The U.S. Intelligence Community is a federation of executive branch agencies and organizations that work separately and together to conduct intelligence activities necessary for the conduct of foreign relations and the protection of the national security of the United States. Thank you again for the opportunity to testify today and I look forward to your questions. There is a near equal distribution of espionage activities between the four major organizational clusters. We tend to think of espionage as involving information classified under national security legislation and relating to political or military secrets. First, espionage is a segment of the larger intelligence cycle, which in turn describes the sets of activities designed to produce the information necessary for policymakers' decision-making. We live in a time of acute and persistent terrorist and criminal threats to our national security, our economy, and indeed our communities. Chinese theft of U.S. intellectual property has been one of the major legal and policy rationales for the Trump administrations Section 301 finding on China and subsequent imposition of tariffs on some $250 billion in Chinese goods imported into the United States. Senior administration officials made clear prior to President Trumps recent trade policy-focused meeting with Chinese President Xi that reductions in IP theft are a major administration priority, and reductions in Chinese IP theft should be a be a major U.S. demand in the U.S.-China trade negotiations that will occur over the next three months. Economic Espionage Act of 1996. Through the Internet, terrorists anywhere overseas now have direct access to our local communities to target and recruit our citizens and spread their message faster than was imagined just a few years ago. The EEA covers both theft of trade secrets, which can benefit any outside entity that does not own the intellectual property, and economic espionage, which has additional burden of proof. Espionage, spying, or intelligence gathering is the act of obtaining secret or confidential information (intelligence).A person who commits espionage is called an espionage agent or spy. Chinese social groups, enterprises and public entities will have increased responsibility to combat foreign espionage under new regulations issued by the country's ministry of state security. Anything that doesn't fit the pattern could be an indicator of espionage Practice Communications Security Law.com Compass includes access to our exclusive industry reports, combining the unmatched expertise of our analyst team with ALMs deep bench of proprietary information to provide insights that cant be found anywhere else. The third pillar of our approach is based on strong relationships with the private sector. Chinese agents have also physically broken in to U.S. corporate offices. Is there an need to share? Introduction Chinese entities conducting espionage include government agencies, the military, state- owned enterprises (SOEs), private companies/individuals, and select universities. DOJ has also faced repeated setbacks in its prosecution in the Eastern District of Virginia of Bijan Rafiekian, former business partner of Trumps National Security Advisor Michael Flynn, accused of acting as an illegal agent of the Turkish government in an effort to obtain the extradition of a Turkish dissident. For U.S. government leaders, I offer five specific recommendations: First, the Trump administration should expand the use of U.S. legal authorities to target companies that engage in and/or benefit from economic espionage: Both the Chinese government and individual Chinese companies need to understand that economic espionage carries costs, not just benefits. Cyber espionage: Russian state-sponsored groups have been implicated in a range of cyber espionage activities against Ukraine, including stealing sensitive government and military data, intellectual property, and other confidential information. These elements of tradecraft included specially designed smartphone software for secure covert communications (U.S. vs. Kevin Mallory); third country meetings, or use of third parties (cutouts) in the United States for communicating information between the in-country handler and recruited asset, or the in-country handler and Chinese intelligence services. In addition, there has been a debate in the community about the extent to which the apparent reduction in attacks simply represented Chinese efforts to restructure how China engages in cyber operations, rather than a genuine change in Chinese intentions. On October 30, 2018 the U.S. Department of Justice announced the indictment of 10 Chinese intelligence officers and cyber hackers from the Ministry of State Security (MSS), Chinas main civilian espionage organization. If Beijing sees no path to a cooperative economic relationship with Washington and instead believes that it will face mounting U.S. pressure regardless of any concessions Beijing may offer, Beijing will have little incentive to curb its efforts to steal U.S. technology. These information objectives are also tied to national defense and economic priorities. A .gov website belongs to an official government organization in the United States. This Act is the National Security Legislation Amendment (Espionage and Foreign Interference) Act 2018. The French engaged in economic espionage throughout the 1980s. Do not leave equipment unattended, in hotel safes or left in vehicles. Foreign intelligence services not only seek our nations state and military secrets, but they also target commercial trade secrets, research and development, and intellectual property, as well as insider information from the federal government, U.S. corporations, and American universities. A joint effort would provide an integrated approach to disrupt China's espionage activities which generally fall into one (or more) of five categories: Traditional espionage (18 USC 792-799 . And this is a pervasive reality. We remain concerned that groups such as the Islamic State of Iraq and ash-Sham (ISIS) and al Qaeda have the intent to carry out large-scale attacks in the U.S. 2023 Diplomat Media Inc. All Rights Reserved. Contact Us| Asia, Asia Dynamically explore and compare data on law firms, companies, individual lawyers, and industry trends. Over the last five years, I compiled and analyzed 274 cases of Chinese espionage that have occurred since the year 2000. Death, Theft of Trade Secrets for a Foreign Govenment, Penalty for individual We're looking at $200 billion to. As part of a nationwide campaign to raise awareness of the growing economic espionage threat, the FBI has released a short video, "The Company Man: Protecting Americas Secrets." Congress has also played an important role. This has taken several forms. More deaths were caused by domestic violent extremists than international terrorists in recent years. Beware of being overheard Intercepts of cell phones or wireless signals, 1. With Such Low Win Rates, Should Law Firms Respond to So Many RFPs? In closing, the work being done by the FBI is immeasurable; however, we cannot afford to be complacent. Detailed analysis of these cases provides ample evidence that China is conducting espionage, as well who is responsible, their information objectives, gaps in their knowledge, and operational tradecraft techniques. DOJ used FARA to prosecute former Trump campaign chair Paul Manafort and Trump fundraiser Elliott Broidy, and in its unsuccessful prosecution of former Obama White House Counsel Gregory Craig for his alleged lobbying efforts on behalf of Ukraine stemming from his private practice legal work. Similarly, even as the U.S. increases pressure on Chinas unconventional espionage, we should make sure that we do not inadvertently shut down or prevent valuable academic study, research and development, and other activities that benefit the U.S. For example, the U.S. derives major benefits from the hundreds of thousands of highly-skilled foreigners, including from China, who come to the U.S. to study, to work, and to start businesses. Collection methods of operation frequently used by Foreign Intelligence Entities (FIE) to collect information from DoD on the critical technology being produced within the cleared defense contractor facilities we support include, Unsolicited requests for information Second, Congress should study ways to expand prohibitions on the import into the U.S. of items made with stolen U.S. IP, and the Trump Administration should work with allies to keep such products out of foreign markets. Many foreign terrorist organizations use various digital communication platforms to reach individuals they believe may be susceptible and sympathetic to violent terrorist messages. The foreign intelligence threat to the United States is expanding, becoming more complex and less predictable. Law Offices of Gary Martin Hays & Associates Almost 25 percent of cases target commercial interests. The Economic Espionage Act (EEA)1996 Public Law 104-294, 110 Stat. International conventions, seminars, and exhibits As part of this process, the FBI provides input and analysis to the National Intelligence Council within eight days of a CFIUS filing and a risk assessment to the Department of Justice within 30 days of a CFIUS filing. Most of Chinas espionage activities are not traditional espionage, yet they are having a profoundimpact on Americas economic wellbeing, national security, and potentially our political and governance processes. Sri Lankas default highlights the dangers of relying on international sovereign bonds with high interest rates to fund development. Those include going after terrorists and spies, including in cyberspace, countering foreign malign influence, enforcing our export controls and sanctions laws, and reviewing foreign investments in U.S. companies. When in doubt, report it, See something say something The United States has progressively expanded the scope of sanctions and entity-based export controls on Chinese persons (i.e., individuals and entities), primaril By Weak passwords The Department of Justice has in recent years indicted numerous Chinese spies, hackers, and companies for their involvement in stealing U.S. IP. : the practice of spying or using spies to obtain information about the plans and activities especially of a foreign government or a competing company industrial espionage Synonyms spying See all Synonyms & Antonyms in Thesaurus Example Sentences The division has a wide range of responsibilities. The State Department has recently pressed U.S. allies to similarly restrict the use of high-risk Chinese-made network equipment in their national telecommunications networks. Sometimes pressure is even applied by Chinas security services on the family members of those students it finds speaking out in unacceptable ways back in China.. Foreign power activity or knowledge which is inconsistent with the expected norm that suggests that foreign powers have knowledge of U.S. National Security. Unusual work hours An adversary conducts activities with precision that indicates prior knowledge. And getting access to this information would not even really be espionage as we typically think of it--the Chinese could simply set up a front company to buy the data commercially. Espionage Act said the need for the Act to apply everywhere was prompted by Irvin C Scarbeck, a State Department official who was charged with yielding to blackmail threats in Poland. Cyber criminals often operate through online forums, selling illicit goods and services, including tools that lower the barrier to entry for aspiring criminals and that can be used to facilitate malicious cyber activity. The third major line of response has been to increase costs to China over its espionage program and to take action against specific Chinese companies that engage in and/or profit from unconventional espionage. In this Nov. 9, 2017, file photo, an American flag is flown next to the Chinese national emblem during a welcome ceremony for visiting U.S. President Donald Trump. But Congress should examine whether the existing statutory provisions are broad enough and whether resources for Section 337 investigations are adequate. Chairman Grassley, Ranking Member Feinstein, and Honorable Members of the Committee, it is a pleasure to be invited to speak to you today about one of the most important trade and national security issues that the U.S. confronts today: Chinas unconventional espionage against the United States. Acts of espionage and foreign interference can put Canada at a disadvantage, enabling foreign countries and organizations to further their own strategic interests, at Canada's expense. Crime and terrorist activity are an ever- present threat to our Nation. To date these authorities have been deployed against individuals and companies from Russia and Iran in response to cyberattacks, but have yet to be deployed against Chinese entities engaged in or benefiting from economic espionage or other cyberattacks against the U.S. But government tools must also be an important part of the U.S. government response. These malign activities can include assassinations, kidnappings and disinformation operations, alongside traditional espionage activities, but with far more aggressive use of proxies: Think of . Within the FBI, we are focused on the most dangerous malicious cyber activity: high-level intrusions by state-sponsored hackers, global organized crime syndicates, and other technically sophisticated and dangerous actors. There have also been questions about how to limit hacking back so that a company engaged in hacking back is subject to appropriate U.S. government supervision and does not either intentionally or inadvertently escalate the situation. The recent acquittal in the Eastern District of New York of Thomas Barrack, a longtime friend and ally of former President Donald Trump, who was accused of acting as an unlawful agent of the UAE to influence Trumps decision-making, is only the latest example of the DOJs difficulties successfully prosecuting cases of non-traditional foreign influence in U.S. affairs. The winners will be those who break the old rules of the spy game and work out new ones. In addition to the threat posed by foreign influence, the FBI is also concerned about foreign investment by hostile nation states. They include foreign states, criminals, "hacktivist" groups and terrorists. It is absolutely essential to stop Chinese unconventional espionage. Any company with a proprietary product, process, or idea can be a target. Do not use personal commercial computers or cell phones for sensitive or classified matters.. especially at a foreign establishment. The Director of National Intelligence report, Foreign Economic Espionage in Cyberspace (2018) identifies key industries and technologies that are frequent targets of foreign espionage. But universities do need to take appropriate precautions to ensure that China is not able to use academic collaboration to steal U.S. intellectual property or engage in other activities that might harm U.S. national security. Espionage and foreign interference pose a significant threat to our economic prosperity and national interests. U.S. Military or government site But China does not only steal corporate crown jewels like trade secrets: It targets a wide variety of information that can provide Chinese companies with commercial advantage. Share on Facebook Facebook (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. If the United States does not continue to make and expand R&D here in the U.S., China will eventually overtake our technological edge, regardless of how effective we are at preventing China from stealing, buying, or otherwise acquiring U.S. IP. Penalty for an organization In late October, the U.S. Commerce Department put a Chinese semiconductor firm, Fujian Jinhua Integrated Circuit Company, on its entity list, which prohibits U.S. companies from selling Fujian Jinhua technology and products. If this is in fact the case then MSS performance is not likely to improve anytime soon. Sixty-three people were killed and thousands injured. The CCPs Organization Department makes all senior personnel appointments within these business organizations. At a minimum, there is no indication that the CCP or Chinese government have taken any measures to impede the illegal activities (illegal in the United States) of their state corporations and citizens. A recent Hoover Institution-Asia Society report offered a number of recommendations with respect to these operations that I endorse, such as promoting transparency and disclosure around Confucius Institutes and increasing the due diligence universities apply to grants and gifts from Chinese sources. Email Email. The U.S. government has steadily increased its response to the threat of China's unconventional espionage. We expect this trend to continue. This Committee and the Congress as a whole should consider legislative reforms to expand the reach of FARA or to adopt other disclosure legislation that would ensure that Chinese activities related to universities and other non-profits are fully subject to public disclosure requirements. Provide non-descript answers Based on an actual case, The Company Man: Protecting Americas Secrets illustrates how one U.S. company was targeted by foreign spies and how that company worked with the FBI to bring the perpetrators to justice. Private companies (and individuals) are most likely to employ no or minimal tradecraft. Foreign espionage strikes at the heart of U.S. national security, impacting political, military and economic arenas. United States v. Franklin, Rosen, and Weissman was an early 21st century court case from the United States District Court for the Eastern District of Virginia.The government prosecuted one Department of Defense employee (Franklin) and two lobbyists (Rosen & Weissman) for the American Israel Public Affairs Committee (AIPAC) for allegedly disclosing national defense information to persons 'not . 20 Espionage falls Other U.S. agencies are also working to expand cutting-edge U.S. R&D. The first of these is espionage targeting cutting edge research and technologies being developed by U.S. universities, including technology that has U.S. military applications. Information gathered and activities conducted to identify, deceive, exploit, disrupt, or protect against espionage, other intelligence activities, sabotage, or assassinations conducted for or on behalf of foreign powers, organizations or persons or their agents or international terrorist organizations. As the committee is well aware, the frequency and severity of malicious cyber activity on our nations private sector and government networks have increased dramatically in the past decade when measured by the amount of corporate data stolen or deleted, the volume of personally identifiable information compromised, or the remediation costs incurred by U.S. victims. This button displays the currently selected search type. But if China proves willing to make systemic changes, the administration should be willing to relax the trade remedies the U.S. has imposed, rather than locking the U.S. into an economic cold war with Beijing. Espionage and counterespionage have been essential tools of statecraft for centuries, of course, and U.S. and Chinese intelligence agencies have been battling one another for decades. But China is by far the most active practitioner of economic espionage today. We continue to actively coordinate with our private and public partners to pierce the veil of anonymity surrounding cyber based crimes. We also handle intelligence operations and oversight. Lastly, in 27 cases, roughly 9 percent of the total, case officers and/or agents displayed a more sophisticated level of tradecraft. Currently there are open investigations with a foreign influence nexus spanning FBI field offices across the country. Responding to Chinas unconventional espionage threat will require a whole-of-society approach, not just a whole-of-government approach. The act of securing information of a military or political nature that a competing nation holds secret. Traditional espionage encompasses a government's efforts to acquire clandestinely classified or otherwise protected information from a foreign government. The governing Chinese Communist Party (CCP) uses government, quasi-government, academic, and commercial entities as mechanisms to conduct all forms f espionage abroad. In 2017 and 2018, suspected China-linked hackers have targeted U.S. firms operating in sectors including cloud computing, artificial intelligence, internet connected devices, biotechnology, energy, robotics, transportation, agricultural machinery and other agricultural technology, and high-end medical devices. In addition to FTOs, domestic violent extremists collectively pose a steady threat of violence and economic harm to the United States. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team. The FBIs affidavit describes luring Xu to Belgium to illegally purchase General Electric commercial aviation technology. Trust your instincts The attack was attributed to Russian hackers and caused an estimated $10 billion in damages. Chinas defense industry is working to develop a comparable engine. This is a significant transformation from the terrorist threat our nation faced a decade ago. An adversary uses technical countermeasures to block a previously undisclosed or classified U.S. intercept technology. Task force personnel work closely with other U.S. government agencies and international partners concerned about foreign influence efforts aimed at their countries, using three key pillars. However, other influence operations may include targeting U.S. officials and other U.S. persons through traditional intelligence tradecraft; criminal efforts to suppress voting and provide illegal campaign financing; concealing efforts to influence U.S. government activities, cyber attacks against voting infrastructure, along with computer intrusions targeting elected officials and others; and a whole slew of other kinds of influence, like both overtly and covertly manipulating news stories, spreading disinformation, leveraging economic resources, and escalating divisive issues. Economic Espionage and Trade Secret Theft . And the U.S. would need to take the Ronald Reagan line towards Soviet military commitments when it comes to Chinese concessions, Trust, but verifywith an emphasis on the verify. But we should not foreclose the possibility of cooperation. Sanctions need to be deployed carefully to avoid unintended consequences and, at least initially, should be used only against egregious violators. Practice good Operations security Amid great power competition, life in the China-Russia borderlands reveals the paradoxes underpinning the Beijing-Moscow friendship. These techniques were used approximately one-third of the time. Report, Trans-Pacific Figure 1: Categories of Chinese Espionage. Emily Kilcrease & Michael Frazer. Failure to report may result in disciplinary action. It is probably not a coincidence that FBI also arrested Mr. Chaoqun Ji, a PRC national in Chicago, on espionage related charges. Such crimes are not limited to the United States and, with the aid of Internet like-minded hate groups, can reach across borders. Avoiding polygraph Cyber Attacks, Potential espionage indicators (PEIs) are activities by an individual who may have volunteered or been recruited by a foreign entity as a writing espionage agent. The threats posed by foreign fighters, including those recruited from the U.S., are very dynamic. Department of Justice indictments and private sector reports in recent years have accused Chinese hackers of breaking into the corporate networks of U.S. and western companies including defense contractors, non-profits, semiconductor firms, healthcare companies, industrial manufacturers, aerospace companies, media companies, solar companies, and electronics companies, among others. Expressing an obligation to engage in violence We have also been confronting a surge in terrorist propaganda and training available via the Internet and social media. Does anyone need to know? , Statement Before the House Homeland Security Committee. Regardless of the method or activity, Foreign Intelligence Entities seek one thing: to learn more about the Department of Defense plans in order to exploit its information and impede its mission. 13757 (2016) that authorize the Treasury Department to impose sanctions on entities that engage in various forms of cyber hacking and on companies that steal trade secrets or other high-value IP via cyber-enabled means, or which benefit from such stolen IP. Do not probe for information Emily Kilcrease, View All Reports CCP embedded committees manage all actions within directly managed SOEs. Foreign Intelligence Threats - Traditional Activity. Due to online recruitment, indoctrination, and instruction, FTOs are no longer dependent on finding ways to get terrorist operatives into the United States to recruit and carry out acts of terrorism. This initiative will also work to use tools like the Foreign Agent Registration Act (FARA) to require better disclosure of Chinese activities across the United States. These criminals have also increased the sophistication of their schemes, which are more difficult to detect and more resilient to disruption than ever. The final aspects of Chinese espionage activities are their use of specific clandestine collection techniques commonly known as espionage tradecraft. Chinese government agencies, SOEs, companies and individuals employ varying levels of sophistication of espionage tradecraft. Terms of Service. Both Barrack and Rafiekian were charged under 951 of the U.S. Criminal Code, which has roots in the Espionage Act of 1917, and broadly prohibits agents of foreign governments from acting in the United States without first notifying the Attorney General. China has also tried to hack think tanks to understand policy and think tank engagement with government officials. U.S. intelligence, security, and law enforcement apparatus is just starting, 20 years later, to catch on. Any unprotected trade secret can be illegally stolen. Victims of Chinas espionage efforts include major defense and aerospace companies, pharmaceutical firms, technology research companies, manufacturers, and universities. The. But recent FBI cases have shown that no industry, large or small, is immune to the threat. The FBI is the lead agency for exposing, preventing, and investigating intelligence activities in the U.S. Because much of todays spying is accomplished by data theft from computer networks, espionage is quickly becoming cyber-based. Spies might seem like a throwback to earlier days of world wars and cold wars, but they are more common than everand they are targeting our nations most valuable secrets. In intelligence terminology, information objectives identify the specific information (or technology) that is tasked for collection. Reporting threats to your Facility Security Officer or Supervisor. View, About I the Handling phase the foreign intelligence officer will instruct the target on specific information needed. The alleged scheme ran from 2010 to 2015 and targeted turbofan engine technology developed through a U.S.-French partnership.