Tracking Financial Assets of Terrorists

3:07 P.M. EST

MODERATOR: Good afternoon, ladies and gentlemen, and a special greeting to our guests from India. We hope you'll feel free to ask questions when that time comes.

It's my great pleasure to present Undersecretary of Treasury for Enforcement Mr. Jimmy Gurule. As you know, he is in charge of all enforcement activities in the Department of Treasury, and this includes activities centered on financial networks. And that's what he's going to address today, tracking down terrorist financial networks.

So I'd like to introduce Mr. Gurule. He will give an introduction for a few minutes. After that he'll take your questions. If you will wait, when I call on you, until the mike reaches you and introduce yourself by name and organization, I would appreciate it.

Thank you very much, Mr. Gurule.

MR. GURULE: Thank you. Good afternoon, and welcome. Thank you for coming here today.

In the aftermath of the September 11th terrorist attacks, the president of the United States specifically tasked the U.S. Department of the Treasury with the responsibility of going after the money. And by that I mean the responsibility of tracing, tracking the financial networks that were responsible for funding, financing, the cowardice acts that took place at the World Trade Center and at the Pentagon.

In response to the president's directive, we have formulated a multi-tiered strategy to disrupt and dismantle the financial underpinnings of these terrorist groups, specifically al Qaeda and terrorist Osama bin Laden. I would like to take a few minutes and briefly summarize the components, if you will, of this comprehensive strategy.

First, Treasury has taken a proactive approach. As illustrated by the September 11th attacks, money in the hands of terrorists is effectively money that kills. The president signed an executive order on September 24th that greatly expanded Treasury's ability to target and shut money associated with -- close down operations associated with terrorists.

Pursuant to this executive order, the president has named 66 individuals and entities to this list, terrorists and terrorist entities. And we expect that there will be future additions in the days and months to come. In short, this is an ongoing process. There have been 66 names to date, but certainly that list is going to be expanded in the near and long future.

To date, internationally and domestically, there have been $24 million in funds blocked since September 11th. The process by which the blocking orders have been issued and these accounts have, in essence, been blocked has operated through the Office of Foreign Assets Control. This is an office located within the Office of Enforcement within the Treasury.

Specifically, the Office of Foreign Assets Control has established a Foreign Terrorist Asset Tracking Center, or FTAT, as it's referred to. This new group housed at Treasury brings together all of the intelligence and law enforcement agencies for the purpose of sharing information and building a profile of the financial infrastructure of terrorism.

In essence, FTAT serves as a clearinghouse for intelligence information derived from the CIA, the Federal Bureau of Investigation, the Bank Secrecy Act data base that is administered by the Financial Crimes Enforcement Network, as well as open-source information. It's at this clearinghouse where this information, this intelligence, is analyzed and determinations are made with respect to blocking of terrorist assets.

However, it would be an effort in vain if the focus of blocking terrorist assets was restricted domestically. As we all know, the threat of terrorism is by no means restricted to the United States. Terrorists pose a global threat, and therefore with respect to our response to the terrorist networks, it must be global in nature. It would do little good if we blocked assets in the United States cutting off the domestic financial systems to these terrorist organizations only for them to easily operate by moving money through international foreign banks.

Therefore, this comprehensive strategy has contained an international component, an international effort and outreach. The president's executive order of December 24th has galvanized nations around the world to work to hunt down and freeze terrorist assets. To date, 98 countries have issued blocking orders against those listed by the United States. One hundred seventy-six countries have further pledged their cooperation in this effort to go after the money.

At the same time, we have engaged in several productive phone calls held by the secretary of the Treasury, the deputy secretary, as well as Undersecretary Taylor, with our foreign allies and counterparts from all over the world with respect to reaching out and obtaining their cooperation in this effort. So it truly has been a global cooperative effort to go after the money and dismantle, disrupt and dismantle the financial networks of these terrorist organizations.

In addition, most recently the Treasury Department led an effort, an initiative, with respect to the Financial Action Task Force, or FATF. As I'm sure you are aware, an extra plenary session was held in Washington DC earlier this week. FATF, as you know, is an international organization comprised of 29 nations and committed to anti-money laundering.

FATF has established, set the international standards with respect to anti-money laundering. And this was an effort headed by the Department of the Treasury to take FATF, which, as you know, has a very successful, very productive track record with respect to causing countries to come into compliance with these international standards with respect to money laundering, and to take that effort, the FATF effort, and to direct it, expand it, if you will, to include terrorist financing.

The plenary session was clearly a success. The deliverable included eight specific recommendations geared towards, directed towards, terrorist financing that were embraced by the FATF members. Those recommendations include the ratification and implementation of the U.N. International Convention for the Suppression of Financing on Terrorism, as well as relevant Security Council resolutions. In addition, the recommendations that were adopted by FATF included criminalizing the financing of terrorism and enacting domestic legislation to seize and freeze assets that are related to terrorist financing.

The Department of the Treasury, more specifically the Bush administration, is very grateful for the leadership provided by President Clary Lowe (sp), the president of FATF, to mobilize the FATF members, the 29 countries, to cause them to act so quickly in response to this scourge of terrorism and to adopt these new recommendations.

One last point. In addition, Treasury has attempted to expand and enhance, if you will, its law enforcement efforts with respect to terrorist financing through the creation of a financial crimes task force, a Treasury-based financial crimes task force, titled Operation Green Quest.

Operation Green Quest, which was announced -- it was established just last week -- will bring to bear the most sophisticated, the federal law enforcement investigators with the greatest level of expertise and talent, involving money laundering and direct those talents and that expertise against these terrorist financial organizations.

This is a multi-agency effort that involves agents from the U.S. Customs Service, the Internal Revenue Service criminal investigation division, the Financial Crimes Enforcement Network, the Secret Service, as well as agencies from the Department of Justice, specifically the Federal Bureau of Investigation.

It's up and operational, and this task force will serve as the investigative muscle, if you will, of the Foreign Terrorist Asset Tracking Center in helping to develop additional investigative leads, to help identify additional participants in terrorist financing, and to identify additional assets in bank accounts to be blocked through the president's executive order of September 24th.

That is a very brief summary of the efforts that the Treasury Department Office of Enforcement has undertaken over the last six or so months since the tragic events of 9/11. And I'd be happy at this time to answer any questions that you might have. Thank you.

Q Yes, my name is Gabriel Uruarte. I'm from Paginos (ph) in Argentina. There have been several reports that the bulk of financing for Osama bin Laden's organization come through very informal channels of money transfer, this Pakistani system. In context, it's been called the call it Eastern Union, and also, on a smaller-base scale, fund-raising in places like Paraguay or, at least according to new reports today, in Sierra Leone. Are these channels vulnerable to the kind of actions that the Department of Treasury and its counterparts all over the world are taking?

MR. GURULE: Osama bin Laden and the terrorist organizations associated with Osama bin Laden use a myriad or very clever, crafty schemes to move money both into and outside the United States to support terrorist activities. Those operations, those schemes, include the use of small businesses known as hawalas.

They include, of course, more traditional methods, moving money through the financial institutions, both domestically and internationally. They include bulk cash, moving large quantities of money through bulk-cash form into and outside the United States, using money orders and other creative methods.

Make no mistake about it. The Treasury Department is committed to investigating these schemes and any others upon which credible evidence can support. It is an aggressive, investigative campaign. And no relevant lead will be left unattended, will be left unturned, if you will, in an effort to go after every dollar that we can link to bin Laden and his terrorist thugs.

Q One follow-up. How and who exactly would go after this system, because most of it is located in foreign countries, and apparently most if it is not really controlled by the banking systems or -- (inaudible)?

MR. GURULE: As I stated earlier, this is a cooperative effort. And there's no question about it. You know, we've reached out to our foreign allies with respect to achieving, obtaining blocking orders from them. We're certainly going to be working closely with respect to investigative efforts as well. We'll be taking advantage of existing extradition treaties. We'll be taking advantage of existing mutual legal assistance treaties in an effort to leverage law enforcement resources throughout the world.

Q Julian Borger (ph) from the Guardian newspaper. Do you have any comment on today's Washington Post story about the diamonds and the raising of money through diamonds?

MR. GURULE: The only comment -- I mean, it would go back to my previous comment with respect to different methods, different schemes and techniques used by bin Laden. I'm not going to go into any details with respect to what we're doing, where we're exactly focusing in terms of particular methods of operation with respect to bin Laden.

I want to keep bin Laden guessing. I don't want to tip our hand with respect to what we're doing, what particular schemes we're going after at this moment. I want him to keep guessing. But make no mistake about it. We're going after every one, again, that we can support, based upon credible information. So certainly that one is not off the table by any means, and we're going to go after and aggressively pursue them.

MODERATOR: Right there.

Q Richard Caddon (sp), BNA Banking Report. The amount that you cited that you said had been seized was the same number that you gave two or three weeks ago. Does that suggest a certain amount was available to be seized and it's been shifted to different forms, or is this an ongoing number that continues to rise?

MR. GURULE: It is an ongoing number. This is an ongoing effort, as I stated. There are other accounts that have been blocked, but we're not including those in our tally, simply because they have yet to be verified. We want to make sure that when we announce any particular number or increase to our total, that we've been able to verify as precisely, as correctly as possible to ensure that these particular accounts are linked to bin Laden and to al Qaeda.

As you can imagine, it's difficult to do in some cases, because there may be -- the particular name that's listed on the annex may be a fairly common name. And so if we have a bank that has stated that "We have an account in that particular name," we need to make sure that that particular name is, in fact, the name that's on our annex, on our list. And that may require, in a particular case, going back to double-check date-of-birth information, place-of-birth information, passport information, and other identifying information to make sure that our numbers are correct.

And so it's a time-consuming effort. It's a cautious effort with respect to the actual listing of the dollars. But it's only conservative in that end. With respect to going after and blocking the accounts, it is a very active and aggressive effort.

MODERATOR: The lady in back.

Q I am Sandra Albergada (ph). I work with RCN TV from Colombia. There is three terrorist organizations in Colombia -- AOC, FARC, ELN. Can you tell me more details about your department is working against them and to stop them -- (inaudible)?

MR. GURULE: Let me say simply that the president has announced a global war on terrorism. And terrorism is not limited to bin Laden and al Qaeda, and therefore the current efforts of the United States government are likewise not limited to Osama bin Laden and al Qaeda but are targeting other terrorist organizations.

Today, in fact, as I'm sure you are aware, the State Department designated 20 foreign terrorist organizations as, again, terrorist organizations that we'll be looking at under the president's or examining pursuant to the president's executive order of September 24th in an effort to block accounts that are linked to this additional now list of 20 terrorist organizations that were named today. So this is an ongoing effort and it is an effort that is not limited to bin Laden and al Qaeda.

Q Excuse me. Do you have any companies or any person who work with paramilitaries like ELN or FARC, even -- (inaudible) -- ?

MR. GURULE: I'm not going to comment specifically with respect to what we are doing on investigations with respect to any particular terrorist organization. I'm not going to disclose or display our investigative hand on that part. But let me just say this. You know, this wasn't an empty effort. I mean, listing these particular foreign terrorist organizations isn't for show.

I mean, this demonstrates the commitment of this administration to engage in a war. And when that term is used, it's not used as pure rhetoric. This is a war that the U.S. government is waging against terrorism, against all terrorist groups. And 20 additional terrorist groups have been named today in that effort, in that undertaking. So we're going to go after them is the short answer.

MODERATOR: The gentleman in back, way in back.

Q R.J. Kumar (ph) from Ajtek (ph), India. There are reports that a Pakistani-based terrorist outfit Lashkurturiba (ph) has been banned by the United States government. I would like to know whether it is true. And secondly, which other terrorist organizations are under the scrutiny of the U.S. Treasury Department which are operating from Pakistani soil?

MR. GURULE: Well, as I stated, 20 foreign terrorist organizations were listed today. I'm not going to go ahead and recite, you know, each of those names. I'm sure that they're available to you. They're a matter of public information. I don't know if they're on a particular Department of State Web site. I assume that they are, so you could take a look at that information.

With respect to the particular organization that you mentioned in Pakistan, I'm not going to comment with respect to action or inaction that's been taken against that group.

MODERATOR: (Inaudible.)

Q In the past, we've seen that the United States has banned one more organization which is working out of Pakistani soil, Jaish-e Mohammed.

But just today, before the announcement was made, it changed its name. Often, we have seen that organizations are banned and they change their names and pursue their activities. Is the United States trying to formulate a policy whereby such eventualities are taken care of?

MR. GURULE: This is an aggressive effort. And if that is the case -- I mean, if there is reliable, credible evidence, information, that a particular terrorist organization is now assuming operations under a different name, certainly that is going to be investigated. I mean, the effort here is to destroy these terrorist organizations. And we're certainly not going to be dissuaded from that objective simply by the particular name or moniker that such organization is using at any particular point in time.

MODERATOR: This gentleman.

Q I'm Ryan Damweyer (sp) with Bloomberg News. In the days after September 11th, there were several reports of suspicious short selling of insurance and airline stocks in various parts of the world. Have those been confirmed to have been linked to terrorist activities? And going forward, if they are, would that information -- will this effort lead to actions against "John Doe" accounts generally?

MR. GURULE: Let me say that first, that this particular incident that you're referring to -- this report that you're referring to -- is -- represents an ongoing investigation. An ongoing investigation is being conducted by the Securities and Exchange Commission. And because it is an ongoing investigation, it is one that I'm not going to comment with respect to the progress that's been made, and confirm or deny any other aspects of that report other than, again, stating the fact that it is an ongoing investigation. Treasury has been working closely with the SEC in this effort.

Q The second part of my question had to do with John Doe accounts generally.

MR. GURULE: Well, John Doe -- I don't know about John Doe accounts generally, but I do know that Suspicious Activity Reports involving broker/dealers is something that the Treasury Department, the Office of Enforcement is working on. And specifically, if you take a look at the 2001 National Money Laundering Strategy, it provides that the Suspicious Activity Report requirement, or the SAR- S, is going to be expanded beyond banks to include broker/dealers.

That effort is underway and we are moving aggressively to complete that effort.

Q (Name inaudible) -- again, from The Guardian. Part of the September 24th announcement was the threat of sanctions against countries that failed to act against terrorist organizations. Has that threat been invoked so far? And how long do countries have to respond?

MR. GURULE: That's an excellent question. That question is a question that was raised at the FATF plenary session early this week. As you know -- as I stated, there were eight recommendations that were embraced by FATF. And I had an opportunity to meet the U.K. representative who was actively involved in this effort.

The objective here, with respect to these recommendations, is, again to take the FATF process and expand it to include terrorist financing. And likewise with respect to the process, if countries are not in compliance with these new international guidelines, these eight recommendations that have been embraced by FATF, it's envisioned that the non-complying countries and territories process, the listing of non-complying countries, will be extended with respect to countries that are not in compliance with respect to these principles, these guidelines on anti-terrorism.

Next steps? The next steps include, with respect to the follow- up to the plenary, is that the -- include, number one, the FATF members have agreed to engage in a self-evaluation. And by that I mean, to examine whether or not they are in compliance with these eight recommendations, and to complete that self-evaluation by the end of December. So in less than two months, that process will be completed.

The process is not limited to the 29 FATF members, but FATF has strongly encouraged, and will be encouraging, non-FATF countries to engage in this same self-evaluation process.

If a country finds that it is not in compliance with these recommendations, then by the end of December, they are going to prepare an action plan -- have prepared an action plan with respect to how they're going to get into compliance and do so quickly. That action plan, and the status with respect to that action plan and compliance is going to be taken up by FATF at their June plenary session, and then it will be decided at that point when countries are going to be listed on the -- on the "shame list," if you will, if they are found to be not in compliance.

MODERATOR: Here in the middle.

Q Hello. Rebecca Christy (sp), Dow Jones NewsWires. I was wondering if you could come back to the topic of Suspicious Activity Reports and talk about the resources devoted to processing them once they come in at the different regulatory areas, and how you want to -- how you can make sure you have enough stuff on hand to handle things, how you make sure you don't get so many false alarms that you're deluged and can't find the right ones, and what steps are being taken.

MR. GURULE: Okay. It's an excellent question.

With respect to the SARs, the Suspicious Activity Reports, I mean, the objective here is to have, in the case of -- let's just take for an example the banking industry -- to report to the Financial Crimes Enforcement Network, or FINCEN, particular transactions that, for whatever reason, are deemed to be suspicious and, more specifically, linked to criminal activity, where there may be reason to believe that the monies constitute illicit proceeds or, more specifically, more relevant to our conversation, are linked to terrorist organizations or entities. Obviously, FINCEN nor federal law enforcement are interested in transactions that have no value to law enforcement, but only those that we think can further a criminal investigation.

To do that, what we're doing -- to ensure that, we're doing a couple of things. We're, number one, engaged in kind of a continuing outreach with the relevant financial-industry sector to continue to educate them with respect to what it is we're looking for. And we're doing that now with respect to terrorist financing by coming up with a -- coming up with some typologies, if you will, and so that if, if you will, kind of a schematic saying if these factors are present with respect to particular transaction, it should -- the should raise a red flag for you. So if this combination of circumstances and factors is present, then you should report it.

This is something that we think is valuable. At the same time, if not, you know, we may not -- you know, don't feel compelled. I mean, so we're trying to give them more specific guidance on what they should be reporting; what kind of transactions we think would be most valuable to law enforcement.

Following the FATF plenary session that concluded on Tuesday, the Egmont Group met in Washington, D.C. This is a group that's comprised of the financial institutions like FinCEN, from throughout the world. I believe that the number of participating FIUs is presently 58 or 59 countries that are participating. This issue of typologies was one of the principal subjects of discussion by the Egmont Group, and they're working on these typologies, and once they're prepared, they'll be distributed to the relevant business in order to assist them. So that's one way.

With respect to getting this information quickly, expeditiously, FinCEN has established a toll-free number, and that toll-free number has been distributed to banks throughout the United States. And these financial institutions are encouraged, in the event that they see a transaction that gives them reason to believe that it's linked -- perhaps linked to a terrorist organization -- to use the toll-free number to report that information immediately so we can have immediate contact, interaction with the bank representatives so we can get that information, ask questions if we have questions about the relevance of that transaction and then decide whether we need a follow-up so we can use that information.

Q Yeah. To follow up, are you working only directly with the banks, or are you working also with other bank regulators in trying to go through all the other types of suspicious activity that may not be directly criminal in this context?

MR. GURULE: Well, I think the effort here is to reach out to all relevant agencies, you know, to work closely. So certainly, we're not limiting ourselves. I mean, we want to engage in a cooperative effort. Certainly the task at hand with respect to dismantling the financial networks of these organizations is one that requires us to break through, kind of -- I don't want to say jurisdictional barriers, but that certainly requires us to reach across agency lines, bureau lines to work more cooperatively, and we're undertaking that effort.

Q Jose Carreno with El Universal, Mexico City.

Just for precision, how far are you ready to go in terms of individuals or companies that have any kind of link with these terrorist organizations?

MR. GURULE: How far are we willing to go? I mean, depends on the strength of the evidence. I mean if we have evidence to believe that a particular business is a shell business or is a pass-through for terrorist organizations, and certainly that business is going to be shut off. It's going to be marginalized with respect to its ability to access the U.S. financial system.

It is going to be marginalized with respect to its ability to do business in the United States. If the evidence with respect to the operatives of that particular business rise to the level of criminal activity, that's one of the reasons why we've established Operation Green Quest.

We will use all available law enforcement tools to bring down these terrorist organizations, bringing these people up on violent criminal charges, bringing criminal indictments. We are certainly prepared to do that.

Q For instance, all these people that are private individuals who have any kind of link would with these terrorist organizations, are you forcing their accounts too?

MR. GURULE: When we can identify if there is -- if we find credible evidence that a particular account, individual account, is linked to one or more of the 66 names on the annex list, then we will be taking efforts to block those accounts. Make no mistake about it.

Q I'm Verena Kolp (ph) from the SWP from Germany. I wanted to ask you, I got that right, the 66 entities and organizations are linked to Osama bin Laden and al Qaeda? What do you do, or do you go after charities or organizations that are linked to the Hamas- Hezbollah and other terrorist groups too?

MR. GURULE: Well, as I stated today, the secretary of State, Colin Powell, announced, or the State Department announced twenty foreign terrorist organizations, and these are twenty foreign terrorist organizations that in essence fall under the president's executive order of September 24th. Those terrorist organizations are organizations that certainly we are going to be using the same methods with respect to blocking accounts that we've employed against bin Laden and al Qaeda.

Q Thomas Gorguissian, Al Wafd, Egypt. Mr. Gurule, I will try to first clarify some numbers you mentioned. You mentioned 66 names and entities, and then you say now it's -- I know that they're -- State Department -- either 28 or 22 country, or organizations. So, it's become like now, what it's 88?

MR. GURULE: You're correct; it is -- I think I said 20. It is 22. So I thank you for correcting me. Twenty-two. So 88 -- that's correct.

Q Eighty-eight. So that's clear.

You mentioned the number $24 million blocked. Is it -- this is in United States or abroad, or this is related simply to bin Laden or other groups too?

MR. GURULE: It is money that is -- that we've been able to connect to the names, the original -- well, I shouldn't say "the original" -- the 66 names of individuals and entities that are related to bin Laden and al Qaeda. So, first of all, in terms of the scope of the -- or the linkage of those accounts to terrorist organizations, they're -- they've been linked to al Qaeda and to bin Laden.

In addition, with respect to where, those are monies that have been blocked, both domestically and internationally. But as I stated, there are other accounts that have been blocked, but because we are continuing our effort to verify that we have blocked the account of one of the persons on the list, then those numbers have not yet been disclosed or released.

Q All in general view?

MR. GURULE: Yes.

Q My two other questions -- short ones, I mean; I don't like long ones --

MODERATOR: This will have to be the last one.

Q Yes. I mean, it's up to you. It's -- Mr. Gurule, you mentioned that 90 countries issued statements or show of cooperation besides the 176 countries pledged their commitment. How do you classify -- how would you describe or how do you assess the cooperation of Arab countries -- in particular, in that region of whatever is the trouble?

And of course, somehow -- another question, in general question, are there other caves in this -- all process of tracing money, like the caves now in Afghanistan, so we cannot reach them?

MR. GURULE: Well, let me respond first -- there are 98 countries that have issued blocking orders with respect to the list of 66 names of individuals, terrorist individuals, and entities. The United States government is very pleased with the cooperation that it has received to date from all countries, including Middle East countries.

This, again, is an ongoing effort, ongoing cooperation. But at this point, the president has made clear, the secretary of the Treasury has reiterated, as well as Secretary Powell, that we are very pleased with the cooperation that we received internationally.

MODERATOR: (Off mike.) You do one more. That'll be it.

Q Thank you. Is -- well, there was a question that was not answered, the last question, which is, physically now there are caves, and we say bin Laden and others are disappearing, and we don't get -- you cannot get them.

Are there possibility of similar caves in this whole process or it's --

MR. GURULE: I'm only -- right now, I'm interested, Treasury is interested if these caves have money. If these caves have money in them, we're going to go after those -- after the money wherever it's located, including these caves. If we happen to find bin Laden inside, well, that's great; we'll seize him too.

Q On this list of countries that have been compliant and have blocked funds, is Saudi Arabia on that list?

MR. GURULE: Saudi Arabia is one of the countries, one of the 98 that I have referred to, that has issued a blocking order.

Q You said 98?

MR. GURULE: Ninety-eight; 98.

Thank you very much.

MODERATOR: Thank you very much, Mr. Gurule.

END.

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