United States Government Accountability Office

GAO Testimony 

Before the Committee on Financial 

Services, Subcommittee on Oversight and 

Investigations, House of Representatives

TERRORIST FINANCING

Agencies Can Improve 

Efforts to Deliver CounterTerrorism-Financing 

Training and Technical 

Assistance Abroad 

Statement of the Honorable David M. Walker 

Comptroller General of the United States 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Thursday, April 6, 2006

 

GAO-06-632T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 6, 2006

TERRORIST FINANCING 

Agencies Can Improve Efforts to Deliver 

Counter-Terrorism-Financing Training 

and Technical Assistance Abroad 

Highlights of GAO-06-632T, a testimony to 

the Subcommittee on Oversight and 

Investigations, Committee on Financial 

Services, House of Representatives 

Disrupting terrorists’ financing is 

necessary to impede their ability to 

organize, recruit, train, and equip 

adherents. U.S. efforts to 

strengthen domestic and global 

security include, among others, the

provision of training and technical 

assistance in countering terrorist 

financing abroad. An interagency 

Terrorist Financing Working Group 

(TFWG), chaired by the U.S. 

Department of State (State),

coordinates the delivery of this

training and technical assistance to 

“priority” countries—those 

considered most vulnerable to 

terrorist financing schemes—as

well as to other vulnerable 

countries. In addition, the 

Department of the Treasury

(Treasury) Office of Foreign Assets 

Control (OFAC) leads U.S. efforts 

to block access to designated 

terrorists’ assets that are subject to 

U.S. jurisdiction. 

In response to multiple

congressional requesters, GAO 

examined U.S. efforts to combat

terrorist financing abroad, 

publishing the report in October 

2005. In this testimony, GAO

discusses the report’s findings 

about challenges related to (1) 

TFWG’s coordination of the 

counter-terrorism-financing training

and technical assistance abroad and

(2) Treasury’s measurement of

results and provision of information

needed to assess OFAC’s efforts to 

block terrorist assets. 

Under State’s leadership, TFWG has coordinated the interagency delivery of

counter-terrorism-financing training and technical assistance—for example, 

providing training and placing resident advisors—in more than 20 priority 

countries as well as other vulnerable countries. However, TFWG’s effort has 

been hampered by the absence of a strategic and integrated plan. GAO 

found that the effort lacks three elements that are critical to strategic 

planning for operations within and across agencies:

• Key stakeholder acceptance of roles and practices

• Strategic alignment of resources with countries’ needs and risks 

• A process to measurement the effort’s results

For example, two key TFWG stakeholders, State and Treasury, disagree

about the extent of State’s leadership as chair of TFWG. GAO recommended 

that State and Treasury, with other government agencies, implement an 

integrated strategic plan that addresses these challenges and sign a 

Memorandum of Agreement to improve coordination of counter-terrorismfinancing training and technical assistance abroad. State and Treasury

responded that they are taking several steps to improve the interagency 

process, but they did not address all of GAO’s recommendations. 

OFAC undertakes a number of efforts related to the blocking of terrorists’ 

assets. For example, OFAC compiles evidence as a basis for designating 

terrorist groups and individuals. However, GAO found limitations regarding 

Treasury’s measurement of results and provision of information about 

OFAC’s efforts.

• Inadequate measures. At the time of GAO’s review, Treasury lacked 

adequate measures to assess the results of OFAC’s efforts. OFAC was in 

the process of developing new measures, which it recently completed. 

Although GAO has not reviewed them, these measures may enable 

officials overseeing OFAC to ascertain the strengths and weaknesses 

of its efforts as well as hold OFAC managers accountable. GAO

recommended that, in addition, Treasury develop an OFAC-specific

strategic plan that describes, among other things, how its performance 

measures relate to general program goals and objectives. As of March 30,

Treasury had not yet finalized the strategic plan. 

• Insufficient information. Treasury’s yearly report to Congress on 

terrorist assets blocked does not provide sufficient information for 

Congress to assess OFAC’s progress. For instance, the report shows the 

total dollar value of blocked terrorist assets held under U.S. jurisdictions 

but does not show changes from amounts of assets blocked in previous 

years. GAO recommended that Treasury provide information on such 

changes, along with other key performance metrics, in its annual 

Terrorist Assets Report. Treasury responded that it would discuss with 

Congress recrafting the report to address congressional interests. 

www.gao.gov/cgi-bin/getrpt?GAO-06-632T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

202-512-4347 or yagerl@gao.gov . 
Madame Chairwoman and Members of the Subcommittee: 

Thank you for inviting me here today to discuss GAO’s findings on certain 

U.S. government counter-terrorism-financing efforts as well as various 

recommendations we have made for improving the management and 

oversight of these efforts. We appreciate the opportunity to contribute to 

the record that this panel has created on the subject. Madame 

Chairwoman, we also recognize and appreciate your consistent attention 

to issues related to the financing of terrorism. For example, you 

cofounded the bipartisan Congressional Anti-Terrorist Financing Task 

Force in 2004 to bolster efforts to shut down terrorist funding networks. 

You also coauthored recent legislation to create a certification regime, led 

by the Department of the Treasury, that would annually report to Congress 

the efforts of other countries to combat terror funding and would impose 

sanctions on countries that fail to perform up to standard. Thank you for 

your leadership in this area. 

As you have stated on prior occasions, Madame Chairwoman, disrupting 

terrorist financing can raise terrorists’ costs and risks of gathering and 

moving assets and is necessary to impede their ability to carry out 

significant operations. The United Nations (UN) reports that more than 

ever before, security threats are interrelated; a threat to one country can 

be a threat to all, and no country by its efforts alone can make itself 

invulnerable. It is in every country’s interest, accordingly, to cooperate 

both internally and with other countries in addressing threat priorities. 

In GAO’s October 2005 report on U.S. efforts to counter terrorist financing 

abroad, we noted that the United States plays an active and ongoing role in 

building international support for measures to combat terrorist financing.1

For example, the U.S. government has participated in efforts to develop

and implement international standards to combat terrorist financing, 

sometimes leading these efforts. The United States also conducts various 

intelligence and law enforcement activities designed to identify and 

disrupt the flow of terrorist financing abroad. These activities include, 

among others, gathering intelligence and sharing information with other 

countries. 

 1

See GAO, Terrorist Financing: Better Strategic Planning Needed to Coordinate U.S.

Efforts to Deliver Counter-Terrorism Financing Training and Technical Assistance

Abroad, GAO-06-19 (Washington, D.C.: October 24, 2005). 

Page 1 GAO-06-632T 
Further, the United States provides training and technical assistance to 

help countries that are vulnerable to terrorist financing establish effective 

counter-terrorism-financing regimes. To coordinate the delivery of this 

training and assistance to about two dozen “priority countries”—those 

considered most vulnerable—as well as to other vulnerable countries, the 

National Security Council (NSC) established the interagency Terrorist 

Finance Working Group (TFWG), whose members include, among others, 

the Department of State (State), which chairs the group; the Treasury; and 

the Department of Justice (Justice). 

In addition, the United States has participated in global efforts to publicly

designate individuals and groups as terrorists and to block access to their 

assets. U.S. officials have worked with members of the UN to develop and

support UN Security Council resolutions to freeze the assets of designated 

individuals or groups that conduct or facilitate terrorist acts. The United 

States successfully participated in bilateral efforts with Saudi Arabia and 

jointly designated more than a dozen Saudi-related entities and multiple 

individuals as terrorists or terrorist supporters. Officials of the Department 

of the Treasury (Treasury) have stated that public designations discourage 

further financial support and encourage other governments to more 

effectively monitor the activities of the designated individuals or groups. 

Treasury’s Office of Foreign Assets Control (OFAC) serves as the lead U.S.

agency for blocking the assets of terrorists designated by the United States 

unilaterally or bilaterally or as a result of UN Security Council Resolutions. 

As our October 2005 report showed, much has been accomplished. 

However, our report also noted various challenges that could negatively 

affect the results of some of these efforts as well as U.S. agencies’—and 

Congress’s—accountability for, and oversight of, these efforts. Today, as 

requested, I will discuss our report’s findings and recommendations 

regarding challenges related to 

• TFWG’s efforts to coordinate interagency delivery of counterterrorism-financing training and technical assistance abroad and 

• Treasury’s use of performance measures and provision of information 

necessary to assess OFAC’s efforts to block terrorist assets. 

In discussing these challenges, I will address the need for more strategic 

and integrated planning that focuses on achieving results in connection 

with U.S. counter-terrorism-financing activities rather than on the 

activities themselves. Such planning should include a risk management 

Page 2 GAO-06-632T 
element—a systematic process for assessing threats and taking 

appropriate steps to deal with them. 

GAO’s mission is to help Congress improve the performance and ensure 

the accountability of the federal government for the benefit of the 

American people. We have been actively involved in improving the federal 

government’s performance in the critically important area of homeland 

security, including providing numerous products related to counter–

terrorism financing. We have also been privileged to actively support 

Congress and the 9/11 Commission by providing details about key 

personnel, testifying before Congress and the 9/11 Commission, and 

sharing our research, products, and experiences. In addition, GAO is an 

active member of the International Organization of Supreme Audit 

Institutions (INTOSAI),2

 a professional organization of national supreme 

audit institutions that provides its members opportunities to share 

knowledge and experiences about the challenges in today’s global 

environment, to ensure that government auditing continuously progresses 

with new developments. GAO also serves on an INTOSAI task force on 

international anti–money laundering that aims to design and promote 

policies, strategies, and actions to enable INTOSAI members to strengthen 

their anti–money laundering capabilities. 

In preparing our October 2005 report, we examined documentation and 

interviewed officials from State, Treasury, Justice, and the Departments of 

Homeland Security and Defense as well as from the intelligence 

community. We also assessed information from the UN, Financial Action 

Task Force (FATF) on Money Laundering, World Bank, and International

Monetary Fund (IMF). We conducted field work in Pakistan, Indonesia, 

and Paraguay, where we assessed information from government, law 

enforcement, nongovernmental organizations, regional organizations, and

donor government officials as well as from U.S. embassy officials. We 

performed our work for the report from April 2004 to July 2005. In 

addition, for this testimony, we obtained information in March 2006 from 

State and Treasury on their actions to implement our recommendations. 

All work was conducted in accordance with generally accepted 

government auditing standards. 

 2

INTOSAI has more than 180 members consisting of supreme audit institutions from

countries that belong to the UN or its specialized agencies.

Page 3 GAO-06-632T 
Although the U.S. government provides a range of training and technical

assistance to countries it deems vulnerable to terrorist financing, it does 

not have a strategic and integrated plan to coordinate the delivery of this 

assistance. The training and technical assistance coordinated by TFWG 

include, among other activities, training courses and the placement of 

intermittent or long-term resident advisors. However, we found that the 

interagency effort lacks three elements that GAO has previously identified

as critical to effective strategic planning for operations within and across 

agencies: key stakeholder acceptance of roles and procedures, a strategic

alignment of resources with needs and risks, and a process to measure 

results.3

Summary 

• Key stakeholder acceptance of roles and procedures. State and 

Treasury disagree about roles and procedures related to the delivery of 

counter-terrorism-financing training and technical assistance. Among 

these disagreements, Treasury does not accept State’s assertion of 

leadership over the delivery of all U.S. counter-terrorism-financing 

training and technical assistance to vulnerable countries and criticizes 

the range of control that State exerts as chair of TFWG. Consequently, 

the overall effort lacks effective leadership, resulting in less than 

optimal delivery of training and technical assistance. For example, in 

May 2005, State denied a Treasury official entry into a priority country 

to help set up a financial intelligence unit (FIU)4

 at the central bank 

minister’s request. State officials told us that because the country had 

been designated as a priority country after Treasury began preliminary 

work there, State wanted to conduct a TFWG assessment before 

allowing Treasury to continue its work.5

 At the U.S. Embassy’s request, 

State delayed the assessment and Treasury’s work proceeded, but the 

Treasury official’s entry into the country was delayed several months. 

 3

See GAO, Executive Guide: Effectively Implementing the Government Performance and

Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1996). Also see GAO, Electronic 

Government: Potential Exists for Enhancing Collaboration on Four Initiatives, 

GAO-04-6, pages 17-21 (Washington, D.C.: Oct. 10, 2003) for a discussion of key practices

for interagency collaboration. 

4

A financial intelligence unit is a central, national agency responsible for receiving,

analyzing, and disseminating financial information concerning suspected proceeds of crime 

or required by national regulation in order to counter money laundering. Treasury’s

Financial Crimes Enforcement Network (FinCEN) is the FIU for the United States. 

5

A TFWG assessment includes meetings with host government financial regulatory 

agencies, the judiciary, law enforcement agencies, the private financial services sector, and 

nongovernmental organizations. TFWG assessment teams are, like TFWG, led by State and

comprise technical experts from each of TFWG’s member departments and agencies.

Page 4 GAO-06-632T 
• Strategic alignment of resources with needs. The U.S. government, 

including TFWG, has not systematically assessed the allocation of its 

resources for counter-terrorism-financing training and technical 

assistance. For example, the government has no clear record of the 

funding that key agencies allocate for the training and assistance and

has not systematically assessed the availability and suitability of the 

agencies’ human capital resources or of international resources. As a 

result, government decision-makers are limited in their ability to 

strategically align available resources with the needs and relative risks 

of priority countries and other vulnerable countries. 

• Performance measurement process. The U.S. government, including 

TFWG, has not established a system to measure the results of its 

counter-terrorism-financing training and technical assistance. In 

addition, a database that Justice created in November 2004 to track the 

results of training and assistance delivered to priority countries was, as 

of July 2005, not yet functional. As a result, the government is unable to 

systematically consider the past performance of these efforts when 

strategizing for the future. 

In our October 2005 report, we recommended that the Secretaries of State 

and the Treasury, in consultation with the NSC and other government 

agencies, implement an integrated strategic plan and sign a Memorandum 

of Agreement to improve coordination of counter-terrorism-financing 

training and technical assistance. In their March 2006 letters to Congress 

regarding their responses to our recommendations, State and Treasury 

describe, in general terms, steps they are taking to improve the 

interagency process—for example, working with one another and with 

other TFWG members to review and revise TFWG procedures—that may 

provide a basis for improving stakeholder acceptance of roles and 

procedures. However, the letters do not provide any information regarding 

steps to systematically assess or align U.S. resources with country needs 

or to measure results of the training and technical assistance, and they do 

not address our recommendation of a Memorandum of Agreement. 

Treasury’s OFAC undertakes a number of activities as part of its terrorist 

asset blocking efforts. We found in October 2005, however, that Treasury 

lacked meaningful performance measures and that sufficient information 

was not available for Congress and decision-makers to assess the results 

of these efforts. Although Treasury had developed some limited 

performance measures, OFAC officials acknowledged that these measures 

were not specific to terrorist financing, were not designed to show 

progress, and did not track related activities and results. The officials 

Page 5 GAO-06-632T 
reported that they were in the process of developing more meaningful 

performance measures as well as an OFAC-specific strategic plan. In 

addition, OFAC’s annual Terrorist Assets Report to Congress regarding the 

nature and extent of terrorists’ U.S. assets does not provide the 

information needed to assess results that have been achieved. Although it 

shows the amount of assets blocked each year, it does not show changes 

from amounts of assets blocked in previous years or explain such changes. 

We noted in our report that this information, along with other key 

performance metrics, could help Congress assess results related to 

OFAC’s asset blocking efforts. We recommended that Treasury complete 

its efforts to develop an OFAC-specific strategic plan and performance 

measures and that the annual Terrorist Assets Report include more 

complete information about blocked assets. OFAC officials told us in 

March 2006 that OFAC had developed new performance measures to 

assess its role in administering and enforcing economic sanctions against 

terrorists; however, we have not reviewed the new measures. According to

OFAC officials, its strategic plan has not yet been finalized. In its March 

2006 letter, Treasury reported that it would work with Congress to discuss 

recrafting the Terrorist Assets Report to address congressional interests. 

The financing of terrorism is the financial support, in any form, of 

terrorism or of those who encourage, plan, or engage in it.6

 Terrorist 

financing may derive from licit activities, such as fundraising by charities,

or from illicit activities, such as selling counterfeit goods, contraband 

cigarettes, and illegal drugs.7 Disguising the source of terrorist financing, 

whether licit or illicit, is important to terrorist financiers: if the source can 

be concealed, it remains available for future terrorist financing activities.

Some international experts on money laundering find that there is little 

difference in the methods used by criminal organizations or terrorist 

Background 

 6

World Bank and International Monetary Fund, Reference Guide to Anti-Money

Laundering and Combating of Financing of Terrorism, (2003). As noted in the guide, the 

formal definition of terrorist financing is provided in the United Nations International 

Convention for the Suppression for the Financing of Terrorism (1999). However, a

universally accepted definition for “terrorism” has not been established owing to significant 

political and national implications that differ from country to country. The UN continues to

work to gain worldwide consensus on the definition of terrorism. 

7

See GAO, Terrorist Financing: U.S. Agencies Should Systematically Assess Terrorists’

Use of Alternative Financing Mechanisms, GAO-04-163 (Washington, D.C.: Nov. 14, 2003). 

Page 6 GAO-06-632T 
groups to conceal their proceeds by moving them through national and

international financial systems.8

FATF, an intergovernmental body, sets internationally recognized 

standards for developing anti-money laundering and counter-terrorismfinancing regimes and assesses countries’ abilities to meet these 

standards. To strengthen anti-money-laundering and counter-terrorismfinancing worldwide, international entities such as the UN, FATF, World 

Bank, and IMF, as well as the U.S. government, agree that each country 

should implement practices and adopt laws that are consistent with 

international standards.9

 The U.S. government has worked with 

international donors and organizations—for example, the United Kingdom, 

Australia, Japan, the European Union, FATF, UN, the Organization of 

American States, the Asian Development Bank, IMF, and the World 

Bank—to build counter-terrorism-financing regimes in vulnerable 

countries. 

U.S. offices and bureaus—primarily within the Departments of State, the 

Treasury, Justice, and Homeland Security—and the federal financial 

regulators10 provide training and technical assistance, chiefly funded by 

State and Treasury, to countries deemed vulnerable to terrorist financing.

One of TFWG’s functions is to prioritize the delivery of such assistance to 

countries that it deems most vulnerable. To identify priority countries, 

TFWG considers intelligence community analysis of countries’ 

vulnerabilities to terrorist financing, importance to U.S. security, and 

capacity to absorb U.S. assistance. NSC guidance for TFWG states that 

delivery of assistance to other vulnerable countries—that is, those that 

have not been designated as priority—may proceed so long as it is 

possible without adversely affecting the delivery of assistance to priority 

countries. Other vulnerable countries receive counter-terrorism-financing 

training and technical assistance through other U.S. government programs 

as well as through TFWG. (See app. 1 for TFWG membership and 

process.) 

 8

These experts define money laundering as the processing of criminal proceeds to disguise

their illegal origin in order to legitimize ill-gotten gains. 

9

International standards are represented by the UN International Convention for the

Suppression of the Financing of Terrorism and by FATF’s 40 recommendations on money 

laundering and nine special recommendations on terrorist financing. 

10These federal regulators are the Federal Reserve Board, the Federal Deposit Insurance

Corporation, and the Office of the Comptroller of the Currency. 

Page 7 GAO-06-632T 
Although the U.S. government provides a range of training and technical

assistance to countries it deems vulnerable to terrorist financing, it lacks 

an integrated strategy to coordinate the delivery of this assistance. 

Specifically, the effort lacks key stakeholder acceptance of roles and 

practices, a strategic alignment of resources with needs, and a process to 

measure results—three elements that previous GAO work has identified as 

critical to effective strategic planning within and across agencies. GAO 

recommended that the Secretaries of State and the Treasury implement an 

integrated strategic plan and a Memorandum of Agreement for the delivery 

of training and technical assistance. According to March 2006 

correspondence from State and Treasury, the departments have taken 

several steps to enhance interagency coordination. 

The training and technical assistance that U.S. agencies provide to 

vulnerable countries are intended to help the countries develop the five 

elements that, according to State, are needed for an effective anti-moneylaundering and counter-terrorism-financing regime: a legal framework, a 

financial regulatory system, an FIU, law enforcement capabilities, and 

judicial and prosecutorial processes. The training and assistance are 

offered through courses, presentations at international conferences, the 

use of overseas regional U.S. law enforcement academies or U.S.-based 

schools, and the placement of intermittent or long-term resident advisors.11

According to State officials, at the time of our review, TFWG had 

coordinated the delivery of training and technical assistance in at least one 

of these five elements to more than 20 priority countries. 

U.S. Government 

Lacks an Integrated 

Strategy to 

Coordinate the 

Delivery of Training 

and Technical 

Assistance 

U.S. Agencies Provide 

Wide Range of Training 

and Technical Assistance 

Key Stakeholders Disagree 

about Roles and 

Procedures 

U.S. agencies involved in providing counter-terrorism-financing training 

and technical assistance disagree both about agencies’ roles relating to the 

coordination of the training and assistance efforts and about training and

assistance procedures and practices. Consequently, the overall effort lacks 

 11See GAO-06-19, appendix IV, for key U.S. counter-terrorism-financing and anti-moneylaundering training and assistance for vulnerable countries by U.S. agency and financial 

regulators. 

Page 8 GAO-06-632T 
effective leadership, resulting in less than optimal delivery of training and 

technical assistance to vulnerable countries.12

State and Treasury disagree regarding State’s role in coordinating the 

training and technical assistance. According to State, its Office of the

Coordinator for Counterterrorism is charged with directing, managing, and 

coordinating all U.S. agencies’ efforts to develop and provide counterterrorism financing programs, including, but not limited to, those in 

priority countries. Treasury, a key stakeholder, asserts that there are 

numerous other efforts outside States’ purview and that State’s role is 

limited to coordinating, as chair of TFWG, the provision of such assistance 

in priority countries.13 In addition, senior Treasury officials told us that 

they strongly disagree with the degree of control State asserts over TFWG 

decisions and said that State creates obstacles rather than coordinating 

efforts. Officials from Justice, which provides training and technical 

assistance14 and receives funding from State, told us that they respect 

State’s role as the TFWG chair and coordinator and said that all counterterrorism-financing training and technical assistance efforts should be 

brought under the TFWG decision-making process. While supportive of

State’s position, Justice’s statement demonstrates that State’s role lacks 

clear definition and recognition in practice. 

In addition, State and Treasury officials disagree about procedures and 

practices for delivering the training and technical assistance. State cited 

NSC guidance and an unclassified State document focusing on TFWG as 

providing procedures and practices for delivering training and technical 

assistance to all countries. Treasury officials told us that the procedures 

and practices defined by NSC were pertinent only to the TFWG priority 

 12We have previously found that building a collaborative management structure across

participating organizations is an essential foundation for ensuring effective collaboration

and that strong leadership is critical to the success of intergovernmental initiatives. [For a 

discussion of practices essential to interagency collaboration, see GAO, Electronic 

Government: Potential Exists for Enhancing Collaboration on Four Initiatives, GAO-04-6 

(Washington, D.C.: Oct. 10, 2003): 17-21.] Moreover, involvement by leaders from all levels 

is important for maintaining commitment. 

13For example, according to Treasury officials, the agency has developed numerous 

counter-terrorism-financing programs to advance the core strategic aims identified in the 

2003 National Money Laundering Strategy. The officials said that these programs are not

under TFWG’s, and therefore State’s, purview.

14According to Justice, a high-level interdepartmental decision has assigned Justice the lead

among U.S. agencies in drafting foreign criminal laws, reviewing the legal sufficiency of 

such laws, and providing prosecutorial training and development for the TFWG countries. 

Page 9 GAO-06-632T 
countries and that TFWG has no formal mandate or process to provide 

technical assistance to non-priority countries. Moreover, Justice officials 

indicated that differences in the procedures and practices for delivering

training and technical assistance to priority countries versus those for 

other vulnerable countries had created problems. 

State and Treasury officials cited numerous examples of their 

disagreements on procedures and practices. For example: 

• According to Treasury officials, funding provided by Treasury’s Office 

of Technical Assistance (OTA) should primarily support intermittent 

and long-term resident advisors, who are U.S. contractors.15 According 

to State officials, OTA should instead supplement State’s funding for 

counter-terrorism-financing training and technical assistance, which 

primarily funds current employees of other U.S. agencies. 

• According to OTA officials, their contractors provide assistance in 

drafting counter-terrorism-financing and anti-money-laundering laws in 

non-priority countries and OTA provides the drafts to Justice and other 

U.S. agencies for review and comment. State officials cited NSC 

guidance that current Justice employees should be primarily 

responsible for working with foreign countries to assist in drafting 

counter-terrorism-financing and anti-money-laundering laws and 

voiced strong resistance to use of contractors. Justice cited two 

examples in which contractors’ work resulted in laws that did not meet 

FATF standards. According to OTA officials, the host country itself is 

ultimately responsible for final passage of a law that meets 

international standards.16

• State officials said that OTA’s use of confidentiality agreements 

between contractors and the foreign officials they advise had impeded 

 15According to Treasury officials, OTA funds other Treasury offices that conduct 

assessments or deliver training, such as Terrorist Financing and Financial Crimes and 

FinCEN, in conjunction with its programs. Also according to Treasury, OTA has funded the 

expenses of other agencies to deliver technical assistance in support of an existing work

plan and to meet performance objectives. 

16According to OTA officials, Justice and other U.S. agencies do not always have the time 

and resources to comment on draft laws. Justice officials agreed but maintained that this 

problem will be resolved only when other agencies acknowledge Justice’s jurisdiction and 

expertise. According to Treasury, in many cases, countries pass laws that don’t meet 

international standards, even after having received substantial commentary from the U.S. 

government. 

Page 10 GAO-06-632T 
U.S. interagency coordination in one country and that the continued 

practice could present future challenges.17 However, Treasury officials 

said that the incident was an isolated case involving a contract problem 

and that procedural steps have been taken to ensure the problem is not 

repeated. 

• According to TFWG procedures for priority countries, if an assessment 

trip is determined to be necessary, State is to lead and determine the 

composition of the teams and set the travel dates.18 However, this 

procedure becomes complicated when a vulnerable country is

designated a priority country. For example, in November 2004,

Treasury conducted an OTA financial assessment in a vulnerable 

country and subsequently reached agreement with the country’s central 

bank minister to install a resident advisor to set up an FIU. However, 

after TFWG had changed the country’s status to priority, State officials, 

in May 2005, denied clearance for Treasury officials to visit the country 

to arrange for the placement of a resident advisor; according to State

TFWG officials, State delayed the officials’ visit until a TFWG 

assessment could be completed. At our review’s conclusion in July 

2005, Treasury’s work had been delayed by 2.5 months. However, the 

U.S. embassy requested that Treasury proceed with its visit and TFWG 

delay its assessment. 

U.S. Effort Does Not 

Strategically Align 

Resources with Related 

Needs and Risks 

The U.S. government, including TFWG, has not strategically aligned its 

resources with its mission to deliver counter-terrorism-financing training 

and technical assistance.

19 The U.S. government has no clear record of the 

budgetary resources available for counter-terrorism-financing assistance. 

Further, the government has not systematically assessed the suitability 

and availability of U.S. human capital resources or the potential 

availability of international resources. As a result, decision makers do not

know the full range of resources available to meet the needs and address 

 17When signing a contract for placement of a resident advisor, OTA also signs an agreement 

with foreign officials that it advises to not share sensitive information with third parties. 

18A TFWG assessment, conducted by a Financial Systems Assessment Team, includes 

meetings with host government financial regulatory agencies, the judiciary, law 

enforcement agencies, the private financial services sector, and nongovernmental 

organizations. 

19Our previous work has shown that alignment of resources is critical to making strategic 

planning a dynamic and inclusive process. See GAO, Executive Guide: Effectively

Implementing the Government Performance and Results Act, GAO/GGD-96-118 

(Washington, D.C.: June 1996). 

Page 11 GAO-06-632T 
the related risks they have identified in priority countries and to determine 

the best match of remaining resources to other vulnerable countries’ 

needs. 

State and Treasury do not have clear records of the funds that they 

allocate for counter-terrorism-financing training and technical assistance. 

Each agency receives separate appropriations that it can use to fund 

training and technical assistance provided by themselves, other agencies, 

or contractors. State primarily transmits its training and technical 

assistance funds to other agencies, while Treasury primarily employs 

short- and long-term advisors through contracts.20 However, because 

funding for counter-terrorism-financing training and assistance is mingled 

with funding given to the agencies for anti-money-laundering training and 

assistance and other programs, it is difficult for U.S. government decisionmakers to determine the actual amount allocated to these efforts.21

U.S. Government Lacks Clear 

Record of Budget Resources 

for Training and Assistance 

State officials told us that funding for State counter-terrorism-financing 

training and technical assistance programs derives from two primary 

sources: 

• Non-Proliferation, Anti-Terrorism, Demining, and Related 

Programs. State’s Office of the Coordinator for Counterterrorism uses

funding from this account to provide counter-terrorism financing 

training and technical assistance to TFWG countries. Our analysis of 

State records showed that budget authority for the account included 

$17.5 million for counter-terrorism-financing training and technical 

assistance for fiscal years 2002-2005. 

• International Narcotics Control and Law Enforcement. State’s 

Bureau of International Narcotics Control and Law Enforcement uses 

funding from this account to provide counter-terrorism-financing and 

anti-money-laundering training and technical assistance to a wide range 

of countries, including seven priority countries, during fiscal years 

2002-2005, as well to provide general support to multilateral and 

regional programs. Our analysis of State records shows that budget 

authority for this account included about $9.3 million for anti-moneylaundering assistance, counter-terrorism-financing training and 

 20OTA also funds the travel of all Treasury participants in the assessment process and has

funded other U.S. government employees in support of an existing work plan and to meet 

performance objectives. 

21TFWG expenditures are classified. 

Page 12 GAO-06-632T 
assistance, and related multilateral and regional activities for fiscal 

years 2002-2005.22

State officials also told us that other State bureaus and offices provide 

counter-terrorism-financing and anti-money-laundering training and 

technical assistance (e.g., single-course offerings or “small-dollar” 

programs) as part of regional, country-specific, or broad-based programs.23

Treasury officials told us that OTA’s counter-terrorism-financing technical 

assistance is funded through its Financial Enforcement program. Our 

analysis of Treasury records showed that OTA received budget authority 

totaling about $30.3 million for all financial enforcement programs for 

fiscal years 2002-2005. However, because OTA funding for counterterrorism-financing training and technical assistance is embedded with 

funding for anti-money-laundering assistance, the exact amount allocated 

to countering terrorist financing cannot be determined. One OTA official 

told us that in any given year, as much as two-thirds of these program 

funds may be spent on counter-terrorism-financing or anti-moneylaundering assistance. 

The U.S. government, including TFWG, has not systematically assessed the 

availability and suitability of the human capital resources used by the 

agencies for counter-terrorism-financing training and technical assistance. 

As a result, agency decision makers lack reliable information to use in 

determining the optimal balance of government employees and 

contractors to meet the needs and relative risks of vulnerable countries. 

U.S. Government Has Not 

Assessed Human Capital 

Resources for Training and 

Assistance

According to State and Treasury officials, the effectiveness of contractors 

and current employees in delivering the various types of training and 

technical assistance has not been systematically evaluated. Decisions at 

TFWG appear to be based on anecdotal information rather than 

transparent and systematic assessments of resources. In addition, 

according to the State Performance and Accountability Report for fiscal 

year 2004, a shortage of anti-money-laundering experts continues to 

 22An official from State’s Bureau of International Narcotics and Law Enforcement Affairs 

Office told us that in fiscal year 2004 about $2.3 million, which had been carried forward 

from prior years, was transferred to a development program, reducing the total to $7 

million.

23State’s Bureau of International Narcotics and Law Enforcement Affairs Office provided a 

document showing about $4.1 million in Support for European Democracy funds obligated 

for anti money laundering training between Fiscal Years 2002-2004. 

Page 13 GAO-06-632T 
hamper efforts to meet the needs of nations that request assistance, 

including priority countries. According to State officials, U.S. technical 

experts are especially overextended because of their frequent need to 

divide their time between assessment, training, and investigative missions. 

Moreover, officials from State’s Office of the Coordinator for 

Counterterrorism said that a lack of available staff had slowed the 

disbursement of funding at TFWG’s inception.24

Although Treasury said that there may be a shortage of anti-money 

laundering experts in the U.S. government who are available to provide 

technical assistance in foreign countries, Treasury officials told us that 

many such experts, recently retired from the same U.S. government 

agencies, are available as contractors. A senior OTA official said that OTA 

has actively sought to provide programs in more priority countries but that 

State, as chair of TFWG, has not supported OTA’s efforts. Specifically, our 

analysis showed that OTA obligated about $1.1 million of its financial

enforcement program funding in priority countries, in part to place 

resident advisors, in fiscal years 2002-2005.25 State officials said that they

welcomed more OTA participation in priority countries as a component of 

applicable resources; however, they questioned whether OTA consistently 

provides high-quality assistance. At the same time, State officials 

repeatedly stated that they needed OTA funding, not OTA-contracted staff, 

to meet current and future needs.26

The U.S. government, including TFWG, has not systematically

consolidated and synthesized available information on other countries’ 

and international entities’ counter-terrorism-financing training and 

technical assistance activities or integrated this information into a 

decision-making process. Further, TFWG has not developed a strategy for 

encouraging allies and international entities to contribute resources to 

help vulnerable countries build counter-terrorism-financing capabilities 

and coordinate training and technical assistance activities—one of 

U.S. Government Has Not 

Assessed Potential 

International Resources 

 24Department of State expenditures for priority countries are classified. 

25Our analysis considered 19 priority countries, excluding countries that TFWG added to 

the priority list in March 2005. At the time of our review, OTA had obligated $9.5 million of

the $30.3 million budgeted for financial enforcement programs in priority and non-priority

countries in fiscal years 2002-2005. 

26State generally funds other, non-State agencies—including OTA—to provide training to

foreign governments, whereas OTA generally funds contractors, the majority of whom are

former U.S. government employees, to do so. 

Page 14 GAO-06-632T 
TFWG’s stated goals. State and Treasury officials told us that, instead, they

take an ad hoc approach to working with allies and international entities

on coordinating resources for training and technical assistance. These

officials also noted that at TFWG meetings, interagency issues are given 

higher priority than international resource sharing. Without a systematic 

way to assess information about international activities and to consolidate,

synthesize, and integrate this information into the U.S. interagency 

decision-making process, the U.S. government cannot easily capitalize on 

opportunities for resource sharing with allies and international entities. 

U.S. Government Lacks 

System to Measure 

Performance and 

Incorporate Results 

The U.S. government, including TFWG, has not established a system to 

measure the results of its training and technical assistance efforts and to 

incorporate this information into its integrated planning efforts. According 

to an official from Justice’s Office of Overseas Prosecutorial Development, 

Assistance and Training (OPDAT), OPDAT led an interagency effort to 

develop a system for measuring the results of training and technical 

assistance provided through TFWG and related assistance results for 

priority countries. In November 2004, OPDAT assigned an intern to set up

a database to track such results. Because the database was not accessible 

to all TFWG members, OPDAT planned to serve as the focal point for 

entering the data collected by TFWG members.27

OPDAT asked agencies to provide statistics on programs, funding, and

other information, including responding to questions concerning results 

that corresponded to the five elements of an effective counter-terrorismfinancing regime. OPDAT also planned to track key recommendations for 

training and technical assistance and progress made in priority countries 

as provided in FATF and TFWG assessments. However, as of July 2005, 

OPDAT was still waiting to hire an intern to complete the project. OPDAT 

and State officials confirmed that the system had not yet been approved or

implemented by TFWG.

 27It became unclear at our meeting with OPDAT and State whether the database should be 

classified. Justice had not classified the database, because officials were under the 

impression that only the ranking of priority countries was classified information, while 

State maintained that the listing of priority countries was classified. 

Page 15 GAO-06-632T 
To ensure that U.S. government interagency efforts to provide counterterrorism-financing training and technical assistance are integrated, 

efficient, and effective, ‘particularly with respect to priority countries, we 

recommended in our report that the Secretary of State and the Secretary 

of the Treasury, in consultation with NSC and relevant government 

agencies, develop and implement an integrated strategic plan for the U.S.

government that 

GAO Recommended 

Actions to Improve 

Interagency Coordination, 

and Agencies Are Taking 

Steps 

• designates leadership and provides for key stakeholder involvement; 

• includes a systematic and transparent assessment of the allocation of 

U.S. government resources; 

• delineates a method for aligning the resources of relevant U.S. agencies 

to support the mission based on key needs and related risks; and 

• provides processes and resources for measuring and monitoring 

results, identifying gaps, and revising strategies accordingly. 

We also recommended that the Secretaries of State and the Treasury enter 

into a Memorandum of Agreement concerning counter-terrorism-financing 

and anti-money-laundering training and technical assistance to ensure a 

seamless campaign in providing such assistance programs to vulnerable 

countries. The agreement should specify, with regard to U.S. counterterrorism-financing training and technical assistance, 

• the roles of each department, bureau, and office;

• methods to resolve disputes concerning OTA’s use of confidentiality 

agreements in its contracts; and 

• coordination of funding and other resources. 

In March 2006 letters to relevant congressional oversight and

appropriation committees, State and Treasury describe general steps that 

they are taking to improve the interagency process in delivering counterterrorism-financing training and technical assistance abroad. The agencies

report engaging with each other at all levels to ensure increased 

coordination. In addition, they report that, in concert with the NSC and the 

Departments of Homeland Security and Justice, they are reviewing TFWG 

and its procedures with a view to enhancing its effectiveness. Also, State 

reports that it has begun chairing TFWG at the Deputy Assistant Secretary 

level to further enhance coordination. State also says that it is reconvening 

Page 16 GAO-06-632T 
a senior-level interagency Training and Assistance Subgroup that is 

responsible for coordinating all U.S. government assistance on 

counterterrorism matters, including counter-terrorism-financing training 

and technical assistance. 

Although these steps could provide a basis for improved stakeholder 

acceptance of roles and procedures, State’s and Treasury’s letters lack 

sufficient detail to affirm that the preparation of an integrated and riskbased strategic plan is under way. The letters also do not address efforts to 

strategically align resources with needs or to measure performance. 

Moreover, the letters do not address our recommendation regarding the

Memorandum of Agreement or offer alternative means of ensuring the 

duration of any improvements in coordination. 

Treasury’s OFAC undertakes a number of activities as part of its efforts to 

block terrorist assets. However, although Treasury uses some limited 

performance measures related to OFAC’s efforts, Treasury officials 

acknowledged that the measures do not assess results or show how 

OFAC’s efforts contribute to Treasury’s terrorist financing-related goals. In 

addition, OFAC officials acknowledged that Treasury’s annual Terrorist 

Assets Report to Congress on the nature and extent of blocked terrorists’ 

U.S. assets does not provide the information needed to assess progress 

achieved. In our report, we recommended that the Secretary of the 

Treasury finalize the development of the performance measures as well as 

an OFAC-specific strategic plan and provide more complete information in 

its annual reports to Congress on terrorist assets blocked. As of March 

2006, OFAC had developed new performance measures and said it would 

work with Congress to provide the information needed regarding OFAC’s 

terrorist asset blocking efforts. 

Treasury Needs 

Meaningful 

Performance 

Measures and 

Information to Show 

Results and Progress 

of Terrorist Asset 

Blocking 

Page 17 GAO-06-632T 
OFAC administers and enforces economic sanctions, based on U.S. foreign 

policy and national security goals, against designated individuals or groups 

that conduct or facilitate terrorist activity.28 Once individuals or groups are 

designated by Treasury or State, OFAC serves as the lead agency 

responsible for prohibiting transactions and blocking assets subject to U.S. 

jurisdiction. As part of its efforts, OFAC 

• coordinates and works with other U.S. agencies to identify and 

investigate prospective terrorist designations; 

• compiles the administrative record or evidentiary material that will 

serve as the factual basis underlying a decision by OFAC to designate 

individuals or groups; and 

• engages foreign counterparts to gather information, apply pressure, or 

request or offer assistance in support of terrorist designation and asset 

blocking activities. 

OFAC may use the threat of designation to gain cooperation, forcing key 

sources of financial support to choose between public exposure of their 

support of terrorist activity of their good reputation. OFAC also works 

with the regulatory community and industry groups to assure that assets 

are expeditiously blocked and the ability to carry out transactions through 

U.S. parties is terminated. 

OFAC Administers 

Terrorism-Related 

Sanctions

Treasury’s Performance 

Measures Do Not Assess 

Results of Terrorist Asset 

Blocking 

At the time of our October 2005 review, Treasury lacked effective 

performance measures to assess the results of OFAC’s terrorist asset 

blocking efforts or show how these efforts contribute to the department’s 

goals of disrupting and dismantling terrorist financial infrastructures and 

executing the nation’s financial sanctions policies. Treasury’s 2004 

Performance and Accountability Report contained limited performance 

measures related to asset blocking, including terrorist designations, 

including 

 28According to Treasury, these economic sanctions are intended to deprive terrorists and

terrorist groups of access to U.S. markets and the international financial system and are 

aimed at impeding their larger supply networks, which aid, facilitate, and ultimately 

underpin the successful execution of terrorist acts. OFAC also administers other economic

and trade base sanctions against foreign countries, international narcotics traffickers, and 

those engaged in activities related to the proliferation of weapons of mass destruction. 

Page 18 GAO-06-632T 
• an increase in the number of terrorist finance designations in which 

other countries join the United States, 

• an increase in the number of drug trafficking and terrorist-related 

financial sanctions targets identified and made public,29 and 

• the estimated number of sanctioned entities no longer receiving funds 

from the United States.30

OFAC officials told us that they recognized the inadequacy of these 

measures to assess progress in blocking terrorist assets. According to the 

OFAC officials: 

• The measures in the 2004 Performance and Accountability Report are 

not specific to terrorist financing. Two of the three measures do not 

separate data on terrorists from data on other entities such as drug 

traffickers, hostile foreign governments, corrupt regimes, and foreign 

drug cartels, although OFAC officials acknowledged that they could 

have reported the data separately. 

• Progress on asset blocking cannot be measured simply by totaling an

amount of blocked assets at the end of the year, because the amounts 

may vary over the year as assets are blocked and unblocked.

• As of October 2005, Treasury had not developed measures to track 

activities and results related to asset blocking. For example, Treasury’s 

underlying research to identify terrorist entities and their support 

systems is used by other U.S. agencies for activities such as law 

enforcement investigations. However, Treasury lacked measures to 

track other agencies’ use of this research. 

Treasury officials also noted that measuring the effectiveness of these 

efforts in terms of their deterrent value is problematic, in part because the 

direct impact on unlawful activity is unknown and because precise metrics 

for illegal and clandestine activities are hard to develop. According to 

Treasury officials, measuring these efforts’ effectiveness can also be 

 29Treasury’s 2004 Annual Performance and Accountability Report states that Treasury 

proposes to discontinue use of this indicator in 2005. 

30Sanctioned entities include hostile foreign governments, corrupt regimes, foreign drug

cartels, and other sanctioned targets determined by the President, the Secretary of State, or 

the Congress. 

Page 19 GAO-06-632T 
difficult because many of them involve multiple U.S. agencies and foreign 

governments and are highly sensitive. However, contrary to a U.S. 

legislative directive to agencies to ascertain and explain the infeasibility or 

impracticableness of a performance goal for a program activity, Treasury’s 

annual report does not address the deterrent value of designations or the 

difficulties in measuring their effectiveness.31

In October 2005, in commenting on a draft of our draft report, Treasury 

officials told us that they were in the process of developing better 

quantitative and qualitative measures for assessing the results of OFAC’s 

terrorist asset blocking efforts. In addition, Treasury officials said that 

they were developing a strategic plan to guide OFAC’s efforts.32 The 

officials stated that they expected OFAC’s new performance measures to 

be completed by December 1, 2005, and its new strategic plan to be 

completed by January 1, 2006. We recommended in our report that the 

Secretary of the Treasury complete the efforts to develop meaningful 

performance measures and an OFAC-specific strategic plan to ensure that 

policy makers and program managers are able to examine the results of 

U.S. efforts to block terrorists’ assets. According to discussions with 

OFAC officials in March 2006, OFAC has developed new measures to 

assess its role in administering and enforcing economic sanctions against 

terrorists; however, we have not assessed the adequacy of these new 

measures. According to OFAC officials, as of March 30, 2006, the strategic 

plan had not yet been finalized. 

 31According to the Government Performance and Results Act (GPRA) of 1993, Pub. L. No.

103-62, when it is not feasible to develop a measure for a particular program activity, the 

executive agency shall state why it is infeasible or impractical to express a performance 

goal for the program activity. GPRA also states that the agency shall consult with the 

Director of the Office of Management and Budget to determine that it is not feasible to 

express the performance goal in a measurable form. 

32According to GPRA, agency strategic plans should include, among other elements, a set of

general goals and objectives and a description of how performance goals and measures are

related to the general goals and objectives of the program. Currently, OFAC’s efforts are

guided by Treasury’s overall strategic plan. 

Page 20 GAO-06-632T 
Treasury’s annual Terrorist Assets Report, which offers a year-end 

snapshot of dollar amounts of terrorist assets held in U.S. jurisdiction, 

does not provide sufficient information to demonstrate OFAC’s progress in 

its terrorist asset blocking efforts.33 In 2004, OFAC reported that the United

States blocked almost $10 million in assets belonging to seven 

international terrorist organizations and related designees.34 The 2004 

report also noted that the United States held more than $1.6 billion in 

assets belonging to six designated state sponsors of terrorism.35 However, 

the report does not document or quantify changes from amounts of assets 

blocked in previous years. For example, the 2004 report stated that the 

United States held $3.9 million in al Qaeda assets, but it did not show that 

this represented a 400 percent increase from the value of al Qaeda assets

held by the United State in 2003 or offer an explanation for this increase.36

Treasury Report Does Not 

Show Progress in Asset 

Blocking 

We noted in our October 2005 report that although the amounts of assets 

blocked are not in themselves a complete measure to assess progress over 

time, such information, along with other key performance metrics, could

help policy makers and program managers examine the results of OFAC’s 

asset blocking efforts. We recommended that the Secretary of the 

Treasury provide more complete information in the annual Terrorist 

Assets Report on the nature and extent of assets blocked, such as 

differences in amounts blocked each year, explanations for such 

differences, results of OFAC’s terrorist asset blocking efforts, and 

 33Section 304 of Public Law 102-138, as amended by Public Law 103-236 (codified at 22 USC 

§2656g), requires the Secretary of the Treasury, in consultation with the Attorney General 

and appropriate investigative agencies, to provide an annual report to Congress “describing 

the nature and extent of assets held in the United States by terrorist countries and 

organizations engaged in international terrorism.” Treasury must submit the Terrorist

Assets Reports to the Committee on Foreign Relations and the Committee on Finance of

the Senate and to the Committee on International Relations and the Committee on Ways 

and Means of the House. 

34The 2004 Terrorist Assets Report listed the international terrorist organizations as al 

Qaeda, HAMAS, Mujahedin-E Khalq Organization, New People’s Army, Palestinian Islamic 

Jihad, Kahane Chai, and the Taliban. This figure does not include amounts under review or

investigation. 

35The 2004 Terrorist Assets Report listed the state sponsors of terrorism as Cuba, Iran, 

Libya, North Korea, Sudan, and Syria. Of the $1.6 billion, $1.5 billion in assets are blocked 

because of economic sanctions imposed by the United States. 

36According to OFAC, amounts blocked for terrorist entities may shift year to year for

policy-related purposes. For example, funds may be unblocked when the U.S. government

terminates a sanctions program or when OFAC issues exceptions to sanctions programs in

accordance with applicable law.

Page 21 GAO-06-632T 
obstacles faced by the U.S. government. In commenting on a draft of our 

report, Treasury observed that the Terrorist Assets Report “is not 

mandated or designed as an accountability measure.” However, nothing in 

the statutory language or the congressional intent underlying the mandate 

precludes Treasury from compiling and reporting in this manner. Senior 

OFAC officials acknowledged that the Terrorist Assets Report is not useful 

for assessing results of asset blocking efforts. In its March 2006 letter to 

relevant congressional oversight and appropriation committees, Treasury 

responded that although it does not believe that the amounts of assets 

blocked is a meaningful measure of its efforts’ effectiveness, it would work 

with Congress to discuss recrafting the Terrorist Assets Report to address 

congressional interests. 

U.S. agencies have accomplished much in their efforts to combat terrorist 

financing abroad. Despite the difficulties of interagency coordination, 

TFWG has delivered counter-terrorism-financing training and technical 

assistance to numerous vulnerable countries and has designated and 

blocked significant amounts of terrorist assets. However, as GAO’s 

October 2005 report described, several challenges impact the effectiveness 

of U.S. agencies’ efforts. Without a strategic and integrated plan for 

coordinating the funding and delivery of training and technical assistance 

by the agencies, the U.S. government cannot maximize the use of its 

resources in the fight against terrorist financing. Interagency disputes over 

State-led TFWG roles and procedures have hampered TFWG leadership 

and wasted staff energy and talent. In addition, decisions based on 

anecdotal and informal information, rather than transparent and 

systematic assessments, have hindered managers from effectively 

addressing problems before they grow and potentially become crises. 

Further, the U.S. government’s, including TFWG’s, failure to integrate all 

available U.S. and international resources may result in missed 

opportunities to leverage resources to meet related needs and risks, 

particularly given the scarce expertise available to address counterterrorism financing. Finally, without a functional performance 

measurement system, TFWG lacks the information needed for optimal 

coordination and planning. 

Conclusion 

Although OFAC undertakes a number of important efforts with regard to

blocking terrorist assets, the lack of meaningful performance measures 

and sufficient information regarding these efforts has created uncertainty

about their results and progress. The new performance measures that 

OFAC has recently developed may enable Congress and other officials 

with oversight responsibilities to ascertain the strengths and weaknesses 

Page 22 GAO-06-632T 
of these efforts as well as hold OFAC managers accountable. OFAC’s 

strategic plan, when completed, could further facilitate the development of 

meaningful performance measures by describing the relation of 

performance goals and measures to OFAC’s mission, goals, and objectives. 

In addition, including information in Treasury’s annual Terrorist Assets 

Reports that shows changes in the amounts of assets blocked from year to 

year may help Congress and other officials better understand the 

importance of these efforts in the overall U.S. effort to combat terrorist 

financing and may assist in the strategic allocation of resources. 

In view of congressional interest in U.S. government efforts to deliver 

training and technical assistance abroad to combat terrorist financing and 

the difficulty of obtaining a systematic assessment of U.S. resources 

dedicated to this endeavor, as stated in our report, Congress should 

consider requiring the Secretary of State and the Secretary of the Treasury

to submit an annual report to Congress showing the status of interagency 

efforts to develop and implement an integrated strategic plan and 

Memorandum of Agreement to ensure TFWG’s seamless functioning, 

particularly with respect to TFWG roles and procedures. 

Madame Chairwoman, this concludes my prepared statement. I would be

pleased to respond to any questions that you or other members of the 

subcommittee may have at this time. 

Should you have any questions about this testimony, please contact Loren 

Yager at (202) 512-4128 or yagerl@gao.gov. Other major contributors to 

this testimony were Christine Broderick, Kathleen Monahan, Tracy 

Guerrero, Elizabeth Guran, and Reid Lowe. 

Matter for 

Congressional 

Consideration 

Contacts and 

Acknowledgments 

Page 23 GAO-06-632T 
Page 24 GAO-06-632T 

Appendix I: Terrorist Finance Working 

Group (TFWG) Membership and Program 

Development Process 

According to the Department of State (State), the Terrorist Finance 

Working Group (TFWG) was convened in October 2001 to develop and 

provide counter-terrorism-financing training to countries deemed most 

vulnerable to terrorist financing. Composed of various agencies 

throughout the U.S. government, TFWG is cochaired by State’s Office of 

the Coordinator for Counterterrorism and Bureau for International 

Narcotics and Law Enforcement Affairs. It meets biweekly to receive

intelligence briefings, schedule assessment trips, review assessment 

reports, and discuss the development and implementation of technical 

assistance and training programs. 

TFWG Membership Agencies and offices participating in TFWG include the following: 

Department of State 

• Office of the Coordinator for Counterterrorism 

• Bureau for International Narcotics and Law Enforcement Affairs, 

Crime Programs 

• Regional bureaus 

• Bureau for Economic and Business Affairs 

• Bureau of Diplomatic Security Office of Antiterrorism Assistance 

• United States Agency for International Development 

Department of the Treasury 

• Terrorist Financing and Financial Crimes 

• Office of Technical Assistance: Financial Crimes Enforcement 

Network: 

• Office of the Comptroller of the Currency 

• Internal Revenue Service—Criminal Investigation 

Department of Justice

• Office of Overseas Prosecutorial Development, Assistance, and 

Training 

• Asset Forfeiture and Money Laundering Section 

• Counter Terrorism Section 

• Federal Bureau of Investigation 

• Drug Enforcement Administration 
Department of Homeland Security

• Bureau of Customs and Border Protection 

• Bureau of Immigration and Customs Enforcement 

Other participants 

• National Security Council

• Central Intelligence Agency 

• Federal Deposit Insurance Corporation 

• Federal Reserve Board

TFWG Program 

Development Process 

According to State, the TFWG process for developing counter-terrorismfinancing training and assistance programs involves the following steps: 

1. With input from the intelligence and law enforcement communities, 

identify and prioritize countries most vulnerable to terrorist financing , 

and needing the most assistance in combating it. 

2. Evaluate priority countries’ counter-terrorism-financing and antimoney-laundering regimes with Financial Systems Assessment Team 

(FSAT) on-site visits or Washington tabletop exercises. State-led FSAT 

teams of 6 to 8 members include technical experts from State, 

Treasury, Justice, and other regulatory and law enforcement agencies. 

The FSAT on-site visits take about 1 week and include in-depth 

meetings with host government financial regulatory agencies, the 

judiciary, law enforcement agencies, the private financial services 

sector, and nongovernmental organizations. 

3. Prepare a formal assessment report on each priority country’s

vulnerabilities to terrorist financing and make recommendations for 

training and technical assistance to address these weaknesses. The 

formal report is shared with the county’s government to gauge its 

receptivity and to coordinate U.S. offers of assistance. 

4. Develop a counter-terrorism-financing training implementation plan 

based on FSAT recommendations. Counter-terrorism-financing 

assistance programs include financial investigative training to “follow 

the money,” financial regulatory training to detect and analyze

suspicious transactions, judicial and prosecutorial training to build 

financial crime cases, financial intelligence unit development, and 

Page 25 GAO-06-632T 
training in detecting over- and under-invoicing schemes for money 

laundering or terrorist financing. 

5. Provide sequenced training and technical assistance to priority 

countries in the country, regionally, or in the United States. 

6. Encourage burden sharing with our allies, with international financial 

institutions (e.g., IMF, World Bank, regional development banks), and 

through international organizations such as the United Nations (UN), 

the UN Counterterrorism Committee, Financial Action Task Force on 

Money Laundering, or the Group of Eight (G-8) to capitalize on and 

maximize international efforts to strengthen counter-terrorismfinancing regimes around the world. 

Page 26 GAO-06-632T (320414) 
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