Lawmakers Question Treasury Officials on Efforts to Sanction Hostile Nations

Rep. Blaine Luetkemeyer questions U.S. Secretary of Health and Human Services Alex Azar as he testifies before the House Select Subcommittee on the Coronavirus Crisis, on Capitol Hill in Washington on Oct. 2, 2020. (J. Scott Applewhite/POOL/AFP via Getty Images)

At a hearing of a subcommittee of the House Financial Services Committee on April 27, lawmakers addressed and questioned Treasury officials about the actions, ability, and commitment of the Biden administration to place effective financial sanctions on—and disrupt the flow of money to—governments and other entities that support actions hostile to the United States.

A particular focus of the hearing centered on efforts to restrict and interfere with the banking and commerce of China, Iran, and Russia.

Appearing as witnesses at the National Security, Illicit Finance, and International Financial Institutions Subcommittee hearing, titled “Oversight of the Office of Terrorism and Financial Intelligence (TFI) and Financial Crimes Enforcement Network (FinCEN),” were Treasury Under Secretary for TFI Brian Nelson and Himamauli “Him” Das, acting director of the FinCEN department of the Treasury.

Blocking Bad Actors’ Access to Money

In his opening statement, Subcommittee Chairman Blaine Luetkemeyer (R-Mo.) called the Treasury Department to task for not being sufficiently tough with China and Russia.

“We need to demand accountability from Treasury for its refusal to stop Russia from waging war on Ukraine,” said Luetkemeyer. “As Institute of International Finance has shown, Russian imports are stable from a year ago, with Chinese exports making up for Western goods.

“The Treasury has allowed sanctioned Russian banks to use the U.S. financial system in order to rake in energy-related revenues, and it worked to roll back tough EU sanctions on Russian crude. Treasury appears to care more about the oil market and Democrats’ electoral prospects than on Putin’s war crimes. This is shameful.”

Luetkemeyer cited the genocide that China and its ruling party, the Chinese Communist Party (CCP), are conducting against the Uyghurs.

The chairman also noted that the Treasury has sanctioned international leaders but “top officials in the Chinese Politburo have been spared.”

Treasury Undersecretary for TFI Brian Nelson. (United States Department of the Treasury)

Nelson testified: “In the past few years, the demand for TFI’s expertise has grown exponentially. In the past year alone, the department has played a central role on a range of national security priorities, including in the response to Russia’s further invasion of Ukraine.

“Simultaneously, we understand that illicit actors have taken advantage of gaps within the U.S. and international financial systems. One of TFI’s core missions is to close these exploitable gaps.”

Nelson told the committee that to prevent states with bad intent from exploiting weaknesses in financial networks, TFI develops and uses a comprehensive framework of regulations against money laundering and the financing of terrorism, gathers and studies information, takes “enforcement actions,” and enlists the “private sector and nongovernmental agencies.”

Rep. Brittany Pettersen (D-Col.) spoke on the issue of deadly fentanyl trafficked into the United States, most of which comes from Mexico and is made with precursor chemicals from China and the CCP.

The issue of drug abuse is personal for Pettersen. She said her mother has battled addiction, which began when she was prescribed opioids. She then used heroin and eventually fentanyl.

Pettersen thanked Nelson and Das for the work the Treasury is doing to combat drug, human, and firearm trafficking and said that for America to disrupt and shut down shipment and transport of fentanyl, it is “going to require significant resources for agencies like yours to stop the drug cartels from utilizing our financial systems to launder money.”

Pettersen went on to say that she had concerns that the budget cuts that the GOP passed in the House the previous day could hinder the anti-drug-trafficking efforts of the Treasury.

A Government-Wide Challenge

Efforts against money laundering and the financing of terrorism are battles waged across the government.

The House Financial Services subcommittee hearing came in the wake of congressional testimony on April 19 of John Sopko, the special inspector general for Afghanistan reconstruction.

Sopko testified that he believes it is likely that the Taliban is getting its hands on portions of the $8 billion in taxpayer money that the Biden administration dedicated to the Afghan people following the U.S. withdrawal.

John Sopko, special inspector general for Afghanistan reconstruction, testifies before the Senate in Washington in a file photograph. (Sarah Silbiger/Getty Images)

In his testimony, Sopko said he is not sure how the money is being spent and allocated because the administration has been dragging its feet in providing access and oversight to records that he has requested.

On April 27, Sens. Kirsten Gillibrand (D-N.Y.) and Ted Budd (R-N.C.), and Reps. Zachary Nunn (R-Iowa) and Jim Himes (D-Conn.) co-sponsored and introduced in Congress the Financial Technology Protection Act, a bill that would form a group to research, evaluate, and analyze how cryptocurrencies and other cyber financial instruments can be used to fund terrorism and other illegal activities.

The Treasury announced on April 24 that it had frozen the U.S. assets of three people who had laundered virtual currency that North Korean hackers had stolen to fund Pyongyang’s weapons program, and that the agency would sanction those who do business with money launderers.