Financial Technology Protection Act

Floor Speech

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Mr. LYNCH. Mr. Speaker, I rise in support of H.R. 56.

First, I would like to thank our chairwoman, the gentlewoman from California (Ms. Waters), for her outstanding leadership in bringing this bill to the floor. I would also like to thank the gentleman from North Carolina (Mr. McHenry) for his energetic support as well. In addition, I would like to thank my distinguished colleague, the gentleman from North Carolina (Mr. Budd), a colleague of ours on the Financial Services Committee, for working in a bipartisan fashion with me to get this bill to the floor in a better way to safeguard our emerging financial technology sector against its illicit use by terrorists and their financiers, money launderers, computer hackers, and other criminal actors.

I would also like to point out, as evidenced in the course of our ongoing committee investigation to examine terrorist and money laundering activities, that continued innovations in digital currencies, peer-to-peer financing, mobile payments, and other emerging financial technologies--or in today's lingo, fintech--have been met with increasing efforts by malign actors to exploit these digital platforms and services for terrorist and other criminal purposes. According to the Combating Terrorism Center At West Point: ``Given the interest that terrorist organizations have shown in leveraging digital currencies, their use of such mediums for conducting financial transactions will only increase in the future.''

So the growing reliance on digital currency for terrorist financing recently manifested itself in the U.S. in the form of a complex bank fraud scheme perpetrated by a Long Island woman, Zoobia Shahnaz, who pleaded guilty in November of 2018 to providing material support to a terrorist organization.

In an attempt to raise funds for the Islamic State, Ms. Shahnaz fraudulently obtained credit cards which she used to purchase more than $62,000 in bitcoin and other cryptocurrencies. After converting the currency to U.S. dollars and transferring the funds to her checking account, she proceeded to execute wire transactions totaling over $150,000 directed to top Islamic State-affiliated individuals and shell entities in Pakistan, China, and Turkey.

The illicit use of digital currency systems has also extended to other criminal enterprises, including cybercrime. According to a six- count indictment returned by a Federal grand jury in Newark, New Jersey, two Iranian nationals engaged in a nearly 3-year international extortion and computer crime scheme involving the deployment of so- called sam sam ransomware against U.S. public and private entities. Acting from inside Iran, these cybercriminals forcibly encrypted the computer systems of more than 200 hospitals, municipalities, and public institutions in the United States, including the city of Atlanta, the city of Newark, and the Colorado Department of Transportation. In exchange for decryption keys, they demanded ransom to be paid in bitcoin. In total, the men collected over $6 million in ransom payments, to date, while causing more than $30 million in losses to their U.S. victims.

Moreover, in July of last year, Special Counsel Bob Mueller indicted 12 Russian intelligence officers stemming from their involvement in cyber attacks against U.S. individuals and entities leading up to the 2016 Presidential election. According to the 11-count indictment, in order to ``facilitate the purchase of infrastructure used in their hacking activity . . . the defendants conspired to launder the equivalent of more than $95,000 through a web of transactions structured to capitalize on the perceived anonymity of cryptocurrencies such as bitcoin.''

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Mr. LYNCH. So as we continue to witness and embrace rapid digital innovation in the traditional banking and finance sector, it is urgent that government and industry work together to adopt and deploy regulatory protocols such as blockchain technologies to protect the integrity of digital financial systems against abuse.

To this end, our legislation, the Financial Technology Protection Act, would establish an independent task force consisting of both public and private stakeholders to address the threat of exploitation of new financial technologies by terrorists and other malign actors.

It would also authorize innovative fintech grants to enhance the ability of U.S. companies, academic institutions, nonprofit organizations, and other private-sector entities to develop new tools designed to protect against criminal use of cryptocurrencies and enhance U.S. competitiveness in global financial markets.

Moreover, the bill would authorize a rewards program for individuals who provide information leading to the conviction of those who use digital currency systems for terrorist purposes.

Mr. Speaker, I urge my colleagues on both sides of the aisle to support H.R. 56.

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