▶ 0:11:48The subcommittee on national security, illicit finance, and international financial institutions will come to Without objection, the chairman is authorized to declare a recess of the committee at any time. This hearing is titled evaluating the effectiveness of US sanctions programs. Without objection, all members will have five legislative days within which to submit extraneous material to the chairman for inclusion in the record. I now recognize myself for 4 minutes for an opening statement.
▶ 0:12:13I welcome our distinguished witness, the Honorable Jonathan Burke, Assistant Secretary for Terrorist Financing at the US Department of Treasury. Today's hearing provides the subcommittee an opportunity to review US sanctions programs and the process for making sanctions policy and Ensuring that our sanctions are effective, targeted, and strategic is vital to achieving our national security This discussion is especially timely as we work to further isolate Iran and prevent it from funding its nuclear program,
▶ 0:12:43ballistic missile development, and regional proxies who have made them the world's number one state sponsor of As we have become more comfortable with sanctions over the past few decades, they've become a go-to tool to advance our national security objectives with designations on topics as varied as counterterrorism, anti-corruption, human rights, fraud, organized crime, and counter narcotics.
▶ 0:13:10Sanctions are also a centerpiece of our response to bad actors like Russia and North Korea. In fact, as of 2024, the United States had sanctioned targets in around a third of the world's countries. Too often, it seems that sanctions are used too easily without a coherent strategy or a clear theory of success or metrics to assess the effectiveness. Furthermore, the use of sanctions is not without cost.
▶ 0:13:42They predictably cause hedging behavior, whether it's China and Russia conducting trade outside the dollar system or Europe developing the digital euro euro in part as a way to evade US sanctions.
▶ 0:13:55It also provides uh without without a uh clear connection to foreign policy, we can't accurately signal when we might use signal uh might use sanctions, and it uh erodes our own credibility and weakens the deterrence effect as they become overused. Recently, the Robert M.
▶ 0:14:17Gates Global Policy Center released a noteworthy report summarizing several key shortcomings in our approach uh to sanctions policy, such as a lack of coherent achievable goals, a failure to adequately communicate with the private sector, and the need for a single entity within government to communicate sanctions policy. Many of these concerns are well-known and long-standing.
▶ 0:14:40Some have been acknowledged by Treasury, including the need for a more robust internal policy process to ensure sanctions remain strategic. Frustratingly, despite this widespread recognition, little has been done so So, I hope this hearing will give us an opportunity to evaluate how we might fix these problems to ensure that the long-term viability of our sanctions toolkit and the strength of the dollar as the global reserve currency.
▶ 0:15:06Finally, Assistant Secretary Burke, uh given your role at uh TFI, I'd also like to touch on FinCEN. Uh SAR and CTR thresholds have not been updated since the 1970s, yet Treasury's latest uh Bank Secrecy Act rule fails to change them. um concern is we get a lot of noise and not enough signal.
▶ 0:15:28Furthermore, a year ago, the administration took the welcome step on the Corporate Transparency Act uh to narrow the scope to foreign companies. Uh despite assurances, Treasury still has not deleted the beneficial ownership information millions of Americans have already turned over. I I hope we can get some uh clarity on the timeline for when we can expect action on all those fronts, and I yield back. I now recognize the ranking member of the subcommittee, Ms.
▶ 0:15:56Beatty, for 4 minutes for her opening statement. Thank you, Mr. Chairman, and thank you to our witness, Assistant Secretary Burke, for appearing here today. The title of the hearing is has been stated as evaluating the effectiveness of United States sanctions program. I'm frankly shocked that the majority on this committee has chosen to hold a hearing on sanctions effectiveness while we have a president with no clear sanction policy and while we are 54 days into a war with Iran.
▶ 0:16:27Sanctions are intended to apply targeted economic pressure on a country's leadership to change harmful behaviors without the use of military force. When used correctly, they are not just a show of strength, but a tool to bring adversaries to the negotiating table.
▶ 0:16:45Instead of utilizing this strategy, President Trump and his administration have abused sanctions in ways that fuel conflict as evident by the current war in Iran, which undoubtedly shifts the burdens onto the American people through increased costs. Under this administration, sanctions sanctions have become erratic and ineffective.
▶ 0:17:07One day, he's touting a maximum pressure campaign designed to economies, and the next he's easing pressure on adversaries like Iran and Russia, inconsistently enforcing sanctions and alienating our allies. That's not strategy, that's whiplash.
▶ 0:17:26Just like his chaotic tariffs that have weakened havoc on the United States businesses and consumers, Trump's reckless use of sanctions is driving up costs for Americans at the gas pump, at the grocery stores, making the affordability crisis even worse for hardworking families. And I say this because we get the calls every day about the price, whether it's gasoline or food.
▶ 0:17:52Democrats and Republicans have long agreed that the United States sanctions regime must be clear, consistent, and properly enforced. But now my colleagues across the aisle are standing by as President dismantles that system. Their silence is enabling this administration to threaten our national security, destabilize global markets, and increase again costs for American consumers.
▶ 0:18:20To make matters worse, just yesterday, Republicans on this committee voted to advance a bill that repeals almost in its entirety the bipartisan, operative word bipartisan, Corporate Transparency Act, which seeks to unmask the bad actors hiding behind anonymous shell companies, including sanctioned Instead of giving law enforcement better, sharper tools to crack down on money laundering, my colleagues
▶ 0:18:50across the aisle are making it easier to evade sanctions through opaque legal entities. We did that yesterday, and that was in a full committee, I remind you. Then they turn around and hold a hearing on the effectiveness effectiveness of United States sanctions programs? The bottom line is sanctions are a serious national security tool, but when they are imposed and enforced inconsistently with no clear plan, they do what? They fall short.
▶ 0:19:20We can our credibility and undermine the United States leadership on the global stage. Let me say thank you again, Mr. Secretary, for appearing today, and I look forward to hearing your testimony and learning more about the administration's sanctions policy. I yield back. The gentle lady yields back.
▶ 0:19:43Today, we welcome the testimony of the Honorable Jonathan Burke, Assistant Secretary for Terrorist Financing of the US Department of Treasury. Assistant Secretary Burke, we thank you for taking the time to be here. We thank you for your service. You will be recognized for 5 minutes to give an oral presentation of your written testimony without objection. Your written statement will be made part of the record. Assistant Secretary Burke, you are now recognized.
▶ 0:20:12Thank you very much and good afternoon, Chairman Davidson, Ranking Member Beatty, and distinguished members of the Thank you for the opportunity to appear before you. My name is Jonathan Burke, and as you said, I serve as the Assistant Secretary of the Treasury for terrorist financing. I look forward to discussing how under President Trump and Secretary Mnuchin, the Treasury Department is safeguarding the US financial system from illicit I will be brief so we can move quickly to questions, but I will focus on three areas.
▶ 0:20:39One, the role of the Office of Terrorist Financing and Financial Crimes, known as TFFC, which I lead. Number two, key vulnerabilities facing the US financial system. And three, priorities for countering illicit It has been an honor to return to Treasury to lead TFFC, an office that I previously served as a career policy advisor from 2008 to 2012. When I was there, I focused on disrupting Iran-linked financial activity and strengthening the effect of US sanctions.
▶ 0:21:09After leaving government, I spent more than a decade in the financial services sector working on sanctions and illicit finance risk management and compliance. The role of TFFC is to coordinate US anti-money laundering and counter-terrorism financing policy. We serve as Treasury's policy office for national security functions, working with partners across government and with offices including OFAC and FinCEN.
▶ 0:21:33We identify and deploy Treasury's financial tools against threats ranging from cartels and cyber criminals to terrorist financiers. We also lead engagement with foreign governments, international bodies like the Financial Action Task Force, and the private sector to combat illicit finance. Our top priority remains safeguarding the range of national security threats against the United States and the integrity of the US financial system.
▶ 0:21:58While long-standing threats such as Iran, drug cartels, and terrorist financing persist, new risks have also Fraud has become a defining challenge. Organized criminal groups operate large-scale scam centers abroad, while domestic fraud costs taxpayers hundreds of billions of dollars annually. This level of abuse is unacceptable. Adversaries are also using increasingly sophisticated methods to evade sanctions, including shadow fleets, shell companies, digital assets, and alternative payment systems.
▶ 0:22:28Cartels and drug traffickers have similarly advanced their financial operations, often in partnership with Chinese money laundering networks that move billions across borders. As President Trump and Secretary Mnuchin have emphasized, economic security is national security. The Treasury Department is committed to addressing these risks. Doing so requires aligning resources to the most significant challenges in combating illicit finance. Let me highlight three of our key priorities.
▶ 0:22:55First, Treasury is supporting a whole-of-government effort to combat fraud. My office recently published the National Money Laundering Risk Assessment, which details the scale of fraud in the United States. We are leveraging financial intelligence, law enforcement partnerships, asset recovery tools, and collaboration with foreign foreign counterparts and the private sector to disrupt networks and hold perpetrators Second, Iran remains a central focus.
▶ 0:23:22The regime continues to seek new ways to finance its weapons program, support terrorist proxies, and evade sanctions. Treasury is working with foreign partners and financial institutions to disrupt these activities, including by exposing and degrading Iranian shadow banking networks in line with the administration's maximum pressure Third, we are modernizing the US regulatory framework for illicit finance to ensure it is risk-based, effective, and fit for purpose.
▶ 0:23:49Our system should focus on the biggest risk areas and avoid unnecessary burdens on industry, while also improving national security outcomes. A key component is implementation of the GENIUS Act, including proposed rules for stablecoin issuers and broader efforts to support financial innovation. And we are advancing reforms to ensure AML/CFT regulations allow financial institutions to focus on high-risk activities and are supervised on the basis of risk.
▶ 0:24:16Additionally, we are reviewing sanctions practices to improve their efficiency and impact. Current compliance practices such as screening large sanctions lists often generate high volumes of false positives and divert resources from higher-risk threats. We are working to sharpen our sanctions tools, remove outdated designations, and provide guidance that helps financial institutions focus on meaningful risks. Success should be measured by the impact and national security outcomes.
▶ 0:24:44All of these efforts rely on strong partnerships with financial institutions, with law enforcement, with foreign governments, and with Congress, whose support and authorities are essential to our mission. I look forward to continuing this partnership and to your questions today. Thank you very Thank you, Assistant Secretary Burke, and we'll now turn to member questions. I'll now recognize myself for 5 minutes for questioning.
▶ 0:25:06Um, in your testimony, you note that our adversaries are employing increasingly sophisticated ways to access funds and US sanctions. I'm I'm interested in two two areas of especially when it comes to China. We we passed a bill called the COINS Act in the NDAA that gives to the president additional sanctions authorities related to Chinese military-industrial complex companies.
▶ 0:25:34And we we have a lot of different lists in the government. We have the CMIC list at Treasury, NSCS CMIC list. We have, of course, the Commerce has all of the entity lists and various other lists relating to export controls. Uh, the Department of War has Chinese lists.
▶ 0:25:55But, can you speak to list coordination when it comes to sanctions and working on uh, sanctions enforcement and and adversarial sanctions evasion? Is there any coordinated effort at Treasury to start coordinating these lists?
▶ 0:26:13Because if if we're trying to, for example, if if an entity is problematic enough to be listed uh, on the Commerce Department's BIS BIS export control list, why would they not be on a Treasury list that would restrict outbound capital flows to that same entity? What is the what is the work that's being done to coordinate on all of these Thank you, Mr. Chairman.
▶ 0:26:40you referenced several lists, and I can tell you, even from my experience in the private sector, list management is a very complex exercise in terms of its The purpose of the lists have very varying degrees of authorities that impose different obligations. And the purpose of the list is to identify where there is a particular authority or restriction that needs to be imposed and implemented.
▶ 0:27:03So, implementation of those lists is really at the private sector from a variety of of different private sector entities, whether it's banks or exporters. And so, one of the things that we're doing, cuz at Treasury, it's the sanctions list that we that we manage, and as I mentioned in my opening remarks, we're looking at how can we make the list most effective. And that's also there's a couple of different pieces to that.
▶ 0:27:26But, one is making sure that it's clean and that it's it's it's aligned to the priorities and it can be usable and implemented in institutions that are relying on that list. Well, and and if I could just reclaim my time, I know you're not Office of Investment Security, but at Treasury generally, uh, do know that Congress in that in that legislation imposed additional responsibilities on Treasury to explain entities would be on one list but not on another.
▶ 0:27:53So, we're actually trying to push Treasury to take a lead on on list coordination there. In 2021, Treasury identified the need to adopt a structured policy framework that links sanctions to a clear policy objective. Uh, can you tell us the status of this So, I recall that that uh, that was in the previous administration where they did the sanctions review and put out uh, uh, views on how sanctions should be aligned to national security.
▶ 0:28:21There's a lot in there that I think we agree with. Um, I haven't seen from the previous administration implementation of that. And so, we're looking at how can we actually do that in a way that's meaningful and effective. And that's what I mentioned in looking at not only the lists we have, but the how the sanctions are applied, what they're intended to achieve, and how they can complement the array of of tools and authorities available to the US government to achieve those objectives.
▶ 0:28:47And could you discuss changes that Treasury has made since that report in 2021 that that would strengthen your ability to determine whether sanctions are in fact the right tool to achieve a given policy outcome? I think what you've seen is the judicious use of sanctions since uh, since this administration started. Uh, we we, you know, we do continue to roll out sanctions against uh, targets that are aligned with the national security objectives. We also look at ways to make that meaningful.
▶ 0:29:15So, in the Russia context, you saw sanctions against Rosneft and Lukoil. That was welcomed by some of our global partners, but that was seen as a very meaningful measure that would support the US policy objective. Uh, FinCEN collects millions of reports under the Bank Secrecy Act, yet it failed to stop or deter major fraud schemes like the rampant benefits fraud in Minnesota. you testified about the focus of the administration on fraud. I applaud you for that.
▶ 0:29:40Can we have confidence though that FinCEN is making meaningful use of its reports when, you know, we we FinCEN did not uncover that that fraud that we saw in in Minnesota. Thank you for the question. As as I mentioned the with the fraud priority is a whole-of-government effort and FinCEN has done a number of things to and continues to do things to support that effort. As you know, the the Vice President is leading the task force to eradicate fraud.
▶ 0:30:08FinCEN's role in that is included providing advisories to institutions to be able to enhance the reporting as well as investigating money services businesses and other activities and that will continue. Well, thank thank you very much for your testimony. The chair now recognizes the ranking member of our subcommittee, Ms. Beatty of Ohio, for 5 minutes. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here. I think you actually answered part of my first question, but let let me just skip down to the bottom of it.
▶ 0:30:38Do you think that the Trump administration believes that the sanctions, I think that Mr. Barr also referenced, can be effective policy tools? And if so, under what And why didn't maximum pressure sanctions work? Thank you for that that question. I do think that sanctions are a very valid tool to support policy objectives.
▶ 0:31:06They do a couple of different things and every situation can be different and sanctions can be used for different reasons and and to complement other that are available to the US government. One of those is disruption. So, when we see a potential sanctions target and we're trying to protect the US financial system from exposure to that sanctions target, sanctions can be useful to isolate those sanctions targets and make sure they don't have access to the US or or not easy access to the US or freeze
▶ 0:31:37The other thing is to change behavior. So, we can use sanctions in a variety of ways to try to change behavior. Even the the prospect of sanctions before using them can can be effective at change me changing behavior of various actors. So, I do think sanctions continue to be an effective tool and we we want to make sure they are used in an effective way aligned to the strategy with clear objectives that we can see the impact of and make sure that they're still valued.
▶ 0:32:03Let me ask you another question. There is evidence from the United States intelligence community that Russia and Iran are working together to resist President Trump's goals in the Middle East, whatever those those may be. Russia is sharing targeted data with Iran as the regime seeks to attack US soldiers, bases, equipment in the Middle East. What is your department doing to disrupt that cooperation either directly or with federal partners or with our allies?
▶ 0:32:35So, we have a few approaches to addressing the and we look at all risks to of the financial system and all forms of illicit finance. And so, we we we we continue to support the President's policy on seeing a peaceful resolution to the Russia-Ukraine conflict and supporting the President's policy of maximum pressure on Iran.
▶ 0:32:54So, where there are instances of any illicit finance taking place through either one of those, you know, we continue to maintain our sanctions, we continue to identify new ways to apply sanctions and we continue to work with our international partners to make sure where there is vulnerability that they need to act on that we can share information and ensure that they can do that as well. Okay, Mr.
▶ 0:33:16Burke, the conflict with Iran has been costly resultant resulting in the loss of American lives and billions of dollars worth of military equipment. In the case of Iran, can you explain why we are bombing a country but also allowing them to sell their oil unsanctioned?
▶ 0:33:33Our reports are that thanks to the OFAC's actions, Iran was able to sell its oil above Brent oil classification for multi-billionaire dollars of profit. In the case of Russia, why are we lifting sanctions and facilitating billions of oil revenue for a country that is helping Iran attack our military? Thank you for the question.
▶ 0:33:58I think in both instances, then as the Secretary has been clear about this as well, the general licenses that were offered to allow this sale of Russian or Iran oil were were limited in nature, limited in time period, limited in scope and they applied to oil that was already on the water and we don't think that it would be material benefit to either country and it would be very difficult for them to receive benefit from that, but it also allows the balance of supporting
▶ 0:34:30better stability in the energy markets and and supporting our partners who who had the energy needs. Let me see if I have time for one more Through the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, more commonly known as REPO REPO Act, Congress directed the President to use confiscated and liquidated Russian sovereign assets to compensate Ukraine for damages and needed reconstruction resulting from
▶ 0:35:00Russia's invasion. The law also directed the government to work with allies to develop an international compensation mechanism for Ukraine. Does the United States plan to use the Russian assets as required by law? If so, how and when? So, I understand that those assets remain frozen, the ones that have come into US jurisdiction.
▶ 0:35:22And what I can say is that, you know, the the President has been clear about a desire to see a peaceful resolution to that conflict and we'll continue to support the President in achieving that. Thank you. My time is
▶ 0:35:34time has expired. The chair recognizes the chairman of our task force on monetary policy, Mr. Lucas of Oklahoma. Thank you for holding this hearing, Mr. Chairman, and thank you, Mr. Burke, for testifying today. I want to begin our conversation discussing prevention. A top priority of mine has been sending my Protect Taiwan Act to the President's desk to ensure China understands the repercussions of threatening Taiwan.
▶ 0:35:58How does the Office of Terrorism and Financial Intelligence think about deterrence and the value of prevention before approaching sanctions? Well, thank you for the question. You part of what we do, you know, we support the Secretary in his engagement with international on a range of issues.
▶ 0:36:21When it comes to that issue, we have, you know, sanctions are a tool that can be used in to prevent certain, you know, behaviors or to change certain behaviors, but that's just one tool of and we'll continue to support the Secretary in his ongoing diplomatic There's been no shortage of debate on the effectiveness of various economic and diplomatic sanctions regimes on altering bad behavior by our foreign adversaries.
▶ 0:36:50How does TFI define and monitor success when implementing sanctions? When do we know we're making some progress? It's a great question and it's and it sometimes can be lots of different ways to approach that question. And every situation is different. There are some, you know, sanctions have a cumulative effect over long periods of time.
▶ 0:37:10I think if you look at Iran, we've had sanctions for decades with different periods of maximum pressure, which we've of course been on since Trump President Trump implemented that last year. And that has a long-term degrading effect, which I think also opened up opportunity for the use of different tools. And then we also have circumstances that require where sanctions can be used to disrupt certain actors or prevent certain actors from obtaining financial services that would be used to support illicit activities.
▶ 0:37:40Will the gentleman suspend? We'll freeze the time here. All All those in attendance are reminded in accordance with rule 11, clause four, of the House of Representatives to observe standards of dignity, propriety, courtesy, and decorum traditionally observed by the House and this The witness now can may continue. Thank you, Mr. Chairman.
▶ 0:38:06Um so, there are different circumstances that the sanctions will have a different effect and we look at different ways of being able to measure that, whether that's a long-term objective or something that's more acute. Can you expand on your written testimony about how does TFI work across agencies and in coordination with the private sector to ensure everyone is contributing to the defense of our national security interest? Thank you for that question.
▶ 0:38:33I do think it is not only a lot of the illicit finance issues are whole-of-government approach, but the private sector plays a very important role. A lot of times, you know, banks have been seen or see themselves as the front line in the fight against financial crime. So, we have to make sure that industry has the appropriate information and can be encouraged to use the appropriate tools to identify, prevent, and disrupt various types of financial crime.
▶ 0:39:01And so, we do work very closely across the interagency, particularly on international activities, but we work with the private sector to make sure they're well equipped to address those risks. Thank you very much, Secretary. I appreciate the mission of your organization and how difficult it is. And with that, Mr. Chairman, I yield back the balance of my The gentleman yields back. The chair recognizes the ranking member of our subcommittee on financial institutions, Dr. Foster of Illinois, for 5 minutes. Thank you, Mr. Chairman, to our witness.
▶ 0:39:31Let's see. In March, in response to the GENIUS Act that we passed and was signed by the President, the Department of Treasury published a report on innovative technologies to counter illicit finance involving digital assets.
▶ 0:39:44And in developing this report, the Treasury noted that digital identity technology was endorsed by digital asset industry leaders and advocacy groups, quote, due to its innovative potential for countering illicit finance involving digital assets, streamlining employment compliance requirements, and maintaining privacy for customers. In particular, the report highlighted the utility of Real ID compliant digital driver's licenses in the customer AML KYC processes.
▶ 0:40:14Not only does this technology allow financial institutions to streamline and make less expensive customer identification processes, they can also minimize the amount of sensitive data that gets collected. Now, similar tools are already being utilized around the world as reported in the report, including the EU, the UK, Japan, Korea, and the free democracies of the world. In my view, the United States is behind the curve.
▶ 0:40:42You know, I imagine in your extensive experience in this front, you spend a lot of time tracking down identities, you know, mistaken or deliberately fraudulent or just confused identities. And that's not going to be the case for citizens of the EU, for citizens of Japan, UK, you name it, but it will still be in the US. And one particular obstacle to adoption that was noted in this report is the fragmentation between state, federal, and other digital identity standards.
▶ 0:41:11Now, in response to that, Congressman Sessions and I have recently introduced a Stop Identity Fraud and Identity Theft Act, which would provide resources to states that wish to create their own NIST-compliant digital ID programs. And I remind you, all of this technology was developed by NIST, you know, back over a decade ago and is now in Android and iPhone and is adopted around the world, but not in the United States for purposes like KYC.
▶ 0:41:39So, do you believe that this kind of federal support to encourage the development and deployment of digital ID technology among the states would support its use to secure the financial system more broadly? Thank you, Congressman, for that question. It's a really important topic, and I appreciate you highlighting the innovation report that was submitted to Congress following the implementation of the Genius Act or during the implementation.
▶ 0:42:03And you're right, digital ID was Maybe first I can describe briefly what we think of when we think of digital ID, cuz I do think that that carries different connotations for different different groups. And the message that we're hearing from industry, I think as you pointed out, is that they could be more effective at performing their compliance requirements around KYC, understanding their customers, and validating their identity using and leveraging the technologies that are emerging or available, including different data sources.
▶ 0:42:34So, our objective is to really encourage, support innovation in the financial services and in the ability to address these illicit finance risks. And so, we are going to pursue an effort to look at how digital ID technology can be leveraged by industry to be more effective at implementing their compliance requirements.
▶ 0:42:58Now, another Treasury also identified the regulatory uncertainty among financial institutions on how to adopt these technologies as a major barrier to adoption. In the report, Treasury stated that it would issue guidance to financial institutions on how they could utilize verifiable digital credentials to satisfy their KYC obligations. Do you have a sense of when the banking industries will actually receive that guidance? And is there anything that you can share about the next steps ahead for Thank you.
▶ 0:43:27I don't have a timeline on the guidance. That was As I mentioned, we're going to be undertaking a project to engage with the the industry to really find the right parameters that will help to shape what we can provide to them. As you rightly pointed out, a lot of the feedback we get is they they need to invest. So, they're going to need to invest in technologies, and they need to be confident that those investments in the technologies they employ will pass muster with their regulators.
▶ 0:43:56And so, we are engaging with the federal banking agencies and engaging with industry, and we'll try to make sure that we can issue guidance that will support those needs and make sure they can be effective at their implementation. Now, because many of these businesses operate around the world, and they see the difference in their efficiency operating in the EU, and it's going to become more important to as the era of agentic finance comes into play, where the first question you have to answer is who is the legally traceable human behind this
▶ 0:44:26agent that has just contacted my agent. And the standards for that are NIST is actually leading the way helping to get those involved, and it's going to be crucial that we the starting point is secure digital ID for citizens. Thank you. Yield back.
▶ 0:44:40Gentleman's time has expired. The chair recognizes the chairman of the House Small Business Committee, Mr. Williams of Texas. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here. Mexican drug cartels have become more sophisticated in how they move their money, often working with Chinese money launderers through cross-border networks and non-bank channels. These bad actors are exploiting gaps in our financial system and adapting faster to traditional enforcement tools.
▶ 0:45:07We must cut the head of the snake if we're going to going to protect our communities and these terrorists from these drug cartels. So, Mr. Burke, can you walk us through how Treasury is adapting its tools to target those financial networks? And what more should we we be doing to eliminate their access to the US financial system? Thank you for that question.
▶ 0:45:30There are a number of facets to the approach the Treasury is taking to address the contained risk of of drug cartels and and narcotraffic in the financing that goes with that. Maybe I'll split it up into some of the domestic activities and then also some of our international activities.
▶ 0:45:46So, domestically, as you've seen, primarily through FinCEN, there's the deployment of geographic targeting orders that highlight certain risks and require enhanced reporting from certain institutions within that geography, and that gives more information to FinCEN that can be used to support law enforcement activities. And so, that that helps to concentrate where there can be a law enforcement applied to where where there's the most risk.
▶ 0:46:11Internationally, in my office leads engagement primarily with with foreign governments on on these on illicit finance issues, and we've had very robust engagement, particularly with with the Mexican government, which is ongoing, to make sure that we're working together to identify these risks and take action against those, not only from the US side, but from the Mexican side as well, and strengthen their their framework domestically to address these risks In Texas, where I'm from, energy production is a major driver
▶ 0:46:41of jobs and economic growth, and our producers are competing in a global market shaped in by by US in part by the US sanctions policy. Those policy decisions don't happen in a vacuum. They ripple through supply, pricing, and investment decisions. So, again, how is Treasury working about or thinking about the downstream impact of licensing decisions on our domestic producers and making sure we are not putting American energy at a disadvantage?
▶ 0:47:13Thank you for that question. As I mentioned before, you know, this when we look at some of the geopolitical challenges in the world that we're facing, and the secretary is is uh managing very closely this the balance of the use of sanctions, the economic pressure, and the stability of energy markets. And also looking at the need to make sure that where there's opportunity that US businesses have have have the ability to participate.
▶ 0:47:38I think Venezuela is a good example of the the policy to now work with the Venezuelan government after the the incredible actions that the president took to remove the leader and set the stage for reopening of economic engagement with Venezuela given their natural resources and providing the the authorities through OFAC general licenses and working with with US businesses as well to participate in Finally, I hear from community and regional banks back home in Texas
▶ 0:48:08who tell me that their compliance compliance costs have gone have significantly over the past several years, and they have. And while truly bad actors abroad keep finding ways around the system. So, quickly, can we walk [clears throat] can you walk us through TF TFFC's distinguishes between a regional bank that may mark may make a minor screening error and a foreign bank that knowingly facilitates illicit payments? And how should we think about tailoring the reinforcement approach in those different situations?
▶ 0:48:39Thank you. That's a great question. It really goes to the heart of what one of the things we're trying to achieve at Treasury now, which is support for a risk-based approach. And you may be aware that Treasury just issued a notice of proposed rulemaking for an updated anti-money laundering program rule, which was called for under under AMLA, I believe.
▶ 0:49:02And central to that is the risk-based approach and using a risk-based approach to make sure that more resources are spent against higher risk activities and less resources spent against lower risk activities within all financial institutions. And that really is fundamental to that for any institution is the ability to understand those risks and then be able to align their controls appropriately.
▶ 0:49:26So, you're exactly right, a community bank is going to have a very different risk profile than a major global institution that might be operating throughout the world. And it's important that they also have the ability to uh tailor their controls to meet the risks they face and that they get the confidence that that they're doing it appropriately. So, that's something very important to what we're doing right now. Thank you very much and I yield my time
▶ 0:49:51Gentleman yields, the chairman recognizes uh the well, she's not Oh, the ranking member of the full committee, Ms. Waters for 5 minutes. Thank you very much. Assistant Secretary Trump's Treasury has waived sanctions for Russia and for Iran, allowing Russia to make an estimated 2 to 10 billion dollars in first month of Treasury's free-for-all oil license.
▶ 0:50:19A similar license allowed Iran uh to make an estimated 5 billion over the past month. This is a windfall for Putin and the new Ayatollah and uh their war machines. These sales represent a blip uh to the global oil market's daily usage, but amounted to a huge windfall for these adversarial nations.
▶ 0:50:41Gas prices for Americans have not fallen and now we hear that the energy secretary thinks they won't fall until 20 27. So, please explain to us why enriching corrupt leaders like Putin and fueling wars that harm the US and our allies is good for US interests. Thank you for for the question.
▶ 0:51:09Um I think as Secretary Blinken has noted that the licenses that were offered were limited in scope, uh limited in time frame. We do not believe that they're windfall to Russia or Iran. In fact, the payment mechanisms for their oil, uh I believe makes it very difficult for them to benefit uh directly during that period of time. Yet, it also was intended to help uh provide stability to energy markets.
▶ 0:51:32We had the meetings of the go World Bank and and the IMF last week where a number of countries expressed uh a request for relief from some of their in energy needs. So, that was both a way to stabilize uh or provide stability to the energy markets, support some of our closest partners uh during this time of need while we're also trying to address um the risks posed by uh by Iran and as President has said, see a peaceful resolution to the conflict with Russia.
▶ 0:52:03Well, sanctions uh give leverage uh to a president using a stick as a carrot, so to speak, to encourage the targeted person to act in a way that's beneficial to US national security interests. What leverage is created by lifting sanctions in Russia, Belarus, and other friends of Putin and his war effort?
▶ 0:52:26By rewarding Russia with billions of extra dollars, especially through the general licenses, allowing Russia to sell its illicit oil freely and above the oil price caps set by the United States, Europe, and others, how will this get Putin uh to the negotiating table or convince Russia to end his unjustified invasion of Ukraine? Thank you.
▶ 0:52:53As as I mentioned, the licenses were, you know, for a very short period of time, intended to support the market and some of our key partners. We don't believe that that uh provides a windfall to Russia during that time. And we also continue to maintain sanctions on Russia. Uh one of the things I mentioned earlier that the the president and the secretary want to make sure that the sanctions are meaningful and used strategically.
▶ 0:53:20Um at the end of last year, the uh uh Treasury announced sanctions against Rosneft and Lukoil, which was pretty monumental at the time and had a incredible impact uh on on Russia and you've seen, you know, efforts now by uh Lukoil to sell their their assets. So, I think the sanctions remain a viable tool and will continue to to support the president and the secretary in in that Well, you know, let me just, you know, um divert from this a little bit.
▶ 0:53:51What does the president think about oil and gas prices now? Does he think he has helped or hurt? So, I haven't spoken to the president about gas prices. My role is to look at illicit finance risks and try to make sure we uh apply the tools appropriately to the
▶ 0:54:08your role is uh to want to do what's in the best interests of the American people. And if it means asking questions, if it means challenging, you're in the meetings, you know what's going on, you have an opinion. Do you believe or did the president tell you uh that he knows what he's doing and is helping uh the United States uh with this problem that we have with uh and that he does not believe that he's hurting in any way.
▶ 0:54:39The gas price is going up is somebody else's problem. Somebody else caused this. What do you know? So, so again, my focus is on uh the implementation of our tools to combat illicit finance and to uh support foreign policy through those tools such as sanctions. So, I'm happy to take your point back. We have a building full of economists who are advising the secretary every day on economic measures uh and economic indicators. I'm focused on the
▶ 0:55:08Gentlewoman's time has expired. And I'll recognize myself for 5 minutes for questions. Uh Mr. Burke, your role is uh Assistant Secretary for Terror Financing. Thank you for being here and thank you for what you do. You know, sanctions are among the most powerful tools Congress gives the executive branch. They're also one of the least Uh to help me understand or those watching uh how sanctions are designed, can you identify a current sanctions program?
▶ 0:55:39Walk me through the objective, uh what benchmarks might be used to gauge success, and then conditions under which you might see uh an opportunity to lift those sanctions, sir? Well, thank you for the question. Um you you you and I appreciate your reflection that they can be misunderstood and and are hard to to follow.
▶ 0:55:59Um I'll try to keep it simple in the interest of of time, but I sanctions, you know, having done this for many, many years, I see kind of multi-layers of this. One is sanctions can be used to disrupt financial activity from certain actors, whether that's terrorist organizations, Iran and their front companies.
▶ 0:56:21And so, by using sanctions, you can block assets uh and disrupt their ability to move that move those funds to support their illicit activities. Another way that sanctions have been used is to raise awareness about the various risks. So, where the United States, you know, sanctions when sanctions are applied, they're applied to US persons or where US persons come into contact with assets, they have to handle accordingly. Sometimes uh transactions might exist outside the US jurisdiction or outside of US reach.
▶ 0:56:51So, the US tools are to raise awareness of those risks and then we have engagement with our partners around the world to also raise awareness of those risks and encourage them to take action. Then there's other layers of sanctions such such as secondary sanctions, which the secretary mentioned last week are on the table with Iran.
▶ 0:57:09There's a number of authorities that provide for the application of secondary sanctions where a party outside, particularly a bank that might be outside of US jurisdiction, is doing activity um that uh doesn't touch the United States, but would violate sanctions and allows us to then impose secondary sanctions um by removing their access to the United States.
▶ 0:57:30So, there's multiple layers of the way sanctions work and and it provides us with the tools to be able to target uh behavior or activity that's posing a risk even indirectly to the US financial system and try to protect the US system from that activity. Yes, sir.
▶ 0:57:48And I I want to underscore, you know, the point that you're making, the complexity of the way sanctions can be structured and quite frankly, targeted to a specific state actor, entity, etc. And one set of sanctions may not look exactly like the other. And so, to that point, you know, the efficacy of our sanctions relies on partnerships with the private sector, foreign governments, and other actors.
▶ 0:58:13And I'm happy to see the United States use sanctions aggressively to advance American interests uh to quite frankly, make the world a better place. But, it's important that we ensure that we're leaning on our partners, to your point, to help with those sanctions and those regimes uh for our own strategic reasons. At the end of the day, we are the the our mere presence, uh we are that provider of a global security, uh which impacts pricing in commodity markets, travel around the globe, etc.
▶ 0:58:41And so, we'll put a pause there in the the brief time I have left, shift to banks. You talked about the risk assessment. Um when you identify a designation that no longer, you know, for a bank, serves a strategic purpose, what does that delisting process look like for an institution? And how do you signal that we're not getting soft, but we we've changed our assessment on for this particular bank or entity, sir? Well, thank you.
▶ 0:59:11That's a really important topic and one we're we're focusing heavily on. I know it's important to the secretary as well. So, m- maybe the first thing to say is that, you know, the US system, when you put a sanction on, I think it's a very important to understand, there is a rigorous process and legal process to be able to impose that type of measure. That also allows for challenge, uh which happens on occasion through the courts.
▶ 0:59:35It allows for uh petition for delistings if there has been a change in circumstance that can be proven to allow that to be removed. Uh and it also it it is a regular process for OFAC to look at where there's uh names on a list that just aren't appropriate anymore.
▶ 0:59:54So, I think that's a really important part to making sure that we continue to see value and have value in the use of sanctions, so it's not just a never-ending list uh of of growing names. Um but to give you a to give you a sense of some figures, in OFAC put 880 new names on the list. In 2024, it was 4,000. And we're working to make sure we sharpen the tool of the use of sanctions to make sure they're appropriate and viable.
▶ 1:00:23I appreciate that response. My time has expired. I would like to recognize the gentleman uh from Illinois, Mr. Casten, for 5 minutes. Thank you, Mr. Ogles. Um So, the the best, and thank you for being here. The I've seen estimates that uh digital wallets associated with Iran um accepted nearly $8 billion in crypto payments last year, and about half of that was through the I IRGC.
▶ 1:00:48And I mention that really to thank Um because the the the January action this year that sanctioned a crypto exchange tied to Babak and Johnny, the um that was processing a billion funds a year. So, ballpark 25% of what was going through the IRGC. And I'm just I just appreciate you doing it. Thank you. Um the my I think that's frankly I think it's the first time that Treasury has imposed sanctions um against some of these terrorist-backed crypto exchanges.
▶ 1:01:19And um I guess I'd say keep it up. And hopefully you will confirm that it is your intent to continue following those sanctions channels for crypto groups there that are linked with the Iran and Iran terrorist organizations. I see you nodding, but that feels like a yes to me. Um the Well, I would I would just say well, thank you for the the remarks. Um we are Crypto's interesting um because
▶ 1:01:40Well, I I just I and and I I appreciate that, but I want to just get I want to just move on. So, I just I'm I'm glad just thank you, and glad you're continuing to work on it. Um Treasury had previously not sanctioned, but had brought action against a crypto exchange that facilitated $600 million um in in for sanctioning people in Iran, and in the settlement agreement that they came to, the CEO admitted that they were encouraging people to use VPNs to bypass um some of the weak geofencing controls.
▶ 1:02:11Is that the type of action that you would continue to go after? We we will We have a range of tools available, as as we've discussed, whether it's sanctions or other actions. So, where we see illicit finance activity, and certainly the type of activity you've described, we will look at how to use the appropriate
▶ 1:02:30Okay. Um That That was the Binance case. That was under the last Treasury. Um and of course, that settlement agreement, you know, not only had a lot of fines, but had, you know, 5 years of monitors that are inside um inside Binance to monitor what was going on. And in in just February, so after your recent decision, Wall Street Journal found that Binance had sent $1.7 to Iranian-backed terrorist groups like the Houthis.
▶ 1:03:01Can you tell me, are those compliance monitors that were imposed under the Biden Treasury still in place? So, I I can't speak about uh regulatory enforcement matters or the monitors. I'll have to Well, but this was a there was an agreement to put those compliance on it in place. And I ask because after let me back up. As you know, Binance was used as a conduit. The Emiratis bought a bunch of World Liberty Financial Coins that went to Binance.
▶ 1:03:30CZ was then pardoned shortly thereafter. There's a lot of stink on that rose. After CZ was pardoned, we sent a letter to Treasury saying, "Can you confirm that these monitors are still there?" And I've not gotten a response to that This is This was an agreement. So, I I don't I don't think this is anything confidential. There was an agreement by the prior administration. Treasury was there. You've got a commitment to continue going after Iranian-backed terrorist organizations.
▶ 1:04:00Are we still monitoring what is known to be the biggest single network to facilitate crypto um money laundering for Iranian terrorists? So, Congressman, I am happy to take your question back to those who are responsible for the enforcement uh actions in Treasury and where they are, and and take your question back to them for a response.
▶ 1:04:20Okay. And I would I would appreciate that. And maybe maybe if you could speak more generally, you've got the targeted action against Sanjan Sanjan, if I'm saying that right. Um we seem to have some confusion as to whether or not this administration is still targeting Binance as a network. Are there rulemakings that you've issued?
▶ 1:04:41Are there specific things that you are going after as a matter of rule to go after these crypto terrorist financing networks, or is it or is it being done on an ad hoc basis against specific bad actors? So, I think there are a number [clears throat] of things there.
▶ 1:04:59Um in terms of the rulemakings, as you're aware, we've uh issued uh proposed rules to implement the GENIUS Act, which I think sets up a framework for AML CFT compliance in uh the for payment stablecoin issuers. Um there's a number of other, you know, rules that are in place. Sanctions obviously apply to all US persons.
▶ 1:05:23Well, let let me let's let's continue the conversation offline, cuz I'm particularly concerned that the administration seems to say that there's legitimate cases for mixers. If I'm a money launderer, I love mixers. They allow me to cover my trail. And I'd like to see this administration take more aggressive actions towards actually saying terrorism is bad, terrorist financing is bad, using crypto networks that are designed to evade evade monitoring are also bad. And you shouldn't have to wait for us to do the Intergenius. The Biden administration had done it before.
▶ 1:05:51Gentleman's time has expired. Recognize the gentleman from Iowa, Mr. Nunn, for 5 Thank you very much, Mr. Chair. And thank you, Secretary Blinken, for your incredible work on threat financing and terrorist financing. You've been working on this all the way since I was back on the National Security Council. We worked together in going after some of these really bad actors that are out there. Look, here's the reality right now. Threat actors have stolen nearly $200 from the American public.
▶ 1:06:19And to put this into perspective for us, that's the entire budget of the US Army today, plus another $50 billion. This is a real threat, Mr. Chair, that we have to get after. It's one of the reasons I've been proud to work with this committee and lead the TRAPS Act and the GUARD Act, two very important bills to go after threat actors who are scamming money from Americans and using it directly to support terrorist Mr. Secretary, would you agree with me that these type of scams should be considered a national security threat?
▶ 1:06:50Yes, Congressman, we consider them a threat to national security. I agree with you on this, and that's why I think it's even more critical that we continue to work in a bipartisan way to move these two very important bills forward. Now, I'd like to talk about some of the events that have happened just as recently as yesterday with the Iranian ghost fleet. You can see here that Operation Epic Fury has Iran on its heels. In fact, this is one of the vessels that was seized by the US Navy. Iran currently is moving 1.5 million barrels of oil daily using these ghost fleet.
▶ 1:07:18And these ships have scrubbed their manifest, changed their flags, and mysteriously appear as Malaysian or Omni or Sri Lankan. But the reality is this, these directly financed by Iran, by the IRGC. Mr. Secretary, in this situation that happened with the MV Tusca, a sanctioned vessel, ran the blockade after cycling through Chinese ports and Malaysian transfer points.
▶ 1:07:45Just yesterday, we caught a massive Iranian ship carrying Iranian oil. How do we move from designating these vessels to actually disrupting their So, thank you for that question. Um you're you're right. There is a network around shipping and vessels, and we've done a number of things to try to not just target the vessels with sanctions, as we have, as you know, but also make sure that they cannot access uh flags, cannot change flags as quickly.
▶ 1:08:14You know, we work with uh flag states on that issue. They've been largely cut out of insurance from the global insurance market. And some of that's also raising awareness with financial institutions about some of the networks that might be uh seeking banking services in support of those vessels. So, we really have an approach to try to uh disrupt that activity from all corners. Critically, while Iran dominates the headlines this week, Russia is watching. Moscow now mimics this exact same playbook.
▶ 1:08:43If we allow Iran to evade with impunity, Putin learns that Americans' sanctions are merely a suggestion, not something they should be held accountable to. Mr. Chair, this is why I led the PEACE Act. It is the only legislation to pass out of committee, overwhelmingly bipartisan, to hold Russia accountable on its sanctions. And it includes Chairman Hill's REPO Act. I think our financial institutions screening millions of transactions a day are put in a position where we can give them a clearer and safer harbor, rather than lean back.
▶ 1:09:13Meaning that we go after the banking institutions, the insurers. Is this something that you feel you've got the tools to do in your current Congressman, yeah, I believe we are leveraging all the tools at our disposal to try to disrupt these these types of networks, and we'll continue to do that. That's very good to hear. I want to talk on this issue of when sanctions have outlived their intended purpose. They're a tool, sanctions, not a trophy. And when they stop advancing US interests, they candidly become dead weight. You know, I consider the country of Azerbaijan.
▶ 1:09:43Every president since 2002 has waived sanctions annually, including President Trump. In fact, we've only brought it up once in that time, and that was the last year Biden for some unknown reason. Yet, Azerbaijan still carries the scarlet letter of a sanctioning country because only Congress can repeal that statute. Mr. Secretary, how should Treasury and Congress evaluate when sanctions regime have outlived their usefulness and help them transition? It's a great point and something that we're very focused on.
▶ 1:10:08I know it's very important to the secretary as well that we look at the utility of our sanctions programs, ensuring that they are aligned with our foreign policy objectives of today, and also managing the the uh un perhaps unintended consequences to legitimate commerce. And then coming from a uh a bank that was managing all of these sanctions programs on a global level, as I mentioned, you know, lists grow out of control.
▶ 1:10:32Other countries now are adding to that with with additional lists and and and the numbers of sanctions have gone up, and we don't want to measure uh the impact of sanctions by how many names we put on a list. So, we're looking at trying to make sure and we don't want to disrupt legitimate commerce. So, we want to make sure that sanctions are valuable tool, that they are uh as streamlined as effective as possible, that they are implementable, and that they uh target those that we're trying to target effectively without disrupting legitimate commerce and US businesses.
▶ 1:11:02Targeted, effective, and pack a punch when they need it. Thank you, Mr. Secretary, for what you do. I yield back my time. The gentleman yields back. I now recognize the gentleman from California, Mr. LaHood for 5 minutes. Uh thank you, Mr. Chair. Secretary Burck, thank you for your testimony about the impact of sanctions. can you tell us back in October of 2025, why did we originally impose sanctions on Russian oil? I'm sorry, the question was why did we oppose sanctions?
▶ 1:11:32Well, I think there was there were sanctions on elements of that. That's correct. There were existing sanctions, and then we imposed additional sanctions, I think, on Rosneft and Lukoil as well. We Oh, why did we impose? Yes.
▶ 1:11:43Oh, I thought you said oppose. Um no, we we imposed those sanctions because we saw those as um an impactful tool that would support and the president wants to see a a peaceful resolution to that conflict, and at the time those sanctions were seen as an impactful measure to help support that policy. And specifically to curb funding for the war in Ukraine, is that right? I think it just supports the president's policy to see a peaceful resolution, whatever that that impact would be. And so, Russia is clearly an adversary.
▶ 1:12:14It's fair to say. I think they have historically been uh unaligned with the United States in a number of ways. And in fact, there are multiple sources, including US officials, who have indicated that Russia uh has been providing intelligence to Iran regarding US positions in the Middle East during this war with Iran. I've I've heard of that report today in this hearing. And in fact, that has been publicly reported for several weeks. Is that I don't recall specifically.
▶ 1:12:43When Treasury issued a pause on sanctions on the sale of Iranian oil on March 12th, when that pause was imposed on the sale of Russian oil, uh we issued what's called a general license. Is that right? There was a general license uh issued to allow the purchase of Russian oil that was already on the water. It was very specific in time and very specific in scope.
▶ 1:13:13Yeah, specifically for 30 days, that general license. That's right. Had that duration. Uh and then on April 15th of this year, Secretary Yellen publicly stated the United States would not extend uh the waiver or the pause on Russian oil sanctions. Is that right? I don't recall specifically his statement, but Well, let me let me read to you the quotation that appeared in in the media.
▶ 1:13:38Uh Secretary Yellen said, quote, "We will not be renewing the general license on Russian oil, and we will not be renewing the general license on Iranian Uh is that fair to say? If if that's what he said when you quoted it. Why do you think Secretary Yellen stated that the US would resume imposing sanctions on the sale of Russian oil on that date?
▶ 1:14:03I'm sorry, the question is why Yeah, why would Why would your boss, Secretary Yellen, on April 15th say, "We're going to resume sanctions on Russian oil?" And by not renewing the license? That's Because they maybe at I don't know, at the time he might not have seen the need to to re-extend that license, and we continue to maintain sanctions on Russia very broadly for a number of things to continue to support the president's In fact, there were public reports at that time already, for example, in the Financial Times,
▶ 1:14:33that Russia was receiving enormous windfall as a result of the waiver on sanctions, somewhere on the order of $150 million per day, according to Financial Times, which would be roughly 3 and 1/2 to 5 billion dollars in the month of March alone. Is that fair? I don't I haven't seen specific numbers on that, and I specifically I think it's you you know, my understanding that Russia receives revenue at the point of extraction.
▶ 1:15:00This license was narrowly scoped to purchases of Russian oil that were already on the water. But clearly, whether it's on the water or not, the money still flows back to the source, doesn't it? I I I don't I don't know. Well, it's important for us to know, doesn't it? Because after all, Russia is a supporter of our adversaries, providing them intelligence to kill US members of our services. Uh in response to questions of my colleagues from ranking members Waters and Beatty, you said that lifting sanctions on Russian oil supported key partners.
▶ 1:15:31Is that right? There were a number of conversations with other countries that requested that relief. According to the Center for Research and Energy in their April 13th report, just a few days ago, relying on customs reports, actually China was the largest overall buyer of Russian crude, taking 51% of Russia's crude exports in March of 2026.
▶ 1:15:51Chinese imports of Russian Eastern Siberia Pacific Ocean grade crude saw a rise in that month when we lifted Didn't we just benefit China and Russia? Congressman, I don't think that's a fair characterization from what I understand. Well, the data certainly suggests it's fair. So, should we ignore the data and just take your suggestions on hope? The gentleman's time
▶ 1:16:20Thank you. Recognize the gentleman from Indiana, Mr. Stutzman, for 5 minutes. Thank you, Mr. Chairman, and thank you, Mr. Secretary, for being here. Um you know, President Trump has made American energy dominance a key focus of his administration. With that, I'd like to discuss some of OFAC's recent actions regarding our sanctions on Venezuela.
▶ 1:16:40Since President Trump's decisive action to bring Nicolas Maduro to justice, OFAC has issued 16 general licenses, allowing some American participants to return to the Venezuelan oil market. A lot has been said about companies bringing Venezuelan oil to the US market, but I'm curious about the opportunity for American companies to play an important role in selling this oil to partner nations. Under the current sanctions framework, are US companies able to purchase Venezuelan oil and resell it into the global markets?
▶ 1:17:12Thank you, Congressman, for that As you know, the general licenses have been issued to support reintegration with Venezuela across the natural natural resources industries, energy. And so, US companies can certainly participate in that.
▶ 1:17:29Does Treasury and OFAC have a position on whether a US company should could act as an intermediary purchasing Venezuelan oil and reselling it to third country I I don't have specific information about intermediaries specifically. I'm happy to take that question back, but there is a active effort to try to make sure that our work with Venezuela is in the interest of, you know, US opportunity and US priorities. Okay.
▶ 1:17:59And then, are there steps the Treasury is taking to ensure that American companies have the information needed to ensure they are compliant with those licenses? Well, we're always open to to engagement with companies to make sure that they have what they need through the licenses and that they understand how the licenses can be applied. So, we're we're constantly in
▶ 1:18:20Okay. And from my understanding is that the oil in the Venezuela, it's a heavier crude, and that we don't have the refining capacity or capabilities here. And and I know that's some of the the concern is, you know, how do we utilize it if we can't if we don't have that infrastructure to uh to be able to refine that. Um I'd like to switch over to Syria. Um there's obviously a lot going on there.
▶ 1:18:44Um in regarding the SST designation, you know, we repealed the Caesar Act um last uh this this past year, and Syria formally joined the US-led coalition to defeat ISIS. Um but in spite of all that, Syria is still listed as a state sponsor of terrorism by the State Department. Uh last week I I met with the Syrian finance minister, who said that removing Syria's SST designation is the last milestone to unlock US investment in the country.
▶ 1:19:15My question to you is, first of all, should the SST designation be removed? And then if so, um what sorts of sanctions are still in place under this designation, um and how would that impact the ability for US companies to participate in So, I'll defer to the State Department on the technicalities of that designation and and and what it would take to to modify that.
▶ 1:19:41Uh from the Treasury Department's perspective, we still maintain sanctions on individuals under terrorism authorities, and those uh you know, intended to make sure that we don't let uh active terrorists back into the financial system. And more broadly, we are working with Syria uh to support reforms and structural enhancements to their AML/CFT framework.
▶ 1:20:02You know, a lot of businesses the you know, for for businesses to want to go back into Syria and engage, they need to make sure that they feel comfortable with the risk environment, and that the right uh structural elements are there to protect against illicit finance risk. So, we're very much supporting Syria in that effort. Do you How do you feel Syria's doing when it comes to that?
▶ 1:20:20I mean, do you feel a sense that they are genuinely pursuing those benchmarks and those standards that uh would would ultimately bring them to the table and be able to participate um not only with American companies, but the EU and others? I certainly think they have the the the will and interest to do those things, and they've they've taken a number of steps to bring in the right expertise to develop the system to make sure they have an an assessment of the risks, and that they develop the structures.
▶ 1:20:49So, I don't I think that those are not easy things to do, um but we're definitely supportive of their efforts.
▶ 1:20:56Yeah, I I mean, I know it's I mean, it's tricky, um especially, you know, with the the new administration there and still getting to understand what their objectives and goals are, um but I know, you know, the the people of are are hopeful and wanting a new day, but I know that that that infrastructure, especially when it comes to finance, is a big piece for them. So, thank you again. I'll yield back. Thank you. The gentleman yields back.
▶ 1:21:23I would like to recognize the ranking member of our Subcommittee on National Security, Mrs. Beatty for Ohio from Ohio. She has a point of personal privilege privilege for 1 minute. Thank you so much, Mr. Chairman. It gives me great privilege today before this audience and all those watching to recognize and acknowledge uh three brilliant scholars. I have with me in the audience today Sophie Lee from the University of Kentucky. Stand up, please.
▶ 1:21:52And I have Yasmine Johnson, a recent graduate from the University of Texas at Arlington. And keeping the work in the office is Ava Shryer from Dartmouth. Uh please join me and congratulating them on a job well Thank you, Mr. Chairman. I yield back. The gentlewoman yields. Assistant Secretary Burck, I would like to thank you for your service to our country and for your testimony here today.
▶ 1:22:20Without objection, all members will have five legislative days to submit additional written questions for the witness to the chair. The questions will be forwarded to the witness for his response. Assistant Secretary Burck, please respond no later than May 27th, 2026. This hearing is adjourned.