26 July 2002
Source: http://usinfo.state.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=02072503.clt&t=/products/washfile/newsitem.shtml

US Department of State
International Information Programs

Washington File

25 July 2002

U.S. Releases New Anti-Money Laundering Strategy

 (Seeks better data, enhanced overseas cooperation) (2830)

 The United States hopes to build on recent successes in combating
 money laundering through enhanced cooperation with overseas partners
 and by focusing on "high impact" targets such as corrupt charities and
 cash smuggling operations, says Treasury Under Secretary Jimmy Gurulé.

 Briefing reporters July 25 on the new National Money Laundering
 Strategy report released by the Treasury Department and the Department
 of Justice, Gurulé said the plan also calls for more coordination
 among U.S. law enforcement agencies.

 "We will 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," he said. "In addition the strategy calls for
 more jail time for the money laundering masterminds."

 Gurulé said that one key element of the Treasury plan involves
 development of a reliable measurement model that will allow the
 government to gauge its success in detecting, preventing and deterring
 money laundering.

 "It is not enough merely to pledge to do better," he said. "We must
 have ways to meaningfully quantify our efforts."

 He said the report places special emphasis on continued U.S.
 involvement in multinational bodies such as the Financial Action Task
 Force (FATF )and on working with other countries to issue joint
 designations that identify, target and block the assets of
 terrorist-related individuals and entities. Officials are also
 pursuing agreements with U.S. allies that would allow for joint
 investigations of financial links to terrorists, Gurulé said.

 Treasury will also 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.

 According to the report, federal law enforcement agencies seized more
 than $1,000 million in criminal assets in fiscal year 2001, with more
 than $300 million of that attributable to money laundering cases.

 The National Money Laundering Strategy is on the Internet at:

 Following is the text of Gurulé's opening remarks to reporters:

 (Note: In the text "billion" means 1,000 million.)

 (begin text)

 U.S. Department of the Treasury
 Office of Public Affairs
 July 25, 2002

 Remarks of Under Secretary Jimmy Gurulé
 2002 National Money Laundering Strategy Roll Out

 Thank 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.

 The 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

 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

 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 why.

 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.

 That 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

 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.

 For example, 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.
 In March 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 300 Bank
 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 at various
 locations on 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.

 The Customs 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.
 Investigators seized over $8 million in cash, 400 kilos of cocaine,
 100 kilos of marijuana, 6.5 kilos of heroin, nine firearms, and six

 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.

 Terrorist Financing

 The 2002 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 terrorists.

 Charities and Improper Use of NGOs

 The 2002 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.

 Treasury will 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 innocent

 The United 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
 effort, the U.S. government will identify high-risk areas and deploy
 multi-agency teams to assist host governments in applying charitable
 regulation "best practices".

 Creation of Targeting Team

 Officials at 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
 those 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.

 We will 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.


 Information 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
 regulations 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.

 Highlights of our major accomplishments over the past nine months

 -- Issuing 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 customers.
 -- Providing immediate guidance for complying with an important
 provision of the Act that cuts unregulated foreign shell banks off
 from our financial system.
 -- Expanding our basic anti-money laundering program requirement to
 the major financial services sectors, such as broker-dealers, and
 -- Developing a proposed rule to implement a comprehensive statutory
 provision that seeks to minimize risks presented by correspondent
 banking and private banking accounts.


 The 2002 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 O'Neill.

 The 2002 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.

 -- We know that some districts, even densely populated districts,
 prosecuted a limited number of money laundering cases.

 These 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.

 For instance 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 years.


 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
 seeks the 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

 (end text)

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