Investigations of Terrorist Financing, Money Laundering, and
Other Financial Crimes (20-FEB-04, GAO-04-464R).
After the tragic events of September 11, 2001, federal efforts to
wage a seamless, coordinated campaign against sources of
terrorist financing became critically important. In May 2003, the
Attorney General and the Secretary of Homeland Security signed a
Memorandum of Agreement (Agreement) concerning terrorist
financing investigations, which contained a number of provisions
designed to resolve jurisdictional issues and enhance interagency
coordination. The Agreement and its related procedures specified
that the Federal Bureau of Investigation (FBI) was to have the
lead role in investigating terrorist financing and that the U.S.
Immigration and Customs Enforcement (ICE), a component of the
Department of Homeland Security, was to pursue terrorist
financing solely through participation in FBI-led task forces,
except as expressly approved by the FBI. Specific provisions of
the Agreement directed the FBI and ICE to, among other things,
develop collaborative procedures for handling applicable ICE
investigations or financial crimes leads that have a nexus to
terrorism. Another provision required that the FBI and ICE
jointly report to the Attorney General, the Secretary of Homeland
Security, and the Assistant to the President for Homeland
Security on the status of the implementation of the Agreement 4
months from its effective date. Shortly after the Memorandum of
Agreement was signed, Department of Homeland Security component
agencies, the U.S. Secret Service and ICE, expressed concern that
the Agreement could adversely affect their ability to conduct
investigations involving financial crimes. Thus, Senate Report
108-86 (July 2003) directed that we evaluate the Agreement's
impact on the existing authorities of the Secret Service and ICE
to effectively carry out traditional financial crimes
investigations. Our initial work showed that the Agreement
pertains only to investigations and operations of the FBI and ICE
and does not impact the investigative authority or operations of
the Secret Service. Therefore, we are not discussing the Secret
Service in this report. In accordance with the congressional
mandate and as agreed with your offices, this report addresses
(1) what is the status of the implementation of the Memorandum of
Agreement? (2) how has the Agreement affected the mission or role
of ICE regarding investigations of financial crimes? and (3) What
are the potential challenges to the successful implementation of
the Agreement?
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-464R
ACCNO: A09339
TITLE: Investigations of Terrorist Financing, Money Laundering,
and Other Financial Crimes
DATE: 02/20/2004
SUBJECT: Agency missions
Counterterrorism
Crime prevention
Crimes or offenses
Performance measures
Terrorism
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GAO-04-464R
United States General Accounting Office Washington, DC 20548
February 20, 2004
The Honorable Thad Cochran
Chairman
The Honorable Robert C. Byrd
Ranking Minority Member
Subcommittee on Homeland Security
Committee on Appropriations
United States Senate
Subject: Investigations of Terrorist Financing, Money Laundering, and
Other Financial Crimes
After the tragic events of September 11, 2001, federal efforts to wage a
seamless, coordinated campaign against sources of terrorist financing
became critically important. In May 2003, the Attorney General and the
Secretary of Homeland Security signed a Memorandum of Agreement
(Agreement) concerning terrorist financing investigations, which contained
a number of provisions designed to resolve jurisdictional issues and
enhance interagency coordination. The Agreement and its related procedures
specified that the Federal Bureau of Investigation (FBI) was to have the
lead role in investigating terrorist financing and that the U.S.
Immigration and Customs Enforcement (ICE), a component of the Department
of Homeland Security, was to pursue terrorist financing solely through
participation in FBI-led task forces, except as expressly approved by the
FBI. Specific provisions of the Agreement directed the FBI and ICE to,
among other things, develop collaborative procedures for handling
applicable ICE investigations or financial crimes leads that have a nexus
to terrorism. Another provision required that the FBI and ICE jointly
report to the Attorney General, the Secretary of Homeland Security, and
the Assistant to the President for Homeland Security on the status of the
implementation of the Agreement 4 months from its effective date.
Shortly after the Memorandum of Agreement was signed, Department of
Homeland Security component agencies, the U.S. Secret Service and ICE,
expressed concern that the Agreement could adversely affect their ability
to conduct investigations involving financial crimes. Thus, Senate Report
108-86 (July 2003)1 directed that we evaluate the Agreement's impact on
the existing authorities of the Secret Service and ICE to effectively
carry out traditional financial crimes investigations. Our initial work
showed that the Agreement pertains only to investigations and operations
of
1 Title I of the Senate Appropriations Committee report on the Department
of Homeland Security Appropriations Bill for 2004.
GAO-04-464R Financial Crimes Investigations
the FBI and ICE and does not impact the investigative authority or
operations of the Secret Service. Therefore, we are not discussing the
Secret Service in this report. In accordance with the congressional
mandate and as agreed with your offices, this report addresses the
following questions:
o What is the status of the implementation of the Memorandum of
Agreement?
o How has the Agreement affected the mission or role of ICE regarding
investigations of financial crimes?
o What are the potential challenges to the successful implementation of
the Agreement?
To address these questions, our work focused on the principal components
of the Department of Homeland Security and the Department of Justice that
are responsible for implementing the Agreement and investigating and
prosecuting terrorist financing-ICE, the FBI and its Joint Terrorism Task
Forces, the Terrorist Financing Unit of the Counterterrorism Section in
Justice's Criminal Division, and U.S. Attorneys Offices. To determine the
implementation status of the Agreement and the potential challenges to its
successful implementation, we contacted headquarters officials from these
components, and we reviewed available documentation of intraagency and
interagency communications on these topics. We obtained additional
perspectives on the Agreement and its implementation from field officials
in three major U.S. cities and reviewed related documents.
Further, to determine how the Agreement has affected the mission or role
of ICE, we interviewed ICE headquarters and field officials and reviewed
applicable laws and other documents. We also contacted the Department of
the Treasury's Financial Crimes Enforcement Network, officials from three
financial regulatory agencies (Federal Reserve Board, Office of the
Comptroller of the Currency, and the Securities and Exchange Commission),
two large U.S. banks, and one banking industry
2
association. The results of our interviews with federal law enforcement
officials in the field offices and with the financial community officials
may not be representative of the views and opinions of others nationwide.
We performed our work from October 2003 to February 2004 in accordance
with generally accepted government auditing standards. Enclosure I
presents more details about our objectives, scope, and methodology.
Results in Brief
As of February 2004, the FBI and ICE had implemented or taken concrete
steps to implement most of the key Memorandum of Agreement provisions. For
example, the agencies had developed collaborative procedures to determine
whether applicable
2 A primary role of the Financial Crimes Enforcement Network is to support
terrorist financing investigations through the facilitation of information
sharing and networking among the law enforcement, regulatory, and
financial communities. This role includes collecting and disseminating
financial leads to law enforcement agencies.
ICE investigations or financial crimes leads may be related to terrorism
or terrorist financing-and, if so, determine whether these investigations
or leads should thereafter be pursued under the auspices of the FBI. The
FBI and ICE have not yet issued a joint report on the status of the
implementation, which was required 4 months from the effective date of the
Agreement. By granting the FBI the lead role in investigating terrorist
financing, the Agreement has altered ICE's role in investigating
terrorism-related financial crimes. However, the Agreement generally has
not affected the agency's mission or role in investigating other financial
crimes. The FBI and ICE have and will continue to confront a number of
operational and organizational challenges, such as establishing and
maintaining effective interagency relationships and ensuring that the
financial crimes expertise and other investigative competencies of both
agencies are appropriately and effectively utilized. Continued progress in
implementing the Agreement depends largely on the FBI's and ICE's ability
to find workable strategies to overcome these challenges.
Background
The former U.S. Customs Service, which is now part of ICE, and the FBI
both have a long history of investigating money laundering and other
financial crimes.3 In response to the terrorist attacks of September 11,
2001, the Departments of the Treasury and Justice both established
multi-agency task forces dedicated to combating terrorist financing.
Treasury established Operation Green Quest, led by Customs, to augment
existing counterterrorist efforts by targeting current terrorist funding
sources and identifying possible future sources. In addition to targeting
individuals and organizations, Operation Green Quest was designed to
attack the financial systems that may be used by terrorists to raise and
move funds, such as fraudulent charities and the shipment of bulk
currency. In January 2003, Customs expanded Operation Green Quest by
doubling the personnel commitment to a total of approximately 300 agents
and analysts nationwide to work solely on terrorist financing matters. In
March 2003, Customs and Operation Green Quest were transferred to ICE,
within the Department of Homeland Security.
On September 13, 2001, the FBI formed a multi-agency task force-which is
now known as the Terrorist Financing Operations Section (TFOS)-to combat
terrorist financing. The mission of TFOS has evolved into a broad role to
identify, investigate, prosecute, disrupt, and dismantle all
terrorist-related financial and fundraising activities. The FBI also took
action to expand the antiterrorist financing focus of its Joint Terrorism
Task Forces (JTTFs)-teams of local and state law enforcement officials,
FBI agents, and other federal agents and personnel whose mission is to
investigate and prevent acts of terrorism.4 In 2002, the FBI created a
national JTTF in
3 Money laundering is the process used to transform monetary proceeds
derived from criminal activities into funds and assets that appear to have
come from legitimate sources.
4 According to the FBI, the first JTTF came into being in 1980, and the
total number of task forces has nearly doubled since September 11, 2001.
Today, there is a JTTF in each of the FBI's 56 main field offices, and
additional task forces are located in smaller FBI offices.
Washington, D.C., to collect terrorism information and intelligence and
funnel it to the field JTTFs, various terrorism units within the FBI, and
partner agencies.
Following September 11, representatives of the FBI and Operation Green
Quest met on several occasions to attempt to delineate antiterrorist
financing roles and responsibilities. However, such efforts were largely
unsuccessful. The resulting lack of clearly defined roles and coordination
procedures contributed to duplication of efforts and disagreements over
which agency should lead investigations.5 To help resolve these
long-standing jurisdictional issues, in May 2003, the Attorney General and
the Secretary of Homeland Security signed a Memorandum of Agreement on
terrorist financing investigations. According to the Agreement, the
Department of Justice will lead federal law enforcement efforts against
terrorist financing.6 The Agreement specifies that the FBI is to lead
terrorist financing investigations and operations, utilizing the
intergovernmental and intra-agency national JTTF at FBI headquarters and
the JTTFs in the field. The Agreement also specifies that, through TFOS,
the FBI is to provide overall operational command to the national JTTF and
the field JTTFs.
The Agreement contains several provisions designed to increase information
sharing and coordination of terrorist financing investigations. For
example, the Agreement requires the FBI and ICE to (1) detail appropriate
personnel to each other's agency and (2) develop specific collaborative
procedures to determine whether applicable ICE investigations or financial
crimes leads may be related to terrorism or terrorist financing. Also, the
Agreement required the FBI and ICE to produce a joint written report on
the status of the implementation of the Agreement 4 months from its
effective date. Additional details on the Agreement and all of its
provisions are presented in enclosure II.
Most Key Memorandum of Agreement Provisions Have Been Implemented
As of February 2004, most of the key Memorandum of Agreement provisions
had been implemented or were in the process of being implemented (see
table 1). For example, in accordance with the Agreement, the FBI and ICE
have cross-detailed key management personnel at the headquarters level,
with an ICE manager serving as Deputy Section Chief of TFOS and an FBI
manager detailed to ICE's financial crimes division. Also, the FBI and ICE
have developed collaborative procedures to determine whether appropriate
ICE money laundering investigations or financial crime leads may be
related to terrorism or terrorist financing.
5 See U.S. General Accounting Office, Combating Money Laundering:
Opportunities Exist to Improve the National Strategy, GAO-03-813
(Washington, D.C.: Sept. 26, 2003).
6 According to Justice, the main terrorist financing criminal statute is
18 U.S.C. S: 2339B, which gives the Attorney General the responsibility
for investigating the crime of terrorist financing.
Table 1: Status of Implementation of Key Memorandum of Agreement
Provisions (as of Feb. 2004)
Agreement provisions Implementation status
Increase information sharing and
coordination (para. 3). o Take all o According to FBI and ICE
reasonable and necessary steps to officials, the implementation of
permit the maximum allowable this provision is ongoing. For
information sharing relating to example, the agencies are taking
terrorist financing information and steps to ensure that ICE agents
intelligence among the members of the assigned to field JTTFs have
national JTTF and field JTTFs. o required security clearances. o
Detail appropriate FBI personnel to the In February 2004, the FBI detailed
financial crimes division of ICE. Such a manager to ICE's financial
detailees are to be provided full and crimes division. Earlier, other
timely access to all data developed in FBI staff had been detailed to
ICE's money laundering and financial ICE.
crimes cases on an ongoing basis.
Develop collaborative procedures to
implement the Agreement (para. 4). o
By June 30, 2003, develop collaborative o The FBI and ICE finalized the
procedures to determine whether an ICE collaborative procedures in July
money laundering or financial crime 2003. (See enc. II.)
lead or investigation is related to
terrorism or terrorist financing and to
ensure effective deconfliction.
Detail a Homeland Security employee to
be Deputy Section Chief of TFOS (para.
5). o When the position of Deputy o In July 2003, the position of
Section Chief of TFOS next becomes Deputy Section Chief of TFOS was
vacant or by December 1, 2003-whichever filled by a Homeland Security
comes first-the position shall be employee. ICE has maintained
filled by a Homeland Security employee staffing at TFOS (or predecessor
detailed to the FBI. groups) since October 2001.
Detail ICE personnel to the national
JTTF and JTTFs (para. 6). o To
utilize the expertise and capabilities
of ICE in the federal campaign against o In February 2004, ICE officials
terrorist financing, Homeland Security said that 3 ICE agents had been
will detail a significant number of assigned to the national JTTF and
appropriate personnel to the national a total of 277 ICE agents had been
JTTF and field JTTFs, and the FBI will assigned to field JTTFs.a The
ensure that the detailees are fully officials did not know how many of
integrated into its efforts to combat these assignments were made after
terrorist financing. the Agreement was signed.
Report on the implementation status of
the Agreement (para. 8). o The FBI
and ICE shall provide a joint written
report to the Attorney General, the
Secretary of Homeland Security, and the o No report had been issued, as
Assistant to the President for Homeland of February 20, 2004.
Security on the status of the
implementation of the Agreement 4
months from the effective date of the
Agreement.
Source: GAO analysis of the Agreement and the collaborative procedures
(see enc. II) and discussions with FBI and ICE officials.
aAccording to ICE officials, the total for the field JTTFs does not
include ICE agents who will be assigned in consonance with vetted cases
being transitioned to the JTTFs, nor does it include ICE investigators who
participate part time on JTTFs. Also, the officials said that 32 of the
277 ICE agents assigned to field JTTFs were former Customs Service agents.
The ICE officials did not know how many of the 32 Customs agents had
worked under the former Operation Green Quest.
Further, as an integral aspect of the collaborative procedures, ICE
created a joint vetting unit, in which ICE and FBI personnel-who have full
access to ICE and FBI databases-are to conduct reviews to determine
whether a potential nexus to terrorism or terrorist financing exists in
applicable ICE investigations or financial crimes leads. If so, the matter
is to be referred to TFOS, where the FBI Section Chief is to provide the
ICE Deputy Section Chief with information demonstrating the terrorism
nexus, as well as the stage and development of the corresponding FBI
investigation. Then, the Section Chief and the ICE Deputy Section Chief
are to discuss the elements of the terrorism nexus, ICE's equity or
commitment of resources to-date in the investigation, violations being
pursued by ICE before the Memorandum of Agreement, and the direction of
the investigation. After this collaborative consultation, the FBI and ICE
are to decide (1) whether the ICE investigation will be conducted under
the auspices of the JTTF and (2) agency roles in pursuing related
investigations. Specific investigative strategies generally are to be
developed at the field level by FBI, ICE, and U.S. Attorneys Office
personnel. The Terrorist Financing Unit of the Counterterrorism Section in
Justice's Criminal Division is involved in coordinating and prosecuting
matters and cases involving terrorist financing, which are investigated by
both the FBI and ICE.
From July to October 2003, the FBI provided a list of individuals,
businesses, and organizations to the vetting unit that it believed were
related to pre-Agreement ICE Operation Green Quest investigations. A
review of the list by the vetting unit and TFOS identified approximately
30 potential crossover subjects. The FBI believed that these subjects had
ties to terrorism or terrorist financing-and, accordingly, per the
Agreement's collaborative procedures-any related ICE investigations should
be transitioned to JTTFs. According to ICE officials, in late-October,
TFOS demonstrated that 10 of the approximately 30 subjects had a confirmed
nexus to terrorism or terrorist financing, and ICE agreed to transition
the related ICE investigations to JTTFs. Regarding the other subjects, as
of February 2004, FBI and ICE officials were engaged in discussions to
determine appropriate courses of action.
Moreover, ICE has provided the vetting unit two sets of financial crimes
leads to determine whether they may be related to terrorism or terrorist
financing. Specifically, in September 2003, ICE provided the vetting unit
a computer disk containing more than 7,000 subjects records that were
related to all open former Operation Green Quest leads in ICE's financial
investigations database. As of February 2004, TFOS was in the process of
running the approximately 7,000 ICE subject records through FBI databases
to determine whether the FBI had ongoing investigations involving the same
subjects. Since the Agreement was signed, ICE has provided an additional
11 financial crimes leads to the vetting unit. TFOS has determined that
none of these 11 leads had a significant connection to an FBI terrorism
investigation and, therefore, would not be governed by the Agreement and
ICE could continue to pursue them. More details about the results of the
vetting process are presented in enclosure III.
Another Agreement provision-requiring ICE to detail a significant number
of appropriate personnel to the national JTTF and the JTTFs in the
field-is being handled on a location-specific, case-by-case basis. In
response to our inquiries, FBI
and ICE officials said that this provision was not intended to refer to a
specific number of personnel and certainly was not intended to imply that
all former Operation Green Quest agents were to be detailed to JTTFs.
According to ICE officials, as of February 2004, a total of 277 ICE
personnel (from various legacy agencies) were assigned full time to
JTTFs-a total that consisted of 161 former Immigration and Naturalization
Service agents, 59 Federal Air Marshals, 32 former Customs Service agents,
and 25 Federal Protective Service agents. ICE officials said that this
total does not include ICE agents who will be assigned to JTTFs in
consonance with vetted cases being transitioned to the JTTFs, nor does it
include ICE investigators who participate part time on JTTFs.
Further, in response to our inquiries, ICE officials said they could not
readily determine how many of the 277 ICE personnel (including the 32
former Customs Service agents) were assigned to JTTFs after the Agreement
became effective or how many of these personnel were now working on
financial aspects of terrorism investigations. The officials also said
they could not readily determine how many of the 32 former Customs Service
agents had financial investigations expertise or had worked in the former
Operation Green Quest.7 The officials noted that all former Customs
Service agents assigned to the JTTFs had received financial investigations
training.
Finally, as shown in table 1, the FBI and ICE have not yet produced the
required joint report on the status of the implementation of the
Memorandum of Agreement. ICE officials said they provided a draft report
to the FBI in January 2004. FBI officials said they anticipate that a
joint report will be finalized by the end of February 2004.
The Memorandum of Agreement Generally Has Not Affected ICE's Mission or
Role in Investigating Nonterrorism-Related Financial Crimes
By granting the FBI the lead role in investigating terrorist financing,
the Agreement has altered ICE's role in investigating terrorism-related
financial crimes. However, the Agreement generally has not affected the
agency's mission or role in investigating other financial crimes.
Specifically, the Agreement did not affect ICE's statutory authorities to
conduct investigations of money laundering and other traditional financial
crimes. ICE investigations can still cover the wide range of financial
systems-including banking systems, money services businesses, bulk cash
smuggling, trade-based money laundering systems, illicit insurance
schemes, and illicit charity schemes-that could be exploited by money
launderers and other criminals. According to ICE headquarters officials,
ICE is investigating the same types of financial systems as before the
Memorandum of Agreement.
Also, while the Memorandum of Agreement specifies that the FBI has primary
investigative jurisdiction over confirmed terrorism-related financial
crimes, the Agreement does not preclude ICE from investigating suspicious
financial activities
7 As mentioned previously, Customs expanded Operation Green Quest in
January 2003 by doubling the personnel commitment to a total of
approximately 300 agents and analysts nationwide to work solely on
terrorist financing matters.
that have a potential (unconfirmed) nexus to terrorism-which was the
primary role of the former Operation Green Quest. To support
investigations with a potential nexus to terrorism and other financial
crimes investigations, in July 2003, ICE launched Operation Cornerstone, a
new financial investigative program designed to identify and eliminate
vulnerabilities in financial systems that could be exploited by
individuals, criminal organizations, and terrorists. According to ICE
headquarters officials, ICE will continue to aggressively investigate
financial crimes within its jurisdiction, regardless of the origin of the
targets or the source or destination of the money.
Further, ICE officials at headquarters and the three field locations we
visited said the Agreement generally has not affected the agency's
relationships with the financial community. Through Operation Cornerstone,
ICE plans to continue efforts to develop working partnerships with
financial industry representatives to share information and identify and
close industrywide security gaps that could be exploited by money
launderers and other criminal organizations. The three financial
regulators we contacted (the Federal Reserve Board, the Office of the
Comptroller of the Currency, and the Securities and Exchange Commission)
also said the Agreement has not affected their relationships with ICE. The
two financial institutions we contacted offered similar comments. The
banking industry association representative we contacted said that it may
be too soon to tell how the Agreement has affected ICE's relationships
with the financial community.
According to Financial Crimes Enforcement Network officials, the
Memorandum of Agreement did not affect their agency's procedures for
collecting and disseminating financial leads, except in specific cases
where the information was related to terrorist financing. The officials
explained that after the Agreement was signed, the agency sent only those
specific cases potentially related to terrorist financing to the FBI and
no longer to ICE. In August 2003, ICE sent a letter to the Financial
Crimes Enforcement Network announcing the creation of Operation
Cornerstone and requesting that all leads be referred to Cornerstone,
regardless of any alleged or apparent terrorist connection. In its letter,
ICE noted that under the former Operation Green Quest, most referrals
initially characterized as "terrorist-related financing" did not
ultimately reveal a link to terrorism but were successfully investigated
by ICE regarding other financial crimes. In its September 2003 response to
ICE, the Financial Crimes Enforcement Network explained its process for
referring terrorist-related leads to the FBI-based on its understanding of
the Agreement-and offered to work with ICE to improve the vetting process
if needed. In December 2003, the Financial Crimes Enforcement Network's
new Director made the decision to provide Operation Cornerstone with the
same terrorist financing information as provided to the FBI.
Finally, ICE officials at the three field locations we visited said the
Agreement generally has not affected their relationships with state and
local law enforcement agencies. Specifically, at one location, after the
Agreement was signed, local law enforcement agencies withdrew two agents
from Operation Green Quest but subsequently replaced them with agents who
did not specialize in terrorism matters. At a second location, after the
Agreement was signed, 8 to 10 state agents stopped
working joint investigations with Operation Green Quest but subsequently
continued to work with ICE on nonterrorism-related financial
investigations.8 At a third location, state and local law enforcement did
not support Operation Green Quest before the Agreement was signed. ICE
officials at all three locations said the Agreement did not affect state
and local support on other types of financial crimes investigations that
were unrelated to terrorism.
The FBI and ICE Face Many Challenges in Implementing the Memorandum of
Agreement
The successful implementation of the Memorandum of Agreement will require
the FBI and ICE to address many operational and organizational challenges.
First, the agencies face the task of finding common space for FBI, ICE,
and other JTTF personnel to work together. Additionally, ICE personnel
assigned to JTTFs may encounter obstacles to effective information sharing
as agents requiring additional security clearances complete the
time-consuming process for obtaining such clearances. At the
organizational level, the FBI and ICE confront various challenges
integrating organizational cultures and effectively coordinating
resources. Shifting priorities and large-scale reorganizations in these
agencies produced a certain amount of turmoil and anxiety, which initially
was exacerbated by the Agreement, particularly for ICE agents, who may
have perceived the Agreement as minimizing their role in terrorist
financing investigations.
The most effective investigations of terrorist financing will bring to
bear all relevant resources on the problem. The FBI and ICE face
challenges in ensuring that the implementation of the Agreement does not
create a disincentive for ICE agents to initiate or support terrorist
financing investigations. Additional challenges involve ensuring that the
financial crimes expertise and other investigative competencies of the FBI
and ICE are effectively utilized and that the full range of the agencies'
collective authorities-intelligence gathering and analysis as well as law
enforcement actions, such as executing search warrants and seizing cash
and other assets-are effectively coordinated.
Inherently, efforts to meet these challenges will be an ongoing process.
Our interviews with FBI and ICE officials at headquarters and three field
locations indicated that long-standing jurisdictional and operational
disputes regarding terrorist financing investigations may have strained
interagency relationships to some degree and could pose an obstacle in
fully integrating investigative efforts. In addition, some of the ICE
field officials we contacted had concerns about permanently detailing
financial agents to JTTFs, partly because the officials were reluctant to
have ICE agents supervised by FBI personnel. Further, FBI and ICE
headquarters generally were not issuing joint communications to their
field offices. For instance, the agencies had not issued joint guidance to
all their supervisory agents regarding implementation of the Agreement.
Rather, the agencies issued separate memorandums. Similarly, the agencies
distributed separate memorandums
8 According to ICE officials, the 8 to 10 state agents were not detailed
to Operation Green Quest but worked joint investigations with ICE on an ad
hoc, as-needed basis.
to their field offices regarding the transition of certain ICE
investigations to JTTFs. While the separate memorandums generally
addressed the same issues, these communications varied in the specificity
of the agencies' respective roles in pursuing the investigations. In
summary, these examples indicate that establishing and maintaining
effective interagency relationships will be a key determinant of continued
progress in implementing the Agreement and achieving its ultimate goal.
Concluding Observations
The Memorandum of Agreement represents a partnering commitment by the FBI
and ICE to wage a seamless, coordinated campaign against sources of
terrorist financing. In the 9 months since the Agreement was signed,
progress has been made. Continued progress will depend largely on the
ability of the agencies to establish and maintain effective interagency
relationships and meet various other operational and organizational
challenges.
Agency Comments
We provided a draft of this report for review and comment to Justice,
Homeland Security, and Treasury. The three departments did not comment on
the overall substance of the draft report. We received responses from
three Justice components (Criminal Division, FBI, and Executive Office for
U.S. Attorneys), Homeland Security's ICE, and Treasury's Financial Crimes
Enforcement Network. Four of the five respondents provided technical
comments and clarifications, which have been incorporated in this report
where appropriate. The fifth respondent, the Executive Office for U.S.
Attorneys, had no comments. Also, we provided a draft of the applicable
sections of this report for review and comment to the three federal
financial regulatory agencies we contacted. The Federal Reserve Board said
the draft sections accurately reflected the agency's position vis-`a-vis
ICE. A representative from the Office of the Comptroller of the Currency
said he had no objection to the draft language. And, the Securities and
Exchange Commission had no comments.
We are providing copies of this report to the Attorney General and the
Secretary of
Homeland Security. We also will make copies available to others on
request.
If you have any questions about this report, please contact me at (202)
512-8777 or
Danny R. Burton, Assistant Director, or Eric Erdman, Senior Analyst, at
(214) 777
5600. Other key contributors to this report were Alison Heafitz, Allison
Abrams,
Barbara Keller, and Kathryn Young.
Richard M. Stana
Director, Homeland Security and Justice Issues
Enclosures - 3
Enclosure I
Objectives, Scope, and Methodology
Objectives
In May 2003, the Attorney General and the Secretary of Homeland Security
signed a Memorandum of Agreement (Agreement) concerning terrorist
financing investigations to help resolve jurisdictional issues and enhance
interagency coordination. Regarding the Agreement, Senate Report 108-86
(July 2003)9 contained the following directive:
The Committee [on Appropriations] is concerned that the recent Memorandum
of Agreement (MOA) between the Department of Homeland Security and the
Department of Justice regarding investigations of terrorist financing will
adversely affect the ability of the United States Secret Service (USSS)
and the Bureau of Immigration and Customs Enforcement (BICE) to
effectively carry out traditional financial crimes investigations. The
Committee expects the General Accounting Office (GAO) to provide the
Committee ... an evaluation of the MOA's impact on existing authorities of
the USSS and BICE to effectively carry out financial crimes
investigations, including the MOA's impact on the financial community and
State and local cooperation.
Our work indicated that the Agreement does not apply to the Secret
Service. Therefore, we did not focus on the Secret Service in our
evaluation. Rather, in accordance with the congressional mandate-and as
agreed with the offices of the Chairman and the Ranking Minority Member,
Subcommittee on Homeland Security, Senate Committee on Appropriations-we
addressed the following questions in reference to the progress of the U.S.
Immigration and Customs Enforcement (ICE) and the Federal Bureau of
Investigation (FBI) in implementing the Agreement:
o What is the status of the implementation of the Memorandum of
Agreement?
o How has the Agreement affected the mission or role of ICE regarding
investigations of financial crimes?
o What are the potential challenges to the successful implementation of
the Agreement?
Scope and Methodology
To address these questions, our work focused on the federal entities
primarily responsible for investigating and prosecuting terrorist
financing and implementing the Memorandum of Agreement. Within the
Department of Homeland Security (DHS), we focused principally on ICE (the
component that is comprised of agents from the legacy U.S. Customs
Service). Within the Department of Justice, we focused on the
FBI-including its Joint Terrorism Task Forces (JTTFs) and Terrorist
9Title I of the Senate Appropriations Committee report on the Department
of Homeland Security Appropriations Bill for 2004.
Enclosure I
Financing Operations Section (TFOS)-the Terrorist Financing Unit of the
Criminal Division's Counterterrorism Section, and U.S. Attorneys Offices.
Status of the Implementation of the Memorandum of Agreement
Preliminarily, we reviewed the Agreement to obtain an understanding of its
various provisions. Also, we contacted headquarters officials from ICE,
the FBI, and the Executive Office for U.S. Attorneys to discuss the
implementation status of the Agreement and to identify and review
applicable procedures or other guidance for implementing the Agreement. To
obtain additional perspectives on the status of Agreement's
implementation, we visited ICE, FBI, and U.S. Attorneys Offices in three
field locations. Each of the three locations was a major metropolitan
area. However, due to law enforcement sensitivity of ongoing
investigations, the three field locations are not disclosed in this
report. We queried the field office officials about the implementation
status of the MOA's various provisions, and we reviewed available
documentation of intra-agency and interagency communications on this
topic. The views and opinions expressed by officials in the field
locations may not be representative of officials nationwide.
Effects of the Memorandum of Agreement on the Mission or Role of ICE
To determine how (if at all) the Agreement has affected the mission or
role of ICE- including impact on state and local law enforcement
cooperation-we interviewed ICE headquarters officials and field officials
in the three locations. Further, regarding financial community
relationships, we contacted
o the Department of the Treasury's Financial Crimes Enforcement
Network;10
o regulatory officials at the Federal Reserve Board, the Office of the
Comptroller of the Currency, and the Securities and Exchange Commission;
o representatives from two large U.S. banks; and
o a representative from a banking industry association.
The results of these contacts are not necessarily representative of the
entire financial community. Generally, based on relationships established
in previous work, the interviewees were individuals who agreed to talk
with us and were accessible within the limited time frames of our review.
10 A primary role of the Financial Crimes Enforcement Network is to
support terrorist financing investigations through the facilitation of
information sharing and networking among the law enforcement, regulatory,
and financial communities. This role includes collecting and disseminating
financial leads to law enforcement agencies.
Enclosure I
Potential Barriers to the Implementation of the Memorandum of Agreement
To identify potential barriers to the successful implementation of the
Agreement, we interviewed ICE, FBI, and U.S. Attorneys Office officials at
headquarters and the three field locations. Also, we reviewed agency
memorandums and other communications regarding Agreement implementation.
Enclosure II
Memorandum of Agreement and Collaborative Procedures Concerning Terrorist
Financing Investigations
In May 2003, the Attorney General and the Secretary of Homeland Security
signed a Memorandum of Agreement (MOA) concerning terrorist financing
investigations. Consistent with the MOA, in July 2003, the FBI and DHS/ICE
agreed on collaborative procedures for determining whether appropriate ICE
financial crime leads or money laundering investigations may be related to
terrorism or terrorism financing.
The following sections of this enclosure provide the details of the MOA
and the collaborative procedures, respectively.
Memorandum of Agreement Between the Department of Justice and the
Department of Homeland Security
On May 13, 2003, the Attorney General and the Secretary of Homeland
Security signed a Memorandum of Agreement that consisted of the following
11 paragraphs:
1. Definitions. For purposes of this agreement:
(a) "Secretary" means the Secretary of Homeland Security, and his
successors, on behalf of all covered entities they head, supervise or
represent.
(b) "Attorney General" means the Attorney General of the United States,
and his successors, on behalf of all covered entities they head, supervise
or represent.
(c) "Director" means the Director of the Federal Bureau of Investigation,
and his successors.
(d) "Parties" means the signatories to this Agreement and their
successors, on behalf of all covered entities they head, supervise or
represent.
2. Understanding the importance of waging a seamless, coordinated
campaign against terrorist sources of financing, the undersigned agree
that the Department of Justice will, as part of its responsibilities as
the lead law enforcement agency in combating terrorism, and in accordance
with the President's National Strategy for Homeland Security, lead the
federal law enforcement effort against terrorist financing. The Federal
Bureau of Investigation (FBI) will lead terrorist financing investigations
and operations, utilizing the intergovernmental and intra-agency National
Joint Terrorism Task Forces (NJTTF) at FBI Headquarters and the Joint
Terrorism Task Forces (JTTFs) in the field to conduct terrorist financing
investigations and operations. Through the Terrorist Financing Operations
Section (TFOS), the FBI will provide overall operational command to the
NJTTF and the JTTFs.
Enclosure II
3. The Secretary and the Attorney General will ensure that all
appropriate information and intelligence relating to terrorist financing
is shared with members of the NJTTF and JTTFs, including Department of
Homeland Security (DHS) detailees, to the greatest extent permissible by
law and applicable guidelines, and consistent with the March 3, 2003,
Memorandum of Understanding Between the Intelligence Community, Federal
Law Enforcement Agencies, and the Department of Homeland Security
Concerning Information Sharing. The parties agree to promptly take all
reasonable and necessary steps to permit the maximum allowable information
sharing relating to terrorist financing information and intelligence among
the members of the NJTTF and the JTTFs. To further increase information
sharing and coordination, the Attorney General and the Director agree to
detail appropriate personnel to the financial crimes division of the
Bureau of Immigration and Customs Enforcement (ICE). The Secretary shall
ensure that such detailees are provided full and timely access to all data
developed by ICE's money laundering and financial crimes cases on an
ongoing basis.
4. After June 30, 2003, DHS will pursue terrorist financing
investigations and operations solely through its participation in the
NJTTF, the JTTFs, and TFOS, except as expressly approved by TFOS as
provided in this paragraph. Both DHS and the Department of Justice (DOJ)
will, however, continue independently to investigate money laundering and
other financial crime matters that are unrelated to terrorism. DHS will
focus its activities on protecting the integrity of U.S. financial
infrastructures. To determine whether a money laundering or financial
crime matter is related to terrorism or terrorist financing and to ensure
effective deconfliction, all appropriate DHS leads relating to money
laundering and financial crimes will be checked with the FBI. The parties
agree to develop, as soon as possible but no later than June 30, 2003,
specific collaborative procedures to enable the Section Chief of TFOS and
Deputy Section Chief of TFOS detailed from DHS (or, if prior to the
appointment of the Deputy Section Chief from DHS, the Associate Chief
referenced in paragraph 3) to determine which leads should be provided to
TFOS to enable TFOS to determine whether such leads may be related to
terrorism or terrorist financing. Such procedures will provide for joint
and continuous analysis of leads. Beginning on July 1, 2003, in any given
matter, if TFOS determines that the matter is unrelated to terrorism or
terrorist financing, the leadership of the investigation regarding the
matter shall not be governed by this MOA. Determinations by TFOS shall
take into account the following factors: strength of the terrorism or
terrorist financing nexus; impact on the investigation of non-terrorism
matters; and stage and development of the respective investigations. If
TFOS, after consultation with DHS, determines that the matter is related
to terrorism or terrorist financing, the investigation and operation of
the matter shall be led by the FBI in accordance with paragraph 2. In
pursuing investigations, TFOS will consider, among other things, the
following factors: preservation of the government's flexibility and
options to pursue investigations of both terrorism and non-terrorism
matters; maintenance of the continuity of investigative personnel and
management where appropriate (including the option, at the discretion of
TFOS, to allow ICE to
Enclosure II
conduct terrorist financing investigations); and utilization of relevant
expertise and authorities.
5. The parties agree that when the position of Deputy Section Chief of
the TFOS next becomes vacant or by December 1, 2003, whichever comes
first, the position shall be filled by a DHS employee detailed to the FBI,
and shall continue to be filled by a DHS employee in the future. The
employee will be chosen by mutual agreement of the Secretary and the
Attorney General. Until such time as the position of Deputy Chief is
filled by a DHS employee, the parties agree that a DHS employee shall be
detailed to the FBI in a newly created position of "Associate Chief" of
TFOS. The employee will be chosen by mutual agreement of the Secretary and
the Attorney General.
6. The parties agree that the federal campaign against terrorist
financing must utilize the significant expertise and capabilities of ICE.
To this end, the parities will ensure that the appropriate ICE personnel
have a significant and active presence on the NJTTF at headquarters and
the JTTFs in the field. The Secretary will detail a significant number of
appropriate personnel to the task forces, and the Director will ensure
that the detailees are fully integrated into the FBI's efforts to combat
terrorist financing, both at Headquarters and in the field, and are able
to assist in the process described in paragraph 4, supra. The Secretary
will ensure that the performance of DHS agents detailed to the FBI under
this Agreement is recognized as a critical component of the DHS mission
and that Customs Service's pre-existing financial investigative expertise
is preserved and developed through recruitment, training and retention
initiatives.
7. The Secretary agrees that no later than June 30, 2003, Operation Green
Quest (OGQ) will no longer exist as a program name. The Secretary agrees
to ensure that any future DHS initiative or program to investigate crimes
affecting the integrity and lawful operation of U.S. financial
infrastructure will be performed through the financial crimes division of
ICE. DHS will investigate matters related to terrorism and terrorist
financing only with the consent of the FBI in accordance with this
Memorandum of Agreement.
8. The Attorney General and the Secretary shall direct the Director and
the Assistant Secretary for ICE to provide a joint written report to the
Attorney General, the Secretary, and the Assistant to the President for
Homeland Security on the status of the implementation of this Agreement
four months from the effective date of this Agreement.11
9. The parties shall immediately pursue implementation of the terms of
this Agreement. Within ten days of the effective date of this Agreement
the parties
11 As indicated in paragraph 10 below, "the terms of this Agreement shall
be effective upon the signature of all parties." The Agreement was signed
by applicable parties on May 13, 2003. Four months later would be
mid-September 2003. However, according to ICE officials, the Agreement was
not fully effective until the collaborative procedures were signed in July
2003. Therefore, the officials said the joint report was due in November
2003.
Enclosure II
shall jointly issue guidance to all FBI and ICE supervisory agents
regarding this Agreement.
10. Except where otherwise indicated, the terms of this Agreement shall
be effective upon the signature of all parties.
11. These provisions are not intended to and do not create any rights,
privileges, or benefits, substantive or procedural, enforceable by any
individual or organization against the United States, its departments,
agencies, or other entities, its officers or employees, or any other
person.
Collaborative Procedures Pertaining to the Memorandum of Agreement
Consistent with the MOA dated May 13, 2003, the FBI and DHS/ICE jointly
agree on the following collaborative procedures to determine whether
appropriate ICE financial crime leads or money-laundering investigations
may be related to terrorism or terrorism financing.12 Nothing in this
document shall supersede the written provisions in the aforementioned MOA.
The following procedures pertain only to information and the operations of
DHS/ICE:
1. DHS/ICE will establish a Joint Vetting Unit (JVU) within the Financial
Information Analysis Section, which will continue to utilize the existing
ICE vetting methodology to identify financial leads or investigations with
a nexus to terrorism or terrorism financing consistent with the MOA.
2. The JVU will be staffed by DHS/ICE and FBI personnel who will have
full access to relevant DHS/ICE and FBI databases to conduct reviews to
determine whether a nexus to terrorism or terrorism financing exists in
the appropriate DHS/ICE lead information or investigations. The JVU will
establish a joint tracking system on investigative leads referred to the
JVU and provide the assigned FBI personnel access to the system.
3. Throughout the collaborative vetting process, the determination of
whether a DHS/ICE investigative referral or investigation is related to
terrorism or terrorist financing shall be governed by the factors
delineated in the MOA.
4. DHS will designate an ICE official to serve as the Deputy Chief of the
FBI's TFOS. The Deputy Chief will have a fully integrated role in the
evaluation and determination of whether a DHS/ICE referral or
investigation has a nexus to terrorism or terrorism financing. The Deputy
Chief and other DHS/ICE personnel assigned to TFOS will be provided
complete and continuous access to FBI databases.
5. If, after collaborative consultation is made between the TFOS Section
Chief and the DHS/ICE Deputy Chief, TFOS determines that a lead or
investigation has a nexus to terrorism or terrorism financing, the matter
will be investigated solely
12 Michael Garcia, Assistant Secretary for ICE, signed the collaborative
procedures on July 2, 2003. Robert Mueller, Director of the FBI, signed
the collaborative procedures on July 7, 2003.
Enclosure II
through the NJTTF, JTTF and TFOS, except as expressly approved by TFOS as
delineated in the MOA.
6. Beginning on or about July 1, 2003, DHS/ICE and the FBI will begin the
joint collaborative review within the JVU of pending DHS/ICE terrorist
financing investigations. The review process to determine nexus to
terrorism and terrorism financing will be governed by the procedures as
outlined in this document and as delineated in the MOA.
Enclosure III
ICE Investigations and Leads Identified as Having a Potential Nexus to
Terrorism or Terrorist Financing
This enclosure summarizes the status of the vetting of U.S. Immigration
and Customs Enforcement (ICE) investigations and leads regarding the
following three sources:
o From July to October 2003, the Federal Bureau of Investigation (FBI)
provided a list to the joint vetting unit of approximately 30 terrorist
financing or terrorist subjects it believed had crossover with ICE
investigations.
o In September 2003, the ICE vetting unit provided the FBI's Terrorist
Financing Operations Section (TFOS) a computer disk containing more than
7,000 subject records.
o In addition, as of January 2004, the ICE vetting unit had provided 11
leads to TFOS to determine whether they may be related to terrorism or
terrorist financing.
FBI Referral of Approximately 30 Investigative Subjects
From July to October 2003, the FBI provided a list to the joint vetting
unit of approximately 30 terrorist financing or terrorist subjects
(including individuals, businesses, and other entities) it believed had
crossover with ICE investigations. According to ICE officials, the FBI was
claiming sovereignty over any ICE investigation that related to these
subjects, claiming these subjects had sufficient ties to terrorism or
terrorist financing, per Memorandum of Agreement guidelines.13 The
officials said that, in late-October, TFOS demonstrated that 10 of the
approximately 30 subjects had a confirmed nexus to terrorism or terrorist
financing and ICE agreed to transition the related ICE investigations to
the FBI's Joint Terrorism Task Forces (JTTFs). Regarding the other
subjects, as of February 2004, FBI and ICE officials were engaged in
discussions to determine appropriate courses of action.
In late-2003, the FBI and ICE sent memorandums to their respective field
offices to notify them about agreements reached regarding the 10 subjects.
In general, the memorandums noted that future investigative activities
related to these subjects would be conducted under the auspices of the
JTTFs and that the FBI and ICE would make joint collaborative decisions on
strategic and operational issues. The memorandums also addressed, in
different levels of detail, the respective roles of the FBI and ICE in
pursuing the investigations.
13 According to ICE officials, the approximately 30 subjects were related
or linked to about 30 former Operation Green Quest leads and about 80 ICE
investigations. The officials noted that (1) an ICE investigation can
consist of multiple, related leads and (2) in some cases, leads may become
multiple investigations due to location and subject associations.
Enclosure III
We visited three field locations where ICE investigations had been
identified to be transitioned to the local JTTF. We found that the status
of the transitions and the continuing role of ICE varied by location and
circumstance.
o At one location, the investigative and prosecutorial strategy for
pursuing the joint investigation had recently been developed at the field
level by FBI, ICE, and U.S. Attorneys Office personnel. ICE had agreed to
detail personnel to the local JTTF, and ICE and JTTF personnel were
jointly working the investigation.14 The JTTF also had been supporting the
ICE investigation before the Memorandum of Agreement.
o At a second location, the investigative and prosecutorial strategy for
pursuing the joint investigation had recently been developed at the field
level by FBI, ICE, and U.S. Attorneys Office personnel. ICE had agreed to
support part of the JTTF investigation that involved violations within
ICE's jurisdiction. However, ICE would not commit personnel to the JTTF,
in part because of the distance between the ICE and JTTF offices.
o At a third location, ICE had provided its investigative files to the
JTTF and was not supporting the investigation. In January 2004, ICE
headquarters officials said the files were turned over during a period of
initial confusion about the role of ICE under the Agreement. The officials
said that they have asked the ICE field office to contact the JTTF to
determine if ICE support is needed on the investigation.
ICE Provided TFOS More Than 7,000 Subject Records
In September 2003, the ICE vetting unit provided TFOS a computer disk
containing more than 7,000 subject records-including individuals,
businesses, and other entities-that were related to all open former
Operation Green Quest leads in ICE's financial investigations database.
According to ICE officials, ICE requested that the FBI identify any
positive subject record hits in FBI databases, so that ICE field offices
could be advised of FBI investigative interests or crossover
investigations. As of February 2004, the FBI had not provided the final
disposition to ICE on the results of the FBI's subject record checks.
According to an FBI official, TFOS was in the process of running the ICE
subject records through FBI databases to determine whether the FBI had
ongoing investigations involving the same subjects.
ICE Provided TFOS an Additional 11 Leads
In addition, as of January 2004, the ICE vetting unit had provided 11
leads to TFOS to determine whether they may be related to terrorism or
terrorist financing. According to TFOS, some of the ICE leads were found
to have either a nexus to terrorism or crossovers with
nonterrorism-related FBI investigations. However, TFOS determined
14 At the time of our review, the local JTTF did not have enough space to
accommodate the ICE personnel. As a result, the joint investigation was
being conducted out of the ICE field office, with FBI personnel visiting
the ICE office two or three times each week.
Enclosure III
that none of the 11 ICE leads had a significant connection to an FBI
terrorism investigation. Therefore, the leads would not be governed by the
Memorandum of Agreement and ICE could continue to pursue them.
(440259)
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