STATEMENT OF JIMMY GURULE
UNDER SECRETARY FOR ENFORCEMENT
U.S. DEPARTMENT OF THE TREASURY
FOR THE SENATE COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
DOMESTIC AND INTERNATIONAL MONEY LAUNDERING
Chairman Sarbanes, Senator Gramm, and distinguished members of the Committee, I appreciate the opportunity to share with you the Treasury Department's ongoing commitment to the fight against money laundering. I appear before you today more convinced than ever of the importance and necessity of a comprehensive money laundering strategy. I know you feel the same way and I look forward to sharing with you some of the key aspects of President Bush's plan to combat domestic and international money laundering.
Let me begin by saying that criminal acts of violence, such as the horrific terrorist attacks of September 11th, need more than just cunning leadership and dedicated followers to be successful. Such undertakings also require extensive financial funding as well. Let me be clear--the Treasury Department is committed to identifying the sources of funding used to underwrite attacks of this nature and we will take whatever action is necessary to shut them down. Although the complexities of money laundering have long been associated with concealing the true nature of proceeds generated from the drug cartels, the tragedies of September 11th also underscore the need for aggressive and vigilant anti-money laundering efforts which target the movement of funds into this country for the purpose of criminal activity - especially funds earmarked for terror. In response to this need, the implementation of the 2001 Money Laundering Strategy includes several specific steps to dismantle and disrupt the financing of terrorist activities.
As Secretary O'Neill has stated publicly, the Treasury Department's top priority is to dismantle the financial infrastructure of the terrorist groups in question. To that end, we will deploy all of our resources to trace and block the funds of those who engage in these heinous acts of murder as well as those who harbor them and fund them. Two days ago, President Bush signed a new Executive Order under the International Emergency Economic Powers Act (IEEPA) blocking the assets of, and transactions 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 who perpetrate acts of terror, we will use every tool at our disposal to pursue and eliminate terrorist fundraising networks.
Because terrorism is global in nature, international cooperation must be an essential component of any enforcement strategy if it is to be successful. The Treasury Department has already taken steps to capitalize on the spirit of international cooperation and is in the process of working diligently with our counterparts abroad to ensure that accounts under their jurisdiction linked to terrorist organizations will be frozen.
Foreign Terrorist Asset Tracking Center
Another important step that Treasury has taken in light of the September 11th attacks, was to get our new inter-agency team, the Foreign Terrorist Asset Tracking Center (FTAT) up and running. FTAT is dedicated to identifying the financial infrastructure of terrorist organizations worldwide and curtail their ability to move money through the international banking system. FTAT represents a preventative, proactive, and strategic approach to using financial data to target and curb terrorist financing worldwide. This team will ultimately be transformed into a permanent Foreign Terrorist Asset Tracking Center in the Treasury Department's Office of Foreign Asset Control (OFAC). This is an extraordinary effort that really illustrates the Treasury Department's creativity in developing new ways to combat terrorism.
In addition, agents and analysts from Treasury's law enforcement bureaus - the U.S. Customs Service, U.S. Secret Service, Internal Revenue Service-Criminal Investigation, and Financial Crimes Enforcement Network, as well as analysts from the intelligence community will be coordinating efforts, and Treasury law enforcement bureaus will continue to coordinate closely with the Department of Justice and Federal Bureau of Investigation on these matters.
These efforts will act in concert with the 2001 National Money Laundering Strategy, which calls for unprecedented levels of intra-agency, inter-agency, and international coordination and cooperation to combat money laundering and related financial crime.
With respect to the strategy, I would like to take a few minutes to outline for 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 input and approval of more than twenty federal agencies, bureaus, and offices. It is a comprehensive plan designed to disrupt and dismantle major money laundering enterprises and prosecute professional money launderers through aggressive enforcement, measured accountability, preventative efforts, and enhanced intra-agency, inter-agency, and international coordination. By major enterprise, I mean complex, large-scale, large-volume, transnational money laundering schemes perpetrated by professional money launderers. Our policy should focus and will focus on pursuing terrorist funds and these kinds of high-impact and high-profile investigations.
The first goal of the 2001 Strategy is to focus law enforcement's efforts on the prosecution of major money laundering systems and terrorist groups moving funds into this country for the sole purpose of conducting criminal activity and wreaking havoc in our society. We recognize that we must concentrate our resources in high-risk areas and target major money laundering organizations. To focus our limited federal resources, the Strategy calls for the organization, supervision, and training of specialized money laundering task forces located in High Risk Money Laundering and Related Financial Crimes Areas (HIFCAs). In a departure from precedent, the HIFCAs will function primarily in an operational capacity. They will be tasked with coordinating law enforcement and regulatory assets against corrupt entities engaging in money laundering activities. I am hopeful that the two newest HIFCAs, Chicago and San Francisco, as well as the existing Los Angeles HIFCA, can complement ongoing enforcement efforts to infiltrate and isolate the terrorist financial networks. HIFCA Task Forces will be jointly supervised by the Departments of Treasury and Justice and will be composed of all relevant federal, state, and local agencies, and will serve as the model of our anti-money laundering efforts.
One aspect of the 2001 Strategy that I am particularly proud of is the establishment of an advanced money laundering training program. I believe that such a program is imperative to providing our agents and inspectors with the proper investigative tools to combat the complex and ever changing money laundering schemes of the criminals. The Federal Law Enforcement Training Center (FLETC) and the Department of Justice's Asset Forfeiture and Money Laundering Section will be spearheading this effort to train our teams to investigate sophisticated money laundering schemes.
An aggressive anti-money laundering attack requires that law enforcement utilize all available statutory authorities to dismantle large-scale criminal enterprises. The 2001 Strategy mandates an emphasis on federal asset forfeiture laws in conjunction with money laundering investigations and prosecutions to strip criminals of their ill-gotten gains and dismantle criminal organizations by attacking their financial base.
We will also continue our ongoing efforts to uncover the sophisticated schemes devised by professional criminal enterprises and seek to disrupt the financial operations of these illicit organizations. For example, we will continue to partner with the private sector and our international colleagues to combat the Black Market Peso Exchange, the largest trade-based money laundering system in the Western Hemisphere. I would especially like to note the contributions that the governments of Colombia, Venezuela, Panama, and Aruba have made to this effort.
Another concept unique to this year's Strategy is the idea of "measured accountability". To raise our standards of performance, we must measure the effectiveness of our efforts. For too long, federal law enforcement has not been subject to accountability through measured evaluation. Secretary Paul H. O'Neill, in particular, is dedicated to changing business as usual. Therefore, we will seek to create and implement a uniform system that measures the government's anti-money laundering results. Emphasis will be placed on measured results, rather than the level of law enforcement activity.
We will establish a system to collect reliable information that will provide law enforcement with an accurate picture of its anti-money laundering programs. Once we institutionalize these databases, we can begin to meaningfully evaluate the success of our approaches. Our measurement methods will include an examination of:
- quantitative factors, such as the number of money laundering investigations, prosecutions, and convictions, which will provide a numerical snapshot of our efforts from year to year;
- qualitative factors- each investigation, prosecution, or conviction will be assigned a weighted value to mirror the case's complexity, importance, and scope of impact;
- forfeiture and seizure datarelated to money laundering activity that will represent a monetary value of our efforts; and
- the criminal marketplace price of laundering moneythat will help determine whether our anti-money laundering efforts are making it more expensive and more difficult for criminals to launder their illicit proceeds.
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 prioritize its investigations and prosecutions, and allow law enforcement to articulate measurable goals.
A comprehensive money laundering strategy must also include an effective regulatory regime that denies money launderers easy access to the financial sector. The 2001 Strategy continues previous efforts to expand and implement proposed suspicious activity reporting requirements to financial institutions that are particularly vulnerable to money laundering activity. We will also seek to establish a true partnership with the private sector to create a vigorous anti-money laundering regime and to eliminate vulnerabilities that money launderers seek to exploit. Treasury will encourage the private sector to develop and implement a rigorous set of "best practices and procedures", thus enabling the industry to aid in the protection of the integrity of the U.S. financial system.
Our principal focus will be to ensure that law enforcement fully utilizes reported information. To this end, law enforcement must seek to receive only those reports that have law enforcement value. In 2000, the Financial Crimes Enforcement Network (FinCEN) received and processed 12,000,000 Currency Transaction Reports (CTRs), thirty percent of which had no meaningful law enforcement value and would not have been filed if existing reporting exemptions had been used. The 2001 Strategy calls on law enforcement to work with the private sector to ensure fuller use of the regulatory reporting exemptions and seeks to expand the exemptions to other low-risk transactions, if appropriate.
Effective utilization also requires that law enforcement evaluate the usefulness of reported currency transactions. The Strategy will require law enforcement agencies that use CTR or Suspicious Activity Report (SAR) information to provide operational feedback to FinCEN. In turn, FinCEN will use the feedback to evaluate or change its database programs to fit the needs of law enforcement.
We will also continue our work to "level the playing field" between banks and non-bank financial institutions. Currently, only those institutions that come under the jurisdiction of the federal bank supervisory agencies are required to file SARs. I am in the process of working with my staff and the relevant FinCEN personnel to reevaluate the proposed dates regarding the implementation of the SAR requirements on money services businesses (MSBs). It is the position of the Treasury Department that in light of the horrific events of September 11th that these regulations need to be put into place as soon as prudently possible. We cannot afford to permit terrorists the luxury of moving funds through any avenue of our financial system undetected.
Lastly and perhaps most importantly, 2001 Strategy stresses the importance of federal, state, local, and international coordination by creating structured, inter-agency, operational task forces that provide supervision and accountability. In addition, there will be new cooperation-based incentives.
As I mentioned earlier, the HIFCA Task Forces will be the driving force that unites federal, state, and local law enforcement agencies. To ensure coordination, HIFCA Task Forces will prepare a detailed action plan and regularly brief Treasury and Justice officials on the progress of major money laundering investigations as well as the involvement of state and local law enforcement agencies in the HIFCAs. Similarly, the Department of the Treasury will conduct evaluations of existing Financial Crime-Free Communities Support Program (C-FIC) grant recipients to ensure that local officials are including HIFCA Task Forces in their efforts. Further, the Strategy strongly encourages U.S. Attorneys in each judicial district to create SAR Review Teams, which will incorporate state and local officials whenever possible. Money laundering is a problem of global dimensions that requires concerted and cooperative action on the part of a broad range of institutions.
At the international level, the Strategy seeks to remove all barriers that inhibit international cooperation. Appropriate officials from the Departments of State, Justice, and Treasury will review key existing extradition and mutual legal assistance treaties and recommend that coverage of money laundering offenses be considered an important objective in assessing future treaty negotiations. The Strategy will mandate increased use of the international asset-sharing program, which will provide incentive for international cooperation. Our participation within the Financial Action Task Force (FATF) also provides a unique opportunity for us to work internationally with other member countries to require that countries in good standing with FATF have rules or regulations in place to address the issue of terrorist fundraising within their borders. The United States will push for FATF to take action to address these new issues of concern.
Because money laundering has the potential to increase risks to the global financial system, Treasury and the other G-7 nations have worked extensively with the International Financial Institutions (IFIs), and, as a result, the IFIs have agreed to take on an enhanced role in the global fight against money laundering. The United States will coordinate with G-7 and FATF members to ensure that the IMF and World Bank incorporate the Forty Recommendations into their operational work and promote the Forty Recommendations as the international standard for combating money laundering consistent with the mission and responsibilities of the IFIs.
The United States, its G-7 partners, and other FATF members are urging the IFIs to institute a separate "Report on Observance of Standards and Codes" (ROSC) module on money laundering. Such a module would provide a comprehensive and articulated assessment of the status and performance of a country's anti-money laundering regime, and we look forward to having the IFIs full cooperation in this effort.
In closing, I leave you today with my personal assurance that during my tenure as Under Secretary (Enforcement), the Department of Treasury will continue to aggressively pursue money launderers with every tool that we have at our disposal. Last week I had the opportunity to visit Ground Zero at what remains of the World Trade Center and see the devastation first hand. It was a sight I will never forget and I am here today to make sure that this Committee and the United States Congress know that we will continue to pursue terrorist fundraising networks and other money laundering operations diligently and with passion.