U.S. GOVERNMENT PUBLISHING OFFICE

31–491 PDF WASHINGTON : 2019

ILLICIT USE OF VIRTUAL CURRENCY 

AND THE LAW ENFORCEMENT RESPONSE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TERRORISM 

AND ILLICIT FINANCE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

JUNE 20, 2018 

Printed for the use of the Committee on Financial Services 

Serial No. 115–102 

( 

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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 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

STEVE STIVERS, Ohio 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

DAVID A. TROTT, Michigan 

BARRY LOUDERMILK, Georgia 

ALEXANDER X. MOONEY, West Virginia 

THOMAS MACARTHUR, New Jersey 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

CLAUDIA TENNEY, New York 

TREY HOLLINGSWORTH, Indiana 

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 

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 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

VICENTE GONZALEZ, Texas 

CHARLIE CRIST, Florida 

RUBEN KIHUEN, Nevada 

SHANNON MCGAHN, Staff Director 

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(III) 

SUBCOMMITTEE ON TERRORISM AND ILLICIT FINANCE

STEVAN PEARCE, New Mexico Chairman 

ROBERT PITTENGER, North Carolina, Vice 

Chairman 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

LEE M. ZELDIN, New York 

WARREN DAVIDSON, Ohio 

TED BUDD, North Carolina 

DAVID KUSTOFF, Tennessee 

ED PERLMUTTER, Colorado, Ranking 

Member 

CAROLYN B. MALONEY, New York 

JAMES A. HIMES, Connecticut 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JUAN VARGAS, California 

JOSH GOTTHEIMER, New Jersey 

RUBEN KIHUEN, Nevada 

STEPHEN F. LYNCH, Massachusetts 

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C O N T E N T S 

Page 

Hearing held on: 

June 20, 2018 .................................................................................................... 1 

Appendix: 

June 20, 2018 .................................................................................................... 33 

WITNESSES 

WEDNESDAY, JUNE 20, 2018 

Nevano, Gregory, Deputy Assistant Director, Illicit Trade, Travel, and Finance Division, Homeland Security Investigations ........................................... 5 

Novy, Robert, Deputy Assistant Director, Office of Investigations, United 

States Secret Service ........................................................................................... 7 

Ott, Thomas, Associate Director, Enforcement Division, Financial Crimes Enforcement Network ............................................................................................... 9 

APPENDIX 

Prepared statements: 

Nevano, Gregory ............................................................................................... 34 

Novy, Robert ..................................................................................................... 41 

Ott, Thomas ...................................................................................................... 48 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Pearce, Hon. Stevan: 

Written statement from Steven D’Antuono .................................................... 55 

Ott, Thomas: 

Written responses to questions for the record from Representative 

Sinema ........................................................................................................... 63 

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ILLICIT USE OF VIRTUAL CURRENCY 

AND THE LAW ENFORCEMENT RESPONSE 

Wednesday, June 20, 2018 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON TERRORISM

AND ILLICIT FINANCE, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:04 p.m., in room 

2128, Rayburn House Office Building, Hon. Stevan Pearce [chairman of the subcommittee] presiding. 

Present: Representatives Pearce, Pittenger, Tipton, Poliquin, 

Zeldin, Davidson, Budd, Maloney, Himes, Foster, Delaney, Sinema, 

Vargas, Gottheimer, and Waters. 

Also present: Representatives Scott, Velazquez, Crist, Heck, and 

Capuano. 

Chairman PEARCE. The subcommittee will come to order. Without objection, the Chair is authorized to declare a recess with the 

subcommittee at any time. Members of the full committee who are 

not Members of the Subcommittee on Terrorism and Illicit Finance 

may participate in today’s hearing. All Members will have 5 legislative days within which to submit extraneous materials to the 

Chair for inclusion in the record. 

This hearing is entitled, ‘‘Illicit Use of Virtual Currency and the 

Law Enforcement Response.’’ I now recognize myself for 3 minutes 

to give an opening statement. 

I want to thank everyone for joining us today. Today’s hearing 

is going to examine the exploitation of virtual currencies and how 

law enforcement is working to identify and disrupt their use to 

fund illicit activities through both mainstream and dark Web marketplaces. With today’s advancements in the evolving world of financial technology, the ability to deposit, transfer, and raise money 

is at our fingertips. While this is a significant improvement for 

those who struggle to access the financial system, the ease of 

transacting also opens the doorway for abuse by bad actors. 

The appeal of virtual currencies to criminals is their ability to 

transact across the globe and the low cost of resolution. Virtual 

currencies are also well known for being the preferred means to 

purchase drugs, illicit goods, and criminal services from online forums on the dark Web, including places like the Silk Road and 

AlphaBay. There is also anecdotal evidence of terrorist groups 

transferring money and attempting to raise funds using virtual 

currencies. 

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Moving forward, as this technology becomes cheaper and more 

prevalent globally, we must be aware of the risks, the abuse of the 

virtual currencies can pose to our financial system, criminal groups 

infect computers and networks with ransomware and ask for payments in virtual currency or use online marketplaces to buy, sell, 

and advertise illicit goods and services. 

As Members of Congress, we should work to remain as informed 

as possible about the current and emerging risks around us. And 

in fact, Members of this subcommittee have already been active in 

this arena. Last week, I was happy to speak in support of the 

FIND Trafficking Act, a bill that would require the Government 

Accountability Office to study and report how virtual currencies in 

online marketplaces can be used for illicit means. This bill is a first 

step in defining the issues surrounding virtual currency exploitation, as well as creating solutions to help law enforcement and 

protect our citizens. 

I also applaud Congressman Ted Budd for introducing the Financial Technology Protection Act earlier this year, which would bring 

industry insiders and Federal regulators together to find best practices and solutions to help our law enforcement solve this problem. 

Today’s hearing is an opportunity to learn more about law enforcement’s investigations and responses to the illicit use of virtual 

currencies. I hope our Members will take this chance to learn from 

our witnesses about the current issues facing law enforcement in 

the detection of criminal activity in this area and explore what additional tools may be necessary to combat threats to the U.S. financial system. We would also like to thank our witnesses for being 

here today. I look forward to your testimony. 

I would now recognize Mr. Foster for 5 minutes. 

Mr. FOSTER. Thank you, Chairman Pearce and thank you to our 

witnesses here. 

The illicit use of virtual currency is a very important topic. And 

under normal circumstances, I would say that it deserves our full 

attention. However, there are extraordinary circumstances today. 

Hundreds of children are sitting in cages who have been forcibly 

separated from their families. And so, I think this is really the 

issue that is more pressing to discuss. 

Mr. Nevano, as the highest ranking ICE (U.S. Immigration and 

Customs Enforcement) official who is being allowed to testify before 

Congress, we Democrats have some questions that we will be asking you. Just last month, ICE agents rounded up and incarcerated 

immigrants, as well as people who simply appeared to look like immigrants to them, in and around my district in Illinois and without 

any apparent cause or reason and uncertain attention paid to adequate rules and procedures. 

On our southern border, ICE agents are ripping children out of 

their parents’ arms. We don’t need a new law to put an end to this 

trauma and the President could very easily have put a stop to any 

of these policies with one phone call a week ago or simply never 

have put these policies in place at all. Instead, he chose to manufacture a humanitarian crisis that was unnecessary and easily preventable. 

The United States has served as a beacon of hope and freedom 

since its founding. We are watching that hope and freedom erode 

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right before our eyes as thousands of these children spend another 

night in a metal cage. 

Mr. Nevano, history does not look kindly on our government 

when we do not uphold our commitment to human rights and basic 

morality. I strongly believe that the American people deserve a 

government that embodies the values on which it was founded. We 

look forward to your testimony and the answers that you will be 

providing to this committee. 

Thank you. I yield back. 

Chairman PEARCE. I now recognize the gentleman from North 

Carolina, Mr. Pittenger, for 2–1/2 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman and Ranking Member 

Perlmutter for your leadership and holding this hearing today. 

Additionally, I would also like to thank our distinguished panelists for lending their expertise to our subcommittee this afternoon. 

Of special note is Financial Services intern and UVA student, Hugo 

Bonilla, for his exceptional research on virtual currencies. 

One of the greatest emerging threats to U.S. national security is 

illicit use of virtual or cryptocurrencies. Domestic and international 

law enforcement agencies have begun taking the steps necessary to 

combat this new model of criminal transactions. It is our duty to 

provide the tools and the oversight of said tools required to maintain our edge over our adversaries. 

Virtual currency, due to its higher degree of anonymity, is seen 

as a very lucrative opportunity for those with nefarious intentions. 

The risk that arises from this anonymity is that criminals can use 

virtual currencies to store and transmit their financial gains from 

illegal practices such as drug dealing or human trafficking. Under 

the guidance of the Department of Homeland Security (DHS), the 

Secret Service, and the National Computer Forensics Institute, 

they provided our State and local law enforcement personnel with 

the training necessary to investigate and combat cyber crime, including the illicit use of virtual currency. And issues like these 

must be continued and expanded by Congress to combat this 

emerging threat. 

I have hosted a dozen parliamentary intelligence security forums 

over the last 5 years in which delegates from 68 nations have met 

to address issues such as this. The United States must continue 

acting as a global leader in the realm of cybersecurity. It is my 

hope that today we can thoroughly examine this threat to determine what additional tools and resources we need to combat it. 

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

Chairman PEARCE. The gentleman yields back. 

The Chair would now recognize the gentlelady from California, 

Ms. Waters, for 3 minutes. 

Ms. WATERS. Thank you very much. Thank you for scheduling today’s hearing to examine the illicit uses of virtual currency and the 

law enforcement response. It is alarming how virtual currencies, 

especially newer ones, are being used to finance terrorism, launder 

money, and purchase drugs and weapons on the dark Web. 

This is an important topic. However, it is not the only topic that 

we must discuss today. Despite the fact that the witness from the 

Department of Homeland Security works for U.S. Immigration and 

Customs Enforcement, commonly known as ICE, and is not the 

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agency tasked with working on the border, it would be a dereliction 

of duty if I did not share my concerns about the human rights 

abuses occurring on our border at President Trump’s direction and 

at least find out what ICE’s role is in this issue. 

The world has watched and listened in horror and with overwhelming sadness as children have been ripped from their parents 

and separated from their families. They are young, alone, and terrified without their families and made to live in literal cages. It is 

not clear when this child abuse will end. 

The White House has made every argument it can to deflect the 

blame for their zero tolerance policy that led to the forcible separation of over 2,000 children from their parents in just 6 weeks. They 

have quoted the Bible, denied the policy, and begrudgingly acknowledged it. The President, in an attempt to convince the American public that up is down and down is up, even tried to blame 

Democrats for his own policy. 

This is Donald Trump’s abhorrent policy. This is child abuse. 

Neither of those statements is refutable. It is time for the President, Department of Homeland Security Secretary Nielsen, and Department of Justice Attorney General Sessions to admit that their 

actions were not thought out and that the consequences of those actions are inhumane and completely inconsistent with the values of 

this country. 

And I am hoping that during the period where we can raise some 

questions that you will be able to help us understand what your 

role is. And with that, I yield back the balance of my time. 

Chairman PEARCE. The gentlelady yields back. 

The Chair now welcomes the testimony of our two witnesses. The 

third is stuck in traffic reportedly somewhere on New York. I am 

assuming that is the avenue, not the city. But we will introduce 

Mr. Ott when he comes. He is representing FinCEN here today. 

Mr. Robert Novy is a Deputy Assistant Director of the United 

States Secret Service Office of Investigations with oversight of 

criminal investigations, operations, strategy, and policy related to 

cyber and financial crimes. Mr. Novy was detailed with the staff of 

the National Security Council at the White House as the Director 

for Cyber Security Incident Response, Intelligence, and Defense 

Policy and was the deputy assistant director for the Congressional 

Affairs and special agent in charge for public affairs. 

Mr. Novy has previously served as the supervisor of the Electronic Crimes Task Force in the New York Field Office and was a 

member of the Washington Field Office’s Electronic Crimes Special 

Agent Program. In addition to his expertise on cyber crime, Mr. 

Novy served on the Presidential Protective Division during both the 

Clinton and Bush Administrations. Prior to his Secret Service career, Mr. Novy was an assistant branch chief for the U.S. Securities and Exchange Commission (SEC), also served in the U.S. 

Navy. 

Mr. Novy received his Masters of Public Administration from 

Troy State University and serves on the Board of Advisers for the 

University of Texas in Austin. 

Mr. Gregory Nevano is a Deputy Assistant Director at Homeland 

Security Investigations Illicit Trade, Travel, and Finance Division 

with oversight of all financial, narcotics, document and benefit 

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fraud, criminal gang exploitation, and several targeting infusion 

centers. Previously, Mr. Nevano served as the chief of staff to the 

deputy director of the U.S. Immigration Customs and Enforcement, 

ICE, as the associate deputy assistant director for the Investigative 

Services Division and is the unit chief for the Asset Forfeiture 

Unit. 

Mr. Nevano’s long career also included assignments as an assistant special agent in charge in the ICE Boston Field Office, the 

group supervisor of the Narcotics and Violent Gang Group—or 

group supervisor of the Operational Support Group as a detailee to 

the FBI’s Joint Terrorism Task Force. Mr. Nevano received his 

Bachelors of Science in political science from Boston College. 

We will go ahead and introduce Mr. Ott and we will then just 

move into his testimony when he comes. But he is the Associate 

Director for the Financial Crimes Enforcement Network or 

FinCEN’s Enforcement Division with oversight of the FinCEN 

Bank Secrecy Act (BSA) Compliance and Enforcement Program. 

Mr. Ott joined FinCEN in 2014 as a senior adviser to the director 

and was responsible for providing guidance on various matters regarding law enforcement and transnational crime. 

Prior to joining FinCEN, Mr. Ott was a prosecutor for over 25 

years with both the Tax and Criminal Divisions of the United 

States Department of Justice, most recently serving for 8 years as 

deputy chief of the Organized Crime and Racketeering Section. 

Throughout Mr. Ott’s career with the DOJ, he prosecuted and supervised prosecutions of cases involving RICO, public corruption, 

national security, tax evasion, financial fraud, and money laundering. Mr. Ott received his juris doctorate degree from the University of Baltimore School of Law. 

Each of you will now be recognized for 5 minutes to give an oral 

presentation of your testimony. Without objection, each of your 

written statements will be made part of the record. 

Mr. Nevano, you are recognized for 5 minutes. 

STATEMENT OF GREGORY NEVANO 

Mr. NEVANO. Chairman Pearce, Ranking Member Perlmutter, 

distinguished Members, and my fellow law enforcement colleagues, 

thank you for the opportunity to appear before you today to discuss 

the use of virtual currency and the efforts of U.S. Immigration and 

Customs Enforcement to target and investigate those who exploit 

virtual currency to carry out nefarious activity. 

ICE’s Homeland Security Investigations (HSI) has long stood at 

the forefront of combating transnational criminal activity that 

seeks to exploit our trade, travel, and financial systems for illicit 

purposes. HSI is the largest investigative agency within the U.S. 

Department of Homeland Security with more than 6,000 special 

agents assigned to more than 200 domestic offices and 67 international offices in 50 countries. HSI has the authority to enforce 

more than 400 U.S. Federal statutes to include financial crimes 

and the use of virtual currency. 

Virtual currency is not a new phenomenon. Virtual currency, in 

the form of airline mileage reward programs, has been in existence 

since the early 1980’s. The challenge for law enforcement; however, 

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ized virtual currency. With its introduction, an entirely new world 

was created in relation to money laundering and financial investigations. Following its introduction, Bitcoin quickly became the 

currency of choice on the dark Net as buyers and sellers enjoyed 

the pseudo-anonymity it provided. 

The good news for law enforcement; however, is that despite the 

pseudo-anonymity exploited by the use of Bitcoin and other virtual 

currencies, as well as their ease to transfer at some point, criminals need to convert their cash into virtual currency or their virtual 

currency into cash. Whenever monetary exchanges are made, a 

choke point is created. This is the time when criminals are most 

vulnerable and can be identified by law enforcement means and 

methods. 

Utilizing the traditional investigative methods coupled with financial and blockchain analysis, HSI is able to disrupt and dismantle the criminals and the TCOs utilizing virtual currencies. Legitimate users of virtual currencies are more than willing to conduct business with a legitimate virtual currency exchange. Legitimate exchanges are registered with the U.S. Department of Treasury’s Finance Crimes Enforcement Network also known as 

FinCEN. 

FinCEN issued guidance in 2013 identifying persons or companies involved in the exchange of virtual currency as money service 

businesses, requiring them to follow regulatory and reporting protocols. Those who use virtual currency for illegal purposes; however, more often than not stay away from registered exchanges in 

an attempt to conceal their own identities. Instead, these criminals 

look to illicit or unregistered peer-to-peer exchanges that don’t require or ask for personal identifying information. They illegally 

generate revenue by charging a premium for allowing their customers to remain anonymous. They will sell cryptocurrencies above 

market value and buy below market value from those customers 

who wish to remain anonymous. 

As part of the commitment to combating the opioid crisis in the 

United States, HSI has engaged in a multiyear effort to increase 

its cyber-enabled workforce by training employees to conduct online 

investigations. Additionally, HSI has conducted virtual currency 

and dark Net training for Federal, State, local, tribal, and international partners. In Fiscal Year 2018, HSI has conducted more 

than 50 outreach and training sessions both nationally and internationally reaching over 4,000 law enforcement partners. 

HSI not only collaborates with fellow law enforcement agencies, 

we also understand the importance of partnering with the private 

industry. We expanded the focus of Operation Cornerstone which 

was created in 2003, with a primary focus and goal of detecting 

and closing vulnerabilities within the U.S. financial, trade, and 

transportation sectors. With the rapid growth of virtual currency 

and with the expansion of private companies involved in virtual 

currency, HSI has expanded Operation Cornerstone to include private industry involved in the virtual currency space. 

HSI’s increased commitment to conducting virtual currency investigations has steadily increased as evidenced by our increase in 

training and collaboration. In Fiscal Year 2011, HSI initiated only 

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ated 203. As of May 2018, HSI has already initiated 144 virtual 

currency investigations. With the increase in our investigations, 

HSI has also seen a large increase in our seizures. 

For example, in FY 2014, HSI seized 150,000 in virtual currency. 

However, by the end of Fiscal Year 2017, we seized nearly 7 million 

in virtual currency. And right now, in this Fiscal Year through 

April 2018, HSI has already seized more than 25 million in virtual 

currency. Technology will inevitably continue to evolve and law enforcement agencies everywhere must continue to adapt and evolve 

as well. HSI will continue to partner with all law enforcement 

agencies along with cutting-edge technology partners. 

In closing, I appreciate your interest in the bourgeoning field of 

virtual currency and thank you again for the opportunity to appear 

before you today. I look forward to answering any of your questions. 

[The prepared statement of Mr. Nevano can be found on page 34 

of the Appendix.] 

Chairman PEARCE. Thank you. 

Mr. Novy, you are recognized for 5 minutes. 

STATEMENT OF ROBERT NOVY 

Mr. NOVY. Chairman Pearce, Ranking Member Perlmutter, and 

Members of the subcommittee, thank you for allowing me to testify 

today. 

The challenge of the illicit use of digital currency spans across 

sectors of industry and areas of criminal law. As such, the response 

necessarily requires a whole of government approach. That is why 

I am so pleased to be here today with two of our partners from 

FinCEN and ICE. I would like to commend them for their important work and for continuing their productive partnership with us 

at the United States Secret Service. 

At its most basic level, the challenge of digital currencies mirror 

those challenges faced by the broader financial system. The key to 

success in countering crime is to identify the beneficiary of the 

crime. So, that is why we follow the money. This rule has held true 

for thousands of years and continues for crimes in cyberspace and 

crimes involving digital currencies. 

As one of the Nation’s original investigative agencies, the United 

States Secret Service has, for over 150 years, conducted criminal 

investigations to protect the American public, financial institutions, 

and critical infrastructure from criminal exploitation. In 1982, the 

Secretary of Treasury directed us to investigate crimes related to 

electronic funds transfer. Two years later in 1984, Congress passed 

legislation to expand the Secret Service’s responsibilities to include 

investigating a range of computer hacking and access device violations. And today, we have extensive authorities to safeguard financial and payment systems from criminal exploitation, especially 

from those enabled by the Internet. 

To perform our mission, the United States Secret Service has 

long kept pace with new technologies used by the financial sector. 

Accordingly, over the past 30 years, we have successfully investigated and arrested some of the world’s most significant and most 

sophisticated cyber criminals. Today, with respect to digital currencies, our primary focus is around three core areas: No. 1, crimimcarroll on FSR431 with DISTILLER

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nal schemes that undermine the integrity of the financial systems; 

No. 2, money laundering; and, No. 3, fraud schemes that include 

computer access device, identity theft, and other forms of fraud. 

Over the past decade, working with our law enforcement partners here and around the world, we have investigated and shut 

down two major centralized digital currencies, both of which supported extensive criminal activity: eGold in 2007 and Liberty Reserve in 2013. The Secret Service continues to work on a range of 

investigations involving digital currencies. A few of these cases are 

referenced in my written testimony. 

Let me stress, there are real and legitimate commercial applications for digital currencies. That said, in recent years, some digital 

currencies have been widely adopted for illicit purposes. For example, eGold and Liberty Reserve, two centralized digital currencies, 

were used: a) to purchase illicit goods and services such as drugs, 

credit card information, personally identifiable information, child 

pornography, and a range of criminal services; and, b) to launder 

illicit proceeds particularly as a means of facilitating overseas 

money transfers. 

More recently, the growing use of decentralized digital currencies 

such as Bitcoin has enabled additional criminal activities. These include: Cryptojacking, which is the use of malware or compromised 

websites to hijack the computing power of others to obtain 

cryptocurrencies through mining; the theft of crypto assets directly, 

generally by targeting the private encryption keys of users; 

ransomware in which digital currencies are demanded as part of an 

extortion scheme; and attacks on the blockchain networks themselves. 

As these decentralized currencies proliferate and evolve, new 

risks are emerging. Criminals are increasingly leveraging anonymity-enhanced currencies and services such as cryptocurrency tumblers and mixers to obscure transactions on the blockchain. In 

order to counter all these diverse illicit activities, effective law enforcement requires robust cooperation, both domestically and internationally, between law enforcement and regulatory agencies as 

well as thoughtful partnerships with industry. 

Consequently, the Secret Service remains squarely focused on 

hiring, developing, and retaining a skilled and experienced investigative workforce. We are committed to working with partners 

across the law enforcement community to jointly train and develop 

shared technical solutions. The constant development of investigative capabilities is how we maintain our ability to effectively respond to innovations of technology now and into the future. Lastly, 

continued attention is needed to ensure that law enforcement agencies maintain lawful access to critical sources of evidence regardless of where or in what form that information is stored. 

In closing, let me speak directly to those who seek to further the 

illicit activities through the use of digital currencies. As the investigative work of the United States Secret Service and our law enforcement partners continues to demonstrate, we are relentless in 

enforcing the law, and we will not be stopped by the perceived anonymity of digital currencies or the broader Internet. 

Thank you again for your opportunity to testify and I look forward to your questions. 

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[The prepared statement of Mr. Novy can be found on page 41 

of the Appendix.] 

Chairman PEARCE. Thank you. 

Mr. Ott, we have introduced you previously and I recognize that 

your just in time manufacturing has walked in just in time. If you 

are settled, we will recognize you for 5 minutes. 

STATEMENT OF THOMAS OTT 

Mr. OTT. Chairman Pearce, Ranking Member Perlmutter, and 

Members of the subcommittee, thank you for inviting me to speak 

today on behalf of the Financial Crimes Enforcement Network commonly known as FinCEN. 

FinCEN has a leading role in the regulation of virtual currency 

activity and supports law enforcement investigations involving virtual currency and related financial crimes. So, I appreciate the opportunity to discuss our work in this space and the national security implications and illicit finance risks presented by virtual currency. FinCEN also works to combat the threats presented by both 

traditional and emerging payment systems while promoting responsible technological innovation throughout the financial sector. 

In 2011, FinCEN issued a regulation that defined money transmissions services as the acceptance and transmission of currency, 

funds, and other value that substitutes for currency by any means. 

The 2011 rule serves as the foundation of our regulation of certain 

virtual currency activity. In March 2013, FinCEN issued guidance 

to clarify that virtual currency exchangers and administrators generally qualify as money transmitters under the Bank Secrecy Act. 

Virtual currency payments pose illicit financing risk and necessitate careful assessment and mitigation. In particular, we are concerned about the growing use of decentralized convertible virtual 

currency to facilitate cybercrime, fraud, extortion, drug trafficking, 

money laundering, and other transnational crimes. FinCEN estimates that at least 4 billion in virtual currency has moved through 

the dark Net marketplaces since 2011. While traditional financial 

methods remain the primary vehicle for illicit activity, FinCEN believes virtual currency presents specific illicit finance risks and 

that without vigilance and targeted action, the scale of this activity 

could grow. 

FinCEN has increasingly prioritized identifying, tracing, and disrupting the flow of illicit virtual currency activity. To that end, 

FinCEN examines financial institutions for compliance with their 

regulatory obligations to prevent money laundering and terrorist financing. In 2014, FinCEN together with its delegated examiners at 

the IRS have conducted examinations at more than one-third of all 

registered virtual currency money transmitters in the United 

States. 

FinCEN has also taken significant enforcement actions. In July 

2017, acting in coordination with our law enforcement partners, 

FinCEN assessed a penalty of over $110 million against BTC-e, an 

Internet-based foreign located money transmitter for various BSA 

violations. As part of this action, FinCEN also assessed a $12 million penalty against one of BTC-e’s operators, the highest penalty 

we have ever assessed against an individual. 

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Collaboration is critical to combat the growing threats presented 

by virtual currency. Just last month, I met with my enforcement 

counterparts at the CFTC (Commodity Futures Trading Commission) and the SEC. My staff and others at FinCEN carefully and 

closely coordinate with these agencies on an ongoing basis. 

One area where we continue to work together is on the illicit finance risk surrounding the recent growth of the initial coin offerings or ICOs. While ICO arrangements vary and, depending on 

their structure, may be subject to different authorities, one fact remains clear: FinCEN along with our partners at the SEC and 

CFTC expect businesses involved in ICOs to meet all of their AML 

(anti-money laundering) CFT (combating the financing of terrorism) obligations. 

As both a former police officer and a former Federal prosecutor, 

I also want to highlight the important collaborations FinCEN has 

with our partners in law enforcement. FinCEN has provided support in over 100 cases since 2016. FinCEN’s experts trace different 

types of virtual currency activities, identify suspicious sources of 

funds, target unregistered MSBs that do business in whole or in 

substantial part within the United States, and help disrupt 

transnational criminal networks operating in virtual currency. 

Foremost, among our challenges in combating this activity, is the 

lack of consistent AML CFT regulations and supervision of virtual 

currency activity in most jurisdictions around the world. FinCEN 

and other Treasury components are working with the Financial Action Task Force or FATF and the Egmont Group to engage key jurisdictions directly to address these vulnerabilities. FinCEN looks 

forward to working with the committee, the law enforcement partners, the public sector, and our regulatory partners to identify 

strategies to help the United States remain both a global hub for 

innovation and a safe and secure financial system. 

Thank you again for having me here today. I am happy to answer any of the questions you may have. 

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

the Appendix.] 

Chairman PEARCE. Thank you, Mr. Ott. 

I now recognize myself for 5 minutes for questions. Mr. Novy, 

you quote on page four of your document about the different 

cryptocurrencies, the different exchanges that exist, how do you— 

many times these are very dark—how do you go about establishing 

those? How easy is it to find out about them? 

Mr. NOVY. Thank you, Mr. Chairman. So, in the Secret Service 

when we conduct our investigations, we target any and all technologies or currencies that can be used for illicit activity. And so, 

therefore, digital currencies or virtual currencies are one of those 

types of technologies or means of transacting. So, what we do is in 

our undercover operations or through our operations in our criminal investigations, we investigate and look for different currencies, 

different transactions, different ways that crimes are committed 

and then we look to see how they are doing it. 

We also do that through criminal informants. Criminal informants introduce us to those different areas as well. And so, that is 

how we learn these things. 

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Chairman PEARCE. I guess my question is, do you know what you 

don’t know? Do you know how many currencies are out there that 

have not yet surfaced? Do you have a good feeling for that and how 

do you go about identifying them? 

Mr. NOVY. That is a very good question, Mr. Chairman. The answer is we have an understanding that there are a lot of digital 

currencies out there. We don’t know every single one of them. We 

understand a majority of the major ones, but currencies and coins 

can be created through technology. So, we don’t know every single 

one of them. But through our partners of our Electronic Crimes 

Task Forces, which are both members of academia, of the private 

sector as well as other law enforcement, we collaborate together to 

learn and teach each other what each of us learns and that is how 

we keep up with it. 

But the answer is I couldn’t tell you how many digital currencies 

or virtual currencies are out there, but as they come up and they 

are used by— 

Chairman PEARCE. Yes, sure. You also quote fairly significant 

numbers of transactions and are you pretty comfortable that those 

are accurate? 

Mr. Ott, let me ask you that because I think, don’t you have an 

intersection of responsibility right here at this point, aren’t you 

both looking at the same issues? 

Mr. OTT. Yes, Chairman. We have, through our intelligence division, we regularly track the incoming BSA filings, analyze those 

based on our business rules and be able to analyze that, put together a piece that would disseminate that to— 

Chairman PEARCE. Are you pretty comfortable that you know 

what is going on? 

Mr. OTT. The financial institutions are a very great partner and 

the best resource for that type of information. Yes, sir. 

Chairman PEARCE. I guess one of my deeper concerns is—well, 

let me switch over to a different question. Not all the transactions 

are illicit with the digital currency. Is that correct? 

Mr. OTT. That is correct. 

Chairman PEARCE. And so, if digital currencies are used for legitimate transactions, how does say the IRS identify tax liabilities 

for legitimate operations if you have a digital currency? 

Mr. OTT. Well, again, that would be—I am not familiar with the 

IRS procedures as it responds to virtual currency. FinCEN focuses 

on money transmissions. I know that we certainly work very closely with all law enforcement agencies as well as— 

Chairman PEARCE. OK. If I could interrupt, I am running out of 

time here. I want to drill down on this a bit. If any of you have 

an idea because this to me is one of the biggest exposures that we 

have is legitimate goods and services being bought by very difficultto-track transaction methods, and, at some point, you undermine 

the entire stability of society because society does work with its 

safety nets, with government spending off of taxation. 

And if that becomes more difficult to pursue, if it is more difficult 

to identify what those transactions are, then, I am just wondering 

is anybody thinking about this aspect, maybe right now the digital 

currencies are not that prevalent, but in a matter of time, they will 

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12 

be unless we understand what we are dealing with. So, if somebody 

wants to wrap up in a 30-second answer here. 

Mr. NEVANO. Chairman, I will take that question. It is my understanding that the IRS treats virtual currency as property and 

therefore, the sale of virtual currency actually is subject to capital 

gains tax. 

Chairman PEARCE. OK. But that is assuming they can see it. 

And all of you are talking in your testimony about many of them 

are invisible. And so, how are they going to identify it as a property 

if it is not too visible. That is my question and I will leave it dangling in the air here. 

We go to Mr. Foster now for 5 minutes. 

Mr. FOSTER. Thank you, Mr. Chairman. 

Deputy Assistant Director Nevano, are you aware of any higherranking ICE officials who will be testifying before Congress who 

might address the crisis being caused by this Administration’s polices of children being deliberately separated from their parents? 

Mr. NEVANO. Congressman, at this time, I am not aware of any— 

Mr. FOSTER. So, you are all we have. OK. 

Now, first on the issue of family separation, I understand the Administration has announced plans to expand its capacity for holding children who have been separated from their parents in facilities sometimes known as ‘‘baby jails’’. And I was wondering if you 

can give this committee any further information about what this 

expanded capacity will look like. Specifically, will ICE be constructing more cages to separate children from their parents? Will 

this expanded capacity be in the same location as the children’s 

parents where they are being held or elsewhere? 

And what sort of childcare training are the personnel running 

these facilities being given? And are the background checks for 

these personnel up to the standards that we expect for childcare in 

the United States? 

Mr. NEVANO. Chairman, thank you for your—Congressman, 

thank you for your question. I am here to testify today regarding 

virtual currency. I work for the director within the Department of 

Homeland Security. That is Homeland Security Investigations and 

our mission is basically to combat transnational criminal organizations that seek to basically exploit our immigration customs laws. 

I do not work for the director within the Department of Homeland Security that handles the matters that you have addressed. I 

would be happy to take your questions back and have someone appropriately answer those questions, but that would not be me sitting in my position with Homeland Security Investigations. 

Mr. FOSTER. Yes. So, I will be submitting those for the record 

and look forward to your responses on them because this is just a 

crucial issue. 

Now, more locally in my district, ICE in the last month or so has 

executed a number of raids. ICE conducted a 6-day enforcement action in and around my district. I was told from advocates on the 

ground, which were later confirmed by the Chicago Tribune and 

others, that ICE agents pulled over and detained one Victor Cortez, 

a Mexican national who is here legally, visiting a friend in Joliet, 

Illinois in my district. Mr. Cortez was in the country legally with 

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a valid visa and Mr. Cortez produced this visa for ICE agents and 

yet despite this, he was still detained for several hours. 

And so, my first question is, is it a common practice for ICE to 

pull over and detain anyone simply because they look Hispanic or 

speak with an accent? 

Mr. NEVANO. Again, Congressman, I appreciate your concerns 

and your questions. I am not familiar with the situation that you 

are describing. Again, I work for the Homeland Security Investigations Directorate and that does not sound like something that HSI 

would have been involved in. I am happy to take the questions 

back for the record and provide you the answers that you require, 

sir. 

Mr. FOSTER. OK. So, this issue of pulling people over where they 

actually—there is an illegal—they are here legally and are being 

pulled over, it is a little bit personal to me. My wife is an immigrant from Korea, but here obviously legally. Can she expect also 

to be pulled over because someone thinks that she doesn’t look like 

an American? 

Mr. NEVANO. Again, Congressman, I am not familiar with the 

situation. I will tell you that all HSI agents go through specific 

training, are trained not to profile and to conduct targeted law enforcement investigations. Again, specific circumstances you are 

talking about, I am not prepared to testify here today with those 

circumstances, but I would be happy to take those questions back 

and provide you a response. 

Mr. FOSTER. Yes. I would be interested specifically on the 

profiling of Mr. Cortez. Is it a common practice for ICE to impersonate police officers and conduct traffic stops or is that part of 

your training as standard operating procedure? 

Mr. NEVANO. Well, ICE deportation officers as well as special 

agents are considered, in our view, police officers. We are law enforcement officers, but to deal with the specific questions that you 

are talking about, I don’t know the specifics. So, it is hard for me 

to provide you an answer without knowing those specifics. Again, 

I am happy to take those questions back and respond appropriately 

once those questions are submitted for the record. 

Mr. FOSTER. Thank you. And I also think all of Congress looks 

forward to your superiors having the courage to appear before Congress to answer for the outrage that is happening in our southern 

border. Thank you. 

Chairman PEARCE. The gentleman yields back. 

And the Chair would now recognize the gentleman from North 

Carolina, Mr. Pittenger, for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Again, thank each of you for your statements today and your insights on these critical issues. I would ask you in these illicit cases 

that you have identified, are the perpetrators that you have previously flagged, are they suspicious? Are they regarded as being engaged in other activities outside of cryptocurrency, or is this a traditional group of people, the same plot of actors or is this a new 

breed? 

Mr. NOVY. Congressman, I could take that. So, a majority of the 

cyber criminals that we go after, a majority of them are using some 

type of virtual currency to move their money, to launder their 

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14 

money, to either make sales or purchases of illicit items or to further their crimes. We are actually going after the criminals. And 

then, as we are going after the criminals, we come across the ways 

that they are moving money and the ways that they are laundering 

money. 

And so, as Secret Service agents, we are financial crimes investigators as we have been since 1865, and so, like I said in my testimony, we follow the money. 

Mr. PITTENGER. So, these are traditional criminals that have 

been involved in previous criminality. 

Mr. NOVY. They could be. They could be. But the thing is, sir, 

they are pretty sophisticated these days. These days, the cyber 

criminals of today are a little bit different than the bank robbers 

of yesterday, but they are still doing the same thing, trying to steal 

the money. 

Mr. PITTENGER. Yes, sir. There is also evidence suggesting that 

cryptocurrencies are increasingly used in money laundering 

schemes by organized criminal groups. But does U.S. law enforcement see any trends in the use of cryptocurrencies for money laundering related to drug traffickers, human traffickers, or the tradebased money laundering? 

Mr. NEVANO. As my colleague from the Secret Service stated, we 

investigate all crimes, all crimes in the dark Net. So, yes, we would 

be concerned with drug traffickers, human traffickers, all individuals who are involved in nefarious activity. I think the goal of 

using these cryptocurrencies is the anonymity that they believe it 

provides. 

So, we in law enforcement obviously face challenges at times to 

determine who they are. Some of these individuals still use traditional means such as third-party money laundering, trade-based 

money laundering. But those who want to be pseudo-anonymous 

actually use these decentralized cryptocurrencies to conduct their 

businesses on the dark Net. 

Mr. PITTENGER. Do we have any estimates in terms of percentage, the amount of these crimes that are conducted cyber or otherwise with just the illicit use of cryptocurrencies? How much of a 

factor is it? 

Mr. NOVY. Congressman, I can’t come up with an exact percentage right now, but I can tell you that a good majority of the crimes 

that the Secret Service investigates, virtual currencies are used in 

those transactions, primarily because when they are transacting 

online in the dark Web or using criminal forums, that is how they 

can easily move money without having to talk to each other or communicate but also use anonymity. 

Mr. PITTENGER. Do you have the legal latitude to perform your 

duties? Are there any legislative interests that you have that will 

give you greater capability to be successful in your duties in stopping illicit finance? 

Mr. NOVY. For the Secret Service, I think I am not comfortable 

with the Secret Service suggesting that, but I will tell you that as 

technology increases, we use the laws and authorities that we have 

today. But, with that being said, we always have to look to see 

what is going to be the next crime, what is going to be the next 

step. 

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15 

And so, we would say that we are always looking to make sure 

that laws and statutes are always kept up-to-date so that we can 

maintain and keep active what we can get. 

Mr. PITTENGER. Is there anything that you see now, are there 

any impediments now legally that impede your ability to perform? 

Mr. NOVY. I would say currently—currently, I would say the 

CLOUD Act was a very good step in moving forward for us to be 

able to get access to evidence, digital evidence in such an area. I 

would say as we use that and as we move forward, I would look 

to make sure that we still maintain access to lawful access to digital evidence that we can get from—when we serve subpoenas and 

court orders. 

Mr. PITTENGER. Yes, sir. Anybody else want to comment on that 

point? 

Well, my last question would be related to just—do you believe 

that there are additional factors that would limit terrorist exploitation of virtual currencies and how could they impact the domestic 

or international counterterrorism community focus on this front? 

Mr. NEVANO. I think as we stated, all transnational criminal organizations, people involved in nefarious activities, there is obviously a desire to be anonymous and the use of cryptocurrencies 

would be one. So, I think it is definitely a possibility that we all 

need to be concerned about. 

Mr. PITTENGER. Yes, sir. Thank you. My time is expired. 

Chairman PEARCE. The gentleman’s time is expired. 

The Chair would now recognize the Ranking Member of the full 

committee, Ms. Waters, for 5 minutes. 

Ms. WATERS. Thank you very much. 

Mr. Nevano, I know that you are here to testify about the illicit 

use of virtual currency, but that is only one aspect of your job. As 

I see it, you are responsible—you are the Deputy Assistant Director 

responsible for the Illicit Trade, Travel, and Finance Division of 

Homeland Security Investigations and U.S. Immigration and Customs Enforcement. Is that right? 

Mr. NEVANO. That is correct. 

Ms. WATERS. OK. Can you tell me what you do with that aspect 

of your job that is described as U.S. Immigration and Customs Enforcement? 

Mr. NEVANO. So, I work for the Department of Homeland Security which Immigration and Customs Enforcement is a directorate 

under the Department of Homeland Security. Within Immigration 

and Customs Enforcement, there are several components: Homeland Security Investigations being one, Enforcement Removal Operations being another. I do not work for Enforcement Removal Operations. I work for the criminal investigations side, which is 

Homeland Security Investigations. 

Ms. WATERS. Are you familiar with the zero tolerance policy of 

the agency? 

Mr. NEVANO. Yes. I have heard of it. I know it is all over the 

news. 

Ms. WATERS. Well, I need you to help me understand a few 

things. If a mother and child or children go to what is known as 

a port of entry to claim amnesty, do you have anything to do with 

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that at all or your department, under Immigration and Customs 

Enforcement, have anything to do with that aspect of the agency? 

Mr. NEVANO. So, if an individual shows up at a port of entry and 

claims asylum, they would be dealt with by our Customs and Border Patrol, which is basically under the Department of Homeland 

Security. How my directorate would be involved in individuals who 

are claiming asylum is more from the fraud standpoint. If there 

were facilitators who are actually organizing frivolous claims of 

asylum here in the United States, it would be my directorate that 

would actually look into those frivolous claims, but we are not the 

frontline who are dealing with these individuals when they come— 

Ms. WATERS. So, explain to me how it works. So, a mother and 

children show up at the port of entry claiming amnesty and as I 

understand zero tolerance policy, they are not facilitated in the way 

that we thought the law works. They could be subject to detention 

at that point. What happens to the child at that point? 

Mr. NEVANO. Again, Congressman, I am not familiar with the 

current practices along the border because I do not work for that 

directorate. So, I cannot comment, but I would be happy to take 

those questions back for the record. 

Ms. WATERS. You are the Deputy Assistant Director and U.S. Immigration and Customs Enforcement is part of your responsibility 

or oversight. Do you supervise anybody in that division? 

Mr. NEVANO. So, again, I do work for Immigration and Customs 

Enforcement, but specifically for Homeland Security Investigations 

and we do not have people on the frontline who are making those 

determinations of admissibility when an individual enters the 

United States. 

Ms. WATERS. What and how do you investigate someone who is 

claiming amnesty who is thought not to be eligible for amnesty? 

What happens to them at that point? 

Mr. NEVANO. We don’t investigate every single person who 

claims— 

Ms. WATERS. But the ones that you do investigate, what happens? How do you do that? 

Mr. NEVANO. We are looking more to the facilitators, the organizations who are exploiting these individuals who are claiming asylum, taking their money, filing frivolous claims. That is more what 

Homeland Security Investigations does. We are not looking at 

every single person who files an application. 

Ms. WATERS. I know that you may not be looking at every single 

individual, but those that you do look at, maybe it is a mother with 

children who you think may be part of a ring where they are trying 

to get folks into the United States at the port of entry, you have 

to investigate them. You don’t investigate all of them, but when 

you do, how does it work? 

What do you do from that point? And if you want to continue the 

investigation because you are suspicious, you have enough information that would lead you to believe that something is going on, 

what happens to the child? Who has the responsibility for taking 

the child if you are going to retain the woman or the family? What 

happens at that point? 

Mr. NEVANO. Again, Congressman, I do not deal with the detention of individuals. Those decisions are made by another direcmcarroll on FSR431 with DISTILLER

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torate. We are on the backend. We are investigating when people 

have already made an entry into the United States. They may have 

a hearing before an immigration judge here in the United States. 

We are not involved in that. 

Ms. WATERS. So, you are not involved in the supervision of that 

aspect of your job at all. Is that right? 

Mr. NEVANO. That is correct. 

Ms. WATERS. Thank you very much. I yield back the balance of 

my time. 

Chairman PEARCE. The gentlelady yields back. 

The Chair now recognizes the main man from Maine, Mr. 

Poliquin, for 5 minutes. 

Mr. POLIQUIN. Thank you very much, Mr. Chairman. Thank you, 

gentlemen, for being here very much. I appreciate it. 

You folks deal with criminal activity at the Federal level or from 

a Federal standpoint and you have a lot of tools available to you 

that we don’t have up in Bangor, Maine or Lewiston, Maine, both 

of which I represent. I represent the rural part of Maine and Bangor and Lewiston are part of my district. 

Tell me a little bit about the type of training that you folks might 

extend to law enforcement officials on the ground at the local level 

in our great State and other parts of our country. Mr. Nevano, who 

wants to take a shot at that? 

Mr. NOVY. I will take that one. 

Mr. POLIQUIN. Yes. 

Mr. NOVY. So, the Secret Service, we actually have partnered 

with the State of Alabama and we have the National Computer 

Forensics Institute in Alabama. 

Mr. POLIQUIN. Right. 

Mr. NOVY. Fantastic operation, fantastic organization and what 

we do there is we train solely State and local law enforcement, 

prosecutors, and judges. The Secret Service, we focus on the law 

enforcement portion of it while the State of Alabama District Attorney Association focuses on the prosecutors and judges. 

And what we do is we take the same level of training that we 

give our Secret Service agents and we provide that to State and 

locals especially for someone like your folks in Maine, upstate, 

downstate, wherever you are going to go. The idea is we are looking to train the cyber supply chain if you want to call it, all the 

way from law enforcement all the way up to judges so that they 

completely understand and we don’t leave them alone. 

The main thing is after they get their training, they actually 

leave with the equipment that they are trained on because many 

times, they can’t afford a digital forensic lab of their own. So, when 

they leave there, whatever equipment they are trained on, they actually get that equipment. They take it back to their police department and use that at their police department to work on any investigation. It doesn’t have to be a cyber crime. It could be a rape. It 

could be a murder. It could be a bank robbery. It could be any type 

of crime. 

The main thing, though, is when it deals with cyber, cyber is 

really difficult technology and sometimes it takes a little bit more. 

And so, we don’t leave people hanging out there as well. What we 

do is we connect them to our electronic crimes task forces. By doing 

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that, let us say an officer in Maine has a hard time trying to figure 

out a forensic tool or something along those lines, we will work 

with them through our Electronic Crimes Task Force primarily in 

Boston, but we will actually send agents up to Maine if we need 

to, to help them understand. We will work whatever they need to 

work on. 

Mr. POLIQUIN. My primary constitutional responsibility, Mr. 

Novy, is to protect our families and there is no one who is more 

pro jobs, pro business, pro national security, pro protecting our 

families than I am. So, I really appreciate you giving me that information because it is all hands on deck. We have to make sure that 

the folks at the local level who are the frontline, that thin blue line, 

have the tools they need to do all of this work. And this whole 

cryptocurrency and everything else is new to a lot of folks and very 

complicated. 

Let me morph a little bit and maybe, Mr. Nevano, this would be 

for you, but if not, someone else jump in, ransomware where bad 

actors are able to put a virus or something else on your system 

whether it be personally or at a business and effectively contact 

you and say, ‘‘Unless you pay us X amount of money, we will let 

this virus run rampant and destroy your system and interrupt your 

workflow’’ and which could kill jobs and so forth and so on. 

What about the use of cryptocurrency to pay that ransomware— 

excuse me, that ransom, if you will, to remove that problem from 

your network? Do you folks run into that and how in the heck do 

you fight that? How do our folks at the local level fight that? 

Mr. NOVY. I will take that one as well, Congressman. 

Mr. POLIQUIN. Thank you. 

Mr. NOVY. So, ransomware, actually we believe at the Secret 

Service, has proliferated from the use of digital currencies because 

it is used in just about every payment that you can imagine for 

ransomware, and because of the anonymity and the quickness that 

you could make a transaction, that is why people use virtual currencies for ransomware. 

The tough thing about ransomware is it does take preparation. 

People should take into consideration basic cybersecurity and basic 

cyber practices. People should have backups to their systems. In 

the Secret Service, we have actually gone out and done a whole 

bunch of workshops all around the Nation with us as well as with 

the Financial Services Information Sharing Analysis Center as well 

as the FBI where we have gone and we have taught different 

courses and classes of how to defeat or how to get prepared for 

ransomware. 

But to answer your question, virtual currency has actually been 

the propagator for ransomware we believe. 

Mr. POLIQUIN. If I call Bill O’Malley who is the Chief of Police 

in Bangor or Phil Kroll who is the Chief of Police in Auburn, 

Maine, would they know who to call at your shop to get help for 

any of these issues? Are you folks pretty good as far as outreach 

to our local folks in the ground? 

Mr. NOVY. Yes, absolutely. So, we have an office in Portland, 

Maine and that office in Portland, Maine is actually there to go and 

liaison with all law enforcement agencies no matter how big or 

small they are in your State. 

mcarroll on FSR431 with DISTILLER

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Mr. POLIQUIN. OK. 

Yes, sir. 

Mr. NEVANO. I am familiar with your AOR being from New England and I know that we have multiple task forces. We have an office in Portland, Maine; Bangor, Maine; as well as Houlton, Maine. 

And I know that we have several task forces in those areas where 

we work every day and collaborate with State and local law enforcement officers in your district. 

Mr. POLIQUIN. Great. Well, thank you very much, and I do want 

to— 

Chairman PEARCE. The gentleman’s time is expired. 

Mr. POLIQUIN. How do you divide your loyalties between the Red 

Sox and the Nationals if you are from New England? It is not easy. 

Thank you, Mr. Chairman. I yield back my time. The witness 

does not have to answer that question. 

Chairman PEARCE. It was not the lapse of time. It was your problem with the last statement. Thank you. 

But now, I recognize the gentlelady from New York, Mrs. 

Maloney, for 5 minutes. 

Mrs. MALONEY. Thank you. I thank the Chairman for yielding. 

Mr. Nevano, first of all, I would like to thank all of the panelists 

for being here. But, Mr. Nevano, I am sure you are aware of what 

is happening at our southern border. Children including babies are 

being ripped out of their parents’ arms and these people were just 

merely looking for a better life for their families here in the United 

States. It is nothing short of government-sanctioned child abuse 

and runs counter to everything that we stand for as a Nation. 

I have seen photos of children in cages, heard recordings of children crying, and spoken with fathers at a detention center this 

past weekend in New Jersey where they came legally seeking asylum and were put into detention prisons. And one father said, at 

three o’clock in the morning, they came and tore his daughter from 

his arms. And just last night, the Associated Press reported that 

babies and toddlers are being shipped literally hundreds of miles 

away from their parents to be housed in so-called tender age facilities. 

Make no mistake. I don’t care what they are called. These are 

prisons—prisons for babies. And has this Administration no soul? 

Have they no basic human empathy? This is not governance. This 

is not enforcing existing law. This is law that was made up by this 

Administration. And it is stone cold evil and is entirely the choice 

of this Administration and a reflection of a heartless ideology. 

So, my question, Mr. Nevano, is that surely many ICE agents are 

mothers and fathers in addition to their role with the agency. Is 

there any concern among your colleagues about the irreparable 

damage this policy of separation will have on these children? 

Mr. NEVANO. Congressman, thank you for your question. Again, 

working for Homeland Security Investigations, we are not involved 

in that aspect of what you are speaking about. I am a parent and 

of course I understand exactly what you are saying. I have been 

doing this job for 27 years. I am a law enforcement officer and I 

certainly understand what you are saying. 

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But I am not here to comment on that because I am here to testify on virtual currency. I would be happy to take any specific questions you have back for the record. 

Mrs. MALONEY. Well, this Administration has deliberately chosen 

this path and would you agree that the Administration has the authority to change this policy? But now I know you are not going 

to answer, but I do believe they could change it. 

But before I close, I would like to play a very troubling recording 

that has been widely circulated in the news this week. 

[Audio recording played.] 

Mrs. MALONEY. Well, I just want to close by saying as a mother 

of two children, I find this policy absolutely unconscionable. I cannot imagine what it is like to have your children torn from your 

arms and these are people that are just seeking a better life for 

their families. They are coming here seeking asylum. We have always been a beacon of hope to the world, and persecuting and separating children from their families is just un-American and just 

plain wrong. 

And it is an outrageous policy. It needs to end and we need to 

make sure the Administration absolutely never does it again. I 

thank you very much and I yield back. 

Chairman PEARCE. The gentlelady yields back. 

The Chair would now recognize the gentleman from Ohio, Mr. 

Davidson, for 5 minutes. 

Mr. DAVIDSON. Thank you, Mr. Chairman, and thank you to our 

witnesses, I appreciate your expertise on financial crimes enforcement, illicit finance, and particularly related to cryptocurrencies 

today. Hopefully, we can stay on topic during my 5 minutes, I will 

try to stay focused on the topic at hand. Because it is hard to get 

these hearings scheduled, so thank you, we can’t change course on 

hearings all the time because of the news of the day, pressing as 

it is, I trust that we are on a path to a better policy in all sorts 

of arenas, including this one which we are here to work on. 

So, the past several years I have been watching the growth of 

digital assets and cryptocurrencies and I am excited about the opportunities they create. And I am curious just in terms of framing 

this issue, it is very important that your tools in your kit bag stay 

in compliance with current laws. And we have illicit finance denominated in U.S. dollars, correct? Correct? 

Mr. NOVY. So, Congressman, it could be denominated in a number of things, the cost or the value of digital currency— 

Mr. DAVIDSON. No, no. I am not talking about cryptocurrencies, 

I am just—the cash, cash in bags, duffel bags of cash, hay bales 

full of cash, ship containers full of cash, rail cars full of cash, suitcases full of cash, we transact in cash, right? 

There is also illicit finance in hawala networks, right? These 

things aren’t illegal, we are looking for ways to be able to—U.S. 

dollars aren’t illegal, carrying cash in a satchel is not illegal. 

Though we have set trip wires in place like crossing a border with 

too much cash without reporting that they are crossing a border 

with too much cash. These are the things that help you catch that. 

Still struggling last I heard about hawala networks and things 

like that. Though operating a hawala network isn’t illegal, operating one to do illicit things is. And I guess, how do we apply those 

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sort of kit bag things to cryptocurrencies so that we protect the use 

of cryptocurrencies, yet have the trip wires that help us detect illegal activity with the cryptocurrencies? 

Mr. NEVANO. So, when we conduct our investigations, as you are 

mentioning all tools in our tool bag are used, whether it is traditional schemes to attack money laundering, which would be as you 

are mentioning: Bulk cash smuggling, third-party money laundering, trade-based money laundering, we also—as my colleague 

from Secret Service mentioned, use of confidential informants, use 

of undercover operations, whatever we can do to basically detect, 

disrupt, and dismantle those organizations, whether they are using 

the traditional methods that you are speaking about, or 

cryptocurrencies, we are trained to actually attack the problem as 

it exists. 

Mr. DAVIDSON. In general, when something moves across an electronic format, is it easier to have record keeping on that than say 

hawala or cash? Even cryptocurrencies? There is a record, right? A 

searchable record or queriable record? 

Mr. NOVY. So, Congressman, the answer is usually yes. Usually 

when it creates a record there is an electronic record that can be 

followed. However, in virtual currencies sometimes it can be obscured through tumblers or mixers, or something along those lines 

as well. So, there is a record if you can find it, but sometimes it 

is a little bit harder to find. 

Mr. DAVIDSON. OK. And so, additional guidance has been given 

to provide compliance as money service businesses for people that 

are doing these transactions in the U.S. We have places that don’t 

comply with those laws just like we have it for people who don’t 

comply with it for wires and other ways that we do it with cash. 

I am concerned about, in the States, we have all sorts of regs 

that are duplicative. Wyoming has some laws related to crypto, but 

so does New York. I am not sure why New York needs such a 

heavy-handed AML provision, do you view the duplication as counterproductive, would it be easier to have a uniform reg across the 

country or is it easier to have State-based systems as well? 

Mr. OTT. Well, Congressman, for FinCEN’s perspective, of course 

we are on the Federal level, but many we recognize that we work 

very closely with some of our State regulators as well, they adopt 

many of the similar provisions as are found in the Bank Secrecy 

Act, and what we find in terms of the biggest challenge that we 

have in regulating virtual currency is in fact, an inconsistent or 

lack of consistent AML CFT regulations internationally that open 

up vulnerabilities within the United States. And I believe, while we 

are working with our foreign counterparts to try to correct that situation, feel that there will still be a vulnerability until we have 

that international cooperation. 

Mr. DAVIDSON. Thank you, my time has expired. 

Chairman PEARCE. The gentleman’s time is expired, the Chair 

will now recognize Mr. Vargas for 5 minutes. 

Mr. VARGAS. Thank you very much, Mr. Chairman, I appreciate 

the opportunity. Again, I want to thank the three witnesses here 

today, as I especially want to thank them for your diligent work 

against illicit use of cryptocurrency, especially in sex trafficking 

and drug trafficking. Again, thank you very much. I do, however, 

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want to ask some questions to Mr. Nevano, I am taking a look here 

at the information that you sent to us and it does say, U.S. Immigration and Customs Enforcement right at the top. 

And I think when you were introduced, we heard that you had 

more experience than your present job. Could you repeat again, 

your career has been long, it has been 27 years in law enforcement 

and we appreciate that, what other experiences, what other jobs 

did you have with ICE? 

Mr. NEVANO. Congressman, I started my career as an immigration inspector. That is where I started my career. I became a special agent. I worked my way up to be a group supervisor. Assistant 

special agent in charge. As you are probably aware, in 2003, Immigration Naturalization Service and Customs actually merged to 

form Immigration and Customs Enforcement, Homeland Security 

Investigations. Since my time in headquarters, I have worked as a 

unit chief in asset forfeiture, I was the chief of staff for the deputy 

director of Immigration and Customs Enforcement. And I was also 

now in my position, I am the Deputy Assistant Director for Illicit 

Trade, Travel, and Finance. 

Mr. VARGAS. So, you do have quite a bit of experience beyond 

simply working in the position that you have today, I think some 

of the questions that we were asking of you were questions maybe 

that you do have some experience on. I do want to ask some myself, are you familiar with the family—the Family Case Management program? 

Mr. NEVANO. I have heard of it, sir. I know it is part of the enforcement removal operations portfolio; I am not intimately, 

though, knowledgeable about it. 

Mr. VARGAS. OK. It had an almost 100 percent court appearance 

rate, so this is where the families were not separated instead they 

were able to stay together, and then they had to come back for 

court appearances, it almost had a 100 percent rate of people coming back for their court appearance, it was very, very successful. 

It didn’t—they did this for families that weren’t flight risks and 

they weren’t dangerous, it was quite successful, I don’t know why 

we stopped it. But that is one of the reasons why there has to be 

the separation of families the President says, there does not have 

to be, when, in fact, the President claims the DHS is required to 

separate families under current law, I don’t understand, maybe you 

could explain that to me. 

Contrary to claims by the Attorney General, the Bible in Romans 

13, which I know well, I studied to be a priest for a number of 

years, it is not statutory authority. It doesn’t justify this horrific 

and unconscionable policy. But can you point to any statutory authority mandating that families be separated because, I can point 

you to these—the Family Case Manager program that didn’t do 

this, didn’t separate the families? 

Mr. NEVANO. I am not familiar with any statutes that require 

that, Congressman. 

Mr. VARGAS. I can tell you this and I think you would agree with 

this, I represent the border in California, and I do go and visit not 

only with ICE but the CBP and BP, Border Patrol, I can tell you 

this what they are doing today, your agents, they are bringing diapers that they are paying for themselves, milk for kids, other 

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things that these children need, because they know they are going 

to be separated, and they think because like you, they are parents, 

they think they need these things. 

If you ask your own agents out there, you will tell—they will tell 

you, they do not like what they are doing, they are not happy about 

it, they are spending their own money trying to help these kids, are 

you familiar with any of that? 

Mr. NEVANO. Congressman, again, I think you are speaking 

about Border Patrol agents— 

Mr. VARGAS. No, no. I am also speaking about the CBP, and I 

am also speaking about ICE. 

Mr. NEVANO. CBP is not under my directorate, so again, our special agents more than likely, unless they are investigating some 

type of transnational criminal organization entering the border, 

would not be involved in some of the circumstances you are speaking about. 

Mr. VARGAS. But I think you are being very technical, because 

you do have experience within all of the range there, if you—as you 

would under—as you described to me earlier, you were in fact the 

line officer, you did in fact have— 

So, what I would tell you is this, this policy that you have now, 

I wish you would go back and look at those and talk to your agents 

on the look—on the ground, they don’t like it, they know it is not 

their values. When you go and you see like I had the opportunity 

to see on Monday these children, they just want their moms, they 

just want their dads. What we are doing is wrong. Certainly not 

based on Christianity or any type of religion that I am aware of, 

and it has to be reversed. 

Your own agents, if you talk to them, they will tell you, and you 

can go there and see the diapers that they buy, the food that they 

buy for these children, because they are concerned about their own 

safety, the safety and the wellbeing of these kids when they are 

separated from their moms, they are parents too. If you would like 

to answer the questions. 

Mr. NEVANO. Congressman, in my 27 years career, I have worked 

under several different Administrations, and during those Administrations with the change, laws continually change, the way we are 

enforcing laws. And, again, what you are speaking about now in 

the current environment I am not involved with what you are 

speaking about. We are involved in the aftermath, if there are individuals who are being so exploited, who are victims who are being 

supported by organizations, that is where we will come in to try to 

look at the facilitate—the people who are facilitating this activity. 

Mr. VARGAS. Thank you, I yield back. Thank you. 

Chairman PEARCE. The gentleman’s time has expired. The Chair 

would now recognize Mr. Budd for 5 minutes. 

Mr. BUDD. Thank you, Mr. Chairman. And again, thanks to the 

witnesses for your time today, for your expertise, all you do for security for our country. And I want to shift a bit to the topic, the 

original topic at hand, terror financing and virtual currencies. So, 

the Foundation for Defense of Democracies or FDD, they have been 

a great resource to me and staff on issues like this. And they recently reported the first publicly verifiable instance of an online 

propaganda unit, it was based in Gaza, in the Gaza Strip, calling 

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for Muslims worldwide to donate funds for terrorist purposes. They 

only raised a few hundred dollars, but even this is an early sign, 

I am thinking, and it is disturbing that terrorist financing mechanisms are evolving using this technology. 

I have also seen evidence of Hamas groups embracing the technology and promoting Wallet apps like Telegram. So the question 

is, what is the likelihood that we see more propaganda or terrorist 

campaigns from groups like this in the future? And what can be 

done to prevent it from happening? 

Mr. NEVANO. I am familiar with the article that you mentioned 

and I would agree with you that I believe there were only two individuals that actually volunteered to donate, it was somewhere in 

the vicinity of $500 that was—that was received, so although it 

was a low turnout as far as volunteers, it did something that law 

enforcement would be concerned about, because as virtual currency 

continues to grow, it is certainly an avenue that could be used for 

those types of propaganda situations to collect money in support of 

terrorist organizations. 

Mr. BUDD. So even at a few hundred dollars, we still shouldn’t 

dismiss something like this? 

Mr. NEVANO. Absolutely not. 

Mr. BUDD. OK. Thank you. Can you tell me what factors are limiting terrorist exploitation of the virtual currencies, basically what 

is working, and how that should impact the counterterrorism community, and Congress’ focus on this front? 

Mr. NEVANO. So one of the challenges I think is terrorist organizations are used to the traditional money laundering/bulk cash 

smuggling, hawala situations. I think one of the challenges that we 

may be facing for the traditional terrorist organizations that we are 

speaking about, is maybe some of the resources logistics, some of 

the locations that they are involved, and that they don’t have the 

technology right now, but, over time with, as technology advances, 

et cetera, that certainly would be a concern. 

In lone wolf terrorist type of situations where you may have a 

domestic terrorism situation, that, to me, would be a concern, because they would have the technology, they would have the access 

to the internet, et cetera, working right at home from their computers, and that certainly would be a concern. 

Mr. BUDD. Thank you. Gentlemen, do you care to comment on 

what is working and how you would ask Congress to focus on this 

front? 

Mr. NOVY. From the Secret Service standpoint, we are—our area 

is not terrorism or counterterrorism, but the—what we see is 

though, is that on the criminal side with the exploitation of digital 

currency to move forward their crimes, we know that terrorists 

look to gain education from how other criminals are doing things. 

And so, how other criminals are moving money, and then they can 

learn from that. So from my expertise, I see it going, as I see it 

rising in criminal activity, I would assume, that, at some point, the 

terrorists will start learning from the criminals. 

Mr. BUDD. Good. 

Mr. OTT. From FinCEN’s perspective, I would just mention that 

we work very closely in partnership with the financial institutions 

in terms of our outreach and we see, have seen from 2016 to 2017, 

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a 90 percent increase in the BSA filings involving some type of 

cryptocurrency across the variety of criminal activities, whether 

that is terrorist financing, narcotics trafficking, money laundering, 

or other illicit activities. So to that extent, we are very pleased with 

the increase of the type of law enforcement intelligence that we can 

share with our counterparts. 

Mr. BUDD. Thank you all for this, a little bit different type of a 

question, but I would like to get law enforcement’s perspective on 

this, and it is a hot topic right now especially here in D.C. as we 

look at this as legislators, but how should we classify virtual currencies? Is it a security, is a commodity, another form of property? 

And what is the appropriate framework for us to use to work on 

legislation addressing virtual currencies? 

Mr. OTT. Thank you, Congressman. I think—from again, from 

FinCEN’s perspective, we certainly recognize that this is a complex 

area, we focus on money transmissions, specifically. So our concern 

is the transmission of either currency, finds, or what we say is a 

subset—of other value that substitutes for currency. And we have 

said that in our guidance and in our legislation that the current 

virtual currency is also included in that definition of other value, 

that substitutes for currency. 

So we feel that certain regulatory regime right now, that we have 

in place, is sufficient to cover virtual currency, and to be—provide 

the correct reporting. And I would also say that that applies to 

whether or not an MSP or a money transmitter is located within 

the continental United States or outside the United States, but 

does substantial, either substantial business within the United 

States or other. 

Mr. BUDD. My time has expired, I yield back. 

Chairman PEARCE. The Chair would now recognize the gentleman from Georgia. Mr. Scott for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. I am sitting here and I 

am absolutely amazed. You all are sitting here and just seemingly 

unknowledgeable about one of the greatest tragedies that we are 

faced with, with the treatment of these little children at the borders. 

Now, Mr. Nevano, several Members have asked you, and questioned you, and reminded you that you do have responsibility here, 

you keep saying, you don’t. Your entity deals with MS-13s, the 

gangs, the drug cartels, all of the very reasons that we got in this 

situation today. These people are putting their children first. I 

looked up there, I saw this picture of this little girl, I wish they 

would put it back up there at the truck and she is looking up, and 

you know what I saw from that? 

I said what the Lord said, ‘‘Suffer the little children to come unto 

me: for of such is the kingdom of God.’’ If you really understand 

that scripture is it because people were trying to push this one up 

to see, that one up, but He said no, it is the children who come 

first, that is why this Nation is crying out to stop this meanness. 

There is the picture right there, look at it, Mr. Nevano, there it 

is right there, would you mind? That is the image of the United 

States of America, we have to stop it now. If you can’t give information to us, you are the representatives of this Administration, 

that ain’t the Democrats causing this, it is President Trump, and 

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take a message back to him. That the Lord said, ‘‘First, suffer the 

children to come unto me: for of such is the kingdom of God.’’ 

That is the scripture that they should be admonishing. Tell me, 

Mr. Nevano, when was the first tolerance, the zero tolerance policy 

first put into place? 

Mr. NEVANO. Congressman, I am not specifically aware of when 

it was put in place, my recollection from hearing it in the news was 

maybe sometime around April. 

Mr. SCOTT. How many children have been reunited since the zero 

policy has been put in place? 

Mr. NEVANO. Again, I do not work in that directorate, so I do not 

have that information. 

Mr. SCOTT. And you can see from the pictures there, that most 

have not been reunited. What is going to happen to these children? 

How many people who legally entered this country to seek asylum 

have been detained as a result of this policy? 

Mr. NEVANO. Again, I do not have those numbers with me. 

Mr. SCOTT. How many children separated from their families on 

the U.S.-Mexican border have had to enter the foster homes? The 

foster care as a result of this Administration’s decision? 

Mr. NEVANO. I do not have that information. 

Mr. SCOTT. Yes. How many children may never see their mothers 

or their families again because of what this Administration has decided to do on the borders? Think about it. 

I am telling you, man. We have to stop this. If there’s any message to take back to the White House, tell them to stop it. This 

country has been blessed by God. Divine intervention is throughout 

our history, from the soldiers at Valley Forge, to those who went 

to Montezuma fighting. We are the beacon of hope, liberty, freedom 

of the world. The little girl on these pictures looking up, that ain’t 

America. Please, will you take that message back to the President? 

Chairman PEARCE. The gentleman’s time has expired. The Chair 

would now recognize Mr. Crist for 5 minutes. 

Mr. CRIST. Thank you, Mr. Chairman. I just have a few questions 

for you, Mr. Nevano. How many children have been separated from 

their families since the Trump Administration announced the zero 

tolerance policy on April 6, 2018? 

Mr. NEVANO. I don’t have that information. I am happy to take 

it back for the record, and see if our enforcement removal or our 

other component within DHS can get that information for you. 

Mr. CRIST. Thank you. And I will provide these for you before 

you leave. What is the plan to reunite the children with their parents? 

Mr. NEVANO. Again, I don’t—I am not involved in the policymaking on that side of the enforcement house, I don’t have that information, but, again, I am happy to take that back for the record. 

Mr. CRIST. Physically, where is your office? 

Mr. NEVANO. It is located at 12th & D Streets, sir. 

Mr. CRIST. And your colleagues there, have you had any conversations about what is all over the news for the past 72 or so 

hours? Any concern about it? 

Mr. NEVANO. I watch the news every morning like everyone else, 

and obviously see what is going on, but it is not a topic of conversamcarroll on FSR431 with DISTILLER

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tion within my directorate, because, again, we are not involved in 

that activity. 

Mr. CRIST. Nobody there has talked about this? 

Mr. NEVANO. Absolutely, it is on the news, everyone is watching 

it, but it is not a conversation that I have. I was here to prepare 

for virtual currency and that is how I spent my past week or so 

preparing for this hearing on virtual currency. 

Mr. CRIST. You have dedicated your life, it sounds like to appropriate law enforcement? 

Mr. NEVANO. Twenty-seven years, I have. 

Mr. CRIST. Do you think this is the right kind of law enforcement 

for the United States of America? 

Mr. NEVANO. Again, I am not here to give my opinion, I am a 

sworn law enforcement officer, that I was sworn to defend the laws 

of the United States, but I am not here to comment on my personal 

situations, I am happy to take any questions you may have, but— 

Mr. CRIST. I am not asking about your personal situation, I am 

just asking your opinion, sir. 

Mr. NEVANO. I don’t have an opinion on that, sir. 

Mr. CRIST. OK, that is interesting. You have no opinion on this? 

Mr. NEVANO. I have an opinion on what my job is and what I 

am required to do and— 

Mr. CRIST. No, I am talking about what we are talking about. 

Mr. NEVANO. Congressman, anyone who looks at that picture obviously would have concerns looking at that picture. I faced several 

of these situations in my career as an immigration inspector, and 

what I—what I have done is if I was directed to do something, I 

would do what the direction of the—my superiors in my Administration told me what to do. 

Mr. CRIST. Even if you felt it was wrong? 

Mr. NEVANO. That is my job, I swore on the oath to uphold the 

Constitution of the United States. 

Mr. CRIST. But what if it is not a constitutional act they are asking you to do? 

Mr. NEVANO. It may be a directive that we are following that is 

from our leadership, and that is what I do on a day-to-day basis, 

if I get direction from my leadership, I follow what my leadership’s 

directives are. 

Mr. CRIST. Follow right or wrong? 

Mr. NEVANO. It is not my decision to make, Congressman. 

Mr. CRIST. Yes, it is. Yes, you are a citizen of this country, you 

don’t have to do everything you are told to do if you think it is 

wrong and immoral. 

Mr. NEVANO. If there was something that was immorally correct 

or is not legal, then obviously I would not do that. But— 

Mr. CRIST. I am glad to hear that. 

Mr. NEVANO. Yes, absolutely. I have 27 years, and I have been 

doing my job for 27 years, I am a family member, obviously, situations like that when you see that, touch everyone’s heart, but, 

again, we are not the ones to blame for this situation, meaning me 

as a special agent within my Homeland Security directorate, if 

laws need to be changed, they need to be changed, but it is not me 

to make the change in the law. 

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Mr. CRIST. I am not blaming you. I didn’t say that. Who do you 

think is to blame for this? 

Mr. NEVANO. I think obviously the laws need to be changed, I am 

not here to say who is responsible for it, but if the laws need to 

be changed, it is not for me as a deputy assistant director, at my 

level, to be making those changes. 

Mr. CRIST. Do you know if any children have been physically 

harmed or died while in this custody since April? 

Mr. NEVANO. That I am not sure about. 

Mr. CRIST. Can you find out? 

Mr. NEVANO. I am happy to take any questions you have and get 

it to the appropriate locations within the Department of Homeland 

Security. 

Mr. CRIST. Thank you for your help. 

Chairman PEARCE. The Chair would now recognize Mr. Heck for 

5 minutes. 

Mr. HECK. Thank you, Mr. Chairman, thanks to all the witnesses 

for being here today. I am not sure who can answer this question, 

anybody that has the answer I would appreciate. How long is the 

list of mothers with young children who have been detained at the 

border are suspected or known to have used cryptocurrency for illicit purposes? 

Mr. NEVANO. I am not aware of that. 

Mr. HECK. Any? So we can at least eliminate that category of 

reason to be afraid of young mothers with young children? Mr. 

Nevano, you have had a distinguished career, and I sincerely thank 

you for that at ICE. I would like to ask you if you believe that the 

current resources provided ICE and the staffing levels that result 

therefrom are 100 percent sufficient for the agency to fulfill its mission in a robust fashion? 

Mr. NEVANO. Congressman, we have plus or minus 6,500 special 

agents within the Homeland Security Investigations, we could obviously use more— 

Mr. HECK. No, sir. I asked about agency overall, drawing upon 

your 27 years, the question is very straightforward, does the agency overall, from where you sit, based on your 27 years of experience, have 100 percent of the resources and staffing it needs in 

order to fulfill its mission in a robust fashion? 

Mr. NEVANO. Again, I am familiar with my directorate which is 

Homeland Security Investigations, I am not familiar with the other 

components within DHS, there are over 22 components within 

DHS, I am not familiar with every other component. 

Mr. HECK. Is it your impression you have all the staffing and resources you need? 

Mr. NEVANO. Within Homeland Security Investigations, we could 

certainly use more. 

Mr. HECK. So, if that is also true, if the other divisions at ICE, 

we can reasonably and logically conclude that if they were asked 

to do anything additional, it would only come of the compromise or 

result in a compromise of their effort to fulfill their mission? 

There is a Federal prison, Mr. Nevano, in Victorville, California 

where we now have about a thousand ICE detainees. Do you know 

whether or not the guards there have been trained to deal with the 

non-criminal occupants and immigrants at that facility? 

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Mr. NEVANO. No, I am not, Congressman, I am not aware. 

Mr. HECK. Do you know whether or not the immigrant detainees 

are being accorded the same rights and privileges as the prisoners, 

violators of crimes, such as visitation and access to counsel and recreational opportunities? 

Mr. NEVANO. I am not familiar with the situation in that facility. 

Mr. HECK. I have a facility in my district that is called the Selma 

Carson Home which 16- and 17-year-old unaccompanied boys are 

kept, do you know if the current population includes anyone that 

has been separated from their parent? 

Mr. NEVANO. I do not. 

Mr. HECK. I guess I would like to make an observation if I may 

about this overall issue, because the truth of the matter is, I completely understand somebody that is deeply concerned about our 

Nation’s security in general, and as it even relates to some degree 

with respect to borders. 

What is difficult for me to understand is the obsession on just 

one border, and the obsession on only one fix to the issue there. I 

guess I can’t forget the fact that a goodly number of the people who 

helped plot and implement the 9/11 attack on our soil, the deadliest 

in our Nation’s history, came in through the northern border, not 

a lot of talk about enhanced northern border security. And I am 

very mindful of the fact that nearly 50 percent of the people who 

are here without the appropriate documents came in legally and 

just stayed. 

And yet, all the focus seems to be on one of our four borders, the 

water on our east and west take care of that, nothing on the north 

for all practical purposes, nothing on the way the people who come 

here legally but stay. 

I guess, in simpler terms, this strikes me as if somebody owned 

a home and they felt that they had a security risk of being robbed, 

they decide to build two walls, not four, two, in order to protect 

themselves, or even one wall, leaving the other two or three open. 

I guess that would be one way to try to protect themselves, not 

very effective, or they could buy an alarm system, or they could put 

up increase lighting, or they could trim the bushes that provide 

cover for people, or they could buy a dog, or, my point being, that 

the issue of security has to be solved intelligently. Not just with a 

half-baked, half idea on how to provide for our Nation’s security. 

Thank you, Mr. Chairman, and I yield back. 

Chairman PEARCE. The gentleman’s time has expired. The Chair 

would now recognize Mr. Capuano for 5 minutes. 

Mr. CAPUANO. Thank you, Mr. Chairman. Thank you gentlemen 

for being here. And honestly, I was looking forward to having a 

hearing on the subject matter that was advertised, but with today’s 

crisis I assume by now you have figured out we just can’t do that. 

We can’t remain silent. 

Mr. Nevano, I see you have an excellent education, I am a B.C. 

guy, too. My son as well. I don’t remember being taught by any of 

the Jesuits it was OK to separate parents from children, and I 

want to be real clear, you have been incredibly professional under 

some tough questionings, and I respect your position, and I am not 

going to try to make you, put you in a tough position, because I 

think you have done a good job today defending the indefensible or 

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actually avoiding defending the indefensible. And I really do, I appreciate what you are doing, and I don’t want to put you in a tough 

position. 

But, you are the guy who is here, you are the guy we got, and 

I am sorry, but is there anybody behind you who can answer the 

questions that have been asked today? I don’t know, something, 

anybody else from ICE who are here that can answer these questions? 

Mr. NEVANO. I don’t believe there is anybody with me here today 

from Customs and Border Protection Enforcement and Removal operations that may have some of those answers to your question. 

Mr. CAPUANO. OK. I expected that. I know you have heard the 

audio before, but I want to play that audio just one more time, because I do have a question related to it. I don’t know exactly all 

this technology stuff, but there’s a guy in the backroom doing some 

magic, so. 

[Audio recording played.] 

Mr. CAPUANO. I think that’s enough, I think that is all we need. 

I don’t know. I appreciate it, thank you. Did you hear any MS-13 

members in that audio? 

Mr. NEVANO. I did not. 

Mr. CAPUANO. I didn’t either. Any other gang members that you 

could tell that secret code that we could tell that these children 

were somehow associated with an international gang that came 

here to terrorize us? 

Mr. NEVANO. I did not. 

Mr. CAPUANO. No, I didn’t either. So, it was interesting that the 

President was able to hear that. I don’t know, I know you have 

been testifying for a while, I don’t know if you are caught up on 

the news, you probably not, but if you—it has been announced the 

President has just signed an order reversing his previous order. So, 

do you—I assume your agency is going to get some new orders. 

But I am interested, I just heard the last 3 days, the President 

of the United States telling me repeatedly on the news, very publicly that he didn’t have the authority to change his own zero tolerance policy, and now he has done it. Could you explain to me how 

the President could say on, for 3, 4, or 5 days in a row we didn’t 

have the authority, and now somehow have the authority? 

Is anybody at ICE going to ask questions as to who actually has 

the authority to make a determination whether children can be 

ripped from the arms of their mother? 

Mr. NEVANO. I don’t have that answer for you today, sir. 

Mr. CAPUANO. No, I am just—I am just curious, because it 

strikes me, if the President says for day, after day, after day on 

T.V. that he doesn’t have the authority and then now he does. I 

don’t know, but I am just guessing that if that was somebody else 

that he didn’t like that the President would say that person was 

lying, and has been lying for day, after day, after day. 

I am just—I am just confused how the President can do that. 

And I know that, again, I know that you are going to carry out the 

orders, and I respect that, I really do, I respect that. But at some 

point, somebody at DHS, somebody at ICE is going to have to look 

in the mirror and ask themselves whether they want to keep doing 

this. Are you from Mass or just were lucky enough to go to B.C.? 

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Mr. NEVANO. No, I am from Massachusetts. 

Mr. CAPUANO. And you—do you remember the name Elliot Richardson? Our former State Attorney General who became the U.S. 

Attorney General? 

Mr. NEVANO. I am familiar with that name. 

Mr. CAPUANO. Elliot Richardson quit. When the President of the 

United States ordered him to take action he found to be immoral, 

he quit his job. Now, I am not asking any line guy, 27-year-career 

guy to do that. That is a little much. But somebody somewhere at 

DHS and ICE, at some point, is going to have to ask themselves, 

when is it too much? When are the orders too much? I can’t do 

them. 

And, again, I am not suggesting it should be you or anybody in 

particular, and I really hate even putting that question to a career 

guy. I really would rather put that question to a political appointee, that would be people above your pay grade, and I get it, 

but again, and I apologize as I did earlier. I have to say some of 

these things to you, I don’t really mean to direct them to you, you 

seem like a nice guy doing your job. 

But until and unless we have access during a public forum to the 

people that can answer these questions, and can make those decisions, unfortunately you are stuck in. And I actually feel bad that 

your superiors put you in this position today to have to take this 

abuse. And I—and again, it is not directed to you, but I would be 

very clear, it is unequivocally directed to your superiors who do 

have the authority to say no, and should have said no to this policy. Thank you, Mr. Chairman. 

Chairman PEARCE. The gentleman’s time has expired. I would 

like to thank our witnesses for your testimony 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. 

This hearing is adjourned. 

[Whereupon, at 3:43 p.m., the subcommittee was adjourned.] 

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A P P E N D I X 

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