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| FROM THE OFFICE OF PUBLIC AFFAIRS September 26, 2001 STATEMENT OF JIMMY GURULE UNDER SECRETARY FOR ENFORCEMENT U.S. DEPARTMENT OFTHE TREASURY FOR THE SENATE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS DOMESTIC AND INTERNATIONAL MONEY LAUNDERING Chairman Sarbanes, Senator Gramm, and distinguished members of theCommittee, I appreciate the opportunity to share with you the TreasuryDepartment's ongoing commitment to the fight against money laundering. Iappear before you today more convinced than ever of the importance andnecessity of a comprehensive money laundering strategy. I know you feel thesame way and I look forward to sharing with you some of the key aspects ofPresident Bush's plan to combat domestic and international money laundering. Let me begin by saying that criminal acts of violence, such as the horrificterrorist attacks of September 11th, need more than just cunning leadershipand dedicated followers to be successful. Such undertakings also requireextensive financial funding as well. Let me be clear--the TreasuryDepartment is committed to identifying the sources of funding used tounderwrite attacks of this nature and we will take whatever action isnecessary to shut them down. Although the complexities of money launderinghave long been associated with concealing the true nature of proceedsgenerated from the drug cartels, the tragedies of September 11th alsounderscore the need for aggressive and vigilant anti-money launderingefforts which target the movement of funds into this country for the purposeof criminal activity - especially funds earmarked for terror. In response tothis need, the implementation of the 2001 Money Laundering Strategy includesseveral specific steps to dismantle and disrupt the financing of terroristactivities. Recent Steps As Secretary O'Neill has stated publicly, the Treasury Department's toppriority is to dismantle the financial infrastructure of the terroristgroups in question. To that end, we will deploy all of our resources totrace and block the funds of those who engage in these heinous acts ofmurder as well as those who harbor them and fund them. Two days ago,President Bush signed a new Executive Order under the InternationalEmergency Economic Powers Act (IEEPA) blocking the assets of, andtransactions with, terrorist organizations and certain charitable,humanitarian, and business organizations that finance or support terrorism.To fulfill President Bush's pledge to eliminate safe havens for those whoperpetrate acts of terror, we will use every tool at our disposal to pursueand eliminate terrorist fundraising networks. International Cooperation Because terrorism is global in nature, international cooperation must be anessential component of any enforcement strategy if it is to be successful.The Treasury Department has already taken steps to capitalize on the spiritof international cooperation and is in the process of working diligentlywith our counterparts abroad to ensure that accounts under theirjurisdiction linked to terrorist organizations will be frozen. Foreign Terrorist Asset Tracking Center Another important step that Treasury has taken in light of the September11th attacks, was to get our new inter-agency team, the Foreign TerroristAsset Tracking Center (FTAT) up and running. FTAT is dedicated toidentifying the financial infrastructure of terrorist organizationsworldwide and curtail their ability to move money through the internationalbanking system. FTAT represents a preventative, proactive, and strategicapproach to using financial data to target and curb terrorist financingworldwide. This team will ultimately be transformed into a permanent ForeignTerrorist Asset Tracking Center in the Treasury Department's Office ofForeign Asset Control (OFAC). This is an extraordinary effort that reallyillustrates the Treasury Department's creativity in developing new ways tocombat terrorism. In addition, agents and analysts from Treasury's law enforcement bureaus -the U.S. Customs Service, U.S. Secret Service, Internal RevenueService-Criminal Investigation, and Financial Crimes Enforcement Network, aswell as analysts from the intelligence community will be coordinatingefforts, and Treasury law enforcement bureaus will continue to coordinateclosely with the Department of Justice and Federal Bureau of Investigationon these matters. These efforts will act in concert with the 2001 National Money LaunderingStrategy, which calls for unprecedented levels of intra-agency,inter-agency, and international coordination and cooperation to combat moneylaundering and related financial crime. With respect to the strategy, I would like to take a few minutes to outlinefor the Committee some of the key components of the Administration's plan. The 2001 Money Laundering Strategy The 2001 National Money Laundering Strategy represents the combined inputand approval of more than twenty federal agencies, bureaus, and offices. Itis a comprehensive plan designed to disrupt and dismantle major moneylaundering enterprises and prosecute professional money launderers throughaggressive enforcement, measured accountability, preventative efforts, andenhanced intra-agency, inter-agency, and international coordination. Bymajor enterprise, I mean complex, large-scale, large-volume, transnationalmoney laundering schemes perpetrated by professional money launderers. Ourpolicy should focus and will focus on pursuing terrorist funds and thesekinds of high-impact and high-profile investigations. Aggressive Enforcement The first goal of the 2001 Strategy is to focus law enforcement's efforts onthe prosecution of major money laundering systems and terrorist groupsmoving funds into this country for the sole purpose of conducting criminalactivity and wreaking havoc in our society. We recognize that we mustconcentrate our resources in high-risk areas and target major moneylaundering organizations. To focus our limited federal resources, theStrategy calls for the organization, supervision, and training ofspecialized money laundering task forces located in High Risk MoneyLaundering and Related Financial Crimes Areas (HIFCAs). In a departure fromprecedent, the HIFCAs will function primarily in an operational capacity.They will be tasked with coordinating law enforcement and regulatory assetsagainst corrupt entities engaging in money laundering activities. I amhopeful that the two newest HIFCAs, Chicago and San Francisco, as well asthe existing Los Angeles HIFCA, can complement ongoing enforcement effortsto infiltrate and isolate the terrorist financial networks. HIFCA TaskForces will be jointly supervised by the Departments of Treasury and Justiceand will be composed of all relevant federal, state, and local agencies, andwill serve as the model of our anti-money laundering efforts. One aspect of the 2001 Strategy that I am particularly proud of is theestablishment of an advanced money laundering training program. I believethat such a program is imperative to providing our agents and inspectorswith the proper investigative tools to combat the complex and ever changingmoney laundering schemes of the criminals. The Federal Law EnforcementTraining Center (FLETC) and the Department of Justice's Asset Forfeiture andMoney Laundering Section will be spearheading this effort to train our teamsto investigate sophisticated money laundering schemes. An aggressive anti-money laundering attack requires that law enforcementutilize all available statutory authorities to dismantle large-scalecriminal enterprises. The 2001 Strategy mandates an emphasis on federalasset forfeiture laws in conjunction with money laundering investigationsand prosecutions to strip criminals of their ill-gotten gains and dismantlecriminal organizations by attacking their financial base. We will also continue our ongoing efforts to uncover the sophisticatedschemes devised by professional criminal enterprises and seek to disrupt thefinancial operations of these illicit organizations. For example, we willcontinue to partner with the private sector and our international colleaguesto combat the Black Market Peso Exchange, the largest trade-based moneylaundering system in the Western Hemisphere. I would especially like to notethe contributions that the governments of Colombia, Venezuela, Panama, andAruba have made to this effort. Measured Accountability Another concept unique to this year's Strategy is the idea of "measuredaccountability". To raise our standards of performance, we must measure theeffectiveness of our efforts. For too long, federal law enforcement has notbeen subject to accountability through measured evaluation. Secretary PaulH. O'Neill, in particular, is dedicated to changing business as usual.Therefore, we will seek to create and implement a uniform system thatmeasures the government's anti-money laundering results. Emphasis will beplaced on measured results, rather than the level of law enforcementactivity. We will establish a system to collect reliable information that will providelaw enforcement with an accurate picture of its anti-money launderingprograms. Once we institutionalize these databases, we can begin tomeaningfully evaluate the success of our approaches. Our measurement methodswill include an examination of:
We will ensure accountability and raise our standards of performance,expectation, and success. Measured evaluation will identify money laundering"hot spots," indicate areas where law enforcement must enhance or prioritizeits investigations and prosecutions, and allow law enforcement to articulatemeasurable goals. Preventative Efforts A comprehensive money laundering strategy must also include an effectiveregulatory regime that denies money launderers easy access to the financialsector. The 2001 Strategy continues previous efforts to expand and implementproposed suspicious activity reporting requirements to financialinstitutions that are particularly vulnerable to money laundering activity.We will also seek to establish a true partnership with the private sector tocreate a vigorous anti-money laundering regime and to eliminatevulnerabilities that money launderers seek to exploit. Treasury willencourage the private sector to develop and implement a rigorous set of"best practices and procedures", thus enabling the industry to aid in theprotection of the integrity of the U.S. financial system. Our principal focus will be to ensure that law enforcement fully utilizesreported information. To this end, law enforcement must seek to receive onlythose reports that have law enforcement value. In 2000, the Financial CrimesEnforcement Network (FinCEN) received and processed 12,000,000 CurrencyTransaction Reports (CTRs), thirty percent of which had no meaningful lawenforcement value and would not have been filed if existing reportingexemptions had been used. The 2001 Strategy calls on law enforcement to workwith the private sector to ensure fuller use of the regulatory reportingexemptions and seeks to expand the exemptions to other low-risktransactions, if appropriate. Effective utilization also requires that law enforcement evaluate theusefulness of reported currency transactions. The Strategy will require lawenforcement agencies that use CTR or Suspicious Activity Report (SAR)information to provide operational feedback to FinCEN. In turn, FinCEN willuse the feedback to evaluate or change its database programs to fit theneeds of law enforcement. We will also continue our work to "level the playing field" between banksand non-bank financial institutions. Currently, only those institutions thatcome under the jurisdiction of the federal bank supervisory agencies arerequired to file SARs. I am in the process of working with my staff and therelevant FinCEN personnel to reevaluate the proposed dates regarding theimplementation of the SAR requirements on money services businesses (MSBs).It is the position of the Treasury Department that in light of the horrificevents of September 11th that these regulations need to be put into place assoon as prudently possible. We cannot afford to permit terrorists the luxuryof moving funds through any avenue of our financial system undetected. Enhanced Coordination Lastly and perhaps most importantly, 2001 Strategy stresses the importanceof federal, state, local, and international coordination by creatingstructured, inter-agency, operational task forces that provide supervisionand accountability. In addition, there will be new cooperation-basedincentives. As I mentioned earlier, the HIFCA Task Forces will be the driving force thatunites federal, state, and local law enforcement agencies. To ensurecoordination, HIFCA Task Forces will prepare a detailed action plan andregularly brief Treasury and Justice officials on the progress of majormoney laundering investigations as well as the involvement of state andlocal law enforcement agencies in the HIFCAs. Similarly, the Department ofthe Treasury will conduct evaluations of existing Financial Crime-FreeCommunities Support Program (C-FIC) grant recipients to ensure that localofficials are including HIFCA Task Forces in their efforts. Further, theStrategy strongly encourages U.S. Attorneys in each judicial district tocreate SAR Review Teams, which will incorporate state and local officialswhenever possible. Money laundering is a problem of global dimensions thatrequires concerted and cooperative action on the part of a broad range ofinstitutions. At the international level, the Strategy seeks to remove all barriers thatinhibit international cooperation. Appropriate officials from theDepartments of State, Justice, and Treasury will review key existingextradition and mutual legal assistance treaties and recommend that coverageof money laundering offenses be considered an important objective inassessing future treaty negotiations. The Strategy will mandate increaseduse of the international asset-sharing program, which will provide incentivefor international cooperation. Our participation within the Financial ActionTask Force (FATF) also provides a unique opportunity for us to workinternationally with other member countries to require that countries ingood standing with FATF have rules or regulations in place to address theissue of terrorist fundraising within their borders. The United States willpush for FATF to take action to address these new issues of concern. Because money laundering has the potential to increase risks to the globalfinancial system, Treasury and the other G-7 nations have worked extensivelywith the International Financial Institutions (IFIs), and, as a result, theIFIs have agreed to take on an enhanced role in the global fight againstmoney laundering. The United States will coordinate with G-7 and FATFmembers to ensure that the IMF and World Bank incorporate the FortyRecommendations into their operational work and promote the FortyRecommendations as the international standard for combating money launderingconsistent with the mission and responsibilities of the IFIs. The United States, its G-7 partners, and other FATF members are urging theIFIs to institute a separate "Report on Observance of Standards and Codes"(ROSC) module on money laundering. Such a module would provide acomprehensive and articulated assessment of the status and performance of acountry's anti-money laundering regime, and we look forward to having theIFIs full cooperation in this effort. Conclusion In closing, I leave you today with my personal assurance that during mytenure as Under Secretary (Enforcement), the Department of Treasury willcontinue to aggressively pursue money launderers with every tool that wehave at our disposal. Last week I had the opportunity to visit Ground Zeroat what remains of the World Trade Center and see the devastation firsthand. It was a sight I will never forget and I am here today to make surethat this Committee and the United States Congress know that we willcontinue to pursue terrorist fundraising networks and other money launderingoperations diligently and with passion. Source: The Department of the Treasury. |