THE IRAN NUCLEAR DEAL AND ITS 

IMPACT ON TERRORISM FINANCING 

HEARING 

BEFORE THE

TASK FORCE TO INVESTIGATE 

TERRORISM FINANCING 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 22, 2015 

Printed for the use of the Committee on Financial Services 

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THE IRAN NUCLEAR DEAL AND ITS 

IMPACT ON TERRORISM FINANCING 

HEARING 

BEFORE THE

TASK FORCE TO INVESTIGATE 

TERRORISM FINANCING 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 22, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–44 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

TASK FORCE TO INVESTIGATE TERRORISM FINANCING

MICHAEL G. FITZPATRICK, Pennsylvania, Chairman 

ROBERT PITTENGER, North Carolina, Vice 

Chairman 

PETER T. KING, New York 

STEVE STIVERS, Ohio 

DENNIS A. ROSS, Florida 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

DAVID SCHWEIKERT, Arizona 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

FRENCH HILL, Arkansas 

STEPHEN F. LYNCH, Massachusetts, 

Ranking Member 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

AL GREEN, Texas 

KEITH ELLISON, Minnesota 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

KYRSTEN SINEMA, Arizona 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

July 22, 2015 ..................................................................................................... 1 

Appendix: 

July 22, 2015 ..................................................................................................... 47 

WITNESSES 

WEDNESDAY, JULY 22, 2015 

Berman, Ilan I., Vice President, American Foreign Policy Council ..................... 6 

Dubowitz, Mark, Executive Director, Center on Sanctions and Illicit Finance, 

Foundation for Defense of Democracies ............................................................. 8 

Heinonen, Olli, Senior Fellow, Belfer Center for Science and International 

Affairs, Harvard Kennedy School of Government ............................................. 11 

Nephew, Richard, Program Director, Economic Statecraft, Sanctions and Energy Markets, Center on Global Energy Policy, Columbia University ............ 13 

Perles, Steven R., Senior Attorney and Founder, Perles Law Firm, P.C. ........... 10 

APPENDIX 

Prepared statements: 

Berman, Ilan I. ................................................................................................. 48 

Dubowitz, Mark ................................................................................................ 58 

Heinonen, Olli ................................................................................................... 266 

Nephew, Richard .............................................................................................. 274 

Perles, Steven R. ............................................................................................... 284 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Pittenger, Hon. Robert: 

Congressional Research Service Memorandum, ‘‘Terrorism Judgments 

Against Iran,’’ dated July 20, 2015 .............................................................. 299 

Schweikert, Hon. David: 

‘‘SWIFT General Terms and Conditions,’’ dated July 3, 2015 ...................... 303 

(1) 

THE IRAN NUCLEAR DEAL AND ITS 

IMPACT ON TERRORISM FINANCING 

Wednesday, July 22, 2015 

U.S. HOUSE OF REPRESENTATIVES, TASK FORCE TO INVESTIGATE

TERRORISM FINANCING, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The task force met, pursuant to notice, at 4:22 p.m., in room 

HVC–210, the Capitol Visitor Center, Hon. Michael Fitzpatrick 

[chairman of the task force] presiding. 

Members present: Representatives Fitzpatrick, Pittenger, Ross, 

Wagner, Barr, Rothfus, Schweikert, Williams, Hill; Lynch, Sherman, Green, Himes, Foster, and Sinema. 

Ex officio present: Representative Hensarling. 

Also present: Representative Royce. 

Chairman FITZPATRICK. The Task Force to Investigate Terrorism 

Financing will come to order. The title of today’s task force hearing 

is, ‘‘The Iran Nuclear Deal and Its Impact on Terrorism Financing.’’ 

Without objection, the Chair is authorized to declare a recess of 

the task force at any time. 

Also, without objection, members of the full Financial Services 

Committee who are not members of the task force may participate 

in today’s hearing for the purposes of making an opening statement 

and questioning the witnesses. 

The Chair now recognizes himself for 3 minutes for an opening 

statement. 

Over the first several hearings of this task force, members have 

heard foreign policy experts and others testify regarding the pervasiveness of Iran’s involvement in the financing and exporting of terror throughout the Middle East and around the globe. We know 

that Iran is the leading state sponsor of terror, and as such, any 

diplomatic engagements with Iran or understanding or agreements 

with them would be incomplete without a clear and full understanding of these facts and its impact on the face of global terror 

financing. 

Today’s hearing will explore the recently announced nuclear 

agreement negotiated by the Obama Administration and the P5+1 

nations with Iran, specifically its impact on terrorism financing 

through and by Iran. Most concerning to many members of this bipartisan task force is the easing of congressional sanctions and 

with it the danger that a new influx of cash will find its way to 

terrorist organizations threatening to strike the United States of 

America. It appears this agreement fails to address the realities 

2 

surrounding Iran’s sponsorship of terror while furthering empowering its mullahs by infusing billions of dollars into the economy 

through the lifting of sanctions that successfully brought Iran to 

the negotiating table in the first place. 

The Iranian regime has demonstrated a lack of concern about its 

own people. Leaving in doubt the estimated $150 billion in funds 

currently held abroad will allow the Iranian economy to fully recover, not to the benefit of the oppressed citizens but to the advantage of the next generation of terrorist syndicates. A nation so 

deeply committed to promoting terror has lost its right to goodfaith agreements. That is why over the next 2 months, Members 

of both the House and the Senate will review the fine points of this 

agreement before voting on it, the product of the bipartisan passage of H.R. 1191. 

It is my hope that this hearing, both the questions asked by the 

members and the testimony of our witnesses, provides vital information for Congress and the American people when looking over 

this nuclear deal. 

This agreement will determine the future of our Nation’s foreign 

policy and the global balance of power. It is far more significant 

than a Presidential legacy or the political goals of any party, and 

cannot take place with an eye on the next election or an ideological 

allegiance. Republicans, Democrats, and Independents alike hold 

the power to turn back a bad deal, and I am confident that this 

task force, rooted in bipartisanship, will play an important role in 

the decisionmaking process. 

At this time, I would like to recognize the task force’s ranking 

member, my colleague from Massachusetts, Mr. Lynch, for an opening statement. 

Mr. LYNCH. Thank you, Mr. Chairman. 

I also want to thank our esteemed panel here for your willingness to help the task force with its work. 

Last week Iran and the P5+1, which I hate using acronyms, but 

it includes the United States, the U.K., France, Russia, China, and 

Germany, finalized a Joint Comprehensive Plan of Action that attempts to ensure that Iran’s nuclear program can be used exclusively for peaceful purposes and in exchange for a broad suspension 

of many U.S., European, and United Nations sanctions. 

I am pleased that today’s hearing will present our task force with 

the opportunity to hear from experts with varying perspectives on 

that deal. 

While there is no such thing as a perfect negotiation that leads 

to a perfect deal, I think that with proper implementation and compliance, there is a great deal of good in this deal. I cite section 3 

of the deal, which I find particularly comforting, and it says that: 

‘‘Iran reaffirms that under no circumstance will Iran ever seek, develop, or acquire any nuclear weapons.’’ 

Of course in the next section, the agreement guarantees that 

Iran will have the ability to develop a peaceful energy-related nuclear industry in exchange for some sanctions relief, primarily related to oil and banking, and as well of obtaining nuclear weapons 

release for at least a decade, sanctions related to terrorism and 

human rights abuses will remain in place. 

3 

I am cautious but hopeful that we can make this deal work. I believe there are still some questions that need to be answered. Particularly concerning to our task force is how to ensure that the approximately $100 billion in frozen assets do not flow to terrorist organizations. 

The State Department has designated Iran as a state sponsor of 

terrorism since 1984 and notes that Iran continues to support 

Hezbollah and the Assad regime in Syria, as well as Hamas, Islamic jihad, and others. 

On the other hand, the multi-layered sanctions imposed by the 

United States and its allies have weighed heavily on the Iranian 

people. Treasury Secretary Jack Lew recently stated that Iran’s 

GDP shrank by 9 percent in the 2 years ending in March 2014 and 

is now 15 to 20 percent smaller than it would have been without 

the sanctions. Iran’s oil, coal, auto, aircraft, financial, and textile 

industries are reeling from U.S.-led sanctions, and due to the embargo on aircraft components, visitors have regularly expressed 

dread at the prospect of flying within Iran because of the woeful 

condition of their domestic airlines. 

Iran’s policies have brought isolation and few allies. Many experts view the election of President Hassan Rouhani, the relative 

moderate candidate in that last election, as an expression of Iran’s 

desire to move in a new direction. Sanctions relief could provide an 

opportunity for Iran to rebuild its economy and invest in infrastructure and embracing that moderate future. 

While the opportunity is here, the trust necessary to move forward is not. Fortunately, I believe this agreement does not require 

us to place our trust in Iran. Under the deal’s terms and its roadmap for clarification on nuclear issues in Iran, this entire agreement hinges on the adoption and implementation of a rigorous 

International Atomic Energy Agency inspection, monitoring, and 

guidance procedure. Indeed, the agreement relies more on the 

IAEA inspectors. And it is good to see Olli Heinonen here, someone 

who knows a little bit more about that than any other party because in the absence of trust, we will need the IAEA’s assurance 

that Iran will remain in compliance. 

While we should move forward with care and every precaution 

for ourselves and for our allies, I believe we should move forward. 

Mr. Chairman, I yield back the balance of my time. 

Chairman FITZPATRICK. I now recognize the vice chairman of the 

task force, Mr. Pittenger, for 1 minute for an opening statement. 

Mr. PITTENGER. Thank you, Mr. Chairman. Thank you for calling 

this hearing. 

This agreement, without question, has the most grave outcomes 

of any agreement negotiated by this government. Our allies in the 

Middle East, those whom I have met with on countless times, from 

Prime Minister Netanyahu and other leaders of the Arab world, 

are gravely concerned about the outcome. They know their neighbor, they know and have watched. Iran over the last 35 years is 

the greatest exponent of terrorism. 

Of course, each of us has concerns over the inspections, but clearly this body today is going to address the terrorism financing capacities that they will have with $100 billion. No less than National Security Advisor Susan Rice, and General Dunford, who is 

4 

President Obama’s nominee to be chairman of the Joint Chiefs, 

have expressed those same concerns, that this funding will be used 

for the purposes of building a military and terrorism financing. 

So I look forward to our discussions today. And thank you, Mr. 

Chairman, for calling this hearing. 

Chairman FITZPATRICK. I now recognize the gentlelady from Arizona, Ms. Sinema, for an opening statement of 2 minutes. 

Ms. SINEMA. Thank you, Chairman Fitzpatrick and Ranking 

Member Lynch, for holding this very important and timely hearing. 

A nuclear Iran is one of the greatest threats to security in the 

United States and to peace and stability in the Middle East. To 

support this deal, the agreement must end Iran’s nuclear weapons 

programs and strengthen the safety and security of both the 

United States and our allies in the Middle East. 

This deal, if Iran does not cheat, prevents Iran from obtaining a 

nuclear weapon for 10 to 15 years. However, I have several concerns about the deal’s structure, planned execution, and broader 

implications. 

Several questions: Number one, is the United States confident in 

success of the verification regime established by this agreement? 

Number two, what is the exact timing of sanctions released by the 

United States and the EU? And once these sanctions are removed 

and foreign investment floods into Iran, can we be confident that 

sanctions will snap back into place if or when Iran cheats? Number 

three, what are the broader consequences of this agreement for our 

security and regional stability? And how will an influx of billions 

of dollars affect the geopolitical balance in the Middle East? 

Iran is the number one state sponsor of terrorism, and the current regime is a destabilizing force in the region. Taking our most 

effective sanctions tools from banking and energy sector sanctions 

off the table could limit our ability to counter Iranian aggression, 

stabilize the region, support our allies, and avoid military contact. 

Fundamentally, I seek to understand whether this deal prevents 

a nuclear Iran for 15 years with long-term positive change in the 

region or whether it could allow Iran to further destabilize the region using financial resources and new non-nuclear weapons while 

becoming an empowered nuclear threshold state. 

Over the next several weeks, Mr. Chairman, I know we will all 

thoughtfully and thoroughly review the details of the agreement, 

including the comments coming from Iran. And I want to thank the 

chairman and the ranking member for holding today’s hearing, and 

thank our witnesses for coming to share their expertise with us 

today. Thank you. 

Chairman FITZPATRICK. The gentlelady from Missouri, Mrs. Wagner, is recognized for 1 minute. 

Mrs. WAGNER. Thank you, Mr. Chairman, and thank you, Mr. 

Ranking Member, for calling this timely hearing today. We have 

just left our classified briefing, so it couldn’t be more timely. And 

I thank you, Mr. Chairman, for sounding the alarm about the mistake, I believe of historic proportions, agreed to by the Obama Administration last week in Vienna. 

The President has agreed to far-reaching concessions in nearly 

every area that was supposed to prevent Iran from acquiring a nuclear weapon. Under this deal, Iran would receive $100 billion to 

5 

$150 billion in sanctions relief and regain access to conventional 

arms and ballistic missiles that has been denied for nearly a decade. Iran will be free to transfer these weapons, as has been stated, 

to Hezbollah, the Syrian Government, Yemeni rebels, and other 

terrorist groups. These organizations threaten the security of the 

United States, our ally Israel, and the world, and will further destabilize a region already in crisis. 

As Prime Minister Netanyahu said when visiting Congress earlier this year, ‘‘No deal is better than a bad deal.’’ And by any 

measure, this is a bad deal, Mr. Chairman. Congress should show 

the world that America will not accept a nuclear Iran. 

I yield back, and thank you. 

Chairman FITZPATRICK. The gentlelady yields back. 

We now welcome our witnesses. Ilan Berman is vice president of 

the American Foreign Policy Council. Mr. Berman has consulted 

with the Central Intelligence Agency and the Department of Defense and provided assistance on foreign policy and national security issues to a range of governmental agencies and congressional 

offices. He is a member of the associated faculty of Missouri State 

University’s Department of Defense and Strategic Studies. He also 

serves as a columnist for Forbes.com, and The Washington Times, 

and is editor of the Journal of International Affairs. 

Mark Dubowitz is executive director of the Foundation for Defense of Democracies and director of its Center on Sanctions and 

Illicit Finance. He is an expert on sanctions and has testified before 

Congress and advised the Administration, Congress, and numerous 

foreign governments on Iran and sanctions issues. He holds a master’s degree in international public policy from Johns Hopkins University’s School of Advanced International Studies and Law, and an 

MBA degree from the University of Toronto. 

Steven Perles is senior attorney and founder of the Perles Law 

Firm. Mr. Perles has handled a number of cases before the United 

States Supreme Court, United States courts of appeals, and district 

courts across the country. His litigation practices included cases in 

the fields of Foreign Sovereign Immunities Act litigation. He has 

lectured on the evolution of antiterrorism civil litigation at conferences for national crime victims’ groups. He holds a law degree 

from the William & Mary Law School. 

Dr. Olli Heinonen is a senior fellow at the Belfer Center for 

Science and International Affairs at the Harvard Kennedy School 

of Government. Before joining the Belfer Center in September of 

2010, Dr. Heinonen served 27 years at the International Atomic 

Agency in Vienna. Dr. Heinonen served as the deputy director general for the IAEA and head of its Department of Safeguards. Prior 

to that, he was director at the agency’s various operational divisions and was an inspector at the IAEA’s office in Tokyo, Japan. 

He studied radio chemistry and completed his Ph.D. dissertation in 

nuclear material analysis at the University of Helsinki. 

Dr. Richard Nephew is the program director of the Economic 

Statecraft, Sanctions and Energy Markets, Center on Global Energy Policy at Columbia University. Prior to this position, Dr. 

Nephew served as the principal deputy coordinator for sanctions 

policy at the Department of State. He also served as the lead sanctions expert for the United States team negotiating with Iran. 

6 

From May 2011 to January 2013, he served as the director for Iran 

on the National Security staff. He holds a master’s degree in security policy studies and a bachelor’s in international affairs from 

George Washington University. 

The witnesses will now be recognized for 5 minutes each to give 

an oral presentation of their written testimony. And without objection, the witnesses’ written statements will be made a part of the 

record. Once the witnesses have finished presenting their testimony, each member of the task force will have 5 minutes within 

which to ask the witnesses questions. 

On your table, there are three lights: green; yellow; and red. Yellow means you have 1 minute remaining, and red means your time 

is up. The microphone is sensitive, so please be sure that you are 

speaking directly into it. 

And, with that, Mr. Berman, you are now recognized for 5 minutes. 

STATEMENT OF ILAN I. BERMAN, VICE PRESIDENT, AMERICAN 

FOREIGN POLICY COUNCIL 

Mr. BERMAN. Thank you, sir. And thank you, Mr. Chairman and 

Ranking Member Lynch and distinguished members of the task 

force for the opportunity to be here today to speak to you on a truly 

critical issue. 

There is a great deal to say about the Joint Comprehensive Plan 

of Action (JCPOA), as the new agreement with Iran is formally 

called. I simply don’t have the time to say it all, and on issues like 

verification and compliance, I think my colleagues can acquit themselves much better than I. 

So, if I could, I would like to devote my time to talking about one 

issue in particular, which is the threat potential of the Iranian regime and how it will change and expand as a result of the JCPOA. 

This relates directly to the question of sanctions relief because 

under the agreement, the Islamic Republic is now poised to receive 

massive economic stimulus in the very near future. Specifically, 

later this year or at the very latest early next year, upon 

verification by the International Atomic Energy Agency that Iran 

has disclosed the requisite details of military-related nuclear work, 

the United States will begin unblocking $100 billion and to $150 

billion of Iranian revenue from oil sales that have been locked in 

escrow accounts in China, South Korea, and in other nations. I 

think it is necessary to put this in some context precisely because 

it is so large. 

In 2014, the U.S. Government estimated that Iran’s total annual 

gross domestic product was $415 billion. So what we are talking 

about here is a quarter, roughly, of Iran’s annual GDP. I think, 

with very little exaggeration, what we are talking about here is a 

Marshall Plan for the Islamic Republic, the financial equivalent 

thereof. And while White House officials have expressed hope that 

the Iranian regime will use these funds to focus internally, to focus 

on domestic conditions, on improving the economic welfare of ordinary Iranians, it is necessary to point out that money is fungible, 

and an Iranian regime that has this kind of economic stimulus 

package has an unprecedented financial windfall that will invariably translate into greater capability in two areas. 

7 

The first area is terrorism. Several years ago, the U.S. Government publicly estimated that Iran had ‘‘a 9-digit line item in its 

budget for support of terror organizations.’’ This included $100 million to $200 million annually to Lebanon’s Hezbollah, as much potentially as $25 million monthly to Hamas in the Palestinian Authority, and the list goes on. And this assessment was made at a 

time when Iran was subject to stringent international sanctions, 

and there was no financial relief for the Islamic Republic in sight. 

Today, the situation is very different. The resources at Iran’s disposal in this area are poised to expand exponentially, and as a result, what you will see is a much greater potential on the part of 

Iran to translate its financial windfall into a financial windfall for 

its proxies. 

The second issue of particular concern to me is the question of 

Iranian regime expansionism. The Iranian regime possesses a distinct manifest destiny. Idealogically, it talks about itself as the center geopolitically of the Middle East, and it has launched—even in 

absence of sanctions relief—an ambitious effort to expand its influence globally, but in particular in the Middle East. What this looks 

like in practice is a massive investment in propping up the Assad 

regime in Syria, which has been estimated to cost the Iranian regime something like $6 billion or more annually. The Iranians have 

provided extensive military and economic backing for Yemen’s 

Houthi rebels. And, primarily, although not exclusively, but primarily because of Iran’s assistance, the Houthis have managed to 

change fundamentally the power dynamic in that country, and Iran 

has become a key power broker in Yemen’s future. 

And the same holds true in Iraq, where Iran already processes 

extensive political influence. The current fight against the Islamic 

State terrorist group and the disarray of Iraqi politics has allowed 

Iran, through both economic and military and financial means, to 

expand its ambit still further. 

So what should we expect here? The Iranian leadership already 

believes that it has an unprecedented opportunity to dominate the 

region. The Iranian Supreme Leader, Ali Khamenei, said as much 

in September of 2014 when he declared publicly that, ‘‘The power 

of the West on their two foundations—values and thoughts, and 

the political and military—has become shaky and could be subverted.’’ Now, with the conclusion of the nuclear deal, Iran is poised 

to have greater resources to accomplish this than ever before, and 

this gets us to the question of what we expect. 

The White House has said in public that this deal is merely 

transactional, it is focused strictly on the nuclear issue and doesn’t 

touch on other issues, including Iran’s support for terrorism, but 

both in scope and in duration and, frankly, in its material minutia, 

what you see is a deal that is aspirational. It is one that hopes that 

the Iranian regime will, as a result, turn over a new idealogical 

leaf. But this is not how the deal, how the framework agreement, 

is being read in Tehran. As the Iranian Supreme Leader himself 

said several days ago, Iran remains steadfast in its opposition of 

the United States as well as its efforts to reshape the region in its 

own image. 

So what we end up with is a situation where, although Iranian 

belligerency remains unabated, the Iranian regime, through the 

8 

JCPOA, now has dramatically greater financial tools to accomplish 

its goals. 

Thank you. 

[The prepared statement of Mr. Berman can be found on page 48 

of the appendix.] 

Chairman FITZPATRICK. Mr. Dubowitz, you are now recognized. 

STATEMENT OF MARK DUBOWITZ, EXECUTIVE DIRECTOR, 

CENTER ON SANCTIONS AND ILLICIT FINANCE, FOUNDATION FOR DEFENSE OF DEMOCRACIES 

Mr. DUBOWITZ. Great. Thank you. Chairman Fitzpatrick and 

Ranking Member Lynch, on behalf of the Foundation for Defense 

of Democracies’ Center on Sanctions and Illicit Finance, it is an 

honor to testify before you and your task force and an honor to be 

testifying with these distinguished experts. 

I want to focus on the Revolutionary Guard Corps, the IRGC, 

which I think is a major beneficiary of this nuclear deal. And this 

nuclear deal itself is fundamentally flawed in both its design and 

architecture. As a result of these artificial sunset provisions, the 

IRGC, in fact, which controls Iran’s nuclear and ballistic missile 

programs, has patient multiple pathways to developing nuclear 

weapons and regional power. Again, as long as it is patient and 

faithfully complies with the agreement, Iran over time will develop 

an industrial size nuclear program with near zero breakout, an advanced centrifuge powered sneak-out pathway, and multiple heavy 

water reactors. Iran will be able to buy and sell heavy weaponry, 

with the expiration of the arms embargo. Iran will also be able to 

develop long-range ballistic missiles, including an ICBM. And let’s 

be clear that most of the economic sanctions are being dismantled, 

unlike the nuclear program. 

Now, I am focusing on the Revolutionary Guards, again, because 

they are the major beneficiary. And, Mr. Chairman, last spring, 

FDD provided the U.S. and U.K. Governments with a database of 

1,290 IRGC companies and individuals. The full lists are in my testimony. I would ask them to be, please, entered into the record. 

After 16 months, the United States has not sanctioned any of 

these IRGC entities or individuals. And the nonlisting of these entities provides the IRGC with economic benefits and the ability to 

operate without restrictions. 

So the IRGC stands to benefit even more now because of the 

JCPOA. The deal requires the United States and Europe to remove 

numerous IRGC-linked entities from their sanctions list, including 

the most important terrorism finance and money laundering 

facilitator, the Central Bank of Iran. Most Iranian banks, including 

some IRGC-controlled banks, will be permitted back onto the 

SWIFT financial messaging system, giving Iran’s most dangerous 

actors access to the global financial system. This is deeply troubling, because the IRGC, again, the most dangerous actor in Iran, 

controls at least one-sixth of Iran’s economy, including major strategic sectors. 

Now, these delistings are a direct challenge to the conduct-based 

nature of the sanctions regime imposed by the Obama and Bush 

Administrations. Those sanctions were designed to target the full 

range of Iran’s illicit activities and not just Iran’s nuclear program. 

9 

And they were also designed, according to Treasury officials, to protect the integrity of the U.S. financial system. This was made clear 

when Treasury issued a finding under Section 311 of the USA PATRIOT Act, which found that Iran’s financial sector, including its 

central bank, was ‘‘a jurisdiction of primary money laundering concern.’’ Treasury cited Iran’s ‘‘support for terrorism and the use of 

deceptive financial practices.’’ In short, the entire country’s financial system ‘‘posed illicit financial risks for the global financial system.’’ Internationally, the Financial Action Task Force confirmed 

these terror financing and money laundering risks. 

Though the 311 was conduct-based, this agreement now calls for 

sanctions relief without a demonstrable change in Iran’s behavior. 

This mass delisting includes nearly 650 entities, many involved in 

Iran’s nuclear and ballistic missile programs. More than 67 percent 

are going to be delisted from Treasury’s blacklist within 12 months. 

After 8 years, only a quarter will remain on our lists. 

In 8 years, the United States and the European Union will lift 

sanctions on Fereydoon Abbasi-Davani and Mohsen FakhrizadehMahabadi—they are the Robert Oppenheimer and A.Q. Khan of 

Iran’s nuclear weapons development—and Gerhard Wisser, who actually ran, helped run A.Q. Khan’s proliferation network. The EU 

also lifted its nuclear sanctions on notorious Quds Force Commander Qasem Soleimani, though he will remain on the EU’s terrorism list for now. 

The deal lifts U.S. sanctions on 47 Iranian banks designated for 

proliferation, nuclear and ballistic missile activity or for providing 

financial services to other delisted entities. They are all going to 

get back onto the SWIFT financial messaging system. 

Now, the White House assures us that they have a snapback 

mechanism, that they can impose non-nuclear sanctions like terrorism, but the agreement itself notes that Iran may walk away 

from the deal and its nuclear commitments if new sanctions are 

imposed. The agreement also contains an explicit requirement for 

the European Union and the United States to not interfere with 

trade and economic relations with Iran. So Iran can use these provisions to argue that the reimposition of sanctions, even if implemented on terrorism grounds, is a violation of the agreement. Iran 

will threaten to return to its nuclear program, and this gives Iran 

an effective nuclear snapback, much more powerful than our economic snapback, to intimidate the United States and especially Europe from reinstating sanctions. 

Now, Ilan has talked about the hundreds of billions of dollars 

that are going to go back to Iran. And with Iran back on the 

SWIFT system and its banks reintegrated into the formal financial 

system, halting the flow of these funds to bad actors will be challenging. 

In short, Congress should require the White House to renegotiate 

and to resubmit an amended deal for congressional review that addresses these weaknesses, including the snapbacks and sunsets, 

which are dangerous design flaws of the agreement. 

Mr. Chairman, I am happy to share the other recommendations 

in my testimony during Q&A. Hopefully, this is a good start. And 

thank you for the opportunity to testify. 

10 

[The prepared statement of Mr. Dubowitz can be found on page 

58 of the appendix.] 

Chairman FITZPATRICK. Thank you. 

Mr. Perles, you are now recognized for 5 minutes. 

STATEMENT OF STEVEN R. PERLES, SENIOR ATTORNEY AND 

FOUNDER, PERLES LAW FIRM, P.C. 

Mr. PERLES. Thank you very much. Mr. Chairman, Ranking 

Member Lynch, Mr. Pittenger, thank you again for the invitation 

and the honor to testify before you today. 

Over the last 20 or 30 years, my law firm has probably represented and reconstructed more terrorist attacks involving the 

death of, or personal injuries, to U.S. nationals than perhaps the 

rest of the private bar combined. We have extensive experience reconstructing and then litigating these matters against countries 

like Libya, Syria, Iran, and the Sudan. Our litigation portfolio is currently valued at about $17 billion. 

During the course of that period, we have separated roughly half 

a billion dollars from the material supporters or financiers of these 

attacks, and we currently hold $1.9 billion of Iranian assets that 

were illicitly invested in New York in our trust account awaiting 

final court order so that they can be distributed to various clients. 

I was asked to testify for a very explicit and narrow question of expertise: In my view, my opinion, will the release of $100 billion 

to Iran result in an increase in Iran’s funding of terrorist organizations resulting in the future deaths and personal injuries of United 

States nationals? I think, based on Iran’s behavior that I have 

looked at since 1979, the answer to that question is, inevitably, yes, 

there will be a substantial increase in funding for those organizations, and they will target U.S. nationals. 

In a perverse way of looking at this, Secretary Kerry’s next objective in the world diplomatic arena is the Palestinian peace process. 

If you study, as we have because of our client portfolio, the Oslo 

Peace Accords, which were negotiated in the mid-1990s, you come 

to the inevitable conclusion that there was real peace in the Middle 

East at the conclusion of Oslo and that the Iranians could not tolerate peace in the Middle East. It is not consistent with their foreign policy view of how the Middle East should be mapped. 

Being unable to tolerate peace in the Middle East, the Iranians 

sponsored a bus bombing campaign designed to destroy the Oslo 

peace process, intentionally targeting American students in Israel. 

The most famous of these is Alisa Flatow of New Jersey and other 

students, like Matt Eisenfeld of Connecticut and Sara Duker also 

of New Jersey. Alisa Flatow happened to be the first American student killed in an Iranian-sponsored bus bombing intended to destroy the Oslo peace process. 

You see Iran engaging in the same kinds of conduct even earlier, 

back into the 1980s. The last time the United States entered into 

this kind of agreement with the Iranians was 1981. That agreement is known as the Algiers Accords. It resolved—and resulted in 

the release of people who were called the Tehran hostages. These 

are the American diplomats who were held captive in Iran for more 

than 400 days. And look at the result, again, through my optic. 

That agreement was executed in 1981. Thirty-one months later, the 

11 

Islamic Republic of Iran detonated the largest non-nuclear device 

ever exploded, resulting in the deaths of 241 U.S. servicemen in 

Beirut. Those service families are our clients. The $1.9 billion that 

we hold in our trust account, if this agreement does not interfere 

with that distribution, should be distributed to those families some 

time this fall. 

One country that we have completed the cycle for in this country 

in this kind of litigation is Libya. Muammar Qadhafi engaged in 

a series of bombing campaigns against the United States and U.S. 

interests in the late 1980s, including the downing of Lockerbie and 

the La Belle discotheque bombing, the La Belle victims being our 

client. We separated collectively—and I am including the work that 

other law firms did for Lockerbie—roughly $3 billion, something in 

excess of $3 billion in reparations from Mr. Qadhafi that were distributed to American victims. I dare say, in retrospect, if Mr. Qadhafi had known in the late 1980s that his bombing campaign was 

going to result in his having to cough up $3 billion to his American 

victims, he would have found some other way to be obstreperous; 

he would not have engaged in that bombing campaign. 

I think that the litigation that Congress has authorized American victims of state-sponsored terrorism to engage in serves a real 

national security purpose. There is no amount of money that will 

help compensate a family for the loss of their loved ones. The purpose of the litigation is deterrence. 

Thank you, and I apologize for running over. 

[The prepared statement of Mr. Perles can be found on page 284 

of the appendix.] 

Chairman FITZPATRICK. Thank you, Mr. Perles. 

Chairman FITZPATRICK. And we will have an opportunity in the 

Q&A to get further into that issue. 

Dr. Heinonen, you are now recognized for 5 minutes. 

STATEMENT OF OLLI HEINONEN, SENIOR FELLOW, BELFER 

CENTER FOR SCIENCE AND INTERNATIONAL AFFAIRS, HARVARD KENNEDY SCHOOL OF GOVERNMENT 

Mr. HEINONEN. Thank you, Chairman Fitzpatrick, Ranking 

Member Lynch, and distinguished members of the task force for 

giving me this opportunity to discuss one of the most crucial issues 

in front of us today, the Iran Nuclear Deal. 

In my testimony, I will focus on the verification aspects of the 

Joint Plan of Action, but in my remarks, I am also mindful that 

the reference to the roadmap agreed between the IAEA and Iran, 

while it is publicly available, it has secret attachments, which have 

not been available to me when I made my testimony and statement. 

Iran will retain a sizeable nuclear program with its supporting 

nuclear infrastructure. In technical terms, Iran has not changed its 

nuclear course. It will maintain substantial uranium enrichment 

capacity, and it is permitted to expand it after 10 years without 

having technical or economical needs to do so. In addition, implementation of the additional protocol remains provisional until the 

time when the IAEA has reached a broader conclusion on the 

peaceful nature of Iran’s nuclear program. 

12 

This contradicts current IAEA practice. Such conclusions have 

only been drawn by the IAEA when an additional protocol is in 

force and ratified. This is not an easy matter to dismiss, as we 

need to be mindful of potential complications down the road should 

Iran seek to leverage, pull back, or dilute some of its obligations 

at some point in time under its provisional status. 

Verification in Iran involves implementation of safeguards agreement, additional protocol, additional transparency measures agreed 

to by Iran, and the IAEA-Iran roadmap. The sum of these parts is 

to block or at least to delay all pathways for Iran to get the bomb. 

Our assessments should focus on whether the verification provisions measure up to this goal and look at the JCPOA’s strengths, 

limitations, and challenges that it could face. We also need to ask 

ourselves, what measures are in place that will prevent slippage or 

account for changing circumstances? 

In light of my previous testimonies, I will only speak now about 

some salient points. JCPOA has, from the verification point of 

view, strong points but also vulnerabilities. Without additional access to Iran’s nuclear facilities, introduction of modern monitoring 

tools to track nuclear material from cradle to grave, the IAEA will 

be able to detect and report in a timely manner any substantial diversion of declared nuclear material at declared facilities. The 

measures will also provide a high level of confidence that larger declared facilities, such as Natanz or the conversion facility in 

Esfahan, are not used to process undeclared nuclear materials. 

At the same time, we know that nuclear proliferation cases of the 

past have opted not to divert declared nuclear material but used 

undeclared nuclear material or undeclared facilities. To this end, 

JCPOA could have included stronger provisions. 

The first one is the expanded declaration. As I pointed in my previous testimonies, a complete declaration of all Iran’s nuclear activities, including the past ones, for example, status of equipment 

and materials from dismantled installations, would be important to 

set a critical baseline for monitoring and verification. This is particularly significant since Iran’s nuclear program has been subject 

to several changes, and has grown substantially since Iran stopped 

its provisional additional protocol implementation at the end of 

2005. 

Access to undeclared and suspected sites: The JCPOA provides 

for a dispute settlement mechanism should Iran refuse to cooperate 

or challenge the IAEA’s request. There are, however, concerns that 

matter. One example is the mechanism by which information and 

evidence is provided that would compromise sources of intelligence 

and give Iran the opportunity to take countermeasures to buy time 

and erase evidence. 

Timeliness of access also matters. The comprehensive safeguards 

agreement in 1972, negotiated by the IAEA Board of Governors, 

has a provision that IAEA has access to a nuclear installation if 

it believes that the information gets compromised even during the 

arbitration process. 

In terms of the settlement time, 24 days does not cover credibly 

all plausible scenarios. It is clear that a facility of sizeable scale 

cannot be simply erased in 3 weeks without leaving traces. But the 

likely scenarios involved here would be small scale, which would be 

13 

critical to the weapon manufacturing process, such as manufacturing of uranium components for a nuclear weapon. But a 24-day 

adjudicated timeline reduces detection probabilities exactly where 

the system is weakest: detecting undeclared facilities, materials, 

and keeping in mind the breakoff times. 

Then I have some additional remarks with regard to the manufacturing of centrifuges, possible military dimensions, noting that 

IAEA has to provide a report by mid-December. I don’t think that 

this will be a complete existing report which will put the PMD 

issue at rest since IAEA will not have time to do all the investigations according to its prevailing standards. 

And then I also draw your attention to a couple of other things. 

I think it will be very difficult to use American staff on these inspections in the next few years in Iran, which I see as significant 

because U.S. citizens will bring extra skills which the IAEA otherwise doesn’t have, and then on top of that, the IAEA has to, I 

think, issue a little bit more transport reports. 

Chairman FITZPATRICK. Thank you. 

Mr. HEINONEN. Thank you. 

[The prepared statement of Dr. Heinonen can be found on page 

266 of the appendix.] 

Chairman FITZPATRICK. Thank you, Dr. Heinonen, for your testimony. 

Mr. Nephew, you are now recognized for 5 minutes. 

STATEMENT OF RICHARD NEPHEW, PROGRAM DIRECTOR, 

ECONOMIC STATECRAFT, SANCTIONS AND ENERGY MARKETS, CENTER ON GLOBAL ENERGY POLICY, COLUMBIA 

UNIVERSITY 

Mr. NEPHEW. Thank you, Chairman Fitzpatrick, Ranking Member Lynch, and other members of this task force for inviting me to 

speak to you today. It is an honor to speak to you in my first formal testimony before Congress. 

I would like to begin by extending my personal gratitude to the 

members of the U.S. negotiating team. Regardless of how one evaluates this deal, we are all most fortunate that this country produces dedicated diplomats, civil servants, and experts like those 

who worked on this deal. 

In my opinion, the deal that they negotiated is a very good one, 

especially compared to the most realistic alternatives. And any negative consequences can be managed. The deal reached satisfies the 

two most important U.S. national security objectives for Iran’s nuclear program: one, lengthening the time that Iran would need to 

produce enough nuclear material for one nuclear weapon; and two, 

ensuring that any such attempt could be quickly detected. 

With respect to breakout time, the deal delivers, giving us years 

before we have a uranium breakout timeline shorter than a year. 

For plutonium, breakout can be measured in decades. Breakout is 

not the sole measure of a deal, but compared to the status quo, 2 

to 3 months to break out for uranium with one to two weapons 

worth of plutonium being produced per year at Arak, we are far 

better off with the deal than without it. Further, with the transparency steps that Iran has accepted, both breakout and any attempt at a covert path will be easier to detect quickly. Some of 

14 

these authorities will remain in effect for 20 to 25 years, while 

Iran’s obligations to the IAEA under its standard treaties will continue in perpetuity. 

Even some skeptics may agree that within a 10- to 15-year band 

of time, the deal may work as designed but that the sunsets 

present an irreconcilable problem. I disagree that this concern is 

worth killing the deal. The argument against sunset presupposes 

either that there is no point in time in which Iran could be trusted 

with a nuclear program, requiring regime change, or that negotiations could possibly have delivered a longer sunset. Having been in 

the room, I believe the length is as long as achievable. And in any 

event, after key restrictions lapsed, the United States is also free 

to declare that Iran’s nuclear program remains a concern. Getting 

international support to do something about it will require effective 

diplomacy, but it is an option for a future President. 

The other major complaint is that it provides Iran with far too 

much sanctions relief and that the practical effect of increasing 

trade with Iran will render snapback ineffective. First, it is a blunt 

reality that Iran was not going to accept major restrictions and 

invasive monitoring on the cheap. The Administration did the right 

thing in leveraging sanctions relief for maximum early nuclear 

steps. Iran is now under every incentive to take the steps required 

of it as soon as possible, which the IAEA will verify before Iran 

gets an extra dollar. 

Of course, the sanctions relief provided by the United States does 

not equate with unilateral sanctions disarmament. The United 

States retains a number of sanctions authorities that will continue 

to exact consequences for Iranian violations of human rights and 

damage Iran’s ability to engage in terrorism financing, though I 

personally believe fears about the extent of new Iranian spending 

in this regard are overblown, and, according to the LA Times anyway, so does the CIA. 

But foremost of our tools remain secondary sanctions. The 

United States will still be able to pressure banks and companies 

into not doing business with the IRGC, the Quds Force, Qasem 

Soleimani, and Iran’s military missile forces. Even if the EU and 

U.N. remove some of these from their lists, these bad actors in Iran 

generally will find business stymied until they correct their own behavior in the eyes of the United States. This is both due to the direct risk of U.S. sanctions and the improvement in international 

banking practices since 9/11, a bipartisan effort begun under 

George Bush and continued under Barack Obama. 

The United States will also retain its ability to impose sanctions 

on those trading with Iran in conventional arms as well as with respect to ballistic missiles even after U.N. restrictions lapse. The 

United States can also trigger snapback of existing sanctions. Even 

just one JCPOA participant can trigger UNSC review and a vote 

on a U.N. Security Council resolution to continue with relief. The 

U.S. veto power in the UNSC gives us the ultimate free hand to 

reimpose these sanctions. This could come with political costs, and 

many skeptics point to these costs as likely meaning that no such 

snapback would ever be triggered, but international reaction to 

U.S. actions will always depend on the context. If the rationale for 

15 

doing so is credible, then chances for success will always be higher. 

Iran too would have much to lose if snapback were to be triggered. 

The description of the deal as a Marshall Plan is an exaggeration, except that, in Iran, it needs the sort of domestic investment 

that it would provide due to damage with sanctions. Iran’s leaders 

would therefore have to carefully evaluate the costs and benefits of 

any course of action that threatens the integrity of a nuclear deal. 

These costs will grow as Iran’s economy grows. Some may see this 

as resilience, and I see it as Iran having more to lose. 

To conclude, though it is not a perfect deal, I believe that the nuclear deal reached by the United States, its P5+1 partners, and 

Iran, meets our needs and preserves our future options. Like the 

Algiers Accord, it is necessary even if it will have consequences 

which must be managed, and I urge Congress to make the right 

choice and support this deal. 

Thank you. 

[The prepared statement of Mr. Nephew can be found on page 

274 of the appendix.] 

Chairman FITZPATRICK. We thank the witnesses for their testimony, and each of the members of the task force will be given 5 

minutes now to question the witnesses. I will recognize myself for 

5 minutes. 

And I will first ask Mr. Berman and Mr. Dubowitz if you could 

respond to a recent statement of National Security Advisor Susan 

Rice, who suggested—admitted, I guess—that some portion of the 

$150 billion that will accrue back to the Islamic Republic of Iran 

as part of the sanctions relief could be or would be spent to support 

international terrorism. So the question is to what extent you believe—and, again, $150 billion is an estimate—that any of these 

funds would be used to enhance the capabilities of their terrorist 

proxies, including Hezbollah, including Houthi rebels in Yemen, 

who were mentioned earlier today, to bring terror not just to the 

region, but to American citizens? 

Mr. BERMAN. Thank you, sir. I think the best way to illustrate 

the concerns that I have with regard to the fungible nature of the 

money that Iran will get is to harken back to the experience that 

the U.S. Congress and the U.S. Government had with post-Soviet 

Russia in the 1990s. During that decade, we implemented a program called Cooperative Threat Reduction, colloquially known as 

Nunn-Lugar, to help the post-Soviet Russian Federation dismantle 

both conventional and unconventional weaponry, including ballistic 

missiles. The investment at the time, and I believe it was somewhere on the order of $600 million, was intended to widen the pie, 

so to speak, with regard to Russia’s ability to execute dismantlement that it needed to do anyway. That was at least the rationale 

that was given. 

What was discovered belatedly was that the Russian Government had allocated a certain percentage of its defense budget for 

this dismantlement, and an infusion of American cash was not sufficient to widen the pie, rather, that money was used for other 

things, including a revival of the Russian bioweapons program in 

the late 1990s. 

I think the same concern is germane here. The sanctions relief, 

and the scope is indeed enormous, it is certainly not a Marshall 

16 

Plan of the 1940s, which was $800 billion for all of Europe, but 

$100 billion for one individual country is still an awfully large sum 

of money. There is that concern that the money will, even if it is 

spent overwhelmingly on domestic affairs, will free up other dollars 

that will be spent on terror, perhaps significantly so. 

Chairman FITZPATRICK. Mr. Dubowitz, do you concur? 

Mr. DUBOWITZ. Yes. I do concur with Mr. Berman. I think that 

we also need to talk about economic relief. It is much more than 

$100 billion. It is much more than $150 billion. We are talking 

about economic relief that will allow Iran to sell 21⁄2 million barrels 

a day, which will increase its revenues $15 billion to $20 billion a 

year, open up its auto sector, which represents about 10 percent of 

the GDP of Iran, its petrochemical sector. We are talking about 

hundreds and hundreds of billions of dollars over time. 

Now, I agree with Mr. Berman and I agree with Mr. Nephew. I 

don’t think Iran is going to spend all of its money on terrorism. 

Iran will spend some of its money on terrorism. And a small percentage of hundred and hundreds of billions or dollars means that 

Iran can keep Bashar Assad in power for more time. It costs Iran 

about $6 billion a year, according to the U.S. Special Envoy on 

Syria, to keep Bashar Assad in power, not to mention the hundreds 

of millions of dollars available for Hezbollah and other terrorist organizations. 

But picking up on a point that Mr. Nephew made, the problem 

is that Iran is also going to spend its money on its economy, and 

not just on growth and diminishing unemployment but on economic 

resiliency. See, the Iranians learned from 2012, 2013, when we 

were hitting them with asymmetric shocks to their economy that 

plunged them into a severe recession; they don’t want to be in a 

situation again where their economy is fragile. So they will keep 

substantial foreign exchange reserves in place and build up the 

kind of resilience they need down the line so then when we try to 

snap back our sanctions, it will not have the kind of asymmetric 

impact that it had on Iran at that time. Economic resiliency is 

their rainy day fund. That is what they are thinking of down the 

line when they have an industrial size nuclear program with near 

zero breakout, and we try to use economic leverage in the future 

to peacefully enforce the deal. I believe we will diminish our peaceful enforcement of this deal. We will leave a future President with 

two options: Accept an Iranian nuclear weapon or use military 

force to forestall that possibility, which is why this deal makes war 

more likely, and when that war comes, Iran will be stronger and 

the consequences will be more severe. 

Chairman FITZPATRICK. Thank you. 

Mr. Perles, briefly, if you can, in the Beirut barracks bombing in 

1983, many of those marines were residents of the Commonwealth 

of Pennsylvania, and some of their families were constituents of 

mine. They have an open judgment against Iran for their connection. How do we bring closure to families like those? 

Mr. PERLES. It is a two-track process, sir. First, we have this $1.9 billion of illicit Iranian funds that we captured in New York. 

That money is almost ready for distribution. The Supreme Court 

has solicited the views of the Solicitor General of the United States 

with respect to the underlying statute that Congress passed to help 

17 

us get at those funds. The statute is facially constitutional. If the 

committee could ensure that the Solicitor General promptly issues 

its statement of issue to the Court affirming the constitutionality 

of that statute, we should be able to proceed with releasing those 

funds this fall. 

A second issue, and one that is far more serious from its implications, are what are referred to as movement of funds by book entry. 

That process can simply be described as, if you have a billion dollars in a bank account in New York and one day it is owned by 

a commercial company and the next day that billion dollars belongs 

to the Islamic Republic of Iran, but instead of moving money by 

SWIFT back and forth, you simply keep track of who is earning the 

benefit of that money by a book entry sitting in a bank in Luxembourg, you are able to entirely avoid sanctions. 

Chairman FITZPATRICK. Mr. Perles, I am out of time. Maybe we 

could get back to this in a second round of questioning if that is 

possible. 

But I want to recognize the ranking member of the task force, 

Mr. Lynch, for 5 minutes. 

Mr. LYNCH. Thank you, Mr. Chairman. 

And, again, thank you to all of our witnesses. 

Professor Heinonen, you have actually in the past been an IAEA 

inspector. Is that correct? 

Mr. HEINONEN. That is true. 

Mr. LYNCH. Okay. And from our earlier conversations—and I 

again thank you for your willingness to help the task force—you indicated that you have been on the ground in Iran previously with 

inspection responsibilities. Is that correct? 

Mr. HEINONEN. Yes. True. 

Mr. LYNCH. Okay. And tell me a little bit about that. How long 

were you there in Iran? 

Mr. HEINONEN. Actually, I have never counted the number of 

days I spent— 

Mr. LYNCH. Okay. 

Mr. HEINONEN. —but I went there for the first time actually in 

1986, and it was a very different era. 

Mr. LYNCH. When was the last time you were in Iran? 

Mr. HEINONEN. 2009. 

Mr. LYNCH. Okay. So you had a chance to see how the inspection 

protocols were. And I guess to try to simplify it for people, on a 

scale of 1 to 10, let’s say 1 is that the agreement is worthless, okay, 

and 10 means the agreement provides absolute security, where 

along the spectrum—you have had a chance to read this agreement 

now and sift through this and try to figure out what the inspection 

protocols and monitoring would provide. Where along that spectrum do you think you would—on a scale of 1 to 10, what is the 

value of this agreement in your estimation? I am trying to simplify. 

I’m sorry, but it is the best we can do. 

Mr. HEINONEN. Yes. It is a little bit difficult to give the rating 

yet because there are a few aspects of this agreement which I don’t 

know, like what is the real agreement between Iran and IAEA on 

this possible military dimension. 

Mr. LYNCH. The PMD— 

18 

Mr. HEINONEN. —so that is a little bit unknown here. And this 

is, then, to do with the setting of the baseline for the monetary. 

And then there are certain answers that are also, I think, still in 

the text with regard to the past activities on Iran, and that is why 

I urge that baseline there. 

Mr. LYNCH. Right. 

Mr. HEINONEN. If you have a poor baseline, then your 

verification system will get compromised, but with— 

Mr. LYNCH. Why didn’t we get that? 

Mr. HEINONEN. —information available today, I would rate it 

perhaps 7 or 8. 

Mr. LYNCH. Okay. Seven or eight. 

Mr. HEINONEN. Or higher. 

Mr. LYNCH. Okay. I appreciate that. 

Mr. Nephew, I noticed that in the agreement there are carve-outs 

here. If you look at the sanctions that are provided with relief, they 

are almost exclusively regarding nuclear activity. They are sanctions that were put in place because of past nuclear activity and 

nuclear research, uranium enrichment, things like that, that Congress and the U.N. and the EU and the President of the United 

States have put in because of nuclear activity. 

I don’t see any lifting of sanctions regarding terrorism or funding. And, look, no question about it, Iran has funded Hezbollah, 

has funded Al—not Al Qaeda, they are Shia—they are Sunni, rather—but has funded Hamas, has funded Islamic Jihad and others. 

So I am not coating that over in any sense, but the agreement is 

focused on the nuclear activity and not on the so-called terrorist 

funding activity. Is that correct? 

Mr. NEPHEW. Yes, sir, that is correct. 

Mr. LYNCH. Is there anything to stop us from maintaining the— 

I had a chance to talk to Mr. Szubin over at Treasury, who sort 

of rides herd on all of these financial sanctions, and he tells me 

that they are going to stay in place. Is that your understanding? 

Mr. NEPHEW. Yes, sir, that is my understanding. 

Mr. LYNCH. Okay. And would anything in this agreement stop us 

from, if we saw money going from the central bank to any of these 

groups, we could put sanctions in place against the Central Bank 

of Iran if we saw further violations of terrorist financing provisions? 

Mr. NEPHEW. Yes, sir. That is a possibility. I think the big issue 

at that point will be what the Iranian response would be to that. 

They have the ability to say that they think that kind of sanction 

would violate the terms of the deal because it would imperil the 

rest of their relief, but we have not ceded any ability whatsoever 

to impose sanctions with respect to our terrorism, human rights or 

other related authorities that are outside of the nuclear arena. 

Mr. LYNCH. Okay. Thank you. 

I have 6 seconds left. I will just yield back my time. 

Thank you, Mr. Chairman. 

Chairman FITZPATRICK. I now recognize the vice chairman, Mr. 

Pittenger, for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Mr. Perles, you stated in your testimony that your representation of victims for you and your legal group has enabled $1.9 billion. 

19 

Mr. PERLES. Yes, sir. 

Mr. PITTENGER. Given that you said that would be a deterrent 

toward future actions, considering Qadhafi and the bombings of 

Lockerbie and La Belle, that perhaps you would be thinking about 

future efforts. 

With that in mind, with this agreement it appears what we have 

done on these cases with these victims is basically wipe out this 

agreement, the result being that these funds would no longer be accessible. Is that a concern to you that they would not be able to 

receive the judgments repatriated back to them and be accessible? 

Mr. PERLES. It is a serious concern to us. As I said to Mr. 

Fitzpatrick, it would be very helpful if the committee could ensure 

that—speaking again for the Beirut Marine barracks bombing families—$1.9 billion remains available as an asset. Those funds are 

no longer with the Islamic Republic of Iran— 

Mr. PITTENGER. The future funds won’t be accessible if the case— 

Mr. PERLES. Future funds could be a very serious problem. There 

are no future funds currently in the United States. Were we to go 

out and try and reach funds outside the United States—and we are 

trying to do that currently in Italy—I can tell you that we have not 

received a warm reception overseas from governments that like to 

trade with the Iranians. 

In our enforcement activities for the Flatow, Eisenfeld, and 

Duker case in Italy, where I suspect a lot of this $100 billion will 

go, as they are Iran’s largest trading partner in the EU, the Italian 

foreign ministry has formally entered our proceeding against the 

Iranians in objection to our domestication of the Flatow, Eisenfeld, 

and Duker terror victim judgments in Italy. If the Italian courts 

abide by the request of their foreign ministry, essentially, these 

judgments become non-entities in Italy and probably the rest of the 

European Union. 

Mr. PITTENGER. Thank you for that. 

Mr. Dubowitz and Mr. Berman, we have provided, repatriated 

back to Iran $700 million a month; in the last 16 months, $12 billion. We certainly see their footprint throughout the Middle East, 

in Yemen, and Syria, and Iraq. Now they are going to have access 

to substantially more money than that. It will be an enormous 

challenge for the Financial Action Task Force (FATF) and our 

Treasury working with other governments to track these funds as 

they go through the financial system, through the 47 financial institutions there in Iran and their capacity through money laundering. 

What advice—where do you think we should go? Given that this 

could very well be the case, what do you recommend we could do 

to enhance the role of—encourage the role of FATF, the 34 nations 

that work together and the role of Treasury? We are going to have 

a lot more money accessible for terrorism financing. 

Mr. DUBOWITZ. Congressman, my recommendation would be that 

Treasury should submit to House Financial Services an Iran sanctions rehabilitation program with benchmarks that the financial institutions and the Central Bank of Iran have to meet before they 

are allowed back onto SWIFT. Because here is the problem that 

Mr. Nephew is not telling you about: The problem is the Central 

20 

Bank of Iran is going to go back to SWIFT, so are dozens of Iranian 

banks. 

It would be virtually impossible for us to de-SWIFT those banks 

again, because the head of VTB bank in Russia, when the British 

were talking about de-SWIFTing Russian banks, called that an act 

of war. The Iranians will call that an act of economic war. And 

what they will do is they will use their nuclear snapback in this 

agreement to claim that the reimposition of those sanctions and the 

de-SWIFTing of the Central Bank of Iran and other banks constitutes a violation of this agreement. 

Now, we might say, that is not true. It is non-nuclear. It is terrorism. We have the absolute right to do this. But the problem is 

that the Iranians will then intimidate the Europeans, and they will 

say that we will walk away from the agreement, we will engage in 

nuclear escalation because the de-SWIFTing of our banks is an act 

of war. We will never get the Iranian banks off SWIFT again. It 

took an act of God to get them off in the first place. We will never 

get them off again. 

Now, once they are plugged back in the formal financial system—and by the way, we have not required them to actually rehabilitate. There is no indication that they are no longer engaged in 

illicit financial activities. And by the way, it wasn’t just nuclear. It 

was ballistic missiles. It was terror financing. It was money laundering. It was sanctions evasion. 

That is the reason the Central Bank got designated in the first 

place, designated by Treasury, in a 311 finding. It wasn’t just nuclear, Ranking Member Lynch. It was actually a range of illicit financial activities that constituted the basis for that designation in 

the first place. 

And so what we have done, essentially, is we have swept all of 

that away for a nuclear deal, and we are allowing all of these 

banks back onto SWIFT to plug back in the formal financial system 

without actually having any indication that they have been rehabilitated. So if I were House Financial Services, I would require 

Under Secretary Szubin in the U.S. Treasury Department to 

present a rehabilitation plan to you with specific benchmarks, and 

to demonstrate to you on a timely basis over time that these banks 

are now rehabilitated banks, and only then should they be de-designated and put back onto SWIFT, because once they are on 

SWIFT, we are not getting them off SWIFT ever again. 

Mr. PITTENGER. Thank you. I yield back. 

Chairman FITZPATRICK. The gentleman’s time has expired. 

The gentleman from California, Mr. Sherman, is recognized for 

5 minutes. 

Mr. SHERMAN. Thank you. 

This deal has the good, the bad, and the ugly. The good and the 

bad happened the first year. We get rid of the stockpiles. We decommission two-thirds of the centrifuges. The bad, you witnesses 

have already commented on, they get their hands on tens of billions of dollars. The ugly is next decade when they could have such 

an enormous nuclear program that in the words of the President, 

their breakout time would be basically zero. 

So the question, at a minimum, is how do we put ourselves in 

the position where we force a renegotiation of this deal before we 

21 

get to the ugly? There is a natural tendency for—and the witnesses 

have done this. I tend to do it—is to grade the deal, as if we are 

pundits trying to say whether the President did a good job or not. 

And that is a wonderful use of time, but we don’t have a time machine to go back to June 2015. 

And pundits get to do that, but we have to decide how to vote. 

We have three possible votes coming up. One is a vote to approve 

the deal. That has a 0.0 percent chance of passing. If it did pass, 

it might morally bind future Administrations to the deal. So we are 

not going to do that. The deal is an executive agreement, which is 

below an executive legislative agreement, which is below a real 

treaty. 

So this is the weakest possible exchange of notes among the Executive Branch. And if, God forbid, we were to vote to approve this, 

and maybe somebody could claim it was an executive legislative 

agreement, but we won’t and it isn’t. But the real issue before us 

is whether we vote to disapprove and whether we override. And 

one of the reasons not to vote to disapprove is because we will 

probably fail to override. 

And then we are going to be in a circumstance where we are telling the world Congress has not ratified or endorsed the agreement, 

and the proponents are showing a picture of themselves celebrating 

our failure to override the veto. So the last vote will be a victory 

for the 34 percent or the 40 percent who vote not to override. That 

is confusing to the world. So I am hoping that instead we just vote 

on a resolution to approve and vote it down. 

But if we do override, that has real, legal binding effects. We 

were in the classified hearings, and now I am here trying to figure 

out what those effects would be. Legally, what it does is it restores 

the sanctions and deprives the President of his authority to waive 

the sanctions. Those sanctions are not sanctions on Iran. Those are 

sanctions on British and French and Japanese and Indian banks. 

Those are sanctions against Italian and Russian and Chinese oil 

companies. It is easy to say we want to sanction Iran. Start asking 

people if they want to sanction French banks. 

So the question is how other countries react if we try to sanction 

their businesses for doing something our President says is a reasonable thing to do, which is, do business with Iran as long as they 

are following the agreement that Congress may very well repudiate. 

So, Mr. Berman, how are the French, the Italians, the Japanese 

going to react if Congress wants to punish their banks and cut 

them off from the most important financial banking sector in the 

world, because those banks dared to participate in transactions 

which the President of the United States says are legitimate and, 

oh, by the way, are profitable for the home country? 

Mr. BERMAN. Sir, in a word, not well. And I know you led me 

to that answer, but if you remember, earlier this year, I had the 

privilege of— 

Mr. SHERMAN. Could they kowtow? Politically, could they kowtow? Could they say, look, we are announcing that we are going to 

prevent our banks from doing these transactions, prevent our companies from doing these transactions? 

Mr. BERMAN. Yes. 

22 

Mr. SHERMAN. The President of the United States thinks they 

are reasonable. We think they are reasonable. We think they are 

profitable. But Congress is so powerful that we are going to prohibit our companies from engaging in reasonable and profitable 

business. 

Mr. BERMAN. Sir— 

Mr. SHERMAN. Could an Indian—could Moby do that? Could Abi 

do that? Politically, even if they wanted to, could they go to their 

people and say we are kowtowing the Congress? 

Mr. BERMAN. I think Mr. Dubowitz will have some input as well, 

but my amateurish interpretation of this is absolutely they could, 

provided there is political will to actually enforce those sanctions 

and enforce those measures. Because as we have discussed before, 

one of the bipartisan failings of Iran’s sanctions up until this point 

is that while there are the legislative means to sanction these 

banks for engaging in this commercial activity with Iran, what we 

have been lacking on both sides of the political aisle has been the 

political will to truly enforce. 

Mr. SHERMAN. If I can just sneak in one comment. We were just 

in a classified briefing and a nonclassified non-answer was, I asked 

the Administration whether they would follow the law, and under 

those circumstances, punish those banks, and the answer was a 

deafening non-answer. So it is, by no means, sure that the President would impose those sanctions, let alone that our trading partners would adhere to them and we accede to them. 

And I yield back. 

Chairman FITZPATRICK. The gentleman’s time has expired. 

The gentleman from Florida, Mr. Ross, is recognized for 5 minutes. 

Mr. ROSS. Thank you, Mr. Chairman. 

And I want to thank the witnesses for being here. 

Mr. Berman, you spoke in your opening statement about the use 

of funds to be funneled as they have been for such things as building Iranian regime contacts. For example, I think you said that 

they put $6 billion annually into Bashar al-Assad’s coffers, and 

that we are continuing to fund, or they are continuing to fund 

Hezbollah, continuing to fund Hamas, Houthis. We had some witnesses testify before this task force sometime ago who essentially 

stated that Iran was the central bank of terrorism. 

And so what we are now about ready to do if this deal is effec- tuated is to allow for an increase anywhere from $100 billion to 

$150 billion of frozen assets, accounts, and then to channel this 

money through the same infrastructure that has been there to fund 

state terrorism. Now, it seems to me that we have allowed, or at 

least the premise of this negotiation has been, let us not have an 

Iranian nuclear weapon capability, but let us do so at the expense 

of expanding international and global terrorism. 

And to that end, I ask, what are we to expect? Are we to expect 

that now those missiles that were funneled down into Gaza are 

going to be more sophisticated? What are we going do expect with 

regard to the missile defense system that now will be sold from 

Russia to Iran? Are we here just basically saying that we have licensed the management of nuclear capabilities in Iran totally at 

the expense of expanding terrorism throughout this world? 

23 

Mr. BERMAN. Sir, I think you hit upon what I believe is a crucial 

point, which is that when we begin looking at this agreement, one 

of the, I believe, most sober ways to approach it would be to look 

at the consequences and whether or not the United States has the 

political, economic, and strategic tools to manage the consequences 

that are likely to flow from it. Obviously, increased funds allocated 

to terrorist proxies of the Islamic Republic is a tremendous concern. 

Mr. ROSS. And it is going to happen, as a matter of fact. Let’s 

just look at history. It has happened. And now let’s look at the history of our relationship with Iran. The only thing that we have to 

rely on to make sure that this deal is effectuated as it is written, 

quite frankly, is the trust of Iran. And so, let’s look at the history 

with Iran. Let’s see, since 1979, on every November 4th, they proclaimed Death to America Day. 

Just recently, within the last year, they put a mock battleship 

out in the Persian Gulf and had that attacked and sank in the 

name of destroying the United States. So essentially, we have negotiated a deal that says that we are going to have to trust Iran, and 

yet we are going to have to trust them through a third party. So 

have we managed our consequences to this point? And if not, what 

in history has given us any indication that this was a deal that we 

should have negotiated? 

Mr. BERMAN. I don’t believe we have. And in my opening remarks, I made the point that although the premise that the White 

House has put forward for the deal is transactional in nature, that 

it is limited, it is limited to the Iranian nuclear program, the way 

we have gone about negotiating this, and the things that we have 

put on the table, including massive sanctions relief as a result— 

Mr. ROSS. And the sanctions have worked. The sanctions have 

worked. 

Mr. BERMAN. They have. But the ability to rehabilitate the Iranian economy and provide additional aid to terrorist proxies of the 

Islamic Republic is a function of the fact that we are looking at this 

deal privately, aspirationally, the idea that Iran will turn over a 

new ideological leaf as a result of these negotiations. 

Mr. ROSS. And if there is a violation by Iran, the realistic expectation of snapback sanctions is not realistic at all, is it? 

Mr. BERMAN. I think there are many technical reasons to be very 

skeptical of snapback, but maybe the most important is the fact 

that, as former Secretary of State Henry Kissinger has written 

about in several books, as you become deeply enmeshed in negotiations, such as the ones that we are engaged in today, you become 

a vested stakeholder. And bad consequences— 

Mr. ROSS. Exactly. 

Mr. BERMAN. —are actually worth— 

Mr. ROSS. You do it for the sake of having a deal, not for the 

sake of the substance of the deal that would have benefited you 

had you stayed to your principles at the outset. 

Mr. Perles, really quickly, what did the Administration use to determine what were considered sanctions for nuclear violation, terrorist violations? I just ran out of time, I think. 

Mr. PERLES. Simple answer to your question: I remain totally befuddled. I have no idea. 

24 

Mr. ROSS. I agree with you. 

Thank you. I yield back. 

Chairman FITZPATRICK. The gentleman from Texas, Mr. Green, 

is recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

I thank the ranking member as well. 

You never know who is tuned in to these hearings, and for this 

reason, if by chance a family member of someone who is being held 

hostage is tuned in, I would like to make it very clear that we are 

still working to get them returned, those who are being held hostage. And while we talk about transactions and all of the various 

ramifications of a deal, we have not forgotten them, and that is, I 

think, important for us to say. 

Mr. Nephew, I notice that you are making notes and your name 

has been mentioned on more than one occasion and you have not 

had an opportunity to respond. Do you have something that you 

would like to say in response to some of the things that have been 

said and directed toward you? 

Mr. NEPHEW. Thank you, sir, for the opportunity. 

I would say just a couple of things to preserve your time. First 

off, I think there are some distinctions about the way in which 

sanctions were applied against the Central Bank of Iran that are 

relevant here. The United States did not impose a designation on 

the Central Bank of Iran in the traditional sense, in part, because 

we recognized the dramatic economic implications that could result 

from that. 

Instead, we took sanctions decisions that were intended to clamp 

off their ability to get access to oil revenues. It is a very unique 

way of doing business. We also imposed sanctions that dealt with 

basically stigmatizing the Iranian financial system for terrorism, 

money laundering related reasons. So as far as I am aware, none 

of those implications are lifted as a result of this deal. 

Now, there are people out there who will still sell oil or buy oil 

from Iran and transact with the Central Bank of Iran, but we have 

not given a green light to believe that the Central Bank of Iran is 

a good institution, or institution that is not involved with respect 

to terrorism or money laundering or any of these other things that 

they are involved with. 

The reality is, though, if you are going to get a nuclear deal with 

Iran, they are not going to do it without real sanctions relief, without real economic sanctions relief. And the decision that was made 

by the Administration—and, again, I think it was a good decision— 

was that getting 10 to 15 years of real distance from Iranian nuclear weapons breakout was worth dealing with a future consequence of Iranian economic revival. 

I should also note too, on this issue of $100 billion to $150 billion, I think it is an impression that it was a savings bank that 

was opened up for the Iranians, and it is money that is pouring in 

that we can’t wait to give back to the Iranians. You should bear 

in mind that this is Iranian money that we have been restricting 

from them that they have not been able to use. It is for this reason 

that they had the economic downturn that Secretary Lew spoke 

about earlier. 

25 

So I think the bottom line is the Iranians do have a lot of things 

they need to do with this money. It is not a gift from U.S. taxpayers and it is not manna from heaven for them. 

Mr. GREEN. Mr. Nephew, you have some knowledge of this. Were 

you associated, in any way, with these negotiations? 

Mr. NEPHEW. Yes, sir, I was the lead sanctions negotiator starting in August of 2013 until I left the government in December of 

2014. 

Mr. GREEN. And is it your opinion that we can or cannot reopen 

the negotiations? 

Mr. NEPHEW. Sir, I do not believe that we can reopen these negotiations. I believe that to do so, or to attempt to do so, would cripple us in those negotiations, particularly dealing with countries like 

Russia and China, not even to mention our European partners. 

Mr. GREEN. I believe there are others who have opinions that differ, so I would like to give some equal time. Let’s see, Mr. 

Dubowitz, you have an opinion that varies from this, I believe? 

Mr. DUBOWITZ. Thank you, Congressman. 

I think there is an alternative because President Obama always 

said there was an alternative. He said that no deal was better than 

a bad deal. And the President is a responsible Commander in Chief 

and a responsible executive, and he went to these negotiations 

knowing that he had an alternative to this deal. And I believe that 

we agree with the President; he has an alternative. The alternative 

is to use American power, including U.S. secondary sanctions, in 

the context of the U.S. Congress asking this President to negotiate 

a better deal, particularly around snapbacks and sunset provisions. 

Now, if the President doesn’t believe in the power of the U.S. secondary sanctions, if his argument is that if you vote down this deal, 

the sanctions regime will crumble, then, unfortunately, there is no 

power in the economic snapback because the economic snapback actually depends on the power of the U.S. secondary sanctions to 

send a message of fear to the marketplace, so that financial institutions and energy companies at 7, 8, 9, 10 years when they have 

sunk in hundreds of billions of dollars back into the Iranian economy—by the way, contracts that are grandfathered—that they will 

respond by moving out of the Iranian economy. 

So the President can’t have it both ways. Either there was an alternative to this deal, in which case he was a responsible negotiator who went in with the best alternative negotiated agreement, 

or there is no alternative to this agreement, in which case he negotiated with the Iranians without an alternative. 

Either U.S. secondary sanctions are powerful, in which case, 

Congressman Sherman, they will survive if Congress votes no, because, ultimately, they send a message to companies and financial 

institutions based on risk and reputation who will not want to go 

back into Iran, given the power of U.S. secondary sanctions; or they 

are not powerful, in which case we are going to have a really significant problem on our hands down the line when Iran has an industrial-size nuclear program with near zero breakout, significant 

economic resilience, and the banks are all back on SWIFT and we 

try to go back in order to try and impose sanctions. 

Chairman FITZPATRICK. The gentleman’s time has expired. 

26 

The gentlelady from Missouri, Mrs. Wagner, is recognized for 5 

minutes. 

Mrs. WAGNER. Thank you, Mr. Chairman. 

And I want to thank the panel for being here today. I have to 

say that I find all of your comments much more enlightening and 

informational than the classified briefing that we just attended, by 

a thousandfold. 

It is an absolute fact that the cumulative effect of western sanctions on Iran is a reason that Iran finally came to the negotiating 

table. These sanctions have led to a 15 to 20 percent decline in 

Iran’s GDP since 2010, and have driven down Iran’s crude oil sales 

by some 60 percent. Yet, while Iran’s economy has significantly declined, their investment in terrorism groups and in regional, I will 

say, proxy militias engaged in conflict has remained the same, if 

not, increased. 

Iran has continued to support, as we have heard from everyone, 

on both sides of the aisle, Hezbollah and Hamas. They have involved themselves in conflicts in Egypt, Syria, Yemen, and Iraq, 

and have successfully been promoting further instability throughout the region. It would seem logical to say that if Iran could find 

the resources to support terrorism and regional turmoil while 

under the intense pressures of economic sanctions, as they have 

been, they will continue to do so under this deal, if not to a greater 

extent, due to their increased access to financial resources. 

In fact, it was National Security Advisor Susan Rice who admit- ted that some of that $150 billion that Iran will receive will be 

spent to support international terrorism. I don’t think anybody disagrees with that. However, there are some in the Administration 

who have indicated that they believe Iran will steer this additional 

funding into its own economy. 

Mr. Dubowitz, how likely is it that funding will be steered towards military proxy groups engaged in destabilizing conflicts in 

the east, including Iraq? 

Mr. DUBOWITZ. Congresswoman, it is very likely that they will 

spend money on terrorism in supporting Assad. It’s also very likely 

that they will spend money on economic resiliency. And I think, unfortunately, the conversation, the debate is getting lost, because 

economic resiliency from our perspective is a very, very bad thing. 

Because economic resiliency means that Iran can fortify its economic defenses against future economic pressure. 

Now, Dr. Heinonen has spoken about verification inspection, but 

a verification inspection is only as good as enforcement, and the 

IAEA does not enforce. The United States of America enforces. So 

it will be the United States of America that will enforce this deal 

against Iranian stonewalling and cheating. 

And if we have lost our ability to use peaceful economic leverage 

to enforce this deal, the Iranians will therefore cheat incrementally, 

daring us to respond for them using military force. No President 

will use military force against incremental cheating. And Iran will 

have the ability not just to break out or sneak out to a bomb, but 

to inch out to a bomb. 

Mrs. WAGNER. The United States will only have secondhand 

knowledge of Iranian facilities, to be perfectly honest, as we will 

not and cannot be directly involved in the process of monitoring or 

27 

of verification. Oh, I wish I had an hour to visit with each and 

every one of you. 

I understand Iran’s status as a state sponsor of terrorism was 

not part of this deal. Do you believe, Mr. Berman, that Iran will 

seek to be removed from the state sponsor of terrorism list? 

Mr. BERMAN. Ma’am, I don’t think, necessarily, that is a proximate goal, although it is certainly something that, provided the 

politics, the political wind shift in that direction, may be raised 

with regard to Iran. 

Where I think we enter the zone of danger with regard to increased Iranian sponsorship of terrorism as a result of the JCPOA 

is precisely the fact that under the current structure of the deal, 

and under the current mechanisms in the hands of the U.S. Treasury Department, the Financial Action Task Force, and other bodies 

that are tasked with overseeing this, we simply don’t have mechanisms that allow us to provide responses that are short of walking 

away from the table. 

In other words, there are no scalable responses to Iranian cheating. And, as Mr. Dubowitz said, Iran is far more likely to inch out 

of its obligations with regard to the deal than to break out and 

make a sprint for the bomb. And as a result, what we have is we 

have a scale problem. Currently, we don’t have the ability, short 

of abandoning the process altogether, to exact tactical punishments 

from the Iranians for instances of malfeasance, including additional 

funding for terrorism. 

Mrs. WAGNER. Mr. Berman, as I am running out of time—and let 

me just say this: Mr. Dubowitz, I am very interested in your discussion about the rehab plan and the Central Bank of Iran. I spent 

4 years as United States Ambassador to Luxembourg from 2005 to 

2009. I am very, very familiar with the Central Bank of Iran, and 

I would consider one of the most important things I have ever done 

in my entire life was to stop terrorist financing from being 

laundered and sent through the Grand Duchy of Luxembourg. 

So I am very interested in your thoughts on SWIFT and the 

rehab plan, and I would love to pursue that with you in the future. 

I am sorry about my time. I yield back, Mr. Chairman. 

Chairman FITZPATRICK. The gentlelady’s time has expired. 

Mr. Himes of Connecticut is recognized for 5 minutes, with advice to the members of the task force, we are in the middle of the 

vote. So at the conclusion of Mr. Himes’ questioning, we will go into 

recess. We will reconvene at approximately 6:35 for the remainder 

of the questions. 

Mr. Himes? 

Mr. HIMES. Thank you, Mr. Chairman. 

This is clearly a challenging decision for the Congress. It is the 

opposite of a black-and-white decision. If there is anybody who is 

under the misapprehension that this is an easy call, I think that 

speaks more to their credibility and bona fide than it speaks to 

their understanding of what is a very, very complicated thing. 

And to illustrate that, this hearing, the undercurrent of this 

hearing is how shocked we are to learn that as a result of this deal, 

Iran may get some money. There is a little controversy over how 

much money: the figure of $100 billion to $150 billion keeps being 

bandied about. I will let those of you who are saying $100 billion 

28 

to $150 billion work this out with the Treasury Secretary. He estimates the money at $56 billion. 

Setting that aside, we are shocked that this terrorist regime is 

going to get money. Folks, this was the deal. We voted for the sanctions for the express purpose of taking away the money to force 

them to the table to negotiate the deal. Now, we may agree that 

the deal is good or bad, but to negotiate the deal whereby they 

would get that money back. And now we are shocked, shocked to 

learn that this bad regime is getting the money back. 

Now, bad regime, we get it. We know that. I am on the Intelligence Committee. I see that day in and day out. You do these 

deals with bad regimes. In the 1970s and the 1980s, we did these 

deals, these similar nuclear deals with China and with Russia at 

a time where I would daresay they were probably both committing 

things that would qualify as crimes against humanity. But we do 

these deals not with our friends but with our enemies. 

And context is important here, because we find ourselves with a 

deal. It turns out when you negotiate with Persians, you don’t get 

everything you wanted. You have a deal with some things that 

make you uncomfortable. But what about the history of deals? Yes, 

there was the Algiers agreement whereby we freed some hostages. 

We haven’t mentioned, by the way, the deal that was struck by 

the Reagan Administration in 1985, 2 years after the Marine bombing killed over 200 Marines, whereby the Reagan Administration 

provided conventional arms to Iran so that hostages would be released so that U.S. law could be violated to fund the contras, violating the Boland Amendment. 

George W. Bush tried to strike a deal in which there would be 

no enrichment. That deal fell apart and we found ourselves with 

19,000 spinning centrifuges. So the question I have—and the idea 

is that context is important. This isn’t a great deal. You don’t get 

a great deal in situations like this. I personally believe that the 

idea that we can just shut it all down—and the President’s coming 

under a lot of criticism here. The Russians, the Chinese, the U.K., 

French, the EU, this was a P5+1 deal. 

My question is—and I haven’t gotten a good answer on this. I 

have 2 minutes left—if we unilaterally say no to something that 

the world negotiated, that the Security Council has endorsed, that 

the EU has endorsed, what scenario results in us being in a better 

position than the position of having 15 years—and I understand 

they may cheat—but 15 years in which we have some confidence— 

unless they cheat—that they are not building a bomb? What happens that puts us into a better place than we are in if we accept 

this deal? 

I just open that up for a scenario that is better than accepting 

the deal. 

Mr. DUBOWITZ. Congressman, first of all, this is not a 15-year 

deal, and it is not even a 10-year deal. You have to look at this 

deal not through the prism of nuclear physics. You have to look at 

this deal through the prism of Iranian economic, conventional, and 

military power. The Iranians have negotiated an agreement that in 

terms of their deal structure, it is front-loaded. 

Mr. HIMES. But you do agree, this is a nuclear deal? 

29 

Mr. DUBOWITZ. That is not a nuclear deal. We are lifting the 

arms embargo. We are lifting ballistic missile restrictions, so it is 

not just a nuclear deal. 

Mr. HIMES. Got it. But from the standpoint of developing a nuclear weapon, the centrifuge and the enriched uranium is, in fact, 

a 10- to 15—unless they cheat—there is a 10- to 15-year period in 

which there is high confidence and high visibility that they are not 

building a bomb, right? 

Mr. DUBOWITZ. Actually, I don’t think that is true at all. 

Mr. HIMES. Why not? 

Mr. DUBOWITZ. In fact, by year 81⁄2, they begin to develop advanced centrifuges. By year 10, they begin to enrich at the Natanz 

facility and install a limited number of sanctions— 

Mr. HIMES. But they can enrich above 3.67, right? 

Mr. DUBOWITZ. No. What they have done is they have phased 

this so they can start introducing on an industrial scale advanced 

centrifuges. So right at year 15, they can actually enrich not to 

3.67 percent, not to 20 percent, but to 60 percent, because they will 

use that as justification that they are going to have a nuclear-powered navy. 

So what the Iranians have done is they have front loaded the 

sanctions relief; they are getting the arms embargo lifted, the ballistic missile restrictions lifted; they are fortifying their regional 

presence; they are getting back in the formal financial system; and 

they have negotiated themselves a patient pathway to a bomb. 

So when that pathway actually comes—because we are not cutting off the pathways, we are delaying them and then we are expanding them—when it finally comes, Iran will be much stronger 

economically from a nuclear perspective, from a ballistic missile 

perspective, regionally, and with respect to terror financing and its 

proxies. 

So when it comes, Congressman, the problem is is we are in a 

worse situation because we now have a hardened regime with an 

industrial-sized nuclear program at near zero breakout, which 

means it is undetectable breakout. And they have multiple enrichment facilities buried in an amount and looking like Fordow. And 

then we have a problem on our hands. Now, the problem on our 

hands at that point is we have no other peaceful way to stop them, 

which is why this deal, in my opinion, is going to lead to war. And 

it will make war more likely. 

The other thing that I want to take issue with is we didn’t put 

these sanctions in place to respond to Iran’s nuclear program. The 

U.S. Treasury Department, over two Administrations, said these 

were conduct-based sanctions. Your task force is about illicit financial conduct. Your task force should be very concerned that we are 

lifting sanctions on the Central Bank of Iran and letting all these 

banks back onto SWIFT despite to think none of these banks have 

been rehabilitated from an illicit financial perspective. That is a 

concern. 

Chairman FITZPATRICK. The gentleman’s time has expired. I appreciate it. 

I ask unanimous consent—I know we said we are going to go to 

recess. The House Foreign Affairs Committee chairman is here, Mr. 

30 

Royce, who would like to be recognized. Without objection, Mr. 

Royce is recognized. 

Mr. ROYCE. Thank you, Mr. Chairman. 

To get a clear sense of the consequences of Iran’s support for terrorism, I just wanted to give the task force one horrific example. 

On January 20, 2007, a convoy of SUVs cleared several checkpoints 

to reach a government compound that included our American security team. Once inside the base, the vehicle occupants, who were 

wearing U.S. uniforms provided to them, and speaking English, by 

the way, fatally shot one soldier, and they kidnapped four other 

U.S. soldiers. 

With U.S. and Iraqi forces in pursuit, these Iranian-supported 

militias executed our four soldiers in cold blood. One was the father 

of two small children from southern California. Hezbollah, the 

Quds Force, and their Shia militia proxies were behind this attack. 

And shortly after, U.S. forces apprehended Ali Musa Daqduq, senior Hezbollah operative, who, together with the IRGC, masterminded that particular attack. 

Unfortunately, the current Administration did not retain custody 

of this individual, and an Iraqi court released him in 2012. And the 

point is this: There are many amongst the IRGC who have had to 

operate under the restrictions that sanctions have placed on them. 

And sanction are being lifted. But they remain committed to harming the United States. And I don’t take their chants of ‘‘Death to 

America’’ as an idle threat. 

As part of the nuclear agreement, the Obama Administration is 

committed to bringing the Central Bank of Iran, and a number of 

major Iranian financial institutions back into the global financial 

system, a financial system that is much different today than the 

one that Iran knew in 2012, between the increase of 

cryptocurrencies and the increase in the use of non-banks, our 

vulnerabilities to Iran’s terror finance apparatus have increased. 

And our legislative and regulatory structures have not been adjusted for some time, and my concern is that their effectiveness is 

beginning to decline. 

So my question to Mr. Dubowitz and to Steve, to Mr. Perles as 

well is, what specific measures would you recommend Congress 

take to effectively address these vulnerabilities? 

And I will add one other question to you, Steve, Clearstream, a 

known money launderer for Iran is still moving Iranian money out 

of New York to Luxembourg through an illegal book entry system 

to keep the Beirut Marines, the families of those Marines, from enforcing their judgment. In your experience, what is OFAC doing 

about this kind of book entry based laundering for Iran? 

If you don’t have time to finish this, by the way here, we could 

have it for the record. But Mr. Dubowitz and Mr. Perles, if you 

would like to give it a shot. 

Mr. DUBOWITZ. Thank you, Chairman Royce. 

You are exactly right. Europe is going to become a Revolutionary 

Guards economic free zone. The Europeans are lifting sanctions on 

the Revolutionary Guards and the Quds Force. Iran’s Revolutionary Guard and Quds Force can now operate much more freely 

in Europe. 

31 

What would I do? First, Congress should require that the IRGC 

be designated as a foreign terrorist organization. It should also be 

designated under Executive Order 13224 for directing and supporting international terrorism. The IRGC is only designated for 

proliferation purposes under U.S. law. 

Second, as I mentioned earlier, Chairman Royce, this task force 

and Congress should require Under Secretary Adam Szubin to 

present a rehabilitation program to you with specific benchmarks 

to explain how these financial institutions, including the CBI, will 

be rehabilitated, and to demonstrate to you that they are no longer 

engaged in a full range of illicit financing. 

Mr. ROYCE. Thank you, Mark. 

Steve? 

Mr. PERLES. Thank you, sir. 

Let me start by saying that the Karbala attack that you referred 

to in Iraq is one of my cases, and I promise you, sir, I will see that 

case through to the end. The Department of Defense issued POW 

medals to each of these servicemen and, of course, they were presented to their families. No nation, let alone Iran, gets to take a 

U.S. serviceman into POW status and extrajudicially execute them. 

I promise you, sir, I will see that case through to the end. The conduct there is patently offensive by any standard. 

Mr. ROYCE. And I think we better get the rest of the answer for 

the record in writing. 

And, Mr. Chairman, I think you and I better make tracks to that 

vote right now. Thank you. 

Thank you, sir. 

Chairman FITZPATRICK. The task force is in recess. We appreciate the perseverance of the witnesses. We will be back at approximately 6:35. Thank you. 

[recess] 

Chairman FITZPATRICK. This hearing is called back to order. We 

appreciate the perseverance of the witnesses and your testimony 

today. 

Mr. Rothfus of Pennsylvania is recognized for 5 minutes of questions. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Again, i thank the panel for sticking with us through that series 

of votes. And I apologize for your inconvenience, but thank you for 

being here. 

I want to talk a little bit about the idea of the intermingling of 

the types of sanctions; nuclear, nonnuclear, ones that were directed 

towards terror. I am looking at a report that the Bipartisan Policy 

Center put out last week. And they noted that throughout negotiations with Iran, the position of the United States has consistently 

been that it would only lift nuclear-related sanctions as part of a 

final agreement. 

Given the complexity of the U.S. sanctions regime and numerous 

overlapping reasons for which sanctions have been placed on Iran, 

distinguishing between those measures which are and are not nuclear-related would pose a significant challenge to the deal’s implementation. 

They continue with their analysis, and they say out of more than 

800 entities listed for sanctions relief under the JCPOA, the BiparVerDate Nov 24 2008 16:01 Sep 22, 2016 Jkt 097157 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\97157.TXT TERI
32 

tisan Policy Center analysis finds the total of at least 81 agencies, 

companies and persons, that were sanctioned for reasons that are 

either explicitly nonnuclear or could be contested as nonnuclear, 

these include entities that have been involved in developing ballistic missile systems, weapons smuggling, supporting terrorism, 

and violating human rights. Under a strict interpretation of what 

constitutes nuclear-related sanctions, these entities should not be 

subject to sanctions relief. 

Mr. Dubowitz, I wonder if you want might want to comment on 

that and give and me your opinion of how much of an issue this 

is? 

Mr. DUBOWITZ. Thank you, Congressman. I think it is a big 

issue. And I think what the Administration has done is that they 

started to try to recharacterize nonnuclear sanctions as nuclear 

sanctions so that they could provide sanctions relief under the 

JCPOA. Let me give you an example. Ballistic missile financing 

was considered to be a separate example of illicit conduct. And so, 

there are a number of designations of Iranian banks. The designation of the Central Bank of Iran included in its—on its predicate, 

the financing of ballistic missiles, but the Administration had a 

problem, which is that the Iranians were demanding negotiations 

that a number of these entities be de-designated, including the 

Central Bank of Iran. And so what they have done is they have 

taken ballistic missile financing, and they have recharacterized 

that as nuclear financing. 

Mr. ROTHFUS. You might think you would have gotten a concession if you are releasing a terrorism-related sanction or a missilerelated sanction, that you would have gotten a commitment from 

Iran, for example, that they stop exporting terror. 

Mr. DUBOWITZ. That is true. But what we have to be careful of 

here is because the Administration is saying, we retain the rights 

to designate on terrorism and human rights ground. But the fact 

of the matter is that terrorism and human rights sanctions, for the 

most part, are not economic sanctions. And as a result, what we 

are effectively doing is we are dismantling the economic sanctions 

regime while still retaining the right to go after Iran for terrorism 

and human rights purposes. The problem is if we ever try to go 

after Iran for anything that is considered economic, the Iranians 

will point to the agreement, and they will say, there is a clause in 

there that you promised not to interfere with the normalization of 

trade and commercial affairs, and they will say that basically we 

retain a nuclear snapback to walk away from the agreement. So we 

have dismantled the economic sanctions regime and the Administration has done that by recharacterizing, effectively, nonnuclear 

sanction that— 

Mr. ROTHFUS. Thank you. That is one of the issues I think people 

really need to take a look at as they look at this agreement. 

Now, I want to direct this one to Mr. Berman. Earlier this year, 

the G-20, whose 34-member countries constitute the world’s major 

financial centers met in Istanbul and committed to take action to 

more aggressively combat terrorism financing around the world. 

The G-20 enlisted the assistance of the Financial Action Task Force 

(FATF), which will hopefully issue a report later this year on how 

to prevent terrorist organizations from using the global financial 

33 

system for fundraising. Should the JCPOA be implemented? How 

much damage does it do to this effort by the G-20 and the FATF? 

Mr. BERMAN. Thank you, Congressman. I think it does a considerable amount of damage, because the sheer volume of potential 

funds that will be transferred from Iranian coffers to its terrorist 

proxies inevitably will complicate the analysis of the Financial Action Task Force and also strain existing mechanisms to monitor 

and interdict— 

Mr. ROTHFUS. How much easier is it going to be for Iran to launder money through the financial system to fund its terrorist proxies 

under this agreement? 

Mr. BERMAN. I think that is a good question. I am going to defer 

to my colleague, Mr. Dubowitz. 

Mr. DUBOWITZ. The problem is that FATF, at the end of the day, 

has fundamentally actually depended on American financial sanctions powers. So, on the one hand, you could say that because we 

retain U.S. financial sanctions, we still have power. On the other 

hand, it also relies on the ability to get other nations to go along 

with us. And what we have effectively done under this sanctions 

regime is we have dismantled the EU sanctions. The EUs, they are 

lifting all of their sanctions because the majority of them are nuclear sanctions. 

And so as the Europeans go back to business, the Chinese, the 

Russians, and everybody else, it is going to be much more difficult 

to seek the kind of consensus that we need at FATF in order to 

actually crack down on Iranian list of financial flows, because our 

very partners are going to be so deeply invested in the Iranian 

economy, that it will be more difficult than it has been in the past 

to persuade them to enforce these regulations on their financial institutions. 

Mr. ROTHFUS. I think my time has expired. Mr. Chairman, I 

yield back. 

Chairman FITZPATRICK. The Chair now recognizes the gentleman 

from Arizona, Mr. Schweikert, for 5 minutes. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. I would like to ask 

for unanimous consent to put some documents into the record in 

regards to the charter SWIFT. 

Chairman FITZPATRICK. Without objection, it is so ordered. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

Mr. Dubowitz, you are the only one up here who has actually 

talked about SWIFT. And this is something I have been trying to 

get my head around and wanted to focus on just for a couple of 

minutes. First, in 30 seconds—20 seconds, describe the backbone of 

what SWIFT is. 

Mr. DUBOWITZ. Congressman, if I wanted to wire money to you, 

I am going to wire money from my financial institution to your financial institution, SWIFT provides the financial messaging codes 

that, essentially, allow my financial institution to identify my bank 

account and identify your bank account to your financial institution, so that wire transactions can take place. SWIFT is the international backbone and the global standard for financial messaging 

that facilitates financial flows around the world. 

Mr. SCHWEIKERT. Okay. And the secure international backbone 

of electronic movement of money? Simple enough? And Belgian 

34 

charter. So walk me through a conceptual idea. Let’s say this 

agreement moves forward, and all of a sudden, Iranian institutions, 

banks, others that actually would be—have had a SWIFT membership, would be able to move money. Except for the fact that if I am 

here reading the SWIFT charter, both the country and an institution that have been involved in bad acts don’t have rights to access 

that system. 

So what happens here? I have here, where we are obligating ourselves and countries to this agreement, at the same time, I have 

a private electronic backbone moving money that is not allowed to 

do this, that is the first question. How does that end up working? 

Mr. DUBOWITZ. The issue is that under the SWIFT bylaws, they 

can deny access to any financial institution that brings the SWIFT 

system into disrepute. SWIFT connects to something called Target 

2, which is essentially the EU’s equivalent of the U.S. Fed wire. 

Under the Target 2’s bylaws, it said that no bank engaged in proliferation sensitive financing, terror financing, or money laundering 

should be accessing Target 2 through SWIFT. Of course, that fits 

Iran to a letter, which is why, ultimately, in 2012, EU regulators 

ordered SWIFT to de-SWIFT designated Iranian banks. 

The problem: Now they are going to de-designate all of those Iranian banks, including the Central Bank of Iran. EU regulators will, 

whether they order or strongly suggest to SWIFT that SWIFT 

reSWIFT or allow them back into the SWIFT system. And, by the 

way, there are a lot of bad banks on the SWIFT system. There are 

Russian banks, as I mentioned, who are still there. The problem 

has been that the Russian banks that are still there, as I mentioned earlier, the head of the B-C-D Bank of Russia said if you deSWIFT my bank, that is an act of economic war. 

So the problem is, SWIFT, I think, will allow these banks back 

on. Once they are back on, it would be very difficult to de-SWIFT 

them again, despite the bylaws. Because the only thing that ultimately got SWIFT to move was congressional pressure in 2012 

threatening sanctions against SWIFT that led to a chain reaction. 

Mr. SCHWEIKERT. For the chartering country, which is Belgium— 

Mr. DUBOWITZ. Correct. 

Mr. SCHWEIKERT. —what do its laws end up affecting here? And 

my fear is if there is a change of government in Iran, or something 

happens, are they able to make an excuse at some point saying, 

you haven’t given us full access to the world’s financial systems, so 

we are going to blow up the agreement on their end. 

Mr. DUBOWITZ. If I am Iran, that is exactly what I am going to 

do all the way through this process. I am going to keep claiming 

that I am not getting sufficient economic relief. Because economic 

relief, the sufficiency of economic relief is a relative basis. So what 

Iran would do is claim that they are not getting it, and then they 

will use that, excuses to not actually fully comply with their nuclear— 

Mr. SCHWEIKERT. Not to allow an inspection. I am just seeing 

this sort of tit-for-tat negotiations coming out of nowhere. And also, 

the fact of the matter is—and forgive my language, sort of the bastardization of the movements of electronic money and the ethics 

that we particularly, in this country, have been trying to drive into 

this. And now we are about to say, oh, except for in this case, igVerDate Nov 24 2008 16:01 Sep 22, 2016 Jkt 097157 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 K:\DOCS\97157.TXT TERI
35 

nore the bad acts. Use the international system that we have 

helped create, and it is okay to move at least these bad actors’ 

money. 

Mr. DUBOWITZ. To me, this is the—essentially, this is dropping 

a bomb on Treasury’s mandate. Because Treasury’s Office of Terrorism Financial Intelligence (TFI) was set up to protect the integrity of the U.S. financial system, the global financial system, from 

bad actors. It wasn’t set up to get a nuclear deal. It was set up to 

protect the integrity of their financial system from money laundering, terror financing, proliferation-sensitive financing and sanctions of Asia. And by giving a nuclear deal—this nuclear deal to 

Iran and dismantlement of our sanctions regime, we are effectively 

saying it is not about conduct-based sanctions anymore. It is about 

diplomatic achievement. Now we made this mistake before with 

North Korea and Banco Delta Asia. North Koreans got all those 

sanctions relief, and they got a nuclear weapon, and we lost our 

economic leverage on North Korea. 

My fear is we are going to do the same thing again. And these 

have deep consequences for our sanctions programs writ large, including against Russia and other targets. 

Mr. SCHWEIKERT. Mr. Chairman, I appreciate your patience. I 

am just waiting for the day that we are going to owe a family or 

many families an apology because we allowed this backbone to finance some horrible act, and we allowed them to use our own systems. With that, I yield back, Mr. Chairman. 

Chairman FITZPATRICK. The gentleman yields back. The gentleman from Texas, Mr. Williams, is recognized for 5 minutes. 

Mr. WILLIAMS. Thank you, Mr. Chairman. 

And thank all of you for hanging in there with us tonight. We 

appreciate it. 

I am one of those who really wants to take care of America first, 

and not Iran first. I think a lot of us here on the task force are 

concerned about trusting Iran. Obviously, historically speaking, 

many of us find it hard to believe that Iran will actually allow for 

an open and honest process when inspecting their nuclear sites. 

Determining how the JCPOA will treat military site inspections is 

something I am really concerned about. Most importantly, however, 

the fact that the President agreed to a deal that lacked inspection, 

anytime, anywhere, I believe will have serious consequences. And 

I am a small business owner myself. I make deals all the time, and 

I am still concerned why we negotiate when ‘‘death to Americans’’ 

and ‘‘death to the Israelis’’ is a common theme among the people 

we say we can trust. 

Now, my question to you, Mr. Heinonen, is the following: I have 

heard you say that the 24-day window will allow Iran to cheat, that 

Iran has not changed its nuclear course, it is keeping all the options open for building nuclear arms. Can you explain your comment? 

Mr. HEINONEN. Thank you, Congressman. And I will seize the 

opportunity also to clarify my rating with Ranking Member Lynch, 

who asked about it earlier today. He asked me to rate the deal on 

a scale from 1 to 10. And as you see from my testimony, I actually 

have divided this testimony in three parts. One part is the nuclear 

facilities with nuclear materials; one is the rights and provisions to 

36 

access on nuclear activities, where I raised those concerns, and 

there is a third category, which I mentioned in my written statement, which are some other activities which are proscribed, like activities related to acquisition of computer software to design nuclear explosive devices, certain multipoint detonation systems. 

When I looked at the rating for each of those, I think it is better 

to look at each of those and you make your own risk assessment 

on that. 

The first one, when I said rating 7 to 8, this is for nuclear facilities, the way I see it. And why it is not higher is because there is 

this dispute settlement process which you mentioned 24, up to 24 

days or even more. But then, if you ask me to keep the rating for 

this access to suspected sites on nuclear sites, I don’t think that I 

would be give more than 5, if we use this rating. 

And then if you ask my opinion, which other possibilities to find 

these computer codes, and someone using them, that is actually 

even not really inspection procedure for that, I think it is a zero. 

It is not even 1. So I think that this clarifies an answer to your 

concerns. 

And we need to keep also in our mind that the timeliness here 

is of essence. It is probably most with the time when Iran’s capabilities increase. And just as an example, I am not a sanctions expert, but when you come to year 15, when Iran can have any number of investment facilities, anyplace, actually, a little bit deeper in 

ground than in Fordow, they can produce oil enrichments they 

want, then the break-off time goes down, goes to the weeks or even 

smaller. And then if you add this manufacturing of weapon components and others, they are prepared, that adds another 2 or 3 

weeks to this whole picture. I don’t think that the sanctions have 

any meaning at that point of time, because Iran already achieved 

what it needed in a worst case. 

Mr. WILLIAMS. My next question is directed to you also, sir. How 

important is it that Congress knows which military sites and scientists the Administration tends to demand access to? 

Mr. HEINONEN. That is a difficult question. 

Mr. WILLIAMS. That is why I asked you. 

Mr. HEINONEN. I think it is important for the international community to know these names and installations in public. And the 

reason for me is that there are some other states which may have 

the information which, for example, the United States of America 

Government doesn’t have. So by disclosing these names, these 

places, we achieve two things: We engage the other states to the 

process and this really reinforces the system and makes any concealment by Iran much more difficult. It also makes the verification 

system much more transparent when the names are known. 

Mr. WILLIAMS. Thank you. 

Mr. Chairman, I yield back. 

Chairman FITZPATRICK. The gentleman from Arkansas, Mr. Hill, 

is recognized for 5 minutes. 

Mr. HILL. Thank you, Mr. Chairman. Dr. Heinonen, I was interested in talking about, for a minute, the IAEA annexes to the 

agreement. Secretary Kerry really was quite dismissive of those in 

the briefing to Congress earlier this afternoon. 

37 

What amount of importance should we put on the Iranian document with IAEA in terms of studying it as a part of fully understanding the verification regime, inspection regime? 

Mr. HEINONEN. I think it is one of the most important activities. 

I have been dealing with Iran for 12 years in a row. And one of 

the most difficult things is to get things written down on paper. 

What was not written, what was not specified was allowed. So, 

therefore, I think that all of those documents should be available 

for IAEA member states. I don’t see any technical reason why those 

should be—seek the information from the member states of the 

IAEA. IAEA perhaps keep some of those information in technical 

briefings, but, again, I think that the transparency of the process 

requires those to be disclosed so that we can see what kind of confidence level we have for this verification regime which is foreseen. 

And as I said in my statement earlier today, I think at the time 

from mid-August to mid-December, it is much, much too short to 

solve this PMD problem. And then I also pointed out that this 

IAEA is looking for all the facilities in the annex of November 2011 

report. But Mr. Amano himself has said that there is some other 

information which came after this. And the way I read this JCPOA 

doesn’t really keep this opportunity to IAEA to go to verify at this 

stage that other information. 

Last, knowing from my own experience from earlier years is that 

the IAEA, which reports only information which it is sure at that 

point of time and information which meets its standards for the veracity of the information. So I am sure that there were also some 

pieces which, for those reasons, that Mr. Amano decided not to include in this program. So, therefore, I see in essence that the [inaudible] of the governments and the legislative parts will see those 

details, so that they can do a full assessment of what we can 

achieve, and what we cannot achieve, because after all, these are 

the elements of your risk assessment. 

Mr. HILL. Right. And I feel like Secretary Kerry, as I said, Mr. 

Chairman, was dismissive, and I hope that you will speak with 

Chairman Royce about making sure that we see these annexes and 

know the detail of the verification regime. 

A question for Mr. Berman: You were talking about the GDP in 

your written testimony and potential amounts of money that are 

being released. Give me some feel for the flow in addition to any 

near frozen money that is released. What kind of monthly flow you 

think their revenue would be, and also, tell me what you think the 

actual amount of foreign reserves should be for their belt-and-suspenders approach of having adequate cash on hand were snapback 

sanctions to come back? How much money would you estimate? 

Ten percent of GDP? More? What would you say? 

Mr. BERMAN. I think that is a good question. And it comes down 

to sort of a term-of-art calculus. I think the numbers that we heard 

earlier from other members of the task force when we talked repatriation of sanctions of frozen funds that have already been released in the context of $12 billion to date, I think that is a useful 

barometer to look at when we look at the sum of money that is expected to be provided. 

38 

Mr. HILL. How much would you say would be held in reserves? 

Ten percent of the GDP? Would that give them that kind of surety 

that they would— 

Mr. BERMAN. I think that is a reasonable estimate. My colleagues might disagree, might have a different estimate. 

Mr. DUBOWITZ. Just to give us a sense of this, in 2012, 2013, 

Iran’s full accessible foreign exchange reserves were $20 billion, 

economy of about $350 billion GDP. That is why they were at 4 to 

6 months in a severe balance of payment crisis to the point where 

we could have actually accelerated the sanctions and brought them 

to severe crisis. Would let up. We gave them $12 billion, which took 

their foreign exchange reserves, increased it by 60 percent to $32 

billion. Now we are going to give them at least $100 billion. 

Now, their foreign exchange reserves are going to get to $132 billion, and they have effectively gone from 6 percent of their GDP to 

almost 40 percent of their GDP. So that what we have done is we 

built up their foreign exchange reserves, which now increases their 

economic resilience, and with that kind of foreign exchange reserve 

rainy-day fund, over time, it is go to make it very difficult for us 

to snap back sanctions and create the kind of economic pain and 

time. 

And Dr. Heinonen is right. When their industrial size near zero 

breakout days away from actually breaking out to a nuclear weapon, our ability to actually impose that kind of economic coercive 

force at that time would be significantly diminished, because it 

would take much longer to have any kind of impact, never mind 

the impact we had in 2012. 

Mr. HILL. Thank you. 

Mr. BERMAN. Might I add one additional factoid just to round out 

the discussion? I think it is useful to point out when we were having the earlier discussion about the amount of constriction that has 

occurred with regard to the Iranian economy as a result of sanctions, we heard about a fifth with regard to sort of the constriction 

of Iranian GDP. If these numbers are anywhere near accurate, if 

we are, indeed, looking at $100 billion to $150 billion, we are actually providing or facilitating the expansion of the Iranian economy 

by a significant portion. We are wiping clean the constriction that 

occurred as a result of sanctions, and we are actually forcing an expansion. 

I think that should be noted because, as I said before, money is 

fungible, and this expanded revenue is likely to trickle in various 

ways to Iranian regional activities as well as to terrorism. 

Chairman FITZPATRICK. The gentleman’s time has expired. We 

will now proceed to a second round of questions, and I would seek 

unanimous consent to do so. So, without objection, I will now recognize Mr. Sherman of California for 5 minutes. 

Mr. SHERMAN. I have heard reports that Iran really has as little 

as $28 billion or as much as $150 billion. I would like to know how 

much money they have on deposit, and then what are the obligations that the host bank or the host country is going to extract 

from that because obviously, nobody is going to give Iran its money 

if it owes it to a domestic vendor, or if it owes it to the bank where 

they have the deposit. 

39 

So, Mr. Nephew, how much do they have worldwide gross, and 

how much of that is obligated? 

Mr. NEPHEW. So, sir, thank you for the question. I would have 

to defer to the colleagues at the Treasury Department for a very 

accurate, specific set of numbers. My last information suggests, 

again, that they have somewhere between $100 billion and $150 

billion in total reserves worldwide. Some of that is in Iran, and 

some of that is in— 

Mr. SHERMAN. When you say ‘‘in Iran,’’ you mean they have currency of another country in a vault in Iran, or they have their own 

money, which, of course, they have an unlimited amount of? 

Mr. NEPHEW. No, sir, that they have some other country’s currencies as well as gold, which would also tend to count as the reserves as well. 

Mr. SHERMAN. Okay. So excluding what is in their country, we 

obviously, we are not giving back to them, what do they have outside their country? 

Mr. NEPHEW. And, again, my estimate would only be preliminary. I have to defer to Treasury. I would say somewhere in the 

neighborhood of— 

Mr. SHERMAN. Trying to get a straight answer out of Treasury 

is impossible, and in a classified briefing, it is almost impossible. 

So can you tell me what percentage is in China? What percentage 

is in Japan? Korea? What percentage is in India? 

Mr. NEPHEW. I would say a large percentage is in China, probably in the neighborhood of 20 to 30 percent. 

Mr. SHERMAN. Okay. 

Mr. NEPHEW. I would say that another, maybe 20 percent, is in 

Japan, and that the rest is spread between Korea, India, and Turkey, which are the other main oil importers from Iran. 

Mr. SHERMAN. And none is in Europe, because they stopped importing a while ago? 

Mr. NEPHEW. Right. There is some that is in Europe, but, again, 

if we are talking percentages, you are probably in the single-digit 

percentages. 

Mr. SHERMAN. Okay. 

Mr. Heinonen, and this picks up on earlier questioning, we are 

being told that 24 days is enough, because whatever Iran does is 

going to have this signature, and you are going to be able to tell 

that something radioactive was there. 

What I am most concerned about is can they perfect and create 

a raise of their IR-8 centrifuges? Now, in order to build these centrifuges, they are going to have to test them and calibrate them. 

Do they need to use gasified uranium to calibrate, or could they use 

an alternative gas in order to create an array of centrifuges, what 

I will call a virgin set, it has never touched uranium, there is nothing reactive in the room, but they are ready to go? 

Mr. HEINONEN. Congressman, when you develop this kind of centrifuge, actually it is basically a three-step process. The first step 

is you do what is called a mechanical testing. You just get them 

to spin and see that they survive long enough under the very conditions where they are running. The next step after that is normally 

that people use some other gas, like the Xenon— 

Mr. SHERMAN. Like what? 

40 

Mr. HEINONEN. —like Xenon, which is noble gas. 

Mr. SHERMAN. Okay. 

Mr. HEINONEN. But that is the centrifuge, just to see that they 

work, because Xenon has several isotopes so you can see the enrichment factors. So this is very open and second step. And the 

beauty of that, if I may say, is that it doesn’t cause any corrosion 

or— 

Mr. SHERMAN. It is an inert gas, yes. 

Mr. HEINONEN. Yes, inert gas. And then the third step is when 

you run with the uranium gas to see that it still really works as 

it was designed. 

Mr. SHERMAN. Is there any substitute for the third step that does 

not leave a radioactive signature? 

Mr. HEINONEN. I don’t think that you can perfect the centrifuges 

in such a way that it can survive— 

Mr. SHERMAN. So the 24 days might be long enough to catch 

them if they went to the third step. They can do computer modeling. Obviously, we would never catch that. 

Mr. HEINONEN. Sir, I don’t think that this 24 days has much to 

do with that because these, first of all, things are happening in different places. And when you go through the tests, the last step of 

the tests, you don’t need to test so many machines. 

Mr. SHERMAN. You don’t need to calibrate each one. 

Mr. HEINONEN. No. You need to use uranium hexafluoride. You 

need a room, which is probably the size of this. That is all that you 

need. And then if you have 3 weeks’ time to sanitize it, as Mr. 

Albright also agrees with me, it is doable if you do the planning 

in advance. And this is, I think, we need also to recognize that 

when people talk about the reception techniques of Iran in 2003, 

they were ad hoc arrangements. They were caught by surprise. But 

if they have to do it today, they would have very different— 

Mr. SHERMAN. You are saying you could actually use uranium 

hexafluoride gas in a centrifuge in a room like this and walk into 

that room 24 days later and not be able to detect that there had 

been any radioactive material in that room? 

Mr. HEINONEN. Yes, you can. But you have to plan it in advance 

how you dismount—you can design it in such a way that this can 

be done swiftly. And I want to remind you, that there were places 

in— 

Mr. SHERMAN. I would hope that you would issue a paper or 

something on this to get it the kind of definitive press coverage because we are being told and the American people are being told 

that the 24 days is not too long because if they are doing anything 

with uranium involved, it can be detected. And you are saying not 

if you plan it in advance? 

Mr. HEINONEN. Yes. There were cases in 2003 that the IAEA did 

not find in certain places enriched uranium, even though there 

should have been. 

Mr. SHERMAN. So if we just happened to bring a box of uranium 

into this room, hopefully without us in it, and then moved it out 

of this room in a few days, it is not certain that you could detect 

that uranium had been in the room? 

Mr. HEINONEN. Provided that you renovate the room. 

41 

Mr. SHERMAN. Renovate the room. Okay. That usually takes 

more than 24 days, but this is the U.S. Congress. 

I yield back. And I am referring to this exact room. 

Chairman FITZPATRICK. The vice chairman of the task force, Mr. 

Pittenger, is recognized for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Mr. Heinonen, 20 years ago, when we negotiated with the North 

Koreans, we had the support of allies over there, and the Japanese, 

who supported it; South Korea. Is the world safer because of that 

agreement? Is the world safer because of the agreement that we 

have with North Korea that was negotiated 20 years ago? 

Mr. HEINONEN. North Korea, yes, I was actually involved myself 

from the IAEA side for the Agreed Framework. I think that the vision of the people who designed the Agreed Framework at that 

point in time was that North Korea regime would not be a very 

long time. So this agreement, which was supposed—has now lasted 

2 decades, was not supposed to last 2 decades. And that is why the 

provisions were like they were. 

Mr. PITTENGER. Excuse me. Is the world safer today? 

Mr. HEINONEN. No, for sure not in North Korea. 

Mr. PITTENGER. Thank you. That is my question. 

In my discussions with IAEA in Vienna, my understanding is 

that they are limited, when they have access, just to those 17 sites. 

Is that correct? 

Mr. HEINONEN. Yes. 

Mr. PITTENGER. They can’t go anywhere else in the country? 

Mr. HEINONEN. At this point in time, no. But when this additional protocol provision is sent in, this extra transparency undertaken by Iran will be implemented, IAEA can have access to additional places. 

Mr. PITTENGER. To additional places? 

Mr. HEINONEN. Additional places. 

Mr. PITTENGER. Predetermined, pre-agreed. But restricted to 

that, and not accessible to anywhere else in the country. If there 

is some other clandestine effort taking place, do we have access to 

go to other places besides the 17 approved sites? 

Mr. HEINONEN. The problem is that there are certain limitations 

for this access, which I have explained in my written testimony. 

This is not anytime, anywhere. You need to justify in writing why 

you want to go there, and what is the information which drives 

you. 

Mr. PITTENGER. But if I could, just for times sake, is that clarified to just be the approved sites, those 17 sites? Can they say, ‘‘We 

want to go to another part of the country?’’ 

Mr. HEINONEN. According to this agreement, yes. 

Mr. PITTENGER. Okay. Since the Iranians can stall through the 

ICPA for at least a month or more, in reality, several months, how 

would we know if Iran is removing compromising material during 

this time, and how significant is this lead time? Does it compromise 

the inspection process? 

Mr. HEINONEN. Yes, it cuts. And this is the reason why I made 

the clarification to my statement with regard to the access of suspected and undeclared sites. There, the detection probably is much 

lower because of this time-lapse between the request of access and 

42 

going there, and in addition to this extra certification which IAEA 

has to give and which the counterpart can use to deceive the organization if it so wishes. 

Mr. PITTENGER. Okay. Thank you. 

Thank you, Mr. Chairman. I yield back. 

Chairman FITZPATRICK. The gentleman yields back. 

The Chair recognizes himself for 5 minutes. 

Mr. Dubowitz, the Administration has stated that all sanctions 

relief is from the nuclear sanctions regime only. And after reviewing the list of entities and individuals de-designated, which I think 

you referred to in your opening statement—I think that was the 

list you referred to, and if it was, we want to include it as part of 

the record. 

My question to you is, do you agree with the Administration’s 

statement? 

Mr. DUBOWITZ. As I mentioned earlier, Mr. Chairman, the Administration is taking non-nuclear sanctions and recharacterizing 

them as nuclear sanctions. So, on that basis, I don’t agree with the 

Administration. There were sanctions put in place that were not related to Iran’s nuclear program. They were related to Iran’s ballistic missile program, its money laundering, it’s a list of financial 

activities. And if you look at the Central Bank of Iran, which to me 

is a classic example of this, and there are other examples, but the 

Central Bank of Iran was designated, legislatively designated and 

designated by the Administration, and there was a finding under 

Section 311 of the PATRIOT Act, and there were numerous Treasury statements to confirm that it was engaged in a range of illicit 

financial activities, nuclear, ballistic missile, terrorism, money 

laundering, sanctions evasion, and yet, the Administration is essentially allowing the Central Bank of Iran back in the global financial 

system. 

I disagree with Mr. Nephew. There are other ways to negotiate 

this. There are ways to actually allow the CBI back partially. 

There are ways to actually put down specific benchmarks and say 

to the Iranians: Once you have established and met those benchmarks, then we will rehabilitate your Central Bank of Iran. But we 

are not going to wipe away all of these illicit financial activities 

just because we have a nuclear agreement. That could have been 

proposed and won in a negotiation. It is not good enough to say 

that the Iranians would have rejected it, and therefore, we took it 

off the table. 

Chairman FITZPATRICK. Why do you think that is happening? 

Mr. DUBOWITZ. I don’t want to speculate what is in the minds of 

negotiators, and I have a lot of respect for the men and women who 

put a lot of their years of their lives into this, including Mr. Nephew. But I do think that we went into these negotiations and I believe that the fundamental precept on the sanctions side was that 

we can sweep away these sanctions, but we will reinstate them if 

we have to. And that is the construct. The construct is we will take 

them away, and we will reimpose them if we need to; instead of 

saying, how are we going to defend the sanctions architecture in 

key ways so that we maintain the economic leverage, particularly 

on the full range of Iran’s illicit financial activities, and that said 

to the Iranians: We will give you relief here, but we are not giving 

43 

you relief there until you establish that your banks are no longer 

engaged in the full range of illicit financial activities. That could 

have been a separate construct. I think we could have defended 

that. I think we would have had international support for that, but 

at the end of the day, the Administration had a very different construct: Take it all way and reimpose it if they cheat. 

Chairman FITZPATRICK. My concern is that some of those de-designations may affect the rights of American citizens who have judgments against Iran. 

And, Mr. Perles, in my first round of questioning, we talked 

about the Beirut barracks bombing, a case I believe you were involved in. We spoke off the record before the hearing about how 

after September 11th, the district that I represent, Bucks County, 

Pennsylvania, had too many families who lost a loved one in the 

Towers and in other places around the country. Fiona Havlish was 

a lead plaintiff in the case. I think Ellen Saracini was involved in 

the case against the Islamic Republic of Iran. They did receive a 

judgment in excess of a billion dollars, which is yet uncollected. I 

saw a Congressional Research Service list of total awards against 

Iran, and this, excluding punitive damages, just compensatory 

damages, exceeds $20 billion and doesn’t even include the Havlish 

case from my district. 

So what message are we sending to—and I completely associate 

myself with the remarks of Mr. Green earlier about the four individuals who are hostages today in Iran. We speak their names on 

the Floor of the House, and we don’t forget them, and we continue 

to work for them. 

What message are we sending to the individuals who have claims 

and judgments uncollected against the Republic? Might those 

claims be wiped out as part of this agreement? Any of you? 

Mr. PERLES. As counsel for many of the claimants, and I spoke 

earlier with you off the record, we share an enforcement activity 

with the Havlish plaintiffs and the Justice Department in New 

York. The target of that enforcement activity was a skyscraper, 650 

Fifth Avenue in Manhattan, that Iran was using as a money laundering facility. We sit at the knife’s edge today, not knowing what 

the impact of this agreement will be on all of those enforcement activities. We don’t know what instruction the Administration will 

give to the Justice Department with respect to this joint seizure 

that we have done with the Havlish plaintiffs. We are simply stuck 

in stasis in this wait-and-see attitude. 

What we do know is at least in the case of this bookkeeping 

entry system that we touched upon earlier, which is really the 

world’s largest hawala banking system—that is all it is at the end 

of the day, is the world’s largest hawala banking system. A Federal 

judge in Manhattan last year asked OFAC to comment on the lawfulness of this hawala system. This is Clearstream SA, a Luxembourg country owned by Deutsche Borse running what we track— 

I have no idea how much money really went through the account. 

We were able to track $1.67 billion of Iranian money going out of 

JPMorgan Chase by this bookkeeping system. And OFAC, frankly, 

declined to opine upon the lawfulness of that sort of transaction. 

From a practitioner’s perspective, that is very frightening because 

if a Clearstream can move Iranian money in and out of New York 

44 

by book entry without it being a violation of law, the entire sanctions regime—and I am not talking about Iranian sanctions; I am 

talking about sanctions across-the-board—collapses. It means that 

any drug cartel, for example, could move their money to Luxembourg in a Gulfstream and have a Luxembourg-based bank move 

it into the U.S. system by book entry. It is unreportable and— 

Chairman FITZPATRICK. Mr. Perles, that skyscraper to which you 

are referring, Fifth Avenue in Manhattan, New York City, I believe 

is owned by Assa Corporation, which is alleged to be a shell corporation controlled by Iranians. 

Mr. PERLES. That is correct. 

Chairman FITZPATRICK. My concern is that the Assa Corporation 

is on the list of organizations to be de-designated, which goes back 

to Mr. Dubowitz’s concern, what does this have to do with nuclear 

sanctions, and what is really happening here, and what is the impact? Perhaps that is a subject for another hearing. 

Mr. DUBOWITZ. Mr. Chairman, if I could just add one quick 

thought. Mr. Nephew said that we are going to give $100 billion 

of Iran’s money back to Iran. It is interesting, I wonder if U.S. negotiators, maybe you can ask Secretary Kerry this, did they ever 

say to the Iranians: Of the $100 billion that we are going to give 

you back, we are going to take X percent, and we are going to use 

that to satisfy the claims for the judgments of Iranian victims of 

terrorism. So before we give you money back so you can use it to 

create future victims of Iranian terrorism, you are going to pay 

those judgments out of that money. And we are going to give you, 

for every dollar that we give you—for every dollar that we take, we 

are going to give 80 cents back to you and 20 cents back to the victims of Iranian terrorism. That would have been an easy way to 

have settled this issue. 

Chairman FITZPATRICK. My time has well expired. 

And the vice chairman of the task force is recognized for the final 

question of the hearing. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Mr. Perles, in representation of your clients, you made contact 

with OFAC, DOJ, the Solicitor General, as I understand, on behalf 

of your clients— 

Mr. PERLES. On a variety of matters related to—yes. 

Mr. PITTENGER. —in seeking assistance on their behalf. Can you 

tell us the nature of that? We understand that your request was 

denied on one occasion at least, and you didn’t—you were rebuffed 

by them? Could you give us some context for that, and is this consistent with your previous work with the government? Had they 

been cooperative in the past, and why were they not this time? 

Mr. PERLES. What we currently see could be more appropriately 

characterized as nonresponsiveness. And we just talked about the 

fact that a Federal judge asked OFAC to opine upon the lawfulness 

of this gigantic hawala banking system. We were in touch with 

OFAC after that request was made, and OFAC simply failed to respond. They advised the Federal judge that they were not going to 

respond. 

We had hoped to be finishing up our activities at the Supreme 

Court last spring. We were waiting for the Solicitor General to 

opine upon the constitutionality of statutes that you gentlemen 

45 

passed to assist victims of terror. We are still waiting. I certainly 

hope that the Solicitor General will opine upon the constitutionality of those statutes this fall, but we have no schedule. We 

really don’t know where we are. 

That is a very different contrast to where we were at the conclusion of the Bush Administration. Stuart Levey, for whom I have 

enormous respect, turned intelligence data over to us so that we 

could seize $1.9 billion that was transient in New York. At that 

time, he said to us: Your point of contact in the Treasury will be 

the General Counsel of OFAC. The General Counsel of OFAC gave 

me a phone number to call when I needed to reach him. It was always answered by a recording, and I always, without fail, received 

a call back from him within 10 minutes of the time I called. We 

just don’t see that anymore. It is just not happening. 

Mr. PITTENGER. So you have seen a reluctance on behalf of those 

who represent our government to assist American citizens in their 

claims against Iran? 

Mr. PERLES. Yes, sir. 

Mr. PITTENGER. Thank you very much. 

I yield back. 

Chairman FITZPATRICK. The gentleman yields back. 

I would like to, again, thank our witnesses for their testimony 

here today. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

Without objection, this hearing is adjourned. 

[Whereupon, at 7:42 p.m., the hearing was adjourned.] 

(47) 

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