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Examining Terror Funding Streams from South America Hearing

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Examining Terror Funding Streams from South America Hearing THE ENEMY IN OUR BACKYARD: EXAMINING TERROR FUNDING STREAMS FROM SOUTH AMERICA HEARING BEFORE THE TASK FORCE TO INVESTIGATE TERRORISM FINANCING OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTEENTH CONGRESS SECOND SESSION JUNE 8, 2016 Printed for the use of the Committee on Financial Services Serial No. 114–92 ( U.S. GOVERNMENT PUBLISHING OFFICE 25–847 PDF WASHINGTON : 2017 For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 16:41 Aug 18, 2017 Jkt 025847 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\25847.TXT TERI HOUSE COMMITTEE ON FINANCIAL SERVICES JEB HENSARLING, Texas, Chairman PATRICK T. MCHENRY, North Carolina, MAXINE WATERS, California, Ranking Vice Chairman Member PETER T. KING, New York CAROLYN B. MALONEY, New York EDWARD R. ROYCE, California NYDIA M. VELA´ ZQUEZ, New York FRANK D. LUCAS, Oklahoma BRAD SHERMAN, California SCOTT GARRETT, New Jersey GREGORY W. MEEKS, New York RANDY NEUGEBAUER, Texas MICHAEL E. CAPUANO, Massachusetts STEVAN PEARCE, New Mexico RUBE´ N HINOJOSA, Texas BILL POSEY, Florida WM. LACY CLAY, Missouri MICHAEL G. FITZPATRICK, Pennsylvania STEPHEN F. LYNCH, Massachusetts LYNN A. WESTMORELAND, Georgia DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri AL GREEN, Texas BILL HUIZENGA, Michigan EMANUEL CLEAVER, Missouri SEAN P. DUFFY, Wisconsin GWEN MOORE, Wisconsin ROBERT HURT, Virginia KEITH ELLISON, Minnesota STEVE STIVERS, Ohio ED PERLMUTTER, Colorado STEPHEN LEE FINCHER, Tennessee JAMES A. HIMES, Connecticut MARLIN A. STUTZMAN, Indiana JOHN C. CARNEY, JR., Delaware MICK MULVANEY, South Carolina TERRI A. SEWELL, Alabama RANDY HULTGREN, Illinois BILL FOSTER, Illinois DENNIS A. ROSS, Florida DANIEL T. KILDEE, Michigan ROBERT PITTENGER, North Carolina PATRICK MURPHY, Florida ANN WAGNER, Missouri JOHN K. DELANEY, Maryland ANDY BARR, Kentucky KYRSTEN SINEMA, Arizona KEITH J. ROTHFUS, Pennsylvania JOYCE BEATTY, Ohio LUKE MESSER, Indiana DENNY HECK, Washington DAVID SCHWEIKERT, Arizona JUAN VARGAS, California FRANK GUINTA, New Hampshire SCOTT TIPTON, Colorado ROGER WILLIAMS, Texas BRUCE POLIQUIN, Maine MIA LOVE, Utah FRENCH HILL, Arkansas TOM EMMER, Minnesota SHANNON MCGAHN, Staff Director JAMES H. CLINGER, Chief Counsel (II) VerDate Nov 24 2008 16:41 Aug 18, 2017 Jkt 025847 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\25847.TXT TERI TASK FORCE TO INVESTIGATE TERRORISM FINANCING MICHAEL G. FITZPATRICK, Pennsylvania, Chairman ROBERT PITTENGER, North Carolina, Vice STEPHEN F. LYNCH, Massachusetts, Chairman Ranking Member PETER T. KING, New York BRAD SHERMAN, California STEVE STIVERS, Ohio GREGORY W. MEEKS, New York DENNIS A. ROSS, Florida AL GREEN, Texas ANN WAGNER, Missouri KEITH ELLISON, Minnesota ANDY BARR, Kentucky JAMES A. HIMES, Connecticut KEITH J. ROTHFUS, Pennsylvania BILL FOSTER, Illinois DAVID SCHWEIKERT, Arizona DANIEL T. KILDEE, Michigan ROGER WILLIAMS, Texas KYRSTEN SINEMA, Arizona BRUCE POLIQUIN, Maine FRENCH HILL, Arkansas (III) VerDate Nov 24 2008 16:41 Aug 18, 2017 Jkt 025847 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\25847.TXT TERI VerDate Nov 24 2008 16:41 Aug 18, 2017 Jkt 025847 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\25847.TXT TERI C O N T E N T S Page Hearing held on: June 8, 2016 ...................................................................................................... 1 Appendix: June 8, 2016 ...................................................................................................... 29 WITNESSES WEDNESDAY, JUNE 8, 2016 Braun, Michael A., Co-Founder and Managing Partner, SGI Global, LLC ........ 7 Federici, Mariano, President, Financial Intelligence Unit of Argentina ............. 5 Ottolenghi, Emanuele, Senior Fellow, Center on Sanctions and Illicit Finance, Foundation for Defense of Democracies ............................................................. 8 APPENDIX Prepared statements: Braun, Michael A. ............................................................................................ 30 Federici, Mariano ............................................................................................. 40 Ottolenghi, Emanuele ...................................................................................... 46 (V) VerDate Nov 24 2008 16:41 Aug 18, 2017 Jkt 025847 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 K:\DOCS\25847.TXT TERI VerDate Nov 24 2008 16:41 Aug 18, 2017 Jkt 025847 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 K:\DOCS\25847.TXT TERI THE ENEMY IN OUR BACKYARD: EXAMINING TERROR FUNDING STREAMS FROM SOUTH AMERICA Wednesday, June 8, 2016 U.S. HOUSE OF REPRESENTATIVES, TASK FORCE TO INVESTIGATE TERRORISM FINANCING, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The task force met, pursuant to notice, at 9:03 a.m., in room 2128, Rayburn House Office Building, Hon. Michael Fitzpatrick [chairman of the task force] presiding. Members present: Representatives Fitzpatrick, Pittenger, Ross, Rothfus, Schweikert, Williams, Poliquin; Lynch, Ellison, Himes, Foster, and Sinema. Chairman FITZPATRICK. The Task Force to Investigate Terrorism Financing will come to order. The title of today’s task force hearing is, ‘‘The Enemy in Our Backyard: Examining Terror Funding Streams from South America.’’ Without objection, the Chair is authorized to declare a recess of the task force at any time. Also, without objection, members of the full Financial Services Committee who are not members of the task force may participate in today’s hearing for the purpose of making an opening statement or questioning the witnesses. The Chair now recognizes himself for 2 minutes for an opening statement. First, thank you, everyone, for joining us for the eighth hearing of the House Financial Services Committee’s Task Force to Inves- tigate Terrorism Financing. I would like to again thank Chairman Hensarling and Ranking Member Waters, as well as my colleagues here, for their unwavering support as we continue to investigate the threat of terror finance. In previous task force hearings, Latin America, specifically the tri-border region, has repeatedly been cited as an area of concern regarding anti-money laundering and terror finance. As chairman of this task force, we have met with our regional partners, as well as U.S. personnel on the ground in South and Central America who are working to identify and choke off funding to terrorist and orga- nized criminal groups. While in country, including in Argentina and Paraguay, we investigated and engaged the efforts put forth by our allies, the means being employed, the efforts being made by the United States in the region, and whether the United States law- (1) VerDate Nov 24 2008 16:41 Aug 18, 2017 Jkt 025847 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\25847.TXT TERI 2 makers need to provide new tools or engage the Administration to more effectively use the authority and resources that they already have. Today, with this expert panel of witnesses before us, we aim to continue our investigation. This hearing will examine how South American criminal enterprises, including those designated by the State Department as foreign terrorist organizations, fund their op- erations, including through the illicit uses of the financial system. At this time, I would like to recognize the task force’s ranking member, my colleague Mr. Lynch from Massachusetts, for an open- ing statement. Mr. LYNCH. Thank you, Mr. Chairman. I want to thank our witnesses for your willingness to help this task force with its work. I also want to thank Vice Chairman Pittenger, whom I under- stand was renominated in the Republican primary yesterday. So congratulations on that. I am pleased we are holding today’s hearing so we can further examine terrorist financing streams from South America. Today, I would like to put particular focus on the revelations contained in the leaked financial documents known as the Panama Papers. This past April, millions of leaked documents from the Panama-based law firm Mossack Fonseca exposed how some of the world’s most powerful people used a web of complex financial transactions, in- cluding offshore bank accounts and shell companies, to hide their wealth. According to the International Consortium of Investigative Jour- nalists, ICIJ, more than 214,000 offshore entities appear in the leak connected to people in more than 200 countries and territories, including alleged drug traffickers from South America. In addition, the files include at least 33 people and companies blacklisted by the U.S. Government because of evidence that they have been in- volved in wrongdoing, such as doing business with Mexican drug lords or terrorist organizations like Hezbollah, and these revela- tions highlight the need to combat secrecy and corruption in the global financial system. In response, we on this committee have been working, along with some of our colleagues on the larger committee and on this task force, on legislation to combat corruption by foreign governments. Our legislation would authorize the Department of the Treasury to pay rewards that help identify and recover stolen assets linked to foreign government corruption. This is necessary because no exist- ing reward program provides monetary incentives for identifying and recovering stolen assets linked solely to foreign government corruption. Individuals who come forward to expose this type of corruption do so at great risk to themselves and their families, and
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