TOP OF DOC
TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR
1998
TUESDAY, MARCH 4, 1997.
FINANCIAL CRIMES ENFORCEMENT NETWORK
WITNESS
STANLEY E. MORRIS, DIRECTOR, FINANCIAL CRIMES ENFORCEMENT NETWORK
Opening Comments From Chairman Kolbe
Mr. KOLBE. We will call next Mr. Stanley
Morris, Director of the Financial Crimes Enforcement Network, FinCEN.
Mr. Director, we have already made our opening
statements, and your statement, will be placed in the record. We hope you
would summarize it so that we can have some time for questions.
Mr. MORRIS. Thank you, Mr. Chairman, Mr.
Hoyer, members of the subcommittee. I appreciate very much the opportunity
to discuss our mission and the '98 budget request for the Financial Crimes
Enforcement Network.
I have with me Dave Gilles, who is our Assistant
Director for Information Technology, who does more than click the
''mouse'', which he will do here in a little bit. He also designs what I
think are some of the most interesting applications of technology in the
effort to deal with financial crimes anywhere in the world. Mr. Hoyer's
visit to us not too long ago, was a great morale booster for a small law
enforcement agency located outside the beltway. I might point
out—with all the criticisms of organizations inside the beltway, we
are just barely out—I would invite you, Mr. Chairman, at some point
in time to also come out.
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Mr. KOLBE. We will do that.
Mr. MORRIS. It is a different kind of
organization and seeing, I hope, is believing.
The theme of this hearing——
Mr. HOYER. Excuse me, Mr. Director. If you
would yield, you came in late, but I did mention to the Chairman my visit
there, and the extraordinary capability of you and your staff and how
impressed I was with the technical ability that we have to track money now,
which makes it much more difficult to hide illegal transactions. I wanted
to reiterate that I mentioned that before you came in. I really was
impressed by my visit.
Thank you, Mr. Chairman.
Mr. MORRIS. Thank you very much. Again, as
I said, it was a great morale booster for a small agency with a funny name,
that not a lot of people have heard of.
As I said, the subject of the hearing, innovation
and technology, describes in large part what FinCEN is all about. Law
enforcement has to use every weapon in its arsenal to ensure the best
offense and defense against financial criminals. Technology is one such
weapon, and innovation is critical to its effectiveness.
As our name states, FinCEN is a network, a link
between law enforcement, regulatory and financial communities. Our goal,
therefore, is to maximize information sharing among our partners in these
communities and to find new ways to create cost-effective and efficient
measures to prevent and detect money laundering.
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In addition to employing creative uses of
technology to provide case support to over 150 Federal, state and local law
enforcement agencies, we also administer the Bank Secrecy Act, which is the
Government's anti-money laundering regulatory statute. This Act requires
banks and other financial institutions to take steps to help deter and, if
unsuccessful in deterring, detect money laundering and other financial
crimes through various reporting and record-keeping measures.
My testimony today will illustrate the value to
law enforcement of the information collected through our regulatory
programs. The kind of thing we could show Mr. Hoyer actually in place, we
will try to show you, Mr. Chairman, through the application of a little
technology in presenting our testimony and trying to describe it.
Let me turn to an example of the type of case we
help law enforcement develop. Such a case could be generated by FinCEN's
proactive analysis on its own, or it could be developed in response to a
law enforcement request.
We start here with a mid-sized city in the United
States, bustling with financial activity. Within this city we will be
discussing three grocery stores run by five family members. Their financial
dealings have come to our attention because their business practices don't
fit within the normal financial activity of other small grocery stores in
this city. The cash activity is unusual and their bank has reported that
some of their transactions are suspicious.
How did we arrive at this information and how will
it help us in law enforcement develop a case? The answers are found in
FinCEN's toolbox. Now, it looks like a traditional toolbox, but it's filled
with anything but traditional tools. Its tools are state-of-the-art
technology. In this case we will demonstrate four of our most important
tools that we utilize to develop case information.
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First, one of the most innovative devices in the
toolbox is FinCEN's artificial intelligence, or AI system. Let me digress
for just a moment to describe it.
Under the Bank Secrecy Act, financial institutions
are required to file reports on cash transactions over $10,000. At present,
more than eleven million such reports, called Currency Transaction Reports,
or CTRs, are filed every year. Information on each of those reports, such
as name of the transactor, bank account numbers, amount of transaction,
names of the users of the accounts, addresses, are all included. As you can
imagine, with over 100 bits of information on each of eleven million
reports, the amount of information available in the database is
staggering.
Although this data contains valuable clues to
suspicious activity, they are much like needles buried in a haystack.
Fortunately, we have found a way to use technology to get at those
needles.
AI is a complex computer system that provides the
ability to process vast amounts of data, enabling our analysts to explore
the sets of links it has established.
As illustrated in the next several screens, the
customized programs and algorithms developed by FinCEN's computer
scientists allow the AI's KDD, or Knowledge Discovery Databases, to pull in
relevant information from the universe of CTR data. The system then
connects disparate pieces of information, such as banking transactions and
accounts, and this linking process reveals patterns of financial
transactions that we know are used to launder money or to perpetrate other
crimes. Thus, we can find potential suspects during the AI analysis who
might have gone undetected.
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Let me show you how the AI system worked in our
case example. What you see on the screen is a graphic representation of
relationships revealed in the data. The AI system has linked together
common elements from 90 different currency transaction reports. The system
has honed in on these particular CTRs because the activity reveals a
suspicious pattern of cash deposits which simply do not fit the normal
profile of a small grocery store.
This wheel represents the application of our data
visualization software which is extracted from that CTR data. It's one of
the ways our systems visually link those CTR filings.
These spokes represent the interwoven and
overlapping relationship of transactions to suspect businesses and people,
and the total of these CTRs makes up nearly two million dollars.
This next wedge highlighted in green displays the
three accounts associated with these CTRs. The wheel continues to build as
the system identifies our three grocery stores connected to the
accounts.
Finally, the last element identifies nine
individuals making the transactions.
At this point we have culled the needles out of
millions of records in a haystack and zeroed in on an organization with a
highly questionable degree of financial activity.
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Since the wheel is not necessarily the most
''user friendly'' way to explain what we've developed, FinCEN's customized
software allows us, literally with the click of a mouse, to quickly convert
the AI system information into a more easily understandable link chart.
This chart then becomes the foundation of our case analysis.
As you will see, our analysts can untangle the
lines to show how the transactions relate to each other, and the colors and
lines become commonly used law enforcement symbols.
Now let's return to the toolbox. The second tool
that we have used to develop our case is the Suspicious Activity Reporting
System, SARS. It is our newest tool and a very important device in our
toolbox.
SARS merged two older paper-based regulatory
requirements for banks to report criminal activity. These systems had been
in place for years. We eliminated these separate and overlapping filings,
thereby easing the reporting burden on the banks. In sum, it reduced the
amount of required flow of paper by over two million pieces, while at the
same time significantly improving the quality of the information.
I have heard, Mr. Chairman, that Federal agencies
are sometimes criticized by some of your colleagues up here as being awash
in data, from which we extract a tiny bit of information and generate
absolutely no wisdom. We hope our systems here are adding a little bit of
wisdom to an extraordinary amount of data.
Under SARS, banks report criminal activity to one
collection point—that's FinCEN—which then provides the
appropriate information electronically to its users, both regulators and
law enforcement. This single filing point provides for easier compliance by
the banking industry and more comprehensive information for use by law
enforcement and regulatory agencies.
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SARS was implemented less than a year ago by us
and by the bank regulatory agencies. It provides a single, centralized
system for banks to report to law enforcement all criminal activities such
as bank fraud, money laundering, embezzlement, check kiting, or misdeeds by
bank officials, as you can see from the point on the screen.
Most significantly, SARS provides valuable
detailed information that is received first hand from the bank, and
therefore, this data can help us to identify money laundering trends and
patterns which can be vital to law enforcement and to the bank industry who
have to develop countermeasures.
This system proves to be very useful in the case
example we're working on.
As you can see on the SARS form, a bank has
identified the subject, as did our AI system. In fact, during a five-month
period, the bank filed numerous SARS on this business. All are for amounts
suspiciously just under the CTR reporting threshold of $10,000, as you can
see on the screen.
Finally, many of the transactions occurred on
successive days. This is a clear indication of what we call
''structuring''; that is, breaking down the transactions into smaller
amounts to avoid FinCEN's currency reporting requirements. So we now can
add that information obtained from the SARS to the information originally
derived from our AI system.
The information contained in these two systems
validates the partnership that we have fostered with the financial
community to create an efficient and workable regulatory and reporting
structure. The information provided by the banks has enhanced the overall
picture of the grocery store's irregular financial activity. But we have a
couple more tools as well.
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We spend two million dollars a year for the
purchase of databases from commercial vendors. Information from
commercially available sources plays an increasingly vital role in criminal
investigations.
Commercial database products include information
such as state corporations, property records, people locator records,
professional licenses, vehicle registration and the like. From these
records our analysts were able to identify numerous luxury
purchases—a large yacht, a couple of expensive vehicles and other
items which are clearly beyond the means of the owners of a small,
family-run grocery store.
In addition, we discovered a corporate record that
identifies an as yet unknown additional owner of the stores. Now you can
see that the assets of the subjects, as well as a new name, are added to
the mix.
As a repository of more Federal databases than any
other agency, FinCEN uses a fourth tool, law enforcement
databases—Customs, DEA, Postal Service, INS, DOD and others. These
databases provide the status of current or closed investigations, as well
as information gathered from informants, surveillances and other sources.
They also include customs, trade, and travel information.
The subjects of our case have been very busy. Law
enforcement databases revealed repeated travel to and from a money
laundering haven. We now find that the additional owner, first discovered
in our commercial database, has a criminal record for marijuana smuggling.
In addition, there is an investigative report linking our subjects to
cocaine smuggling.
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The information from our law enforcement database
has further enhanced the overall view of our subjects and their activity,
and the mining of these data from these four sources yields a more complete
picture, a picture that would be unavailable without the resources, the
tools of FinCEN.
So what does all this mean? Since an investigative
report on one of the owners indicated involvement with narcotics
trafficking, the suspicious financial activity may be related to laundering
drug money. Another owner's history of narcotics smuggling and
international air travel to a money laundering center would fit a narcotics
organization.
The recurring and structured deposits of cash are
contrary to the level of business these small stores would usually
generate, and the overt attempt to avoid reporting requirements indicates
an effort to disguise the transactions from Federal authorities.
We would, at this juncture, routinely provide our
case findings to Federal law enforcement and work closely with the agents
to provide the further support that they needed.
Finally, the investigation can begin, but it
finally has to be done in the streets by the men and women who make up
Federal and state law enforcement.
Financial investigations like this one are
essential if we are to beat criminals at their game, whether it's related
to narcotics trafficking, health care fraud, or public corruption. FinCEN's
tools are key to following the money, but, of course, our tools are no
ordinary tools. The support of this Committee in the past has allowed us to
assemble a highly advanced client server computer environment to help
FinCEN stay on top of the ever evolving world of high tech financial
crime.
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Moreover, our computer savvy analysts are adept at
exploiting emerging technologies and data sources, such as the Internet, to
predict and counter the use of technology by organized crime and
criminals.
In addition, as we informed the committee last
year, electronic money, although in its infancy, stands to alter the way
criminals conduct their financial business. Our expertise in the area of
new technologies permits us to prepare for the changing global financial
world.
Mr. Chairman, Mr. Hoyer, I hope this brief
demonstration gives a somewhat better idea of how we try to use technology
and innovation to help law enforcement. To keep up with the increasingly
sophisticated activities of today's financial criminals, we must ensure
that the contents of our toolbox are replenished and updated as changing
circumstances warrant. Imagination and unconventional thinking are key to
keeping money launderers in check. Our 181 FTE carry out our many domestic
and international programs, and we try very hard to use our resources in
ways which cross traditional bureaucratic lines. For example, we have
pioneered a platform concept, offering office space and database access and
training to employees of other Federal agencies who need to conduct
research using some of the tools that you just saw. At the moment, database
access is provided to 43 platform participants from 21 different
agencies.
Within FinCEN, approximately 55 percent of our
resources support cases to law enforcement, just as you have seen. Another
20 percent is devoted to our regulatory program, and 25 percent to
strengthening our network in international partnerships and
relationships.
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Our '98 budget request of 181 FTE and
$23,006,000 reflects this approach. In addition, we're proposing that two
one-time initiatives be funded from the Violent Crime Reduction trust fund,
a million dollars for the secure Communications Outreach Program for us and
the Treasury agencies, and two million dollars and four FTE in support of
the President's efforts to encourage money laundering countries to
institute internationally accepted anti-money laundering measures.
These programs are designed to improve secure
communications among Treasury's bureaus and strengthen our country's
ability to surround the borderless world of money laundering with a global
network of nations working together to combat financial crime.
We appreciate the committee's consideration for
giving us a little time here to do a ''show and tell'' on one aspect of our
mission. I look forward to questions from you and Mr. Hoyer.
[The information follows:]
Offset folios 615 to 642 insert here
Mr. KOLBE. Thank you very much.
It was an interesting presentation. We discussed
your work recently, and this gave an even better illustration of it.
I have just a couple of questions. This
subcommittee, the Treasury, and the Federal Government in general are very
interested in performance measurements. You are a support organization, and
it seems to me that it would be very difficult to link directly the work
that you do to the solution of cases, the breakthroughs in investigations,
or specific rates of convictions. Do you attempt to do this indirectly?
What kind of measurements, indirect or otherwise, do you try to use to
measure your performance?
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Mr. MORRIS. Well, this is probably the best
and probably the hardest question you could ask, Mr. Chairman. We have been
struggling with this for some time because we are primarily a
prevention-oriented agency. Indeed, if arrest and seizures and
money-laundering go up, it probably means we are doing something wrong. So
we need to be very careful in what we examine.
The one piece of comfort I have is that there are
now some 25 nations that have created FinCEN-like agencies. Cloning is not
illegal in the area of bureaucratic assimilation, and a number of countries
have created organizations like ours that are quite new. All of them are
struggling with the same issue.
There are some indirect measures, as you suggest,
that we think at least give us some comfort. Whether it will provide the
committee comfort, I am not sure, but at least it provides us some
comfort.
First, as I mentioned, as we move additional
countries to meet international standards, which we didn't devote a lot of
time to, criminalizing, money-laundering, creating mechanisms for reporting
suspicious activities from financial institutions, I think we can say each
of those actions is making it more difficult for money-laundering
abroad.
We can look at and we do examine what, in fact, is
going on in the underworld, essentially. We know, for example, in 1990 and
1991, the average cost of money-laundering, that is, if you wanted to get
money into a bank anonymously or through a special account, was running
about 8 percent. It runs about 25 percent now.
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[CLERK'S NOTE.—The agency later
indicated that the phrase ''1990 and 1991'' should be changed to ''the
mid-1980s''; ''8 percent should be 6 percent.'']
Now, FinCEN can't take exclusive credit because
there is a whole range of elements, but our regulatory programs have had an
impact. Nobody brings satchels of cash any longer into the bank because
they will show up in the SAR system as we have described, and so we made
the challenge of money-laundering more difficult. So that deals a little
bit with the regulatory aspect.
We think we can come up with indirect measures in
that regard. We do a lot of surveys, of course, with our colleagues in the
private sector.
As it relates to the support of law enforcement,
which is more than half of our resources, in this area, we have tried to
avoid, as you point out in your question, arrests because that's not what
we do, but instead have built customer surveys into the materials.
[CLERK'S NOTE.—The agency later
changed the phrase ''have tried to avoid'' to ''do not make.'']
So, when we send a case file out, we ask the law
enforcement what the value of it was. Now, I had previous experiences in
law enforcement, and cops don't spend a lot of time worrying about that
aspect. So we only get about 25 percent offered, but we also go and do
surveys within the law enforcement community. We could make some of those
available to the committee. But as I said, what we are driven to is the
long-term goal would be to come up with a reasonable estimate of the size
of the problem and then demonstrate what our progress towards that is, but
we are some distance from being able to do that.
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Mr. KOLBE. Along those lines, the committee
last year asked you to increase your efforts at outreach and education. Can
you tell us more about what you have done to increase that capability?
Mr. MORRIS. Yes. We have set up an ongoing
set of meetings with the Treasury components. We have now visited, I think,
and met with all of our customers in 11 cities, 11 major cities from coast
to coast. We are looking and continue to look at ways of following on. We
have made, I think, 145, 150, if my memory is correct, separate special
requests for feedback, essentially, on performance, and I think probably
one important measure is how successful our tools are. We have doubled the
number of agencies in the last year and a half who have taken their own
resources and come out to use some of the things that Dave Gillis and our
people have designed, but again, those are indirect measures.
The clear purpose of a lot of this is to get the
best—be involved in the best and most significant cases. This allows
us to do our other job, which is extract information about the trends and
changing nature of the criminal activity we are dealing with, so that we
can alert the banks to report it when they see it, and we can alert law
enforcement to identify it as a part of their investigations.
So this is important to us, both in terms of good
customer relations, as well as making sure that we are engaged in the most
significant matters.
Mr. KOLBE. Would you say, then, that the
financial institutions and State and local law enforcement agencies are
aware of your work and your capabilities?
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Mr. MORRIS. Yes.
Mr. KOLBE. Okay. You are requesting a
million dollars in the violent crime reduction trust fund for a secure
outreach program. Would this be a one-time thing for hardware, for
equipment, or would this get added to the base?
Mr. MORRIS. It is a one-time for equipment
and planning to do that.
Just a quick brief anecdote to explain to you what
we are trying to accomplish here. We underwent an evaluation by the
Financial Action Task Force who came in and assessed U.S. performance
against the 40 recommendations of the FATF, which was completed in
December, and I will make a copy of their report available to the committee
staff. It is very interesting and identifies some strengths and weaknesses
in our system.
We had helped the Financial Action Task Force set
up an e-mail system that could directly transmit what is, in fact, a
50-paged product. So I got a call at 8:30, Paris time, from the person who
had completed the report and said to check my screen, that he was going to
e-mail it immediately.
In about a minute and a half, I had a 50-paged
report that I could download. Then I had to go out and essentially xerox it
and get a driver to run around and deliver it to the Government Agencies in
Washington. So I could get it from Paris to here in a matter of seconds,
and it took me a day and a half to run it around town.
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What we are trying to do is help set up systems
that will allow us to communicate like that securely and use some of the
capabilities of the Internet for law enforcement within Treasury.
Mr. KOLBE. Thank you. I have a couple of
other questions, but I will submit them for the record.
Mr. Hoyer.
Mr. HOYER. Thank you, Mr. Chairman.
Mr. Morris, I am not sure I followed one of your
answers. You indicated that one of the indications of success would be that
caseloads went down and not up. Now, we want to get people off the street
so they are no longer committing crimes. I understand that. But let us
assume for the minute, as I do, that we are presently, even with our
capability here, probably catching a pretty small percentage of the folks
that are laundering money and doing all sorts of things that they shouldn't
be doing in the financial field.
As we increase in technological capability to
follow that grocery story to find its compound incidents and report that to
Secret Service, FBI, and local officials, wouldn't we see a spikeup at
least in the short run? Perhaps in the next 5 years?
Mr. MORRIS. Yes.
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Mr. HOYER [continuing]. In terms of
successful arrests and convictions of people participating in this
money-laundering business?
Mr. MORRIS. Well, Mr. Hoyer, you are quite
right. Forgive me for trying to be a tad bit provocative and facetious, but
I was thinking in the long term, obviously.
Clearly, we do not have, in my own personal
judgment, the investment at all levels of law enforcement that I would
consider adequate to deal in financial crimes for a range of reasons being
driven by other matters, and so that the better we get and the more tools
we provide, the limited resources, the more cases that they will be able to
make, and then the issue becomes adequate, prosecutorial and court
time.
In an ideal world, I was trying to make the point
that our goal, really, is prevention. In the ideal world, we would push all
the money-laundering activity outside of the United States because it was
too risky and difficult to conduct that activity inside the United States,
but we are not there for a long time, and you are quite correct, in the
near term, arrests and seizures should go up as we become more
effective.
Mr. HOYER. And I would think that in answer
to the chairman's first question, obviously the 4 months of evidence is an
objective of the administration's, of Vice President Gore, and of the
Congress on both sides of the aisle. Clearly as we have constraints in
resources available, we need to make sure we are spending them smart and
having an effect.
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It would be useful to the committee as we
consider your budget to have any data which indicates that an upswing in
successful prosecutions of money-laundering, is the result of better
identification. We find out that the grocery store money is, A, very high
for a local grocery store and, B, going to an awful lot of different places
and, C, that there are nine other grocery stores acting similarly, and then
we do those prosecutions.
So it seems to me that, in the short run, we are
going to have a clear performance indicator that what we are doing here,
the investment we are making, the people that are doing their job, getting
the information, and therefore, are getting the bad guys off the
street.
Now, let me make another observation, which ties
into my next question. You mentioned 43 platforms, with 21 agencies
participating. Platforms, I guess, are the technical hardware?
Mr. MORRIS. Yes.
Mr. HOYER. Okay. Then 21
agencies——
Mr. MORRIS. Right.
Mr. HOYER [continuing]. Sharing their
information and pooling it and coming up with the greatest wealth of
information that can then be accessed and through our smart technology weed
out the bad guys.
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Driving offshore will not be the solution. It
is sort of like driving crime out of Prince George's County, or better yet,
driving crime out of the District of Columbia. As we beef up the District
of Columbia Police Department, they become more effective. The criminals
simply go to Prince George's, probably first choice, then Fairfax, and, the
surrounding area.
My point is this. Mexico recently had
certification. How cooperative are they? I cite Mexico, but how cooperative
is the rest of the world in dealing with this problem. They have platforms
themselves. These are international criminals, for the most part. The Cali
cartel, billions and billions of dollars. They are trying to get money back
into legitimate circulation. It seems to me, we need that kind of
cooperation. What are we doing there? Specifically, can you comment on
Mexico, what they are doing to work with us on this money-laundering issue?
Because it is an international issue, with worldwide financial transfers.
You know, you talked about getting data from Paris to your office in
Washington. You can make a deposit in Hong Kong as quickly as you can make
a deposit in District Heights, which is 10 or 15 minutes from here.
Mr. MORRIS. Absolutely. Finance is global.
The nation's state lines are meaningless. There are no visas and there are
no mechanisms.
[CLERK'S NOTE.—The agency later
changed ''The nations state lines'' to ''A nation's borders.'']
We have been focussing at Treasury, not just
FinCEN and not just enforcement, but more broadly at what the dimensions of
this really are.
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There is increasing world commitment. We have been
very active with the Financial Action Task Force, for example, and we just
readjusted under Treasury's leadership last year, the 40 major
recommendations, toughened them, broadened them, deepened them in a number
of, I think, important ways.
As I mentioned, just a couple of years ago, there
were only three or four organizations like FinCEN. There are now over
25.
I just left—when I should have been
preparing for the tough question on performance measures that the Chairman
asked me—a meeting with the Finance Minister from Romania and his
deputy. Romania is very much concerned about organized crime, very much
wanting to establish and have us try to help them establish some mechanisms
there because, while they don't have a vital economic system at present,
they can certainly build one.
As it relates to Mexico, all of us have different
relations, depending on who they deal with, of course. We have been dealing
with the Secretary and Assistant Secretary Johnson, specifically, with
Hacienda. They have passed some important laws in the last 6 months that
require—move them towards international standards. We have provided
them some computers, and some material and some training, and we will
continue to provide that training to try to build up the infrastructure
necessary for them to develop the same kind of deterrence mechanisms that
we have developed here.
It is absolutely true that the more effective we
are, the bad guys are going to go to the area that is of least resistance,
and right now, Mexico has a 1,900-mile border and relatively
unresistant.
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We had similar problems in Panama, a
dollar-denominated economy with lots of cash sloshing around in there. Dave
had people down, helping them set up the computer systems, and I have got
five people—in the amazing world that we live in—five people
from Panama all week long, including the lead of their—what they call
their financial analysis unit, again, trying to give them the expertise and
knowledge that we have developed and also tell them the things that we have
done well and the things we have not done very well. Clearly, the
international element to this is very, very important, and they will go to
the weakest link.
Last year, there was a major conference in the
Caribbean of the various countries there because of the history of the tax
havens and the like. I quip the Caymans have passed a major
money-laundering law in the last year, not because of any strong pressure
by the United States, but because of John Grisham and the film, ''The
Firm,'' when he tainted them a little bit, and that was not good for the
fifth-largest banking center in the world, the Cayman Islands, but you are
quite correct, and I think this becomes very important.
On the other hand, while it might not make some
people happy, we have just pushed the problem outside the United States.
That is progress.
Mr. HOYER. It is progress in one sense. It
is caution. If you push it outside the United States and they can't cope
with it outside the United States, you have a festering cancer that will
ultimately infect us because we are involved with the rest of the world
more and more. We are not insular.
I think the bottom line is your international
outreach, an inclusion of as many financial centers around the world. Such
as the Far East and Central South America, Europe, and Russia where there
is a big crime problem, as we know.
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Mr. MORRIS. Yes, sir.
Mr. HOYER. We read about Moscow and the
burgeoning economy there, and a lot of that is underground. So, if you give
a criminal a haven——
Mr. MORRIS. That is right.
Mr. HOYER [continuing]. It is a little bit
like the Vietnam War. If you give them Hanoi and they can organize there
all the time, you are just going to get your head beaten in continually,
even though you may control the area.
In any event, I think you are doing an outstanding
job. I have some other questions. I will submit them for the record, Mr.
Chairman, and I appreciate Mr. Morris' leadership in this agency. I know he
is doing an outstanding job, and I believe this committee wants to be
supportive.
Mr. MORRIS. Thank you.
Mr. KOLBE. I concur with that, and we thank
you very much for coming today and participating.
Mr. MORRIS. Thank you, Mr. Chairman.
Mr. KOLBE. The subcommittee is
adjourned.
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[Questions and answers submitted for the record
and budget justifications follow:]
"The Official Committee record contains additional
material here."
TUESDAY, MARCH 4, 1997.
FEDERAL LAW ENFORCEMENT TRAINING CENTER
WITNESS
CHARLES RINKEVICH, DIRECTOR, FEDERAL LAW ENFORCEMENT TRAINING CENTER
Opening Comments From Chairman Kolbe
Mr. KOLBE. This meeting of the Subcommittee
on Treasury, Postal Service and General Government will come to order.
We're here this afternoon to hear from two agencies, to discuss the budgets
of two agencies, the Federal Law Enforcement Training Center, or FLETC, and
the Financial Crimes Enforcement Network.
Under Secretary Kelly was here this morning, so I
presume he is not going to be with us this afternoon. His testimony covered
all the agencies today.
I am pleased to welcome Director Rinkevich and
Director Morris, who will be with us in the next part of this hearing
today. This afternoon we are going to be reviewing these two arms of
Treasury that carry out essential law enforcement missions to train Federal
and other law enforcement officers to meet high standards of
professionalism and sophistication required of police organizations in this
last part of the twentieth century, and to lead Treasury's battle against
money laundering, which is a key weapon in undercutting narcotics
trafficking and other forms of organized crime.
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We will begin with Director Rinkevich, about his
fiscal year 1998 request for the Federal Law Enforcement Training Center. I
am particularly interested in hearing about the progress of the Center and
its efforts to meeting increasing demands for its services brought on by
the recent surge in the number of INS officers. Following that, we will
hear from Director Morris about his request for the Financial Crimes
Enforcement Network. For this agency, we are very interested in hearing
about the recent progress that FinCEN has been making in developing a
computerized database on money laundering and financial crime and making
that information available to law enforcement officers nationwide.
I did want to mention a moment ago that
Representative Kingston is not on this subcommittee any more, but he did
ask me to offer a welcome on his behalf. In fact, he had planned to sit
in—he still remains a member of the full committee—but was
detained in his district for personal reasons.
I look forward to hearing from our witnesses this
afternoon, and now would ask if the distinguished ranking member, Mr.
Hoyer, has some comments.
Opening Comments from Mr. Hoyer
Mr. HOYER. Thank you very much, Mr.
Chairman. I, too, want to welcome Mr. Rinkevich, who is the Director of
FLETC. I have had the privilege of visiting with him in Georgia at this
site. They do outstanding work.
GOVERNMENT RESOURCES
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One of the real challenges for this committee, Mr.
Chairman, is to make sure that the resources that we have centralized at
Glynco remain a Federal Government resource, not just a Treasury resource
and not just a limited law enforcement resource, but a resource for law
enforcement across the board. Because there are obviously other training
centers. The FBI has its own training center. There is an inclination of
almost every agency to have its own training center, and with that comes
the inefficiency, obviously, of decentralization. There is always a pull to
do that.
I don't know whether you have been down to Glynco
or not, Mr. Chairman——
Mr. KOLBE. I have not been to Glynco.
Mr. HOYER. Maybe you ought to take the
opportunity, on one of our trips to Florida, on the customs perspective,
maybe we could possibly stop at Glynco, just to get a feel for the synergy
and the way in which the agencies utilize this centralized facility. It
really is an outstanding facility and is very well-equipped. Some of the
facilities were really hurting, particularly the living quarters were
pretty dismal. We're getting at that problem and rehabilitating them.
In any event, welcome, Mr. Rinkevich. We look
forward to your testimony.
WELCOME TO FINCEN
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Rather than make another statement to
Director Morris, let me say I had the opportunity to visit with FinCEN at
their headquarters over in Virginia, and was extraordinarily impressed by
the competency of their personnel and the technical capability they have in
terms of tracking dollars from an individual deposit to the geometric
explosion of that deposit as it goes from institution to institution,
deposit to deposit.
We heard the Secret Service testify, and in
response to my question, Director Bowron indicated how closely the Secret
Service works with FinCEN on all the money laundering efforts that the
Secret Service has as it relates to the integrity of our currency. So I
look forward to hearing their testimony as well.
I might add that they are extraordinarily well
served by one of the members of their staff who used to be a member of my
staff, Miss Hafner, who not only was a member of my staff but also
practiced law with me and is an outstanding attorney. She made my look
good, which is very hard to do. So I welcome her here as well.
Thank you.
