[Senate Hearing 112-352]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-352

        COUNTERING TERRORIST FINANCING: PROGRESS AND PRIORITIES

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

                                HEARING

                               before the

                  SUBCOMMITTEE ON CRIME AND TERRORISM

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 21, 2011

                               __________

                          Serial No. J-112-42

                               __________

         Printed for the use of the Committee on the Judiciary











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                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
HERB KOHL, Wisconsin                 CHUCK GRASSLEY, Iowa
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
CHUCK SCHUMER, New York              JON KYL, Arizona
DICK DURBIN, Illinois                JEFF SESSIONS, Alabama
SHELDON WHITEHOUSE, Rhode Island     LINDSEY GRAHAM, South Carolina
AMY KLOBUCHAR, Minnesota             JOHN CORNYN, Texas
AL FRANKEN, Minnesota                MICHAEL S. LEE, Utah
CHRISTOPHER A. COONS, Delaware       TOM COBURN, Oklahoma
RICHARD BLUMENTHAL, Connecticut
            Bruce A. Cohen, Chief Counsel and Staff Director
        Kolan Davis, Republican Chief Counsel and Staff Director
                                 ------                                

                  Subcommittee on Crime and Terrorism

               SHELDON WHITEHOUSE, Rhode Island, Chairman
HERB KOHL, Wisconsin                 JON KYL, Arizona
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
DICK DURBIN, Illinois                JEFF SESSIONS, Alabama
AMY KLOBUCHAR, Minnesota             LINDSEY GRAHAM, South Carolina
CHRISTOPHER A. COONS, Delaware
                Stephen Lilley, Democratic Chief Counsel
               Stephen Higgins, Republican Chief Counsel













                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Kyl, Hon. Jon, a U.S. Senator from the State of Arizona..........     2
    prepared statement...........................................    60
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, 
  prepared statement and August 3, 2011, letter..................    64
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................     1

                               WITNESSES

Boelter, Ralph S., Acting Assistant Director, Counterterrorism 
  Division, Federal Bureau of Investigation......................     6
Glaser, Daniel L., Assistant Secretary for Terrorist Financing, 
  U.S. Department of the Treasury................................     8
Monaco, Lisa O., Assistant Attorney General, National Security 
  Division, U.S. Department of Justice...........................     4

                         QUESTIONS AND ANSWERS

Responses of Ralph S. Boelter to questions submitted by Senators 
  Grassley and Kyl...............................................    21
Responses of Daniel L. Glaser to questions submitted by Senators 
  Grassley and Kyl...............................................    28
Responses of Lisa O. Monaco to questions submitted by Senator Kyl    39

                       SUBMISSIONS FOR THE RECORD

Boelter, Ralph S., Acting Assistant Director, Counterterrorism 
  Division, Federal Bureau of Investigation, statement...........    44
Glaser, Daniel L., Assistant Secretary for Terrorist Financing, 
  U.S. Department of the Treasury, statement.....................    48
Monaco, Lisa O., Assistant Attorney General, National Security 
  Division, U.S. Department of Justice, statement................    68
Weich, Ronald, Assistant Attorney General, Department of Justice, 
  Washington, DC, August 12, 2011, letter........................    73

 
        COUNTERING TERRORIST FINANCING: PROGRESS AND PRIORITIES

                              ----------                              


                     WEDNESDAY, SEPTEMBER 21, 2011

                               U.S. Senate,
               Subcommittee on Crime and Terrorism,
                                Committee on the Judiciary,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 10:58 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Sheldon 
Whitehouse, Chairman of the Subcommittee, presiding.
    Present: Senators Whitehouse, Klobuchar, Blumenthal, Kyl, 
and Grassley.

 OPENING STATEMENT OF HON. SHELDON WHITEHOUSE, A U.S. SENATOR 
                 FROM THE STATE OF RHODE ISLAND

    Chairman Whitehouse. The hearing will come to order.
    Today's hearing considers a central element of the fight 
against terrorism: the disruption and dismantling of terrorist 
finance networks. I am very grateful that the Ranking Member, 
Senator Kyl, is here. I know he has significant duties 
elsewhere as one of a certain group of 12 who are getting 
considerable attention in Washington these days, and I 
appreciate that he has taken the trouble to be here for this 
hearing. I will make a brief opening statement, yield to the 
Ranking Member, and then if nobody else is here, we will 
proceed to the witnesses.
    It is obvious that terrorists need funds to maintain their 
organizations, to recruit and train new members, and to conduct 
operations. To meet this need, terrorists have sought funds 
from various sources: states hostile to our country; wealthy 
individuals who share their extreme ideology; charitable donors 
who may not know that their donations will end up in the hands 
of violent terrorists; corruption or even criminal activity 
such as drug production, kidnapping, or other cooperation with 
international organized crime groups.
    Terrorists also have used various methods for moving their 
money, including through use of the American financial system, 
as well as through informal channels, such as hawalas and cash 
smuggling. Terrorists may deliver it into the United States to 
fund an attack against our homeland, launder it through our 
financial institutions, or move it from so-called charities in 
the United States to fund terrorist attacks abroad.
    This diversity of sources of terrorist financing and means 
and purposes for moving terrorist cash makes the vital 
challenge of choking off terrorist funds highly complex. It 
demands an integrated and well-coordinated response by the U.S. 
Government.
    To that end, the United States has brought a sharpened 
focus to this fight in the decade since the 9/11 attacks. New 
legal authorities provided by statute and by Executive order 
have given the executive branch powerful tools to designate 
terrorist organizations and stop their use of the American 
financial system.
    Reorganizations of departments and agencies have 
prioritized the fight against terrorist financing to ensure 
sustained effort in this crucial task. The Federal Bureau of 
Investigation and the Department of Justice have investigated 
and successfully prosecuted cases of material support for 
terrorist groups. The Treasury Department, State Department, 
and other agencies have worked to identify terrorist groups and 
freeze their assets in the United States and overseas.
    Disrupting terrorist financing requires sophisticated 
analysis of bank records, meticulous study of available 
intelligence, careful assessment of foreign groups that may 
support terrorist organizations, and international partnerships 
that allow insight into the movement of terrorist finances 
abroad.
    As I saw in a recent visit, this international work has 
reached as far as Afghanistan. Corruption, the diversion of 
funds from military contracts, and the poppy trade provide 
ready cash for terrorists in Afghanistan and the region. So I 
was glad to meet in Kabul with representatives of the Afghan 
Threat Finance Cell. The testimony provided today by the 
Treasury Department describes the ATFC's efforts to improve the 
targeting of insurgents' financial support and to disrupt other 
illicit financial activities. Their work throws into stark 
relief the tight relationship between terrorist finance and 
terrorist violence.
    This close connection with terrorist violence is the reason 
we must sustain focus against terrorist finance. In that spirit 
today's hearing will assess our past performance in the effort 
to disrupt and interdict terrorist funds, and it will evaluate 
our Nation's readiness for future challenges.
    This is no partisan issue. Every member of this Committee 
and of the Senate as a whole shares a commitment to disrupting 
and dismantling terrorist financing networks, and Congressional 
oversight, I believe, plays an important role in ensuring that 
we are on the right track.
    With that in mind, I am happy that we are joined today by 
representatives of the Department of Justice, the FBI, and the 
Department of the Treasury. The responsibilities and expertise 
of the witnesses here today promise a full discussion of where 
we stand in the fight against terrorist financing and how ready 
we are to take on the challenges ahead.
    I thank the witnesses in advance for their participation, 
and I yield to the Ranking Member for any statement he might 
like to make.

  STATEMENT OF HON. JON KYL, A U.S. SENATOR FROM THE STATE OF 
                            ARIZONA

    Senator Kyl. Thank you, Mr. Chairman, and because of the 
commitment the Chairman mentioned, I will have to depart after 
this statement. But I want to make a point to the witnesses in 
particular. I really appreciate your presence here and hope 
that you will convey to your colleagues our appreciation for 
the work that has been done by all three of the entities with 
whom you work.
    I share all of the views that the Chairman just conveyed 
and would just comment on a couple of things, and I will put my 
full statement in the record.
    Chairman referred to the material support statutes. I am 
delighted that they have been upheld in the Holder v. 
Humanitarian Law Project decision because they are a very 
important work horse in our efforts against al Qaeda, Hamas, 
and other terrorist organizations.
    Since we make it a crime to knowingly provide material 
assistance to these and other terrorist groups, these statutes 
have helped starve those groups of resources, as the Chairman 
noted, and it makes it more difficult for them to carry out 
their attack plan and to do business with others. And they 
critically recognize that money is fungible, an important 
principle here, because it is impossible to give money to al 
Qaeda or Hamas, for example, without furthering these 
organizations' terrorist goals, regardless of how it is done. 
Not only is any dollar given to Hamas' so-called charitable 
wing a dollar that can be diverted to terrorism, but donations 
to this and other groups also enhance their power and prestige, 
which in turn makes it easier for them to recruit terrorists.
    So the rigorous enforcement of the material support 
statutes can make these groups radioactive, deterring others 
from working with them, and ultimately cripple them entirely. 
As the Chairman pointed out, finances are such a key part of 
this that this is the way to go right to their bread basket, in 
effect.
    The second thing I want to mention is the Comprehensive 
Iran Sanctions Accountability and Disinvestment Act, a long 
name for the CISADA acronym. Here we have aimed particularly at 
Iran, but there are others as well, but the Treasury Department 
is required to prescribe regulations that require our banks 
here in the United States to maintain--the banks that maintain 
foreign correspondent relations to have an audit or a 
certification requirement that neither they nor their 
correspondents abroad are servicing designated Iranian banks. 
Now, I really appreciate the effort that Treasury has made in 
this regard, but it did take nearly a year to draft the rule, 
and we still await the issuance of the final rule to implement 
Section 104(e) of the Act to address the vexing problem of 
foreign correspondents' accounts. And so I want to urge the 
Office of Management and Budget to complete an expeditious 
review of the final review and get this done so that we can 
take advantage of the tools that we passed here in the Congress 
and confront these illicit financing activities head-on.
    In addition, we continue a bipartisan effort to strengthen 
the economic and political tools available to the 
administration to confront other illicit financial activities. 
For example, Senators Menendez, Lieberman, and I introduced S. 
1048, the Iran, North Korea, and Syria Sanctions Consolidation 
Act of 2011, which would enhance existing measures, and it 
targets the nexus of proliferation between States like Iran and 
Syria and North Korea, and I would hope that my colleagues 
would consider and potentially act on this legislation so that 
we can continue to try to close all of the loopholes that we 
have identified that enable illicit financial activities.
    Again, I want to thank the Chairman for calling the 
hearing, for getting a good group of witnesses here, for all of 
those who are interested in the subject that are here. I will 
have questions for the record, Mr. Chairman, but I am going to 
have to depart in about 10 minutes.
    Chairman Whitehouse. Understood and appreciated.
    [The prepared statement of Senator Kyl appears as a 
submission for the record.]
    Chairman Whitehouse. If we are ready to go to the 
witnesses, then I will first introduce Lisa Monaco, who is the 
Assistant Attorney General for National Security. She 
previously served as Principal Associate Deputy Attorney 
General, and prior to joining the Deputy Attorney General's 
office, she was chief of staff to FBI Director Bob Mueller. Ms. 
Monaco has also served as special counsel to Director Mueller 
and initially joined the FBI on detail from the U.S. Attorney's 
Office for the District of Columbia. Ms. Monaco served with me 
in the Department of Justice under Attorney General Janet Reno, 
where she served as counsel to the Attorney General, providing 
advice and guidance on national security, law enforcement, 
budget, and oversight issues. We are delighted to have her here 
today. You are invited to proceed.

   STATEMENT OF LISA O. MONACO, ASSISTANT ATTORNEY GENERAL, 
     NATIONAL SECURITY DIVISION, U.S. DEPARTMENT OF JUSTICE

    Ms. Monaco. Thank you very much, Chairman Whitehouse, 
Ranking Member Kyl, and Senator Grassley. I have a brief 
opening statement, with your permission, and if I could ask for 
my full statement to be entered into the record.
    Chairman Whitehouse. Without objection, it will be.
    Ms. Monaco. Thank you, Chairman Whitehouse and Ranking 
Member Kyl, for holding this hearing and for inviting me to 
testify today regarding the Department of Justice's role in 
combating terrorist financing.
    The Department's efforts to combat terrorist financing are 
closely coordinated with those of our interagency partners, 
including, of course, the gentlemen who are here with me today. 
Our common objective is to deploy our counterterrorist 
financing tools in a coordinated, integrated way to disrupt the 
flow of funds and other material support to terrorist 
organizations.
    Our efforts in this regard fall into three general 
categories: investigating and prosecuting terrorist financing 
and material support to terrorism, as the Chairman mentioned; 
foreign capacity building and technical assistance; and 
defending the laws and regulations designed to disrupt and 
punish terrorist financing. And I will just briefly mention 
each of these.
    Perhaps the Department's principal role in countering 
terrorist financing is to work with the FBI and our other law 
enforcement partners to investigate and prosecute the 
individuals and networks who are engaged in it. Prosecution not 
only disrupts terrorist financing networks; it often permits us 
to gain valuable intelligence about terrorist networks.
    My full statement for the record cites several cases in 
which we have disrupted fundraising activity, and in some cases 
those funds were actually earmarked to support specific violent 
acts of terrorism like the attempted assassination of the Crown 
Prince of Saudi Arabia.
    Our ability to investigate and prosecute these cases relies 
on working with the Congress to ensure that our investigative 
authorities, our evidentiary rules, and the substantive 
criminal provisions remain effective and up to date, and I want 
to thank the members here today for your assistance, and I want 
to thank Chairman Whitehouse for your leadership in holding 
this hearing.
    Although domestic prosecutions are important, the 
Department also recognizes that because the networks that 
finance and support terrorist organizations are international, 
so must be our efforts. To disrupt terrorist financing networks 
and bring their members to justice, we rely on cooperation with 
capable foreign partners. Toward that end, the Department 
currently has a network of 55 resident legal advisers in 
countries around the world, and those who are stationed in 
Bangladesh, Kenya, Turkey, and in the United Arab Emirates are 
expressly focused on the problem of terrorist financing.
    We also frequently provide technical assistance to foreign 
countries who are drafting or amending their own terrorist 
financing laws, and we support and participate in training 
foreign governments and their investigative and prosecutorial 
services so that they, too, can mount effective terrorist 
financing cases.
    Finally, the Department, as Ranking Member Kyl mentioned, 
defends the laws and Executive orders used to disrupt terrorist 
financing. You will hear from Assistant Secretary Glaser about 
how the Department of the Treasury uses Executive Orders 12947 
and 13224 to designate individuals and entities that support 
terrorism and to freeze their assets.
    In addition, under the provision of the Antiterrorism and 
Effective Death Penalty Act, which was enacted by this body, 
the Secretary of State, in consultation with the Departments of 
Justice and Treasury, designates foreign terrorist 
organizations, or FTOs. FTOs' assets are then frozen, and their 
members and supporters are barred from admission to the United 
States. And as the Committee well knows, it is also a Federal 
crime under one of the material support statutes to provide 
anything of value to an FTO, and the Department has 
successfully defended these and other terrorist financing laws 
and Executive orders against legal challenge.
    As you will hear from my colleagues here today, our efforts 
to counter terrorist financing have had some significant 
success in the past decade, but we have work yet to do. 
Terrorist organizations and their supporters continue to adapt 
and evolve their operations, and in order to be effective, we 
must work with the Congress to ensure that we maintain our 
authorities and capabilities necessary to counter terrorist 
financing.
    Thank you very much, Chairman, and I welcome the 
Committee's questions.
    [The prepared statement of Ms. Monaco appears as a 
submission for the record.]
    Chairman Whitehouse. Thank you very much, Ms. Monaco. We 
are delighted to have you here, and we will hold questions 
until all the panel has had the chance to provide their 
testimony.
    Our next witness is Ralph Boelter, who currently serves as 
Acting Assistant Director of the FBI's Counterterrorism 
Division. Mr. Boelter began his career at the FBI up in New 
England as a special agent in the Boston division, 
investigating white-collar crime, violent crime, and criminal 
enterprise matters. He has since served at FBI headquarters in 
the Criminal Investigative Division, as supervisor of the Los 
Angeles Division's Violent Crime and Criminal Enterprise Squad, 
and as special agent in charge of the Minneapolis Division, 
where he managed a number of high-profile investigations, 
including significant corporate fraud and counterterrorism 
matters. We are delighted he is here and ask for his testimony.

   STATEMENT OF RALPH S. BOELTER, ACTING ASSISTANT DIRECTOR, 
   COUNTERTERRORISM DIVISION, FEDERAL BUREAU OF INVESTIGATION

    Mr. Boelter. Thank you, Senator, Chairman. Good morning, 
Chairman Whitehouse, Ranking Member Kyl, Senator Grassley. I 
appreciate the opportunity to testify before you today 
regarding the efforts of the FBI to combat terrorist financing.
    As we commemorated recently the tenth anniversary of the 
tragic events of September 11, 2001, we are reminded that the 
FBI's No. 1 priority is the prevention of terrorist attacks 
against the United States. The mission of the Terrorism 
Financing Operations Section within the FBI--the TFOS, as we 
call it--is to ensure that financial investigative efforts and 
techniques are applied in all counterterrorism investigations 
and to manage investigative efforts into individuals and 
entities who provide funding to terrorists.
    TFOS carries out this mission through the application of 
financial investigative techniques and the exploitation of 
financial intelligence. To improve its ability to detect and 
disrupt those with the intent and capability to conduct attacks 
against the United States, TFOS has undergone a significant 
shift in the way it addresses the threat of terrorism 
financing.
    Rather than solely collecting evidence to solve a 
particular case, this new approach prioritizes the collection 
and utilization of intelligence to develop a comprehensive 
threat picture, enabling strategic disruptions of terrorist 
financing operations. Thus, TFOS exploitation of intelligence 
not only seeks to identify the scope and breadth of terrorist 
financing, but also it seeks to identify the members of the 
terrorist network. This enables the FBI to enhance indicators 
and tripwires and develop actionable intelligence to identify 
and prevent terrorist attacks.
    To more fully utilize the intelligence we receive from our 
domestic intelligence and law enforcement partners, TFOS 
recently added a Targeting Unit. The Targeting Unit works to 
identify currently unknown fundraisers and their associates.
    In addition, TFOS added a Strategic Intelligence Unit to 
monitor threats, financial trends, and methodologies which are 
key to identifying possible terrorist financing transactions at 
their earliest point.
    In May of this year, Hor and Amera Akl pled guilty to 
conspiring to provide material support to Hizballah. The Akls 
claimed to an FBI informant that they had moved money to 
Lebanon and had high-ranking contacts with Hizballah. Amera Akl 
told the informant that she ``dreamed of dressing like 
Hizballah, carrying a gun, and dying as a martyr.''
    Posing as an individual with access to investors, the FBI 
informant delivered $200,000 to Hor and Amera for delivery to 
Hizballah. Both were arrested after the two were observed 
attempting to hide the money in a vehicle destined for shipment 
overseas.
    In addition, in the last year, the FBI conducted terrorist 
financing investigations that led to the indictment of 
individuals for providing funding to the Pakistani Taliban, al 
Qaeda in the Arabian Peninsula, and Al-Shabaab. These cases, 
among many others, highlight the importance of applying 
financial investigative techniques to counterterrorism 
investigations.
    Of course, we cannot accomplish this mission alone. Our 
close partners in these efforts are members of the Treasury 
Department, and in particular the Financial Crimes Enforcement 
Network within that Department. Working closely with the 
Treasury, the FBI conducts significant outreach to our 
financial industry counterparts. Through these continuing 
partnerships, the financial industry is better able to identify 
and report trends or patterns of suspicious activity around the 
country.
    In addition, TFOS coordinates efforts with our foreign 
intelligence and law enforcement partners around the world. 
Through all the FBI's 62 legal attache offices, TFOS jointly 
investigates terrorist financing matters with our foreign 
counterparts. These relationships are key to the FBI's efforts 
to stem the flow of financial support to terrorists and protect 
the United States from terrorist attacks.
    In conclusion, the efforts of TFOS, in close coordination 
with our Federal, State, and local partners, the financial 
industry, and our international partners, have established an 
increasingly difficult environment within which terrorist 
financiers can operate undetected. We believe these efforts 
have reduced the funding available for terrorist operations and 
have made the concealment and transfer of terrorism-related 
funds more difficult.
    As the terrorists adapt their methods to raise and transfer 
funds, the FBI--and its partners--has also adapted its efforts 
and its capacity to detect and disrupt these financial 
networks. To identify new and emerging networks and currently 
unknown subjects, TFOS systematically tracks and analyzes 
intelligence to guide terrorist financing investigations. 
TFOS's cooperative efforts with our Government and private 
sector partners ensures an ongoing and coordinated approach to 
terrorist financing to prevent future terrorist attacks against 
the United States.
    Chairman Whitehouse, Ranking Member Kyl, I appreciate the 
opportunity to come before you today to share the work that the 
FBI is engaged in to address terrorist financing and 
counterterrorism in this country and around the globe, and I am 
happy to answer any questions.
    Thank you.
    [The prepared statement of Mr. Boelter appears as a 
submission for the record.]
    Chairman Whitehouse. Thank you, Mr. Boelter. I appreciate 
your testimony.
    Our final witness on the panel is Daniel Glaser, who is the 
Assistant Secretary for Terrorist Financing at the Department 
of Treasury's Office of Terrorism and Financial Intelligence. 
He has also served as Treasury's Deputy Assistant Secretary for 
Terrorist Financing and Financial Crimes. In addition to his 
prior roles at the Treasury Department, he has served as an 
attorney for the United States Secret Service and as the head 
of the U.S. delegation to the Financial Action Task Force, an 
intergovernmental agency charged with formulating policies to 
combat international money laundering and terrorism financing.
    Mr. Glaser, welcome.

    STATEMENT OF DANIEL L. GLASER, ASSISTANT SECRETARY FOR 
      TERRORIST FINANCING, U.S. DEPARTMENT OF THE TREASURY

    Mr. Glaser. Thank you, Chairman Whitehouse, for the 
opportunity to discuss our efforts to combat terrorist 
financing.
    In the decade since the tragic attacks of September 11th, 
the U.S. Government has worked toward developing a 
comprehensive, whole-of-government approach to combat terrorist 
financing. Critical to this evolution has been the recognition 
that the Treasury Department--and the financial tools it 
wields--is central to our counterterrorism efforts and, indeed, 
to our National security as a whole.
    Money is vital to terrorist organizations. The monetary 
cost of executing an individual attack may be low, but 
terrorists require substantial sums to recruit, train, and 
sustain operatives, procure weapons, compensate families of so-
called martyrs, and garner support from local populations. This 
need to raise and move funds is a significant vulnerability 
that can be exploited. The financial networks of terrorist 
organizations are susceptible to identification and disruption. 
It is our efforts to do just this that I would like to discuss 
today.
    Prior to 9/11, the U.S. national security community had yet 
to grasp the full significance of the terrorist threat. Not 
surprisingly, terrorist financing was not high on the national 
security agenda, but that changed quickly 10 years ago. A 
galvanized U.S. Government recognized the importance of 
attacking terrorists' financial infrastructure as a critical 
component of an effective counterterrorism strategy.
    Treasury, armed with new authorities to freeze terrorists' 
assets, played a significant role in this response. We 
designated various terrorist-affiliated entities, crippling the 
financial nodes of al Qaeda, Hamas, and other foreign terrorist 
organizations. Today I can confidently say that the U.S. no 
longer remains fertile ground for terrorist fundraising.
    Despite our initial success, though, we recognized that 
Treasury's full potential remained bridled without a more 
comprehensive strategic approach and the institutional 
framework to implement it. Accordingly, in 2004 the Treasury 
Department, working with Congress, created the Office of 
Terrorism and Financial Intelligence, or TFI. The creation of 
TFI, the first office of its kind in the world, was a 
revolutionary development in the national security arena, and 
in less than 8 years, TFI has had a dramatic impact on our 
National security and become a fixture within our foreign 
policy establishment. Our mission is clear: Marshal the 
Treasury Department's policy, enforcement, regulatory, and 
intelligence functions to sever the lines of financial support 
to international terrorists, WMD proliferators, narcotics 
traffickers, organized criminals, and other threats to our 
National security.
    We advance this goal in many ways. For example, we work 
through multilateral bodies such as the Financial Action Task 
Force to establish a global framework that promotes 
transparency and which enables us to identify and address the 
various forms of terrorist financing vulnerabilities and 
threats.
    We have also sought to mitigate the risks posed by hawalas, 
charities, cash couriers, and new payment methods. And we have 
systematically undermined terrorist financial networks by 
imposing targeted financial measures.
    We have coupled these instruments with sustained outreach 
to the international and private sectors seeking to freeze 
terrorist groups out of the international financial system. Of 
course, in achieving these successes, cooperation from foreign 
counterparts is essential. Our engagement with Saudi Arabia 
exemplifies this approach. Though our partnership in combating 
terrorist financing in earlier years with Saudi Arabia had not 
always been good, sustained engagement over the years has 
produced strong progress. Moving forward, we must continue to 
build on this relationship and to encourage other regional 
players, in particular Qatar and Kuwait, to follow Saudi 
Arabia's lead in prioritizing the fight against terrorist 
financing.
    Of course, considerable challenges remain ahead. We are, as 
Secretary of Defense Panetta has said, within reach of 
defeating al Qaeda. Their financial situation is indeed dire, 
and our goal is to make it worse.
    But some pillars of financial and logistical support remain 
intact. Even as we make progress against core al Qaeda, we are 
finding that with the rise of al Qaeda affiliates, the 
terrorist financing threat has changed and, in some ways, 
become more intractable. Issues such as kidnapping for ransom 
and other terrorist groups that rely on non-traditional sources 
of funding, such as Al-Shabaab and Hamas, will require 
innovative approaches. We must continue to work with our 
interagency partners, the private sector, and our international 
counterparts to advance our mission. With the comprehensive 
strategic approach I have outlined here today, we will move 
forward to meet these challenges.
    Thank you, Mr. Chairman, and I look forward to answering 
any questions you might have.
    [The prepared statement of Mr. Glaser appears as a 
submission for the record.]
    Chairman Whitehouse. Thank you very much, Mr. Glaser. Let 
me turn right away to your observation that some pillars of 
financial and logistical support for terrorist organizations 
remain intact. What are those pillars? And in what way are they 
resistant to our previous efforts? What do we need to do to 
bring them down?
    Mr. Glaser. Well, thank you for the question, Mr. Chairman. 
I think we have made--we have to be vigilant across the board 
on every way terrorists raise funds and move funds, and all the 
ways that they have traditionally raised funds and all the ways 
they have traditionally moved funds, all the ways they continue 
to do so. But I think we have had a lot of success and made a 
lot of progress on the more traditional ways of fundraising 
through charities, moving funds through the formal financial 
sector, we have made a lot of progress, and I think we really 
have made it, as I like to say, costlier, riskier, less 
efficient for terrorist organizations to move their funds--
raise funds and move their funds around the world.
    One of the results of that success has been to transform 
the problem, and one of the things we have seen, particularly, 
as I said in my opening statement, with the reliance--with the 
emergence of not just al Qaeda core but al Qaeda affiliates, 
groups like al Qaeda in the Islamic Maghreb, al Qaeda in the 
Arabian Peninsula, Al-Shabaab, is an increased reliance on 
localized criminal activities to support themselves--in 
particular, with respect to al Qaeda in the Islamic Maghreb, 
kidnapping for ransom from which they derive substantial sums, 
so much so that it really-you know, they could survive on it.
    So while we need to continue to sort of look at the deep-
pocket donors and look at the ways that money moves into those 
regions, it is also important that we come up with new ways of 
thinking about how a group like AQIM is raising their funds.
    I think it is important that we engage with our partners in 
Europe, for example, on the very substantial ransom sums that 
are paid and come up with a common view and a common approach 
on ransom sums that are paid. That would be something that I 
think we need to focus on.
    There are other ways these groups raise funds. You have 
groups that are controlling territory, so you have Al-Shabaab, 
not an al Qaeda group, but Hamas who could raise funds the way 
the U.S. Government does through taxation. And, again, that 
presents challenges, and how do we target those financial 
systems? How do we find a way in to doing that? You know, these 
are some of the challenges that we face.
    Chairman Whitehouse. The more geographically local ones 
provide new types of challenges.
    Mr. Glaser. One of the successes has been, you know, you 
smash the center, you make it harder for them to exert command 
and control and deliver potentially devastating attacks. One of 
the consequences of that that you have to face is a more 
dispersed threat with its own sources of financing, which are 
in some ways smaller--and that is a good thing--and harder to 
sort of coordinate as an overall global strategy. That is a 
good thing. And in a lot of ways poor, and that is a good 
thing. But, you know, then you have your new challenges of 
going after the localized ways that they raise funds.
    Chairman Whitehouse. Ms. Monaco, tell me a little bit about 
how we are doing against the hawala networks. These are 
financing networks that have lasted for hundreds, perhaps even 
thousands of years, supporting the trading communities in that 
area of the world, and they have developed an informal means of 
operating that does not require reporting and is hard to 
penetrate. Given that, what are the techniques you find that we 
are using that have generated some success, and can we be 
optimistic about encouraging further success against them?
    Ms. Monaco. Well, Chairman Whitehouse, I think we have had 
some success, as you alluded to, and as Assistant Secretary 
Glaser's testimony discusses, we have also made some headway in 
ensuring that informal networks like hawalas are subject to 
registration requirements and trying to build in some of the 
same requirements that surround the formal system into the more 
informal system. So I think that is a success and that is a 
point of progress that we can recognize.
    I think we have been successful in some cases, and some of 
the statements submitted for the record recognize this as well. 
I would point to the Younis case, an individual who pled guilty 
just earlier this summer in New York. I think that is an 
example of the great efforts of the FBI and the Assistant U.S. 
Attorneys in New York in focusing on all aspects of a 
particular threat and following each thread, including the 
financial thread, and the defendant in that case pled guilty to 
operating an unlicensed money-transmitting operation in which 
eventually some of that money found its way to Faisal Shahzad, 
the plotter of the attempted car bomb, of course, in Times 
Square. So that is an instance where FBI investigators very 
diligently followed every aspect of that operation, including 
where the funding was coming from, and in that case identified 
the use of the informal money-transmitting system and disrupted 
that operation going on both here and in Pakistan.
    So I think we have had some successes. I think the Treasury 
Department's efforts to impose some of the requirements that 
exist in the formal system onto the informal system I think is 
a tremendous step in the right direction.
    Chairman Whitehouse. Very good. Thank you.
    Let me turn to Senator Grassley and then, in order of 
arrival, Senator Blumenthal and Senator Klobuchar. Senator 
Grassley.
    Senator Grassley. I probably will not have an opportunity 
to ask all of you questions because I can only stay for one 
round, but I appreciate it and I will submit some questions for 
answer in writing. I will start with Ms. Monaco.
    I sent a letter to the Department of Justice requesting 
information about the non-prosecution agreement entered into 
with the Islamic Investment of the Gulf Limited. I think it was 
an unusual move when the Department issued no press release 
about this agreement. The agreement was the conclusion of an 
investigation that moved around the Department from the 
National Security Division to the Criminal Division's Terrorism 
Financing Section to the Tax Division. As of today I have not 
had a response to the letter because--well, you know, I just 
kind of expect answers to my letters, but maybe it is a little 
soon to get them, so I am going to ask you. But I hope that we 
can get answers because I want to make sure that the Department 
is not trying to hide something.
    The silence on this issue of not issuing a press release I 
think kind of runs afoul with the claim that this 
administration is going to be very transparent.
    So what role did the National Security Division play in 
this investigation and in the non-prosecution agreement with 
the Islamic Investment?
    Ms. Monaco. Senator Grassley, I do understand that the 
Department has received your letter, and I was informed about 
that in preparation for this hearing, and I will certainly take 
back the urgency with which the Senator has expressed a desire 
to get a response to that and ensure that we get a prompt 
response, that the Department gets a prompt response to you.
    With respect to the National Security Division's 
involvement, I am not aware of a particular involvement in that 
matter, but, again, I am happy to go back and review that.
    Senator Grassley. Then you cannot answer the question who 
were the individuals at the Department that approved of the 
non-prosecution agreement? Or that is probably separate so you 
probably cannot answer that.
    Ms. Monaco. I cannot, Senator.
    Senator Grassley. You can answer this: At any time did you 
offer an opinion on it?
    Ms. Monaco. I did not, Senator, no.
    Senator Grassley. OK. There are reported connections 
between the Islamic Investment and known terrorist groups. 
Surely the National Security Division would investigate those 
connections, wouldn't they? I mean just as a matter of 
procedure.
    Ms. Monaco. Senator, I would not want to speculate in this 
particular case. Again, I am not aware of what involvement, if 
any, the Division had in that matter, but I would be happy to 
go back and take a look at that, and we will ensure that we try 
and get a response to your letter promptly.
    Senator Grassley. Well, it would seem to me like they would 
have something to do with it. You may not know specifically 
what they had to do with it, but they surely had something to 
do with it.
    Ms. Monaco. Again, Senator, I am not aware, and I would not 
want to speculate to the Committee.
    Senator Grassley. You can answer this question: How much 
money did the non-prosecution agreement involve?
    Ms. Monaco. I do not know.
    Senator Grassley. Well, can you tell us why they did not 
publicize the agreement when they normally would?
    Ms. Monaco. I am not aware of what the practice--if it 
would be normal practice to disclose that information, Senator.
    Senator Grassley. Well, would it be possibly because the 
Department got a bad deal and they are trying to hide it?
    Ms. Monaco. Again, Senator, I am not sure if it is, in 
fact, normal practice to disclose the terms of any particular 
settlement agreement in that regard.
    Senator Grassley. In keeping with the spirit of openness 
and transparency that the President and the Attorney General 
promote, will you provide my office with a copy of the non-
prosecution agreement with the Islamic Investment as well as 
answers to my questions contained in the letter of September 
7th?
    Ms. Monaco. Senator, I will absolutely go back and ensure 
that we get a response to your letter and provide whatever 
information is appropriate to provide to you and to the 
Committee.
    Senator Grassley. Could you tell me when I could expect an 
answer to that letter?
    Ms. Monaco. I would not want to overpromise, Senator, but, 
again, I would certainly go back and make sure that we do get a 
prompt response.
    Senator Grassley. As far as you know, there would not be 
any national security implications about releasing the 
information I have asked for?
    Ms. Monaco. I am not----
    Senator Grassley. I mean, after all, it was a grand jury 
situation that was investigated.
    Ms. Monaco. I am not aware of what the national security 
implications would be. It certainly would not be outside the 
realm of possibility that there would be national security 
implications in a grand jury investigation. But, again, I would 
not want to speculate.
    Senator Grassley. I had my staff ask the Justice Department 
yesterday whether the matter involved national security and if 
that was the reason for silence on the non-prosecution 
agreement. The Office of Legislative Affairs did not answer my 
staff's question despite notice that I would bring it up today. 
We have the capacity to review classified information, and if 
there is something about this that involves national security, 
since I have the capacity for classified information, I would 
urge you to use those channels to provide me with the 
information.
    Ms. Monaco. I understand, Senator.
    Senator Grassley. OK. And then I will stop with this: On a 
related matter, I understand that, despite the hiring freeze at 
the Justice Department, more staff have been hired for the 
National Security Division. How many people do you have in the 
National Security Division Policy Office? How many were hired 
since the hiring freeze? And who approved the hires?
    Ms. Monaco. Senator, the Department is under a hiring 
freeze, as you know, given the current budget situation. There 
are, however, exemptions that have been granted based on--to 
that hiring freeze where Department components can demonstrate 
that they have the funding and the allowable positions that 
have been provided by the Congress. I would have to double-
check on the precise number, but I would say in the 
neighborhood of 30 individuals in the Law and Policy Office.
    Senator Grassley. OK. Thank you very much, Mr. Chairman.
    Chairman Whitehouse. Thank you very much, Senator Grassley.
    The next questioner will be Senator Blumenthal of 
Connecticut, who has a distinguished career in law enforcement, 
as you all well know.
    Senator Blumenthal. Thank you, Mr. Chairman, and thank you, 
Chairman Whitehouse, for your distinguished career in law 
enforcement and for holding this hearing.
    I think that we are all gratified by the progress that has 
been made in this area, particularly in combating the financial 
institutions' potential complicity in these transactions that 
involve financing terrorism. And I recognize that progress has 
been made in that area, and I want to thank each of you and the 
people who work with you for your continuing work and your 
accomplishments.
    All three of you, I believe, have made reference to the 
guilty plea by Mohammad Younis and the information that was 
developed about the sources of funding for the Shahzad plot. 
And apparently a major source was in Pakistan, possibly with 
the complicity of the financial institutions there, possibly 
with the knowledge of officials in Pakistan. I wonder if you 
could comment on what information has been developed about the 
Pakistanis' involvement in financing terrorist organizations 
and what steps can be taken to combat it.
    Ms. Monaco. I will just comment briefly on that, Senator 
Blumenthal. First I want to make clear that in the Younis case 
that individual was prosecuted and has pled guilty to operating 
an unlicensed money-transmitting operation, which I mentioned 
previously. He was not witting in the guilty plea--in that case 
did not demonstrate that he was witting of the purpose of those 
funds but, rather, the unlicensed transmission operation. So I 
just wanted to make that clear for the record.
    As to development of information with regard to the 
Pakistani end of that operation, I do not have anything that I 
would be able to offer to the Committee. I am not sure about my 
FBI colleague.
    Mr. Boelter. Yes, Senator, I would just say generally that 
one of our great challenges is a lack of visibility in the 
financial institutions and entities overseas. That is a 
challenge, I would not limit that to Pakistan, but globally.
    With respect to this case in particular, I think I would 
defer to speak to that issue in a more----
    Senator Blumenthal. In a different setting.
    Mr. Boelter. Yes.
    Senator Blumenthal. Well, I appreciate the reasons for your 
preference, although your testimony does say, and I am quoting, 
``Shahzad advised that the funding was arranged in Pakistan by 
associates of the . . . (TTP).'' And I take it from that fairly 
general statement that perhaps a follow-up in a different 
setting would be worthwhile because I would be very interested 
in this instance and others where Pakistan perhaps played a 
part with degrees of knowledge and intention that may be open 
to question about the terrorist financing.
    And let me follow up with you in another related area. What 
other countries would you say would bear scrutiny and perhaps 
could cooperate more fully in making their systems more 
transparent and, therefore, aid us in tracking down and 
stopping this kind of financing?
    Mr. Boelter. Well, Senator, I think I would defer to my 
Treasury colleague to speak on that point, if I may, Senator.
    Senator Blumenthal. Sure.
    Mr. Glaser. Thank you, Senator. We spend a lot of time at 
the Treasury Department on precisely this issue, trying to work 
with other countries on what should be the international 
standards for anti-money-laundering and counterterrorist 
financing and then putting systems in place to ensure the 
countries are actually taking steps to comply with those 
standards. And we do that through an organization called the 
Financial Action Task Force.
    The Financial Action Task Force has what is called the FATF 
40+9, which is the 40 recommendations on money laundering, 9 
special recommendations on terrorist financing, and taken 
together they represent a comprehensive framework for combating 
money laundering and terrorist financing. It includes criminal 
laws, regulatory laws, and international cooperation.
    And then we have worked with the IMF and the World Bank and 
FATF to make sure that every country or virtually every 
country--North Korea, for example, has not been reviewed, but 
virtually every country in the world is subject to a very 
rigorous review process.
    FATF has on its website identified the countries which in 
particular have performed very poorly on those. Pakistan is one 
of those countries that has been so identified by the FATF, and 
there are about 25 countries. I could tell you a few. I cannot 
rattle them all off, off the top of my head, but it is publicly 
available on the FATF website which countries still have a lot 
of work to do. I am just getting this basic structural 
framework in place.
    Senator Blumenthal. I know that that information is 
available publicly, and just one last question because my time 
is about to expire. Does that list coincide with the list of 
countries that are actually responsible or without perhaps the 
knowledge of the governments themselves, does that list of the 
least transparent coincide with the list of countries that also 
are the most complicit, perhaps unwittingly?
    Mr. Glaser. Exactly, and that is----
    Senator Blumenthal. I am not framing the question very 
artfully, but you get the----
    Mr. Glaser. I know exactly what you are asking. I was about 
to make that distinction as well. That group of countries that 
I was mentioning are countries that need work on their basic 
framework, on their basic regulatory structure, their basic 
legal structure, and a lot of them are working to put those in 
place.
    Then you get to the more difficult question of which 
countries are actually implementing it, which countries are 
actually doing what they need to do.
    For example, Kuwait is a country that does not even have a 
terrorist financing law, the only country in the gulf that does 
not have a terrorist financing law. Kuwait is a country that 
has some work to do.
    Qatar is making progress, but Qatar has a lot of work to do 
in implementing its terrorist financing laws, and I am going to 
be visiting Qatar and Kuwait later this month or the beginning 
of October--the end of September or beginning of October, to 
talk to them about the steps that they still need to take in 
order to make progress.
    And then, of course, you have your state sponsors, 
countries like Iran, which we have recently designated an al 
Qaeda financial support network supported by Iran. Iran is the 
chief donor to Hizballah, to Hamas. So, I mean, you know, once 
you get to the state sponsorship arena, it is a whole different 
level.
    So as you point out, I would say there are sort of three 
levels: the countries that still need work on a framework, the 
countries that simply do not have the political will or need 
more political will to implement, and then the countries that 
are actually actively part of the problem.
    Senator Blumenthal. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Whitehouse. Senator Klobuchar.
    Senator Klobuchar. Thank you very much.
    I first wanted to welcome the Assistant Director, Ralph 
Boelter. He was a special agent in charge of the Minneapolis 
office and did an amazing job with our FBI there, and we have a 
very close law enforcement community in Minnesota. My favorite 
story of that was the Secret Service once had a holiday party, 
and I will never forget the invitation: ``You're invited to the 
Secret Service Open House,'' which I thought was sort of funny. 
And when we got there, they would not tell you how many agents 
worked there because it was a secret. But I have really enjoyed 
working with you, and I welcome you here today.
    Mr. Boelter. Likewise, Senator. Thank you.
    Senator Klobuchar. Thank you.
    I wanted to first start and follow up a little with you, 
Assistant Secretary Glaser. You were talking with Senator 
Blumenthal about some of the work that you are doing. I was 
just curious, from sort of a bigger picture question, what are 
the most common--like the two or three most common forms of 
fundraising you are seeing to finance these terrorist entities? 
And I know that in your testimony you talk about how it has 
become more intractable, more difficult to find. So what are 
you seeing now?
    Mr. Glaser. Thank you for the question. As I said before, 
all the methodologies that we have traditionally seen for 
raising and moving terrorist funds we are still seeing. So 
terrorist organizations continue to receive money from deep-
pocket donors in the gulf. They continue to receive money 
through charities. They continue to move money through both the 
informal and formal financial sectors. So all of that continues 
to go on, even though we continue to make tremendous progress 
in those areas. And I would just again point to Saudi Arabia as 
a good example of that progress.
    I have been at this for a long time, and several years ago 
we were quite frustrated with what we thought was Saudi Arabia 
not taking as much action as it should be taking. In recent 
years we have seen Saudi Arabia have investigations, real law 
enforcement investigations into terrorist financing and real 
prosecutions in terrorist financing, and it put in place some 
of the strictest laws in the world with respect to how it 
regulates and oversees its charities with respect to their 
international disbursements of funds. So that is progress, and 
that is one of the ways that we have made it harder for 
terrorist groups to access the international financial system.
    As a result, we have seen the problem disperse and become 
more localized, which has its advantages and disadvantages. One 
of the disadvantages is some of the more traditional tools we 
use in terms of sanctions, in terms of engaging with 
governments, and in terms of confronting governments are less 
effective, and we have to come up----
    Senator Klobuchar. Because it is more dispersed and it is--
--
    Mr. Glaser. Because it is more dispersed, it is more 
localized, and it becomes almost a local law enforcement issue. 
One of the things I pointed to is kidnapping for ransom. I know 
I keep mentioning it like a broken record, kidnapping for 
ransom, because it is really, really important and it is----
    Senator Klobuchar. And so that money is going from these 
looser groups into terrorism.
    Mr. Glaser. Well, these looser groups are terrorist 
organizations, and this is how they are funding themselves, but 
oftentimes----
    Senator Klobuchar. Right, so they just do it themselves. 
They kidnap people, they use that money, and then they commit 
acts of terrorism.
    Mr. Glaser. These are terrorist organizations that raise--
yes, that in part, and to a large part, support themselves 
through that criminal activity.
    Senator Klobuchar. Right. Could I turn to Assistant 
Director Boelter? Sort of combining your old job and your new 
job, organized crime, what do you see as the relationship 
between financing terrorism and organized crime?
    Mr. Boelter. I do not see a strong connection there. I 
think organized crime is not--it is not naturally paired with 
terrorism because the objectives of organized crime are to make 
money, frankly, and the objectives of terrorists are really to 
inflict harm on this country and our interests, and other 
countries as well. So I think there is not a natural 
relationship between those two entities, and likewise, I am not 
saying there is no connection, but I do not think it is a 
significant connection.
    Senator Klobuchar. And do you see some of the same things 
that Mr. Glaser was talking about with the funding?
    Mr. Boelter. In the different modes of raising----
    Senator Klobuchar. Yes, that it is more dispersed with 
individual terrorist groups funding themselves.
    Mr. Boelter. Absolutely, and I think to some extent that we 
have moved them in that direction over the last few years by 
shutting down the formal financial network or access to it, to 
them. So I think that is a product somewhat of what we have 
done, but, yes, it is a changing landscape in terms of how they 
raise money. I would not suggest that engaging in kidnappings 
would be their first choice, but it is something that--because 
that is a high-risk activity, but that is clearly overseas in 
particular something that we are seeing.
    Senator Klobuchar. Assistant Attorney General Monaco, you 
talked about training and working with our partners 
internationally. What response have you received? Have there 
been changes over the last decade? Have you seen changes to the 
foreign laws that make it easier for us to work with them?
    Ms. Monaco. I think we have seen a growing level of 
cooperation and particularly in those areas where we have 
targeted our efforts. I mentioned Bangladesh, Kenya, and some 
other areas where we really are focusing almost exclusively 
with personnel in those areas on terrorist financing.
    I think in areas like Indonesia there have been good 
strides made, and I think while we are working in those 
targeted areas to bring up the level specifically on terrorist 
financing in the areas I mentioned, our resident legal attache 
program across the world with the 55 folks I mentioned is 
something we are trying to buildup our counterterrorism 
cooperation generally, buildup the level of attention and 
cooperation across the board.
    Senator Klobuchar. You know, I spent the evening of 
September 11th this year with the family of Tom Burnett, who 
was one of the passengers on that flight and one of the four 
guys that decided in that split second to wrestle the 
terrorists in the plane and then landed in a field in 
Pennsylvania instead of in one of our buildings here, which 
could have killed thousands of people, and his parents actually 
are--Mr. Chairman, I am glad you held this hearing. They are 
very focused on this financing issue and trying to go after who 
financed this terrorism act and working on it. So I just want 
to thank you for your work on their behalf and everyone else in 
this country. Thank you very much.
    Ms. Monaco. Thank you, Senator.
    Chairman Whitehouse. Thank you, Senator Klobuchar.
    I have a statement from Chairman Leahy on this hearing. 
With unanimous consent, I will put the statement into the 
record, and it has two letters attached, which I will also put 
into the record.
    [The prepared statement of Chairman Leahy appears as a 
submission for the record.]
    [The letters appear as a submission for the record.]
    Chairman Whitehouse. Ms. Monaco, I will summarize its 
conclusion, which is that the Attorney General should issue 
prosecutorial guidelines that remove the uncertainty over the 
scope of the material support law. I will hope very much that 
the Department takes that advice to heart. We have just had a 
vote in the last markup where the Department was invited to 
issue prosecutorial guidelines and did not, and the result was 
that a measure passed through the Judiciary Committee that the 
Department disapproves of. When the Chairman of the Judiciary 
Committee invites the Attorney General to issue prosecutorial 
guidelines on a matter, I think that is something that the 
Attorney General should attend to with considerable dispatch 
and attention because it is a device that leaves the control 
over this in the hands of the Department as to how to design 
the very best response. If you fail at that, then you end up 
with us. So please take that as a very positive step, and I 
would urge the Attorney General to respond quickly and 
affirmatively to the Chairman's request.
    Back to the hawalas for 1 second. It strikes me from the 
description of the areas in which we have had success that it 
has been in this country where the operation of the hawala 
violates in essence our banking laws--they are operating an 
unauthorized financial facility. Once you get outside of that 
geographic boundary and into the area, say, between Afghanistan 
and Saudi Arabia, where funds are floating back and forth, or 
other gulf states, have we had any success dealing with the 
hawala system?
    Ms. Monaco. I think that some of our efforts have been in 
the intelligence-gathering vein and have allowed us some 
insight--and I think my colleagues may have more to offer on 
that--has allowed us some insight into those activities 
overseas, but I do think it poses one of the challenges we face 
in terms of the transparency, or lack thereof, of the operation 
of formal and informal networks.
    Chairman Whitehouse. Mr. Glaser, would that be one of your 
pillars of financial and logistical support that remain 
standing?
    Mr. Glaser. Well, sure. As you noted, the reason hawala and 
other forms of informal remittances and informal money services 
exist is because there are large communities throughout the 
world that do not have access to formal financial services or 
affordable financial services. So the long-term ``solution'' to 
hawala is a generational one, and it is about building an 
international financial system that everybody around the world 
has access to.
    Now, since that is a long-term solution, we need shorter-
term--we need to address the problem in a shorter-term way as 
well. As you point out, the first prong is having an 
appropriate regulatory regime. I do think we have an 
appropriate regulatory regime in the United States, and money 
service businesses--and hawala would be a money service 
business--are required to register; they are required to have 
an anti-money-laundering program, and they are required to 
report suspicious transactions.
    There are international standards that I mentioned before 
through the Financial Action Task Force that apply to all 
countries to have similar sorts of systems, and we are working 
with other countries to ensure that those around the world.
    The next prong would be enforcement, and I think that we 
have taken--you mentioned Afghanistan. We have tried to be very 
aggressive with respect to international hawaladars that we 
think are problematic. In February of this year, under the 
Kingpin Act, under our kingpin sanctions, we designated the New 
Ansari Network, which is a major hawala operation in 
Afghanistan, which is moving billions of dollars in narcotics 
proceeds into and out of Afghanistan. So there is a particular 
hawala network that we went after, and we continue to follow up 
on that.
    You mentioned the ATFC, the Afghan Threat Finance Cell. 
They have worked directly with special units of the Afghan 
police to conduct raids on hawaladars within Afghanistan. So 
there is an important--in addition to the regulatory component, 
there is an important enforcement component.
    The way we try to approach it beyond the sort of long-term 
effort to make financial services available to everybody, you 
know, is a regulatory prong, enforcement, international 
standards, and general economic development. So that is at 
least how we think about the issue, but I do not want to give 
the impression that we have the issue cracked. It is there. It 
is a tough issue, and it is a largely non-transparent system as 
it exists today, and that is something that we focus on very 
intently.
    Chairman Whitehouse. Thank you.
    A final question probably to Ms. Monaco. I believe that one 
of the great attributes of American democracy in this wonderful 
balanced system that has been handed down to us from the 
Founding Fathers is the jury and the right that every American 
has, when harmed, to go before a jury of their peers and plead 
their case and stand equal before the law with whoever may have 
harmed them. Americans have clearly been harmed by terrorist 
organizations. They have been harmed in America by terrorist 
organizations. And some have sought to vindicate their rights 
by bringing private actions to establish the scope of those 
terrorist organizations, to establish the scope of the networks 
that support them, financially and otherwise, and to seek the 
redress that is every American citizen's right.
    Do you find that a helpful element of the various ways in 
which--it is a nongovernmental element to a significant degree, 
but is it a helpful element in trying to identify and bring to 
justice people who are financing terrorist activities that harm 
Americans here in our home country?
    Ms. Monaco. If I understand the Chairman's question, the 
right of individuals or organizations to challenge their 
designation?
    Chairman Whitehouse. The right of victims of terror to go 
after those who finance the terrorist plotters who harmed them 
and seek to bring them to justice in our civil courts.
    Ms. Monaco. Certainly, Senator, there are a number of those 
cases in which individuals have, as you say, sought redress in 
the courts. I certainly agree with you as a lawyer and as a 
former prosecutor about the jury system and its importance in 
our system. And I think the ability of individuals to seek 
redress in the courts is absolutely a founding element of our 
democracy.
    Chairman Whitehouse. And so the Department of Justice is 
perfectly comfortable with the notion that people can proceed 
in that way to vindicate their rights against those who have 
harmed them in the American civil court system?
    Ms. Monaco. Well, I think equally so the Department plays a 
role in defending statutes, in defending--in acting in 
litigation. Great career members of our Civil Division, as you 
know as a former denizen of the Justice Department, tremendous 
lawyers there who seek to uphold statutes passed by this body 
and to vindicate the interests of the Government in the courts, 
and I think they equally play an important role.
    Chairman Whitehouse. Very good. I appreciate everybody's 
testimony. I know that you have important responsibilities, and 
for you to take the time to come up here and share with all of 
us the work that you are doing and the concerns and challenges 
that you face is very helpful to us as we try to provide you 
the necessary material support to do the jobs that you have to 
do to protect us. So let me close by thanking you for your 
diligent service on behalf of our Nation, recognizing what 
every member who has been here has noted, which is the vital 
importance of the task that you have made it your purpose and 
mission to accomplish and to wish you well as you go forward. 
Please feel free to come to us with any specific requests you 
have to strengthen the hand that you have against those who are 
providing this kind of material support to the terrorist 
networks that still are targeting our country and our people.
    Thank you very much. The record of the hearing will remain 
open for an additional week in the event that anybody wishes to 
add anything, but subject to that, the hearing is now 
adjourned.
    Ms. Monaco. Thank you, Senator.
    [Whereupon, at 12:03 p.m., the Subcommittee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]




                                 
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