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

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

BODY:

REP. KING: (Sounds gavel.) Good morning. This joint hearing of the Subcommittee on Domestic and International Monetary Policy, Trade and Technology, and the Subcommittee on Oversight will come to order.

Without objection, all opening statements will be made a part of the record. The Subcommittee on Domestic and International Monetary Policy and Subcommittee on Oversight, chaired by my colleague from New York, Mrs. Kelly, meet jointly today to receive testimony from Treasury and State regarding their efforts in the global fight against terrorist financing. We're fortunate to have the Honorable Juan Zarate, assistant secretary for terrorist financing from Treasury; and the Honorable Tony Wayne, with whom I shared a plane ride back once from Northern Ireland-very pleasant-assistant secretary for economic and business affairs for the State Department, here with us today.

Ms. Maloney and I have agreed to have our opening statement made part of the record, and now I'll ask Mrs. Kelly if she would like to make an opening statement.

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REP. KING: Thank you both very much for your testimony. I would like to follow up on something that Secretary Wayne said, but actually address the question to both of you. That's on the choreography involved-I think that was your term-with the Treasury Department, State Department, Justice Department, Homeland Security, and make the analogy to the intelligence community where, partly as a result of the 9/11 commission, a consensus is developing that there should be one type or another of national intelligence director. We can debate about the exact terms, but there seems to be a consensus that there needs to be greater coordination and centralization.

Do you think the current system that you have, this choreography that you have, it's efficient to work? Or could you consider the appointment of a czar, because it's just for the purpose of cracking down or coordinating the effort against terrorist financing?

MR. WAYNE: Let me take a first crack at this. We have learned and adapted since 9/11 and adjusted, tried to improve, and I think we have significantly improved the way we work together with other agencies, the way we share information, and the way we talk through, on a case-by-case basis, the range of different options that we have available.

We have come up with a system where the National Security Council pulls all the agencies together. The grouping is currently chaired by Fran Townsend, who's also the homeland security advisor. She also chairs the counterterrorism security group, which does the broader counterterrorism. And I know Juan participates there; I don't in that. And she or her deputy chair RPCC (sp), depending on-sometimes everybody's not available.

And we really have worked it out so we get together in a small group of people with all the right clearances and talk through what are the big issues, what are the big targets, what are the right ways to go about it. And it works. It's working very well.

REP. KING: Secretary Zarate.

MR. ZARATE: Chairman, just to add to what Secretary Wayne has indicated, I think the NSC is, in essence, serving in the role of the czar, if you will, the coordinator, the master coordinator of these efforts. And I think that --

REP. KING: In effect, that's Fran Townsend, right?

MR. ZARATE: That's right. And I think that's an important development for two reasons. One, the campaign against terrorist financing is one part of the larger campaign against terrorism. And to divide the two in any real or substantive or bureaucratic way, I think, does damage to the notion that attacking terrorist financing is part of a strategic approach to dealing with the larger issue of terrorism.

The other potential problem with creating some new figure or a new bureaucracy to deal with these things is the issue of terrorist financing is ultimately a cross-cutting issue from a disciplinary standpoint. It's a regulatory issue. It's an administrative function issue. It's a law enforcement issue. It deals with intelligence. It's a diplomatic issue.

So it's a full range of national powers and influences and expertise that is really implicated in terms of the effort against terrorist financing. So I think the way it's constructed now, the way it's worked, it's worked well. And I think the 9/11 commission and the monograph really signal that.

REP. KING: I'll ask a question which, again, is more of a, I guess, value judgment on your part. Can you describe generally and specifically, to the extent you can, the level of intensity of cooperation you're getting from other governments? I mean, how much-are they doing this because they have to, because they really want to? I mean, how serious do they see this issue in other governments? Are they just doing it to keep us happy?

MR. WAYNE: Let me start off again, and I know Juan will add on this, because we sort of go to different parts of the world at different times, but we do it in a very coordinated way, so we get to work with the same group of countries.

In general, the vast, vast majority of governments want to cooperate. There are a big chunk of governments that don't have the capability to cooperate. And we find this particularly in developing countries around the world.

There are also-there's a difference between wanting to cooperate and having an effective inter-ministerial, or we would call it inter-agency, system that works. Not surprisingly, in many countries around the world, ministries don't talk to each other very often about things that they consider their prerogative. So there's a lot of breaking down of barriers that has to go on as it went on in the United States.

So what we've been doing in our effort over the past several years-and it varies from country to country; it's hard to really categorize it-is working very hard with each of our partners. There are a number where there's no question that they're quite like- minded. We together dwell on trying to figure out the right way to go about it.

And that was a reflection of what I was doing last week with my colleagues in the European Union. We had 100 people-prosecutors, designators, policy people-who are really trying in their own capitals to grapple with this and working on it.

In other places, we found people very eager to work together. One of the examples, in fact, we shared with the Europeans last week was the results of some training we had done in Latin America with a country that hadn't had the ability to really track money laundering or terrorist financing; how, as we trained people up, they then used that to find a terrorist financing network; again, a country with limited capabilities but with the will to take it on, and it had made a big difference.

Juan.

MR. ZARATE: Chairman King, just to add briefly to what Secretary Wayne indicated, I think generally my impression, and the impression of Treasury officials who've traveled around the world and who meet with their foreign counterparts all the time, including this weekend with the IMF and World Bank meetings, where the secretary and other Treasury officials will be meeting with quite a few finance ministers and central bank governors from around the world, there is the political will to deal with this issue, largely because, in particular from the finance ministry perspective, the lack of security and the threat of terrorism affects very tangibly economic development and the security of the world economy, not to mention the physical security, national security of many countries around the world.

So I think that's there, and countries have taken very important steps to put legal structures in place, regulatory structures in place. The challenge that we face-and Secretary Wayne mentioned this in his opening statement-is to get to the point where countries are able to enforce their laws effectively to the point where they're able to take action that we need them to take effectively and efficiently. And that, I think, is the greatest challenge for us.

I just returned from Saudi Arabia and the United Arab Emirates, where the change in attitude since 9/11, I think, has been dramatic. The level of activity on the issues related to terrorist financing and financial flows is dramatic. And the level of cooperation has grown immensely over the past three years.

REP. KING: My friend from Illinois.

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