Investigations of Terrorist Financing, Money Laundering, and Other Financial Crimes

GAO-04-464R: Published: Feb 20, 2004. Publicly Released: Feb 20, 2004.

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Richard M. Stana
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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 the offices of the Chairman and Ranking Minority Member of the Senate Committee on Appropriations, Homeland Security Subcommittee, 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?

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 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.

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