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tv   Officials Testify on Digital Financing of Terrorism - Part 1  CSPAN  July 27, 2021 12:41pm-1:05pm EDT

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>> [inaudible conversations] [inaudible conversations] >> the subcommittee -- good lord, sorry. tone it down so we cannot have my booming voice. the subcommittee on intelligence and counterterrorism will come to order. subcommittee is 90 day on terrorism and digital financing, how technology is changing the threat. without objection pitchers authorized to declare the subcommittee in recess at any point make. good morning, everyone. what you think of witnesses from the department of homeland security for beingng here todayo discuss a topicic that you think is really timely and really interesting, which is a digital financing tools can be exploited by terrorists actors to final support for the activities.
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over the past several months the abuse of digital finance platforms and technologies has jumped into the public view, as result of the o burst of ransomware attacks that have struck at the heart of day-to-day life in america, on gas pipelines and meat processing plants to schools anr hospitals. last month, i held an event in my district with the secretary of agriculture that was focused on family farms, just days after a ransomware attack on the world's largest meat processor.y and in a room full of michigan farmers, the john detractors behind and we opened it to for q&a the first question from the farmers was about cyber attacks, crypto currency, and asking what their government was doing to protect them. now let's be clear, there is nothing inherently of illicir illegal about cryptocurrencies or other digital finance technologies. they are used by millions of law-abiding people every single day. nor is anything inherently
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suspect about using technologies that aim tos protect the privay of users. but it's our responsibility ons this committee to also understand how these tools could enable malicious activity, that threatens our homeland security, whether that's a ransomware attack, like the one i discussed with those farmers, or our topic today, funding for terrorism. detecting and preventingg terrorist funding, at home and abroad, has long been a cat and mouse game for federal investigators and the intelligence community. just like cyber criminals, terrorists consistently seek legal loopholes, illegall pathways, and new technologies to stay one step ahead of governments, especially when it comes to funding their operations. as a former cia analyst, i know this is far from a new challenge, we've been tracking terrorist financing for decades, and i know firsthand how difficult it can be. while technology has changed, today's terrorist and extremist. groups benefit from using many of the same tools that so many of us rely on for our daily, honest activities, just as they exploited commonly-used
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financial systems, in the past. some of these online platforms and online technologies allow easy access for thousands, if not millions, of users to donate money through online campaigns. for example, crowdfunding through paypal, gofundme, and amazon became a popular way in recent years for extremist t groups to raise money. to put this into context, according to the global project against hate and extremism, from about 2005-2015, just about every extremist group they tracked featured a paypal button on their website. now, even though paypal and other payment processing platforms became aware of the issue and began to ban extremists from such platforms which is a great first step, these groups have persevered and maintained a strong online presence. so be on social media platforms, newtek like cryptocurrencies
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which are decentralize largely anonymous forms off digital mony have enabled terrorist to further expand and disguise the funding efforts. think about for many of us who are sort of in the 9/11 era, we all became familiar with after 9/11 except now the currency is virtual instead of being filtered through couriers. as these technologies become more and more widely used we've seen a number of incidents in the past year that highlight the need for s the federal governmet to understand these technologies, the degree to which they pose a threat, and their impact on terrorist financing. there's a number of examples from recent days or recent weeks. i'm sure you will all be talking about then that just as the fairies groups have changed after crackdowns from paypal come when law-enforcement begins following that cringes, terrorist fundraisers advised
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supporters to use other cryptocurrencies to avoid detection. this is the case of april isis website that requested it supporters send money via monero, another cryptoo currency instead of bitcoin because of its privacy and safety features. to properly understand and combat this threat that requires a lot a partnership between the private sector, our allies and partners and, of course, the department of homeland security is well-positioned to leak i will just ended by saying that am hoping eyewitnesses will help us understand the actual scope and scale of this challenge. how much money are we talking about, how does it compare to terrorist financing as a whole? for the total amount of crypto currency transactions and who's taking advantage of this new tool. it's a domestic or foreign groups? help us contextualize a a bit. we know we haven't uphill battle. our subcommittee stands ready to help of the department with what you need.
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if any changes to legislation, even need resources who wanted more less. where please welcome our witnesses today. i will just know it as an agent to the witnesses we expect votes to be called probably in the next ten minutes. we will try and keep the hearing going as long as possible. there will probably be a short gap when myself and mr. malinowski are voting but we'll try to tag team to make it as minimal as possible. i now recognize the ranking member of the subcommittee the gently from texas mr. pfluger for an opening statement. >> thank you, madam chair. i appreciate your latest hearing today today and i would like to thank the witnesses a will. assistant director john eisert from investigative programs that hsi and acting deputy undersecretary stephanie dobitsch from office of intelligence and analysis. i appreciate your your expertise and your willingness to speak with us today on this very important subject and i'm
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looking forward to annd informative and productive discussion on this very important topic. i think this hearing is especially timely right now with american troops in effect fully withdrawn from afghanistan and the taliban rapidly taking control, afghanistan is provincial districts, about a third of the country including the keyboard of crossing areas. afghan security forces are submitting, the taliban is beginning to fight for some of the provincial cities and there's reporting, public reporting afghan government could collapse at some point as soon as maybe even six months. i think the point is all that to say that foreign terrorist organizations are alive and well. not only are they present overseas but they are growing and has been a afghanistan is only a portion of the widespread and diverse terror threat landscape that we face around the world. if there givene the opportunity to submit the present overseas, i have no doubt the next goal is
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and will continue to be to launch an attackhe on u.s. soilr on those upper partners and allies. those who served in afghanistan saw first in the death and destruction terrorist organizations can cause and have cause, and is absolutely imperative that the war on terror be fought abroad, on foreign soil, not here at home. we must guarantee that foreign terrorist organizations do not have the resources to expand their operations in bring the fight to the united states, to our homeland. cutting off access to financing is absolutely critical. it is paramount in this fight. terrorist financing is not a new issue. whether a transnational criminal organization, a foreign terrorist organization or money launderer, we have been confronting problem for decades. crypto currency is, in fact, becoming a new tool that terrorist and other criminal
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enterprises have at their disposal. unfortunately, congress has not always been known for our ability to stay one step ahead when it comes to the latest technological issue. but when we're confronting the issue of terrorism and financing, playing catch-up is not an option for us. during a conversation i i had earlier this week with assistant director shared in anrs assistat director iser, he mentioned that relative to terrorist financing come to the terrorist financing world that crypto currency and the transactions account from 81% 81% of all cases ai think that this tells me now that we are having this hearing at exactly the right time, that we might have a chance to stay onein step ahead of what the issues and the w problems coulde before this becomes a systemic issue worldwide. we arete now in a position where our agency partners come with the resources and the authorities that they need to confront this proactively
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instead of reacting to it. that is why i mostly looking forward to the hearing of, daring today and how do we ensure that crypto currency transactions continue to be onee percenter maybe even less of the problem. and what does dhs need from us in congress to best situate themselves to combat this threat. coming out of this hearing i also to understand what, what should we expect one form? although this is a small portion of the problem now, do we see that changing? if it is suspected to grow, how much will it grow and how can we minimize that growth? it's been almost 20 years since 19 al-qaeda terrorists coordinated hijacking a fourr commercial airlines. flying into buildings which are recognized worldwide were white as e symbols of american streng, freedom, accomplishment and
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taking 2977 innocent lives. thus far we have successfully prevented an attack of that magnitude that we experience on september 11.us and as long as i serve my country and i think the chairwoman would also agree, whether it's in uniform overseas or in the capacity that we now serve here in congress, i will do everything and i think i can confidently say we will do everything in our power to ensure that what happened on 9/11 doesn't happen again. and i'm confident my fellow members on homeland security committee also feel the same way in a very bipartisan manner. i'm looking forward to working with chairwoman slotkin and other members of this committee to ensure wee are providing the department with all the tools necessary to minimize the threat caused by terrorist financing and to successfully protect our homeland. once again i would like to thank our witnesses for joining us today, for your expertise, for your service to'd this country d
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for looking at a threat in a proactive way that we can combat now so it doesn't get it to become a problem of larger magnitude. with that i jump expert i now look of our panel of witnesses the office witness is is a stephanie dobitsch, deputy undersecretary for intelligence enterprise operations at dhs. her second witness is mr. john eisert, assistant director of investigative programs at u.s. immigration and customs enforcement, homeland security investigations, hsi. and our third and final witness is mr. jeremy sheridan, assistant director of the office of investigations at the u.s. secret service took without objection the witnesses full statements will be inserted into the record and i now ask each witness to summarize his/her statement for five minutes beginning with deputy undersecretary r dobitsch. morning chairwoman slot can, ranking member , members of the subcommittee. thank you for the opportunity to appear before you today to represent the office of
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intelligence and analysis and to discuss the malicious use of crypto another digital currencies. over the last several years we have observed a trend of a wide range of malicious actors seeking use access to digital and cryptocurrencies to facilitate the activities. this includes domestic and international terrorists, nationstate adversaries, transnational and other criminal organizations and cyber criminals. while the intent and capabilities of these factors varyio widely, we assess all of them using crypto and other digital currencies as an effective means to obfuscate and fund their operations including against the united a states. cryptocurrencies are a digital or virtual currency that is secured by cryptography or in other words, sophisticated coding. they are not issued by any central authority and the offer users a high degree of anonymity, public and law enforcement and intelligence community efforts to identify and destroy potentially
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threatening activity. bitcoin is a market leader but there are thousands of other cryptocurrencies, including currency known as privacy coin which provide an even greater level of obscurity for malicious actors. this means users can easily hide who is sending our receiving a transaction, transaction amount and individual units ofth currencies. since at least 2015 we have observed terrorist seeking use cryptocurrencies to procure materials and solicit funding for thecu operation. most of this activity has occurred by terrorist groups and associates associates overseas spanning the ideological spectrum. for example, support of isis and al-qaeda have solicited crypto currency donations. earlier this year april al-qaeda media group offered a reward of one bitcoin worth about $60,000 at the time to the first person to kill a police officer in a western country. we've also seen for an racially or ethnically motivated violent
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extremist claim their activities were supported by use of cryptocurrencies. in 2019 the perpetrator of the mosque attacks in christchurch, new zealand, claimed in his20 manifesto to have made money dealing in crypto currency. later that same year a racially or ethnically motivated violent extremes who t attended anad atk in a synagogue in germany claimed he received financial support for his operation via crypto currency. beyondpo terrorism use crypto currency has become even more common among cyber actors and criminal organizations. north korea and cyber actors with the regime have executed lucrative crypto currency thefts valued at hundreds of millions of dollars. cryptocurrencies increasingly being used to buy and sell drugs on the dark web, and by drug cartels seeking to launder their drug profits and cryptocurrencies becoming a payment of choice for cyber criminals who are conducting ransomware attacks or selling
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malicious cyber services online. it is important to remember that the illicit use of crypto currency is a small fraction of the global transactions that occur daily, and many t malicios actors particularly foreign terrorist groups, are still reliant on traditional means of funding. however, as of this technology becomes more accessible and more scrutiny is applied to traditional banking system, we expect to see more activity and are our ability to detect and disrupt theses threat actors would be even more difficult. our mandate and coordination is to provide federal, state or local tribal territorial and private sector partners with intelligence and information necessary to secure the homeland. homeland. i want to underscore that we're committed to strengthening our effort to identify and i communicate the plans and intentions of malicious actors seeking to exploit emerging technologies like crypto currency. just this week we hosted our partners from the state and local intelligence council for a conference where the topic of this topic was discussed as a
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significant intelligence gap in our intelligence. like with any threat, to the homeland, ina will insure policy and operational decision-makers have the most robust understanding of this threat that the intelligence community can provide. thank you again for the opportunity to appear before you today to discuss this issue and for your continued support to the office of intelligence and analysis. >> thank you, ms. dobitsch. and i recognize assistant director eisert to summarize a statement for five minutes and my senses we may break just after for a few moments while they go and vote. >> thank you, chairwoman slotkin, ranking member pfluger and distinguished members of the subcommittee. thank you for the opportunity to appear before you today to discuss the critical investigative role homeland security investigations plays in the fightht to protect the homeland fromst transnational crime and threats. my testimony today will focus on hsi efforts to
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identify,, investigate and bring to justice criminal organizations and terrorist networks whose illicit use of crypto currency jeopardizes national security and public safety. as a principalal investigative component of the department of homeland security, hsi is a global law enforcement organization responsible for conducting criminal investigations into illegal cross-border movement of goods, money and people and technology. .. hsi strives to protect the borders and pursue cyber actors with the same dedication that we safeguard our physical, land and sea borders. hsi applies capabilit >> currency is a visual works as a medium of exchange is often used for purchase of
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items such as drugs, guns on the marketplace or the means to provide material for terroristorganizations . concurrency can now use to facilitate a activity. currency is utilized across the ice, hsi plays a critical to investigate and prevent illicit use. is each of these investigations related to currency and single investigation in 2011 investigations and even dollars seizures this year alone. this signifies drawing confidence in by state actors and technical proficiency in performing these investigations. jesus hsi recognizes the importance public private
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partnerships that we continue to be for a efforts. since 2019 hsi has provided a 50 positions with a focus on protecting full abilities and financial transportation sector. there will currency, hsi outreach group is holding a crypto currency space over 5000 participants. the relationships we a center directly correlates to investigate this. last year hsi old cyber harassment the fbi on sunday currency accounts identified as significant. the hsi undercover operation was initiated to investigate the unlawful use of currency or terrorism the resulting investigation hsi sees 63 one
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$80 million donated illicit financial networks. case hsi initiated resulted in the seizure of 150 currency house and taking over of a mock. >>. already having lost in an email to funds. the result of the spaces and others. how long and is terrorist groups the use of hsi's financial will you. undercover on the ability to use private sector as a force multiplier to disrupt and dismantle control of these organizations. in closing i appreciate your business and this rapidly growing field. thank you for the opportunity to be for you today and are considered of homeland security investigations class
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is they stand in recess stsubject to all of the chair. mister malinowski will be shortly and we members of our online. you can see and they are all able at it you will be aware of them so give us a few minutes and we will be you . >>

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