Thank you for that gracious introduction. It is a pleasure to be here with you today to discuss the Treasury Department's ongoing efforts in the fight against money laundering.
When I was confirmed as Under Secretary for Enforcement in August, I identified money laundering as my top priority. However, the goal of aggressive enforcement of the federal money laws has taken on a new focus and meaning following the tragic and horrific attacks of September 11th.
The Treasury Department is now waging a multi-lateral battle to break the financial backbone of terrorist groups and their financiers. Although the complexities of money laundering have long been associated with concealing the true source and nature of drug proceeds, the attacks of September 11th clearly underscore the need for aggressive and vigilant anti-money laundering efforts which target the movement of funds into this country earmarked for terror.
As President Bush stated on September 24th: "[W]e will direct every resource at our command to win the war against terrorists: every means of diplomacy, every tool of intelligence, every instrument of law enforcement, every financial influence. We will starve the terrorists of funding, turn them against each other, rout them out of their safe hiding places and bring them to justice."
The Treasury Department is following the President's orders. We are directing our assets to financially paralyze and marginalize those who serve as financial supporters and intermediaries for terrorists. Let me be clear -- we are at war with the terrorists and as the President has stated on numerous occasions. This will be a multi-faceted effort designed to attack our faceless enemy from every side. The Treasury Department is playing a key role in this new and unconventional war with respect to dismantling the maze of money that makes these atrocious acts possible.
This, however, is not a battle that we can win unilaterally. At every stage of our efforts, we must work in close partnership with other government agencies, the private sector, and our global partners to achieve success. For this is war that threatens our way of life and a war that we must win together.
I would like to outline for you today three principle components of our strategy to choke the flow of terrorist funds. First, we have established the inter-agency Foreign Terrorist Asset Tracking Center (FTAT) dedicated to identifying and disrupting the sources of terrorist financing. Second, we have created a strong, inter-active private-public partnership with the financial industry to crack down on those who criminally misuse and corrupt the international financial system. Third, we are working closely with our foreign partners on a bilateral and multilateral basis to effect concrete results in finding and freezing terrorist funds.
Along these lines, let me share the facts about our Foreign Terrorist Asset Tracking Center, a new proactive, preventative strategy for waging the financial war.
Clearinghouse for analyzing information from federal law enforcement, BSA database, general sources or public sources, and the intelligence community.
Inter-agency cooperative venture consisting of Treasury assets, including OFAC [Office of Foreign Assets Control], FinCEN [Financial Crimes Enforcement Network], the various Bureaus, as well as the FBI [Federal Bureau of Investigation] and the intelligence community.
Purpose is to identify, disrupt and dismantle complex financial terrorist networks.
Proactive, preventative and strategic.
Endgame is blocking assets and prohibiting transactions with persons who commit, threaten to commit, or support terrorism.
We have directed the financial forensic expertise of our Treasury law enforcement agents (in particular from the Secret Service, Customs, and IRS-CI [Internal Revenue Service-Criminal Investigation]) to engage in the battle against terrorist financing. Our agents have contributed since September 11th to deciphering the financial puzzle of the attack and are now concentrating on disrupting financial flows to terrorists.
Our victory will not solely emerge from law enforcement efforts, but will also depend upon public-private partnership. Public-private partnership is a principle that is of particular relevance to many of you here today and a theme that is stressed repeatedly in the Bush Administration's 2001 National Money Laundering Strategy. A strong, interactive private-public partnership between government and the financial industry is imperative to a successful crack down on money launderers and others attempting to misuse the international financial system. The terrorists and other wrongdoers are constantly seeking new, creative ways to move money around the world. This is a problem of global proportions and one that needs to be addressed jointly by both the private and public sectors for maximum effectiveness.
In the past, the public and private sectors have worked well together; as seen with the increased utilization of SARs - Suspicious Activity Reports - filed routinely by the banks. In fact, since September 11th, FinCEN has taken steps to streamline SAR reporting requirements. For instance, FinCEN has set up a toll free number, 1-866-556-3974, to enable banks to file SARs over the phone. We are also in the process of exploring new technologies that would expedite the SAR filing process.
I also hope to forge a public-private partnership on the topic of Currency Transaction Report exemptions. Currently, FinCEN receives roughly thirteen million CTRs [Currency Transaction Reports] a year. It is estimated that approximately 30 percent of those do not need to be filed under existing exemption regulations. In the coming months I will be working closely with the financial industry to better utilize the exemption rules. Proper use of the exemptions would provide law enforcement with data purged of meaningless reports. This would be extremely helpful in an age when law enforcement is inundated by more information than they can sometimes process.
The Treasury Department has also supported new anti-money laundering legislation intended to address current deficiencies in our nation's anti-money laundering laws.
The new legislation grants the Secretary of the Treasury an array of options (special measures) to deal with jurisdictions, entities, or systems that pose a primary money laundering concern. This new authority fills a gap in what steps the Treasury can take to deal with targeted money laundering concerns. For instance, the legislation designates foreign corruption as a specified unlawful activity (but limited to offenses that are defined as crimes within the United States).
I have already met with leaders from the financial industry to discuss some of these proposals and I anticipate further dialogue with the industry in the weeks and months to come. However, as we all know, the public-private relationship can become even stronger. Success in this war depends on both of our sectors working together. To this end, I envision a close working relationship between the financial industry and law enforcement with respect to typologies and patterns that are indicative of money laundering activities. Over the next few weeks, we will develop these typologies and share them with you to assist you in identifying money launders.
As I stated earlier, money laundering is a problem of global proportions. President Bush signed an Executive Order on September 24 providing the Secretary of the Treasury with the tools to build an international coalition to disrupt terrorist financing. Under the Executive Order, 66 individuals, entities, organizations have been designated as terrorist financing sources. Banks in the United States are required to block their accounts. Under the Executive Order, foreign banks that do not cooperate may also have their US assets blocked, causing them to lose their access to US capital markets.
144 countries have committed to joining the international effort to disrupt terrorist's assets. The civilized world has spoken with one voice - individuals and organizations that infuse these terrorist organizations with money are no better than the terrorists perpetrating these acts.
In addition, Secretary O'Neill met personally with his G-7 counterparts two weeks ago to discuss a joint plan of attack and to coordinate ongoing efforts. Specifically, the G-7 called on all countries to establish functional Financial Investigative Units [FIUs] as soon as possible. In addition all of the G-7 countries will join the Egmont Group, which promotes cooperation between national FIUs with particular emphasis on the sharing of information between FIUs.
Immediately following the September 11th attacks, we began engaging the multilateral Financial Action Task Force on Money Laundering, comprised of 29 countries and two regional bodies, in the international battle against terrorism. FATF has been extremely effective in encouraging and cajoling countries to make dramatic changes in their anti-money laundering regimes. The G-7 followed our lead and called on FATF to take action. FATF 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 FATF is convening an emergency plenary meeting here in Washington next week to discuss specific proposals to be incorporated into the FATF's Forty Recommendations. The purpose of the plenary meeting is to refocus the FATF process to address terrorist financing. It is here that we will develop money-laundering typologies that will be shared with you.
Among the proposals under consideration are:
Ratification of the U.N. Terrorist Financing Convention.
Criminalizing terrorist financing.
International assistance relating to terrorist financing.
SAR requirements for terrorist financing: If a financial institution knows, or suspects or has reason to suspect that funds are involved in, generated or held for, directed to, used by, used to support or represent the proceeds of acts of, terrorists or their organizations, it should be required to report promptly relevant information to the competent authorities.
Alternate remittance systems -- Senders of money and their subagents, or any other person who engages as a business in the transmission of funds, including through informal value transfer systems or facilitation or the transfer of value outside of conventional financial institutions, should register with competent authorities, and should comply with FATF Recommendations 12.
Freezing/Seizing/Confiscating Terrorist Assets -- Each country should immediately implement U.N. resolutions relating to the prevention and suppression of the financing of terrorist acts, including U.N. Security Council Resolutions 1267, 1333, and 1373. Countries shall have measures to disrupt and prevent financial benefits and support to terrorists, including the ability to freeze assets of individuals and organizations with terrorist links.
International Wire Transfers -- Countries should take measures to require financial institutions and money remitters to include originator information (name, address and account number) on funds transfers and related messages sent to and from their country and the information should remain with the transfer or related message through the point of disbursement.
After the September 11th attacks, I visited the Pentagon and Ground Zero, the site of the World Trade Center's remains. I saw the unforgettable horror and devastation created by our enemies. I will never forget this sight. As I looked out at the ruins, I knew tangibly that we are at war -- at war against a faceless enemy that uses money to wreak havoc and pain on innocent civilians. We are at war with an enemy who will use money from so-called charities or businesses to bloody our democracy.
The Treasury Department is dedicated to taking the war directly to the terrorists by draining their financial lifeblood and marginalizing them from the legitimate financial marketplace. Ours is a battle that cannot be won alone and it cannot be won using conventional means. Victory over this terrorist threat, in its many forms, will take cooperation at all levels of government, with you in the private sector, and with our foreign partners. It is only in unison and with innovative new strategies that we can stamp out the scourge of terrorism.
That is what we have begun to do. I assure you that Treasury will continue to pursue money launderers and terrorist financiers aggressively, methodically, and in close coordination with our partners using every tool that we have at our disposal. This is a financial war that we must win together.
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Source: U.S. Government Website |