U.S. Efforts in the Financial War on Terrorism

1:10 P.M. EDT

Real Audio of Briefing

COL MACHAMER: Well, good afternoon and welcome to the Foreign Press Center. As you all are well aware, the global war on terrorism is being fought on many fronts: militarily, law enforcement, diplomatic and others. And today, we are pleased to have with us Juan Zarate, the Assistant Secretary for Terrorist Financing out of the U.S. Department of Treasury, and along with him, William Fox, who is the Director of the Financial Crimes Enforcement Network, also from Treasury, who are here to talk to us about the U.S. efforts in the financial war on terrorism.

Both gentlemen will have opening statements and they'll be glad to take your questions. Mr. Zarate.

ASSISTANT SECRETARY ZARATE: Thank you very much for being here. Good afternoon. We are announcing today -- the Treasury Department -- the designation of two financial institutions using the powers given to the Secretary of the Treasury under the Patriot Act Section 311. The designation of these two financial institutions as primary money-laundering concerns is yet another step in our efforts to protect the integrity of the U.S. financial system and forms part of our ongoing initiative to identify rogue financial institutions around the world that pose a risk to not only the U.S. financial system but the international financial system at large.

Last year, we designated two Burmese banks, Myanmar Mayflower Bank and Asia Wealth Bank, as primary money-laundering concerns. Just recently, we designated as well the Commercial Bank of Syria as a primary money-laundering concern. And today, we are designating InfoBank as well as First Merchant Bank as primary money-laundering concerns.

InfoBank is a bank located in Belarus. It is an institution being cited today for its complicity in activities with the former [Saddam] Hussein regime in activities to violate the Oil-for-Food Program. The bank itself was used to facilitate financial activities that were not sanctioned by the United Nations [and] that were outside of the Oil-for-Food Program and form a basis for the designation today and the finding by the Secretary of the Treasury.

First Merchant Bank is actually an offshore bank located in what is termed the Turkish Republic of Northern Cyprus, a jurisdiction with some problematic anti-money laundering controls. That bank has been engaged in the marketing and sale of fraudulent financial products and services. It has been a conduit for laundering of these fraudulently obtained funds. The U.S. correspondent accounts have been used for such activities, and the director and those who operate and control the bank have direct links with organized criminal activity and were, in one instance, indicted in the Southern District of New York in January of last year for such complicity in such irregular financial activities.

So the actions today are yet another step, as I mentioned, in terms of our ability to identify financial institutions as well as financial foreign jurisdictions that pose a risk to the U.S. financial system.

With me today, as mentioned, is Director Bill Fox from our Financial Crimes Enforcement Network. FinCEN has had the laboring oar on a good bit of this work and is in charge of implementing the regulations and setting forth the requirements for the U.S. financial system. And Mr. Fox is here to talk a bit more in detail about what the requirements are, given the announcement today.

Thank you.

MR. FOX: Thank you, Mr. Secretary. Again, my name is William Fox. I'm the Director of the Financial Crimes Enforcement Network. I thought I would give you all a little bit of detail about the way that this sanction works. The Secretary has designated two institutions today as being of primary money-laundering concern; again, First Merchant Bank from Cyprus and the InfoBank from Belarus.

In conjunction with this designation, Treasury's Financial Crimes Enforcement Network, or FinCEN, as we like to call it, has issued two Notices of Proposed Rulemaking. And this is the technical way that these measures are actually implemented. What our notices will impose is a special measure against the two banks that will prohibit covered financial institutions or, essentially, U.S. financial institutions, from establishing, maintaining, administering or managing any correspondent account in the United States for or on behalf of First Merchant Bank or of InfoBank. In addition, covered financial institutions are required to apply due diligence to their correspondent accounts to guard against their indirect use by First Merchant Bank or by InfoBank.

Assistant Secretary Zarate discussed a little bit about what Section 311 is about. It was an amendment to the USA Patriot Act that authorizes the Secretary of Treasury, in consultation with the Department of Justice, the State Department and appropriate federal regulators, to designate a foreign jurisdiction, institution or class of transactions or type of account as being of primary money-laundering concern.

When that designation occurs, the Treasury Department can institute one of several special measures, which cover everything from additional reporting obligations to measures that are similar to the ones that we are taking today where we terminate correspondent banking relationships with the designated entity.

The notion of the power, again, is to ensure that the United States financial system is protected from jurisdictions, institutions, transactions, [and] types of accounts that pose a particular risk to money laundering or terrorist financing.

The way this will work technically is that the Notice of Proposed Rulemaking was published today in the Federal Register. It's available on FinCEN's website at www.FinCEN.gov, and the public will have 30 days to comment on the proposed rule. After that 30-day period elapses, a final rule will or may be issued that will either impose the special measures as proposed or in some adjusted form or, if the information we receive during the comment period negates the imposition of the measures, it will be withdrawn.

So we have 30 days from today -- I believe that 30-day comment period will end on September 23rd -- before the implementation of these measures becomes final.

With that, I'm sure we'd all be happy to take any of your questions.

COL MACHAMER: Before we go to questions, I also want to welcome our journalists that are participating via DVC from the Foreign Press Center up in New York, and we're going to go there for the first question.

Go ahead.

QUESTION: Yes, I actually have two questions. My name is Choongo Moonga, Incisive Media. The first one regards insurance companies, and I'm aware that, at the moment, I think FinCEN requires them to file a suspicious activity report.

According to the General Accounting Office, many state insurance regulators, unlike their counterparts in the banking and securities industries, continue to lack legal authority to access the FBI's nationwide criminal history data. In fact, only 16 departments have such authority.

In addition, financial regulators do not have ready access to all relevant data related to regulatory enforcement action taken against individuals or firms. This exposes the consumer to inadequate protection from unscrupulous practitioners migrating from one financial services industry to another.

What is the Department doing about this?

Number two, we've heard that regulators are revising examination procedures regarding anti-money laundering. What is the focus of this revision and how far away is it from its completion? Please refer to the differences in fighting terrorist financing as well as fighting money laundering.

Thank you.

ASSISTANT SECRETARY ZARATE: I'll let Director Fox answer some of the questions and perhaps I can amplify as needed.

MR. FOX: Okay. We have yet to issue a final rule that will require insurance companies here in the United States to fully comply with the provisions of the Bank Secrecy Act of 1970, as amended; we're in the process of gathering comments. We have issued a Notice of Proposed Rulemaking that will require certain insurance entities to comply with that Act, and we are gathering comments and studying the comments, and that rule should be implemented in the near future.

And then, do you want to handle the second?

ASSISTANT SECRETARY ZARATE: Sure, and a quick point on the first question, as well. One of the benefits of the Patriot Act was to amplify, to broaden and deepen the anti-money laundering controls we have in the U.S. financial system to avoid the very problems that the questioner had with respect to migrations between financial sectors.

So one of the things that FinCEN has done quite well over the past two-plus years, almost three years now, given the Patriot Act passage in October of 2001, is to amplify the scope of the anti-money laundering controls and requirements for the non-bank financial institutions. And that's something that we continue to work on very diligently and well, and I commend Director Fox for that.

With respect to the second issue, one of the major homework assignments of the Department of Treasury, and FinCEN in particular, is to make sure that our anti-money laundering controls are judiciously enforced and regulated. And one of the things that we have undertaken, and Director Fox is leading, is a regularization and a normalization of how those examinations occur through our regulatory agencies.

Given how the U.S. system works, there are multiple regulatory bodies that inspect various banking industries, as well as the non-banking financial sectors. So one of our challenges, given the expansion of our anti-money laundering controls, is to ensure that those types of examinations and enforcement actions are consistent, well done, frequently done and ensure the integrity of the U.S. financial system.

COL MACHAMER: Okay. We'll take one more from New York.

QUESTION: Silvia Jelenz from Handelszeitung, Switzerland.

It's basically a follow-up question on the -- on a previous question. Could you maybe comment on the state of the implementation of anti-money laundering law and regulation and the supervision of compliance, especially keeping in mind the Senate subcommittees on investigations report on Riggs, and how far you implemented the recommendations of the Financial Action Task Force's recommendations on AML and terror financing?

Thank you.

ASSISTANT SECRETARY ZARATE: Absolutely. The Senate report is an important report that dovetails with a good bit of information that we already had and that FinCEN has with respect to the occurrences within Riggs Bank. We have used that occurrence and the problems we have encountered with respect to Riggs, not only what happened within Riggs, but also how the regulatory structure was functioning. We've used that to impel the very reforms that I just talked about, making sure that we normalize and enhance our ability to examine banks as well as non-bank financial institutions, and that's something that we're working on very closely with our partners in the regulatory community.

On the issue of the Financial Action Task Force, we are a major contributor and player in the Financial Action Task Force. It is the primary international body that sets and assesses standards with respect to anti-money laundering and anti-terrorist financing. We work very hard with them, especially now in the terrorist financing context, to make sure that countries are implementing the new standards that are relevant to terrorist financing; for example, originator information required on wire transfers, regulation of the hawala sector, and other such new measures and standards that are in place.

So we are fully committed to the FATF standards, work very closely on a daily basis. In fact, my office and members of Bill's office, as well, work very closely with our foreign counterparts to make sure that the entire world is trying to adhere to the FATF standards.

COL MACHAMER: Okay, now we'll come back to Washington. As a reminder, please wait for the microphone and identify yourself by news organization. We'll start with the front row on the end here.

QUESTION: Michael Backfisch, Germany's business daily, Handelsblatt. How many so-called rogue financial institutions have been identified after 9/11? How much money has been frozen so far? And how does the cooperation with Swiss authorities look like?

ASSISTANT SECRETARY ZARATE: Well, what we have done since 9/11, as you are well aware, is to identify individuals and entities who are terrorists themselves or who are terrorist supporters. Under the President's Executive Order signed in September of 2001, we have designated and identified 384 individuals and entities. Those include not just individuals, but also front companies, charities and other businesses that have been used by terrorist groups, not only al-Qaida, but other likeminded terrorist groups to support terrorism around the world.

In the context of those designations, there have been a couple of banks that have been designated: Bank Al Taqwa, a bank that was controlled by Yusef Nada, was designated with locations previously in the Caribbean, as well as a couple of banks in the West Bank, Beit El-Mal and Al Aqsa Bank, were designated under that authority.

What we are doing today, though, is using a new authority, a different authority, which doesn't freeze the accounts or the assets of these banks, but what it does is it protects the U.S. financial system by having the rule come out from FinCEN to say U.S. financial institutions cannot and should not have correspondent relationships with these identified banks. And under this authority, we have now identified, I believe it's five banks worldwide. I mentioned at the beginning First Merchants Bank today, InfoBank today, Commercial Bank of Syria recently, and the two Burmese banks previously.

With respect to Swiss cooperation, our cooperation has been extremely good and cooperative with the Swiss authorities. Both Director Fox and I have been to Switzerland numerous times and meet frequently with our Swiss counterparts. The recent announcement from the Swiss federal prosecutor's office of the movement on three of their terrorism and terrorist financing investigations was extremely welcome news for us, in the fruits of over two years of cooperation between our authorities and their authorities. So I would venture to say very cooperative and very good.

COL MACHAMER: Okay, we'll go here to the second row on the end, and then back to the first row after that.

QUESTION: Fernando Canzian from Folha de São Paulo, Brazilian newspaper. I'd like to -- there has been a lot of talk about financial activities in the triple border area in Brazil, Paraguay and Argentina that could finance terrorists. I'd like to know if you have some clear indication of that, and how the authorities, especially in Brazil, are dealing with the problem. Thank you.

ASSISTANT SECRETARY ZARATE: Obrigado. That's a very good question. The tri-border area has been an area that we've been concerned about because of the traditional lack of controls with respect to movement of money, people and goods in that region. We have met quite directly, the State Department has met directly with the Brazilian authorities. I was there in May of last year to meet with Brazilian, Paraguayan and Argentinean authorities to talk about some of the issues of concern with respect to enforcement and regulation in that region.

One very good example, which we came out with publicly on June 10th, was the designation of a Hezbollah financier, a treasurer, in essence, for Hezbollah, operating in the tri-border area, currently in prison in Paraguay, thanks to the good cooperation between the Brazilian authorities and the Paraguayan authorities. We designated him on June 10th, signaling very clearly that he was engaged in a panoply of different financial activities used to support Hezbollah, everything from extortion to counterfeiting of currency to using his businesses, to trade smuggling. Really, it was a potpourri of financial criminal activity that he was using and his counterparts were using to support Hezbollah and to send funds back to Lebanon.

So that, I think, is a very clear example of where that type of funding and that type of illegal financial activity has gone to support terrorist financing from the tri-border area. But we've seen very good cooperation and very good results from our South American counterparts.

COL MACHAMER: Okay, first we'll go over to India.

QUESTION: Raghubir Goyal, India Globe and Asia Today. Two questions quick. One, as far as Riggs National Bank is concerned, how many countries do you think were involved in money laundering, and also if any of the countries were going to be punished or if you have sent any letters to them that they were doing wrong?

ASSISTANT SECRETARY ZARATE: Actually, in connection with the Riggs matter and the specific countries that have been named, I'm not going to comment on that because that's currently under investigation by the Department of Justice. I will tell you that we have had some fallout as a result of the action in Riggs where Riggs had terminated many embassy accounts, not for any wrongdoing but merely because they've decided to get out of that business.

We have been working very diligently with our counterparts at the State Department and at Treasury to try to ensure that banks in this region understand the risks associated with embassy banking and ensure that they can take on that business. But I'm sorry, I can't comment directly on Riggs because it's still currently under investigation.

QUESTION: Second question is that since you came up with the new rules (inaudible) money laundering for banks, many of the terrorists or people are not using banks anymore. Money laundering is still going on in different ways. If you'll pick up the afternoon newspapers here, you will see how people are using those institutions and how you can send money to a different country. And also, many people are doing this money laundering, I believe, in the name of shows, cultural shows and also many shows coming here, and those shows are involved like $500,000 each for many ethnic shows here.

So have you looked into those, at how people are now using not banks because now they know what you are doing because they are one step ahead of us -- the terrorists -- than what we're doing?

ASSISTANT SECRETARY ZARATE: Well, we're a bit of a victim of our own success and I won't concede that they are one step ahead because I think that what we have been doing for the past three years has been to watch the trends that are happening and to try to get ahead of them. Some very good examples are the regulations that are coming out of FinCEN with respect to dealing with new sectors that are potentially susceptible. One very clear sector that was not regulated prior to 9/11 is the money service business sector, which encompasses, potentially, hawalas in the U.S.

So, certainly, we are very much aware of the variety of ways that money can be raised as well as moved and we have been trying to stay a step ahead. Another very clear example is our now increased international focus on the issue of the use of cash couriers. We know from bygone years that drug money launderers and drug couriers have used the physical movement of money across borders to move money. We now know that, given our very good efforts internationally to cut off the flow of funds through the formal financial sector, that groups like al-Qaida are resorting to the use of couriers to move money across borders and to get money into the hands of operatives.

QUESTION: Or hawala.

ASSISTANT SECRETARY ZARATE: Or hawala. And that's something we've been very clear on and that we've worked very closely with countries such as Pakistan, such as India, such as the United Arab Emirates -- the leadership role of the Central Bank Governor of the UAE has been pivotal -- in making sure that this issue receives the type of attention it deserves and needs in the Middle East.

All of these things are things that we work on day and night and I would daresay that we are at least trying to stay apace with the terrorists and the bad guys.

QUESTION: Maybe if you would (inaudible) newspapers here, it might help to bring some (inaudible).

MR. FOX: I would only add one thing to that, if I could. The real goal here is financial transparency. I think we have achieved that in large measure, not only in the U.S. but also in much of the world as a result of the good work of the FATF and other entities. And that has driven criminals and terrorists away from the formal system, not completely but to a large extent. It's clearly not completely.

But I think the goal here is that we bring that same sort of transparency to other industries and other mechanisms that we have for transferring value so that we don't stop those mechanisms, which can be very valuable mechanisms for the transfer of value, particularly for very poor people who use those methods and I think that's important. But we need to bring that same transparency, I think, that we have brought to the formal financial system to those informal ones.

The final thing I would say is it was a very good point you made about being predictive. We look at money laundering and illicit finance, to include the financing of terror, sort of as a river with a weak bank, and every now and again, the bank will break and the water will go, and I think it's our job at FinCEN and at Treasury to think about where that next break is going to be and try to stay ahead of it as best we can.

COL MACHAMER: In the back. Right there. There you go.

QUESTION: My name is Tamman Albarazi from Alwatan Al-Arabi Magazine. Can you clarify, sir, about the CBS, the Commercial Bank of Syria? Was it regarding money laundering through the ex-regime, the Iraqi regime, the $10 billion the U.S. talk about? Or is it about the involvement with Hamas or other organization? Can you clarify the Syrian Government involvement in this money laundering?

MR. FOX: Absolutely. And I would commend to you the publication from FinCEN on the Commercial Bank of Syria designation because it lays out very clearly the basis for the Secretary's designation of that bank as a primary money laundering concern, and there were three primary reasons for that designation.

First was the complicity, in terms of the movement of money with the Iraqi regime, the Iraqi funds outside of the Oil-for-Food Program that were moved in and through the Commercial Bank of Syria, much of which is still sitting in the Commercial Bank of Syria and has not been transferred back to the Development Fund for Iraq, pursuant to UN Security Council resolution requirements. So that was the first basis.

The second basis was a concern with respect to anti-money laundering controls in the bank itself and in the Syrian system. As you will see laid out in the FinCEN publication, there are some weaknesses and some very grave concerns that we have with respect to how the bank is monitored, whether or not there is transparency, which is a key point here. And that is a second and very important concern.

And as you'll note, in today's announcement, it's also a concern with respect to the Belarusian system that does not exist in the way that we would want.

And the third reason was concerns with respect to terrorist financing conducted through the Commercial Bank of Syria or facilitated by the Commercial Bank of Syria. That is something that we laid out, in general terms, and we cannot go into the classified details to substantiate that, but that was a substantial concern as well.

So those three primary reasons were the basis for the designation, and the Syrian Government is well aware of those assertions.

COL MACHAMER: Okay. Third row, in the middle.

QUESTION: My name is Thabet Elbardicy with Al-Jazeera TV. If you could please help us with some numbers concerning the First Merchant Bank and the InfoBank. Do they have any assets? Have there been any money frozen in the United States for these banks, and also for the other three banks -- Al Taqwa, Beit El-Mal and Bank Al Aqsa?

ASSISTANT SECRETARY ZARATE: Again, so glad for the question. It's a very good question.

The designations today under Section 311 are a different type of action; in fact, as Director Fox mentioned, the provision of Section 311 was intended to give the Secretary of the Treasury unique and different powers than the powers he already had with respect to the freezing of assets.

So the announcement today is not an announcement of the freezing of anyone's assets. What we are announcing is a notification to the U.S. financial community, as well as to the international community at large, that these two financial institutions present a heightened risk, in essence, given their activities and complicity in facilitation of financial criminal activity and money laundering.

So, in the context of your question, no assets have been frozen. We do not contemplate any assets being frozen with respect to First Merchant Bank or InfoBank. What we are talking about here is the closing of correspondent accounts that those banks may have in the U.S., and, in fact, we think they do have accounts here. So that is the effect of the action today.

With respect to the other banks, we do know that assets have been frozen. It's part of the assets worldwide that have been frozen since 9/11. Now, over $141 million in assets worldwide [have been frozen]. We expect that number to grow, and that's part of the overarching due diligence by the international community to deal with terrorist financing specifically.

MR. FOX: If I could just add one thing. The 311 action is really a prophylactic or protective action for the U.S. financial system. It's not intended to be a direct sanction against another country. It's really an action that protects the U.S. financial system from an institution, a jurisdiction, a type of transaction that we have determined is of primary money laundering concern or a concern relating to terrorist finance.

COL MACHAMER: Let's go to Russia.

QUESTION: Dimitri Kirsanov, Russian News Agency TASS.

I would like both of you gentlemen, if I may, to talk a little bit about cooperation with the Russian counterparts on these issues. What specifically you work together on? Is it good or bad? I mean, is there success stories?

And secondly, if I may just squeeze in the second one, what countries were involved in those schemes with InfoBank? I assume you have this information. I wonder if you can share it with us.

ASSISTANT SECRETARY ZARATE: Well, why don't we start with your second question first.

With respect to countries involved, certainly Iraq was directly involved and heavily involved, not only with InfoBank, but also with its subsidiary, Belmeltelrus. I can't remember the exact name of it. But one of subsidiaries of that bank was engaged directly with the Iraqi regime. Let me get you the correct pronunciation. Belmetalenergo is the name of the company. And, in part, that company was using the bank to facilitate arms deals for the Iraqi regime, which, in our estimation, makes the offenses all the more terrible and worse. So that's, in essence, with respect to InfoBank and the Oil-for-Food Program, it was direct involvement with the Iraqi regime itself, which presents a risk, obviously.

The question with respect to Russia. Again, Director Fox and I meet regularly and speak regularly with our Russian counterparts. Given the initiative by Presidents Bush and Putin, there have now been two reports issued. We just issued a report a month ago with respect to ongoing cooperation between the United States and Russia on the countering of terrorist financing and dealing with money laundering.

We are dealing specifically, and we've talked to the Russian authorities, about dealing with international financial institutions that present a risk to the banking sector. And that's something, among other things, that we are dealing very closely with the Russian Government on. And again, Director Fox and I deal almost on a weekly basis with our counterparts in Moscow.

COL MACHAMER: Okay.

QUESTION: Priscilla Huff with Channel News Asia. You've spoken a lot about the banking and financial sectors. I was wondering where you're at on investigating or stopping the flow of money from, say, commercial companies, for example, like logging or mining companies in South Asia that might have advertently or inadvertently transferred money to groups that support or finance terrorism.

ASSISTANT SECRETARY ZARATE: As I said before, we're looking at all potential channels of funding and movement of money for terrorist groups or rogue regimes. We are certainly looking at the context you described with respect to the logging industry. It's been of concern now for a couple of years because of the potential connections. We're looking in West Africa, with respect to the conflict diamond issue. We're looking around the world and dealing with our counterparts, frankly, around the world, to look at where funds may have flowed.

And when I mention rogue regimes, that's an incredibly important point because, at the Treasury Department, we certainly are focused on terrorist financing but we are also in charge of the sanctions regime worldwide with respect to U.S. sanctions. So, for example, we are very much concerned about financing with respect to Charles Taylor and his regime in Liberia, and other such regimes that have used illicit means of pilfering funds from their own people, as well as moving funds for their own benefit. And that's precisely what we've done in the case of Iraq, with the freezing of $6 billion around the world, the return of over $2.7 billion back to the Iraqi people in a worldwide movement to find and return the money to the Iraqi people.

COL MACHAMER: Okay, all the way in the back.

QUESTION: My name is Eunice Ajambo from allAfrica.com. You just mentioned West Africa. And, of course, it's not financial institutions that are engaged in financing terror in West Africa. And I was wondering if you could talk more about individuals and entities within Africa, besides Charles Taylor, that might have engaged in the financing of terrorism.

And the other question is, I was wondering if you could also build more on how you intend to engage African countries in undermining the financial networks of terror. Thank you.

ASSISTANT SECRETARY ZARATE: Let me address the last question first because, as we speak, financial experts from around the world are assembled in Tanzania with the FATF-style regional body in Africa. It's known as ESAAMLG, the East and South African Anti-Money Laundering Group. That is a group that's assembled, that works on building regimes in Africa, building capacity in Africa to deal with these issues -- and again, as you mentioned, not just in the banking sector, the formal financial sector, but in the less regulated, less formalized sectors, like the money exchange houses which exist and which are of potential use.

So that is one mechanism and one very good example that's happening right now where we engage, we engage bilaterally all the time with countries around the world, not just in West Africa but in East Africa and Southern Africa. And our concerns range the whole gamut in terms of activities in Africa.

It's a potential source of financing in movement of funds for al-Qaida. We've seen that in East Africa with a number of our designations. We've seen it in some of the hawaladar networks; for example, Al Barakat, which was a key network connected to Somalia. There are other groups that potentially have used Africa to raise funds and to move funds.

One of our great challenges with respect to Africa is building capacity -- helping African nations to help themselves in what really is a global endeavor.

MR. FOX: I might add, we at FinCEN entertained this past week a delegation from Egypt and their new financial intelligence unit, which was accepted into the Egmont Group this summer.

They are also a leader in the, I think it's the MENA FATF-style regional body, which is the Middle East-North Africa FATF-style regional body. We think it's really important that we do build this capacity. I know Tanzania is hard at work at developing a financial intelligence unit. There are good units in Mauritius and in South Africa and in Egypt and in other place in Africa. And again, I think the more we globalize this, the better we are and the better we can help African countries develop those systems, again, that lead to financial transparency. I think we're all better in the world for that.

COL MACHAMER: Okay, anyone else?

All right, one more from Russia, in the front.

QUESTION: TASS News Agency again.

As far as I remember, Russia is trying to create some kind of FATF-like group for the post-Soviet territory, Commonwealth of Independent States. What is the U.S. Administration reaction to that?

ASSISTANT SECRETARY ZARATE: We are extremely supportive of that initiative and, in fact, that was a major component of our report to President Bush and President Putin, which is our cooperation on the establishment of a FATF-style regional body -- not just for the former Soviet republics, but also for Central Asia and, potentially, farther to the east, potentially with other countries in Asia. So that's an incredibly important initiative and it dovetails very well with what Director Fox mentioned, which is the Middle East and Northern Africa-style regional body, which is being established somewhat in parallel.

And again, this signals for us a very important point and evolution in this process, which is these countries and these regions around the world taking ownership of these issues because not only does this make sense from an anti-money laundering, financial crime, anti-corruption, anti-terrorist financing perspective, but it makes sense in terms of building the capacity and the transparency and the health of the financial systems of these countries and the maturity of those systems.

So we are incredibly supportive of it. We've worked directly with the Russian Government on that and there is an upcoming meeting, which we will be attending, to discuss that very issue.

QUESTION: Where is that?

ASSISTANT SECRETARY ZARATE: I believe it's in Moscow, but I would have to check.

QUESTION: Thank you.

COL MACHAMER: Okay. We have time for one more question. Up front.

QUESTION: The quick question is: (1) As far as the Oil-for-Food or Food-for-Oil Program for the UN, again, I'm not going to ask how many countries, but I think -- do you think that the countries involved in that are going to be punished by the UN or by the U.S. or Treasury Department?

And also, at the same time, after you have these new rules and regulations and the new standard, any complaints from any countries? Have they complained about these rules, as far as any kind of embarrassment for them or any that they don't like it?

ASSISTANT SECRETARY ZARATE: With respect to the last question, we work very closely, especially with these announcements, work very closely with our foreign counterparts and we make very clear what the purpose is of this action. And as Director Fox mentioned, this is not intended as a sanction against the host governments but, in essence, as notification to our financial community and to the financial community at large that these are problematic institutions.

We've had quite a bit of discussion with our foreign counterparts and with foreign banking associations about the reach and scope of the Patriot Act. There are provisions that give us additional powers and give the Department of Justice additional powers that we did not have prior to the passage of that Act. But that's something we deal with on an ongoing basis and have a very good working relationship and understanding with groups like the Swiss Banking Association and others.

The first part of your question, I have already forgotten.

QUESTION: As far as the Oil-for-Food as far as --

ASSISTANT SECRETARY ZARATE: Oh, right. It would be remiss of me to comment at all. There are a number of investigations underway. The Senate has one. The UN has one; Mr. Volcker is leading that initiative. So there are a number of investigations underway to find out how the system did not work in the case of the Oil-for-Food Program.

An important point to note here is that Saddam Hussein is the one who gamed the international community and used the goodwill of the international community for his own devices, and we need to keep that in mind as these investigations go forth.

From the Treasury Department's perspective, we have been engaged in an effort to find and return assets to the Iraqi people. That's been our mission, and that's where we've come across Oil-for-Food-related issues, but our mission is to find the money still and to return it.

COL MACHAMER: Okay. Thank you.

QUESTION: But that did not die with Saddam Hussein because Saddam Hussein is gone because they were used by him --

COL MACHAMER: Could you walk toward the microphone?

ASSISTANT SECRETARY ZARATE: There is money out there that needs to be returned to the Iraqi people. That's right.

COL MACHAMER: Thank you, gentlemen.