Providing timely, accurate, and focused intelligence on the full range of economic, political, and security issues.

OIA also began producing analytic papers for Under Secretary Levey, primarily on Non Governmental Organizations (NGOs), which may be providing support to terrorists. Under Secretary Levey has passed a number of these papers to the foreign governments where these NGOs are based, asking them to take appropriate action. He has then followed up to ensure that the governments are taking the necessary steps to put a halt to this activity.

Articles for senior administration officials, such as the Senior Executive Intelligence Brief.

Law Enforcement: The FBI has detailed an intelligence analyst to OIA.

Intelligence: A representative from NSA is assigned to OIA to provide support to senior Treasury officials.

Insurgency Financing: OIA will attempt to improve its understanding of the insurgency financing in FY 2006, primarily through the Baghdad-based Iraq Threat Finance Cell (ITFC) for which Treasury serves as the co-lead with Department of Defense. ITFC was established to enhance the collection, analysis and dissemination of intelligence to combat the Iraqi insurgency. Such intelligence is critical to support and strengthen U.S., Iraqi and Coalition efforts to disrupt and eliminate financial and other material support to the insurgency.

In fact, the Treasury presence in Iraq on the ITFC is already paying dividends. More and better detailed information on the insurgency finance issues is becoming available. In addition, the financial intelligence analysts have provided great support to the military in identifying trends and patterns in insurgency financing in the context of a cash-based economy.

Rogue Regimes/Proliferation Financing: Over the past year, OIA has assumed an increasingly important role in Treasury's effort to combat national security threats, including rogues regimes involved in WMD proliferation, such as Iran, Syria, and North Korea. In FY 2006, OIA is continuing to build on its nascent effort in this critical area.



	April 6, 2006 JS-4164 Testimony of Janice Gardner, Assistant Secretary Office of Intelligence and Analysis U.S. Department of the Treasury Senate Appropriations Subcommittee on Transportation, Treasury, the Judiciary, Housing and Urban Development, and Related Agencies Introduction Chairman Bond, Ranking Member Murray, and Members of the subcommittee, I thank you for the opportunity to testify today on the Office of Intelligence and Analysis' 2007 budget request. The Department of the Treasury greatly appreciates the Committee's support to this point for our efforts to establish and build the Office of Intelligence and Analysis (OIA). I request that a copy of OIA's report on its Fiscal Year (FY) 2006-2008 strategic direction be entered into the record. We produced this report for your committee in response to the conference report accompanying the FY 2006 appropriations bill. OIA was required to submit a report that detailed "how OIA will implement the purpose of the Office as intended by the Congress." OIA's report defines its mission, establishes strategic objectives, and outlines OIA's priorities and direction for the next several years. In addition, it describes the role that OIA will play in the Treasury Department's intelligence activities, and expands on OIA's plans to better integrate the office into the Intelligence Community (IC). We hope that the Committee members will find the report to be helpful as they consider OIA's 2007 budget request. I will discuss a number of the themes covered in the OIA report in my prepared remarks today. I will provide some background on our office, provide an overview of the significant progress we made in FY 2005, update you on where we stand with our FY 2006 efforts, and explain how we would plan to use the funds we have requested in FY 2007. Background on OIA OIA was established by the Intelligence Authorization Act for FY 2004. The Act specifies that OIA shall be responsible for the receipt, analysis, collation, and dissemination of foreign intelligence and foreign counterintelligence information related to the operation and responsibilities of the Department of the Treasury. Prior to the creation of OIA, Treasury did not have an in-house intelligence analytic element. On April 28, 2004, Secretary of the Treasury John Snow established the Office of Terrorism and Financial Intelligence (TFI) by Treasury Order, which placed OIA within TFI. As the Assistant Secretary, I report directly to Under Secretary Levey, who heads TFI. OIA's mission is to support the formulation of policy and execution of Treasury authorities by: Producing expert analysis of intelligence on financial and other support networks for terrorist groups, proliferators, and other key national security threats, and Providing timely, accurate, and focused intelligence on the full range of economic, political, and security issues. Significant Progress in FY 2005 While OIA is still a fairly new entity, it took a number of significant steps in 2005 towards building the robust intelligence and analytic program necessary to fulfill its critical mission. Moving the OFAC Foreign Terrorist Division (FTD) analysts to OIA was instrumental in transforming Treasury from a passive consumer of analytic and intelligence products to a full contributing member of the IC. OIA has been using the expertise of these analysts - as well as that of the new hires - as a foundation for a true center of expertise on material support to terrorist organizations. As a result, OIA has considerably improved its analytic coverage and capability in priority areas, such as Iraqi insurgency funding. OIA's top priority, as we mentioned in our report to your committee, is to help translate intelligence into policy. OIA analysts conduct "all source" analysis, regularly reviewing a broad range of information from the IC, including human and signals intelligence reports, other agencies' analytic assessments, as well as open source information. OIA's role in this regard is to then ensure that the current intelligence information and analysis are incorporated into all aspects of policy deliberations. OIA took several steps in 2005 to address this objective. Perhaps most significantly, OIA initiated weekly targeting sessions, which are led by Under Secretary Levey and include officials from OIA, OFAC, and FinCEN as well. At these sessions, potential targets are presented and discussed. The participants assess the full range of potential Treasury actions, including designation, and then assign follow up action. OIA also began producing analytic papers for Under Secretary Levey, primarily on Non Governmental Organizations (NGOs), which may be providing support to terrorists. Under Secretary Levey has passed a number of these papers to the foreign governments where these NGOs are based, asking them to take appropriate action. He has then followed up to ensure that the governments are taking the necessary steps to put a halt to this activity. In addition to these diplomatic papers, in 2005 Treasury's intelligence office prepared a number of other all source intelligence analytic products on terrorist financing and other national security threats. In fact, OIA has disseminated over 50 cables to the IC over the past year. OIA analysts also participated in the drafting and coordination on a variety of IC analytic products. These include: National Intelligence Estimates CIA studies Articles for senior administration officials, such as the Senior Executive Intelligence Brief. There were two key reasons why OIA was able to improve its capability to produce all source intelligence analytic products. First, Treasury - through OIA - is becoming far better integrated into the IC than it has been in the past. In 2005, OIA hired its first full time Requirements Officer, who has played a key role in bringing OIA into the IC. This officer is sending in specific questions and inquiries on behalf of all Treasury entities, including OFAC, to the IC. In these "requirements submissions" Treasury includes comprehensive background information as well as a detailed statement of Treasury's intelligence gaps to help focus the IC on Treasury's needs. In response to these detailed requirements, Treasury has received a greatly increased level of tailored support from the IC. Second, OIA has also built its analytic expertise and improved its access to intelligence information by establishing detail arrangements with various intelligence, law enforcement and military agencies. These detail assignments include: Military: OIA has analysts detailed to 3 of the military commands-CENTCOM, PACOM, and EUCOM-and a military officer from CENTCOM is assigned to OIA. OIA also has an established liaison relationship with SOUTCOM. SOCOM is also preparing to assign an officer to OIA. Law Enforcement: The FBI has detailed an intelligence analyst to OIA. Intelligence: A representative from NSA is assigned to OIA to provide support to senior Treasury officials. In 2005, OIA also began to build its analytic expertise and coverage in another key area - proliferation financing. The Treasury Department's ability to target proliferators of weapons of mass destruction (WMD) was enhanced in June, 2005 with the issuance of Executive Order 13382. This order applies the same tools Treasury has used to successfully block the assets of terrorist supporters to those who aid in the spread of WMD. OIA analysts were integrally involved in supporting OFAC in developing the designation targets listed in the annex of the Executive Order, and continue to assist OFAC investigators in identifying intelligence reporting that may be useful to support future designations. Building Analytic Coverage and Depth in FY 2006 The funding allocated by the Congress for FY 2006 is allowing OIA to make significant additional improvements in a number of areas this year. For example, the additional personnel and the infrastructure improvements funded in FY 2006 are enabling OIA to increase its analytic coverage and to further develop its expertise on the financial aspects of key threats to U.S. national security, including terrorism and WMD proliferation. In FY 2006, OIA analysts will be completing strategic research papers on high priority terrorist and proliferation financing topics. OIA has completed a research and production plan for FY 2006 to help guide OIA's activities during the upcoming year. The plan was coordinated with OIA's primary customers, including TFFC, OFAC, and FinCEN, and is consistent with IC, NSC, and Treasury priorities. Terrorist Financing: Over the past several years, the terrorist threat has become far more decentralized in nature, and many terrorist groups affiliated with al Qaida increasingly pose a serious threat to U.S. national security. In FY 2006, OIA will continue to develop its analytic expertise and expand its analytic coverage on the financial and other support networks of the various terrorist groups and networks bent on attacking the U.S. and its allies. Insurgency Financing: OIA will attempt to improve its understanding of the insurgency financing in FY 2006, primarily through the Baghdad-based Iraq Threat Finance Cell (ITFC) for which Treasury serves as the co-lead with Department of Defense. ITFC was established to enhance the collection, analysis and dissemination of intelligence to combat the Iraqi insurgency. Such intelligence is critical to support and strengthen U.S., Iraqi and Coalition efforts to disrupt and eliminate financial and other material support to the insurgency. In fact, the Treasury presence in Iraq on the ITFC is already paying dividends. More and better detailed information on the insurgency finance issues is becoming available. In addition, the financial intelligence analysts have provided great support to the military in identifying trends and patterns in insurgency financing in the context of a cash-based economy. Rogue Regimes/Proliferation Financing: Over the past year, OIA has assumed an increasingly important role in Treasury's effort to combat national security threats, including rogues regimes involved in WMD proliferation, such as Iran, Syria, and North Korea. In FY 2006, OIA is continuing to build on its nascent effort in this critical area. To accommodate its rapid growth, and to achieve the ambitious goals that have been laid out for OIA, we have developed a hiring strategy to ensure that we are recruiting a high quality work force with the appropriate skill mix. OIA has been taking advantage of a number of different recruiting fora and using a variety of federal recruiting programs, such as the Presidential Management Fellows Program. In terms of our analytic hires, OIA is hiring all source analysts with a variety of experience, ranging from junior analysts directly out of graduate school to senior analysts with years of relevant experience. OIA is also targeting analysts with prior IC and financial sector experience, as well as relevant regional/area expertise. OIA is also targeting economists in its FY 2006 hiring efforts. The Treasury Department has made significant strides over the past several years designating terrorism - and more recently proliferation - targets. Developing a better assessment of the economic impact of the sanctions is essential in determining whether Treasury is focusing on the appropriate types of targets. This kind of analysis is extremely valuable not only for Treasury policymakers, but for policymakers elsewhere in the government as well. It can help shed light on what policy tools the U.S. Government should use - and are likely to be effective - against particular countries or targets. In sum, we believe that we are on track to succeed with our rapid expansion, and that we will make - and are already making - major strides in FY 2006 to continue transforming OIA into a center of analytic expertise on the issue of financial and other support networks for terrorist, proliferators, and other key national security threats. FY 2007 Budget Request The funding request for FY 2007 would enable OIA to continue its efforts to build Treasury's intelligence capabilities by improving its key infrastructure and adding to its analytic breadth and expertise. Our key initiatives in our FY 2007 request include: TFIN: The modernization of Treasury's Foreign Intelligence Network (TFIN), the sole information technology system in the Department authorized for Top Secret information. With the creation of Treasury's Office of Terrorism and Financial Intelligence (TFI) and OIA, the Department's counterterrorism-related responsibilities were expanded dramatically. A new information technology architecture was required to support this broader, Congressionally-mandated mission. The current system is unstable and has not been modified or upgraded to keep pace with the changes in intelligence, user, or technological requirements. The operating system is no longer supported and the entire system is at risk of catastrophic failure. The frequent system crashes have been preventing senior Treasury officials from receiving intelligence reporting from other agencies in a timely manner. In addition, the system's performance issues have been hampering the ability of Treasury's intelligence analysts to perform their jobs. Ultimately, the upgraded TFIN system will allow Treasury to interact seamlessly within the IC and provide Treasury analysts with the common software tools used throughout the Community. It will allow timely and efficient collaboration with other intelligence analysts in the IC, other government departments/agencies, and the Department of Defense. ITFC: Our request will allow Treasury to sustain its co-lead role in the Baghdad-based ITFC. Two Treasury officers have already been assigned temporarily to Iraq, where they conducted the initial assessment or "Phase I." "Phase II," which calls for the assignment of Treasury personnel to Iraq on an ongoing basis to bolster the all-source intelligence analysis on the insurgency, is now in progress. Improving the U.S. Government's understanding of the insurgency funding is a key goal for our office, and I as mentioned earlier, this interagency initiative is already paying important dividends. All Source Analysis Capability: The additional analysts OIA is requesting in FY 2007 will allow OIA and Treasury to further increase the depth and breadth of its analytic coverage and expertise in priority areas, such as terrorist financing, and proliferation financing. Over the past year, as OIA has grown and policymakers - both at Treasury, in the White House and elsewhere - have become more aware of its capabilities, OIA has been increasingly tasked with addressing the most pressing national security issues. Given its small size and increasing importance, bringing new analysts on board as quickly as possible is essential for OIA's continued success. These additional positions would also allow OIA to engage in increased analyst exchanges with other national security and IC agencies, in accordance with the Intelligence Reform and Terrorist Prevention Act of 2004. Secure Space: As the committee is aware, in addition to the proposed OIA growth, the Office of Foreign Assets Control (OFAC) is expanding its terrorism and WMD designations programs. Both OIA and OFAC's expansion is necessary, in part, as a result of the June 2005 Executive Order, giving the Treasury Department additional authority to target proliferators of WMD. The highly classified work of these expanding units can only be accomplished in specially constructed secure areas, known as Sensitive Compartmented Information Facilities (SCIFs). Once the FY 2006 hires have been assigned their work spaces in existing SCIFs, there will be no available SCIF space remaining in the Department. Both OIA and OFAC are requesting additional positions in FY 2007; the Secure Space Initiative is directly linked to that request. Given the lack of remaining available SCIF space in the Treasury Department, we will have to build additional SCIF space to accommodate any FY 2007 OIA and OFAC hires. Adequate security infrastructure is critical to protecting the intelligence and national security functions of the Department. Approval of this initiative will ensure Treasury personnel have the required secure workspaces to support the mission of disrupting and dismantling the financial infrastructure of the terrorists and isolating their support networks. Conclusion Thanks again for your continued support for OIA and TFI. We appreciate the confidence that your Committee has shown in our office to this point. We believe that the resources that we requested in FY 2007 will enable OIA to take the next steps in building the type of robust intelligence capability that Congress envisioned when you created our office. That concludes my prepared remarks. I would be happy to answer any questions.