Thank you, Chairman Pearce and Ranking Member Perlmutter, for convening this hearing on countering the financial networks of weapons proliferation and for inviting me to appear before this subcommittee.
The financing of weapons of mass destruction proliferation is a grave threat facing the United States and the global financial system. The ability of rogue states and, potentially, malicious non-state actors to obtain weapons of mass destruction by using illicit financial activity and procurement networks is a major challenge to U.S. foreign policy goals, to the security of our homeland and that of our allies and partners, and to the integrity of the global financial system and the global nonproliferation regime.
Countering proliferation finance must be a core part of the policy approach to the United States’ most pressing national security concerns, specifically North Korea, Iran, and Syria. Furthermore, the United States must lead on this issue in international forums such as the United Nations Security Council. This body and several others have taken important, though merely nascent, measures to place obligations on member states to halt proliferation finance. There is broad opportunity for the United States to advance policy and global cooperation on an important security issue, with nearterm and meaningful benefits for global nuclear security.
Advancing the critical, even essential, global policy regime to counter the financing of proliferation will feature several primary challenges. First, proliferation finance is difficult to detect. Proliferation networks and specific individuals in these networks leverage the openness and interconnectedness of the global financial and trading system to achieve their malicious goals. For example, in 2013 Spanish authorities intercepted a shipment of corrosion-resistant valves destined for an oil field services company in the United Arab Emirates. Subsequent investigation found that the valves were going to be diverted to Iran for potential use in Tehran’s nuclear program. As evident from this case study, the global financial system prizes frictionless transfers of goods and capital, which proliferators have taken advantage of on multiple occasions. Moreover, proliferators have taken advantage of gaps in different national regulatory regimes to evade detection.
Read the full testimony below.