We live in an age of immense technological innovation and disruption. While these technologies make our lives easier, criminal groups and terrorist networks have the tools to exploit them, as policymakers struggle to keep up with rapid pace of change. Terrorist groups like the Islamic State and rogue regimes like North Korea employ these technologies to illicitly finance their operations, often using cryptocurrencies in order to evade detection. Despite the partisan rancor in Washington, Republican and Democrat members of Congress are coming together to counter illicit financing and wrestle with these emerging policy challenges.

Rep. Steve Pearce, Nancy Lindborg, Rep. Jim Himes
Pictured from left to right, Rep. Steve Pearce, Nancy Lindborg, Rep. Jim Himes

“Innovation in financial services revolutionizes and simplifies our lives. However, bad actors around the globe exploit the global financial system and modernized technologies for criminal gain. From social media to cryptocurrencies, hackers can break into networks and steal sensitive information for their own capital advantage,” said Congressman Steve Pearce (R-NM), the chairman of the House Financial Services Subcommittee on Terrorism and Illicit Finance.

Rep. Pearce and Congressman Jim Himes (D-CT) discussed their work on the Subcommittee as part of the U.S. Institute of Peace’s Bipartisan Congressional Dialogue—a series of discussions to explore U.S. legislators’ common ground on foreign policy problems and to advance solutions.

No Room for Partisanship Amid an Ever-Changing Problem

For lawmakers in Washington, the fast pace of change in the cyber arena requires constant vigilance and there is agreement that this issue supersedes partisan concerns, as all Americans utilize these technologies and are vulnerable to exploitation. “There’s a lot of work to be done and opening the dialogue like we have done today is definitely a step in the right direction,” Himes said. “There is no room for partisanship on this issue,” added Pearce.

There is a critical need for political leaders to be educated on cybersecurity and to ensure that regulatory agencies are facing the challenges of the 21st century. Cyberthreats move much quicker than lawmakers and regulating agencies can. Indeed, cyberattacks occur around the world every day and hacking financial systems is still a low-risk, high-reward method of illicit financing.

“Representatives Pearce and Himes are leading Congress in combatting the illicit funding of terrorism that perpetuates violent conflict and undermines American interests. They are leaders on the frontier of technology and national security issues where bipartisanship is essential,” noted USIP President Nancy Lindborg.

The 2018 National Security Strategy recognizes the urgency of this issue, and says the United States will “use sophisticated investigative tools to disrupt the ability of criminals to use online marketplaces, cryptocurrencies, and other tools for illicit activities.”

Nation States Must Step Up

It’s not just groups like the Islamic State or hacker collectives that illicitly finance their operations by exploiting vulnerable technologies. States like Russia and Iran also look to illicit financing to skirt sanctions and manipulate the international financial system. “All of these problems get a lot easier if nation states act responsibly,” Himes said.

Ultimately, no country wants to see its electrical grid or water system hacked or tampered with and this should lead to common ground in the international community. “We need to focus on creating the cyber equivalent of the Geneva Conventions,” Himes asserted.

Cryptocurrencies present their own problems, as they help criminals evade taxation and are difficult to track and monitor. “Technologies such as cryptocurrencies offer anonymity and are borderless, making them targets for exploitation by malicious actors for illicit activities ranging from terrorist financing, money laundering and evasion of sanctions,” Himes said.

While issues surrounding cybersecurity and threats are often borderless, the nation state remains the organizing principle of the international order. Cooperation among the international community, therefore, is the most effective and comprehensive way to address illicit financing and other cyberthreats.

What Can be Done?

Both congressmen said the United States must maintain its role as the leader of a functioning international system and work closely with allies to develop solutions. The United States is still not at the cutting edge of cybersecurity compared to other countries, said Pearce, and must work with countries, like Israel and Australia, that have advanced experience in addressing cyberthreats.

Importantly, a set of norms must be agreed upon and codified, particularly when it comes to issues with little room for disagreement—all states, for example, can agree that they do not want their hospitals to be hacked. “We should take care of the easy things first,” Pearce said, coming to international agreements on points of convergence.

The United States can also arm the financial centers of the world to regulate what is immediately possible. “The U.S. should be a leader in developing resilient and proactive cybersecurity strategies,” Pearce said.

USIP’s Bipartisan Congressional Dialogue will continue to bring together leaders from both political parties to address urgent national security and foreign policy challenges.  

Related Publications

How Climate Change Deepens Bangladesh’s Fragility

How Climate Change Deepens Bangladesh’s Fragility

Monday, September 13, 2021

By: Mubashar Hasan; Geoffrey Macdonald

The Intergovernmental Panel on Climate Change (IPCC) released its sixth report on the state of the earth’s climate in early August — and it paints a dire picture. The report argues that unless governments take appropriate measures to curb greenhouse gas emissions and spur behavioral change, the world is moving toward a climate crisis of rising sea levels, warmer temperatures and more extreme weather. The report’s findings are particularly relevant in Bangladesh, where low elevation, high population density and weak infrastructure make it highly vulnerable to climate change. 

Type: Analysis and Commentary

Economics & Environment

After Taliban Takeover, Can Afghanistan’s Economy Survive?

After Taliban Takeover, Can Afghanistan’s Economy Survive?

Tuesday, September 7, 2021

By: William Byrd, Ph.D.

The Taliban’s unexpectedly rapid and complete victory over the now defunct Islamic Republic of Afghanistan brings with it yet another shock to the long-suffering Afghan people and the country’s very weak economy. Already plagued by insecurity, COVID, corruption, government over-centralization and mismanagement, declining revenues and drought, the Afghan economy will now face a host of challenges in the aftermath of the Taliban’s takeover and the international community cracking down on aid and assistance. As a new Afghan government takes shape, the actions of the Taliban and the response of the international community could greatly exacerbate or modestly ameliorate the current economic and humanitarian crises.

Type: Analysis and Commentary

Economics & Environment

Myanmar Regional Crime Webs Enjoy Post-Coup Resurgence: The Kokang Story

Myanmar Regional Crime Webs Enjoy Post-Coup Resurgence: The Kokang Story

Friday, August 27, 2021

By: Jason Tower; Priscilla A. Clapp

Following the coup by the Myanmar army on February 1, 2021, fighting exploded immediately in the China-Myanmar border area along a strategic trade route between the two countries. But the outbreak wasn’t about the coup — instead it was a battle between two Chinese-speaking militias over control of the Kokang Special Administrative Zone, a lucrative center for illegal business. The story behind this episode provides a small window on the rise of regional criminal networks under the army’s patronage and how they are enjoying a new lease on life under the junta.

Type: Analysis and Commentary

Conflict Analysis & Prevention; Economics & Environment

View All Publications


Related Projects

Bipartisan Congressional Dialogues

Bipartisan Congressional Dialogues

The U.S. Institute of Peace, a congressionally funded national institute, will host a new series of Bipartisan Congressional Dialogues. USIP will bring together leaders from both political parties in public discussions to develop solutions for urgent national security and foreign policy problems.

View All