In the rush to react to the events surrounding September 11, politicians from both parties scrambled to create the Department of Homeland Security. Since then, problems at DHS have been widely chronicled, and the behemoth department has not lived up to its initial billing. This has been particularly true in combating international money laundering and its inverse partner terrorist finance.
When DHS was formed, Treasury’s proud enforcement arm was gutted. The U.S. Customs Service (created in 1789) and the Secret Service (established in 1865) were transferred to Homeland Security, and the Bureau of Alcohol Tobacco and Firearms was shifted to the Justice Department.
The FBI, within the DOJ, is very good at financial crimes; i.e., catching white collar criminals and bank robbers. The DEA, also within DOJ, only pursues money laundering relating to narcotics. DHS is pulled by conflicting priorities. The current dearth of successful money laundering prosecutions, impact cases, seizures and forfeitures, etc. demonstrate that the current situation is not working.
Yet the Treasury Department by definition focuses on financial matters. This includes international money laundering and value transfer, which employs trade-based and underground finance networks, and new mobile and cyber payment technologies. These are vitally important issues that have not received the focus they deserve. Moreover, the domestic financial sector views Treasury as its natural government partner, and over the coming years relationships with industry will only grow in importance.
Unfortunately, however, today’s Treasury, minus its enforcement arm, in only able to develop strategies, policies and regulations in the fight against money laundering and terrorist financing. It lacks the investigative, intelligence, and enforcement resources to implement and enforce those policies. (I am not counting IRS/CID because its priority remains taxes).
I believe the Secret Service and Customs should be brought back to Treasury. Most Secret Service and Homeland Security Investigations agents would jump at the opportunity. If politically unpalatable, the creation of a Global Illicit Financial Team – a type of interagency federal law enforcement task force - should be created as a nimble state-of-the-art financial investigating team operating under the Treasury banner.
Using the resources and authorities that are uniquely Treasury’s -- including the 18 million pieces of intelligence filed each year in its Financial Crimes Enforcement Network, the robust legal tools deployed under the USA PATRIOT Act, criminal sanctions and designations spearheaded by OFAC, domestic and international enforcement and regulatory networks, and financial expertise -- real progress can be made in combating large scale and complex financial crimes.
A re-attached Treasury enforcement arm would help mitigate some of the failed Washington management syndromes I identified in previous steps such as “group think” and “lack of imagination.” An enforcement arm would also help right the wrong created when Treasury was castrated for reasons of political expediency after September 11. Moreover, a new and robust Treasury enforcement capability would pay homage to the legacy and history of a proud Department. Most importantly, a Treasury enforcement arm would encourage financial enforcement expertise and would re-vitalize our efforts to combat international money laundering and other financial crimes.
When DHS was formed, Treasury’s proud enforcement arm was gutted. The U.S. Customs Service (created in 1789) and the Secret Service (established in 1865) were transferred to Homeland Security, and the Bureau of Alcohol Tobacco and Firearms was shifted to the Justice Department.
The FBI, within the DOJ, is very good at financial crimes; i.e., catching white collar criminals and bank robbers. The DEA, also within DOJ, only pursues money laundering relating to narcotics. DHS is pulled by conflicting priorities. The current dearth of successful money laundering prosecutions, impact cases, seizures and forfeitures, etc. demonstrate that the current situation is not working.
Yet the Treasury Department by definition focuses on financial matters. This includes international money laundering and value transfer, which employs trade-based and underground finance networks, and new mobile and cyber payment technologies. These are vitally important issues that have not received the focus they deserve. Moreover, the domestic financial sector views Treasury as its natural government partner, and over the coming years relationships with industry will only grow in importance.
Unfortunately, however, today’s Treasury, minus its enforcement arm, in only able to develop strategies, policies and regulations in the fight against money laundering and terrorist financing. It lacks the investigative, intelligence, and enforcement resources to implement and enforce those policies. (I am not counting IRS/CID because its priority remains taxes).
I believe the Secret Service and Customs should be brought back to Treasury. Most Secret Service and Homeland Security Investigations agents would jump at the opportunity. If politically unpalatable, the creation of a Global Illicit Financial Team – a type of interagency federal law enforcement task force - should be created as a nimble state-of-the-art financial investigating team operating under the Treasury banner.
Using the resources and authorities that are uniquely Treasury’s -- including the 18 million pieces of intelligence filed each year in its Financial Crimes Enforcement Network, the robust legal tools deployed under the USA PATRIOT Act, criminal sanctions and designations spearheaded by OFAC, domestic and international enforcement and regulatory networks, and financial expertise -- real progress can be made in combating large scale and complex financial crimes.
A re-attached Treasury enforcement arm would help mitigate some of the failed Washington management syndromes I identified in previous steps such as “group think” and “lack of imagination.” An enforcement arm would also help right the wrong created when Treasury was castrated for reasons of political expediency after September 11. Moreover, a new and robust Treasury enforcement capability would pay homage to the legacy and history of a proud Department. Most importantly, a Treasury enforcement arm would encourage financial enforcement expertise and would re-vitalize our efforts to combat international money laundering and other financial crimes.
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