 U.S. Institute of Peace was founded by Congress in 1984, dedicated to the proposition that peace is a very practical undertaking, that it's indeed possible and it's essential for our national and international security. So we work with partners around the world in hotspots seeking to apply the best research, strategies and practices for preventing and resolving violent conflict around the globe. We were founded originally with very strong bipartisan support from Congress, so we recognize the importance of members of Congress working together to address critical challenges for American security, and in that spirit we inaugurated this series. We are very pleased to be joined this morning by Congressman Steve Pierce from New Mexico and Congressman Jim Himes from Connecticut for this second event to discuss how the U.S. can prevent illicit funding of terrorism, especially in this critical moment of technological disruption. We are seeing how technologies present enormous opportunities around the world, and in fact several years ago, USIP created a sister organization called Peace Tech Lab, which is using media, technology and data to accelerate and scale technical solutions for peace building. But we also know that there's substantial risk for exploitation of these technologies by terrorists, criminals, traffickers and others. So we've long looked at economic sanctions as a tool to rein in illicit activities, but we're seeing that non-state actors in particular terrorist groups like ISIS, Boko Haram and others are using new technologies and new tactics to fund their operations and evade any law enforcement. So policymakers have a real challenge. They have the challenge of creating a new mechanism to stem the tide of money to extremist groups and a growing urgency to do so. We are very grateful that Congress has identified this as an issue to address. And our featured guests today are at the forefront of those efforts through their work on the House Financial Services Subcommittee on Terrorism and Illicit Finance. And it's a new subcommittee. It was started just last year and it's chaired by Congressman Pierce. And I look very much forward to a conversation today about a lot of issues that probably not enough of us are well-versed in understanding. I invite all of you to follow USIP on Twitter and join today's conversation with the hashtag USIP Bipartisan. I also want to encourage you to listen to our new podcast. It's at usip.org backslash podcast. And that will include this event and many other events so that you can listen to it later. I also want to give a special shout out to those from Greenwich High School and Fairfield University who are joining us from Congressman Himes District. And welcome to all of you who are joining us by a live stream. And with that please join me in welcoming to the stage Congressman Steve Pierce and Congressman Jim Himes. Well I have intended to start posting this Fortinet Threat Map so I would ask you some time to look it up. It's a real time look at the hacks that are flying back and forth, the attempts to penetrate systems and it goes on 24 hours a day. So I call it up in Fortinet Threat Map and you should get that before I drop it or throw it away. So thank you very much. The things that are really basic to peace are quite simple. You need food, you need a place to stay and you've got to be able to breathe. But beyond that the human needs are, they become sort of, well they're just not the basic needs. And what we're experiencing right now is a threat to the very social structure of the world and most people don't care about their political systems. They don't care about the parties, they don't care about anything. They just want to feed their families, send them to school safely and that's good. But when you consider that the store of value is, it used to be gold, maybe silver or whatever and that was very cumbersome so we replaced it with paper money and then we replaced it with promises to pay and then we took away the gold standard and so if you look at the cyber currencies they're just another promise to pay. But what they are is they're linked through blockchains and you can see what's been done but you can't see who did it. Governments tax based on what you did and they know you did it. So if you really want to dig down to the deepest level of the threat of the currencies Bitcoin or whatever they are and they're developing very rapidly and Bitcoin is not nearly the most sophisticated or best now, just as the one with the most name ID, then how are countries going to tax if we don't know who's doing what and to whom? But if you take a look at ISIS, you look at the real threat of terrorism, ISIS was one of the most, it is the richest terror organization in human history. They got that way primarily through four or five main avenues, oil sales to about a billion dollars a year in oil sales, then architectural antiques, they're jackhammering things out that have survived all through human history and selling them on the internet. Then kidnapping is something that's very valuable. The extortion that goes on, in other words they take over regions, go to the banks and simply say we're going to take the accounts over and we're going to manage those accounts and we'll take some percent all or a piece or whatever and they're very successful with that. I first got engaged in the whole idea of terror financing when I went to talk to the group who is responsible for identifying and stopping terrorist financing and said at least stop the oil sales. Well that's very complex and I said no I'm from the oil country, that was my business, not very complex at all. Every barrel of oil either goes through a pipeline but most of the places don't have pipelines and so it's going through a truck, it's being carried from a well to there. You don't have to cause environmental degradation, you simply stop that little four inch pipe that runs from the well to the tank battery and from the tank battery to the truck. It's the loading that you can stop very easy, you don't have to blow up the trucks, you don't have to blow up the wells, you don't have to blow up the tank batteries and that just seemed too complex for the system to understand so we allowed a billion dollars worth of oil to be moved to market and understand the nature of the moving. The trucks would sit in line for months to get one load of oil, months to get to the front of the line and we couldn't find a way to disrupt that but the more immediate concerns the systems are now being attacked in huge ways so in Kiev there was a hack of the system that just suddenly caused ATMs to start spitting out cash and so ATMs had to be shut down so I mean you and I used this for convenience but our convenience is being used against us. You can take a look at Bangladesh, everyone knows that they lost 81 million dollars, what's not as well known is the SWIFT system is what moves financing back and forth across the world, 25 million transactions a day and everybody used it if you're going to transfer from one country to the next or sometimes from one bank to the next in a country use the SWIFT system and they penetrated the SWIFT system and told the New York Fed to transfer money. Luckily they misspelled the word foundation or it would have been a billion dollars instead of 81 million because all of them had misspelled the word except those four transactions that actually occurred for the same thing is happening around the world that Fortinet threat map will show to you the attacks on the system so you have basically and I'll wrap up with this but you got basically three or four major reasons that people get into the hacking system one is just people love to disrupt systems they like to see if they can outsmart the system we experience that quite a bit in our in our DOD then what can we do there to disrupt you get criminals they make a lot of money and there's almost no consequence so we're pretty sure who who accomplished 81 million highs from Bangladesh but there's no consequence for it and almost none worldwide for any of these so you have a tremendous opportunity for gain and almost no risk so you get high reward no risk you're going to invite a lot of players who get better and better and they change by the moment and their process has changed by the moment so when we're defending now that's what happened two days ago in the threats now are much more advanced and so that constant chasing you also have people who wanted they want the disruption the system they want the system to collapse and to fail and and those are the ones that we really should worry about then you've got just like in my hometown we have an oil and gas economy and so you have cartels bringing cash in and buying trucks they never really move anywhere but they funnel a lot of money so a lot of money laundering goes on through legitimate businesses but what they're doing is undermining the basis of finance and the operation of businesses in in America because of our lax position on beneficial ownership America has become a haven and maybe the haven for corporate misdeeds around the world so again you just as far as you want to go the system is being compromised and so I appreciate mr. Himes being here with me today this this committee is very bipartisan way we just there's almost no room for partisan comments here as I took over you you can hear the breadth of issues we dealt with and so I took every member and paired them with the Republican and Democrat and you all have a column and so if you visualize the whole area of cyber crime and terrorism illicit finance you we've got probably 50 different categories and we picked out 15 of the most important and we put individuals and you all you too go and plumb the depths of that one issue and so we've been able to ramp up the the knowledge in in Congress pretty quickly but it's by it's bipartisan effort and people like mr. Himes have made that bipartisan effort work so I'm proud to be here with you all today proud to be on the stage with him so thank you very much for hosting this Nancy thanks thank you well good morning everybody and thank you Nancy into the Institute of Peace for having this conversation very very important topic thank you Steve for doing this we were chuckling in the green room it's not easy to find topics it really truly are bipartisan but this is one of them and there's little bonuses I heard Steve say that the necessities of life are housing food and clean air so I'm taking that as an endorsement of HUD food stamps in the EPA thank you we'll keep that in this room though I want to want Steve back next next Congress anyway I really appreciate the topic it's I'm a former banker I now sit on this subcommittee of financial services committee and I actually act as ranking member of the NSA and cyber security subcommittee of the intelligence committee so I spent a lot of time thinking about this and in my three or four minutes let me just say I am both a technology optimist but also an optimist around our ability to ultimately make sure that the tool cryptocurrencies networks in general the internet is on balance a force for good and that when as soon as you go to cryptocurrencies in the in that the anonymity that cryptocurrencies offer and that congressman Pierce talked about you spin out the scenarios of of course drug dealers and child molesters and terrorists being able to move value anonymously and yes that's a problem and we've seen that to be a problem but there are things that we can and must do and by the way I'm not sure necessarily that we need to start with overall macro framing that is pessimistic I mean again if you talk to people at FBI CIA NSA and said 50 years ago there will come a moment where no human being on the planet will do anything and not leave a record of that either on Facebook or at an ATM or under a surveillance camera those guys would have gotten pretty excited 50 years ago and that by the way offer some really potent challenges to the concept of privacy and how we think about that and who gets access to what information which is well beyond the scope of this conversation but my point is that when more and more stuff happens on breakable observable networks that's a heck of a tool for both law enforcement the intelligence community again raising all kinds of issues but there's a couple of things that I do think we we can and need to do number one make sure that our political leadership is is educated on this stuff when I came to Congress nine years ago not only members of Congress but quite frankly senior flag officers and others had no idea what was going on in the cybersecurity realm didn't really understand the problem generally and we hadn't invested a lot of time and energy and money and in countering that that has changed pretty dramatically in the last nine years but also in the specific realm of cryptocurrencies and how they might be used for ill a couple of thoughts we can talk more about but in addition to making sure that we understand the problem obviously we've got to arm our Fincens of the world with the tools to regulate the pieces of this stuff that are the pieces of these things that are regulatable so strong encryption is a huge problem there is encryption out there that cannot be broken by anybody and that is a problem but of course around any kind of strong encryption whether it's cryptocurrencies or or something like WhatsApp there is a person typing something into a device in the case of a cryptocurrency at some point there is a tangible good being purchased or moved there are lots of opportunities around that problem of strong encryption to get at and to learn information about the people who are who are using those things for with malign intent and so I think like so many policy questions this doesn't have a silver bullet easily satisfying answer but making sure that our regulatory agencies are keeping a close eye on those elements that they're capable keep capable of keeping a close eye on acknowledging that some things are just out there and this gets back to educating policymakers there's still a lot of people on the hill who believe that we could do away with strong strongly encrypted communications and that's an old way of thinking right I mean an encrypted communication is very simply a piece of software that can reside anywhere it can reside offshore and people can get to it using using networks and this all came up in the whole discussion of Apple and San Bernardino and the terrorists iPhone a lot of those issues were surfaced for the first time in both the popular imagination and amongst my colleagues but making sure that we have our regulatory agencies really facing the 21st century rather than the 19th century and then and I say this is more with my hipsy hat on than financial services but the good news is is that here in the United States and in the West the UK NATO we're as good as it gets in terms of thinking about the threats to and the tools to be used against those who create a threat to cyber security so I would never take the bet that this thing that looks scary to us now is the strong encryption that is at the core of of cryptocurrencies that it will be different from any other technology that anyone in this room has ever experienced which is to say 20 years from now maybe 10 years from now maybe five years from now we'll look back on it and say guess that's it's antiquated what an obsolete piece of what an obsolete piece of technology and that's why I think it's important for people who do things behind closed doors in places like Fort Meade or across the river in that direction to make sure that they are leading the way in understanding the technology and making sure that we can get as much insight into what bad players are doing and I know that sounds a little scary on the privacy front but even if you think that we shouldn't be working to do things like de-encrypt strong encryption I promise you that the Russians the Iranians and the North Koreans are doing it and if nothing else we need to make sure that we stay out in front of our potential adversaries in in having the capability to to try to keep some order and what could otherwise be a disorderly realm so let me stop there and say thank you again to Nancy and the Institute of Peace and the Congressman Pierce for the conversation. Thank you both and before we plunge into what is both a complicated and sobering topic I want to start by just asking both of you it's in this era of increasing partisanship how did you come to the bipartisanship of this committee you mentioned a little bit that we didn't have room for it but that's not always good enough in and of itself so tell us a little bit about how that's worked for you and what you've been able to accomplish with with that spirit. For me it's it's quite easy I represent a district that's 34 percent Republican I mean so see better be bipartisan you don't get elected I have to I have to have almost half of the Democrats vote for me to be elected and so it begins right there and and frankly I had an offer from some of my Democrat friends in the state legislature during the last redistricting hey we can give you 10 percent more Republicans I said why would you do that well you know you have to work so hard and they don't vote for you I said I'm gonna get elected I think we should have to work this hard so for me the most powerful thing we could do is take care of the the whole jury-mandering thing both sides do it by the way but if you represent an 85 percent Democrat County or 85 percent Republican County and you are that registration you can say almost anything and saying almost anything then heightens the tensions it heightens the rhetoric I find myself almost never using the words Democrat Republican because it's you begin to categorize people I talk about my values a lot either like my values and vote for me you don't and vote against me but that's the beginning point for me. I completely agree and you've got two rarities here I have also a purplish district my my predecessors back with a couple of little exceptions we're Republicans I'm a Democrat and so there's a whole other lesson in that about what congressional district should look like whether there should be safe seats what what it means to have a safe seat and who you pay attention to so I completely agree with what Congressman Pierce said what I would add to this though is there's something that is particularly interesting about this issue broadly cryptocurrencies number one a lot of people don't understand it that probably helps number two anything that falls into the realm of national security and keeping Americans safe starts out not being terribly partisan look we'll fight over how much money should be spent on the Pentagon and the CIA and everything else so they'll have to take on a little bit of a partisan gene but not much when it comes to keeping people safe traditionally whether it's armed services or intelligence these things have these things have started out in a strong bipartisan fashion and lastly I would point out any issue that touches on privacy and networks the forces are almost a lot less well they are a lot less partisan than they are somewhere on a spectrum of libertarianism so in other words when I said what I just said up there about making sure that you know people in behind closed doors at NSA are really doing their research to be able to penetrate networks that would enrage the libertarians on both the left and the right and that's why I'm careful to say with all due protection of privacy but my point is that there's less attention between right and left and more attention between folks who are you know more national security types and folks that are more about you know intense civil liberties and privacy that's that's where the tension often is in these issues and what Jim was saying there the spectrum is usually left to right and we find ourselves falling somewhere on the spectrum but in certain issues it becomes circular so the left and the right meet together and those are very difficult issues but but the privacy issues probably right there right now I'm wrestling we want to reform the Bank Secrecy Act hasn't been touched since the 70s it's way behind time things are the threats are moving much faster than the bureaucracy in the greatest fight on beneficial ownership is coming from my my libertarian leaning guys and they would join up with with the the left on this issue and so it's it's just a bare-knuckle fight to try to get something done that threads this point that Jim's bringing up well it's interesting because this is a new subcommittee your subcommittee on terrorism and illicit finance and you are really on what is the new frontier of crime it seems both you know for us and internationally how do you think of this in terms of the balance between policy solutions technology advances and what you see this subcommittee able to do as you grapple with these issues well the first thing we did is get the focus on on the oil sales stop the easy stuff first that's easy compared to the to the hacking then trying to get with the national the international auction houses to to begin to identify those those people who traffic in in the archaeological antiques I mean we're seeing the structure of entire cultures that have survived for thousands of years and and so so just doing those things that we can and then trying to get harmony among the nations the U.S. is actually it's not very we're not at the front cutting edge of the cyber security we were actually back in the pack somewhere so talking to those countries that have handled it very effectively in Israel those countries Israel would probably be high Australia I think is good the tie line has had to wrestle with problems in it so it's those that have wrestled with it internally rather than waiting for somebody to come save them one other thing I would add to that is on the broader topic of illicit funding I point to a solution that I actually think is a solution to a lot of problems and sadly one that we are wandering away from or rushing away from which is continuing to stand up as a leader globally for a functioning international system of cooperating nation-states who act responsibly again a whole other conversation around kind of the America first concept I understand where it comes from but you know all of these problems all of these problems get a lot easier if nation-states act responsibly including including this one you know okay so irresponsible nation-state you probably think I'm talking about Iran and North Korea yes I am in fact North Korea you know is using many of these tools as a sovereign actor in ways that you would expect rogues to use these tools but I'm also talking about you know Steve talked about about oil trucks those oil trucks wouldn't have been worth anything if they hadn't been able to cross the Turkish frontier and so to the extent that we can stand up and cajole and push and pull you know not just North Korea and Iran into a cooperative international system with a common sets of values but also some of our NATO allies not to mention the Russians and the Chinese the more we can stand for you know going quite frankly in the opposite direction I sort of feel like we're going internationally right now all of these problems get easier rather than harder I think that's an important point in terms of how those international networks and norms can can be a part of the solution we have been reading about what Venezuela has done in terms of issuing its crypto its own cryptocurrency as a means of evading some of the sanctions there's been an American policy response it you know it reads like some sort of old dusty spy novel with you know Venezuelan networks and shadowy Russian actors and you know how how how effective do you think our response to that will be in terms of addressing what the Venezuelans are trying to accomplish well our response has been pretty clear I mean the Treasury issued their their warning about investing in these things look I you know be surprised to hear this from a Democrat but you know look if you want to go invest in the Petro you got what's coming you know you know you here's a wildly irresponsible almost roguish regime that is coming up with an instrument they want to sell you right you know I mean again we have an we have an obligation to protect our to protect our citizens but look the whole that that to me is not that scary other than apparently a number of people are going to fall for it and there you are going to deliver a couple hundred million dollars to to a to a pretty corrupt to a pretty corrupt regime but to me that's a little bit of a side show the whole thing doesn't make much sense most people look at the stuff and understand it don't think it doesn't make much sense so I think it's quite likely to go away pretty quickly but it to me it's a side show to the larger issue of what North Korea is doing in the cyber realm and what ISIS and others can do if you look a little bit broader because I think Jim is exactly right it's it's one guy out of desperation trying to create debt or the finance debt and that's what our sanctions were trying to stop but you can you can easily look at the value that accelerated on Bitcoin and what it tens of thousand dollars just overnight per per share and realize that there is the world is very large and it's trillions of dollars and coming up with six billion which was the intent of Venezuela coming up with six billion is really not that hard and so step apart from Venezuela and consider the broader issue of rogue states or individuals who want to finance whatever and so you realize then that's the mechanism that terrorist organizations use to fund themselves they'll go to and they'll set up a go fund me account for some somebody who's experienced the loss of a home or a loss of a family member the severe accidents all made up but they're able to get tens of thousands hundreds of thousands of dollars and then you and you take a look nationwide and you look at the Bitcoin prices and realize people people will put money into a lot of things and in that potential aside from the question of Venezuela is still very destabilizing because when people don't have the belief when when the truth is unknown then they're going to retreat away from the systems the the magic that the wonder of the world economy today is is the fluid flow of money and right now one of the things that that is being targeted or is the very basic framework of the financial system so if we can target the trust in the financial system the movement of money those 46 trillion moves and in one of those structural systems here in the US and if you can just disrupt it a bit then you can freeze everything because people lose confidence even the people who who run the system if they lose confidence that that money is escaping out of it they have to shut it down a bank holiday and suddenly you have caused pandemonium to happen and it's all through systems like you're asking about here so addressing that issue and building on your comment congressman about the need for national cooperation there's an an international entity that has been formed specifically to address these issues I f some acronym yes some acronym is that effective is that making a difference does your subcommittee interact with it so again I would as imagine the threat map up here and we're going to be sitting down holding a three-day conference and the attacks are coming by the second and the tax are changing by the second they're upgrading when they find a cyber block they're going to find a way around the cyber block and that's the difficulty the systems have to be very very fast moving and that's not I'm not seeing that in the US systems and I'm not seeing it in the world systems and so yes it is effective but it's effective at beginning a conversation the other side is making billions without risk and so the stimulation for them to to create problems is is maybe greater than hours to solve the problems and that's that's what I see is is the difficulty in any of these in even within the US we are visiting at Vincent and so I began to hear it was hearing from the top people that that we really not in the job of enforcement I said why don't you change your name find after crimes enforcement network you know and so we had a discussion with the secretary of the Treasury when he was confirmed that I think we have a basic question to ask here what is their function and so Jim was right we were we are developing very sophisticated tools but engaging in the whole international community as it's difficult and it's even difficult for us to keep up so that's it's it's a very complex issue and then your question is right on point I would just quickly add to that quite apart from organizations I've been interested for a long time and we've been making very slow progress but we really need to prioritize creating the cyber equivalent of the Geneva Convention and I know state has worked on this IOP has worked on this but we we need to make this a high priority and again it's I understand why it's hard you know Chinese are doing things we want to retain the ability to do things in the cyber realm but you know again we have such we don't have a ton of common interest with Iran and North Korea but making sure we don't take down each other's electricity networks as one so for whatever reason is I guess it's gummed up in the UN Council of Experts or whatever's called but you know this really should be a high priority if we don't do it eventually we're going to get into a tit for tat and in fact you know I sort of felt we should have been more aggressive in demonstrating to the Russians what our cyber capabilities were after the hack and the fear of that of course is that it escalates and it may take that it may take you know Florida being without power for eight hours to pick on one state for us to understand that we should be putting at the very top of our list and effort to codify some norms it shouldn't be that hard to codify you know hospitals let's start with hospitals you're not taking hospitals offline and then expand the conversation from there sure and then to really take Jim's comments and move them further if you take a look our entire electrical grid is managed through computers our entire water supply is managed through a system of computers if you want to know how easily society can be disrupted think about those vulnerabilities and and that's when Jim is talking about Geneva Convention on this stuff because now you're undermining the very trust of civil government itself and if we want chaos in the world just walk away from from that and since Jim's confessing I might confess to here that so he's doing some stuff out in the Republican direction I'm sort of doing things out the other direction because if you look at the Equifax breach they actually were using the world's best program but they became a little sloppy and a little lazy and they didn't put in the latest fix the system knew it had a vulnerability and they just didn't install that they didn't hit the you know install button and so so they were then hacked and what a hundred million records lost or something like that and so so I sometimes think that that we need almost a utility like a utility that is available and and you simply pay a monthly fee and you don't have to keep up with all the installations that we have a protocol that would would underlie or overlie the the Israelis think of an umbrella that simply defends them from the attacks coming in the umbrella is to deflect and then each person's got their own level of security so I don't really have a strong opinion if it should be an undergirding protocol or that overarching protocol but I kind of think that that's that's where we're going to have to end up because right now they're attacking the big institutions if they really wanted to if the terrorists really wanted to make hey they'd set up the dollar store of the dollar store concept and they'd attack all the small banks because that's where the vulnerabilities are just take a couple million you don't have to get a billion at a time just take a few million here and there from all the thousands of small banks around and you realize how vulnerable the system is and then you do the whole marketing system it you can we're very vulnerable in modern society because we're very comfortable or very we have a lot of tools to make our lives easier just the ATMs and paying online all those things are points at which the hackers will find find you and us I want to open to the audience who I'm sure are feeling very reassured right now okay I told her I would sit between her and the window I don't have to just feel bad when she threw herself out you know so we have people coming with mics I'm going to take a few questions and let's start right here and then go to Nancy and then well thanks very much for your bipartisan support on this issue which is very important to many of us I've been working for the past four years formerly with the state department on illicit funding of terrorism and the anti-ISIS coalition and particularly I was working on the trafficking and illegal antiquities which I know you've been interested in we found that there's still some problems associated with both certain countries to which we can't get agreements like Yemen which is currently experiencing great instability and we can't have a bilateral MOU with a country that we don't have a relationship and we also have a problem with some countries that are not signatories to the UNESCO agreement of 1972 on the prohibit prohibition of antiquities so I guess I was hoping to ask whether whether you as members would be interested in first doing what you did for Iraq and Syria and passing a resolution providing emergency closure of our borders to illegally acquired antiquities from Yemen because it's a country at war civil war and or perhaps revisiting your implementing legislation for the 1972 UNESCO agreement since now it's very very old and perhaps unwieldy perhaps ceding to the secretary of the state the opportunity to put emergency restrictions in when countries fall apart so just a thought thank you let's take a couple so that we have time to hear voices so Nancy and then I'm scared very scared let me say that I've heard a lot of ideas from both of you how to handle this is the is there legislation that that embodies those ideas I understand that that without international players buying in it doesn't help that much but are there is there legislation are there talks going on with with our allies on these issues adding the Geneva protocol is very very interesting thank you and then pass it back to Rohini hi i'm Rohini Shri Hari from Peace Tech Lab so you know throughout the world we see all these incentives by governments to bring you know more people who are underprivileged into the digital economy through establishing digital identities and so on India had a huge program to do that kind of thing and the goal there is essentially you know people who don't even have a bank account allowing them to participate in the digital economy so this is the the good part of these kinds of technologies so it seems like there's two things happening simultaneously all of that stuff is happening where we're trying to bring all these people online with digital identities which protects them and so on but are you also now concerned that that's going to exacerbate these kind of issues yes you so let's let's handle that package of three go for it i just want to connect the last two i candidly i'm i think congressman pierce is a lot smarter on antiquities than i am but but it's i think it's really important to keep perspective here the blockchain and networks generally are going to do dramatic good in the world i mean just the ability to identify you i've read about some of the benefits programs that are getting out into the hinterlands of india the ability to identify an individual in some remote part of india and make sure the benefits get to that it's remarkable it's really amazing and i don't know nancy that that that really scared is is the right answer there i i'm exactly the generation when i was in grade school where every single day i went to school with some meaningful possibility that we were going to have global nuclear war and you know there were going to be 250 hydrogen bombs in the united states and we were going to be a crater i look this stuff is cake in comparison to what i grew up in an elementary school which doesn't mean that we don't take it seriously but you know again the the the threats here um are are i would argue not as intense as they were in the 50s in the 60s and also addressable in the sense that there are there are constraints uh north korea iran china has some pretty scary capabilities about what they might do to us in the cyber realm but they also understand in a classic deterrence framework that we are probably better at that that stuff than they are and so they are deterred so we go to where we do in so many of these conversations about weapons of mass destruction nuclear weapons which is what you really start to worry about are non-deterrable entities non-state actors rogue actors and yes um you know i again probably spend a lot more time worrying about a rogue actor getting a nuclear weapon and that there's five programmers acting as rogues because again i you know a nuclear weapon going off in manhattan because there's a rogue actress who somehow secured one to me i think has ripples much more dramatic than you know somebody manages to close down uh you know jp morgan for a day or so which would be pretty catastrophic in and of itself so anyway that's a long advertisement for making sure we keep perspective around the dramatic good that these network and encryption devices can do and also that um you know there are levers that we have and constraints that exist that shouldn't have any of us sort of dwelling on the apocalyptic scenario too too much do you want to comment on the antiquities and yes um obviously be unrested in it but i'll also tell you how to work very closely with the state department and and sometimes they have sensitive negotiations going on that maybe have been ongoing for years and so you get throughout a resolution in congress you simply take it back to square one so so i'm always a little bit nervous in congress getting too involved but but i'm interested in stopping the trade first of all legislation um you're just not going to be able to keep bills and laws moving as fast as the system's moving so we really need strong oversight from congress of the institutions that are trusted so fence and has tremendous mobility and in the ability to act and and to use international actors but we in congress can't can't step aside from it because the the american people only get to touch it through us and so that that oversight capability is is really remarkably important and both parties tend to sort of step away from the oversight responsibility in my opinion watching for 14 years so that's the flaw and then obviously the two systems you know getting people into the digital ages also exposing us the more people are connected the more one connection can take it i agree with jim i i want to point out the difficulties because people three years ago four years ago we were talking about should we really have uh cyber cyber protection should that be something that the u.s is really that interested in and so and so you can imagine that yes i want people to understand exactly what the risks are that we're facing but i would agree with with jim that we've always faced risk we're just going to have to be a lot more mobile and agile on this because the the threats come from so many different sources so we'll do another round of questions but i'm going to start it off uh with a question we got um from our live feed from a 12th grader at Greenwich High School uh renais lepont jamison thank you for watching who asks how does the federal government determine which terrorist groups are the largest threats to the u.s and address them or counter their work in illicit funding do you want to take that one for renais thanks renais senior i hope you register to vote i'm not going to tell you who to vote for just register to vote but thank you for the question so um how do we determine who the biggest threats are that's a the united states government maintains a formal list of designated terrorists and that's a calculation that is made on on a whole series of criteria that that result in in in this list and it's a list of people who are interested in attacking us attacking our allies and then our national security apparatus really does a lot of thinking research and surveillance to determine where the threats lie and so a very small group operating in a remote corner of pick a country pakistan without a lot of international connections without a lot of resources without a lot of talent is going to attract a lot less focus and attention than a than a global group like just to use an example isis or al-qaeda which is shown an ability to build networks around the world to bring in people from all over the place and to recruit people in the west and elsewhere as well as to set up businesses like antiquities and oil and even you know do things like explore the use of cryptocurrency so a lot of your taxpayer dollars go to pay for the people who day in and day out are paid to really analyze where the threats lie and then think about how we best how we best deal that and all of our responsibility you get into realms here that american citizens need to develop strong opinions on our national security apparatus always bumps up against the nature the intensity of surveillance we had this steve's exactly right on the 702 surveillance program this is capturing this is capturing internet communications abroad that sometimes pick up us person information the parties were really split on you know how powerful should the u.s. government be to suck in communications that may include your email if you were corresponding with a non-us person that that's the responsibility of all of us to develop a strong opinion balancing the need for security against the the demands of civil liberties and i would add to that the the ability to destabilize affecting stability i'm i'm not so interested in in the former government democracy republic or whatever we can exist but stability to me is the key we can exist coexist with people who view governmental systems much different than we do but stability if they're exporting instability then i would take them very seriously but then like jim says they got to be able to finance it and that's reason isis was so dangerous they were the most elaborately funded terror organization in human history and we should be paying attention to that so we'll take two quick questions right here in the blue jacket and if there's one more yeah go ahead hi my name is lex i'm an intern at the state department i have a question about what congress is doing you guys mentioned bitcoin and cryptocurrencies and that can be traced as well as hacks can be traced back to the hacker but what is congress doing specifically to counter terrorism funding that can't be traced for instance with the hawala system okay the hawala and then right here if you could do a quick one hello justin marinelli um similar congressman you mentioned that part of the problem with cryptocurrency is tracking transactions so not knowing what to tax essentially but isn't that similar to the problem we have with cash transactions cash transactions now you trust the waitress made 83 in tips instead of 97 for example doesn't that mean that at a certain point we just have to say we trust people are mostly honest and we'll do the best we can to get any more if we can yeah i starting on the last question first i i think given the scale of of the cryptocurrencies uh and their ability to be completely invisible cash is not completely invisible in other words it's a it's an established system that that is trackable and and has an entry point an exit point cryptocurrencies don't currencies don't have that then on your first question of all we're trying to do on the cryptocurrencies is be aware because there's not too much that congress can do right now the hawala system is many of the people who use it it's legitimate that's where you've got a representative in this country and you want to ship money over there so you have a representative over there talk to the representative here somebody pays here the email and the payments made down there with the the fee taken out and so that's a a legitimate legitimate form of commerce except it can be easily easily misused and so finding that that misuse point is is extraordinarily difficult um any comments on that um digital wallets uh i'm often tempted to answer the question what is congress doing on any problem with not much um uh look it is a it's a it's a somewhat dysfunctional body heading into an election right so this is just for all kinds of reasons we're going to be slow in our pace of doing what we will do slowly over time which is updating privacy laws updating the bank secrecy act doing all the stuff that congressman pierce mentioned earlier um but again let me tell me fall back on the technology uh we're spending a lot of money to understand um strong encryption um a lot of the anonymity if not all of the anonymity relies on strong encryption um the technologists in the room will know the breaking encryption is a function largely of computing power and you know around the world people are really looking hard at uh quantum computation and other technological ways of addressing it so my point is simply that don't there's no technology that we haven't looked backwards 20 years or 10 years or five years or one years later and say isn't that quaint and obsolete right and so that's going to happen here too um we just need to be at the forefront i don't ever want somebody to crack strong encryption that is not us um and because that means everything we do our military our nuclear cook man in control becomes observable to somebody who cracks strong encryption so i want us at the forefront of that and then again if i can make the same plea i did uh to the young woman at granite high school um citizens of the country need to think hard about about what that means and what they want us to do about it if the government can crack strong encryption there is no theoretically theoretically privacy anywhere ever um and so what constraints do you want to put on that or how much do you want us to keep up with our ability to use uh tools like that congressman appears final comments yeah the i think jemma's really cast a very good theme here that that the last thing we should do is just retreat and try to take our money out of the bank put it on the the mattress it's uh that it will get to that point to where instability is is everywhere in front of us and if we will stay engaged if we're the ones driving the system then typically the u.s has as a more global view in my opinion doesn't matter which party typically we we look at things a little more globally and a little bit more for the human human benefit and that's that value system that comes from us as as a collective body and again it's not associated with any party any religion or anything it's just us as people that's probably the greatest gift that we can give to the world that that sense of purpose and in a sense that we're always going to be working toward the right we may not always be correct and we might not always act correctly but we generally do that Winston Churchill said americans always do the right thing after they've tried everything else we pretty well tried everything else congressman i want to thank both of you for joining us here today i want to thank you for your bipartisan spirit both today and on your subcommittee and i think all of us in particular want to thank you for you really tackling an issue that's on the frontier of technology and crime and privacy issues and a lot of the values that you've laid out for us today and we we're all counting on you to make sure that we collectively as a nation can navigate something that has the potential to undermine the the fundamentals of our system or to continue to take us forward so thank you both please join me in thanking the congressman