FROM THE OFFICE OF PUBLIC AFFAIRS

Thank you for that gracious introduction. As a former federal prosecutor I am especially pleased to be here with you today to commemorate OCDETF’s Twentieth Anniversary. During my years as an Assistant United States Attorney, and Deputy Chief of the Major Narcotics Unit in Los Angeles, I worked with the task force on a number of different cases. I was impressed with the expertise and professionalism that was the hallmark of OCDETF prosecutors and agents. You are all to be commended for the important role you play in combating the scourge of illicit drug trafficking.

When I was sworn in as Treasury Under Secretary for Enforcement last August, I pledged to make anti-money laundering enforcement one of my primary goals. I am here today to tell you that it has become the top priority of Treasury Enforcement for one critical reason. Attacking the financial structures of criminal organizations – their lifeblood – is one of the best ways to dismantle sophisticated criminal enterprises. The reasoning is straightforward and well known to the crowd assembled here today. If you want to hit criminal organizations where it hurts, go after the money. These complex criminal organizations exist for one purpose and one purpose only: to make a profit.

If our law enforcement agents arrest a drug mule carrying narcotics across the border, while it certainly cannot be ignored, it doesn’t make a permanent impact on the criminal organization. The drug gang will simply go down the block and find another willing participant to take his place. This goes for leaders of the drug cartel. When a drug cartel leader is arrested, prosecuted, and convicted, the victory is short-lived for there is always someone ready and anxious to step forward and fill the void. In short, the members of the drug cartel are easily replaceable.

However, if you penetrate the financial underpinnings of a criminal organization the impact can be profound. Simply stated, the members of the drug cartel cannot easily replace the corrupt accountant or bank official with knowledge of the global banking systems who is able to quickly disguise and move funds through a labyrinth of foreign bank accounts.

My goal at the Treasury Department has been to implement a new philosophy with respect to financial crimes. A philosophy that recognizes that shutting down the money flow means shutting down the entire criminal enterprise.

I am pleased to tell you that our efforts thus far to refocus our priorities are making a difference. In 2001, law enforcement agents of the Departments of Treasury and Justice seized over $1 billion in criminal funds – about 38% of which was related to money laundering investigations. The Departments forfeited over $241 million in criminal assets in FY 2001 relating to money laundering. In addition, several major money-laundering operations have been dismantled through efforts such as Operation Wire Cutter and Operation Oasis. Between October 2001 and February 2002, members of Treasury’s Operation Green Quest made over 200 bulk cash seizures totaling over $10 million dollars. In addition, the Treasury Department has established six "super" financial crime task forces (HIFCAs). These task forces have initiated over 100 new money-laundering investigations during 2001 alone.

On the terrorist financing front, we have blocked the assets of 211 terrorist entities and individuals. $34.3 million has been blocked domestically and $77.9 million have been blocked by our allies abroad. A total of over $112 million that is not going to support terrorist training camps and to purchase weapons of death.

But we can and must do even better. With that in mind, I would like to summarize some of the key points of the 2002 National Money Laundering Strategy.

The 2002 Strategy recognizes that our anti-money laundering efforts are making more difficult for terrorist and terrorism sympathizers to move money through traditional financial institutions. Thus terrorists are resorting to alternative means to transfer money globally. The 2002 Strategy is responsive to this challenge by emphasizing blocking the assets of "high impact" targets such as corrupt charities that in the name of humanity raise money to support terrorism. The Strategy also focuses on dismantling hawalas and other alternative remittance systems.

The Strategy further addresses the importance of interagency coordination and making joint decisions about what money laundering organizations to target. To address this concern, the Departments of the Treasury and Justice will co-lead an interagency effort to identify "high-impact" money laundering-related targets. An interagency targeting team will focus our efforts and resources against the most significant money laundering organizations and systems, such as bulk cash smugglers and terrorist groups. In addition the Strategy calls for more jail time for the money-laundering masterminds.

Information is a critical weapon in the war against terrorist financing. The new information-sharing provisions of the USA PATRIOT Act afford financial institutions greater flexibility in evaluating potential risks.

Highlights of our major accomplishments over the past nine months include:

• Requiring securities brokers-dealers to file suspicious activity reports.

• Requiring Banks to verify the identity of customers seeking to open new bank accounts. Such names will also be compared against government "watch lists."

• Requiring a broad range of financial institutions to develop anti-money laundering programs.

• Prohibiting banks from doing business with "shell" banks.

The 2002 Strategy is a groundbreaking document. For the first time, it provides baseline facts and figures that can help determine how well the federal government is succeeding in its efforts to detect and deter money laundering.

For example, the 2002 Strategy publishes data collected by the U.S. Sentencing Commission in Fiscal Year 2000. The data tracks defendants sentenced in federal court where money laundering was the principal offense. Although the Sentencing Commission data is incomplete by itself, analysis of this data is instructive and provides a starting point for meaningful baselines and metrics. For example:

• We now know that over 80% of all money launderers that were sentenced did not receive a enhanced sentence for their leadership role in the offense.

• We now know that almost 80% of those sentenced laundered less than $1 million.

• We know that some districts, even densely populated districts, prosecuted a limited number of money laundering cases.

• We know that the median sentence imposed was 38 months.

These statistics show that we can improve our ability to focus on major money laundering prosecutions and target large-scale organizations.

Of course, it is not enough merely to pledge to do better. We must have ways to meaningfully evaluate our efforts. We are also seeking to develop new baselines within the Strategy by measuring our investment in money laundering enforcement and developing a uniform reporting system. These efforts will take time, and, if done right, should show some real results.

For instance by tracking the commission rate charged in money laundering transactions, we will be able to ascertain if our efforts are making a difference over a period of years.

Thank you again for the invitation to be with you here today. As you can tell I am encouraged by the progress we have made thus far with respect to money-laundering investigations. I thank you all in advance for your continued dedication to these important issues in the coming months and years.