U.S. Department of the Treasury

(Archived Content)

Chairman Dorgan, Ranking Member Campbell, and Members of the Subcommittee, I am privileged to be here today to introduce the President's FY 2003 budget request for the Department of the Treasury's law enforcement bureaus and offices. It is indeed an honor to appear before you this week to represent the more than 31,000 dedicated men and women who quietly and selflessly serve their country every day -- often at great personal peril and sacrifice.

Testifying with me this afternoon are Bradley A. Buckles, Director of the Bureau of Alcohol, Tobacco and Firearms (ATF), James F. Sloan, Director of the Financial Crimes Enforcement Network (FinCEN), Brian L. Stafford, Director of the United States Secret Service (USSS), and Paul Hackenberry, Acting Director of the Federal Law Enforcement Training Center (FLETC). Tomorrow, I will be joined by Robert C. Bonner, Commissioner of the United States Customs Service (Customs).

I am pleased to note that this week's hearings are the first time this Subcommittee will hear from five, rather than four, Treasury Enforcement bureaus, since FinCEN recently was authorized as a bureau within Treasury Enforcement with enactment of the USA PATRIOT Act. I take this opportunity to thank the members of this Subcommittee for your support of this provision and the many new tools which the USA PATRIOT Act provided to the Treasury Department to fight terrorism and dismantle and disrupt terrorist financing.

The President's FY 2003 budget seeks a program level of $5.497 billion and 31,847 FTEs for Treasury Enforcement. This level is significantly higher than the President's initial FY 2002 request largely due to additional resource needs associated with the horrific events of September 11th and the overall support of this Subcommittee. The request is 20 percent ($879 million) above the President's initial FY 2002 budget request for Treasury Enforcement, and it provides for an increase of 2,403 FTEs for Treasury Enforcement.

The 2,403 FTE increase includes 1,779 FTE for Customs; 381 FTE for the Secret Service; 124 FTE for ATF; 94 FTE for FLETC; and 25 FTE for FinCEN. Furthermore, the FY 2003 budget request indicates a staffing level of 48 FTE for the Office of Enforcement, with the provision of staffing up to 58 FTE within the Office's appropriated level -- the same level for the third consecutive year.

In response to the terrorist attacks of September 11th, Congress provided essential FY 2002 emergency appropriations of $674.1 million to the Treasury Enforcement bureaus: approximately $428.6 million to Customs; $141.5 million to the Secret Service; $31.4 million to ATF; $31.5 million to FLETC; and $1.7 million to FinCEN. Much of this emergency funding was for one-time, non-recurring costs. I am pleased to inform the Subcommittee that the recurring costs from the Terrorism Supplemental have been annualized and incorporated in the President's budget request.

When the President submitted his budget request on February 4, 2002, he indicated it "recognize[d] the new realities confronting our nation, and funds the war against terrorism and the defense of our homeland." To implement this objective, the President's FY 2003 request contains $159 million in new funding for Homeland Security program initiatives for Customs ($158 million) and FinCEN ($1 million). The FY 2003 budget request includes $29.2 million for other program initiatives -- $21.7 million for ATF and an additional $7.5 million for the Customs Automation Modernization programs. The budget request also includes $8 million in additional resources for Secret Service protection services to begin preparation for the 2004 Presidential campaign.

The FY 2003 Budget includes inflation type increases and Homeland Security annualizations of $259.2 million. Although the immediate Office of Enforcement ($8.5 million) FY 2003 budget request is $231,000 more than the FY 2002 Financial Plan, it is $139,000 less than the ($8.6 million) FY 2002 Enacted. As I mentioned, the staffing level remains the same.

Over the next two days, the Subcommittee will hear from the Treasury Enforcement Bureau Directors regarding their respective bureaus' new initiatives and programs. Therefore, I would like to take this opportunity to provide the Subcommittee with an overview of the newest challenges facing the men and women in Treasury law enforcement and the exemplary manner in which they have responded. That they have been able to do so effectively is due, in large part, to the support that this Subcommittee and the Congress have provided us both before and in the aftermath of September 11th.

We have all been deeply affected by the horrific acts of that day. We at Treasury lost a respected member of our law enforcement family, Secret Service Master Special Officer Craig Miller, who perished in the World Trade Center. And of course, the New York offices of Customs, Secret Service, and ATF were destroyed

Combating terrorism has become the Nation's primary agenda. As you are aware, on September 24, 2001, President Bush stated, "We will direct every resource at our command to win the war against terrorists, every means of diplomacy, every tool of intelligence, every instrument of law enforcement, every financial influence.

We will starve the terrorists of funding." Under Secretary Paul O'Neill's leadership, we in Treasury Enforcement have devoted extensive resources and expertise to fulfill this mandate.

 

We have worked, and continue to work, in close coordination with the Justice Department, the Federal Bureau of Investigation (FBI), State Department, the intelligence community and the Defense Department. Specific examples of our close cooperation include joint activities in the September 11th investigations and on the Financial Review Group (FRG). In these investigations, Treasury has added its investigative expertise and access to unique databases to support the U.S. Government's efforts.

Our war against terrorist financing extends to financial intermediaries and facilitators who infuse terrorist organizations with money, materiel, and support. We have come to clearly appreciate and understand that terrorism has been nourished by ample funding channeled from a plethora of sources, including banks, charities, hawalas, narcotics traffickers, and money launderers.

Disrupting and Dismantling Terrorist Financing

Since September 11th, Treasury Enforcement, including its component bureaus, has launched a number of new initiatives to identify, disrupt, and dismantle terrorist financial networks both domestically and abroad. I am pleased to report to the Subcommittee this morning that Treasury has named 192 individuals and entities as financiers of terrorism, and has blocked over $34 million in assets. Our Coalition partners have blocked another $70 million. A portion of that amount has since been unblocked for the new Afghan Interim Authority to assist in its critical period of rebuilding. This is truly a global effort -- 196 nations have expressed support to disrupt terrorist financing and 149 nations can block terrorist assets.

We are grateful that you and your colleagues made significant improvements in the laws that allow us to tackle the issue of terrorist financing in a more unified, aggressive manner. Of particular importance to our counter-terrorism efforts is the USA PATRIOT Act that clarifies the law enforcement and intelligence communities' authority to share financial information regarding terrorist investigations. These provisions are already being utilized and are bearing fruit in disrupting financing networks.

Office of Foreign Assets Control

The Office of Foreign Assets Control (OFAC), an office within Treasury Enforcement, plays a key role on the inter-agency working group, chaired by Treasury, that has been targeting and listing individuals and entities pursuant to Executive Order 13224 which President Bush signed on September 23, 2001. In this process, we have identified, among other entities, front companies, charities, banks, and a hawala conglomerate that served as the financial support networks for al-Qaeda and other global terrorist groups. We have shut down the operations of these entities in the United States and abroad. Foreign countries have been remarkably cooperative in this process.

 

Hawala is a type of alternative remittance system that is common in many parts of the world, including the Middle East and Far East.

 

OFAC has widely disseminated the names of new designated terrorists to the business and financial communities through websites, Fedwire Alerts, CHIPS system notices, communications to Federal and State regulators, and electronic broadcasts to 175 key industry groups. Information on terrorist designations is also distributed to the public by way of Customs, the Government Printing Office, and other agency networks.

As you will recall, the Foreign Terrorist Asset Tracking Center (FTAT) was in the process of being organized and staffed when the terrorist attacks of September 11 ^th occurred. In fact, the Financial Crimes Enforcement Network (FinCEN) had already been staffed for the purpose of providing analytical support to the interagency FTAT and was supplying the product of that staffing to the Office of Foreign Assets Control (OFAC). Immediately following the attacks, the Treasury Department helped to accelerate the development of the interagency FTAT by establishing a temporary operational presence within the secure environment of FinCEN. The unit quickly began to serve as an analytical center for combating the problem of terrorist financing.

Section 906 of the USA PATRIOT Act requires that the Director of the CIA, the Attorney General and the Secretary of the Treasury jointly file a report on the "feasibility and desirability" of reconfiguring FTAT. This matter was reviewed by senior government officials, including the Principals Committee of the National Security Council. Based on that review, a decision was made to move and reconfigure FTAT to ensure it was fully integrated into the ongoing terrorist financing activities of other agencies. Treasury will continue its support of FTAT and its broader efforts to disrupt and dismantle terrorist financing.

Blocking Assets

One of the higher profile results of OFAC analysis was the identification of Al-Barakaat as a major financial operation that supported terrorist organizations. The Al-Barakaat case is a good example of model coordination between the Treasury Department, the FBI, and other enforcement agencies both domestically and abroad.

Al-Barakaat is a Somali-based hawaladar operation, with locations in the United States and in 40 countries, that was used to finance and support terrorists around the world. The investigative work of the FBI, Customs, and IRS-Criminal Investigation, along with analysis by OFAC, FinCEN, and the intelligence community, identified Al-Barakaat as a major financial operation that was providing material, financial, and logistical support to Usama bin Laden and other terrorist groups.

 

A hawaladar is an entity that engages in hawala transactions. Some individuals may have used Al-Barakaat as a legitimate means to transfer value between individuals in different countries without passing through the formal international banking system.

 

Treasury, along with the Department of Justice, coordinated efforts to block assets and to take law enforcement actions against Al-Barakaat.

On November 7, 2001, Federal agents executed search warrants in three cities across the country -- Boston, Columbus, and Alexandria -- and shut down eight Al-Barakaat offices across the U.S., including locations in the following cities: Boston, Massachusetts; Columbus, Ohio; Alexandria, Virginia; Seattle, Washington; and Minneapolis, Minnesota.

As part of that action, OFAC was able to freeze approximately $1,100,000 domestically in Al-Barakaat-related funds. Treasury also worked closely with the United Arab Emirates (UAE) to enable the UAE to block Al-Barakaat's assets at its financial center of operations in Dubai. Disruptions to Al-Barakaat's cash flows, resulting from OFAC's designation actions and international cooperation, are estimated to be in excess of $65 million from the United States alone. In addition, the combined work of OFAC, Operation Green Quest, and law enforcement had led to additional leads in the Al-Barakaat investigation.

This is an example of what our combined efforts can accomplish when we join our resources and our expertise to fight the common scourge of terrorist financing.

Joint Designations

On March 11 ^th, on the six month anniversary of the September 11th attacks, the Treasury Department, joined by the Saudi government, took a new step in the war on terrorist financing by making its first joint designation of a financial supporter of terrorism. Prior to that date, Treasury received significant cooperation from other countries in blocking accounts of those named by the United States, and our European allies have made designations of their own. The joint blocking action on March 11 ^th is especially significant for it is a sign of the growing strength of the anti-terror coalition and marks a new level of international coordination and cooperation.

Treasury and the Saudi government blocked the accounts of the Somalia and Bosnia-Herzegovina branches of the Saudi Arabia-based Al-Haramain Islamic Foundation. While the Saudi headquarters for this private charitable entity is dedicated to promoting Islamic teachings, Treasury and our Saudi Arabian allies determined that those specific branches of Al-Haramain have been engaged in supporting terrorist activities and terrorist organizations such as al-Qaeda, AIAI (al-Itihaad al-Islamiya), and others.

Last month, Treasury Secretary O'Neill visited the Persian Gulf region, where he had the opportunity to meet with King Fahd and Crown Prince Abdullah, others in the Saudi government, and the leadership in Bahrain, Kuwait and the UAE. Throughout the region, the Secretary encountered a clear understanding that the September 11 ^th attacks were not only an attack on the United States, but were an attack on the civilized world. These governments' leaders assured Secretary O'Neill that they, like others in the world, are doing what they can to cut off terrorists' access to funds, wherever those funds are found.

This action also highlights the special need to safeguard charities, so that well-intentioned donors can be assured that their donations will be used only for their intended good purposes, and not for acts of terrorism.

During his trip to the Gulf, Secretary O'Neill underscored that misusing charity funds to support terrorism harms the people who gave the donation, harms the people who should have received it and is dangerous to us all. The Treasury Department is committed to finding those organizations that use charities to fund terrorists or terrorist acts, exposing them, and shutting them down.

Operation Green Quest

On October 25, 2001, Treasury created Operation Green Quest ("Green Quest"), a new multi-agency financial enforcement initiative designed "to augment existing counter-terrorist efforts by bringing the full scope of the government's financial expertise to bear against systems, individuals, and organizations that serve as sources of terrorist funding." This task force is led by the Customs Service and includes the Internal Revenue Service, the Secret Service, ATF, OFAC, FinCEN, the Postal Inspection Service, the FBI, the Department of Justice, and the Naval Criminal Investigative Service. Operation Green Quest also receives support from Interpol's National Central Bureau, based in Washington, D.C. Green Quest brings together the extensive financial expertise of the Treasury Enforcement bureaus along with the exceptional experience of our partner agencies and departments to focus on terrorist financing.

Green Quest has complemented the work of OFAC in identifying terrorist networks at home and abroad, and it has served as an investigative arm to aid in blocking actions. Green Quest's work has led to 12 arrests, 4 indictments, the seizure of nearly $4 million, and bulk cash seizures -- cash smuggling -- of over $11 million. Green Quest agents, along with those from the FBI and other government agencies, have traveled abroad to follow leads, exploit documents recovered, and to provide assistance to foreign governments. In this effort, Green Quest has made full use of its overseas Customs Attachés to investigate suspect networks and to gather information for its own use and the use of OFAC. The work of these financial experts is just starting as they have opened well over 200 terrorist financing investigations and are following leads on a daily basis. Green Quest's work, in combination with the work of OFAC, serves as a seminal part of our enforcement efforts.

International Cooperation

Our efforts will not have the greatest success if prosecuted unilaterally, and may ultimately fail if we cannot obtain the cooperation of other nations. To date, all but a handful of countries have expressed their support for the international fight against terrorist financing. Currently, 149 countries and jurisdictions around the world can block terrorist assets. The Office of Enforcement, in concert with other Federal agencies, is providing technical assistance to a number of countries to strengthen their capacity to freeze terrorist funds. Daily, we are in contact with foreign financial officials and are engaged in bilateral and multilateral discussions regarding international cooperation and action against terrorist activities and financing.

The Office of Enforcement has also helped coordinate the deployment of financial "jump teams" consisting of experienced accountants, bank examiners, and other financial experts from OFAC, the Customs Service, IRS, FinCEN, the FBI, and other agencies. These experts review business records and possible links to money associated with bin Laden's al-Qaeda network.

Treasury has engaged in numerous international fora, including the G-7, G-8, G-20, the Financial Action Task Force (FATF), the Egmont Group -- the global network of Financial Intelligence Units (FIUs) of which FinCEN is a key member -- and the international financial institutions to combat terrorist financing in a global, systematic way.

The Treasury Department, in conjunction with the Departments of Justice and State, hosted an Extraordinary Plenary session of the Financial Action Task Force in Washington, D.C., at the end of October 2001 to address terrorist financing. This meeting was immediately followed by a meeting of the Egmont Group to discuss information sharing and terrorism. At the plenary session, FATF established eight Special Recommendations regarding terrorist financing which represent an important step to establishing a global regime to cut terrorists off from the international financial system.

These new Recommendations were endorsed by countries throughout the world at a special FATF Forum on Terrorist Financing held in February and attended by over 55 jurisdictions. Moving forward, FATF, with the strong support of the U.S., is now leading a global effort to bring all countries in compliance with these new standards. The U.S. has recently completed a self-assessment questionnaire against these standards, which is posted on the Treasury web site. In June, FATF will begin to consider a process with respect to countries that are not cooperating in the international effort against terrorist financing.

While countering terrorist financing is a Treasury Enforcement priority, we are also committed to preventing terrorist acts on U.S. soil and against U.S. interests abroad, and to reducing violent crime here at home.

Preventing Terrorism and Reducing Violent Crime

Not only is the mission of Treasury law enforcement uniquely suited to combating terrorist financing, but we play a leading role in homeland security efforts -- from protecting the Nation's borders to protecting its leaders, to ensuring the integrity of our financial institutions and critical infrastructures. The President's budget request will ensure that Treasury bureaus can continue to effectively fulfill missions that are integral to protecting the homeland.

U.S. Secret Service

The U.S. Secret Service protects the Nation's top leaders, combats financial fraud, protects the integrity of the financial systems against cyberattacks, and leads the effort to ensure the safety of thousands of citizens participating in designated National Special Security Events (NSSEs). We have seen the stellar work of the Secret Service in providing security for two recent NSSEs - the Super Bowl and the Winter Olympic Games in Salt Lake City. The complexity of these security events highlighted the special expertise and professionalism of the Secret Service. The dedicated men and women of the Secret Service are to be commended for their outstanding work at protecting thousands of spectators, employees, and athletes at these events. The President's budget request will allow the Secret Service to strengthen its efforts in an increasingly complex and threatening environment.

U.S. Customs Service

The U.S. Customs Service also played a key role in security for the Salt Lake City Olympic Games. The Customs Service role included providing air surveillance in restricted air space, ground support to the United States Secret Service, increased presence at the Northern Border, and screening general aviation aircraft and their passengers and pilots. A total of 500 Customs officers were committed to day-to-day oversight of the Games.

The Customs Service is the vanguard agency in protecting the country against weapons of mass destruction as it monitors travelers and cargo crossing the northern and southern borders and through the Nation's seaports and airports. Last November, Secretary O'Neill, Commissioner Bonner, and I met with our Canadian counterparts in Ottawa, Canada, to discuss cooperative efforts between the U.S. and Canada along our shared border. We have since been engaged in a number of new collaborative initiatives to strengthen security along our shared border, while working on ways to expedite the flow of trade. Commissioner Bonner and I also are working with the Office of Homeland Security to help implement the 30-point Action Plan announced in December by Governor Ridge and Deputy Prime Minister John Manley. The "Action Plan for Creating a Secure and Smart Border" has four pillars: 1) The secure flow of people; 2) The secure flow of goods; 3) Secure infrastructure; and 4) Coordination and information sharing. I can assure this Subcommittee today that the coordination and cooperation among Federal border agencies and their Canadian counterparts has never been stronger.

A similar Smart Border Accord is now in place for the U.S.-Mexico border. On March 22, 2002, President Bush and President Fox announced in Monterrey, Mexico, a 22-point agreement to build a smart border for the 21 ^st century between our two countries. In their joint announcement, President Bush stated, "President Fox and I are determined to make our shared border modern, efficient, and secure. The Smart Border Declaration our countries have just signed will move us toward this important goal. Our common border must be closed to drugs and terrorists, and open to trade and legitimate travel." The U.S. Customs Service and the Treasury Department will play a key role in implementing this important Smart Border Accord.

Bureau of Alcohol, Tobacco and Firearms

The President's budget request will ensure that the Bureau of Alcohol Tobacco and Firearms will be able to expand its training capacity at the Canine Training Facility in Front Royal, VA, increase ATF Canine Handler teams, and expand ATF's participation in critical Joint Terrorism Task Force activities. ATF has developed the most respected program in the world for detection of explosives and accelerants. This expertise is vital in our war on terrorism, in which explosives is the terrorists' weapon of choice.

ATF also played a significant role in the security of the Winter Olympics. For several years, ATF worked with its law enforcement and public safety partners on a comprehensive and integrated Olympic security plan.

ATF committed over 330 special agents and support personnel to support security for the Olympic Games. ATF Special Agent Certified Explosive Specialists, Explosive Enforcement Officers, Explosive Detection Canines/Handlers, and National Response Team members were assigned to the Olympic Bomb Management Center. These experts were available to respond to any critical incident, explosive or suspected device at any of the venues. At these Olympic Games, unlike at the Atlanta Olympics, ATF had a new mobile crime laboratory with state of the art detection and analysis equipment on-site. The crime lab could identify explosives and other evidence within minutes, which would provide immediate leads to investigators on the ground.

Federal Law Enforcement Training Center

The Federal Law Enforcement Training Center, known as FLETC, conducts the training for the vast majority of the Federal Government's law enforcement personnel. FLETC is projecting the greatest increase in training requirements in its history as it responds in full measure to the September 11th attacks.

In the days following September 11th, representatives of the U.S. Department of Transportation's Federal Air Marshal Division reached out to FLETC regarding increased training needs for the Federal Air Marshal Program (FAMs). These requests have resulted in an increase of over 20,000 student weeks of training. In October, the FLETC and the FAA developed a 5-week integrated basic training program and a 3-week agency specific basic follow-on training program.

In January, Transportation Security Administration (TSA) representatives met with FLETC staff to identify resources needed to develop a training curriculum for the TSA Security Screeners. FLETC subject matter experts then met with TSA and FAA representatives to develop that training curriculum. The result was a pilot TSA Basic Screeners training program conducted at FLETC in February. The TSA Management Team continues to meet with FLETC personnel to determine the extent to which the FLETC will be asked to further assist the TSA in training Federal Law Enforcement Officers/Agents within a very short time frame. The quality of training developed and delivered by FLETC will set the standard for our level of protection in the air for years to come.

FinCEN

The increased funding in the President's request for the Financial Crimes Enforcement Network will strengthen FinCEN's law enforcement investigative support efforts to enforce the Bank Secrecy Act, combat money laundering and other financial crimes, and implement its new responsibilities under the USA PATRIOT Act of 2001.

Immediately after the tragedy of September 11th, FinCEN redirected approximately 30 percent of its resources to the initial investigation of the terrorist attacks.

Those efforts included: establishing a 24-hour operation center to enhance liaison with the FBI Counter-terrorism Center; establishing a telephone hotline for financial institutions to report suspicious activity; facilitating a multi-agency effort using their specialized tools and secure facility; and developing valuable investigation referrals and financial lead information by redirecting 100 percent of its intelligence liaison office to that effort.

On November 7, 2001, President Bush, Treasury Secretary O'Neill, Secretary of State Powell and Attorney General Ashcroft visited the FinCEN offices where the President thanked all of the FinCEN employees for their work on the front lines in the war against terrorist financing. At that time, the President stated: "We put the world's financial institutions on notice: if you do business with terrorists, if you support them or sponsor them, you will not do business with the United States of America." FinCEN plays a critical role in this effort and will continue to provide this invaluable service to our Nation.

IRS Criminal Investigation

While the Office of the Under Secretary for Enforcement does not have direct oversight authority over IRS-Criminal Investigation, we do provide policy guidance for IRS-CI criminal investigators. These investigators offer a unique blend of accounting and enforcement expertise that is invaluable in perfecting complex financial investigations, including cases involving leaders and members of extremist groups who have committed tax, money laundering, or currency violations and individuals engaged in fundraising activities to support terrorism, especially if tax exempt organizations are being used. In the aftermath of September 11th, IRS criminal investigators have played critical roles in the Strategic Information Operations Center; the Joint Terrorism Task Force; Operation Green Quest; the Office of Foreign Assets Control; the Anti-Terrorism Task Forces throughout the country; the High Intensity Money Laundering and Related Financial Crime Area Task Forces, and the Air Marshal Program.

Combating Money Laundering

The Office of Enforcement is currently developing the 2002 National Money Laundering Strategy, as well as overseeing the implementation of the 2001 Strategy. The main focus of the Strategy is on enforcement and investigation of money laundering enterprises and sophisticated networks. This work has been significantly impacted by the passage of the USA PATRIOT Act. We have been working with the Treasury General Counsel to draft timely implementing regulations for the various provisions of the USA PATRIOT Act, such as the provision that terminated the relationship between U.S. financial institutions and shell banks.

The Office of Enforcement is overseeing the progress and development of the six High Intensity Money Laundering and Related Financial Crime Area (HIFCA) Task Forces. The six HIFCAs are now focused on operational activities, in addition to gathering intelligence which is useful in money laundering investigations. I am confident the HIFCAs will play a significant role in our anti-money laundering efforts.

At this point, I take the opportunity to highlight for the Subcommittee the recent success of Operation Wire Cutter, a 2 1/2-year joint DEA/Customs undercover operation targeting the largest Colombian Black Market Peso Exchange (BMPE) money brokers. These brokers are professional money launderers who sell their services to the Colombian drug cartels.

On January 15, 2002, U.S. and Colombian officials arrested 37 people in the U.S. and Colombia and seized over $8 million in cash, over 800 pounds of cocaine, and a total of over 1,000 pounds of narcotics. One suspect tried to evade arrest in New York City by throwing a suitcase with $400,000 in cash out of his apartment window. The El Dorado Task Force, operating out of the office of the U.S. Customs Service Special-Agent-in-Charge in New York, played an important role in this law enforcement operation.

The Multinational Black Market Peso Exchange (BMPE) Experts Working Group (Colombia, Aruba, Panama, Venezuela, and the United States), led by the Office of Enforcement, has produced a report that recommends BMPE initiatives to participating governments to improve international cooperation in efforts to combat and dismantle the BMPE. Last month a joint statement was issued embodying the conclusions and recommendations of this Working Group. We are also working closely with senior executives of major trade associations and corporations operating in the United States whose products are vulnerable to being involved in BMPE transactions.

Treasury Enforcement also works closely with the Department of Justice's Bureau of Justice Assistance to oversee the Financial Crime-Free Communities Support Program (C-FIC) which awards anti-money laundering grants to state and local law enforcement agencies and prosecutors' offices through a competitive grant award program. Treasury has awarded approximately $4.2 million in grants to 17 recipients in the first 2 years of this program.

Reducing Firearms Violence

One of the top priorities of the Bush Administration is to make a lasting reduction in the gun crime rate in America. Last May the President announced Project Safe Neighborhoods, a comprehensive approach that targets violent offenders and crime guns.

Project Safe Neighborhoods has been implemented by U.S. Attorneys across the country, working in partnership with communities and state and local law enforcement. The strategy has five components: 1) Partnership/Coordination; 2) Strategic Planning; 3) Training; 4) Community Outreach and Public Awareness; and 5) Accountability. Stronger relationships among Federal prosecutors and agents with their state and local counterparts has strengthened their ability to identify, investigate and prosecute gun violence.

The Treasury Department, through its Bureau of Alcohol, Tobacco and Firearms, plays an integral role in implementing Project Safe Neighborhoods through its Integrated Violence Reduction Strategy (IVRS). The strategy provided additional resources to ATF to add new agents, inspectors and support staff to enhance its enforcement and investigation of firearms violations and efforts to reduce violent crime.

Under IVRS/Project Safe Neighborhoods, ATF has a broader impact in target cities by educating police departments about the effectiveness of crime gun tracing and firearms trafficking. ATF supports Project Safe Neighborhoods through the excellent work of its National Tracing Center, which performs traces of crime guns, and its Youth Crime Gun Interdiction Initiative.

Countering Narcotics

One of Treasury Enforcement's highest priorities is reducing the supply of dangerous drugs entering the United States. It is also one of our most difficult challenges. We are confronted by well-financed criminal organizations that adapt quickly to every advance we make in the detection of illegal drugs. Moreover, interdiction is only one piece of a comprehensive drug control strategy that includes eradication of drug production abroad, sanctions against drug kingpins, investigation and disruption of trafficking activities within the United States, treatment of drug users, and, as mentioned above, combating money launderers.

The Office of Enforcement and its bureaus are decisively engaged as part of the Federal Government's effort in support of Plan Colombia, which is a comprehensive and balanced response to that nation's multiple challenges. In addition to targeting the critical drug trafficking problem, the integrated strategy addresses human rights, democratization, judicial reform, social development, the economy, and the peace process. Colombia's lawlessness, corruption, and long internal conflict are exacerbated by the immense profits generated by the drug trade. Ninety percent of the cocaine supplied to the United States originates in or passes through Colombia, as does two-thirds of the heroin seized in this country. As a result, Colombia is the central focus of the United States' Western Hemisphere efforts to reduce the supply of illicit drugs.

Treasury's support of Plan Colombia is an integral part of the U.S. Government's programs aimed at strengthening the justice sector and financial infrastructure throughout Colombia. The Emergency Supplemental provided funding to the State Department under the provisions of the Foreign Assistance Act, by which State transfers authority to Treasury and its components for programs via specifically negotiated letters of agreement ("632 agreements"). However, sustainment of most Treasury Plan Colombia programs beyond amounts appropriated by the Terrorism Supplemental will rely on assistance provided by the State Department in 2002 and 2003.

We appreciate the Subcommittee's support for Treasury's role in Plan Colombia. The Plan Colombia package passed by Congress included programs with $71.5 million in specific line item allocations for Treasury. These are:

• $68 million for Customs detection and monitoring aircraft radar upgrades
• $2 million for the Office of Foreign Assets Control
• $1 million for banking supervision assistance (Office of the Assistant Secretary for International Affairs/Office of Technical Assistance)
• $500,000 for tax revenue enhancement (OASIA/OTA).

In addition to these specific allocations for Treasury components, we have received $14.67 million for law enforcement programs from Justice accounts in the legislation, for a total of $86.17 million. We anticipate all Treasury programs should be completed by June 2003, approximately 24 months from the transfer of Plan Colombia spending authority from State to Treasury and its components in June of 2001.

Enforcing Tariff and Trade Laws

The United States is the world's largest exporting and importing country, and the volume of both exports and imports is growing rapidly. Over the five-year period from 1994 to 1999, the dollar value of exports increased by over a third (about 36 percent). During the same period the dollar value of imports increased by more than half (about 51 percent). These increases translate into increased workload for the Customs Service.

Our trade with other nations is vital to our economic strength and our standard of living, and we want to do everything we can to ensure that the movement of trade across our borders is as expeditious as possible. At the same time, however, we recognize our responsibility to assure Congress and the American public that laws enacted to protect public health and safety, as well as other interests, are being effectively enforced at the border.

Treasury Enforcement's Office of Regulatory, Tariff, and Trade Enforcement performs a variety of important functions, including review of all regulations relating to enforcement of trade laws, participation in negotiations of international trade agreements, and management of the private sector Advisory Committee on the Commercial Operations of the Customs Service (COAC).

The COAC is a legislatively constituted advisory committee of 20 private sector members, which meets with Enforcement and Customs officials quarterly. Until September 11th, their advice focused on trade facilitation. After September 11th, I requested COAC's input on border security and the role the private sector can play in increasing cargo security. Utilization of the group's expertise provides a unique opportunity to examine synergies between enhanced cargo security and the private sector concern that the smooth flow of trade not be impeded unnecessarily due to increased security concerns.

The COAC produced an excellent report in January with 60 recommendations. Many of these have already been implemented, and others are under close examination by Customs and Treasury officials. Three COAC members also have entered into agreements with Customs under the new Customs-Trade Partnership Against Terrorism program.

President's Management Agenda

The Treasury Department's FY 2003 budget recognizes the importance of achieving the President's Management Agenda. The Office of Enforcement is working with the law enforcement bureaus to support Secretary O'Neill's goal of Treasury becoming a results-driven world class organization, consistent with the President's five Presidential Management Initiatives:

1. 1. Strategic Management of Human Capital;
   2. Expanded Electronic Government;
   3. Improved Financial Performance;
   4. Budget and Performance Integration; and
   5. Competitive Sourcing.

Only through a balance of implementing all five Presidential Management Initiatives will the Treasury Department and its enforcement offices and bureaus be able to achieve world class status and become an organization that is performance-driven with specific, measurable results linked to investment of resources. In working towards this goal, the Department emphasizes the importance of leadership, accountability, integrity, improving the work environment, and giving employees the tools they need to do their jobs with excellence.

Enforcement Organization

The Office of the Under Secretary for Enforcement has oversight responsibility for more than a third of all Federal criminal investigators, including roughly 32,000 personnel and a $5 billion operating budget. Moreover, Treasury Enforcement collects about $35 billion in revenues. When I assumed the duties of the Under Secretary, one of my first imperatives was to ensure that the Office had an efficient organization to be informed adequately about the day-to-day functions and operations of the bureaus and offices it supervises. This became even more critical in the post September 11th environment. In coordination with the Treasury Department's leadership, we have implemented a reorganization of the Office of Enforcement, within existing FTE ceilings, that I am convinced will enable the Office to achieve its mission more effectively and efficiently.

The reorganization strengthens Enforcement's ability to address critical budgetary, resource, and training needs for the immediate Office of the Under Secretary as well as the Enforcement Bureaus. Additionally, the new organization also provides needed emphasis in the major areas of Terrorism and Violent Crime and Money Laundering and Financial Crimes.

Strategic Goals and Performance Measures

Each year, the world becomes a more complex place. The events of September 11th only emphasize this point. As a result, Treasury's law enforcement mission grows in complexity, scope, and impact. The Enforcement Bureaus must continue to meet these challenges as they perform their critical roles in advancing America's law enforcement priorities. To provide a long range focus, the Office of Enforcement identified six strategic goals for FY 2000 - FY 2005:

• Combat money laundering and other financial crimes;
• Protect our nation's borders and major international transportation terminals from traffickers and smugglers of illicit drugs and weapons of mass destruction;
• Reduce violent crime and the threat of terrorism;
• Protect our nation's leaders and visiting dignitaries;
• Provide high quality training for law enforcement personnel; and
• Collect revenue due to the Federal government.

In the aftermath of September 11th, we plan to add an additional strategic goal and supporting objectives in the next revision of the Treasury Strategic Plan. This new goal will focus on "Targeting, disrupting and dismantling terrorist financing and terrorist financing organizations."

In addition, Treasury's law enforcement bureaus support two other Treasury strategic goals through the following strategic objectives:

• Protect the public and prevent consumer deception in specific regulated commodities; and
• Facilitate legitimate trade, enhance access to foreign markets, and enforce trade agreements.

To ensure excellence in achieving these goals, and in keeping with the spirit of the Government Performance and Results Act, Treasury continues to engage in a strategic management process to enhance and improve the results we deliver to the American people. To that end, the Office of Enforcement is committed to setting long-term strategic and annual performance goals, managing our resources and investments to achieve those goals, instituting measures, and reporting annually on the results of our performance.

Overall, Treasury law enforcement bureaus' achievement against established performance targets continues to improve. For example, in FY 1999, the law enforcement bureaus achieved 64 percent of the established performance targets. In FY 2000, 77 percent of the established targets were achieved, and in FY 2001, 79 percent of all performance targets were achieved. While not every goal was met, the results were significant.

For FY 2003, the Office of Enforcement and the Treasury law enforcement bureaus will continue to work hard to accomplish our defined strategic goals and objectives. We will also strive to achieve an even higher percentage of our established performance targets. Doing so will help to ensure excellence in protecting our borders and our nation's leaders, disrupting and dismantling terrorist financing, fighting terrorism and violent crime, combating money laundering and financial crimes, and training our law enforcement personnel for the challenges they will face in the future.

Thank you for the opportunity to provide an overview of the President's FY 2003 budget request and to highlight the efforts of the Office of Enforcement in support of the mission of Treasury's enforcement bureaus. I look forward to answering any questions you may have.