 Good afternoon. Hope everyone's doing well. It's been a fantastic lineup. I want to thank Dr. Hamry again for, and CSIS for hosting. I'm a senior advisor here. My name is Juan Zarati. I also want to thank Secretary Lew, David Cohen, the entire TFI family, and the Treasury Department for entrusting this important event to CSIS and all of us. I think it's been a very important discussion. This one, I think, is important in part because what we're going to do is focus a bit more heavily on the question of the private sector and the role of the private sector in this new era of the use of financial tools and influence. And as we've heard before and as Stuart mentioned in his remarks, one of the evolutions, and frankly revolutions of this period, has been the centrality of the private sector in this period where the private sector in many ways, both banks and non-bank financial institutions alike, have served as guardians at the gate of the financial system and where reliance on American power, the role of the dollar, attractiveness of American capital markets have been the pillars of the strength and tools that we've talked about. And so with us today, we've got two phenomenal experts to help us through that discussion. To my immediate left is Neil Wolin, former Deputy Secretary of the Treasury, longtime public servant, numerous roles at the Treasury Department, including General Counsel during the Clinton administration, numerous roles in the intelligence community as well. To his meet left is Reuben Jeffrey, CSIS Senior Advisor here, also former Under Secretary of State for Economic, Business and Agricultural Affairs, currently the CEO of Rockefeller & Company and Rockefeller Financial Services. Before we begin the questions, and we'll open this up, we'll reward those of you who've stayed to the end with enough Q&A time to ask these experts great questions. But I just want to say thank you to everybody. Kind remarks to Dennis McDonough just made. And just for a moment, take the prerogative to say thank you to the TFI family and everybody who's worked in this community. This is a little bit like a family reunion. And seeing a lot of the same familiar and very good faces is incredibly satisfying and an honor to include not just those at Treasury, but those who worked in the community of interest in the audience. So with that, let me start. Let me start by asking our experts the question, why does this matter? Why does this matter not just in the context of what we've talked about today, stopping flows of funds to terrorists or squeezing regimes like Iran, but why do these issues of financial integrity and illicit capital actually matter to the safety and soundness and the integrity of the financial system at large? Neil? Well, so the national security implications have been much discussed already, one as you suggested, but I think it's important to note, and Dennis just noted in his remarks, that the global financial system of which the U.S. sort of stands right in the center, I think, depends importantly on it for its robustness and its resilience and its strength on making sure that illicit flows are kept to a minimum, are not present, that the kinds of integrity principles which really stand at the foundation of what TFI does are well-observed. And so apart from all the national security implications, it's critically important for the world's economy and for the world's financial system that these kinds of illicit activities, whether it's terrorists or organized crime or narcotics traffickers or what have you, have a light shown on them and their activity be scrutinized and to whatever extent possible, eliminated. And I think that we as a country spend a lot of time policing our own financial system and running around the globe, talking to foreign ministries and central banks and private sector participants about the importance of having financial systems and economies that are resilient and transparent and effective. And I think that this set of issues, the set of things on which TFI has been focused for the last 10 years is critically important to the proper functioning and the resilience of all of that, which in turn, on which in turn an awful lot of global commerce and global well-being depends. Ruben, can you speak to this from your perspective both from within the government now in the private sector? Juan, thank you and I'd like to add my thanks to David and Treasury and John Hamery and CSIS for hosting this. And I would also evaluate caveat. So I look around the room and was looking at the roster of people. I was with some trepidation that I'm up here before you as one of the few representants. Stuart, you're still here, thank you. The private sector, I had a seven year detour which I wouldn't trade for anything as most rewarding experience of my life, having the privilege of working in the US government on many of these issues with Stuart Juan and their colleagues at the time. Just to underscore what Neil said, I can't understate the significance of the confidence factor in the integrity, solidity, solvency and resiliency of the global financial sector and the US banking and financial institution sector itself. Accordingly, managements of any responsible institution around the world take this issue of compliance, of sanctions enforcement, of cracking down on illicit flows extremely seriously because any given institution is only good as its reputation. If you talk to bank CEOs or senior representatives of the financial community, they will have reputation, reputation, reputation at the top of their list of things first and foremost on their minds when it comes to running their businesses, assuring the solidity of their businesses and building those businesses going forward, working with their counterparties in government, the private sector, let alone dealing with their own employees and local communities. In terms of implementation, just anecdotally by way of preparation for this, I went to our general counsel, Rockefeller and Company, we're a little investment management firm and I said, you know, I better kind of dust off the file on BSA, AML, Patriot Act, that sort of thing. And she handed me our 100 page single spaced manual and she took me around the corner and introduced me to who just happened to be in resident, one of our OCC examiners, who was the AML BSA person. This implementation enforcement, the practical nitty gritty of getting all the things that we're talking about that TFI represents. Ultimately, it's a shared responsibility between government and responsible private sector participants. So the private sector part of this, it's about commitment at the top, share of mind, but it's actually about permeating every organization and making sure that from the most micro level that these desired effects are being put in place, monitored, police and sanctioned when they're shortcoming. I just want to extend on what Rubens just said and connected to something Stuart said earlier. I think it is true that in general, private sector firms really do care about reputational risk, don't want to do business with people who are involved in one fashion or another with illicit finance. But I think it's also true that the work of TFI over this last set of years in sort of putting up the mirror and reminding people of this proposition and reminding them that they're watching and that there are consequences to people who are insufficiently attentive to this set of things has been critically important in both reminding folks and sort of heightening their sensitivities because it's not every private sector actor certainly not globally, certainly not in geographies near and far that have over time given this sufficient attention. And so I think it's the combination of it being in the economic interest of private sector entities and the work that TFI, David and Stuart, their colleagues and others in the US government have done to help keep that kind of in the top of consciousness consistently that have been the sort of twin pieces of getting the advantage from the private sector and this regime that Stuart, I think, spoke very effectively about earlier today. You know, let me take from that point and ask the question and it's a fair one. I get it sometimes when we go ahead and do talks and things. How can we talk about sort of the importance of the private sector, the integrity of the system when you see so many examples over and over of banks failing, getting hit with enormous fines? Are we talking about two different narratives? How do you square that circle or is it part of the same story, Neil? Well, first of all, I think private sector entities have lots of different objectives and lots of competing goals. So although they wanna be compliant, they also want to make good returns for their shareholders and I think sometimes those things have tended to be in tension. I think there also is a tension or can be a tension between the senior most officials and some of these entities who have kind of a broader view, perhaps a greater capability of being able to see all these different dimensions and coming down in a place that we would think is integrity laden and folks within very far flung, very decentralized, very complicated institutions. And I think compliance with these regimes doesn't come with the snap of the fingers. Ruben talks about 100 page manual, but in some of these institutions that are doing business in 150 or 180 or almost 200 different geographies, it's a complicated business. So I think companies have gotten themselves on the wrong side of this regime with greater frequency than we'd like. I think that's part of, so TFI does prophylaxis, lays out the rules, hopefully with a lot of clarity so that people can understand them and follow them effectively. They do monitoring and then they do ex post enforcement when that's appropriate. I think it's all those pieces that together make an effective regime in this area because some people will get it right at the beginning. Some people want to get it right, but don't. And then the world's full of bad actors in all kinds of places and some people have other objectives in mind. Ruben, can you feed off of that and also maybe give folks a sense of where maybe you've seen an example. One of the important aspects of the relationship between the private sector financial institutions and the governmental institutions involved in creating these rules implementing it and enforcing them is sufficient to agree of trust, transparency and communication in when inadvertencies occur or mistakes occur or even within an institution you've got to just, they're always gonna be somebody, he's a little boss, my former boss of mine once told, said that no matter what you do in any large organization from a leadership standpoint, there's probably always gonna be someone who's making a bad decision somewhere that could come back that hurt the institution institutionally. But there has to be sufficient trust where in legitimate circumstances, there are incentives to report, there are incentives to remediate and the punishment is calibrated to fit the crime as it were. But then there are also situations, not very commercial, but I'll give you one of the money, services brokers, where there's a legitimate clash of strongly felt and important policy interests. One of my favorite case studies in this area is the money transfer business in Somalia where you have two purposes which proved to be irreconcilable for the banks at issue. One is cracking down on any risk of terrorist financing flows to illicit actors and I think it's fair to say that history has shown that there probably are one or two of those who hang around in Somalia in various places. And the other is the important crucial humanitarian concern that remittance flows make it to disaffected, impoverished populations of innocent people in Somalia who rely heavily on flows from friends, relatives and others who are working out of the country. We had a situation, it was classic, where the bank at issue, the regulators around the globe were concerned, all of us on terrorist finance, et cetera, can't do that, well, the announcer stopped doing it, the NGO community raises their hands and many politicians say, wait a second, you can't just leave, 99% of these people are total innocents, you just can't cut it off, there was actually an injunction that stopped them and our process of being worked through a sensible collaboration of government, the private sector, the relevant financials vision are kind of working through and knitting a work around solution. But there are, it's a great example of kind of an academic, if only we're academic, it's the real world of the extreme case where you get direct policy trade-offs of two laudable, important, but conflictual objectives. I wanna dig a little deeper on this because I think it's a critical point and a question that goes along with some of the themes we heard earlier in the day about the potential overuse of these tools and perhaps even the burdens on the private sector. So feeding off of what your example was, Reuben, you think we've reached a tipping point perhaps where we're asking the private sector to do too much and where the de-risking that's happening with some of these institutions are affecting, as you said, some of the public policy principles of financial inclusion, which may be at indirect opposition to the tools of financial exclusion which are sort of the stock and trade of TFI. Neil, what do you think about that? So I think this is a subject that bears lots of continued scrutiny and I think it's very hard to answer these questions at a conceptual level. That is, you need to look at them almost every one of them in their individual contexts. I don't view the sort of set of regulatory imperatives whether it's the TFI set of imperatives with respect to money laundering or sanctions regimes and so forth or lots of others that the US government in other guises imposes on the private sector or in particular the financial sector as being kind of inherently and inexorably in conflict with a set of laudable policy objectives like financial inclusion. So for example, in some of these circumstances and without the specific reference to the Somalia example that Ruben gave, there will be some space open for some financial institution that has the right compliance regime and observes the right integrity principles to have an economic incentive to go fill that space. In some cases, in Somalia might be this case, that won't be true, meaning there just isn't enough economic incentive for a private sector entity to go do that. And so then you need another set of possibilities whether that's governments or NGOs or a set of things but in no case does it strike me that it's an impossible aspiration to think that you can provide financial services to these populations even in populations that have lots of complexity and are fraught from the perspective of TFI and not have good transparency and a set of compliance regimes in place that will allow people to have access to financial services in some fashion or another, allow them to live their lives and do things that we think are important in other respects but also make sure that the bad guys aren't taking advantage of access to the national system that we think has other problems associated. So I kind of resist the idea of it being zero summed but I do acknowledge that in any one of these particular contexts, the exact solution, the way to sort of figure out the rubrics cube of that particular circumstance could be very difficult. Ruben? Yeah, I think you have to keep in mind that there's been a substantial evolution of TFI since 9-11 really, that were the first actions immediately after 9-11 and the TFI initiative and then it gets a little bit, some of these initiatives get conflated with Dodd-Frank and additional regulatory measures taken to shore up, protect the global financial system, post the financial crisis. Going through this significant evolutionary phase, it strikes me that we're at a place now where, and the devil is in the details, Neil's absolutely right here and it's hard to talk about this conceptually but where we have to take stock of a lot of rules, regulations that are out there and look at, given the benefit of experience, what's, and there's still work in process with many of the implementation regulations of Dodd-Frank, et cetera, of what's working, what's not, what are the costs and benefits, et cetera. Another recent example, a large U.S. bank, which I think cuts both ways, announces it's gonna cut off activity to so-called, what is it, PEPs, politically exposed persons, is the acronym. And yeah, just newspaper smart. I mean, it's ways, what's that all about? And the question is from a policy standpoint, is it better to have them do that or to have them work with these guys, at least the guys who weren't certified bad actors, in ways that you have some transparency, visibility on what's happening. And that's not to say that what they did is right or wrong or even they didn't even know what they did. But there's a lot of, there are a lot of actions that financial institutions are taking in response to various regulatory measures that I think needed need to be, you know, we're sort of at that second wave. It's like what Michelle talked about early on the Intel bill, where you gotta step back away from the furor of media, lobbyists and all that and sort of say, okay, what makes sense here? What doesn't wear the trade-offs? I'd say two of the things on your tipping point, question one that I think, from my perspective, are important to think about. So one is, you know, there's an argument out there that the more attention, more regulatory focus is placed on these big financial institutions, the likelihood is that whatever bad activity is gonna migrate to other places. It's a little bit like chasing the, you know, spot of mercury around the table. And to some extent that's absolutely true, meaning, you know, bad actors will find the sort of weakest place in the system and presumably try to exploit it. So I think, to me, that's not an argument that we're overdoing it on the big financial institutions. That's an argument for figuring out and it's not necessarily easy. TFI has been working at it, they're getting better and better at it and, you know, that's gonna be, I think an important part of their, which is to use Dennis's metaphor the next 10 years to try to figure out how to bring some, essentially equivalent set of regimes to other parts of the financial sector that are smaller, less formal, less interconnected, for which, you know, having the capacity to say, you know, dollar clearing at the New York Fed is sort of the key lever. And so that's gonna be, you know, a complicated business. The second thing is, you know, I spent a little bit of time in the government on financial regulation more generally. And, you know, you hear globally, this is too much and it's gonna put US firms at a huge disadvantage relative to their competitors elsewhere. And, you know, I think my natural reaction to that and the reaction that sort of TFI has brought and the Treasury has brought more generally in all these contexts is that that's not the right way to think about it. The rest of the world should come up to our standard and TFI and the Treasury and other domains have spent an awful lot of elbow grease trying to do just that and being quite successful in doing just that rather than sort of dumbing down our own regime in a way that makes the whole thing less robust. And it connects back, of course, to where you started one, which is that it's not for academic reasons that we're putting all these different things in place. It's got a huge national security component and it's got a huge component that relates to the effectiveness, the integrity, and the proper functioning of our financial markets in the US and therefore globally. Let me piggyback off of that and maybe ask a couple of questions related to challenges and limitations. Because earlier we heard, and Stuart made this point quite articulately, you know, these tools in some ways have capacitated diplomacy. It's animated the ability to cooperate. Are we seeing though in the enforcement environment, especially with major foreign banks getting hit with multi-billion dollar fines, are we seeing a moment where some of these measures are beginning to complicate diplomacy or to change the dynamics in the way that we haven't seen over the last 10 years? So I guess it depends a little bit what you mean. Just to take Stuart's actual example and then I'll brought it out to your question, Juan. Stuart said, look, there ought to be more cooperation in the area of data sharing as between the government and private sector entities. And I think that's absolutely the right objective. It's laudable, it's important, and there's a lot of potential benefit from it. On the other hand, it's a complicated business. Stuart said at the core of it, David does now. Danny, you know, the government operates in a broadly classified world, or at least TFI does. That creates a lot of challenges for the government in thinking about how and what to share with the private sector. And correlatively or adversely, the private sector thinks of all their data in large measure as their proprietary set of things, don't really want the government to be poking around in it, don't want the possibility that some committee of Congress or some FOIA requester is gonna get a hold of it, quite keen to keep it close to their vests. And so you've got these two broad dynamics that work in opposition to Stuart's aspiration, which doesn't mean we shouldn't continue to focus on it, but it means it's hard. I think on the broader set of things about enforcement measures, the following. In our country anyway, law enforcement does its thing and it does it on its own. And I don't know if that's either good or bad, but the basic judgments about prosecution and enforcing the criminal laws in the United States are made by law enforcement officials and not by the rest of the government. I think that, you know, I think it's a good thing that when financial institutions or anyone else for that matter do things that are, you know, in violation of our law or someone else's law, there'd be consequences. I don't think that's very complicated. I think that to some extent, what we see now is a heightened appetite or increased willingness for law enforcement officials, both at the federal level and the state level to do things that here to for they had some skittishness about particularly in the midst of and amidst of and in the immediate aftermath of the financial crisis, but I think their appetite for this sort of thing is obviously ticked up. You know, I don't know, I think for all these institutions it remains the case. You know, in some sense, Ruben is better situated than now and now Stewart who sits, you know, in one of the world's biggest financial institutions. I think it is absolutely still a case that the US is the irreducible, you know, unavoidable place where one needs to do business, not just because of the dollar as a reserve currency, maybe we'll get to that, I hope we do, but because our economy is the biggest and most important and, you know, it's both a reason why these firms need to get their act together more than ever before. And I think it also has a certain, you know, deterrent effect to sort of being a little loose at the joints. And ultimately, they're gonna have to think of it, if they don't think of it that way, they're gonna have to think of it as a cost of doing business, which is not the preferred way, but none of them will leave the US economy as far as my eye can see. It's unthinkable. Too much opportunity here, too important, both from an economic perspective and from a financial markets perspective. And so although it's true that, you know, a series of law enforcement actions have, you know, gotten a lot of headlines and mean a considerable amount to the firms involved, I think it hasn't really changed the basic realities of how and why and whether they'll engage in the US economy and the US financial markets. Ruben, before you go on this question of diplomacy, complication or not, I do wanna get to the conversation about what this all means for the role of the dollar, et cetera. But, Neil, I wanna follow up on your point about law enforcement. Are we at a point where the Department of Justice or state authorities, be they regulators or law enforcement, are now driving the systemic debate? I mean, in some ways, the next 10 years is going to be a discussion about the role of law enforcement and regulators and should there be more of a hand, for example, from Treasury in thinking through the systemic impacts of enforcement actions? Well, the Treasury thinks a lot about the systemic implications of everything in the financial markets and the economy. That's kind of what they're paid to do in large measure, but I think that in our country, again, law enforcement decisions, about whether to prosecute on a criminal basis, individuals or entities is given over to, at the federal level, the Department of Justice and at the state level, a range of state law enforcement entities. I think that's a good thing. I think the long history of this in the U.S. is that we don't want our judgments about criminal prosecution to be affected by politics or by other kinds of considerations. Hopefully, those folks are thinking about systemic implications of their law enforcement activity. They ought to be, you know, when they think about charging decisions and about whether to go after this target or that target, they ought to be taking, you know, account of a whole range of things. But I don't think that it changes the basic dynamic. You know, it has always been the case that the Justice Department at the federal level has been in charge of criminal enforcement and the regulators in the case of sanctions and money laundering, OFAC and FinCEN have been at the core with a set of, you know, financial institutions regulators, the civil side enforcement and the actual, you know, carrying out of the administration of these sanctions regimes. I don't think that dynamic changes and I can assure you that financial institution X, Y, or Z doesn't want to get on the wrong side of OFAC and that's not liable to have changed just because the Justice Department is now doing some of these big criminal prosecutions where they're, you know, insisting on a guilty plea or they're trying to reach settlements that include fines that are, you know, ginormously big. Ruben, do you want to address this and also this question about the international financial diplomatic effects? Yeah, again, from the perspective of someone who's newspaper smart but with some about what government's doing or not doing from a law enforcement or other standpoint but who's dealing with some of these issues day in and day out in my private sector capacity. I think it's unarguable in the private sector and the financial community that people who knowingly evade, you know, sanctions, things like that, there's obviously appropriate recompense is due in the form of monetary penalties or whatever is appropriate. I think internationally, there's probably some lack of understanding and perhaps confusion and it bears reminding some of our friends and allies that we do have a federal system, state and local governments have their own laws and bureaucracies and judicial processes and within the executive, within the federal government we have a firm separation of the judicial branch from the executive branch. That said, another, my sense is depending on how a lot of this plays out, we don't want to be in a position where we have the home country governments of some of the institutions that are affected thinking, you know, relenting in their commitment, their commitments undertaken post 9-11 as part of the global sort of terrorist finance initiative and post the financial crisis to really work together to knit up seams, look for vulnerabilities in the financial system. We're gonna have to work extra hard from a diplomatic standpoint to keep everybody on side because going back to things like sanctioning, sanctions application in the Russia's Ukraine situation or whatever South Sudan, whatever the next thing might be, our sanctions, they can be effective in a lot of ways but they're most effective, the bigger coalition of relevant economic powers are. So there's a, you know, this is inevitable push and tug and pull of, you know, the interagency processes, intergovernmental working groups but also cross-border, very important that it's quiet behind the scenes, you know, economic diplomatic work that we need to be working, sort of redoubling our efforts to making sure our counterparties understand the way we work, understand why we're doing the things we're doing from an enforcement standpoint and that those kinds of things aren't gonna get in the way of a larger objective of assuring that we never have another 2008, we show up the global financial system and we continue to work together on these measures to deter illicit flows, terrorist finance, et cetera. Let me ask you just quickly, both of you, the question of Russia and whether or not how the financial measures sanctions against Russia are playing out demonstrates that there are inherent limits to the use of these kinds of tools, the ability to unplug folks from, or targets from the global financial or commercial order. Does Russia prove that if the economy's too big or too integrated that there are inherent limits to how these tools can work? Or is that a false conclusion? I don't think that's the way I would put it, meaning the administration has made a judgment to try to calibrate their sanctions regime relative to what the Russian government or the Russian president has decided he wants to do in Ukraine, or originally in Crimea and now the rest of Ukraine. And I think Jack had the statistics this morning, first thing about the sort of economic and financial implications of what the sanctions regime here at a four has created. And the administration has been clear, I think sort of exceedingly clear that if Putin does things that are more aggressive and additionally counter to international law, they'll ratchet that up. And I think it's been a little bit complicated, obviously, in the European dimension. I think the Europeans understandably a little more skittish about some of this stuff given their energy dependencies and so forth. But I think that it depends what set of aspirations you pour into a particular sanctions regime and people wanted to know right away why wasn't the Russia sanctions regime like Iran sanctions regime in this sort of different context, very different objectives, very different circumstances. And I think this is a pretty useful example of how sanctions can be, as Steve Hadley put it earlier this morning, additive to kind of a multifaceted set of tools, no question that it's gotten the Russians attention, no questions having real effects with respect to their financial markets and with respect to their real economy. And also clear that there is the sort of the specter of more to come should whatever Putin does in the next set of turns sort of make that appropriate. Ruben? Peter, comment. I don't have a lot to add. My own view is that President Putin's paying a long term losing hand in terms of just the hard core economics of his economy if he's moving in a direction of being increasingly isolated by the rest of the rest of the world economy. In the short term, watching the measures that Treasury and the US government has taken with respect to sanctioning particular individuals, I guess it's been very, it's calibrated. People seem to be moving away, you wanna avoid sort of tit for tat ratcheting up but the message is being across, getting across not just to those affected but to other, immediately, but to other elites who surround Putin, who kind of get the message that gosh I might be on those crosshairs at some point too and counterparties of those elites who suddenly might say at financial institutions other commercial operations say well gee, should I really be dealing with Mr. X or Ms. Y who's a known longstanding associate of the regime? So it's early days. Let me shift then to some systemic questions and this is where I'll come back to the dollar issue, Neil, that you alluded to. As you said, the attractiveness of the American economy, capital markets, the role of the dollar as chief reserve currency, the dollar clearing process itself all plays into the U.S. hand and TFI's hand, ability to use these tools to isolate rogue actors. Does there come a point though with the rise of other currencies to include even digital currencies that you begin to threaten the primacy of the dollar by overusing or overburdening these tools internationally? Is there the potential that overburdening overuse actually accelerates the de-Americanization of the global economy starting with the dollar? So I think the first point is that the fact that the dollar, the U.S. dollars, the global reserve currency is an enormous asset for the United States, an unbelievably important asset. It's also, as you said, Juan and others have said earlier today, a critically important aspect, lever really, of the work of TFI. It allows TFI to basically make the point to whomever you want to deal with the United States or do you want to deal with XYZ and have that have meaningful effect. I think that because it's such an important asset to the United States, we always ought to be spending a lot of time thinking about what is it that has made the U.S. dollar the world's reserve currency and how is it that we can try to make that continue to be the case? I would say this, in broad measure, the reason the dollar is the world's reserve currency is because we have the deepest, most liquid financial markets. We have an economy that is huge and sort of centrally consequential to the global economy. We have a country in which the rule of law is overwhelmingly the reality and where sanctity of contract is observed. And so there are reasons that are sort of macro reasons, hugely macro reasons, as to why the dollar has this kind of position of esteem. And my own view is that although some of these things like financial regulation or sanctioned regimes or anti-money laundering efforts may have at the margin something to say about the relative attractiveness of the dollar as compared to other things, it's also true that a lot of these regimes are pretty multilateral so that doesn't, you know, in those circumstances doesn't really create competitive disadvantage to the dollar. And I'd say more importantly, the basic dimensions of why the dollar is the world's reserve currency, at least as far as my eye can see, are unlikely to go away and in particular, since it's a comparative judgment because something else would have to replace the dollar as the world's reserve currency. As far as my eye can see, I can't see something else being a meaningful competitor, not over what I would call short and intermediate time horizons. You know, you think about what are the alternatives, the euro, you know, as someone said earlier, the camera was Steve Hadley or Tom Donilon, you know, it wasn't 18 months ago we were worrying about whether the euro was done. The rem in B, you know, not particularly convertible. I think lots of questions about contract sanctity and other kinds of things. Obviously a currency that's doing well relative to its history and certainly, you know, China's economy is increasingly important and so forth. You know, the non fiat currencies, the digital currencies, there's a lot of activity, a lot of energy behind them in various places, but it strikes me hard to imagine them becoming the reserve currency of the world in time frames that, you know, are likely to be relevant to this conversation. So having said that, we should constantly be worrying about this and vigilant as you would with any asset that is of enormous value, but it doesn't, you know, whether we add, you know, three more sanctions programs or tighten up four other sanctions programs or, you know, make it clear to Europe that we really think we need to turn the next, you know, screw the next thing of the dial with respect to Ukraine and Russia. Doesn't strike me as having any real implication in the here and now with respect to the centrality of the dollar. Ruben, can you comment on this, especially given your current role? Yeah, I shared in your view that in the intermediate term in the foreseeable future, the dollar will be the world's reserve currency and it's earned that right by virtue of the strength, the resiliency, the solidity of the U.S. economy and the importance of rule of law here. And Neil mentioned it, it bears repeating. I spent my State Department incarnation traveling the world preaching the gospel of anti-corruption, rule of law, property rights, sanctity of contract, integrity of the judicial system. This ties back, loops back to a whole other policy area. Anything and everything, the Treasury, the administration is doing to continue to work to maintain the resiliency, spur economic growth, innovation, competition, education, immigrate, all that kind of stuff is absolutely critical on an ongoing basis to assure that we continue to earn that stature. But around the margins, on the diplomatic, on the diplomatic front and in dealing with our counterparties, yeah, I mean any given thing, the sanctions, whatever, people are not, it's a classic thing, you can please some of the people, some of the time, but not all of the people all the time. There will be trade-offs, but we have to be mindful of our stature, which some people admire, others envy, and we have to be respectful of that and treat counterparties fairly, accordingly, if we want to bring them and keep them on our side, bring them along on our shared policy objectives and initiatives. So I totally agree with everything Ruben just said, and I think it, just to maybe clean up after myself, I think it's not foreordained anywhere, it's not sort of in the laws of nature that the dollar is gonna be the reserve currency of the world, and so it does require us, certainly over the longer horizon, to make sure we're, things like labor flexibility, innovation, immigration, deep liquid capital markets, human capital, all these things which are, in some sense, at the bedrock of why our economy is so strong and why it's fundamentally the envy of every other economy on the planet and need to be tended to, and if one doesn't tend to them over long periods of time, this thing could change, so I think that's an important, I think Ruben, I completely agree with him on that. Well, let me ask this question in terms of the main American competitor, the rising power of China economically. Even if the remnant B doesn't outpace the dollars the chief reserve currency around the world, does the attractiveness of Chinese markets, the influence of Chinese capital begin to affect sort of the rules of the road internationally and begin to sort of affect the ability of the Treasury Department, the U.S. government, to implement the kinds of financial integrity measures it wants to do around the world? Does the Chinese market itself impact what the U.S. can do? Well, I mean, I think that this is something that needs to be, should be of substantial focus to TFI and to the government more broadly from now and into the future. The Chinese economy is very big, very important globally. Their financial sector, by the way, needs a lot of reform. It doesn't really respond to market signals, particularly currently, and so that's a problem for the Chinese leadership, which they've acknowledged, I think, and are very much focused on. I don't think of, and I think there's plenty of reason for the U.S. to continue its conversations both bilaterally and multilaterally in broader context with the Chinese about this set of objectives, but I don't see, I don't think of the rise of the Chinese economy, the rise of China more generally as something that is for the moment and again for the sort of foreseeable term being a real constraint or being fundamentally antithetical with what the U.S. government is trying to achieve in these areas. Urban, what's your thought on China? Would agree with Neil on that. I think you have to separate, and I'm not worried about the RMB taking over as a World Reserve currency anytime soon because, see, when you get into the Chinese financial system, it is really at its nascent stages. There's not a developed capital, indigenous capital market in the sense that we know it that the global financial community relies on it when dealing with dollar flows or euro flows or yen flows or the flows of other major currencies or currency-denominated, denominated financial instruments. From a bilateral standpoint, dealing with the Chinese, there are many well-established for the most important, one of the more important ones being the strategic and economic dialogue where the U.S. government engages on these, on the one hand, engages on these financial market development issues in a very supportive way to help the Chinese help themselves build a stronger, more robust, more market-driven financial system. On the other side, where I do worry about it, I think all of us should be concerned about some Chinese activity, is what we heard earlier today in the intelligence panel on this. It's just out and out. Cyber theft is unacceptable, and that's very damaging to the global, not just the global financial community, the global economic community. It's in nobody's interest that the Chinese be allowed to do that, get away with that with impunity, including other Chinese companies and businesses that Chinese want to develop and grow indigenously. Ruben, that's an interesting point. Do you see that as a kind of a form of Chinese financial warfare, in a sense, and do you see the potential that China could learn the lessons from the U.S. Treasury in some ways and develop its own version of TFI and own set of sanctions and tools? There's already a debate internally within China about the use of unilateral sanctions and what that looks like. There's been episodes of the use of export of rare earth minerals as a diplomatic tool with the Japanese, for example. So do you think part of what we need to worry about, not just the cyber dimension, but the fact that China in growing in economic strength may develop similar tools to what Treasury has developed? Well, tools per se, I'm not so sure because they don't have necessarily the implementation mechanisms through the financial sector that's as well-developed as ours to have the requisite transmission effects. But there's absolutely no doubt, just staying current on the news, that China's figured out ways to exert their economic strength in areas of their choosing where it advances their own interest. I mean, it's no coincidence that if you go to some countries in Africa, you see a lot of the buildings, the elevators are Chinese made and the buildings are Chinese made. The workforces are a lot of Chinese workers. Not necessarily a good thing or a bad thing, but the Chinese are really out forward leaning in shoring up their interests in areas where they think they have vulnerabilities using their economic access. Neil? I think that's, I agree with all that. I think, you know, Jane Harman talked about sort of asymmetrical warfare and so this is not really sanctions per se, but it's sort of ancillary. It's sort of adjacent to that. There's no question that our economy generally, our infrastructure, but also our financial sector is hugely vulnerable to a bunch of this stuff, whether it's from China or from other state actors or for that matter from a set of non-state actors and given how much of the sort of the plumbing and the technology related to the financial sector is in the U.S. and the extent to which the U.S. is comparatively dependent on and good at and successful at the financial world. It's an important vulnerability. I don't presume to be able to say what's on the mind of the Chinese government, whether it's the PLA or the more senior leadership, but obviously them noodling around in this set of things is troubling. I was just reminded, you know, Stuart talked about his trip to Libya. This is totally off topic, but Stuart at least got to go to Libya when there was a security environment. I got to go to Libya when all hell was breaking loose. I got to go to Libya when all hell was breaking loose. Me too, by the way. Me too. Let me ask one last question and then we'll open it up to the audience. So get ready. Drawing back to the private sector and sort of the totality of American economic policy and economic power and influence. In some ways, you know, one way of thinking about this is overly simplistic, but one way of thinking about TFI is it's developed and harnessed the tools to exclude actors from the financial system, or at least rogue actors, illicit capital, to national security effect or impact. Have we done enough, as the United States, to think about holistically how we use powers of financial inclusion and positive dimensions of American power as part of a national security strategy? That is to say, we use the sticks quite well. We're very good at it. Do we use the carrots in a commensurate and complementary way? I think there are different parts of the US government that are spending time focusing on this, whether it's the State Department or AID or the Treasury or others. You know, lots of technology-based solutions, lots of other ways in which people can be brought into the world's economy, into the world's financial system, allow them to better realize their own aspirations in ways that, to some extent, you know, are meant to aviate the kinds of things we're talking about here so that people have a better opportunity to meet their aspirations. I think also these things, by the way, again, this gets to your question about the extent to which sort of TFI goals and financial inclusion goals are in some amount of tension. I think, you know, if you think about inclusion solutions that are based on, you know, cards of some sort or telephony of some sort or, you know, one or another kind of technology solution, I think there's a pretty good probability that those things bring financial inclusion and also allow TFI to do its job in a much better, more systematic, more effective way. And, you know, in that sense, they're not just in, not in tension, they're actually, you know, quite sympathical, quite symbiotic. Things like mobile banking and the rest. Yeah, exactly. Or, you know, so, just take Afghanistan or plenty of other places in the world now. Various technology providers or payment services providers are giving individuals cards on which they can get their, you know, whatever payment it is. If you're a government official, your salary payment, if you're a citizen, your social welfare benefits or what have you, in ways that are more secure, quite effective at providing inclusion in ways that, you know, big populations haven't had access to here to four and all by the way, you know, give, just back to the intelligence piece of this, give folks like David and Danny and others an opportunity to have a pretty keen sense of what's going on or what, you know, they want not to be going on. Reuben? Yeah, I think on the broadest plane, I would put initiatives such as, you know, the Trans-Pacific Economic Partnership, the Everett-Sur-Rege, where I get a transatlantic trade and services agreement negotiated. These are all part of bringing the global financial system, the global economic system closer together in a way that the areas of common interest trump those areas of disagreement and encourage people to be part of the system and to comply with accepted rules, regulations, norms, et cetera. So it's the broadest level and then you get down to the individual, sort of, micro-programs that USAID has and the State Department, and increasingly a lot of this is technology-driven, so it's not just the financial sector, it's working with a telephone company, it's the internet, the internet service providers. I mean, that work is ongoing. It's the day in and day out, you know, work of a lot of, you know, diplomats and Treasury professionals and A-professionals around the world with their colleagues in like-minded governments and development institutions. Fantastic. All right, let's open it up for questions. I'd ask you to raise your hand, wait for the mic, stand, identify yourself and then ask a question. Let's go right here in the middle of this young lady in the back. Hi, this is Anna Yukina from Reuters. And thank you for your discussion about some of the banking settlement issues. And I don't think, you know, with some of the big fines that we've seen recently, it's not really a question of US banks withdrawing from the US, or big banks withdrawing from the US financial system, but do you think this could have any other negative repercussions? For example, voluntary disclosure, which is so important for OFAC to address future sanctions violations or elaborate a bit more on the diplomatic repercussions. Thank you. So on voluntary disclosure, I mean, I think if I were running one of these big firms or if I were, or one of these other firms that's been watching their colleagues and competitors, I think the takeaway is, you know, better to be more transparent, better to get the regime right in the first place, better to be more transparent more quickly. And I think that, you know, the other way around is just, you know, deepening the hole. So I think that, so that's all, that's what I'd say on that. On the diplomacy, you know, I think these are complicated things. Governments across the world want understandably to make sure that their firms, their companies aren't being treated, you know, comparatively worse than others, that there isn't a sort of a favoring of US firms relative to foreign competitors and so forth. I think they have every right to ask those questions. And I think, you know, the US government, you know, or in this case, law enforcement officials should be providing answers. I think if you look, by the way, at the range of settlements, not my line of work, so I should probably avoid this, but anything. If you look at the range of settlements, you know, there have been a lot of US firms that have had pretty unhappy resolutions in a range of ways and their set of foreign firms. And I think, you know, what's important is that it be the case and it be the perception of the case that what matters is the facts and that, you know, if you did something across the line, that the response by the law enforcement entities ought to be calibrated to what you did and how much of it you did and so forth and that ought to be the sort of ultimate decided on those kind of things. But on the diplomacy, Ruben has more different to say. Well, I think, from a private sector perspective, when in doubt, self-report is the base, I think the basic mantra, going back to the initial requirement to report SIRs, Suspicious Activity Reports under, you know, they came out of the Patriot Act and the Bank Secrecy Act post 9-11. And from a diplomatic, I can't comment on what's, you know, what's in the newspapers, I just don't know what's going on in the legal community. But I think I'd share Neil's view that over time, these issues will get resolved. It's something, from time to time, there are, you know, some disconnect between the penalties and the crime. But it's early, you know, in many cases, what we're talking about is remediating, you know, an outstanding pattern of transgressions that really shouldn't happen in the first instance. It's important, though, that people step back and remember and reflect on the overarching principles at stake here, which, again, go back to the origins of DFI, which is cracking down on something everybody wants to crack down on, which is illicit flows, organized crime, terrorist finance, money laundering, human trafficking, et cetera. Good. Question up front here, this gentleman. Yeah, my name is Pat Malloy. I'm a former general counsel of the Senate Banking Committee. I had a great privilege of observing 10 years as a commissioner on the U.S. China Commission. And I'm really glad, Juan, that you pressed this issue of the reserve currency. And I agree with Neil all the advantages that we get. One of my concerns, though, is that when you run negative net exports, it detracts from your GDP and job growth. And the fact that we run $10 trillion worth of negative net exports, I think, has been made possible by the fact that we have the reserve currency. I mean, that this has permitted us to live a lifestyle we're not earning and become the largest debtor nation in the world. Do you guys see that as a problem for the United States and something that we ought to address as a matter of some urgency? So I would say, Pat, look, I think that I should have added to my list when I was saying, you know, left untended, left untended, there are set of things that could eat away, chip away at the primacy of the dollar. On that list ought to be long-term fiscal coherence, no question about it. And also probably ought to be some version of reasonably balanced current account. Now, on both those, you can look at the short term where they're both getting better. If you look at our trade deficits, contracting at a pretty unbelievable rate on a historic basis relative to where it had been, part of that, and there's lots of different explanations for that. And if you look at the fiscal imbalances, they've gotten quite a lot better over the last four years, meaning they were at least sort of gapped out to something just north of 10% of GDP. They're on a path now to getting something more like three to three and a half percent, which is pretty good. If you look over a longer horizon, that progress is gonna start to inflect and it's gonna get worse. And so it is true, I think, that for the longer-term health of the dollar, policy makers need to grapple with some of these big trends. And that's hard. I mean, that becomes right away a political question. But I think you're right to point out that those are things that also need tending certainly over anything more than the intermediate horizon. I think we have time for one more question. Let's go to the gentleman in the back. Peter Sharfman, MITRE Corporation. We've heard from a number of speakers that one of the great advantages of TFI's tools is that they can be calibrated fairly precisely and respond quickly to events. But isn't it a problem for the private sector when things get turned on and turned off rapidly and in response to events that are hard to predict? It absolutely can be. It absolutely can be. I think it is important for the government in that context. I mean, the government can't control all the exogenous factors that cause them to wanna put sanctions programs in place in the first place. So if Vladimir Putin decides he doesn't wanna take Crimea, then Adam Zubin doesn't have to worry about figuring out a sanctions program for Russia. But I think it is important for TFI and for that matter, you know, the rest of government in all kinds of other spheres to communicate as much as possible and to do so with as much clarity as it can possibly muster. That's, I think, an obligation. This piece hasn't gotten that much attention today, but since we're talking about the private sector, hugely important for the government to do as much as it can to bring clarity and precision so that private sector actors, on whom, as Stuart and others were clear, they depend in the fulfillment of their objectives to give them the best opportunity to do what they need to do, and without all this ambiguity. It's good, both in terms of the private sector, not sort of flailing around with uncertainty and confusion, which is not good for the economy. It's good because it helps the OFEC, or the TFI programs optimize and be as successful as they can be. And I think that, you know, my sense is is that the government needs to continue to struggle and continue to find new ways to bring that communication and that clear communication and that quick communication to bear for all those reasons, both for its own self-interest and because it's good for the private sector and therefore good for economy. And although they work hard at it, I think there's probably room to improve. And I think it's a piece of business on which they can and should continue to focus going forward. Ruben? I, clarity, precision, and I would add consistency is absolutely critical in dealing with the private sector. I mean, most private sector institutions, when you have a targeted, take a targeted sanction against a particular government or group of entities, they have the systems that at least significant large ones do, large financial institutions, and procedures in place and the organizational flexibility to react, provided though it's clear as between the private sector actors and government what the rules of the road are and there's a shared understanding of mutual expectations. Well, it's been a fantastic discussion. Help me in thanking Neil and Ruben for their insights and to all of you for coming. Thank you. Well, thank you again to Neil and to Ruben, to Juan for that discussion. That was great. Before closing the symposium, I'd like to say just a few words. First, I wanna thank all of our participants, Secretary Jack Lew, White House Chief of Staff, Dennis McDonough, my predecessor, Stuart Levy for their remarks. Each of our panelists, Tom Donilon, Steve Hadley, Michelle Flournoy, Jane Harmon, Keith Alexander, and Neil Wollin and Ruben Jeffery and also our moderators, Andrew Mitchell, David Sanger and Juan Zarate. I think the conversation today has been highly entertaining and engaging and also deeply informative. I know I have a lot of action items that I've written down to take care of when I get back to the office. I'd also like to thank the Center for Strategic and International Studies as president and CEO, John Hamery and the entire CSIS team for hosting this event here in their beautiful new facility. We've had the opportunity today to trace the evolution of Treasury's Office of Terrorism and Financial Intelligence over the past decade and reflect on and at times even applaud some of our accomplishments to note where we have fallen short and most importantly to think about where and how TFI can contribute in the years ahead. Our speakers and panelists have helped us better understand how financial measures, the mix of targeted financial and economic sanctions programs, financial transparency at home and abroad, collaboration with the global private sector, all underpinned by financial intelligence, have become increasingly important tools in the President's foreign policy and national security toolbox. Today's discussion has highlighted that Treasury is playing an increasingly central role in projecting US power in a consequential, albeit non-kinetic fashion in service of a broad variety of important national security objectives. It is sometimes said that financial sanctions are a new form of warfare. While that overstates the case, there is no question that real war is decidedly different and we should never forget that. There is also no mistaking that the tools we have developed and deployed deliver real and meaningful impact. That is, after all, the point. And now, after the past decade, Treasury's ability to deliver impact is embedded in our national security discussions and strategy. So importantly, today's conversation also has illuminated some of the key challenges that we will face in the future as we continue to employ and increasingly rely upon financial measures to help achieve our core foreign policy and national security goals. So I'd like to take a moment to note a few challenges that I see as I look out over the horizon of the next few months and years. Issues that we can discuss at TFI at 20. First is the challenge posed by the changing nature of terrorist financing. In part due to our success in squeezing terrorist financing out of the regulated financial sector and in part due to the increasingly diffuse nature of the international terrorist enterprise, we have seen a decline in the traditional donor model of terrorist financing and an increase in terrorist groups' reliance on kidnapping for ransom to raise funds. Aside from state sponsorship of terrorism, ransom payments are the greatest source of terrorist financing today. Groups such as AQAP, AQIM, Boko Haram, and Al-Shabaab have collected tens of millions of dollars in ransoms over the past several years. These ransom payments are used to fuel the whole cycle of terrorist activities, including inflicting indiscriminate harm. Improving the international effort against kidnapping for ransom is an urgent challenge for the years ahead. Second is the challenge to the international community's ability to impose targeted conduct-based financial sanctions. We have never lost a case challenging the evidentiary sufficiency of a sanctions designation. This is because we take great care in building a record before we act and because there are procedures in U.S. courts to protect against the unnecessary disclosure of classified information. In Europe, however, there have been a number of recent cases successfully challenging targeted sanctions, including sanctions that were first adopted by the UN Security Council. Our European colleagues are focused on these challenges, but if solutions are not found soon, Europe's ability to continue to work with us on combating illicit conduct through targeted sanctions will be imperiled. Third is the challenge to financial transparency posed by new technologies, including new payment methods, such as mobile banking, and new methods of payment, such as virtual currencies. Without a doubt, expanded financial access provided by the inexorable march of new financial technology is a great boon to millions of people around the world. We need to ensure that we remain abreast of these developments, neither stifling innovation nor allowing it to undermine the key principles of financial transparency, which serve as the foundation for much of our work. Fourth, we will face the ongoing challenge of ensuring our access to timely, accurate, and specific financial intelligence, while also respecting legitimate demands for privacy, both by American citizens and foreigners. Make no mistake, financial intelligence is essential to what we do. We cannot map illicit financial networks or identify targets for action without financial intelligence, and we could not have achieved any of our successes from stemming the flow of funds to Al Qaeda to imposing crippling sanctions on Iran without the information generated by our intelligence community. Nonetheless, as President Obama recently emphasized, we must remain sensitive to the risk of government overreach and guard against the possibility of impairing our core liberties in pursuit of security. And finally, there is the challenge of using financial measures strategically against an expanding range of threats to U.S. national security, from narcotics trafficking to transnational organized crime to malicious cyber actors. We've applied these tools over the past decade to attack and disrupt the financial networks of terrorist organizations and WMD proliferators. In the years ahead, we will be increasingly called upon to employ our techniques to undermine the financial foundation of a whole host of illicit actors. These are all complicated challenges requiring deaf skill and innovative thinking. And I have no doubt that the great people of TFI, almost all of whom are career employees, are more than up to the task. At a time when public service is not valued nearly enough and when federal employees hardly ever receive the recognition that they deserve, I would like to conclude today's event by acknowledging the men and women of TFI. Over the past 10 years, as TFI has grown from an interesting idea into a formidable reality, the people of TFI have shown time and again that they are nimble, creative, and tireless. Working with outstanding colleagues within the Treasury Department and across the government, the people of TFI have developed new tools, new approaches, and whole new ways of thinking about confronting our adversaries, providing policymakers with options for action that did not previously exist. Nothing that TFI has accomplished over the past 10 years could have been done without their devotion, dedication, and skill. And everything that TFI is able to accomplish in the months and years ahead will be due to their continued outstanding service to our country. So as we wrap up today's symposium, in addition to my heartfelt thanks to our participants and to CSIS, I would like to express my deepest appreciation to the TFI team. Thank you for all that you've done over the past decade and all that you will do in the years ahead to make our country safer and more secure. Thank you.