National Money Laundering Strategy Roll Out
Gurulé, Under Secretary
U.S. Department of the Treasury
July 25, 2002
the text "billion" means 1,000 million.)
you, Deputy Secretary Dam. I want to thank you and Secretary O'Neill for your
leadership and support in the development of the 2002 Money Laundering Strategy.
This is an
important day and an important document.
preparation of the National Money Laundering Strategy is an enormous
undertaking. The active support and participation of a number of federal
agencies contributed to the final project. I would like to thank the
representatives here today of all the other bureaus and agencies who have
contributed to the 2002 Strategy. This is truly a collaborative process
reflecting the input of all the relevant players.
I would also
like to thank Deputy Assistant Secretary for Money Laundering and Financial
Crimes, Julie Myers, for spearheading the preparation of this Strategy and the
Treasury Executive Office of Asset Forfeiture for the valuable role they played
in assisting DAS Myers.
When I was
sworn in as Under Secretary, I pledged to make anti-money laundering enforcement
one of my primary goals. I am here today to tell you that it has become a
priority of Treasury Enforcement for one critical reason. Attacking the
financial structures of criminal organizations -- their lifeblood -- is one of
the best ways to dismantle sophisticated criminal enterprises. Let me explain
If our law
enforcement agents pick up a drug mule carrying narcotics across the border that
helps to fight crime but it doesn't leave a permanent impact on the criminal
organization. The criminal gang will simply go down the block and find another
willing participant to take their incarcerated colleague's place. But if you
penetrate the financial underpinnings of a criminal organization replacement is
not so easy. The criminals can't just pick up the phone and find another
sophisticated accountant or professional money handler who understands global
banking systems and is willing risk their white collar lifestyle to tread into
illegal waters. As Treasury agents recognized long ago, if you get Al Capone's
money, you get Al Capone.
rationale also applies to attacking the financial underpinnings of terrorist
groups. These networks of murderers are mercenaries who require hard money to
finance their deadly acts of terror. If we can shut down their financial
structures, we save innocent lives.
I am pleased
to tell you that our efforts are making a difference. We have blocked the assets
of 211 terrorist entities and individuals. $34.3 million has been blocked
domestically and $77.9 million has been blocked by our allies, for a total of
over $112 million that is not going to support terrorist training camps and to
purchase weapons of death.
At the same
time, we are making solid progress on our more traditional money laundering case
investigations. For the first time, the 2002 Strategy reports on some of the
significant money laundering cases that the federal government has investigated
and prosecuted in the last year.
last month, Customs agents in New Jersey arrested an Assistant Vice-President of
a bank who was operating an illegal money transmitting business that moved
approximately a half billion dollars in eight months. The Assistant VP
maintained over 250 accounts at the bank, 44 of which were in the names of
non-existent companies and people that were fronts for currency exchange firms
in Brazil. Customs received substantial assistance from IRS-CI and DEA in the
case, which is now being prosecuted by the U.S. Attorney's Office in Newark.
I would also
like to highlight a few other cases that illustrate the progress we are making
on the money-laundering front:
Last month, a
jury in North Carolina convicted Mohamad Hammoud and his brother Chawki, for
providing material support to the terrorist group Hezbollah through
racketeering, conspiracy, and conspiracy to commit money laundering by funneling
profits from a cigarette smuggling operation to purchase military equipment for
the Hezbollah terrorists.
2002, several of the Hammoud's co-defendants pled guilty to a number of charges
including conspiracy to commit money laundering. That case began when West
Virginia State Police seized a significant quantity of contraband cigarettes and
notified Treasury agents at ATF. The Financial Crimes Enforcement Network or
FinCEN, from the early stages of this investigation, supplied and networked over
Secrecy Act leads to the FBI and ATF.
A New York
City policeman pled guilty in March to laundering between $6 and $10 million
obtained from the sale of drugs in the New York City metropolitan area.
Colombian narcotics traffickers shipped sixty tons of cocaine to the New York
City area over a two-year period. After the cocaine was sold, the defendants
received instructions to pick up the drug money, and would meet the drug dealers
the streets of New York City where they received bags containing between
$100,000 and $500,000 in cash. The defendants rented cars and drove the drug
proceeds to Miami, Florida. Once in Miami, the defendants delivered the money to
various Miami area businesses, which accepted the drug money as payment for
goods, such as video games, calculators, print cartridges, bicycle parts and
tires, which they subsequently exported to Colombia – transactions consistent
with the operation of the trade-based BMPE laundering system frequently employed
by Colombian narcotics traffickers.
Service, in conjunction with DEA and Colombia's Departamento Administrativo de
Seguridad arrested 37 individuals in January 2002 as a result of Operation Wire
Cutter, a 2 1/2 year undercover investigation of Colombian peso brokers and
their money laundering organizations. These individuals are believed to have
laundered money for several Colombian narcotics cartels. The peso brokers
contacted undercover Customs agents and directed them to pick-up currency in New
York, Miami, Chicago, Los Angeles, and San Juan, Puerto Rico that had been
generated from narcotics transactions. The brokers subsequently directed the
undercover agents to wire these proceeds to specified accounts in U.S. financial
institutions that were often in the name of Colombian companies or banks that
had a correspondent account with a U.S. bank. Laundered monies were subsequently
withdrawn from banks in Colombia in Colombian pesos.
seized over $8 million in cash, 400 kilos of cocaine, 100 kilos of marijuana,
6.5 kilos of heroin, nine firearms, and six vehicles.
I should also
note the long-standing "El Dorado" Task Force, which is led by U.S. Customs and
IRS in New York. Comprised of 185 individuals from 29 federal, state, and local
agencies, the "El Dorado" Task Force is one of the nation's largest and most
successful financial crimes task forces, having seized $425 million and arrested
1,500 individuals since its inception in 1992. In addition the HIFCA Task Forces
(High Intensity Financial Crimes Areas) have also made significant progress.
They initiated over 100 new money laundering investigations during 2001 alone.
Finally, in 2001, law enforcement agents of the Departments of Treasury and
Justice seized over $1 billion in criminal funds -- about 38% of which was
related to money laundering investigations. The Departments forfeited over $241
million in criminal assets in FY 2001 relating to money laundering.
But we can
and must do even better. Good government requires creative problem solving to
successfully address the problems this country faces today. The 2002 National
Money Laundering Strategy is a blueprint of how the Administration will address
critical issues surrounding the enforcement of financial crimes.
With that in
mind, I would like to walk you through some of the key points of the 2002
Strategy and then take some of your questions.
Strategy calls on the Departments of State, Treasury, and Justice and the
intelligence community to enhance the level of cooperation currently received
from our partners abroad.
There is a
special emphasis placed on continued involvement in multi-national bodies such
as FATF and also in joint designations with other countries. Furthermore we are
also working on agreements with our allies that would allow us to partner with
law enforcement agencies abroad to jointly investigate financial links to
Improper Use of NGOs
Strategy focuses on "high impact" targets and systems, including corrupt
charities, the misuse of alternative remittance systems, which include hawalas,
and bulk-cash smuggling. The enactment of the USA Patriot Act has made it more
difficult for terrorist financiers to transfer money through traditional Western
banking system. Thus terrorists have resorted to alternative means of moving and
hiding money. FinCEN has been conducting a study on the use of these alternative
systems that will be completed in October.
lead an interagency process to develop a set of internationally accepted
standards or "best practices" for the alternative remittance industry. This goal
will be pursued in the context of the Financial Action Task Force (FATF) Special
Recommendations on Terrorist Financing and the Asia Pacific Group (APG)
recommendations on Alternative Remittance and Underground Banking Systems, both
of which call for enhanced regulatory oversight.
The use of
non-governmental organizations (NGOs), including charities, to raise funds in
support of terrorist groups is an area that demands further attention from the
U.S. Government. Though these NGOs may be offering humanitarian services here or
abroad, funds raised by certain charities have been diverted to terrorist
causes. This scheme is particularly troubling because these funds are earmarked
for good and they are being grossly perverted to fund acts of evil against
States will work to help develop international "best practices" on how to
regulate charities to prevent their abuse and infiltration by terrorists and
their supporters. At the June 2002 FATF Plenary meeting, the United States
presented a paper that will form the basis for a discussion of international
standards. As part of this
U.S. government will identify high-risk areas and deploy multi-agency teams to
assist host governments in applying charitable regulation "best practices".
both the Department of the Treasury and the Department of Justice recognize that
it is vitally important to cooperate and coordinate with one another to
investigate priority targets whenever it is possible to do so. The strategy
addresses the importance of making joint decisions about what major money
laundering organizations and systems to target and how to investigate and
prosecute them before
investigations are initiated. To address this concern, the Departments of the
Treasury and Justice will co-lead an interagency effort to identify potential
money laundering-related targets, and then deploy the necessary assets to attack
those agreed upon targets.
establish an interagency targeting team to help focus our efforts and resources
against the most significant money laundering organizations and systems, such as
individuals who smuggle bulk cash and terrorist groups. In addition the Strategy
calls for more jail time for the money-laundering masterminds.
is a critical weapon in the war against terrorist financing. The new
information-sharing provisions of the USA PATRIOT Act afford financial
institutions greater flexibility in evaluating potential risks and sharing their
concerns with both the federal government and amongst themselves. We are working
with FinCEN to draft
to implement some of the anti-money laundering provisions of the PATRIOT Act,
and are evaluating comments submitted to the regulations we proposed to
implement other sections.
our major accomplishments over the past nine months include:
customer identification and verification regulations jointly with the federal
regulators to ensure that all federally regulated financial institutions
employ basic procedures to identify and verify the identity of their
immediate guidance for complying with an important provision of the Act that
cuts unregulated foreign shell banks off from our financial system.
our basic anti-money laundering program requirement to the major financial
services sectors, such as broker-dealers, and
a proposed rule to implement a comprehensive statutory provision that seeks to
minimize risks presented by correspondent banking and private banking
Strategy is a groundbreaking document. It provides, for the first time in a
National Money Laundering Strategy, baseline facts and figures that can help
determine how well the federal government is succeeding in its efforts to
detect, prevent, and deter money laundering -- a major goal of Secretary
Strategy publishes data collected by the U.S. Sentencing Commission in Fiscal
Year 2000 concerning defendants in federal cases that went to jail for
committing a money laundering offense. Although the Sentencing Commission data
is incomplete by itself, analysis of this data is instructive and provides a
starting point for meaningful baselines and metrics.
We now know
that over 80 percent of all money launderers that were sentenced did not
receive a leadership enhancement.
We now know
that almost 80 percent of those sentenced laundered less than $1 million.
that some districts, even densely populated districts, prosecuted a limited
number of money laundering cases.
statistics show that we can improve our ability to focus on major money
laundering prosecutions and target large organizations.
Of course, it
is not enough merely to pledge to do better. We must have ways to meaningfully
quantify our efforts. With these articulated baselines, we will be able to
develop metrics to evaluate our progress. We are also seeking to develop new
baselines within the Strategy by measuring our investment in money laundering
enforcement and developing a uniform case reporting system. These efforts will
take time, and, if done right, should show some real results.
by tracking the commission rate charged in money laundering transactions we will
be able to ascertain if our efforts are making a difference over a period of
On the ever
important international front, we will continue to work with the international
financial institutions, such as the World Bank and International Monetary Fund,
and the multinational Financial Action Task Force to improve and monitor
anti-money laundering compliance efforts throughout the world. The Strategy
reports on the efforts and results achieved by all the countries that have
appeared on the FATF list. FATF periodically revises the Forty Recommendations
to address new anti-money laundering challenges. The U.S., under Treasury
leadership, is playing an active role in this effort. In May 2002, FATF
finalized a consultation paper that presents options and
views of non-FATF members and the private sector on these possible revisions.
FinCEN has also been instrumental through the Egmont Group of financial
intelligence units (FIUs) in enhancing the exchange of financial information in
support of criminal investigations including terrorist-related financing.
I would be
happy to answer any questions that you have on the 2002 Strategy.
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