FBI’s terror finance fight draws congressional scrutiny and is heading for more

01/01/2004
[Having just released one tough report criticizing the U.S. government’s battle against terrorist financing, the U.S. General Accounting Office is preparing a second report that will appraise the key inter-agency agreement that gave the FBI the pivotal ro

Having just released one tough report criticizing the U.S. government’s battle against terrorist financing, the U.S. General Accounting Office, the congressional watchdog, is preparing a second report ordered by Congress that will appraise the key inter-agency agreement that gave the Federal Bureau of Investigation the pivotal role in that fight.

That report, which was due out on December 30, dates from a Memorandum of Agreement signed in May by Homeland Security Secretary Tom Ridge and Attorney General John Ashcroft. The MOA ended the longstanding reign of the U.S. Customs Service as the government’s lead anti-money laundering agency.

FBI given anti-terror lead

The two men agreed that the FBI would henceforth head terror financing investigations, even though Customs – now a unit of Homeland Security known as Immigration and Customs Enforcement ( ICE) — has more than 30 years of experience in financial investigations, and headed a terrorism finance task force called Green Quest from October 2001 until the MOA was signed.

The MOA required that Secretary Ridge ensure that the FBI is “provided full and timely access to all data developed in ICE’s money laundering and financial crimes cases on an ongoing basis.” The FBI was under no reciprocal obligation.

At the time, skeptics took issue with this decision, which was seen as a successful power play by the FBI and a further blow to the authority of the infant Homeland Security Department.

Time has passed, but resistance has not. Included in the department’s 2004 appropriations bill is a provision requiring that the GAO evaluate the decision to give FBI this sweeping jurisdiction.

House subcommittee wary

The House Subcommittee on Homeland Security explained the GAO reporting requirement by saying it “is concerned that the recent Memorandum of Agreement between the Department of Homeland Security and the Department of Justice regarding investigations of terrorist financing will adversely affect the ability of the United States Secret Service and the Bureau of Immigration and Customs Enforcement to effectively carry out traditional financial crimes investigations.”

The appropriations bill required that within 90 days of the bill’s enactment – it was signed by President Bush on October 1 — the GAO provide the committee an evaluation of the effects of the MOA. Calls requesting advance comment on the report were not returned by GAO staff.

A spokesman for ICE said that the inter-agency rivalries that were highly publicized immediately after the MOA was signed have largely been resolved, and that the lead agency for any given investigation is determined through a “vetting” process. He said the process involves considerations such as how much time each agency has already devoted to the investigation and whether the case involves materially-supported terror, which the vast majority do not. Some cases, he said, are handled jointly.

Recent terror report critical

But if the GAO’s recently released report card on U.S. anti-terrorist financing efforts is any indicator, the upcoming report may be less upbeat than that assessment. The November report on the fight against alternative means of terror finance declared that efforts by U.S. law enforcement – under FBI leadership — to disrupt terrorist financing suffer from a poor understanding of the sophisticated methods terrorists use, weak intelligence gathering and a lack of rigorous analysis and data sharing.

The report was requested by U.S. Senators Dick Durbin and Charles E. Grassley, and in response, Senator Grassley issued a statement to Money Laundering Alert that expressed disappointment in the performance of federal agencies.

“These terrorist organizations are the money laundering experts,” Grassley said. “They are switching from one method to another when the need arises. If the U.S. is going to get a handle on these organizations, they need to operate smarter and be better coordinated than they are today. Without improvements, we can’t keep up with them.”

FBI faulted on alternatives

The GAO found that the FBI focused too heavily on traditional bank-oriented financing, and did not collect information systematically about alternative terrorist financing methods such as gem and precious metal trading, “charitable” donations, bulk-cash smuggling, and informal hawala banking systems.

“Without such an assessment, the FBI does not have analyses that could aid in assessing risk and prioritizing efforts,” the report states.

DOJ responds

In response, the Department of Justice issued a statement of response in which it cited its successes in combating terrorist financing.

“Our work is far from over and, while we welcome constructive criticism about our efforts, these types of reports, which focus on very specific issues, should be considered in light of the very real progress made by the Department of Justice and FBI,” the statement said.

In reaction to the report, Senator Durbin said, “The grim conclusion of this report – that our federal government has no clear picture of the extent of the terrorist financing problem – should make all of us stand up and take notice.”