Testimony of Robert S. Mueller, III, Director, FBI
Before the House
Committee on Financial Services
September 19, 2002
"The Work of the Terrorism
Financial Review Group"
Introduction
Good morning, Chairman Oxley,
Congressman LaFalce, and members of the Committee. I appreciate
this opportunity to discuss the work of the Terrorism Financial
Review Group and our use of the provisions contained in Title
III of the USA PATRIOT Act, also known as the International
Money Laundering and Anti-Terrorist Financing Act of 2001.
I would like to thank the members
of this Committee, and this Congress, for your prompt and
comprehensive response to the terrorist threat we face. I
would also like to thank the Treasury Department and Secretary
O'Neil for their crucial assistance in this endeavor. The
USA PATRIOT Act provided law enforcement powerful tools to
carry out our mission. As we use these tools in an aggressive
and responsible manner, the Act will significantly help us
achieve our overarching goal - to prevent future acts of terrorism.
As you know, civilized countries
face grave threats from terrorists. As the President stated,
the war on terrorism is a long-term battle. It will not be
won overnight nor without the extraordinary cooperation and
coordination among law enforcement and intelligence agencies
around the globe. Terrorism knows no borders. The threat is
not limited to any one region of the world. Creating an alliance
between law enforcement and intelligence agencies is the key
to dismantling terrorist organizations and eliminating the
threat they pose.
Terrorists do not play by the
rules of a civilized society. Fighting the war on terrorism
requires new and formidable tools and a multi-agency approach.
After 9/11, more than one-half of our Agents were assigned
to identify the hijackers and their international sponsors
and, with other agencies, prevent the next attack. Today,
the number of FBI Agents assigned to combating terrorism is
twice the number of our pre-9/11 commitment. We will apply
to prevention whatever level of resources is necessary to
address this threat. In addition, 9/11 has triggered a wide
range of organizational and operational changes within the
FBI.
The Terrorism Financial Review
Group (TFRG)
To illustrate how these anti-money
laundering provisions aid our efforts, it is necessary to
understand how the FBI has been re-structured to address terrorist
financing matters. Identifying and tracking the financial
structure supporting terrorist groups is critical to dismantling
the organization and preventing future attacks. As in ordinary
criminal investigations, "following the money" identifies,
links, and develops evidence against those involved in criminal
activity . In the early stages of the investigation into the
events of September 11, it was financial evidence that quickly
established links between the hijackers and identified co-conspirators.
It was also in the early stages
of the 9/11 investigation that the FBI and DOJ identified
a critical need for a more comprehensive, centralized approach
to terrorist financial matters. In response, we established
an interagency Terrorism Financial Review Group (TFRG) operating
out of FBI Headquarters. By bringing together vast databases
and the expertise of numerous federal agencies, the TFRG focuses
a powerful array of resources on the financial tentacles of
terrorist organizations.
After September 11th, the FBI
and CIA quickly combined their resources to investigate terrorist
funding mechanisms, including the exchange of personnel between
the TFRG and the CIA Counterterrorism Center (CTC). In addition,
at my request, the CIA generously agreed to detail a number
of its analysts to the FBI Counterterrorism Division to help
develop more effective analytical processes. I firmly believe
the relationship and information sharing with the CIA is at
an unparalleled level and will continue to pay dividends in
our common mission. Information sharing has also been facilitated
by PATRIOT Act provisions that permit the FBI to disclose
foreign intelligence information, including information obtained
through FISA, to intelligence agencies.
The TFRG was formed with a two-fold
mission. First, it was designed to conduct a comprehensive
financial analysis of the 19 hijackers to link them together
and to identify their financial support structure within the
United States and abroad. Second, it was designed as a template
for preventive and predictive terrorist financial investigations.
The mission of the TFRG has since evolved into a broader effort
to identify, investigate, prosecute, disrupt, and dismantle
all terrorist-related financial and fund-raising activities.
The TFRG has taken a leadership
role in coordinating the financial investigative effort, and
it is a comprehensive one. To accomplish this mission, it
has implemented initiatives to address all aspects of terrorist
financing. For instance, it:
- conducts full financial analyses
of terrorist suspects and their global financial support
structures;
- coordinates liaison and outreach
efforts to exploit financial resources of private, government
and foreign entities;
- uses FBI and Legat expertise
and relationships to develop financial information from
foreign law enforcement and private agencies;
- works jointly with the law
enforcement, regulatory, and intelligence communities;
- develops predictive models
and mines data to proactively identify terrorist suspects,
and;
- provides the financial component
to classified counterterrorism investigations in support
of the FBI's counterterrorism responsibilities.
The TFRG has conducted an aggressive
international outreach program to share information regarding
terrorist financing methods with the financial community and
law enforcement, and has built upon long-established relationships
with the financial services community in the United States
and abroad. The international outreach initiative is coordinated
through the network of FBI Legal Attache Offices located in
44 key cities worldwide, providing coverage for more than
200 countries and territories.
A significant focus of the TFRG
is prediction and prevention. It has developed numerous data
mining projects to provide further predictive abilities and
maximize the use of both public and private database information.
These efforts are complemented by the centralized terrorist
financial database which the TFRG developed. This information
is used to identify terrorist cells operating in the United
States and abroad to prevent further terrorist acts. Indeed,
the TFRG meets regularly with representatives from the banking
community and the financial services industry to share information
and to refine methods to detect and identify potential terrorists
around the world.
The TFRG created and updates
a financial control list which contains names and identifying
data for individuals under investigation for potential links
to terrorist organizations. These lists are regularly shared
with domestic and international law enforcement and intelligence
agencies, and with the Federal Reserve Board (FRB), which
disseminates the lists to financial institutions so they can
flag suspicious financial activity.
As a participant on the National
Security Council's Policy Coordinating Committee (PCC) on
terrorist finance, the TFRG leads the effort to target Non-Governmental
Organizations believed to provide financial support to known
Foreign Terrorist Organizations and affiliated terrorist cells.
The PCC coordinates the development and implementation of
policies to combat terrorist financing and provides analysis
on these issues. Numerous FBI Field Offices have open investigations
into organizations that may be funneling money to Foreign
Terrorist Organizations and the TFRG has acted as a clearinghouse
for these cases, gathering and summarizing data.
The TFRG regularly shares information
with the Joint Terrorist Tracking Task Forces, Customs' Operation
Green Quest (TFRG provides daily downloads from its RAID database
to Green Quest), and FinCEN. Further, the TFRG is working
with FinCEN to explore new ways to data mine the Suspicious
Activity Report (SAR), Currency Transaction Report (CTR),
and Currency and Monetary Instrument Report (CMIR) databases.
Based on its international investigative
abilities, and its close association with the Intelligence
Community, the TFRG is in a unique position to coordinate
anti-terrorism financial investigations and to ensure those
investigations are coordinated with the goals and objectives
of our Counterterrorism program.
Use of the USA PATRIOT Act
Terrorist financing methods
range from the highly sophisticated to the most basic. Traditionally,
their efforts have been aided considerably by the use of correspondent
bank accounts, private banking accounts, offshore shell banks,
bulk cash smuggling, identity theft, credit card fraud, and
other criminal operations. Informal Value Transfer Systems,
such as "Hawalas," also present problems for law
enforcement. They permit terrorists a means of transferring
funds that is difficult to detect and trace. These informal
systems are particularly prevalent in mostly "cash"
societies such as Pakistan, Afghanistan, and the Phillippines.
However, provisions of the USA PATRIOT Act will significantly
erode the effectiveness of such methods. The Act establishes
stricter rules for correspondent bank accounts, requires securities
brokers and dealers to file SARs, and certain cash businesses
to register with FinCEN and file SARs for a wider range of
financial transactions.
The Act contains many other
provisions I believe will considerably aid our efforts to
address terrorist financing. These include the authority to
seize terrorist assets, and the addition of terrorism and
other offenses to the list of racketeering offenses. The Act
also enables prosecutors to seize money subject to forfeiture
in a foreign bank account by authorizing the seizure of a
foreign bank's funds held in a U.S. correspondent account.
Other important provisions expand the ability to prosecute
unlicensed money transmitters, allow law enforcement faster
access to reports of currency transactions in excess of $10,000,
and provide authority for the service of administrative subpoenas
on foreign banks concerning records of foreign transactions.
This latter provision allows law enforcement to obtain critical
information in an investigation on a more timely basis than
was possible before. In counterterrorism investigations, of
course, speed is of the essence because prevention is the
goal.
Section 362 of the PATRIOT Act
mandates that FinCEN establish a highly secure network to
1) allow financial institutions to file SARs and CTRs on-line,
and 2) "provide financial institutions with alerts and
other information regarding suspicious activities that warrant
immediate and enhanced scrutiny." FinCEN has developed
the PATRIOT Act Communication System (PACS) to meet this mandate
and is implementing the system. This will be a valuable tool
for law enforcement, but it will require the full cooperation
of private financial institutions. The TFRG has worked with
financial institutions, and has provided to them information
to help detect patterns of activity possibly associated with
terrorist activity. I am confident that the PACS will help
considerably in these efforts.
While I am optimistic the PATRIOT
Act will help, it is too early to judge its full effect. We
continue to digest its provisions, develop guidelines and
protocols for its appropriate use, and educate investigators
and prosecutors. In addition, many of its provisions require
the Department of the Treasury to issue new regulations --
regulations which it is still working expeditiously to promulgate.
Additional Legislative Needs
The Committee indicated an interest
in recommendations the FBI has regarding additional legislative
measures to advance the financial war against terrorism. In
September 2001, the Department of Justice submitted the proposed
"Money Laundering Act of 2001" to Congress. The
FBI concurs with the recommendations made by the DOJ, which
is in the best position to address these issues, and would
also urge you to consider them. I would like to summarize
these recommendations and proposals.
The foremost problem we face
regarding the recovery of criminal proceeds in terrorism cases,
as well as those involving corporate fraud, is the inability
to freeze assets pending trial. In both criminal and civil
cases, with a limited exception, pre-trial restraining orders
are limited to property directly traceable to the offense.
Post-conviction, the court can enter an order permitting the
confiscation of an amount of money equal to what the defendant
obtained by committing the offense, but by that time the money
we hope to recover - and return to the victims - is often
gone.
These strict tracing requirements
serve little purpose. Many common law countries permit the
pre-trial restraint of property that will be subject to forfeiture
without requiring strict tracing of the funds to the underlying
crime. It is important to the success of our efforts against
the economic underpinnings of crime that we be able to do
the same. Simply put, if the property can be confiscated after
the conviction, it should be frozen prior to a conviction.
Thus, the criminal forfeiture laws should be amended to allow
the pre-trial restraint of all forfeiture assets without requiring
strict tracing to the offense, and the civil forfeiture laws
should be amended to treat all electronic funds - as well
as diamonds, gold and other precious metals - as fungible
property for the period of the applicable statute of limitations.
We also need to address the
clandestine movement of cash that represents the proceeds
of crime or that will be used to finance a future criminal
or terrorist act. Section 371 of the PATRIOT Act created a
new offense of bulk cash smuggling that makes it illegal to
knowingly conceal more than $10,000 in currency and attempt
to transport it into or out of the United States with the
intent to evade currency reporting requirements. However,
it is not an offense for a money courier to transport bulk
currency in a vehicle inside the country, even if the funds
represent criminal proceeds. Moreover, terrorists engage in
what amounts to "reverse" money laundering, in which
they transport large quantities of cash that is not derived
from any illegal source but which is intended to be used to
finance a terrorist act or to commit another crime. The DOJ
proposed to make it illegal to transport more than $10,000
in currency concealed in a vehicle traveling in interstate
commerce, knowing that the currency was derived from some
kind of criminal activity or knowing that the currency was
intended to be used to promote such activity. I support this,
too.
The DOJ noted gaps in our ability
to seize proceeds resulting from foreign crimes as well as
our ability to restrain the funds, even temporarily, of criminals
arrested in the United States. Under current law, only a limited
number of foreign crimes are specified unlawful activities.
This enables foreign criminals to launder the proceeds of
many foreign crimes in the United States without providing
us the ability to prosecute and seize those funds for forfeiture.
We similarly lack authority to temporarily restrain funds
in a U.S. bank account of an international terrorist arrested
in the United States to determine whether such funds were
connected to illegal activity.
Conclusion
The PATRIOT Act is an important
and necessary fix and its passage was a remarkable achievement.
The Act will make --and has made-- a difference. It enhances
the ability of law enforcement and intelligence agencies to
achieve our common goal of preventing acts of terrorism, without
compromising the civil liberties and Constitutional protections
enjoyed by our citizens. The PATRIOT Act is a shining example
of this Committee's devotion to that endeavor and I thank
you for your support.
I am proud to lead the premier
law enforcement agency in the world . We take great pride
in what we do, and the quality of the work performed by the
men and women of the FBI is remarkable. Of course, there is
always room for improvement and we welcome your guidance.
Thank you for this opportunity
to appear today. I look forward to working together in the
war against terrorism. I welcome any questions you have.
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