Skip to main content

tv   Election Interference from Shell Companies Virtual Currency  CSPAN  July 5, 2018 8:02am-9:04am EDT

8:02 am
is this any precursor what we might see down the road? when you let the genie out of the bottle of mixing guns and religion in almost any society, it's usually been problematic. >> sunday night at eight eastern on c-span's q&a. >> next a hearing on the use of shell companies and virtual currencies by foreign countries to influence u.s. elections. it uses include a former of the treasury department office of illicit finance and representative of the cybersecurity firm dark tower here senator lindsey graham chairs the judiciary subcommittee on crime and terrorism. this is a less than one hour. >> subcommittee will come to
8:03 am
order. appreciate senator whitehouse inc. and attended and coming up with an endless pool of good ideas. [laughing] ackland a lot about the currency -- see if i can put into action but the purpose of this hearing today is to look at the problem the country faces in terms of how a shell corporation could be exploited by foreign entity. how easy it would be to create a corporation in america and final foreign money through it to affect our democracy and how these virtual currencies, bitcoin and others, had they can be manipulate by foreign powers or other groups to influence our democracy. so what i would like to do is introduce our panel and turn it over to senator whitehouse who will lay out the case better than i, why we're doing it. but i will say this, chairman
8:04 am
grassley here, appreciate his attendants, we'll talk enough about this problem. it's going to happen probably already has happened and the good news is there's legislation that we can act pretty quickly if we chose to that would make it easier to stop this and senator grassley has been true thick on the matter and i appreciate that. but i'll turn it over now to senator whitehouse. >> thank you very much, chairman graham for holding this hearing. i appreciate it. this is one of a series of firsts that we have accomplished in the subcommittee under your leadership and i am grateful for it. some are obvious like holding the first trick on russia. some are not publicly known but are significant and i just want to open with a word of appreciation to you. we had hearing in april where facebook ceo mark zuckerberg testified before the judiciary committee about the new measure of facebook with a minute to make sure foreign actors could
8:05 am
not by political ads on facebook and interfere in u.s. elections. facebook, mr. zuckerberg does, was going to require a valid government identification and verified political ad purchaser. in response to my question, mr. zuckerberg conceded facebook would not look behind a shell corporation to determine the actual identity of the actual buyer. if a fourth actor merely funnels money into a domestic shell corporation, which in purchases the ad, facebook would be none the wiser. unfortunately the federal election commission and other campaign-finance regulators are no better equipped to detect for identity laundering in u.s. elections. while foreign corporations and foreign nationals are prohibited from spending money in elections, our lack of effective disclosure laws would allow for a interest to set up shell
8:06 am
companies, hide their identities, and engage in illegal political spending. we would never know it. quite simply, vladimir putin and his oligarchs can use the exact same tactics american special interest use to spend anonymous money in our elections and secure influence. the criminals have long used shell companies to obscure ownership. as we've learned more and more about russian interference in our own elections, and about the playbook abroad, much thanks to previous subcommittee hearings, we now see how the same devices can be used to hide foreign meddling in our elections. last year at a judiciary committee hearing on russian interference election, ken weinstein, when security advisor to george w. bush, noted, quote, it is critical that we effectively enforce the campaign-finance laws that would prevent this type of financial influence by foreign actors. i couldn't agree with you more
8:07 am
but we don't and part of it is because we don't look through shell corporations to see who is really there. the first attempt address this problem i'm pleased to work with senator graham, chairman grassley and senator durbin and blumenthal. a bill targets the congress of professionals who help establish these shell companies. would make it a felony for owner, , officer, attorney or corporation agent of a business entity to establish or use corporation company or business entity to conceal illegal political activity by foreign national. separately, senator durbin, senator blumenthal and introduced the stop secret foreign interference and elections act, among other things that bill would require senior executive and financial offices of entities spending money in elections to certify that they've done their due diligence to ensure that no foreign money has been accepted
8:08 am
for the political activity and that they have not spent any foreign money on campaign related disbursements. that bill is referred to the finance committee. i received today as another example of the type of legislation congress should consider to defend against the clearly predicted threat of foreign interference in our elections. our hearing today will examine whether crypto currency can be used to launder for money in this elections. the growth of virtual currency and crypto currency raises a host of challenges for congress and regulators. i'm glad her subcommittee is beginning to examine it and gain a a better understanding of how this emerging technology works. i'm looking for to learn more about just how anonymous various virtual currencies are and about the risk the anonymity of the cryptocurrencies poses for hidden influence in our political system. alexander hamilton advised way back in federalist 68 that
8:09 am
corruption from the desire in foreign powers to gain an improper ascendant in our councils is one of the most deadly adversaries of republican government. that is a small art, lindsay. this adversary is no less deadly today, so while campaign finances is often a hyper partisan affair on hill, i think we can all agree hamilton was right and that we have a compelling interest of making sure foreign governments and foreign agents cannot sabotage american elections and covertly infiltrate our political arena. so i think chairman graham for holding this hearing. i look forward to hearing from our witnesses and i hope this is a site of good future work to protect our elections. thank you, chairman. >> i notice the presence of the committee chairman, senator grassley. would you like to say anything? >> sure.
8:10 am
number one, , to explain that i won't be here because of the farm bill. number two, to thank our witnesses because i know everybody that appears witness before this point has to do a lot of work, so thank you for doing that and thank you for the audience being interested in it. then beside saint thank you to the chairman and ranking member, congress continues to confront the election interference issue and find all the ways that we can to try to prevent in future elections the judiciary committee has taken a lead role in that effort. this is the seventh hearing that we had on this single topic over the past 19 months. we've heard from a number of witnesses on this topic who made a wide range of recommendations on how to deal with the election interference as we approach 2018 midterms. i'm pleased that the witnesses here today have offered to lend their expertise and offer their own perspective.
8:11 am
i've also cosponsored the shell company abuse act along with senators white house, graham, durbin and blumenthal. the bill incorporates some of the recommendations we've heard from experts on both sides of the aisle. this bipartisan bill shows that we can work together across party lines, put politics aside for the good of the country and help secure our election infrastructure. so i look forward to the ring record, as walter from today's witnesses about the additional steps that can be taken to protect our elections. and i'll submit some questions for response if you would respond to them in writing. thank you. >> mr. chairman, if i could, i overlooked expressing my appreciation to chairman grassley for his work also on the title corporation which is probably the broadest shell corporations disclosure measure in congress right now, focus obviously on for election spending but also on not having
8:12 am
america become a haven for cut the grass and criminals around the world and i appreciate very much the chairman support on that legislation guy should've mentioned it. >> thank you, mr. chairman for your leadership. our panel today is mr. david murray, financial integrity networks vice president for product development and services. before joining fi fim last yeae was involved in all aspects of financial integrity politics at the treasury department serving both instructor the office of us of finance and senior advisor to then undersecretary terrorism for financial intelligence. mr. scott dueweke -- dedicate right? mr. dueweke is at dark tower, global advisory firm focused on cyber engineering solutions. he has advised senior leadership within financial institution, the united states government, come in national enforcement on issues involving alternative payment systems like crypto
8:13 am
currency and application of blockchain to the financial healthcare supply chain, other industries, and last is ms. sheila krumholz. ms. krumholz is executive director for the center for responsive policies, a nonpartisan watchdog that tracks money in the u.s. politics on its website she briefly served as the sens research director supervising data analysis for, and the centers clients. will you all please stand and be sworn? [witnesses were sworn in] >> thank you. be seated. mr. murray, you can lead us off. >> thank you, chairman graham and ranking member whitehouses for convening this hearing to
8:14 am
discuss protecting our election from foreign interference. and thank you for the invitation to be here today. it is an honor. foreign interference in our democratic processes is a critical national security threat and the american people are fortunate for diligence in addressing it. as you noted ranking member whitehouses the concern about foreign interference in our elections predates the ratification of the constitution. since then congress has acted to protect our election from foreign interference. despite these efforts of the united states remains vulnerable to foreign interference in our political and electoral processes, in part because of critical gaps in our financial transparency regime. foreign adversaries have both low-tech and high-tech options for covertly funding interference operations that undermine democratic processes. among the low-tech options anonymous companies are the leading threat. among high-tech options, virtual currencies are an emerging one. today will discuss how foreign actors have exploited these gaps to evade campaign finance laws. i will conclude by providing recommendations for
8:15 am
strengthening the nature transparency. in 2016 russia unleashed a covert campaign that was a boldest yet to target the united states according to u.s. intelligence community. the campaign represented a significant escalation indirectness, level of activity, and scope of effort compared to previous operations aimed at u.s. elections. now covert influence requires dark funding in order to remain covert. if the funny fund trip led diry back to equipment this would unravel in short order. the russians covered the financial tracks by funneling money through shell companies and financial accounts established using stolen or false identities. the russians 2016 covert influence campaign was not the only the tip by a foreign actor to intervene in views election in the past decade. less well-known is a case of josé as on a wealthy mexican businessman. starting in 2011 he tried to buy influence in san diego through a campaign spending. he funneled money through you was show coming to an
8:16 am
expenditure committee that support a candidate in the mayors race. he was convicted along with his u.s. co-conspirators in 2017. shell companies are well assange threat to financial transparency and has these cases illustrate, a threat to campaign finance. virtual currencies are an emerging threat. despite efforts to increase relation and supervision of virtual currency exchanges, virtual currencies remain vulnerable. they could be used by foreign adversary to thwart u.s. campaign finance laws. some virtual currencies promote anonymity and irreversible settlement come to traits attracted to criminals. they facilitate peer-to-peer transactions saying there is defined institution between the sender and receiver of funds. the absence of the financial intermediate makes it easier for foreign adversary to conceal their location outside the united states. it is vital we build a financial transparency regime that enables the exposure and interconnection
8:17 am
of foreign campaigns in near real-time not merely a machine that enables investigation of them after-the-fact. as much a successful prosecutions can satisfy our sense of justice, convictions are a poor remedy for national security harms and article should be interdiction. i recommend three financial transparency measures to support interdiction. first, we should ban anonymous companies. second, we should not delay enforcement of the customers ofd due diligence role for financial institutions. third we should require cross-border funds transfers to be reported. alone each of these recommendations would help to protect our election some interference. if lynn blended together each would strengthen the others. thank you again for having me here today and i look for to enter any questions you may have. >> esteemed members, i'm honored to be testifying before you today on the critical topic of how to protect our elections from foreign interference that
8:18 am
the use of virtual currencies and shell companies. the relevance of focusing virtual currencies is of course their use attempt to shield identities of the using that as was described. foreign parties come state actors and others interested in affecting used clinical processes need anonymity to appear to be valid members of this community. for this, virtual currencies are tailor-made. it's important knowledge that virtual currencies are about much more than cryptocurrencies such as bitcoin. virtual currencies to include decentralized system such as cryptocurrencies like bitcoin as well as centralized systems such as the russians kiwi, web money, the chinese ali pay any others. there are thousands of the systems of the less than 100 are relevant due to a lack of liquidity. the system did not stand in isolation but are part of a thriving ecosystem of not only virtual currencies but also other digital mobile and stored value systems that cumulative a number in the thousands.
8:19 am
rush has been able to leverage these virtual currencies and is not needed cryptocurrencies to influence our elections. facebook disclosed in september 2017 that it had discovered more than 3000 ad spot by 470 accounts run by a russian full form in st. petersburg reaching more than 11.4 11.4 million people w the ads. but how would these pay for? as the post reported many ads were into and influence of thee election were paid for through the russian centralized virtual currency kiwi. visa, the credit card giant compartment with kiwi on a virtual wallet in 2011. there are proximate 18.5 million easy kiwi while the accounts and their relatively easy way for russian to send money internationally. without stronger identity attribution and understanding of the digital payment ecosystem, this type of mafia will continue. another major centralized virtual currency to be aware of
8:20 am
these web money to using well protected servers not a public blockchain like bitcoin, this is chief amongst channel for russian funds to flow to the patriotic hackers or other cooperating actors. in the passover use web money has become not only ubiquitous in russian language speaking country but also from vietnam to mexico. these russian speaker managed centralized virtual currencies meet nettle and legitimate needs but our lifeblood of global organized crime. these and other systems are today the jews to buy the services of hackers who are advertising their ability to influence elections. one of my fellow private sector cyber warriors told me last week quote, we have identified two sleuth cyber espionage agents who post on line short message of the last one to two hours and then are deleted. they are calling for cutout hackers from anonymous, the organization, circle come to work as contract hackers for
8:21 am
elections. then we seen some interesting posts inquiring on what the u.s. election systems are open or closed. there's some nasty folks out there that are eyeballing these elections currently. any are advertising their ability to target candidates social media pose and their ability to sabotage them, unquote. for cryptocurrencies the greatest emerging threat of foreign funds reaching the coffers of political candidates or use other operations are the increasing number and the quarterly of privacy coins. these are cryptocurrencies the seek to evade efforts identify the users to the blockchain and criminals are using them. thousands around the world that are interconnected and do not necessarily meet any type of ky see, know your customer, requirements. for some who knows what they're doing and are skilled at the most impossible to follow them
8:22 am
through this matrix of exchanges. academic and payment association, a not-for-profit that provides public-private model for not only education but a platform to enable a market-driven approach to self-regulation, we look at how this can be used as a critically important way to solving the problem of de- risking, as well as mentioning some of the security risks. it's essential whatever approaches are made are based on a public-private partnership rather than a government only approach to the problem. in closing my recommendations revolve around identity. identity is at key to this. international cooperation is critical, , providing a cooperative environment whether through interpol or some of the multinational law-enforcement body, regulatory organization or optimally through a through a public-private partnership, focus on establishing identity of season criminal virtual currency assets of this so will help protect our institutions
8:23 am
and industries from the illicit use of virtual currencies. also to influence implement thd honest ads act, knowing your customer adherent should be required of advertisers. that does not currently exist. understand with the money is coming from should be another requirement. finally, the entity managing these opportunities and risks associate with the use of virtual currencies or as sunny mechanism for influence operations can be answered to get sanctification reporting of identity. the approach cannot be limited only to bitcoin another cryptocurrencies as there's a shadow financial system that is thriving outside of our control reaching every country and using systems that range from those meeting kyc requirements to those that are opaque. we need to take strong steps to understand control and have the risk while encouraging the growth of new virtual currency systems that are governed the rule of law. the world is changing that we must change with it. identity is the key. thank you.
8:24 am
[inaudible] >> mr. chairman, ranking member whitehouses, members of the committee thank you for the opportunity to testify. my name is sheila krumholz, nonpartisan nonprofit research group that tracks money in politics and policy. testimony focuses on shell corporations and concerns raised about potential foreign influences on u.s. elections. the concept of one person, one vote is bedrock principle of our democracy but most people acknowledge that individuals and entities the country of large sums of money to candidates, parties, , super pacs included active nonprofit team priority access and influence of elected officials. contribution limits and disclosure requirements including prohibitions automations in spending by four nationals were established to detroit use of money to unduly influence our corrupt government and to ensure democratic system of integrity worthy of its
8:25 am
voters trust and confidence. today that trust has been shaken. both the campaign-finance limits and disclosure provisions haven't undermined by decisions that now allow nominally independent super pacs and politically active nonprofits to raise and spend unlimited sums from unlimited sources and if they so choose to do so in secret. so-called dark money organizations primarily not disclosing nonprofits, llcs and super pacs have received donations from non-disclosing entities means voters may not know who was bombarding them with attack ads another political spending. since the structure limited liability companies often requires the entities to disclose only minimal information, llcs have become an attractive you to move funds through different shell companies and other groups penny on u.s. elections without disclosing the source behind the money. this leaves open the possibility that for interspace final political spending using llcs and not disclosing nonprofit groups enabling them to effectively act as proxies for foreign actors whose influence on u.s. elections is under
8:26 am
federal law prohibited. history is littered with examples of illegal donation by four nationals laundering money through the sewer legally eligible to contribute. eat nations that diminish public trust in the system. those serving in congress,, during the mid-1990s are studying campaign-finance as i was able recall the raft of skin associate with a tense by four inches to inject funds into american elections. today ages after citizens united unleashed a flood of secret money, the potential for foreign money filtering into the political system has grown larger and given other attempts to metal in elections more serious. recent court decision amid unlimited contributions from the much larger range of sources from individuals and institutions are much more important. regulatory inaction has led to much less transparency in terms of the original sources of the sons. given this this it would be
8:27 am
foolish to think that the same types of outside sources that sought to undermine the integrity and independence of our electoral system two decades ago would not be interested in preps more confident in their ability to manipulate electoral outcomes to favor their own interests today. in 2012 we begin using form 990 texel to track financial activities and networks that politically active nonprofits operate in. the idea was even the political active nonprofits did not have to disclose its donors to the fec when it engaged in election spending, it's nonprofit donors, if it hadn't become had to disclose grants to the group on schedule i of the own 990. an alphabet soup of untraceable llcs present one roadblock in our research work in one case and erroneously entered employer identification number or e etim correspond to a welfare organization that we later found lifted the fallacy disregarded entity.
8:28 am
that is a wholly-owned subsidiary of the parent group. repeat given networks to show these nonprofits i close it network of the dosages at this got entity for the obstacle to transparency. without the mistake we were not even able to track any of the money coming into the nonprofit which were spending tens of millions of dollars or how the nonprofits were doling out money to other those in the network and by forming subsidiaries endowed with insured for a lower information of the people running the llcs would be public. to give a a recent example is notable there still $1 million cut patient of president trump's inaugural committee that is essentially anonymous. the llc that made a contribution was formed just four months before made the seven-figure donation to the inauguration. the address illicit in his incorporation papers in virginia as a virtual office and the only name on the document appears to be a paralegal at the law firm well known for helping political donors cover their tracks. the sources of money and
8:29 am
politics in the past money can take are now numerous infrequently unknown and unknowable. short of any inadvertent disclosure, a a signed confessn for a leaked document. given that anonymous money flows to the campaign-finance system there is no way to know much of this money might be coming from foreign sources, and it's a weather they are for individual, corporation governments. that's the point about dark money, it keeps all of us in the dark, uncertain who's paying our elections, what their motivations might be and even whether they are for our domestic friend or foe to our form of government government. for this reason taken steps towards transparency and spinney is not a partisan issue by foundational to americans sovereignty to appreciate the opportunity to speak today and i'm happy to answer any questions. thank you. >> thank you. that was excellent. seems to me that who's giving the money and what money is is the challenge here.
8:30 am
of the two challenges i think we could pass laws to make it more obvious to the public how corporation gets its money. that's what we're trying to do here, but when it comes to the money itself, this is something that is sort of new to me. mr. murray, how easy would it be for a foreign entity government, and to ask mr. dueweke the same thing, to final virtual money -- final -- into a shell corporation if russia never cooperated with us in terms of the transparency you're looking at come looking for or china? do you need russia and china to make this work? >> know you do not need rush or time to make this work and, in fact, you wouldn't need the virtual money. he may just need the shell company. it is a sizable vulnerability in
8:31 am
our financial transparency regime, that the anonymous copies, and it's one that meets the be closed off not just for campaign-finance purposes but for general financial transparency purposes. this is a vulnerability that undermines our anti-money-laundering regime and dynamite our sanctions. >> but you don't need a corporation of a foreign government to have the transparency that mr. dueweke spoke of, is that right, mr. dueweke? >> no, you do not need the cooperation of a foreign government to use the systems, whether it is to funnel money into a shell company which you can easily do with other funds as well, or from one individual to another. the aspect that's interesting is the degree to which what had heretofore been almost exclusively criminal systems, such as web money, that existed
8:32 am
in russia, and i actually was at a hearing, or a conference at the hague six, seven utica, before crimea, and the russian fsb was participating their version of the dea, and they went on to describe how web money was considered by them to be the primary money movement mechanism globally for russian organized crime. crimea is your sanctions. suddenly web money is almost a de facto part of their core financial system. it's in the light. it is brought in. so that points to a fundamental, almost development of a shadow economy, almost a eyeshadow sws system for money movement that has been embraced by the russian
8:33 am
government and the banks. >> what can we do about a system that benefits the russian government? >> it's very difficult to do much about it directly. they are not going to cooperate. however, what you can do is what i described in my testimony, which is focus on identity, focus on these exchange points. >> who do need cooperation from to get that? >> so the exchangers primarily. now, you probably own a significant bitcoin investment yourself, i hope. you got out when it was 19,000, good. >> i'm working on a flip phone. [laughing] >> if you were to buy bitcoin in the u.s., chances are you would use a very reputable company called coin base. i have.
8:34 am
they do very strong know your customer vetting. they are not the problem. however, there are exchanges like them around the world that don't require any type of know your customer. >> so how to get them into the fold? what do you do? >> that's the difficulty and that's where some sort of international cooperation, you know, i proposed to a not-for-profit that could do such a thing. >> do you need to rush his help to that work? >> you know what, , you can cree an approach where those that will want to be a part -- >> if you're not in it you could be punished. >> you could be excluded from the club. >> you have to stick to it. >> exactly. >> i do agree with that. >> do you think the european union would sign up for this pretty quickly? >> the european union has issued
8:35 am
regulations at the union level, strengthen regulations covering virtual crunches. this is a this is a problem thee sosa. it's a problem the united states us think it's a slippery i think it's important to note that our regulatory reach for virtual currency exchanger that serves u.s. customers extends beyond our borders. so in other words, if you a virtual currency exchanger was based in russia, they are subject to the bank secrecy act because the financial crimes enforcement network has given itself that jurisdiction. it's got that jurisdiction from congress and it's brought enforcement action against a virtual currency exchanger located outside the united states. there is currently somewhat under arrest for running a virtual currency exchange that did not adhere to the banks secrecy act. >> thank you. senator whitehouse. >> thank you very much. thank you to all the witnesses. when i was a boy, john dean
8:36 am
famously said that is a cancer on the presidency. i think right now there is a cancer on our democracy and it is dark money and the forces the manipulate government through dark money, and i'm adamant that we need to clean that up and passed disclosure legislation. i want to make that point on the record. this is not that bill. we're trying to focus on not just eliminating dirty special interest influence in politics, but at least eliminate dirty foreign special interest influence in our politics. that really ought not be too much to ask. i can remember what i was floor managing the disclose bill several years back, as we were on the floor a story emerged in the news about a corporation that had been set up out of no
8:37 am
place, given $5 million, dumped the $5 million into a political by in the campaign, closed up shop, leaving only a lawyer behind to assert attorney-client privilege and wouldn't talk about what had happened. so to this day nobody knows who's $5 million it was that just got dumped into that election. and to this day nobody knows what the prequel well was come with the understandings were, what the deal was behind such a $5 million transaction. what we do know is that behind that darkness could lurk a foreigner. that could just as easily be vladimir putin's $5 million as any american special interest $5 million, and until we cleaned that up we are of liquid of a real problem on her hands. so we have two bills. one is the one that's in the subcommittee that is bipartisan that would make it a felony for
8:38 am
that lawyer who asserted attorney-client privilege to knowingly have facilitated a foreign influence spanned through the corporation. you would still have to prove it. he probably wouldn't disclose it. he would still say attorney-client privileged but at least he would be unnoticed that is not just a black mark on his character by the potential click, click handcuff mum for him and that would be a good disincentive. that's one thing we are looking at and that's the bill specifically before this committee. over in finance we would be requiring that individual to certify that who advocate that $5 million was not a foreign influence. and, indeed, to do to jill jensen to look behind the first shell corporation and the second shell corporation, because people who play in this game can easily stack shell corporations like those russian stacking dolls we open the first shell corporation, there's another show corporation.
8:39 am
yet open the second, another show corporation. so they would be, and the easy solution for that lawyer in that situation is if it looks too smelly, don't take the money. don't take the money. i think the combination would be a powerful combination. so first of all, mr. murray, i appreciate your very simple recommendation, and anonymous companies. i could not agree with you more. it's the direction of the worls going. it is national security implications and we should not be a laggard, but we are. tell me about the size of the industry of dirty shell corporation activities around the world as revealed, for instance, by the animal and paradise papers. we are not going to know exactly because it's pretty dark itself, but just general sense of scale. >> thank you, senator. it's a massive industry.
8:40 am
>> virtually and time up to no good, right? >> not entirely. >> virtually. >> but there's a lot of no good there. i think some important indicators, look at the olfactory designation entities were there to north korea to use chilcote was all over the world. right? that's no good use shall come in all over the world. some had to set almost up. look at the designations relate to iran over the years. use shell companies all over the world. those are people who are up to no good. look, it's a big industry. if you want to live money somewhere in the world, there are a lot of options for you to do that. you could use overseas british territories, you could just panama, you could use london. >> this week and interface cabe using social corporations to funnel money into american political influence. >> certainly. but the people who create them may not what they're going to be used for and that's one of the
8:41 am
issues, is that they don't know. they hear no evil encino evil. >> i type is run out but with your permission i will ask one more question of mr. dueweke. these cryptocurrencies you mentioned create the possibility of providing an anomalous means of payment, your excel, russia. to make people who are either hackers or trolls were engaged in election influence and manipulation in the united states and to try to hide the connection back to russia because the money connection is hard to prove, correct? >> that is correct. >> would also be possible for the crypto currency to be used to facilitate actual spending through shell corporations or through other means where people actually put money into federal elections? you can't put a a bitcoin into federal count but you could
8:42 am
watch it through an intermediary and use bitcoin and thereby longer the identity of the true donor, correct? >> that is absolutely true. there is a global shell game that is being played now. this is tailor-made for money laundering. you have notes all over the welcome many of which are completely anonymous. they don't ask questions. it's like the law firms that set of shell company to ask questions. they exchange one form of virtual currency to another. wet money for bitcoin, fiat currency in, the currency out again between you love multiple layers of these different virtual currencies that are going to be impossible to track, if you know what you're doing and can use speedy can end up as u.s. currency and u.s. election. >> yes. >> thank you, chairman for farrt me go over. >> thank you for another port hearing of the subcommittee. you been doing terrific work and a want to commend senator whitehouse for his persistent and could work on the disclose act fo shell company these act
8:43 am
you just reference. mr. murray, you know how anonymous companies are the most critical threat to financial transparency highlight of the counterterrorism at illicit finance act being discussed in the house and how specifically you state this vote is most direct limited use of anonymous u.s. companies to circumvent campaign-finance laws and other illicit finance threats. this proposal is supported by delaware secretary of state. why deplete this is the most direct approach for improving transparency? >> put simply, it bans the problem. it prohibits the problem. it's a direct attack on the money laundering vulnerability, and we do more than any other single proposal i think to shore up their anti-laundry machine and close off important gaps. >> let me ask a couple machines about ? about what is happened, one of the areas of focus we've had for a number of months. based on special counsel
8:44 am
mueller's investigation we know three senior trump campaign officials accepted money from lobby foreign agents without writers and activities. national to devise a michael flynn, trump campaign manager paul manafort and rick gates. why is it problematic for a current or former foreign agents to be do work on a u.s. presidential campaign and getting paid by foreign entities without disclosing those foreign interests? >> the key there is the lack of disclosure and the lack of candor. coming from the government and not having been in government too long ago, you know, i know that one of the concerns with respect to security was always lack of candor. if someone discloses and you can see what they were up to in the past and what they may be up to now, you can take steps to mitigate that risk. it's really the lack of candor that i think is important there.
8:45 am
>> mr. dueweke, if i might, special counsel mueller's indictment of 13 russian individuals and three companies asserts the russians engage in information warfare against the united states through fictitious use personas on social media platforms. with that he links on this topic. what american has already pled guilty to identify because he sold bank account numbers to russians involved in this plot. how can stolen bank accounts be used to allow for national to interfere with our presidential or other elections? >> stolen bank accounts are one more layer of obfuscation and configuration that can be sued into the process to hide the tracks of those that are moving money from one point to another. very simple, and that additional note just makes it that difficult to follow the money as it follows do this labyrinth. >> mr. murray, senator whitehouse and i in august of 2016 sent a letter to the
8:46 am
venture of oversight subcommittee, the junior senator from texas, expressing our great concern regarding potential for interference in our election. we were shocked that in canada trump would openly encourage a hostile foreign power to act as opposing candidate e-mails and asked for an oversight hearing to consider whether existing criminal statutes sufficient address conduct reload to four in the pose a to our elections. do you believe our existing laws are sufficient to protect our election from interference financed by foreign governments? >> no, i don't. i think that there are structural gaps in our laws which i've covered in my written testimony. i think that there are also gaps in the criminal statutes. and i think that the legislation that ranking member whitehouse mentioned during his introduction we an important step to improving the transparency into really shoring up our system. >> thank you.
8:47 am
ms. krumholz, my last question if i might. the "new york times" reported on august 2016 meeting that donald trump, jr. health and trump tower with george nader, and adversary for the crown prince of the uae and saudi arabia and joel, israeli social media specials specialist link to israel intelligence, according to report i multimillion dollar social media plan. i am deeply troubled mr. trump, jr. didn't find information about this meeting during his judiciary committee overview, india despite his being specifically asked about any foreign governments or for nationals offers this is the trump campaign. i've asked the chairman to call mr. trump jew trump, jr. tesla. i'm disturbed as late as june 2018 with a learning about prison undisclosed meetings between the trump campaign and foreign entities. would it be lawful for foreign government like the uae or for national to provide services to support the u.s. presidential campaign?
8:48 am
>> senator, , i'm not an electin lawyer or a lawyer at also i i should probably try not to practice law without a license but i would again point back to comments made on by colleaguest the table saying we are lacking a wish, and interest in being forthright in candid about obvious topics of interest that could imperil our independence and sovereignty and the integrity of our democratic process. so it seems at the very least unwise, if not illegal, for them not to divulge that information. >> thank you for that careful answer. thank you to the whole panel for your testimony and thank you to the chairman and ranking for this hearing. >> well, thank you. and i assure you, ms. krumholz is careful because she's from minnesota. she has that prudence about her, so welcome. thank you for being here.
8:49 am
my first question is just a very focused one. i started my morning today with former director chernoff talking about russia and what he thought would happen in the election to come and in 2012 and and i just wonder if you agree with director coats who testified under oath here, president trump's national security director, national director of intelligence. he said we expect a russia will be bolder and more disruptive in their cyber operations during the next year. do you believe you're going to see continued attempts at foreign interference in our elections? >> i think there's a question were going to -- c russian temps interfere. that's the judgment of intelligence committee is presented by the director, and that's a tv show think we should trust by intelligence community on that question. number two, think we can see the
8:50 am
evidence. think we can see that troll firms that work. we all read social media site bankruptcy the evidence, and number three i too think the russians were pretty happy with the outcome. covert influence is not necessarily about pushing an election in a particular way. we are electing a particular candidate. the goals could be much more modest any campaign to be successful merely if it is a discord. the russians know the system is long and assist will never be as good as ours. the really only way that they can catch up is to make our system worse because they know that there's isn't going to get much better. >> thank you. ms. krumholz, you do a lot of studying to tracking money in politics. how is the supreme court's decision in citizens united impacted the ability of foreign entities to influence our election? >> my sense is the citizens united decision which upheld disclosure by vote of eight-one,
8:51 am
come with me precipitously and without first getting that the regiment and for such wasn't there to guarantee its implementation. i think that was unfortunate and now it falls to our regulatory bodies, the election commission and the internal revenue service as well as congress of course. >> how would you assess the job congress is doing in changing the laws to meet this threat? >> i regret that, again, because of the seriousness of the discussion today and it's important for our health of our democracy, i regret that it is not speedy enough to protect us from foreign interference. >> and you think the rest of the world notices that and we're not doing much? >> i think they never stop noticing the weaknesses that
8:52 am
have at various times cropped up. and it's been a bit of, kind of two steps forward, one step back chase to stop, to fill up the gaps in the ability to undermine the system, so yes. >> we have gotten some money out for our state elections, which is good, like a couple hundred million dollars and that's great and that's going now. but what concerns me is that, one, what you've raised and some of the topics of this, how money can be hidden, and senator blunt and i have bill, using unverified credit card and things like that. you can do that. i will ask you some questions on the record about the shell corporation are choosing real estate, and that is a big concern for me and i'll ask you that, mr. murray, later. but just this come with nearly half of all homes in the u.s. worth at least $5 million
8:53 am
purchased using shell companies. my concern, this event i was at this link someone came up to and afterwards and said people concern that was a way of funneling money through. would you agree with that come without entering in-depth? >> yes, i would agree, we should be concerned about shell companies purchasing real estate at the rate they are. >> you think this could be used to funnel foreign money? >> i think it could be. i think there are better methods. >> okay. my last question of what to ask you, mr. dueweke, because you raised the honest ad act is a window in addition to the 21 states that russia attempted act into the notices in guinea forest illinois as the voter registration info, we know they hacked into one presidential campaign. as we're learning more and more also played a round in the primary, the republican primary which is important for our republican colleagues to know. i don't senator graham understands this having been in the race himself, with a really
8:54 am
big front row seat. but they were messing about in that as well and i think it just shows it's not just a one party versus the other. as we go into this next year with 1.4 billion having been spent online on political ads in 2016, and the projected three to 4 billion in 2020. we have to change the rules of the road for social media and the companies are doing stuff themselves. facebook is putting up the ads now an archive which is incredibly helpful. twitter is doing more but those companies have now come around to support the honest and accurate could you put the, on why that is important to have some nationals of the road in place? >> national rules of the road are needed for this. i actually worked in republican presidential primaries back in the '80s for jack camps presidential campaign, and it
8:55 am
was hard. there were a lot of rules of the road. now it seems that many of those rules have eroded or become irrelevant. the types of rules that are needed i think need to extend further because of the degree of the information campaigns that a been waged against the american people through not directly through political ads but the other types of influence operations that are meant to find our divisions, to inflame passions just like the federalist papers pointed to originally about the real dangers to this democracy at the time. they persist and they become all the more relevant and evident. so again i think this has to get down to identity. we have to be able to identify the people that are fanning the flames, whether it be the something direct like ads and i think you'll need to identify the advertisers that are buying
8:56 am
these ads, as well as have some kind of way to identify those who are fanning the flames, who are doing these, call it fake news, call it what you want but there are a lot of levers that are being played in american society right now and is being done under misattribution, under anonymity. and that's what needs to have some mechanism. anonymity should always be there for people to want to use it, but there has to be consequences, right? if you're going to use it, you can use anonymity when you're buying a house but yet you can use to influence an election. >> all right, thank you. thank you to both of you for doing this hearing. >> senator whitehouse? >> i just want ask if you wrap up questions. i think based on our conversation in answer all these questions from all the witnesses it's going to be yes, but it don't want to take anything for granted. the first ask, do you all agree
8:57 am
that there is a national security dimension to this problem? >> yes. >> yes. >> okay, let the record reflect three yeses. you all agree that the anonymity of shell corporations is a channel for mischief by bad actors? >> yes. >> yes, yes, yes. do you all agree that foreign entities are ready, willing and able to use those channels to accomplish their mischief? >> yes. >> yes, yes, yes. do you conclude from that that that gives us in congress the responsibility to try to bring a remedy to this problem? >> yes. >> all right. that about does it. let me close my time by thinking again our chairman for doing this. we began these hearings with a review of some of the expert
8:58 am
understanding, i would say, of the russian foreign influence playbook. we have considered the csis kremlin playbook report. we considered the atlantic council kremlin trojan horse report, and we've seen that groups across the ideological spectrum from the center for american progress to the hudson institute and its kleptocracy initiative have all flag this is a really important national security problem here i think that having brought attention to it through this committee early on, we're in a position to have a recommendation to our colleagues to begin doing things about it with any luck in time to determine a little bit the misconduct in the upcoming election -- deter -- i appreciate how chairman graham has led this subcommittee. i think this is real progress and i appreciate it very, very much. >> inky.
8:59 am
i'll return the compliment. you have been terrific on this. you have obviously done your homework, and the combination of bad things are almost endless and it seems to me that we need to up our gain. with that in mind will try to up our game. the record will remain open for one week. the hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]
9:00 am
[inaudible conversations] [inaudible conversations] >> .. [inaudible conversations] >> tonight but tv is in prime time with a look at books from the executive branch. michelle obama reflects on her
9:01 am
life and time in the white house in her new book, becoming. karen pens and her daughter charlotte share the story of their pet rabbit heard then former deputy security advisor for security -- president obama is tonight at eight eastern on c-span2. in 1979 c-span was created as a public service by america's cable television company. today we continue to bring you unfiltered coverage of congress, the white house, the supreme court in public policy events in washington d.c. and around the country. he said that you buy your cable or satellite provider.
9:02 am
sunday night on q&a, tom dunkel on his washington post magazine article, lost and loaded for the lord on the sons of the late reverend and their church in new finland pennsylvania. >> what's going on is a co- mingling of a lot of undercurrents in the country of religion, politics and guns. it's too a degree we haven't seen before. it's still a small church, no question about that. sean has a worldwide following. probably 200 people in the congregation in pennsylvania and maybe a thousand or 2000 worldwide.
9:03 am
it's that co- mingling of passion in america and what does this say about us. when you get the genie out of the bottle of mixing guns and religion, in almost any society it's been problematic. a recent form looked at president trump's postal service task force to modernize the structure of the postal service. they are handling an increase of package delivery from internet based company practices two hours 15 minutes.


info Stream Only

Uploaded by TV Archive on