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23 April 2004

The Patriot Act, Terrorists, and the Financial System

Op-ed column by Secretary of the Treasury John Snow

(This column by Secretary of the Treasury John W. Snow was published in the Wall Street Journal April 23 and is in the public domain. No republication restrictions.)

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Blood Money
By John W. Snow

One of the most critical things the 9/11 Commission hearings have brought to light is the important role the Patriot Act plays in helping to win the war on terror. We have heard a lot about "the wall" -- a conceptual barrier that prohibited agencies such as the FBI and CIA from communicating freely with each other. That wall was knocked down when President Bush signed the Patriot Act in October 2001.

Sept. 11 compelled our nation to identify the areas we needed to bolster in order to secure our homeland. We have learned a number of very important lessons about the vulnerabilities in our financial system. First, that our ability to combat terrorist financing is linked with our ability to combat money laundering. Second, that we must remain vigilant in our continuing efforts to identify new ways in which terrorists and criminals will attempt to use our own financial system to fuel their agendas. And third, that our ability to obtain and share financial information is critical to our success in identifying and bringing down terrorist networks.

Money is the lifeblood of terrorists because, like any businesspeople, they cannot sustain operations without it. A lack of finances can hinder or thwart short-term goals, and dismantle long-term agendas. Without funds, terrorist groups suffer disarray, defection and, ultimately, demise. The Patriot Act aids the ability of the government, along with our partners in the financial sector, to identify dollars flowing through our financial system in support of nefarious acts, and to prevent new dollars from entering the system. Notably, the act has helped the U.S. and our international partners designate 361 individuals and organizations as terrorists and terrorist supporters -- and to freeze and seize approximately $200 million in terrorist-related assets.

Under the Patriot Act, banks and other financial institutions are directed to bolster defenses in potentially vulnerable areas. As we strengthen our defenses against financial crimes in traditional financial institutions, such as banks, criminals and terrorists will look to other types of financial institutions or methods through which to move or launder their money. With that in mind, we continue to bring additional types of businesses under the umbrella of anti-money-laundering and anti-terrorist-financing regulation, thereby raising awareness of the issues and equipping these businesses with the tools to protect themselves.

We are committed to balancing the weight imposed by these regulations with our mission of ensuring that we are taking all appropriate steps to keep our citizens safe. We believe that financial institutions should have the flexibility to design programs custom-tailored to address their business, the products they offer and their customer base. This reflects the Treasury Department's judgment that those dealing directly with the public are in the best position to make such decisions, and that this flexibility ultimately enhances the effectiveness of the regulation.

Additionally, the Patriot Act authorizes the sharing of critical information about suspected terrorist or money-laundering activity -- not only between the government and financial institutions, but also among financial institutions themselves -- by allowing them to register with the Treasury Department.

As a first step to expand its information-sharing capabilities, Treasury has asked law enforcement authorities to provide the names of suspected terrorists and money launderers. We then review the names and, if appropriate, send them on to financial institutions to search their account and transaction records for potential matches. Matches are forwarded to law enforcement authorities through Treasury. At that point authorities must follow the appropriate legal process to take further steps.

This process has been incredibly helpful to law-enforcement officials' efforts by saving them critical time and resources. In addition, the financial community has done an exemplary job; institutions large and small have committed themselves to the task, provided valuable leads for law enforcement, and our country is safer because of it.

Since September 11, there has been a tremendous resolve in the financial community to deny terrorists access to the financial system. However, the Patriot Act was essential to first put in place the procedures needed to follow through on that resolve by providing innovative and essential tools to eliminate known risks to our financial system, as well as to identify and halt new risks that develop.

As I mentioned before, the Patriot Act also lowered a wall that prevented the intelligence community from supporting our administrative authority. For example, when the Treasury Department had information indicating that two U.S.-based charities -- the Benevolence International Foundation and the Global Relief Foundation -- might be supporting al Qaeda, the Patriot Act gave Treasury clear authority to block the assets of these organizations while they were under investigation. This action prevented those assets from being dissipated or diverted to support terrorists. The U.N. ultimately joined the U.S. in designating these entities as supporters of Osama bin Laden and al Qaeda.

Cutting off terrorists from the financial system is fundamental to disrupting their activities. Through our efforts, we continue to make it more difficult for terrorists to move money through formal financial systems, thus exposing them to greater risk of detection. The results are crippling to the networks that want to do us harm.

Perhaps the most important result of the Patriot Act has been the strengthened partnership among the financial community, the government's financial agencies, and law enforcement, much to the detriment of terrorists. This partnership is the key to our success in choking off the blood money used by terrorists to fuel their agendas of hatred.

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