[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
SAFEGUARDING THE FINANCIAL SYSTEM
FROM TERRORIST FINANCING
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TERRORISM
AND ILLICIT FINANCE
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
APRIL 27, 2017
__________
Printed for the use of the Committee on Financial Services
Serial No. 115-18
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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
STEVAN PEARCE, New Mexico GREGORY W. MEEKS, New York
BILL POSEY, Florida MICHAEL E. CAPUANO, Massachusetts
BLAINE LUETKEMEYER, Missouri WM. LACY CLAY, Missouri
BILL HUIZENGA, Michigan STEPHEN F. LYNCH, Massachusetts
SEAN P. DUFFY, Wisconsin DAVID SCOTT, Georgia
STEVE STIVERS, Ohio AL GREEN, Texas
RANDY HULTGREN, Illinois EMANUEL CLEAVER, Missouri
DENNIS A. ROSS, Florida GWEN MOORE, Wisconsin
ROBERT PITTENGER, North Carolina KEITH ELLISON, Minnesota
ANN WAGNER, Missouri ED PERLMUTTER, Colorado
ANDY BARR, Kentucky JAMES A. HIMES, Connecticut
KEITH J. ROTHFUS, Pennsylvania BILL FOSTER, Illinois
LUKE MESSER, Indiana DANIEL T. KILDEE, Michigan
SCOTT TIPTON, Colorado JOHN K. DELANEY, Maryland
ROGER WILLIAMS, Texas KYRSTEN SINEMA, Arizona
BRUCE POLIQUIN, Maine JOYCE BEATTY, Ohio
MIA LOVE, Utah DENNY HECK, Washington
FRENCH HILL, Arkansas JUAN VARGAS, California
TOM EMMER, Minnesota JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York VICENTE GONZALEZ, Texas
DAVID A. TROTT, Michigan CHARLIE CRIST, Florida
BARRY LOUDERMILK, Georgia RUBEN KIHUEN, Nevada
ALEXANDER X. MOONEY, West Virginia
THOMAS MacARTHUR, New Jersey
WARREN DAVIDSON, Ohio
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
CLAUDIA TENNEY, New York
TREY HOLLINGSWORTH, Indiana
Kirsten Sutton Mork, Staff Director
Subcommittee on Terrorism and Illicit Finance
STEVAN PEARCE, New Mexico Chairman
ROBERT PITTENGER, North Carolina, ED PERLMUTTER, Colorado, Ranking
Vice Chairman Member
KEITH J. ROTHFUS, Pennsylvania CAROLYN B. MALONEY, New York
LUKE MESSER, Indiana JAMES A. HIMES, Connecticut
SCOTT TIPTON, Colorado BILL FOSTER, Illinois
ROGER WILLIAMS, Texas DANIEL T. KILDEE, Michigan
BRUCE POLIQUIN, Maine JOHN K. DELANEY, Maryland
MIA LOVE, Utah KYRSTEN SINEMA, Arizona
FRENCH HILL, Arkansas JUAN VARGAS, California
TOM EMMER, Minnesota JOSH GOTTHEIMER, New Jersey
LEE M. ZELDIN, New York RUBEN KIHUEN, Nevada
WARREN DAVIDSON, Ohio STEPHEN F. LYNCH, Massachusetts
TED BUDD, North Carolina
DAVID KUSTOFF, Tennessee
C O N T E N T S
----------
Page
Hearing held on:
April 27, 2017............................................... 1
Appendix:
April 27, 2017............................................... 31
WITNESSES
Thursday, April 27, 2017
El-Hindi, Jamal, Acting Director, Financial Crimes Enforcement
Network, U.S. Department of the Treasury....................... 4
APPENDIX
Prepared statements:
El-Hindi, Jamal.............................................. 32
Additional Material Submitted for the Record
Perlmutter, Hon. Ed:
Department of the Treasury Financial Crimes Enforcement
Network Guidance dated February 14, 2014, ``BSA
Expectations Regarding Marijuana-Related Businesses''...... 45
El-Hindi, Jamal:
Written responses to questions for the record submitted by
Representatives Pearce, Hill, Love, Messer, Pittenger, and
Foster..................................................... 52
SAFEGUARDING THE FINANCIAL SYSTEM
FROM TERRORIST FINANCING
----------
Thursday, April 27, 2017
U.S. House of Representatives,
Subcommittee on Terrorism
and Illicit Finance,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 2:23 p.m., in
room 2128, Rayburn House Office Building, Hon. Stevan Pearce
[chairman of the subcommittee] presiding.
Members present: Representatives Pearce, Pittenger,
Rothfus, Tipton, Williams, Poliquin, Love, Hill, Emmer, Zeldin,
Davidson, Budd, Kustoff; Perlmutter, Maloney, Himes, Foster,
Kildee, Delaney, Sinema, Vargas, Gottheimer, Kihuen, and Lynch.
Ex officio present: Representatives Hensarling and Waters.
Also present: Representative Royce.
Chairman Pearce. The Subcommittee on Terrorism and Illicit
Finance will come to order.
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time. Also, without
objection, members of the full Financial Services Committee who
are not members of the Subcommittee on Terrorism and Illicit
Finance may participate in today's hearing.
Today's hearing is entitled, ``Safeguarding the Financial
System from Terrorist Financing.''
I now recognize myself for 5 minutes to give an opening
statement. Today, most of us are very fortunate to have a more
modern and secure means of storage for our hard-earned money.
Unfortunately, so do terrorists, cartels, and other criminals
around the world. In an ever-evolving world, this is the
driving mission of our subcommittee: How can we continue to
provide the safety and security in our markets that American
families have come to expect while rooting out the bad actors
in the system? What actions is our Nation taking to ensure
markets for legitimate users? What in our current AML/CFT
structure is working and what needs improvement?
Today's hearing is the first in a series this subcommittee
will hold on the Bank Secrecy Act and the regulatory structure
the United States has in place to combat money laundering,
terrorist financing, and other illicit financing activities. It
is only fitting that the subcommittee begins its work by
examining the role and the function of the Financial Crimes
Enforcement Network, more commonly known as FinCEN, which was
established in 1990 by the Secretary of the Treasury.
FinCEN was upgraded to official bureau status in 2002 with
the passage of the PATRIOT Act. The bureau is not only the
primary regulator of the BSA, but it also acts as the United
States' financial intelligence units (FIUs). FinCEN's mission
is to safeguard the financial system from illicit use and
combat money laundering and promote national security through
the collection, analysis, and dissemination of financial
intelligence and strategic use of financial authorities.
From the most traditional forms of financial transactions
to the ever-evolving world of financial technology, it is
essential that our Nation has an efficient, effective, and
modern set of rules and regulation to safeguard our Nation's
financial system. This hearing starts the conversation and
ensures our subcommittee is taking pragmatic and complete look
at the laws and regulations we currently have in place.
I thank our witnesses for being here today and I look
forward to the conversations to come.
With that, I will now recognize the ranking member of the
subcommittee, the gentleman from Colorado, Mr. Perlmutter, for
5 minutes for an opening statement.
Mr. Perlmutter. Thanks, Mr. Chairman, for holding this
hearing so our subcommittee can design policies to update,
modernize, and strengthen the Bank Secrecy Act.
FinCEN plays a critical role in safeguarding our Nation's
financial system through the collection and analysis of
suspicious activity reports (SARs) and currency transaction
reports (CTRs). In fact, FinCEN has collected over 200 million
filings. The U.S. continues to be the financial capital of the
world whereby essentially all payments move through or touch
the United States' financial system. Therefore, the U.S. plays
an important role in reducing the threat of terrorism and
disrupting illicit and illegal financial flows. So it is
important we evaluate how our current regulatory regime is
functioning, what is lacking or needs updating, how we can
better strike a balance between law enforcement and civil
liberties, and how we can build in efficiencies without
overburdening our financial institutions.
I want to thank Mr. El-Hindi for your testimony today.
Chairman Pearce. If you will hold here, let me yield one of
my minutes to Mr. Pittenger, and then that gives us a second
there to--
Mr. Perlmutter. All right. I will yield.
Chairman Pearce. Mr. Pittenger is recognized for 1 minute.
Mr. Pittenger. Thank you, Mr. Chairman, and thank you,
Ranking Member Perlmutter, for organizing such an important
hearing and such a timely reason to meet with our Financial
Crimes Enforcement Network.
Director El-Hindi, thank you for your excellent service and
your friendship, and thank you for lending your time to our
subcommittee today.
Earlier today, FinCEN associates of Mr. El-Hindi joined our
subcommittee members and staff at a roundtable meeting with
several major financial institutions to discuss the importance
of information sharing as a tool to combat terror finance.
Specifically, we were discussing how Section 314 of the USA
PATRIOT Act can be codified to improve the information-sharing
process for our financial institutions. Information sharing for
financial institutions is a critical component of our domestic
capabilities to stop the flow of illicit funds to support
terror, both domestic and abroad.
Director El-Hindi, thank you for your service. I look
forward to hearing your testimony.
I yield back.
Chairman Pearce. The gentleman yields back.
Mr. Perlmutter. I will yield the balance of my time back to
the Chair.
Chairman Pearce. Okay. And when we get an opportunity, we
will try to recognize that.
Today, we welcome the testimony of Mr. Jamal El-Hindi, who
has served since May of 2015 as the Deputy Director of the
Financial Crimes Enforcement Network, or FinCEN, a bureau of
the Treasury Department. Mr. El-Hindi has served at FinCEN in
various positions since June of 2006. Prior to joining FinCEN,
Mr. El-Hindi served as the Associate Director for the Program
on Policy and Implementation at Treasury's Office of Foreign
Asset Control, or OFAC. Mr. El-Hindi first joined Treasury in
December of 2000 in the Office of General Counsel. Prior to
that, he served as an associate at Patton Boggs in Washington,
D.C..
Mr. El-Hindi graduated from the University of Michigan Law
School, and received a master of arts in modern Middle Eastern
and North African studies from the University of Michigan, a
diploma in international relations from the London School of
Economics and Political Science, and an undergraduate degree in
journalism from the University of North Carolina.
Mr. El-Hindi, you will now be recognized for 5 minutes to
give an oral presentation of your testimony. And without
objection, your written statement will be made a part of the
record.
And I recognize the gentleman from Colorado.
Mr. Perlmutter. Thanks, Mr. Chairman. I notice the ranking
member has just joined us, and if I could have unanimous
consent to--
Chairman Pearce. Yes. The gentleman is recognized to yield
time to the gentlelady from California.
Mr. El-Hindi, if you will suspend here for a second.
Mr. Perlmutter. I would like to yield to the ranking member
of the full Financial Services Committee, the gentlelady from
California, Ms. Waters, for her statement.
Ms. Waters. Thank you very much. I appreciate your
consideration. Thank you, Mr. Chairman.
One of the key issues this subcommittee will be looking at
is the adequacy of current information-sharing authorities and
the degree to which they strike the right balance between
security and civil liberty concerns. Last Congress, we heard
from a number of experts and Administration officials who spoke
to the benefits and efficiencies that would accrue from
increased information sharing between financial institutions
and the government, as well as financial institutions
themselves. But I would also like to note that nearly every
expert who spoke in favor of improved information sharing also
acknowledged that these efforts must be cognizant of the need
to protect privacy and civil liberties.
So, Mr. Chairman, as we explore legislative efforts to
codify current authorities or otherwise enhance information
sharing, I strongly agree that we have a responsibility to
solicit views from all interested stakeholders, and we need to
hear and discuss these views and concerns in a public setting,
such as this hearing today, and not only in private meetings.
I would also like to touch upon another important issue,
which is the gaping hole in our anti-money-laundering framework
with respect to the real estate sector. While I appreciate, Mr.
El-Hindi, that your written testimony notes the ``outstanding
concerns'' that FinCEN has had with the money laundering risk
in real estate, I must say that I find it disturbing that
FinCEN continues to largely exempt the real estate sector from
even the most basic anti-money-laundering requirements, given
that high-end real estate is a key sector used by corrupt
foreign leaders, drug traffickers, and other criminals to
launder illicit money. I believe FinCEN should take more urgent
action to address these risks nationwide and on a permanent
basis.
And with that, I yield back the balance of my time. And
thank you very much.
Mr. Perlmutter. I yield back. Thank you.
Chairman Pearce. The gentleman yields back.
Now, Mr. El-Hindi, I will recognize you for 5 minutes.
STATEMENT OF JAMAL EL-HINDI, ACTING DIRECTOR, FINANCIAL CRIMES
ENFORCEMENT NETWORK, U.S. DEPARTMENT OF THE TREASURY
Mr. El-Hindi. Chairman Pearce, Vice Chairman Pittenger,
Ranking Member Perlmutter, and the distinguished members of the
subcommittee, thank you for inviting me to appear before you
today to discuss the role of the Financial Crimes Enforcement
Network in collecting, analyzing, and disseminating Bank
Secrecy Act data. I appreciate the subcommittee's interest in
FinCEN's mission and your continued support of our efforts. My
oral remarks are brief. I am submitting a more comprehensive
written statement.
FinCEN, as we are commonly known, is a Treasury Department
bureau charged with safeguarding the financial system from
illicit use, combating money laundering, and promoting national
security through the collection, analysis, and dissemination of
BSA information, and the strategic use of our authorities. We
are one of five components reporting to the Under Secretary for
Terrorism and Financial Intelligence collectively focused on
Treasury's mission in this area.
FinCEN serves two roles. First, as the financial
intelligence unit for the United States, we collect, analyze,
and disseminate financial intelligence to help fight money
laundering and the financing of terrorism. Second, we are the
lead regulator for the Federal Government with respect to anti-
money-laundering and countering the financing of terrorism,
also known as AML/CFT.
FinCEN's ability to work closely with regulatory, law
enforcement, industry, and international partners promotes
consistency across our regulatory regime. In short, we strive
for responsible use of financial information for greater
security and integrity in the U.S. financial system.
The Bank Secrecy Act is the primary Federal anti-money-
laundering law. It requires a broad range of U.S. financial
institutions to establish anti-money-laundering programs,
maintain records, and provide reports to FinCEN. The majority
of BSA data FinCEN collects comes from two reporting streams.
Financial institutions must file currency transaction reports,
known as CTRs, with FinCEN for cash transactions totaling more
than $10,000. They must also file suspicious activity reports,
known as SARs, to report suspected illicit transactions.
The objective reporting in CTRs and the subjective
reporting in SARs are both critically important. They provide a
wealth of potentially useful information to FinCEN and other
agencies working to detect and prevent money laundering, other
financial crimes, and terrorism.
Thanks to funding from Congress, FinCEN successfully
completed an information technology modernization program in
2014 updating the process of collecting, analyzing, and
disseminating BSA data.
FinCEN receives an average of roughly 55,000 new financial
institution filings each day. These filings come from more than
80,000 financial institutions and 500,000 individual foreign
bank account holders through FinCEN's modernized e-filing
system. FinCEN maintains over 200 million of these BSA filings
in our database. FinCEN makes this information available to
more than 10,000 law enforcement and other government users
through a search tool designed to meet their specialized needs.
We call it FinCEN Query. Our users, internal and external,
perform approximately 30,000 searches of the data per day.
E-filing has streamlined the reporting process for
financial institutions and individual filers, and has
significantly improved users' ability to exploit BSA data by
making it more accessible and searchable.
The protection of the sensitive information received is a
critical part of our mission. FinCEN safeguards BSA data
through a continual process of reviewing IT security measures
and procedures, adjusting to current and emerging risks, and
ensuring that security is a consistent requirement considered
throughout the life cycle of each system. FinCEN systems are
accredited to high Federal information security management
levels and employ strong security measures, such as two-factor
authentication, encryption, and activity monitoring to protect
BSA data.
FinCEN works with others in the Department of the Treasury
and the Department of Homeland Security in its focus on
cybersecurity within the general context of security operations
and mitigation activities.
FinCEN delivers BSA information and related analysis to law
enforcement, regulatory, foreign, and private sector partners
following a five-stage cycle. The cycle involves: one,
collection; two, data processing and exploitation; three,
analysis; four, dissemination; and five, the direction of
future BSA collection efforts.
In the first stage of the cycle, FinCEN not only collects
the types of reports I mentioned previously, such as SARs and
CTRs, but also has the ability to collect other data. FinCEN
can proactively target certain financial intelligence for
collection using a variety of authorities and special measures
that might involve focus on particular areas or financial
institution.
Data processing and exploitation is the second stage of the
cycle. With approximately 55,000 filings per day, advanced
technology solutions are needed to review, analyze, and quickly
disseminate time-sensitive information.
To combat our most significant money laundering and
terrorist financing threats, FinCEN employs automated business
rules to screen filings on a daily basis and identify reports
that merit further review by analysts.
For the analysis and dissemination stages of the cycle, the
third and fourth stages, over the past few years we have
consolidated our analytic capabilities and expanded the scope
of our work to create products that address critical priority
threats for our stakeholders, including the financial industry.
With respect to dissemination in particular, financial
intelligence is most effective when information flows in both
directions between the public and private sectors. FinCEN is a
critical hub between financial institutions, law enforcement,
regulators, and international colleagues. Providing information
back to the financial industry based on our analysis of their
reporting is a force multiplier.
One of the tools FinCEN uses to disseminate information to
industry is our financial institution advisory program. FinCEN
can issue public and nonpublic advisories to alert financial
institutions of specific illicit finance risks. Advisories
often contain illicit activity typologies, red flags to
facilitate monitoring, and guidance on complying with FinCEN
requirements.
In addition to close collaboration with domestic partners,
FinCEN works to establish and strengthen mechanisms for the
exchange of information globally. We engage with, encourage,
and support international partners to take steps to strengthen
their own regimes. Much of this involves FinCEN's interaction
with other financial intelligence units.
FinCEN and most other FIUs are members of the Egmont Group,
through which we collectively serve as conduits for information
requests from each other's law enforcement agencies.
The fifth and final stage of the intelligence cycle
involves using everything we have learned to help inform future
planning and direction. Once threats and vulnerabilities have
been identified, FinCEN can adjust the regulatory framework
protecting the U.S. financial system. FinCEN uses its
regulatory rulemaking authority to, among other things, define
the reporting that financial institutions and others must
provide. These rulemaking activities, together with the special
information collections and advisories I previously mentioned,
expand or improve the information that FinCEN collects. The
dovetailing of this final stage with the collection I outlined
as the first stage confirms the iterative and cyclical nature
of our financial intelligence activities.
I will conclude by noting that the annual CFT landscape is
complex and dynamic. It requires ongoing adaptation by FinCEN
and our many partners. As we have to adjust to ever-evolving
threats, we will continue to use the tools at our disposal to
collect financial intelligence information, analyze it, and
deploy it in support of our mission to safeguard the system
from illicit use, and promote national security.
On behalf of all the hardworking and dedicated FinCEN
staff, I want to thank you again for the opportunity to testify
today, and I look forward to your questions.
[The prepared statement of Acting Director El-Hindi can be
found on page 32 of the appendix.]
Chairman Pearce. Thank you, Mr. El-Hindi.
The Chair now recognizes himself for 5 minutes for
questions.
Mr. El-Hindi, on page 3, you talk about the number of
filings each day, and those numbers seem very large. Of those
filings, which ones actually turn into actionable information,
just roughly?
Mr. El-Hindi. In terms of trying to associate each filing
with a particular action, that is a little bit difficult. I
realize that the number of filings that we have is large, but
you have to understand how it is used. The filings could be a
tip in and of themselves alerting law enforcement to something
that they hadn't known before. They can be used to expand law
enforcement investigations. They are also used to identify
trends in terms of what is going on in terms of the financial
sector, and new methodologies with respect to illicit activity.
Chairman Pearce. How many people do you have assigned to
review these reports?
Mr. El-Hindi. At FinCEN, we currently have on staff 280--
Chairman Pearce. I am not asking the number on staff. I am
asking the number of people who are directed to this. Surely
you have some people who open the mail and who answer the
phones to just walk-in traffic, so not every one of your
people. How many are assigned to go through the 55,000 new
filings every day?
Mr. El-Hindi. At FinCEN, we have an intelligence division
staff of approximately 70. But keep in mind that because we
have 10,000 other users of the database throughout the
government, there are others who are also looking at the
information on a daily basis.
Chairman Pearce. That gives me a scope of what I am looking
at.
Now, on page 12, you are talking about the amount of money
that you returned. Do you have estimates of how much is lost
every year?
Mr. El-Hindi. I think that you are referring to the portion
in the written testimony where I talk about business email
compromise. Just by way of background, that is a situation in
which we have been working with the FBI to have reported to us
situations in which someone has compromised an email account
and directed a financial institution to send funds, maybe a
payment or something else, instead of the usual place that it
should go, to a new place to go.
The estimates of that type of fraud, business email
compromise, are in the hundreds of millions. I don't have
specific numbers on it.
Chairman Pearce. Hundreds of millions a year or--
Mr. El-Hindi. Yes.
Chairman Pearce. Yes. Okay.
Mr. El-Hindi. This is a phenomenon that has started over
the past few years. So I think that is cumulative.
We have been able, through our contacts with other
financial intelligence units, when we can alert them quickly to
the fact that funds have fraudulently gone overseas, we have
been able to work with them to have a transaction stopped and
have money returned to the United States. Over the past year
and a half, 2 years, we have been able to assist in the
recovery of approximately $250 million.
Chairman Pearce. Okay. You talk in your testimony about IT
modernization. How long had you all been working on that, and
did the modernization actually work? I ask that because, as a
pilot, I watch the FAA and their continual attempts to change
the way they process data, and it never works and it is always
extremely expensive and it is always behind time. Give me a
little bit of an update on that?
Mr. El-Hindi. With respect to our modernization program, I
think we do consider it complete. We are now in the operation
and maintenance phase of continuing it. It was a program that
was a multiyear effort, but we delivered it on time and under
budget. And in terms of external review of it, it was one of
those few situations where we got no recommendations from our
auditors in terms of how we might have been able to--
Chairman Pearce. So you feel satisfied with what you got?
Mr. El-Hindi. Yes.
Chairman Pearce. Okay.
Mr. El-Hindi. We actually--I will say, there is always
room--
Chairman Pearce. All right. I don't need any qualifiers
here.
The process does not appear to have undergone much change
since you all were stood up as an organization. Does that
process need review?
Mr. El-Hindi. In terms of the premise of the question that
the process hasn't changed much since we were stood up, I might
disagree with that.
Chairman Pearce. Okay.
Mr. El-Hindi. I think that the rules and the requirements
have pretty much stayed the same, but we collect information
from the financial sector. The ways in which we have analyzed
that information and begun to disseminate it and more actively
target some of our information collection with industry have
changed over the course of time.
Chairman Pearce. Okay. My time has expired.
I will now recognize the ranking member, the gentleman from
Colorado, for 5 minutes.
Mr. Perlmutter. Thanks, Mr. Chairman. And we have a lot of
Members here today, so I am just going to focus on one subject
and then yield back.
First, I would like to introduce into the record FinCEN-
2014-G001, dated February 14, 2014, ``BSA Expectations
Regarding Marijuana-Related Businesses.''
Chairman Pearce. Without objection, it is so ordered.
Mr. Perlmutter. Thank you.
Mr. Perlmutter. So my focus is going to be, obviously, on
marijuana. We are now at 29 States that have some level of
medical marijuana or fully legalized marijuana usage, plus
eight or nine States with cannabis oil for seizures and other
maladies. So today, I introduced the Secure and Fair
Enforcement Banking Act, which was formerly the Marijuana
Business Access to Banking Act, to try and get us here in the
Congress to say if a State has a regulatory structure in place,
then all of the different Bank Secrecy Act and SARs and things
like that are sort of set to the side, and if individuals are
operating as legitimate businesses in their State, then they
will be given authority to continue to do business.
But my questions are to you, Mr. El-Hindi--and thank you
for your service to the country--what is the status of the
guidance that I just listed, otherwise known as the Cole memo?
Are you going to follow it? That is my question.
Mr. El-Hindi. The Cole memo actually came from the
Department of Justice.
Mr. Perlmutter. Right.
Mr. El-Hindi. And I will say--
Mr. Perlmutter. In concert with FinCEN.
Mr. El-Hindi. And our guidance followed on that. The Cole
memo specified some priority areas for law enforcement focus in
the marijuana space. Our guidance was designed, within the
financial sector space, to provide law enforcement with
information that would be useful with respect to following
those priorities.
We feel that the guidance has worked. There is information
in the database that, under the guidance, helps financial
institutions distinguish between situations in which they are
providing service to a marijuana business where it seems to be
consistent with the State law and does not touch upon any of
the priorities in the Cole memo. That is one type of filing
that they can do.
They can do a type of filing where they indicate that there
are other activity--there is more suspicion--
Mr. Perlmutter. They are out of--there are irregularities
of some kind.
Mr. El-Hindi. Yes. And then they file reports when they
have terminated the relationship as well.
The construct there actually came from what we saw the
banks filing even prior to the guidance coming out. In a
situation where you have a conflict of a Federal law and a
State law, we wanted to see how the banks were actually dealing
with it. And when we looked at the data that they had already
been providing, they were making those distinctions in terms of
situations where they would say, the only reason we are filing
this suspicious activity report is essentially because
marijuana trade remains illegal under Federal law.
So we saw the distinctions that they were making. We felt
that going forward with guidance in the way that we did would
provide law enforcement in States, whether legalized or
nonlegalized, it would provide them with information that they
could use.
In our context, for us, it is all about the information and
making sure that law enforcement has the information that it
needs.
We will continue to work with law enforcement and the
Department of Justice on that front. And to the extent that
they--you will provide any further indication of what their
needs are, we will be working with them.
Mr. Perlmutter. So far, you are operating under that
guidance that I read into the record?
Mr. El-Hindi. That guidance still stands.
Mr. Perlmutter. Yes. Thanks.
I yield back.
Chairman Pearce. The gentleman yields back.
The Chair now recognizes the gentleman from North Carolina,
Mr. Pittenger.
Mr. Pittenger. Thank you, Mr. Chairman. And thank you
again, Mr. El-Hindi.
Mr. El-Hindi, just for clarity, your interest in FinCEN is
to receive the data from the financial institutions, these SARs
reports, and analyze this data and then send that out for
certain investigations. Is that correct?
Mr. El-Hindi. That is one of the many things that we do in
terms of our support to law enforcement.
Mr. Pittenger. In that framework.
Mr. El-Hindi. Yes.
Mr. Pittenger. What I would like to assess here is the
impact that could be achieved by the banks also having access
to data from the government and how that might limit or greatly
restrict the number of potential SARs reports that need to
truly be evaluated or to be processed out for investigation. Is
that a good assumption?
Mr. El-Hindi. I think that you are touching upon some of
the work that we have been trying to do with industry and law
enforcement to target information-collection efforts.
Mr. Pittenger. Given the impediments that we have in terms
of restrictions in data sharing, would it be reasonable to
assume that we can achieve better results with less proactive
engagement through a broad range of data over the financial
institutions? If we had a safe harbor for banks where they
could share with each other, and if they had access to
government data, would that enhance our ability and make it a
more fluid approach that would make us to not have to address
as many data points as are acquired at this point?
Mr. El-Hindi. I think the enhanced sharing of information
across financial institutions, based on what we have seen and
how we have worked with them, really would be helpful. Each of
them only has so much of a view of a particular transaction.
And some of the special projects that we have engaged with
them, we have been quite happy to bring them together, have
them share information with each other and share information
with ourselves, and we do view that as bringing added
efficiencies to our regime. The benefits with respect to that
type of information sharing are clear.
Mr. Pittenger. We heard this morning from Andrea Sharrin,
your associate, and with a number of banks who were there who
were wanting to achieve the best results but believe that we
may have less interest--or less cause for privacy issues if
we--through--if that data-sharing capacity was there, and that
we wouldn't infringe on privacy issues as much if we would be
able to enhance the data-sharing capabilities. Would you concur
with that?
Mr. El-Hindi. I think that the opportunities for greater
data sharing among the banks and among the banks with
government are great. And I think that, as was mentioned
earlier, we have to be sensitive to the privacy issues that
come up both with respect to general reporting under our rules
as well as with respect to information sharing among the banks.
Mr. Pittenger. One other question quickly, as you work with
other FIUs and the Egmont Group, what is your assessment in
terms of their technological capabilities, admitted
extraordinary software capabilities that are already there at
FinCEN, do you believe that we need to do greater work with our
allies and friends in terms of enhancing their technological
capabilities to have better engagement with us and
collaboration with us?
Mr. El-Hindi. One of the things that we have been talking
about within the FIU community generally is making sure that
FIUs are well-positioned to do the work that they are supposed
to be doing. Different FIUs in different jurisdictions are at
different points, but as a group, we work on trying to elevate
each other as much as possible. And there are ways in which
some of them could benefit from greater capacities
technologically as well as greater support within their own
legal systems.
Mr. Pittenger. But to the extent that they are weak, it
weakens the entire system. Isn't that correct?
Mr. El-Hindi. Yes. We always say that within a global
system, the weakest link can hurt the chain.
Mr. Pittenger. Yes, sir. Thank you.
Chairman Pearce. The gentleman's time has expired.
The Chair now recognizes the gentlelady from New York, Mrs.
Maloney, for 5 minutes.
Mrs. Maloney. Thank you, Mr. Chairman, and thank you to the
ranking member. And thank you to our witness for being here
today.
You mentioned in your testimony that FinCEN issued two
geographical targeting orders, or GTOs, covering two sites,
Manhattan and Miami, that would require title insurers to
collect beneficial ownership information for any legal entity
making an all-cash real estate transaction over a 6-month
period. And I am very pleased that FinCEN extended these GTOs
in February, so I want to thank you and your organization for
doing that. But the findings from the first 6 months were
absolutely startling.
As you noted, about 30 percent of the transactions reported
in those 6 months involved a beneficial owner or purchaser
representative that had previously been the subject of a
suspicious activity report. And I would say it is unusual to be
buying real estate with all cash. It is usually in the banks
and everything. So the fact that it is an all-cash transaction
and that there also is a suspicious activity report, and 30
percent is really, I think, problematic. I would characterize
it as a shockingly high number, especially since you announced
to the world that you would be collecting this information on
beneficial ownership in these two cities for that exact period
of time. So I would think that money launderers or bad actors
would just know not to go to those two cities during this
timeframe, since it was so widely reported.
So in light of the findings from these two GTOs, would you
say that collecting beneficial ownership information is
important for catching money launderers and stopping terrorism
financing and other illegal activity like gun running or other
illegal activities?
Mr. El-Hindi. Yes. Beneficial ownership information and the
collection of it and greater transparency in that space are
definitely something that will help law enforcement in their
efforts.
Mrs. Maloney. And what do you think about the 30 percent
who are using cash to--
Mr. El-Hindi. Let me also clarify that in the context of
the geographic targeting order, when we talk about a cash
transaction in real estate, we are essentially saying, and we
clarified this in the rollout of the GTO, that we were focused
on non-loan-related transactions. The cash component of it
comes into play with respect to the confines of our 8300
requirement and our geographic targeting order, generally.
The way the requirement works, if it is a non-loan-related
transaction, and some portion of that transaction involved cash
or a monetary instrument and was done by a legal entity and
within the thresholds that we set with respect to the value of
the property, then it was reportable.
So the geographic targeting order was very specific. There
are certain things that would not be captured within that
reporting, for example, an all wire transfer of funds, even
though it was--there was no loan involved with a bank, would
not have been covered by that geographic targeting order.
Mrs. Maloney. There have been a number of reports in New
York that real estate over $2 million is almost always an LLC.
Beneficial ownership is hidden. Have you done any reports
looking at LLCs, which is the prime form of hiding the
ownership, the number of them in the country now? Could you
look at it if you haven't?
Mr. El-Hindi. I would have to get back to you in terms of
precisely what our analysts might have researched. We are all
familiar with some of the things that we see in the press
reports. And real estate has been an area that we know that we
need to focus on. It has been an evolutionary process for us.
I would just go back and say that with respect to how we
have covered residential real estate in the past, since roughly
75 percent of the market involves a bank or a bank loan, we
feel that the involvement of the banks in those contexts
provides us with a certain amount of coverage, but we do have
to focus on areas where banks aren't involved.
Mrs. Maloney. Actually, we just came from a meeting that
Mr. Pittenger organized, and the banks were saying they don't
know the ownership either in an LLC. They have no idea.
So I just would just like to ask very quickly, do you think
it would be easier if companies had to disclose the beneficial
owners at the time the company is formed?
Mr. El-Hindi. Yes. That kind of transparency would
certainly be of benefit to law enforcement.
Mrs. Maloney. As many people on this committee know, I have
a bill that would do just that. So I want to thank you for your
thoughts and input on it.
Mr. El-Hindi. If it would be helpful, and to the extent
that Congress is going to focus on this issue, we would be
happy to work with them.
Mrs. Maloney. Thank you very much. My time has expired.
Chairman Pearce. The gentlelady's time has expired.
The Chair now recognizes the gentleman from Pennsylvania,
Mr. Rothfus.
Mr. Rothfus. Thank you, Mr. Chairman. And thank you, Mr.
El-Hindi, for being here today.
Talk a little bit more about these real estate
transactions. Does the government have any idea of how many
real estate transactions involve money originating from foreign
accounts?
Mr. El-Hindi. I would have to get back to you on that in
terms of any work that we have done particularly in that
context. I will say that the real estate market is complicated.
It is something that varies, the information requirements and
processing requirements vary by State, and vary by county. So
it is something where we feel that we still are in the process
of collecting information to find out precisely what
information is out there and how we should approach it.
Mr. Rothfus. I may want to follow up with you on that.
Do you foresee a need to expand the use of geographic
targeting orders to more localities in the U.S.?
Mr. El-Hindi. The geographic targeting order authority that
we have had, we have been using more of, of late, just as part
of FinCEN being more active in this space. Law enforcement has
asked us, and we have worked with them on geographic targeting
orders in Los Angeles with respect to garment manufacturing. We
have done work in Miami with respect to trade in electronics
equipment, both of those on a trade-based money laundering
context. It is a useful tool and it is something that we
continue to explore the best use of with law enforcement.
If you are asking with respect to real estate in general, I
am not in a position right now to talk about any future
regulatory efforts. I can just tell you in general that we find
the tool useful and continue to discuss it.
Mr. Rothfus. What about the 180-day duration of a GTO? Is
that long enough?
Mr. El-Hindi. To the extent that a GTO needs to be
extended, we can extend it for another 180 days under the
statute.
Mr. Rothfus. Do you know whether there would be certain
domestic real estate markets that are exposed to cartel-owned
real estate, real estate that the cartels from Latin America
might be going to certain geographic regions?
Mr. El-Hindi. I can tell you that in terms of some of the
criteria that we looked at and discussed with law enforcement
when we identified regions of focus, we were looking at the
market, we were looking at to the extent that there was an
active use of shell companies within that real estate market,
we were looking at value, we were looking at the amount of
foreign interest in those jurisdictions. So that is how we made
selections in terms of the scope of the geographic targeting
order.
Mr. Rothfus. The difference between our larger institutions
and smaller ones, are smaller banks and credit unions more
vulnerable to money laundering versus the bigger banks?
Mr. El-Hindi. Small banks and bigger banks, they are both
banks, they both process transactions. They have different ways
of knowing who their customers are. I would say that both can
be vulnerable, and that is why both are subject to our rules.
We say that banks need to comply on a risk-based approach. They
need to assess their risks and act accordingly.
I would just say that with respect to smaller institutions,
for example in the terrorism context, some might assume that
they may not have the same type of information that large banks
might have, or be able to look at thousands and thousands of
records, but we have seen that in the terrorism context, small
banks are contributing, I think it is 10 or 12 percent of some
of the most useful reporting in that regard.
There are differences among those institutions and there
are differences in the way they approach things, but both large
institutions and small institutions have a very important role
in what we do.
Mr. Rothfus. I thank the gentleman.
I yield back.
Chairman Pearce. The gentleman yields back.
The Chair notes that votes have been called. It is my
intention that if Mr. Foster, who is next in the queue, desires
to go ahead and ask questions now, we will do that. We will
come back and complete the hearing afterwards, but you can go
now or wait till after the votes, Mr. Foster. It is your
choice.
Mr. Foster. I am happy to proceed.
Chairman Pearce. Okay. The gentleman is recognized for 5
minutes.
Mr. Foster. Thank you for everything you do here. I would
like to return to the real estate issue a little bit. You
mentioned the value of just eliminating anonymous shell
corporations, which is something--do you know roughly what
fraction of countries on Earth allow anonymous shell
corporations and what don't?
Mr. El-Hindi. I do not have that information.
Mr. Foster. Would you feel comfortable in saying the
majority do not allow anonymous shell corporations?
Mr. El-Hindi. Again, I would have to--
Mr. Foster. Okay. I would be interested in knowing that,
because it is my impression that we are sort of an oddity in
allowing this, and it is the--makes--one of the reasons that
the U.S. is not on the center for financial activity generally,
but also unfortunately for a lot of money laundering.
The other thing, some countries, it is my impression, have
what is often called a cadastre. This is a legally binding
registry of who owns which parcel of land, so you can sometimes
literally just go to the Federal map and mull over a certain
plat of land, and it gives you the whole ownership history and
all the transactions. This is information that is publicly
accessible in the U.S., but often only by going into the
basement of some dusty courthouse to get that information. And
if there was a national legally binding registry of who owns
which parcel of land--and I think some States are doing this,
for example, Minnesota, areas of Canada, I believe, do this--
would that really simplify the whole procedure of figuring out
what each transaction was about?
Mr. El-Hindi. I would just say that in general, greater
transparency with respect to beneficial ownership in this space
would be useful. Precisely how we get there is something that,
again, we would be happy to work with the Congress on to the
extent that they are focused on this issue.
Mr. Foster. Now, you go through title insurance companies
to attempt the geographical targeting. In what ways is that
satisfactory or unsatisfactory or complete or incomplete?
Mr. El-Hindi. When we looked at the geographic targeting
orders, we were trying--and as we would do in any regulatory
context where we are trying to collect information, we are
looking for nodes and places where we can efficiently collect
information. In that context, given their role in the
transactions and the information that they could obtain as part
of that, we felt that it made sense.
Mr. Foster. All right. And is title insurance mandatory for
these cash transactions and so on?
Mr. El-Hindi. I had mentioned before that what happens in
each particular part of the country in terms of the
jurisdiction--there are different rules in different places,
whether it is mandatory, whether it is something that is
essential--has become essential by virtue of practice, I would
have to get back to you on. I just would say that part of the
complications in the real estate sector is the variety of rules
that exist.
Mr. Foster. Thank you. I think this is something where
Congress should really have a look at this, because the
anonymous ownership of land is--not only having to do with
terrorist financing, but there is a lot of just ordinary
corruption associated with secret ownership of land in this
country. And it would be, I think, in the interest of good
government, general governance generally to have some
improvements here. So thank you.
I yield back.
Chairman Pearce. The gentleman yields back.
It is the intent of the Chair to reconvene the hearing
immediately after votes. For now, the subcommittee stands in
recess.
[recess]
Chairman Pearce. The subcommittee will come to order.
We will resume with questions. We left off with Mr. Foster
from the minority side, and we will proceed to Mr. Williams
from Texas.
You are recognized for 5 minutes.
Mr. Williams. Thank you, Mr. Chairman. And thank you, Mr.
Director, for being here today.
I wanted to first start by exploring the topic of trade-
based money laundering (TBML) this afternoon, then discuss in
more depth the use of geographic targeting orders, GTOs as we
know them, by FinCEN and the use of trade transparency units.
As you know, trade-based money laundering is a process in
which someone, whether that be a criminal or terrorist
organization, attempts to disguise the proceeds of crime, in
this case using trade to legitimize their illicit behavior. And
although it is difficult to put a price tag on how much money
is laundered annually through trade, I think it is safe to say
it is in the billions of dollars. In fact, a 2010 advisory
report on TBML issued by FinCEN stated that from 2004 to 2009,
more than 17,000 suspicious activity reports described TBML
involving transactions totaled $276 billion. And although the
practice of TBML is common, combating it remains very
difficult, especially when companies change names, locations,
and schemes so frequently.
So let me start by asking you this: Is that normal? Is it
routine for the names to change and the businesses to go on
operating?
Mr. El-Hindi. I would say that is definitely a methodology
we have seen in some of our work and certainly with our work
with law enforcement.
Mr. Williams. Okay. Is the U.S. Government not providing
adequate resources to help you combat these schemes?
Mr. El-Hindi. Congressman, I think that, as you have seen
from the things that we have put out, we know that trade-based
money laundering is an issue, and we continue to work on it and
we work with financial institutions on it. We work with the
trade transparency units as well. They have access to the data
that comes to us through the financial institutions, and we
work with them to make sure that they are in a position to use
it. We have ongoing discussions with them on that. It is
definitely an issue and it is something that we are focused on.
Mr. Williams. Do you think it is all about resources, or
does Congress need to give more authority in this space?
Mr. El-Hindi. I am really not in a position right now to
talk about our authorities. I can just tell you that within the
authorities that we do have, and the information that we are
currently collecting, we are working with other parts of the
government.
Mr. Williams. Okay. In your testimony, you spoke about GTO
authority, which Congress gave Treasury the authority to use in
the 1980s. And although back then, criminal organizations were
mostly cash and other monetary instruments, wire transfers are
not covered in the GTO authority. And as we had talked about in
past hearings, and something that is personal to me as an auto
dealer, the trade-based money laundering scheme using used cars
relies heavily on money transfers for completing a sale. Do you
believe Congress needs to go back and update this authority?
Mr. El-Hindi. To the extent that Congress is interested in
looking at that authority, and looking at some of the issues
that have been raised with respect to the limits on what we are
able to collect currently, we would be happy to work with
Congress on that.
Mr. Williams. Good. In your opinion, what industry that
GTOs are intended to target can circumvent these orders by
using wire transfers?
Mr. El-Hindi. I'm sorry. Could you repeat that?
Mr. Williams. What industry the GTOs are intended to target
can circumnavigate these orders by using wire transfers?
Mr. El-Hindi. To the extent that the authority right now is
limited to our ability to use geographic targeting orders when
there is cash involved, any type of transaction that goes
through wire transfers wouldn't be within the scope of what we
could do. So I would say that that is going to apply to a
variety of different businesses.
Mr. Williams. Okay. Finally, something that this committee
has talked extensively about expanding is the use of trade
transparency units (TTUs) to help combat trade-based money
laundering. Most of the active TTUs reside in countries located
in South America. In addition, the importance of knowing trends
and conducting ongoing analysis of trade data provided through
partnerships with other countries, trade transparency unit is
vital. I think we would agree.
So, Director, although FinCEN doesn't run these units, can
you talk to the committee about the importance of sharing data
with other countries and maybe how expanding these units will
help you better do your job?
Mr. El-Hindi. A lot of other parts of government that are
focused on the TTUs address the TTU aspect of it. I can just
tell you again that, domestically, we work with the TTUs and we
are focused on making sure that they have the data that we have
and they are able to use it. And then generally speaking, in
terms of the way we as a financial intelligence unit work with
our counterparts overseas, we have definitely been pushing for
more and more appropriate sharing on a secure and efficient
basis of the information that each of us have. So, I think in
the FIU context, with respect to financial intelligence, we
definitely see the value of working with our counterparts
overseas.
Mr. Williams. Thank you for your testimony.
And I yield back.
Chairman Pearce. The gentleman's time has expired.
The Chair now recognizes the gentleman from Minnesota, Mr.
Emmer.
Mr. Emmer. I thank you very much. I want to thank you for
being here today, and the chairman and the ranking member for
setting this up.
As I understand it, you have been the acting Director--
well, actually, not the acting Director. You have been the
acting Director since the new Administration came in, of
FinCEN?
Mr. El-Hindi. I have been acting Director since--
Mr. Emmer. 2015?
Mr. El-Hindi. I have been the Deputy Director since 2015,
and in May 2016, I became the acting Director.
Mr. Emmer. Thank you.
FinCEN has how many total employees?
Mr. El-Hindi. Onboard right now, we have about 280, and our
target is 340.
Mr. Emmer. And your total budget, annual budget, is in the
neighborhood of what?
Mr. El-Hindi. Historically, it has been in the $110 million
to $115 million range. I am not prepared to get into budget
specifics right now.
Mr. Emmer. No. I was just asking for a ballpark, and it is
nothing--these aren't ``gotcha,'' whatever. I am just asking--
Mr. El-Hindi. Thank you.
Mr. Emmer. --mostly for my own knowledge.
And you are divided up into six divisions, as I understand
it?
Mr. El-Hindi. Yes.
Mr. Emmer. And since you have been at FinCEN, has the
organization been remodeled in any way or changed, or has this
always been the way it has been since it was created?
Mr. El-Hindi. Actually in 2013, we went through a
restructuring of the organization under the previous Director.
I was onboard at that point and I headed one of the divisions
at the time. And that restructuring, we undertook because
FinCEN, as I mentioned before, bridges the financial community,
the law enforcement community, the regulatory community, and
our international counterparts.
Mr. Emmer. Right.
Mr. El-Hindi. And under our previous structure, we found
that the divisions that were focused on regulatory seemed to
view only the financial sector as their customers. The division
that was focused on analysis and liaison only viewed law
enforcement as their customers. A division focused on
international issues only focused on other FIUs.
The reality is, for an organization like ours, every one of
our stakeholders is a customer of the whole organization. And
in the new structure, we tried to break that down a bit, and we
really stressed the fact that every external stakeholder is a
customer of every part of FinCEN and every part of FinCEN is a
customer of every other part. So it is six divisions--
Mr. Emmer. If I can interrupt you, because I am going to
run out of time. I am not interested--and forgive me if I sound
a little sharp--in customers of FinCEN. I am more interested in
you are collecting all this information, 154,000 reporting
entities, which I would suggest you would call one of your
customers if you are looking at this whole thing.
I am really concerned about private information and how you
ensure that law abiding people are not drawn into this net:
55,000 reports every day based on suspicious activity. I was
trying to look at the law. How is suspicious activity defined
and who makes the determination as to whether it is suspicious
or not?
Mr. El-Hindi. With respect to the reporting that we get,
keep in mind that some of it is the currency transaction
reporting, which is objective reporting of the value of the
transaction if it is more than $10,000 of cash coming in and
out.
Mr. Emmer. Right.
Mr. El-Hindi. That is objective reporting. That is roughly
15 million reports a year.
Suspicious activity is more subjective, and our
regulations--
Mr. Emmer. Who determines it?
Mr. El-Hindi. Our regulations instruct the bank.
Mr. Emmer. Yes. So you send out a guideline, right?
Mr. El-Hindi. To the bank, yes.
Mr. Emmer. And what is your guideline--
Mr. El-Hindi. Banks and other financial institutions.
Where they have reason to believe that the source of funds
might be illicit, where the transaction might not seem to have
an apparent business purpose--
Mr. Emmer. What happens if they don't--so what if they are
just putting money into a savings account?
Mr. El-Hindi. To the extent that an individual is putting
money into a savings account, a bank might not find that
suspicious.
Mr. Emmer. But it seems to be so vague. What is suspicious
activity? And if you are putting the onus on the reporting
institution, what is the consequence if they don't--
Mr. El-Hindi. I understand. So let me just work through a
story. Say, I am a customer of the bank--maybe I am a student;
I am a student customer of the bank. The bank understands that
I am a student and I have opened up an account. To the extent
that as a student I begin to engage in incredibly large and
repeated transactions, that is going to be something that the
bank, in terms of knowing its customer and what it might expect
from a student, would say, that looks suspicious. That is
different from a transaction that you would normally expect
from a student. That is just one category.
The guidance that we provide to banks walks through--helps
them identify red flags in certain situations in which they
could be identifying that type of activity.
Mr. Emmer. I see my time has expired. If I could get a copy
of your guidance afterwards--
Mr. El-Hindi. Sure.
Mr. Emmer. --I would appreciate it.
Mr. El-Hindi. Of course.
Mr. Emmer. Thank you.
Chairman Pearce. The gentleman's time has expired.
The Chair now recognizes the gentleman from Maine, Mr.
Poliquin, for 5 minutes.
Mr. Poliquin. Thank you, Mr. Chairman, very much. And thank
you very much for being here, sir.
You folks, in my terminology anyway, are the financial cops
for the U.S. Government, intelligence and the cops. Is that
right, roughly?
Mr. El-Hindi. Yes. We assist. We assist the cops and--
Mr. Poliquin. Good.
Mr. El-Hindi. --we assist the financial institutions.
Mr. Poliquin. Great. So we know how important your work is,
Mr. El-Hindi. We are quite proud of our State of Maine. We
consider ourselves one of the safest States, and statistically
are one of the safest States in the country. However, all of
us, I think, here in Congress have been alarmed by knowing that
there are terrorist investigations going on in each of the 50
States, I should say. And one of the things that really
frightened us last summer was, actually, an individual who had
settled in Maine as a refugee ended up dying on the battlefield
for ISIS in the Middle East. So we all want to make sure we
help you make sure this process is as efficient as possible.
Now, Mr. Emmer and other folks have mentioned the huge
volume of SARs every day, about 55,000. Based on 70 or 80 folks
you have working on this at your shop, if I understand this,
that is about 800 per day. So, that is a lot. And I am not
quite sure. I am guessing it probably doesn't make a lot of
sense to spend a lot of manhours on 800 filings per day. I am
guessing some of those aren't of great quality.
And is there anything--and if I am wrong, I know you will
correct me--that we can do to help you, any legislation we can
pass, any rulemaking that you folks can go through with our
support that allows you to use different technology to get to a
better place so this is more efficient, to make sure we drill
down on what filings are actionable?
Mr. El-Hindi. I will just try to provide a little context
with respect to all that information that comes in. It is
varying types of information. As I mentioned before, some of it
is objective reporting. Some of it is suspicious activity
reports. And when you think about the percentage of things that
come in on a daily basis, the percentage of SARs is actually
going to be lower in comparison with currency transaction
reports. That is just the math.
But people need to--we try to make sure that industry and
the public understand that the way this information is used is
in a variety of contexts. It is not easy to associate any one
particular filing with any one particular action. In fact, in
terms of our metrics and how we measure our success, we try to
emphasize the fact that it is not as if every single piece of
information is going to lead to some individual arrest.
Mr. Poliquin. Okay. Let me drill down a little bit, if I
can, Mr. El-Hindi. I only have a couple of minutes left here.
Under the Bank Secrecy Act, is there liability for a financial
institution to--not permit; that is not the right word--but is
there a financial liability, and otherwise responsibility for a
financial institution if some of the money laundering issues
and other illicit activities flow through their institution? Is
there liability?
Mr. El-Hindi. Under the Bank Secrecy Act, they are required
to have programs in place that enable them--
Mr. Poliquin. And if they don't, there is liability?
Mr. El-Hindi. If they don't, there are liabilities.
Mr. Poliquin. Okay. You--
Mr. El-Hindi. We have an Enforcement Department, and they,
on occasion, will take action.
Mr. Poliquin. Okay. In our healthcare industry, for
example, in our great country, there are instances where
doctors--I don't want to be accusatory here. But there are
narratives where some folks in the healthcare profession will
overuse procedures--or testing, I should say, instead of
procedures--because of fear of liability down the road,
defensive medicine.
Do you find that might be analogous to the situation we
have here where financial institutions will file these
suspicious activity reports in abundance to make sure they are
protecting themselves against future liability, and, therefore,
it gums up your work, and we are missing opportunities to
really drill down on actionable items?
Mr. El-Hindi. This issue actually came up prior to the
financial crisis, and we actually looked at the SARs to try to
discern whether or not we found that data was coming into the
database on a defensive basis where it had no value. And we
could not see that.
The financial institutions themselves, we feel, are making
good decisions about what to file and what not to file. We
don't ask for perfection. We ask for them to have systems in
place so that they can meet the requirements and generally
provide the information that is necessary.
And, again, as we have looked at it, we have not been able
to discern this so-called defensive filing.
Mr. Poliquin. Mr. El-Hindi--
Mr. El-Hindi. We are sensitive to a lot of the concerns
that industry has in terms of the costs and the resources that
go into it. And we continue to discuss with them better ways of
making the system more efficient.
Mr. Pearce. The gentleman's time has expired.
Mr. Poliquin. Thank you, Mr. Chairman.
Chairman Pearce. The Chair now recognizes the gentleman
from Arkansas, Mr. Hill, for 5 minutes.
Mr. Hill. Thank you, Mr. Chairman.
I appreciate you being here, Mr. Director. Thanks for
sharing your thoughts about FinCEN.
I want to follow up on some of Mr. Emmer's questions. I
have looked at a lot of material and found a number of
different authorized and FTE positions. So I am just going to
try to clarify that. It looks like there are 373 FTEs for
FinCEN, with about 280 current positions. Is that--
Mr. El-Hindi. I think it is closer to 340.
Mr. Hill. Okay. That is what I am saying. I have some
confusing information.
And it is my understanding that there are a number of
unfilled staff positions at FinCEN based on those numbers. How
many exactly are unfilled, and what is the average unfilled
slots for the past year or two? And is it fair to just look at
FTEs versus--
Mr. El-Hindi. I will focus on the FTEs. Currently, we have
roughly 70 vacancies that we are looking to fill. Of that,
roughly half are in what I will call an active recruitment
process or a selection process where we are waiting for people
to get through security clearances.
We have had some issues with respect to our hiring, and we
are working on that. One of the things that--
Mr. Hill. What is an example of--I mean, you have security
clearances. That gets backlogged.
Mr. El-Hindi. Yes, security clearances--
Mr. Hill. Do you have a competitive pay issue at all?
Mr. El-Hindi. Given the interest in what we do, there are
instances where we lose people to the private sector.
Mr. Hill. What is the average tenure of an intel
investigator for you?
Mr. El-Hindi. I would have to get back to you on that. I
don't have that.
Mr. Hill. But you do a good job of training, I would--
Mr. El-Hindi. We do do a good job of training. And because
we have a great mission, I think that we are in a position to
recruit the talent that we need.
I will just say that you lose a person in about 2 weeks.
The amount of time that it takes from the posting of an
announcement to the selection and primarily the security
clearance, the average is sometimes over a year. So that is
something that we continue to work to address.
Mr. Hill. Really, for us, and the work that we do on this
Terrorism Subcommittee, that is a national security problem,
isn't it, that you have a year lag time in that process? As I
understand it, some aspects of national security intel analysts
are--have a fast-track hiring authority. Is that correct?
Mr. El-Hindi. That is correct.
Mr. Hill. And are your slots not covered by that authority?
Mr. El-Hindi. We are not covered by that.
Mr. Hill. Does it take legislative action to have you
covered under that authority?
Mr. El-Hindi. I would have to get back to you in terms of
precisely how something like that might work.
Mr. Hill. It seems like somebody like the Secretary of the
Treasury could make that happen.
So how many, roughly--is that the 70 intel analyst slots
that would be covered by that--
Mr. El-Hindi. Actually, the intel division is, I believe,
almost fully staffed at this point.
Mr. Hill. Okay. If slots go unfilled and you have them
authorized, which means you have the appropriated money to pay
them, but they go unfilled for a year, you don't risk losing
that Federal funding; it is authorized--
Mr. El-Hindi. We have done a number of things. We work to
bring on Presidential Management Fellows. We work with the
Workplace Recruitment Program to try to bring people on faster.
We do have the ability to use some of that money to bring
in contractors on a basis to make sure that we are able to get
the work done.
Mr. Hill. If you don't mind just following up maybe with a
memo on this subject that talks about authorized positions and
steps you have taken to compress the hiring time and any
additional authority you think the Secretary needs to have the
critical national security analytic jobs be covered under that
fast-track authority, that would be, I think, very helpful to
the committee.
Mr. El-Hindi. We can provide you with the information, I
think.
Mr. Hill. And in the intelligence community inside the
government, do people pay retention bonuses or things of that
nature within the government scale to retain key employees who
are sought after by the private sector?
Mr. El-Hindi. Keep in mind that we are not part of the
intelligence community.
Mr. Hill. I am throwing you in with a great group of
people. You can just say thank you.
But in the law--in Federal law enforcement--I will rephrase
and say, ``within Federal law enforcement.''
Mr. El-Hindi. Yes. I will just say, within FinCEN, that we
do have the ability to use retention bonuses.
Mr. Hill. Okay. Thank you for your time.
Thank you, Mr. Chairman.
Chairman Pearce. The gentleman's time has expired.
The Chair now recognizes the gentlelady from Utah, Mrs.
Love, for 5 minutes.
Mrs. Love. Thank you. Thank you, Mr. Chairman.
Thank you for being here today.
One of the concerns we hear is that financial institutions
are spending so much time and money to gather information. But
there is a great desire, at the same time, to make sure that
the effort that is being spent to gather--is spent to gather
actionable information rather than just more information. So
there is a concern--and I apologize if this was covered
already. We have been in and out. I just need them for my
information.
There is a concern that FinCEN gets too much information
and, thus, is unable to sort through it for all important
indicators of crimes. Can you please address that?
Mr. El-Hindi. It is true that we get a lot of information.
And we get more information now than we did 10, 20 years ago.
Actually, this is FinCEN's anniversary week. We are now 27
years old. But the capacity to digest that information and use
it and disseminate it quickly has also increased over the
course of time. We are in an electronic era now where the
information can come in faster and can be analyzed more
quickly. And we work on that.
I think that one of the things that we also try to do is
make sure that the financial sector knows the many ways in
which we use the information and how valuable it is.
Mrs. Love. Do you need to gather that much information? Are
you focused on specific actionable information that you gather?
Or because of the technology, do you decide to get as much as
you possibly can and try and analyze it?
Mr. El-Hindi. Keep in mind that FinCEN is a bridge between
law enforcement users and the financial sector. I think one of
the things that we like to point out is that law enforcement
would probably want more information on basically everything
that they can. As a regulator in this space, we are responsible
for making sure that we are balancing burden and benefit and
trying to hit the--
Mrs. Love. Okay. So who looks at the 55,000 reports that
come in every day?
Mr. El-Hindi. 55,000 filings come in each day. They go into
the database. Within the database, they are subject to queries
by 10,000 stakeholders. And essentially there are--
Mrs. Love. So 10,000 stakeholders are the ones who look
into the--
Mr. El-Hindi. They have the ability to use that information
and access that information. But they are not--would 10,000
people be looking at every single filing that came in? That is
not how it works.
Mrs. Love. Okay.
Mr. El-Hindi. What we try to stress is that there is--for
each filing, it has its individual value, but then collectively
they have aggregate value as well. And different pieces of
information filed by different financial institutions with
respect to different transactions can be connected in that
system.
Mrs. Love. Okay. Let me--
Mr. El-Hindi. That is how we develop and understand better
networks of illicit activity, by putting all of this
information together.
Mrs. Love. Okay. Let me delve a little bit more
specifically into your operations. Does FinCEN report on the
commonalties found between SARs and, namely, these common
items: addresses; ID numbers; phone numbers; email addresses;
IP addresses?
Mr. El-Hindi. Commonality? I think that what--when the
information is in the database, one of the things that our
modernization has enabled us to do is use business rules and
algorithms to help identify situations in which there may be
common elements, such as you said, for example, a phone number
and address that may be appearing in multiple reports coming in
with respect to different transactions and particularly across
different institutions. So that is a way in which those data
points can be connected and we can identify network activity.
Mrs. Love. So, according to you, FinCEN proactively
analyzes the above to find common attributes and share with law
enforcement so that investigations can be initiated.
So how do the rules--how do--I am losing time. If there is
extra time, I would like some extra time.
Chairman Pearce. The gentlelady's time is extended.
Mrs. Love. Thank you. Oh, thank you.
How do the searches within the database work daily? What
are the rules that you use when you are searching within the
database daily?
Mr. El-Hindi. I will give you an example in the terrorism
context. We will identify a situation, and we will work with
our team to figure out what types of terms or what types of
situations might be most associated with a terrorist-type
activity.
We will put that into the system, use that as a business
rule, and then that will help us flag items of particular
interest for further follow-up.
That is just one example of the development of a business
rule.
Mrs. Love. So are they basically glorified Google searches?
How long does--
Mr. El-Hindi. Some types of searching of the database might
be based on a simple watch list or a name type thing. Others
are going to be much more complicated, weighted, multifactor
analysis.
I have to apologize. I am not one of the experts with
respect to the development of these types of rules. But we can
certainly get back to you in terms--
Mrs. Love. I would like to have some details as to what the
rules are. You are talking about quite a bit of information
daily. I would just like to dive into that a little bit more
and understand how it works.
Thank you, Mr. Chairman.
Chairman Pearce. The gentlelady's time has expired.
The Chair now recognizes the gentleman from Ohio, Mr.
Davidson, for 5 minutes.
Mr. Davidson. Thank you, Mr. Chairman.
And thank you for being here and thanks for the information
and the time that it takes to answer all these questions.
I am new to the committee and new to the topic as a Member
of Congress anyway, but certainly right at the intersection of
a lot of things where you say, ``Just follow the money.'' And
you are the folks who make that possible. So it is nice to talk
with you, and I think it is an incredibly important mission.
I am particularly concerned about, how do we do that and
not forget about our Bill of Rights? How do we not forget about
who we are as Americans?
And one of the things that is very relevant is something in
your testimony regarding Section 314(b). I am just going to
read what you stated here briefly: ``One issue that FinCEN
frequently hears about from the financial services industry
regarding information sharing is the scope of their safe harbor
for information sharing under Section 314(b). The statute
currently only provides safe harbor from liability for
disclosing information under this section for activities that
may involve terrorist activities. Activities that are predicate
offenses for money laundering are not exclusively included in
the provision.''
So, serious activity that could lead to money laundering.
When we provided the USA PATRIOT Act, we basically said: ``Hey,
we are going to kind of stretch the parameters of our civil
liberties here because we really want to get after
terrorists.''
Then we said: ``Well, let's go a little deeper because
these things might actually lead to that.''
So what kinds of safeguards are in place? Historically,
that was a warrant or a subpoena. You get all this information.
People are querying it. Could you go into some of the
safeguards that protect civil liberties in this?
Mr. El-Hindi. In terms of the 314, we have 314(a), which is
about industry--the government sharing information back and
forth between industry and government, and 314(b), which
enables the institutions to share with one another.
The 314(a) authorities, as we put them in place, we have
been--again, I mentioned before, we are between law enforcement
and the financial sector. Part of our responsibility is to make
sure that, when we are putting out requests from law
enforcement for information, we do that in a responsible--
Mr. Davidson. Do those requests from law enforcement come
in the forms of warrants or subpoenas?
Mr. El-Hindi. They come to us in--not in warrants or
subpoenas. They come into us with respect to ongoing
significant investigations.
Keep in mind that the requests come to us, and under
314(a), we are able to send that information out to financial
institutions. They then say whether or not they have anything
that meets--
Mr. Davidson. Right now, this is a little bit like playing
Go Fish and saying: ``Got any transactions?''
Mr. El-Hindi. But after that, when law enforcement reaches
out to the financial institution, they then proceed with
engaging with them in the normal course and--
Mr. Davidson. This isn't yet personalized. In some cases,
where it is just like we have this big set of data, and we just
say: ``Hey, do we have any transactions that look like clubs?
Do you have any clubs?'' To put it in Go Fish language: clubs,
hearts, or diamonds. So whatever the parameter is that you are
looking for, and then you go: We have these five people who
have completed a transaction like that.
Or is it, instead, personalized, where you say, ``I am
looking for this person right here or this LLC?''
Mr. El-Hindi. The way the requests come in to us, they are
going to be much more particular. Again, the particular
information we receive from law enforcement that involves their
investigations is--the names are--shared with the financial
institutions, and they say: Do you have transactions where
these individuals or entities are involved, or do you have
accounts?
If they say yes or no, then law enforcement is able to
follow up with them.
It is a very efficient system. I think that one of the
things that, over the course of time, because we have been able
to mete out the requests and work with the financial
institutions on it, it has worked very well for law
enforcement. They have been--the average connection of
identifying ways in which they can expand their accounts--for
every request they make, they are able to identify roughly 50
transactions or accounts of interests.
Mr. Davidson. Thank you for that. Most of that is (a).
But (b)--you highlight some of the categories under (a)
that are the government's interaction with the bank. But then,
frankly, we didn't get to all the safeguards. And we, perhaps,
can schedule a briefing to go into that.
But then you go to the next layer. Now banks can share this
stuff iteratively back to one another. And I don't want to
dismiss that it could be effective, but I want to understand
what are the civil liberty safeguards, which is something we
didn't quite get to. So I would like to try to schedule time
with your office to follow up.
My time has expired.
Mr. El-Hindi. We would be happy to do that.
Chairman Pearce. The gentleman's time has expired.
The Chair now recognizes the gentleman from New York, Mr.
Zeldin, for 5 minutes.
Mr. Zeldin. Thank you, Mr. Chairman.
Thank you, Mr. El-Hindi, for being here today.
The issue of illicit financing and money laundering is
hitting home in the most personal and tragic way in my district
where we have seen ongoing violence perpetuated by MS-13 and
other Central American gangs taking innocent lives and
threatening the safety of our schools.
Money laundering is a key tool for these violent criminal
organizations. They are tearing apart peaceful communities on
Long Island and across our country. It allows them to hide
their drug-trafficking revenue and transfer it illicitly across
the border. That is how they buy weapons, and it fuels the
growth of their dangerous criminal enterprises.
Earlier this month, we saw the senseless and tragic murders
of four young men in Suffolk County, New York, which only
further cemented our need to solve the gang violence problem on
Long Island and nationwide. These murders have gotten the
attention of both President Trump and Attorney General
Sessions. Two of the victims of these murders perpetuated by
MS-13 were residents of my district, and tomorrow, Attorney
General Jeff Sessions will be visiting this community of
Central Islip, which has been shattered by these senseless
murders and other acts of transnational gang violence.
Mr. El-Hindi, we know that FinCEN, as the national experts
on combating money laundering, is playing a key role to defeat
threats to America's safety and security. Now more than ever we
need coordination on all fronts so that our local law
enforcement on our front lines can respond to this grave
threat, working with other State and Federal agencies.
My first question is asking for you to speak on the effort
currently to combat the threat of MS-13.
Mr. El-Hindi. With respect to priorities that we have in
FinCEN in terms of our focus, transnational organized crime,
narcotrafficking, gang activity are within those priorities.
When you mention Federal, State, and law enforcement working
together, Federal, State, and law enforcement all have access
to the data that FinCEN has, and they all have access to the
support that we can provide.
To the extent that law enforcement is focused in terms of
investigations and gang activity, we are there to support them
and make sure that they have the best use of the information
that we have.
Mr. Zeldin. Can you walk me through how FinCEN flags
suspicious activity at the local level and shares this intel
with local law enforcement, especially in dealing with
transnational criminal organizations like MS-13?
Mr. El-Hindi. We have a memorandum of understanding (MOU)
that allows access to our database at the Federal level, at the
State level, and, in many situations, at the local level with
certain municipalities.
When we have an MOU with a municipality, they have direct
access to the data. In many instances, however, they can work
through a State coordinator to have access to the data as well.
In terms of the products that we put out where we identify
a methodology or a trend, those can go out to a wide variety of
our law enforcement stakeholders.
Mr. Zeldin. The Bank Secrecy Act puts the onus of reporting
suspicious financial activity on banks. But what about violent
gangs that are increasingly using apps and other technology,
prepaid cards and various other nonbank instruments to launder
money? How is FinCEN intercepting and monitoring those
transactions and working with the local agencies on that front?
Mr. El-Hindi. We cover more than just banks. Money
transmitters are subject to our regulations. And some of the
methods that you mentioned for moving money electronically
might involve apps. To the extent that that activity gets into
the realm of money transmission, which it often does, those
financial institutions--we consider them financial
institutions--are covered under the scope of our requirements.
They are required to file suspicious activity reports. They are
required to have programs in place to enable them to identify
illicit activity and make themselves resilient to that. So that
is the type of information that will go into the database.
In terms of new methods, for example, FinCEN clarified in
2013 that virtual currency exchangers, administrators of
virtual currency are actually money transmitters and subject to
the scope of our regulations. And we find that, by working with
that industry, we are able to get valuable information to law
enforcement.
Mr. Zeldin. I appreciate that. And we certainly have law
enforcement from all different levels of government and elected
and community leaders. Everyone is engaged in this very
important issue in Suffolk County. Again, as I mentioned,
Attorney General Sessions is coming to Suffolk County tomorrow,
and the President himself often talks about this issue that is
in our community in Suffolk. So anything that you can possibly
do to be able to assist with this effort, it is an urgent
effort for my local community. And I would certainly appreciate
all of your help.
I yield back.
Mr. El-Hindi. Thank you.
Chairman Pearce. The gentleman yields back.
The Chair now recognizes the gentleman from California, Mr.
Royce, chairman of the House Foreign Affairs Committee, and a
member of the full Financial Services Committee, for 5 minutes.
Mr. Royce. Thank you, very much, Mr. Chairman. I appreciate
that.
Mr. El-Hindi, in November, the Treasury Department
acknowledged to Congress that it was seeking to detail 15
FinCEN personnel to the Office of Intelligence and Analysis on
a temporary basis. This committee raised concerns about the
impact of the reorganization on Treasury's ability to disrupt
and inhibit the financing of terrorism and other financial
crimes. It was also a puzzling development in light of the fact
that the Obama Administration had requested an increase in
FinCEN's 2017 budget to expand the use of contractors to
support FinCEN's efforts to disrupt the financing of terrorist
groups, including ISIS.
So, Mr. El-Hindi, can you provide the committee with an
update on the reorganization and how it is impacting your work?
Is the Trump Administration supportive of or aware of the
changes that their predecessor made shortly before leaving
office?
Mr. El-Hindi. I can just provide you with a little bit of
context in terms of within Treasury--
Mr. Royce. That would be helpful.
Mr. El-Hindi. --a focus on--I mentioned in my testimony
that we are one of five components that report to the Under
Secretary for Terrorism and Financial Intelligence.
There were thoughts about how we could all work better
together. One aspect of that involved the idea of detailing
staff from FinCEN to another component part. The status of that
is it has not occurred.
Mr. Royce. Let me ask you another question. In its
advisories, FinCEN recommends U.S. financial institutions use
risk-based policies, procedures, and practices regarding
jurisdictions with anti-money-laundering deficiencies. This is
appropriate, but some institutions would argue that the Federal
banking regulators do not themselves use a risk-based approach
when they develop AML/CFT reporting requirements. To the
contrary, many bankers complain that their regulators take a
dragnet approach focused on burdensome and, in their view,
time-consuming reporting inputs over quality outcomes.
So, Mr. El-Hindi, is it fair for FinCEN to ask financial
institutions to meet a standard that the regulators do not
meet? Would you agree with The Clearing House's conclusion that
many, if not most, of the resources devoted to AML/CFT by the
financial sector have limited law enforcement or national
security benefit? That would be one question I would ask.
And what can Congress do to refocus the Bank Secrecy Act
and other legal tools on outcomes over inputs?
Mr. El-Hindi. I will just respond to that by noting that I
personally, and FinCEN generally, have talked about the fact
that, along with a risk-based approach on the financial
industry's part in terms of complying with our regulations,
there should be a risk-based approach to regulation as well.
We have been very clear on that. And to the extent that we
have to make decisions on the industries or the types of
activities that we fold within the scope of our regulations,
that risk-based approach to regulation is very much a part of
it.
A number of things were raised in The Clearing House report
that you mention. I think it is an example of a situation where
industry reaches out to discuss concerns that they have with
respect to how situations could be improved. FinCEN has always
been eager to work with industry and discuss those ideas.
We have a forum called the Bank Secrecy Act Advisory Group
where we are able to bring together law enforcement, the
regulatory community, and the industry sector together with us
where we can have very frank and open discussions about what is
working, and what is not working. A lot of the issues that are
raised in the paper that you mention are things that we discuss
and are working on within that context. But we have always been
eager to work with industry and law enforcement to make sure
that we are on the right track and that we are doing the right
things.
That is why we have--I continue to say that we are a bridge
between both worlds. To the extent that neither is completely
satisfied with the results that we sometimes come up with, it
probably is an indication that we are doing the right thing.
Mr. Royce. Mr. El-Hindi, thank you very much.
I yield back.
Chairman Pearce. The gentleman yields back.
Mr. El-Hindi, you have been very gracious with your time.
If you could spare just a couple more minutes.
You are part of a group of about 150 FIUs worldwide. Of
those, which would you estimate has probably the best
information technology sharing?
Mr. El-Hindi. I am not in a position right now to comment
on particular jurisdictions. We have strong relationships with
many of our FIU partners, and there are other relationships
that we would like to improve. At the same time, there are some
of our FIUs that are in great shape in terms of their ability
to do things and others that would need to improve.
In some of the rulemaking that we have discussed, if you go
through past FinCEN records, you can see a close involvement
that we have with our Canadian counterparts, our Australian
counterparts, and other counterparts as well. But I am not in a
position to comment on the strengths--
Chairman Pearce. If you could reach out and grab someone's
technology and put it into FinCEN, whose would that be? Do you
have an opinion about that?
Mr. El-Hindi. I am not in a position to comment on that
right now. I would just say that one of the great things about
being an FIU and having a forum that we can compare the tools
that we have and the authorities that we have is that it does
create opportunities for us to think along those lines. And
that happens.
I mentioned virtual currency earlier today. When we came
out with our interpretation of virtual currency, our FIU
counterparts from other jurisdictions were on the phone, and we
were comparing notes. And in terms of how we approach that
situation, the same could be true with respect to the
technology as well. And we do have workshops with them in which
we can compare ideas.
Chairman Pearce. And if you were going to take a guess--
again, these are highly speculative things--how many of the 150
would like to take ours and implement? I am still trying to
drive--
Mr. El-Hindi. How many of them--
Chairman Pearce. Would like to use our technology instead
of the one they have? Half? Three quarters? All of them?
Mr. El-Hindi. I would--given--
Chairman Pearce. I am just trying to figure out kind of
where we stand in the world as far as our expertise and our
capabilities from the IT point, not the human capacity.
Mr. El-Hindi. I think that we are up there. And others are
up there as well.
Chairman Pearce. Okay. So we are in the top 10 percent or
so? Top 30 percent?
Mr. El-Hindi. I will just say we are up there, and others
are up there as well.
Chairman Pearce. You have been very gracious. We appreciate
everything.
I would like to thank you for your testimony today and for
answering all of our questions.
The Chair notes that some Members may have additional
questions for this witness, 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 this witness and to place his 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 4:35 p.m., the hearing was adjourned.]
A P P E N D I X
April 27, 2017
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