During Thursday's Senate Banking Committee hearing, Sen. Andy Kim (D-NJ) asked Deputy Secretary of HUD nominee Andrew Hughes about his concerns regarding North Korea using cryptocurrency to launder money.
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00:00Senator Kim. Yeah, thank you, Chair. Mr. Hurley, I wanted to just start with you.
00:06If you're confirmed, you oversee FinCEN, the Financial Crimes Enforcement Network.
00:12In your opening statement, you said that part of the role that you'll have is disrupting and
00:16dismantling the financial networks that support terrorist groups, organized crime,
00:21including nations, also nations that threaten our national security. So right now, we're having
00:26before this committee, sort of bipartisan talks about cryptocurrency, stablecoin. I want to ask
00:32if you have concerns about North Korea, drug cartels, other types of organizations like that
00:36from utilizing cryptocurrencies and stablecoin. Thanks very much, Senator, and also very much
00:43enjoyed our conversation. Absolutely share the concern on the use of crypto. I mean, obviously,
00:51you know, our adversaries, anytime we use any tool, they're, as I described, they're fairly
00:58sophisticated, and they're going to find a way around it. And we can see obvious examples. The
01:02recent headline stories, I'm not in the building yet, so I haven't had a chance to dig deep in the
01:06intelligence, but it seems very clear that the DPRK was able to take, you know, well over a billion
01:11dollars in crypto, and it sounds like they've successfully laundered it through the blockchain.
01:15And look, as I talked to colleagues on the other side of the aisle, industry, I mean, people are
01:21recognizing this is a problem. Industry doesn't want, you know, this to be something that puts a
01:26stain upon their technology. One idea that came up is trying to get FinCEN to be able to take a bigger
01:32role here, in particular, you know, when it comes to allowing illicit actors from being able to access
01:38mixers, other types of anonymization tools. Does that sound like a potential place where FinCEN can get
01:45engaged in? You know, absolutely, Senator, and I, you know, as you, as we both understand very well,
01:53you know, the blockchain is transparent. You know, one friend of mine describes it as
01:57it's prosecution futures. With some basic network analysis, you can figure out the source of pretty
02:02much anything on the blockchain. And so it does make sense to me that the key for us is the off-ramps,
02:08and FinCEN's right at those off-ramps. Well, you have that transparency until you have
02:12technologies like mixers that can, you know, add that anonymity that allows for, you know,
02:18some of these types of illicit actors. Does that, do you agree with that? You know, absolutely, but at
02:23the end of the day, there's still IP addresses. And so I think actually with good application of
02:28network analysis, at some point it leaves the blockchain. And exactly to your point, sir,
02:32us having the tools in place to catch it at the moment, it's trying to get into our financial
02:39system and pollute it, or be used by weapons proliferators, by terrorists. I think that's,
02:44that's the, that's the big opportunity for us. So that's something you'll work with me on?
02:47Absolutely. Okay. Look, also, you'd be overseeing OFAC, and a lot that we're trying to gather in
02:52terms of our ability to use sanctions and what role that plays. Right now, you know, one place in
02:58particular, I've been trying to get some greater sense of in terms of what comes next is with regards
03:02to Syria. So I wanted to ask you if you believe a sanctions regime, you know, the framework that we have in
03:08place with respect to Syria should be updated to reflect the new political realities on the ground
03:13from the collapse of the Assad regime? Well, I think the phrase that you use in our conversation is
03:18that we have a moment here in Syria and the Middle East broadly, and I completely agree. And, and, and
03:25the, hopefully we can, we can make that to get the best possible outcome. I would say, you know,
03:31again, I need to get in the building, get deeper in the intelligence. I have been able to have some
03:36conversations with friends at State and elsewhere who were, who were deep into the topic. And the, and I, and I
03:41think the way in which we would take down sanctions, to the extent that we can influence the best possible
03:48outcome for the region and for our own safety, safety and security, I think that's gonna be, it's gonna be a, a, a, a
03:55complicated process, and I hope we do it, you know, very carefully. Yeah, I agree. And especially when there's still concerns about ISIS and terrorist groups, et cetera. And it's not just about the architecture that's
03:55sanctions, but also the enforcement side. So for instance, what we've seen with regards to Russia was continuing to see PRC associated entities, helping Russia circumvent enforcement, what can we be doing better to try to improve that and try to prevent, you know, the Russia from and other actors from evading US sanctions.
04:14Yes, sir. And the discussions that I've had with, and it's been, it's been great to get a chance to meet the folks across the silos of TFI. And I think certainly what I'm hearing as a consensus is, is that it doesn't matter what sanction you claim to have in place, it's the
04:32to meet the folks across the silos of TFI.
04:35And I think certainly what I'm hearing as a consensus
04:39is that it doesn't matter what sanction
04:42you claim to have in place,
04:43it's the aggressiveness with which you follow up on the Senate.
04:47And I think the example of the game Whack-A-Mall,
04:50anything you do, there's gonna be a counter response to it.
04:54My sense is we look at the difference
04:55between the huge success of the maximum pressure campaign
04:58on Iran, for instance, in Trump One,
05:01and the leakiness of it that we've seen
05:03over the last four years.
05:05It's not so much the specific sanctions,
05:07it's the aggressiveness of the follow-up
05:09with our foreign partners, with the banks,
05:12and then just being very diligent about,
05:16all right, we reflagged that tanker,
05:18we gotta do the next tanker, you know, one step at a time.
05:20And obviously for the Russia oil sanctions,
05:24they're not just adopting the same techniques,
05:27but sharing techniques.
05:29And also drawing upon the expertise of the staff,
05:32the civil servants and others.
05:34So with that, I'll yield back to the chairman.
05:36Thanks.
05:37You've been brilliant.
05:40Thank you so much.
05:42Thank you,
05:43STEVE.
05:44I'm sure you're looking to make a progress
05:45on thisę£² stand for the Waarom.
05:47You're behind the scenes for us.
05:49Please come to theussa for a while.
05:49We are doing what harvary forrasies of the paper.
05:51And we're looking for the commander.
05:52And I would like men to be in front
05:53of the cab.
05:54This is the one I have to do.
05:55I'm sure the Cruz reaction areŠ.
05:57I'm so guilty.
05:58Thanks, not all.
06:01I'm stupid now.
06:02Thank you very much.
06:03I'm not American.
06:03I'm nervous.
06:04But,å,