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26 September 2001

Text: Treasury's Gurule on Strategy Against Money Laundering

(He says IMF, World Bank agree to more cooperation)  (2820)
Treasury Under Secretary Jimmy Gurule says the Bush administration is
taking steps to improve cooperation in the fight against money
laundering both domestically and internationally.
In September 26 testimony before the Senate Banking Committee, Gurule
said the International Monetary Fund (IMF) and World Bank have agreed
to do more to fight money laundering in cooperation with the Group of
Seven (G-7) leading industrial countries and the 29 members of the
Financial Action Task Force (FATF).
He also described new task forces to coordinate anti-money-laundering
activities among federal, state and local law-enforcement agencies in
the United States.
Yet another new federal interagency team, the Foreign Terrorist Asset
Tracking Center, aims specifically at disrupting terrorists' ability
to move money through the global financial system, he said.
Gurule said the Treasury Department is working to accelerate
implementation of rules requiring U.S. non-bank financial services to
file the same suspicious activity reports that are already required of
U.S. banks.
He also reviewed the administration's just-released 2001 Money
Laundering Strategy, which places new focus on large-scale
transnational money laundering schemes. The strategy also places new
emphasis on accountability and results, he said.
Gurule said the administration will also continue working against the
Black Market Peso Exchange money laundering system operating
throughout the Western Hemisphere from its base in Colombia.
Following are some abbreviations used in the text:
-- FTAT: Foreign Terrorist Asset Tracking Center
-- HIFCAs: high risk money laundering and related financial crimes
-- FinCEN: Financial Crimes Enforcement Network
-- CTR: currency transaction report
-- SAR: suspicious activity report
-- FATF: Financial Action Task Force
-- IFIs: international financial institutions
Following is the text of Gurule's prepared testimony, as submitted for
the committee's record:
(begin text)
September 26, 2001
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.
Recent Steps
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
International Cooperation
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.
Aggressive Enforcement
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
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.
Measured Accountability
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 data related to money laundering activity
that will represent a monetary value of our efforts; and
-- the criminal marketplace price of laundering money that will help
determine whether our anti-money laundering efforts are making it more
expensive and more difficult for criminals to launder their illicit
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.
Preventative Efforts
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
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
Enhanced Coordination
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
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site:

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