At any time. This hearing is entitled evaluating the effectiveness of u. S. Sanctions programs. I now recognize myself for five minutes to give an opening statement. Im pleased to welcome our colleagues and our witnesses to the subcommittees hearing on u. S. Sanctions from iran to north korea to russia and venezuela, sanctions are increasingly used as an instrument in our Foreign Policy tool kit and Congress Must ensure that they be held accountable for results. This hearing will examine major sanctions programs as we seek to evaluate their effectiveness. Let me highlight three points that may provide context for this discussion. First, sanctions are key to bringing about behavioral change abroad and this committee has stressed that they should be designed accordingly. That means calibrating sanctions and sanctions relief based on specific and achievable actions we wish to see from a foreign actor. Tailoring sanctions in this way is important for secondary sanctions, given how banking restrictions tend to have broader and less predictable effects than primary measures. In october the Financial Services committee reported and the full house overwhelmingly passed the Otto Warmbier north korea sanctions act a piece of legislation that i was proud to sponsor with our Ranking Member. The bill would impose financial sanctions targeting every area of north koreas economy including all Petroleum Imports and any deployment of labors abroad. This weeks test launch by the dprk of an icbm that can reach any part of the United States under lines why maximum pressure is needed. Our bill outlines the principals that the majority and minority here consider essential for the use of secondary sanctions not only with respect to north korea but other countries as well. Namely, we should strike with as much strength as possible, provide the president with flexibility and link the termination of sanctions to a narrow set of realistic objectives. This kind of approach is distinguished from what we might call, quote, symbolic sanctions, end quote. That is devoting scarce resources to designations with no real impact on our Foreign Policy objectives or tying sanctions to a list of outcomes that no one expects to emerge in the foreseeable future. For sanctions to retain their credibility we must guard against such half measures. If sanctions are akin to antibiotics then we should ask what indiscriminate use will do for antibiotic resistance. If we want to preserve the trust that the world continues to hold in the u. S. Financial system, we must think clearly about what it means to restrict access to that system and communicate with equal clarity so that others understand the rational that governs both the imposition and lifting of our sanctions. The second point to underscore is the need for continuous engagement with congress when the executive chooses to wield its sanctions power. As we know, the executive possesses broad authorities under the International Emergency economic powers act. What may be less wellknown is that lays out explicit and reports so that these authorities are exercised with appropriate oversight. The committee would encourage our witnesses to examine whether the office of terrorism and Financial Intelligence is upholding the letter and spirit of these provisions. Tfi has been the recipients of bipartisan good will and using Emergency Powers accountably will help ensure that such good will is sustained. This brings me to point number three. As our country becomes more reliant on economic sanctions to carry out its Foreign Policy the Treasury Department will be increasingly called upon to make its voice heard on the substance of that policy. We have already seen bureaucratic changes that reflect the shift. In august, the president signed into law the countering americans adversaries through sanctions act which included the secretary of the treasury as a member of the National Security council. In light of this trend we should expect that congress will look more and more to the department and particularly to tfi not only to implement sanctions but to help shape their goals, scope and strategy and to answer for sanctions shortcomings if they fail to meet their objectives. Of course treasury under takes these things to a certain extent already but its accountability will only grow in these debates. I want to thank our witnesses for testifying today and look forward to working with them so our sanctions programs are coherent, realistic and impactful. The chair now recognizes the Ranking Member of the subcommittee, the gentle lady from wisconsin, gwen moore for five minutes for an opening statement. Thank you so much, mr. Chairman. Let me thank our guests from the Treasury Department. I always look forward to hearing from the experts and, you know, information is a powerful tool. Just let me begin, of course, by thanking my our chairman for calling this hearing and as he indicated before, im a part of the bipartisan work on the north korea sanctions, so proud to have been worked on that in a bipartisan manner and i do believe that weve passed a strong bill and i certainly hope that the administration does the hard work of implementing this bill. With that said, i cant pretend that im not concerned about the general state of the United StatesForeign Policy and this administrations commitment to implementing our sanctions programs. I can tell you that as an american, i think there are many other people who join me in feeling that we are isolated and weak with even the british debating whether or not the president of the United States is welcome in england. This is stunning. My constituents are very concerned about the extent and depth of the relationships with human rights violators, with putin, relationship that of course has the president and on many of his cabinet and advisers mired in deepening and widening scandals relating to criminal connections. Im concerned with reports that the department of state eliminated the office of the coordinator for sanctions policy and we did the hard work in this committee to draft this north korea sanctions bill and im sure that our witnesses are aware that the u. S. Currently has sanctions against russia and congress recently passed further sanctions against russia. It is puzzling to me why the department of state would eliminate the office that would coordinate these sanctions policy. I think you can catch my drift and perhaps even empathize with me. Cutting out some people who could help you all. Im sure youre also aware that the administration seems not to be implementing these russian sanctions. Forgive me, but i grew up in a time and era whereas a Public School student as a little girl we were diving under our desks we were so afraid of russia and so it is puzzling to me why were not implementing those russian sanctions at this point. Its im worried that the administration is more interested in implementing the goals of the kremlin to not have sanctions and the statutory mandate of this congress to expand and strengthen russian sanctions. I really am interested in hearing about the treasurys efforts to make sure it is implementing congressional intent and vigorously enforcing sanctions against russia. Im going to apologize in advance for bowing out of the meeting somewhat early because i have a conflict of another meeting that is extremely important as well, but i do look forward to hearing your testimony. I will be hear to hear your testimony and answer some of these questions. Thank you so much and mr. Chairman i yield back. The gentle lady yields back. Today, we welcome the testimony of marshal billingsly, the assistance secretary of the treasury for terrorist finance. We helps oversee the administrations efforts in administering economic sanctions programs globally. Prior to yoing treasury, he served as managing director for Business Intelligence services as deloit advisory. He held positions at department of defense where he served as deputy under the secretary of navy for special operations and low intensity conflict. He has also worked as a nato instant secretary general for defense investment and as a staff member, he is a recipient of the defense medal for distinguished Public Service. John smith is the director of the Treasury Departments office of foreign assets control. Which is responsible for administering economic and trade sanctions to advance u. S. National security and Foreign Policy goals. Mr. Smith is previously served as ofacs acting director. Prior to joining ofac mr. Smith served as an expert to the Al Qaeda Committee in 2004 to wu78 and as a trial attorney, from 1999 to 2004. Each of you will be recognized for five minutes to give an oral presentation of your testimony. Without objection, each of your written statements will be made part of the record. Mr. Billingsly you are now recognized for five minutes. Chairman bar and Ranking Member moore. If you could pull your microphone a little closer that would be great. Thank you for inviting me today to offer testimony on the effectiveness of sanctions and to talk about a number of the matters that you chairman and Ranking Member have raised in your opening statements. The Treasury Department has in my view pioneered the use of targeted sanctions as a tool of state craft and we are continually refining how we Employee Financial pressure. In the interest of time, ill skip to the bottom line up front which is that i believe that there are several reasons why sanctions are quite effective tools. Chairman, i do actually agree with the way you laid out the overall context of sanctions but i believe i can name and i will name numerous examples in which our sanctions have been effectively and id like to provide four specific reasons or four specific matters which i think effect the effectiveness of sanctions when we choose to deploy them. This administration has aggressively targeted isis leaders and operatives for their support around the world. The result is with that we have engaged in over 70 actions against isis leaders, their facilitators. U. S. And u. N. Designations along with close cooperation between the United States and iraqi authorities in particular, i just came back from baghdad more than a week ago, have effectively shut down a number of Exchange Houses that were functioning at key nodes for isis or dash as we might call them and their financial facilitating networks. We continue the effort against al qaeda and other terrorist groups through both unilateral and multilateral actions and secretary mnuchin recently announced the opening of a rather significant and rather innovative breakthrough which is the creation of a multinational terrorist Financing Targeting Center the tftc that is housed in saudi arabia and in conjunction with that announcement, the six gulf cooperation councilmember states, seven of us all together, impose sanctions on a network of al qaeda and isis financiers in yemen. This was, in fact, one of the biggest multinational designations ever outside the united nations. Weve also targeted and im sure youll hear more about the way weve gone after dozens of north korean individuals and entities including coal companies, banks, financial facilitators. Any revenue that north korea generates that can be used to support or actually any revenue they generate period is used to support the various Weapons Program that the regime has and were determined to cut that off. Finally, and i know well want to talk more about iran today. Sanctions were the dominant factor in forcing iran to the negotiating table and were committing, the administrations committed to combatting irans maligned behavior around the globe. Even hezbollahs leader as acknowledged that our donors are scared to remit funds. I mentioned four specific reasons i think sanctions are effect yichlt we deploy these against the backdrop of an International Financial system that we are continuously working to improve, to create enforceability, cape bts to create standards through the financial Transaction Task force to cause the Financial System to embrace antiMoney Laundering and counterering the standards of terrorism. This has been a patient and longstanding effort of the Treasury Department. It is a bipartisan nonpartisan endeavor that has stretched across multiple administrations and its because of this backdrop of driving the creation of these regimes that we are, in fact, able to cause our partner nations to work with us and to embrace and enforce these measures. I would say in the interest of time a second reason that sanctions are so effective is because of the financial diplomacy that goes with the actions we under take. A specific treasury action by ofac or by fin sin is often proceeded by and almost followed by engagement with the treasury and state departments with our allies and partners and as a general proposition sanctions are most effective as the Ranking Member implemented when theyre implemented multilaterally. No administration would hesitate to take action unilaterally to defend the American People as necessary. But when and where possible we do work with other nations and drive concerted action. And we of course pursue financial diplomacy through a variety of multilateral and multinational countries but the tftc that was just established. Im at time but simply to summarize the final two reasons which i can come back upon as you wish, the third reason and a third important criteria we have to be clear and consistent in our messaging. When we sanction. What is it that were seeking to achieve . I suggest how weve approached venezuela is a good example. The fourth is that influence aechktiveness and mr. Chairman you mentioned this specifically is the extent to which the targeted individual their finances, do they touch the International Financial system. We would, i would agree with you that symbolic sanctions probably are not worth the candle, those there are times and places where that is worthwhile. Appreciate the chance to appear before the chee. Mr. Chairman. Thank you. Director smith, youre recognized now for five minutes. Thank you. Thank you for inviting me here to discuss the Important Role of sanctions in addressing some of our nations most prominent National Security and Foreign Policy challenges. As the director of the Treasury Departments office of foreign assets control, ofac, ill speak to the sanctions my office has imposed against supporters of the destabilizing and provocative actions of governments such as north korea, iran and russia as well as a range of other actors engaged in conduct to our nations ideals and interests. When deployed strategically and with provision, sanctions are highly effective way of pressuring regimes and malign actors to change their behavior. These regimes and actors ultimately rely on funding to operate and by freezing their assets, cutting them off from the u. S. Financial system and restricting their ability to interface in an International Financial system the choice to them becomes clear. Either modify your behavior or accept the isolation and negative economic effects. One of our highest priorities is targeting the north korea regime and its key financial vulnerabilities. This year ofac has issued eight rounds of sanctions related to north korea adding 112 individuals and entities to our specially designated nationals and block persons list, what we call the sdn list. The regime requires revenue to maintain and expand its nuclear and Ballistic Missile programs and we focused our efforts on areas where we can have the maximum disruptive impact. Just last week, ofac sanctioned several Chinese Trading Companies that were responsible for hundreds of millions of dollars of imports from and exports to north korea over the past few years. Between 2013 and 2016, that action combined with diplomatic pressure and mull till lat ral sanctions helped pressure china to announce it would halt all coal imports from north korea representing a blow to the regimes revenue. Iran is another top priority and since january, ofacs issues eight traunchs of sanctions involving iran dead ig naturing targets around the globe in connection with the irgc and irans Ballistic Missile program, support for terrorism, human rights abuses, cyberattacks, transnational criminal activity and other destabilizing regional activity. We recently designated the irgc under the global terrorism executive order pursuant to the countering americas adversaries through sanctions act. The legislation that you mentioned. And just last week we sanctioned an irgc force countering feeting network that deceived european suppliers to procure advanced equipment to print yemen bank notes potential worth hundreds of millions of dollars. Another significant priority for ofac is addressing russias destabilizing activities in ukraine. This summer we continued our regular pattern of sanctions and designated 38 individuals and entities involved in the ongoing conflict in ukraine and more recently weve been