I think that is very true, and this is a moment to restore 
bipartisanship on issues that used to be completely bipartisan 
and can be again. This is the moment. If this is not going to 
be the moment, I don't know what will be.
    What are those assumptions? That Hamas, if given the 
opportunity, will moderate, will suddenly become a governing 
force in Gaza? That if we empower other states to sponsor them, 
to enable them, to host them in their countries, they will 
become a moderating force? That is behind us. That assumption 
is gone. Anybody who believed and subscribed to that for years 
with good intentions, that is over.
    The Qataris and the Turks need to be held accountable. We 
can't sit here today and empower countries to host Hamas 
leaders, to give them money, to give them ideological support, 
and to use their media, their state media to amplify their 
propaganda and disinformation. It has to stop. We have to put 
these countries to a choice, and we have the economic tools to 
do just that.
    When we have assumptions as far as whether Hamas continues 
to operate in the United States, to raise money here, we 
remember 20-some years ago the cases against the Holy Land 
Foundation, the Islamic Association for Palestine. We think 
these are things of the past, that if we see Students for 
Justice in Palestine, or American-Muslims for Palestine, 
organizations that are active throughout the country right 
now--we see these pro-Hamas demonstrations and we think there 
is nothing behind that.
    We have done a lot of research for several years at FDD on 
these organizations. We have a lot of new information as well, 
things that the Justice Department, the Treasury Department, 
and Congress needs to examine. Where is the money coming from? 
Where are the connections? Where are people traveling to?
    We have had assumptions about Hezbollah, that we can just 
ignore Hezbollah in our own back yard in Latin America and the 
Western Hemisphere. We have our border patrol telling us 
Iranians are showing up at the border. Hezbollah is active in 
the tri-border area, making money on a whole range of illicit 
activities, including cigarette trafficking.
    What are we doing about it? We have laws. This Congress has 
passed two laws to crack down on Hezbollah. We need enforcement 
of those sanctions, alongside any new sanctions we are going to 
put on Hamas.
    We have had assumptions coming from some in Washington that 
if we open up cash availability to the Islamic Republic of 
Iran, the chief terror sponsor of Hamas, which was complicit in 
this massacre, that somehow Iran will moderate, that it is okay 
to open the valve for money to flow to the Islamic 
Revolutionary Guard Corps that trains, equips, supplies, and 
funds Hamas and other terrorist organizations to carry out this 
massacre, because at least they will slow down that expansion 
of the nuclear program. We will buy some time before they go to 
90-percent weapons-grade uranium production, all while 
encouraging this regime, emboldening this regime, and giving it 
the resources to pour more money into terrorism.
    No blame games here. Action. Bipartisan action. Lock down 
the money. Lock down the $6 billion. Don't forget about the $10 
billion that was made available over the summer, transferred 
out of Iraq to Oman. We have no information on that money 
today. What has happened to that money? We talk about $6 
billion, because the hostage deal was exciting in the news.
    Talk to me about the $10 billion and more money because 
every single month, Iraq continues to make electricity payments 
to Iran into those accounts. Lock it down. You can do that if 
the Administration won't.
    Turn the screws on oil sanctions enforcement. I wrote those 
laws as a staffer. They are not permissive unless you issue a 
national security waiver. They are mandatory. It says, 
``shall,'' not, ``may,'' in the law. You need to turn the 
screws as Congress on a bipartisan basis and crack down on the 
oil shipments from Tehran to China.
    And finally, let me say we have to re-evaluate the way we 
deliver aid into Gaza. We believed that if we just wrote checks 
to the United Nations Relief and Works Agency for Palestine 
Refugees in the Near East (UNRWA), for years, the United 
Nations that doesn't recognize Hamas as a terrorist 
organization, that that money would make it to the people, and 
not to Hamas. We know that is not true.
    Mr. Chairman, I look forward to your questions.
    [The prepared statement of Mr. Goldberg can be found on 
page 49 of the appendix.]
    Chairman Luetkemeyer. Thank you, Mr. Goldberg. I appreciate 
your passion and your information today. That was good.
    Mr. Noronha, you are recognized for 5 minutes.

 STATEMENT OF GABRIEL NORONHA, FELLOW, THE GEMUNDER CENTER FOR 
    DEFENSE AND STRATEGY, THE JEWISH INSTITUTE FOR NATIONAL 
                  SECURITY OF AMERICA (JINSA)

    Mr. Noronha. Chairman Luetkemeyer, Ranking Member Beatty, 
and distinguished members of the subcommittee, thank you for 
inviting me to testify.
    Over the past decade, the Islamic Republic of Iran has 
spent more than $20 billion to support foreign terror groups in 
the Middle East. It has spent tens of billions more of its own 
funds for its own terror operations. And when they chant, 
``Death to Israel,'' and they chant, ``Death to America,'' we 
know from the last 2 weeks that they are deadly serious. And 
given the opportunity, they would not distinguish between 
Democrat and Republican when they attack us.
    Hamas' heinous terror attack on Israel was only possible 
because of increased funding from the Iranian regime. 
Historically, Iran has provided $100 million to Hamas. In the 
past year, however, that support increased to $350 million. The 
maximum pressure campaign forced the regime to cut back those 
funds as our sanctions deprived Iran of $200 billion, according 
to Iran's president.
    Today, Iran is providing 93 percent of Hamas' budget. This 
extra funding allowed Hamas to lay low in preparation for its 
sneak attack. It is ensuring that Hamas can continue their 
attacks against Israel today, and we just learned today that 
Iran trained 500 terrorists of Hamas in their bases as recently 
as September.
    The Iranian regime could only afford this largess because 
it has been flooded with cash in the past 30 months: $80 
billion, as Jason described, in oil sales since the beginning 
of 2021; $10 billion and a questionable payment from Iraq that 
we just learned is now being laundered by the Chinese 
Government--so there are no restrictions on it once that is 
done--and then, the additional $6 billion into Qatari accounts. 
There are also unconfirmed reports that Iran has recently 
gained $6.7 billion in International Monetary Fund (IMF) 
Special Drawing Rights (SDRs) which are under this committee's 
jurisdiction.
    Supreme Leader Khamenei's philosophy is to use all of the 
funds the regime can obtain to advance its foreign policy of 
terrorism, leaving the bare minimum necessary to sustain the 
needs of a functional state, and ignoring entirely the material 
needs of the Iranian people. The United States must not aid 
this effort.
    Over the past 30 months, Iran's economy has rebounded due 
to lax sanctions enforcement and a permissive diplomatic and 
economic environment. As a direct result, they have been able 
to increase their own military and terror budget by double 
digits. The United States can and must reverse this trend.
    I have a few recommendations. First, Congress should force 
the Executive Branch to enforce their existing oil sanctions 
against shipping companies, insurance companies, tankers, 
ports, refiners, and all of those conducting trade in Iranian 
oil.
    Those sanctions need to be mandatory, not discretionary, as 
Rich mentioned. And the same applies to the United States' 
sectoral sanctions against metals and petrochemical industries. 
Their exports have soared in the last 30 months as well, 
generating precious revenue for the regimes. And our sanctions 
on those sectors have barely been enforced, as well.
    The countries most responsible for helping Iran rate 
sanctions are China, Hong Kong--which is run by the Chinese 
Communist Party (CCP)--and the United Arab Emirates (UAE). 
Congress should press the Administration to launch a major 
diplomatic and economic pressure campaign against the CCP to 
pressure their leadership into cutting imports of Iranian oil 
as part of broader negotiations, and we have to let the UAE 
know that business as usual with Iran is over.
    Second, the United States must claw back the $6 billion 
provided to Iran last month. The deal we made with Iran became 
irrelevant when they funded the attack that killed more than 30 
Americans, and took more than a dozen Americans hostage in 
Gaza. I can assure this committee, having worked on Iran's 
sanctions of Asia for several years, that if given to Iran, 
these funds will not be used to alleviate the suffering of 
Iranian people, and I am happy to go into detail.
    The regime has a long history of pilfering food and 
medicine to resell on the black market in Iraq and Afghanistan. 
The proceeds will likely be diverted for terror or stolen by 
regime elites.
    The Treasury Department's temporary freezing of these funds 
is not sufficient. The Iranian regime will inevitably pressure 
Qatar and the U.S. to turn that spigot back on. Perhaps they 
will take more hostages to do so. So, Congress should rescind 
the September 11th waivers and ultimately work to transfer 
those funds to the victims of Iran and Hamas' terror.
    Congress should work to ensure Iran cannot access the $6.7 
billion in IMF funds by codifying restrictions that prohibit 
them from converting Special Drawing Rights to currencies they 
would like to use. And Congress should ensure that all state 
sponsors of terror, including Iran, are excluded from future 
allocations of Special Drawing Rights.
    The status quo must end. Today's policies are enriching, 
enabling, and encouraging the regime to carry out their terror 
plots.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Noronha can be found on page 
78 of the appendix.]
    Chairman Luetkemeyer. Thank you.
    The buzzer a minute ago indicated that we do have votes 
that are being called. What we will do is continue on with the 
testimony, and see once where we are at that point, and where 
we are with the vote.
    So, Mr. Zarazinski, you are recognized for 5 minutes.

  STATEMENT OF ADAM ZARAZINSKI, CHIEF EXECUTIVE OFFICER, INCA 
                            DIGITAL

    Mr. Zarazinski. Thank you, sir.
    Honorable members of this subcommittee, thank you very much 
for giving me the opportunity to testify here today. It is an 
honor and a privilege.
    My name is Adam Zarazinski. I am the CEO of Inca Digital, a 
data analytics and all-source intelligence company focused on 
cryptocurrency. I am also a Major in the U.S. Air Force Reserve 
JAG Corps, and I spent 4 years on active duty.
    I don't like bad people who try to do bad things, and I 
have, in part, dedicated my career to stopping them. By 
utilizing the advantages of blockchains and the crypto 
ecosystem, when combined with other open-source intelligence, 
Inca Digital helps financial institutions and government 
agencies identify and root out those who wish to do harm, both 
to consumers and to the United States and its allies.
    The overall discussion of crypto and how it is used in 
illicit finance is oftentimes chaotic, misconstrued, and taken 
out of context. As a result, we have multiple competing 
narratives, often at opposite sides of the spectrum. On one end 
of the spectrum, many paint broad brushstrokes and argue that 
all crypto is related to crime and illicit finance, and 
therefore, we should do away with crypto outright or restrict 
its use here in the United States as much as possible.
    On the other end of that spectrum, I am sure you are often 
told by lobbyists from large and well-financed crypto companies 
that all crypto transactions are trackable and that there isn't 
anything to worry about, and that every new case of theft, 
fraud, money laundering, or illicit activity is an aberration 
to be ignored.
    Hamas, Hezbollah, and Iran do receive donations via 
cryptocurrency and do use crypto to move money. I have provided 
some examples in my written testimony that show this. But they 
also use local money changers, Hawalas, shell companies at 
banks, trade-based money laundering, and other methods. And, 
therefore, I want to put in context their use of crypto.
    I am sure you all saw The Wall Street Journal article that 
came out about Hamas utilizing crypto to raise funds, and I 
suspect that may be the impetus for me being here today. In 
that article, two forensics companies estimated that a portion 
of $135 million had been received by Hamas and the Palestinian 
Islamic Jihad through crypto since 2020. After that article, 
there was a series of debates, new statements, and new findings 
from different forensics companies.
    For argument's sake, if we use the $135 million as the top-
line estimate, it amounts to about $45 million per year of 
approximately $700 million per year Hamas uses, or about 6 
percent. And that is the biggest number that the industry has.
    The same is true of Hezbollah. The industry's top-line 
highest estimate for their use of crypto is about $4 million 
per year, with close to $1 billion sent to the organization 
directly from Iran, from drug trafficking in South America, and 
other criminal activity.
    My goal of providing the above context is not to minimize 
the role crypto plays in financing these organizations, but we 
must do so within a different framework, which is that the use 
and abuse of crypto is no different than the use and abuse of 
other methods of transferring value.
    Organizations like these are like planets with a 
gravitational pull for illicit funds, and they will try to drag 
money in through whatever vector they can. The key is 
interdicting the bad guys across all vectors, and integrating 
new data analytics to create intelligence as operational 
realities on the ground change.
    While the extent of terrorist financing through crypto 
might sometimes be amplified, it remains an undeniable concern. 
And there are plenty of other national security challenges 
where crypto is now part of illicit operations, from North 
Korean hackers stealing billions, to China building crypto 
infrastructure to avoid U.S. financial rails.
    Even with these challenges, the United States Government 
does not have the capacity to hammer crypto out of existence. 
No amount of sanctions, no amount of stringent policies against 
crypto here at home will stop Iranian or Russian crypto OTC 
providers from laundering money.
    The problem is not primarily on shore in the United States. 
The problem is offshore crypto financial services providers 
that refuse to play ball with U.S. law enforcement because they 
don't have to.
    We, of course, can't ignore the problem and expect it to go 
away either. You are right to be concerned. Hamas and others 
will exploit any weak spot in order to bring in funds, crypto 
or otherwise. In order to interdict this sort of activity, what 
we must do is continue to develop technology to identify and 
stop bad actors in crypto, and to build a strong crypto 
ecosystem here in the United States.
    Bringing crypto onshore is ultimately the best way to 
control these activities, because it will exist offshore 
whether we like it or not, and the more of the market we get 
here to monitor and regulate safely, the better.
    I acknowledge that we are not there yet. So part of the 
goal of the work of our lawmakers should be to draft bills in 
such a way that it can and does get there, and gets here on 
shore in a healthy way that balances privacy and law 
enforcement.
    In other words, one of the best ways to stymie crypto used 
in terrorist financing is to do what we always have, what is 
fundamental to America: to allow for an open society with bold 
thinkers and entrepreneurs pushing the limits of the system 
with technological innovation. Our national security depends on 
it. Thank you.
    [The prepared statement of Mr. Zarazinski can be found on 
page 94 of the appendix.]
    Chairman Luetkemeyer. Thank you.
    I misspoke a minute ago. We do not have votes. They called 
us, but they are going to have some debate first. I was 
misinformed. It will probably be an hour before votes are 
called, so we should be able to go a long way through the 
hearing here. And I look forward to your continued testimony 
and questions here.
    Dr. Levitt, you are recognized for 5 minutes.

 STATEMENT OF MATTHEW LEVITT, FROMER-WEXLER SENIOR FELLOW, THE 
           WASHINGTON INSTITUTE FOR NEAR EAST POLICY

    Mr. Levitt. Thank you, sir. I promise to take less than an 
hour.
    Chairman Luetkemeyer, Ranking Member Beatty, and 
distinguished members of the subcommittee, it is an honor and a 
privilege to be able to be here to testify before you today.
    My name is Matt Levitt, and I used to serve as the Deputy 
Assistant Secretary for Intelligence and Analysis at the U.S. 
Department of the Treasury and, before that, I worked on these 
issues at the FBI.
    In the weeks leading up to this horrendous attack, which I 
think we have to put into context as one of the worst acts of 
international terrorism ever, and one of the worst acts of 
international terrorism ever to affect the United States--
before this, I was gearing up for a major study on the 
financing of Hamas. So if you will allow me, in my written 
testimony, I have gone into great detail about it. I will 
highlight a little bit about it here because I think there are 
some things we need to understand.
    First of all, there are constants, and there are also 
things that have changed. The constant is Iran. Iran has 
financed Hamas since its inception in 1987, with a continual 
regular upgrade in funding. Even when Hamas and Iran broke a 
little bit over Hamas' refusal to back the Assad regime, 
Iranian funding for the military wing in particular continued 
apace.
    And without that funding, Hamas could not be the capable 
organization it is today. And when we look at this, we need to 
not only look at the financing, but we need to look at the 
resourcing. I am interested not only in the money they get, but 
in the weapons they get and in the training they get, and we 
need to take a greater look at that.
    But there are also things that have changed over time. In 
2007, Hamas took over the Gaza Strip by force of arms, turning 
its weapons on fellow Palestinians. The Israelis had already 
withdrawn. At that point, it governed territory. And as we saw 
with the Islamic State, when a terrorist group governs 
territory, it can extort, it can tax, it can run customs, it 
can run racketeering, and Hamas has done all of that.
    Everybody I have spoken to in this country, in Israel, 
agrees that as of right now, Iranian funding for Hamas is the 
second-most significant source of funding. The most-significant 
source of funding for Hamas right now is its ability to fund in 
place.
    Therefore, everything else aside, the Israeli effort to 
dislodge Hamas from governance in the Gaza Strip and from being 
able to use that area as a safe haven and as a cash cow is the 
single-most important thing to be able to deny them money.
    Now when that happens, it will also remove Hamas' greatest 
costs. They will need less money because they won't be paying 
salaries and all that, but it will be a significant, 
significant strike.
    They will also have to deal with Iranian financing of 
Hamas, which is the constant, and here I think we need to focus 
not only on the amounts of money, which have been constant, by 
the way, even constant under maximum pressure. I have yet to 
see any evidence that maximum pressure--and maybe it would have 
if it went longer--but in the amount of time maximum pressure 
was in force, it forced Iran to cut back its support for these 
militant groups. According to Trump Administration officials 
themselves, it increased. That just shows how nefarious Iran 
is.
    What we need to also do is not just stop them from having 
the money to be able to do this, but look at how they transfer 
the funds, and in my written testimony, I get into that in some 
detail.
    There are certain things that were a big deal once upon a 
time, and now they are back again. In particular here, abuse of 
charity. Just in the 2 weeks since this attack, the Revival of 
Islamic Heritage Society based in Kuwait, and designated by the 
United States, has been raising funds for Hamas again. A 
father-daughter team in the Netherlands raised 5 million Euro 
for Hamas. The Union of Good, designated by the U.S. Treasury, 
and created by Hamas, for Hamas to oversee charitable giving, 
is in the business again.
    I am going to skip my comments on crypto, because Adam did 
a great job. I get into it in my written testimony.
    But I think that the three different U.S. Treasury actions, 
including the one this week on Hamas finance and investment 
committees are critical. And I direct you to look at the 
details in my written testimony about the extent of the 
locations across the Middle East and North Africa where this 
happens.
    There needs to be robust sanctions diplomacy with these 
countries. And where that doesn't work, I think Congress has a 
role to play, because it is long overdue for there not to be 
secondary sanctions targeting all foreign terrorist 
organizations.
    As of right now, only with the Hizballah International 
Financing Prevention Act (HIFPA), are there secondary sanctions 
in regard to Hezbollah. Can somebody explain to me why we don't 
have secondary sanctions regarding every other Foreign 
Terrorist Organization (FTO)? And if we went to Turkey and 
said, Hey, the company that Treasury designated last time, that 
this week they show is still working, raising funds for Hamas, 
if you don't want to do something about it, just know there 
will be secondary sanctions. That will have an effect.
    I appreciate the opportunity to testify before you today 
and I look forward to your questions. There is a lot more we 
have to do on Hamas. Thank you.
    [The prepared statement of Dr. Levitt can be found on page 
60 of the appendix.
    Chairman Luetkemeyer. Thank you, gentlemen. Wow. That was 
very powerful testimony from each of you. Thank you very much.
    Now, we will begin the question portion of our hearing, and 
I will recognize myself for 5 minutes.
    Before I get started with my questions, I have another 
question with regards to terror cells here in the United 
States. We continue to see an open border where there are all 
sorts of terrorists pouring through; the number is staggering 
so far this year that they have caught, I think, between 150 
and 200 terrorists. And how many got in before we caught them? 
That is a concern.
    Does anybody have any information with regards to terrorist 
cells here?
    Yes, sir, Mr. Noronha?
    Mr. Noronha. In the first 14 days of this fiscal year, 
there were 30 individuals from Iran encountered at the southern 
border between border crossings, and 68 from Syria. In terms of 
terror cells, there are active assassination plots against 
around a dozen Americans today, including my former bosses, 
Mike Pompeo, Brian Hook, and John Bolton.
    Chairman Luetkemeyer. These are existing terrorist 
activities that are assassination plots right now on American 
citizens?
    Mr. Noronha. Active, active plots on U.S. soil. There have 
been close calls. And those close calls have continued even 
after warnings from the White House against the Iranian regime. 
And there are operatives here in the United States, as well.
    Chairman Luetkemeyer. Are they financed from Iran, or are 
they financed from Hamas and Gaza?
    Mr. Noronha. They are primarily financed from Iran. There 
are bounties of between $300,000 and $1 million on the heads 
of--John Bolton's bounty is $300,000 and Iran's----
    Chairman Luetkemeyer. How is the money transferred? I am 
assuming they are using U.S. banks to transfer the money here 
to allow those cells to exist and to fund them?
    Mr. Noronha. Those payments have been made in crypto 
currency, according to DOJ filings, deposited into the accounts 
of would-be assassins.
    Chairman Luetkemeyer. And those accounts are overseas?
    Mr. Noronha. They are crypto accounts on the chain, on the 
blockchain, as----
    Chairman Luetkemeyer. So, they transfer the money for the 
assassination plots that these cells hope to carry out in 
crypto.
    Mr. Noronha. That is correct, sir.
    Chairman Luetkemeyer. Wow. Okay. We have just scratched the 
surface, haven't we?
    The first question I have is with regards to UN Council 
Resolution 2231 (UNSCR 2231), also referred to as the Iran 
Nuclear Deal. A core component of it prohibits transferring 
missiles, drones, and adjacent weapons technologies to and from 
Iran. That resolution expired one week ago, on October 18th. As 
a result, the UN no longer prohibits Iran from activities 
related to developing nuclear weapon delivery systems, 
including intercontinental ballistic missiles, ICBMs.
    Moreover, the UN Security Council is no longer monitoring 
Iran's imports and exports for items that could contribute to a 
nuclear program. While the U.S. and the E.U. decided to 
maintain restrictive measures against Iran, those two countries 
represent just a small portion of the 193 countries bound by 
UNSCR 2231.
    Mr. Goldberg, please describe the gaps that are in place as 
a result of the expiration of this agreement, that allow Iran 
to buy and sell previously-controlled technologies?
    Mr. Goldberg. Yes, thank you, Mr. Chairman. This is a 
really important issue.
    This Administration has valid multilateralism as something 
paramount in their foreign policy, the value and legitimacy of 
a Security Council resolution of working with allies, of not 
just having America-first policies in our sanctions, but going 
to countries and saying, we have sanctions, we are going to 
enforce our sanctions, and they are in line with the Security 
Council resolution.
    One would think that if you had the ability to keep a 
Security Council resolution restriction on Iran with respect to 
the transfer of missiles and drones and conventional arms, that 
you would want to keep that in place, because we have see Iran 
transferring armed drones to Russia for months, for use against 
the Ukrainian people. We see the ability of Russia now to work 
with Iran to advance their missile program for use against us, 
the United States of America, Mr. Chairman, as you mentioned, 
in their long-term ambition of developing ICBMs.
    So the question is: Could we have avoided this gap that we 
now have? Last Wednesday, when the President was in Israel, 
expressing his solidarity with the Israeli people, it was the 
same day he was allowing, with our European allies, that 
Security Council resolution restriction to expire. It actually 
doesn't have to expire; we can bring it back anytime we want. 
The U.S., France, and Germany can send a letter; we can write 
it in the back right now, Mr. Chairman. ``Dear Mr. President of 
the Security Council, we are triggering the snapback of UN 
sanctions.''
    And in 30 days, it all comes back, and Russia and China 
can't do anything about it. The only reason you wouldn't do 
that is either: (A) you are keeping the possibility of 
continued nuclear negotiation and a nuclear deal on the table; 
or (B) you fear Iran's response. And, therefore, you are 
actually signaling at this moment of trying to restore 
deterrence that we are afraid militarily of the Islamic 
Republic of Iran.
    Chairman Luetkemeyer. Any time you allow yourself to be 
bullied, you are in for trouble. Just mark my words.
    Thank you for your testimony.
    With that, we will yield 5 minutes to the ranking member of 
the subcommittee, Mrs. Beatty from Ohio.
    Mrs. Beatty. Thank you, Mr. Chairman.
    And thank you for bringing up the whole question of funding 
with crypto and crowdfunding.
    And thank you, Mr. Zarazinski, for explaining that. That 
took care of my question.
    But I think that is something we need to pay a lot of 
attention to, that has also been one of the topics in this 
committee, as we look at illicit financing and what can happen 
with that.
    Dr. Levitt, let me go to you. We have talked a lot about 
not only the financing, but the training, and we have talked 
about the weapons and the guns.
    Let's talk about Treasury, since a lot has been said about 
what we could do. Can you put it in perspective for us on how 
the Treasury is or can be working to disrupt these funding 
streams now, or what more can we do?
    Mr. Levitt. Thanks for the question. There is a lot that 
Treasury can do. There is a lot that others can do, as well. It 
is not just a question of Treasury.
    I expect that the designation package that we saw this week 
is not the end, but the very beginning of a slew of actions 
that the U.S. Government, Treasury in particular, are going to 
take, targeting various aspects of Hamas funding and transfer, 
not all, but many of which will involve Iran.
    I think one of the things, in general, that this conflict 
reminds us is that if you don't visit the Middle East, it is 
going to visit you, and that Great Power competition and 
counterterrorism are not mutually exclusive.
    As my colleague just mentioned, when Iran is sending drones 
to Russia, which, by the way, it was doing even before the 
sunset clause just now; the existence of this UN Security 
Council resolution wasn't stopping it. That means that there 
are obvious areas of overlap between Great Power competition, 
regional power competition, and counterterrorism. And we need 
to do a better job there.
    So, I think you are going see some rejiggering within the 
government of full-time employment slots. Many people were 
moved, starting in the Trump Administration and continuing in 
the Biden Administration, from Counterterrorism to Great Power. 
And I understand that, but I think it is pretty clear we are 
going to need to figure out the balance.
    Mrs. Beatty. Let me go to something else that we discuss on 
both sides of the aisle a lot. There has been a lot of 
discussion about this fungibility--and that is with a, ``G''--
that are designated for humanitarian purposes.
    The theory is that there is no way to reliably prevent the 
use of funds designated for food or medicine from being 
diverted towards the financing of terrorism. Any thoughts you 
may have on that?
    Mr. Levitt. Fungibility is a critical issue. So, thank you 
very much for the question.
    There are two issues here: one is the humanitarian aid; and 
then, there are other types of fungibility.
    With respect to my colleagues, I think I have an issue, as 
I have concerns about the $6 billion in the first place. But 
the $6 billion hasn't moved. It is not fungible. Knowing that 
it is there, doesn't help you. That is not part of the concept 
of fungibility, nor did Iran need that $6 billion to be able to 
finance Hamas; this plot was financed long before.
    I don't think there is an issue here of fungibility of 
funds, that the $6 billion affected this particular attack. 
Iran was already responsible for that in other ways.
    Humanitarian aid--I think we need to recognize that there 
has to be a balance. It can't be zero sum. It can't be that we 
are going to stop all money ever going to terrorism, so, we are 
going to do nothing in a humanitarian crisis. And it can't be 
that there is a humanitarian crisis. So, we are just not going 
to do anything to combat terror financing.
    There are all kinds of licenses within U.S. law. The U.S. 
and Ireland put forth a process that passed at the UN Security 
Council so that there is the ability, even in areas of Syria or 
Somalia or the Gaza Strip, where there are terrorists in 
charge, where you can still provide some aid.
    And we are going have to balance that. You don't provide 
all aid. You do it carefully. We can't be comfortable that 
there is any way to ensure that it won't benefit Hamas at all, 
but we have to do something, because otherwise, people are 
going to die.
    Mrs. Beatty. Thank you.
    Mr. Chairman, I only have about 40 seconds left, so I am 
going to forego my last question.
    But I do want to say to all of the witnesses how much we 
appreciate your being here. I know this is emotional for many, 
it is personal; and it is horrific. Three weeks ago, I was at 
the Iron Dome. I was in Israel. And while it is emotional for 
me, I am just thinking, what if it would have been 3 weeks 
later?
    So, again, thank you for all of your comments, and your 
work. We are taking it very seriously, and part of this 
committee is for us to figure out bipartisan pathways because 
we are talking about human lives. It is more than a President, 
and you are very right. It is up to us to listen and bring 
forward something.
    Thank you, Mr. Chairman.
    Mr. Nunn. [presiding]. Well said, Ranking Member Beatty, 
and we appreciate your service both in country and here.
    The gentleman from Texas, Mr. Williams, is now recognized 
for 5 minutes.
    Mr. Williams of Texas. Thank you, Mr. Chairman.
    And thank you to the witnesses for being here today.
    Mr. Goldberg, in your testimony you mentioned several 
foreign actors that are supporting Hamas, Hezbollah, and other 
terrorist organizations. You noted that Hezbollah has been a 
longtime ally to the Mexican drug cartel, which further 
highlights our country's need to secure the southern border. 
And I happen to be from Texas. There are serious issues that 
impact our national security, and it is clear that America's 
enemies are forming alliances to further their common goal of 
waging war against the West.
    So, Mr. Goldberg, we have seen disturbing evidence that 
organizations like Hamas and Hezbollah are taking advantage of 
our wide-open southern border to infiltrate terrorists into the 
United States. We all know that is happening.
    Could you speak about that, and how specifically we can use 
this committee's tools to track and stop these bad actors?
    Mr. Goldberg. Thank you, Congressman. That is an excellent 
question to raise, as my colleague, Mr. Noronha, was just 
discussing the recent statistics in just this fiscal year from 
the border of the foreign nationals who are showing up, and as 
the chairman, before he departed, had referenced the known-
unknowns and who is in that population, as well.
    A country that does not control its border does not have 
its national security under control. I think we should all be 
able to agree on that. Now maybe, we have differences on 
immigration policy and all that, and I don't want to go there. 
But I will say that having control of our border and ensuring 
that the known foreign terrorist organizations and their 
sponsors who are active south of our border with known 
partnerships and connections to the Mexican cartels to move 
things into the United States, including people, need to be 
dealt with in a very serious and sober way.
    There has to be a bipartisan way forward to look at the 
networks that Iran has set up, and that Hezbollah has set up in 
South America, and understand what that threat means to the 
United States, and how we are going to interdict it.
    I personally think it is impossible to get full control of 
this if you don't have full control of the border. But there 
are other tools--economic tools, diplomatic tools--that are 
going to need to be exercised with countries in South America, 
in the Western Hemisphere, and with the Mexican Government, as 
well, to get very serious about this.
    Increase our intelligence collection. Increase our 
financial sanctions picture. Really put pressure on some of 
these governments to crack down. Make arrests. Interdict. I 
think this is going to be critical.
    I know Mr. Levitt has also spent a lot of time looking at 
this, as has my colleague at FDD, Emanuele Ottolenghi. I think 
Americans are missing the big picture. It is not over there. It 
is here. It is in our back yard, sir.
    Mr. Williams of Texas. I think Americans get it. I think it 
is the Biden Administration that does not.
    Thank you for that.
    Iran has been continuously evading sanctions for years by 
using underground financial networks and smokescreens. The 
Trump Administration's maximum pressure campaign dramatically 
reduced Iran's foreign exchange earnings, but now sanctions are 
clearly not having the intended effect due to the lack of 
enforcement in lenient waivers by the Biden Administration.
    Currently, the most significant ways this Administration 
enables these bad actors to financially profit is by turning a 
blind eye to illicit oil sales, authorizing waivers for $10 
billion in electricity sales to Iraq, and releasing $6 billion 
of assets to Iran. Clearly, the Biden Administration's policies 
are allowing the Iranians to evade current sanctions and 
increase their ability to bankroll terrorist organizations. It 
is a bad situation.
    So, Mr. Noronha, how is the Iranian regime exploiting the 
gaps that exist within the current sanctions that have been 
placed against them? And which types of sanctions have proven 
to be the most effective against Iran over the years?
    Mr. Noronha. Thank you, sir.
    Under the multilateral sanctions in 2011 to 2014, we got 
Iran's oil exports down to about 1.1 million barrels of oil per 
day. Under the unilateral U.S. sanctions, we were able to get 
them down closer to 300,000 barrels per day, at times. It 
wasn't always perfect; it fluctuated.
    But we can do more. What they are looking for is for us to 
ignore shipments to China. They are looking for the tankers, 
the insurance companies, all the ports that service those 
boats. They all want to be able to do that without penalties, 
and so far, they have gotten away with that.
    With that, again, Iran's foreign exchange reserves have 
gone from $4 billion at the end of 2020, to as much as $49 
billion today. That has saved their economy from this crisis 
they were facing. They weren't able to conduct basic trade in 
many goods because of it.
    Mr. Williams of Texas. Thank you.
    I have a limited amount of time left, so I yield back. 
Thank you.
    Mr. Nunn. Thank you, Mr. Williams.
    The Chair now recognizes the ranking member of the Full 
Committee, the gentlewoman from California, Ms. Waters, for 5 
minutes.
    Ms. Waters. Thank you very much, Mr. Chairman.
    I am very curious to know what was happening with Saudi 
Arabia, and Israel led by Mr. Netanyahu, in an effort to start 
some kind of peace initiative in the Middle East. Are you 
familiar with that?
    If so, would someone, whomever has some information on 
that, share it with us? Was that real, and were other countries 
involved? Was Jordan involved with that? Who all was involved 
in this effort that supposedly was to be about bringing about 
peace?
    Mr. Noronha. If I may, and I will then turn it over to my 
colleagues, Israel and Saudi Arabia have been in talks for the 
last year-and-a-half to 2 years over a normalization agreement. 
That deal was nearing completion. There were problems with it, 
but they were getting to the final end.
    I think Hamas and Iran understood that, and what they were 
trying to do was weaponize the deaths, and images of death of 
Gazans, to make it harder politically for Saudi Arabia to make 
that peace deal. And that is what they are hoping that these 
attacks and this ongoing war will accomplish.
    Mr. Levitt. Yes, there is no question in my mind that while 
the attacks of October 7th were planned at least a couple of 
years ago, the precipitant event was absolutely a desire by 
Hamas, by Hezbollah, and by Iran to undermine Israeli-Saudi 
normalization.
    If you are Iran, then you know that other countries getting 
together to share defense to be able to stop you and your 
proxies from attacking them, whether it is drones or rockets or 
all of the stuff that Iran's proxies do against Israel, that is 
not in your interest.
    And if you are Hamas, the fact that the Saudis were going 
to ask something of the Netanyahu administration vis-a-vis the 
Palestinians wasn't good news. It was bad news, because Hamas 
isn't fighting because of occupation. Hamas isn't fighting 
because of a lack of a two-state solution. Hamas opposes a two-
state solution. And, therefore, it saw that it would be the 
Palestinian entity on the outs. The extremist would be on the 
outs. So, I think the reason this happened now is all about 
that.
    I will give you a little silver lining. I do believe that 
when the dust ultimately settles--and it will take some time--
if you are sitting in Riyadh or Abu Dhabi or Jerusalem, at the 
end of the day, you look at these events and you see that the 
runt of the litter of Iran's proxies, little Hamas, was able to 
do this and bring the entire region to the precipice, and 
hopefully just the precipice of regional war, and your 
conclusion has to be, no, we really do have to normalize and 
get together.
    At the end of the day, the message has to be clear to all 
parties that the moderates need to partner together because 
this what is Iran is about. This is Hamas. October 7th is 
Hamas.
    Ms. Waters. Let me ask you, because I have not had the 
opportunity yet to read information about cryptocurrency and 
how it could be utilized by Hamas in terms of gathering 
resources that they need to continue with the war materials, et 
cetera, would that connection be Iran? Is the crypto connection 
with Hamas?
    Mr. Levitt. Hamas doesn't need Iran for a crypto 
connection. The nature of crypto is that it is decentralized 
and they can access it themselves.
    I think I would like to defer to Adam on the nature of this 
because that is his business.
    Ms. Waters. Thank you.
    Mr. Zarazinski. Thank you, ma'am.
    I think Dr. Levitt is right. What we see is Hamas utilizing 
cryptocurrency to fundraise. That does happen, and that happens 
external from Iran. You will see in my written testimony that 
they will put up a website, and some websites are not hosted in 
Russia. And they solicit for crypto donations. We can track 
that, and we can watch as funds flow into their wallet 
addresses.
    That is the primary connection, but it is not the only one. 
They are utilizing cryptocurrency to move funds back and forth, 
but the primary method through which Hamas and Hezbollah 
utilize cryptocurrency is fundraising campaigns.
    Ms. Waters. Thank you.
    I don't have much time left.
    I was of the impression that Lebanon was practically 
destroyed, but then I keep hearing about Hezbollah, that it is 
headquartered there with all these missiles. How could that be? 
If Lebanon doesn't work very well, how could Hezbollah be doing 
so well there?
    Mr. Levitt. Hezbollah has the best of both worlds. It is 
part of the government and also apart from the government. And 
it is making decisions of life and death and war and peace 
without asking the government or the people about it. That is 
the problem with Hezbollah.
    And right now, it is bringing Lebanon to the precipice of 
real destruction, if, God forbid, there is serious war beyond 
the escalation we have already seen along the Lebanese-Israeli 
border.
    Ms. Waters. Thank you very much.
    I yield back, and thank you for the extra time.
    Mr. Nunn. Thank you, Ranking Member Waters.
    The gentleman from Georgia, Mr. Loudermilk, is recognized 
for 5 minutes.
    Mr. Loudermilk. Thank you, Mr. Chairman, and I appreciate 
all of our witnesses for being here today.
    As everyone here knows, sanctions are among the most 
powerful tools we have in our foreign policy toolbox. And when 
we use those correctly, we can undermine our enemies' ability 
to fight us conventionally. That said, they only work if U.S. 
payment channels and financial institutions are prolific 
globally.
    Mr. Brodsky, I want to ask first about the effectiveness of 
secondary sanctions in relation to the $6 billion in oil 
revenues that have been discussed in the news lately. In our 
conversation prior to this hearing, and in your testimony, you 
mentioned the need to levy sanctions on Qatar. If we were to 
tighten those sanctions, would that undermine the willingness 
of the Qataris to cooperate in a freeze on that $6 billion in 
oil revenue?
    Mr. Brodsky. Thank you, Congressman, for that question.
    I think that we have to separate out the $6 billion. Right 
now, the U.S. has oversight on how that is being spent in 
Qatar. The issue is the fungibility question, and $6 billion 
that is allocated for humanitarian purchases frees up $6 
billion more in the Iranian budget to enable it to use for 
nefarious purposes around the world.
    Now, we are not advocating for sanctions on Qatar right 
now. We are demanding that they first turn over Hamas 
leadership--Ismail Haniyeh, Khaled Mashal, and others--to U.S. 
custody. And if they don't, that is when consequences have to 
happen and, in our view, the sanctions should be levied.
    Mr. Loudermilk. Thank you for that.
    What about future economic operations targeting Iran 
through Qatar? Could sanctions on Qatar discourage future 
cooperation with U.S. sanctions?
    Mr. Brodsky. I think that it would fire a warning shot to 
Qatar, because Qatar has a choice. It could choose the United 
States, or it could choose the Islamic Republic of Iran. For 
most of us, that is no choice at all. It is the United States. 
So, I do think that it is time to give them that choice and 
make them choose.
    Mr. Loudermilk. Okay. We are going to call their bluff.
    In your opinion, what can Congress do to ensure U.S. 
sanctions on Iran remain credible and don't discourage our 
current partners from engaging with the United States?
    Mr. Brodsky. I think that, first of all, we have to enforce 
our sanctions consistently. As I mentioned in my testimony, 
this has been an ongoing issue. It is a feature, not a bug, of 
current U.S. policy, and that is because, as a part of the 
informal diplomatic understandings, as publicly reported, that 
the Biden Administration had reached with the Islamic Republic 
to de-escalate, the U.S. would turn a blind eye to a lot of 
these illicit purchases of Iranian oil, especially from China.
    What is happening now is that the Islamic Republic has 
violated those understandings. One of the elements of those 
understandings was that its militias would refrain from 
targeting U.S. forces in Iraq and Syria. We have seen at least 
13 attacks over the last few days, which is a clear violation 
of some of the terms, as publicly reported, so that is why we 
need to crack down on that.
    Mr. Loudermilk. What I understand is that there is a side 
deal, per se, that was made with Iran that never came through 
Congress, and even though that side deal was done, the 
Administration is looking away from the violations of what I 
would call an illegal side deal.
    Mr. Brodsky. Yes. It just happened. Those violations just 
happened in recent days, but that should have already triggered 
the U.S. to start enforcing sanctions.
    But, yes, I think that they are looking the other way, and 
there needs to be a fundamental rethink and reset of our Iran 
policy, and that is what is needed at the moment.
    Mr. Loudermilk. So, sanctions only work when they are 
actually enforced.
    Mr. Brodsky. Right. And I would just add there is a 
difference between quantity of sanctions and quality of 
sanctions. With quantity of sanctions, you could levy 400 
sanctions on individuals who have no assets or don't travel to 
the United States, but that does not impact the Islamic 
Republic's decision-making calculus. What does impact the 
Islamic Republic's decision-making calculus is enforcement of 
the oil sanctions and the energy product sanctions.
    Mr. Loudermilk. Mr. Brodsky, I appreciate your testimony 
here.
    I am quickly running out of time, so I really don't have 
time to get into these other questions. I will submit them in 
writing for the record.
    With that, Mr. Chairman, I yield back.
    Mr. Nunn. Thank you, Mr. Loudermilk. Those will be 
submitted for the record.
    The gentlewoman from Colorado, Ms. Pettersen, is now 
recognized for 5 minutes.
    Ms. Pettersen. Thank you, Mr. Chairman.
    Thank you all for being with us today. And I know that we 
have talked extensively about some of the questions that I had.
    We all know that we are on the precipice of an extended war 
and humanitarian crisis in the Middle East, and the committee's 
focus today on Iran and their illicit financing of terrorism is 
incredibly important. Iran is Hamas' most significant funder, 
providing Hamas upwards of $100 million a year. And while we 
still don't know if Iran directly coordinated with Hamas on the 
recent attacks, it is clear that they are complicit with these 
actions.
    And in September of this year, as we have discussed at 
length, the Biden Administration negotiated an agreement with 
Iran for the release of $6 billion in Iranian funds in exchange 
for the release of 5 American citizens. And something that I am 
going to touch on is when we look back since 2015, the United 
States has negotiated with Iran and walked back numerous deals.
    Dr. Levitt, what do you think are the long-term 
implications with our relationship with Iran if we walk back 
this deal, what would the relationship look like in the future, 
and what hings should we contemplate if we move in this way?
    Mr. Levitt. Thank you for the question.
    There can be no question that Iran is a terribly malign 
actor. I think, though, that it is long past time to move past 
the siloed approach that looks only at the nuclear file.
    Recent events show that Iran, through proxies that are 
extremely inexpensive for Iran in terms of its overall budget, 
can do a tremendous amount of damage, not only to the region, 
and not only to our allies, but to us in terms of targeting our 
interests as well.
    We need to balance what sanctions we want to consider 
revitalizing. We also need to balance the nuclear program. So 
while we move out of this silo focus, we need to recognize Iran 
is closer today to being able to have a nuclear capability than 
it was under the JCPOA, and I don't say that as a partisan 
statement.
    So, this is a complicated matter. It is not one to be 
decided in the emotion of the moment.
    I also think that it is not the case that the only way to 
deal with things like the sunset clause is to snap back. I 
don't have any faith in the United Nations tracking these 
things. We were never using the United Nations to track these 
things. It was U.S. intelligence and British intelligence and 
others, and that is absolutely still happening. In fact, our 
European allies, most of them, are saying they are not going to 
respect the end of this sunset, and they are not going to allow 
this.
    So, I think we need to take a holistic view at all of our 
authorities. And while I appreciate the comments, as a former 
Treasury official, about how effective sanctions are, I am 
going to be the skunk in the room and say that sanctions are 
not going to solve your problem, never alone, they have to be 
part of a larger toolkit.
    Ms. Pettersen. Thank you. I would love to talk about that 
larger toolkit. But also, when you acknowledge that sanctions 
are not the only answer, and they have to be used 
strategically, and I think something that I am concerned about 
is if we overuse them, that we push the move away from the U.S. 
dollar and the implications there for our economy.
    And when we look at the roles that Qatar and Turkey are 
playing in financing terrorist groups like Hamas, what do you 
think the long-term consequence is of looking at sanctions, 
because we know that they are supposed to be our allies? They 
hold key military bases for the United States.
    So, how can we think about approaching Qatar and Turkey 
around these issues as well?
    Mr. Levitt. First, I think there is a lot to be discussed 
on concerns about the overuse of sanctions, but we shouldn't be 
too concerned about that.
    There were sanctions on people related to the international 
criminal court that I thought were ridiculous and severely 
undermined the credibility of our sanctions regimes, not just 
that particular set of authorities. But these sanctions are 
here to stay. If we decide that every problem is a nail and 
every solution is a hammer, if every problem has a sanctions 
answer, not only are we not going to be effective, we could 
undermine the ability of sanctions.
    But I don't accept the argument that if we consider 
sanctioning Hamas or Iran, we are automatically moving towards 
the devaluation of the dollar.
    Qatar is an extremely complicated situation. The fact that 
Hamas leaders--leave aside the luxury they are living in--lived 
there while Hamas carried out this attack that targeted so many 
Americans is beyond the pale, and every one of them should be 
indicted, period, for starters.
    We also need to recognize that Al Udeid Air Base is there. 
That is not something we can easily replicate elsewhere, so it 
is not going to be as easy as just saying, hey, we should just 
take Qatar to the wall. There is going to be a process here, 
especially in the moment while they are helping to negotiate 
some hostage releases.
    I don't forgive them for what they have done in the past in 
terms of housing Hamas, but in the moment, we have to let that 
play out.
    Ms. Pettersen. Thank you very much.
    Mr. Nunn. The time has expired. The gentlewoman from 
Colorado yields back the remainder of her time.
    The gentleman from Pennsylvania, Mr. Meuser, is now 
recognized for 5 minutes.
    Mr. Meuser. Thank you, Mr. Chairman.
    I appreciate you all being here with us. Your comments and 
statements have been pretty interesting, and pretty alarming, 
but not surprising. And sort of the sad fact is that we know 
how to correct this. There is a solution here. You are nodding 
your heads. It is a pretty simple solution here.
    Iran funds terrorism, Hamas, Hezbollah. The list goes on, 
and here we are. We have an Administration that is busy doing 
JCPOA, trying to keep them from expanding their nuclear weapons 
against every other country, including Israel and the United 
States.
    I have been to the atomic energy agency. They told us how 
previously, there were about 9 or 10 or 11 violations of 
uranium being moved and everything else taking place with Iran. 
Iran is not to be trusted. They fund terrorism.
    It must be very frustrating, as you are specialists in 
this, that the solutions are pretty much right in front of us, 
and yet we are dancing around them. We have a Biden 
Administration that has this inexplicable affinity, an 
affection for this regime. It is absolutely maddening.
    What is your estimate of how many weapons--I will start 
with you, Mr. Goldberg--Hamas has been provided, whether 
through funding, through payment, or through actual weapons to 
Hamas from Iran, that wonderful country, Iran?
    Mr. Goldberg. As much as $100 million a year can buy, when 
you look at weapons, underwriting, and training.
    Mr. Meuser. Was it higher recently because they were 
getting prepared for war, the terrorist attack on Israel where 
they mutilated 1,400 to 1,500 Israelis, took Americans hostage, 
and killed Americans?
    Mr. Goldberg. We know that since 2021, sir, the IRGC has 
been coordinating an intelligence war room in Beirut where they 
sit with Hamas, Hezbollah, and the Islamic Jihad, and share 
intelligence, train, coordinate, et cetera. The Wall Street 
Journal has extensive reporting, including just a few hours 
ago, on the role Iran has played.
    This is extensive. The idea that we are going to try to 
separate Iran from this massacre is outrageous.
    Mr. Meuser. With a Department of Defense and a State 
Department that say, no, we don't see any direct connection, 
and the White House. And yet, the head of Hamas was in Tehran 
10 days before the invasion. What were they talking about? The 
weather? What do you all think?
    Mr. Goldberg. Do you know what I would like to know? I 
would like to know why 24 hours after Tony Blinken was in Doha, 
the Iranian foreign minister was allowed to show up and meet 
with Hamas' leader who lives there, and why we do nothing about 
it with the Qataris. Why, when we have all of this, do we have 
to balance our act with the Qataris because it is complicated? 
It is not complicated.
    Mr. Meuser. Exactly.
    Mr. Goldberg. It is not complicated.
    Mr. Meuser. The so-called fungibility or nonfungibility--
give me a break. It is a ridiculous argument not to think that 
$6 billion, that the president of Iran, by the way, stated, We 
are going to use the money any way we want, but let's not 
believe him. Of course, it is fungible. You don't need that 
word.
    He can use other funds for military that he would normally 
use to maybe feed his people who are starving and were starving 
more under the Trump Administration. And their economy was 
plummeting because of the oil sanctions. I want to ask about 
that, too.
    Mr. Goldberg. One hundred percent, sir.
    You know what, when people try to make apologies and say, 
oh, this $6 billion would never help them, stop talking about 
the $6 billion. This has been going on since January 20, 2021, 
when we moved from maximum pressure to maximum deference, 
starting to not enforce our soil sanctions.
    You see the surge in the exports starting there. And over 
this summer when we cut the secret nuclear deal, over $50 
billion in this package, that's a lot of money.
    Here is a basic question to ask everyone: Are we better off 
in our national security with the largest state sponsor of 
terrorism having more money or less money? Basic question. Or 
do we have to balance it with their nuclear--why do we have to 
balance? What do we have to balance? Because they might go 
nuclear or we might be forced to actually have a credible 
military threat?
    Well, I will tell you what. If the President of the United 
States right now is going around the world saying, I am going 
to deter Iran, don't you do it, I'm going to move another 
carrier strike group in, who in Tehran believes he is willing 
to do that? He is afraid to snap back a UN sanctions 
resolution.
    Mr. Meuser. Saudi Arabia, Israel, all the countries are not 
in favor of our ridiculous appeasement policy with Iran.
    I am out of time. Thank you all very much. Keep up the good 
work.
    I yield back, Mr. Chairman.
    Mr. Nunn. Thank you, Mr. Meuser. That was a good line of 
questioning there.
    The gentleman from Illinois, Mr. Foster, is now recognized 
for 5 minutes.
    Mr. Foster. Thank you, Mr. Chairman, and Ranking Member 
Beatty.
    First, just a quick comment about the JCPOA. I am a 
physicist, and I have spent I don't know how many hours getting 
classified briefings on the breakout time for Iran under that 
deal, and it was my opinion, as a physicist who understands 
this technology, that it was an incredible blunder by the 
previous Administration to tear up the JCPOA, which resulted in 
a lack of inspectors and equipment looking at the real-time 
performance of the Iranian nuclear facilities. And it was going 
to go down in history as one of the biggest counterproductive 
blunders ever.
    But Mr. Levitt, can you talk a little bit more about the 
entire toolkit? It seems to me that one of the real points of 
leverage that we have with Iran is that young people, 
especially, kind of hate the autocratic theocracy that is 
running the place. And there is a danger that if we provide the 
wrong kinds of sanctions, the wrong kinds of financial 
pressure, it simply gives the government an excuse for why 
things are going so badly.
    So, how do we look at that? And more generally, what is the 
entire toolkit and the pros and cons of using different parts 
of it?
    Mr. Levitt. First of all, thank you for the question.
    I do think that the majority of Iranians aren't buying what 
the theocratic regime in Iran is selling, but it is a 
totalitarian regime, and we see how they react violently 
against their own, whether it is head scarves or anything else.
    I don't think that sanctions can make Iranians suddenly 
like the regime. Even when the sanctions make life difficult, I 
think people understand, especially the type of sanctions that 
we typically employ, that this is targeting a regime and it is 
trying to prevent the regime from doing the types of things it 
wants to do.
    But you are absolutely right; it can't be all sanctions, 
all the time. The goal can't be only to maximize sanctions and 
then the only metrics be how much sanction has there been and 
how much has the economy shrunk. The goal is not shrinking the 
economy. The goal is affecting the nuclear program. The goal is 
affecting their ability to finance militants.
    Those are the metrics we have to look at. How effective is 
the economic pain in changing those policies? We need to have a 
credible military threat. I do believe that when we put two 
aircraft carriers in the region and we say to Hezbollah, in 
particular, I think they hear that.
    But I understand here and even partially agree with the 
argument that over the past several Administrations, things 
have happened or not happened, and our allies maybe aren't 
always 100 percent sure of how we are going to act. There is 
utility in that, too.
    I think there is a lot more diplomacy and sanctions 
diplomacy that can be done. I think the best type of sanction 
is the one you actually, at the end of the day, don't have to 
implement, but I think there are other things we can do.
    The number of children of senior Iranians--the worst of the 
worst--who travel the world, go to school in this country, and 
go shopping in Paris is really astounding. And I think that the 
State Department and visa sanction authorities could be 
employed and should be employed. Global Magnitsky Act authority 
should be employed.
    Because if I am a senior Iranian involved in bad behavior, 
and my wife and children are complaining to me that they can't 
go shopping in Paris or go to school in America, that will 
likely affect me more than, as you heard earlier, a sanction 
against somebody who doesn't come to this country or have 
assets in this country.
    Mr. Foster. Thank you.
    Some of our witnesses seem to think it is simple with 
Qatar, and we should just go ahead and threaten them with 
sanctions. If I recall properly, I think Qatar is very involved 
in the hostage negotiations, in trying to broker a release. Is 
this a simple situation, or is it complicated?
    Mr. Levitt. Yes and no. It is both simple in that Qatar is 
on the wrong side of some things here, and simple that so long 
as Qatar can and is playing any kind of role to get any of the 
hostages out, we should let that play out.
    We have seen this in Israeli domestic politics today where 
one senior Israeli official tweeted out, ``We are grateful for 
Qatar diplomacy.'' And another senior Israel official blasted 
him for it.
    I think that once the crisis, please, God, settles, and I 
don't pretend that is going to happen quickly, then we will be 
able to sit back and say, okay, how do we reassess our 
relationship with Qatar? And I think some of that is going to 
have to happen.
    The idea of allowing the heads of terrorist organizations 
that carry out these types of actions, that victimize so many 
Americans and so many others is just mind-boggling, and that 
can't be allowed to stand.
    Mr. Foster. Thank you.
    I am out of time, and I yield back.
    Mrs. Kim. [presiding]. The gentleman from Iowa, Mr. Nunn, 
is now recognized for 5 minutes.
    Mr. Nunn. Thank you, Madam Chairwoman.
    And thank you to this panel for being here to talk about 
the Iranian regime and their specific support of terrorism.
    As a former counterintelligence officer for nearly 2 
decades, I personally witnessed the hostile acts coming out of 
Tehran, specifically targeting its partners in the region, and 
most recently, those innocent individuals in Israel.
    So, let me be very clear at the start of this. With the 
Ayatollah terrorist group within the IRGC, and the vile members 
of Hamas, the United States is never going to falter in our 
support for Israel or the protection of the homeland. Unless 
you make an informed decision to stand down, I can guarantee 
that members of this committee, both Republican and Democrat, 
are prepared to assert a maximum pressure campaign of our own.
    I want to thank all the witnesses for being here. And as an 
Air Force guy, we are going to go A-10 style and really rapid-
fire these questions. I will begin here with Mr. Noronha. 
Working with the Chair of the subcommittee, we have written a 
bill I am proud to lead, the Revoke Iranian Funding Act. This 
works with members on both sides of the committee to be able to 
address an effort led also by Senator Tim Scott on the Senate 
Banking Committee to permanently freeze the $6 billion in 
Iranian assets. It enhances the transparency to bolster global 
security interest, and it restricts access to other means of 
terrorist financing.
    So, Mr. Noronha, let's be very clear here: Is Iran selling 
medicine and other humanitarian aid for terrorist financing?
    Mr. Noronha. Yes, it is.
    Mr. Nunn. Is Iran falsifying official documents to obtain 
terrorist financing?
    Mr. Noronha. Yes, it has.
    Mr. Nunn. Has the Turkey cooperation facilitated the 
fraudulent documents to empower Iran proxy forces through 
financing?
    Mr. Noronha. Yes, it has, and there is U.S. Government 
documentation of it.
    Mr. Nunn. Is Iran the key provider of weapons and munitions 
to Hamas today?
    Mr. Noronha. Yes, it is, sir.
    Mr. Nunn. Is the IRGC, the Iranian Revolutionary Guards 
Corps responsible for training and equipping Hezbollah?
    Mr. Noronha. Without a doubt.
    Mr. Nunn. In the last week alone, Iran is responsible for 
enabling 14 attacks on U.S. forces in the Middle East. Is there 
any reason to believe that Iran has not been direct in both 
training and equipping these attacks?
    Mr. Noronha. They are 100-percent responsible, sir.
    Mr. Nunn. Then, you would agree that it would be 
insufficient to simply do what the Administration now is doing 
as pausing the distribution of funds, but that Congress should 
enact legislation to permanently freeze Iran's access to any of 
the $6 billion that could go forward if left unchallenged?
    Mr. Noronha. I believe it is vital that the Congress work 
to freeze those funds. I believe your bill and the bill with 
Senator Scott would absolutely be necessary for that. And thank 
you for your leadership on it.
    Mr. Nunn. I appreciate you saying that.
    I am now going to turn to Mr. Goldberg. Does the U.S. have 
a sanctions enforcement problem with Iran?
    Mr. Goldberg. We have a sanctions non-enforcement problem 
with Iran.
    Mr. Nunn. In fact, I think you said it very clearly. We 
have gone from maximized pressure to maximized deference. So, I 
want to be very clear here. The Biden Administration, including 
our friends at the State Department, have obviously turned a 
blind eye to many of the sanctions violations.
    I would like to look beyond. If the State Department is not 
going to do their job, what ways can Congress incentivize our 
partners or legal institutions to report our Iranian sanctions 
violations to hold these bad actors accountable?
    Mr. Goldberg. Yes, Congressman. Thank you for the question.
    I think there is legislation on this, and you can expand on 
it. At this point, the Administration is violating the law 
intentionally and knowingly. You should subpoena documents, if 
possible. Oversight should work with you on that as well, and 
any communications with the Chinese to give them direction to 
continue to import at such levels.
    You cannot go a million barrels per day increase like this 
without it being an intentional, willful policy. So, anything 
you can do to force the Administration to show you the targets 
that they are sitting on at the Treasury Department, which must 
be pretty tall at this point from non-enforcement, and all of 
their communications with any other parties involved, including 
the Chinese, would be very important.
    Mr. Nunn. Let's talk about the real money maker in the 
room. Mr. Brodsky, let's talk specifically about illicit 
Iranian oil sales. Is this the most lucrative source for Iran's 
current funding source to terrorists?
    Mr. Brodsky. Yes. It has been $80 billion since 2021.
    Mr. Nunn. You talk about a ghost armada or the use of 
illicit ships to transport oil and other petro chemicals. How 
would we best combat that?
    Mr. Brodsky. We need to start sanctioning the vessels in 
that 353 group of vessels that are part of the ghost armada. 
These vessels can now use ports because they are not 
sanctioned, and that is a very big problem.
    Mr. Nunn. Who is the biggest provider of Iranian oil to 
other countries? Under what flag do they fly?
    Mr. Brodsky. Panama.
    Mr. Nunn. How many of these ghost ships are directly 
charted to Panama? Do we know?
    Mr. Brodsky. Panama, actually, in the ghost armada itself, 
has flagged 47 percent of that ghost armada.
    Mr. Nunn. Going after their insurance provider is probably 
the key way to stop that. Is that correct?
    Mr. Brodsky. Absolutely.
    Mr. Nunn. Very quickly, I want to follow up with Mr. 
Zarazinski.
    The cryptocurrency that we have talked about today, the 
more that we push it out of the United States, the more illicit 
actors will use cryptocurrency in nefarious ways, is that 
correct?
    Mr. Zarazinski. Yes, sir.
    Mr. Nunn. This is why we need to be able to address it in 
this committee, to bring it back home and regulate it.
    Thank you, Madam Chairwoman. I yield back.
    Mrs. Kim. Thank you.
    The gentleman from California, Mr. Vargas, is now 
recognized for 5 minutes.
    Mr. Vargas. Thank you very much, Madam Chairwoman. And I 
ask that you thank the chairman for organizing this hearing. I 
appreciate it.
    I also want to thank all of the witnesses here today.
    It is important for our country to show a united front in 
unequivocally condemning the atrocities committed by Hamas. We 
need to express our outrage, and I was outraged by Hamas' 
murder and massacre of innocent people in Israel. It was an 
ugly crime against humanity.
    We know Hamas has received funding, weapons, and training 
from Iran. We heard that today from our witnesses. We know 
Hamas has been a designated foreign terrorist organization for 
over 20 years. We know the connections between Iran and Hamas 
are extensive, longstanding, and well-documented.
    We have seen public reporting stating that beginning in 
August, Iranian security officials began assisting in Hamas' 
surprise attack on Israel on October 7th. According to The Wall 
Street Journal reporting, Iran's Islamic Revolutionary Guard 
Corps leaders and Iran's foreign minister participated in 
precursory meetings with Hamas and Hezbollah to coordinate 
these attacks.
    Over time, Iran has grown its network of proxies through 
which it funds its foreign terrorism regimes against our allies 
and partners. According to the Central Intelligence Agency, 
Iran activates these proxies to escalate the threat landscape 
in the Middle East,
    Notably, last week, Iranian-backed Houthi and Palestinian 
Islamic Jihad militants fired missiles at Israel. Thankfully, 
our U.S. Navy had been positioned to intercept some of these 
missiles before they reached Israeli families. This defensive 
measure bolsters the great work that the Biden Administration 
has done to hold Iranian-backed terrorists accountable.
    Just last week, the Treasury Department sanctioned key 
Hamas terrorist group members, operatives, and financial 
facilitators in Gaza and the surrounding region. In addition to 
military aid and targeted sanctions, I would like to applaud 
the Biden Administration for coordinating with Israel to ensure 
the timely delivery of humanitarian aid to Gaza.
    This is not the time for partisan politics. I agree with 
that. We must form a bipartisan front to support Israel's right 
to defend itself, provide humanitarian aid to innocent 
civilians, and hold those responsible for these reprehensive 
attacks accountable.
    In that same spirit of bipartisanship, I am proud to join 
my good friend from Arkansas, Mr. Hill, in introducing the 
Holding Iranian Leaders Accountable Act. This bipartisan bill 
requires the President to report on the assets of certain 
Iranian Government officials and terrorist leaders. 
Additionally, this legislation requires the Secretary of the 
Treasury to seek the closure of U.S. and foreign financial 
accounts connected with these assets.
    Again, I would like to thank my friend, French Hill, and 
his staff for participating on this much-needed legislation. I 
look forward to the day where there is lasting, sustainable 
peace in the Middle East.
    I have to say that today I heard a few criticisms of 
President Biden. I would like to point out the fact that he, in 
fact, went to Israel, stood with Israel, and said that we are 
with you. And, in fact, the signs that are up around Israel 
thank President Biden for his courage to be there. And I think 
we should acknowledge that.
    Again, I very much agree that we should stand with our 
ally. However, I do think that he made a mistake when it came 
to the $6 billion. I do think that is a mistake. I do think 
that we should freeze that money. I don't think it should go to 
Iran.
    We have to be able to criticize our own Administration at 
points, and this is a criticism that I would give. I don't 
think he did it for a mean reason. I think that people 
negotiated the release of hostages, that it was to release the 
hostages, obviously, but I think it was a mistake.
    I hope that we can work in a bipartisan way to try to 
figure this out. I think that it is important.
    But, again, I would thank the President for standing with 
Israel. I think he has made that very, very clear, not only in 
his words but in his actions, putting his own body in place. 
And so, I thank him.
    I do want to ask one quick question before my time is over, 
and that is about Hezbollah. Hezbollah really worries me 
because the amount of missiles they have in southern Lebanon--I 
have been to Lebanon, I have been to Beirut with my good 
friend, Darrell Issa, and that really does concern me.
    Could you say a word or two on that, Mr. Levitt?
    Mr. Levitt. You are absolutely right. Hamas is highly 
incapable compared to Hezbollah. Hezbollah has at least 150,000 
to 200,000 rockets of different types, and at least 200 to 300 
of them are really very dangerous smart rockets with large 
payloads that can go the distance and have guided systems.
    They have enough rockets that they can overload even 
Israel's four-tier antimissile system, and there are pieces of 
critical infrastructure, like desalination plants and 
electricity facilities that, if the missiles get through, they 
could do significant damage to Israel, aside from the obvious 
loss of life.
    Hezbollah has been able to build up an army, a state within 
a state, and an army next to an army in Lebanon, and we have to 
figure out how to change that. We have to change the paradigm, 
as you heard earlier. The positions we held on the 6th of 
October can't be what we have after the 7th of October.
    Mr. Vargas. My time is up thank you.
    Mrs. Kim. Thank you very much.
    I now would like to recognize myself for a few minutes of 
questioning.
    First of all, I want to thank you all so much for being 
here.
    Iran has made it very clear that its goal is to wipe Israel 
off the map, and its malign influence campaign in support of 
terrorist groups like Hamas and Hezbollah in the Middle East 
has made it very, very clear that they are actually 
contributing to Iran's goal of wiping out Israel, and for far 
too long, we have not taken these threats seriously enough.
    And now, Iran is dangerously close to developing an atomic 
weapon and is more blatantly supporting attacks on the Israeli 
people.
    The Administration said that the $6 billion in unfrozen 
funds were only intended for nonsanctioned goods such as food 
and medicine. We know, of course, that money is fungible, and 
Iran has ways to launder the proceeds of unfrozen funds.
    So, Mr. Noronha, how can the Iranian regime elude the 
monitoring by the Treasury Department to use the unfrozen funds 
to finance international terrorist groups like Hamas and 
Hezbollah?
    Mr. Noronha. Thank you for the question.
    One of my greatest concerns is there is no monitoring of 
end-use goods and medicines after they are bought and 
transmitted into Iran. So, Iran could do two things: they could 
use those medicines for the IRGC's military; or they could do 
what they did in 2019, when 19 trucks full of medicine were 
confiscated at the Iraqi border, headed there to be sold on the 
black market. And who knows what would have been done with 
those funds?
    Mrs. Kim. Do you believe we should be thinking about 
narrowing down the executive authority to waive sanctions on 
Iran? And, if so, how would you narrow that down?
    Mr. Noronha. I do think that Congress should put more 
sanctions as being mandatory, reduce--change the licenses and 
waiver processes to require the affirmative vote of this 
committee and other committees in Congress. Something like arms 
sales where if you say we have a really good justification, 
there is a deal we need to make, we can sell it to Congress, 
that's fine. But it should require the affirmative consent, not 
saying you have to go now and pass all these laws to rescind 
these waivers. I think that puts power back where it belongs, 
in this chamber.
    Mrs. Kim. Thank you.
    According to a Bloomberg report, the Chinese imports of 
sanctioned Iranian oil are running at the highest level in at 
least a decade. Other reports say that about 80 percent of 
Iranian crude exports go to China. So, it seems these so-called 
Chinese teapots, which are small refineries taking Iran's oil 
at a discount, are part of the problem.
    Let me ask you a question, Mr. Brodsky. In your written 
testimony, you state that Iran has generated approximately $80 
billion in revenue from oil sales since the Biden 
Administration took office in 2021. So in your view, what can 
we do to reduce Iranian crude exports going to China?
    And, obviously, our goal here is to stop the Iranian regime 
from funding international terrorist organizations.
    Mr. Brodsky. Yes, that is a very good question. First, as I 
mentioned before, given that the Islamic Republic has violated 
those informal understandings that it reached with the Biden 
Administration by attacking U.S. forces in Iraq and Syria, now 
is the time to really enforce our existing sanctions, 
especially on the teapot refineries, Chinese banks, and Chinese 
entities. We have not been doing that.
    I think that if you look at the State Department, they have 
been saying that we raised the issue of Chinese oil purchases 
from Iran in our diplomatic conversations. Well, diplomatic 
conversations are not sanctions enforcement. And this is the 
same answer that they have been giving for a couple of years 
now. So, I think the time has come for a more aggressive 
approach.
    Mrs. Kim. Thank you.
    Let me come back to you, Mr. Noronha, for one more 
question.
    Iran has over $6 billion in reserves held in IMF Special 
Drawing Rights (SDRs). The SDRs represent unconditional 
liquidity. Could you describe some of the risk we face if the 
government in Tehran were able to convert these holdings into 
high currency?
    Mr. Noronha. If Iran got access to $6.7 billion today, it 
would not go to the Iranian people. It would go to the regime's 
most immediate need, which is advancing its terror plots. 
Having access to that currency is gold for them because their 
terror proxies don't want Iranian rial, and they don't want 
Iraqi dinar. They want dollars and euros, and the fastest way 
for them to get that is through these Special Drawing Rights.
    That is why I think it is imperative that Congress work 
with the Treasury Department to make sure that never happens 
and that they don't get the next round of Special Drawing 
Rights the next time the IMF gives a round.
    Mrs. Kim. Thank you. I know my time is up.
    The gentleman from Missouri, Mr. Gottheimer, is now 
recognized for 5 minutes.
    Mr. Gottheimer. Thank you so much, Madam Chairwoman. I 
thank you, and I really appreciate you having this timely 
hearing.
    On October 7th, on Shabbat, and the 50th anniversary of the 
Yom Kippur War, as we all know, Iranian-backed Hamas terrorists 
invaded Israel, slaughtered Americans, and 1,400 innocent 
Israelis, injured thousands, and pulled men, women, young 
children, and grandparents from their homes and took them 
hostage. We know how gruesome it was.
    In 1979, I was 4-years-old when Iranians took 52 American 
diplomats and citizens hostage, and nearly 5 decades later, my 
young children have now witnessed the brutal and senseless 
hostage-taking and killing of Americans and Israelis, and they 
remain hostages, as we know. Americans are hostages, as well as 
Israelis.
    Dr. Levitt, what else can we be doing as policymakers to 
ensure that my grandchildren don't experience something 
similar? I know that is a very big question, but in the short 
run, what do you think we should be doing from a policy 
perspective right now?
    Mr. Levitt. I think there are two things. The first is, I 
really do think that there is no excuse for not having 
secondary sanctions on all Foreign Terrorist Organizations. We 
have them on Hezbollah, but we don't have them on others. And 
it would give tremendous leverage to sanctions diplomacy when 
we go to countries like Turkey that are not doing enough on 
already U.S.-designated investment companies of Hamas. And that 
is just one example.
    But I think more broadly, we really need to move beyond a 
siloed approach when it comes to an adversary like Iran that is 
doing multiple, really bad things at once.I understand, and I 
appreciate the need to focus on the Iranian nuclear file. I was 
at Treasury when we came up with the original sanctions 
program, but it can't only be that.
    What we have seen in the past few weeks is the way Iran, at 
fairly little cost, and, unfortunately, zero political cost, 
can bring the entire region to the brink of regional war. So, 
we have to have a smarter policy.
    And then, it is not just Iran. We have to be able to have a 
more honest conversation with Qatar, with Turkey, and with 
other countries in the region so that they understand that this 
isn't acceptable.
    When a Hamas terrorist involved in a suicide bombing years 
ago in Jerusalem that targeted Israelis and Americans is able 
to live freely in Jordan, who is a very close ally, that is a 
problem.
    Mr. Gottheimer. I agree. Thank you.
    Part of standing with Israel, obviously, means ensuring 
that we isolate and punish terrorist organizations, as you 
point out, like Hamas or Hezbollah, by cutting off their 
financial resources, which is critical.
    I was very proud to lead the bipartisan Hamas International 
Financing Prevention Act with Representative Mast of Florida, 
and although it only passed out of the House Foreign Affairs 
Committee last week, it imposes sanctions on foreign persons, 
agencies, and governments that assist Hamas, the Palestinian 
Islamic Jihad, or their affiliates.
    And I think we need to do everything possible, as the 
President pointed out last week, to make sure that we do 
everything to crush terrorist organizations like Hamas, as well 
as giving Israel room to do everything they can to get the 
hostages out alive, especially American hostages.
    I was also proud to help introduce the bipartisan 
`Operation Swords of Iron' Iron Dome Supplemental 
Appropriations Act with Representatives Tenney, Schneider, and 
Miller to resupply Israel's missile defense system, which I am 
very concerned about in terms of the supply perspective.
    As we know, the Iron Dome saves thousands of lives, 
intercepting missiles targeting Israeli towns and cities.
    Mr. Goldberg, and Mr. Noronha, I was glad that both 
agencies supported the bill. While on top of the missiles, I am 
concerned about the expiration of UN Security Counsel sanctions 
on Tehran's ballistic missile program, to your point as well. I 
am especially concerned about the destabilizing effects that 
embolden Iran and the regime's ability to transfer dangerous 
weapons around the world.
    The Administration announced new sanctions and other 
measures designed to prevent Iran from selling or acquiring 
parts or technology relating to ballistics, missiles, or 
drones, saying that Washington would remain focused on the 
issue, despite the expiration of human measures.
    Mr. Goldberg, and Mr. Noronha, do you think that the 
Administration's new sanctions are adequate? In your view, is 
there more the Administration should be doing?
    Mr. Goldberg. I would come back to a point that Jason made 
earlier, and that is quantity is not quality. You can come up 
with a list of targets that are absolutely meaningless, 
symbolic sanctions. You can have a list and say, we have done 
this to the drone program. We've done this to the missile 
program. And it is a press release, and the media does run that 
story, and it feels like there are a lot of sanctions going on, 
and there is something happening.
    And by the way, next door, we are releasing $6 billion or 
$10 million in Oman, or we are letting massive amounts of oil 
go to China. So, the priority here has to be to lock down the 
resources, deny the resources to the regime. Sanctions that 
help accomplish that are important. Other policies that help 
accomplish that are a priority.
    Mr. Gottheimer. Thank you so much.
    I yield back. Thank you, Madam Chairwoman.
    Mrs. Kim. Thank you.
    The gentleman from Kentucky, Mr. Barr, who is also the 
Chair of our Subcommittee on Financial Institutions and 
Monetary Policy, is now recognized for 5 minutes.
    Mr. Barr. Thank you, Madam Chairwoman.
    In the last several weeks, we have witnessed the horrors of 
this unprovoked savage attack by Hamas terrorists on civilians, 
with 1,400 Israeli civilians killed, over 32 Americans among 
them, decapitated babies, innocent women, elderly women burned 
alive. Hostage incentivized by policy.
    My question is, how did this happen? How did we allow this 
to happen?
    And I will note, Mr. Noronha, your testimony that in the 
past year, Iran's oil sales have soared. The regime's financial 
support to Hamas has increased by $350 million annually.
    And then I noted Mr. Brodsky's testimony that Iran has 
generated approximately $80 billion in revenue from oil sales 
since the Biden Administration took office in 2021, and the 
maximum pressure campaign came off.
    Mr. Goldberg, in your testimony, you touch on the fact that 
over $20 billion in approved, freed-up funds for Iran has 
helped finance this barbarism by Hamas. This includes $6.7 
billion in available resources at the IMF, $2.76 billion in 
funds being held in escrow in Iraq to pay off debts, and $10 
billion of Iraqi debts to Iran made available for non-
sanctioned goods.
    We have heard a lot about the $6 billion hostage deal that 
actually incentivizes all the hostage-taking we see right now, 
but I want to touch on the utility of this stream of funding to 
the Iranian Government, especially this $10-billion issue.
    Can you talk about, in detail, what is going on there?
    Mr. Goldberg. Yes, absolutely. And thank you, Congressman, 
for the question.
    I would say in the $6 billion hostage deal, with everybody 
talking about how valuable it is that Qatar is running a 
hostage negotiation, the Qataris brokered that deal. Wake up, 
people. You are giving Hamas' sponsor the negotiator role so 
they can drag Israel out and delay the invasion. This is 
outrageous. Yes, pressure on Qatar would work. Let's try it.
    But to answer your question, Congressman, on the $10 
billion, it is very concerning. The $6 billion was very flashy. 
It was tied to a hostage deal. It made no sense to anybody who 
actually follows policy that you would say, let's trade five 
guys for five guys, oh, and we will throw in $6 billion.
    No, it is tied to a much broader sanctions relief package 
that had already started earlier in the year. We saw Brett 
McGurk, the Middle East coordinator of the White House, go to 
Oman and cut the deal through channels, and the Sultan of Oman 
went to Tehran at the end of May. The Iranians clearly accepted 
whatever offer was sent.
    In early June, we started seeing reports in Haaretz, by one 
of the most prominent journalists there from Israel, leaking 
out the details of the deal. And then suddenly, we saw $2.76 
billion out of an escrow account in Iraq making payments for 
various Iranians debts.
    Well, I guess the Iranians didn't like that arrangement, it 
was going too slow or something. We have no details or 
briefings from the Administration to know. And suddenly, in 
July, a waiver came up to Capitol Hill, a waiver that a lot of 
people haven't seen. Where is that waiver? They have classified 
it. We need to find out more about this waiver because it 
allowed for the first time, according to the State Department, 
Iran to pull money out of its escrow accounts and get paid in 
third countries, Oman, maybe other countries; we know about 
Oman.
    And $10 billion was built up there. There were electricity 
payments that Iraq was making to Iran. They are now moved out 
of Iraq. How much is left in Iraq? How much is in Oman? How 
much has been spent? There are so many questions about the $6 
billion, but no, not a penny has been spent?
    Does anybody in this chamber know how much has been spent 
of the $10 billion? You don't. They haven't told you. Has 
anything been borrowed against it? What is going on with that 
money?
    And by the way, this waiver allows ongoing payments. The 
electricity payments keep going. It is not one-time money, like 
the $6 billion. What is going on with this money?
    Mr. Barr. That is very troubling.
    Mr. Brodsky, on the oil revenues, since President Biden 
lifted all the sanctions on Iranian oil--by the way, this 
should be a bipartisan issue. My friends are obsessed about the 
climate, so why is Iranian oil so important to not sanction?
    How many of these sales, Mr. Brodsky, are operating under a 
waiver?
    Mr. Brodsky. Because most of it is from lax sanctions 
enforcement; that is what a lot of these sales are operating 
under. It is because of the informal understanding, the secret 
nuclear deal that the Biden Administration has not explained 
before Congress.
    Mr. Barr. How does Hamas carry out this brutal attack? How 
are they funded to do it? Well, I think we know the answer. The 
answer is that the Biden Administration allowed this to happen 
by pursuing a policy of weakness and appeasement that allowed 
Iran to finance this invasion.
    I yield back.
    Mrs. Kim. Thank you.
    The gentleman from North Carolina, Mr. Nickel, is now 
recognized--oh, I'm sorry. Hold on.
    I have been advised that the votes have been called. So, it 
is the intention of this Chair to wait until we have 200 
remaining votes, and then, we will recess and return 
immediately following that vote.
    I now recognize the gentleman from North Carolina, Mr. 
Nickel, for 5 minutes.
    Mr. Nickel. Thanks so much.
    I would like to thank Chairman Luetkemeyer and Ranking 
Member Beatty for holding today's hearing. I am glad we can do 
this in a bipartisan way and focus on this issue.
    And thanks so much to our witnesses for joining us today.
    About 2 weeks ago, Hamas terrorists brutally massacred over 
1,400 men, women, and children in Israel. This heinous act 
underscores the continuous threat that the Hamas terrorist 
organization poses not only to Israel but also to peace and 
stability in this entire region. Hamas actions sustained, in 
part, by foreign illicit financial networks, have brought 
untold suffering to countless innocent victims.
    In response, we must safeguard our nation's interest, 
support our ally, Israel, in the wake of this tragedy, and 
dismantle the financial channels that facilitate terrorism. The 
bond between the U.S. and Israel is strong and steadfast. Our 
focus now should be both on reaffirming this bond and actively 
disrupting the funding sources that embolden groups like Hamas.
    Dismantling Hamas is essential, not only for the security 
of Israel but also for the well-being of Palestinian civilians. 
Hamas tactics, which involve weaponizing densely-populated 
civilian areas, show a complete disregard for innocent lives in 
Gaza. For the safety and prosperity of both Israeli and 
Palestinian civilians, our primary objective must be to 
neutralize the threat that Hamas poses.
    Mr. Zarazinski, can you dive deeper into the challenge of 
tracing funds in the era of digital currencies and 
decentralized finance? How significant is the threat? And what 
tools or legislation should we consider to counteract these new 
financial avenues for terror groups?
    Mr. Zarazinski. Yes, sir. Thank you for the question.
    Generally speaking, as finance moves online, in particular 
with cryptocurrency, we have the availability of the 
blockchain. It is an additional tool that we can use to track 
the flow of funds on the blockchain, and there are a number of 
great companies out there that do specifically that, they watch 
the flow of funds move from wallet A to wallet B to wallet C, 
and then, they flag those wallets. And sometimes, they can flag 
those wallets as a particular entity or a particular 
organization, and sometimes they can just say, hey, this looks 
to be a wallet that was used illegally somehow, or it was 
flagged for X, Y, Z reasons. It actually allows us more data 
than we would otherwise have for other avenues of terrorist 
financing. That is a positive.
    I am not saying that there is a full solution to this 
problem, but if you compare the data available for us to track 
terrorist financing using cryptocurrency versus using hawala, 
for example, we have no idea how much is used in hawala. We 
have no idea how much is used for trade-based money laundering, 
for example.
    Actually, earlier today I googled how much Hamas raised 
through trade-based financing, and the only articles that were 
there were articles on cryptocurrency. And it just goes to show 
that at least we have a number. And there is a debate on what 
that number is, but there are a lot of tools available, from 
digital tools to the forensics companies that the U.S. 
Government currently uses to track that financing, and they are 
only getting better.
    Mr. Nickel. Given that many of the challenges originate 
from unregulated foreign entities, how can the U.S. ensure its 
regulations are effectively enforced?
    Mr. Zarazinski. I am not going to comment on policy, 
ultimately. I am a tech CEO, but here is what I will say: What 
we need to do is we need to bring crypto markets back onshore. 
It is literally a zero sum game. The more liquidity that is 
offshore, that is outside of U.S. jurisdiction, that is a bad 
thing. We need to bring that liquidity onshore where we can 
regulate it, where we can work with law enforcement, and where 
those organizations are responsive to law enforcement.
    The more that we bring onshore, the less liquidity bad guys 
have to launder money globally.
    Mr. Nickel. Thanks so much.
    I am running out of time here, but I will follow up in 
writing with my remaining questions.
    Mrs. Kim. I now recognize the gentleman from Illinois, Mr. 
Casten, for 5 minutes.
    Mr. Casten. Thank you. And I am glad to be sneaking in 
under the wire here.
    I appreciate you all being here.
    Last week, on October 17th, Senator Warren, Senator 
Marshall, and I led 102 lawmakers in a bipartisan, bicameral 
letter to Treasury raising concerns about some of these reports 
that we have mentioned about the use of crypto in financing 
Hamas and the Palestinian Islamic Jihad. Those reports have 
indicated more than $130 million of funding.
    I think several of you have mentioned that former Secretary 
of State Pompeo, who was never one to understate the threat of 
Iran, had estimated in 2020 that Iran provided $100 million. 
So, we are talking comparable orders of magnitude of funding 
coming in from these channels, and I hope we will provide 
comfortable levels of attention.
    And this isn't just us talking. Among what was seen in 
those reports: Israeli Defense Minister Yoav Gallant said the 
use of digital currencies is making the job of stopping 
terrorist financing ever more complex; and the executive 
director of the Israeli National Cyber Directorate said that in 
this period of war, cryptocurrency is a major issue for 
financing terror, because there are no other options. And it 
has also been reported that Hamas is increasingly turning to 
mixers to generate crypto addresses that obscure the value.
    With respect to the last comment, as long as we have mixers 
and anonymous wallets, the blockchain is just a really bad 
accounting system. Let's not overstate what it does, if you can 
provide those holes in it.
    I am proud that the letter was bipartisan. I am sorry that 
we did not get any of my colleagues across the aisle in this 
committee to join the letter, but we were pleased to see that 
the day after Treasury received that letter, on October 18th, 
Treasury's Office of Foreign Assets Control (OFAC) issued 
sanctions on Buy Cash, the digital asset exchange located in 
Gaza.
    And on October 19th, the Financial Crimes Enforcement 
Network (FinCEN) announced a proposed rulemaking to 
specifically identify these asset mixers as a class of 
transactions of primary money laundering concern, and that rule 
would require financial firms to report information about 
transactions that involve suspected crypto mixers.
    Mr. Noronha, in rolling out that proposal, FinCEN said a 
lack of transparency surrounding international mixing activity 
is an acute money laundering and national security risk. Do you 
agree with that statement?
    Mr. Noronha. I do, yes.
    Mr. Casten. Good. It makes my job easier here.
    Also, in April of this year, the Treasury Department 
released a report entitled, ``Illicit Finance Risk Assessment 
of Decentralized Finance,'' and recommended that we strengthen 
our Anti-Money Laundering and Countering the Financing of 
Terrorism (AML/CFT) by closing identified gaps in the Bank 
Secrecy Act (BSA), which currently can allow existing DeFi 
services to fall outside of the scope of the BSA's definition.
    Again, Mr. Noronha, would you agree that we need to 
identify those gaps if we are going to shut down sources of 
terrorist finance?
    Mr. Noronha. I do. And if I can elaborate very quickly, 
Iran has been on the blacklist of the Financial Action Task 
Force (FATF) since February 2020, because they refused to 
ratify the Palermo Convention, the counterterror financing 
convention. It is an active decision in the regime to not be in 
compliance with any of these things so they can----
    Mr. Casten. Yes. No, I appreciate that, and that is 
probably more than we can get into here.
    I think we still have to do a lot of work to figure out if 
$130 million came to Hamas, it is fairly easy to say, well, 
let's pay the money to somebody else. We will transfer material 
over here. I think we are just at the beginning of tracking 
those flows.
    But I am glad you agree we need to strengthen the BSA. We 
will be introducing a bill that Senator Warren has already 
introduced on the Senate side. To do that over here, I am 
hoping we will get some bipartisan support this time because I 
think, as all of you have mentioned, this is a bipartisan 
issue. And our goal is not to cripple the people of Iran; our 
goal is to cripple Hamas. And if they are getting funding from 
any source, let's go through and hit all of that.
    I would also just note that we have had long conversations 
about the cryptographic industry and lots of bills, and it is a 
tragedy that it took October 7th to have this conversation. But 
I would truly hope that we can revisit some of the bills that 
we have passed on a partisan basis out of this committee that, 
among other things, provided a safe harbor for the crypto 
industry.
    That it doesn't have to comply with AML rules, that was a 
bill led by Mr. Emmer. Mr. Davidson's bill, to prohibit 
regulation of all self-hosted wallets, this is a real problem, 
and either we agree that we don't want to launder money or we--
I don't know even know what the, ``or,'' is there, but let's at 
least take this to put a call in.
    Mr. Goldberg. Can I respond?
    Mr. Casten. I have 24 seconds.
    Mr. Goldberg. I agree with you. I agree with you, and I 
would recommend to you--we would love to work with you on this 
report that I coauthored earlier in the year, the underside of 
the coin, where we identified all of the threats you are 
talking about, mixers, coin joiners, privacy coins, and also 
ensuring that they use technology to identify hops between 
mixers before they cash out.
    And if we can actually use secondary sanctions to enforce 
what we also try to apply in our own domestic regulatory 
market, we could do a lot of good for national security, sir.
    Mr. Casten. Yes, please reach out, because I think we can 
do much better than we have on this topic.
    Thank you. I yield back.
    Mrs. Kim. Thank you.
    The gentleman from Michigan, Mr. Huizenga, who is also the 
Chair of our Subcommittee on Oversight and Investigations, is 
now recognized for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman. And I think now 
this really is getting under the wire, so I am going to go 
quickly.
    Mr. Noronha, you are familiar with the $10 billion Iraq 
paid to Iran in exchange for electricity. Correct?
    Mr. Noronha. Yes, sir.
    Mr. Huizenga. Okay.
    Madam Chairwoman, I would like to ask unanimous consent to 
enter into the record this unclassified report from the State 
Department, produced to this committee, entitled, ``Report to 
Congress on Renewal of Iraq Sanctions Waiver for Electricity 
Payments'' and its associated waiver determination.
    I am assuming that would be okay, Madam Chairwoman?
    Mrs. Kim. Without objection, it is so ordered.
    Mr. Huizenga. Okay. Thank you.
    Mr. Noronha, are you familiar with the waiver 
determinations and reports to Congress like this one that I 
just mentioned?
    Mr. Noronha. Yes, sir. I used to draft them from the State 
Department myself.
    Mr. Huizenga. Okay. Can you explain how a waiver 
authorizing a funds transfer is different from other 120-day 
sanction waivers and why it is required?
    Mr. Noronha. Under existing law passed by Congress in 2012, 
the Administration is able to allow a country, say, Iraq, to do 
bilateral trade with a country like Iran, but they are not 
allowed to set up an account in a foreign country or allow 
other countries to convert those funds unless those countries 
are also given a waiver, but they would have to meet certain 
qualifications in order to do so.
    Mr. Huizenga. Okay. And that was the 2012 National Defense 
Authorization Act (NDAA)?
    Mr. Noronha. Yes, sir. Section 1245.
    Mr. Huizenga. Okay.
    The report states at the end that, ``The Secretary also 
certifies that France, Germany, and Oman faced exceptional 
circumstances preventing them from significantly reducing 
purchases of petroleum and petroleum products from Iran.''
    Have you seen similar language in waivers citing the 
national security exception?
    Mr. Noronha. That language to me, sir, seems at odds with 
reality. France, Germany, and Oman do not purchase Iranian oil 
products or petroleum products. I have never seen language 
drafted like that, and that seems to me to be trying to 
circumvent something.
    It has been done like that with a country like South Korea, 
which was attempting to reduce its imports of Iranian oil over 
a period of a year and was finding it difficult to do so. But 
France, Germany, and Oman are not in that category.
    Mr. Huizenga. The one that stood out to me was Oman.
    Mr. Noronha. They have their own oil.
    Mr. Huizenga. Exactly. That seemed rather confusing to me.
    Okay. So if they are choosing to use this unusual language, 
why would they insert that? Why would they put that into this 
paragraph, into this document?
    Mr. Noronha. The Iranians don't want Iraqi rial. They want 
euros, because Hamas and Hezbollah want euros, so they made 
this legal fiction, from what you are describing, in order to 
do so.
    I would also note----
    Mr. Huizenga. Just so I am clear in understanding this, 
they are claiming that Germany and France have this requirement 
or exception that they need to satisfy their petroleum needs, 
but it is really, potentially, a backdoor to get at their 
euros, correct? Is that what you are saying?
    Mr. Noronha. That is exactly what it sounds like, sir.
    Mr. Huizenga. That seems like it a little bit to me, too.
    I kind of cut you off there, so I will give you----
    Mr. Noronha. I was going to say there have been reports 
over the summer that the Administration was looking to conduct 
an informal nuclear arrangement with Iran and try to bypass 
Congress, a congressional review of this. In doing so, U.S. 
officials have said they looked the other way on Iranian oil 
exports.
    There was $10 billion transferred in this waiver. Normally, 
there is about $500 million. This is way out of normal 
proportion.
    The other thing that is very concerning is there was a 
report from the Iranian Central Bank just last week that they 
are working with China to, ``finance this $10 billion, which is 
in this fund in Oman.'' That strikes me that they are trying to 
launder this money to be able to be used in any way they can.
    Mr. Huizenga. Let me take the last couple of seconds here.
    Do you believe that all of the provisions of the 2012 NDAA 
and the sanctions that were in there are being fully 
implemented to maximize pressure?
    Mr. Noronha. No, they are not. They are not being enforced.
    Mr. Huizenga. Would you be surprised if the Administration 
or OFAC or others claimed that it is being utilized that way?
    Mr. Noronha. That would be a stretch of reality, sir.
    Mr. Huizenga. Okay.
    Mr. Brodsky, I was hoping to get to flagged ghost ships and 
some other things, but I know I am running out of time, so I 
would like to maybe follow up in writing on that.
    But I do appreciate all of our witnesses today. This has 
been enlightening, and we will continue this conversation 
tomorrow with our Oversight and Investigations Subcommittee as 
well, and I encourage all of our Members to waive on to that.
    With that, Madam Chairwoman, I yield back.
    Mrs. Kim. Okay. Thank you, everyone.
    Seeing that all members of the subcommittee have had their 
chance to ask our witnesses questions, and with the remaining 
votes getting smaller and smaller, I would like to thank our 
witnesses. And instead of coming back after the votes, I think 
we can adjourn now.
    Without objection, I would like to also submit three 
articles for the record from Elliptic, Chainalysis, and TRM 
Labs on the volumes of crypto donations.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    And I ask our witnesses to please respond as promptly as 
you can, because it will be very helpful for us.
    With that, the hearing is now adjourned.
    [Whereupon, at 5:07 p.m., the hearing was adjourned.]

                            A P P E N D I X

                            October 25, 2023
                            
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