FROM THE OFFICE OF PUBLIC AFFAIRS

Mr. Chairman, Senator Kohl, and Members of the Committee, itis a pleasure for me to be here before you today to highlight theFY 1998 budget request for Treasury’s law enforcementbureaus and offices (with the exception of the Internal RevenueService, Criminal Investigation Division (IRS-CID)). With metoday are George J. Weise, Commissioner of the U.S. CustomsService; John Magaw, Director of theBureau of Alcohol, Tobacco and Firearms; Eljay Bowron, Directorof the U.S. Secret Service; Charles Rinkevich, Director ofthe Federal Law Enforcement Training Center (FLETC); and StanleyMorris, Director of the Financial Crimes Enforcement Network(FinCEN), and members of their staffs.

The Treasury Department represents approximately 40 percent ofthe total law enforcement officers of the Federal Government.Each year, Treasury’s mission grows in complexity, scope andimportance. Treasury Enforcement plays a critical role in servingthe nation’s law enforcement priorities. Treasury agenciesprotect our leaders and safeguard our financial institutions frommoney launderers and fraud. Treasury agents and inspectorsprotect our borders from drug traffickers and every day ouragents fight to protect our streets from the threat of bombs,arson and gun violence.

In my testimony today, I wish to highlight aspects of our workand how that work would be supported by the FY 1998 budgetrequest.

U.S. Customs Service
The Customs Service plays the leading role for theTreasury Department and the United States in interdicting drugsand other contraband at the border, and ensuring that all goodsand persons entering and exiting the United States do so incompliance with all our laws and regulations. Most of thenarcotics seized in the United States each year are seized by theCustoms Service.

Customs’ responsibility is tremendous. To put the druginterdiction challenge faced by Customs into perspective: Lastyear, Customs processed over 457 million people, 126 millionvehicles and nearly $800 billion of trade. It performed theinitial checks, processes, and enforcement functions for over 40federal agencies and applied hundreds of laws and regulations. Itperformed these tasks by covering over 7,000 miles of land borderand servicing over 300 ports of entry. While doing so, itcollected approximately $22 billion in revenue for the UnitedStates in the form of duties, taxes, and fees.

Customs constantly strives to improve its ability to stem theflow of drugs while dealing with the increasing volumes of cargoand passengers into and out of the United States. Indeed, thenumber one operational priority for the Customs Service ispreventing the smuggling of narcotics into the United States. Itpursues this mission through interdiction, intelligence andinvestigation capabilities that disrupt and dismantle smugglingorganizations. Major initiatives, such as Operation Hard Line atthe Southwest border and Operation Gateway in the Caribbean, havebeen extremely effective in denying smugglers access to theUnited States.

However, as you are aware, the job is not finished; althoughCustoms seizes more illegal narcotics than all other agenciescombined, illegal narcotics and other contraband continue to findtheir way into the United States. Customs will continue todevelop the capabilities to meet the ongoing smuggling threats,on our southwest land borders, in the Caribbean, and at allborders and ports of entry across the country. Customs activelyparticipates in inter-agency criminal investigations, and it willcontinue to strengthen its partnerships with the private sector,cooperative foreign governments and other federal agencies inorder to continue its active role in the efforts againstnarcotics smuggling.

Customs’ budget proposal reflects increases for OperationHardline, Operation Gateway, updated technology and therebuilding of infrastructure. The $23.4 million requested forOperations Hardline and Gateway, along with the funding requestfor infrastructure and equipment needs, will permit Customs tocontinue its fight to prevent illegal drugs from being broughtinto the United States.

Secret Service
The Secret Service is the nation’s lead agencyin investigating counterfeiting, forgery, and access devicefraud. As the nation’s counterfeitingexpert, the Secret Service has investigated fictitious financialinstruments, counterfeit currency and credit card schemes bothdomestically and internationally. United States currency iscounterfeited around the globe. Indeed, approximately 70% of allcounterfeit currency detected domestically is of foreign origin.Therefore, it is only prudent that the Secret Service devotes alarge portion of its investigative resources to battlinginternational counterfeiting issues.

The Secret Service has learned throughexperience that the best method to manage this problem is toaddress counterfeit issues at their source, with the permanentstationing of Secret Service agents in foreign posts. Inaddition, the Secret Service leverages its resources by enlistinginternational law enforcement agencies to identify counterfeitcurrency and suppress counterfeiting plates. These efforts,primarily carried out through counterfeit detection seminars,have promoted a cooperative international law enforcement effortto detect, suppress and prosecute counterfeit violations

Moreover, to prevent financial fraudschemes, the Secret Service has developed and implementedlongstanding and effective partnerships with private industry tobetter understand various financial systems and combatsignificant losses. Assisting the industry and their financialsystems with "systemic fixes," aggressive analysis, andproactive security enhancement measures has increased the overallsecurity of these financial systems. Proactive joint initiativeswith the industry, such as public awareness campaigns, mediaprograms, speeches, seminars, and security training, are having apositive impact. These partnerships have reduced the ability ofcriminal organizations to target financial institutions.

As you know, the Secret Service also has the criticalresponsibility of protecting the President, Vice President, andother specially designated protectees. Its protective dutiesrecently included the 50th Anniversary of the United Nations, theOlympics in Atlanta, and the presidential election campaign. Included inthe Secret Service’s FY 1998budget is a request for $28.8 million to implement securitychanges at the White House which are being made in accordancewith recommendations made in the White House Security Review.This funding, along with the additional funding provided thisfiscal year, will enable the Secret Service to implement all ofthe Review’s recommendations. The funding providesfor staffing to cover an enlarged security perimeter, as well asfor the construction of additional crash resistant barriers andguard booths needed to define this perimeter.

ATF
ATF is responsible for investigating some of themost destructive, dangerous, and controversial crimes in theUnited States - bombings of abortion clinics, arson of churches,firearms trafficking, and firearms and explosives violations. Inan effort to reduce violent crime, ATF focuses its investigativeefforts on armed violent criminals, career criminals, armednarcotics traffickers, violent gangs, and domestic andinternational arms traffickers. It strives to deny criminalsaccess to firearms, safeguard the public from bombings and arson,and imprison violent criminals.

ATF has developed and implemented a number of innovativeprograms to achieve these goals. ATF’s Project LEAD,introduced in 1996, uses information obtained from tracing crimeguns to identify and prosecute illegal firearms traffickers. Previously, a gun would be recovered inconnection with a crime and, except for the investigation of theunderlying crime, it would not be analyzed or traced further bylaw enforcement authorities. ATF has stepped up its efforts withother law enforcement agencies to learn more about crime guns.Using advanced computer software, ATF analyses informationobtained during the tracing of crime guns to determine patternsof multiple purchases by one individual or from one store. WhenATF uncovers a situation where multiple guns used in crimes allemanated from one source, they are able to investigate andprosecute, thereby eliminating a source of illegal guns. Forexample, when a New York City police officer was recently killed,four handguns were recovered at the scene. Tracing these handgunsthrough Project LEAD has resulted in several investigations ofsizable drug and gun trafficking rings across the country.

To further reduce the trafficking of firearms to juveniles,last summer ATF initiated the Youth Crime Gun InterdictionInitiative (YCGII) in 17 pilot cities throughout the country. TheYCGII will help identify the sources of firearms being suppliedto juveniles and to prosecute the traffickers responsible forproviding these guns.

In response to the growing needfor Federal assistance in communities experiencing serious gangand drug-related shooting incidents, ATF initiated acomprehensive enforcement approach entitled CEASEFIRE. TheCEASEFIRE Program combines ATF’s gun tracing, guntrafficking, and violent offender initiatives with the latestforensic technology. The Integrated Ballistic IdentificationSystem (IBIS) is the heart of the CEASEFIRE Program. IBIS is acomputer imaging identification system capable of matchingcartridges or bullets from multiple shooting incidents. It alsoallows investigators to link shootings that occur locally toshootings involving the same weapon in another city. Given thenumber of shooting incidents that occur in the United States eachyear, a firearms examiners unassisted by technology working toconnect related shooting incidents is in effect trying to findthe proverbial needle in the haystack. Now, with IBIS, what usedto take weeks and sometimes months, if it could be done at all,now can be done in seconds. The IBIS technology has alreadyyielded significant results in violence-plagued communitiesacross the country, and will continue to contribute significantlyto the identification of homicide and shooting suspects and thelinking of related gang shootings. For example, when agang-related shooting occurred in Atlanta, GA, in September 1996,no suspect was identified and no one was arrested. However .40caliber shell casings were recovered at the scene and wereentered into IBIS. Two weeks later, an individual was arrested onunrelated narcotics charges. The gun found in his possession wastest fired, entered into IBIS, and found to match the gun used inthe earlier attempted murder. But for the use of IBIS, these twoseemingly unrelated cases would likely never have been linked.Based on the results achieved with IBIS to date, we estimate that1 firearms examiner equipped with IBIS can do the work of 550firearms examiners without IBIS. This results in substantial costsavings, greater efficiency and more crimes solved..

ATF is also renowned for itsexpertise in the areas of arson and explosives. Through itscertified fire investigators, National and International ResponseTeams, accelerant and explosives detection canine program, itsaccredited laboratory, its forthcoming arson and explosivesrepository, and numerous other programs, ATF maintains its roleas the leader and innovator in these areas. Its expert work onthe National Church Arson Task Force has helped produce a 33%clearance rate for the arsons under investigation, a rate that ismore than twice the average rate for arson crimes in general. ATFassists State and local authorities with arson investigationsfalling under Federal jurisdiction and having a significantimpact on their community, particularly when the nature or extentof the problem extends beyond the available resources orexpertise of the locale involved.

ATF also provides training toother Federal, State, and local enforcement agencies in thedetection and investigation of arson, particularlyarson-for-profit, and post-blast bombing investigation.

In addition to all of itsinvestigative efforts, ATF is working to prevent violent crimeand drug use through its Gang Resistance Education and Training(G.R.E.A.T.) project. G.R.E.A.T. is a program by which uniformedlaw enforcement officers help elementary and middle schoolchildren reject gangs and the drugs they peddle. ATF administersthe program in partnership with the Phoenix Police Department,the National Sheriffs’ Association, the InternationalAssociation of Chiefs of Police, and the Federal Law EnforcementTraining Center (FLETC), and provides the training to lawenforcement officers to become certified G.R.E.A.T. instructors.Currently, over 800 different localities are teaching theG.R.E.A.T. curriculum in classrooms around the country.

To continue its vital workcombating firearms violations, arson, explosives and violentcrime, ATF’s budget request for FY 1998 represents a modest3% increase over its FY 1997 base funding.

FLETC
One of the reasons thatTreasury law enforcement is so successful is the quality oftraining that its agents and inspectors receive at the Federal LawEnforcement Training Center(FLETC). Since its establishment by a memorandum of understandingin 1970, FLETC has built a reputation for providing high quality,cost effective law enforcement training. As you know, there aremany advantages to consolidated training for Federal lawenforcement personnel, not the least of which is an enormous costsavings to the Government. 70 agencies in 200 differenttraining programs now train at the Center. Additionally, FLETC has been involved inproviding law enforcement training overseas for over 20 years andhas trained more than 5,000 foreign law enforcement officialsfrom more than 102 different countries. We expect this growthto continue as moreagencies recognize the many benefits of consolidated training.

Let me just mention a few of themany valuable training programs provided by FLETC: One ofFLETC’s particularly valuable tools is its Financial FraudInstitute (FFI). The FFI provides the skills that criminalinvestigators need to combat the ever increasing sophisticationof money laundering, financial crime, and computer crime.

FLETC is increasingly utilizingcomputers to provide instruction, thereby both providing state ofthe art training and maximizing the use of its facilities. It isalso working with the U.S. Army Simulation Training andInstrumentation Command (STRICOM) to develop a joint technologytransfer proposal, the centerpiece of which will be theFLETC’s prototype multimedia computer based training module.This module will help prepare law enforcement officers to makesplit-second decisions in life or death situations. The expandeduse of this computer based instruction will permit delivery ofconsistent and accurate information and training, as well asmeasurement and documentation of student performance. .

The FLETC’s budget request for FY1998 is $100,832,000. This represents a 30% increase (of which25% relates to master plan construction projects) over FY 1997that results from the tremendous growth in FLETC’s workload.Among the chief factors that have contributed to thisunprecedented increase in workload is the recent CongressionalandAdministrative initiative to control immigration along ourborders, the addition of new Federal prisons, and enhancements tosecurity now being required at Federal buildings around thecountry. Since early 1996,FLETC has been operating at full capacity and we expect that thisworkload will continue through FY 1999. To accommodate thisincreasing demand, FLETC has been utilizing temporary buildingsand contracted or licensed facilities. In addition, some BorderPatrol training is occurring at a temporary facility inCharleston, S.C.

To permit FLETC to train the lawenforcement agents in the skills needed for the future, it hasbeen implementing its master plan for facilities. This plan wasfirst introduced in 1989 and when fully implemented will permitFLETC to achieve its goal of further developing, operating, andmaintaining state-of-the-art facilities and systems responsive tointeragency training needs. Indeed,a major portion of FLETC’s FY 1998 request -- $18.6 million-- is the continued implementation of the facilities master planfor new construction at FLETC’s two centers in Glynco andArtesia. As FLETC’s capacity increases, the need for atemporary site at Charleston, SC, now being used for overflow USBorder Patrol training, can be phased out as soon as possible.

FinCEN
While Customs, SecretService and IRS-CID are thefinancial crime investigators, FinCEN serves as Treasury’sprincipal support arm for such investigative efforts. As its namestates, FinCEN is a network, a link between the law enforcement,financial, and regulatory communities. It brings togethergovernment agencies and the private sector, in this country andaround the world, to identify ways to prevent and detectfinancial crime, particularly money laundering.

In the complex world of moneylaundering, innovation is the key to keeping money launderers incheck. This innovative approach was recently demonstrated byTreasury and FinCEN with the use of a Geographic TargetingOrder--or GTO-- in the New York City area. This order, whichsupports an anti-money laundering operation of the U.S. CustomsService, IRS, New York City Police and others, has caused adramatic reduction in the amount of illicit funds moving throughNew York money transmitters by requiring 22 licensed transmittersof funds to report information about the senders and recipientsof all cash purchased transmissions to Colombia of $750 or more.

As a result of the GTO, the targetedmoney transmitters’ overall business volume to Colombia hasdropped by approximately 30 percent. With this mode of movingmoney to Colombia restricted, the criminals have had to findother means of moving their money, including bulk smuggling. As aresult, their transfers have become easier for law enforcement todetect and seize. Indeed, since the GTO went into effect inAugust 1996, Customs and the other participating law enforcementagencies have seized over $50 million, which is approximatelyfour times higher than the amount seized during comparableperiods in previous years.

FinCEN’s FY 1998 budget request of181 FTEs and $23,006,000 will support the GTO and otherinnovative techniques to combat money laundering and financialcrimes, using both regulatory and enforcement tools. In addition,under FinCEN’s appropriation, we are proposing that twoone-time initiatives be funded from the Violent Crime ReductionTrust Fund: $1 million dollars for a Secure CommunicationsOutreach Program and $2 million dollars and four FTE in supportof the President’s efforts to encourage money launderingcountries to institute internationally accepted anti-moneylaundering standards.

IRS-CID
Although IRS-CID is nota part of this appropriations hearing, I want to say a few wordsabout their important contribution to Treasury’s lawenforcement efforts. Fighting financial crime is a job wellsuited for the special agents of the IRS-CID. They are known fortheir ability to "follow the money trail" and stop thecriminal when no one else can. IRS-CID agents are financialexperts in combating money laundering and tax evasion. Theirexpertise is sought in investigations of all types of financialcrimes, including health care fraud, pension fraud, insurancefraud, bankruptcy fraud, telemarketing fraud, gaming, narcotics,and public corruption.

Today, IRS-CID is combating theincreased use of computers for committing financial crimes withits latest weapon... a new type of special agent known as theComputer Investigative Specialist (CIS). Through IRS-CID’snational Computer Investigative Specialist Program, the CIScontinuously receives training in cutting edge investigationautomation and evidence seizure and data recovery methods.Combining its unique financial expertise with advanced computerskills permits IRS-CID to optimize its ability to investigate andsolve computer based and computer related financial crimes.

Conclusion
In summary, theTreasury Department is proud of the contributions that its lawenforcement bureaus have made and continue to make to thisnation. Treasury law enforcement will continue to make us proudas it enters into the 21st century by contributing to the goalsof establishing leadership in the global economy, expandingtrade, protecting our borders, fighting crime, and preserving thehealth and safety of the American people. This budget requestwould enable Treasury’s law enforcement bureaus to meet thecurrent challenges and to begin preparations for the challengesof the 2lst century. I am confident you will find this to be aresponsible budget, as it considers the growing demands of thelaw enforcement in a constrained budget environment.

With your permission Mr.Chairman, I would like to ask the Directors of the Treasury lawenforcement bureaus to describe in more detail those strategiesand goals we see as playing a key role in the coming fiscal year,as well as our recent accomplishments. After which we would bepleased to answer any questions you or members of this Committeemay have.

Thank You.