[Senate Hearing 115-26]
[From the U.S. Government Publishing Office]
S. Hrg. 115-26
NOMINATIONS OF SIGAL P. MANDELKER,
MIRA RADIELOVIC RICARDEL, MARSHALL BILLINGSLEA, AND HEATH P. TARBERT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
BANKING,HOUSING,AND URBAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
ON
NOMINATIONS OF:
Sigal P. Mandelker, of New York, to be Under Secretary for Terrorism
and Financial Intelligence, Department of the Treasury
__________
Mira Radielovic Ricardel, of California, to be Under Secretary for
Export Administration, Department of Commerce
__________
Marshall Billingslea, of Virginia, to be Assistant Secretary for
Terrorist Financing, Department of the Treasury
__________
Heath P. Tarbert, of Maryland, to be Assistant Secretary, International
Markets and Development, Department of the Treasury
__________
MAY 16, 2017
__________
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COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
MIKE CRAPO, Idaho, Chairman
RICHARD C. SHELBY, Alabama SHERROD BROWN, Ohio
BOB CORKER, Tennessee JACK REED, Rhode Island
PATRICK J. TOOMEY, Pennsylvania ROBERT MENENDEZ, New Jersey
DEAN HELLER, Nevada JON TESTER, Montana
TIM SCOTT, South Carolina MARK R. WARNER, Virginia
BEN SASSE, Nebraska ELIZABETH WARREN, Massachusetts
TOM COTTON, Arkansas HEIDI HEITKAMP, North Dakota
MIKE ROUNDS, South Dakota JOE DONNELLY, Indiana
DAVID PERDUE, Georgia BRIAN SCHATZ, Hawaii
THOM TILLIS, North Carolina CHRIS VAN HOLLEN, Maryland
JOHN KENNEDY, Louisiana CATHERINE CORTEZ MASTO, Nevada
Gregg Richard, Staff Director
Mark Powden, Democratic Staff Director
Elad Roisman, Chief Counsel
John O'Hara, Chief Counsel for National Security Policy
Kristine Johnson, Professional Staff Member
Graham Steele, Democratic Chief Counsel
Laura Swanson, Democratic Deputy Staff Director
Colin McGinnis, Democratic Policy Director
Dawn Ratliff, Chief Clerk
Cameron Ricker, Hearing Clerk
Shelvin Simmons, IT Director
Jim Crowell, Editor
(ii)
C O N T E N T S
----------
TUESDAY, MAY 16, 2017
Page
Opening statement of Chairman Crapo.............................. 1
Opening statements, comments, or prepared statements of:
Senator Brown................................................ 3
NOMINEES
Sigal P. Mandelker, of New York, to be Under Secretary for
Terrorism and Financial Intelligence, Department of the
Treasury....................................................... 5
Prepared statement........................................... 37
Biographical sketch of nominee............................... 39
Responses to written questions of:
Senator Corker........................................... 84
Senator Toomey........................................... 85
Senator Sasse............................................ 86
Senator Menendez......................................... 88
Senator Warren........................................... 89
Senator Donnelly......................................... 92
Mira Radielovic Ricardel, of California, to be Under Secretary
for Export Administration, Department of Commerce.............. 7
Prepared statement........................................... 52
Biographical sketch of nominee............................... 53
Responses to written questions of:
Chairman Crapo........................................... 93
Senator Sasse............................................ 94
Senator Perdue........................................... 94
Senator Warren........................................... 95
Senator Donnelly......................................... 96
Marshall Billingslea, of Virginia, to be Assistant Secretary for
Terrorist Financing, Department of the Treasury................ 8
Prepared statement........................................... 60
Biographical sketch of nominee............................... 62
Responses to written questions of:
Senator Sasse............................................ 96
Senator Warren........................................... 98
Heath P. Tarbert, of Maryland, to be Assistant Secretary,
International Markets and Development, Department of the
Treasury....................................................... 10
Prepared statement........................................... 70
Biographical sketch of nominee............................... 71
Responses to written questions of:
Senator Brown............................................ 101
Senator Warren........................................... 101
Senator Donnelly......................................... 102
Additional Material Supplied for the Record
Letters submitted in support of the nomination of Sigal P.
Mandelker...................................................... 104
Letters submitted in support of the nomination of Mira Radielovic
Ricardel....................................................... 114
Letter submitted in support of the nomination of Marshall
Billingslea.................................................... 116
(iii)
NOMINATIONS OF SIGAL P. MANDELKER, OF NEW YORK, TO BE UNDER SECRETARY
FOR TERRORISM AND FINANCIAL INTELLIGENCE, DEPARTMENT OF THE TREASURY;
MIRA RADIELOVIC RICARDEL, OF CALIFORNIA, TO BE UNDER SECRETARY FOR
EXPORT ADMINISTRATION, DEPARTMENT OF COMMERCE; MARSHALL BILLINGSLEA, OF
VIRGINIA, TO BE ASSISTANT SECRETARY FOR TERRORIST FINANCING, DEPARTMENT
OF THE TREASURY; HEATH P. TARBERT, OF MARYLAND, TO BE ASSISTANT
SECRETARY, INTERNATIONAL MARKETS AND DEVELOPMENT, DEPARTMENT OF THE
TREASURY
----------
TUESDAY, MAY 16, 2017
U.S. Senate,
Committee on Banking, Housing, and Urban Affairs,
Washington, DC.
The Committee met at 10:03 a.m., in room SD-538, Dirksen
Senate Office Building, Hon. Mike Crapo, Chairman of the
Committee, presiding.
OPENING STATEMENT OF CHAIRMAN MIKE CRAPO
Chairman Crapo. This hearing will come to order.
Congratulations to all of you on your nominations to these
very important offices. I see friends and family behind you,
and I welcome all of you here as well.
This morning, we are going to consider four nominations:
First, Ms. Sigal Mandelker. She is to be the Under
Secretary of the Treasury for Terrorism and Financial Crimes.
Second, Ms. Mira Ricardel. Did I get that right, Ricardel?
Ms. Ricardel. Yes, sir. Thank you.
Chairman Crapo. Thank you. To be Under Secretary of
Commerce for Export Administration.
Third, Mr. Marshall Billingslea, to be Assistant Secretary
of Treasury for Terrorist Financing.
And, finally, Mr. Heath Tarbert, to be Assistant Secretary
of the Treasury for International Markets and Development.
Again, welcome to all of you.
Considering the nature of these nominations, especially in
a time of heightened security in the international arena, we
need to work together to process your nominations quickly.
All four of these highly qualified nominees have extensive
national security experience from their years spent in
Government, supplemented by an understanding of the
practicalities and specific commerce and finance requirements
honed in the private sector.
Ms. Mandelker's experience in senior law enforcement and
national security positions equip her with the judgment
necessary as Under Secretary to lead Treasury's Office of
Terrorism and Financial Intelligence, the TFI, where she would
oversee sanctions policy on Iran, Russia, North Korea, Syria,
and some 25 other programs, including narcotraffickers, nuclear
proliferators, and the like. Ms. Mandelker would also lead on
the Nation's anti-money laundering efforts and other illicit
financial threats.
As Assistant Secretary, Mr. Billingslea would work with Ms.
Mandelker to coordinate all elements of the national security
and law enforcement community to develop and execute TFI
policies and to conduct outreach strategies to address threats
to the domestic and international financial system. Mr.
Billingslea has worked jointly with Treasury elements in the
past while he served in senior defense positions. This
experience puts him in an excellent position to leverage these
and other such relationships in the future.
Mr. Tarbert has an in-depth knowledge of both international
and domestic financial markets. He will be a great
representative for the United States in international
discussions on matters of financial services regulation and
open investment. If confirmed, he will manage Treasury
regulations affecting financial institutions, including
systemic risk designations. He will also coordinate Treasury
initiatives on financial education and overseeing the Terrorism
Risk Insurance Program. And as if that were not enough, a
critical part of Mr. Tarbert's job, and the reason for which
his position was created by legislation passed in this
Committee, is to marshal the procedures and processes of the
multi-agency, Treasury-led Committee on Foreign Investment in
the United States, or what we call ``CFIUS'', in a timely
manner to protect our Nation from hostile foreign investment
transactions designed to undermine the national security
interests of the United States.
Ms. Ricardel has extensive Government and private sector
leadership experience in the national security arena necessary
to lead the Commerce Department's Bureau of Industry and
Security. The core mission of BIS is to ensure that sensitive
dual-use items do not find their way into the hands of
dangerous countries, organizations, and individuals in such a
manner that still ensures the United States retains its
innovative and productive capacity. Every decision will call
for a national security, foreign policy, and fundamental
business decision affecting the bottom line of companies, U.S.
exports, and American jobs.
All four of these positions are important to maintaining
critical United States law enforcement and national security
interests, while also preserving vibrant financial markets and
cross-border transactions that can contribute greatly to the
economic growth of the United States.
While many people may not have heard of the exact positions
to which each of you have been nominated, these are critical
and sensitive national security positions within the United
States financial system.
Some have argued that candidates for such positions must be
able to balance these security interests with supporting an
environment for flexible and open financial and commercial
transactions. The United States is not in the business of
balancing its national security interests against anyone or
anything; it assures them.
In that context, you are also charged with preserving the
integrity of a uniquely American financial and commercial
environment respected the world over for its access and its
certainty.
None of the candidates here will ever wake up in the
morning asking themselves why they are going to work. There is
too much at stake in the perennial war on terror and in
protecting our national interests.
Thank you very much for accepting these difficult
challenges and for your service to our country. I urge my
colleagues to confirm you without delay.
At this time I would like to ask unanimous consent to enter
into the record six letters in support of the nominees. Without
objection.
Senator Brown.
STATEMENT OF SENATOR SHERROD BROWN
Senator Brown. Thank you, Mr. Chairman.
Today the Banking Committee is meeting to do something it
rarely or never did over the last 2 years: to assess the
qualifications of four nominees that the President has put
forward for key national security roles in the Treasury and
Commerce Departments. These include:
Ms. Sigal Mandelker, to be Treasury Under Secretary for
Terrorism and Financial Crimes. Welcome.
Mr. Marshall Billingslea, to serve as Treasury Assistant
Secretary for Terrorist Financing. Welcome to you.
Mr. Heath Tarbert, to be Treasury Assistant Secretary for
International Markets. Welcome, Mr. Tarbert.
And Ms. Mira Ricardel, to serve as Commerce Under Secretary
for Export Administration. Welcome to the Committee.
As you will introduce them, Mr. Chairman, I will not spend
more time on their distinguished backgrounds. I will join you
in thanking the nominees for their willingness to serve and in
welcoming them and their family members to our Committee. I am
pleased we appear to be returning to the Banking Committee's
long tradition of giving Administration appointees full, fair,
and prompt consideration. For the last 2 years, this Committee
slow-walked, and more precisely in many cases stonewalled, the
President's nominations for key positions in our jurisdiction.
Perhaps the most reprehensible was Adam Szubin, who testified
before one of our Subcommittees last week. He was denied a
Committee vote for many months, then was never considered by
the Senate--all this despite broad bipartisan support for him
and the superb work he did in the terrorism and illicit finance
arena at Treasury for many years. This Committee's dereliction
of duty during that period was reprehensible.
Considering the volatile situations in North Korea and
Syria and Iran, and with non-State actors like ISIS, I am all
for getting these important national security nominees in
place. How fast we do so likely depends in part on how quickly
Treasury satisfies a bipartisan request for certain financial
information on the Russia investigation by the Intelligence
Committee. I share Senator Warner's views on this. I hope that
information is provided without further delay.
As Under Secretary for Terrorism and Financial Crimes, Ms.
Mandelker would oversee the Office of Terrorism and Financial
Intelligence. With 700 employees, this office marshals
Treasury's intelligence and enforcement functions. Its twin
aims are to safeguard the financial system against illicit use
and to combat threats from rogue Nations, terrorist
facilitators, weapons of mass destruction proliferators, money
launderers, and drug kingpins. It is also perhaps the most
important role in the U.S. Government to ensure that economic
measures like sanctions are applied effectively against our
adversaries.
Mr. Billingslea's role alongside Ms. Mandelker will also be
critical. He has been selected for a position as the head of a
unit that does outreach across all elements of the national
security community, including law enforcement, regulatory,
policy, diplomatic, and intelligence communities, and with the
private sector and foreign Governments to identify and address
illicit finance threats within the international finance
system.
Mr. Tarbert has been nominated to be Treasury Assistant
Secretary for International Markets and Development. If
confirmed, he would be responsible for leading Treasury's
efforts related to the Committee on Foreign Investment in the
United States, CFIUS, as well as international financial
services regulation, trade, development, technical assistance,
and climate finance. CFIUS continues to play a vital role
reviewing foreign investments that could threaten our national
security. We should be concerned when investments come from
entities with ties to the Chinese Government and State-owned
enterprises. We have already seen attempts by foreign entities
to acquire businesses and real estate of senior Administration
officials.
In addition, after the financial crisis, as economies
around the world continue to recover, it is essential that
Treasury engage with our international counterparts to conduct
strong financial services oversight. I expect the U.S. will
continue to pursue strong rules and not support a race to the
bottom that put the world's financial institutions at risk.
Finally, as Under Secretary for Export Administration, Ms.
Ricardel would oversee the Commerce Department's Bureau of
Industry and Security. BIS is a licensing, regulatory, and
enforcement agency that works to ensure an effective export
control and treaty compliance system and promotes U.S.
technology leadership and a strong industrial base.
Again, I welcome the nominees to the Committee. I look
forward to hearing from them. Thank you.
Chairman Crapo. Thank you very much, Senator Brown.
And with that, I need to administer an oath, so would each
of you please stand and raise your right hand? Do you swear or
affirm that the testimony you are about to give is the truth,
the whole truth, and nothing but the truth, so help you God?
Ms. Mandelker. I do.
Ms. Ricardel. I do.
Mr. Billingslea. I do.
Mr. Tarbert. I do.
Chairman Crapo. And do you agree to appear and testify
before any duly constituted Committee of the senate?
Ms. Mandelker. I do.
Ms. Ricardel. I do.
Mr. Billingslea. I do.
Mr. Tarbert. I do.
Chairman Crapo. Thank you. You may take your seats.
Your written statements will each be made a part of the
record, and as I believe you have been informed, I ask you to
try to keep your oral comments today to 5 minutes. We have a
lot of Senators, who I also remind to keep their questioning to
5 minutes.
And before you begin your statements--we will go in the
order that you are seated. Before you begin your statements,
you are welcome to introduce anyone of your family who is here,
if you would like, and we will start with you, Ms. Mandelker.
Ms. Mandelker. Thank you, Chairman. I have a number of
people here, my brother, my father, and my niece.
Chairman Crapo. Thank you very much. We welcome you here.
You have got to be very proud.
Please proceed.
Ms. Ricardel. Thank you, Mr. Chairman. I am honored to
introduce my husband, Vincent; my mother, Brigitta; my brother
and sister-in-law, and my aunt and uncle. And I am so honored
to have their love and support and have them here today. Thank
you.
Chairman Crapo. Thank you.
Mr. Billingslea.
Mr. Billingslea. Thank you, Chairman. I am joined by my
wife, Karen, and my youngest daughter, Elsa, and my oldest
daughter, Morgan; and my sister, who is in the very back.
Chairman Crapo. Thank you.
Mr. Tarbert.
Mr. Tarbert. Thank you, Mr. Chairman. I am joined by my
wife, Kate; my 5-year-old son, Ben; my mother, Pat Tarbert; my
brother, Colin Tarbert; and my sister-in-law, Bonnie Tarbert.
Chairman Crapo. Well, thank you. And you are each honored
by your family who are here to support you, and I know that
they, as I just indicated, are all very proud of you. We
appreciate, again, your willingness to be of service to your
country.
Let us start with the testimony then, and, Ms. Mandelker,
please proceed.
STATEMENT OF SIGAL P. MANDELKER, OF NEW YORK, TO BE UNDER
SECRETARY FOR TERRORISM AND FINANCIAL INTELLIGENCE, DEPARTMENT
OF THE TREASURY
Ms. Mandelker. Thank you very much. Thank you, Chairman
Crapo, Ranking Member Brown, and Members of the Committee. It
is a great honor to appear before you as the President's
nominee to lead the Office of Terrorism and Financial
Intelligence. I want to thank the President and the Secretary
for their trust and confidence in me. I have had the
opportunity to meet with so many of you over the last few
weeks, and I want to thank you for the courtesies that you have
shown me. And I also look forward to working very closely with
this Committee if I am honored to be confirmed.
I also want to say I am very grateful for the tremendous
support of my family and friends, including those who traveled
to attend this hearing. I want to recognize in particular two
of my heroes and constant sources of inspiration: my father,
Gershon Mandelker, who is here today, and my wonderfully lovely
mother who passed away 12 years ago. Both of them were
Holocaust survivors who spent part of their childhood hiding
underground, in the forest, and elsewhere in constant fear for
their lives as they tried to escape the Nazis. My dad tells one
story about how he was hiding in a barn. The head of a village,
a very courageous man, had agreed to hide my dad, my
grandfather, and several others. And as they were hiding, a
group of soldiers came to the barn because they wanted to see
whether or not that was a good place to park their guns and
their horses. And so my dad hid under a haystack, and he very
distinctly remembers the soldiers coming in, walking around,
looking, and then ultimately decided that that is not where
they were going to put their horses. But he has a vivid memory
of watching the boots of one of those soldiers. If my dad had
so much as sneezed in that moment, I can assure you I would not
be here today, and my dad would not be here proudly sitting
beside me.
I grew up hearing about these stories of my parents, their
stories of survival and how they narrowly avoided death.
Unfortunately, many members of my family did not survive. Three
of my grandparents who were either killed or died as a result
of the Holocaust. But I can say that with this history, my
parents not only survived, but they went on to pursue
successful careers in Pittsburgh. They gave us a very normal
life, and they were incredibly positive role models. They
raised my brother and me with enormous love and a deep
appreciation for the opportunities that our great Nation
provides and the knowledge that we should never take for
granted our safety, security, and our freedom. I carry this
legacy, which is an important one, with me always, and as I
have told some of you, it is really what has motivated me to
public service, for I think that the opportunity to make a
difference is incredibly humbling, especially when we consider
the kinds of threats that we face today.
After 9/11, like so many other Americans, I wanted nothing
more than to contribute to the response to this terrible attack
on our Nation. After finishing my clerkship on the Supreme
Court, I immediately went to work for the Justice Department in
August of 2002, where I joined in its counterterrorism and
national security mission in positions in both the Criminal
Division and later the Deputy Attorney General's Office. With
the Nation on high alert for follow-on attacks, I was
privileged to work as part of the dedicated team that oversaw
all of the country's counterterrorism and national security
criminal cases, including those involving the illicit financing
of terrorism.
Among other positions that I held in the Government, I was
also a counselor to the Secretary of Homeland Security, where I
had a very similar focus. And then in 2006, I returned to the
Justice Department to be Deputy Assistant Attorney General in
the Criminal Division, where I supervised four major sections,
again, touching on the many issues that I will be confronted
with should I be confirmed, including just by way of example
cybersecurity, human rights money laundering, among other
cases. Then in 2009, I joined the private sector, where I
gained valuable and practical insights into the compliance
issues that financial institutions and other companies face on
a regular basis.
I am particularly honored to be nominated for this
position, which serves such an important function in our
national security, foreign policy, and economic apparatus. If
confirmed, I will strategically and tactically marshal all of
the tools of the Office of Terrorism and Financial Intelligence
and will constantly evaluate how to evolve those tools to meet
new challenges, and to always be proactive, intelligence
driven, and results oriented. I am also very much looking
forward to leading the many talented and dedicated career
professionals in the Office of Terrorism and Financial
Intelligence. And, of course, I look forward to working both
closely with this Committee and with the interagency to make
sure that we are effectively executing those tools in order to
meet the objectives that we set for ourselves and for the
country.
Thank you.
Chairman Crapo. Thank you, Ms. Mandelker.
Ms. Ricardel.
STATEMENT OF MIRA RADIELOVIC RICARDEL, OF CALIFORNIA, TO BE
UNDER SECRETARY FOR EXPORT ADMINISTRATION, DEPARTMENT OF
COMMERCE
Ms. Ricardel. Thank you. Mr. Chairman, Ranking Member
Senator Brown, Senators of the Committee, it is a distinct
privilege and truly humbling experience to come before this
Committee to be considered for Under Secretary of Commerce for
Export Administration. I am deeply honored to have been
nominated by President Donald Trump and greatly appreciate the
confidence that has been placed in me by the President and
Secretary of Commerce Wilbur Ross.
When I served as legislative assistant to Republican Leader
Bob Dole, I did not imagine that the future might hold this
opportunity, that one day I would not be preparing questions
but answering them. Perhaps my late father might have thought
this possible, not only because of his bias toward his
daughter, but because he was always optimistic about what was
possible in this great Nation--a view that carried him from
communist-controlled Croatia via Germany to the United States,
with little more than optimism in his pockets.
I wish to thank Senator Bob Dole for teaching me so much
about leadership, integrity, and fairness. I learned hands-on
that building bipartisan coalitions is essential to progress
and reaching agreements. This lesson informed how I approached
issues as a member of his staff and also how later I approached
working within the U.S. Government interagency while serving at
the Department of Defense. The ability to understand and
balance the equities of U.S. agencies and drive toward
solutions that strengthen U.S. national security is vital.
The role of the Under Secretary of Commerce for Export
Administration is consequential and one in which I will be able
to leverage my experience and skills if confirmed. The Bureau
of Industry and Security advances U.S. national security and
economic objectives by ably managing and ensuring effective
export control systems, supporting treaty compliance, and
enforcing sanctions. The Bureau's responsibilities are executed
in close cooperation with a wide range of departments and
agencies, including the Departments of Treasury, Justice,
State, Defense, and Homeland Security.
The recent announcement by Secretary Ross of record
criminal and civil penalties against ZTE Corporation is the
culmination of 6 years of investigation and highlights the
crucial functions of the Bureau's Office of Export Enforcement.
Last year, the Bureau's Export Administration office processed
nearly 33,000 license applications related to dual-use items
and items that had previously been on the U.S. Munitions List.
The U.S. retains jurisdiction over re-exports of U.S. origin
goods abroad; this is an indispensable tool to address the
potential diversion of items to our adversaries who might use
them against U.S. military forces abroad or in the development
of weapons of mass destruction.
Important also is that the licenses processed by the Bureau
of Industry and Security enable exports of U.S. goods, and
these exports mean jobs for American workers. As a former
employee of an aerospace company, I can appreciate the impact
of exports on jobs. At the same time, the health of the U.S.
defense industrial base is imperative, and in that regard,
under Secretary Ross' initiative, the Bureau of Industry and
Security has launched two investigations on steel and aluminum
imports under Section 232 of the Trade Expansion Act. In
addition, the Bureau regularly conducts studies on other areas
of the U.S. industrial base.
Secretary Ross recently said, ``Under President Trump's
leadership, we will be aggressively enforcing strong trade
policies with the dual purpose of protecting national security
and protecting American workers.'' If confirmed, I will act
vigorously to enforce U.S. export controls, embargoes, and
sanctions, as well as continuously promote and advance policies
that support U.S. industries and technologies and the American
workers who are the foundation of our industrial base.
Mr. Chairman, Senator Brown, and Senators of this
Committee, thank you for your consideration of my nomination. I
would be pleased to answer any questions the Committee may
have.
Chairman Crapo. Thank you, Ms. Ricardel.
Mr. Billingslea.
STATEMENT OF MARSHALL BILLINGSLEA, OF VIRGINIA, TO BE ASSISTANT
SECRETARY FOR TERRORIST FINANCING, DEPARTMENT OF THE TREASURY
Mr. Billingslea. Thank you. Chairman Crapo, Ranking Member
Brown, and members of the Committee, I am honored to appear
before you today as the President's nominee for Assistant
Secretary of the Treasury for Terrorist Financing.
Senators, at the outset, I thank my family--I introduced my
wife, Karen, and my two daughters, Morgan and Elsa--for
supporting my decision to accept the President's nomination.
These positions require significant family sacrifice, and I
could not undertake this without their love and their backing.
Unfortunately, my mother and father could not be here
today, but I am very happy that my sister, Rachel--who is a
career Pentagon official--is present. Rachel and her husband,
Craig, who is a chief warrant officer, have collectively served
more than 5 years in Afghanistan and Iraq, both together and
apart during their marriage, helping keep our Nation safe from
the terrorist threat. They are, in my view, Senators, great
Americans who have sacrificed much to protect our Nation.
By way of background, Rachel and I were born and raised in
Montgomery, Alabama, as your constituents, Senator Shelby. Our
father, Oliver, is the son of a cotton farmer and was, in fact,
the first to graduate from college. Our mother, Nancy, Senator
Brown, hails from Xenia, Ohio, where I am proud to say that
today we have a very large extended family and do family
reunions out there when we can. From our parents I learned the
value of stoicism and hard work, and I am deeply grateful to
them for the sacrifices that they made over the years that have
allowed me to be here today.
I have had the opportunity over the past weeks to meet with
several Members of the Committee, and I greatly appreciate that
chance and the opportunity to understand the issues that you
feel are most important with respect to the Treasury Department
and terrorist financing. And if confirmed, I look forward to
working with all Members of the Committee, and with your staff,
on this crucial national security issue.
There are four brief points that I would like to stress for
you this morning with regard to my nomination.
First is that I understand the criticality of close,
bipartisan working relationships both within the and with
Congress. From 1995 to 2001, as the Senior Professional Staff
Member for National Security Affairs on the Foreign Relations
Committee, I drafted multiple pieces of sanctions legislation,
most of which were subsequently enacted into law with
overwhelming bipartisan support. The focus of these statutes
was, and remains today, to combat the proliferation of weapons
of mass destruction and missile systems and to disrupt foreign
terrorist and trafficking networks.
Second, I appreciate how important are financial and
economic tools in the fight against terrorism. After 9/11, I
served as the Principal Deputy Assistant Secretary for Special
Operations and Low Intensity Conflict. Disruption of the terror
network's financing operations featured heavily in our day-to-
day operations and our planning. And, in fact, working very
closely with multiple Treasury offices, this Committee had not
yet created the position to which I have been nominated. That
was done a few years later. I established the first DOD Counter
Threat Finance cell, with a detailee from Treasury playing a
critical role.
Third, ``buy-in'' from friendly Nations is crucial to the
work of the office. At NATO, from 2003 to 2006, I served as our
Assistant Secretary General for Defense Investment, and my time
at NATO taught me the importance of forging close working
relationships with officials from across the Alliance. Many of
these officials remain in office today overseas and I believe
will be in a position to assist the United States in many of
the various initiatives that are either underway or which need
to be undertaken.
Finally, disrupting terrorist finance and illicit trade
requires working closely with the private sector, as the
Chairman mentioned in his opening remarks. Since 2009, I have
served as a managing director at Deloitte, where I lead the
Federal Business Intelligence Services group. We perform due
diligence into third parties on behalf of both Federal
departments agencies--the counterintelligence community, for
example--but also for commercial clients, and the purpose of
this is to protect against doing business with entities accused
of corruption, of narcotics trafficking, of money laundering,
of child or slave labor activities, or other worrisome matters.
So I bring close working relationships across the global
financial services sector, and I will leverage those
connections to advance our national security agenda.
In conclusion, Chairman and Ranking Member Brown, I greatly
appreciate the opportunity afforded by your Committee to appear
before you today as your consider my nomination. Over the past
22 years, I have had the privilege of working closely with the
Department of the Treasury on multiple terrorist financing and
financial crimes issues, and I believe I bring a unique
combination of both legislative as well as executive branch and
private sector experience to the role. If confirmed by the
Senate, I will work very closely with this Committee to drive
the policies and actions necessary to disrupt illicit finance
and terror networks.
Thank you, sir.
Chairman Crapo. Thank you, Mr. Billingslea.
Mr. Tarbert.
STATEMENT OF HEATH P. TARBERT, OF MARYLAND, TO BE ASSISTANT
SECRETARY, INTERNATIONAL MARKETS AND DEVELOPMENT, DEPARTMENT OF
THE TREASURY
Mr. Tarbert. Chairman Crapo, Ranking Member Brown, and
distinguished Members of the Committee, I am honored to appear
before you today. I am humbled by the confidence the President
has shown in me by nominating me to be the next Assistant
Secretary of the Treasury for International Markets and
Development.
I appear before you today with full recognition of the
serious responsibilities associated with the position. If
confirmed as Assistant Secretary, I would lead nine of the
Treasury Department's offices charged with protecting and
supporting foreign investment in the United States, reducing
global financial instability, fostering international economic
development, and managing key global challenges. I believe that
my professional background and desire to serve our country will
enable me to perform this role and work to keep our country
safe and prosperous.
While growing up in Baltimore, my family emphasized hard
work, education, and the importance of public service at every
level of Government. Both of my grandfathers fought in World
War II--one with the Army in Europe, one with the Navy in the
Pacific. One of my uncles was a police officer, another a
firefighter. My father went to night school to become an
accountant and eventually served as Comptroller of the Maryland
Port Administration and of the Baltimore County Community
College System. Although my father passed away after a
courageous battle with cancer, his commitment to public service
remains a guiding example for me.
Each of my adult guests today is or has been a public
servant. My mother retired as a child support enforcement
officer, my sister-in-law is a public school teacher, and my
brother just completed a term as deputy mayor of Baltimore for
economic and neighborhood development. Finally, my wife, Kate,
and I met clerking for the U.S. Court of Appeals here in
Washington. Now a full-time mom to our two young sons, she has
served in the Justice Department and as a law clerk to the
Chief Justice of the United States. I have been inspired by
their dedication to public service as well.
I myself have had the privilege of serving in all three
branches of the Federal Government. One of my most enjoyable
jobs in public service was working as Special Counsel to this
Committee back in 2009 and 2010. During that period, I had the
privilege of working closely with Banking Committee staff
members and legislative assistants on both sides of the aisle
on a number of important international economic issues. And it
was especially an honor to serve under your leadership, Senator
Shelby.
Since leaving the Banking Committee staff, I have practiced
as a regulatory compliance lawyer, with a chief focus on
international markets. In this role, I have assisted public and
private sector institutions from outside the United States make
investments in our country that created jobs for working
Americans and their families. I have also helped financial
services companies around the world comply with regulatory and
supervisory measures intended to make them safer and sounder,
thereby reducing or eliminating the possibility of future
taxpayer bailouts. In addition, I have designed compliance
programs aimed at detecting and preventing money laundering and
terrorist financing.
If confirmed as Assistant Secretary of the Treasury, I hope
to work closely with this Committee, others in the Senate and
House of Representatives, and my colleagues in the
Administration to carry out my responsibilities.
Thank you again for the opportunity to appear before you
today. I am happy to answer any questions you may have.
Chairman Crapo. Thank you, Mr. Tarbert.
For my 5 minutes of questioning, I would like to give each
one of you about a minute to just respond briefly to me about
what you see as your top one or two priorities in assuming
office. What would you use your minute for to discuss this? We
will start with you, Ms. Mandelker.
Ms. Mandelker. Thank you, Chairman. I will try to fit it in
in a minute. I will have, of course, many priorities. But first
and foremost, I want to focus very immediately on the areas
that pose the greatest threats. That is, of course, North
Korea, Iran, ISIS, Syria, Russia. I will immediately ask for a
briefing from the folks in the Intelligence Office that I will
be supervising so I can understand where we are in intelligence
in the area of threat finance.
I will also immediately want to gather all folks from all
of the components of TFI so I can understand, number one, what
are we doing in any particular area, what do we propose to the
interagency, what are our gaps, our vulnerabilities, and how
can we increase pressure using the wide array of tools, not
just sanctions, of course--FinCEN has a number of tools. TFFC
is very engaged internationally. And I will want to put myself
right in the middle of that so I can lead them in the right way
and continue to think innovatively and strategically and
tactically as to how we can further our national security
interests.
Chairman Crapo. Thank you.
Ms. Ricardel.
Ms. Ricardel. Thank you. Through the use of effective
export controls and enforcement, we need to be sure that we are
preventing the export of technology and goods to terrorists and
stemming the flow of weapons of mass destruction, while at the
same time protecting U.S. critical technologies and
competitiveness. I think it is very important as an early step
to see whether there are sufficient resources allocated to do
these important functions, to assess whether there are
potential gaps that could be filled with stricter restrictions,
for example, on the export of goods, at the same time assessing
the state of the industrial base, getting up to speed on what
the internal assessments are currently on critical areas. And I
look forward to also consulting with the Committee on areas of
concern, if confirmed, to see what will be on your priority
list.
Chairman Crapo. Thank you.
Mr. Billingslea.
Mr. Billingslea. Thank you, Mr. Chairman. I was in the
Pentagon the day they slammed the plane into the building, and
I think if you had told me at the time that we would today and
potentially my daughters would be facing the threat of
terrorism, I am not sure I would have believed you at the time.
The reason I have agreed to accept this nomination and come
before you today is because I am absolutely committed. We live
in a very dangerous world today, and I believe we have to apply
every potential source of leverage to deal with both terrorist
threats as well as State sponsors of terrorism, as well as
Nation States who are engaged in unacceptable behaviors.
And so I share Ms. Mandelker's priorities, and disrupting
these networks will be my absolute and unrelenting focus, if
confirmed.
Chairman Crapo. Thank you.
Mr. Tarbert.
Mr. Tarbert. If confirmed, Mr. Chairman, I believe my top
priority would be to ensure that the Office of Investment
Security and the CFIUS process more generally has the resources
and tools it needs to perform the function that Congress
intended it to.
Chairman Crapo. All right. Thank you very much. In fact,
you all kept within the time limits.
Senator Brown, I am going to yield a minute back.
Senator Brown. Thank you, Mr. Chairman.
Since my time is short, I would appreciate a yes or no
answer from each of you on a handful of questions. If you would
like to expand your answer, feel free, but please do it in
writing, if you would. And remember, you are under oath. I will
start with you, Ms. Mandelker, and just work my way down.
Do you commit to reply to every oversight or other letter
and request for information from me and from all other Members
of the Banking Committee in a timely manner?
Ms. Mandelker. Yes, I do.
Ms. Ricardel. Yes, I do.
Mr. Billingslea. Yes, sir.
Mr. Tarbert. Yes.
Senator Brown. Thank you. Do you commit to alert the
Committee of any attempt by the White House to interfere with,
to stall, or to change responses from your Department for
oversight information that has been requested by Congress? Do
you commit to alert the Committee of any attempt like that?
Ms. Mandelker. Well, Senator, I commit to working very
closely with this Committee, and should any issue like that
arise, I would think that we would have some consultation.
Senator Brown. That is not quite a yes.
Ms. Mandelker. Well, I would, of course, want to consult
with the Department----
Senator Brown. If the White House tries to interfere or
change responses by your Department, would you notify this
Committee?
Ms. Mandelker. Well, Senator, I would work very closely
with this Committee on a wide range of issues. I would want to
consult with the Secretary in any such case, and I will commit
to doing that.
Ms. Ricardel. Senator, I do not anticipate that this kind
of an issue would come up, that there would be any interference
in that way. I would execute, if confirmed, my duties within
the authorities of the Bureau.
Senator Brown. Mr. Billingslea.
Mr. Billingslea. Senator, as the Under Secretary nominee
has indicated, within those parameters, yes, sir.
Mr. Tarbert. Again, within those parameters, yes, sir.
Senator Brown. Also, I would appreciate a yes or no on this
bit more complicated question but one answerable that way.
Unlike past Administrations that you have worked in, senior
Government officials in this Administration have not divested
themselves of many of their assets, some overseas, some with
international partners, some unclear as to who the ultimate
beneficial owner of an interest might be. The question is: Do
you think it would be in the interest of those officials as
well as the offices you will head to undertake a process to
ensure that foreign entanglements are benign with respect to
the laws you will enforce on terrorism, on money laundering, on
sanctions, on CFIUS, and the like? Ms. Mandelker.
Ms. Mandelker. Senator, again, I would have to consult with
the ethics officials at the Department and elsewhere. I do not
think that we should--I do not have any issues of that sort,
and I would agree that----
Senator Brown. But many in the Administration do, correct?
Ms. Mandelker. I cannot--I cannot----
Senator Brown. But you know the answer to that.
Ms. Mandelker. Well, I cannot weigh in on that question. I
have not seen their financials, of course.
Senator Brown. But you read a lot. OK.
Ms. Ricardel. Senator, I can speak for myself. My ethics
letter reflects that I am going to divest of any assets that I
have that could pose a conflict of interest, and I do not have
insights into other people's personal finances.
Mr. Billingslea. Senator, as my Committee questionnaire
indicates, I am divesting, including going above and beyond
what the Office of Government Ethics required.
Mr. Tarbert. Senator, I plan to fully comply with all
applicable ethical laws and regulations, and I would assume
other public officials will as well.
Senator Brown. I think you know from my question I am not
challenging or concerned with the ethics of the four of you. I
am concerned with ethics of others in the Administration that
you have all read widely about and, frankly, I think perhaps
made some of you not so certain perhaps that you wanted to sign
up with this Administration. I will leave it at that.
Ms. Mandelker, I am sure you have read the papers today.
Can you tell me if an allied Nation in the Middle East or
elsewhere shares sensitive intelligence with us on condition
that they will control the sharing or release of it, and the
U.S. then shares that information without permission of the
country that originated it, do you think that would harm our
future ability to gather similar intelligence from that ally
and from others because it would undermine their confidence in
our willingness to protect such information?
Ms. Mandelker. Senator, that is a difficult question for me
to answer. I would have to understand the underlying facts and
circumstances and speak with the individuals who are experts in
how we do share information with other countries.
Senator Brown. I am not asking what might have happened in
the Oval Office when the U.S. President asked the American
media to leave and stayed there with the old Soviet news agency
TASS. I am not asking about the specifics because we do not
know for sure yet exactly what was said. But I am asking if, in
fact, an allied Nation which shared sensitive intelligence with
us on the condition that we not share it or release it without
their approval, if they did it, would that harm our future
ability to get information and gather similar intelligence from
that ally or other allies?
Ms. Mandelker. Again, Senator, in the absence of
understanding any particular set of facts and circumstances, it
is difficult for me to answer that question. Of course, we
should be careful in how we share information with our allies
and elsewhere, but I cannot answer a hypothetical when I do not
understand all the complexities that are involved.
Senator Brown. All right. Thank you.
Chairman Crapo. Senator Shelby.
Senator Shelby. Thank you, Mr. Chairman.
I believe this is a great group, the four of you eminently
qualified for your jobs here. I have a few questions, and I
will start with you, Ms. Mandelker. You have been nominated to
be the Under Secretary for Terrorism and Financial
Intelligence. That is at Treasury. Tell us and share it with
the American people who are watching how important the war on
terrorism--that we win this war, that we contain it and try to
destroy it and the connection to financial intelligence.
Ms. Mandelker. Thank you for that question, Senator. It is,
of course, incredibly important. It is what I dedicated myself
to when I joined the Justice Department in 2002. I think that
the Office of Terrorism and Financial Intelligence has
tremendous tools which have been used very successfully since
the office was stood up in 2004, and it is one that I would
dedicate myself to every day.
Senator Shelby. Ms. Ricardel, you have had great experience
in the private sector but also starting out with the Majority
Leader here in the U.S. Senate, Senator Dole. What do you
believe will be your biggest challenge as Under Secretary of
Commerce for Export Administration? Will it be protecting
American business? Or what will it be?
Ms. Ricardel. Thank you, Senator, and I appreciated the
opportunity to meet with you the other day. I believe that
strong national security requires a strong defense industrial
base. So in a way, I do not see the question as either/or,
protecting defense business or protecting our national
security, because we need strong defense capabilities, and that
is what our defense industry brings us with the right guidance.
Senator Shelby. Mr. Billingslea, you bring broad experience
into your nomination as Assistant Secretary of the Treasury for
Terrorist Financing. Of course, a lot of this overlaps
financial intelligence and what we do with it. But terrorists
cannot go very far in today's modern world without financing,
can they? They have got to have it one or the other. So your
role has got to be central to our fight against terrorism all
over the world globally.
Mr. Billingslea. Thank you, Senator. Yes, I believe very
strongly in the position that this Committee and the Congress
has established and its value in supporting the Under
Secretary, particularly in the diplomatic arena, engaging with
Nations across the spectrum.
If I may just very quickly add that we have come a long
way--I remember the very first time I heard of a hawala and
tried to understand what that was back 15 years ago. Our
country has come a very long way in our ability to combat this
kind of illicit finance.
Senator Shelby. But the challenge goes on.
Mr. Billingslea. The challenge goes on.
Senator Shelby. The terrorists are very resourceful and
very smart in a lot of ways, are they not?
Mr. Billingslea. They are thinking--they are very thinking
and creative people.
Senator Shelby. And they are thinking in tomorrow's world
through the Internet and everything that goes with it.
Mr. Billingslea. Yes, sir.
Senator Shelby. And that is our challenge.
Mr. Billingslea. Absolutely, sir.
Senator Shelby. Mr. Tarbert, you are no stranger to this
Committee as you worked here before and you did a lot of great
work. We are glad to have you back. What do you believe is
going to be your biggest challenge?
Mr. Tarbert. If confirmed, I think the biggest challenge
would be really making sure that no investment gets approved as
part of the CFIUS process that has any unresolved national
security concerns, so to really make sure that there are no
unresolved national security concerns before CFIUS certifies it
to Congress.
Senator Shelby. How do you balance that with the concerns
of not exporting things that are so important to our national
security with ordinary commerce? Isn't that part of the----
Mr. Tarbert. The test right now focuses solely on national
security, and so as I read the statute, it does not include
considerations of commerce. But what I would say is that the
very fact that CFIUS sits in the Treasury Department--the idea
is we want to encourage foreign investment, and the only
exception to that is where there is a national security issue.
Senator Shelby. Do you believe that the CFIUS statute as
now written, which we were all involved in on this Committee,
is sufficient for your work?
Mr. Tarbert. It is a great question, Senator Shelby. I
understand there are discussions now about whether that is the
case. There is also a GAO report due out. So, if confirmed, I
would obviously want to ensure that the CFIUS process, first of
all, is doing the job that Congress intended, but, second,
whether there are any gaps.
Senator Shelby. Would you work with this Committee on any
deficiencies that are brought up and maybe we need to address?
Mr. Tarbert. If confirmed, I absolutely would, Senator.
Senator Shelby. Thank you, Mr. Chairman.
Chairman Crapo. Thank you.
Senator Reed.
Senator Reed. Thank you very much, Mr. Chairman, and thank
you all for your willingness to serve.
I want to follow up with a variation on one of Senator
Brown's questions, and I will go down the line. Are you aware
of any formal or informal guidance from the White House that
urges limiting or not responding to legitimate oversight
letters from Members of Congress, particularly minority Members
of Congress? We will begin with Ms. Mandelker.
Ms. Mandelker. No, Senator, I am not.
Senator Reed. Ma'am.
Ms. Ricardel. No, sir, I am not.
Mr. Billingslea. Senator, I am not.
Senator Reed. Thank you.
Mr. Tarbert. No, Senator Reed.
Senator Reed. Thank you very much.
Mr. Tarbert, in 2012, the U.S. Joint Economic Security
Review Commission issued a report that essentially said a lot
of the investment by Chinese companies is based on strategic
rather than purely economic interests because of subsidies they
receive from the Government, because many of them are entities
of the Government in most respects. If this is the case, and if
they are doing this, should we look again at our laws with
respect to evaluating Chinese acquisitions of U.S. interests in
U.S. companies?
Mr. Tarbert. I think it is an excellent question, Senator.
My understanding is that there are discussions now about
pending legislation as well as a GAO report that is coming out,
and I think one of the questions that was listed is the one
that you are addressing.
I do know that currently as part of the CFIUS process,
which was required by this Committee in FINSA, State-owned
enterprises automatically trigger a presumption of an
investigation. But, if confirmed, I commit to working with this
Committee to discuss this issue and others.
Senator Reed. And you would sort of take the material that
is being developed now and use that to advise us on statutory
changes that might be necessary or you would use your current
authority to try to resist these types of acquisitions?
Mr. Tarbert. If confirmed, I would imagine I would do both.
Senator Reed. Thank you.
Ms. Mandelker, China is providing significant support to
North Korea, and they are doing it through financial means;
they are doing it through their banking system. How would you
propose to disrupt this trade, which, if we do not, could lead
us to a very serious confrontation on the peninsula?
Ms. Mandelker. Thank you for that question, Senator. I
share your concerns. I think it is very important to engage
very proactively with China to curb the support that is going
to North Korea. I note, of course, that Secretary Tillerson,
the President, and others in the Administration have engaged in
a very active dialog with the Chinese, and not just with China
but also, of course, with other countries. In fact, over the
weekend there was a call for all countries to enhance their
sanctions regimes when it comes to curbing the North Korean
threat.
I think that we have to be very active in how we track,
trace, and ultimately interdict illegal assets that are going
to North Korea. We have to be very active in our enforcement of
illicit actors that are violating our sanctions. We have to be
very active in how we track down the intelligence, and we have
to constantly consider what levers of pressure we are going to
apply if other countries do not, in fact, abide by our call to
further isolate North Korea.
Senator Reed. Thank you very much.
Ms. Ricardel, there have been changes recently in the items
that can be sold, basically moving some items from the U.S.
Munitions List, the State Department's, the Commerce-
administered list. Do you have any comments on those changes
and any perspective about how you would enforce them?
Ms. Ricardel. Senator, thank you. I am aware of the things
that have been moved from the U.S. Munitions List, and my
understanding is that there is still a vigorous export control
enforcement process, whether it is on the Munitions List or on
the Commerce Control List. Certainly, dual-use technologies are
often challenging, but that is why there are controls not just
on what the end use is, but also end users.
Senator Reed. Thank you very much.
Thank you, Mr. Chairman.
Chairman Crapo. Thank you.
Senator Tillis.
Senator Tillis. Thank you, Mr. Chair. Thank you all for
being here. I appreciate the three of you that were able to
come into my office, and I am sorry, Ms. Ricardel, we were not
able to meet together. But Robert Wilkie speaks very highly of
you, and his opinion means a lot to me. So I thank you for
being here and congratulations to the family.
Ms. Ricardel. Thank you, Senator.
Senator Tillis. I have a general question, and it relates
to the current--the person in an acting capacity--we have in
acting capacity. We are looking to confirm people to move into
the organization. Can you very quickly down the line describe
why you think it is problematic to maybe delay the
confirmations and what that would prevent the head of the
organizations that you are going to be confirmed to, how that
would affect the day-to-day operations, either morale or
execution? Mr. Tarbert, in your particular case, acting on the
recommendations that come from the GAO? So just down the line
why you would emphasize the importance of an expedient
confirmation in your roles?
Ms. Mandelker. Senator, I know from my prior experience
having worked in the Government that it is very important to
have your political appointees confirmed. The authority that
somebody speaks with once they have been confirmed by the
Senate is much greater. Your ability to engage in the right way
with the international community is very much heightened when
you have a confirmed person in that position. And I think that
the career professionals within any department are looking for
direction and leadership, and they want to know what their next
steps are, where is the office going to be taken under the
leadership of the new appointee, and it is very important to
have that person in there as quickly as possible so that they
can carry on and get to the--I am sure they are all dedicated
and working very hard, but they can get to the business of
understanding what the direction is going to be.
Senator Tillis. Ms. Ricardel.
Ms. Ricardel. Thank you. I would agree with my colleague's
assessment on the internal and external aspects of this. Also,
policymaking tends not to move forward when you have people in
an acting capacity.
Senator Tillis. Is it fair to say that we have some open
switches on policy that we need to move forward on?
Ms. Ricardel. Yes, sir.
Senator Tillis. And every day delayed is a delay in policy
that has probably got bipartisan support?
Ms. Ricardel. I would agree with that assessment.
Senator Tillis. Thank you.
Mr. Billingslea. Senator, on top of that, events are moving
ahead, and we have a worsening situation in North Korea, to
name just one flash point, where incoming Administrations are
in the process of--you know, they always contend with new
issues, and this Administration is going through a review on a
variety of issues. To the extent that this Committee trusts our
judgment, it might be better to have us involved in those
discussions sooner rather than later.
Mr. Tarbert. I will not repeat all the things that my
colleagues said, all of which I think go to your question.
Specifically with respect to CFIUS, Congress enacted FINSA in
2007 for the main reason of making sure that there was a
Senate-confirmed appointee who would certify the transactions
once approved. So that is an example of where specifically
Congress had intended there to be a political appointee.
Senator Tillis. So it sounds like to me consensus that a
lot of--the threats are increasing every day, and you are going
to be in very, very important roles that either affect our
national security or homeland security or our economic
relationships with other--in a global economy. So this delay,
it seems to me, would not be healthy for the areas that you are
being tasked with trying to improve our situation, our safety
and security. I do not see anyone that wants to question that.
I want to go to maybe a specific question, and, Heath, this
is back to you, and it relates to CFIUS. You know, we are in an
increasingly complex world where we want to attract global
investment, but sometimes that global investment could wade
into an area where we have to assess national security
interests. How do we modernize or how do we get to a point--it
could be about the data that a global investor may have access
to. It could be about trade secrets, other things. How do you
balance that and make sure that we have got a modern view of
how that works? Because we are in a global data environment and
economy so----
Mr. Tarbert. It is an excellent question, Senator. I
probably do not have a fulsome answer for you now, but I think
you raise an excellent point, which is that we want to make
sure for those foreign investments that do not raise actual
national security issues that they are certified in a fast
process so we can have foreign investment in the United States
that creates jobs for American workers and families. Then, of
course, we want to make sure that for those transactions that
do raise genuine national security issues, that we take the
time we need to really evaluate them.
Senator Tillis. Ms. Ricardel, I was going to ask you a
similar question, but my time has expired, and I admire the way
the Chair keeps us on time.
Chairman Crapo. I appreciate it. Thank you.
Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman. The nominees we
are considering today are critical components of our national
security and foreign policy, particularly in combating
terrorism and implementing what I consider to be a peaceful
tool of foreign diplomacy, including sanctions.
And I would agree with the answer you gave Senator Tillis,
Ms. Ricardel, in that had we not held up Adam Szubin, that
being Republicans holding up Adam Szubin, for a critical
position, there is a difference between someone who is acting
or someone who has the full authority of the position. And so I
wish that my colleagues had had the same focus and attention
and commitment as they seem to have now. But at least it is a
good moment to move to the understanding of the importance of
these positions.
Ms. Mandelker, if you are confirmed, you will oversee a
wide range of financial tools that the United States
strategically employs to target the finances, assets,
laundering office of terrorist networks, dictators, other
actors who facilitate nefarious activities against U.S.
interests. I have often been not only the advocate but the
architect of those sanctions in Iran, Russia, and North Korea.
And what I want to hear from you is: Are you committed to
robustly enforcing the law in all of its elements as it relates
to these sanctions, these different financial consequences that
we create on actors that are adverse to the national interests
and security of the United States?
Ms. Mandelker. Absolutely, Senator. That is one of the
primary reasons I took on this job, because I am committed to
robustly enforcing those authorities.
Senator Menendez. And you will not only be someone who will
be an implementer of the sanctions that Congress passes into
law or that the President by Executive action does, but also
you will be at a table in interagency processes in which there
will be a role for you to be an advocate. When it is
appropriate, will you be an advocate when we are looking to
have a peaceful diplomacy tool against an adversary who defies
the national interests of the United States? Will you be an
advocate of using these different tools, sanctions, financial
limitations, and whatnot, in that context?
Ms. Mandelker. Yes, Senator, one of my primary roles will
be to be that advocate within the----
Senator Menendez. Can you commit to the Committee--the
Office of Foreign Assets Control, which is an important office
within the TFI, we have given it an overwhelming amount of work
to do. They do exceptional work. I do not always agree with
their decisions, but they do exceptional work. And so the
question is--I am not sure that anybody has analyzed whether or
not OFAC actually has the resources to do the work that is
necessary to make sure that sanctions are enforced, because any
law without enforcement is meaningless. Will you commit to the
Committee upon confirmation to go ahead and review and
understand whether they have the assets? And if they do, that
is fine. But if they do not, that you will be an advocate for
increasing their assets in order for us to see the law
implemented?
Ms. Mandelker. Yes, I will commit to doing that as well.
Senator Menendez. Thank you very much.
Mr. Tarbert, I am seriously concerned about--I want foreign
investment in the United States, but I am seriously concerned
when that foreign investment potentially undermines national
security questions. The reality is with Russia we have seen
escalated attacks on the United States, particularly in its
cyberwarfare against the United States. I think that it would
be naive to approach any potential acquisition, for example, by
Russia of critical national security infrastructure when they
have already demonstrated their affinity for executing
cyberattacks to disrupt energy grids in Ukraine, using the
Russian oil and gas industry to manipulate prices in Eastern
European economies. We have seen that they are willing to do
this in different parts of the world.
Last year, due to increasing financial pressure as a result
of Venezuela's financial crisis, PDVSA, the State-owned oil
company, pledged nearly 50 percent of Citgo shares to Rosneft,
which is a Russia State-owned oil company, in exchange for a
loan. Not only do they have that 50 percent potentially if
PDVSA defaults, the Venezuelan oil company, but they may have
purchased additional shares on the open market, which puts them
as a majority shareholder. They own Citgo in the United States
which has 48 U.S. petroleum product terminals, three refineries
in Texas, Louisiana, Illinois, nine pipelines throughout the
country.
Do you consider that possibility of Russia owning Citgo a
clear element of what we should be looking at CFIUS to ensure
that the national interests of the United States are not
compromised?
Mr. Tarbert. Senator, I will refrain from discussing any
particular transaction, but what I would say is that, if
confirmed, any covered transaction would be examined thoroughly
for any national security concerns.
Senator Menendez. Well, is this going to be the possibility
of an instance of first impression, because we have already a
foreign company, PDVSA, a Venezuela-owned company, owning
Citgo. Now you would see the possibility of Russia owning that
company as a result of a default of the debt obligation. And I
would hope that if you are to be confirmed, you will make sure
that we are ensuring that the critical infrastructure of the
United States does not fall in the hands of a foreign
Government that has shown its hostility to the United States.
Mr. Tarbert. If confirmed, I would take all action as
appropriate to ensure our national security interests are
protected, including relying upon our intelligence community
for reports on Nations that have hostile intentions.
Senator Menendez. Thank you, Mr. Chairman.
Chairman Crapo. Thank you.
Senator Kennedy.
Senator Kennedy. Thank you, Mr. Chairman.
Thank you all for your service and for your past service.
You all have very impressive resumes. If you could answer my
questions in 30 seconds or less, I would be grateful. We only
have 5 minutes.
Ms. Mandelker--am I saying that right?
Ms. Mandelker. Yes.
Senator Kennedy. Is Iran cheating with respect to our
nuclear agreement?
Ms. Mandelker. Well, Senator, as I am sure you know, there
is an ongoing review that is underway within the Administration
now to evaluate the JCPOA and our Iran policy. I am not part of
that process at this point. I would look forward to learning
more about the answer to your question, should I be confirmed.
But I do not have--I am not privy to the intelligence today. I
am very concerned about the activity that we are seeing in
Iran.
Senator Kennedy. OK. That was pretty evasive. That is good.
Do you think the International Atomic Energy Agency is
doing a good job in terms of transparency and telling us what
is going on?
Ms. Mandelker. Again, I am not privy to the intelligence. I
am not in the Administration----
Senator Kennedy. I get it. I get it.
Mr. Billingslea, does President Vladimir Putin have assets
in the United States?
Mr. Billingslea. Senator, I do not know that.
Senator Kennedy. Who would know that in Government, either
held in his name or in a nominee's name?
Mr. Billingslea. That certainly is something that I would
hope the intelligence community is investigating for the
purpose of understanding where assets are held, not only in the
United States but potentially in offshore accounts elsewhere in
the world.
Senator Kennedy. But let us start with the United States.
You have had a lot of experience in Government. Do you believe
that the U.S. Government has that information?
Mr. Billingslea. I do not know if they have that
information, Senator.
Senator Kennedy. I know that, but I am asking you, based on
your experience, if you think we likely do.
Mr. Billingslea. I genuinely do not know. It depends on how
clever he has been at hiding his assets.
Senator Kennedy. All right. Well, let me ask you this: Tell
me one more time where that information could be obtained if
somebody had it.
Mr. Billingslea. I would direct that question to Senator
Coats, DNI Coats, the Director of National Intelligence.
Senator Kennedy. OK. Mr. Tarbert, you have got a fine young
man here. He has been very good. Can you give me your thoughts
about Glass-Steagall?
Mr. Tarbert. My understanding is that the Administration is
considering a 21st century version of the Glass-Steagall Act. I
do not have any insight into what that is. I know Members of
this body have introduced legislation of perhaps a similar
nature. I do not have any views at this point, but I look----
Senator Kennedy. You do not have any opinion at all about
it? You have written extensively. What do you think of----
Mr. Tarbert. Well, my----
Senator Kennedy. Good idea or bad idea? I am not asking you
about the Administration. I am asking you.
Mr. Tarbert. What I would say is that I believe that
Federal deposit insurance should not subsidize nonbanking
activities. Now, that is the current law of the land. It should
not be controversial. I know there is a debate as to whether it
has, in fact, been achieved. Glass-Steagall is obviously a
prophylactic measure to address that, but it is not the only
measure. So I look forward to seeing--I am not sure in my
position, if confirmed, I would have any role in domestic
financial legislation.
Senator Kennedy. I know, but I have read your resume. You
have got deep experience in this.
Ms. Ricardel--am I saying that right?
Ms. Ricardel. Yes, Senator.
Senator Kennedy. Could you give me your thoughts, if you
have any, about the Belt and Road Initiative? Is it going to
work? Is it worth the money? Is it something that we should be
concerned about in terms of geopolitical effects?
Ms. Ricardel. Senator, I have only read some of the news
reports. I would certainly want to look into it further, if
confirmed, and see what intelligence we have on what other
internal information we may have on it.
Senator Kennedy. Do you know if Vladimir Putin has assets
in the United States?
[Laughter.]
Ms. Ricardel. No, sir, I do not.
Senator Kennedy. Do you know who I could talk to?
Ms. Ricardel. I think my colleague directing you to
Director Coats----
Senator Kennedy. He was not asked that question----
Ms. Ricardel. ODNI Director Coats would probably be the
right place to start.
Senator Kennedy. All right. Thank you, Mr. Chairman.
Chairman Crapo. Thank you.
Senator Tester.
Senator Warren. He has offered to let me go ahead.
Chairman Crapo. Senator Warren.
Senator Warren. Thank you, Senator Tester, and thank you,
Senator Warner. I appreciate it.
So there are many questions about disturbing ties between
the Trump administration and the Russian Government, and thanks
to pressure from Congress, the Administration is currently
enforcing sanctions on Russia. But I remain concerned that
Russian influence could cause President Trump to roll back
these sanctions.
Russia's behavior has not changed. In fact, last week, the
Commander of Cyber Command publicly told the Armed Services
Committee that he had seen no reduction in Russian
cyberattacks. We know that Russia hacked into the American and
French systems to try to influence the outcome of national
elections. We also know that Russia is still illegally
occupying Ukraine territory.
Ms. Mandelker, as far as you know, based on public
information, is Russia still engaging in cyberattacks and
violating Ukraine's territory?
Ms. Mandelker. Well, Senator, ODNI Coats testified about
that last week.
Senator Warren. So is your answer yes?
Ms. Mandelker. According to his testimony, they are still
engaging in problematic cyberactivity. I, of course, do not
have access to----
Senator Warren. So the answer is yes----
Ms. Mandelker. ----the intelligence myself.
Senator Warren. OK. The answer is yes?
Ms. Mandelker. According to ODNI Coats----
Senator Warren. OK, according to all the information
available. OK. So let me just ask then, should we roll back our
existing Russia sanctions without meaningful changes in
Russia's behavior?
Ms. Mandelker. No, Senator, I do not think so. Secretary
Tillerson has spoken to that particular issue, and I----
Senator Warren. So you will strongly support keeping those
sanctions in place unless Russia changes its behavior?
Ms. Mandelker. Yes.
Senator Warren. Good. If you are confirmed to this job, we
are going to expect you to be tough on Russia.
The nuclear deal between the United States, five other
world powers, and Iran imposed limits on Iran's nuclear program
and placed it under rigorous monitoring and inspections. Iran
receives relief from economic sanctions as long as it remains
in compliance with the agreement.
Now, Donald Trump threatened to rip up the Iran deal, but
last month, the Trump administration certified that Iran is
complying with the nuclear deal, which is required for Iran to
get sanctions relief and to keep the agreement intact.
Ms. Mandelker, if confirmed, you are going to be in charge
of the Iran sanctions enforcement at Treasury. So do you agree
with the Trump administration's recent conclusion that Iran is
complying with the nuclear deal?
Ms. Mandelker. Senator, I would defer to the Secretary of
State on that. I do not have any reason to doubt it, but, of
course, I am not in the Administration. I do not have access
to----
Senator Warren. OK. But the Secretary of State has said, so
you would at least presumptively say yes and agree? That is
what you are telling me?
Ms. Mandelker. Correct.
Senator Warren. I just want to make sure.
So we expect Iran to live up to its commitments in the
nuclear agreement. My question is: Should the United States do
the same?
Ms. Mandelker. Well, Senator, as I think you know, the
Administration is undertaking a 90-day review of the Iran
policy and the JCPOA. As a general matter, I think the United
States should live up to its commitments when it enters into
international agreements.
Senator Warren. And is there some reason that you think
there should be an exception in the case of Iran, if Iran is
living up to its part of the agreement, that the United States
should somehow back away from its part of the agreement?
Ms. Mandelker. Again, that very subject is part of the 90-
day review, but as a general matter, to the extent that we have
agreements, I think that the United States should live up to
those agreements.
Senator Warren. And that would also apply in the case of
Iran?
Ms. Mandelker. Yes.
Senator Warren. All right. Thank you.
You know, the Iran nuclear deal is not perfect, but it is
still our only realistic option to peacefully prevent Iran from
developing a nuclear weapon. If the United States tears up the
deal, we isolate ourselves instead of Iran, and we empower the
Iranian hardliners who reject engagement with the West. I
believe that makes the world less safe instead of more safe.
Thank you, Mr. Chairman, and thank you again, Senator
Tester and Senator Warner. And I would note I finished a minute
early.
Chairman Crapo. Thank you.
Senator Cotton.
Senator Cotton. Ladies and gentlemen, thank you all for
your testimony today and for your willingness to serve your
country, once again in many cases, and thank you all to the
family sitting behind you for supporting your family members
for going back into Government.
Ms. Mandelker, Senator Warren was just asking you about
preserving Russian sanctions. Many of us over the last 2 or 4
years have advocated for even tougher sanctions against Russia.
The Obama administration opposed those. Do you think there is
room to add additional sanctions to Russia if the product
review that is being undertaken now concludes that that would
be in the United States' interests?
Ms. Mandelker. Well, if the policy review that is being
undertaken comes to that conclusion, of course, as the Under
Secretary of the Treasury, if confirmed, it would be my
responsibility to lay out those options. And, of course, there
is always room for enhanced capabilities.
Senator Cotton. Enhanced sanctions capabilities that the
Obama administration refused to pursue for 8 years.
Ms. Mandelker. Well, I cannot speak to the Obama
administration, but I can assure you that I will lay out all of
the potential options on the table.
Senator Cotton. I can.
Mr. Tarbert, I want to talk briefly about CFIUS and its
role. What is its primary purpose, to promote investment into
this country from abroad or to protect our security?
Mr. Tarbert. To protect our security.
Senator Cotton. When the call is close, do you view that
the tie, so to speak, should go to protecting our security?
Mr. Tarbert. The test by statute is no unresolved national
security issues. So if there is a member agency that has a
problem, then there is no tie. That trumps.
Senator Cotton. It is an interesting statutory test, isn't
it, that all issues have to be resolved in favor of protecting
our security before you get to the actual business case for the
investment?
Mr. Tarbert. Yes, and I would say there is not even a
business case for the investment. It is presumed----
Senator Cotton. But speaking colloquially.
Mr. Tarbert. Yes, absolutely.
Senator Cotton. Is there room or need for reforming the
CFIUS statute and process?
Mr. Tarbert. If confirmed, that is something I would like
to consider and look into. I do not know whether statutory
changes are warranted or whether it is a matter of regulatory
change or even just simply a resource issue. But that is an
issue that I commit to studying, if confirmed.
Senator Cotton. Ms. Ricardel, you look like you might have
something to add?
Ms. Ricardel. No, I do not. I do think it is a very
important statute, CFIUS. Commerce has an input into the
process and there is a lot of legislative input and legislation
regarding new ideas, which, if confirmed, I would look at
closely.
Senator Cotton. Thank you. I would simply say that while we
want to promote investment in this country and there are many,
many legitimate reasons why foreigners want to invest directly
into the largest and most dynamic economy in the world, our
foremost concern obviously has to be the protection of our
national security.
Ms. Mandelker, I want to speak in general about the
offshore wealth protection and management industry. There are
many countries, or you might call them ``statelets'',
oftentimes in the Pacific or in the Caribbean or around the
waters of Europe, that specialize in helping people hide or at
least obscure the origins of certain kinds of wealth. Many
times these are used by nefarious people for nefarious
purposes--dictators and their families who are stealing
national wealth, oligarchs, criminals, terrorists, deadbeat
husbands who do not want to reveal assets to the wives they are
about to divorce. But at the same time, there is a legitimate
business purpose for American corporations in particular who
are dealing in the global economy to create corporate entities
overseas.
How could we as a Congress balance those two competing
interests by making sure that American businesses can remain
competitive in the global market, but at the same time trying
to get after some of the illicit monies that are being hidden
in lands that oftentimes have more bank accounts than they have
residents?
Ms. Mandelker. Well, Senator, of course, my responsibility
will be to make sure that we understand who the beneficial
owners are, how can we identify who the illicit actors are. Of
course, I would be happy to study that issue further. I think
it is--you point out that it is an important balance, and I
would want to review that with not just the Treasury
Department. It is really a much wider question that would also
go to the Justice Department and other agencies.
Senator Cotton. It goes to Treasury and the IRS as well. It
is a difficult question because American businesses do have
their legitimate reasons to have dealings in some of these
overseas territories. But at the same time, I think it is fair
to say that there are a lot of nefarious characters around the
world and some Americans here who are hiding assets from
spouses about to be divorced, for instance, who are able to
move billions and sometimes even trillions of dollars in
aggregate around the world. And I think it is something that
this Congress should address, and it is something that we need
to address because we do not want them to take advantage of the
U.S. financial system or to buildup the kind of entrenched
domestic interests that you have seen now in some Western
European capitals that influence the policy of those capitals
toward certain countries. So thank you for that commitment.
Thank you all again for your testimony and for your
willingness to serve.
Chairman Crapo. Thank you.
And back to you, Senator Tester.
Senator Tester. Thank you, Mr. Chairman. I appreciate you
having this hearing today, and I appreciate how you run this
Committee.
We have got four appointees here today for important
positions that appear to be well qualified, and I want to thank
you for being willing to serve in these capacities. It has
occurred to me this is not the first time we have had four
well-qualified people. It may be the first time we have had
four well qualified, by the way, because usually it is one at a
time. But it does take me back to a time when I would wonder if
we would have this hearing at all if we had a different
President that had just fired the Director of the FBI
apparently for doing an investigation, maybe another President
or not, and a President who has just been accused of
transferring top secret information to a foe of ours. And I
just wonder if we would be having this hearing at all if it was
on a different foot.
But, nonetheless, I appreciate you guys coming forward and
being willing to serve. I think your positions, as has been
indicated earlier, are very, very important, and we need to
take this seriously.
I am going to start with you, Ms. Mandelker. First of all,
I want to thank you for telling a little bit about your life
story and your father's story. I was watching your father as
you were telling that story, and it was etched on his face what
was going through his mind, and so I appreciate that very much.
As the Senator from North Dakota and I were visiting, this is a
country of immigrants, and you have proven that, both you and
Ms. Ricardel.
The Ranking Member asked a question about an allied Nation,
an ally of ours that had given us sensitive information, and
that sensitive information was handed over to a foe, whether
that would impact that ally of ours giving further information.
I do not know the specifics of that question, but I thought it
was pretty clear, and I do not think you gave him a clear
answer, and so I am going to revisit it.
If an ally of ours gives us sensitive information and that
sensitive information was transferred to an enemy of ours and
the ally's, do you think it would impact that ally giving us
further sensitive information?
Ms. Mandelker. Senator, I do not know the answer to that
question. I think it would have to depend on the particular set
of facts and circumstances. I think----
Senator Tester. Which is what you said before.
Ms. Mandelker. I think----
Senator Tester. The question is: Wouldn't human nature
dictate that, hell, no, they would not give us information
again?
Ms. Mandelker. Again, I think it depends on the
complexities of the relationship, the type of information that
you are--that was communicated, the assurances that had been
given on either side. So it is difficult for me to answer a
hypothetical without understanding all of the facts and
circumstances. Of course, I agree that it is very important to
safeguard the intelligence that we receive.
Senator Tester. OK. This has not happened to me as a
Ranking Member, but it has happened to many of our Ranking
Members, and it is what the Ranking Member of this Committee
said, that we ask people from the Administration for
information, and they are either directed by somebody above
them or they choose not to give information back. This is a
question for all four of you. If we ask a question, either
verbally or in writing, will you promise to get back to us?
Ms. Mandelker. Yes.
Ms. Ricardel. Yes, sir.
Mr. Billingslea. Absolutely.
Mr. Tarbert. Yes.
Senator Tester. OK. Thank you. Going back on the Russia
stuff for a second, Ms. Mandelker--and Senator Cotton talked
about it for a little bit, and Senator Warren talked about it,
too--it is apparent that Russian officials have been involved
with Syrian leadership for some time. There have been innocent
civilians killed in Syria due much, I think, because of that
relationship. Do you think that that should require further
sanctions on Russia, that relationship and what Syria has done
because of that relationship?
Ms. Mandelker. Well, Senator, I am, of course, just like
you, very disturbed by what we are seeing in Syria, including
the news that we heard yesterday. Whether or not we go the
route of sanctions is a difficult and complex question, and----
Senator Tester. Wouldn't it be smarter to do that than put
boots on the ground or drop bombs? Wouldn't that be the smart--
--
Ms. Mandelker. Well, going the non-kinetic way is obviously
a more peaceful--is a more peaceful solution, but, again, it is
difficult for me to address what are our options or what
decisions we might make in any particular circumstance.
Sanctions is one very important tool that we have to address
behavior that we are concerned by. It is not the only tool, and
we would want to consider it in light of all of the policy
considerations that----
Senator Tester. But the sanctions are a tool that you are
in charge of.
Ms. Mandelker. That is right, Senator.
Senator Tester. OK. Let us talk about the U.S. trade
embargo against Cuba. Do you believe that embargo should be
lifted?
Ms. Mandelker. Senator, that is something that I would want
to study, should I be confirmed, and carefully review within
the Administration. I know that there is an ongoing policy
review about Cuba that is----
Senator Tester. How about exemptions----
Ms. Mandelker. ----I do not want to prejudge that.
Senator Tester. Would you agree there should be some
exemptions? I am taking some of Warner's minute, by the way. Do
you think there should be exemptions to that trade embargo?
Ms. Mandelker. Again, it is something that I would commit
to studying and to reviewing. I do not want to prejudge the
outcome of that question before I have a chance to look into it
further.
Senator Tester. Thank you for being here. You are all
really good. I would just hope for better answers because you
guys know what you think. You are smart people. You are a hell
of a lot smarter than the people up here. OK?
Thank you very much.
Chairman Crapo. Senator Warner.
Senator Warner. I take exception to that.
[Laughter.]
Senator Tester. Sorry.
Senator Warner. Ms. Mandelker, I appreciated the meeting we
had on May 4th in my office, and as I said at that point, you
have had some very strong recommendations, people that we
mutually know. And echoing what Senator Tester said, I think
your background shows that you are well suited for this
position in the Administration.
But as we discussed in my office, Senator Burr and I, in
our role of leading the Intelligence Committee's Russia
investigation, sent a letter to Treasury's Terrorism and
Financial Intelligence Office on April 26th. In that letter we
requested documentation from FinCEN that will be absolutely
critical to the Russia investigation. Our asks include things
like the FinCEN flash notices and the 314(a) requests.
I know that we have received a preliminary response from
Treasury that they are ``working on it.'' Well, I got to tell
you, that is not good enough for an investigation that is so
critical, that is dominating the news, that is dominating
Americans' attention, that we are virtually a month later and
we are getting a ``working on it.''
So as I told you in my office, I cannot support moving
forward with your nomination until the questions that Chairman
Burr and I get a full answer. This investigation, I believe, is
the most important thing I will ever have taken on in my public
life, and we are going to need the full cooperation of not just
Treasury but all aspects of Government if it is appropriate for
us to look into those areas. And, clearly, the follow-the-money
route is one of the areas that is critically important.
Mr. Billingslea, I understand that you were a member of the
Trump transition team supporting national security. I also
understand from press reports that you were instrumental in
preparing Lieutenant General Flynn for a meeting with Russian
ambassador Kislyak. In those same press reports, there was
information about your efforts to ensure that General Flynn
understood the risks of talking to Ambassador Kislyak and that
you sought classified information about the Ambassador for
General Flynn to ensure that he was fully aware of the risks he
was taking.
Now, I appreciate, again, your background as well. I think
you are well qualified. I want to simply state for the record
as well I appreciate the fact that you voluntarily came in and
talked to Intelligence Committee staff yesterday, and I think
that was a sign of good faith, and I appreciate your
willingness to continue to cooperate if there is other
information we need.
So I want to ask all four of you, and recognizing that we
are in this investigation going in areas that, frankly, are
uncharted territory, we have access to raw intelligence that
has never been provided before because the potential charges of
collaboration or collusion between a foreign power and a
campaign operation and potentially an Administration have never
been explored before.
It has taken us some time, but the intelligence community
has cooperated in those efforts because I think they realize
how serious it is. And, if anything, the attention and focus
gets even hotter in light of some of the President's actions
last week.
So what I am asking all four of you, but particularly Ms.
Mandelker and Mr. Billingslea, would be that, should you be
confirmed, will you cooperate with the requests of the
Intelligence Committee to provide information that is requested
and do that in a timely manner and a complete manner?
Ms. Mandelker. Yes.
Mr. Billingslea. Yes, Senator.
Ms. Ricardel. Yes, Senator.
Mr. Tarbert. Yes, Senator.
Senator Warner. Well, I think that is very important. You
know, the sooner we can complete this process, the sooner we
can either remove the cloud that hangs over this Administration
or get to the bottom if there are circumstances that some of
the press reports bear out to be true. And to do that, we are
going to need everyone's cooperation. This is a really
important time, a dangerous time, a challenging time. I think
you have heard from both sides of the aisle real concerns about
Russia and their attempts not only to intervene in our
elections, the French elections, and I think you will see it in
the German elections, their actions in Ukraine. And if there is
ever a time that we must be vigilant, it is now.
Thank you, Mr. Chairman.
Chairman Crapo. Thank you, Senator.
Senator Cortez Masto.
Senator Cortez Masto. Thank you, Mr. Chair. And thank you
to all of you, and let me just say, first of all, thank you for
taking the time to come visit with me. I really appreciate it.
And welcome to all of your family who have been sitting here
now for it seems like days. But we will end soon. Do not worry.
Let me follow up with some of the questions, and let me
start with Mr. Tarbert. If confirmed to the position for which
you are nominated--and we have been talking about this. You
will be leading the Treasury Department's work related to the
Committee on Foreign Investment in the United States. As it
stands now, the public has no idea what President Trump's
investments consist of because he will not release his tax
returns, and meanwhile, we are reading in the papers that
members of the President's extended family are going to China
looking for investors in various business ventures and playing
up their connections to the Oval Office.
If confirmed, could President Trump and his family's vast
global business entanglements complicate your efforts to lead
the Treasury's work on the Committee on Foreign Investment in
the U.S.?
Mr. Tarbert. I do not believe so. If confirmed, I am
committed to applying the law, and the law requires that for
any covered transaction there be no national security concerns.
Senator Cortez Masto. And how can we be sure about that
transparency? How does the public know that you are making
those decisions when it comes to our President and his
interactions with foreign investments, including his family
members?
Mr. Tarbert. The CFIUS process, most of it is obviously
classified, but FINSA has provisions whereby Congress and this
Committee in particular can exercise oversight.
Senator Cortez Masto. So let me ask you this: If it comes
up that there is that entanglement, are you committed to
ensuring that the public has a full airing and understanding of
your decisions when it comes to whether the President's
involvement or his family's involvement with foreign
investments and likewise?
Mr. Tarbert. I am committed to following all applicable
laws and regulations and being as transparent as I can in
compliance with those laws and regulations.
Senator Cortez Masto. OK. Let me follow up on another thing
we did not get a chance to talk about and I am not sure whether
you are familiar with or not, which is MoneyGram. If confirmed
to this position, you will be leading, again, the Committee on
Foreign Investment, and as someone with a background in law
enforcement, I know that working with money transfer companies
is key to identifying, catching, and stopping illicit
financing.
If confirmed, how will you evaluate the proposed MoneyGram
purchase by a company in part owned by Chinese State in terms
of its impact on U.S. national security?
Mr. Tarbert. Thank you, Senator. I am going to refrain from
speaking about any particular case, but the general thrust of
your question about money transmitters I think is an important
one and also referencing a State-owned company. Right now,
under the CFIUS process, a State-owned company automatically
triggers in the investigation phase. So, if confirmed, I would
use all available resources to ensure that there are no
unresolved national security concerns.
Senator Cortez Masto. OK. And them I am going to follow up
with some similar line of questioning based on your previous
experiences, some of the articles that you have written. You
have written extensively on the Wall Street Reform Act's
resolution planning provisions, including living wills. These
documents require large financial companies to document how
they could fail without harming Main Street. Some want to
eliminate or weaken the act's provisions in this regard. What
is your opinion?
Mr. Tarbert. I think the resolution process--so the living
wills that you referred to, under Title I, which requires large
systemically important financial institutions or anyone caught
under that to present a plan as to how they could be resolved
under the Bankruptcy Code, I think that, at least from a
personal standpoint, is a worthwhile exercise.
Senator Cortez Masto. OK.
Mr. Tarbert. Now, again, my position is--if confirmed, I
would be potentially representing the U.S. at the international
level, so I do not believe I would personally have a role in
Dodd-Frank or legislation dealing with domestic finance.
Senator Cortez Masto. Thank you. I appreciate that. And
thank you again. Good luck to all of you. And I appreciate you
seriously taking the time to sit and visit with me.
Chairman Crapo. Senator Heitkamp.
Senator Heitkamp. Thank you, Mr. Chairman. And thanks to
all of you for your willingness to serve our country. Many of
you have incredible resumes--all of you have incredible
resumes.
I think that it is not unfair to ask you this question: Who
is your loyalty to? Once you are confirmed and if you are
confirmed, who do you serve and who is your loyalty to? We will
start with Ms. Mandelker.
Ms. Mandelker. My loyalty is to the American people.
Ms. Ricardel. My loyalty is also to the American people and
to the laws that govern this country.
Mr. Billingslea. Senator, my loyalty is both to the
American people and to the Constitution.
Mr. Tarbert. Yes, the Constitution and the American people.
Senator Heitkamp. It is critically important to remember
that. Sometimes when you are confirmed and people give you
positions like this, there may come a time when you are asked
to do something that is not in the interest of the American
people, that is not in the interest of our checks and balances
system in the Constitution, and that will, in fact, jeopardize
our national security. And I think it is fair to ask that
question today, and so I want to thank you all for the answer.
I believe that you are earnest about this. But we all know that
there is a slippery slope, and little compromises lead to big
compromises. And it is critically important, hopefully--I do
not mean to be lecturing here, but that you remember that as
you serve once you are confirmed.
I want to talk first, Ms. Mandelker, first off just tell
you how moving your family's story is and how grateful we are,
and I think I believe your answer a little bit more as a result
of the challenges that your family has experienced. But I want
to talk about a hearing that we had last week. We heard from
two previous distinguished incumbents of the position that you
are nominated to about both the value and the limitations of
secondary sanctions.
How would you go about thinking whether to apply this
relatively blunt instrument? And what steps can Treasury take
to ensure that sanctions advance tailored national security
instruments without unleashing unintended consequences? And I
would just tell you I think that when we are looking at this,
this is going to become a critical piece, and it is very
important that you be clear on how you see secondary sanctions.
Ms. Mandelker. Thank you, Senator, for that question, and
obviously, it is something that I have been thinking about. I
had the opportunity to watch the testimony last week, which I
thought was very useful. Both witnesses had excellent ideas,
and I appreciate their testimony and their counsel.
Issuing secondary sanctions is a blunt instrument. It is an
instrument, of course, that worked. It was very impactful when
it came to how we used it, how the U.S. Government used it in
Iran. It is something that I think we have to consider
carefully, but we also have to understand what the secondary
and tertiary impact might be of using those secondary
sanctions. It is something that I will look forward to engaging
in a robust conversation within the interagency. It is going to
be very important that we have a fulsome understanding of what
the impact would be, both in executing our national security
strategy and then in the other impact it might have on the
economy.
Senator Heitkamp. Thank you so much.
Mr. Billingslea, in your testimony you reference the
importance of buy-in from friendly Nations when ratcheting up
pressure on terrorist financing. Trust is a huge factor in this
with everyone concerned. What has been your experience at NATO
and elsewhere in your career that taught you the importance of
forging these alliances and building trust? And do you think
that trust based on tweet is a good way to advance our foreign
policy interests?
Mr. Billingslea. Senator, my daughters will tell you I do
not have a Twitter account. I do not have it on my iPhone.
You know, as Winston Churchill famously said, you know, the
only thing worse than fighting with your allies is fighting
without them. And so it is crucial, it is painstaking. It
requires that you sometimes control your inner voice when you
work with allies, but it is essential to bring them along and
work very closely with them, particularly----
Senator Heitkamp. Do you think it is important to
communicate with them in a way that respects them?
Mr. Billingslea. Absolutely. These are sovereign Nations.
Senator Heitkamp. So do I, and I think that one of the
things that we have to be very, very careful in this
environment is understanding who our allies are and who our
allies are not. And I think the recent examples of disclosing
classified information to foes is not a step in the right
direction, and I hope that if you guys are all confirmed, the
advice that you provide will be advice that will be heeded by
the White House.
Chairman Crapo. Thank you.
Senator Van Hollen.
Senator Van Hollen. Thank you, Mr. Chairman. I would like
to join my colleagues in welcoming all of you. Thank you for
your testimony. Welcome to your families.
I do want to associate myself with the remarks of Senator
Warner with respect to the information that has been requested
by the Congress of the Treasury Department.
Ms. Mandelker, I think you are responsible for a lot of the
areas regarding preventing money laundering, and others will be
as well. And I wanted to follow up on a line of questioning
that I think Senator Cotton started with respect to being able
to figure out the beneficial ownership interests, because we
know the Russians as well as many others try to use the U.S.
market to launder money, the Russians especially in the area of
real estate. And one of the tools that the Obama administration
developed to try and fight that was FinCEN's geographic
targeting order, looking at high-risk regions, including South
Florida, New York. My understanding is the Trump administration
has extended this effort through August, and my question is: Do
you believe this is a useful tool? And do you plan, if
confirmed, to extend this beyond August?
Ms. Mandelker. I do agree that it is a very useful tool. I
know both from my experience in Government service and in the
private sector that understanding who the beneficial owners are
of any particular entity can be extraordinarily valuable. It is
something that I will look forward to discussing with the
career professionals of FinCEN. And I would be happy to get
back to you. But I think that those tools, the geographic
targeting orders, can provide us with an enormous amount of
very valuable information, and I look forward to using it not
just in this area, but in others as well.
Senator Van Hollen. Well, thank you. And I do want to say,
Mr. Chairman and Ranking Member, there are a number of States--
I think there are about three States that have really made a
specialty of welcoming money that cannot be tracked, and I do
hope this Committee will begin to look into that issue because
it is in contradiction, it conflicts with the Federal focus on
trying to get to the bottom of money laundering.
My colleague Senator Heitkamp raised the issue of secondary
sanctions, and you yourself pointed out that they were very
effective. You said it worked with respect to bringing Iran to
the negotiating table. Congress worked on that on a bipartisan
basis. The Obama administration supported those efforts.
We all know that North Korea has been working to develop an
intercontinental ballistic missile that can reach the United
States. We know that they have successfully tested and have a
number of nuclear weapons. And we have heard, you know, from
the Trump administration a variety of possible policy
responses, including talking about potential military action.
In my view, that is premature until we have exhausted the
other alternatives, and one of those other alternatives is
secondary sanctions. The reality is that North Korea GDP runs
about $30 billion a year, according to most estimates. They do
have access to international supply chains. Obviously, China is
the major conduit for their economic activity.
The House passed legislation on North Korea sanctions. I am
working with some others on expanding on that idea, including
secondary sanctions on North Korea. And so my question to you
is: Do you think that would be an effective way to put more
pressure on North Korea as a means to address their clearly
hostile actions that they are taking?
Ms. Mandelker. Thank you for that question, and I know this
Committee and other Members of the Congress have showed a lot
of leadership when it comes to deploying those tools, and I
would look forward to working with you on that particular
question. I do not want to confine myself to agreeing to any
particular option. What I can tell you is that we need to study
the use of secondary sanctions in this context very carefully
and closely. That discussion has to be part of the robust
interagency discussion that I am sure by all accounts is very
much underway now in the Administration. And what I will commit
to you is that I will review it very carefully. I will discuss
it within the interagency, and I would look forward to having
conversations with this Committee about what options will be
the most effective in disrupting the North Korea threat,
because as I said at the outset, that is really going to be at
the top of my agenda.
Senator Van Hollen. Well, good, and I think we all share
your conclusion, at least speaking for myself, your conclusion
that that effort did work with respect to bringing the Iranians
to the negotiating table. So I look forward to working with you
on that, and I thank all of you for your testimony.
Thank you, Mr. Chairman.
Chairman Crapo. Thank you.
Senator Schatz.
Senator Schatz. Thank you, Mr. Chairman. Thank you all for
coming here. Thank you to the families for allowing your
spouses and parents and children to be public servants.
This is a question for the three Treasury nominees. The
success of your future work in stopping illicit finance flows
and keeping dangerous technologies out of the hands of our
enemies depends on well-crafted diplomacy. But I am extremely
concerned that vacancies at high levels of the Administration
are preventing us from successfully crafting a response to
international threats.
For example, we do not have any regional Assistant
Secretaries. None. We also do not have an Assistant Secretary
for Economic and Business Affairs. This is the person at State
who works together with Treasury to develop and implement
economic sanctions. We also do not have an Assistant Secretary
for International Narcotics and Law Enforcement. This is the
person who bolsters Treasury's work by helping countries to
counter illicit narcotics trade and other international crimes.
These are just a few examples. They are the people
responsible for crafting and implementing strategies that make
use of all of our tools of national power, including what
Treasury is trying to do through sanctions. And these positions
remain empty--not just not confirmed but no nominees.
How do you think that these State Department vacancies will
impact your ability to do your jobs?
Ms. Mandelker. Senator, I am not familiar with the
positions at the State Department that remain open. What I can
tell you, having worked at the Justice Department and
Department of Homeland Security in the past, and having worked
closely with the State Department, there are many very talented
people who are there and regardless----
Senator Schatz. Let me--excuse me. Does this sound like a
problem to you?
Ms. Mandelker. Well, Senator, I am very much in favor of
nominating and confirming political positions, so I would hope
that the Congress would move expeditiously in that direction.
Senator Schatz. And we need to have nominees in order to
consider them.
Mr. Billingslea.
Mr. Billingslea. Yes, Senator, I very much would like to
have counterparts to work with.
Mr. Tarbert. I agree as well.
Senator Schatz. Following up on the line of questioning on
this side of the dais around loyalty, I am going to be very
blunt in terms of the interactions you may have had with either
the Administration or the transition. Did anybody ask you for
loyalty?
Ms. Mandelker. No, Senator. That is not a conversation that
I have had.
Ms. Ricardel. No, sir.
Mr. Billingslea. No, Senator.
Mr. Tarbert. No, Senator.
Senator Schatz. Following up on the line of questioning of
the Ranking Member of the Intelligence Committee, I understand
that it is Treasury professionals that have to get back to the
Members on the Committee who made the request of FinCEN. But do
you think that the Congress deserves an expeditious response to
these requests?
Ms. Mandelker. Yes.
Ms. Ricardel. Yes, sir, I do.
Mr. Billingslea. Yes, sir.
Mr. Tarbert. Yes.
Senator Schatz. I will be quick because a lot of the
questions have been asked, but I just want to put a fine point
on it. In the context of what is going on, it seems to me that
people of good will and good faith and loyalty to the
Constitution and laws of the United States, loyalty to country,
are being put in impossible positions in this Administration.
And so I never thought I would have to ask this question, and I
know the answer that you will all provide, and I believe you in
this moment. But I want to hear it from you. If there is a
moment when you have to choose between loyalty to law and the
country and loyalty to party and the White House, what will you
choose?
Ms. Mandelker. Senator, as I have always conducted myself
in Government service, my loyalty is to the American people and
to the laws of our country.
Ms. Ricardel. I will always put laws of the country first.
Mr. Billingslea. Senator, likewise. My loyalty is to the
United States Constitution.
Mr. Tarbert. The Constitution and the American people.
Senator Schatz. Thank you.
Chairman Crapo. Do you have anything?
Senator Brown. Just one comment. Thank you, and thanks to
all four of you, and again to your families. And, Ms.
Mandelker, your story of your father was so meaningful, and we
all were watching him as you were talking, and it was so
inspiring. Thank you.
I think that Senator Schatz's question and Senator
Heitkamp's speak volumes about the situation you are going in.
We do appreciate your willingness to serve. We do not question
the ethics of any of you. But I have never sat--I have been in
this Senate now almost 11 years, and I have never heard the
kinds of questions that he posed asked with--I have been here
through Presidents of--three different Presidents, and I was in
the House with two others, and I think it is really important
that, as you leave here today, you think about that question.
And I hope you are not put in that position, but the first 120
days or so of this President suggests that you might be. And I
know you take your responsibilities seriously. I know you will,
and we are counting on you to do the right thing.
Thank you, Mr. Chairman.
Chairman Crapo. Thank you, Senator Brown.
That concludes the questioning and the hearing, with the
exception of final announcements. Before I do that, though, I
want to again thank each of you for coming and participating
today here at the hearing. I thank you for your service and
your willingness to give more service to the country, and I
appreciate that.
For Senators, all follow-on questions need to be submitted
by Thursday. And for our witnesses, responses to those
questions are due on Monday. So please respond quickly to the
questions you get.
With that, this hearing is adjourned.
[Whereupon, at 11:50 a.m., the hearing was adjourned.]
[Prepared statements, biographical sketches of nominees,
responses to written questions, and additional material
supplied for the record follow:]
PREPARED STATEMENT OF SIGAL P. MANDELKER
To Be Under Secretary for Terrorism and Financial Intelligence,
Department of the Treasury
May 16, 2017
Chairman Crapo, Ranking Member Brown, and Members of the Committee,
it is a great honor to appear before you as the President's nominee to
be the Under Secretary to lead the Office of Terrorism and Financial
Intelligence. I thank the President and the Secretary for their trust
and confidence in me. I have had the opportunity to meet with many of
you and your staff over the last few weeks and I want to thank you for
the courtesies you have extended to me. I look forward to working
closely with this Committee if I am honored to be confirmed.
I am grateful for the tremendous support of my family and friends,
including those who have traveled to attend this hearing. I want to
recognize in particular two of my heroes and constant sources of
inspiration, my father, Gershon Mandelker, who is here today, and my
wonderfully lovely mother, Ester Mandelker, who passed away 12 years
ago. Both of them were Holocaust survivors who spent part of their
childhood hiding underground, in the forest, and elsewhere in constant
fear for their lives as they tried to escape the Nazis. My father tells
one story about how, when he was around 6 years old, he was hiding with
my grandfather and others in a barn that belonged to the head of a
village, a courageous man who agreed to hide them. My father recalls
that one day, soldiers came into the barn in order to decide whether to
park their guns and horses there. My father was hiding under a haystack
as the soldiers walked in, looked around, and then decided not to use
the barn. My father vividly remembers watching the boots of one of the
soldiers as he walked by. Had my father so much as sneezed, I would not
be sitting here before you in this Committee room.
I grew up hearing about my parents' many courageous stories of
survival and how they narrowly avoided death. At the same time, I knew
that so many members of my family did not survive, including three of
my grandparents who were either killed or died as a result of the
Holocaust. With this history, my parents not only survived but went on
to pursue successful careers and served as incredibly positive role
models. They raised my brother and me with enormous love and a deep
appreciation for the opportunities that our great Nation provides and
the knowledge that we should never take for granted our safety,
security, and freedom. I carry this legacy with me and it has always
been what has motivated me to public service, for the opportunity to
make a difference is truly humbling.
After 9/11, like so many other Americans, I wanted nothing more
than to contribute to the response to this terrible attack on our
Nation. After finishing a clerkship, I immediately went to work for the
Justice Department in August 2002, where I joined in its
counterterrorism and national security mission in positions in both the
Criminal Division and later the Deputy Attorney General's Office. With
the Nation on high alert for follow on attacks, I worked as part of the
dedicated team that oversaw the Nation's counterterrorism and national
security criminal cases, including those involving illicit financing of
terrorism. After then going on to serve as an Assistant United States
Attorney in the Southern District of New York, I came back to
Washington to work as a Counselor to the Secretary of Homeland
Security, where I focused again on counterterrorism, national security,
law enforcement, and intelligence. In 2006, I returned to the Justice
Department to be Deputy Assistant Attorney General in the Criminal
Division, where I supervised four major sections, leading the many
talented prosecutors and other professionals in those sections, and had
a portfolio that included ground-breaking and cross-border
cybersecurity, human rights, money laundering, and other cases that
involved the intersection of national security and law enforcement. In
2009, I joined the private sector, where I have gained valuable and
practical insights into the compliance issues that financial
institutions and other companies face on a regular basis.
I am particularly honored to be nominated for this position, which
serves such an important function in our national security, foreign
policy, and economic apparatus. If confirmed, I will strategically and
tactically marshal all of the tools of the Office of Terrorism and
Financial Intelligence, and will constantly evaluate how to evolve
those tools to meet new challenges, and to always be proactive,
intelligence driven, and results oriented. I am looking forward to
working with and leading the talented and dedicated career
professionals in the Office of Terrorism and Financial Intelligence. I
will also work closely both with this Committee and the interagency to
ensure that we use all of the elements of Government power in the most
effective way to achieve the objectives we set for ourselves and for
the country.
Finally, from my time in the Executive Branch, I know how important
it is to have a close relationship with Congress. I have thoroughly
enjoyed my discussions with so many of you and I look forward to doing
important work together should I be honored to be confirmed.
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PREPARED STATEMENT OF MIRA RADIELOVIC RICARDEL
To Be Under Secretary for Export Administration, Department of Commerce
May 16, 2017
Mr. Chairman, Ranking Member Senator Brown, Senators of the
Committee, it is a distinct privilege and truly humbling experience to
come before this Committee to be considered for Under Secretary of
Commerce for Export Administration. I am deeply honored to have been
nominated by President Donald Trump and greatly appreciate the
confidence that has been placed in me by the President and Secretary of
Commerce Wilbur Ross.
When I served as legislative assistant to Republican Leader Bob
Dole, I did not imagine that the future might hold this opportunity--
that one day I would not be preparing questions, but answering them.
Perhaps my late father might have thought it possible, not only because
of bias towards his daughter, but because he was always optimistic
about what was possible in this great Nation--a view that carried him
from communist-controlled Croatia via Germany to the United States,
with little more than optimism in his pockets.
I wish to thank Senator Bob Dole for teaching me so much about
leadership, integrity and fairness. I learned hands-on that building
bipartisan coalitions is essential to progress and reaching agreements.
This lesson informed how I approached issues as a member of his staff,
and later how I approached working within the U.S. Government
interagency while I served in the Department of Defense. The ability to
understand and balance the equities of U.S. agencies and drive toward
solutions that strengthen U.S. national security is vital.
The role of the Under Secretary of Commerce for Export
Administration is consequential and one in which I will be able to
leverage my experience and skills if confirmed. The Bureau of Industry
and Security (BIS) advances U.S. national security and economic
objectives by ably managing and ensuring effective export control
systems, supporting treaty compliance, and enforcing sanctions. The
Bureau's responsibilities are executed in close cooperation with a wide
range of departments and agencies, including the Departments of
Treasury, Justice, State, Defense, and Homeland Security.
The recent announcement by Secretary Ross of record criminal and
civil penalties against ZTE Corporation is the culmination of 6 years
of investigation and highlights the crucial function of the Bureau's
Office of Export Enforcement. Last year, the Bureau's Export
Administration office processed more than 33,000 license applications
related to dual use items and items that had been on the U.S. Munitions
List. The United States retains jurisdiction over re-exports of U.S.
origin goods abroad; this is an indispensable tool to address the
potential diversion of items to our adversaries who might use these
them against U.S. military forces abroad or in the development of
weapons of mass destruction.
Important also is that the licenses processed by the Bureau of
Industry and Security enable exports of U.S. goods and these exports
mean jobs for American workers. As a former employee of an aerospace
company, I can appreciate the impact of exports on jobs. At the same
time, the health of the U.S. defense industrial base is imperative and
in that regard under Secretary Ross' initiative, the Bureau of Industry
and Security has launched two investigations on steel and aluminum
imports under Section 232 of the Trade Expansion Act. In addition, the
Bureau regularly conducts studies on other areas of the U.S. industrial
base.
Secretary Ross recently said, ``Under President Trump's leadership,
we will be aggressively enforcing strong trade policies with the dual
purpose of protecting national security and protecting American
workers.'' If confirmed, I will act vigorously to enforce U.S. export
controls, embargoes and sanctions, as well as continuously promote and
advance policies that support U.S. industries and technologies and the
American workers who are the foundation of our industrial base.
Mr. Chairman, Senator Brown and Senators of the Committee, thank
you for your consideration of my nomination. I would be pleased to
answer any questions the Committee may have.
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PREPARED STATEMENT OF MARSHALL BILLINGSLEA
To Be Assistant Secretary for Terrorist Financing, Department of the
Treasury
May 16, 2017
Chairman Crapo, Ranking Member Brown, and Members of the Committee:
I am honored to appear before you today as the President's nominee for
Assistant Secretary of the Treasury for Terrorist Financing.
Senators, at the outset, I thank my family--my wife Karen and my
two daughters Morgan and Elsa--for supporting my decision to accept
President's nomination. These positions require significant family
sacrifice, and I could not undertake this without their love and their
backing.
Unfortunately my mother and father could not be here today, but I
am very happy that my sister Rachel--who is a career Pentagon
official--is present. Rachel, and her husband Craig, who is a Chief
Warrant Officer, have collectively served more than 5 years in
Afghanistan and Iraq--together and apart--helping keep our Nation safe
from the terrorist threat. They are, in my view, great Americans who
have sacrificed much to protect our Nation.
By way of background, Rachel and I were raised in Montgomery
Alabama, as constituents of Senator Shelby. Our father, Oliver, is the
son of a cotton farmer and the first to graduate from college in his
family. Our mother, Nancy, hails from Xenia Ohio, where--Senator
Brown--I am proud to say that we today have a large extended family.
From our parents I learned the value of stoicism and hard work, and I
am deeply grateful to them for the sacrifices they made over the years
that have allowed me to be here today.
I have had the opportunity over the past weeks to meet with several
Members of this Committee, and it has been very helpful to understand
the issues you feel are most important with respect to the Treasury
Department and terrorist financing. If confirmed, I look forward to
working with all Members of the Committee, and your staff, on this
crucial national security matter.
There are four brief points that I underscore for the Committee
this morning:
First, I understand the criticality of a close, bipartisan working
relationship with Congress. From 1995-2001, as the Senior Professional
Staff Member for National Security Affairs on the Foreign Relations
Committee, I drafted multiple pieces of sanctions legislation, most of
which were subsequently enacted into law with overwhelming bipartisan
support. The focus of these statutes was (and remains) to combat the
proliferation of weapons of mass destruction (WMD) and missile systems,
and to disrupt foreign terrorist and trafficking networks.
Second, I appreciate how important are financial and economic tools
in the fight against terrorism. After 9/11, I served as the Principal
Deputy Assistant Secretary for Special Operations and Low Intensity
Conflict (SO/LIC). Disruption of the terror network's financing
operations featured heavily in both our planning, and in day-to-day
operations. Working very closely with multiple Treasury offices, I
established the first DoD Counter Threat Finance cell, with a detailee
from Treasury playing a central role.
Third, ``buy in'' from friendly Nations is crucial to the work of
the Terrorist Financing office. At NATO, from 2003-2006, I served as
the Assistant Secretary General for Defense Investment. My time at NATO
taught me the importance of forging close working relationships with
officials from across the Alliance. While at NATO, I secured Alliance
agreement to launch more than a dozen counter-terrorism related
measures, and this experience will greatly assist in the international
duties of the office to which I have been nominated, if confirmed.
Finally, disrupting terrorist finance and illicit trade requires
working closely with the private sector. Since 2009, I have served as
Managing Director at Deloitte, where I lead the Federal Business
Intelligence Services (BIS) group. We perform commercial due diligence
into third parties on behalf of Federal agencies and commercial clients
to protect against doing business with entities accused of corruption,
narcotics trafficking, money-laundering, child or slave labor, or other
worrisome matters. I bring close working relationships across the
global financial services, technology and telecommunications sectors,
and will leverage those professional connections to advance our
national security agenda.
In conclusion, I appreciate the opportunity afforded by the
Committee on Banking to appear before you today as your consider my
nomination. Over the past 22 years, I have had the privilege of working
closely with the Department of the Treasury on terrorist financing and
financial crimes in a variety of capacities, and I bring a unique
combination of legislative, executive branch, and private sector
experience to the role. If confirmed by the Senate, I will work very
closely with this Committee to drive policies and actions to disrupt
illicit finance and terror networks, and to advance our national
security. I appreciate your time this morning, and look forward your
questions.
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PREPARED STATEMENT OF HEATH P. TARBERT
To Be Assistant Secretary, International Markets and Development,
Department of the Treasury
May 16, 2017
Chairman Crapo, Ranking Member Brown, and distinguished Members of
the Committee, I am honored to appear before you today. I am humbled by
the confidence the President has shown in me by nominating me to be the
next Assistant Secretary of the Treasury for International Markets and
Development.
I appear before you today with full recognition of the serious
responsibilities associated with this position. If confirmed as
Assistant Secretary, I would lead nine of the Treasury Department's
offices charged with protecting and supporting foreign investment in
the United States, reducing global financial instability, fostering
international economic development, and managing key global challenges.
I believe that my professional background and desire to serve our
country will enable me to perform this role and work to keep our
country safe and prosperous.
While growing up in Baltimore, my family emphasized hard work,
education, and the importance of public service at every level of
Government. Both of my grandfathers fought in World War II: one with
the Army in Europe, one with the Navy in the Pacific. One of my uncles
was a police officer; another a firefighter. My father went to night
school to become an accountant, and eventually served as Comptroller of
the Maryland Port Administration and of the Baltimore County Community
College System. Although my father passed away after a courageous
battle with cancer, his commitment to public service remains a guiding
example for me.
Each of my adult guests today is or has been a public servant. My
mother retired as a Child Support Enforcement Officer, my sister-in-law
is a public school teacher, and my brother just completed a term as
Deputy Mayor of Baltimore for Economic and Neighborhood Development.
Finally, my wife Kate and I met clerking for the U.S. Court of Appeals
here in Washington. Now a full-time mom to our two young sons, she has
served in the Justice Department and as a law clerk to the Chief
Justice of the United States. I have been inspired by their dedication
to public service as well.
I, myself, have had the privilege of serving in all three branches
of the Federal Government. One of my most enjoyable jobs in public
service was working as Special Counsel to this Committee in 2009-10.
During that period, I had the privilege of working closely with Banking
Committee staff members and legislative directors on both sides of the
aisle on a number of important international economic issues. It was
especially an honor to serve under your leadership, Senator Shelby.
Since leaving the Banking Committee staff, I have practiced as a
regulatory compliance lawyer, with a chief focus on international
markets. In this role, I have assisted public and private sector
institutions from outside the United States make investments in our
country that created jobs for working Americans and their families. I
have also helped financial services companies around the world comply
with regulatory and supervisory measures intended to make them safer
and sounder, thereby reducing or eliminating the possibility of future
taxpayer-funded bailouts. In addition, I have designed compliance
programs aimed at detecting and preventing money laundering and
terrorist financing.
If confirmed as Assistant Secretary of the Treasury, I hope to work
closely with this Committee, others in the Senate and House of
Representatives, and my colleagues in the Administration to carry out
my responsibilities.
Thank you again for the opportunity to appear before you today. I
am happy to answer any questions you may have.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
RESPONSES TO WRITTEN QUESTIONS OF SENATOR CORKER
FROM SIGAL P. MANDELKER
Q.1. Do you believe the current anti-money laundering regime is
as effective as it could be? If not, would you be open to a
realignment of incentives and the setting of priorities within
the regime? Additionally, are there certain areas that you feel
are ripe for reform?
A.1. I believe that the current U.S. anti-money laundering and
countering the financing of terrorism (AML/CFT) regime is
strong. The United States has been a leader in the world,
including through the Financial Action Task Force (FATF), in
combatting money laundering and terrorist financing. We have to
constantly evaluate, however, how to evolve these tools to meet
new challenges, technologies, and threats.
If confirmed, one of my top priorities will be to assess
the effectiveness of our tools and to engage in comprehensive
discussions within Treasury and with other stakeholders,
including the law enforcement community, other regulators, the
Congress, and the private sector, regarding mechanisms to
improve these safeguards in the U.S. financial system, to
further enhance transparency, and to assess Treasury's analytic
and information sharing tools both within the Government and
with the private sector. I believe that Treasury should be open
to realigning incentives and setting priorities as threats
evolve, and as our law enforcement, regulatory, foreign policy,
and national security priorities shift to meet new and emerging
challenges. If confirmed, I will carefully assess what areas
are ripe for reform after engaging in these discussions and
will look forward to addressing them with you.
Q.2. Financial institutions are withdrawing from customer
relationships and businesses that are perceived to pose risks
under the anti-money laundering laws. Do you think this so-
called ``de-risking'' by financial institutions undermines the
effectiveness of our anti-money laundering regime? If so, has
past enforcement policy, or other aspects of the current legal
framework, created incentives to ``de-risk''? Are there
additional safe harbors or other changes to the legal framework
that might better align financial institutions' incentives in
order to avoid that pressure to ``de-risk''?
A.2.In this area, we must advance two complementary objectives:
safeguarding the financial system from abuse and promoting
financial inclusion where appropriate. We should continue to
engage in a robust conversation with financial institutions
about mechanisms for de-risking that simultaneously promote
both objectives. If confirmed, I will look forward to
discussing these issues with public and private sector
stakeholders in order to maintain an effective AML/CFT
framework, ensure that the risk-based approach is appropriately
applied, promote innovation where appropriate in the private
sector's use of new tools to analyze data, and facilitate a
clear understanding of both illicit finance risks and U.S.
legal and regulatory expectations.
For example, I believe that it is important to consider how
to share more targeted information and provide dynamic feedback
to the private sector in order to enhance its ability to engage
in decision making as it manages risk. Likewise, I believe that
financial institutions should continually assess how to improve
their analytic capabilities as part of the risk calculus that
they undertake.
Q.3. Do you see opportunities to facilitate or otherwise
encourage financial institutions to voluntarily engage in
information sharing under the PATRIOT Act? In particular, could
new regulatory guidance or even legislative changes address
some of the ambiguities under the relevant provisions of the
PATRIOT Act or otherwise encourage financial institutions to
expand their voluntary information sharing?
A.3. Yes, there are opportunities to facilitate greater sharing
of information under the USA PATRIOT Act. I am encouraged that
some financial institutions have begun to utilize the
information-sharing safe harbor provided by the USA PATRIOT
Act. However, I believe that much more can be accomplished in
this area. If confirmed, I will consult with the career
professionals at Treasury and with the private sector regarding
to what degree we need greater regulatory guidance or, if
warranted, legislative changes both to address any ambiguities
and to facilitate information sharing, while being mindful of
the need to balance such sharing with data privacy equities and
civil liberties. I look forward to consulting with Congress on
these issues.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
FROM SIGAL P. MANDELKER
Q.1. Iran and other State sponsors of terrorism have been
caught laundering billions of dollars through the U.S.
financial system with the aid of foreign financial
institutions. Though the money laundering techniques vary,
their goal is the same--to exploit sanctions law for their own
benefit. In particular, I worry that Iran and foreign financial
service providers may have attempted to use creative book-entry
accounting to violate both the spirit and the clear meaning of
Iran sanctions.
Generally speaking, is the processing of a transaction
involving an Iranian person through the United States permitted
under current sanctions?
A.1. I share your concern regarding Iranian and foreign
financial service provider attempts to use creative book-entry
accounting to violate both the spirit and the clear meaning of
Iran sanctions. Generally speaking, transactions involving Iran
or Iranian persons are prohibited through or to the United
States, unless the transaction is exempt or authorized by OFAC.
Q.2. Assuming a transaction is otherwise prohibited, would any
book-entry system allow a foreign financial firm to move
Iranian funds to, though, or within the United States?
A.2. As stated above, transactions involving Iran or Iranian
persons are prohibited through or to the United States, unless
the transaction is exempt or authorized by OFAC. If confirmed,
I am committed to working to ensure that sanctions enforcement
investigations examine fully the facts and circumstances
surrounding any book-entry or book-transfer system in light of
the applicable regulations concerning Iran. I will also
carefully review this issue and commit to working with your
office on this important question.
Q.3. Would you be willing to work together with my office and
the Committee to ensure sanctions State sponsors of terror can
no longer use those ``book entry'' transactions to evade
sanctions?
A.3. If confirmed, I am committed to taking strong action
against attempts to circumvent or evade U.S. sanctions laws--
particularly with respect to transactions processed to,
through, or within the United States and look forward to
working with your office and the Committee on this important
issue. Sanctions against Iran, as in all programs, should be
implemented and enforced in a way that ensures that there are
no loopholes that would allow prohibited transactions.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE
FROM SIGAL P. MANDELKER
Q.1. Does Treasury have the necessary resources and
capabilities to conduct a North Korean leadership asset hunt,
as the North Koreans are adept at developing shell companies
and other methods of hiding money?
A.1. I believe that it is vital that Treasury, along with its
interagency and international partners, pursue all options to
target the many ways in which North Korea hides its money. As I
am not in the Administration, I have not had the opportunity to
review whether Treasury has the necessary resources and
capabilities to do so. If confirmed, I will carefully review
this issue. As mentioned in my testimony, the North Korea
threat will be one of my top priorities.
Q.2. What, if any, are your ideas for innovation in our
sanctions capabilities? Is there anything we're not doing that
may be helpful? For example, are there financial analytical
tools or practices from the private sector that should be
adopted by the public sector?
A.2. I understand that Treasury has a track record of
innovation in its use of sanctions as a tool to address foreign
policy and national security threats. If confirmed, I will work
with Secretary Mnuchin and other senior leaders in our
Government to ensure that we are on the cutting edge of
information analysis in support of our sanctions efforts and
capabilities. Having spent the last 8 years in the private
sector, I know that there are tremendous analytical tools
available within the private sector. If confirmed, I will look
forward to assessing Treasury's tools and to improving upon
them, including by consulting with the private sector as
appropriate.
Q.3. How does the use of sanctions fit within a greater
strategy? For example, do sanctions have to come after
diplomatic efforts, or does it sometimes make sense to have
them work in parallel with diplomatic efforts?
A.3. Sanctions are an important component of the broader
national security and foreign policy toolkit available to the
U.S. Government and can be designed to achieve a number of
objectives. They can, for example, be effectively deployed to
disrupt the financial and commercial activities of illicit
actors, such as ISIS and Al Qa'eda, and thus weaken and degrade
our adversaries by undermining their financial infrastructure.
When used against a Nation-State adversary, sanctions can
provide the leverage necessary to reach a diplomatic solution.
Whether sanctions are deployed before, after, or in parallel
with diplomatic or other efforts, however, depends on the
circumstances. Every region, entity, individual, and problem
presents unique challenges, and we need to make sure that we
carefully tailor and deploy our tools to address those specific
challenges.
Q.4. Do you have any recommendations for developing sanctions
draw-down if a country alters its behavior in response to
sanctions? How feasible are ``snap back'' sanctions?
A.4. Sanctions are not ends in themselves, but rather tools
within our foreign policy and national security apparatus that
are intended to create clear incentives to change behavior.
When there is evidence that sanctions have achieved their
intended objectives, the Administration may consider easing or
lifting them. Typically, when drawing down sanctions or
providing relief, the U.S. Government relies upon the authority
granted to it under the International Emergency Economic Powers
Act (IEEPA), including licensing authority and mechanisms
specified in relevant sanctions laws, which often include
waivers to provide tailored sanctions relief appropriate to a
developing situation.
Flexibility in the executive branch's authority to
administer sanctions programs is critical, as it is often
impossible to predict future developments that may require
corrective action with respect to any draw-down efforts. When
implementing a sanctions regime, we should consider how we
would strategically unwind particular sanctions if we achieve
our objectives while at the same time tactically use the
possibility of unwinding as continued leverage. The effective
use of unwinding tools can force actors to make decisions on a
continual basis that furthers our strategic interests. While it
is important to be able to unwind sanctions, we should be very
careful and generally resistant to lifting sanctions when there
is no behavioral change.
Similarly, with respect to ``snap back'' sanctions, we
should have a comprehensive plan in place regarding the re-
imposition of sanctions, including precise mechanisms and clear
commitments and resolve from our partners where the sanctions
are multilateral. The degree to which ``snap back'' sanctions
are feasible will depend on how effective we are in persuading
other countries and how committed they are to triggering ``snap
back'' sanctions where the evidence supports it.
Q.5. When might secondary sanctions be appropriate?
A.5. We face grave national security risks, and secondary
sanctions can be a powerful and very effective tool to address
those risks. If confirmed, I will work closely within Treasury
and with our partners across the U.S. Government, including
Congress, to evaluate when secondary sanctions should be
deployed to combat critical national security challenges. Such
sanctions must be considered as part of a comprehensive
strategy to curb any particular national security risk that
includes a careful assessment of the benefits and risks of
deploying this tool.
Q.6. What might be upcoming challenges related to bitcoin or
other cryptocurrency, and will you develop a plan to address
those challenges?
A.6. The emergence of a new generation of virtual currencies
designed to provide complete transactional anonymity and the
lack of global regulation and supervision in the virtual
currency space presents complex challenges to our efforts to
curb money laundering and terrorist financing. If confirmed, I
will carefully examine these issues within Treasury, within the
interagency, and with the private sector, including outside
experts. We need to be rigorous in our understanding of the
underlying technologies, assessment of our regulatory
authorities and the degree to which modifications are necessary
to promote transparency and protect the U.S. financial system
from abuse, enforcement against noncompliant actors, and
engagement with other countries.
Q.7. Does Treasury have the capabilities to track or fight
against ransomware that uses cryptocurrency, and if not, will
you commit to push for the development of said capabilities?
A.7. I understand that Treasury leverages its cyberexpertise to
play an active role in determining how to protect our critical
infrastructure from illicit cyberactivity, including ransomware
as well as other business email compromises; deter those that
engage in such activity; and use available financial data to
track transactions and recover funds involved in illicit
cyberactivity. If confirmed, I expect to gain a more detailed
understanding of Treasury's existing capabilities in this
space. I will support these efforts at Treasury and will
promote strengthening capabilities where needed
Q.8. What challenge does block chain pose to future sanctions,
and does Treasury have the capabilities to meet those
challenges?
A.8. It is my understanding that block-chain technology itself
may not inherently be a threat to the effectiveness of
sanctions or alter or reduce Treasury's enforcement
jurisdiction, as block-chain technology is merely a distributed
database system that creates and updates a secure transactional
ledger. Nonetheless, there are always actors who seek to
exploit technology for illicit gain. I am committed to
addressing the threat posed by malign actors who, among other
things, use services that seek to anonymize their presence,
including through the use of block-chain based virtual currency
payments. If confirmed, I will work to ensure that Treasury
continues to develop expertise internally and fosters dialogue
with both private industry and financial industry regulatory
agencies regarding block-chain technology and its use in the
financial sector.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR MENENDEZ FROM SIGAL P. MANDELKER
Q.1. In January 2016, the U.S. Patent and Trademark Office
granted a license to allow Cubaexport to renew an expired
trademark registration for Havana Club rum. Cubaexport is an
entity wholly owned by the Cuban Government, and this decision
reverses a longstanding policy that had denied Havana Club
rights to Bacardi LLC in the United States. Despite repeated
inquiries, the Office of Foreign Assets Control has yet to
provide a satisfactory and legally sound answer for this
decision which in effect rewards the Castro Government that
continues to oppress its people and deny them basic human
rights.
Previously, when making licensing decisions, OFAC has
relied upon Section 211, which determines ``whether the
applicant has obtained the consent of the original owner of the
stolen mark or the latter's bona fide successor-in-interest to
register or renew that mark.'' Since Havana Club was illegally
confiscated from the Jose Arechabala Company (JASA), this
decision to award the trademark to Cuba raises serious concerns
about intellectual property policy implications.
If confirmed, are you planning to uphold OFAC's decision to
award the trademark to the Cuban Government? Or will you commit
to reviewing and clarifying why OFAC departed from precedent
and declined to apply Section 211?
A.1. I am not privy to the details regarding OFAC's decision
with respect to the Havana Club trademark, and it would not be
appropriate for me to comment on any specific decision at this
time. If confirmed, I will review any such decision in light of
the applicable law.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
FROM SIGAL P. MANDELKER
Q.1. Russia--Do you believe that we should increase sanctions
on Russia for its malicious cyberactivities, intervention in
Ukraine, and/or support for Assad in Syria? Please explain why
or why not.
A.1. I share your concerns regarding Russia's cyberactivities,
intervention in Ukraine, and support for Assad. Sanctions are
an important part of the United States' tools to address these
pressing national security issues. If confirmed, I will
carefully assess the ways in which Treasury's tools can be most
effectively deployed and will present those options within the
interagency so that they can be considered as part of the
Administration's overall strategy to address these threats.
Q.2. Would you oppose legislation that requires Congressional
review before any rollback of our existing Russia sanctions?
A.2. As the Administration has made clear, U.S. sanctions
against Russia will remain until Russia reverses the actions
that triggered those sanctions. If confirmed, I look forward to
working within the Administration and with Congress to identify
the best way to hold Russia accountable for its actions and
encourage it to live up to its commitments. While it would not
be appropriate for me to comment on any particular piece of
legislation at this time, if confirmed, I would look forward to
working with Congress regarding this important issue.
Q.3. ISIS (Islamic State in Iraq and Syria)--Is there anything
you would do differently than what Treasury is already doing to
shut off ISIS from the international financial system and from
other financial networks like money remittance channels and
currency auctions?
A.3. As I mentioned during my testimony, if confirmed, I will
focus immediately on the areas that pose the greatest threats,
including ISIS. Disrupting ISIS's financial underpinnings has
to be a top priority. If confirmed, I will conduct an
expeditious review of the intelligence and of Treasury's
actions thus far to cut off ISIS from the international
financial system and other financial networks and determine how
to change, modify, and/or supplement those efforts. For
example, among other things, I will examine whether there are
additional individuals or entities that should be designated
and sanctioned, what related enforcement actions are underway,
and what more we can initiate as part of the effort to seize
ISIS's financial support and deter further financing, whether
our intelligence collection and analytical efforts are
sufficient or should be enhanced to produce actionable
intelligence to address ISIS's evolving financial campaign, and
how we can most effectively work with the Justice Department,
the State Department, and the Defense Department, among others,
to coordinate our efforts and most effectively utilize our
respective authorities. I will also ensure that Treasury
continues to proactively share and analyze information with
coalition partners through the Counter-ISIS Finance Group, the
Egmont Group of Financial Intelligence Units and through other
appropriate channels, including the private sector as
appropriate. I understand that Treasury has served as a leader
in this effort and I believe that it should continue to do so
and strengthen those relationships.
Q.4. Does Treasury need additional authority from Congress to
counter ISIS's finances?
A.4. If confirmed, I will undertake an expeditious and thorough
review of Treasury's actions and authorities to counter ISIS'
finances, and I look forward to working with Congress on this
important national security issue.
Q.5. Iran--At this time, are you aware of another realistic
method, aside from enforcing and complying with the 2015
nuclear agreement [Joint Comprehensive Plan of Action (JCPOA)],
to limit Iran's nuclear program and subject it to rigorous
monitoring and inspections?
A.5. Curtailing Iran's nuclear program and permanently prevent
the regime from developing nuclear weapons is paramount to our
national security interests. I understand that the
Administration is currently undertaking a comprehensive review
of the United States' Iran policy, including with respect to
the JCPOA. If confirmed, I would look forward to participating
in that review and working with the Administration and Congress
to ensure that a comprehensive strategy is implemented that
protects the American people and our allies overseas.
Q.6. As far as you know, are there any deficiencies in
Treasury's currently available tools to counter Iran for its
non-nuclear activities (ballistic missile development, human
rights abuses, support for terrorism, etc.)?
A.6. Treasury already has substantial authorities available to
it to counter Iran's malign, non-nuclear activities, including
many executive orders and statutes that provide Treasury with
primary and secondary sanctions authorities and enforcement
tools. If confirmed, I will work to ensure that the Treasury
continues to aggressively target Iranian provocative activities
in ballistic missile development, human rights abuses, and
support for terrorism, among other areas, consistent with the
Administration's foreign policy priorities. I will carefully
review whether there are additional tools that Treasury can
deploy and, where needed to further target Iran's malign
activities, I will work with the Administration to put in place
new authorities using powers granted under the International
Emergency Economic Powers Act (IEEPA) or other statutory
authorities. Congress has played a vital leadership role in
addressing the Iranian threat, and I would look forward to
working with this Committee and others should Treasury need
additional authorities not available under existing statutes. I
believe that we should vigorously enforce those authorities.
Q.7. Iran is still on the Financial Action Task Force (FATF)
blacklist of countries that are a high-risk of money laundering
and terrorist financing. Last year Iran made commitments to
FATF to make structural reforms in these areas. Will you work
with FATF to pressure Iran to address its money laundering and
terrorist financing problems?
A.7. Yes. I believe that U.S. leadership with FATF on this
critical issue is an important component of the U.S.
Government's efforts to address Iran's ongoing illicit
behavior, including its continued highly egregious money
laundering and terrorist financing activities.
Q.8. North Korea--China is North Korea's outlet to the
financial system. How do we exert pressure on China to get
North Korea to freeze its nuclear and ballistic missile
activities, without provoking a Chinese reaction that harms the
U.S. economy?
A.8. If confirmed, I will carefully and expeditiously study
this issue, in consultation with other partners in the
interagency. I understand from public reporting that exerting
pressure on China to get North Korea to freeze its nuclear and
ballistic missile activities is a critical part of the
Administration's strategy. If confirmed, addressing this issue
and Treasury's role in a comprehensive strategy will be one of
my highest priorities. I will immediately request an
intelligence briefing regarding the North Korea threat and an
assessment of the tools that Treasury has already deployed and
those that should carefully be considered. We should use all
available tools directly against North Korea and carefully
assess and implement ways to effectively persuade China to
bring enormous economic pressure on North Korea.
Q.9. State Department Budget--Former Acting Under Secretary for
Terrorism and Financial Crimes, Adam Szubin, testified before a
Banking subcommittee on May 10 about the need for sanctions to
be part of a broader diplomatic strategy. Mr. Szubin said, in
part: ``Massive diplomatic investment and multilateral
engagement will be needed to marshal a successful effort, and
it will require enlisting like-minded and resistant
countries.'' He went on to say ``it would be counterproductive
in the extreme to deplete our Foreign Service corps at a time
when we need them so urgently.'' President Trump's budget
blueprint proposes deep cuts to the State Department. Given
that diplomacy helps build coalitions with other countries to
enforce effective sanctions, would gutting the State Department
make your job easier or harder?
A.9. The State Department plays a vital role in the enforcement
of our sanctions regime. I have not had the opportunity to
review the State Department budget or assess what impact, if
any, it will have on our diplomatic efforts to work with other
countries to enforce sanctions. However, if confirmed, I look
forward to working closely with the State Department and others
to advance the national security and foreign policy priorities
of the United States. Strong diplomatic engagement plays an
essential role in making our sanctions as effective as
possible.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR DONNELLY FROM SIGAL P. MANDELKER
Q.1. North Korea Sanctions--Last week Senator Sasse and I held
a subcommittee hearing on how to craft a stronger sanctions
regime against North Korea. Our witnesses were both tremendous
experts in this field--Juan Zarate and Adam Szubin, who
previously held the position for which you have been nominated.
There is a strong consensus that China is the linchpin to any
meaningful increase in sanctions against North Korea.
If confirmed, would you support imposing secondary
sanctions against Chinese entities that support the North
Korean regime, particularly those elements that oversee Kim
Jong Un's nuclear and ballistic missile programs?
A.1. Addressing the threats that we face from North Korea will
be one of my top priorities. Sanctions are an important
component of the comprehensive strategy to pressure North Korea
to curb this increasingly urgent threat and to lean on other
countries, including most importantly China, to implement and
enhance existing sanctions against North Korea. I understand
from public reporting that the Administration has been engaged
in a productive dialogue with China on this issue and I would
actively participate in this interagency effort, if confirmed.
I will also make sure that Treasury presents comprehensive
options to the interagency discussion, not only with respect to
sanctions but also the other tools available to the Office of
Terrorism and Financial Intelligence, including those deployed
by FinCEN, the Office of Terrorist Financing and Financial
Crimes, and the Office of Intelligence and Analysis. Before
committing to any particular recommendation, I will need to
understand the status of the United States' diplomatic and
other efforts and how the secondary sanctions option fits
within our comprehensive strategy. I will be extremely
committed to making sure that Treasury actively uses its tools
not only to pressure North Korea, but also to hold accountable
those that facilitate the North Korean regime through illicit
financing. If the Administration determines that secondary
sanctions are appropriate, I will make sure that they are
enforced vigorously.
Q.2. What factors would weigh into your consideration of
whether and how to approach secondary sanctions against Chinese
firms? How would you weigh potential impacts to the U.S. and
global economies?
A.2. The decision to impose secondary sanctions would involve
not only the Treasury Department, but also other Departments
within the interagency, including the State Department. There
are a number of factors that should be considered in any such
strategy, including the effectiveness of secondary sanctions to
the broader goal of containing the Kim regime and its nuclear
and ballistic missile programs; the additional leverage
secondary sanctions would provide over and above the United
States' domestic authorities and U.N. Security Council
sanctions regime; the bilateral relationship with China; and
how such sanctions might impact the economy and our key allies
in the region, such as South Korea and Japan. I would consult
with other members of the interagency to ensure that the
appropriate experts have analytically assessed the impact.
Q.3. Russia Sanctions--The position for which you have been
nominated also serves as a member of the intelligence
community.
As you prepare for this role, have you spoken with the
White House about expanding sanctions against Russia?
A.3. No.
Q.4. Have you spoken with experts at the Treasury Department or
elsewhere about expanding sanctions against Russia to assess
options and seek advice?
A.4. I have not spoken with experts at the Treasury Department
about expanding sanctions against Russia in order to assess
options and seek such advice. This subject has generally come
up during my meetings with Members of the Senate Banking
Committee and I have also reviewed testimony that has been
presented to the Committee regarding this topic.
------
RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN CRAPO
FROM MIRA RADIELOVIC RICARDEL
Q.1. The previous Administration launched the Export Control
Reform Initiative in 2010 based on a concept of four
singularities: merge the commodity control lists into a single
list; adopt a common IT portal, create a single licensing
agency and transfer most enforcement efforts to a single
agency. The four singularity concepts were never achieved
either because of a shortage of time or the lack of support to
consider such a far-reaching bureaucratic restructuring.
However, considerable progress was made with regard to the
merger of the commodity control lists managed by the State and
Commerce Departments. In fact, 18 of the 21 categories on
State's United States Munitions List (USML) were rationalized
by migrating certain commercial and dual-use products from the
USML to the Commerce Control List (CCL) maintained by the
Department of Commerce.
The three remaining USML categories, I-III, largely
pertaining to commercial and sporting firearms and ammunition
products, the least technically complex of all the categories,
were never rationalized and left untouched. This no doubt
impacts both small businesses and the Government resources used
for protecting U.S. national security interests.
If confirmed, will you commit to having the Commerce
Department complete the commodity control lists merger prong of
the Export Control Reform Initiative and finalize the migration
of Categories I, II, and III so that all 21 USML categories are
appropriately merged?
A.1. I am aware that 18 out of 21 United States Munitions List
(USML) categories have been revised and corresponding controls
established in the Commerce Control List (CCL). I also
understand that work on regular review and revisions of those
categories continue. If confirmed, I commit to working closely
with Secretary Ross and the State Department on these reviews
and taking the appropriate next steps to address the remaining
three categories.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE
FROM MIRA RADIELOVIC RICARDEL
Q.1. No U.S. exporter should undergo an unnecessarily
duplicative licensing regime to sell their goods overseas;
doing so unnecessarily increases costs and is ultimately passed
down to Main Street. Accordingly, I'd like to ask about ongoing
efforts to reform the export control process, particularly
regarding the possible transfer to the Bureau of Industry
Security of export licensing responsibility over Categories I-
III of the U.S. Munitions List.
Do you commit to pushing to complete a review of this
possible as soon as possible?
A.1. I am aware that 18 out of 21 United States Munitions List
(USML) categories have been revised and corresponding controls
established in the Commerce Control List (CCL). I also
understand that work on regular review and revisions of those
categories continue. If confirmed, I commit to working closely
with Secretary Ross and the State Department on these reviews
and taking the appropriate next steps to address the remaining
three categories.
Q.2. When do you expect this review to be completed?
A.2. I also commit to working closely with you and your office
and providing timely updates on this matter.
Q.3. Will you commit to doing everything within your power to
improve the efficiency of the export review process for
Categories I-III, while still preventing unlawful possession of
these weapons?
A.3. I am committed to improving the efficiency of the export
review process while maintaining strong national security and
foreign policy objectives, if confirmed.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR PERDUE
FROM MIRA RADIELOVIC RICARDEL
Q.1. Ms. Ricardel, the previous Administration implemented the
Export Control Reform initiative in order to modernize our
cold-war era export licensing controls. This reform was aimed
at enhancing our national security and improving the global
competitiveness of U.S. companies. A key objective in the
Export Control Reform was to rationalize the control lists and
pursuant to the authorities granted within the Arms Export
Control Act, transfer export licensing authority for commercial
and dual-use items from the State Department Directorate of
Defense Trade Controls (DTCC) to the Commerce Department--
Bureau of Industry Security (BIS).
Under the prior Administration, commercial and dual use
products covered in 18 of the 21 DTCC's categories to the BIS.
However, 3 of the 21 categories--USML categories I, II, and III
(commercial and sporting firearms and ammunition products)--
were purposely singled out by the past Administration for
transparent political reasons and have not realized the
benefits of the Export Control Reforms Initiative.
Today, roughly 25 percent of the DDTC's export licensing
workload now involves Category I products like the single shot
bolt action 22 caliber rifle used by many Boy Scouts. Many in
Congress share these same concerns including the submission of
bipartisan letters from Congress that were recently sent to
Secretary Ross and Secretary Tillerson urging completion of the
ECR initiative.
Will you commit to working on the expeditious completion of
the transfer of export licensing authority for commercial and
dual-use items from the DTCC to the BIS?
A.1. I am aware that 18 out of 21 United States Munitions List
(USML) categories have been revised and corresponding controls
established in the Commerce Control List (CCL) and understand
that work on regular review and revisions of those categories
continue. If confirmed, I commit to working closely with
Secretary Ross and the State Department on these reviews and
taking the appropriate next steps to address the remaining
three categories.
Q.2. Once you are in office, will you please provide me an
updated estimate on the date by which Commerce Department will
publish the proposed rule to transfer export licensing of
commercial and sporting firearms and ammunition products
currently on the USML categories I, II, and III to the Commerce
Department from the State Department?
A.2. I also commit to working closely with you and your office
and providing timely updates on this matter, to include
notification of planned publication of proposed rules, if
confirmed.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
FROM MIRA RADIELOVIC RICARDEL
Q.1. Chinese firms and investors are increasingly trying to
acquire U.S. companies, or companies with U.S. assets. Last
December President Obama blocked a Chinese firm from acquiring
a German-based semiconductor company with U.S. assets. Are you
concerned about China's increasing assertiveness in this area,
and if so, what will you do about it?
Some public reports have indicated that China may be
attempting to circumvent CFIUS in order to gain access to
defense or other critical technology by investing in early
stage companies or otherwise obscuring the source of capital.
Is this a concern, and if so, do you believe that changes to
CFIUS are required?
A.1. I share your concerns regarding China's publicly stated
goal of becoming a global leader in the semiconductor and
software technology space. I understand the Department of
Commerce is currently updating its 2009 assessment of the U.S.
semiconductor industry and the impact of competitors, such as
China, on that industry. If confirmed, I commit to work closely
with Secretary Ross on this important matter, as well as with
the Department of the Treasury on China's potential
circumvention of CFIUS, as well as any potential legislative or
regulatory changes to CFIUS.
Q.2. In your prepared testimony, you observed that ``the health
of the U.S. defense industrial base is imperative[.]'' Please
explain in detail how will you advocate for U.S. workers,
companies, and technologies that support the U.S. defense
industrial base.
A.2. I am committed to working within the Department of
Commerce and within the U.S. Government interagency on measures
that can strengthen the U.S. defense industrial base, if
confirmed. The Bureau of Industry and Security protects
critical U.S. technologies that are a vital part of the U.S.
defense industrial base through both its export licensing and
export enforcement processes. If confirmed, I will ensure that
the Bureau's licensing and enforcement efforts are effective,
to include thorough assessments of end-use and end-users.
Furthermore, I will reach out to industry and seek input on
proposed rules, as well as ways in which these processes might
be improved. In addition, the Bureau regularly conducts in-
depth surveys of specific defense industrial capabilities. The
information obtained through these surveys--such as identifying
areas of concern in the supply chain--can be used to develop
appropriate actions and policy recommendations.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR DONNELLY FROM MIRA RADIELOVIC RICARDEL
Q.1. If confirmed, you will have an important role in
protecting the U.S. defense industrial base. Earlier this
month, you and I discussed the fact that current law explicitly
prohibits the transfer of excess military equipment to foreign
countries if doing so would harm U.S. industry and jobs. I'm
talking about section 2321j of Title 22. I remain concerned
that the Pentagon and the State Department are attempting to
circumvent this law and risking critical U.S. manufacturing
capabilities in the process.
If confirmed, will you work with Secretary Ross to enforce
the law and ensure these transfers don't harm American workers?
A.1. If confirmed, I commit to working closely with Secretary
Ross on the important issue of protecting the U.S. defense
industrial base and will do so in accordance with section 2321j
of Title 22.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE
FROM MARSHALL BILLINGSLEA
Q.1. Does Treasury have the necessary resources and
capabilities to conduct a North Korean leadership asset hunt,
as the North Koreans are adept at developing shell companies
and other methods of hiding money?
A.1. If confirmed, I look forward to working with Congress to
ensure that Treasury has the appropriate resources and
capabilities to carry out the Administration's policy of
pressuring North Korea to denuclearize, cease its ballistic
missile testing, and end its proliferation of deadly
technology.
Q.2. What, if any, are your ideas for innovation in our
sanctions capabilities? Is there anything we're not doing that
may be helpful? For example, are there financial analytical
tools or practices from the private sector that should be
adopted by the public sector?
A.2. As a Managing Director at Deloitte leading our Business
Intelligence Services practice, I work with a wide range of
analytic tools, data sets, and have developed tactics,
techniques, and procedures which have repeatedly proven
themselves in investigation of front and shell companies on
behalf of the Federal Government, as well as private sector
clients. If confirmed, I intend to take a close, careful look
at current Treasury capabilities to ensure that we benefit from
the best that the private sector has to offer.
Q.3. How does the use of sanctions fit within a greater
strategy? For example, do sanctions have to come after
diplomatic efforts, or does it sometimes make sense to have
them work in parallel with diplomatic efforts?
A.3. While each case is unique, I believe that sanctions
generally should be part of a broader national strategy to
advance our interests. Of course, there may be situations where
sanctions may precede, or set the stage for, diplomatic
efforts. Moreover, sanctions also can be an important offensive
tool to degrade and disrupt illicit criminal and terrorist
networks. If confirmed, I will look forward to working with our
partners across the Government, including our Congress, to
deploy these tools effectively in support of our national
interests.
Q.4. Do you have any recommendations for developing sanctions
draw-down if a country alters its behavior in response to
sanctions? How feasible are ``snap back'' sanctions?
A.4. Generally, when winding down a sanctions program or
providing relief, the U.S. Government utilizes the licensing
authority under the International Emergency Economic Powers Act
(IEEPA) or waivers in Congressional legislation to provide
appropriately tailored sanctions relief. This flexibility in
our authorities is critical, as it is exceptionally challenging
to predict how future events may impact ongoing draw-down
efforts. This flexibility also has the benefit of allowing us
to quickly remove sanctions relief previously granted via
license or waiver or to reimpose sanctions even if a particular
sanctions program has been terminated.
Q.5. When might secondary sanctions be appropriate?
A.5. In the past, secondary sanctions have played a useful role
as part of a broader strategy to increase pressure on illicit
actors to change their threatening behavior, but may have
consequences to financial relationships with the U.S. and
access to the U.S. financial system. If confirmed, I will
carefully evaluate whether secondary sanctions would be an
effective and appropriate tool to combat critical national
security challenges.
Q.6. What might be upcoming challenges related to bitcoin or
other cryptocurrency, and will you develop a plan to address
those challenges?
A.6. Virtual currency payments potentially provide a more
efficient, cheaper alternative to traditional payment methods
by avoiding interchange and currency exchange fees, providing
faster settlement, and reducing counterparty risk. At the same
time, virtual currency payments present money laundering and
terrorist financing risks that must be assessed and mitigated,
especially with respect to anonymity, challenges in tracing
virtual currency flows, and the lack of regulation and
supervision in most jurisdictions worldwide. If confirmed, I
will work to enhance the effectiveness of our regulatory and
supervisory regime for virtual currency and to urge other
countries to follow suit. This also is an area where I would
look forward to working closely with the private sector.
Q.7. Does Treasury have the capabilities to track or fight
against ransomware that uses cryptocurrency, and if not, will
you commit to push for the development of said capabilities?
A.7. If confirmed, I look forward to understanding the
capabilities already possessed by Treasury, and I will commit
to pushing for the development of any additional capabilities
needed. I understand that Treasury, as the U.S. Government's
lead agency charged with protecting the U.S. financial system,
has a number of authorities designed to defend our critical
infrastructure from abuse by cybercriminals. If confirmed, I
expect to gain a more detailed understanding of these
capabilities to combat the use of virtual currency payments for
cybercrime, including ransomware attacks. I will also work
across Treasury, the entire U.S. Government, and with
international partners to enhance our ability to combat
cybercrime, including ransomware.
Q.8. What challenge does block chain pose to future sanctions,
and does Treasury have the capabilities to meet those
challenges?
A.8. The new generation of cryptocurrencies and more
sophisticated technologies appear to be able to provide
anonymity in virtual currency transactions, and therefore may
present a challenge to future sanctions implementation. If
confirmed, I expect to gain a more detailed understanding of
Treasury's existing capabilities to combat the use of virtual
currency payments, including in the sanctions context, and will
support efforts to increase capacity to address this issue. I
look forward to working with the interagency and the
Intelligence Community on this challenge, and believe that we
will benefit from private sector insight in this area as well.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
FROM MARSHALL BILLINGSLEA
Q.1. Russia--Do you believe that we should increase sanctions
on Russia for its malicious cyberactivities, intervention in
Ukraine, and/or support for Assad in Syria? Please explain why
or why not.
A.1. Countering Russia's malicious cyberactivity, securing a
diplomatic solution in Ukraine, and achieving peace and
stability in Syria are some of the greatest challenges our
Nation now faces. As we have seen, Treasury's sanctions tools
can play a critical role in advancing our interests in these
areas. If confirmed, I will work with the rest of the
Administration and with Congress to identify how these tools
can continue advancing our interests across a range of areas in
which Russia is actively working against U.S. interests and
serving as a destabilizing influence.
Q.2. Would you oppose legislation that requires Congressional
review before any rollback of our existing Russia sanctions?
A.2. Our sanctions against Russia were imposed in large part to
provide leverage to reach a diplomatic solution. As the
Administration has made clear, we will roll back sanctions only
when Russia fulfills its commitments under the Minsk
agreements. To achieve this goal, it is essential that the
Administration have the flexibility and credibility to use this
leverage in a way that best supports both our own efforts and
those of our allies. I look forward to working with the
Congress, if confirmed, to identify the best way to do so with
an eye towards preserving the diplomatic and negotiating space
necessary to reach the outcome we seek.
Q.3. ISIS (Islamic State in Iraq and Syria)--Is there anything
you would do differently than what Treasury is already doing to
shut off ISIS from the international financial system and from
other financial networks like money remittance channels and
currency auctions?
A.3. I certainly will bring my experience in developing
counterterrorism campaign plans to my role at Treasury, if
confirmed. I understand that Treasury is working across the
U.S. Government and with Governments around the world to
isolate ISIS from the international financial system, and I
will continue and enhance these efforts. Treasury has worked
closely with the Government of Iraq to cut off bank branches in
ISIS-controlled territory in Iraq from the Iraqi and
international financial systems and to put in place safeguards
to deny ISIS access to U.S. banknotes.
If confirmed, under my leadership, Treasury will continue
its efforts to ensure that ISIS is not able to use banks and
exchange houses in recently liberated areas of Iraq, and we
will strengthen our international partnerships to prevent ISIS
from moving funds to its branches or its global network. I also
look forward, if confirmed, to examining whether there are
additional ISIS-affiliated individuals who should be designated
and sanctioned under appropriate authorities.
Q.4. Does Treasury need additional authority from Congress to
counter ISIS's finances?
A.4. If confirmed, I look forward to examining this question
carefully and will work closely with Congress on this matter.
Q.5. Iran--At this time, are you aware of another realistic
method, aside from enforcing and complying with the 2015
nuclear agreement [Joint Comprehensive Plan of Action (JCPOA)],
to limit Iran's nuclear program and subject it to rigorous
monitoring and inspections?
A.5. The Administration is currently conducting a review of all
policies related to Iran, including on the benefits and
drawbacks of the JCPOA. I look forward to participating in this
review and to working with Treasury's partners in the
Administration and with Congress on this critical issue if
confirmed.
Q.6. As far as you know, are there any deficiencies in
Treasury's currently available tools to counter Iran for its
non-nuclear activities (ballistic missile development, human
rights abuses, support for terrorism, etc.)?
A.6. I understand that Treasury is well-armed through both
legislation and executive orders in terms of tools to counter
Iran's ballistic missile activity, support for terrorism, and
human rights abuses among other nefarious activity. Since the
beginning of the current Administration, Treasury has issued
three rounds of Iran sanctions, across the above-mentioned
categories.
If confirmed, I will act vigorously to ensure that we use
all available tools to counter Iran's destabilizing activities
and enlist the support of our international partners to do the
same. Should I find the need for additional tools and
authorities, I will not hesitate to work with you to determine
the best means by which to enhance existing capabilities.
Having served in the 1990s as a Senate committee staffer who
drafted several pieces of bipartisan sanctions legislation
(including on Iran), I appreciate the important role of
Congress on this matter and look forward to working closely
together.
Q.7. Iran is still on the Financial Action Task Force (FATF)
blacklist of countries that are a high-risk of money laundering
and terrorist financing. Last year Iran made commitments to
FATF to make structural reforms in these areas. Will you work
with FATF to pressure Iran to address its money laundering and
terrorist financing problems?
A.7. Yes.
Q.8. North Korea--China is North Korea's outlet to the
financial system. How do we exert pressure on China to get
North Korea to freeze its nuclear and ballistic missile
activities, without provoking a Chinese reaction that harms the
U.S. economy?
A.8. This is a crucial question, and if confirmed, I intend to
study it carefully. In general, I believe that Treasury should
continue to use all appropriate tools against North Korea and
to persuade China to bring economic pressure on its neighbor
and trading partner.
Q.9. State Department Budget--Former Acting Under Secretary for
Terrorism and Financial Crimes, Adam Szubin, testified before a
Banking subcommittee on May 10 about the need for sanctions to
be part of a broader diplomatic strategy. Mr. Szubin said, in
part: ``Massive diplomatic investment and multilateral
engagement will be needed to marshal a successful effort, and
it will require enlisting like-minded and resistant
countries.'' He went on to say ``it would be counterproductive
in the extreme to deplete our Foreign Service corps at a time
when we need them so urgently.'' President Trump's budget
blueprint proposes deep cuts to the State Department. Given
that diplomacy helps build coalitions with other countries to
enforce effective sanctions, would gutting the State Department
make your job easier or harder?
A.9. I have not examined the budget blueprint. Having served as
a diplomat during my time as NATO Assistant Secretary General,
I am supportive of our State Department, and both the Career
and Foreign Services. Sanctions are often deployed in
conjunction with other levers of national power, especially
diplomacy. State Department engagement can amplify Treasury's
efforts, and if confirmed, I will continue to be an advocate of
keeping a strong diplomatic posture.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
FROM HEATH P. TARBERT
Q.1. If confirmed, you will lead Treasury's role on the
Committee on Foreign Investments in the United States (CFIUS).
What kind of national security risks could arise if an
Administration official's business was acquired in whole or in
part by a foreign entity?
A.1. An acquisition of a U.S. business by a foreign entity
potentially could give rise to national security concerns,
depending upon a number of factors, including but not limited
to the nature of the particular U.S. business acquired and the
acquiring foreign entity. The relevant statute and regulations
require that, before clearing a transaction to proceed, CFIUS
find that there are no unresolved national security concerns.
If confirmed, I am committed to ensuring that CFIUS satisfies
this standard, regardless of who owns the U.S. business at
issue.
Q.2. Do you believe CFIUS has the resources to thoroughly
monitor and review foreign acquisitions of U.S. businesses that
could threaten national security?
A.2. As I stated in my confirmation hearing, if confirmed, my
first priority will be to ensure that the Office of Investment
Security within the Treasury Department has the necessary
resources and tools to function as Congress intended. To the
extent that additional resources and tools are required, I am
committed to working within the Department and with all
relevant parts of the Government to address such needs.
------
RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN
FROM HEATH P. TARBERT
Q.1. Systemic Risk--Do you see cybersecurity at financial
institutions as a contributor to systemic risk, and if so, what
should Treasury be doing about it?
A.1. Cybersecurity is a critical issue for the safety and
soundness of financial institutions and financial stability
more generally. Potential cyberattacks capable of paralyzing
systemically important financial institutions and financial
market utilities such as clearinghouses and payment systems can
contribute to systemic risk. Furthermore, the nature of
cyberattacks may make traditional micro- and macro-prudential
tools (i.e., capital and liquidity buffers) less useful at
mitigating financial stability threats.
I am aware that domestic regulators have been working on a
framework for addressing cybersecurity, and that the Financial
Stability Oversight Council has highlighted the importance of
this issue. I also understand that the Office of Critical
Infrastructure Protection and Compliance Policy within the
Treasury Department has programs to address cybersecurity
issues. If confirmed, I would advocate for continued attention
to cyber resilience within international forums, such as the G7
and Financial Stability Board--particularly because
debilitating cyberattacks in certain international financial
centers could directly impact the stability of the U.S.
financial system.
Q.2. CFIUS--Chinese firms and investors are increasingly trying
to acquire U.S. companies, or companies with U.S. assets. Last
December President Obama blocked a Chinese firm from acquiring
a German-based semiconductor company with U.S. assets. Are you
concerned about China's increasing assertiveness in this area,
and if so, what will you do about it?
A.2. Notwithstanding the significant benefit that the U.S.
economy derives from foreign direct investment, it is the
responsibility of the Government to ensure the protection of
the national security. If confirmed, I will carefully review
current and potential threats to and vulnerabilities within the
U.S. semiconductor sector. In carrying out my responsibilities,
I will work to ensure that no transaction is approved if
national security concerns remain unresolved.
Q.3. Some public reports have indicated that China may be
attempting to circumvent CFIUS in order to gain access to
defense or other critical technology by investing in early-
stage companies or otherwise obscuring the source of capital.
Is this a concern, and if so, do you believe that changes to
CFIUS are required?
A.3. I recall that during my visit to your office, we discussed
public reports of parties deliberately attempting to circumvent
CFIUS. I am concerned with such reports, although I understand
that a significant amount of work is being done to examine
these issues. Should I be confirmed, I am committed to fully
exploring these questions and to working to ensure that CFIUS
fulfills its statutory mandate.
------
RESPONSES TO WRITTEN QUESTIONS OF
SENATOR DONNELLY FROM HEATH P. TARBERT
Q.1. CFIUS--The Committee on Foreign Investment in the United
States (CFIUS) was established to review transactions involving
foreign entities that could have significant national security
implications. Our domestic steel, aluminum, and other metals
manufacturers are of vital importance to our Nation's critical
infrastructure and national security. Increased levels of
foreign imports, often aided by illegal Government subsidies,
have continued to weaken our domestic manufacturers and provide
foreign companies greater access to the domestic market.
If confirmed, you will be responsible for heading
Treasury's CFIUS efforts. How do you plan to prioritize agency
resources to ensure transactions are being appropriately
vetted?
A.1. If confirmed, I will work to ensure that the resources of
the Treasury Department are prioritized in a manner that
ensures all transactions are appropriately vetted. In addition,
I will make it a priority to assess the adequacy of the
resources available for CFIUS to fulfill its national security
mandate. To the extent that additional resources and tools are
required, I am committed to working within the Treasury
Department and with all relevant parts of the Government to
address such needs.
Q.2. Do you believe there are areas in which the CFIUS review
process can be improved to increase its effectiveness or the
number of transactions reviewed by the Committee, particularly
those involving manufacturing acquisitions?
A.2. If confirmed, I will consult with the career professionals
in the Office of Investment Security within the Treasury
Department and other relevant stakeholders to determine whether
any aspects of the review process should be adjusted to improve
the ability of CFIUS to satisfy its national security mandate.
To the extent that any such adjustments are appropriate, I am
committed to working within the Treasury Department and with
all relevant parts of the Government, as applicable to address
them.
With respect to national security issues potentially
arising from the acquisition of domestic manufacturers, I note
that Section 721 of the Defense Production Act of 1950, as
amended, directs CFIUS to consider a number of factors, at
least several of which are directly relevant to our
manufacturing sector. Those factors include: domestic
production needed for projected national defense requirements,
the capability and capacity of domestic industries to meet
national defense requirements, and the potential national
security effects on United States critical infrastructure. If
confirmed, I will work to ensure those factors and all others
required by law to be considered are appropriately taken into
account.
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