a

GAO

United States Government Accountability Office

Report to Congressional Requesters

October 2005 TERRORIST 

FINANCING

Better Strategic 

Planning Needed to 

Coordinate U.S. 

Efforts to Deliver 

Counter-Terrorism 

Financing Training 

and Technical 

Assistance Abroad

GAO-06-19
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

October 2005

TERRORIST FINANCING 

Better Strategic Planning Needed to 

Coordinate U.S. Efforts to Deliver 

Counter-Terrorism Financing Training 

and Technical Assistance Abroad 

Highlights of GAO-06-19, a report to 

congressional requesters 

Terrorist groups need significant

amounts of money to organize, 

recruit, train, and equip adherents. 

U.S. disruption of terrorist 

financing can raise the costs and 

risks and impede their success. 

This report (1) provides an 

overview of U.S. government 

efforts to combat terrorist

financing abroad and (2) examines 

U.S. government efforts to

coordinate training and technical 

assistance. We also examined 

specific accountability issues the

Department of the Treasury faces 

in its efforts to block terrorists’ 

assets held under U.S. jurisdiction. 

What GAO Recommends

GAO recommends 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.

Congress should also consider

requiring the Secretaries of State 

and the Treasury to report the 

status of that implementation. 

State disagreed with our 

recommendations for an integrated 

strategy and Memorandum of 

Agreement. Treasury did not 

directly address these 

recommendations. While Treasury 

did not disagree with implementing 

an integrated strategic plan, it

limited the plan’s coverage to 

priority countries. We make 

additional recommendations to

Treasury concerning Treasury’s 

terrorist asset blocking efforts with 

which Treasury did not agree.

U.S. efforts to combat terrorist financing abroad include a number of 

interdependent activities—terrorist designations, intelligence and law 

enforcement, standard setting, and training and technical assistance. First,

the U.S. government designates terrorists and blocks their assets and 

financial transactions and supports similar efforts of other countries. 

Second, intelligence and law enforcement efforts include operations, 

investigations, and exchanging information and evidence with foreign 

counterparts. Third, U.S. agencies work through the United Nations and the 

Financial Action Task Force on Money Laundering to help set international 

standards to counter terrorist financing. Fourth, the U.S. government 

provides training and technical assistance directly to vulnerable countries 

and works with its allies to leverage resources. 

The U.S. government lacks an integrated strategy to coordinate the delivery 

of counter-terrorism financing training and technical assistance to countries 

vulnerable to terrorist financing. Specifically, the effort does not have key

stakeholder acceptance of roles and procedures, a strategic alignment of 

resources with needs, or a process to measure performance. First, the 

Department of Treasury does not accept the Department of State leadership 

or the State-led Terrorist Financing Working Group’s (TFWG) procedures for 

the delivery of training and technical assistance abroad. While supportive of 

the Department of State’s role as coordinator of TFWG efforts, the 

Department of Justice officials confirmed that roles and procedures were a 

matter of disagreement. Second, the U.S. government does not have a clear 

presentation and objective assessment of its resources and has not 

strategically aligned them with its needs for counter-terrorist financing 

training and technical assistance. Third, the U.S. government, including 

TFWG, lacks a system for measuring performance and incorporating results 

into its planning efforts. 

The Treasury faces two accountability issues related to its terrorist asset 

blocking efforts. First, Treasury’s Office of Foreign Assets Control (OFAC) 

reports on the nature and extent of terrorists’ U.S. assets do not provide 

Congress the ability to assess OFAC’s achievements. Second, Treasury lacks 

meaningful performance measures to assess its terrorist designation and 

asset blocking efforts. OFAC is in the process of developing more 

meaningful performance measures aided by its early efforts to develop an 

OFAC-specific strategic plan. Officials stated that OFAC’s new performance 

measures will be completed by December 1, 2005, and its strategic plan will

be completed by January 1, 2006; however, they did not provide us with 

documentation of milestones or completion dates. 

www.gao.gov/cgi-bin/getrpt?GAO-06-19.

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. 
Page i GAO-06-19 Terrorist Financing

Contents

Letter 1

Results in Brief 2

Background 5

U.S. Efforts to Combat Terrorist Financing Abroad Include a 

Number of Interdependent Activities 7

U.S. Government Lacks Integrated Strategy to Coordinate the 

Delivery of Training and Technical Assistance 14

Treasury Faces Two Accountability Issues Related to Its Terrorist 

Asset Blocking Efforts 24

Conclusions 28

Recommendations for Executive Action 29

Matter for Congressional Consideration 30

Agency Comments and Our Evaluation 30

Appendixes

Appendix I: Objectives, Scope, and Methodology 35

Appendix II: Key International Counter-Terrorism Financing and 

Anti-Money Laundering Efforts 39

Appendix III: Terrorist Financing Working Group Membership and 

Program Development Process 44

TFWG Membership 44

TFWG Program Development Process 45

Appendix IV: Key U.S. Counter-Terrorism Financing and Anti-Money 

Laundering Training and Technical Assistance for Vulnerable 

Countries 47

Appendix V: Comments from the Department of Justice 49

GAO Comments 52

Appendix VI: Comments from the Department of State 55

GAO Comments 62

Appendix VII: Comments from the Department of the Treasury 66

GAO Comments 70

Appendix VIII: GAO Contact and Staff Acknowledgments 75
Contents

Page ii GAO-06-19 Terrorist Financing

Abbreviations

ADB Asian Development Bank

CTC Counter-Terrorism Committee

FATF Financial Action Task Force

FinCEN Financial Crimes Enforcement Network

FIU Financial Intelligence Unit

FSRB FATF-Style Regional Body

GPRA Government Performance and Results Act

ILEA International Law Enforcement Academy

IMF International Monetary Fund

NSC National Security Council

OFAC Office of Foreign Assets Control

OPDAT Office of Overseas Prosecutorial Development, Assistance and 

Training

OTA Office of Technical Assistance

TFFC Terrorist Financing and Financial Crimes

TFWG Terrorist Financing Working Group

UN United Nations

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Page 1 GAO-06-19 Terrorist Financing

United States Government Accountability Office

Washington, D.C. 20548

A

October 24, 2005 Letr

The Honorable Charles E. Grassley 

Chairman 

Caucus on International Narcotics Control

United States Senate

The Honorable Susan M. Collins

Chairman

Committee on Homeland Security 

and Governmental Affairs

United States Senate

The Honorable Richard J. Durbin

United States Senate

After the September 11, 2001, attacks, the United States and its allies 

quickly recognized the urgent need to detect, dismantle, and deter terrorist 

financing networks around the world. Disrupting terrorist financing can 

raise the terrorists’ costs and risks of gathering and moving assets and is 

necessary to impede their ability to carry out significant operations. 

Terrorist financiers operate more easily in countries with systems that 

enable them to hide their efforts without difficulty. As the United Nations 

reports, more than ever before, security threats are interrelated and a 

threat to one country is a threat to all.1

 No country by its efforts alone can 

make itself invulnerable to today’s threats. It is in every country’s interest, 

accordingly, to cooperate with other countries to address their most 

pressing threats, because doing so will maximize the chances of reciprocal 

cooperation to address its own threat priorities. 

You asked us to address specific U.S. efforts to combat terrorist financing 

abroad as a follow-up to our previous work2

 on the nature and extent of 

terrorists’ use of alternative financing mechanisms.3

 In this report, we (1) 

1

A More Secured World: Our Shared Responsibility, United Nations, December 2004.

2

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).

3

Alternative financing mechanisms are outside the mainstream financial system and include 

the use of commodities (cigarettes, counterfeit goods, illicit drugs, etc.), bulk cash, 

charities, and informal banking systems. 
Page 2 GAO-06-19 Terrorist Financing

provide an overview of U.S. government efforts to combat terrorist 

financing abroad and (2) examine U.S. government efforts to coordinate 

the delivery of training and technical assistance to vulnerable countries. In 

addition, you requested that we examine specific accountability issues the 

Department of the Treasury (Treasury) faces in its efforts to block 

terrorists’ assets held under U.S. jurisdiction. 

In conducting our review, we examined documentation and interviewed 

officials from U.S. agencies, including the Departments of State, the 

Treasury, Justice, Homeland Security, and Defense, as well as from the 

intelligence community. We also assessed information from the United 

Nations (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.4

 At these locations, we assessed 

information from government, law enforcement, nongovernmental 

organizations, regional organizations, and donor government officials, as 

well as U.S. embassy officials. Although we requested a meeting, we did not 

obtain access to the National Security Council (NSC), which is responsible 

for the overall coordination of the interagency framework for combating 

terrorism including the financing of terrorist operations. However, the U.S. 

agencies provided the necessary information that we needed to conduct 

our work and support our findings, conclusions, and recommendations. We 

performed our work from April 2004 to July 2005 in accordance with 

generally accepted government auditing standards. For further details 

about our scope and methodology, see appendix I. 

Results in Brief U.S. government efforts to combat terrorist financing abroad include a 

number of interdependent activities— terrorist designations, intelligence 

and law enforcement, standards setting, and training and technical 

assistance. First, the U.S. government designates terrorists and blocks their 

assets and financial transactions and supports similar efforts of other 

countries. Second, U.S. intelligence and law enforcement conduct 

operations, investigations, and exchange information and evidence with 

each other and their respective counterparts abroad. Third, U.S. agencies 

work primarily through two international entities, the UN and the 

intergovernmental FATF on Money Laundering, to help set international 

4

State identified these countries as major money laundering countries among the 55 

jurisdictions of primary concern in its March 2005 International Narcotics Control Strategy 

Report.
Page 3 GAO-06-19 Terrorist Financing

standards to counter terrorist financing efforts. Fourth, the U.S. 

government provides training and technical assistance directly to 

vulnerable countries and works with its allies to leverage resources for 

those efforts.

The U.S. government lacks an integrated strategy to coordinate the delivery 

of counter-terrorism financing training and technical assistance to 

countries it deems vulnerable to terrorist financing. Specifically, the effort 

does not have key stakeholder acceptance of roles and procedures, a 

strategic alignment of resources with needs, or a process to measure 

performance. First, Treasury, a key stakeholder, does not accept the 

Department of State’s (State) position that it leads all U.S. counterterrorism financing training and technical assistance efforts to vulnerable 

countries. State’s position is based on NSC guidance. Moreover, 

disagreements continue between some Treasury and State officials 

concerning State-led Terrorist Financing Working Group (TFWG) 

coordination for the delivery of training and technical assistance to priority 

countries—about two dozen of the most vulnerable countries. While 

supportive of a State role as coordinator of TFWG efforts, the Department 

of Justice (Justice) confirms that State’s position as lead of training and 

technical assistance to countries beyond those listed as priority lacks 

recognition in practice. Further, Treasury does not agree with the TFWG 

procedures for coordinating the delivery of training and technical 

assistance abroad. Justice officials noted that having procedures that differ 

for TFWG priority countries and other vulnerable countries has created 

problems. Second, the U.S. government has not strategically aligned its 

resources with its needs to deliver counter-terrorism training and technical 

assistance to vulnerable countries. The U.S. government does not have a 

clear presentation of what funding is available for counter-terrorism 

financing training and technical assistance and TFWG has not assessed the 

suitability of available U.S. and international resources. Third, the U.S. 

government, including TFWG, does not have a system in place to measure 

the performance results of its delivery of training and technical assistance 

to vulnerable countries and to incorporate this information into its 

planning efforts. 

Treasury faces two accountability issues related to its terrorist asset 

blocking efforts. First, federal law requires Treasury to provide annual 

reports to Congress that describe the nature and extent of the terrorists’ 

assets held in the United States; however, these reports do not provide the 

reader the ability to assess achievements made. These reports are prepared 

by Treasury’s Office of Foreign Assets Control (OFAC). Second, Treasury 
Page 4 GAO-06-19 Terrorist Financing

lacks meaningful performance measures to assess its terrorist designation 

and asset blocking efforts. While Treasury has developed some limited 

performance measures, OFAC officials acknowledged that the measures 

could be improved and contribute to Treasury’s overall goal of disrupting 

and dismantling terrorist financing networks. OFAC officials said they have 

initiated efforts to develop more meaningful performance indicators aided 

by efforts to develop an OFAC-specific strategic plan. In Treasury’s 

technical comments on our draft report, officials stated that they expect 

OFAC’s new performance measures to be completed by December 1, 2005, 

and its new strategic plan to be completed by January 1, 2006; however, 

they did not provide us with documentation of milestones or a completion 

date. 

In this report we recommend 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 to coordinate the delivery of training and technical assistance 

that includes stakeholder involvement, an alignment of resources with 

needs, and a process to measure performance and use results. We further 

recommend that the secretaries of State and of the Treasury enter into a 

Memorandum of Agreement to ensure a seamless campaign in providing 

counter-terrorism financing training and technical assistance programs to 

vulnerable countries. We also recommend that the Secretary of the 

Treasury provide more complete information on the nature and extent of 

asset blocking in the United States in its annual Terrorist Assets Report to 

Congress and complete its efforts to develop an OFAC-specific strategic 

plan and meaningful performance measures by January 1, 2006, and 

December 1, 2005, respectively, to guide and assess its asset blocking 

efforts. In addition, Congress should consider requiring that the Secretary 

of State and the Secretary of the Treasury submit an annual report to 

Congress on the status of the development and implementation of the 

integrated strategic plan and Memorandum of Agreement for the delivery 

of training and technical assistance.

State disagreed with our recommendations for the development and 

implementation of an integrated strategy and Memorandum of Agreement 

concerning the coordination of the delivery of training and technical 

assistance, stating that they already have documents that serve as an 

integrated strategy and an interagency agreement. Treasury did not directly 

address our recommendation for an integrated strategic plan or a 

Memorandum of Agreement. Treasury proposed a new title, “Integrated 

U.S. Strategic Plan Needed to Improve the Coordination of 
Page 5 GAO-06-19 Terrorist Financing

Counterterrorism Finance Training and Technical Assistance to Certain 

Priority Countries,” which suggests agreement with the recommendation, 

but limits coverage of the integrated strategic plan to cover certain priority 

countries. Further, Justice stated that the fact that it was not included as an 

equal partner with State and Treasury in the recommendation and the 

Memorandum of Agreement was a critical omission. We do not agree that 

the documentation State provided constituted an integrated strategy 

because the effort, in practice, does not have key stakeholder buy-in on 

roles and practices, a strategic alignment of resources with needs, or a 

system to measure performance and use results and thus, an integrated 

strategy is still needed. Moreover, we continue to believe that the 

recommendation and Memorandum of Agreement should be directed to the 

Secretaries of Treasury and State because these agencies both primarily 

fund and support these efforts. Additionally, in response to our 

recommendation that the Secretary of the Treasury provide more complete 

information on the nature and extent of asset blocking in the United States 

in its annual Terrorist Assets Report to Congress, Treasury responded in its 

technical comments that we should “instead recommend that Congress 

consider discontinuing the requirement that Treasury produce the annual 

report altogether.” We continue to believe that the reports, with 

incorporated changes, would be useful to policy makers and program 

managers in examining their overall achievements of U.S. efforts to block 

terrorists’ assets.

Background Funds that support terrorist activity may come from illicit activities, such 

as counterfeit goods, contraband cigarettes, and illicit drugs, but are also 

generated through means such as fundraising by legal non-profit entities. 

According to State, it is the terrorists’ use of social and religious 

organizations and, to a lesser extent, state sponsorship, which 

differentiates their funding sources from those of traditional transnational 

organized criminal groups. While actual terrorist operations require only 

comparatively modest funding, international terrorist groups need 

significant amounts of money to organize, recruit, train, and equip new 

adherents and to otherwise support their activities.
Page 6 GAO-06-19 Terrorist Financing

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

terrorism or of those who encourage, plan, or engage in it.5

 Some 

international experts on money laundering continue to find that there is 

little difference in the methods used by terrorist groups or criminal 

organizations in attempting conceal their proceeds by moving them 

through national and international financial systems. These experts simply 

define the term “money laundering” as the processing of criminal proceeds 

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

Disguising the source of terrorist financing, regardless of whether the 

source is of legitimate or illicit origin, is important to terrorist financiers. If 

the source can be concealed, it remains available for future terrorist 

financing activities.

The President established a Policy Coordination Committee under the 

auspices of NSC to ensure the proper coordination of counter-terrorism 

financing activities and information sharing among all agencies including 

the departments of Defense, Justice, Homeland Security, State, and the 

Treasury, as well as the intelligence and enforcement community. 

Treasury’s OFAC is the lead U.S. agency for administering economic 

sanctions, including blocking the assets of terrorists designated either by 

the United States unilaterally, bilaterally, or as a result of UN Security 

Council Resolution designations.6

 

The international community has acted on many fronts to conduct antimoney laundering and counter-terrorism financing efforts. For example, 

the UN has adopted treaties and conventions that once signed, ratified, and 

implemented by member governments have the effect of law and enhance 

their ability to combat money laundering and terrorist financing. FATF, an 

intergovernmental body, has set internationally recognized standards for 

developing anti-money laundering and counter-terrorism financing regimes 

and conducting assessments of countries abilities to meet these standards. 

5

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

and Combating the 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). The difficult issue is that a 

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

political and national implications that differ from country to country. The United Nations 

continues to work to gain worldwide consensus on the definition of terrorism.

6

OFAC’s mandate is to require all U.S. persons, including financial institutions, to block 

targeted assets located in the United States or under the control of a U.S. person outside of 

the United States.
Page 7 GAO-06-19 Terrorist Financing

In addition, the Egmont Group serves as an international network fostering 

improved communication, information sharing, and training coordination 

for 101 Financial Intelligence Units (FIU) worldwide.7

 See appendix II for 

more information on key international entities and efforts. 

Countries vulnerable to terrorist financing activities generally lack key 

aspects of an effective counter-terrorism financing regime. According to 

State officials, a capable counter-terrorism financing regime consists of five 

basic elements: an effective legal framework, financial regulatory system, 

FIU, law enforcement capabilities, and judicial and prosecutorial 

processes. To strengthen anti-money laundering and counter-terrorism 

efforts worldwide, international entities such as the UN, FATF, World Bank 

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

implement practices and adopt laws that are consistent with international 

standards.8

U.S. Efforts to Combat 

Terrorist Financing 

Abroad Include a 

Number of 

Interdependent 

Activities

U.S. government agencies participate in a number of interdependent efforts 

to address the transnational challenges posed by terrorist financing, 

including terrorist designations, intelligence and law enforcement, 

international standard setting, and training and technical assistance.

U.S. Government Agencies 

Use Designations to Disrupt 

Terrorist Networks 

U.S. agencies participate in global efforts to publicly designate individuals 

and groups as terrorists and block access to their assets. According to 

Treasury officials, international cooperation to designate terrorists and 

block their assets is important because most terrorist assets are not within 

U.S. jurisdiction and may cross borders. According to U.S. government 

officials, public designations discourage further financial support and 

7

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.

8

International standards are represented by the United Nations International Convention for 

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

money laundering and nine special recommendations on terrorist financing. 
Page 8 GAO-06-19 Terrorist Financing

encourage other governments to more effectively monitor the activities of 

the designated individual or organization. Importantly, designations may 

lead to the blocking of terrorist assets, thereby impeding terrorists’ ability 

to raise and move funds and possibly forcing terrorist to use more costly, 

less efficient, more transparent, and less reliable means of financing. 

U.S. agencies led by State have worked with the UN to develop and support 

UN Security Council resolutions to freeze the assets of designated 

terrorists. For example, in October 1999, the Security Council adopted UN 

Security Council Resolution 1267, which called on all member states to 

freeze the assets of the Taliban, and in December 2000, the Security Council 

adopted Resolution 1333, imposing targeted sanctions against Osama bin 

Laden and al Qaeda. Then, in response to the attacks of September 11, 

2001, the UN Security Council adopted Resolution 1373, which required all 

UN member states to freeze funds and other financial assets or economic 

resources of persons who commit or attempt to commit, participate in, or 

facilitate terrorist acts. Later in January 2002 the UN Security Council 

adopted Resolution 1390, which consolidated the sanctions contained in 

Resolutions 1267 and 1333 against the Taliban, Osama bin Laden, and al 

Qaeda. In July 2005, the Security Council adopted Resolution 1617, which 

extends sanctions against al Qaeda and the Taliban and strengthens 

previous related resolutions. The UN has listed over 300 individuals and 

over 100 entities for worldwide asset blocks. Additionally, State’s Bureau of 

International Organization Affairs ensures designations related to al Qaeda, 

the Taliban, or Osama bin Laden are made worldwide obligations through 

the UN Security Council Resolution 1267 Committee and helped to craft 

and aided the adoption of UN Security Council Resolution 1373 and 

assisted in the creation of the UN Counterterrorism Committee to oversee 

its implementation. The United States has also participated in bilateral 

efforts to designate terrorists. For example, as of July 2005, the United 

States and Saudi Arabia jointly designated over a dozen Saudi-related 

entities and multiple individuals as terrorists or terrorist supporters, 

according to State. 

U.S. agencies including the Departments of Homeland Security (Homeland 

Security), Justice, State, and Treasury, and other law enforcement and 

intelligence agencies have implemented an interagency process to 

coordinate designating terrorists and blocking their assets. For example, 

State’s Economic Bureau coordinates policy implementation at the 

working level, largely through the network of Terrorism Finance 

Coordinating Officers located at embassies worldwide. Through this 

interagency coordination, the agencies work together to develop adequate 
Page 9 GAO-06-19 Terrorist Financing

evidence to target individuals, groups, or other entities suspected of 

terrorism or terrorist financing. As the lead agency for the blocking of 

assets of international terrorist organizations and terrorism-supporting 

countries, Treasury’s OFAC compiles the evidence needed to support 

terrorist designations conducted under the Secretary of the Treasury’s 

authority. State’s Office of the Coordinator for Counterterrorism follows 

the same process for terrorist designations conducted under the Secretary 

of State’s authority.9

 State’s Bureau of International Organization Affairs 

may present this evidence to the UN for consideration by its members. 

According to a senior State official, the agencies work together on a regular 

basis to examine and evaluate new names and targets for possible 

designation and asset blocking and to consider other actions such as 

diplomatic initiatives with other governments and exchanging information 

on law enforcement and intelligence efforts.10

U.S. Government Agencies 

Conduct Intelligence and 

Law Enforcement Activities 

Across Borders

The U.S. strategy to combat terrorist financing abroad includes law 

enforcement techniques and intelligence operations aimed at identifying 

criminals and terrorist financiers and their networks across borders in 

order to disrupt and dismantle their organizations. Such efforts include 

intelligence gathering, investigations, diplomatic actions, sharing 

information and evidence, apprehending suspects, criminal prosecutions, 

9

State and Treasury designations authorities are set forth in the Antiterrorism and Effective 

Death Penalty Act of 1996, Section 411 of the USA PATRIOT ACT of 2001, and relevant 

Executive orders [Executive Order (E.O.) 13224, as amended by E.O. 13268, Blocking 

Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, 

or Support Terrorism, and E.O. 12947, Prohibiting Transactions with Terrorists Who 

Threaten to Disrupt the Middle East Peace Process.] U.S. persons are prohibited from 

having dealings and must block the assets within U.S. jurisdiction of terrorists and terrorist 

groups that are designated by the departments of State and the Treasury, and those who are 

owned or controlled by, acting for or on behalf of, or materially, financially, or 

technologically assisting designated terrorists, terrorist groups, or their supporters.

10According to a State official, designation and asset blocking do not come at the expense of 

taking appropriate law enforcement action but frequently complement each other. There are 

cases where in which operational law enforcement action can be initiated quickly to track, 

prosecute, and shut down terrorists. In other cases, for instance when long-term 

investigations are under way, the better option may be to designate for asset blocking until 

law enforcement actions can be undertaken. 
Page 10 GAO-06-19 Terrorist Financing

asset forfeiture,11 and other actions designed to identify and disrupt the 

flow of terrorist financing. According to State, in order to achieve results, 

the intelligence community, law enforcement, and the diplomatic corps 

must develop and exploit investigative leads, employ advanced law 

enforcement techniques, and increase cooperation between domestic and 

foreign financial investigators and prosecutors. 

U.S. intelligence and law enforcement agencies work together and with 

foreign counterparts abroad, sometimes employing interagency or 

intergovernmental investigative taskforces.12 U.S. agencies work 

domestically and through their embassy attachés or officials or send agents 

on temporary duty to work with their foreign counterparts on matters of 

terrorist financing, including investigations. The Federal Bureau of 

Investigation is the lead domestic law enforcement agency on counterterrorism financing and makes extensive contributions to law enforcement 

efforts abroad, including through their legal attachés. Homeland Security’s 

Bureau of Immigration and Customs Enforcement attachés and agents 

conduct work in trade-based money laundering and transporting of cash 

across borders. The Internal Revenue Service’s Criminal Investigation 

Division has an expertise in nonprofit organizations. The Drug 

Enforcement Administration focuses on the narcotics trafficking nexus. 

Moreover, Treasury’s Financial Crimes Enforcement Network (FinCEN) is 

the U.S. government’s FIU and, as such, serves as the U.S. government’s 

central point for the collection, analysis, and dissemination of financial 

intelligence to authorized domestic and international law enforcement and 

other authorities. Financial intelligence is sent through secured lines 

among the FIUs belonging to the Egmont Group and shared with law 

enforcement as part of these investigations.

U.S. Government Agencies 

Are Active Participants in 

International Standards 

Setting Efforts 

The U.S. government has taken an active role in the development and 

implementation of international standards to combat terrorist financing. 

The UN conventions and resolutions and FATF recommendations on 

money laundering and terrorist financing have set the international 

standards for countries to develop the legal frameworks, financial 

11According to Justice, asset forfeiture remains the most powerful tool for disrupting and 

dismantling criminal enterprises of any nature, including terrorist financing.

12Agencies include relevant bureaus, divisions, and offices of the Departments of Defense, 

Homeland Security, Justice, State, and Treasury, and the intelligence community. 
Page 11 GAO-06-19 Terrorist Financing

regulation, financial intelligence unit, law enforcement, and 

judicial/prosecutorial elements of an effective counter-terrorist financing 

regime. Importantly, international cooperation is a cornerstone of these 

international standards. 

The United States has signed each of the relevant UN conventions and 

implemented its obligations pursuant to UN Security Council Resolutions 

related to anti-money laundering and counter-terrorism financing. 

According to State and Justice officials, they have provided training on 

implementing the conventions, and State officials have drafted UN Security 

Council Resolutions concerning terrorist financing. For example, 

according to State, officials from Treasury and State met with the UN 

Security Council Resolution 1267 Committee in January 2005 to detail U.S. 

implementation of the resolution’s asset freeze, travel ban, and arms 

embargo provisions and proposed several ideas aimed at reinforcing 

current sanctions including enhancing the sanctions list, promoting 

international standards, and improving bilateral and multilateral 

cooperation. 

The U.S. government also plays a major role within FATF to draft and 

support international standards to combat terrorist financing. Treasury’s 

Office of Terrorism and Financial Intelligence chairs the U.S. delegation to 

the FATF and has chaired or co-chaired several FATF working groups, such 

as the FATF Working Group on International Financial Institution Issues 

and the FATF Working Group on Terrorist Financing. Treasury also 

develops U.S. positions, represents the United States at FATF meetings, 

and implements actions domestically to meet the U.S. commitment to the 

FATF. Other components within Treasury, such as FinCEN, and other U.S. 

government agencies, including Homeland Security, Justice, and State, and 

the federal financial regulators, are also represented in the U.S. delegation 

to FATF. For example, according to department officials, the Department of 

Justice provided the initial draft for the original eight FATF special 

recommendations on terrorist financing. Additionally, Homeland Security 

gave significant input into Special Recommendation IX on Cash Couriers

due to the department’s expertise on detection of criminals’ cross-border 

movements of cash. Moreover, the U.S. government supports efforts to 

ensure that countries take steps to meet FATF standards. As a member of 

FATF, the United States participates in mutual evaluations in which each 

member’s compliance with the FATF recommendations is examined and
Page 12 GAO-06-19 Terrorist Financing

assessed by experts from other member countries.13 Treasury also leads 

U.S. delegations to FATF-style regional bodies to assist their efforts to 

support implementation of FATF recommendations and conduct mutual 

evaluations.

U.S. Government Agencies 

Provide Training and 

Technical Assistance to 

Vulnerable Countries

The U.S. strategy to combat terrorist financing abroad includes efforts to 

provide training and technical assistance to countries that it deems 

vulnerable to terrorist financing and focuses on the five basic elements of 

an effective anti-money laundering/counter-terrorism financing regime 

(legal framework, financial regulation, FIU, law enforcement, and judicial 

and prosecutorial processes). According to State, its Office of the 

Coordinator for Counterterrorism is charged with directing, managing, and 

coordinating all U.S. government agencies’ efforts to develop and provide 

counter-terrorism financing programs. The NSC established the State-led 

interagency TFWG to coordinate the delivery of training and technical 

assistance to the countries most vulnerable to terrorist financing.14 These 

countries are known as priority countries of which there are currently 

about two dozen.15 According to State’s Office of the Coordinator for 

Counterterrorism, foreign allies inundated the U.S. government with 

requests for assistance; therefore, TFWG developed a process to prioritize 

the use of limited financial and human resources. Although other 

vulnerable countries may be assisted through other U.S. government 

programs as well as through TFWG, according to State, based on NSC 

guidance, overall coordination is to take place through the TFWG process. 

(See appendix III for TFWG membership and process.) TFWG schedules 

assessment trips, reviews assessment reports, evaluates training proposals, 

and assigns resources for training. According to State officials, the U.S. 

13FATF mutual evaluations are conducted using a detailed methodology to assess 

compliance with the FATF recommendations on money laundering and terrorist financing. 

This methodology has been endorsed by the IMF, World Bank, and other FATF-style regional 

bodies. Ultimately, if a member country does not take steps to achieve compliance, 

membership in the organization can be suspended.

14The TFWG is co-chaired by State’s Office of the Coordinator for Counterterrorism and the 

Bureau for International Narcotics and Law Enforcement Affairs.

15The number of priority countries recently expanded from 19. According to State, TFWG 

conducts a process to identify priority countries for assistance based on consideration of 

intelligence community analysis of the vulnerabilities, importance to U.S. security, and 

capacity to absorb U.S. assistance in key states of anti-money laundering/terrorist financing 

concern. According to NSC guidance, all work in frontline countries is also to be 

coordinated within TFWG.
Page 13 GAO-06-19 Terrorist Financing

government has conducted 19 needs assessment missions and provided 

training and technical assistance in at least one of the five areas of an antimoney laundering/counter-terrorist financing regime to over 20 countries. 

U.S. offices and bureaus, primarily within the departments of the Treasury, 

Justice, Homeland Security, and State, and the federal financial regulators 

provide training and technical assistance to countries requesting assistance 

through various programs using a variety of methods primarily funded by 

State and Treasury. Methods include training 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 for a range of subject areas 

related to building effective counter-terrorism and anti-money laundering 

regimes. For example, Justice provides technical assistance on drafting 

legislation that criminalizes terrorist financing and anti-money laundering. 

Treasury’s Office of Technical Assistance (OTA) provides assistance to 

strengthen the financial regulatory regimes of countries. In addition, 

Treasury’s FinCEN provides training and technical assistance including 

assistance in the development of FIUs, information technology 

assessments, and specialized analytical software and analyst training for 

foreign FIUs. (See appendix IV for key U.S. counter-terrorism financing and 

anti-money laundering training and assistance for vulnerable countries.)

According to State, the U.S. government has also worked with international 

donors and organizations to leverage resources to build counter-terrorism 

financing regimes in vulnerable countries. According to State officials, they 

have worked with the United Kingdom, Australia, Japan, the European 

Union, the Organization of American States, the Asian Development Bank 

(ADB), IMF, and the World Bank on regional and country-specific projects. 

According to State, they have also funded the UN Global Program Against 

Money Laundering to place a mentor in one country for a year to assist with 

further development of its FIU. Similarly, Treasury officials said the 

department funded a resident advisor to the ADB as part of the 

Cooperation Fund for the Regional Trade and Financial Security Initiative. 

Treasury officials also state they have coordinated bilateral and 

international technical assistance with the FATF and the international 

financial institutions, such as the World Bank and IMF, which encompassed 

the drafting of legal frameworks, building necessary regulatory and 

institutional systems, and developing human expertise. According to State 

officials, efforts to share identified priorities and coordinate assistance by 

the major donor countries took a step forward at the June 2003 G-8 Summit 

with the establishment of the Counter-Terrorism Action Group, of which 
Page 14 GAO-06-19 Terrorist Financing

the United States is a member. The Counter-Terrorism Action Group has 

partnered with the FATF, providing that organization with a list of countries 

to which its members are interested in providing counter-terrorism 

financing assistance, so that the FATF could assess their technical 

assistance needs. FATF delivered those assessments to the CounterTerrorism Action Group in 2004 and, according to State officials, the 

donors are now beginning to follow through with assistance programs.

U.S. Government Lacks 

Integrated Strategy to 

Coordinate the 

Delivery of Training 

and Technical 

Assistance 

The U.S. government lacks an integrated strategy to coordinate the delivery 

of counter-terrorism financing training and technical assistance to 

countries vulnerable to terrorist financing. The effort does not have key 

stakeholder buy-in on roles and practices, a strategic alignment of 

resources with needs, or a process to measure and improve performance. 

As a result, the effort lacks effective leadership and consistent practices, an 

optimal match of resources to needs, and feedback on performance into 

the decision-making process.

U.S. Effort Lacks Buy-in 

from Key Stakeholder on 

Roles and Procedures 

U.S. interagency efforts to coordinate the delivery of counter-terrorism 

financing training and technical assistance lack key stakeholder 

involvement and acceptance of roles and procedures. As a result, the 

overall effort lacks effective leadership, which leads to less than optimal 

delivery of training and technical assistance to vulnerable countries, 

according to agency officials. We have previously found that building a 

collaborative management structure across participating organizations is 

an essential foundation for ensuring effective collaboration; and strong 

leadership is critical to the success of intergovernmental initiatives.16

Moreover, involvement by leaders from all levels is important for 

maintaining commitment. 

Treasury, a key stakeholder, does not accept State’s position that State 

leads all U.S. counter-terrorism financing training and technical assistance 

efforts and disagreements continue between some Treasury and State 

officials concerning current TFWG coordination efforts. According to State 

officials, State leads the U.S. effort to provide counter-terrorism financing 

16See 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.
Page 15 GAO-06-19 Terrorist Financing

training and technical assistance to all countries the U.S. government 

deems vulnerable to terrorist financing. State bases its position on 

classified NSC documents focused primarily on TFWG, State documents, 

and authorizing legislation. Treasury, an agency that also funds as well as 

provides training and technical assistance, asserts that State overstates its 

role; according to Treasury, State’s role is limited to coordinating other U.S. 

agencies’ provision of counter-terrorist financing training and technical 

assistance in commonly agreed upon TFWG priority countries, and that 

there are numerous other efforts outside of States’ purview.17 Justice, an 

agency that provides training and technical assistance and receives funding 

from State,18 states that it respects the role that State plays as the TFWG 

chairman and coordinator and states that all counter-terrorism financing 

training and technical assistance efforts should be brought under the 

TFWG decision-making process. While supportive, Justice’s statement 

demonstrates that the span of State’s role lacks clarity and recognition in 

practice. Two senior Treasury OTA officials said they strongly disagree with 

the degree of control State asserts over decisions at the State-led TFWG 

regarding the delivery of training and technical assistance. According to a 

Treasury Terrorist Financing and Financial Crimes (TFFC) Senior Policy 

Advisor who attends TFWG, in practice the TFWG process is broken and 

State creates obstacles rather than coordinates efforts. According to 

officials from State’s Office of the Coordinator for Counterterrorism, who 

chair TFWG, the only problems are the lack of Treasury’s TFFC and OTA 

officials’ acceptance of State’s leadership over counter-terrorism financing 

efforts and separate OTA funding.

Legislation authorizing the Departments of State and Treasury to conduct 

counter-terrorism financing training and technical assistance activities 

does not explicitly designate a lead agency. State derives its authority for 

these activities from the International Security and Development 

17According to Treasury, Treasury has developed numerous counter-terrorist financing 

programs to advance the core strategic aims identified in the 2003 National Money 

Laundering Strategy.

18According to Justice, a high level inter-departmental decision has assigned Justice the lead 

among the inter-agency community in drafting foreign criminal laws, reviewing the legal 

sufficiency of such laws, and providing prosecutorial training and development for the 

TFWG countries.
Page 16 GAO-06-19 Terrorist Financing

Cooperation Act of 1985,19 which mandates that the Secretary of State 

“coordinate” all international counter-terrorism assistance. Treasury’s 

primary authority for its assistance programs derives from a 1998 

amendment to the Foreign Assistance Act of 1961,20 which authorized the 

Secretary of the Treasury, after consultation with the Secretary of State and 

the Administrator of the U.S. Agency for International Development, to 

establish a program to provide economic and financial technical assistance 

to foreign governments and foreign central banks. This provision further 

mandates that State provide foreign policy guidance to the Secretary of the 

Treasury to ensure that the program is effectively integrated into the 

foreign policy of the United States. 

State and Treasury officials also disagree on procedures and practices for 

the delivery of counter-terrorism financing 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 were only pertinent to the TFWG priority 

countries and that there is no formal mandate or process to provide 

technical assistance to countries outside the priority list. Moreover, Justice 

officials told us that having procedures and practices for TFWG priority 

countries that differ from those for other vulnerable countries creates 

problems. This issue is further complicated by the lack of consistent and 

clear delineation between the countries covered by TFWG and other 

vulnerable countries also receiving counter-terrorism financing and antimoney laundering assistance funded through State and Treasury.21 Treasury 

officials told us that TFWG procedures and practices are overly structured 

and impractical and have not been updated to incorporate stakeholder 

concerns and that the overall process does not function as it should. State 

and Treasury officials cited numerous examples of disagreements on 

procedures and practices. For example: 

19Pub. L. 99-83. Sec. 502, codified at 22 USC 2349aa-7. See also Section 1(e) of the State 

Department Basic Authorities Act, as amended, codified at 22 U.S.C. 2651a(e).

20Pub. L. 105-277 (Div. A, Title II, sec. 589). This provision has been codified at 22 U.S.C. 

2151aa.

21According to State officials, the number of TFWG priority countries has grown and may 

change again in the future. During the course of our review the number of priority countries 

increased from 19 to about two dozen. According to Treasury, U.S. agencies were providing 

assistance under one set of procedures before these countries became TFWG priority 

countries and were subject to TFWG procedures. 
Page 17 GAO-06-19 Terrorist Financing

• State and Treasury officials disagree on the use of OTA funding and 

contractors. According to Treasury officials, OTA funding should 

primarily be used to support intermittent and long-term resident 

advisors, who are U.S. contractors, to provide technical assistance.22

According to State officials, OTA should supplement State’s program, 

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

• State, Justice, and Treasury officials disagree on whether it is 

appropriate for U.S. contractors to provide assistance in legislative 

drafting efforts on anti-money laundering and counter-terrorism 

financing laws. State officials cited NSC guidance that current Justice 

employees should be primarily responsible for working with foreign 

countries to assist in drafting such laws and voiced strong resistance to 

use of contractors. Justice officials strongly stated that contractors 

should not assist in drafting laws and gave several examples of past 

problems when USAID and OTA contractor assistance led to problems 

with the development of foreign laws. In two examples, Justice officials 

stated that USAID and OTA contractor work did not result in laws 

meeting FATF standards. In another example, Justice officials reported 

that a USAID contractor assisted in drafting an anti-money laundering 

law that had substantial deficiencies and as a result Justice officials had 

to take over the drafting process. According to OTA officials, their 

contractors provide assistance in drafting laws in non-priority countries 

and OTA makes drafts available to Justice and other U.S. agencies for 

review and comment and ultimately the host country itself is 

responsible for final passage of a law that meets international 

standards.23

22According to Treasury officials, OTA funds other Treasury offices conducting assessments 

or delivering training, such as TFFC and FinCEN in conjunction with its programs. Also 

according to Treasury, OTA has funded the expenses of other agencies to deliver technical 

assistance when it was in support of an existing work plan and to meet performance 

objectives. 

23According to OTA officials, Justice and other U.S. agencies do not always have the time 

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

problem will only be resolved 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 18 GAO-06-19 Terrorist Financing

• Treasury and State officials disagree on the use of confidentiality 

agreements24 between contractors and the foreign officials they advise. 

State officials said OTA’s use of confidentiality agreements impedes U.S. 

interagency coordination. State officials said the issue created a 

coordination problem in one country because a poorly written draft law 

could not be shared with other U.S. agencies for review and resulted in 

the development of an ineffective anti-money laundering law. Moreover, 

State officials said the continued practice could present future 

challenges. However, according to Treasury officials, this was an 

isolated case involving a problem with the contract and they said they 

have taken procedural steps to ensure the error is not repeated. 

• State and Treasury officials disagree on the procedures for conducting 

assessments of country’s needs for training and technical assistance. 

Moreover, Treasury stated that their major concern is with State’s 

coordination process for the delivery and timing of assistance. 

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.25 This is complicated 

when a vulnerable country becomes a priority country. For example, in 

November 2004 Treasury conducted an OTA financial assessment in a 

nonpriority frontline country and subsequently reached agreement with 

that country’s central bank minister to put a resident advisor in place to 

set up a FIU.26 However, in May 2005, State officials denied clearance for 

Treasury official’s visit to the country, which has created a delay of 2.5 

months (as of the end of July 2005). Treasury officials provided 

documentation to show that State was aware of their intention to visit 

the country in November 2004 to determine counter-terrorism and 

financial intelligence technical assistance needs, the official leading the 

24When 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. 

25A 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 non-government 

organizations.

26According to State TFWG officials, per NSC guidance, all work in frontline countries is to 

be coordinated within TFWG and some frontline countries are also priority countries. 

However, frontline countries are not subject to the same procedures as priority countries 

which are the main focus of TFWG, according to Department of State and Department of the 

Treasury officials. According to State TFWG officials, frontline countries contain terrorist 

cells.
Page 19 GAO-06-19 Terrorist Financing

segment of work was part of a larger on-going OTA effort in country, and 

that Treasury kept TFWG informed of the results of OTA’s work and 

continuing efforts. State officials expressed concern that the country 

had recently become a priority country. According to State TFWG 

officials, Treasury work needed to be delayed until a TFWG assessment 

could be completed. However, the U.S. embassy requested that Treasury 

proceed with its placement of a resident advisor and that the TFWG 

assessment be delayed.

U.S. Effort Does Not 

Strategically Align 

Resources with Need 

The U.S. government does not strategically align its resources with its 

mission to deliver counter-terrorism financing training and technical 

assistance. For strategic planning to be a dynamic and inclusive process, 

alignment of resources is a critical element.27 However, the U.S. 

government has no clear presentation of its available resources. Further, 

neither the U.S. government nor TFWG has made a systematic and 

objective assessment of the full range of available U.S. and potential 

international resources. As a result, decision-makers do not know the full 

range of resources available to match to the needs they have identified in 

priority countries and to determine the best match of remaining resources 

to needs for other vulnerable countries. 

U.S. Government Does Not Have 

Clear Presentation of Budget 

Resources Available

Because funding is embedded with anti-money laundering and other 

programs, the U.S. government does not have a clear presentation of the 

budget resources that the departments of State and the Treasury allocate 

for training and technical assistance to counter terrorist financing. State 

and Treasury receive separate appropriations that can be used for training 

and technical assistance either by the agencies themselves, by funding 

other agencies, or by funding contractors. State primarily transmits its 

training and technical assistance funds to other agencies while Treasury 

primarily employs short and long term advisors through personal service 

contracts.28 Although various officials told us that funding for counterterrorism financing training and technical assistance is insufficient, the 

lack of a clear presentation of available budget resources makes it difficult 

27See GAO, Executive Guide: Effectively Implementing the Government Performance and 

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

28OTA 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.
Page 20 GAO-06-19 Terrorist Financing

for decision-makers to determine the actual amount allocated to these 

efforts.29

State officials told us that they have two primary funding sources for State 

counter-terrorism financing training and technical assistance programs:

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

funding, which State’s Office of the Coordinator for Counterterrorism 

uses to provide counter-terrorism financing training and technical 

assistance to TFWG countries. Based on our analysis of State records, 

budget authority for this account included $17.5 million for counterterrorism financing training and technical assistance for fiscal years 

2002 to 2005.30

• International Narcotics Control and Law Enforcement funding, which 

State’s Bureau of International Narcotics Control and Law Enforcement 

uses to provide counter-terrorism financing and anti-money laundering 

training and technical assistance to a wide range of countries, including 

seven priority countries between fiscal years 2002 and 2005, as well to 

provide general support to multilateral and regional programs. Based on 

our analysis of State records, budget authority for this account included 

about $9.3 million for anti-money laundering, counter-terrorism 

financing, and related multilateral and regional activities for fiscal years 

2002-2005.31

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

counter-terrorism financing and anti-money laundering training and 

29TFWG expenditures are classified.

30An official from State’s Bureau of International Narcotics and Law Enforcement Affairs 

Office told us that according to Office of the Counterterrorism Coordinator officials, the 

fiscal year 2005 budget was reduced by $300,000 giving a total of $17.2 for fiscal years 2002-

2005.

31An 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.
Page 21 GAO-06-19 Terrorist Financing

technical assistance (e.g., single-course offerings or small-dollar programs) 

as part of regional, country-specific, or broad-based programs.32

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

assistance is funded through its Financial Enforcement program. Based on 

our analysis of Treasury records, Treasury OTA received budget authority 

totaling about $30.3 million for all financial enforcement programs for 

fiscal years 2002 to 2005. Counter-terrorism financing technical assistance 

and training funding is embedded within this program and cannot be 

segregated from anti-money laundering and other anti-financial crime 

technical assistance. One OTA official told us that as much as one third of 

the funds may be spent on programs countering financial crimes other than 

terrorist financing in any given year.

U.S. Government Does Not Have 

a Systematic and Objective 

Assessment of Suitability of 

Available U.S. Resources to Meet 

Needs

The U.S. government, including the TFWG, has not made a systematic and 

objective assessment of the suitability of available resources. According to 

State and Treasury officials, no systematic analysis has been done to 

evaluate the effectiveness of contractors and current employees in 

delivering various types of counter-terrorism training and technical 

assistance. Decisions at TFWG appear to be made based on anecdotal 

information rather than transparent and systematic assessments of 

resources. According to the State Performance and Accountability Report 

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

to create bottlenecks in meeting assistance needs of requesting nations, 

including priority countries. State co-chairs of TFWG repeated this concern 

to us. According to State officials, U.S. technical experts are particularly 

stretched because of their frequent need to split their time between 

assessment, training, and investigative missions. Moreover, officials from 

State’s Office of the Coordinator for Counterterrorism cited the lack of 

available staff as a reason for their slow start in disbursing funding at 

TFWG’s inception.33

Treasury agrees with State that there may be a shortage of anti-money 

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

provide technical assistance in foreign countries, however, according to 

32State’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.

33Department of State expenditures for priority countries are classified.
Page 22 GAO-06-19 Terrorist Financing

Treasury there is not a shortage of U.S. experts who are recent retirees 

from the same U.S. government agencies. According to OTA officials, OTA 

can provide contractors, who are primarily recently retired U.S. 

government employees with years of experience from the same agencies 

that provide training to priority countries through State funding.34 However, 

State officials stated strong opinions that current U.S. government 

employees are better qualified to provide counter-terrorism financing 

training and assistance than contractors. State added that it is TFWG’s 

policy that current U.S. government experts should be used whenever 

possible, and that, when they are not available, the use of contractors in 

those instances should be coordinated with the expert agency or office. 

State officials cited several examples of priority and non-priority countries 

in which they felt that the work of OTA’s resident advisors did not result in 

improvements. However, State officials praised the work of one OTA 

resident advisor in a priority country as a best practice, and other agency 

and foreign officials supported this view. Further, one State official 

commended the quality of OTA’s law enforcement technical assistance. 

Nonetheless, State officials repeatedly stated that they need OTA funding 

and not OTA-contracted staff to meet current and future needs.35

A senior OTA official said that OTA has sought actively to provide programs 

in more priority countries, but State, as chair of the TFWG, has not 

supported their efforts. Specifically, as a portion of funds that OTA has 

obligated for financial enforcement related assistance between fiscal years 

2002 and 2005, OTA has obligated approximately 11 percent to priority 

countries.36 State officials said that they welcomed more OTA participation 

in priority countries as part of the mix of applicable resources; however, 

they questioned whether OTA consistently provides high-quality assistance. 

Without a systematic assessment of the suitability of resources, the 

34According to OTA officials, their contractors must have relevant and recent active antimoney laundering experience, speak a foreign language, and have overseas experience. 

Senior Department of the Treasury officials support this claim and according to the NSC 

guidance, contractor personnel are to be used to supplement U.S. resources, with some 

caveats including that deference be given to those U.S. government institutions with 

substantive equities in the outcome of the missions.

35State 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. 

36This analysis pertains to the nineteen countries originally prioritized by the Terrorist 

Financing Working Group–it does not include the seven additional countries added in March 

2005.
Page 23 GAO-06-19 Terrorist Financing

decision-makers do not have good information to consider when 

determining the best mix of government employees and contractors to 

meet needs.

TFWG Has Not Made a 

Systematic and Objective 

Assessment of Potential 

International Resources to Meet 

Needs

TFWG has a stated goal to encourage allies and international entities to 

contribute resources to help build the counter-terrorism financing 

capabilities of vulnerable countries and coordinate training and technical 

assistance activities, but it has not developed a specific strategy to do so. 

No one office or organization has systematically consolidated and 

synthesized available information on the counter-terrorism financing 

training and technical assistance activities of other countries and 

international entities and integrated this information into its decisionmaking process. State and Treasury officials stated that instead they have 

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

resource sharing for training and technical assistance. Resource sharing is 

not considered a priority at TFWG meetings because U.S. officials state 

that interagency issues take higher priority and little time is left to discuss 

international activities. At one TFWG meeting, U.S. agency officials 

discovered that different countries and organizations were putting 

resources into a priority country without any central coordination. TFWG 

found that Australia was already providing assistance to the FIU in this 

priority country and cancelled the assistance it was planning to provide in 

this area. Without a systematic way to consolidate, synthesize, and 

integrate information about international activities 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, does not have a system in place to 

measure the performance results of its efforts to deliver training and 

technical assistance and to incorporate this information into integrated 

planning efforts. Without such a system the U.S. government cannot ensure 

that its efforts are on track. In August 2004, we found no system in place to 

measure the performance of U.S. training and technical assistance to 

combat terrorist financing. According to an official from Justice’s Office of 

Overseas Prosecutorial Development, Assistance and Training (OPDAT), 

an interagency committee led by OPDAT was set up to develop a system to 

measure results. In November 2004, OPDAT had an intern set up a database 

to track training and technical assistance provided through TFWG and 

related assistance results for priority countries. Because the database was 
Page 24 GAO-06-19 Terrorist Financing

not accessible to all TFWG members, OPDAT planned to serve as the focal 

point for entering the data collected by TFWG members.37

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

other information, including responding to questions concerning results by 

function which corresponded to the five elements of an effective counterterrorism financing 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, little progress has been made in further development of the 

performance measures as the responsible OPDAT official told us they were 

waiting to hire the next intern to input the data. As of July 2005, a year later, 

at our exit meetings with OPDAT and the State TFWG chairs, OPDAT was 

still waiting for an intern to be hired to complete the project. Further, 

OPDAT and State officials confirmed that the system had not yet been 

approved or implemented by TFWG and, therefore, TFWG did not have a 

system in place to measure the performance results of its training and 

technical assistance efforts and incorporate this information into its 

planning. 

Treasury Faces Two 

Accountability Issues 

Related to Its Terrorist 

Asset Blocking Efforts

Treasury faces two accountability issues related to its terrorist asset 

blocking efforts. First, Treasury’s OFAC reports on the nature and extent of 

terrorists’ U.S. assets do not provide Congress the ability to assess OFAC’s 

achievements. Second, Treasury lacks meaningful performance measures 

to assess its terrorist designation and asset blocking efforts. While Treasury 

has developed some limited performance measures, OFAC officials 

acknowledged that the measures could be improved and are in the process 

of developing more meaningful performance measures aided by the 

development of an OFAC-specific strategic plan. 

37It became unclear at our meeting with OPDAT and State as to whether the database should 

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

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

maintained that it was the listing of priority countries that was classified.
Page 25 GAO-06-19 Terrorist Financing

Treasury Reports Do Not 

Provide a Clear Explanation 

of the Nature and Extent of 

Asset Blocking 

Treasury’s annual reports to Congress on terrorists’ assets do not provide a 

clear description of the nature and extent of terrorists’ assets held in the 

United States. Federal law 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.”38 Each year Treasury’s 

OFAC provides Congress with a Terrorist Assets Report that offers a yearend snapshot of dollar amounts held in U.S. jurisdiction for two types of 

entities: international terrorists and terrorist organizations and terrorismsupporting governments and regimes. In 2004 OFAC reported that the 

United States blocked almost $10 million in assets belonging to seven 

international terrorist organizations and related designees.39 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.40

While each annual report provides year-end statistics for each of the 

different entities, they do not provide a clear description of the nature and 

extent of assets held in the United States.41 The reports do not make a 

comparison of blocked assets over the years or offer explanations for many 

38Section 304 of Public Law 102-138 as amended by Public Law 103-236 (22 U.S.C. § 2656g) 

requires Treasury to 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. 

39The 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.

40The 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.

41The Terrorist Assets Reports include information on “assets in the United States,” which 

include blocked assets held in the United States and in U.S. jurisdiction and nonblocked 

assets of terrorist countries and international terrorist designees. Nonblocked assets 

include those assets belonging to entities under sanctions programs that do not contain 

blocking provisions (Iran and Syria are the only two such entities identified in the 2004 

report). 
Page 26 GAO-06-19 Terrorist Financing

of the significant shifts between years.42 For example, the 2004 report 

stated that the United States held $3.9 million in al Qaeda assets, but it did 

not state that this represented a 400 percent increase in the value of al 

Qaeda assets held by the United State in 2003 or offer an explanation for 

this increase. In addition, the reports for years 2000 to 2004 offer no 

explanation for the decline in the value of U.S.-held Iranian government 

assets, which decreased from $347.5 million in 2000 to $82 million in 2004. 

While the 2000 report showed that the U.S. blocked $283,000 of Hizballah 

assets, future reports did not name Hizballah again or explain the status of 

these blocked assets. Senior OFAC officials acknowledge that the Terrorist 

Asset Reports do not provide a clear description of the nature and extent of 

assets blocked and is not useful to assessing progress on asset blocking. 

Treasury’s Performance 

Measures Do Not 

Adequately Assess Terrorist 

Designation and Asset 

Blocking Efforts

Treasury lacks effective performance measures to assess its terrorist 

designation and asset blocking efforts and demonstrate how these efforts 

contribute to Treasury’s goals of disrupting and dismantling terrorist 

financial infrastructures and executing the nation’s financial sanctions 

policies. Among the performance measures in Treasury’s 2004 Performance 

and Accountability Report that are related to designations and asset 

blocking are: 

• An increase in the number of terrorist finance designations for 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,43 and

• An estimated number of sanctioned entities no longer receiving funds 

from the United States.44

42According to OFAC, amounts blocked for terrorist entities may shift year to year for 

policy-acceptable 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. 

43Treasury’s 2004 Annual Performance and Accountability Report states that Treasury 

proposes to discontinue the use of this indicator in 2005.

44Sanctioned 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 27 GAO-06-19 Terrorist Financing

Treasury officials recognize that these measures do not adequately assess 

progress made in designating terrorists and blocking their assets. In 

addition, they note that these measures do not help assess how efforts to 

designate terrorists and block their assets contribute to Treasury’s overall 

goals of disrupting and dismantling terrorists’ financial infrastructure and 

executing the nation’s financial sanctions policies. First, these measures 

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, though OFAC officials acknowledged that they could have reported 

the data separately. Second, Treasury officials said that progress on asset 

blocking cannot simply be measured by totaling an amount of blocked 

assets at the end of the year, as the amounts may vary over the year as 

assets are blocked and unblocked. Third, Treasury has not developed 

measures to track other activities and benefits related to terrorist 

designations and asset blocking. For example, according to Treasury 

officials, Treasury’s underlying research to identify terrorist entities and 

their support systems is used to aid U.S. financial regulators, law 

enforcement, and other officials. However, Treasury does not have 

measures to track the use of this research when used for other agency 

activities, such as law enforcement investigations. 

Treasury officials also stated that terrorist designations have a deterrent 

value by discouraging further financial support. Measuring effectiveness in 

terms of deterrence can be very difficult, in part because the direct impact 

on unlawful activity is unknown, and in part because precise metrics are 

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

officials, measuring effectiveness can also be difficult because many of 

these efforts run across U.S. government agencies and foreign governments 

and are highly sensitive. Treasury’s annual report and strategic plan, 

however, do not address the deterrent value of designations or discuss the 

difficulties in measuring its effectiveness. According to the Government 

Performance and Results Act (GPRA) of 1993, 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.45 

45Pub.L. No. 103-62 (August 3, 1993). According to GPRA, 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. 
Page 28 GAO-06-19 Terrorist Financing

OFAC officials told us that they are in the process of developing better 

measures for assessing its efforts related to designations and asset 

blocking (both quantitative and qualitative) and achievements made. In 

addition, OFAC officials are in the process of developing a strategic plan to 

guide OFAC’s efforts. This strategic planning effort will help OFAC develop 

measures to assess how their activities, including terrorist designations 

and asset blocking, contribute to Treasury’s goals of disrupting and 

dismantling the financial infrastructure of terrorists and executing the 

nation’s financial sanctions policies.46 According to GPRA, executive 

agency strategic plans should include a comprehensive mission statement, 

a set of general goals and objectives and an explanation of how they are to 

be achieved, and a description of how performance goals and measures are 

related to the general goals and objectives of the program. OFAC officials 

said they have initiated efforts to develop an OFAC-specific strategic plan 

and performance measures. In their technical comments in response to our 

draft report, officials stated that the new performance measures will relate 

to OFAC’s research, outreach, and sanctions administration. Additionally, 

officials stated that they expect OFAC’s new performance measures to be 

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

by January 1, 2006. However, OFAC officials did not provide us with 

documentation to demonstrate that they have established milestones or a 

completion date to accomplish these projects. 

Conclusions Without a strategy that integrates the funding and delivery of training and 

technical assistance by State and Treasury’s OTA, the U.S. government will 

not maximize the use of its resources in the fight against terrorist financing. 

Meanwhile, due to disagreements over leadership and procedures, some 

energy and talent of staff are wasted trying to resolve interagency disputes. 

By making decisions based on anecdotal and informal information rather 

than transparent and systematic assessments, managers cannot effectively 

address problems before they grow and become crises. Moreover, given the 

scarce expertise available to address counter-terrorism financing, by not 

focusing efforts on how all available U.S. and international resources can 

be integrated into a U.S. strategy the U.S. government may miss 

opportunities to leverage resources. Finally, without dedicating resources 

to complete a performance measurement system, the State-led TFWG 

46Currently, OFAC’s efforts are guided by Treasury’s overall strategic plan. 
Page 29 GAO-06-19 Terrorist Financing

effort does not have the information needed for optimal coordination and 

planning. 

The lack of accountability for Treasury’s designations and asset blocking 

program creates uncertainty about the department’s progress and 

achievements. U.S. officials with oversight responsibilities need 

meaningful and relevant information to ascertain the progress, 

achievements, and weaknesses of U.S. efforts to designate terrorists and 

dismantle their financial networks as well as hold managers accountable. 

Meaningful information may also help these officials understand the 

importance of asset blocking in the overall U.S. effort to combat terrorist 

financing as well as make resource allocation decisions across programs. 

The development of a strategic plan for OFAC could help facilitate the 

development of meaningful performance measures. 

Recommendations for 

Executive Action

To ensure that U.S. government interagency efforts to provide counterterrorism financing training and technical assistance are integrated and 

efficient, particularly with respect to priority countries, we recommend 

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 does 

the following:

• designates leadership and provides for stakeholder involvement;

• includes a systematic and transparent assessment of U.S. government 

resources; 

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

to support the mission; and

• provides processes and resources for measuring and monitoring results, 

identifying gaps, and revising strategies accordingly.

To ensure a seamless campaign in providing counter-terrorism financing 

training and technical assistance programs to vulnerable countries, we 

recommend 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. The agreement 

should specify:
Page 30 GAO-06-19 Terrorist Financing

• the roles of each department, bureau, and office with respect to 

conducting needs assessments and delivering training and technical 

assistance; 

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

agreements in its contracts when providing counter-terrorism financing 

and anti-money laundering assistance; and

• coordination of funding and resources for counter-terrorism financing 

and anti-money laundering training and technical assistance. 

To ensure that policy makers and program managers are able to examine 

the overall achievements of U.S. efforts to block terrorists’ assets, we also 

recommend that the Secretary of the Treasury provide in its annual 

Terrorist Assets Report to Congress more complete information on the 

nature and extent of asset blocking in the United States. Specifically, the 

report should include such information as the differences in amounts 

blocked between the years, when and why assets were unfrozen, the 

achievements and obstacles faced by the U.S. government, and a classified 

annex if necessary. In addition, as part of the Treasury’s ongoing strategic 

planning efforts, we recommend that the Secretary of the Treasury 

complete efforts to develop an OFAC-specific strategic plan and 

meaningful performance measures by January 1, 2006, and December 1, 

2005 respectively, to guide and assess its asset blocking efforts.

Matter for 

Congressional 

Consideration

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

training and technical assistance abroad to combat terrorist financing and 

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

dedicated to this endeavor, Congress should consider requiring the 

Secretary of State and the Secretary of the Treasury to submit an annual 

report to Congress on the status of the development and implementation of 

the integrated strategic plan and Memorandum of Agreement.

Agency Comments and 

Our Evaluation

We provided draft copies of this report to the Departments of Defense, 

Homeland Security, Justice, State, and Treasury for review. We received 

comments from the Departments of Justice, State, and the Treasury (see 

apps. V, VI, and VII). We did not receive agency comments from the 

Departments of Defense or Homeland Security.
Page 31 GAO-06-19 Terrorist Financing

State did not agree with our recommendation that the Secretaries of State 

and Treasury, in consultation with the NSC and relevant government 

agencies, develop and implement an integrated strategic plan to coordinate 

the delivery of training and technical assistance abroad. State asserted that 

it has an integrated strategic plan and believes that a series of NSC 

documents and State’s Office of the Coordinator for Counterterrorism’s 

Bureau Performance Plan serve this purpose. We reviewed the NSC 

documentation which included minutes, an agreement, and conclusions, all 

of which serve as the NSC guidance for the TFWG. We also reviewed State’s 

Office of the Coordinator for Counterterrorism’s Bureau Performance Plan 

which we found included the Bureau’s objectives and performance 

measures for counterterrorist financing programs. We do not agree that 

this NSC guidance and Bureau performance plan constitute an integrated 

strategy that addresses the issues raised in this report because the effort, in 

practice, does not have key stakeholder buy-in on roles and practices, a 

strategic alignment of resources with needs, or a system to measure 

performance and use results and thus, an integrated strategy is still needed. 

It is also noteworthy that Treasury did not state in their comments that an 

integrated strategic plan existed or was in place, and they did not highlight 

these specific documents as serving this purpose. 

Treasury did not directly address our recommendation for an integrated 

strategic plan and proposed a new title, “Integrated U.S. Strategic Plan 

Needed to Improve the Coordination of Counterterrorism Finance Training 

and Technical Assistance to Certain Priority Countries,” which suggests 

agreement with the recommendation, but limits coverage of the integrated 

strategic plan to cover certain priority countries. Treasury also stated its 

agreement with the need for performance measures. It is useful to note that 

Treasury repeatedly placed the focus of efforts for improvement on priority 

countries and, as noted in its technical comments, does not recognize 

State’s leadership over the delivery of training and technical assistance 

other than to priority countries. For example, in Treasury’s technical 

comments Treasury stated that “State’s role is coordinating each U.S. 

government agency’s personnel and expertise to allow them to deliver the 

needed training in commonly agreed upon priority countries.” This 

comment further supports the need to better integrate efforts. Justice 

stated that with its role and expertise in providing training and technical 

assistance the fact that it was not included as an equal partner with State 

and Treasury in the recommendation was a critical omission. We note that 

Justice is one of a number of agencies referred to as relevant government 

agencies in the recommendation. Justice receives funding from State and, 
Page 32 GAO-06-19 Terrorist Financing

according to Justice, State has been supportive of Justice’s training and 

technical assistance efforts.

State did not agree with our recommendation that the Secretaries of State 

and Treasury enter into a Memorandum of Agreement concerning counterterrorism financing and anti-money laundering training and technical 

assistance. State stated that they have an interagency agreement. Based on 

our review, the classified document serving as an interagency agreement 

lacks clarity, familiarity, and buy-in from all levels of leadership within 

TFWG, particularly Treasury. State added that if there were to be a 

Memorandum of Agreement, they believe it should include all agencies 

engaged in providing training and technical assistance, not just State and 

Treasury. Treasury did not address this recommendation. However, 

Treasury stated that it wished to improve the effectiveness of U.S. technical 

assistance to combat terrorist financing particularly with respect to certain 

priority countries and stated that they would welcome suggestions as to 

how Treasury, together with relevant U.S. government agencies, can better 

achieve that goal. Justice again stated that the report’s critical flaw is 

omitting Justice from equal standing with State and Treasury. Justice noted 

that it is a key player and therefore should be involved in all interagency 

deliberations and decisions. We continue to believe that the Memorandum 

of Agreement should include the Secretaries of State and Treasury. State 

and Treasury both primarily fund and support U.S. government anti-money 

laundering and counter-terrorist financing training and technical assistance 

programs, and in Treasury’s case also provides considerable training and 

technical assistance abroad through current U.S. government employees 

and contractors. It is important that their programs and funding are 

integrated to optimize results. Other agencies are important stakeholders 

as they are recipients of this funding and support and should benefit from 

improved coordination between these two agencies.

In response to our recommendation that the Secretary of the Treasury 

provide more complete information on the nature and extent of asset 

blocking in the United States in its annual Terrorist Assets Report to 

Congress, Treasury responded in its technical comments that we should 

“instead recommend that Congress consider discontinuing the requirement 

that Treasury produce the annual report altogether.” Treasury officials also 

stated that the Terrorist Assets Reports, “based upon the input of 

numerous government agencies, provides a snapshot of the known assets 

held in the United States by terrorist-supporting countries and terrorist 

groups at a given point in time. These numbers may fluctuate during each 

year and between years for a number of policy-permissible reasons. The 
Page 33 GAO-06-19 Terrorist Financing

amount of assets blocked under a terrorism sanctions program is not a 

primary measure of a terrorism sanctions program’s effectiveness, and 

countries that have been declared terrorist supporting, and whose assets 

are not blocked by a sanctions program, are already weary of holding 

assets in the United States.” Moreover, in its technical comments Treasury 

states that Terrorist Assets Reports were “not mandated or designed as an 

accountability measure for OFAC’s effectiveness in assisting U.S. persons 

in identifying and blocking assets of persons designated under relevant 

Executive orders relating to terrorism.” We acknowledge that the language 

in the mandate for the Terrorist Assets Reports did not explicitly designate 

the reports as an accountability measure; however, nothing in the statutory 

language or in the congressional intent underlying the mandate precludes 

Treasury from compiling and reporting information in the manner in which 

we have suggested in this report. Furthermore, we believe that inclusion of 

comparative information and additional explanation regarding significant 

shifts between years will enhance program reporting and congressional 

oversight. Justice did not comment on this recommendation. State 

commented that this recommendation was incomplete in that it makes no 

mention of State’s role in blocking assets and promoting international 

cooperation to achieve it; however, we did not include State in this 

recommendation because it is the Secretary of the Treasury who is 

responsible for producing the annual Terrorist Assets Reports. 

Treasury’s technical comments state that “OFAC officials have advised that 

OFAC’s new performance measures are expected to be completed by 

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

by January 1, 2006.” We modified our recommendation to incorporate this 

new information. State suggested in its technical comments that we revise 

this recommendation to read, “In addition, we recommend that the 

Secretary of the Treasury, in consultation with the Departments of State 

and Justice and the other departments and agencies represented on the 

Terrorist Finance Policy Coordination Committee, establish milestones for 

developing a strategic plan and meaningful performance measures to guide 

and asses its asset blocking process.” We did not include the Secretary of 

State or the Attorney General in this recommendation because the scope of 

this objective focused solely on the accountability issues Treasury faces in 

its efforts to block terrorists’ assets. However, we recognize that State has 

an important role in targeting individuals, groups, or other entities 

suspected of terrorism or terrorist financing and added language to the 

section of the report on terrorist designations to clarify the roles of the 

multiple agencies involved in this effort. 
Page 34 GAO-06-19 Terrorist Financing

Treasury’s comments also suggested that we replace, in its entirety, our 

report’s third objective on the accountability of Treasury’s terrorist asset 

blocking efforts with revised text that Treasury officials had prepared. We 

reviewed the revised text and noted that many of Treasury’s points were 

already covered in our report. In some cases we added technical 

information to our report to help clarify the challenges that Treasury faces 

in assessing the impact of terrorist designation activities. 

None of these agencies provided comments on our matter for 

congressional consideration. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Attorney General, the 

Secretary of Defense, the Secretary of the Homeland Security, the 

Secretary of State, the Secretary of the Treasury, and interested 

congressional committees. We also will make copies available to others 

upon request. In addition the report will be available at no charge on the 

GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me 

at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix VIII. 

Loren Yager 

Director, International Affairs and Trade
Page 35 GAO-06-19 Terrorist Financing

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

Chairman of the Senate Caucus on International Narcotics Control, Charles 

E. Grassley; Senator Richard J. Durbin; and Chairman of the Senate 

Committee on Homeland Security and Governmental Affairs, Senator 

Susan M. Collins, asked us to (1) provide an overview of U.S. government 

efforts to combat terrorist financing abroad and (2) examine U.S. 

government efforts to coordinate the delivery of training and technical 

assistance to vulnerable countries. In addition, they requested that we 

examine specific accountability issues the Department of the Treasury 

(Treasury) faces in its efforts to block terrorists’ assets held under U.S. 

jurisdiction. 

To provide an overview of U.S. government efforts to combat terrorist 

financing abroad we reviewed documents and interviewed officials of U.S. 

agencies and departments and their bureaus and offices. We reviewed 

legislation, strategic plans, performance plans, and other agency 

documents, as well as relevant papers, studies, CRS and our own work to 

identify specific agency responsibilities and objectives. We assessed this 

information to identify key efforts and obtain further details and 

clarification and then validated and deconflicted information across 

agencies and departments in the United States and overseas in Indonesia, 

Pakistan, and Paraguay. We based country selection on Department of 

State (State) reporting of a nexus of terrorist financing, State reporting of 

assistance to the country, and the use of alternative financing mechanisms 

in the country. In each country, we discussed key challenges with 

responsible foreign and U.S. embassy officials, as well as with international 

entity officials.

We grouped the different types of responsibilities into four categories 

(designations, intelligence and law enforcement, standards setting, or 

training) and validated these categories during meetings with U.S. 

government officials. Our scope and methodology were limited by lack of 

complete access to sensitive and classified information. We reviewed 

documents or interviewed officials from the following U.S. departments 

and agencies:

• the Central Intelligence Agency;

• the Department of Defense (Defense Intelligence Agency);

• the Department of Homeland Security (Immigration and Customs 

Enforcement and Customs and Border Protection);
Appendix I

Objectives, Scope, and Methodology

Page 36 GAO-06-19 Terrorist Financing

• the Department of Justice (Bureau of Alcohol, Tobacco, Firearms, and 

Explosives; Criminal Division’s Asset Forfeiture and Money Laundering 

Section, Counter Terrorism Section, and Office of Overseas 

Prosecutorial Development, Assistance and Training; Drug Enforcement 

Administration; Federal Bureau of Investigation);

• the Department of State (Bureau of Economic and Business Affairs; 

Bureau for International Narcotics and Law Enforcement Affairs; Office 

of the Coordinator for Counterterrorism; Bureau of International 

Organizations; U.S. Mission to the United Nations; U.S. Agency for 

International Development; U.S. Missions to Indonesia, Pakistan, and 

Paraguay);

• the Department of the Treasury (Office of Technical Assistance, Office 

of Foreign Assets Control, Financial Crimes Enforcement Network, the 

Office of Terrorist Financing and Financial Crime, IRS’s Criminal 

Investigation Division).

We also verified U.S. government efforts through documentation or 

interviews with officials from international entities including the Financial 

Action Task Force on Money Laundering, the International Monetary Fund 

(IMF), the World Bank, the United Nations (UN), and the Organization of 

American States. 

To examine U.S. government efforts to coordinate the delivery of training 

and technical assistance to vulnerable countries, we examined relevant 

laws; reports to Congress; National Security Council (NSC) guidance; 

strategic plans; policies and procedures; budget and expenditure 

information; agency and international entity training data, documents, and 

reports; contractor resumes; communications between embassies and 

agencies; interagency communications; web site information; and GAO 

criteria for strategic planning, collaboration, and performance results.1

 In 

conjunction we interviewed U.S. agency officials involved in the Terrorist 

Financing Working Group (TFWG), U.S. officials involved in the delivery of 

training and technical assistance abroad, and others with a stake in 

counter-terrorism financing training and technical assistance, including 

1

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

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

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

p. 21 (Washington, D.C.: Oct. 10, 2003) for a discussion of key practices for interagency 

collaboration.
Appendix I

Objectives, Scope, and Methodology

Page 37 GAO-06-19 Terrorist Financing

officials of international entities, foreign government officials, and experts. 

We also observed a TFWG meeting. We requested an interview with the 

NSC, but the NSC declined our request. We assessed U.S. efforts to 

coordinate its efforts to deliver training and technical assistance to 

vulnerable countries using applicable elements of a sound strategic plan 

and identified those areas in which the U.S. effort is lacking. 

We assessed documentation and interviewed officials from:

• the Department of Homeland Security (Immigration and Customs 

Enforcement);

• the Department of Justice (Criminal Division’s Asset Forfeiture and 

Money Laundering Section, Counter Terrorism Section, and Office of 

Overseas Prosecutorial Development, Assistance and Training; Federal 

Bureau of Investigation);

• the Department of State (Bureau for International Narcotics and Law 

Enforcement Affairs, Office of the Coordinator for Counter-terrorism, 

Bureau of International Organizations, U.S. Mission to the United 

Nations, U.S. Agency for International Development; three U.S. 

embassies abroad)

• the Department of the Treasury (Office of Technical Assistance, Office 

of Foreign Assets Control, Financial Crimes Enforcement Network, the 

Executive Office for Terrorist Financing and Financial Crime, IRS’s 

Criminal Investigation Division);

• the Financial Action Task Force on Money Laundering (FATF);

• International financial institutions including the International Monetary 

Fund (IMF), World Bank, Asian Development Bank (ADB); and InterAmerican Development Bank; 

• the United Nations (UN), including the Counter Terrorism Committee 

and relevant UN Security Council resolutions sanctions committees and 

monitoring mechanisms; and

• the Organization of American States. 

To examine specific issues the U.S. government faces in holding Treasury 

accountable for its efforts to block terrorists’ assets held in the United 
Appendix I

Objectives, Scope, and Methodology

Page 38 GAO-06-19 Terrorist Financing

States, we interviewed officials from the Department of the Treasury’s 

Office of Foreign Assets Control (OFAC) in Washington, D.C. We reviewed 

applicable laws, regulations, and executive orders to determine reporting 

requirements. In addition, we examined OFAC’s annual Terrorist Assets 

Reports for calendar years 1999 to 2004. Our examination focused on 

comparing the nature and extent of blocked assets by year for OFAC’s three 

programs targeting international terrorists and terrorist organizations and 

five programs targeting terrorism-supporting governments and regimes to 

understand how OFAC communicated changes in an organization or 

country’s blocked assets over time. We also compared and contrasted the 

performance measures for designation and asset blocking included in 

Treasury’s Strategic Plan for fiscal years 2003-2008 with those indicated in 

its Annual Performance and Accountability Report fiscal years 2003 and 

2004. We reviewed testimony and speeches by OFAC and other Treasury 

officials, as well as information from OFAC’s website, to learn more about 

key issues and progress made on designating terrorists and blocking their 

assets. We reviewed relevant information from the Congressional Research 

Service and our own work. To assess the extent that Treasury’s 

performance measures for designating terrorists and blocking assets 

focused on factors critical to assessing performance, we reviewed a range 

of our previous reports examining factors that were necessary components 

for meaningful measures.2

We performed our work from March 2004 through July 2005 in accordance 

with generally accepted government auditing standards.

2

The GAO reports we reviewed include: GAO, Results-Oriented Government: GPRA Has 

Established a Solid Foundation for Achieving Greater Results, GAO-04-38 (Washington, 

D.C.: March 10, 2004) and GAO, Agency Performance Plans: Examples of Practices That 

Can Improve Usefulness to Decision makers, GAO/GGD/AIMD-99-69 (Washington, D.C.: 

February 26, 1999).
Page 39 GAO-06-19 Terrorist Financing

Appendix II

Key International Counter-Terrorism 

Financing and Anti-Money Laundering Efforts ApendxiI

Entity and importance Efforts

International standard-setters

United Nations (UN): Of the key 

international entities, the UN has the 

broadest range of membership and the 

ability to adopt treaties or international 

conventions that have the effect of law in a 

country once signed and ratified, 

depending on a country’s constitution. 

United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic 

Substances (1988) (The Vienna Convention): Defines concept of money laundering. 

Most widely accepted definition. Calls upon countries to criminalize the activity. Limited to 

drug trafficking as predicate offensea and does not address the preventative aspects.

International Convention Against Transnational Organized Crime (2000) (The Palermo 

Convention): Came into force in September 2003. Obligates ratifying countries to 

criminalize money laundering via domestic law and include all serious crimes as predicate 

offenses of money laundering, whether committed in or outside of the country, and permit 

the required criminal knowledge or intent to be inferred from objective facts; establish 

regulatory regimes to deter and detect all forms of money laundering, including customer 

identification, recordkeeping, and reporting of suspicious transactions; authorize the 

cooperation and exchange of information among administrative, regulatory, law 

enforcement, and other authorities, both domestically and internationally; consider the 

establishment of a financial intelligence unit to collect, analyze, and disseminate information; 

and promote international cooperation. 

International Convention for the Suppression of the Financing of Terrorism (1999):

Came into force in 2002. Requires ratifying countries to criminalize terrorism, terrorist 

organizations, and terrorist acts. Unlawful for any person to provide or collect funds with the 

intent that the funds be used for, or knowledge that the funds be used to conduct certain 

terrorist activity. Encourages states to implement measures that are consistent with FATF 

Recommendations.

Security Council Resolutions 1267 and 1390: Adopted October 15, 1999 and January 16, 

2002, respectively. Obligates member states to freeze assets of individuals and entities 

associated with Osama bin Ladin or members of al Qaeda or the Taliban that are included 

on the consolidated list maintained and regularly updated by the UN 1267 Sanctions 

Committee.

Security Council Resolution 1373: Adopted September 28, 2001, in direct response to 

events of September 11, 2001. Obligates countries to criminalize actions to finance terrorism 

and deny all forms of support, freeze funds or assets of persons, organizations, or entities 

involved in terrorist acts; prohibit active or passive assistance to terrorists; and cooperate 

with other countries in criminal investigations and sharing information about planned terrorist 

acts.

Security Council Resolution 1617: Adopted July 29, 2005. Extended sanctions against al 

Qaeda, Osama bin Laden, and the Taliban, and strengthened previous related resolutions. 

Convention Against Corruption (2003) Not yet in force--First legally binding multilateral 

treaty to address on a global basis the problems relating to corruption. As of July 11, 2005, 

29 countries had become parties to the Convention (30 are required for the Convention to 

enter into force). Requires parties to institute a comprehensive domestic regulatory and 

supervisory regime for banks and financial institutions to deter and detect money laundering. 

Regime must emphasize requirements for customer identification, record keeping, and 

suspicious transaction reporting. 
Appendix II

Key International Counter-Terrorism 

Financing and Anti-Money Laundering 

Efforts

Page 40 GAO-06-19 Terrorist Financing

Global Program Against Money Laundering: research and assistance project offering 

technical expertise, training, and advice to member countries on anti-money laundering and 

counter-terrorism financing upon request to raise awareness; help create legal frameworks 

with the support of model legislation; develop institutional capacity, in particular with the 

creation of financial intelligence units; provide training for legal, judicial, law enforcement, 

regulators and private financial sectors including computer-based training; promote regional 

approach to addressing problems; maintain strategic relationships; and maintain database 

and perform analysis of relevant information.

The Counter Terrorism Committee (CTC): Established via Security Council 

Resolution1373 to monitor the performance of the member countries in building a global 

capacity against terrorism. Countries submit a report to the CTC on steps taken to 

implement resolution’s measures and report regularly on progress. CTC asked each country 

to perform a self-assessment of existing legislation and mechanism to combat terrorism in 

relation to Resolution 1373. CTC identifies weaknesses and facilitates assistance, but does 

not provide direct assistance.

Financial Action Task Force on Money 

Laundering (FATF): Formed in 1989 by 

the G-7 countries,b

 FATF is an 

intergovernmental body comprised of 31 

member jurisdictions and two regional 

organizations whose purpose is to develop 

and promote policies, both at the national 

and international levels, to combat money 

laundering and the financing of terrorism. 

Its mission expanded to include counterterrorism financing in October 2001. FATF 

has developed multiple partnerships with 

international and regional organizations in 

order to constitute a global network of 

organizations against money laundering 

and terrorist financing. 

The 40 Recommendations on Money Laundering: Constitute a comprehensive 

framework for anti-money-laundering designed for universal application. Permit country 

flexibility in implementing the principles according to the country’s own particular 

circumstances and constitutional requirements. Although not binding as law, have been 

widely endorsed by international community and relevant organizations as the international 

standard for anti-money laundering. 

The Special Recommendations on Terrorist Financing: FATF adopted eight special 

recommendations and recently added a ninth. FATF members use a self-assessment 

questionnaire of their country’s actions to come into compliance. The nine deal with both 

formal banking and non-banking systems: 

Ratification and implementation of UN instruments

Criminalize the financing of terrorism and associated money laundering

Freeze and confiscate terrorist assets

Reporting suspicious transactions related to terrorism

International co-operation

Impose anti-money laundering requirements on alternative remittance systems 

Strengthen customer identification measures in international and domestic wire transfers

Ensure that non-profit organizations are not misused 

Detecting and preventing cross-border transportation of cash by terrorists and other 

criminals. 

(Continued From Previous Page)

Entity and importance Efforts
Appendix II

Key International Counter-Terrorism 

Financing and Anti-Money Laundering 

Efforts

Page 41 GAO-06-19 Terrorist Financing

The Non-Cooperative Countries and Territories (NCCT) List: One of FATF’s objectives 

is to promote the adoption of international anti-money laundering/counter-terrorism financing 

standards by all countries. Thus, its mission extends beyond its own membership, although 

FATF can only sanction its member countries and territories. Thus, in order to encourage all 

countries to adopt measures to prevent, detect, and prosecute money launderers (i.e., to 

implement the 40 Recommendations) FATF adopted a process to identify non-cooperative 

countries and territories that serve as obstacles to international cooperation in this area and 

place them on a public list. An NCCT country is encouraged to make rapid progress in 

remedying its deficiencies or counter-measures may be imposed which may include specific 

actions by FATF member countries. Most countries make a concerted effort to be taken off 

the NCCT list because it causes significant problems to their international business and 

reputation.

Monitoring Member’s Progress: Facilitated by a two-stage process: self assessments and 

mutual evaluations. In the self-assessment stage, each member annually responds to a 

standard questionnaire regarding its implementation of the recommendations. In the mutual 

evaluation stage, each member is examined and assessed by experts from other member 

countries. Ultimately, if a member country does not take steps to achieve compliance, 

membership in the organization can be suspended. There is, however, a sense of peer 

pressure and a process of graduated steps before these sanctions are enforced. 

Methodology for Anti-money laundering/Counter-terrorist Financing Assessments: 

FATF developed and adopted a comprehensive mutual assessment methodology for the 40 

and special recommendations based on consultations with IMF, World Bank, and other 

standard setters, which provides international agreement and cooperation among standard 

setters and others for a methodology for assessing anti-money-laundering/counter terroristfinancing regimes based on the 40 and special recommendations.

Typologies Exercise: FATF issues annual reports on developments in money laundering 

through its typologies report, which keeps countries current with new techniques or trends.

International capacity-builders

International Monetary Fund (IMF) and 

World Bank: World Bank helps countries 

strengthen development efforts by 

providing loans and technical assistance 

for institutional capacity building. The IMF 

mission involves financial surveillance and 

the promotion of international monetary 

stability.

Research and Analysis and Awareness-Raising: Conducted work on international 

practices in implementing anti-money laundering and counter-terrorist financing regimes; 

issued Analysis of the Hawala System discussing implications for regulatory and 

supervisory response; and developed comprehensive reference guide on anti-moneylaundering/counter terrorist-financing presenting all relevant information in one source. 

Conducted Regional Policy Global Dialogue series with country, World Bank and IMF, 

development banks, and FATF-style regional bodies covering challenges, lessons learned, 

and assistance needed; and developed Country Assistance Strategy that covers anti-money 

laundering and counter-terrorism in greater detail in countries that have been deficient in 

meeting international standards.

Assessments: Worked in close collaboration with FATF and FATF-style regional bodies to a 

produce single comprehensive Methodology for anti-money laundering/counter-terrorist 

financing assessments; and engaged in a successful pilot program of assessments of 

country compliance with FATF recommendations. In 2004, adopted the FATF 40 and special 

9 recommendations as one of the 12 standards and codes for which Reports on the 

Observance of Standards and Codes can be prepared and made anti-money 

laundering/counter-terrorist financing assessments a regular part of IMF/World Bank work. 

World Bank and IMF staff participated in 58 of the 92 assessments conducted since 2002.

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Entity and importance Efforts
Appendix II

Key International Counter-Terrorism 

Financing and Anti-Money Laundering 

Efforts

Page 42 GAO-06-19 Terrorist Financing

Training and Technical Assistance: Organized training conferences and workshops, 

delivered technical assistance to individual countries, and coordinated technical assistance. 

Substantially increased technical assistance to member countries on strengthening legal, 

regulatory, and financial supervisory frameworks for anti-money-laundering/counter terroristfinancing. In 2002-2003 there were 85 country-specific technical projects benefiting 63 

countries and 32 projects reaching more than 130 countries. Between January 2004 and 

June 2005 the World Bank and IMF delivered an additional 210 projects. In 2004, IMF and 

the World Bank decided to expand the anti-money laundering/counter-terrorist financing 

technical assistance work to cover the full scope of the expanded FATF recommendations 

following the successful pilot program of assessments.

Egmont Group of Financial Intelligence 

Units: A forum for Financial Intelligence 

Units (FIU) to improve support for their 

respective national anti-money laundering 

and counter-terrorism financing programs. 

In June 2005 there were 101 member 

countries. The group fosters development 

of FIUs and the exchange of critical 

financial data among the FIUs.

The group is involved in improving interaction among FIUs in the areas of communications, 

information sharing, and training coordination. The Egmont Group’s Principles for 

Information Exchange Between Financial Intelligence Units for Money Laundering Cases

include conditions for the exchange of information, limitation on permitted uses of 

information, and confidentiality. Members of the Egmont Group have access to a secure 

private website to exchange information. As of 2004, 87 of the members were connected to 

the secure web. The group has produced a compilation of one hundred sanitized cases 

about the fight against money laundering from its member FIUs. Within the group there are 

five working groups—Legal, Outreach, Training/Communications, Operations, and 

Information Technology. The Egmont group is focusing on expanding its membership in the 

Africa and Asia regions. 

Counterterrorism Action Group (CTAG): 

CTAG includes the G-8 (Canada, France, 

Germany, Italy, Japan, Russia, the United 

Kingdom, and the United States) as well 

as other states, mainly donors, to expand 

counterterrorism capacity building 

assistance.

CTAG goals are to analyze and prioritize needs and expand training and assistance in 

critical areas including counter-terrorism financing and other counterterrorism areas. CTAG 

also plans to work with the UN Counter-Terrorism Committee to promote implementation of 

Security Council Resolution 1373. In 2004, CTAG coordinated with FATF to obtain 

assessments of countries CTAG identified as priorities.

Regional entities

FATF-Style Regional Bodies (FSRBs): 

Modeled after FATF, these groups have 

anti-money-laundering/counter terroristfinancing efforts as their objectives.

FSRBs encourage implementation and enforcement of FATF’s 40 recommendations and 

special recommendations. They administer mutual evaluations of their members, which are 

intended to identify weaknesses so that the member may take remedial action. They provide 

members information about trends, techniques, and other developments for money 

laundering in their typology reports. The size, sophistication, and the degree to which the 

FSRBs can carry out their missions vary greatly. The FSRBs are Asia/Pacific Group on 

Money Laundering, Caribbean Financial Action Task Force, Council of Europe MONEYVAL, 

Eastern and Southern African Anti-Money Laundering Group, Eurasian Group on 

Combating Money Laundering and Financing of Terrorism, Financial Action Task Force 

Against Money Laundering in South America, Middle East and North Africa Financial Action 

Task Force, Inter-governmental Action Group Against Money Laundering (West Africa).

Organization of American States—

CICAD: Regional body for security and 

diplomacy in the Western Hemisphere with 

34 member states.

In 2004, the commission amended model regulations for the hemisphere to include 

techniques to combat terrorist financing, development of a variety of associated training 

initiatives, and a number of anti-money laundering/counter-terrorism meetings. Its Mutual 

Evaluation Mechanism included updating and revising some 80 questionnaire indicators 

through which the countries mutually evaluate regional efforts and projects. Worked with 

International Development Bank and France to provide training for prosecutors and judges. 

Based on agreement with Inter-American Development Bank for nearly $2 million, 

conducting two-year project to strengthen FIUs in eight countries. Evaluating strategic plans 

and advising on technical design for FIUs in region.

(Continued From Previous Page)

Entity and importance Efforts
Appendix II

Key International Counter-Terrorism 

Financing and Anti-Money Laundering 

Efforts

Page 43 GAO-06-19 Terrorist Financing

Source: GAO, using information from FATF, United Nations, U.S. Department of State, U.S. Department of Treasury, and World 

Bank/IMF, Egmont Group, Asian Development Bank, Basel Committee on Banking Supervision, and CTAG.

a

A predicate offense is the underlying crime that produces the proceeds that are the subject of money 

laundering.

b

G-7 is short for “Group of 7” whose members are Canada, France, Germany, Japan, Italy, the United 

Kingdom, and the United States. 

Asian Development Bank (ADB):

Established in 1966, the ADB is a 

multilateral development finance institution 

dedicated to reducing poverty in Asia and 

the Pacific. The bank is owned by 63 

members, mostly from the region and 

engages in mostly public sector lending in 

its developing member countries. 

According to the ADB, it was one of the first multilateral development banks to address the 

money laundering problem, directly and indirectly, through regional and country assistance 

programs. The ADB Policy Paper, adopted on April 1, 2003, has three key elements: (1) 

assisting developing member countries in establishing and implementing effective legal and 

institutional systems for anti-money laundering and counter-terrorism financing, (2) 

increasing collaboration with other international organizations and aid agencies, and (3) 

strengthening internal controls to safeguard ADB's funds. The bank provides loans and 

technical assistance for a broad range of development activities including strengthening and 

developing anti-money laundering regimes.

Industry sector standard-setters

Basel Committee on Banking 

Supervision: Established by the central 

bank Governors of the Group of Ten 

countries in 1974, formulates broad 

supervisory standards and guidelines and 

recommends statements of best practice 

in the expectation that individual 

authorities will take steps to implement 

them through detailed arrangements - 

statutory or otherwise - which are best 

suited to their own national systems.

Three of the Basel Committee’s supervisory standards and guidelines concern money 

laundering issues: (1) Statement on Prevention of Criminal Use of the Banking System for 

the purpose of Money Laundering (1988), which outlines basic policies and procedures that 

bank managers should ensure are in place; (2) Core Principles for Effective Banking 

Supervision (1997), which provides a comprehensive blueprint for an effective bank 

supervisory system and covers a wide range of topics including money laundering; and (3) 

Customer Due Diligence (2001), which also strongly supports adoption and implementation 

of the FATF recommendations.

International Association of Insurance 

Supervisors: Established in 1994, an 

organization of supervisors from more 

than 100 different countries and 

jurisdictions that promotes cooperation 

among regulators, sets international 

standards, provides training, and 

coordinates with other financial sectors.

Anti-Money Laundering Guidance Notes for Insurance Supervisors and Insurance Entities

(2002) is a comprehensive discussion on money laundering in the context of the insurance 

industry. Guidance is intended to be implemented by individual countries taking into account 

the particular insurance companies involved, the products offered within the country, and the 

country’s own financial system. Consistent with FATF 40 Recommendations and Basel Core 

Principles for Effective Banking Supervision. Paper was updated as Guidance Paper on AntiMoney Laundering and Combating the Financing of Terrorism (2004) with cases of money 

laundering and terrorist financing. A document based upon these cases is posted on Web 

site and updated, and new cases that might result from the FATF typology project are to be 

added. 

International Organization of Securities 

Commissions (IOSCO): Members 

regulate and administer securities and 

laws in their respective 105 national 

securities commissions. Core objectives 

are to protect investors; ensure that 

markets are fair, efficient, and transparent; 

and reduce systematic risk.

Passed “Resolution on Money Laundering” in 1992. Principles on Client Identification and 

Beneficial Ownership for the Securities Industry (2004) is a comprehensive framework 

relating to customer due diligence requirements and complementing the FATF 40 

recommendations. IOSCO and FATF have discussed further steps to strengthen 

cooperation among FIUs and securities regulators in order to combat money laundering and 

terrorist financing.

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Entity and importance Efforts
Page 44 GAO-06-19 Terrorist Financing

Appendix III

Terrorist Financing Working Group 

Membership and Program Development 

Process ApendxiI

According to the State, TFWG is made up of various agencies throughout 

the U.S. government and convened in October 2001 to develop and provide 

counter-terrorism finance training to countries deemed most vulnerable to 

terrorist financing. TFWG is co-chaired by State’s Office of the Coordinator 

for Counterterrorism and the Bureau for International Narcotics and Law 

Enforcement Affairs and meets on a bi-weekly basis 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 the TFWG include:

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 Oversea 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
Appendix III

Terrorist Financing Working Group 

Membership and Program Development 

Process

Page 45 GAO-06-19 Terrorist Financing

Other Participants National Security Council

Central Intelligence Agency

Federal Deposit Insurance Corporation

Federal Reserve Board

TFWG Program 

Development Process 

According to State the process is as follows:

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

State, Treasury, and the Department of Justice (Justice), identify and 

prioritize countries needing the most assistance to deal with terrorist 

financing. 

2. Evaluate priority countries’ counter-terrorism finance and anti-money 

laundering regimes with Financial Systems Assessment Team (FSAT) 

onsite visits or Washington tabletop exercises. State-led FSAT teams of 

6-8 members include technical experts from State, Treasury, Justice, 

and other regulatory and law enforcement agencies. The FSAT onsite 

visits take about one 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 vulnerabilities to terrorist 

financing and make recommendations for training and technical 

assistance to address these weaknesses. The formal report is shared 

with the host government to gauge its receptivity and to coordinate U.S. 

offers of assistance. 

4. Develop 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 

trade-based money laundering for over/under invoicing schemes for 

money laundering or terrorist financing. 

5. Provide sequenced training and technical assistance to priority 

countries in-country, regionally, or in the United States. 
Appendix III

Terrorist Financing Working Group 

Membership and Program Development 

Process

Page 46 GAO-06-19 Terrorist Financing

6. Encourage burden sharing with our allies, international financial 

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

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

UN Counterterrorism Committee, FATF on Money Laundering, or the 

Group of Eight (G-8) to capitalize on and maximize international efforts 

to strengthen counter-terrorism finance regimes around the world.
Page 47 GAO-06-19 Terrorist Financing

Appendix IV

Key U.S. Counter-Terrorism Financing and 

Anti-Money Laundering Training and 

Technical Assistance for Vulnerable CountriesApendxiIV

Department/

agency Bureau/division/office Description of effort

State, Justice, 

Homeland 

Security, and the 

Treasury

Multiple International Law Enforcement Academies (ILEAs). Regional academies led by 

U.S. agencies partnering with foreign governments to provide law enforcement 

training including anti-money laundering and counter-terrorism financing. ILEAs in 

Gaborone, Botswana; Bangkok, Thailand; Budapest, Hungary; and Roswell, New 

Mexico, train over 2,300 participants annually on topics such as criminal 

investigations, international banking and money laundering, drug-trafficking, human 

smuggling, and cyber-crime.

Board of 

Governors of the 

Federal Reserve 

System

Provides financial regulatory training and technical assistance to central banks, 

foreign banking supervisors, and law enforcement officials in Washington, D.C. and 

abroad, and participates in U.S. interagency assessments of foreign government 

vulnerabilities.

Federal Deposit 

Insurance 

Corporation

Provides financial regulatory training through seminars and regional conference 

presentations in Washington, D.C. and abroad, and participates in U.S. interagency 

assessments of foreign government vulnerabilities.

Homeland Security Bureau of Customs and Border 

Protection and Bureau of 

Immigration and Customs 

Enforcement

Provides law and border enforcement training and technical assistance to foreign 

governments, in conjunction with other U.S. law enforcement agencies and the 

ILEAs. Participates in assessments of foreign countries in the law and border 

enforcement arena.

Justice Asset Forfeiture and Money 

Laundering Section

Assists in the drafting of money laundering, terrorist financing, and asset forfeiture 

legislation compliant with international standards for international and regional 

bodies and foreign governments. Provides legal training and technical assistance 

to foreign prosecutors and judges, in conjunction with Justice’s Office of Overseas 

Prosecutorial Development, Training and Assistance. Sponsors conferences and 

seminars on transnational financial crimes such as forfeiting the proceeds of 

corruption, human trafficking, counterfeiting, and terrorism. Participates in U.S. 

interagency assessments of countries’ capacity to block, seize, and forfeit terrorist 

and other criminal assets.

Counter Terrorism Section Provides investigative and prosecutorial training and technical assistance to foreign 

investigators, prosecutors, and judges in conjunction with the Office of Overseas 

Prosecutorial Development, Training, and Assistance and other Department of 

Justice components.

Drug Enforcement 

Administration 

Provides law enforcement training on international asset forfeiture and anti-money 

laundering to foreign governments, in conjunction with other Department of Justice 

components and through ILEAs. 

Federal Bureau of 

Investigation 

Provides basic and advanced law enforcement training to foreign governments on a 

bilateral and regional basis and through ILEAs and the Federal Bureau of 

Investigation’s Academy in Quantico, Virginia. Developed a two-week terrorist 

financing course that was delivered and accepted as the U.S. government’s model. 

Participates in U.S. interagency assessments of countries’ law enforcement and 

counter-terrorism capabilities. 

International Criminal 

Investigative Training 

Assistance Program

Provides law enforcement training and technical assistance to foreign counterparts 

abroad in conjunction with other Department of Justice components.
Appendix IV

Key U.S. Counter-Terrorism Financing and 

Anti-Money Laundering Training and 

Technical Assistance for Vulnerable 

Countries

Page 48 GAO-06-19 Terrorist Financing

Source: GAO, using information from State, Treasury, Homeland Security, and Justice, and the federal financial regulators.

Office of Overseas 

Prosecutorial Development, 

Training and Assistance 

Provides legal and prosecutorial training and technical assistance for criminal 

justice sector counterparts abroad and through ILEAs in drafting anti-money 

laundering and counter-terrorism financing statutes. Provides Resident Legal 

Advisors to focus on developing counter-terrorism legislation that criminalizes 

terrorist financing and achieves other objectives. Conducts regional conferences on 

terrorist financing, including a focus on charitable organizations. Participates in 

U.S. interagency assessments to determine countries’ criminal justice system 

capabilities. 

State Office of the Coordinator for 

Counterterrorism and Bureau 

for International Narcotics and 

Law Enforcement Affairs 

Coordinate and fund U.S. training and technical assistance provided by other U.S. 

agencies to develop or enhance the capacity of a selected group of more than two 

dozen countries whose financial sectors have been used to finance terrorism. Also 

manage or provide funding for other anti-money laundering or counter-terrorism 

financing programs for Department of State, other U.S. agencies, IlEAs, 

international entities, and regional bodies. Leads U.S. interagency assessments of 

foreign government vulnerabilities.

Diplomatic Security AntiTerrorism Assistance 

Programs

Provides law enforcement training for foreign counterparts and through ILEAs to 

develop the skills necessary to investigate financial crimes. 

U.S. Agency for International 

Development 

Provides legal technical assistance to foreign governments by drafting legislation 

that criminalizes terrorist financing. Provides resident advisors to provide technical 

assistance to judicial officials in their home country.

Treasury Financial Crimes Enforcement 

Network

Provides financial intelligence training and technical assistance to a broad range of 

government officials, financial regulators, law enforcement officers, and others 

abroad with a focus on the creation and improvement of financial intelligence units. 

FinCEN’s IT personnel provide FIU technical assistance in two primary areas: 

analysis and development of network infrastructures and access to a secure web 

network for information sharing. Conducts personnel exchanges and conferences. 

Partners with other governments and international entities to coordinate training. 

Participates in assessments of foreign governments’ financial intelligence 

capabilities. 

Internal Revenue Service 

Criminal Investigation Division

Provides law enforcement training and technical assistance to foreign governments 

and through ILEAs to develop the skills necessary to investigate financial crimes. 

Office of the Comptroller of the 

Currency 

Provides financial regulatory training in Washington, D.C., and abroad for foreign 

banking supervisors. 

Office of Technical Assistance Provides a range of training and technical assistance including intermittent and 

long-term resident advisors to senior-level representatives in various ministries and 

central banks on a range of areas including financial reforms related to money 

laundering and terrorist financing. Conducts and participates in assessments of 

foreign government anti-money laundering regimes for the purpose of developing 

technical assistance plans.

Office of Terrorist Financing 

and Financial Crime

Participates in U.S. interagency assessments of countries’ counter-terrorism 

financing and anti-money laundering capabilities. Provides technical advice and 

practical guidance on how the international anti-money laundering and counterterrorist financing standards should be adopted and implemented. 

(Continued From Previous Page)

Department/

agency Bureau/division/office Description of effort
Page 49 GAO-06-19 Terrorist Financing

Appendix V

Comments from the Department of Justice ApendxiV

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.

See comment 1.

See comment 2.

See comment 3.
Appendix V

Comments from the Department of Justice

Page 50 GAO-06-19 Terrorist Financing

See comment 4.

See comment 5.
Appendix V

Comments from the Department of Justice

Page 51 GAO-06-19 Terrorist Financing
Appendix V

Comments from the Department of Justice

Page 52 GAO-06-19 Terrorist Financing

The following are GAO’s comments on the Department of Justices’s letter 

dated September 29, 2005.

GAO Comments 1. Justice expressed concern that the draft report does not recognize the 

significant role it plays in providing international training and technical 

assistance in the money laundering and terrorist financing areas. The 

report acknowledges the roles of multiple agencies, including Justice, 

in delivering training and technical assistance to vulnerable countries. 

Under the first objective we broadly describe the U.S. efforts to provide 

training and technical assistance to vulnerable countries and note that 

U.S. offices and bureaus, primarily within the departments of the 

Treasury, Justice, Homeland Security, and State, and the federal 

financial regulators, provide training and technical assistance to 

countries requesting assistance through various programs using a 

variety of methods funded primarily by the State and Treasury. 

Moreover, appendix IV includes Table 2, which summarizes key U.S. 

counter-terrorism financing and anti-money laundering training and 

technical assistance programs for vulnerable countries and lists 

contributions provided by Justice, as well as other relevant agencies. 

2. Justice expressed dismay that the report focuses on the interaction of 

State and Treasury rather than the accomplishments of the TFWG. 

While a number of comments suggested including information 

indicative of the successes of agency efforts to address terrorist 

financing abroad, much of this information is outside of the scope of 

this report. However, we have made a number of changes in response 

to these comments. First, we have added information on the 

accomplishments of U.S. agencies to the report. Second, we have 

adjusted our first objective to clarify that we are providing an overview 

of U.S. agencies’ efforts to address terrorist financing abroad. Third, as 

we note in other comments, we have adjusted the title of the report to 

better reflect the focus of our work.

3. Justice notes that the report addresses a narrower issue than the title 

implies. We agree. We have revised the title of the report to focus on our 

key recommendation.

4. According to Justice, our report contains a critical flaw because it does 

not recognize Justice as a key player nor does it place Justice on equal 

standing with State and Treasury in the report’s recommendation and 

Memorandum of Agreement concerning training and technical 
Appendix V

Comments from the Department of Justice

Page 53 GAO-06-19 Terrorist Financing

assistance. Justice noted that it should be involved in all interagency 

deliberations and decisions. The report acknowledges the roles of 

multiple important agencies, including Justice, in delivering training 

and technical assistance to vulnerable countries. The report 

recommends that the Secretaries of State and the Treasury, develop and 

implement an integrated strategic plan in consultation with the NSC 

and relevant government agencies, of which Justice is one (see 

comment 1). We continue to believe that the Memorandum of 

Agreement should be limited to the Secretaries of State and Treasury. 

State and Treasury both primarily fund and support U.S. government 

anti-money laundering and counter-terrorist financing training and 

technical assistance programs, and in Treasury’s case also provides 

considerable training and technical assistance abroad through current 

U.S. government employees and contractors. It is important that their 

programs and funding be integrated to optimize results. Other agencies 

are important stakeholders, as they are recipients of this funding and 

support and should benefit from improved coordination between these 

two agencies. Justice primarily receives funding from State and, 

according to Justice, State has been supportive of Justice’s training and 

technical assistance efforts.

5. Justice states that contrary to the impression conveyed in the draft, it 

fully respects the “honest broker role” that State plays as the TFWG 

coordinator. We have added information from Justice to more 

accurately portray Justice’s support of State as TFWG coordinator in 

the Highlights page, Results in Brief, and body of the report.

Additional Comments from 

the Department of Justice

Justice provided information in its technical comments that we believe are 

important to the key findings and recommendations in this report. While 

we have addressed Justice’s technical comments as appropriate, we have 

reprinted and addressed specific technical comments below.

1. Justice technical comment (on our Highlights page): 

“The draft Report reflects that “Justice officials confirmed that roles and procedures [of 

the TFWG] were a matter of dispute.” The context suggests that DOJ [Department of 

Justice] does not accept the leadership of the State Department. That is not an accurate 

statement. DOJ strongly agrees that there needs to be a designated coordinator in this 

TFWG process and supports that role being given to the State Department, which has been 

an honest broker in the process and DOJ has abided by its procedures. DOJ agrees with the 

observation that the Treasury Department does not accept the State Department’s 

leadership or the procedures. . . .” 
Appendix V

Comments from the Department of Justice

Page 54 GAO-06-19 Terrorist Financing

“Justice officials confirmed that roles and procedures were a matter of dispute.” It would 

be more accurate to replace dispute with disagreement.”

GAO response: Justice made these two comments concerning the 

statement in the draft report that “Justice officials confirmed that roles 

and procedures were a matter of dispute.” We added language to show 

that Justice is supportive of State’s role as coordinator of TFWG efforts 

and substituted the word “disagreement” for “dispute” when stating 

that “Justice officials confirmed that roles and procedures were a 

matter of disagreement.”

2. Justice technical comment (on our second objective): 

“The draft report references that AFMLS [Asset Forfeiture and Money Laundering Section] 

stated that “the Department of State’s leadership role is limited to its chairmanship of 

TFWG...” To be clear, this statement was not made to suggest that the TFWG be limited to 

priority countries, but rather that differing standards on procedures (particularly with DOJ 

leadership role in legislative drafting) for priority countries and vulnerable countries creates 

problems.”

GAO response: In response to this point, we removed the report’s 

reference to AFMLS and noted that Justice officials told us that having 

procedures and practices for TFWG priority countries that differ from 

those for other vulnerable countries creates problems.
Page 55 GAO-06-19 Terrorist Financing

Appendix VI

Comments from the Department of State ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VI

Comments from the Department of State

Page 56 GAO-06-19 Terrorist Financing
Appendix VI

Comments from the Department of State

Page 57 GAO-06-19 Terrorist Financing

See comment 1.
Appendix VI

Comments from the Department of State

Page 58 GAO-06-19 Terrorist Financing

See comment 2.
Appendix VI

Comments from the Department of State

Page 59 GAO-06-19 Terrorist Financing

See comment 3.

See comment 4.

See comment 5.

See comment 6.
Appendix VI

Comments from the Department of State

Page 60 GAO-06-19 Terrorist Financing

See comment 7.

See comment 8.
Appendix VI

Comments from the Department of State

Page 61 GAO-06-19 Terrorist Financing

See comment 9.

See comment 10.

See comment 11.

See comment 2.
Appendix VI

Comments from the Department of State

Page 62 GAO-06-19 Terrorist Financing

The following are GAO’s comments on the Department of State’s letter 

dated October 3, 2005.

GAO Comments 1. State noted in its comments that it does not believe the report 

accurately portrays the overall effectiveness and success of the 

Administration’s counter-terrorism finance programs. While a number 

of comments suggested including information indicative of the 

successes of agency efforts to address terrorist financing abroad, much 

of this information is outside of the scope of this report. However, we 

have made a number of changes in response to these comments. First, 

we have added information on the accomplishments of U.S. agencies to 

the report. For example, we added information on the number of needs 

assessment missions conducted and the number of countries receiving 

training and technical assistance. Second, we have adjusted our first 

objective to clarify that we are providing an overview of U.S. agencies' 

efforts to address terrorist financing abroad. Third, as we note in other 

comments, we have adjusted the title of the report to better reflect the 

focus of our work.

2. State commented that it has an integrated strategic plan which is 

evidenced through classified NSC Deputies Committee documentation 

and the Department of States’ Office of the Coordinator for 

Counterterrorism’s Bureau Performance Plan. We reviewed the NSC 

Deputies Committee documentation, which includes minutes, an 

agreement, and conclusions-- all of which serve as the NSC guidance 

for the TFWG. We also reviewed the performance plan, which includes 

the Office of the Coordinator for Counterterrorism’s objectives and 

performance measures for counter-terrorist financing programs and 

provides some performance indicators, such as the number of 

assessments and training plans completed. Although some aspects of a 

strategic plan for delivering training and technical assistance are 

included in these documents, we do not agree that this guidance and 

performance plan includes the elements necessary to constitute an 

integrated strategy for the coordination of the delivery of training and 

technical assistance abroad. In addition to not having a fully integrated 

strategy on paper, the NSC guidance lacks clarity, particularly regarding 

coverage of non-priority countries. The guidance also lacks familiarity 

and clear buy-in among the pertinent levels of agencies. As a result, the 

documents did not guide the actions of the agencies in actual practice. 
Appendix VI

Comments from the Department of State

Page 63 GAO-06-19 Terrorist Financing

3. State commented that “if the country team, interagency and host 

government agree on an implementation plan, TFWG determines the 

necessary funding for State to obligate to each agency with the 

appropriate expertise.” State added that it carefully monitors and can 

account for all of the funding Congress has appropriated for training 

programs coordinated through the TFWG, as provided in a classified 

report. Our report did not specifically address TFWG-reported 

obligations and expenditures, as this information focusing on priority 

countries was classified. Our report focused on the lack of 

transparency in the overall amount of funds available for all counterterrorism training and technical assistance programs within State and 

the Treasury. Because funding is embedded with anti-money laundering 

and other programs, the U.S. government does not have a clear 

presentation of the budget resources that State and Treasury allocate 

for training and technical assistance to counter-terrorist financing as 

differentiated from other programs. Although various officials told us 

that funding for counter-terrorism financing training and technical 

assistance is insufficient, the lack of a clear presentation of available 

budget resources makes it difficult for decision-makers to determine 

the actual amount that may be allocated to these efforts. 

4. We do not agree with State’s comment that TFWG has been very 

diligent in developing methods to measure its success. As of July 2005, 

the U.S. government, including TFWG, did not have a system in place to 

measure the results of its efforts to deliver training and technical 

assistance and to incorporate this information into integrated planning 

efforts. Our report acknowledges that an interagency committee was 

set up to develop a system to measure results and other efforts were 

undertaken to track training and technical assistance; however, 

according to agency officials, these efforts have not yet resulted in 

performance measures. 

5. Based on our review of NSC and other documents provided by State, 

the U.S. government lacks an integrated strategy to coordinate the 

delivery of training and technical assistance. The classified document 

serving as an interagency agreement lacks clarity as well as familiarity 

and buy-in from all agencies and levels of leadership within TFWG, 

particularly Treasury. The NSC guidance was agreed to at the deputy 

level, and we found that many of the working level staff were not 

familiar with the guidance or the interpretation of the guidance and 

Treasury staff clearly did not have the same interpretation as State 

staff.
Appendix VI

Comments from the Department of State

Page 64 GAO-06-19 Terrorist Financing

6. State noted that there are established methods to resolve disputes that 

arise through the interagency process and it is rare that the TFWG 

process cannot resolve issues. While there are guidelines for resolving 

disputes, in practice there are long-standing disagreements that have 

not been resolved. Based on discussions with agency officials and 

review of documentation, our report provides examples of longstanding disagreements that have not been resolved such as the use of 

contractors and procedures for conducting assessments of country’s 

needs for training and technical assistance. 

7. State commented that it is the primary responsibility of the TFWG to 

coordinate all training and technical assistance and notes the existence 

of formal supporting documents. State commented that while it does 

not believe additional formal documents are necessary, if a 

Memorandum of Agreement concerning counter-terrorism financing 

and anti-money laundering training and technical assistance were to be 

developed, State commented that it should include all agencies 

involved in providing training and technical assistance. Our review as 

well as Treasury’s technical comments clearly shows that Treasury 

does not accept State’s position that TFWG’s primary responsibility is 

to coordinate all counter-terrorist financing training and technical 

assistance abroad. Treasury limits this role to priority countries. Based 

on our review of NSC and other documents provided by State, the U.S. 

government lacks an integrated strategy to coordinate the delivery of 

training and technical assistance. The classified document, which 

according to State serves as an interagency agreement, lacks clarity, 

familiarity, and buy-in from all levels of leadership within TFWG, 

particularly Treasury. State and Treasury both fund and support U.S. 

government anti-money laundering and counter-terrorist financing 

training and technical assistance programs, and Treasury also provides 

considerable training and technical assistance abroad through 

contractors and U.S. government employees. It is important that their 

programs and funding are integrated to optimize results. Other agencies 

are important stakeholders as they are recipients of this funding and 

support and would benefit from improved coordination between these 

two agencies.

8. State comments that our recommendation to the Secretary of the 

Treasury regarding Treasury’s annual Terrorist Assets Report to 

Congress was incomplete because it makes no mention of State’s role 

in blocking assets. Specifically we recommend that Treasury provide 

more complete information on the nature and extent of asset blocking 
Appendix VI

Comments from the Department of State

Page 65 GAO-06-19 Terrorist Financing

in the United States in its annual Terrorist Assets Report to Congress. 

We did not incorporate the Secretary of State into this recommendation 

because the scope of our request for our third objective focused solely 

on the accountability issues Treasury faces in its efforts to block 

terrorists’ assets. State also expressed disappointment that our report 

did not include details on State’s role in terrorist designations. While 

our report provides an overview of how U.S. government agencies use 

designations to disrupt terrorist networks, we recognize that State has 

an important role and added language to provide more detail on State’s 

role in targeting individuals, groups, or other entities suspected of 

terrorism or terrorist financing. 

9. In response to agency comments, we have revised the title of the report 

to focus on our key recommendation.

10. The scope of our second objective was to examine U.S. efforts to 

coordinate the delivery of training and technical assistance to 

vulnerable countries. The effort does not have key stakeholder buy-in 

on roles and practices, a strategic alignment of resources with needs, or 

a system to measure performance and incorporate this information into 

its planning efforts. According to agency officials, the lack of effective 

leadership leads to less than optimal delivery of training and technical 

assistance to vulnerable countries. Without a system to measure 

performance, the U.S. government and TFWG cannot ensure that its 

efforts are on track.

11. Although this report is based on unclassified information, GAO 

reviewed all unclassified and classified information provided by State 

in support of TFWG efforts. We believe that findings, conclusions, and 

recommendations accurately portray the interagency process. 

Moreover, we reviewed and incorporated additional information 

provided by State subsequent to issuing our draft to the agencies for 

comment to ensure that all available information was assessed.
Page 66 GAO-06-19 Terrorist Financing

Appendix VII

Comments from the Department of the 

Treasury ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VII

Comments from the Department of the 

Treasury

Page 67 GAO-06-19 Terrorist Financing

See comment 1.

See comment 2.
Appendix VII

Comments from the Department of the 

Treasury

Page 68 GAO-06-19 Terrorist Financing

See comment 1.

See comment 3.

See comment 1.

See comment 4.
Appendix VII

Comments from the Department of the 

Treasury

Page 69 GAO-06-19 Terrorist Financing

See comment 5.

See comment 6.
Appendix VII

Comments from the Department of the 

Treasury

Page 70 GAO-06-19 Terrorist Financing

The following are GAO’s comments on the Department of the Treasury’s 

letter dated October 5, 2005.

GAO Comments 1. Treasury notes in its comments that the report falls short in describing 

the comprehensive efforts of the U.S. government efforts to combat 

terrorist financing abroad. While a number of comments suggested 

including information indicative of the successes of agency efforts to 

address terrorist financing abroad, much of this information is outside 

of the scope of this report. However, we have made a number of 

changes in response to these comments. First, we have added 

information on the accomplishments of U.S. agencies to the report. For 

example, we added that Treasury has coordinated bilateral and 

international technical assistance with the FATF and the international 

financial institutions, such as the World Bank and International 

Monetary Fund, to draft legal frameworks, build necessary regulatory 

and institutional systems, and develop human expertise. Second, we 

have adjusted our first objective to clarify that we are providing an 

overview of U.S. agencies' efforts to address terrorist financing abroad. 

Third, as we note in other comments, we have adjusted the title of the 

report to better reflect the focus of our work.

2. Treasury suggests that the title of the draft report be modified to be 

consistent with the primary focus of the report. We agree and have 

revised the title of the report to focus on the key recommendations. 

3. Treasury states that the report does not accurately characterize 

Treasury’s role in managing the U.S. government’s relationship with 

international financial institutions. We recognize that Treasury plays an 

important role and added more examples of Treasury’s relationship 

with international financial institutions as provided in Treasury’s 

technical comments. For example, we added Treasury’s relationship 

with an intergovernmental body --the Financial Action Task Force-- in 

setting international standards for anti-money laundering and counterterrorism financing regimes. In addition, we added mentions of 

Treasury’s relationship with the Asian Development Bank, IMF and the 

World Bank. 

4. Treasury comments that the report focuses on the difficulties and 

differences arising from the interagency process to coordinate training 

and technical assistance to combat terrorist financing abroad and fails 

to give due credit for the successes that have been achieved through 
Appendix VII

Comments from the Department of the 

Treasury

Page 71 GAO-06-19 Terrorist Financing

unprecedented interagency coordination. Our report concludes that the 

U.S. government lacks an integrated strategy to coordinate the delivery 

of training and technical assistance because key stakeholders do not 

agree on roles and practices, there is not a clear presentation of what 

funding is available for counter-terrorism financing training and 

technical assistance, and a system has not been established to measure 

performance and incorporate this information into its planning efforts. 

Our report notes that, according to agency officials, the lack of 

effective leadership leads to less than optimal delivery of training and 

technical assistance to vulnerable countries. However, we have 

included some interagency accomplishments such as numbers of 

assessments in our description of training and technical assistance 

efforts under objective 1. To best provide evidence of the effectiveness 

of the U.S. government efforts, the U.S. government should continue to 

develop a system to measure performance and incorporate this 

information into its planning efforts. 

5. In its comments, Treasury states that the report’s third objective on 

accountability issues appears somewhat incongruous in a report 

dedicated to U.S. counter-terrorism training and technical assistance. 

Our requesters asked us to address specific issues related to U.S. 

efforts to combat terrorist financing abroad, including accountability 

issues Treasury faces in its efforts to block terrorists’ assets held under 

U.S. jurisdiction, particularly with regard to the Treasury’s annual 

Terrorist Assets Reports.

6. We reviewed the revised text provided by Treasury for our report’s third 

objective on accountability issues the Department faces in its efforts to 

block terrorists’ assets held under U.S. jurisdiction. We noted that we 

already cover many of Treasury’s points in our report. However, in 

some cases we incorporated technical information to help clarify the 

challenges the department faces in assessing the impact of terrorist 

designation activities. In addition, we updated the report to reflect the 

most current status of Treasury’s efforts to establish performance 

measures for OFAC. Additionally, we acknowledge that the language in 

the mandate for the Terrorist Assets Reports did not explicitly design 

the reports as an accountability measure of the Office of Foreign Assets 

Control’s effectiveness in identifying and blocking terrorist assets; 

however, nothing in the statutory language or in the congressional 

intent underlying the mandate precludes Treasury from compiling and 

reporting information in the manner in which we have suggested in this 

report. Furthermore, we believe that inclusion of comparative 
Appendix VII

Comments from the Department of the 

Treasury

Page 72 GAO-06-19 Terrorist Financing

information and additional explanation regarding significant shifts 

between years will enhance program reporting and congressional 

oversight.

Additional Comments from 

the Department of the 

Treasury

In addition, Treasury provided information in its technical comments that 

we believe are important to the key findings and recommendations in this 

report. While we have addressed Treasury’s technical comments as 

appropriate, we have reprinted and addressed specific technical comments 

below.

1. Treasury technical comment (on our Results in Brief): 

“The second paragraph of this section states, “First, although the Department of State 

asserts that it leads the overall effort to deliver training and technical assistance to all 

vulnerable countries, the Department of Treasury does not accept State in this role.” This 

statement should be clarified to reflect that while Treasury does acknowledge State’s role, it 

believes that State’s function is necessarily one of coordination. State’s role in this process is 

not to actually “deliver” assistance. Rather, Treasury believes that State’s role is 

coordinating each USG agency’s personnel and expertise to allow them to deliver the 

needed training in commonly agreed upon priority countries. Treasury also acknowledges 

that the draft report is helpful in pointing out that this coordination can and should be 

improved to facilitate more effective delivery of assistance in priority countries.” 

GAO response: As Treasury states above, they believe that State’s role 

is limited to coordination for priority countries and does not accept 

State’s position that it leads all U.S. training and technical assistance 

efforts to vulnerable countries, not just priority countries. We have 

adjusted the language in our report and it now reads, “First, Treasury, a 

key stakeholder, does not accept State’s position, based on statements 

in NSC guidance, that it leads all U.S. counter-terrorism financing 

training and technical assistance efforts to vulnerable countries.” 

2. Treasury technical comment (on our first objective):

“The first paragraph contains the following statement “According to the Department of 

State, its Office of the Coordinator for Counterterrorism is charged with directing, 

managing, and coordinating all U.S. government agencies’ efforts to develop and provide 

counter-terrorism financing programs.” This statement is inaccurately overbroad, as 

Treasury (and likely other government agencies) has developed numerous counterterrorist 

financing programs to advance the core strategic aims identified in the 2003 NMLS [National 

Money Laundering Strategy]. It is more accurate to say that the department of State 

coordinates the USG provision of CFT [combat the financing of terrorism] technical 

assistance and training to priority countries.”
Appendix VII

Comments from the Department of the 

Treasury

Page 73 GAO-06-19 Terrorist Financing

GAO response: GAO’s draft statement was attributed to State and was 

supported by State, so we did not change it in the report. Rather we 

added the information provided by Treasury to the section on “U.S. 

Effort Lacks Buy-in from Key Stakeholder on Roles and Procedures” 

noting that Treasury asserts that State overstates its role and that the 

role is limited to coordinating other U.S. agency’s provision of counterterrorist financing training and technical assistance in commonly 

agreed upon TFWG priority countries and notes that there are 

numerous other efforts outside of States’ purview.

3. Treasury technical comment (on our third objective): 

“Substitute [text] with the following language: ‘However, the TAR [Terrorist Asset Report] 

was not mandated or designed as an accountability measure for OFAC’s effectiveness in 

assisting U.S. persons in identifying and blocking assets of persons designated under 

relevant Executive orders relating to terrorism. The report, as mandated, was intended to 

provide only a snapshot view in time of terrorist assets held in the United States by 

terrorist countries and organizations.’”

GAO response: We acknowledge that the language in the mandate for 

the Terrorist Assets Reports did not explicitly design the reports as an 

accountability measure of the Office of Foreign Assets Control’s 

effectiveness in identifying and blocking terrorist assets; however, 

nothing in the statutory language or in the congressional intent 

underlying the mandate precludes Treasury from compiling and 

reporting information in the manner in which we have suggested in this 

report. Furthermore, we believe that inclusion of comparative 

information and additional explanation regarding significant shifts 

between years will enhance program reporting and congressional 

oversight.

4. Treasury technical comment: 

“Substitute [text] with the following language: ‘OFAC officials have advised that OFAC’s 

new performance measures are expected to be completed by December 1, 2005, and its 

new strategic plan is expected to be completed by January 1, 2006.’”

GAO response: We updated the report to reflect the most current status 

of Treasury’s efforts to establish performance measures for OFAC. 

5. Treasury technical comment (on our third objective): 

“In the second paragraph, the following language: “We also recommend that the Secretary of 

Treasury provide more complete information on the nature and extent of asset blocking in 
Appendix VII

Comments from the Department of the 

Treasury

Page 74 GAO-06-19 Terrorist Financing

the United States in its Terrorist Assets Report to Congress and establish milestones for 

developing meaningful performance measures on terrorist designations and asset blocking 

activities.....” Should be replaced with the following language: 

. . . .“We also recommend Congress consider discontinuing the requirement that Treasury 

produce the annual Terrorist Assets Report to Congress. The report, based upon the input 

of numerous government agencies, provides a snapshot of the known assets held in the 

United States by terrorist-supporting countries and terrorist groups at a given point in 

time. These numbers may fluctuate during each year and between years for a number of 

policy-permissible reasons. The amount of assets blocked under a terrorism sanctions 

program is not a primary measure of a terrorism sanctions program’s effectiveness, and 

countries that have been declared terrorist supporting, and whose assets are not blocked 

by a sanctions program, are already wary of holding assets in the United States.’”

GAO response: We noted Treasury’s position on this recommendation 

in our report. However, we continue to believe that the annual Terrorist 

Assets Report, with the incorporated changes, would be useful to 

policymakers and program managers in examining their overall 

achievements of the U.S. efforts to block terrorists’ assets.
Page 75 GAO-06-19 Terrorist Financing

Appendix VIII

GAO Contact and Staff Acknowledgments ApendxiVI

GAO Contact Loren Yager, (202) 512-4347

Staff 

Acknowledgments 

In addition to the contact named above, Christine Broderick, Assistant 

Director; Tracy Guerrero; Elizabeth Guran; Janet Lewis; and Kathleen 

Monahan made key contributions to this report. Martin de Alteriis, Mark 

Dowling, Jamie McDonald, and Michael Rohrback provided technical 

assistance.

(320249)
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