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A number of cyber security firms reported a drop in suspected China-linked attacks in the year following the agreement, and in late 2016 the CEO of the CrowdStrike cybersecurity firm called the change in Chinas behavior the biggest success weve had in this arena in 30 years. However, Justice Department indictments and U.S. government reports indicate that there has been a substantial uptick in Chinese hacking over the past year, and so it remains unclear how much the agreement has or will affect Chinese behavior over the long-term. And third, I will offer some recommendations on additional policy responses that the United States should consider going forward. https://www.law.com/newyorklawjournal/2022/12/07/setbacks-prosecuting-trump-allies-highlight-challenges-in-foreign-influence-cases/. For most daily Internet uses, the hidden world of international cyber espionage may seem too distant to be of any real importance. Doreign officials reveal details they should not have known. The second type of Chinese espionage targeting U.S. colleges and universities has been espionage aimed at intimidating Chinese students and professors critical of Chinese policies, and to a lesser extent American students and academics. The French engaged in economic espionage throughout the 1980s. Sanctions are more of a marathon than a sprint, and the long-term picture looks much more promising than the short-term one. By They seek to hold our critical infrastructure at risk, to harm our economy and to constrain our free speech. But China is investing billions of dollars in its own technological prowess and can draw on the expertise of millions of Chinese engineers and scientists who have studied at top universities globally. The U.S. government has steadily increased its response to the threat of Chinas unconventional espionage. 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. Take time to use secure communications equipment Site Map, Advertise| Espionage. These information objectives include systems, designs, components, radiation hardened chips, integrated circuits, software, manuals, precision optics, thermal imaging systems, production techniques, etc. It is probably not a coincidence that FBI also arrested Mr. Chaoqun Ji, a PRC national in Chicago, on espionage related charges. CCP embedded committees manage all actions within directly managed SOEs. Once established, the foreign intelligence officer makes an offer to help the target with his problems. Unusual work hours Concealing foreign travel Share on Twitter Twitter Private companies (and individuals) are most likely to employ no or minimal tradecraft. Chinese economic espionage, on the other hand, is an unconventional threat and requires an unconventional response. 3488, enacted October 11, 1996 deals with industrial espionage (e.g., the theft or misappropriation of a trade secret and the National Information Infrastructure Protection Act) and four other areas of action that Congress deemed appropriate and the United States Sentencing Commission reports regarding encryption or . In these cases no (23 cases) or minimal tradecraft (21 cases) was employed. The wide variance in sophistication of espionage tradecraft implies the idea of Islands of Excellence (see Figure 6) meaning China employs espionage tradecraft with varying degrees of sophistication and effectiveness. When in doubt, report it, See something say something The two use similar language to talk about China, but that doesn't mean their positions are the same. In addition to FTOs, domestic violent extremists collectively pose a steady threat of violence and economic harm to the United States. 20 Espionage falls But China is by far the most active practitioner of economic espionage today. This has taken several forms. Do not prove for information - nonchalantly ask questions about them. This was often the case in illegal export of military technology, source code, large-scale agricultural and industrial production and manufacturing techniques. Good morning Chairman Thompson, Ranking Member Rogers, and members of the committee. FIRRMA provides important new tools for the U.S. government to screen potential foreign investments in the U.S. for national security risks. DHS is also investing in research into technologies and public-private partnerships that may be able to improve cybersecurity practices and in education and outreach programs designed to improve corporate cybersecurity practices. It is absolutely essential to stop Chinese unconventional espionage. The FBI uses all lawful investigative techniques and methods to combat these terrorist threats to the United States. Similarly, CFIUS should ensure that if the Chinese government has stolen or attempted to steal U.S. technology, no Chinese company should be able to acquire a U.S. company that designs or makes the technology that China attempted to steal. High-level findings are as follows: One cannot simply look at a single or even several espionage cases and hope to understand if, and how, a nation state is conducting espionage. A lock () or https:// means you've safely connected to the .gov website. The alleged scheme ran from 2010 to 2015 and targeted turbofan engine technology developed through a U.S.-French partnership. Traditional espionage encompasses a government's efforts to acquire clandestinely classified or otherwise protected information from a foreign government. Our Team Account subscription service is for legal teams of four or more attorneys. Recognizing innovation in the legal technology sector for working on precedent-setting, game-changing projects and initiatives. Us, Write In its recent stepped-up enforcement efforts against foreign influence in American politics, the DOJ has faced some high-profile setbacks when it has sought to use the broad reach of 18 U.S.C. State-owned enterprises are also engaged in espionage. With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. Espionage is now addressed by 3 offences in the Bill: obtaining or disclosing protected information; obtaining or disclosing trade secrets; and assisting a foreign intelligence service. Lastly, in 27 cases, roughly 9 percent of the total, case officers and/or agents displayed a more sophisticated level of tradecraft. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas. 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. An adversary uses technical countermeasures to block a previously undisclosed or classified U.S. intercept technology. We, along with our law enforcement partners, face significant challenges in identifying and disrupting HVEs. In 2016 broad bipartisan majorities of Congress passed the Defend Trade Secrets Act, which expanded the rights of U.S. companies to sue Chinese firms and other foreign competitors that steal their IP. As a recent report by the Hoover Institution and the Asia Society put it, Chinese-backed associations on American campuses can provide a ready channel or entry point for the political departments of Chinas embassy and consulates in the US to gather information and coordinate action. Thank you for the opportunity to appear before you today to discuss the current threats to the United States homeland. To most individual citizens, cyber espionage may not seem to influence their lives very much, but its costs on a nation-state are significant. No tradecraft, with parties using open communications and true names; Use of false names and/or third parties to transmit information and ship materials; Public and commercial encryption, hosting meetings in China to avoid detection; Tailor made devices or techniques, use of third countries, use of in-country cutouts to transmit information. Analysis reveals several other interesting data points on the application of tradecraft. In a major coup, this past October Justice for the first time managed to extradite a suspected Chinese spy from a third country to the U.S. to face trial for his involvement in stealing U.S. trade secrets. Unauthorized access to information systems. The FBI assesses HVEs are the greatest, most immediate terrorism threat to the homeland. The goal of these foreign influence operations directed against the United States is to spread disinformation, sow discord, push foreign nations policy agendas, and ultimately undermine confidence in our democratic institutions and values. Don't miss the crucial news and insights you need to make informed legal decisions. But this is not just an election-cycle threat. The Defense Departments Defense Advanced Research Projects Agency (DARPA), for example, last year launched a $1.5 billion, five-year initiative to support advances in chip technology. 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. China has also tried to hack think tanks to understand policy and think tank engagement with government officials. 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. As a country we should work to capture that talent here and make sure that it stays in the U.S. Much research and development also works more effectively when scientists and engineers are able to collaborate across borders. I will address three issues in my testimony before you this morning. 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. And local Soviet spies, just like many other denizens of the Bay . It has not been as easy for the United States to gain buy-in as some in Washington expected. The task force now brings together the FBIs expertise across the waterfrontcounterintelligence, cyber, criminal, and even counterterrorismto root out and respond to foreign influence operations. 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. When divided into the aforementioned categories (Espionage, Economic Espionage, ITAR, EAR, Covert Action) the 274 espionage cases show the percentages of operations as follows (Figure 1.). But R&D, and especially the kind of long-term, often basic research that the U.S. government is often more willing to fund than commercial enterprisesneeds to be sustained and expanded over time to achieve results. collecting intelligence for a terrorist organization Copying files Our adversariesterrorists, foreign intelligence services, and criminalstake advantage of modern technology to hide their communications; recruit followers; and plan, conduct, and encourage espionage, cyber attacks, or terrorism to disperse information on different methods to attack the U.S. homeland and to facilitate other illegal activities. China is drawing lessons from Russias invasion of Ukraine. They motivate these individuals to act at home or encourage them to travel. The FBI is engaged in a myriad of efforts to combat cyber threats, from improving threat identification and information sharing inside and outside of the government to developing and retaining new talent, to examining the way we operate to disrupt and defeat these threats. China has expanded its espionage efforts considerably over the last 20 years. Terms of Service. Traditional espionage, often characterized by career foreign intelligence officers acting as diplomats or ordinary citizens, and asymmetric espionage, typically carried out by students,. For example, the Trump Administration and this Congress have taken action to restrict the use of Chinese-made network equipment in U.S. telecommunications networks over concern that such equipment could facilitate Chinese espionage in the U.S. Report, Trans-Pacific 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. Asia, Southeast 2 Commencement. Attempting to gain access, without need-to-know Journalists, military veterans, and judicial figures are being targeted by foreign espionage agencies at "unprecedented" levels, with the country's intelligence chief revealing a "hive of spies . Recent ISIS videos and propaganda have specifically advocated for attacks against soldiers, law enforcement, and intelligence community personnel. In recent years we have broadly seen two types of Chinese espionage targeting U.S. colleges and universities. Hacking back proposals would need to be carefully tailored to mitigate potential unintended consequences and to protect innocent parties, and the risks need to be carefully evaluated. Third, the Trump administration should use Committee on Foreign Investment in the United States (CFIUS) authorities to prevent China from acquiring technologies that it is also trying to steal. Although the Obama administration never sanctioned any Chinese individuals or companies using these authorities, it did use the potent threat of sanctions, as well as criminal prosecutions and significant high-level diplomatic engagement, to convince China to enter into a 2015 agreement in which Chinese President Xi agreed that China would not knowingly support cyber-enabled theft intellectual property for commercial gain. An adversary conducts activities with precision that indicates prior knowledge. Which of the following is an example of an anomaly? Cleared contractor facility The U.S. government has also worked to sharply limit the deployment of Chinese technology and equipment here in the U.S. that China could potentially use to facilitate its unconventional espionage in the years ahead. DOJ officials initially touted one such law, the Foreign Agents Registration Act (FARA), 22 U.S.C. The message is not tailored solely to those who overtly express signs of radicalization. procuring supplies for terrorist organizations Over four years after the project was announced, updates remain scarce on China's first nuclear icebreaker. 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. Twenty years ago, I testified before a U.S. congressional committee on Chinas espionage operations in the United States. The widespread availability of malicious software (malware) that can create botnets allows individuals to leverage the combined bandwidth of thousands, if not millions, of compromised computers, servers, or network-ready devices to disrupt the day-to-day activities of governments, businesses, and individual Americans. To combat the threat at home, the FBI established the Domestic Terrorism-Hate Crimes Fusion Cell in spring 2019. Asia, Central Impact on the U.S. Economy. With Such Low Win Rates, Should Law Firms Respond to So Many RFPs? It is a pleasure to be joined by two distinguished co-panelists who will also speak about the threat and I will focus on the aspects of the threat that I am most familiar with: how China uses unconventional, economic espionage as a component part of a comprehensive strategy to promote Chinas own high-tech industries. The FBIs affidavit describes luring Xu to Belgium to illegally purchase General Electric commercial aviation technology. We continue to actively coordinate with our private and public partners to pierce the veil of anonymity surrounding cyber based crimes. We must seek out new technologies and solutions for the problems that exist today as well as those that are on the horizon. It can involve the analysis of diplomatic reports, publications, statistics, and broadcasts, as well as spying, a clandestine activity carried out by an individual or individuals working under secret identity to gather classified information on behalf of another entity or nation. 13694 (2015) and E.O. Even putting aside general issues of individual privacy, from an espionage perspective this kind of data can be a gold-mine, especially when combined with other data that the Chinese have access to. Foreign Intelligence Threats Traditional FIE Activity includes: Foreign Intelligence Entities operating 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. Do not probe for information For example, if China purchased this information, it could cross-reference location information with data it stole from the Office of Personnel Management about U.S. government employees, or against public record data about corporate executives. The IC remains focused on the missions of cyber intelligence . Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! In intelligence terminology, information objectives identify the specific information (or technology) that is tasked for collection. They would also generally restrict those companies ability to sell products based on stolen IP not only to the United States, but also to other countries around the world. The reason for this is because Snowden did not provide information he obtained to a foreign government. 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. An adversary is able to anticipate DoD plans and activities. 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. Nonchalantly ask questions In October, the U.S. passed sweeping new export controls on China. An official website of the United States government. Economic espionage activities . Now, more than eight years since the climax of the Cold War, the threat of industrial and economic espionage has percolated once again to the forefront, and the tools of the intelligence collector . We will continue working to identify individuals who seek to join the ranks of foreign fighters traveling in support of ISIS, those foreign fighters who may attempt to return to the United States, and HVEs who may aspire to attack the United States from within. The CCPs Organization Department makes all senior personnel appointments within these business organizations. New Delhi has distanced itself from a controversial and unequal deal between Adani Power and the Bangladesh Power Development Board. Sri Lankas default highlights the dangers of relying on international sovereign bonds with high interest rates to fund development. Viruses As former Cisco CEO John Chambers once said, There are two types of companies: those who have been hacked, and those who don't yet know they have been hacked.. Center for a New American Security (en-US), Constructing Regional Partnerships and Seizing Emerging Opportunities, General Mike Holmes, U.S. Air Force (Ret. Figure 3: Distribution of Chinese Espionage Cases in the United States. Broadly speaking, the government response can be divided into three parts: encouraging better defense; prosecuting spies; and increasing costs in an effort to punish and deter unconventional spying. Economic espionage, which is mainly conducted by private companies or individuals, makes up 23.5 percent of cases. An official website of the United States government. The scope of the criminal activity, including evidence of involvement by a foreign government, foreign agent, or foreign instrumentality The degree of economic injury to the trade secret owner The . Based on an actual case, the video illustrates how one company was targeted by foreign actors and what the FBI did to help. The statistics show Chinese private companies adopt an aggressive posture in conducting economic espionage activities, resulting in 60 cases prosecuted just in the United States. Together, they make up 54 percent of cases. Individuals used true names and open communications including emails, text messages, and phone calls. Finally, the investments we make at home to maintain Americas technological edge are ultimately going to be more important than the steps we take to stop Chinas theft of American IP. The Obama administration issued two Executive Orders, E.O. The two countries appeared to quietly reaffirm the agreement in October 2017. The recent attacks in Texas and California underscore the continued threat posed by domestic violent extremists and perpetrators of hate crimes. Peter Harrell. Asia, South Fifth, I would encourage Congress to carefully study proposals to enable U.S. companies who are victims of Chinese economic espionage to hack back. There are significant concerns about hacking back proposals but I believe the concept merits careful study. In addition to these Executive Branch actions, companies and Congress have played an important role in Americas response. 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. That said, I recommend that Congress carefully consider hacking back proposals that would enable U.S. companies to take a broader range of active measures to defend themselves against cyber espionage and other cyber attacks. Recent prosecutions, however, have relied on 951. Nations have been spying on the United States (and us on them) since the American Revolution. As I said earlier, I commend the work of the Department of Justice, the FBI, the Department of Homeland Security, USTR and other federal agencies to address Chinas unconventional espionage threat. Is there an need to share? This week Emily Kilcrease, director of the Energy, Economics, and Security program at CNAS, joins The Asia Chessboard podcast from CSIS for a wide ranging discussion on the i By Other U.S. agencies are also working to expand cutting-edge U.S. R&D. Be observant - note as much as possible and the person asking questions There has also been a large rise in Section 337 investigations. These troubled cases raise caution flags for future DOJ criminal prosecutions of non-traditional foreign influence cases. Law.com Compass delivers you the full scope of information, from the rankings of the Am Law 200 and NLJ 500 to intricate details and comparisons of firms financials, staffing, clients, news and events. Expressing an obligation to engage in violence Figure 6: Espionage Tradecraft Techniques by Specific PRC Entities. Our adversary seeks to expand its Victims of Chinas espionage efforts include major defense and aerospace companies, pharmaceutical firms, technology research companies, manufacturers, and universities. An adversary uses technical countermeasures to block a previously undisclosed or classified U.S. intercept technology. A fine of not more than $5,000,000, Personnel who fail to report CI activities of concern as outlined in Enclosure 4 of DoD Directive 5240.06 are subject to appropriate disciplinary action under regulations, Under DoDD 5240.06 Reportable Foreign Intelligence Contacts, Activities, Indicators and Behavior; which of the following is reportable, Contact with known or suspected foreign intelligence In the Assessing phase the foreign intelligence officer will look for exploitable weaknesses such as: alcohol abuse, drug use, extramarital affairs, gambling or other financial problems. Practice responses Aimed at bolstering the government's arguments, the memo highlights in detail how the FBI identifies the activities of foreigners that would potentially be considered espionage. Any individual or spy ring (a cooperating group of spies), in the service of a government, company, criminal organization, or independent operation, can commit espionage. I'd the target takes the bait, the foreign intelligence officer recruits the target to move into a more clandestine relationship. We face threats from state-sponsored hackers, hackers for hire, organized cyber syndicates, and terrorists. As a result, the FBI must remain vigilant. Share sensitive information only on official, secure websites. The initiative will prioritize cases of Chinese economic espionage and ensure that they are appropriately resourced. What Joseph L. Rini Knows, Attorney Rachel Y. Marshall A Pillar of Strength for the Community, SpotDraft Raises $26 Million in Series A Funding for AI-Powered Legal Software, Access to the entire ALM network of websites, Unlimited access to the ALM suite of newsletters, Build custom alerts on any search topic of your choosing. The act of securing information of a military or political nature that a competing nation holds secret. Customer Service| 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. 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. Espionage activities involving the Peoples Liberation Army reflect primarily illegal arms or military technology transfers where the PLA was known, or believed to be the end user for example, the PLA was assumed the ultimate end user or customer if a TOW anti-tank system (tube-launched, optically tracked, wireless-guided weapon system) was being illegally shipped to China. In nearly 25 percent of cases, individuals employed encryption for communications and/or hosted meetings in China to avoid detection by U.S. law enforcement. NPR's Leila Fadel talks to Rachel Ziemba of the Center for a New American Security about sanctions which have failed to dramatically weaken Russia's economy, and its ability t By The U.S. also needs to start getting a handle on the vast quantity of Americans personal information that is all too readily available to make sure that it cannot be exploited by spies. Taking short trips. China is pursuing a whole-of-society approach to its technological capabilities that includes purchasing innovative companies through overseas investments, requiring western companies to transfer cutting edge technologies to China as a condition of market access, providing vast state resources to finance domestic technological development, and financing training for top Chinese students and researchers overseas and paying a hefty premium to attract talent back to China. (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. 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.
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