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Hearing of the Oversight and Investigations and Domestic and International Monetary Policy, Trade and Technology Subcommittees of the House...

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Location: Washington, DC


Federal News Service September 30, 2004 Thursday

HEADLINE: HEARING OF THE OVERSIGHT AND INVESTIGATIONS AND DOMESTIC AND INTERNATIONAL MONETARY POLICY, TRADE AND TECHNOLOGY SUBCOMMITTEES OF THE HOUSE FINANCIAL SERVICES COMMITTEE

TOPIC: COMBATTING INTERNATIONAL TERRORIST FINANCING

CHAIRED BY: REPRESENTATIVE PETER KING (R-NY) AND REPRESENTATIVE SUE KELLY (R-NY)

WITNESSES: JUAN ZARATE, ASSISTANT SECRETARY OF TREASURY FOR TERRORIST FINANCING; ANTHONY WAYNE, ASSISTANT SECRETARY OF STATE FOR ECONOMIC AND BUSINESS AFFAIRS

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REP. RON PAUL (R-TX): Thank you, Madam Chairman. A while back in our history we had a lot more respect for the Fourth Amendment than we do today. I see that we've had a gradual erosion of that principle that our persons, our papers, and the effects are to be secure. And then there was another blow to that principle with legislation following 9/11 out of the legitimate fears that this country experienced.

But yesterday there was a court ruling dealing with the privacy issue, and a federal court ruled that it was unconstitutional based on the Fourth Amendment that wholesale or blanket searching of records of customers on the Internet-on telephone records-was illegitimate, although we, in the Congress, said it's perfectly all right. So there's a contest going on now-those in the courts who believe a little bit still in the Fourth Amendment, and those in the Congress who seem not to care too much.

And, Mr. Wayne, you mention, and this is a statement I agree with, that you follow money, you get to the terrorists, and that sounds like a pretty good idea. But I have problems with following the money of 200 million Americans and the terrorists getting lost in the maze, and this is, more or less, what the 9/11 Commission said-they said that there was too much material that was never looked at, and even if the new regulations had been in effect, it would not have helped catch the al Qaeda, which is, you know, the real issue today-how can we prevent what happened? And they said they didn't even use the banking system enough that they would have been detected. So there's a question about the impracticality of following everybody's money and then there's also the constitutional question about whether or not we should be doing it. You don't write the laws; you're trying to enforce them; there is a bit of a discussion going on between the courts and the Congress right now. But my question is this-do you think, under today's circumstances, that you're very much involved in trying to protect our country, do you think it is necessary for us in the Congress to give up a little bit of our freedoms, to sacrifice liberty to be more casual about the privacy issue in order to be more secure? Is this a legitimate sacrifice?

MR. ZARATE: Congressman, I leave that balancing act to Congress and to you. Our job, as you indicated, is to implement the law and to enforce it to the best of our ability to safeguard the U.S. economy, the U.S. people, and our financial system. And I cannot speak-you've raised a number of issues-I cannot speak to the case that you've referred to. I'm not familiar with it, and I leave it to the Department of Justice to react to it. I would like to mention, though, with respect to the 9/11 Commission and the monograph two points-first, I think what has changed since 9/11 is a greater awareness in the financial community-not just the banking community but also the non-bank financial institutions. With respect to potential activity related to terrorism there is greater awareness. We have provided more guidance and, frankly, we have used the power that you provided in Section 314a to get more specific information out to the financial community in real time, which has led to very important leads in the money-laundering and terrorist financing field.

REP. PAUL: May I ask you a question along those lines-how much would you be handicapped if you were always required to get the proper search warrant rather than being able to look at the records rather casually? Would that put a big handicap into your ability to do the job you're trying to do?

MR. ZARATE: Congressman, if you're talking about requiring a search warrant, for example, before the filing of a suspicious activity report or before sending out lead information to the private sector via Section 314a, it would be a major handicap, and it would affect greatly the work of law enforcement, not just in tracking domestically potential terrorists and terrorist financiers, but also internationally.

Part of the challenge, and I think this is one of the conclusions from the 9/11 Commission is that prior to 9/11 we were not doing a good job of sharing information, of putting the dots together, and I think the more that we restrict our ability to share information, the more we are at risk of not putting those dots together. And I would like to just indicate one of the issues raised by the 9/11 monograph was an issue with respect to our blocking of assets. As Secretary Wayne mentioned, designation of individuals and the freezing of assets in a preventative way is an incredibly important tool and important part of what we do, and in each instance in which that authority has been used and challenged in court, the U.S. government and the Treasury Department has won in court at the District Court level and as well at the Appellate Court level. So I want to mention that for the record because there is often a discussion of civil rights in the context of what we do, and I wanted to indicate that the Congress has appropriately given us powers that fall within the construct of the constitution and are exercised, frankly, judiciously within the law.

REP. KELLY: Thank you, Mr. Paul. Mr. Inslee.

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