THE NEXT TERRORIST FINANCIERS: STOPPING THEM BEFORE THEY START 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 23, 2016 Printed for the use of the Committee on Financial Services Serial No. 114–94 ( U.S. GOVERNMENT PUBLISHING OFFICE 25–849 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 16, 2017 Jkt 025849 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\25849.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 16, 2017 Jkt 025849 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\25849.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 16, 2017 Jkt 025849 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\25849.TXT TERI VerDate Nov 24 2008 16:41 Aug 16, 2017 Jkt 025849 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\25849.TXT TERI C O N T E N T S Page Hearing held on: June 23, 2016 .................................................................................................... 1 Appendix: June 23, 2016 .................................................................................................... 41 WITNESSES THURSDAY, JUNE 23, 2016 Cassara, John A., former U.S. Intelligence Officer and Treasury Special Agent ..................................................................................................................... 9 Farah, Douglas, President, IBI Consultants LLC; and Senior Non-Resident Associate, Americas Program, Center for Strategic and International Stud- ies .......................................................................................................................... 13 Gurule, Hon. Jimmy, Law Professor, University of Notre Dame Law School .... 7 Realuyo, Celina B., Professor of Practice, William J. Perry Center for Hemi- spheric Defense Studies, National Defense University ..................................... 11 Zarate, Juan C., Chairman and Co-Founder, Financial Integrity Network; and Chairman and Senior Counselor, Center on Sanctions and Illicit Fi- nance, Foundation for Defense of Democracies ................................................. 5 APPENDIX Prepared statements: Cassara, John A. ............................................................................................... 42 Farah, Douglas ................................................................................................. 52 Gurule, Hon. Jimmy ......................................................................................... 62 Realuyo, Celina B. ............................................................................................ 71 Zarate, Juan C. ................................................................................................. 87 (V) VerDate Nov 24 2008 16:41 Aug 16, 2017 Jkt 025849 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 K:\DOCS\25849.TXT TERI VerDate Nov 24 2008 16:41 Aug 16, 2017 Jkt 025849 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 K:\DOCS\25849.TXT TERI THE NEXT TERRORIST FINANCIERS: STOPPING THEM BEFORE THEY START Thursday, June 23, 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 10:13 a.m., in room 2128, Rayburn House Office Building, Hon. Michael Fitzpatrick [chairman of the task force] presiding. Members present: Representatives Fitzpatrick, Pittenger, Ross, Barr, Rothfus, Poliquin, Hill; Lynch, Foster, and Sinema. Also present: Representatives Garrett and Carney. Chairman FITZPATRICK. The Task Force to Investigate Terrorism Financing will come to order. 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 ques- tioning the witnesses. The Chair now recognizes himself for 4 minutes for an opening statement. Thank you, everyone, for joining us today for the eleventh and final hearing of the House Financial Services Committee’s Task Force to Investigate Terrorism Financing. Today’s hearing is enti- tled, ‘‘The Next Terrorist Financiers: Stopping Them Before They Start.’’ I would like to again thank Chairman Hensarling and Ranking Member Waters, as well as my colleagues here, for their unwaver- ing support as we have investigated the threat of terror finance. I would also like to take a moment to thank Liana Rosen and Martin Weiss of the Congressional Research Service for the invaluable as- sistance that they have provided to this body. On June 12, 2016, we watched in horror as a lone terrorist pledg- ing allegiance to ISIS carried out the Nation’s worst terror attack since 9/11. As we continue to grieve and pray for those devastated by this attack, we must redouble our efforts to be clear in our re- solve to protect our Nation and her citizens from radical Islamic terrorism that continues to target us. Our efforts to combat this radicalism must be carried out on multiple fronts through diplo- matic action, military force, and countering the finances used to carry out these attacks. (1) VerDate Nov 24 2008 16:41 Aug 16, 2017 Jkt 025849 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\25849.TXT TERI 2 As chairman of this Task Force to Investigate Terrorism Financ- ing, I have joined with Ranking Member Lynch, Vice Chair Pittenger, and this dedicated bipartisan body to investigate and evaluate the efforts made by the United States to counter and dis- mantle the financial networks funding these terrorist organiza- tions. Our investigation has covered a range of topics, including the vulnerabilities of the global financial system, trade-based money laundering, the importance of assisting the developing world, and the sale and trafficking of illicit goods. During this time, it has be- come evident the United States must be able to work freely with its international partners and seamlessly adapt to evolving money laundering and terror financing tactics. For this reason, the task force will be proposing a series of bills which aim to improve communication and coordination amongst various government agencies, allow for increased information shar- ing, and ensure the Treasury is properly supported and recognized for its role in our Nation’s national security strategy. These bills, coupled with the report containing the task force’s findings, will provide a clear blueprint for the United States so it may continue to evolve and improve in its fight to ensure terror groups are un- able to financially support their operations. Today, for the eleventh and final hearing of this task force, we will recap what we have learned with these five expert witnesses who have previously lent their voices to this discussion in past hearings. Together, we will discuss the necessary changes Congress must consider to better enable U.S. agencies in our fight. At this time, I would like to recognize a member of the bipartisan task force, Ms. Sinema of Arizona, our colleague, who has been a valuable asset and trusted