Terrorist groups do not function in a bubble. They will use whatever means available to obtain funding for their cause. Over the past two-and-one-half years, our attention and rhetoric have been focused financing mechanisms used specifically by terrorist organizations to support their activities. However, we would be naive if we did not recognize that the tools used to launder and disguise funds for terrorist organizations are similar, and quite often identical to, those used by many drug traffickers and criminal organizations to clean their own dirty money.

In 1998, in an effort to facilitate cooperation between the 17-plus government agencies with some responsibility for halting money laundering, I offered legislation to create a national money laundering strategy. With so many different agencies having some responsibility over one particular aspect of money laundering, there needed to be some mechanism available to encourage everyone to work together toward a common objective. This need has not gone away. Only when we have a systematic approach to money laundering will we be able to avoid the duplication and inconsistencies that can easily plague an initiative where no one is in charge.

Last fall, the Government Accounting Office released two reports that examined the effectiveness of this legislation in facilitating our ability to effectively address money laundering and terrorist financing. As with most reports, there was both good and bad news. Encouragingly, the GAO noted that the existence of a strategy requirement had resulted in increased communication between agencies dealing with the problem. But one of the basic concerns expressed in both of these reports is the significant room for improvement, particularly in the execution of a strategic approach to all forms of money laundering.

The first GAO report reiterates what I have been saying for some time: there is a lack of coordination between the agencies in charge of investigating money laundering and financial crimes. The report notes that the following are needed for an effective strategy – effective leadership, clear priorities, and accountability mechanisms – all of which need to be strengthened if the Strategy is going to be an effective document.

It notes that many of the recommendations that were put forth in past Strategies were ignored or not completed. For example, each money laundering strategy called for the Departments of Treasury, Justice, Homeland Security have not implemented a centralized system to coordinate investigations, and that they develop uniform guidelines for undercover investigations. Neither of these steps has been taken. Now, work-arounds to these problems have been developed. But criminal and terrorist organizations are always going to be more flexible than law enforcement, and if we are going to get a handle on money laundering then some of these steps must be taken.

The second report from the GAO specifically focused on mechanisms available to terrorist organizations to generate, move and store their assets. This strikes me as a very useful matrix to analyze all of the opportunities that are available to terrorists-- or any other type of criminal organization looking to hide or move funds. .Thinking that terrorists just use charities, or only move funds via Hawallas, is too narrow a perspective to encompass all of the options available to a criminal financier. We cannot afford to under-estimate the ability of our enemies to hide and move funds. To address these threats we need to communicate better, coordinate better, and share more– or we will continue to be out maneuvered.

Law enforcement has numerous tools, such as the Bank Secrecy Act and Title III of the USA PATRIOT Act, available to investigate criminal financial activity. Typically, the approach is to identify a bad guy or criminal organization, build a case, apprehend and prosecute, move to he next crook. This works, and is effective at getting bad guys off our streets. But it doesn't stop other crooks from doing the same thing.

And that is where, I would hope, a comprehensive money laundering strategy would step in. If we are going to have the flexibility to address new threats, then the thinking at the strategic and resource level needs to go beyond the prosecution of a particular case. The ideal strategy would focus on the weak points in our economic system, and direct resources to address these vulnerabilities. It will also have to make hard choices, choosing one agency to target a particular threat, even though others may also want to investigate. Everyone cannot be in charge of everything. There are not enough dollars to fund everything everyone wants to do adequately. .I encourage today's witnesses to think of a strategy in these terms. I look forward to their comments, not only on how the strategy has effected them in the past, but on what steps they believe are needed in the future. I hope that today's testimony from both panels of witnesses will shed additional light on what steps will be necessary to reach our goals.

Unfortunately, I am not going to be able to be here in person to listen to the testimony, but please be assured I am very interested in what everyone has to say. I want to thank Senator Coleman for agreeing to pinch-hit for me here today, and in advance thank all of the witnesses for agreeing to be here. I look forward to reviewing the record of this hearing.