To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®. March 6, 2008 Prepared Remarks by Stuart A. Levey, Under Secretary for Terrorism and Miami − It is truly an honor for me to be asked to address this audience which includes so many current and former colleagues and personal friends. Throughout my legal career, the ABA White Collar Crime Institute has been the key annual forum for prosecutors, defense lawyers and judges to share views about cutting edge issues in the field of white collar crime. This audience is well-acquainted with how, within the Justice Department, there is a new focus on, and preventative approach to, terrorism and other national security matters. We simply cannot afford to wait for these threats to fully materialize before acting against them. Since 2000, Justice has dramatically increased its number of terrorism- and national security-related prosecutions. What you may be less familiar with is how Treasury also has a preventative role in combating key threats by targeting the financial networks of terrorists and other illicit actors. After 9/11, and particularly after a majority of Treasury's law enforcement functions were moved to the Departments of Justice and Homeland Security in 2003, it was not obvious that Treasury would have any significant national security role. But, over time, it has become clear that Treasury's continued role in protecting the safety and soundness of the international financial system is intrinsically linked to the protection of our national security. My office – which was created in 2004 – marshals the Treasury Department's policy, enforcement, regulatory, and intelligence functions to combat international terrorists, weapons of mass destruction (WMD) proliferators, rogue regimes, narcotics traffickers, money launderers, and other threats to our security. The guiding principle of the Treasury Department's approach is that these threats all have one thing in common: they rely on financial support networks. These networks are a key source of intelligence. Money trails don't lie; financial intelligence is uniquely reliable. That is why we have established at the Treasury Department a fully functioning intelligence and analysis office headed by an Assistant Secretary– the first office of its kind in any finance ministry worldwide. Our intelligence office maps illicit financial networks and helps us identify opportunities to pressure, disrupt and weaken them. As I will explain, we have learned that isolation from the global financial system can have a devastating impact on the ability of illicit actors to function. For much of the first 15 years of my legal career, I grappled with many of the issues that are the subject of this conference, first as a defense lawyer in private practice and then while working for former Deputy Attorneys General Larry Thompson and Jim Comey. Four years ago, I was given the challenge of doing something completely different – to set up this new office at the Treasury Department. Four years after its creation, I think it is fair to say that Treasury is more a part of our national security strategy than it has ever been in the past. I have learned a number of lessons doing this job and also had some new experiences that I never anticipated. I would like to share a few of those with you today. Let me start with a vivid example. In June 2005, I found myself at the airport in That stop in Targeted Measures – A Different Kind of Sanction In the course of trying to build that government and private sector coalition, we have adopted a new strategy. More and more, we are using targeted, conduct-based financial measures aimed at particular bad actors. I intentionally refer to these targeted actions as "financial measures" rather than "sanctions" because the word "sanctions" often evokes such a negative reaction. Sanctions are typically associated with traditional country sanctions, which attempt to stop trade or investment altogether in order to weaken the economy of an entire state. It is hard to persuade other governments to join such broad sanctions, and the international private sector often views them as merely political statements that are not in their interests to comply with and thus, at best, they will do only what is minimally required of them. The dynamic is very different when we employ targeted financial measures aimed at specific actors engaged in illicit conduct. Because they single out those responsible for supporting terrorism, proliferation, and other criminal activities, rather than affecting an entire country, they are more likely to be accepted by other governments that we want to join us in taking action. But the key difference is the reaction by the private sector. Rather than grudgingly complying with, or even trying to evade these measures, we have seen many members of the banking industry in particular voluntarily go above and beyond their legal requirements because they do not want to handle illicit business. This is a product of good corporate citizenship and a desire to protect their institutions' reputations. The end result is that private sector voluntary actions amplify the effectiveness of government-imposed measures. Once some in the private sector decide to cut off companies or individuals we have targeted, it becomes an even greater reputational risk for others not to follow, and so they often do. Such voluntary implementation in turn makes it even more palatable for governments to impose similar measures, thus creating a mutually-reinforcing cycle of public and private action. In the end, if we do our jobs well, especially by sharing critical information with the key governmental and private sector parties around the world, there is the potential for us to create a multilateral coalition to apply significant pressure on those who threaten our security. The tools we have developed and implemented have turned out to be some of the most useful and flexible means that we have to exert leverage against intransigent regimes and to help increase the effectiveness of our traditional diplomacy. I will talk about this more in the context of our Targeted Measures Put to Use But first let me say a few words about how this works in the context of terrorism. Our efforts to track, deter, and disrupt terrorist financing are a key component of the government's overall counterterrorism strategy. After the September 11 attacks, the President signed an Executive Order that authorized the designation of terrorists and their facilitators worldwide. When it comes to al Qaida and the Taliban, there is a corresponding UN Security Council Resolution that makes similar designations global in their application. There are other UN resolutions dealing with terrorist financing more generally, but for HAMAS, Hizballah and other terrorist organizations, there is no comparable UN list. We nevertheless have found that our unilateral designations are followed voluntarily by many banks around the world who have decided that they simply do not want to do business with these actors. The significance of these efforts is that terrorist networks and organizations require real financing to survive. The support they require goes far beyond funding attacks. They need money to pay operatives, support their families, train, travel, and bribe officials. When we restrict the flow of funds to terrorist groups or disrupt a link in their financing chain, they are forced to shift their focus from planning attacks to worrying about their financial viability. These designations can also deter other would-be financiers who want to remain part of the legitimate business world while supporting terrorism on the side. One very challenging issue is how we apply these rules to the problem of charities that are being used to support terrorist organizations. Historically, al Qaida and other terrorist groups have exploited charities, often preying on unwitting donors trying to fulfill their religious obligation of charitable giving. Indeed, most terrorist-supporting charities go to great lengths in attempting to obscure their support for violence to fool these donors who believe their contributions are being devoted to laudable causes. But, occasionally, we find one that makes no such effort. The Islamic Resistance Support Organization, or IRSO, offers one of the starkest examples of a charity openly supporting terrorism and soliciting donations from individuals intending to support terror. As you can see [donor receipts (Arabic), donor receipts (translation)], IRSO's materials present donors with options of sending funds to equip Hizballah fighters or to purchase rockets that Hizballah uses to target civilian populations. The group's leaflet is equally reprehensible. Treasury designated IRSO in August of 2006 for its role as a key Hizballah fundraising organization. While this was a unilateral Terrorists, of course, are not the only illicit actors abusing the financial system to support their dangerous activities; the targeted authorities that we employ against them have proven useful in other contexts as well. We have, for example, targeted these measures at kleptocrats and others engaging in high-level political corruption. In August 2006, the President announced a comprehensive Targeted financial measures have also given us more options in dealing with proliferators of weapons of mass destruction and intransigent regimes, such as those in The real impact has come from the information made public in conjunction with these actions. Many private financial institutions worldwide responded by terminating their business relationships not only with designated entities, but with North Korean clients altogether. They determined that the risks associated with this business far outweighed any benefit. The result has been We are currently in the midst of an effort to apply these same lessons to the very real threat posed by The world is taking note of Voluntary action by the private sector to cut off risky clients is reinforcing this multilateral governmental pressure. In the fall of 2006, Treasury Secretary Paulson launched an effort to inform the public, government partners, and private sector leaders about the danger that Let me give youan example I sometimes share to illustrate how the Iranian government will deceive and abuse banks that do business with them. An affiliate of the Atomic Energy Organization of Iran – an entity that was designated by the UN Security Council in Resolution 1737 – placed an ad in the International Herald Tribune requesting bids to build two nuclear power plants in The result of our global outreach and the formal actions of the UN and the FATF is that Our use of targeted measures is certainly not limited to what I've described here today. We have demonstrated the agility and adaptability of these measures to address other threats to international peace and security – from narcotics trafficking to abusive regimes in Partnership With DOJ It is also worth noting that these targeted measures and the work of the Justice Department and law enforcement often go hand in hand. Perhaps the best recent example is the Justice Department's September 2006 announcement that Miguel and Gilberto Rodriguez-Orejuela, the brothers who ran the infamous Cali Cartel in Colombia, had pleaded guilty to a charge of conspiracy to import cocaine into the United States and had agreed to plead guilty to conspiracy to commit money laundering by hiding the proceeds of narcotics trafficking. Treasury's Office of Foreign Assets Control and law enforcement officials had for years worked to uncover and immobilize the hidden assets of the Cali Cartel, with OFAC designating hundreds of front companies and individuals in It is clear that our national security increasingly depends on the success of these financial measures, which, in turn, depend on the vigilance of the private sector. As I have described, much of the global private sector's conduct in this regard is voluntary, with financial institutions acting even when they are not legally obliged to do so. But strong enforcement of our laws relating to money laundering and our sanctions programs also plays an important role. The Departments of the Treasury and Justice, along with our other law enforcement colleagues, work together as a team to administer and enforce these laws. Most enforcement in this area is civil, involving the banking regulators, OFAC or the Financial Crimes Enforcement Network (FinCEN). In cases of serious violations, however, criminal enforcement may be warranted. In the summer of 2005, the Department of Justice amended the United States Attorneys' Manual to require that all money laundering prosecutions of financial institutions be coordinated with, and approved by, the Criminal Division in The continued consultation between Justice and Treasury is vitally important given the complexities surrounding potential criminal charges against banks and other financial institutions, including the potential impact of such cases on the Conclusion When I was at the Justice Department in 2004 and the idea was floated to create this new office at Treasury, there were many skeptics who questioned whether Treasury still had an important national security function after the creation of the Department of Homeland Security. I know this for a fact because I was one of them. I now know I was wrong – Treasury has a critical national security role to play. I am confident it will continue to do so not only in this Administration but in future ones as well.
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