tv Treasury Justice Dept. Officials Testify on Sanctioning Russia CSPAN September 23, 2022 6:13pm-7:49pm EDT
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powered by cable. >> the treasury department says russia is feeling the effects of u.s. sanctions by being forced to use old equipment in its war with ukraine. the senate banking committee held a hearing on the effectiveness of sanctions and other deterrence including a recent effort by the u.s. and other g7 nations to impose a price cap on russian oil exports. this runs about one hour 30 minutes. banking committee as treasury and justice department officials testified today on sanctions against russia amid its invasion of ukraine. live coverage on c-span three.
today's hearing is in hybrid format, witnesses are in person, thank you, both, for being there. i know you have busy schedules, including today, thank you. members have the option to him here in person or virtually, as you know. vladimir putin's war in ukraine has massacred innocent civilian communities, weaponized food and energy sources, jeopardize the future of a sovereign democracy. his actions threatened global order, drawing a clear distinction between those who stand for democracy and rule of law and the forces of repression and tyranny. there are two things, two things, that putin did not count on, first, the resilience and strength and spirit of the ukrainian people when clear display last week, again, when the ukrainian military reached in kharkiv, ukraine's second largest city, second, the ability of president biden to
assemble and lead abroad and unified coalition of allies and to keep the coalition together. this administration with bipartisan and bicameral support from congress spearheaded a forceful and comprehensive and multi lateral response to support the ukrainian people and to isolate russia. today's hearing examines economic strategy. this hearing follows on the committee's work in evaluating or sanctions policy as we did last year at a hearing on treasury sanctions review and the hearing this past ally, we heard from the congress department on its expansion restrictions on exports to russia. because we are united, how her efforts are beginning to work. secretary of state blinken said last week, putin thought he would divide and weaken and nato, again, putin was wrong his actions have led to nato's growth. we are now police to welcome sweden and finland. his actions lead to nato's growth reminding the world the
vital role this alliance and democracy plays. america -- wise to russian propaganda. this administration corralled an unprecedented multi lateral coalition which includes our european partners and other allied countries to oppose one of the most comprehensive sets of economic sanctions in recent years. these measures aimed to limit trade and financial regulations with russia, to penalize corrupt russian oligarchs for supporting putin and to cripple russia's economy cutting off support for funding this brutal war. we've dramatically escalated these economic efforts and it's impacting every sector, sanctions against a number of major russian banks, dozens of russian officials and putin associates, expanded export controls that restricts russia's access to the technologies needed to sustain its aggressive military capabilities, limitations on imports of russian energy products, and even the siege of the 300 million dollar yacht owned by a sanctioned russian
oligarch. the impact -- has rippled throughout the russian economy, damaging their defence industrial base. ukrainian troops to found russian military equipment right with s conductors that appear to have been taken out of home appliances like dishwashers and refrigerators. passing the six month mark of the war, we welcome back elizabeth rosenberg who serves as assistant secretary for financial crimes at the department of treasury and welcome andrea adams, director of the kleptocapture task force at the department of justice. we look forward to hearing from the witnesses about the economic sanctions designed to weaken russian economy and about our efforts to pursue russian oligarch assets. we're making it increasingly difficult for putin to find his brutal roar in the face of a shrinking russian economy and its isolation in the global stage. we must maintain the pressure of our many sanctions, regimes, we must keep the coalition intact, there's so much of
russia's revenue coming from energy sales, i look forward to hearing more from the witnesses today about the impact and status have the price gap negotiations. just last week, i met with a group of ukrainian americans from ohio, my state is proud to have a vibrant ukrainian community. their match is which clear, we cannot lose the momentum. we must continue to hold the russian government and sanctions -- the multilateral coalition with president biden adeptly stumbled rolled out a sweeping series of rules designed to degrade russia's military and technological capabilities. we will not let up on russia continues to threaten the sovereignty of ukraine,. >> thank you, mister chairman, thank you to our witnesses. last week, ukrainian forces recaptured the town of izium and eastern ukraine. it had been occupied by russian soldiers for six months. in the streets overjoyed and carefully residents celebrated
their liberation, in a forest just outside, town the horrors of russia's invasion were once again revealed. ukrainian soldiers discovered a mass grave filled with hundreds of civilians. many of these victims are believed to have been tortured, bound, assaulted and murdered. not unlike the horrors that occurred in bucha in april. our government has rightly said such atrocities committed by the russians are war crimes identifying and prosecuting these war crime it's crucial. let's be clear, these crimes will continue unless we can fourth flatten your putin and those around him into concluding to abandon the invasion, and to conclude that abandoning the invasion is better than continuing. ending this war on terms acceptable to ukraine's democratic government is not just a morally righteous undertaking for the united states, it is also in the vital interest of our allies and ourselves, the outcome will
have ramifications far beyond ukraine, we cannot allow revisionist autocrats to feel free to redraw international borders and fundamentally challenged global stability the principles of sovereignty and freedom must mean something. even when facing down the barrel of a gun. the stakes are high in europe, with the united states has deep and long-standing security commitments, and they reach as far as asia where the chinese government is taking note of how the u.s. and its allies respond to russia's invasion if it's smaller neighbor. today, this committee will examine the existing sanctions that the u.s. allies will bear on the kremlin honors of asian of ukraine, on the outcome of the war, it will be determined on the battlefield, sanctions have the potential to dramatically hasten and end to the conflict by depriving the kremlin of the funds in needs to continue this war. let's be honest, the sanctions imposed on russia thus far have not yet come remotely close to achieving this objective, roughly one billion dollars in
hard currency continues to flow into the kremlin's war chest every day from energy sales. treasury deputy secretary recently acknowledged and, i quote, there is one part of the russian economy doing even better than when the war began, their oil industry. and quote. by the way, russia's gas industry is doing equally well. gazprom recently announced record profits of over 40 billion dollars. record profits. the first part of this year. today's hearing will focus on the administration's plan for a novel sanctions regime then post price caps on the purchase of russian oil. this is an intriguing idea. i hope it will be -- the premise of the idea is simple, service providers such as financiers insurers within the g7 will only be permitted to facilitate the purchase of russian oil below the set cap price. given that the vast majority of such service providers are in fact domicile in g7 countries,
this plan has the potential to significantly curtail russian oil revenue. several questions remain about this program including, how lower the price cap beset. what will enforcement of the cap look like. how will the administration ensure that buyers and countries like china and india do not escort the price cap for their own game. this last question is arguably the most important to determining the effectiveness of this price cap regime. because it is so important, senator, van hollen i prior to introduce legislation that will compliment the price cap scheme and impose mandatory sanctions on any foreign financial institutions worldwide involved with any transaction and russian oil above the price cap, the legislation will be the first major bipartisan sanction legislation that has been introduced on russia since february. i intend to work with senator van hollen to get this bill and acted as soon as possible so russia can no longer profit
from the oil sales finding its war in ukraine. seven months after putin began his special operation, as he put, sits in ukraine, we ukrainians have conducted a remarkably successful campaign to liberate portions of the country from russian control, concerns harbored by china and india about putin's war have been aired publicly and gas prices in europe are actually falling down 45% since late august. who is not going as planned for putin. i saved my colleagues, now is at the time for half measures are complacency. it is time to crush the kremlin 's ability to continue this war. thank you, mister chairman. >> thank you senator, i will introduce today's witnesses, to elizabeth rest -- and financial crimes and treasury welcome, back to committee as assistant secretary, she is responsible for leveraging the treasury department tools to target threats to national security and safeguarding the financial system from abuse. we also welcome andrew adams,
director of the clapped clasp capture task force at doj, test force at enraged law enforcement a desert led by justice prosecutors and dedicated to enforcing the sweeping sanctions and response to russia's unprovoked military evasion former federal prosecutor in new york. -- assistant secretary rosenberg, please begin. >> chairman browned, ranking member to meet, and the statement of the committee, thank you for the opportunity to speak to you today about the department of treasury's efforts to hold russia accountable for its brutal and unjustified further invasion of ukraine. the u.s. department the treasury is working with administration partners including my colleague from the department of justice who, i am joined with today to implement the u.s. governments holistic response to putin's war. since the further invasion began six months ago we have been advancing president biden's promised to squeeze russia's access to finance and technology for strategic sectors of its economy and degrade its industrial capacity for years to come.
just last week, we are posting chose to further degrade russia's military, while perpetrators of this war accountable and financially isolate putin, to date treasury has sanctioned has dreads of russian individuals and entities and this includes a majority of russia's financial institutions, them industrial supply chain, and the oligarchy not perpetuate putin's war. the united states has been joined by over 30 countries, collectively representing more than half of the global economy and imposing sanctions, the largest sanctions regime and modern history. on the other side, russia's propagandist have been aggressively attempting to bury any unfavorable news and push misinformation, saying that, for example, sanctions are not working and cause food insecurity. in fact, russia has crippled ukraine's forming an export economy and dramatically driven up global energy and green prices. the u.s. and partner economic responses to russia's war have head and will continue to have a significant effect on
russia's ability to fund its war. russia has been forced to imposed a coating in capital controls, the imf expects russia's economy will contract for at least the next two years. sharp reversal from its 4.7% growth in 2021. the russians dark markets that 35% below pre war levels. russia's unsustainably burning through its rainy day funds, moving towards fiscal deficit by years end. simply put, russia's economic picture is bleak and deteriorating. significantly, these economic constraints are translating into real battlefield difficulties of her russia. struggling to import industrial goods and technology, russia has been forced to turn to outdated equipment and approach global prices like north korea and iran to source material. because russia is a sizeable economy, and globally important energy producer, and posing financial cost while mitigating the response -- has required extraordinary planning, coordination, economic analysis, diplomacy,
and created policymaking. we have been keenly focused on russia's large volume oil experts and windfall earnings in a high energy price environment. at this point, this represents russia's primary source of hard currency. given the global nature of oil markets, elevated energy prices affect us all, including american households that have seen rising prices at the pump and inflationary pressure across the economy. high energy prices hit the poorest the hardest in our country and across the world. our effort, alongside an international coalition to start with the g7 to impose a price gap on maritime russian oil exports is the most viable option to support the security and affordability of the global oil supply. and involves price cap -- priced below the cap and refraining to do so from oil priced above the cap. the majority of providers, like
insurance, payments, strayed finances are located within the g7 and eu countries. so, there is an overwhelming economic incentive for buyers to purchase under the price cap so that they can engage the services. it will be cheaper and less risky to move russian oil car goes in this way, we are already seeing this policy were, with russia forced to negotiate steep discounts for oil itself to buyers in asia. to close, i'd like to express my gratitude for the additional resources, that congress has provided in the appropriations package which helps as a treasury and across the u.s. government surge in the policy response to russia's war and critically, the support the people of ukraine. i'd be happy to answer any further questions you have in the setting and you continue to work with you on the future. >> director adams? >> i appreciate the opportunity to appear before you today on behalf of united states
department of justice in my capacity as director of the departments russian sanctions test force, kleptocapture, to discuss the important work of the task force in response to russia's unprovoked illegal and brutal war of aggression in ukraine. the atrocity committed have been well publicized, russian attacks have devastated ukrainian cities, leaving some on the verge of humanitarian collapse. estimates are that as many as 1.6 million ukrainians have been interrogated, detained, forcibly deported to russia under the oversight of russian officials. numerous news reports of the details of the rational campaigns against ukrainians includes a program of torture and rape reporting that, tragically, find supports in the -- and devastation uncovered in the wake of russia's retreat from the recent ukrainian counter offensive. this is why the work of the task force is so important. our targets have and continue
to profit from a system of corruption and violence. they continue to sustain and enable that same corrupt and violent regime, their willingness to facilitate and acquiesce in russia's malign activities contributes to the death and destruction that we are witnessing in ukraine. the task force is dedicated to enforcing the sanctions, export restrictions an economic countermeasures that the united states has imposed along with its international allies and partners in response to this unprovoked military invasion. it dries on the expertise of and an energy of agents, analysts, translators and prosecutors throughout the department and throughout the u.s. government, including prominently our colleagues at the treasury department. our goals are to bring charges against any individuals or entity, or-limited through congress department rulemaking rolled out in response to russian aggression. with respect to people and entities on those list, we will pursue any charge or seizure
theory available. sanctions of asia and money laundering are obvious charges and theories in this space, if opportunities to bring charges on blank rod, visa fraud, extortion, or any other federal crime are presented as to a listed person or entity, that is a charge that this task force will support and pursue. second, we would target those who would facilitate the evasion of economic sanctions and the commerce departments export controls. who begs, real estate agents, brokered dealers, exporters, manufacturers, shipping companies and others, our goal is to shine a light were shanks and actors may other otherwise operate and shadow. our immediate focus has been on disruption of those individuals and entities who have aided and supported the russian regime. we have worked quickly with international partners to seize and oligarchs 90 million dollar luxury yacht in spain, to seize and transports roughly half a billion dollar yacht from fiji
to san diego harbor, to seize millions of dollars associated with sanction parties held at multiple u.s. financial institutions and to pursue all guards involved in violations of u.s. export controls. we've also filed an all-seal charges against russian oligarchs themselves and their associates for invading sanctions and other related. crimes the department welcomes the committee's consideration of legislation to augment the task for civility to seek charges and seize assets, resulting from all derricks corrupts dealings with the russian government, and enable the transfer of proceeds from those actions to ukraine to remediate the harms caused by the russian aggression. in addition, the department continues to advocate for the following key proposals. one, our proposal to clamp down on the facilitation of sanctions by amending the international emergency economic powers act, and it's penalty provision to extend the existing forfeiture thorough
days to facilitating property and not simply the proceeds of such offenses. second, our proposal to add criminal violations of it and the export control reform act, to the definition of racketeering activity and their racketeer influenced or corrupt organization act, we go. it would be a powerful forfeiture tool against racketeering engaged in sanctions violations and pave the way for us -- with appropriately capture the scope in capacity of these evasion hours. third, our proposal to extend the statute of limitation from 5 to 10 years for money laundering in connection with certain foreign offenses which would grant our prosecutors time to follow the money and unravel the complex network for which all of dark rely to hide their wildes. fourth, our proposal to improve the ability to work with the international partners to recover assets linked to foreign corruption.
i appreciate the opportunity to appear here today and to discuss the task force at potential legislation as it relates to russia's unprovoked and illegal rower and aggression in ukraine. >> thank you, director. if we need yet another reminder that competency and commitment to our nation's core values of democracy in the rule of law are essential to good government, we need to look no further than this administration and its herculean effort to impose targeted smart sanctions in russia, and targeting export controls, leverage target controls and the russian economy, done so with an unprecedented multi lateral coalition, and of course we must continue to ratchet up the pain if russia fights this war regression. assistant secondary rosenberg, tell us the right metrics to determine whether sanctions are working and as you discussed, that what are the more significant challenges to make sure the sanctions continue to
achieve that purpose? >> thank you, senator, for the question. as you have noted, the sanctions that the united states and over 30 countries have put in place alongside export controls have had a powerful economic effect in achieving our goal to deprive russia revenue and military equipment to rage its brutal war. some metrics here. half of russia's foreign exchange reserves have been locked up. russia has been forced to resort to these draconian capital controls. it is burning through its physical fiscal buffers and heading towards fiscal deficit by the end of the year. it is struggling to make and to foreign imports including of critical industrial goods necessary for manufacturing. this is translating into battlefield difficulties for russia. crucial to the goal of depriving russia have the ability to fight its war. specifically it is had to cannibalize its domestic industry in order to manufacture battlefield equipment. it cannot procure on the international market because of
the capital controls. it is also compelled to look to international pariahs, iran or north korea, and are to source some of its military equipment. the soldiers on its frontline don't have access to the most modern war fighting equipment. those are important indicators of the criteria that we should look to for the efficacy of this policy approach with regard to challenges, something that is forefront for us at the treasury department and our colleagues that the u.s. government and elsewhere is to look to opportunities russia may be pursuing to evade the sanctions and to find ways to skirt controls in order to engage in procurement for its military equipment. a future current and future priority for us will be looking to enforce sanctions that get at russia's supply networks that might be using for evasion. >> thank you, what else can be done to keep the pressure on russia. >> in addition to the priority
i just noted, going after major enforcement efforts and looking at russia's illicit procurement networks, we can work closely with international allies to ensure that they are enforcing their own sanctions and expanding in augmenting them in ways that compliment measures we have in place. for example, some of our partners still have the opportunity to put full blocking sanctions on some entities that we have fully blocks in the united states. >> thank you. earlier this month the administration with other g7 countries announced the plan that you both mentioned. you both discussed to impose a price cap on importing russian oil. ranking member toomey spoke with possibilities. secretary yellen said it would reduce the main source of funding for the war but keep supplies flowing to global energy markets. what do you estimate its impact would be to the russian economy if the price cap is effective, number, one and as you answer
talk about the necessity or if there is a necessity that china and russia be partners or not be opposed to this. >> thank you for the question. many of us have noticed and focused on the fact that russia is earning windfall profits from energy exports, given that it has driven up energy prices itself by invading ukraine. with this in, mind the g7 has put forward this price cap policy. it will have two major economic effects. to affirm what secretary yellen has said, this will deprive russia of revenue, it will be compelled to sell into the price cap here at lower prices. has second important economic effect, given this downward pressure on prices, developing economies will have the opportunity to purchase them for less, a lower price. significant to them and
significance acuity of supply you. mentioned china. it is important to note -- >> and india, i may misspoke, china and india. both >> it's important to note that it's not essential, by design of this policy, it is not essential for such countries, such major importers of russian oil to formally join this group. use the existence of the price cap to lower prices. we're seeing that already. asian purchasers have used the price cap in order to leverage lower prices, cut rate prices for russian energy. that is this policy already at work. >> thank you. >> thank you, mister chairman, i want to focus on two aspects of this idea that the administration has developed. the likelihood of evasion, but also the price cap level itself. the treasury is guidance on the price cap plan so far indicates the policy is constructed as a
prohibition on service providers within the g7 countries. who finance insure and brechin oil transactions above the price cap level, wherever it ends up being set. as i said, i am hopeful that this will be effective. it strikes me as a very constructive step. obviously it is not my top, certainly not directly, two oil service providers outside the g7. we've seen a huge increase in india and chinese purchases of oil just as u.s. and european purchases have declined. in fact, those purchases have fully offset the decline of the u.s. and the eu. my concern is that china and india will continue to buy russian oil. probably on a lodge still, they will do so with their own service providers. it might not be quite as convenient as the existing regime, they are capable of ensuring and brokering and financing oil sales with indigenous companies and
capabilities. i want to briefly, miss mowers rosenberg, if you could comment on any concerns you have that there is still this mechanism an opportunity for russia to continue to sell oil. albeit not to g7 countries are those who you services of g7 countries. outside of the g7. >> thank you for the opportunity to address the questions. this price cap policy envisions a scenario where countries, excuse me china and india, for example, continue to purchase russian oil. that is envisioned within this policy. it is possible that they could purchase that oil below the cap using g7 services. for example, there is a distinct advantage for them to do so. 80 to 90% of maritime assurance is concentrated in service providers within the eu, rather, within europe.
it means that india, for example, has a powerful interest in purchasing some of that below the price cap in order to take advantage of those services which provide more reliability. >> and sorry to interrupt. i am short on time. there is no question evan would like to buy oil has cheaply or they possibly can. i completely acknowledge that this regime, if it is effective with g7 countries might very well have some downward pressure. there will also be efforts to evade. it will be countries that will see an opportunity to get more discounted oil even if it's not fully discounted to the price level. this is why i think it's important that we address this question. i acknowledge that the big majority of the market for the service providers comes from companies within the g7. they would be affected by this. they don't have monopolies. the chinese in the indians, i said, they are quite people of expanding the role of their indigenous service providers.
this is not meant as a criticism of this arrangement, i am suggesting, this is why senator van hollen and i have introduced legislation that would require sanctions to be imposed on those who would invade this way. let me ask you another question, if i could. what is your best estimate right now of the marginal cost of producing a barrel of oil and russia? >> senator, there is varying cost for doing so. it depends on the geology of the field, the technology involved in lifting and the cost of amateur is a shun. i wanted to take one second to address a key facet of the point you made earlier. >> okay, i have another point i need to get to. we have a minute. do it quickly. >> a key aspect of a successful price cap policy is the international approach involved here. and the entirety of the g7. it is the case that some service providers may be able to function outside of it. the broad coalition of the g7 in the existence of price cap
means that even outside of it, purchasers have the opportunity and leverage in order to ratchet down the price that they pay. >> i get that. i'm hoping that dynamic works. if that market dynamic works, indian and chinese buyers and upping no more than the cap price, then our sanctions legislation is moot. it will sit there as a backstop without doing any harm and without being implemented. if it does not work, let's be honest, russians have taken in a lot of revenue we did not fully anticipate. we would have a backstop. my point on the price level is, i think it makes sense, and i am open to an alternative idea. i don't think you guys have set a price cap level yet. i hope it will be very close to the marginal cost of production. i get that berries over the course of a massive country like russia. keeping it as low as possible diminishes the profits that the russians make.
i think that's a very important step. last point, mr. chairman, if you will indulge me. just an observation for mr. adams sake. i know the administration has proposed expanding justices resources and tools to pursue administrators civil forfeiture and punish sanctions of asians. i think enhancements might very well be appropriate to penalize russia's oil aggression ingrain ukraine. the administration's proposal seen generally not to be limited to russia nor to be time-limited and i think we should proceed very cautiously before we decide to expand these prosecuted serial administrative powers in areas unrelated to this invasion. thank you. >> senator tillis is recommended from north carolina. >> is it because i wore a tie today? >> thank you for being here. what research has been conducted to -- you are talking about a lot of the russian consumption being at the price cap and negotiated below it, what is the biggest
changes in terms of consumption? who are the top three countries that are likely to greatly increase their dependence on russian oil over the next 12 months? >> thank you for the question. the european union has decided and it sucks sanctions package to stop the purchase of russian oil and refine product. that will take effect in december for oil. the several million barrels that europe has been purchasing will flow elsewhere. that may include countries in asia, africa, latin america. there is not one single country or two that would carry -- that would take on all of it. it would likely be an array of countries. >> would china and andrea top the list of some of the greatest increase consumption? >> those are significant consuming countries for russia already. it is possible that it could increase additionally there.
the volume of flow that will come from russia given erupts pullback for the market will flow to many countries. >> do you think the price cap alone is enough to get the price where we want it to be? is there going to be a need for secondary sanctions so we go beyond the u.s. and the g7. >> the price cap we believe will have a powerful effect in doing several things. certainly in the first incensed, denying russian revenue to fund its war. secondly, by keeping russian oil on the market at loyal prices, it will reduce the potential for price spikes in the market. it enhances security of supply. it makes affordable energy available for low income countries. all of those things are important benefits to a price environment that's good for our economy and our partners economy. >> russians have -- putin made a grave mistake when
he went to ukraine, he saw that play out on the battlefield. we're talking about tens of thousands of casualties, probably 25,000 deaths. we also know that there are supply change that have been greatly disrupted. the ability to replace a lot of what they've lost on the battle shield has been greatly disrupted. they are going to countries like north korea and iran to look for support. i believe that's already in violation of sanctions. what more do we need to do to curb that and limit russians options outside of their own defence industrial base? >> it is certainly a violation of sanctions when entities in iran and north korea supply russian designated entities with military equipment. for example, earlier this month the treasury department imposed sanctions on iranian entities that were supplying uavs to russia in violation of our russia sanctions. our approach here will be to
continue to impose a sanctions to hold accountable those a suppliers, the russian designated entities. >> are they in the works now based on transactions that have occurred? >> i am not in a position to forecast or speak about sanctions that may be coming. please dress assured, this is a significant priority for us. >> there is an estimated, 300 billion dollars in russian assets that had been seized by the united states. >> senator, i would respond in part. with respect to seizures, that is correct. >> frozen, had not seized. >> the question is, how can we seize them? what legal hurdles do you have for doing that. it is one of the departments priorities to look at the
assets there close to hannah most readily investigate will. those include assets that are frozen in the united states. we have a focus on looking at whether those relate to the proceeds of crime or have been facilitating money laundering. >> what is the world wide number on frozen assets. have any of those in other jurisdictions been seized. >> the estimation of the total number range into the billions. i do not have a precise number to offer. there are foreign partners who have frozen assets abroad. at least some jurisdictions, there are authorities that may all timidly lead to seizure and full confiscation much like our civil forfeiture and criminal forfeiture. >> i hope we put a foot on the accelerator and do everything we can to make sure that money never falls back into the hands of the oligarchs. thank you. >> thank you, senator van hollen from maryland is
recognized. >> thank you to both of our witnesses. as the chairman others have said, the ukrainian people have inspired people throughout our country and throughout the world in their fight for freedom. and for sovereignty. the support from the united states and our allies to the people of ukraine has been essential in that fight. both the military support and the economic sanctions. i want to applaud the biden administration for working with our allies to provide that essential military equipment and to impose those sanctions very rapidly. we have seen projections of russian gdp having declined as a result of that. we -- the one area where russia has continued to generate a lot of revenue to fund the war machine is in their sale of energy. gas and especially oil. so, i also applaud the
administration's effort with the g7 to establish the price cap. i think we all know, a lot of us have been following this closely. i share the g subcommittee we had a hearing on june 14th with deputy secretary dm all we covered some of these issues. it is pretty clear that there is some skepticism among oil traders about whether this will work. that is why i am really pleased to team up with senator toomey to introduce legislation which is, as he described it, a compliment to the administration's efforts. a backstop. you can easily imagine vladimir putin saying that he is not going to comply with this price cap. and that will set off a negotiation with those around the world who may be willing to purchase oil for both. it still and their interests compared to global prices. the idea behind the legislation
is to provide a uniform backstop worldwide. and say to any financial institution that is thinking about financing or participating in a transaction to purchase russian oil above the price cap set by the g7 will face penalties. if you are right, i hope you are, you will not eat need anything like that people comply voluntarily, that is great. if they do not, we would have a backstop. if it works perfectly, you will not need it. i guess my question is, what is your sense of need for additional leverage. wouldn't you support something that gives you a little bit of extra leverage as you go around negotiating the price cap? >> thank you, senator, for the opportunity to address this
point. the u.s. administration and our g7 partners have a good deal of leverage and authorities right now in order to pursue a policy that sets up a powerful set of incentives for purchasers of russian oil to purchase the oil at cut rate prices below the cap here, we also have authorities that we can bring to bear for the purposes of enforcement, i believe your specifically addressing when there is an instance, for example, of a purchaser that has committed fraud, that has made material misrepresentations to service providers that are acting in good faith to follow this price cap policy. that is the focus, to the extent that we need to use enforcement measures that would be of primary concern for us. at this time, we have sufficient authorities in order to pursue that and those revenues.
i guess, madam secretary, as senator toomey pointed out, if you are, russia you are going to be -bent on trying to develop different avenues to sell your oil, at a price somewhat higher than whatever price the g7 sent. this mechanism signals to russia, and others around the world, that if you are involved in some kind of scheme, to evade these price caps, you will be hit. it will be automatic. i believe one of the benefits of putting this sort of threat of sanctions out in advance, is that everybody is on full alert. this is the law, this will apply. clearly, if somebody is bound in good faith, there can be exceptions for those purposes. i do think there is a great benefit, to having a worldwide
backup, so that russia does not try, as it is bound to do, to play countries against each other, if those countries know they are all going to be subject to the same uniform sanction penalty. thank you mister chair. >> thank you mister chairman. let me start off by commanding the administration's leadership on the price cap. a successful cap however requires agreement from abroad, and it is a delicate balancing act. so where are we at in terms of securing the necessary buying in and support, to make the price cap work, it's their buy-in from other major economies, beyond the g7? >> thank you senator for the question, opportunity to speak to this. in negotiating and crafting the price cap a policy, we have worked very closely with partners in the g7, and that
includes the eu. all of the eu nations as well. that was enshrined, and articulated, and the g7 ministerial statement, several weeks ago. with a commitment to implement the strategy, we are in a very strong place when it comes to coordination across this group. that is meaningful because, the significant majority of services, for the maritime transport of russian oil, our compromise in this country's. we have the opportunity to speak with major purchasing economies, that are not part of the g7. but that would be in a position already, have, been and continue to be purchasers of russian oil. they, understand the purpose of this policy, we have significant common cause with, them when it comes to their ability to purchase russian oil, at significantly decreased rates. >> let me ask you, how much is a concern --
and what are we doing to make those efforts ineffective? >> thank you senator. russia does have insurance, maritime insurance, that it has used. it does not have enough insurance, in order to support all russian oil, that it exports. which is one of the reasons why, insurance provided by european countries, has been important. i think we'll continue to be important for purchasers of russian oil. furthermore, those purchasers of russian oil, no, to use some of the largest tankers, they are essentially required to use european insurance. there is a powerful incentive for those purchasers, to continue to access g7 insurance, and other services, for the purchase of russian oil. >> india's importation of russian oil, has skyrocketed. helping it to maintain russia's exports. how successful is our ongoing engagement with india, and the agreement to adhere to a price
cap? and can the price cap actually work, if india and china are not part of the coalition of countries and parliament? >> it is the case, that india has significantly increased its purchase of russian oil. that is, conceived of, in this policy, when it comes into force. india, continuing to purchase, including at a significant volume, it can be entirely consistent with the price cap. what is key is that, india is in the position to negotiate a lower price. significantly lower price, for the oil that it purchases. to the latter question that you just asked, it's not essential that countries, such as india, or others, in southeast asia for example, that purchase or east asia, that purchased russian oil, it is not essential that they formally joined the pi price cap, in order to be able to use that cap, to leverage a very low cost of oil, that will advance our purpose. driving down rushes revenue, and also keeping russian oil on the market, at depressed
prices. >> that is a great point. but it's also, a question of, if china wants to help russia, then it can purchase oil, beyond the price cap. and it is a direct way of helping russia, at a critical time, without being more directly involved in ukraine. at some point, we have to think about, these are not just any economies. these are major importing economies, in terms of india and china. and how they act, in this context, is going to be critical, as to how successful we are. i look forward to seeing, how we will deal with that. i, get concerned, i have been the author of, more sanctions than i like to remember. and, the challenge is of course, enforcement. and dealing with evasion. and so, it is critical, that the united states crackdown on entities and nations that seek to evade and subvert western
sanctions. i'm particularly concerned about possible sanctions, invasions, by turkish financial institutions. through their use of russia's domestic payment system. i was pleased to see that the u.s. just sanctioned the ceo of an s p k, which oversees the operations. what further steps, is the administration taking, to close loopholes? that allow western sanctions, to be undermined, with the use of a mere payment system? >> thank you senator. we are quite concerned about, the potential for russian sanctions, broadly in any jurisdiction. as you know, this is one jurisdiction, that we have a focused on. our deputy secretary has made a specific effort, in that regard. we are also, interested in how, existing financial connectivity, that russia has to the rest of the world, whether it is the payment service you noted, or others, whether those can be
abused. we should think of, any such connectivity as potentially vulnerable. and appropriate for enhanced due diligence. we will continue to engage, to focus on that vulnerability. >> i have one final question. mr. adams, we've seen a lot of high-profile yachts, i don't know how much it costs us to maintain, it before we get rid of. it i don't know what the effect is. certainly those who lost, it it is significant. the long term success, of the successful seizure, effort will come from the coordination and information sharing, at multiple levels across jurisdictions. what are some of the biggest obstacles to ensuring a robust effort, to identify and sees privately held assets, and how is the u.s. aid and jurisdictions -- to ensure that takes place? >> thank you senator, i appreciate the concern behind that question.
the biggest obstacle historically is communication across borders. dealing with our international partners. in the wake of the february invasion those obstacles have diminished greatly. it has been, in my experience, a significant uptick, in the ability, and the interest of international sharing. both in terms of law enforcement, and intelligence. the key hurdle, previously, was a misalignment between, the u.s. sanctions regime on the one hand, and foreign partner sanction partners, on the other. as the european union our partners in the united kingdom, and elsewhere around the globe, they have come into alignment with our sanctions regime. it is greatly increased our ability to affect seizures, affect requests for searches, for arrests, a cheddar up. that i think will only continue, as those regimes continue to come into alignment, and particular, as our partners in
europe and the united kingdom, continue to work on legislation on their own, that will increase their own ability to pursue on civil asset forfeiture. >> thank you. senator from south dakota is recognized. >> thank you mister chairman. thank you to both of you, for appearing before us today. miss rosenberg, as you know, the use of sanctions has increased astronomically, since the cold war. my question is, do you believe that sanctions are an effective way, to advance u.s. national security and policy priorities? >> thanks for the question. i do believe, sanctions are an effective way to advance u.s. policy objectives, not by themselves. in coordination with other authorities, and tools of statecraft, including diplomacy, when appropriate. the use of military or intelligence tools, and furthermore, they are most
effective, when used alongside international partners. both as an economic matter, and a signaling target. >> in a globalized economy, where russia can still earn a billion dollars a day in oil revenue, even while being heavily sanctioned, how do we make certain that our economic, and other non-military tools, actually stay effective? >> senator, to this excellent point, i would refer back to my comment previously, on the multilateralism here. the united states, is a significantly sized economy. but there are other significant sized economies, that have even greater connectivity with russia. when we act together, given their connectivity to russia, they will have the greatest effect. in causing an economic and financial isolation for russia. that's how multilateral sanctions can be most effective. >> seems interesting. even though they've actually
reduced the amount, that they have produced and been able to deliver, and the fact they have supply chain problems as well, without the price going up, there were two messages that i heard earlier in your opening statement. first was, we were successfully, actually, limiting, and seeing their economy actually reduce, and terms of its overall value. at the same time, their largest industry, which is the production of petroleum, has substantially increased. am i missing something between the two? it seems the sanctions, specifically with regard to their ability to produce and to market oil, it does not seem to have worked as well, as we had hoped, that it would. is that a fair statement? >> senator, these sanctions, these broad international coalition of sanctions and export controls, or having the effect of overall, constraining russia's economy, and putting
it into, pretty difficult and dire conditions. nevertheless, the particular area, that you have noted, is actually, the last significant remaining russian opportunity to earn hard currency, to many people, including members of this committee, that is intolerable. that russia is still continuing to earn, windfall profits from the sale of energy. which is why we seek to address it, with further policy measures. >> mr. adams, it is my understanding, that you task force, is fully empowered, to use the most cutting edge investigating techniques, including data analytics, cryptocurrency tracing. and information, from financial regulators, and private center partners. to identify sanctions, evasions, and related misconduct. in discussions with other federal offices, i have been told, that frequently, the private sector, actually provides more, and better information, and other sectors
of the federal government. my question would be, what role does the private sector play in assisting, you and identifying russia's invasion efforts, have you experienced a similar level of information sharing? >> thank you senator. the private sector has been an enormous partner throughout this threat, we are referring to the backing centers, the financial service sector, generally. to the insurance industry, to shipping industry, a ciattarelli. there are instances in which our job, as long enforcement officers cannot be done without witnesses who, have firsthand knowledge of how the economy is working on the ground. and, how specific knowledge about, particular sanctions, as you have noted. working with the banking sector, is not separate, in my mind, from working with the public sector, and law enforcement. it is a symbiosis. we get information, through bank secrecy reporting channels.
we get information through less formal informants. to be able to marry those, those sources of information, with confidential sources, for example. to marry it with, our ability to perceive via search warrants, et cetera, it amplifies both sides of what is essentially the same coin. >> thank you mister chairman, my time is expired. >> thank you. senator smith, recognized from her office. >> thank you mister chair, thank you to our panelists, for this excellent hearing. my question is around global food insecurity. the russian war and ukraine, is contributing to a global food security crisis. somalia is one of the worst-hit countries. before the war, ukraine and russia contributed up to 90% of somalia's grain supply, and now an estimated 7 million
somalian's are facing acute food insecurity, and near famine conditions. despite some progress, and restoring shipments of, wheat to east african nations, we continue to see, russian efforts, to steal, and divert, grain supplies, -- to look at reducing, future shipments. so miss rosenberg, i was very glad to see last week, the treasury of announcing new sanctions against individuals, that are overseeing the security, the seizure and the theft of ukraine's grain. could you talk to us about, how we can do more, to use sanctions, and other tools, economic statecraft, to hold russia accountable? for intentionally exacerbating this food crisis? >> thank you senator, for the opportunity to speak to food insecurity, and russia's role in enhancing unfortunately, the food insecurity that exists for so many countries. one thing that is important, we have found to point out is, the
necessity to clarify, the fact that our sanctions, do not bear on the export of, or the trait of food, medicine, or medical devices, that speaks to misinformation out there. in fact, what we have sought to do, is to clarify that, we have permission in all of our sanctions structure, to ensure that such trade can continue. we've issued a general licenses to that effect, and additional guidance. it is important to hold accountable, those entities including in russia, that have been responsible for stealing ukrainian grain, and destroying their agricultural equipment, from blockading in the export of ukrainian grain, and as you've noted, it is particularly outrageous, and dismaying, that russia has been engaging in these activities, given the profound need by countries that are food insecure, for this food aid, that ukraine has been in the position of supplying, as well as russia, in the past. beyond efforts that we can
bring forward, and continue to do so, to hold accountable those in russia, that are responsible, it's furthermore, essential to ensure that, that grain is able to be exported, and that the agreements, the negotiated agreements, that have come into place, and hopefully will be retained, in order to allow that grade to continue to be exported, on the water, will be just as essential as holding accountable, those who are responsible for preventing the export of grain. thank you. >> thanks very much. i would like to, and the time that i have left, i would like to follow up on the excellent questions from senator menendez. and senator -- strategies that russia is deploying, to evade sanctions. it seems like this is a constantly of all of a battle. between new strategies on the part of russia to evade sanctions, and our efforts to adapt, and to evolve as well. mr. adams, could you talk a
little bit about that? how have russians strategies to evade coalition sanctions, evolved? how are our detection and enforcement strategies, evolving in response? >> thanks senator. in many ways, i think we see the same playbook for sanctions evasion today, that we have seen for years. there is a drive to evade export controls, in particular, given the stark deficiencies of the russian military. and the ability to re-arm itself. and so, from a strategic standpoint. we, the department, are looking at efforts to -- the sanctionable financing, of, controlled exports. and looking specifically at, new financiers. and new shell companies. new financial services, that are popping up, in order, to essentially play a shell game.
in terms of how to hide that money. one strategy that we have adopted, with the task force, is to be as public, as quickly as possible. in setting out, a roadmap for the private sector, to look at. when we unseal affidavits. when we take actions, and we try to speak with as much detail as possible, about, the specific companies involved, the specific route of money that is going through, the financial system, so that we have an outsized effect. be on a particular case, or seizure. the banks, insurance companies, financial services, firms, can look at our work product, and take their own action, as they instill their own cultures of compliance. >> thank you chair. >> thank you senator smith. >> chairman, thank you. i was one of the first u.s. officials to visit ukraine, following those invasions on
february 24th, that was mid april. following that visit, i saw putin's atrocities, firsthand. about a new york times reported with, me to see the atrocities, of course, north, and a bit to the west of kyiv. i push the biden administration on my return, to take immediate action, to reopen the u.s. embassy. as well as lethal aid to the ukrainian people. on sunday, the guardian reported, that ukraine is lobbying, the un general assembly, to adopt a resolution to establish a mechanism, that could lead to the seizure of as much as 300 billion dollars of russian state assets, overseas. as the war raged on, and russia's actions became more brutal, and barbaric, i've been urged, treasury secretary yellen, to impose tighter sanctions, on russia's financial institutions.
in june, the u.s. department of justice stated, the u.s. and its allies, have frozen 30 billion dollars, i believe a number is closer to 39 billion dollars of russian elite assets. and 300 billion dollars of russian central bank assets, held overseas. not long ago, we introduced a bill senate, it authorized the biden administration, to confiscate these russian assets, and use these assets, to offset the cost of our nations assistance to ukraine. i can tell you, with the taxpayers of this country, they think that is a great idea. as we have been most generous, and sending aid over to ukraine. i think it seems prudent, that we take advantage, of our sanctions, to the fullest. and re-purpose these russian funds, to help pay, for the
response to their invasion of ukraine. for mr. adams, and miss rosenberg, can either of you offer guidance? on what the biden administration plans to do, with the roughly 39 billion dollars of seized russian assets, and by the way, it is a nice balance, we authorized about 40 billion dollars in change, to support the ukrainians, we have about 39 billion dollars in seized russian assets. what is the administration doing with that? why can we not take those dollars here, and use it as an offset, for the aid was sent to the ukraine? >> thank you senator. the concern beyond the question is, entirely felt within the department and the administration. heartfelt by the people, and, the task force, the department, stands ready to work with you, your office, with the committee, with the senate, to talk about,
legislation that has been proposed, that may be proposed, that may further expand our ability. >> thank you for that. heartfelt, that's great. concern, wonderful. why are we not taking action? what is the barrier prohibiting us, to take the seized assets here? and using those to offset, the aid we've sent to ukraine? taxpayer would love to see, that i tell you that. >> thank you senator. to go directly to the hurdles here. with respect to frozen assets, which i think, is a key distinction here, between what has been seized, pursuant to our warrants, -- >> what frozen asset are you looking at? >> i think that is the number you're referring to. >> i just want to make sure we're on the same page. it matches what we sent ukraine. it's about 40 billion dollars. >> there are, with respect to frozen assets, that's it and bank counts, and securities holdings. those are not entirely -- coinciding with what today is,
we can bring a seizure warrant, to go in and ultimately, divest all ownership. >> how much do you think we could provide? and actually take? >> it's difficult to predict today, it's under investigation right now. the question is, as a general matter, are the assets either traceable to the proceeds of an existing crime? involved in money laundering? or the assets of, a racketeering enterprise? >> miss rosenberg, thoughts? >> thank you senator. i, let me affirm that it's certainly is our common cause an interest, to pursue the restitution for the ukrainian people. i would, associate myself with the sentiment that, it is challenging. to move from frozen assets, to forfeited assets. there is a distinction between us, that is a state asset, versus something that is applied to all of sharks, or
individuals. creating different legal standards for the both of them. additionally, some of those assets that you have noted, are held in the united states and other jurisdictions. it's most important, that we move in parallel, to certain of our international counterparts, in order to have consistency and credibility, across our regimes. >> would legislation help? >> senator, from the departments perspective, there are proposals that departments have engaged with, with the senate on, that would help i think, span our biloxi both to investigate and ultimately to pursue the forfeiture of assets, that are under consideration. >> thank you. >> senator from arizona is recognized from her office. >> thank you mister chairman. and thank you to the witnesses, for being here today. arizonian's, and americans continue to stay on with -- stand with ukrainian people, against russia's illegal war. we are inspired by the courage
and the determination of the ukrainian people. we must continue to take smart and aggressive action, to disrupt and dismantle vladimir putin's war machine, and and is bloody illegal conflict, and bring it to a close. earlier this month, the russian government announced that putin has personally sanctioned me, senator kelly, and other distinguished farmers of this committee, when senator mccain, he was sanctioned by putin, in the exact same way. i could not be prouder, to show such a distinction with them. i considered a badge of honor. what he said in response to russia, was this. quote, well i suppose this -- i could not be more proud of being sanctioned by vladimir putin. for standing up for freedom, and human rights, for the russian people. and against putin's deadly aggression in ukraine. i will never stop my efforts to support democracy, free speech, and -- i could not agree more. assistant secretary rosenberg, it's good to see you. i'm encouraged by reports, that the russian military, is being forced to repurpose domestic
industry, to obtain key inputs for its battlefield hardware. because no respected world power, will -- the success shows what is possible with nations put aside differences, and work together, towards a common goal. can you expand on the direct combat implications of this achievement? these international export -- and why the russian military, have to crawl back from kharkiv, a few weeks ago? >> thank you senator, for the opportunity to discuss this issue. indeed, we do believe that export restrictions, and financial sanctions, are directly meaningful, for russia's difficult difficulty in sourcing modern state-of-the-art battlefield equipment. if the soldiers on the front line, don't have access to key war fighting equipment which degrades its readiness, and its ability to wage this war, specifically, we have noticed and pointed out that, russia's
difficulty in getting access to chips, certain high tech equipment, that is -- as you've rightly noted, russia is not in the position, to be able to procure this on the open market. responsible countries of the world, have denied the opportunity to procure those goods. >> that is something we will seek to continue. >> those export controls continue to tighten their vice, it continues to tighten an excessively overtime. it will be more and more difficult for russia to source that equipment. meaning, that its second rate material, is an impediment for battlefield readiness. for the period of the war. that we have ahead of us, unfortunately. >> thank you. do you have a sense of which industrial goods and technology -- >> senator, i did not catch the beginning of your question,
this is about particular goods and technology controlled by law, i would defer to my colleagues, who maintain the lists and the particular prohibitions, as well as my defense department colleagues, and their analysts, to make an assessment of what is most significant to russia's war fighting ability, and its battlefield readiness. i believe, as you've noted, the broad array of restrictions, across many categories of equipment and technology, that russia uses to source its a battlefield equipment, they are important. as well as the complimentary financial sanctions, that also seek to deprive russia of the opportunity to make such procurements. >> banks. i also want to ask about the efficacy of restrictions on russian oil exports. some reports state that russian oil producers are attempting to circumvent the sphere of these restrictions. by blending their oil with
other countries. so that the percentage of russian oil, falls beneath 50%. under current rules, that would allow the oil to be branded as a non-russian countries -- even though nearly half of the oil will continue to go to russia. is this an issue of concern for even night it's dates? or is this primarily an issue for the european -- >> thank you. at this time, we are putting together, as you know. we've had an opportunity to discuss here, the price cap a policy, which will come into force, december 5th. the point that you have made, about blending of russian crude, is one that we have heard from other individuals, and people in the industry. we have an opportunity to offer further clarity and guidance on this important point. and be forthcoming guidance and frequently asked questions that the u.s. government will put out in the coming weeks to effectuate our price cap, and
our partners, and other g7 countries. they will have an opportunity to, so as well to clarify the specific city, it is reported to remember the russian, oil on the water, as russian oil on the water. under the purposes, for the purposes of the price can policy. thank you. >> my final question, does department support european commission efforts, to tighten restrictions, on this very type of weapon scheme? >> thank you senator. we, work very closely, with the european commission, which is part of the g7, which is part of the coalition for the price caps, of g7 countries, we all collectively see the price kept policy, as strengthening and enforcing the eight existing set of restrictions, that we have, to respond to russia, and what it does, is build upon the eu's sixth package, passed in the spring, that has the provisional basis, the provisional legal basis, for its ban on russian services.
for third countries. we certainly, will work closely with the, eu and other energy seven partners, as we continue to implement this policy, thank you. >> thank you thank you. >> thank you senator. senator cortez, from nevada, is recognized from her office. >> thank you mister chairman. and thank you to both rosenberg, and mr. adams. let me talk with you, let me just say this, i appreciate president biden's implementing a robust sanction against the russian government, to stop the illegal and unprovoked invasion against the people of ukraine. i also appreciate the work that you are doing, -- let me talk about two things. i have two proposals, that i am working on. thank, you i know we've reached out to doj. but here is what i'm interested in, and your position, can you
talk about, the benefits of adding a crime of sanctions, and evasions, to the definition of racketeering activity, under -- as you well know, there is civil and criminal actions under the racketeering influence of these organizations, i'm interested in your thoughts, is adding the crime of sanctions, would be helpful in the work that you are doing? >> thank you senator. my thanks to both you and your staff for the conversations about the proposed legislation. we are committed to continuing those conversations. it would be helpful. in a number of respects. to add -- violations to the list of there -- are a number of ways in which we expect that we would work in the benefit of seizing assets. the criminal provisions, and the forfeiture laws, the
ability to go after racketeering enterprises, and the assets, all assets, of a racketeering enterprise, is a particularly powerful forfeiture tool kit is one that is appropriate, in the context of, sophisticated complicated, complex, multinational racketeering enterprises that are engaged in a number of financial crimes. it is the case as we've talked about today, a number of points, what we see our efforts to evade sanctions in russia. but they also tied into efforts to evade sanctions in iran, north korea, there are partnerships and growing partnerships in iran and north korea, in particular, due to the success of our sanction regime, and -- the ability to look at financial service providers, for example. to look at facilitators who are engaged, generally, in the
efforts to make a buck on the back of sanctions of -- irrespective where the sanctions are taking place, it would be particularly powerful, to go after a broad set of actors, and particularly powerful for a forfeiture hammer to ultimately, benefit ukraine. >> thank you. i appreciate your answers to some of the questions today. addressed, and try to take action under forfeiture laws as well. it is very challenging, there is no doubt about it. and, there are certain copyrights that have to be taken into consideration. i do think, we need to make sure that we are giving you all the tools that you need, under our existing laws. and, by adding just sanction invasion, as a predicate, it will be one of the easiest things that we can do, to give you more opportunity, to take
the action that we are all asking you to take, quite honestly. the second thing i want to ask you is, i know the administration, seeks to extend the statute of limitations, against a u.s., -- from 5 to 10 years. can you talk a little bit about that? why that is important? >> thank you senator. the proposal here, is, as you said, to extend the statute of limitations, focusing on, in particular, activity and unlawful activity, that is taking place abroad. the reason for the request is, the difficulty in conducting those kinds of investigations, in particular. i mentioned earlier, the realignments, and the continuing alignment of, our sanctions regime, our foreign partners sanction regime, it's encouraging. it's been robust, particularly over the last few months. that being said, the difficulties in conducting transnational investigations, of piercing, often opaque
jurisdictions that have an interest in concealing or providing a harbor for those who would conceal illegal activity, is a tall order. it requires intensive resources, and at times, requires multiple years of investigation. >> in essence, you just need more time for the investigation? you don't have that because of the incident of, and the assets, and what you're dealing with, in regard to the international perspective. i appreciate both of you, and the work that you do. thank you mister chairman. >> thank you senator cortez. senator warren from massachusetts, is recognized. >> thank you mister chairman. ever since president biden announced sanctions against russia, for the invasion of ukraine, in february, i've had serious concerns about russian elites, potentially using cryptocurrency, to evade sanctions. back then, we already knew that countries like north korea, had
used crypto to -- and launder at least hundreds of millions of dollars. russia could easily be part of that. that is why, i introduced the digital asset sanction compliance and -- handsome and act. with many of my colleagues, actually on this committee. to strengthen our sanctions regime. since my bills introduction and march, treasury has identified numerous cases, of russian entities, attempting to evade sanctions, with crypto. in april, treasury sanction, multiple russian crypto mining companies, just last week. treasury sanctioned five crypto addresses, tied to a russian neil nazi paramilitary group. on top of that, russia's deputy finance minister, announced earlier this month, that russia is looking into using, stablecoins. as a way around western sanctions.
assistant secretary, could digital assets be used right now, five russian oligarchs? to evade sanctions on russia? >> yes senator, that is possible. >> all right. i appreciate your candid answer. many crypto boosters continue to claim that crypto could never be used, as a way to evade sanctions. despite the evidence to the contrary. they say because blockchain is transparent, anybody could see where the tokens are moving, so, no problem here. obviously, we know, there are problems. a whole industry has popped up, to create tools for illicit actors, to tangle, or hide the trail of crypto transactions. one of these tools is called a mixture. which polls funds with explicit purpose of hiding the origins
of the funds. in fact, one report estimates, so far this year, nearly a quarter of all funds, sent to mixers, came from illicit actors. assistant secretary rosenberg, but start with the basics. do mixers, and other technology used to hide crypto transactions, make it harder for treasury officials to do their job, of enforcing sanctions? >> anonymity, enhancing technologies, such as mixtures such as you mention, are indeed a concern, for understanding the flow of illicit finance, and getting after it. it is true, and what you, note that on a public block chain, it is possible to trace the source of money, and where it is flowing. the detracted from that would be, anonymity and handsome technologies. >> like these mixtures. yes. so, that is why i was glad to see last month, that treasury sanctioned tornado cash, are
used by a north korea linked hacking group, to launder nearly half a billion dollars, earlier this year, the mixing service blender, was sanctioned for laundering funds for russian and north korean groups. some in the crypto industry, are furious, over these sanctions. and, they are fighting to have the chance, to keep on laundering money. some downplay, it some law. about the risks associated with their products. one of the industry witnesses, who testified before this committee, earlier this year, claimed that mixers to not make it easier for illicit actors to hide their transactions. well, that was clearly wrong. tornado cash alone has been used to launder seven billion dollars, with nearly 30% of its current business, tied to illicit actors. even so, coinbase, the largest
u.s. coinbase crypto exchange, is now bankrolling a lawsuit, against treasury, for its work, to sanction these mixers. assistant secretary rosenberg, will sanctions against mixers, like tornado cash, help strengthen our sanctions regime against russia and other illicit actors? >> thank you senator. sanctions, such as the one that you have noted, they will serve as a deterrent to any criminal, that would seek to use a mixer, in order to launder their funds, , the proceeds of corruption, or other criminal activity. that is an effective avenue, that we can use, in order to, signal that, we cannot tolerate money laundering. whether that's for a russian, criminal act, or iranian, or north korean, whatever. >> i appreciate that. one thing i've learned over the past couple of years, is where
the crypto boosters try loudest, you are probably on to something. if crypto has nothing to hide on money laundering, for all of sharks, drug lords, tax evaders, then they should not mind a little transparency. thank you very much mister chairman. >> thank you very much, from georgia, is recognized from his office. >> thank you mister chairman, thanks to both of our panelists for your service, and your testimony today. assistant secretary rosenberg, i'd like to begin with you. what will be the most significant implementation challenges associated with the g7 price cap? >> thank you for the question. we've already worked significantly to begin essentially, implementing this, with discussing it plug bleakly, explaining it publicly, it's a different kind of sanction, or different kind of financial set of rules, that we have imposed
before. along with our g7 partners, there is a good deal of work to be done. a good challenge, to be had. and explaining this. and clarifying it, to the parties that would be in the position to take to use it. that includes the service providers, that must know and understand it in order to be able to work within its parameters. we have sought to engage those service providers, extensively. have wheeze -- we've constructed the framework for compliance. and we have learned a great deal, from them. as well as from other countries, that purchased russian oil and i seek to purchase russian oil. the challenge we have, is being able to, continue to discuss and explain this broadly. with all those in a position to implemented. >> thank you miss rosenberg. my understanding is that the guidance that has been issued, according to that guidance financial institution is that, inadvertently, capitalized the shipment of oil that is not compliant with the cap, will
not be penalized for that. how would inadvertently define? how would -- in order to ensure that they are not facilitating oil trades, which are not compliant with this arrangement? >> our purpose is indeed strong compliance with the price cap policy, such that, purchasers of russian oil will be in a position to leverage it, as i have noted before. you reference to the guidance, preliminary guidance that we put out, that speak to service providers that may be duped, or having received false information, if they are acting in good faith. if they are undertaking due diligence in the normal course, along the lines of what they are required to do, under other compliance frameworks, that is the general term, the nature of
the requirements that we'd expect them to be undertaking. here, our focus, as an enforcement matter, would be under those purchasers, making these material misrepresentations, or lying to those service providers. >> thank you miss rosenberg. more broadly, what what forms forms of -- access to international markets or capital or technology that may not currently be constrained by these sanctions regimes as constructed are mostly central to the russian federation's capacity to generate military power over the next several years? let me just received a question for clarity. what forms of access to international markets and capital that the russian federation may still enjoy and two specific technologies, will they -- will the russian government and
russian industry be vesicle to exploit to generate military power given the high rate of attrition that have experienced thus far during operations in ukraine? >> thank you, senator, for the question. one key area of focus for us is looking to rush a significant source of wealth when it comes to its energy sales. it's a major source of hard currency at this time. that is important to russia for budgetary support now and will be in the future. which is why policies such as the price gap policy are essential and degrading its fiscal basis over the -- four now into the future. and i would point out a policy which isn't a u.s. policy but which will nevertheless be significant and that is europe 's long term goal to move away from the purchase of russian energy. and indeed, to seek alternative energy supplies -- that has caused russia to
anticipate decline in revenue, very meaningful declined to review over the years to come. that's significant when it comes to its ability to sustain any kind of economic growth or achieve any kind of economic growth or sustain it into the future. thank you. >> thank you, thank you, mister chairman. >> thank you, senator ossoff. that concludes the questioning in brings this hearing to a close. it's important that we all again realize what's at stake. struggle of ukrainian people and putin's inhumane war. the fight between democracy and tyranny. the price is high. but zelenskyy said it best. describing to putin what ukrainians would go without. he said without gas or without you. without you. without a lighter without, you without you. without food or without you, without you. without honor or without you, without you. that's the strength of ukrainian resolve an hours of this committee and others
congress and in the administration must match it. congress must work hand in hand with you, with the administration, in our multi lateral coalition to protect the sovereignty and to protect the people of ukraine. again, thanks to the two a you for your -- for being here today providing testimony. senators who wishes amid questions, there do one week from today on tuesday september 27th. the two of u.s. witnesses please summit your responses to those questions for the record. 45, no more than 45 days from the day you receive them. thank you again. with that, the hearing is adjourned.
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eastern kentucky lags behind and we are talking about the region of appalachia that struggled the most. >> and his book "twilight in hazard" sunday night on c-span and listen to our podcasts on our c-span now app. g's tourney y perkins to talk about campaign 2022 the evangelical voters. let's talk about first of all the political arm of the family research capsule. what role you play in 2022? guest: good to see you. thank you for the invite to be back. you have a beautiful view of the capital. our political arm is probably a quarter of our operation.
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