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March 4, 2004

Money Laundering: Current Status of Our Efforts To Coordinate and Combat Money Laundering and Terrorist Financing


The Honorable Joseph R. Biden, Jr.
Co-Chairman
Caucus on Interntational Narcotics Control


Mr. Chairman, thank you for convening this important hearing to examine our efforts to combat money laundering and terrorist financing. I am sorry my schedule does not permit me to attend today's session, but this is a critical issue and I look forward to reviewing the hearing record.

The Administration has touted successes in clamping down on the finances of terrorist organizations. Last year, the Administration noted that since September 11th, $104.8 million of terrorist financing had been blocked, $34.2 million of which was blocked in the U.S. and $70.5 million overseas. The International Monetary Fund reports that somewhere between $600 billion and $1.8 trillion is laundered every year. Clearly our challenges are great.

I am particularly concerned by the nexus between international drug traffickers and terrorism. According to the Drug Enforcement Administration, the potential exists for drug money to fund terrorist groups. DEA Administrator Tandy recently testified that "[i]n October 2001, a joint DEA/FBI investigation targeting two heroin traffickers in Peshawar, Pakistan led to the seizure of 1.4 kilograms of heroin in Maryland and identification of two suspected money launderers, one with suspected ties to al Qaida. Similarly, Operation Marble Palace in 2001 determined that several members of a targeted heroin trafficking organization had possible ties to the Taliban and that a connected bank account had been used to launder proceeds to alleged Taliban supporters in Pakistan." This nexus between terrorism and narcotics trafficking is unfortunately not confined to Afghanistan: reports indicate similar activities are underway in Colombia, Russia, and parts of Southeast Asia.

It is not clear to me that our government has a sufficient handle on the money laundering problem. I have reviewed GAO's recent work on this subject, and I hope that today's witnesses answer several important questions: Should the FBI be collecting and analyzing data on terrorists' use of alternative funding mechanisms? What is the status of the joint Justice / Treasury report on how money is moved via trade in precious stones and commodities, a report called for in the 2002 National Money Laundering Strategy? How useful has the National Money Laundering Strategy been in coordinating our efforts to combat money laundering amongst the 17 federal agencies charged with portions of our money laundering and terrorist financing efforts? How is the May 2003 Memorandum of Understanding entered into between Attorney General Aschroft and Secretary Ridge affecting terrorist financing investigations? Do the witnesses need any additional tools to wage this fight, or is the current law and level of resources sufficient?

I have often said that we are in this fight against terrorism for the long term, and we must organize our domestic and international institutions accordingly. This hearing offers us a timely forum to examine the status of our money laundering efforts, and I look forward to our witnesses' testimony.