

	February 12, 2007 HP-261 Prepared Remarks of Patrick M. O’Brien Assistant Secretary Terrorist Financing and Financial Crimes Before the Florida International Bankers Association February 12, 2007 Good afternoon and thank you for inviting me to speak today about our ongoing efforts to combat illicit finance. It is an honor and a pleasure to be here in Miami as part of the Florida International Bankers Association's (FIBA) 2007 annual conference. Thank you, Fernando, for the overview and introduction. Your home country of Ecuador has recently assumed an important leadership role as the president of GAFISUD and has taken important steps with the recent establishment of a Financial Intelligence Unit (FIU). These are very important developments. The FIBA annual conference is an important and much-anticipated event that provides timely and practical knowledge to bankers from around the world. It also provides a useful forum for the public and private sector to come together to discuss our common goal of combating illicit finance. I thank you for the opportunity to share our perspective with you today. My remarks will focus today on the importance of continued cooperation between the public and private sectors in efforts to stem transnational threats such as drug trafficking, money laundering, terrorist financing, and proliferation. I will specifically address the U.S. Treasury Department's role in combating illicit finance, multilateral efforts to disrupt illicit activity in the Caribbean and Latin America, and the upcoming U.S.-Latin American Private Sector Dialogue. My hope is to give you a clearer picture of our efforts and to invite your involvement as we strive to further advance efforts to combat threats to the international financial system. At the U.S. Treasury Department, we recognize the importance of a healthy global financial system. Our engagement in that system is founded on three main principles: the promotion of free trade, the free movement of capital, and flexible exchange rates. The free movement of capital is critical in that equation, and depends on our collective ability to foster open investment and liberal financial markets. None of this is possible without mechanisms to protect the international financial system from abuse. In 2004, the U.S. Treasury Department, in an effort to address its increasing role as a central part of the security fabric, established the Office of Terrorism and Financial Intelligence (TFI). Through this office, the Treasury Department marshals its policy, enforcement, regulatory, and intelligence functions with the twin aims of safeguarding the financial system against illicit use and combating terrorist facilitators, proliferators, money launderers, drug kingpins, and other national security threats. TFI is comprised of five offices: the Office of Foreign Assets Control (OFAC), the Financial Crimes Enforcement Network (FinCEN), the Office of Terrorist Financing and Financial Crime (TFFC), the Office of Intelligence and Analysis (OIA), and the Treasury Executive Office of Asset Forfeiture (TEOAF). Treasury's creation of OIA marks the first time that a finance ministry has organized an internal intelligence analysis office that brings the knowledge of the intelligence community to bear on the financial aspects of national security threats. Through its unique position, OIA supports elements across Treasury and the U.S. Government, including the Office of Terrorist Financing and Financial Crimes (TFFC) that I oversee. TFFC is charged with recommending and aiding in the implementation of U.S. policy to combat illicit finance both domestically and internationally. To meet our mandate, my office is divided into two parts. The Office of Strategic Policy is comprised of professionals who specialize in specific substantive areas such as regulatory matters or emerging payment systems. The other component is the Office of Global Affairs, which is comprised of policy advisors who are experts in various geographic regions and in the authorities and other assets that Treasury can bring to bear on particular vulnerabilities or threats. These advisors also serve as our representatives to FATF Style Regional Bodies (FSRBs) throughout the world and are in contact with both the public and private sectors in each country. With me today is Theo VanLingen who serves as our representative to both GAFISUD and CFATF. I encourage you to meet Theo during this conference and use him as a resource in the future when you have suggestions, questions or issues where Treasury can assist. The collective efforts of the United States Government and regional partners to identify and combat illicit finance have seen impressive results all over the world - but most relevant to this group, we have seen important successes in Latin America. For example, Gilberto and Miguel Rodríguez Orejuela recently plead guilty and were sentenced to 30 years in prison and ordered to forfeit $2.1 billion in assets from their once-powerful narcotics empire. These Colombian drug kingpins revolutionized the global cocaine trade and worked to launder their financial proceeds. At one time, they controlled an estimated 80 percent of Colombian cocaine exports to the United States. Through sustained cooperation among the Department of Justice, including the Drug Enforcement Agency, OFAC, and their Colombian counterparts, this network has been dismantled. Financial measures played a significant complementary role with criminal prosecutions to achieve this victory. This action is a clear example of the effectiveness of financial tools to combat security threats as well as the benefits that result from strong regional cooperation. The development of robust anti-money laundering and counter-terrorist financing (AML/CFT) regimes ultimately requires collaboration not only across regions, but also across the public and private sectors. Government-to-government engagement on illicit financing has been a central pillar of Treasury's policy for many years. That ongoing conversation has been beneficial and has set the stage for increased coordination in our public sectors. However, it is our private sectors that serve on the front lines, protecting in the first instance our financial systems from the threats we face. This conference is a testament to your critical role in the fight against money laundering and other illicit financial threats. Our financial sectors must work together to make our respective efforts as effective as possible. Recognizing the importance of this government/private partnership, the Treasury Department has engaged in a number of efforts to provide outreach to the private sector. Some of these efforts are formal, like the Bank Secrecy Act Advisory Group (BSAAG) chaired by FinCEN, which brings together regulators, law enforcement officials and private sector representatives to discuss issues related to the administration of the BSA. We also participate in informal outreach, like speaking at events such as this one, where Treasury representatives from OFAC, FinCEN, and other offices can exchange views and get feedback from practitioners in the field. In fact, we recently launched a new effort to conduct a series of International Private Sector Outreach (IPSO) initiatives. I am pleased to announce that the first U.S.-Latin America Private Sector Dialogue (US-LA PSD) is scheduled for April 18-20 in Cartagena, Colombia. This event will bring together members of the U.S. and Latin American financial sectors to discuss unique issues related to sound implementation of AML/CFT measures. The goal of the inaugural US-LA PSD is to encourage direct dialogue between the financial sectors in the United States and Latin America in order to: o raise awareness of money laundering risks and terrorist financing; o facilitate a better understanding of effective practices and programs to combat such risks; o strengthen implementation of effective AML/CFT controls; and o exchange information and improve understanding of business cultures and norms. Treasury last summer hosted an initial roundtable event for private sector representatives and senior U.S. regulatory officials and their counterparts from Latin America. Roundtable participants spent the day discussing private sector perspectives on AML/CFT implementation. The roundtable identified a number of issues for further work and discussion and participants agreed to cooperatively plan conferences and seminars dedicated to addressing core areas of mutual interest and concern. With the leadership and support of private sector leaders such as the Florida International Bankers Association, the American Bankers' Association, Feleban, Asobancaria Febraban, as well as government entities such as the Argentina Central Bank, we can look forward to the upcoming event in Cartagena. It should be a productive event and we invite your participation. I would like to close by saying that I look forward to visiting with you further and taking what we learn from this conference and applying it to future efforts, such as our Private Sector Dialogue initiative. Conferences like this are important as we strive to always stay one step ahead of the threat, and I would again like to thank the organizers for assembling such a diverse group of professionals from across multiple sectors. It is only through our collaborative efforts that we can create highly effective AML/CFT regimes, and all efforts that enhance our communication across these sectors help us achieve our collective goals. Thank you.