This. Americans can see democracy at work. Get informed straight from the source on cspan, unfiltered, unbiased, word for word. From the Nations Capital to wherever you are. The opinion that matters the most, your own. Cspan, powered by cable. Officials from the justice and Treasury Department talked about financial crimes at the aspen security form. This is about 35 minutes. If i am not mistaken, i can say with confidence this is surely the most civil panel at the security forum. Welcome. We have with us representatives from the private sector. We have brian from treasury. That is joining us from the Justice Department. We are going to get the Money Laundering, cryptocurrency, how ai is changing the game or not. What gives you hope, what gives you nightmares . I want to start with a quick level set. Lay on me your best swing. How does your work look different . 6 billion transactions. That is a huge Playing Field for us. 20 billion transactions. A very interesting Playing Field for us commercially. The other exhilarating trends we saw are on the bad actors i. They are getting more sophisticated and attacking more scale than ever. I think covid and covid believe is a great example of the last five years. Covid believe as we all read, scams are estimated between 200 and 300 billion. Not for paypal, just overall. We certainly did our part to combat that. We want to stop the bad actors. We also want to enable our customers. We had to quickly give it to deal with that sophistication while ensuring the good customers that needed that belief could get it. Brian, the view from treasury. You see the explosion of in terms of payment opportunities to move value across the globe has exploded. Mobile money, mobile payment systems. That obviously creates opportunity for cyber enabled crime. We have seen an explosion of ransomware, extortion, particularly in the United States but globally we have seen the proliferation of these dark debt markets where drugs and your id, your credential and private information is sold again to facilitate ongoing finance criminal activities. I think we recognize this actor could be anywhere in the world. The one thing i have seen our government do and continue to do well is push for International Solutions to these challenges. Thank you. Great to be here. If i could expand that question to 10 years ago. I sat on the stage. We talked about the rise of isis and attacks in the United States. At the department of justice, we still care about terrorism and recently, domestic terrorism. Now the focus is on the intersection between National Security and financial crime. I think about export enforcement. Keeping Sensitive Technology in the United States from getting to our adversaries. We go after oligarchs and pursue sanctions invasion. The cybercrime you talk about. Our work has really shifted significantly. Just in light of the threats we face and what were looking at in terms of nationstate adversaries. Also, how much that work is not just the federal government terrorism. When we talk about financial crime, it is partnerships with the private sector. They are on the front lines of this fight. I want to make this specific. It is so big and abstract. You mentioned dark debt markets. It is still a little bit of a case study. There were headlines last year. A Justice Department investigation led to the shutdown of this market. You said this was the Worlds Largest running darknet market. Help me understand what that means. What was it . What was happening on this platform . I am happy to. In addition to partnering with justice, we designated this at the time. The things you see on these dark debt markets is a lot of Drug Trafficking. You are worried about Drug Trafficking organizations. Synthetic opioids on these markets really feeling what we have seen in terms of the growth and ventilated debts here in the United States. That is a Critical National secured concern. You see the selling of these credentials so your Social Security number can be sold on these markets. Your house, your home information so they can create a synthetic version of you, apply for your credit or otherwise, try to profit off your information. Who is selling who is telling . It could be anyone. These darker markets are being relied upon by cyber criminals in russia. That is a common jurisdiction we see but truly, these actors are acting everywhere in the world. There is a part where brian and his team have the sanctions. With hydro, we work closely together, we actually charged the individual response of overrunning for running the darknet website. From a security perspective, ransomware and the movement of funds. There is a range of different types of activity. They are the fuel for Illicit Activity and we have to bring all of our tools there across the government to go after them. I was fascinated. This was a doj takedown. The servers of the cryptocurrency while it, that was germany. Why does that matter . Talk about that partnership and why it matters. Where the servers are matters a lot. To be able to actually take down the website, the conversation is always what is the disruptive effect . We have tools and then the foreign partner will also have a tool that could lead to some disruptive thing that we dont want to do. We could take an action that will not disrupt the criminal activity at work. This was critical to get the service taken down. You said you charged the main guy. Now that they know how to do this, are you already see copycats . I think this is a challenge we all face. These nefarious actors take advantage of the boundaryless nature of dark markets, ransomware, cybercrime generally. We are living in a physical world in terms of Law Enforcement where we want to arrest the person responsible and put them in a courtroom in the United States and then a in the United States. Sometimes that can be evasive. Highlighting the kinds of things we are seeing through our charging documents so we can put them on notice but also put other actors that is not always possible so we look for other ways to carry out disruptions and sometimes that can be as basic as announcing and highlighting the kinds of things we are seeing through our indictments and charging documents that we can put them on notice and other actors and achieve some general deterrence because we can say we are watching you and will go after you. Yeah. Please. That is definitely true that you take one down and often times you see them deliver late in another jurisdiction. It is called hydra. [laughter] hydra was so big i think we have not seen a dark net market of scale anywhere near that size the time we took it down. Lets go to ai, a threat running through so many conversations this year. This was on the radar five years ago but nothing like it is now. To make it specific, i know you all have talked about how ai is enabling fraud as a business model. Explain. Sure. One, ai is a big topic that has been around for a while. You have machine learning, ai, and now generative ai, the next big step. Thats why were talking about it, because it is a game changer for everyone, and one of the ways to think about it is because it enables the machine to make the next decision, it lowers the barrier of entry for everyone. So whether you are starting a business to do photoshop to make pictures, well, now you dont need the training you might have needed, but on the bad guys side, which is a trend we have seen over the years you do an amazing job of taking them down but you see bad guys using their capabilities, but rather they built the tools on cell them right . With generative ai they can do that at scale and actually create apidriven products with product releases and you can have fairly low level people on the bad actors side participating in very sophisticated attacks. Give us an example so we can another hot topic is ransomware. The bad actors go after peopless emails and try to convince them. Well, with generative ai those would look more real than ever and you can operate that faster and with more frequency than ever, and by the way, you dont need to know how to do it. You can buy it for someone else in the dark web and deployed against the company, so it will be harder to detect rio from the fake, so no doubt real from the fake, so no doubt deterred by us and others, it would turn into much worse cases if not. How is the private sector generally thinking about using it in good ways . How does it help . Ai has been part of our dna for a long time. Part of the lifeblood for companies you want to enable these transactions and were not taken advantage of and lose too much money, so we have been investing on the cutting edge of these technologies, including Large Language Models for many years, actually, so that continues to be on the leading edge for us that we will continue to invest their to protect our platforming customers because if we dont, we know that the bad guys will continue to expand the capabilities, and so if youre not staying one step ahead, you are behind. To what extent are you able to act it please it police . With the Disruptive Technology strike, what is that . When we think about Artificial Intelligence from a National Security standpoint, doj standpoint, we think about how products these technologies. These are Game Changing technologies that companies and the government are developing that allow us to stay a step ahead of our adversaries, whether military, intelligence, or general technology, so we have laws that protects sensitive technologies, ai first among them, from being transferred illegally to our adversaries, so we set out this year, a new strike to enforce export controls and to make sure that together as a team we are preventing these sorts of sensitive technologies from illegally being moved outside the United States because these are the technologies that literally have the capacity to alter the balance of power between the United States and our adversaries. How well is it working . Right now, pretty well. We just started. We announced five cases a couple of months ago. One involved a Software Engineer who worked at apple who took, stole some of apple Ai Technology and went to work immediately for a company in china, and he has been charged now by an indictment for a budget that engaging in stealing apples proprietary technology, so we are working again very closely with the private sector who are at the forefront of developing these technologies to make sure we are in a position to protect them. Do you want to jump in on this one . We are focused on the one of our roles at treasury is to protect Critical Infrastructure and focus on Financial Institutions, so recognizing that technology will create opportunity, obviously as matt noted both on the National Security side as well as opportunity for adversaries and bad actors out there. We are focused on resilience, not just in the context of ai, but quantum and other Disruptive Technologies as map noted him and in working with private sector partners frankly to understand how bad actors are using these tools and what they are seeing. Staying with new technology and things we might not have been talking about on the stage five or 10 years ago, cryptocurrency. Um, i have a bunch of big general questions but i have been struck by recent headlines of Major Players in that field going belly up. How does that impact your work from a purely just trying to stop financial crimes point of view setting aside convenience, profitability, Everything Else . Is this a Good Development . I dont know if it is good or bad. I think we come from a couple of perspectives, bases we want to support, responsible innovation in the way we see that happening is for cryptocurrency firms, Virtual Asset Service providers, to build in meaningful Money Laundering and terrorist financing compliance in the service, in the app, or on their block chain, so that is critical from our perspective, number one. Number two, i think what we have seen, we have done some illicit finance risk assessments in the context of Digital Assets and specifically decentralize finance, and in both cases what you see is there are a lot of these Virtual Asset Service providers subject to compliance and sanctions, screening rules, and they are not following those, and that is frankly the biggest sorts of source of risk, because bad actors no that if these companies are not doing screening or having that compliance that they can run whatever form illicit finance they want through that service, of getting complaints is sort of the first step for us and then obviously avoiding the scenario where you have these Companies Jumping from jurisdiction to jurisdiction to avoid meaningful compliance are working globally through the Financial Action task force which sets compliance across the world is a key part of that set that we are trying to attach. Sure. Also, obviously for responsible innovation, and you know, embracing new technology and understanding it and being responsible player in it. For cryptocurrency, there are many facets to it, but at the end of the day, whatever the new technology there is concern its moving money from point a to point b, what do you know about. 8, and in between . Richter currency is interesting because as you should sometimes point a you dont know that much but you know where it ends up and heres the interesting part, cryptocurrency runs on the block chain which is technology that actually has an immutable ledger, once something happens there emmett it is there forever there, it is there forever. That is important to help Law Enforcement so there are tools that are actually enabling the government and the private sector to crack really Extensive Global syndicates who are using cryptocurrency. So i think there was a weight the bad actors felt the that this was really going to protect them in a way that they are seeing that those funds are being grabbed, sometimes they are being grabbed, so some demystification is helpful and there are responsible ways to participate in what will no doubt be part of commerce. Yeah, just to comment on that because i totally agree with your comments. We at the Justice Department work closely with companies responsible companies with good compliance programs committed to good Corporate Governance and working with the government, it is the case that crypto by its nature, by its decentralized, pseudoanonymous, there are not intermediaries, that is why, those features of crypto help it to become the fuel for ransomware. From a National Security perspective, the biggest concern is how north korea uses crypto by basically stealing it. They steal it to support their Weapons Program, you can see immediately why that is a big concern for us. I think public reports that is they have stolen three b in crypto since 2016 and we work with response were actors and the Treasury Department and elsewhere to seize and freeze some of this crypto so it can never be actually used, someone just sits on the block chain, not available to the dprk to build muscles. Other specific challenges going after activity happening or linked to north korea . Well, i mean anything linked to north korea will be hard, but it is a newer problem for us and were thinking about how we can be innovative really being able to trace to your exact point, we have some capacity to trace these funds that we can take steps to prevent it from ultimately making its way into the supporting Weapons Program in the dprk. Speaking of specific countries, one of you mentioned a lot of the bad guys are trying to go after art in russia or linked to russia, have you seen any impact from the war in ukraine, have you seen any impact from russia decoupling from the Global Economy in many ways, getting kicked out of swift, etc. , as that impacted illicit financial activity that is russialink you are seeing . It has. So, at the beginning of the conflict, there was a lot of concern that russia would try to use these other financial realms to evade our sanctions and i dont think we have seen that sort of at scale yet, you know, the capacity to move billions and billions of dollars and then cash that out meaningfully. We are still not seeing that, and an economy the size of russia is not able to do that, but we have seen the development and interest in developing new payment relationships, Financial Relationships with countries in russias near abroad, and one of the things that me and my colleagues have been doing around talking to partner countries and countries that um are again, sort of in russias near abroad that they would use to transship the things that they need on the battlefield, about sort of the consequences of materially evading u. S. And partner, ally sanctions, and high priority in this context is to make sure one, we are restricting the revenue russia has in order to continue prosecuting this war, but two, and more critically, restricting russias ability to get the materials and parts and stuff i need on the data field to continue to prosecute this war. When you talk about russias near abroad, the baltics, the caucuses . Caucuses. Uae. Turkey. Jurisdictions like that. It sounds really hard. That is why there is a lot of partner engagement. One of the benefits, as matt noted, why do we designate these wallets, why do we designate companies, people . Because Financial Institutions around the globe want to continue to have access to the u. S. Financial system, they have to follow those designations, so that is a really wide net, so it creates a lot of opportunity to disrupt a lot of the illicit financial flows. Speaking amongst friends [laughter] as the last year and a half with the invasion of ukraine and everything that has happened with russia made it harder and there are people you can reach because of sanctions . I would not say it has made it harder, but we have had some important successes coming together as both the government, but also with International Partners to go after oligarchs and those supporting the kremlin to make a point we are going after their assets, in not only their assets, but those that facilitate them. We have a task force that seized over 500 million, arrested or indicted over 30 individuals from so i think this is making a difference. There will always be people who will beyond our reach, but they cant travel, cannot travel and live the lives they are used to living, and they dont have their yachts anymore, and it hurts over time, and difficult to continue the war. We will open up to questions from all of you in one minute. All that thought. I will come to you in one minute. I want to quickly before were incredibly depressed, i want to go down the road one more time this way what gives you hope . What is a really Good Development you are super excited to talk about . I talk about the intersection between National Security and financial crimes. When statistic that jumps out to me is in the last year or so, two thirds of the corporate resolutions we brought to the doj have involved National Security, two thirds. Almost too big and dollars and financial penalties over the past year involving corporate wrongdoers, so my hope is that we are making changes within the National Security division. I can say today that we now as of this week have a new chief counsel for corporate enforcement. We would not have seen that five years ago. Who will have a Team Dedicated to bringing uh corporate enforcement in line in the way we have done it another contexts like fraud and corruption come in now in the context of sanctions and enforcement and cyber, we are taking that same National Security approach to the problem, so i think the partnerships we will develop to that type of program with Companies Like paypal and others, along with an increased focus within the Justice Department, is a reason to be hopeful that we will make a dent when it comes to overall corporate enforcement. You know, honestly, for me, uh, and as you all can imagine, the bulk of our energy over the last 18 months has largely been focused on all we can do to support ukraine in this war, and the thing that gives me a lot of hope is just how resilient and united the coalition of partners and allies have been in developing together um tools in order to go after the russian elite in the oligarchs and the oligarchs and the proxies to putin to really constrain russias ability to be able to prosecute this war and that resiliency has you know, manifested in ways we have all seen, including adding new members to nato, so that gives me a lot of hope going forward. Yeah. I would say um, cross, you know, cross collaboration across the Public Sector and private sector and Nonprofit Sector is something that gives me hope. I have seen the results throughout my career that we can do more together than individually. We had teams last week in texas talk about sentinel the drug sentinel and the 300 people dying comes so we get trained on how do you make it. What are the precursors to fentanyl . That enables us to monitor that information back to actually disrupt these bad actors and so the fact that is working so well absolutely gives me hope. And that is just attacking purchases . Correct. Something suspicious what are they saying that is suspicious . What indicators are there learning from partnerships with doj and other agencies and how can we identify that to go after these data actors. Got it. We will get to questions. Yes, maam, tell us who you are in a quick question. Yes. Part of Aspen Mountain seems to be have been sold to a Russian Oligarch who possibly seemingly gave his assets to his mother, a swiss citizenship, and i am wondering if the doj or treasury is aware of this problem, and if we can get our land back . [laughter] so, we will talk, ok, you and i. No, i mean, stepping back a bit of a we are very concerned about the way that some of these assets can be hidden through various sophisticated means, and begin working with the Treasury Department and other partners including the intelligence community. One of the stories behind the Crypto Capture Task force the work that we did from intelligence to understand how these oligarchs were moving and hiding their money, so at does, your question does highlight some real challenges in this area. A quick was upfront and we will get to these two. And i offer one comment on that. It goes directly to what we are doing in treasury, developing a Beneficial Ownership reporting requirement that will come into place early next year, and then to matts point, looking at real state transactions, because these are real estate transactions because these are opec ways of doing that. I rent a center called for center for ethics improve of law which is a National Security and ethics center. One area ive worked extensively on that i thought might come up in this discussion is the registration act. One of the tools in the doj toolbox, maybe not the strongest tool, but im wondering especially a question for you matt, there have been revisions. I served on the abea committee that recommended revisions to it and how do you regard it among the tools in your toolbox are addressing the issues here . I really appreciate the question, claire, and i know the important work you do. So, the Foreign Agent registration act as a transparency law that requires individuals who are acting as agents of other governments to register so that basically we know in the United States that if a Foreign Government is seeking basically covertly to influence our politics. We use this rather sparingly over the years, but the point you are making is an important one, we are looking to clarify and strengthen how it is used, give the team that enforces this law some additional civil authorities, some additional ways they can gather more information, but the real goal is to address what we call foreign malign influence, so china, russia, iran and their ability to influence our policies, so we need laws in place that plays a bright light and make sure those efforts are transparent. All right. Under the wire. We have 60 seconds. I am seeing this general and stand right here. Hey there. I am bruce these panels on the same subject get better every year, so congratulations to you guys. However, i am wondering why when we talk about this every year, but we dont have as a country a cyber cyber what . Cyber police, people that prosecute crimes. As of two years ago, we have a director of cybersecurity i dont know what his former title is operating out of the white house, which is an important coordinating feature in dhs is doing a lot of the important work in the cyberspace as well but it is a whole of government effort. We are better of than we were a few years ago in terms of how the government is organized. I will give you a quick example. We worked, and it is relevant to this topic, we worked hard to claw back some of the ransom paid in the Colonial Pipeline Ransomware Attack in 2021 and we were able to use our intelligence authorities that pfizer to get that information fisa to get that back. When you talk about cyber police , using intelligence, Law Enforcement, to be better at protecting our companies in particular from cyber attacks. That was a skillful and quick plug for 702. [laughter] thank you for the question and i think you have teed us up for opening the conversation next year. 19. [applause] on wednesday, officials from the private sector and federal government discussed space strategy at this years Aspen Security Forum in colorado at 8 00 p. M. Eastern on cspan. And then just after 8 30 more, from the same event with representatives of the google in the White House Office of science and technology talking about the upper teens and risks of Artificial Intelligence. You can also watch on the cspan now video app or online at cspan. Org. The cspan bookshelf podcast feed makes it easy for you to listen to all of cspans podcasts that feature nonfiction books in one place so you can discover new authors and ideas. Each week we are making it convenient to listen to multiple episodes with auths discussing history, biographies, Current Events and culture from her signature programs about books, after words, book notes plus come in q a, listen to cspans bookshelf podcast feed today. 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