FROM THE OFFICE OF PUBLIC AFFAIRS

 Mr. Chairman, it is a distinct honor to appear before the Committee today. You and I have previously discussed enforcement and terrorist financing matters in closed hearings before the Senate Intelligence Committee. I am grateful for the chance to speak about these issues in the daylight so we may all profit from an informed debate on something that is central to the lives of our families and to our country.

 Senator Sarbanes, I am equally grateful for the attention that you have turned to this matter. I live in the District of Columbia, so for twenty years you have been the closest thing that I have ever had to a Senator. But what recommends you most, respectfully, is a staff that includes my friend and, literally teacher when I first set foot at Treasury, Steve Kroll. Working closely with Steve Harris, Cathy Casey and, in particular, John Smith, we are all a safer and a freer people because the work of the Chairman, yourself and this Committee.

 Terror traffics in three forms of currency – hate, counterfeit religion and money.  The first two are born out of a deficit of hope in the Middle East, the most naked symbol of which is the failure to resolve the question of Palestine.

 But the malevolence preys on a dynamic that extends far beyond those borders, to corners of the world where you find the Islamic Diaspora – hungry, torn by civil war, living in near permanent refugee camps, looking for remedy where reason seems to beggar the notion. There, hopelessness is forged into hate by merchants of the false cure called terror.

 These are problems writ large that must be addressed if we hope to bring our children up in a world no longer haunted by killers whose political agenda calls for the death of innocents. But it will take years to win hearts and minds and the challenge may be beyond my personal ken.

 I’ve had a more immediate calling – to deal with the third leg of terror, its funding.

 The task came to me with some irony. I joined the Treasury Department in March of 2001, challenged by Paul O’Neill to help him put good money –development aid – to good account. We wanted real world consequence, and our model was water wells in a thousand villages rather than the narcotic of grand master plans.

 After September 11th, I was asked to deal with the distorted mirror image of that ambition, no longer responsible for money intended to enrich people, but to destroy them.

 It is something that we have never done before in this country– at least in any systemic way – and a legitimate subject for examination and, perhaps, reproach.

 I say that because almost nothing is more important on the battlefield of the war on terror than diminishing the flow of money. And there is additional irony that it took the destruction of a temple of commerce to teach us that lesson.

 Why is it important? First, it is doable and within our reach.
Al-Qaida’s cash flow has been balkanized and cut by two-thirds since we started this campaign. 

Second, it provides near infinite leverage to prevent calamity. You cannot limit the imagination or designs of a terrorist cell that is rich with money in its pockets. But all their invention is forfeit if the funds never materialize.

 Third, in this uncommon shadow war of terror, virtually every source of information is suspect, the product of treachery, deceit, bribes or interrogation. But financial records don’t lie and bring integrity to the process of threat assessment and the prevention of mayhem.

 Fourth, a man who straps a bomb to his chest is an implacable foe – beyond redemption and certainly beyond deterrence because of any threat of economic or physical sanction. But his would be banker is a coward and can be made to be wary, apprehensive and a bankrupt source of future funding.

 Fifth, developing intelligence on future acts of terror is a compound of genius, sweat-equity and serendipity. I don’t like the serendipity part. The prospect of collecting and successfully analyzing intelligence on a hundred events at the end of the pipeline of the terrorist enterprise would be nothing short of miraculous.

Stopping the capital formation of that enterprise before all such invention, while a daunting challenge, is our more promising strategic choice and goal.

There will be no surrender on the battleship Missouri in this war. There is no flag to capture. There is no uniform army to corral. There is no clod of earth that our enemies will wish to preserve in the event of defeat.

Rather, we will count our victories one at a time, measured in single captures or killings. We will defeat them, however, in a systematic way only by denying them the lifeline of their mobility and stealth – and that is their financing.

It cannot be done alone. Virtually all of our concerns – save for John Pistole’s good industry on domestic threat – are abroad. We therefore mark our successes by building a new vocabulary, new laws, new capacities and political will globally to stem the flow of terrorist financing -- whether it is Syrian and Iranian support for Hezbollah, European support for Hamas, or Gulf state support for al-Qaida.

There has been a sea change because of our efforts. Let me close with one example.   
 
 Over the past 1700 years, any member of the Islamic faith could walk into one of the tens of thousands of mosques that populate Saudi Arabia and reaffirm a covenant with God – at least in some small part – by depositing coin or currency into a collection box (known as sakadah).

 It is an intensely private act – what you might call a good secret. Nothing vain-glorious, just a simple act of faith and charity.

 In a world of peace, it would not be the business of government. Indeed, to regulate it could be called sacrilege.

 We do not, however, live in a world of peace. And some of these collection boxes have been found in the hands of al-Qaida. And, today, in Saudi Arabia – the keeper of Mecca – cash collection in sakadah is banned.

 That kind of change in even the most fundamental acts of a society, let alone a faith – has taken enormous resources and the kind of industry that would make this Committee proud of a government and interagency process that works as one.

 For a while there, we were spinning gold out of straw. And surely, we can make improvements. But with colleagues like Tony and John, the campaign against terrorist financing will bring more peace to our citizens than an army of soldiers.

 And maybe if I get the privilege to return to public service, I can work on those village wells that Paul and I spoke about three years ago when the world was a different place.