[Senate Hearing 108-872]
[From the U.S. Government Publishing Office]



 
                                                        S. Hrg. 108-872

                    NOMINATIONS OF: STUART A. LEVEY,
                   JUAN C. ZARATE, AND CARIN M. BARTH

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                                   ON

                            NOMINATIONS OF:

          stuart a. levey, of maryland, to be under secretary
            for enforcement, u.s. department of the treasury

                               __________

        juan c. zarate, of california, to be assistant secretary
        for terrorist financing, u.s. department of the treasury

                               __________

        carin m. barth, of texas, to be chief financial officer
            u.s. department of housing and urban development

                               __________

                             JULY 15, 2004

                               __________

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                                Affairs




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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                  RICHARD C. SHELBY, Alabama, Chairman

ROBERT F. BENNETT, Utah              PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               CHRISTOPHER J. DODD, Connecticut
MICHAEL B. ENZI, Wyoming             TIM JOHNSON, South Dakota
CHUCK HAGEL, Nebraska                JACK REED, Rhode Island
RICK SANTORUM, Pennsylvania          CHARLES E. SCHUMER, New York
JIM BUNNING, Kentucky                EVAN BAYH, Indiana
MIKE CRAPO, Idaho                    ZELL MILLER, Georgia
JOHN E. SUNUNU, New Hampshire        THOMAS R. CARPER, Delaware
ELIZABETH DOLE, North Carolina       DEBBIE STABENOW, Michigan
LINCOLN D. CHAFEE, Rhode Island      JON S. CORZINE, New Jersey

             Kathleen L. Casey, Staff Director and Counsel

     Steven B. Harris, Democratic Staff Director and Chief Counsel

                Skip Fischer, Senior Professional Staff

              Mark A. Calabria, Senior Professional Staff

              Stephen R. Kroll, Democratic Special Counsel

   Joseph R. Kolinski, Chief Clerk and Computer Systems Administrator

                       George E. Whittle, Editor

                                  (ii)




                            C O N T E N T S

                              ----------                              

                        THURSDAY, JULY 15, 2004

                                                                   Page

Opening statement of Chairman Shelby.............................     1

Opening statements, comments, or prepared statements of:
    Senator Allard...............................................     3
        Prepared statement.......................................    25

                               WITNESSES

John Cornyn, a U.S. Senator from the State of Texas..............     2
Orrin G. Hatch, a U.S. Senator from the State of Utah............    25

                                NOMINEES

Stuart A. Levey, of Maryland, to be Under Secretary for 
  Enforcement, U.S. Department of the Treasury...................     4
    Prepared statement...........................................    26
    Biographical sketch of nominee...............................    28
Juan C. Zarate, of California, to be Assistant Secretary for 
  Terrorist Financing, U.S. Department of the Treasury...........     5
    Prepared statement...........................................    35
    Biographical sketch of nominee...............................    37
Carin M. Barth, of Texas, to be Chief Financial Officer, U.S. 
  Department of Housing and Urban Development....................    19
    Biograhpical sketch of nominee...............................    44

                                 (iii)


                            NOMINATIONS OF:

                     STUART A. LEVEY, OF MARYLAND,

                 TO BE UNDER SECRETARY FOR ENFORCEMENT

                     JUAN C. ZARATE, OF CALIFORNIA,

                       TO BE ASSISTANT SECRETARY

                        FOR TERRORIST FINANCING

                    U.S. DEPARTMENT OF THE TREASURY

                       CARIN M. BARTH, OF TEXAS,

                     TO BE CHIEF EXECUTIVE OFFICER

            U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                              ----------                              


                        THURSDAY, JULY 15, 2004

                                       U.S. Senate,
           Committee on Banking, Housing and Urban Affairs,
                                                    Washington, DC.

    The Committee met at 2:32 p.m., in room SD-538, Dirksen 
Senate Office Building, Senator Richard C. Shelby (Chairman of 
the Committee) presiding.

        OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY

    Chairman Shelby. The hearing will come to order.
    This afternoon we will hear testimony on the nomination of 
Mr. Stuart Levey of Maryland to be Under Secretary of the 
Treasury for Enforcement; Mr. Juan Zarate, of California, to be 
Assistant Secretary of the Treasury for Terrorist Financing and 
Financial Crimes; and on the second panel, Ms. Carin M. Barth, 
of Texas, to be Chief Financial Officer of the Department of 
Housing and Urban Development.
    I am glad we are holding these hearings. I know you, too, 
are.
    The war on terrorism cannot be won without a firm grip, I 
believe, on the financial means by which terrorist 
organizations operate. Successful prosecution of that mission 
requires a governmental structure uniquely organized and 
resourced to meet the increased demands placed upon offices and 
individuals who, prior to September 11, 2001, focused 
overwhelmingly on money laundering associated with drug 
trafficking and other financial crimes.
    The emergence of counterterrorism as a principal function 
of the Department of the Treasury increased its role in 
national security and law enforcement. It remains imperative, I 
believe, that these missions be executed proficiently.
    The positions for which these two witnesses on our first 
panel have been nominated are the principal offices for 
carrying out the mission of combating terrorist financing as 
well as domestic and global money laundering schemes and other 
financial crimes. Among other responsibilities, they are the 
direct chain of command within the Department of the Treasury 
for ensuring oversight of the Nation's banks for compliance 
with the Bank Secrecy Act, about which this Committee last held 
a hearing on June 3. That hearing was specific to the case of 
Riggs Bank, its repeated failures to comply with antimoney 
laundering laws, and the failure of the Federal regulators to 
adequately enforce those laws.
    These nominees are particularly well-qualified for the 
positions for which they have been nominated. Stuart Levey is 
currently Principal Associate Deputy Attorney General at the 
Department of Justice, a very important post, in which capacity 
he serves as the Attorney General's point man on coordinating 
the Department's counterterrorism activities, including 
investigations, intelligence collection, and prosecution. His 
responsibilities include acting as the Justice Department's 
representative to the National Security Council 
Counterterrorism Security Group.
    Juan Zarate is currently the Deputy Assistant Secretary of 
the Treasury for the Executive Office of Terrorist Financing 
and Financial Crimes. He is well-known to this Committee for 
his role as the Treasury Department's lead office for terrorist 
financing. Prior to joining the Treasury Department, Mr. Zarate 
served in the Criminal Division, Terrorist and Violent Crimes 
Section of the Department of Justice.
    Gentlemen, I welcome all of you here, and our second panel, 
as I mentioned, will be comprised of Ms. Carin Barth, the 
nominee to be the Chief Financial Officer at the Department of 
Housing and Urban Development.
    But what I would like to do is recognize my colleague, 
Senator Cornyn, for any remarks he wants to make.

                    STATEMENT OF JOHN CORNYN

             A U.S. SENATOR FROM THE STATE OF TEXAS

    Senator Cornyn. Thank you, Chairman Shelby, for letting me 
introduce my friend, Carin Barth, who I know is on the second 
panel, but I appreciate the opportunity to come before you 
today to support her nomination to serve as Chief Financial 
Officer of the Department of Housing and Urban Development.
    I have, as I said, known Carin and Todd, her husband, and 
her family for a number of years, and I believe the President 
has chosen very wisely in asking her to take on this important 
assignment at HUD.
    Mr. Chairman, I might say, I just marvel at the number and 
quality of our citizens who, at great financial and personal 
sacrifice, agree to take on these important positions, like you 
are going to hear about from all these nominees. But Carin 
exemplifies what I am talking about. She has a distinguished 
professional record and is an extraordinarily active community 
volunteer. She is President of LB Capital, Inc., a private 
equity investment firm that she co-founded in 1987. In 
addition, she serves on the board of directors of Southwest 
Bank of Texas. She holds a bachelor's degree from the 
University of Alabama and an MBA from the Owen Graduate School 
of Management at Vanderbilt.
    She is Chairman of the board of Unipure Corporation and a 
member of the Investment Committee for the City of Houston. She 
is on the board of directors of the Ronald McDonald House of 
Houston and is a member of the Texas Tech University Board of 
Regents, where she chairs the committee responsible for 
investing the university's endowment.
    Ms. Barth also serves on the Board of Trustees of the 
Oncology Services Endowment Foundation and the Board of 
Governors of the Houston Forum Club.
    I asked her if she was going to have to sever all of these 
relationships to accept this nomination, and she said she 
would. And I know that the loss to these various organizations 
is going to be the Nation's gain with her serving in this 
important role.
    She will be a valuable member of the team at HUD, and like 
many Federal agencies, HUD continues to improve its program and 
management performance under the President's leadership, and 
this is critical. Owning a home is the cornerstone of the 
American Dream, with the Department of Housing and Urban 
Development often playing a critical role in expanding 
homeownership opportunities for low-income families and many 
first-time homebuyers each year.
    Thankfully, as a result of HUD's work and low interest 
rates, homeownership in America is at all-time high of 68.4 
percent.
    So, I would like to thank you for your many courtesies, Mr. 
Chairman, and Senator Allard and the rest of the Members, for 
allowing me to testify in support of this nomination. I urge 
the Committee to approve this nominee and very much appreciate 
the courtesies you have extended to me and certainly to Ms. 
Barth and her family.
    Chairman Shelby. Thank you, Senator.
    I would note for the record that she is well-qualified and 
especially well-educated, being from the University of Alabama.
    [Laughter.]
    Senator Cornyn. I thought you would like the University of 
Alabama, Mr. Chairman.
    Chairman Shelby. Absolutely.
    Senator Allard, do you have any opening statement?

               STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. I do not. Senator Cornyn's recommendation 
is good enough for me.
    [Laughter.]
    Chairman Shelby. Senator, thank you for your appearance. I 
know you have other commitments.
    Senator Cornyn. I think I had better leave while I am 
ahead.
    Chairman Shelby. If I could get Mr. Levey and Mr. Zarate to 
stand and hold up your right hand, do you swear or affirm that 
the testimony that you are about to give is the truth, the 
whole truth, and nothing but the truth, so help you God?
    Mr. Levey. I do.
    Mr. Zarate. I do.
    Chairman Shelby. Do you agree to appear and testify before 
any duly-constituted committee of the Senate?
    Mr. Levey. I do.
    Mr. Zarate. I do.
    Chairman Shelby. Thank you, gentlemen. We will start with 
you, Mr. Levey. Your written testimony will be made part of the 
record in its entirety, and I want to say again, you know, we 
held up these nominees not because you are not qualified, 
because we like you and we know you are qualified, and we are 
going to move these nominations. And as you well know, we will 
be working closely with you on this Committee.
    Mr. Levey.

           STATEMENT OF STUART A. LEVEY, OF MARYLAND,

             TO BE UNDER SECRETARY FOR ENFORCEMENT

                U.S. DEPARTMENT OF THE TREASURY

    Mr. Levey. I appreciate that, sir. Thank you.
    Chairman Shelby, Senator Allard, thank you for the 
opportunity to appear before you today. It is truly an honor 
for me to be here in the capacity as the nominee to be Under 
Secretary for Enforcement and as the proposed head of the new 
Office of Terrorism and Financial Intelligence at the Treasury 
Department. I want to thank the President and Secretary Snow 
for the confidence they have shown in me by selecting me for 
this position.
    Above all, I want to thank my wife, Annette, who is here 
with me today----
    Chairman Shelby. Do you want to recognize them? You can do 
that. Take your time.
    Mr. Levey. I would like to. And also my mother-in-law, 
Lotte Hamburger, who are here with me today. I want to thank 
them for their support and sacrifices that they have made in 
allowing me to pursue opportunities in public service.
    I also think it is appropriate for me to thank my 
colleagues at the Department of Justice, especially former 
Deputy Attorney General Larry Thompson and my current boss, 
Deputy Attorney General Jim Comey, and the staff of the Deputy 
Attorney General's Office for all that they have taught me and 
their support.
    During my time at the Justice Department, I have also been 
privileged to work with and learn from some of the Government's 
foremost experts on terrorist financing and money laundering. 
The dedicated professionals in the Criminal Division and the 
FBI warrant special mention. They have partnered with our U.S. 
Attorney's Offices around the country in developing cutting-
edge criminal cases against terrorist financiers and money 
launderers, achieving success after success in an area that 
many observers considered beyond the reach of criminal law 
enforcement. I look forward to continuing to work with them in 
the Treasury Department if I am confirmed.
    My experience in the last 3 years at the Justice Department 
makes me very mindful of the enormous responsibility that will 
be before me if I am confirmed. Almost every morning, I begin 
the day by meeting with the Attorney General, the Deputy, and 
the FBI Director to go over the most important terrorist 
threats that are facing us that day. Even after so many months 
of doing it, I still find it chilling to hear about people who 
are scheming to kill as many of our citizens, innocent 
citizens, as possible. It is chilling, but it is also a 
motivating force. I never have to question why I am going to 
work and why I am doing what I am doing. There is so much at 
stake in the war on terror.
    The financial aspect of the war on terror is critical to 
the overall mission. Terrorists obviously need money to 
operate--to train, to recruit, to travel, to communicate, and 
to carry out attacks. Whenever we cut off their money supply, 
we reduce their abilities, and force them to adopt new funding 
methods that are more cumbersome or risky and make them less 
effective. On another level, the audit trail that money leaves 
is often our best source of intelligence to find and disrupt 
terrorists. And there are times when watching where the money 
comes from and where it goes is more valuable than taking 
immediate public action to stop it. We have to adapt our 
strategy in each case to do whatever is best for the overall 
mission of preventing terror. And that is one reason why a 
coordinated, interagency effort is vital to our overall 
success.
    But within that effort, the Treasury Department has a 
unique leadership role to play in the financial war on terror. 
The Treasury Department, working with other agencies around the 
Government, and with the support of the Congress, has made 
significant progress in the fight against terrorist financing 
since September 11. The people who have been doing that work in 
the Department, including Juan Zarate, are among the most 
dedicated and talented public servants you will find. If I am 
confirmed, I will be joining a very talented team.
    I think that team would agree with me that there is much, 
much more work that needs to be done. The news in recent days 
reinforces that view. If I am confirmed, I hope to bring a 
heightened sense of urgency to the overall terrorist financing 
mission at the Treasury Department. We have to continue to 
reenergize our efforts because our enemies remain committed to 
killing innocent people and because there really is no longer 
any low-hanging fruit for us to pick in this fight.
    I am aware that there are substantial challenges before us, 
and still, I am optimistic because of the steadfast support 
that Secretary Snow and Deputy Secretary Bodman have shown to 
the overall cause of fighting the financial war on terror. I am 
also heartened by the support for this mission demonstrated by 
the Congress and this Committee in particular. If I am 
confirmed, I look forward to working with you on these 
important issues. I look forward to your questions.
    Thank you, Mr. Chairman.
    Chairman Shelby. Mr. Zarate.

          STATEMENT OF JUAN C. ZARATE, OF CALIFORNIA,

       TO BE ASSISTANT SECRETARY FOR TERRORIST FINANCING

                U.S. DEPARTMENT OF THE TREASURY

    Mr. Zarate. Mr. Chairman, thank you very much, and Senator 
Allard. It is indeed an honor for me to be here today, and I 
thank you for your kind words earlier and your consistent 
support. It is a privilege certainly for me to have been 
nominated by the President, sir, and I thank him, Secretary 
Snow, and Deputy Secretary Bodman for their confidence in 
nominating me for this important position.
    Mr. Chairman, the positions for which Mr. Levey and I have 
been nominated form an important part of our country's long-
term strategy in the war on terror. This Administration has 
waged an unprecedented campaign against terrorism and the 
financing that fuels horrendous acts of violence and hatred 
around the world. This is certainly not just an American 
problem born on September 11. From the railway bombings in 
Madrid and Moscow to the commercial center attacks in Istanbul 
and Casablanca, we have seen that terrorism does not 
discriminate among race, religion, or national origin.
    Mr. Chairman, when I came to Washington as a Federal 
prosecutor, I was immersed quickly into the reality of the 
threat that al Qaeda posed to our country. Two of my most 
important assignments involved helping in the investigation and 
prosecution of those responsible for the American Embassy 
bombings in East Africa and for the killing of 17 of our 
sailors on the USS Cole.
    Just days after I began work at the Treasury Department in 
August 2001, America awoke to the horrors of al Qaeda. As a 
result, our collective mission changed forever.
    Since September 11, I have been charged with many others 
with helping drive the U.S. Government effort, certainly along 
with Mr. Levey, to attack the financial underpinnings of 
terrorism. Allow me now, Mr. Chairman to say that I will count 
myself privileged to work for and with Mr. Levey if we are both 
confirmed.
    Mr. Chairman, we have achieved important successes in the 
mission to bankrupt terrorism. It is now certainly harder, 
costlier, and riskier for al Qaeda and other like-minded terror 
groups to raise and move money around the world. We have frozen 
and seized terrorist assets, exposed and dismantled known 
channels of funding, deterred donors, arrested key 
facilitators, forged an international coalition to face 
evolving threats, and build higher hurdles in the international 
financial system to prevent abuse by terrorists. These efforts 
have tightened the financial noose around al Qaeda's neck.
    The drumbeat of our drive to disrupt terrorist financing 
has been constant, and, Mr. Chairman, it will continue. There 
are many examples of this important and steady work coming from 
the U.S. Government and the Treasury Department, and I think it 
bears mentioning just a few brief recent examples, sir.
    On June 2, the United States and the Kingdom of Saudi 
Arabia further clamped down on terrorist funding by announcing 
the designation of five branches of the Saudi-based charity Al 
Haramain. At the same time the Saudi Government also announced 
the impending consolidation of their charitable sector. On June 
10, we announced the designation of a key Hezbollah financier 
in the tri-border area of South America, along with two of his 
businesses. This Hezbollah treasurer had used these businesses, 
counterfeiting, extortion, and other financial crimes to funnel 
money back into Hezbollah's coffers. We continue to identify 
front companies and individuals who acted on behalf of Saddam 
Hussein and his regime in Iraq and abroad.
    Since Secretary Snow launched our campaign to find and 
return Iraqi assets in March 2003, we have worked with our 
international partners to freeze approximately $6 billion 
around the world and return over $2.7 billion to the Iraqi 
people.
    Earlier this year, as you know, Mr. Chairman, the 
Treasury's Financial Crimes Enforcement Network, along with the 
Office of the Comptroller of the Currency, levied a fine of $25 
million against Riggs Bank for failure to comply with the 
provisions of the Bank Secrecy Act. Led by the Secretary and 
the Deputy Secretary, this has in turn resulted in a more 
aggressive plan with the regulators for ensuring proper and 
more direct Treasury oversight in the administration of the 
Act. Just this morning, the Deputy Secretary publicly laid out 
the plan that Treasury intends to implement along with the 
regulators to ensure that this happens.
    In May, the Secretary of the Treasury designated the 
Commercial Bank of Syria as a primary money laundering concern 
under Section 311 of the USA PATRIOT Act, a power which this 
Committee and Congress gave to us. As a result, the Secretary 
ordered the closing of their corresponding accounts because of 
that bank's complicity in dealing with the Hussein regime, its 
weak money laundering practices, and suspicions of terrorist 
financing through the institution.
    This is but a mere snapshot of the important work that we 
all do and that we all accomplish every day. The need for this 
type of intensive and consolidated work in the long-term is why 
this Administration, in concert with Congress, decided to 
create the new Office of Terrorism and Financial Intelligence. 
TFI brings under one umbrella the intelligence, enforcement, 
diplomatic, policy and regulatory resources of the Treasury. It 
will allow us to at once consolidate our information and 
analysis, to utilize Treasury authorities to advance our 
national security interests, and protect our financial systems.
    This is important, Mr. Chairman, because we know that we 
are in the midst of a real and protracted struggle against 
terrorism. We will continue to strengthen the financial net to 
protect our financial institutions from tainted capital flows, 
and will continue to use all of our authorities, expertise, and 
contacts to proceed with this mission.
    Finally, Mr. Chairman, if I could, I am pleased to have 
with me some very close family, friends, and my dear wife, 
Cindy, who is my best friend and my high school sweetheart.
    Chairman Shelby. Introduce them.
    Mr. Zarate. Cindy is back there.
    Chairman Shelby. Stand up, Cindy. Thank you.
    Mr. Zarate. Directly to her right, sir, is a very close 
family friend who is like a brother to me, Lieutenant Colonel 
James Vogel.
    Chairman Shelby. Thank you.
    Mr. Zarate. Mr. Chairman, I am sorry my parents, who are in 
California, could not be here today, but they are very happy to 
know that I sit here before you.
    Chairman Shelby. Maybe they are watching this on TV.
    [Laughter.]
    Mr. Zarate. Perhaps, perhaps. It has certainly been both a 
dream and expectation of my parents, who emigrated from Mexico 
and Cuba in the 1950's in search of prosperity and opportunity, 
that my siblings and I serve this country. And indeed, it is an 
honor for them and an honor for me to be here before you, and 
if confirmed, I hope to continue to serve this President, the 
Secretary, as well as this Congress on all of these critically 
important issues, and I look forward to working with you and 
other Committees of Congress in this mission. Thank you.
    Chairman Shelby. I want to just say again at the beginning, 
that both of you are highly qualified for these positions, and 
I predict we are going to confirm as fast as possible, I mean 
as quickly as we can, and I commend the President on selecting 
you.
    Now I have a number of questions.
    [Laughter.]
    As you know, and they are not personal to you, as you know. 
But they will be involved in your work.
    Mr. Levey, I was a little disturbed by a recent article in 
the American Banker about the Bureau of Immigration and Customs 
Enforcement's Operation Cornerstone. This operation, according 
to the article, involves unannounced visits by ICE officials at 
banks ostensibly for the purpose of establishing cordial 
relationships and informing banks of their responsibilities. 
Operation Cornerstone is disturbing on two fronts. One is the 
apparent absence of knowledge on the part of the Federal 
regulators regarding the program's existence. The other is the 
central question of leadership over regulation of banks with 
respect to antimoney laundering laws.
    For the Federal Deposit Insurance Corporation, which I know 
is not a Treasury Agency, but which is supposed to coordinate 
with Treasury, to be in the dark over an intrusive program 
involving banks over which it has regulatory jurisdiction is 
alarming, to say the least.
    Could you tell us about your knowledge, if you have some 
information of this program, and what role if any that you 
would anticipate having in its implementation? And if 
confirmed--and you will be--is this the kind of program about 
which you would anticipate having advanced knowledge and some 
measure of influence over.
    You want to start, Mr. Levey?
    Mr. Levey. Yes, of course, sir.
    Chairman Shelby. Is that too much? I know it is not for 
you.
    Mr. Levey. I will take a shot at it. If I do not get it 
all, then I am sure you will come back and tell me I did not.
    Chairman Shelby. Sure.
    Mr. Levey. It sounds as though--I am aware of the article 
that you refer to, sir, and I am also aware of Operation 
Cornerstone generally. It sounds like there may well have been 
a failure of coordination, particularly with the Treasury 
Department, with respect to this program of----
    Chairman Shelby. Coordination is very important, is it not?
    Mr. Levey. It absolutely is, and I do think that Operation 
Cornerstone, based on what I know about it, is something that 
does need to be coordinated well with the Treasury Department, 
and I know that----
    Chairman Shelby. And under your leadership it will be?
    Mr. Levey. It will be. The Assistant Secretary who is in 
charge of ICE, as we call it, ICE, Michael Garcia, is an 
excellent public servant, and I think he would have every 
intention of coordinating this with me. I do think there is 
some valuable role for financial investigations conducted by 
ICE, but these things have to be coordinated with the Treasury 
Department, and I fully expect they will be.
    Chairman Shelby. This morning the Department released some 
information pertaining to changes or refinements in how FinCEN 
operates, and its role as the principal administrator of the 
Bank Secrecy Act. One of the changes that is mandated here is 
increased notification to FinCEN by regulatory agencies of 
significant--I believe that is the term--BSA violations of 
deficiencies discovered during the examination process. We have 
had a hearing on that, the Riggs situation. What will 
constitute significant violations or deficiencies? Can you 
apply a new mode of operation to any of the recent cases of BSA 
violations to show how it will operate in practice. Give us a 
reference point.
    Mr. Levey. Sir, I am aware of the Deputy Secretary's 
announcement and the plan. I think that maybe your staff or 
perhaps even you have been briefed on the basic parameters of 
the plan. The idea is to get FinCEN the information they need 
to see whether there is effective BSA oversight or whether 
there may be systemic problems that Riggs is just the tip of 
the iceberg of.
    I think that the word ``significant''--to be honest with 
you, sir, I do not know exactly what was meant by the word 
``significant,'' but I think what maybe the Deputy Secretary 
was getting at there is that there may be occasional technical 
violations that do not need to be reported to FinCEN, but the 
basic thrust of the overall program is to make sure that there 
is full reporting to FinCEN so FinCEN knows what is going on 
out there so we know whether we have got a huge problem, and 
until we know whether or not we have a huge problem, we cannot 
be confident that we are ensuring effective BSA compliance.
    Chairman Shelby. Today's release would seem to have 
resource implications for 2005-2006 at the latest. I chair 
another Committee, dealing with the funding, and we might cross 
here a little bit. But can you provide information or can you 
do it for the record on how FinCEN's budget will be affected by 
today's announcement? If you cannot do it now, if you can do it 
for the record.
    Mr. Levey. I think that is not something I am in a position 
to do at this moment.
    Chairman Shelby. This Committee would not be as interested, 
but the Appropriations would, to try to make sure you have what 
you need.
    Mr. Levey. I understand and appreciate that, sir.
    Chairman Shelby. This Committee has been critical of the 
Federal regulatory agencies' enforcement of the Bank Secrecy 
Act, as you know. The Riggs Bank, case which was referenced, 
was clearly the most glaring example of deficiencies in 
compliance and enforcement, but a number of other examples have 
come to our attention over the past several months, Banco 
Popular and Hudson United, for example. Is that right, you are 
familiar with those cases?
    Mr. Levey. Yes, sir.
    Chairman Shelby. The Committee is aware of meetings the 
Department has had with industry since our June 3 hearing on 
Riggs, and with meetings internal to the Department, intended 
to convey a sense of urgency with respect to BSA compliance and 
enforcement. One message that was conveyed both internally and 
externally, it is my hope that it was, is that Congress does 
not see a conceptual divide between safety and soundness and 
BSA compliance. I think you have to have both. Can you provide 
the Committee some sense of how you intend to improve the 
oversight of the Bank Secrecy Act? I think it is very 
important, because much of the culture in the banking industry 
and among the regulators, has--and rightly so--for a long time, 
been safety and soundness. But now we have that other big 
challenge.
    Mr. Levey.
    Mr. Levey. I understand, sir. I agree with you this is an 
issue of great significance. It is important both because we 
need to enforce these laws for their own sake, but because, 
frankly, we go around the world and try to tell other countries 
that it is not enough just to have laws on the books, but you 
need to enforce them, so we need to make sure we are doing our 
homework at home in enforcing our laws.
    The examples you give are very troubling, sir, and I know 
that the Deputy Secretary and the Secretary feel the same way. 
I think the steps that they have announced are certainly a step 
in the right direction because it will provide FinCEN and 
ultimately the Secretary with the information we need to know 
whether or not we have a systemic problem, whether or not we 
have only seen the tip of the iceberg, or whether these are 
isolated cases. That is an important question for us to answer.
    I intend to make this a top priority. In fact, I have 
already met with the Department's Inspector General to get the 
benefit of his views. The Inspector General of the Treasury has 
done a fair amount of work on this issue. I wanted to hear his 
views, and get that perspective. This is something we need to 
get on right away.
    Chairman Shelby. You would head, after you are confirmed, 
the Office of Terrorism and Financial Intelligence. 
Additionally, the yet-to-be-filled position of Assistant 
Secretary for Intelligence and Analysis would also play an 
important role in coordinating the Treasury Department's 
intelligence activities with those of the intelligence 
community as a whole. Could you describe for the Committee what 
actions you anticipate will be necessary to ensure that the 
Office of Assistant Secretary for Intelligence and Analysis has 
the kind of relationship cemented with the intelligence 
community that will enable it to operate efficiently and 
expeditiously? In other words, will a memorandum of 
understanding be negotiated here or what do you anticipate? You 
need some clear lines, do you not?
    Mr. Levey. Yes, we do. We need to make sure that the 
Treasury Department is receiving all the information it needs 
from the intelligence community.
    Chairman Shelby. Right. And sometimes, that is not so easy.
    Mr. Levey. I understand that, sir, and you understand that 
probably better than anyone, given your experience on the 
Intelligence Committee.
    I believe that we will have an excellent experience with 
this office because we have gotten a great deal of support from 
the intelligence community in setting this up, and I think 
perhaps you were even on the Intelligence Committee when that 
was first discussed.
    Also part of this is to bring to bear the information the 
Treasury Department already has, and put it together with the 
intelligence information so that we make sure it is all being 
done in one place, and that is the overall vision for that part 
of this office, which I think is something that has not been 
done in the past, but where we can really add value and do 
something new that the Treasury Department has not done before, 
and help us achieve our mission better.
    Chairman Shelby. Well, a lot of us believe that the job you 
two are undertaking is key to this fight with terrorism because 
it is the money. Without money, they have nothing, do they? 
They cannot exist very long.
    Mr. Levey. I agree, sir.
    Chairman Shelby. Mr. Zarate, I have a few questions for 
you.
    Mr. Zarate. Yes, Mr. Chairman.
    Chairman Shelby. Because of your responsibility for 
terrorist financing and money laundering, your position entails 
considerable international exposure. Europe is a central focus 
of the Financial Action Task Force. Much of Asia, notably 
excluding China, belongs to the Asia-Pacific Group on Money 
Laundering; is that correct?
    Mr. Zarate. That is correct.
    Chairman Shelby. There has been a noticeable gap, however, 
in the Middle East, and to a slightly lesser extent, Africa, in 
the terms of regional coordination of antimoney laundering laws 
and enforcement. The July 6 issue of Khaleej Times reported 
that some Middle East and North African states agreed to set up 
a similar regional body to combat money laundering and 
terrorist financing.
    Could you provide for the Committee, either now or for the 
record, your assessment of the status of the proposed Middle 
Eastern, entity which is a step, I have to say, in the right 
direction and whether the individual countries have the track 
records of enforcing financial crimes required to make this 
initiative a success. I know they are going to have to take 
some quantum leaps.
    Mr. Zarate. Mr. Chairman, you have identified gaps that we 
have actually been working on, and the body that you have 
identified is a FATF-style regional body for the Middle East 
that we have been working on with the World Bank, the FATF, and 
those countries for over a year now, and we hope to have that 
established in the fall, along with as well, a Central Asian 
style regional body, because that is another part of the world 
that has been largely ignored with respect to dealing with 
these issues systemically and on a regional basis.
    I think the success of the FATF in dealing with these 
issues on a regional basis, growing so in Africa, as well with 
one of those regional bodies called ESAAMLG, has proven that it 
has been very good in terms of building up the systems, 
building up connectivity between the jurisdictions and having 
them do exactly what Mr. Levey said we try to get them to do, 
which is to enforce their laws, to regulate their financial 
institutions, and to help us do what we need to do, which is to 
capture tainted capital.
    Chairman Shelby. Would that involve the United States in 
capacity-building exercises in these countries that have never 
had to deal with this kind of situation before to facilitate 
the passage and the enforcement of antimoney laundering laws, 
terrorist financing laws, and so forth?
    Mr. Zarate. Absolutely, Mr. Chairman. It will be a focus of 
our attention. It has been a focus. To give you a very good 
example, we spent quite a bit of time with Egypt, which had 
been listed as a noncooperative country and territory by the 
FATF. We worked very hard with our colleagues at the Department 
of Justice and State to work with the Egyptians, and the 
Egyptians were taken off the list given their very good 
progress. That is one minor example of many around the region 
and around the world, based on our international engagement, 
and that that is part of our plan.
    Chairman Shelby. Senator Allard, thanks for your 
indulgence.
    Senator Allard. Thank you, Mr. Chairman.
    This is a question for both of you. Have you heard of GPRA, 
Government Results and Procedures Act? This is an important 
provision in law as far as I am concerned, and the reason I 
think it is so important is because it sets up a format for how 
Members of Congress can review how well your agencies are 
doing. It is similar to a management by objectives procedure. 
So what you have to do in your agencies is to determine 
measurable goals, and then report to the Congress how well you 
do on those measurable goals. I wondered if either one of you 
thought what goals you are going to be setting up here.
    Your agencies are now setting up their budgets for next 
year, and I would like to hear what your thoughts might be on 
measurable goals within both of your areas of interest and 
jurisdiction.
    Mr. Zarate. Senator Allard, first of all, I think it bears 
mentioning we currently have internal measures and goals that 
we use for the Executive Office for Terrorist Financing 
Financial Crimes, for OFAC, for FinCEN, the other elements that 
exist within Treasury that have been dealing with issues 
related to terrorist financing and money laundering. So those 
measurements already exist. We use them internally, and that--
--
    Senator Allard. Let me interrupt you. I do not believe that 
the entire Treasury Department is in compliance with GPRA. I do 
not know your area but I would hope that you would also be a 
voice to make sure we get the whole Department under compliance 
because we will be asking those questions.
    Mr. Zarate. Yes, sir. One of the things we want to do, and 
certainly if Mr. Levey and I are confirmed we will need to do, 
is to sit down, given the restructuring and given the new 
responsibilities that this office now has, and restructure what 
those measurements and goals will be.
    I will tell you, Senator, in all due candor, that 
developing measurements and quantifiables in this area is very 
difficult because our ultimate goal is to deter and to 
dismantle terrorist networks, and it is very difficult at the 
end of the day to determine that. It does not mean you cannot 
do it and it does not mean you should not try, and we certainly 
have, but it becomes more difficult when dealing in issues 
related to deterrence.
    Senator Allard. But I do hope that you overcome those 
obstacles and get the job done.
    Mr. Zarate. Yes.
    Senator Allard. Yes.
    Mr. Levey. Absolutely, and we will do what we need to do in 
that respect. But just to make one point on this issue, which 
is that when talking about terrorist financing in particular, I 
think that there is some caution that we need to exercise with 
respect to some of the metrics or measurable goals that have 
been put out in the past, like how many people have been 
designated or how much money has been frozen, because what we 
do not want to have happen is to have incentives created to do 
things that might not be the best thing to do to disrupt the 
terrorist operation or cell in the long-run. So this is an area 
that takes a lot of hard thought, and we are committed to do 
that.
    Senator Allard. And whenever you show up in front of this 
Committee you are going to get this question from me, see? You 
can plan on it.
    Mr. Levey. Okay.
    Senator Allard. And you will find I think that the 
appropriators will pay attention, and I serve on the Budget 
Committee. We pay close attention when we allocate dollars to 
the Treasury Department just how well your Department has been 
measuring up. So this is important, and it is important I think 
that you take some time and understand what we are trying to 
accomplish here.
    The other thing that I want to address to you, Mr. Levey, 
you talked about you receiving information from the Central 
Intelligence Agency. You did not say anything about passing it 
over to them. You talk about pooling your resources plus theirs 
in some central, but do you not feel an obligation to keep them 
informed? And if there is a law or something that prevents you 
from passing your information to them, I would like to hear 
about that. Do you have any concerns there?
    Mr. Levey. I do feel an obligation to keep them informed. 
There is no law. They will be kept informed.
    Senator Allard. Also, Mr. Levey, originally, as Under 
Secretary of Treasury for Enforcement your responsibility was 
just the Department's law enforcement activities, and then, 
that is, after restructuring, that includes money laundering 
and terrorist finance. While I think each of these is 
definitely distinct, to what extent do you plan to focus on 
these different areas of concern as well as the other areas of 
the jurisdiction of enforcement?
    Mr. Levey. I am sorry, sir. I did not----
    Senator Allard. After a recent restructuring, money 
laundering and terrorist finance have been given a greater 
emphasis.
    Mr. Levey. Absolutely.
    Senator Allard. Now, how do you plan to focus on some of 
the other areas of concern under your jurisdiction?
    Mr. Levey. The main thing that we are going to different I 
think that has not been done in the past, and what 
differentiates this office from what the old Office of 
Enforcement was at the Treasury Department is the intelligence 
function that we have been talking about, which is while the 
Treasury Department has been a member of the intelligence 
community, I think it is fair to say it has not been a 
completely full partner in it. By elevating it, creating 
Assistant Secretary for Intelligence, and fully integrating 
into the intelligence community, we will be able to do the kind 
of long-term strategic effort against terrorist financing that 
maybe we were not able to do, or the Treasury Department was 
not able to do as well before that.
    Senator Allard. This is for both of you. I hear a lot from 
independent bankers. I am from a small State, and the Chairman 
is I guess from a small State too, and they are a vital part of 
what happens in rural areas. There has been some concern 
expressed to my office about the burden of some of these laws 
and the impact they have on small and independent community 
banks. I am wondering if you would talk to me about what your 
thoughts are on this. Are they an area of concern that we need 
to watch particularly closely, or are they of lesser concern or 
are large banks more of an area of concern, or is there any 
differentiation, they all are. Share with me some of your 
thoughts on that.
    Mr. Zarate. Senator Allard, if I could, one of the key 
roles that Treasury certainly plays is balancing the 
enforcement obligations and regulatory obligations on the 
financial sector with burden imposed on the financial sector. 
One of the things that we have seen post-September 11 with the 
passage of the USA PATRIOT Act is that the extension of the 
antimoney laundering regime has now extended well beyond the 
banking industry, and is now applicable to the nonbanking 
financial sector.
    That issue generally is of great concern to us, and we do 
quite a bit of outreach. We host, for example, the Bank Secrecy 
Act Advisory Group, which has as part of it, trade 
associations, small bank associations, where we talk about 
these very issues, where we talk about the burdens being 
imposed, the obligations on institutions, et cetera.
    In general, what we hope to do in very short order is to 
provide these institutions with greater feedback with respect 
to how effective the regulations are and how effective the 
information they are providing us is. We are trying to promote 
e-filing, for example, to lessen the burdens on these types of 
institutions, and in general, incorporate them much more 
broadly in the overarching discussions about antimoney 
laundering issues.
    Senator Allard. Mr. Levey.
    Mr. Levey. I am afraid, sir, I do not really have anything 
much more to add to what Mr. Zarate said.
    If I could, I feel like I might have been a little hasty in 
response to a prior question of yours with respect to whether 
there is any laws that bar the Treasury Department from sharing 
with the intelligence community. There are laws that deal with 
tax information that we might need to deal with. What I was 
referring to when I said there is no such law is that there is 
nothing that prevents Treasury generally from communicating 
information to the intelligence community. I just did not want 
to leave you with a misimpression.
    Senator Allard. I could visualize a situation where that 
issue could be brought up fairly frequently by any taxpayer, 
whether they are a citizen or not, I guess. Do you see that as 
a major impediment?
    Mr. Levey. I do not know whether it is a major impediment 
or not, but it is something that I think we should look at, to 
make sure that the national security comes first, and we take a 
look at whether any of these rules that govern the privacy of 
the tax information would be an obstacle to pursuing a national 
security investigation.
    Senator Allard. Based on your comments, I think yours and 
my priorities are the same. National security is first. If you 
run into problems in that regard, I would be interested in 
holding a hearing about what concerns you run into there so we 
fully understand this problem.
    Mr. Levey. Absolutely, sir.
    Senator Allard. And last question, Mr. Chairman.
    The Currency Transaction Report has a threshold of $10,000, 
which was established 34 years ago. Do we need to change that 
since it was established so long ago and our economy has grown 
and whatnot, or raise it or increase it after we have had 34 
years of experience? Again, this is an issue that was brought 
to my attention by a number of small banks, and I would like to 
hear what your comments might be.
    Mr. Zarate. Senator Allard, from my perspective, it is 
certainly something that we need to review and actually are 
talking about and thinking about. The Bank Secrecy Act Advisory 
Group again is another forum in which we have started to 
discuss this and other issues.
    One of the main concerns we have with the CTR filing 
requirement is that it has become somewhat rote in the industry 
to file CTR's when, in fact, there are a number of exceptions 
under the law that are not taken advantage of. So one of our 
primary duties and, frankly, I think our number one assignment, 
is getting industry to understand those exceptions and to apply 
them. So we are not inundated with less-than-useful 
information.
    Second, I think we need to look at that very requirement.
    I would note, Senator, that one of the things we are 
promoting internationally is greater reporting of currency 
transactions, both with financial institutions and at the 
border, and that is something we are pushing very aggressively.
    Senator Allard. Thank you, Mr. Chairman. I see that my time 
has expired.
    Chairman Shelby. Thank you, Senator.
    I have a few more questions. The growth of remittance 
monies from individuals here in the United States to their 
countries of origin has been astounding. You well know this. 
This year alone over $30 billion will be sent abroad involving 
as many as 150 million separate transactions. We know that such 
transactions are occurring almost entirely outside what we call 
the traditional financial system, primarily by way of 
international money order, money transfer companies, such as 
Western Union, Moneygram, and so forth.
    Mainstream financial institutions are making efforts to 
play a more significant role, attempting to get a piece of this 
huge market. These financial service companies are deepening 
their outreach efforts and offering integrated services for 
remittance customers such as account services, savings, credit 
and mortgage products.
    But with regard to the international money transfers, are 
they difficult to trace, Mr. Levey, and susceptible to money 
laundering practices?
    Mr. Levey. Sir, I absolutely think that they are.
    Chairman Shelby. It is a lot of money involved.
    Mr. Levey. It is a lot of money, and it is actually one of 
the areas I think of concern to the Treasury Department because 
there is a lot of noncompliance out there with the requirement 
that these money service businesses register with the Treasury 
Department.
    Chairman Shelby. Do you need legislation in this regard or 
enforcement?
    Mr. Levey. We need enforcement.
    Chairman Shelby. Are you going to lead that task force?
    Mr. Levey. I will take a look at this and do something to 
make sure that this gets enforced. We have a lot of 
noncompliance with what is a criminal statute under the USA 
PATRIOT Act.
    Chairman Shelby. Would incorporating remittance 
transactions into the traditional financial system help to 
focus the Treasury's oversight and enforcement role, Mr. 
Zarate?
    Mr. Zarate. Mr. Chairman, I think so. And that is, in part, 
what the effort has been about--not only extending regulations 
and antimoney laundering controls----
    Chairman Shelby. We are talking about at least $30 billion. 
You are talking about a lot of money for nontraditional 
banking.
    Mr. Zarate. That is right. And one of the points the 
Treasury Department has been making, both domestically and 
internationally, is that this is a profitable venture for the 
banking community, and we have seen some very good results with 
respect to that. We have seen results not only domestically 
with banks taking more of this type of business, lowering their 
own costs, entry barriers for people, but also abroad in 
Southeast Asia, in Mexico, and elsewhere. So that is part of 
Treasury's mission and something we have been working very hard 
on, and it goes hand-in-hand with our regulatory function.
    Chairman Shelby. For the past year, the amount of terrorist 
money frozen by the U.S. Government seemed frozen at around 
$136 million. Recent Treasury Department statements place the 
number at $200 million. How much has been frozen or seized over 
the past year? Do you know, Mr. Levy, roughly? Do you want to 
furnish that for the record?
    Mr. Levey. We can definitely furnish that for the record, 
but it has not been nearly as much in the last year as it was 
in the prior 2 years.
    Chairman Shelby. It has dropped off, has it not?
    Mr. Levey. It absolutely has, yes, sir.
    Chairman Shelby. You all will work with us on that, for the 
record?
    Mr. Zarate. Yes, Mr. Chairman.
    Chairman Shelby. Mr. Zarate, I know the Joint 
Counterterrorist Financing Task Force in Saudi Arabia is 
Bureau-operated. As the Treasury Department's point man for 
terrorist financing, can you comment--and if you cannot 
herethen for the record--can you comment on the level of 
cooperation the United States is receiving from the Saudis. Is 
it better? Is it about the same? Where is it?
    Is there a gap there?
    Mr. Zarate. The cooperation has been growing, and it has 
been exponentially----
    Chairman Shelby. Has it been growing a lot more since the 
attacks on their own country?
    Mr. Zarate. That is exactly right, sir. The attacks in 
Riyadh have certainly awoken the Saudi Government to the 
realities of the threat that they face. That is what helped, in 
fact, spur the idea of the Joint Task Force, where we actually 
have not only FBI, but also IRS agents on the ground in Riyadh 
sharing financial information.
    We have a situation where there is actual real-time sharing 
of information for the first time at least in my knowledge 
between our Governments and our agents. We are not only working 
well with them, but we are also working very well with our 
Ministry of Finance and their bank regulatory agency, which has 
quite a bit of authority over some of these activities.
    Chairman Shelby. Are they implementing what they have been 
saying? Generally, there is a big difference between how people 
make policy and the way they implement the policy.
    Mr. Zarate. That is right, Mr. Chairman. That is something 
we are----
    Chairman Shelby. We know that ourselves sometimes.
    Mr. Zarate. Yes, sir. We are watching that very carefully, 
and we are working with the Saudis. We make very clear to them, 
in our bilateral discussions and publicly, that we expect them 
to enforce exactly what they are saying they are going to do. A 
very good example of that was their very important announcement 
on June 2 about the consolidation of their charitable sector. 
We want to see that happen, and we want to know how it is going 
to happen, and we are working with them to do just that.
    Chairman Shelby. Mr. Zarate, the General Accounting Office 
estimates the former regime of Saddam Hussein had skimmed as 
much as $10 billion from the United Nations Oil-for-Food 
program. There is concern that some of that money went to 
support terrorist organizations.
    Last May, the Department of the Treasury designated the 
Commercial Bank of Syria as a financial institution of primary 
money laundering concern on the basis partly of its handling of 
money diverted from the Oil-for-Food program. Syria, of course, 
is a U.S. State Department-designated terrorist-supporting 
state.
    What is your assessment of the degree to which money 
skimmed from the Oil-for-Food program went to support terrorist 
organizations? If you cannot get into that here, we will do it 
later. I am sure you have some concerns.
    Mr. Zarate. We certainly do have concerns. We know that the 
regime of Saddam Hussein was paying families of Palestinian 
suicide bombers. We know that he was housing certain terrorists 
in Baghdad. So there was certainly support.
    In terms of the percentage, it is very hard to tell. We 
know that from that $10-billion estimate, we do know that he 
spent quite a bit of that for his pleasure palaces, his 
armaments and his own purposes, and we have found a good bit of 
it abroad. As I mentioned, we have frozen $6 billion of Iraqi-
related assets and returned a good bit of that to the Iraqi 
people. So it is hard, in terms of breakdown.
    One of the things that we are still concerned about, Mr. 
Chairman, is any assets that are still out there that have not 
been frozen that could be used to continue to fuel the 
insurgency or the terrorist acts that we see in Iraq on an 
almost daily basis.
    Chairman Shelby. You both, I know, are familiar with the 
UBS situation involving the Federal Reserve, the Iraqi money 
and so forth, where they were fined $100 million for doing 
business with Libya, Cuba, and Iran.
    Have you looked in or will you look into any possibility a 
link to terrorism financing?
    Mr. Zarate. We have been working very closely, Mr. 
Chairman, with the Federal Reserve Bank in New York to look at 
any appropriate leads.
    Chairman Shelby. Anything that is appropriate.
    Mr. Zarate. And there are ongoing investigations with 
respect to the activity of UBS and that ECI agreement, the 
Extended Custodial Inventory agreement that formed the basis of 
the relationship with the New York Fed.
    It is certainly something we are looking at. I cannot say 
here as to whether or not we are seeing that at this point.
    Chairman Shelby. We will meet with you at another place 
sometime.
    Senator Allard, do you have any more questions?
    Senator Allard. I just want to comment we have been 
entirely too easy on these two gentlemen.
    [Laughter.]
    But on the more serious note, we do think this is very 
important work that you are doing. I am absolutely delighted we 
have got these positions filled and can move forward because 
this is critical work to our country's security, as you are 
probably well aware of. And both the Chairman and I have served 
on the Intelligence Committee so we fully understand the 
implications and importance of your work.
    So thank you very much for taking the time and your 
willingness to do that.
    Chairman Shelby. Senator Allard was saying that in jest. He 
knows we have not been easy on you. We respect you, and from 
where you are coming, and where you are going, and what you are 
going to do.
    Senator Sarbanes asked me, he is also on the Foreign 
Relations Committee, he wants to keep the record open a few 
days. He has a number of questions for both of you in this 
area.
    Gentlemen, we appreciate you and your families appearing 
today, and we will expedite these nominations, we assure you.
    Thank you very much.
    Mr. Levey. Thank you, sir.
    Mr. Zarate. Thank you, Mr. Chairman.
    Chairman Shelby. I look forward to working with you.
    Thank you.
    Chairman Shelby. Our second panel will be, as we said, Ms. 
Carin Barth, of Texas, nominated to be Chief Financial Officer, 
Department of Housing and Urban Development.
    Ms. Barth, welcome to the Committee. Again, we appreciate 
you appearing here. Before I get you to testify, I want you to 
stand and hold up your right hand and be sworn.
    Do you swear or affirm that the testimony that you are 
about to give is the truth, the whole truth, and nothing but 
the truth, so help you God?
    Ms. Barth. I do.
    Chairman Shelby. Do you agree to appear and testify before 
any duly-constituted committee of the Senate in the future?
    Ms. Barth. I do.
    Chairman Shelby. Thank you. As I said earlier--I think I 
did. If I did, I will repeat myself--your opening statement 
will be made part of the record. If you want to move the 
afternoon on, you sum up your--you were well-introduced by our 
colleague Senator Cornyn. And I as noted, you are well-educated 
from the University of Alabama. So you have a heads-up with me. 
You proceed as you wish.

             STATEMENT OF CARIN M. BARTH, OF TEXAS,

               TO BE THE CHIEF FINANCIAL OFFICER,

        U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Ms. Barth. Thank you, sir. Maybe I should stop there.
    Chairman Shelby, Senator Allard, and distinguished Members 
of the Committee, my name is Carin Barth. I thank you for 
inviting me to appear before you today. I know how busy this 
Committee is, and I very much appreciate the opportunity to 
appear before you. I am especially grateful that you have 
invited me to appear on such an expedited basis.
    I would also like to thank Senator Cornyn for appearing and 
introducing me today. I have known and respected Senator Cornyn 
for a long time. I am honored that he was with us today and 
very much appreciate his comments.
    Chairman Shelby. If you have some family members you want 
to introduce, I see them.
    [Laughter.]
    Ms. Barth. Most important, I want to introduce my husband 
Todd, and our three children--Mitchell, Wesley, and Melissa--as 
well as the large contingent of families and friends I have 
here today. You know we do everything bigger in Texas.
    [Laughter.]
    Ms. Barth. I am humbled and honored to be the choice of 
President Bush and Secretary Jackson to serve as the chief 
financial officer for the U.S. Department of Housing and Urban 
Development. If confirmed, I look forward to being a part of 
the team at HUD that will work with you and your staffs to 
address the housing and economic development needs in our 
Nation's communities.
    I would like to briefly talk about my background because it 
is an important part of why I want to be the next CFO of HUD. I 
grew up in Birmingham, Alabama, in a home where community 
service was important. My parents were very involved in the 
local community and set the tone for our family.
    After attending the University of Alabama as an 
undergraduate and business school at Vanderbilt University, I 
took a job in Houston, Texas, in 1986, as an analyst for a firm 
engaged in the private equity investment business. A year-and-
a-half after joining the firm, I purchased an equity interest 
in and went to work for one of the firm's portfolio companies, 
Cain Chemical. My duties at Cain Chemical largely consisted of 
financial analysis of commodity prices. Occidental Petroleum 
purchased Cain Chemical about a year later.
    In August of 1988, I left Cain Chemical and co-founded a 
firm called LB Capital. My partner in LB Capital, Russell 
Bowers, who is here, had been the president of the largest 
division of Cain Chemical. Russell remains my partner today in 
a number of ventures we run out of our Houston office. 
Approximately 9 years ago, my husband Todd, who had been a 
practicing attorney, joined us in the business.
    Currently, I serve on the board of one public company, 
Southwest Bancorporation of Texas, which is a regional bank 
with nearly $6 billion in assets. I serve on the bank's Audit, 
Trust and Governance Committees.
    During the course of my professional career, I have had the 
opportunity to pursue some things that I truly love. One of 
those things is public service, and I would like to talk about 
some of those opportunities.
    I had the opportunity and privilege to co-found, in the 
early 1990's, the Zina Garrison All Court Tennis Academy. The 
Academy is an inner-city program for underprivileged children 
that provides a free, after-school activity for the children of 
Houston. Tennis was the hook that brought in the kids, but we 
taught the kids a lot more than just tennis. The program 
started when Zina Garrison, who you may know is a former 
professional tennis player from Houston, approached me with the 
idea and asked for help. I enlisted the help of other 
Houstonians, two of which are here today, and together we put 
the program in place. Since its inception, the organization has 
literally served tens of thousands of inner-city children in 
Houston.
    I also had the opportunity and privilege of serving on the 
board of the Ronald McDonald House of Houston and later as 
president of the board. As you probably know, the Ronald 
McDonald House offers a home away from home for families 
traveling to obtain cancer treatment for their children. In 
Houston, where we have world-class cancer treatment facilities, 
the Ronald McDonald House serves a huge need in the community.
    I have had the privilege of serving the City of Houston as 
well. I am on the board of the Houston Convention Center Hotel 
Corporation, which is a nonprofit corporation formed by the 
City of Houston to construct and then operate a 1,200-room 
convention center hotel in downtown Houston. I serve on the 
City of Houston's Investment Committee. Our committee oversees 
the investment of the city's short-term funds, which exceeds $2 
billion.
    I also serve the State of Texas as a member of the Board of 
Regents of Texas Tech University in Lubbock, Texas. The 
university has over 25,000 students and an operating budget of 
over $800 million. In connection with my board service at Texas 
Tech, I chair the Finance Committee and also chair the 
Investment Advisory Committee, which manages Tech's $400-
million endowment.
    Based on my private and public service experience, I 
believe I am qualified for the position of CFO for the 
Department of Housing and Urban Development. I have experience 
preparing, justifying, and monitoring budgets and strategic 
plans. I have helped establish, maintain, and review financial 
systems. I have managed assets and credit management functions. 
I have helped develop strong internal control programs and 
assisted in the production of audited financial statements. I 
have helped develop uniform financial management policies and 
procedures, and I have processed accounting transactions and 
payments.
    My background also reflects that I sincerely love public 
service. When I am able to make a positive difference in the 
life of another human being, it makes my day. And I know that 
each Member of this Committee knows exactly what I am talking 
about. Otherwise, you would not be here.
    I am deeply grateful for the confidence that President Bush 
and Secretary Jackson have placed in me. If confirmed, I will 
take the responsibilities and challenges ahead very seriously.
    My husband tells me that I am blessed and cursed with the 
belief that I can make a difference. He is right. I believe I 
have the professional background and the personal drive to be 
successful as the Chief Financial Officer for the U.S. 
Department of Housing and Urban Development. I sincerely hope 
that you will give me that opportunity.
    Mr. Chairman, Senator Allard, thank you for your 
consideration of my nomination and the opportunity to appear 
before you today. I would be pleased to answer any questions 
you may have.
    Chairman Shelby. Ms. Barth, I believe we are going to give 
you that opportunity.
    [Laughter.]
    I like your confidence.
    I want to reference the FHA single-family program. I have 
to put this into context. You are not there yet, but you will 
be there, and I understand none of this is your problem, but it 
will be.
    A recent GAO report identified serious internal control 
deficiencies in FHA's single-family and multifamily property 
programs and have allowed at least one contractor and possibly 
others to commit fraudulent activities. Such fraud, of course, 
we know if it is left unchecked, greatly undermines the 
reputation of HUD, along with potentially costing the taxpayers 
millions of dollars.
    After you are confirmed--I predict you will be--as HUD's 
new CFO, when you get there in a few weeks, what immediate 
actions would you take to strengthen FHA's control environment 
and improve the Department's stewardship over taxpayer funds?
    If you want to do this for the record, since you are not 
there yet or do you want to touch on it now?
    Ms. Barth. I really would prefer to wait and see once I get 
in there. I am not up-to-speed.
    Chairman Shelby. Yes, that would be fair to you, but you 
have still to have a plan once you get there.
    Ms. Barth. Yes, sir, I understand that.
    Chairman Shelby. Ms. Barth, I am greatly concerned that 
HUD's current acquisition practices leave the Department 
vulnerable to theft and fraud. For instance, GAO--and 
referencing that again--recently reported that HUD lacked 
adequate supporting documentation and effective controls over 
its computer purchases. GAO found that HUD did not consistently 
report purchases or even inspect the quantity or quality of its 
purchases.
    Are you aware of these deficiencies? And if you are not 
aware of them, that is one thing, and as I said, I know you are 
not there yet.
    Ms. Barth. I am not specifically aware with respect to the 
computer purchases.
    Chairman Shelby. These are serious accusations.
    Ms. Barth. Yes, sir, I understand.
    Chairman Shelby. Serious problems.
    Contract monitoring. I am going to give some time to my 
collegue in a minute. This is an area he has a great interest 
in is housing.
    I want to bring up another point raised by GAO. HUD, over 
the last 10 years or so, has been increasingly reliant on the 
outside contractors to perform many of its responsibilities. 
GAO has raised the issue of HUD's ability to effectively 
monitor its contractors. If you are aware of this, you can 
speak now; if you are not, for the record, would you detail 
your relevant experience in monitoring and evaluating contract 
performances in the private sector. In other words, how would 
you do the oversight of these contractors to make sure they are 
performing as expected? In other words, you just cannot hire 
somebody and turn them loose. You have to evaluate them.
    Ms. Barth. I understand that, sir.
    Chairman Shelby. You have go to evaluate them, do you not?
    Ms. Barth. Yes, sir, you do. And then after you hire them, 
you have to make sure that they are meeting the expectations of 
what they said once you hire them.
    I understand, with respect to the contract monitoring, and 
I have added it to my list. And what I envision is just 
bringing some internal controls with respect to the contracts, 
different strategies that I have seen in the private sector in 
terms of a more-reporting process as we go along on these 
contracts.
    Chairman Shelby. Senator Allard, this is an area you know a 
lot about--housing.
    Senator Allard. I do not know about that, but I appreciate 
the opportunity to ask a few questions.
    You heard me ask the previous panel about GPRA--the 
Government Results and Procedures Act. And having training in 
financial accountability, you probably fully understand what I 
am talking about, where you set goals and objectives that are 
measurable and then look at the end of the year and see how 
successful you were at reaching those goals.
    And I hope that you make sure that those agencies in which 
you are overseeing meets those requirements because we also 
look at it from a budget aspect, and appropriators look at it. 
And if you looked at this year's budget from the President, 
there was a section fully dedicated to how well the agencies 
were dedicated to meeting those goals and objectives.
    HUD is one that has come to the table with their feet 
dragging, but I do think that they are doing a much better job 
than what they used to. And at one time they were rated as one, 
I think the Chairman mentioned it was rated as one of the worst 
agencies as far as risk analysis was concerned and 
accountability on how they spent the taxpayer dollars. So, I 
think you have a huge responsibility, and you are going to walk 
into potentially some very big challenges.
    Do you have any ideas on how you are going to enforce 
accountability so that, as policymakers, we can look at results 
and your procedures and get some idea of how well the Agency is 
doing?
    Ms. Barth. I have been through the GPRA information I have 
been sent and understand the importance of accountability and 
transparency and actually setting goals that one has to stand 
by and be accountable for. So it is my intention, if I am 
concerned, that I would get in there and review what has been 
set out first and make sure that there is accountability behind 
those goals.
    I think the first thing I need to do is really get in there 
and see what goals have been set.
    Senator Allard. Very good. And like I mentioned earlier, it 
is one of those areas that I hold as a top priority, and you 
can expect me to ask you questions on that from time-to-time.
    Ms. Barth. I understand that, sir.
    Senator Allard. Also, HUD has had some enormously unspent 
balances at certain points in time. At one time, they had $108 
billion of unspent balances. Now, of that, there was about, you 
know, you can understand if you get into a long-term project, 
you have unspent balances, but they are obligated.
    Ms. Barth. Yes, sir.
    Senator Allard. But the figure that really catches my eye 
is that more than $12 billion of those dollars, at various 
times, have been unallocated. They were just sitting there. And 
I appreciate that this Administration has made it a priority to 
reduce the obligated and unspent balances. And as HUD Chief 
Financial Officer, what do you plan to do to help continue in 
this effort?
    Ms. Barth. Well, I will continue in the effort to review 
them and look at why the balances are unspent. At this point, I 
am not able to opine as to how I am going to attack it. I just 
need to understand, and I am getting more familiar with the 
issue.
    Senator Allard. Very good. Again, that is one of those 
issues that I personally will be taking some interest in, too.
    Now, in the private sector, a company must be consumer-
focused to survive. You are aware of that. You have a----
    Ms. Barth. Yes, sir.
    Senator Allard. --a private company that you were involved 
with. How important do you think a customer focus is for the 
public sector, and what would you do to make sure HUD 
identifies its customers, understands their expectations, and 
establishes performance goals and measures to meet these 
expectations consistent with their priorities? Do you have any 
ideas?
    Ms. Barth. I think, first and foremost, we have to 
understand our customer, and we also have to understand, as in 
the private sector, you have a budget, and you have a limited 
amount of money. So one needs to utilize those funds very 
efficiently and effectively.
    So I look at, as I go forward, really taking a look at the 
performance within the various programs.
    Senator Allard. I fully realize that when you are just 
going into the job these are tough questions for you to answer, 
but I want to share them with you because, as Chairman of the 
Subcommittee under Banking here is that it is something that we 
watch for, and I am sure I will not be the only one asking 
those questions.
    I just wish you well.
    Ms. Barth. Thank you, sir.
    Senator Allard. You have a great family there.
    Ms. Barth. Thank you.
    Senator Allard. It is good to see all of you here.
    Thank you.
    Chairman Shelby. Thank you, Senator Allard.
    Ms. Barth, we want to move your nomination as quickly as 
possible, and we will. We appreciate your appearance here 
today. You have a big job ahead of you, but I think you have 
the energy and the background to attack it.
    Ms. Barth. Thank you, sir.
    Chairman Shelby. We will be working with you to do it.
    Thank you so much.
    Ms. Barth. Thank you very much.
    Chairman Shelby. The hearing is adjourned.
    [Whereupon, at 3:40 p.m., the hearing was adjourned.]
    [Prepared statements and biographical sketches of the 
nominees supplied for the record follow:]
               PREPARED STATEMENT OF SENATOR WAYNE ALLARD
    I would like to thank the Chairman for convening today's hearing. 
As always, I appreciate his willingness to ensure that nominees under 
this Committee's jurisdiction receive a prompt, fair hearing.
    As Chairman of the Housing Subcommittee, I am particularly pleased 
that we are considering the nomination of Ms. Carin Barth to be the 
Chief Financial Officer of the Department of Housing and Urban 
Development (HUD). As I have noted at other recent hearings, I have 
been very concerned that this key position at HUD has remained vacant 
for a year. After the Secretary and Deputy Secretary, the CFO is 
probably the most important position at HUD.
    Now that the Committee has received all the formal nomination 
paperwork, I am hopeful that this hearing will be the next step toward 
prompt confirmation. HUD has a difficult challenge, and its mission is 
not made easier, nor is its work more effective, when key positions 
remain vacant.
    As I have also indicated during previous hearings, I believe HUD 
must focus on its core mission--to provide decent, safe, sanitary, and 
affordable housing. Good leadership involves a clear vision. Key HUD 
staff must have a clear set of performance goals in mind, as well as 
ways in which the Department and Congress can measure progress in 
achieving those goals. Additionally, it is critical to consider the 
long-term sustainability of any progress made at HUD.
    Clear, outcome-based vision is critical for success in any agency, 
and the Government Performance and Results Act, or the Results Act, is 
a powerful tool toward that end. I would encourage all of today' s 
nominees to become familiar with their agency's strategic plan, annual 
performance plans, annual accountability reports, and financial 
statements. If properly utilized, they can help you achieve success in 
meeting your department's mission.
    I would also like to welcome Mr. Levey and Mr. Zarate to the 
Banking Committee. Money laundering, and particularly terrorist 
finance, is a critical component of our war on terror, and I look 
forward to hearing your ideas.
    Again, thank you to all of the nominees for your willingness to 
serve in the Government and to appear before the Committee. I look 
forward to working with you on issues before the Banking Committee.
                               ----------
                  PREPARED STATEMENT OF ORRIN G. HATCH
                 A. U.S. Senator from the State of Utah
                              May 15, 2003
    Mr. Chairman, Senator Sarbanes, Members of this Committee, as you 
know, it is a custom in the Senate that allows us to introduce nominees 
before committees that are usually constituents, or, in other cases, 
close friends. I am proud and honored to say that, while Stuart Levey 
is not a constituent, he is a close personal friend whose impressive 
career I have had to pleasure to admire since he first came to 
Washington.
    Stuart likes to say I have known him since he became a Member of 
the Bar, and, in fact that is correct. A graduate of Harvard College 
and Harvard Law School--graduating, by the way, summa cum laude and 
magna cum laude, respectively--he entered private practice in here in 
Washington in 1990, and he quickly built a well-deserved reputation as 
an expert litigator on white collar crime. He served as 
special counsel for our former colleague, Senator Danforth, before he 
joined the Department of Justice.
    Since September 11, we in the Congress have worked as closely as 
possible with President Bush to craft a national response to 
international sub-state terrorism. We have recognized that, in fighting 
and seeking to defeat this new enemy, we needed a strategic approach to 
monitoring, disrupting, and closing the international network of 
terrorism financing. Such an approach required creating authorities for 
the executive, and reorganizing our agency counter-terrorism structure.
    Perhaps Congress' greatest contribution so far was the passage of 
the USA PATRIOT Act, where we created authorities to monitor financial 
networks. The Administration has furthered a strategic approach to 
terrorist financing when, earlier this year, it announced the creation 
of the Office of Terrorism and Financial Intelligence, with a new Under 
Secretary at the Department of Treasury. I commend the President for 
nominating Stuart Levey to fill this position.
    And I thank the Chairman and Ranking Minority Member of this 
Committee for expediting the nomination of the President's choice to 
fill this position. Stuart Levey has the knowledge, experience, and 
character to fill this post. I believe Stuart understands the strategic 
requirements for integrating intelligence analysis with enforcement, as 
well as the need to build on our growing international coordination in 
checking and eliminating the international financial networks of 
terrorism. I believe that you can see, in reviewing his work as 
Principal Associate Deputy Attorney General, where he served Justice's 
coordinator with the Policy Coordinating Committee on Terrorist 
Financing and the NSC's Counterterrorism Security Group, that he 
developed in-depth knowledge of the networks we must penetrate, 
disrupt, and destroy, while forging the important relations within 
Justice, the FBI, the CIA, the State Department and Treasury that will 
be essential for his role in the position to which he has been 
nominated.
    Mr. Chairman, Senator Sarbanes, I certainly do not need to explain 
to this Committee the imperative of disrupting international financial 
networks that keep terrorists funded. I thank you once again for 
scheduling this hearing, and I urge your favorable consideration of 
this nominee, as well as Mr. Zarate, and I hope for a speedy Senate 
confirmation so that our Government can carry on in the essential role 
of defeating those that would do us harm.
                               ----------
                 PREPARED STATEMENT OF STUART A. LEVEY
               Under Secretary-Designate for Enforcement
                    U.S. Department of the Treasury
                             July 15, 2004
     Chairman Shelby, Ranking Member Sarbanes, and Members of the 
Committee, thank you for the opportunity to appear before you today. It 
is truly an honor to be the nominee to serve as Under Secretary for 
Enforcement and as the head of the new Office of Terrorism and 
Financial Intelligence at the Department of the Treasury. I want to 
thank the President and Secretary Snow for the confidence they have 
shown in me by selecting me for this position.
    Above all, I want to thank my wife Annette, who is the best thing 
in my life, for the sacrifices she has made to allow me to pursue 
opportunities in public service. She is the perfect wife, my best 
friend, a fabulous mother to our two baby daughters, and, on top of all 
that, a dedicated public servant at the National Institutes of Health. 
I would also like to thank my parents for the opportunities and support 
they have given me throughout my life.
    I am also grateful to Attorney General Ashcroft for the opportunity 
he has given me to serve at the Department of Justice. I came to the 
Justice Department to work for Deputy Attorney General Larry Thompson, 
and I have continued to serve there under Jim Comey. I have handled a 
variety of issues in the Deputy Attorney General's Office, focusing 
most recently on national security and counterterrorism matters, 
including the Department's terrorist financing portfolio. In my current 
role as Principal Associate Deputy Attorney General, I serve as the 
Justice Department's representative to the Policy Coordinating 
Committee on Terrorist Financing and to the NSC's Counterterrorism 
Security Group. In these roles, I have established close working 
relationships with officials within the Department of Justice as well 
as in the FBI, the CIA, the State Department, and elsewhere that will 
be beneficial to me in my new position, if I am confirmed.
    During my time at the Justice Department, I have been privileged to 
work with, and learn from, some of the Government's foremost experts on 
terrorist financing and money laundering. The dedicated prosecutors in 
the Criminal Division's Counterterrorism Section (CTS) and Asset 
Forfeiture and Money Laundering Section (AFMLS) warrant special mention 
here. They have partnered with our U.S. Attorney's Offices around the 
country in developing and bringing cutting-edge criminal cases against 
terrorist financiers and money launderers, achieving success after 
success in an arena that many observers considered to be beyond the 
effective reach of criminal law enforcement.
    My experience at the Justice Department makes me very mindful of 
the enormous responsibility that will be before me, if I am confirmed. 
I begin almost every morning by meeting with the Attorney General, the 
Deputy Attorney General, the FBI Director, and other senior staff to go 
over the most important terrorist threats that we are facing that day, 
both within the United States and abroad. Even after so many months, it 
is still chilling to hear every morning about people who are scheming 
to kill as many innocent people as they possibly can. Chilling, but, in 
a sense, motivating too. I never question why I go to work in the 
morning. There is so much at stake.
    The financial war on terror is critical to our overall mission to 
defeat terrorism. Terrorists need money to operate--to recruit, to 
train, to travel, to communicate, and, of course, to carry out attacks. 
Whenever we cut off their money supply, we reduce their present 
abilities and force them to adopt new funding methods that are more 
cumbersome or risky. On another level, the audit trail that money 
leaves is one of our best sources of intelligence to find and disrupt 
terrorists. There are times when watching where the money comes from 
and where it goes is more valuable than taking immediate public action 
to stop it. We must adapt our strategy in each circumstance to do 
whatever is best for the overall counterterrorism mission. That is one 
reason why a coordinated, interagency effort is vital to our success.
    Within that coordinated effort, the Treasury Department has a 
unique leadership role to play in the financial war on terror. The 
Treasury Department, working with other agencies around the Government, 
and with the support of the Congress, has made significant progress in 
the fight against terrorist financing since September 11. The people 
who have been doing that work in the Department, including Juan Zarate, 
are among the most dedicated and talented public servants you will 
find. If I am confirmed, I will be joining a fantastic team.
    I think that team would agree that there is much more work that 
needs to be done. If I am confirmed, I hope to bring a heightened sense 
of urgency to the terrorist financing mission at the Treasury 
Department. We must reenergize our efforts because our enemies remain 
committed to killing innocent people and our work grows more difficult 
as terrorists move away from known funding channels and organizations.
    The overarching mission for the new Office of Terrorism and 
Financial Intelligence will be to ensure that the Treasury Department 
is fully exploiting all of its authorities, capabilities, and all of 
the Government's information to combat terrorist financing and 
financial crime. Among other things, if I am confirmed, I would strive 
to make better use of the tools the Congress provided in the USA 
PATRIOT Act and of Treasury's other enforcement powers. I also would 
build a new Office of Intelligence and Analysis that will exploit 
Treasury's own information and integrate the Department more fully into 
the intelligence community. And, I would press terrorist financing 
issues as a priority with other nations around the world whose 
cooperation we need if we are to succeed.
    I am aware that there are substantial challenges before us. Still, 
I am optimistic because of the steadfast support that Secretary Snow 
and Deputy Secretary Bodman have already shown to the cause of fighting 
the financial war on terror. I am also heartened by the support for 
this mission demonstrated by the Congress, including this Committee. If 
I am confirmed, I look forward to working with you on these important 
issues. I am happy to answer any questions you may have.














                  PREPARED STATEMENT OF JUAN C. ZARATE
         Assistant Secretary-Designate for Terrorist Financing
                    U.S. Department of the Treasury
                             July 15, 2004
    Chairman Shelby, Ranking Member Sarbanes, and distinguished Members 
of this Committee, it is an honor for me to be before you today. It is 
a privilege to have been nominated by the President for the position of 
Assistant Secretary of the Treasury for Terrorist Financing, and I 
thank him, Secretary Snow, and Deputy Secretary Bodman for their 
confidence in nominating me for this important position.
    Mr. Chairman, the positions for which Mr. Levey and I have been 
nominated form an important part of our country's long-term strategy in 
the war on terror. This Administration has waged an unprecedented 
campaign against terrorism and the financing that fuels horrendous acts 
of violence and hatred around the world. This is not just an American 
problem born on September 11. From the railway bombings of Madrid and 
Moscow to the commercial center attacks in Istanbul and Casablanca, we 
have seen that terrorism does not discriminate among race, religion, or 
national origin.
    When I came to Washington as a Federal prosecutor, Mr. Chairman, I 
was immersed quickly into the reality of the threat that Al Qaeda posed 
to our country. One of my first assignments was to assist in the 
prosecution of those responsible for the American Embassy bombings in 
East Africa. I further confronted the unabated viciousness of Al Qaeda 
as a prosecutor in the investigation of the murders of 17 of our 
countrymen and women on the USS Cole.
    Just days after I began work at the Treasury Department on August 
27, 2001, our world and our collective mission changed forever.
    Since September 11, I have been privileged to form part of the U.S 
Government effort, along with Mr. Levey, to attack the financial 
underpinnings of terrorism. If confirmed, I look forward to working 
with and for Mr. Levey more directly on issues of such national 
importance.
    We have achieved important successes in the mission to bankrupt 
terrorism. It is now harder, costlier, and riskier for Al Qaeda and 
other like-minded terror groups to raise and move money around the 
world. We have frozen and seized terrorist assets, exposed and 
dismantled known channels of funding, deterred donors, arrested key 
facilitators, and built higher hurdles in the international financial 
system to prevent abuse by terrorists.
    We have forged an international coalition to combat terrorist 
financing and have focused the world's attention on previously 
unregulated, high-risk sectors like charities and hawalas. We have 
placed onto the international agenda the growing concern we have about 
the use of cash couriers by terrorists groups. In all of these 
efforts, we have enlisted the private sector worldwide--the banks, 
money service businesses, broker-dealers and the charitable sector--to 
serve as the front-line in this battle. These efforts have tightened 
the financial noose around Al Qaeda's neck.
    The drumbeat of our drive to disrupt and dismantle terrorist 
financing has been constant and will continue.
    Mr. Chairman, I am very proud that this work has been undertaken 
while our other efforts to combat money laundering, financial crimes, 
and enforce sanctions have also intensified. There are many examples of 
the important and steady work the Treasury continues to produce. I 
would like to share with you just a few of our recent actions:

 On June 2, the United States and the Kingdom of Saudi Arabia 
    announced the designation of five branches of the Saudi-based 
    charity, Al- Haramain, while the Saudi Government also announced 
    the consolidation of their charitable sector. The United States 
    further announced the designation of the leader of Al-Haramain.
 We continue to identify front companies and individuals who 
    acted on behalf of the Saddam Hussein regime in Iraq. Since March 
    2003, when Secretary Snow launched our campaign to find, freeze and 
    repatriate the Iraqi assets stolen by the Hussein regime, we have 
    worked with our international partners to freeze approximately $6 
    billion around the world and return over $2.7 billion to the Iraqi 
    people.
 The Treasury's Financial Crimes Enforcement Network (FinCEN), 
    along with the Office of Comptroller of Currency, levied a fine of 
    $25 million against Riggs Banks for failure to comply with 
    provisions of the Bank Secrecy Act. This has resulted in a more 
    aggressive plan with the regulators for ensuring proper oversight 
    and accountability in the administration of the Bank Secrecy Act.
 The Secretary of the Treasury recently designated the 
    Commercial Bank of Syria as a ``primary money laundering concern'' 
    under Section 311 of the USA PATRIOT Act. As a result, the 
    Secretary ordered the closing of their correspondent accounts 
    because of that bank's complicity in dealing with the Hussein 
    regime, its weak money laundering practices, and suspicions of 
    terrorist financing through the institution.
 In recent weeks, we have continued to provide leadership 
    internationally in the field of countering terrorist financing and 
    money laundering by driving issues of key concern to the United 
    States at the plenary meetings of the Financial Action Task Force 
    and the Egmont Group of Financial Intelligence Units.

    This is but a mere snapshot of the important work the Treasury 
accomplishes every day. These efforts are critical not only to preserve 
the integrity of our financial system, but also to promote the national 
security interests of our country.
    The need for this type of intensive and consolidated work in the 
long-term is why this Administration, in concert with Congress, decided 
to create the new Office of Terrorism and Financial Intelligence. TFI, 
as it will be called, brings under one umbrella the intelligence, 
enforcement, diplomatic, policy, and regulatory resources of the 
Treasury. It will allow us to consolidate our information and analysis 
to best utilize Treasury authorities to advance our national security 
interests and protect our financial systems. TFI will allow us to 
sustain these and additional efforts for the long term.
    This is important, Mr. Chairman, because we know that we are in the 
midst of a real and protracted struggle against terrorism. We will not 
tire in our mission to find and incapacitate those who underwrite 
terror. We will continue to strengthen the financial net to protect our 
institutions from tainted capital flows and will continue to use all of 
our authorities, relationships, and expertise to attack sources, 
conduits and proceeds of financial crime.
    Finally, Mr. Chairman, I am pleased to have with me close friends 
as well as my wife, Cindy, who is my best friend and high-school 
sweetheart. She has unselfishly sacrificed over the past 3 years to 
allow me to pursue this mission. I am sorry that my parents, who are in 
California, could not be here today, but they are very happy to know 
that I sit before you. It has been both a dream and an expectation of 
my parents--who immigrated from Mexico and Cuba in the 1950's in search 
of freedom and opportunity--that my siblings and I serve this country. 
If confirmed, I hope to continue to serve this President and Secretary 
Snow with an unwavering commitment and a deep passion for these issues, 
and to work with this Committee and other Committees of Congress to 
advance our national interests.


































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