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Cmte Financial Services (R)
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Subcommittee Continues Work to Combat Terror Financing

Washington, Jul 18 -

The Terrorism and Illicit Finance Subcommittee held a hearing today to examine the terror and illicit financing risks that are inherent in asset transfers – specifically remittances and money transfers.

“The size and complexity of the financial system in the United States means any financial institutions or business, payments system, or medium of exchange has the potential to be exploited for money laundering or terrorist financing,” said Subcommittee Chairman Steve Pearce (R-NM). “The threat is constantly evolving and requires diligent adaptation by law enforcement, financial regulators, intelligence agencies, policymakers, and the financial sector. In today’s hearing, we explored the terrorist and illicit financing risks that are inherent in the use of money services businesses (MSBs), remittance payments, and other value-transfer systems, as well as how efforts to combat this activity have unintentionally contributed to the problem of de-risking.”

Key Takeaways from the Hearing

• Remittance networks provide migrants and foreign immigrant communities the ability to send money to their home countries, oftentimes developing nations, which can enable investment, entrepreneurship, and reduce poverty. It is important that safe, legitimate, and affordable options for transferring money through regulated and transparent methods exist in these communities.

• Remittance transfers can also be sent through informal channels to evade the scrutiny of regulators and law enforcement, including hawala networks, meaning “transfer” in Arabic, which are trust-based alliances of transferring money between parties.

Topline Quotes from Witnesses

“The deep, ongoing relationships Western Union has with law enforcement are a critical part of what we do. Terrorists and global criminal organizations threaten the individuals, families and businesses we serve. They also threaten our own agents and the foundation of our business. It is in our interest to keep our services out of the hands of those who would use them to do harm, and we remain committed to that effort. Western Union has proved to be a valuable and trusted government partner in protecting US national security, and we consider this to be a paramount responsibility and core aspect of our mission.” – Duncan DeVille, Senior Vice President, Global Head of Financial Crimes Compliance, Western Union

“While our technology has improved remittances, the basic reasons for sending haven’t changed. A recent survey of Remitly’s customers revealed that nearly all are using our service to send money intended to pay for the basic needs of their family members – housing, food, water, electricity, medical care, and education – basic things we take for granted in the United States but can be unattainable for millions living abroad.” – Matthew Oppenheimer, President and Chief Executive Officer, Remitly

“As Osama bin Laden once said, jihadists are aware of the ‘cracks’ in our Western financial system. Informal remittances are not just a crack but a Grand Canyon. There is no doubt that in addition to remitting wages, they are also abused by criminal and terrorist organizations.” – John Cassara, Member, Board of Advisors, Center on Sanctions and Illicit Finance, Foundation for the Defense of Democracies