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





 
                       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
                           
                           
                           
                           
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                 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. VELAZQUEZ, 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            RUBEN HINOJOSA, Texas
BILL POSEY, Florida                  WM. LACY CLAY, Missouri
MICHAEL G. FITZPATRICK,              STEPHEN F. LYNCH, Massachusetts
    Pennsylvania                     DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia        AL GREEN, Texas
BLAINE LUETKEMEYER, Missouri         EMANUEL CLEAVER, Missouri
BILL HUIZENGA, Michigan              GWEN MOORE, Wisconsin
SEAN P. DUFFY, Wisconsin             KEITH ELLISON, Minnesota
ROBERT HURT, Virginia                ED PERLMUTTER, Colorado
STEVE STIVERS, Ohio                  JAMES A. HIMES, Connecticut
STEPHEN LEE FINCHER, Tennessee       JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana          TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina        BILL FOSTER, Illinois
RANDY HULTGREN, Illinois             DANIEL T. KILDEE, Michigan
DENNIS A. ROSS, Florida              PATRICK MURPHY, Florida
ROBERT PITTENGER, North Carolina     JOHN K. DELANEY, Maryland
ANN WAGNER, Missouri                 KYRSTEN SINEMA, Arizona
ANDY BARR, Kentucky                  JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania       DENNY HECK, Washington
LUKE MESSER, Indiana                 JUAN VARGAS, California
DAVID SCHWEIKERT, Arizona
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
             Task Force to Investigate Terrorism Financing

             MICHAEL G. FITZPATRICK, Pennsylvania, Chairman

ROBERT PITTENGER, North Carolina,    STEPHEN F. LYNCH, Massachusetts, 
    Vice 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

                            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


                       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 Investigate 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 organized 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 
lawmakers 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 operations, 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 opening 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 
understand 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, including offshore bank accounts and shell 
companies, to hide their wealth.
    According to the International Consortium of Investigative 
Journalists, 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 involved in wrongdoing, such as 
doing business with Mexican drug lords or terrorist 
organizations like Hezbollah, and these revelations 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 existing 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 monetary rewards can 
provide a necessary incentive to expose corruption and provide 
financial means to provide for their well-being after the fact.
    Another common theme throughout this task force that is 
reinforced through the release of the Panama Papers is the need 
to collect information on the true ownership of these entities. 
Earlier this week, The New York Times did a terrific article 
written by Eric Lipton and Julie Creswell. I want to compliment 
them. It is a thoroughly researched and well-written article 
that demonstrates how U.S. citizens used the Mossack Fonseca 
Law Firm to create shell companies to hide their wealth 
overseas. According to that article, Mossack Fonseca had at 
least 2,400 U.S.-based clients over the past decade and set up 
at least 2,800 companies on their behalf in jurisdictions that 
specialize in helping clients hide their assets.
    Shell companies are particularly susceptible to 
exploitation by terrorists as they are often used to mask the 
identities of their beneficial owners. It is critical that the 
United States collect information on beneficial ownership in 
order to prevent criminals and terrorists from exploiting 
anonymity to conceal their illicit activity.
    Now, these constructs are principally used to avoid paying 
U.S. taxes. However, they also facilitate terrorist financing. 
I am proud to be an original cosponsor of the bipartisan 
Incorporation Transparency and Law Enforcement Assistance Act 
of 2016 sponsored by my colleague, Mrs. Maloney of New York. 
Anonymous corporations significantly hinder investigations into 
terrorist financing. By strengthening beneficial ownership 
disclosure requirements, this legislation will tighten a weak 
link in our current efforts to follow the money that is funding 
terrorist organizations around the world.
    This is an urgent national security issue, and I look 
forward to working with my colleagues on this task force and 
the House Financial Services Committee to close this loophole. 
I am pleased to hear from our witnesses today so we can better 
understand terrorist funding streams in South America, 
including the revelations from the release of the Panama 
Papers.
    I yield back the balance of my time. Thank you, Mr. 
Chairman.
    Chairman Fitzpatrick. Thank you.
    And I now recognize the vice chairman of the task force, 
Mr. Pittenger of North Carolina.
    Mr. Pittenger. Thank you, Chairman Fitzpatrick and Ranking 
Member Lynch, and the distinguished panel before us today.
    Mr. Chairman, I am particularly grateful for today's 
hearing, which will focus on the illicit finance operations in 
South America. As you know, a delegation from this task force 
recently visited Colombia, Panama, Paraguay, and Argentina to 
meet with government officials and view firsthand the problems 
that they face in South America.
    When I was in Argentina, I had the pleasure of meeting with 
one of the distinguished panelists, Mr. Mariano Federici. Mr. 
Federici is an outstanding public servant, a representative of 
the Argentinian people. Mr. Federici's role with Argentina's 
government gives me great hope and certainty of Argentina's 
serious commitment about combating illicit finance operations. 
Furthermore, I would like to highlight that Mr. Federici will 
be participating with us in a parliamentary security conference 
that I will be hosting in Vienna in 2 weeks where he will be 
able to share his work before parliamentarians from over 25 
countries.
    Thank you for your continued partnership with us on these 
issues and your willingness to participate in the forum.
    Back in October, I cohosted a similar security forum here 
in Washington with another panelist, Mr. Braun, who also 
participated.
    Mr. Braun, it is great to see you back here again in 
Washington. Thank you for your continued work and dedication to 
these issues.
    Mr. Chairman, thank you, and I yield back.
    Chairman Fitzpatrick. We now welcome our witnesses.
    Mr. Mariano Federici has been the president of the 
Financial Intelligence Unit of Argentina since January 2016. In 
this capacity, Mr. Federici directs the country's anti-money 
laundering and counterterrorist financing efforts. Previously, 
Mr. Federici was a country lawyer, regional adviser, and senior 
counsel to the International Monetary Fund in Latin America. He 
also worked as an associate for an Argentina law firm, advising 
financial institutions and companies in a wide spectrum of 
transactions and matters involving regulatory and statutory 
interpretation.
    At the start of his career, Mr. Federici worked as a clerk 
for the national criminal courts of the City of Buenos Aires. 
He was born in Buenos Aires, holds a juris doctor from the 
Catholic University of Argentina, and a master of laws in law 
and finance from the University of Virginia School of Law.
    Mr. Michael Braun is a cofounder and one of two managing 
partners at SGI Global. Mr. Braun has 33 years of extensive 
experience in Federal, State, and local law enforcement. He 
spent 24 of these years at the U.S. Drug Enforcement 
Administration where he developed the DEA's successful 
counternarcoterrorism programs, including the formative 
development of the agency's Foreign-Deployed Advisory and 
Support Teams, the FAST teams, and other programs addressing 
narcoterrorism. He is also responsible for the agency's 
extensive expansion in Afghanistan from 2004 to 2008.
    Mr. Braun retired from the DEA as Assistant Administrator 
and Chief of Operations in 2008. And when we were down in 
Central America, we ran into some former colleagues who called 
Mr. Braun an icon in law enforcement. They talked about how his 
influence and his leadership and vision continue to define the 
DEA even a decade after his retirement.
    So, sir, we thank you for your service.
    Dr. Emanuele Ottolenghi is a senior fellow at the Center on 
Sanctions and Illicit Finance at the Foundation For Defense of 
Democracies (FDD). Dr. Ottolenghi's research focuses primarily 
on Iran's Islamic Revolutionary Guard Corps, the European 
Union's Middle East policymaking, transatlantic relations, and 
the Arab-Israeli conflict, as well as Israel's domestic 
politics.
    Prior to joining the FDD, Dr. Ottolenghi headed the 
Transatlantic Institute in Brussels and taught Israel studies 
at Saint Anthony's College at Oxford University. He obtained 
his Ph.D. in political theory at the Hebrew University of 
Jerusalem and an undergraduate degree in political science at 
the University of Bologna.
    The witnesses will now be recognized for 5 minutes to give 
an oral presentation of their testimony. And without objection, 
the witnesses' written statements will be made a part of the 
record.
    Once the witnesses have finished presenting their 
testimony, each member of the task force will have 5 minutes 
within which to ask questions.
    For the witnesses, on your table there are three lights: 
green; yellow; and red. Yellow means you have 1 minute 
remaining. Red means your time is up.
    With that, Mr. Federici, you are now recognized for 5 
minutes.

      STATEMENT OF MARIANO FEDERICI, PRESIDENT, FINANCIAL 
                 INTELLIGENCE UNIT OF ARGENTINA

    Mr. Federici. Thank you very much, Mr. Chairman, and 
members of the Task Force to Investigate Terrorism Financing.
    I would like to start by sharing with you that in September 
2001, I was a young lawyer working for Sullivan & Cromwell in 
New York. I was at the firm's Wall Street office when the 
attacks took place and saw the collapse of the second tower 
with my own eyes. I still vividly remember that moment, the 
frustration and the anger at the terrorists, but also the 
respect and admiration towards the people of this great Nation 
and how fast they came together to bring it back on its feet.
    It is therefore a true and special honor for me to be 
sitting at this hearing today with Representatives of the 
people, only a few months away from the 15th anniversary of 
that tragic day, to discuss how we can suppress terrorism and 
prevent such attacks from happening again. I would like to talk 
about what we found in Argentina upon taking office 4 months 
ago and our vision on how to improve things.
    We encountered a challenging situation in the area of 
financial integrity left by the people who preceded us in the 
Argentine Government. It is clear to us by now that there was a 
complete lack of political will to fight money laundering and 
terrorist financing in Argentina during the last 12 years. 
There was a lack of strategic planning which prevented the 
government from prioritizing its efforts and making an 
efficient use of public resources. This in turn led to a 
serious lack of effectiveness with a related impact on risk 
levels.
    Throughout the last 10 years, the threats to financial 
integrity increased significantly as criminals exploited the 
advantages of a sophisticated financial system with the 
vulnerabilities of an uncommitted government.
    One of the main structural vulnerabilities exploited by 
criminals in recent years was corruption. Corruption under the 
previous administration was the rule, not the exception, and 
corrupt officials were rewarded rather than punished.
    At our Financial Intelligence Unit in particular, the 
situation was also critical. The strategy was to have no 
strategy, which allowed for discretionary use of anti-money 
laundering and counterterrorist financing tools.
    We are now working at full speed in repairing the damages. 
There is a clear and strong political will to fight organized 
crime and terrorism. Our objective is to protect the financial 
system and the broader economy from the threats of money 
laundering and terrorist financing, thereby strengthening 
financial sector integrity and contributing to safety and 
security.
    Our main focus will be placed on effectiveness, as we 
believe Argentina has the necessary legal and institutional 
instruments in place to begin producing results. To achieve 
this, it is important to strengthen the role of operational 
agencies such as ours, and the government of President Macri 
has committed to a stronger Financial Intelligence Unit.
    In particular, we will be very focused on assessing 
terrorist financing risks, which we believe have been 
irresponsibly underestimated by the previous administration. 
Our plan is to begin using our CFT regime to pursue 
international terrorism cases representing a present threat to 
our system and to global peace and security.
    We are also embarking on a wide regulatory reform process 
that will allow reporting entities to adopt a risk-based 
approach to AML/CFT compliance. The reform will also contribute 
to removing existing barriers to financial inclusion and 
generate incentives to reduce the circulation of cash and the 
use of informal mechanisms.
    Over the last 5 years, the FIU issued more than 70 
regulations which imposed significant obstacles to operating in 
the Argentine financial system and economy and contributed 
little to mitigating the real risks of money laundering and 
terrorist financing. We are actually of the view that many of 
these regulations prevented people at the lowest segments of 
our society from accessing financial markets and expelled 
others to the informal economy.
    We are also planning to adopt a risk-based approach to AML/
CFT supervision, and this is something we hope to be able to do 
with the support of the U.S. Government. This will rationalize 
the use of our limited resources and allow us to place focus on 
what is really relevant to protect the integrity of our 
financial system and broader economy.
    On the intelligence side, we are working to regain 
confidence in our domestic and foreign partners. We are 
updating our MOUs with financial intelligence units of 
strategic importance to us. We are in the process of updating 
our MOU with FinCEN following an unauthorized leak of 
information during the previous administration. We are also 
strengthening our strategic analysis capabilities.
    As we move forward in building a stronger AML/CFT framework 
in Argentina, the support from our international community, and 
particularly our main partners, such as the United States, 
becomes critical. I would like to take this opportunity to 
express my deepest appreciation to FinCEN's leadership for the 
trust deposited in us at the earliest of stages and the 
opportunity to work fast towards a reestablishment of our MOU. 
We embrace this partnership and will live up to our commitments 
to protect the information and use it only for authorized 
purposes and to our mutual benefit as nations.
    Finally, I would like to close by saying that we are not 
just interested in adhering to international standards. We are 
interested in becoming leaders in financial integrity matters 
in our region. This is because we truly believe in the value of 
financial integrity to the soundness of our financial systems 
and its significance to economic stability, safety, and 
security, which are necessary preconditions to economic growth 
and development.
    Thank you very much.
    [The prepared statement of Mr. Federici can be found on 
page 40 of the appendix.]
    Chairman Fitzpatrick. Thank you.
    Mr. Braun, you are now recognized for 5 minutes.

STATEMENT OF MICHAEL A. BRAUN, CO-FOUNDER AND MANAGING PARTNER, 
                        SGI GLOBAL, LLC

    Mr. Braun. Thank you. Good morning, Chairman Fitzpatrick, 
Ranking Member Lynch, Vice Chair Pittenger, and other 
distinguished members of the committee and the task force. I 
deeply appreciate the opportunity to appear before you today 
and to make a few comments and to help you in any way that I 
can as you move forward.
    So our success in prosecuting the global war on terror has 
successfully degraded two very important funding streams to 
terrorist organizations--those from very powerful private 
donors, as well as state sponsors. Consequently, terror 
organizations, many of them, have had to resort to other means, 
alternate means, to keep their movements alive and keep their 
operations flowing. And that is what we are really here to talk 
about today. That is why we are here today.
    I will use Hezbollah as the best example of what we are up 
against today and make three important points in that process.
    First, Hezbollah is not the same organization that they 
were 15 years ago, just 15 short years ago. In the early 2000s, 
they began moving small quantities of cocaine from the tri-
border area of Latin America into fledgling markets at that 
time in Europe and the Middle East.
    Flash forward to 15 years later, they are now moving 
multitons of cocaine into Europe in an attempt to satisfy the 
ever-increasing demand for cocaine in Europe, in the Middle 
East, and other emerging markets. They possess a demonstrated 
ability to move, again, hundreds of tons of cocaine over that 
15-year period and move massive amounts of currency, hundreds 
of millions, perhaps billions of dollars in currency around the 
world in the most sophisticated money laundering scheme or 
schemes that we have ever witnessed. They have metastasized 
into a hydra with international connections that the likes of 
ISIL and groups like Al Qaeda could only hope to have. Those 
connections are with transnational organized crime groups, with 
terror and insurgent groups throughout the world.
    We need to build organized crime and investigative judicial 
capacity to deal with the threats that we are up against. We 
are here to talk about illicit finance today. We need to 
develop very close partnerships and even closer partnerships 
with our partner nations around the world to help them build 
judicial capacity and organized crime and terror investigative 
capacity in their countries.
    But we also need to do some work at home, because I can 
assure you that the vast majority of Federal agents in our 
country, I don't care what agency that they work for, are not 
experts in dealing with or investigating necessarily with what 
we are up against today.
    So we talk about illicit finance and the importance of 
going after the money, following the money, but in our 
obsession with following the money over the past many years, 
for some unknown reason, we seem to have missed out on one 
opportunity after another. We seem to have forgotten about the 
importance of disrupting the supply chain, about interdicting 
drugs and other contraband.
    It is important for this committee and task force to 
understand--and the American people to understand, quite 
honestly--that groups like Hezbollah, the FARC, transnational 
criminal organizations, use drugs and other contraband as an 
alternative form of currency. It is the oldest form of 
alternative currency that they utilize and it is very precious 
to each and every one of them. They trade drugs for vehicles of 
all sorts, aircraft, boats, limousines. They trade currency for 
smuggling operations, to pay for smuggling operations for 
counterfeit documents. The list goes on and on. And if we don't 
start focusing as much energy at disrupting the supply chain as 
we do at attacking illicit finance, we will never get to where 
we need to be.
    In closing, I am a career law enforcement professional, Mr. 
Chairman, as you said. I am not here to tell this committee or 
to proclaim to this committee, or anyone else for that matter, 
that a judicial approach to attacking terrorism is a panacea. 
It is certainly not. But I will tell you what it can deliver 
that no other tool in our counterterrorism toolbox can deliver.
    When real justice is meted out in a Federal courthouse 
somewhere in the United States or some other competent 
jurisdiction around the world, where we have brought a terror 
leader to justice, that message that we can deliver by 
identifying that terrorist for who he or she really is: an 
organized crime thug of international proportions that preys on 
the very weakest in our global society and someone who is not a 
freedom fighter, as so many have been indoctrinated or charmed 
into believing they are.
    Thank you for allowing me to make my comments, for being 
here today. I look forward to meeting and working with all of 
you and your staffs to help in any way I can.
    [The prepared statement of Mr. Braun can be found on page 
30 of the appendix.]
    Chairman Fitzpatrick. Thank you.
    Dr. Ottolenghi, you are now recognized for 5 minutes.

  STATEMENT OF EMANUELE OTTOLENGHI, SENIOR FELLOW, CENTER ON 
   SANCTIONS AND ILLICIT FINANCE, FOUNDATION FOR DEFENSE OF 
                          DEMOCRACIES

    Mr. Ottolenghi. Chairman Fitzpatrick, Vice Chairman 
Pittenger, Ranking Member Lynch, and members of the task force, 
on behalf of the Foundation for Defense of Democracies, I thank 
you for the opportunity to testify.
    In Latin America, the combination of weak governments, 
porous borders, widespread corruption in public institutions, 
and the lack of adequate legislative tools to combat terror 
finance creates an ideal environment for transnational 
organized crime.
    Drug trafficking, trade-based money laundering, and terror 
financing can no longer be treated as distinct phenomena. 
Terror organizations help drug traffickers move merchandise to 
their markets. They then launder revenues through sales of 
consumer goods, profits that fund terrorist activities.
    In Latin America, Hezbollah plays a central role in this 
new landscape thanks to a vast network of support. Hezbollah 
generates loyalty among local Shia communities by managing 
their religious and educational structures. It then leverages 
loyalty to solicit funds and use business connections to its 
own advantage, including, critically, to facilitate its 
interactions with organized crime. My written testimony 
explains how the group's religious, charitable, educational 
institutions, its clerics, its supporters' licit commercial 
activities, and its illicit finance network all overlap.
    The tri-border area of Argentina, Brazil, and Paraguay, or 
TBA, illustrates this overlap. It also shows how the absence of 
proper local legislative tools to combat terror finance has 
limited the impact of U.S. measures to counter it. The Galeria 
Page in Paraguay's Ciudad Del Este, which Treasury designated 
in 2006, merely changed its name to Galeria Uniamerica. Its 
owner, Hamzi Ahmad Barakat, continued his activities until his 
arrest in Brazil in 2013, not for terror finance, but for 
fraud. And Mohsen Bilal Wehbe, a Hezbollah cleric that Treasury 
designated in 2010, continues to operate openly in Brazil.
    Porous borders compound these problems. Trade-based money 
laundering in the TBA, a key component of the narcotraffic-
terrorism nexus, relies on commercial goods not produced in 
Paraguay. Imported goods are re-exported through the TBA, a 
porous border at the southern end of a long, lawless frontier 
infamous for drugs and weapons trafficking.
    A recently leaked investigation into tax fraud in Ciudad 
Del Este, which local authorities have dubbed a mega-evasion 
due to its size, brings all this together. Local accountants 
issued false invoices on behalf of 285 companies registered in 
the TBA for an estimated $270 million in tax evasion.
    Authorities are focusing on a cluster of companies with 
alleged links to Hezbollah through two shareholders, Ja'afar 
Balhas and Walid Amine Sweid. Paraguay's media have documented 
their close connections to politicians and custom officials, 
suggesting these links ensure lax custom inspections. Import-
export data for their companies show merchandise deliveries 
from China arrived by air with cargo flights operated by 
Emirates via Dakar, Senegal, and the Miami-based Centurion Air 
Cargo. Both airlines fly regularly to Ciudad Del Este.
    For example, a bill of lading that appears in my written 
testimony details delivery by air to the TBA business Ponto Com 
Megastore from Spaltec Electronics in Hong Kong. Sweid owns 
both companies, as well as Global Logistic Solutions, the Hong 
Kong-registered shipping company. In short, Sweid controlled 
every company involved in the transaction. Given the false 
invoicing, it is highly plausible that this is a trade-based 
money laundering scheme involving false shipments. This pattern 
is common to other companies under investigation, some of which 
use LLCs incorporated in Miami, rather than Hong Kong, as their 
transit point for merchandise and paperwork.
    Successive U.S. Administrations have over the years 
repeatedly designated Hezbollah financiers and financial 
networks. The TBA and other border areas in Latin America offer 
a target-rich environment for new designations.
    Additional measures should be adopted to diminish 
Hezbollah's ability to exploit structural weaknesses prevalent 
in the region that have made it possible for it to interact 
with local criminal syndicates. There should be more stringent 
controls and better monitoring of merchandise travelling to the 
TBA. Problematic shipments by air reach the TBA from two points 
of departure, Miami International Airport and Dubai via Dakar. 
The United States should institute stricter controls over 
shipments from Miami and perform more stringent and timely due 
diligence on companies shipping to the Paraguayan city.
    The same can be said over cargo arriving to the TBA from 
Dubai via Dakar. Washington should ask and work with 
authorities in both countries to exercise greater scrutiny over 
merchandise and its recipients before planes leave. Stricter 
controls could reduce illicit shipments and raise the costs for 
Hezbollah middlemen in the TBA.
    These are just some of my recommendations. I thank you for 
the opportunity to testify, and I look forward to your 
questions.
    [The prepared statement of Dr. Ottolenghi can be found on 
page 46 of the appendix.]
    Chairman Fitzpatrick. We thank the witnesses for their 
opening statements, and the Chair now recognizes himself for 5 
minutes for questions.
    Mr. Federici, 4 months is a relatively short period of 
time, but so much has happened, and we want to congratulate you 
on getting Argentina's FIU back online. I want to thank you for 
the information sharing which is now occurring between your 
country, your intelligence unit, and our Department of the 
Treasury and FinCEN. It is so important to Argentina and to the 
United States and to the region and the security.
    We are aware that a number of countries in Latin America 
don't necessarily perceive the risk of terrorism financing as a 
relevant risk in the context of their domestic relations. In 
your opinion, are these perceptions duly justified? What can 
you tell us about the perceptions of terror finance in the 
domestic context of individual nations?
    Mr. Federici. Thank you very much for your question, Mr. 
Chairman. Indeed, having worked as a regional adviser for Latin 
America and the Caribbean at the IMF for the past 10 years, I 
have had the chance to listen to discussions related to 
perceptions of risk of terrorist financing in the context of 
the GAFILAT, which is the FATF group for Latin America, and the 
CFATF, which is the same type of regional body for the 
Caribbean. And many countries in the region, unfortunately, 
express publicly their perception that the terrorist financing 
risk is not a risk pertinent to the region. It is a problem of 
the United States, it is a problem of Europe, and other parts 
of the world.
    I have always emphasized from the IMF, and I am doing it so 
now with much more strength from my public position in 
Argentina, that these type of opinions lightly thrown in 
international bodies like the ones I referred to are, to say 
the least, irresponsible if they are done without having 
previously conducted a thorough and professional terrorist 
financing risk assessment in the jurisdiction.
    There are very few countries that have completed the 
conduct of money laundering and terrorist financing risk 
assessment in their jurisdictions as the FATF Recommendation 1 
currently requires. However, many of these countries publicly 
express the opinion that terrorist financing is not a problem 
in their country.
    So I think this is related also with a confusion on what 
the risk of terrorist financing is. The fact that there may not 
be terrorist elements operating in the jurisdiction does not 
mean that you are not exposed to the risk of terrorist 
financing. The mere fact that you have a financial system 
interconnected with the rest of the world, with the global 
financial system, in and of itself exposes you to the risk of 
terrorist financing and this is a subtleness that many public 
officials in our region do not yet fully understand.
    That is why it is very important to continue to raise 
awareness on the risk of terrorist financing, and that is why 
it is very important to continue to have the United States 
support in raising awareness on these risks in the region.
    Chairman Fitzpatrick. Thank you.
    Mr. Braun, in your written statement, you mention that 
Hezbollah is hiding behind criminality in Latin America and 
other locations. Can you further elaborate or explain what you 
mean by that?
    Mr. Braun. Thank you for the question, Mr. Chairman.
    Listen, here is the way I look at the situation. 
Organizations like Hezbollah--ISIL is no different, Hamas, you 
name them--their operatives, especially working in clandestine 
ways abroad, they don't carry ID cards, they don't wear 
uniforms, they pound their chest and proclaim to be terrorists 
for some important reasons. They don't want to draw attention 
by the United States, and they don't want to draw the attention 
of many of our partner nations around the world that we work 
very, very closely with.
    So they have been dispatched. How do they operate really 
with impunity at the same time accomplishing so many of 
Hezbollah's kind of strategic global goals? And I think what it 
really comes down to in a large way more and more these days is 
their involvement in the global drug trade. They are involved 
in criminality, but at the same time they can reconnoiter at 
will. They can photograph and look at what may be very 
strategically important targets for some future events. I 
believe firmly that Hezbollah feels that prolonged asymmetric 
conflict in the Western Hemisphere and other places in the 
world, it is going to be playing out some days.
    So they have all the time in the world to engage in 
international drug trafficking and at the same time establish 
the rat lines that they need to establish to support that 
asymmetric conflict down the road. As I said, they can 
reconnoiter at will. They can make all of the nefarious 
contacts that they need to make with other terrorist 
organizations' insurgent groups, as well as transnational 
criminal organizations around the world. And in the process, 
they can generate enormous amounts of contraband revenue that 
ultimately go back to the cause and help the team.
    Chairman Fitzpatrick. Thank you.
    I now recognize the ranking member of the task force, Mr. 
Lynch, for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman.
    Mr. Braun, let me stay right on that issue. We had a 
significant success operating against the Lebanese Canadian 
Bank. I think they were, at their peak, funding Hezbollah at 
about $200 million a month through the same procedures: drug 
trafficking; consumer products. They were selling--they had a 
used car deal there in Senegal and West Africa. They are now 
defunct. We were able to take them out through a 311 action as 
a primary money laundering concern.
    Are we missing something, though, in terms of that process? 
It seems as though as we adapt, some of these terrorist groups 
are readapting and reengineering their organizations to sort of 
escape our measures of accountability. Are there new and 
different approaches that we should be taking that address what 
this new iteration of terrorist financing is undertaking?
    Mr. Braun. Thank you for that question.
    Listen, terror organizations like Hezbollah, that is really 
now a hybrid terror organization, they are one part designated 
terrorist organization by our country and many other countries 
around the world, but they are also an enormously powerful 
transnational organized crime group that is distributing, as I 
said, hundreds of tons of cocaine and generating hundreds of 
millions of dollars in contraband revenue behind that effort 
every single year.
    It is important to understand, though too--let's go back in 
time. You can talk about the cartel. You can talk about the 
Medellin Cartel. You can talk about the Cali Cartel. Look at 
what has been playing out in Mexico for many, many decades.
    What most folks in America don't realize is what has been 
going on in Mexico with respect to drug trafficking has really 
been playing out for more than 70 years, right? And with every 
action that we take, I don't care if it is law enforcement or 
our military or our intelligence services, with every 
aggressive action that you take against these what have evolved 
into ultimately into very powerful threats, they are going to 
evolve, they are going to change their tactics, techniques, and 
procedures.
    It is going to take law enforcement a little time to figure 
out what they are doing before they can hit them again.
    Mr. Lynch. Let me sharpen my question then.
    Mr. Braun. Okay.
    Mr. Lynch. We don't have that much time. Our current 
protocol is to work through FATF and the FIUs, the financial 
intelligence units, and that has been somewhat effective in 
terms of stopping the financing, the wire transfer of resources 
from one institution to another to fund terrorist financing. 
That system is fairly effective, I think. The problem now is 
that they are going off the grid.
    Mr. Braun. Sure.
    Mr. Lynch. They are going off the grid. So those measures, 
that world that we are operating in, is not as effective as it 
once was because of these new networks that, as I say, are off 
the grid and are not subject to the formal regulatory process 
that we are adapting. They are doing consumer products now as 
separate entities. They are deep into the drug trade. There is 
a lot of cross-border smuggling of assets and bulk cash 
transfers across the border.
    Now maybe speak to the situation at the Mexican border. You 
talked about Mexico quite a bit. Is the vulnerability at the 
Mexican border a factor, is it a large factor in our ability to 
combat some of what is going on in South and Central America 
and in Mexico?
    Mr. Braun. It is part of the problem. But we have done, 
thanks to you and many of your colleagues here in the House, a 
phenomenal job at shoring up many of the gaps along the 
southwest border. We have over 20,000 Border Patrol agents now, 
most of which are down in that area interdicting drugs, 
interdicting money, et cetera. So we have done a good job 
there.
    Where we are really lacking is defense in depth, if you 
will. The Department of Defense's detection and monitoring 
assets that they had before 9/11, after 9/11 over 60 percent of 
those assets went away. They went to other parts of the world, 
rightfully where they needed to be, but for the most part they 
have never come back into theater.
    And every four-star admiral and general who has commanded 
SOUTHCOM since 9/11 has talked about this very, very troubling 
situation that they find themselves in where they are tracking 
load after load after load of suspected cocaine and probably 
loads of cash and they cannot do anything about it. They 
literally sit by and watch these targets pass on the screen.
    The one thing, though, that I believe that this committee 
can do that I believe very much needs to be done is we really 
need to tighten the noose on the beneficial ownership issue and 
lower the curtain once and for all and expose these people for 
who they are, because that is the linchpin, that is the choke 
point for all of the money laundering that has been discussed, 
and probably will continue to be discussed, that Hezbollah is 
engaged in. And you are right, the LCB was moving over $200 
million a month in Hezbollah cocaine money through that 
institution and many of its affiliated institutions and banks.
    Mr. Lynch. Thank you. I yield back.
    Chairman Fitzpatrick. The vice chairman of the task force, 
Mr. Pittenger, is recognized for 5 minutes.
    Mr. Pittenger. Thank you, Mr. Chairman.
    Mr. Federici, our objective is to assist you in any way 
possible as you emerge as a major regional leader in our 
efforts to counter illicit finance. What else can be done that 
you would like to see from the United States specifically 
related to an OTA presence that would be important? Just kindly 
give us your insights into what would help you be successful.
    Mr. Federici. Thank you very much for your question.
    I think to begin with, I have to express my appreciation 
for the support that the United States is already providing to 
our new government in Argentina. The presence of President 
Obama, I think less than 2 months ago, with the early arrival 
of President Macri was a very strong political sign of support, 
and the presence of Jennifer Shasky, FinCEN's former now 
director in Argentina a couple of days before the arrival of 
President Obama, was a very strong support to my job.
    I think that type of international and political support is 
very important, not only to motivate us to continue to work in 
the right track, but also to show a sign to the rest of the 
region and the world that we can work as partners and allies.
    I also think your support is fundamental in helping us 
raise awareness, particularly on the importance of addressing 
terrorist financing risks in our country and in our region. I 
would like to see the presence of U.S. officials more often 
coming to Argentina, helping us convey the right message in 
Buenos Aires, in the tri-border area, and I hope to be able to 
team up in partnership with our Brazilian and Paraguayan 
counterparts in those efforts as well.
    Now, we also need technical assistance, and I think that is 
where OTA's support, the Department of Treasury's OTA support, 
can be of great help. We had a first mission to conduct a 
diagnostic of the situation at the FIU and the broader AML/CFT 
system, and we are looking forward to receiving their support, 
particularly to strengthen our AML/CFT supervisory 
capabilities, because apart from being an intelligence agency, 
we are also a regulator for the entire financial system, and 
our main role is to protect financial integrity, and that is 
where I think OTA can really add value to our work.
    We also need technology. And, unfortunately, over the past 
10 years there has been little investment in technological 
resources, and this really affects our capacity to conduct 
sophisticated analysis. And I think that is where the United 
States can also help us come closer to providers and companies 
that can offer solutions to our current challenges.
    Thank you very much.
    Mr. Pittenger. Thank you. I would like you to weigh in some 
more on the tri-border area. As we went to the tri-border area, 
of course it is very open, and we did not see any presence of 
any law enforcement there, just free flow of individuals and 
traffic.
    What do you see, Mr. Braun--and all the panel can weigh in 
on this, we have about a minute-and-a-half left in my time--
that can be done specifically to address the tri-border area?
    Mr. Braun. What it really comes down to is, if not 
ungoverned space, undergoverned space, places like the tri-
border area. And it is important to understand, Congressman, 
that both transnational organized crime as well as terror 
organizations are attracted to those areas because they can 
thrive in those areas, they can operate with impunity, because 
of a lack of law enforcement resources and other security 
forces and really a lack of any type of meaningful judicial 
process whatsoever or, the more raw side of power, almost a 
total lack of any kind of a military or other security 
presence. So they are attracted to those areas because, again, 
they can operate with impunity in those areas.
    What I tried to touch on in my opening remarks is one thing 
that we can do is we can help our foreign counterparts, I 
believe, develop their capacity, both criminal investigative, 
organized--think of it this way, anti-organized crime capacity 
and judicial capacity to attack these threats. And I believe 
that things like task forces, international task forces, can be 
brought to bear in places like the tri-border area to help to, 
if nothing else, monitor and collect intelligence that is 
enormously important to efforts outside of that area.
    Mr. Pittenger. Thank you. My time has expired.
    Chairman Fitzpatrick. Mr. Ellison of Minnesota is 
recognized for 5 minutes.
    Mr. Ellison. Let me thank the chairman and the ranking 
member and thank our witnesses today.
    It is great to see you again, Mr. Federici, and thank you 
for the great work that you do, and all the panelists. But I 
just want to remark that I thought your comments at our recent 
trip were particularly illuminating, and I was grateful for you 
sharing your insights. So thank you.
    I won't go over what some of my colleagues already asked, 
but one of the things in front of the world and our hemisphere 
right now is that two out of three foreign terrorist 
organizations operating in Latin America, the FARC and the ELN, 
are now in a process of negotiating peace with the government. 
I think this is a good thing.
    But what is your opinion on how we are going to deal with 
some of these money laundering issues in the aftermath? I think 
that this is an important question that needs to be asked: Are 
these organizations going to be demobilized? And their support 
for terrorism and their role in international money laundering, 
how is that going to be addressed in the course of this peace? 
Could you all offer any insights you have?
    Mr. Braun. Congressman, I would say one thing, front and 
center, that, listen, I applaud Colombia's efforts to bring the 
FARC, ELN to the peace table and to bring peace to the country 
for the first time since the FARC stood up in 1964. They have 
been around for over 50 years now.
    But the most important point is, and the Colombian 
government realizes this, they know it, is if anyone thinks for 
a moment that these combatants are going to blend back into 
society, are going to take jobs at the local factory or other 
places, the vast majority of them simply won't. They have 
gotten a taste for the excitement. They have gotten a taste for 
the money, enormous amounts of money, especially the 
leaderships of those organizations, where ideology went out the 
window a long time ago after they got a taste for the money, 
and that is what absolutely motivates them to this day. So 
personally, I don't see a great deal of change.
    Mr. Ellison. Any other ideas?
    Mr. Federici?
    Mr. Federici. Sorry, Congressman, I would just like to add 
one point and try to bring the conversation back to a sort of 
broader level looking at the region, because I think that what 
is happening in Colombia with the peace process and the 
challenges that it poses are a reflection of a broader regional 
problem, namely that all of these illicit activities do occur, 
to some extent, because of the corruption, complacency, and 
complicity of sectors of public institutions and politicians in 
the region. There is a vested interest among these categories 
of public servants not to prosecute and go after these 
networks.
    Now, this is a challenge across the continent, across the 
region. And one of the things that I think can be done to 
improve the response of the international community, and 
particularly of the United States, is that if you cannot 
persuade the political classes--and the FARC will join the 
political class of Colombia if the peace process comes to 
fruition--if you cannot persuade the political classes to abide 
by the law, international standards, financial integrity, and 
prosecute criminals, what you need to do is to institute 
mechanisms of enforcement outside of their jurisdictions.
    One example that I would make here is when I was recently 
myself in the tri-border region, 2 months ago, Paraguayan 
officials showed me data about cash flows out of the country. 
More than 90 percent of funds that are wired out of Paraguay 
end up or transit through the United States financial system. 
So here you have a perfect tool to go after some of these money 
flows without the need for the cooperation of those who do not 
wish to help.
    Mr. Ellison. Thank you.
    Dr. Federici?
    Mr. Federici. Yes. I would like to go back to your question 
because I think it is a very interesting question. As part of 
the international community as well, we have begun to think 
about this because Colombia is coming up for an assessment 
against the international standard pretty soon. It is going to 
be conducted by the International Monetary Fund. And this 
question is going to be raised: How is the money that the FARC 
has been harboring in Colombia and out of Colombia going to be 
treated? Because there may be differences in treatment on what 
the Colombians decide to do with that money and what other 
countries decide to do with that money. And how compliant is an 
amnesty of the type that Colombia is contemplating with the 
international standard?
    I don't have the real, the final answer to the question 
yet. I think it deserves some thought from the international 
community as a whole. But I do have my reflection on this 
topic, which is that the money that has been flowing from the 
FARC and other terrorist organizations is money that has 
contaminated the integrity of financial systems outside of 
Colombia as well.
    And so I think we have an interest in protecting the 
integrity of our financial system, and these flows have been a 
real threat to that objective. I have in my country had to deal 
with flows related with these organizations, and to the moment 
our policy has been to treat them as terrorist funds and apply 
the necessary measures to suppress them.
    So we need to be very thoughtful of how we are going to 
treat this after the final amnesty agreements are signed, and 
it very much will depend on the letter of those agreements on 
one side and on the consensus that we manage to reach 
internationally as to how to treat these money flows.
    I do want to say that, regardless of that, I also share and 
applaud Colombia's efforts to come to peace within their 
country.
    Mr. Ellison. Mr. Chairman, may I just say--I know I am way 
over time--but I would just like to say I absolutely look at 
this as a positive thing, the peace effort, but if these 
terrorist groups turn their attention away from fighting the 
government and turn it onto just criminal behavior around the 
world, that is not necessarily a good thing.
    So I am glad all of you are thinking about it, and I 
appreciate your comments.
    Chairman Fitzpatrick. The gentleman from Texas, Mr. 
Williams, is recognized for 5 minutes.
    Mr. Williams. Thank you, Chairman Fitzpatrick.
    And thanks to all the witnesses for being here today, and 
for your testimony.
    Mr. Federici, here in the United States much of our 
immigration debate--and I am particularly sensitive to that 
issue because I represent Texas--is on border security. We 
often argue on how much to spend on Border Patrol agents, 
equipment, new technologies. Yet in your testimony you talk 
about Argentina's border and how it was completely unprotected. 
You go on to say that those working at the Financial 
Intelligence Unit were not qualified and had no understanding 
of money laundering, terrorist financing risk, and strategy. I 
think that probably makes some of us in this room, like myself, 
a little worried, especially since we know that our enemies 
would exploit our southern border if given the opportunity.
    One of the major things that these task force hearings have 
uncovered has been the importance of working with a willing and 
equal partner when it comes to combating terrorist financing. 
So, Mr. Federici, I know you talked about some of this in your 
testimony, but can you expand on what steps Argentina is taking 
within its borders to fight money laundering and how well they 
work with the United States to achieve their goals?
    Mr. Federici. Yes. Thank you very much. This is an 
excellent question, and, in fact, it is part of the tragic 
situation that we found the country in after so many years of 
disinterest for the public thing in Argentina.
    As I said, I think corruption had a lot to do with this. 
Corruption affected particularly the law enforcement agencies, 
including the border protection agencies. Law enforcement 
agencies were seriously dismantled. When we stepped in, we 
found them really badly equipped, with very poor salaries, 
untrained, and even mistreated, and with a very lack of trust 
in themselves. Of course, this led to very little capacity to 
conduct the job that the law mandates them to do.
    With regards to the border in particular, we found that 
only 17 percent of the borders were controlled by radars and a 
very limited air defense system. We found that the airplanes 
that were supposed to protect our borders were not flying, the 
ships that were supposed to protect our seas and our rivers 
were not working, and the military forces, the armed forces, 
were very badly equipped to conduct their preventative job.
    Steps are being taken. There was an increase in salaries 
for all the armed forces very recently. I don't have the exact 
figures because this is an area that is not under my 
competence, but I can provide you with the figures upon my 
return to Buenos Aires.
    This decision was made by the Ministry of Defense and the 
Ministry of Security last week.
    So a recognition, first of all, of the importance that our 
armed forces have and that our border protection forces also 
have in protecting our national security and protecting our 
country, and a recognition and a commitment expressed in 
tangible actions, like an increase in the salary, was the first 
step to do. Now we need to train them again. We need to equip 
them with the necessary resources. We need to provide the 
technology that they need to conduct the job. And we need to do 
this at the same time while thinking strategically how to use 
these resources in the most efficient way.
    I think with regards to border protection in particular, we 
need to bring to our table our neighboring countries, in 
particular Bolivia, Paraguay, and Brazil, which is where most 
of our threats related with drug trafficking and terrorist 
financing are coming from. We need to sit together and start 
working as a team again. And I think in particular related with 
the tri-border area problem and terrorist financing, as I said, 
that is an opportunity to reengage also with the support of the 
United States.
    Mr. Williams. Okay. The State Department released a report 
last year that found there was a significant amount of money in 
Argentina which was outside of government supervision, an 
estimated 25 to 40 percent of an informal economy.
    Mr. Federici. Right.
    Mr. Williams. In other words, this money isn't being taxed 
and Argentina isn't sure where the money is from. So what steps 
in Argentina are you taking to change or rein this in?
    Mr. Federici. This is also an excellent question. I think 
that is correct. Our estimates are even greater than that. We 
think an amount close to the same amount of our GDP is held 
outside of Argentina or basically outside of the radar of our 
tax authorities. And this is related to many reasons. Economic 
instability, inflation, devaluation, and political and 
institutional instability have led many Argentines, in many 
cases Argentines who have legitimately earned their income, to 
protect their wealth in safer currencies and in safer 
jurisdictions.
    The most important measure that we are taking these days to 
overcome the situation is to launch a voluntary tax compliance 
program. We have drafted a bill that is currently in the house 
of representatives in Argentina for discussion to basically 
create an incentive for Argentines holding assets abroad 
undeclared to come clean, and we think this will reduce the 
amount of undeclared cash in the economy and will also reduce 
the amount of informality.
    But I would also like to say that part of this problem has 
been the excess regulatory framework, the excess of regulatory 
pressure. To give you an example, in the area of AML/CFT, in 
the last 5 years Argentina issued more than 5 laws, more than 4 
decrees, and our FIU issued more than 70 regulations which in a 
way obstructed the functioning of the financial system and the 
economy, in many cases prevented financial inclusion, and in 
some cases even led some people to be expelled from the formal 
financial system.
    Mr. Braun. There was a proliferation of informal and 
underground channels to move that money in and out of 
Argentina. And while most of these funds were really related 
with Argentines that have legitimately earned their income and 
were seeking protection, these are also channels that I have no 
doubt could have been used, and most likely were used, by 
criminals and particularly by drug trafficking and terrorist 
financiers.
    So I think this is a problem that needs to be addressed. 
Our voluntarily tax compliance measure will tackle part of this 
problem, but we also need to have more efficient regulations 
with a risk-based approach that don't obstruct the functioning 
of the financial system and the economy and really focus on 
what is important.
    Mr. Williams. Thank you for your testimony.
    I yield back.
    Chairman Fitzpatrick. The gentleman from Illinois, Mr. 
Foster, is recognized for 5 minutes.
    Mr. Foster. Thank you, Mr. Chairman.
    And thank you to our witnesses for your participation in 
this important hearing.
    As you are probably aware, there have from time to time 
been legislative proposals in Congress to eliminate anonymous 
shell corporations in the United States. And as I understand 
it, they have been eliminated in many advanced economies.
    And so I was wondering if, Mr. Braun, or any of you, could 
comment on the importance of anonymous shell corporations in 
the United States, and drug money laundering, terrorist 
financing, international corruption, and other activities, and 
what the essential features of some legislative reforms in this 
area would be to really help us fight these.
    Mr. Braun. Thank you for the question, Congressman.
    As I said earlier, the single most important piece of 
Hezbollah's money laundering operation, or their apparatus, 
extremely sophisticated, and this holds true, certainly, for 
most of the transnational drug trafficking organizations that 
are spanning the globe today as well as many other terrorist 
organizations, is the importance of shell--the anonymity 
related to those shell corporations in those accounts.
    And anything that this committee and task force can do, 
again, to raise the veil, drop the curtain, whatever, to expose 
the beneficial owners of those corporations I believe would 
have a significant impact on the way today's very nefarious, 
very sophisticated money launderers are doing business.
    One thing for sure, it would cause them to change their 
tactics, techniques, and procedures. What law enforcement 
needs, in our country, I believe, needs to get better at is 
some real coordination with folks like you, because when those 
changes take place, those changes result in opportunities for 
law enforcement to take action, to really knock these folks off 
their heels. And then the important thing is to be on top of 
them after that.
    Mr. Foster. And are there countries that you think really 
do this right in terms of transparency of ownership?
    Mr. Ottolenghi. If I may step in, Mr. Congressman. And 
thank you for your questions.
    I think there are two things that countries can do better. 
One is, of course, disclosure, namely, the obligation to make 
the identity of beneficial owners publicly available. And the 
second is transparency, to make it easy for those interested in 
finding out to be able to disclose that information.
    The problem is that beyond these formal conditions and 
requirements, you do have to confront very informal, well-
established systems of concealing that information. And, again, 
I go back to the investigation I mentioned that is ongoing in 
Paraguay of the--the false invoices that are at the center of 
this investigation involved people who had issued invoices for 
up to $1 million who were, in one case, a street vendor of ice 
cream in Ciudad del Este. They were unskilled workers. One of 
them was actually constrained to his bed for an endless--for 
months and hadn't been earning--they didn't even know that they 
themselves were declared as the official owners of the 
companies that were issuing the invoices.
    So, here, you had a situation from a formal point of view, 
you knew who the owners of the businesses were, but you cannot 
go beyond that formality if there is an informal system of 
criminal complicity where officials, accountants, attorneys, 
customs, and law enforcement are allowing this mechanism to go 
on.
    So, again, I think that what is important to complement 
this gap, to fill this gap, is that we have to identify those 
areas where we can intervene operating in a system that is more 
structured and more law abiding. Again, these networks rely on 
the structural weaknesses of these countries and border 
regions. But they are global networks.
    In the examples that I brought, you have false invoicing 
and shipments going from Hong Kong through Miami, Dubai, West 
Africa, into the border regions and back out into the 
international financial system. If we cannot improve standards 
of transparency in those countries, we can at least intervene 
in those points further away in the supply chain where there is 
the rule of law, there are governments that are allies and 
friendly and willing to cooperate in order to mitigate the 
consequences of the system.
    Mr. Foster. Now in the example that you just gave, where it 
went through Miami, would there typically be an anonymous U.S. 
shell corporation involved in that kind of operation?
    Mr. Ottolenghi. Thank you for the follow-up question. 
Actually, that is precisely the point. In the cases that I have 
seen, actually, you can find out who the officers are in the 
companies. You can identify enough names. For example, in the 
case of Miami, there is one individual who is a certified 
public accountant and who is incorporating companies, all of 
these companies that are involved somehow in this 
investigation.
    And he has been involved in the past at least twice in 
cases where there were convictions for fraud and terror finance 
against Hezbollah operatives here in the United States. So 
clearly, this is an individual to whom Hezbollah operatives go 
in order to incorporate companies. The information is there. 
The difficulty is to connect the dots.
    Mr. Foster. Yes. Thank you.
    Chairman Fitzpatrick. The gentleman from Maine, Mr. 
Poliquin, is recognized.
    Mr. Poliquin. Thank you, Mr. Chairman. I appreciate it very 
much.
    And thank you, gentlemen, for being here.
    Mr. Braun, if I may, Hezbollah is an entrenched 
international terrorist organization predominantly operating in 
the Middle East, or at least that's been the understanding of 
many of us who are wrestling with this whole international 
security issue.
    And now we learn from you folks, and others, that their 
tentacles now are reaching into our hemisphere and operating 
now in South America and the drug trafficking trade. And I am 
sure you folks are well aware of the fact that we have a heroin 
epidemic in this country, and it doesn't spare any location. I 
represent the great State of Maine, in particular, northern 
Maine and in other parts of our State, and we have a real 
problem up there.
    Now, we learn, Mr. Braun, that about 95 percent of the 
heroin entering this country enters our southwest border. It 
goes to our southwestern border.
    Do you have any evidence that Hezbollah, in their drug 
trafficking operations in South America, has any kind of impact 
or influence on the heroin entering this country that is now 
reaching all the way to northern Maine, is coming through our 
southwest border?
    Mr. Braun. Thank you, Congressman.
    Listen, I have been out of government now for about 7\1/2\ 
years, so I don't have access to the information like I used to 
have in my old job. But what I can tell you is this, Hezbollah 
has become so proficient at not only engineering the wiring 
diagram, if you will, for what is needed to conduct their very 
effective money laundering operations, but they are now 
providing those same services to both Colombian and Mexican 
drug trafficking cartels.
    So by doing so, if nothing else, they are certainly 
facilitating what is sadly happening in Maine and all across 
our country. And I thank you for bringing that up. Because one 
thing we have to remember, folks, is we experienced over 47,000 
drug-related overdose deaths last year.
    That is 129 Americans dying every day of the week. And 
folks aren't talking about drugs these days. They have just 
absolutely turned their heads. They don't want to hear about 
it. But if we don't get this problem in check, if we don't get 
back to what we used to do, we are going to have an even worse 
situation in the decades ahead.
    Mr. Poliquin. Thank you, Mr. Braun.
    Dr. Ottolenghi, we have a terrific neighbor to our north, 
of course, the Canadians, and they are a major trading partner 
with our country. We have a 3,000-mile border. In the State of 
Maine alone the land border with Canada is about 311 miles. You 
can be in a snowmobile in the middle of the field, Doctor, and 
step off your machine, and one foot is in Canada and the other 
foot is in Maine.
    Do you worry at all, and do we have any evidence whatsoever 
that as we put more and more pressure on our southwest border 
that we may be at risk for additional activities that are 
unlawful and beyond, on our northern border?
    Mr. Ottolenghi. Thank you for your question. Again, like my 
colleague on the panel, I do not have access to intelligence 
and to classified information. I only rely on open sources. So 
my ability to answer is somewhat constrained and limited by 
what I know and by what I know I don't know.
    Having said that, I can tell you that the building blocks 
of Hezbollah's money laundering terror finance operations in 
Latin America, so the social infrastructure, the networks of 
support and their interconnectivity, which enables them to 
leverage the businesses and the so-called illicit commerce for 
their nefarious purposes, do exist also across the northern 
U.S. border with Canada. They do exist in the United States to 
be fair as well, though perhaps not to the same extent.
    And so while not being able to conclusively tell you that 
this is happening, I do see the signs of this language there. 
The difference is, I think, the strength of the financial 
system, the transparency of our corporate laws, the fact that 
you do have the rule of law functioning, that you have strong 
institutions, which are all elements lacking in the regions of 
South America where Hezbollah is more successful.
    Mr. Poliquin. Thank you, Doctor, very much.
    Mr. Federici, could you shed any light on your experience 
in your part of the world where there has been pressure put on 
one border, one international border, and it causes problems on 
another border? Can you share any light on that to help us in 
this committee?
    Mr. Federici. Yes. Thank you very much, Congressman. And 
absolutely, we are actually experiencing this as we speak 
today.
    In recent years, Argentina has become a very important 
transit country for the export of illegal drugs out from our 
borders towards--mainly towards Europe and West Africa. And I 
am talking mostly about cocaine flowing south from Bolivia and 
also from Peru and leaving our ports towards the ocean.
    And what we are seeing is that in the last 6 months that 
the new government has been in office, due to all the pressure 
that we have been putting in controlling our borders and 
controlling the drug routes that we have identified, there have 
already been changes, slight changes for the moment but changes 
in the routes that drug traffickers take. And we have been 
receiving signals from our neighboring countries, as well, that 
some of these changes are starting to affect them, particularly 
south Brazil and Uruguay are seeing an increase in movements, 
suspicious and unusual movements, that they haven't seen before 
due to the pressure that we are placing.
    This is something that is very subtle for the moment, 
because we have only been in office for less than 6 months, but 
that we believe will increase significantly as we continue to 
put pressure against these organizations. The routes and their 
flows.
    Mr. Poliquin. Thank you very much.
    Thank you, Mr. Chairman. I appreciate it.
    Chairman Fitzpatrick. The gentleman from Pennsylvania, Mr. 
Rothfus, is recognized for 5 minutes.
    Mr. Rothfus. Thank you, Mr. Chairman.
    Dr. Ottolenghi, there seems to be some dispute about the 
influence of Iran in South America. Some, including the Obama 
Administration, claim that Iran's influence in the region is 
waning; however, there are other news reports that cite 
military and intelligence officials who directly contradict 
this narrative and claim that Iran's influence is still present 
and potentially growing, particularly through both Hezbollah 
and the so-called cultural centers that are being ruled by the 
Islamic Revolutionary Guard Corps.
    Where do you fall on this issue?
    Mr. Ottolenghi. Thank you very much, sir, for your 
question. That is a very important point, and I would like to 
answer by addressing two themes: the first is Iran and its 
Latin America policy; and the second is the connection between 
Iran and Hezbollah.
    Let me turn to Iran first. I think that the assessment or 
the influence or the emphasis of Iran in Latin America is 
waning is based on the differences in approach between the 
previous president of Iran and his enthusiasm for Latin America 
and the current president who hasn't visited the region yet and 
no other officials, senior officials, of his government have 
put the same emphasis.
    However, the point about Iran's Latin America policies is 
that this is not a file that is mainly handled by the elected 
government and its ministries. It is a file that has always 
been held by the Supreme Leader's office through his own 
personal representatives to Latin America, Mr. Mohsen Rabbani, 
infamous for his role in the AMIA bombing in Buenos Aires, in 
1994, when 85 people were murdered and many more grievously 
injured.
    So that policy continues. It is expanded. It is ongoing. It 
is well-financed, sustained, and I see no signs that there is 
any change in approach. It is a policy that has been ongoing 
for over 30 years that relies on the social network--
    Mr. Rothfus. And you are saying that it is expanding?
    Mr. Ottolenghi. It is expanding, yes, sir. It is expanding 
because it is making a conscious, sustained, well-funded effort 
to actually reach out not just through the local Shia 
communities, which are mainly Syrian and Lebanese, but it is 
actually reaching out to convert non-Muslims to Shia Islam.
    Mr. Rothfus. So you have the Supreme Leader surrogates 
there, on the one hand, and then in tandem with that, you have 
Hezbollah?
    Mr. Ottolenghi. Correct. And what I see is that the 
Hezbollah clerics are mainly focusing on the Shia communities 
of Arab immigrants of Lebanese and Syrian descent. The Iranians 
are focusing on the outreach missionary effort, but they are 
combined. Most of the time they are overlapping in the same 
mosques, in the same centers. They are interacting. There is a 
stream of very senior clerics coming from both Iran and Lebanon 
to visit on a constant basis, and the Hezbollah representatives 
together with Iranian ones are constantly cooperating on this 
effort.
    And this effort, to a large extent, is geared towards 
building support, galvanizing, so to speak, the troops, 
indoctrinating and radicalizing and it is also designed as a 
facade for the financial activities, which are managed in 
coordination.
    I just want to give you one example that, to me, is very 
revealing. We have spoken a lot about the tri-border, but the 
tri-border is just one reality of many. And just along the 
Brazilian-Paraguay frontier, which is mostly lawless and 
severely underguarded and underpatrolled, you have several 
other cities that have the same characteristics of the tri-
border area, mainly cities that are on both sides of the 
frontier with significant Shia and Lebanese communities 
involved in trade. One of the cities is called the Punta Corral 
on the Brazilian border and Pedro Juan Caballero on the 
Paraguay border. There is a very big Shia community run by--
    Mr. Rothfus. What is the population of that community? How 
many people would you say?
    Mr. Ottolenghi. The two cities combined have a little over 
200,000--
    Mr. Rothfus. How many in the Shia community?
    Mr. Ottolenghi. A few thousand, sir. A few thousand. But in 
that city, Mohsen Rabbani has a personal representative. Social 
media information from his own personal Facebook page shows 
that this individual was about 6, 8 weeks ago in Qom 
celebrating his marriage with Mohsen Rabbani in person 
officiating. Now, this is akin to having a very senior member 
of the clergy of Iran, a personal representative of the Supreme 
Leader, celebrating the marriage of a Muslim convert to Islam 
in a very remote region of South America. It tells us how 
important that connection is, and it shows the link in this 
religious social infrastructure in a critical point, place that 
is considered to be one of the highest in crime in Latin 
America currently, even worse than some of the Colombian cities 
during the height of the drug crisis, of Pedro Juan, the 
importance that the city has come to have in the design of 
Iranian policy and their interaction between Hezbollah and Iran 
in Latin America.
    Mr. Rothfus. Thank you.
    Mr. Chairman, I wish I could take more time. I didn't even 
get to any of the other issues. The Iranian connection here, 
though, I would just recommend that we might want to take 
another look at this and continue to shine that light. This is 
fascinating testimony that we are hearing today, so thank you.
    Chairman Fitzpatrick. Yes, agreed. And we may have a second 
round of questioning if we have time before the Joint Session 
of Congress.
    With that, we will recognize the gentleman from Arizona, 
Mr. Schweikert, for 5 minutes.
    Mr. Schweikert. Thank you, Mr. Chairman.
    Mr. Fererici, having been in Argentina just a couple of 
months ago, I know Members of Congress and I think much of the 
world is enthusiastic to see a country that could be such a 
powerful player on the world stage, sort of back as a player on 
the world stage. And we truly wish you and the new government 
the very best. We truly want to know how we can share 
information and actually be a good partner, because I think 
there is a level of trust of the new administration that has 
not existed in, what, 17-some years, and that is really 
important.
    I have a whole bunch of things here. But first off, do we 
fixate too much on the tri-border region?
    Mr. Federici. First of all, thank you very much for your 
comments and for having visited our country, and we really do 
need the support of our partners with the United States in 
particular. I think we share values; we share a common vision 
of the world, and I think we need to team up together to face 
the threats that affect us both as nations. So I really do 
thank you for those words, and we are counting on your support.
    I have so say that from the perspective of our countries, I 
think we fixate too little on the tri-border area. And as I 
said in my testimony, I think we need to quickly and 
professionally assess the risks to money laundering and 
terrorist financing coming out of that area and start 
developing a joint strategy among the countries that are 
affected by this problem in that part of the world and ideally 
with the support of those that have information about--better 
information about what is going on in that part of the world.
    I think personally that my country has irresponsibly 
unattended the risks extending out from that area. That is why 
we need to get back into the game. We need to re-engage our 
neighbors in that assessment and start developing a joint 
strategy together.
    Mr. Schweikert. That is not actually where I wanted to go. 
But to that point, is your counterpart in Brazil, are they 
reaching out and also working with you?
    Mr. Federici. Okay. I don't want to say something 
inappropriate speaking about another country given that I am a 
public official--
    Mr. Schweikert. You can just say you are working on it.
    Mr. Federici. But I do want to say that Brazil's role in 
helping us assess the risks in this part of the world and in 
developing a strategy is fundamental. This cannot be done 
without their engagement. That is why we need Brazil at that 
table, and we need to start working together with them.
    They are currently attending, I think, priorities that may 
be somewhat different, but in my view are also related to this 
problem, because, as we have heard, much of this problem is 
related with the lack of institutional quality, corruption that 
has allowed for these threats to grow and to develop in that 
part of the world.
    So we need to work together. We are hopeful that with the 
new focus that Argentina will put into assessing risks in that 
area and with the support that we may receive from 
international partners like the United States, we will be able 
to bring all of our neighbors to the table and start tackling 
this problem seriously.
    Mr. Schweikert. Okay. Can I pitch a sort of theory, and I 
would love your comments from all three of you on this, and 
that is whether it be from the Shia communities, whether it be 
from money laundering for drug trades, or human smuggling, or 
political corruption that there is an almost--a very complex, 
sort of, semi-formal backbone actually around the world but 
particularly coming out of Central and South America to move 
assets, move money around, and today, that network's client 
could be drug money, tomorrow it could be the cash from weapons 
sales, tomorrow, the day after, that it could be from something 
else, and that may be a constant misunderstanding we have as we 
think of we think of it as terrorism financing or drug money 
financing, that money laundering network is often the same.
    Am I being fair?
    Mr. Braun. I believe you are being fair, and again you are 
very accurate. As I said earlier, transnational organized crime 
groups as well as terror and insurgent groups around the world 
rely on the same shadow facilitators to move their agendas 
forward. In a private sector that I have been in now for 7\1/2\ 
years, we call that outsourcing. All right? They use many of 
the same money laundering organizations; they use many of the 
same arms traffickers; they rely heavily on many of the same 
human smuggling groups, those who provide fictitious or 
counterfeit travel documents that is much needed. They also do 
things that are very unique like corrupting the private sector, 
strategically corrupting aspects of the private sector, as the 
transportation industry, communication industry, and the like.
    Mr. Schweikert. To that point, and Mr. Chairman, this is 
something I beg of you, even for your staff, to consider. We, 
our committee, is structured to look at terrorism financing and 
money laundering, but as we have heard testimony after 
testimony over, a year or so you have been doing this, which is 
incredibly appreciated, if you connect the dots, the very 
networks that are washing money for terrorism are the very 
networks that are, for political corruption, are washing and 
moving money for drug trafficking, who are washing money for 
human trafficking. How do we bring these different law 
enforcement mechanisms that our international partners--because 
my fear is we have too many silos out there. How do you bring 
them together and combine the intelligence that is there and 
focus? Because if the backbone that is being used to launder, 
move money is for lots of pretty evil causes, maybe we can get 
some focus here.
    And with that, Mr. Chairman, I will yield back.
    Chairman Fitzpatrick. The gentleman yields back.
    The gentleman from Florida, Mr. Ross, is recognized for 5 
minutes.
    Mr. Ross. Thank you, Mr. Chairman.
    Ever since this committee has continued its investigation 
in discovery, we have learned about a great deal of tools that 
have been utilized for intelligence purposes, data sharing, and 
otherwise identifying money laundering and terrorism finance 
networks.
    What has concerned me and continues to concern me has been 
the lack of enforcement. So what do we do with this 
information? What have we done with this information?
    And, Mr. Braun, I am particularly impressed with your 
comments and your testimony when you state that to successfully 
disrupt or defeat the threat, the information collected, 
analyzed, and imported must be actioned.
    Could you go into a little bit of detail about that? 
Because I think that is the fulcrum to where we need to go. All 
for show is great, but if we don't have some element of success 
in actually preventing what we are setting out to do, then what 
good is all this intelligence and surveillance that we are 
doing?
    Mr. Braun. Thank you, Congressman.
    I don't want to diminish in any way the important work 
that--
    Mr. Ross. And you won't. And my only concern would be, 
because I am interpreting that, as to mean there are things we 
could do better. This task force needs your recommendations as 
to what we can do to increase enforcement. We have seen an 
administration that exercises prosecutorial discretion in this 
country on Federal laws that are being broken and, yet, that 
are being just turned a blind eye to. And no matter how many 
laws and even if Brazil does what we want them to do, if there 
is no enforcement, then what good is it that we do, and how can 
we--how can we accomplish that enforcement?
    Mr. Braun. There has to be a greater deal of sharing. Our 
intel community, and to a lesser degree, our military, now that 
they have become heavily interested in counter threat finance, 
are collecting enormous amounts of data. But the problem is 
that if you are outside of a declared area of war, that is 
pretty tough to action other than with the use of a judicial 
model. And that is why I keep going back to, this is the 
responsibility of Federal law enforcement to action this work, 
but they--
    Mr. Ross. And jurisdiction?
    Mr. Braun. --flowing.
    Mr. Ross. Right. But would there not be an opportunity? 
Because you talk about having financial incentives in providing 
incentives, or providing assistance, whether it be financial or 
technical governments. Is there not a way that we can impose 
incentives to our partners that would require that in order to 
have this assistance, in order to have this technical or 
financial support, there has to be enforcement? Because 
jurisdictionally, there is only so far that the long arm of the 
United States can go. We have to rely on our partners. And 
while our partners are, of course, welcome to accept our 
assistance, if they are not using it for enforcement purposes, 
then what recourse do we have?
    Mr. Braun. With our counterparts abroad, one thing that 
could be done legislatively is if they are not willing to share 
the information that we are working with them to build capacity 
to collect--
    Mr. Ross. Right.
    Mr. Braun. --then we turn off the tap. That is what it 
comes down to.
    Mr. Ross. I appreciate that. And I think that is what it 
comes down to. I don't want to see it come down to that, 
because I think the source could be in their country. And yet, 
even if they share the intelligence with us to where it gets to 
our country, we can exercise our enforcement jurisdiction, I 
would like to see it stopped at the source.
    Mr. Federici, I am very grateful to you for being here. I 
am very impressed with what Argentina is doing. How have we 
been as a partner? Do you see us in an opportunity to provide 
these incentives? There has to be a good quid pro quo there for 
nation-building, if you will, to defeat anti--money laundering 
and antiterrorism financing. Your comments about enforcement?
    Mr. Federici. I think we are just starting to rebuild our 
trust, I think, as nations with this new government.
    Mr. Ross. Yes.
    Mr. Federici. There's been a paralysis in the relationship 
over the last few years, and I assume, and I am very sure this 
is mostly the responsibility of our previous administration 
that has been unwilling to cooperate.
    Now, I think we need to start building this new trust fast, 
because the threats are there. They are--
    Mr. Ross. They are growing exponentially, almost.
    Mr. Fererici. Exactly. What we mostly need at the moment, 
to be able to operate, and to be able to enforce these actions, 
is intelligence right now. We need high-quality intelligence on 
our hands to be able to use the tools that the law grants us to 
seize the assets of criminals, to interrupt the flows of 
potential terrorists--
    Mr. Ross. You would do that if you had the intelligence?
    Mr. Federici. I have the absolute determination to do that. 
You can count on that for sure.
    We have information that there have been flows of terrorist 
money coming out from Argentina to the hands of foreign 
terrorist fighters that have enlisted with ISIL, and we need 
more of that type of information in order to be able to put our 
hands on those flows to be able to share it internationally as 
well and to take the enforcement action that is necessary.
    Mr. Ross. I am hopeful that if that happens, we will 
exercise our rules of engagement and stop it.
    And I see that my time is up, and I will yield back. Thank 
you, Mr. Chairman.
    Chairman Fitzpatrick. The gentleman yields back.
    And we would like to thank our witnesses for their 
testimony today. We have additional questions, but there is a 
Joint Session of Congress for which we need to get in our 
seats.
    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.
    This hearing is adjourned.
    [Whereupon, at 10:38 a.m., the hearing was adjourned.]

                            A P P E N D I X



                              June 8, 2016
                              
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