In an international context, the Treasury Department is the United States’ counterpart to other nations’ ministries of finance. The department’s responsibilities, among other things, include safeguarding the U.S. financial system from abuse by money launderers, terrorists, and other criminals. Over the years, in carrying out this responsibility, the department has established relationships with finance ministries, central banks, and other financial institutions in nations around the world as well as with multilateral organizations such as FATF, the FATF-style regional bodies, the International Monetary Fund (IMF), and the World Bank. FATF is an intergovernmental entity whose purpose is to establish international standards and to develop and promote policies for combating money laundering and terrorist financing. At its formation in 1989 by the United States and other industrialized nations, FATF’s original focus was to establish anti-money-laundering standards and monitor the progress of nations in meeting the standards. In 1990, FATF issued its “Forty Recommendations on Money Laundering” to promote the adoption and implementation of anti-money-laundering measures. For instance, the recommendations encouraged nations to enact legislation criminalizing money laundering and requiring financial institutions to report suspicious transactions. Following the events of September 11, 2001, FATF expanded its role to combat terrorist financing. Specifically, in October 2001, FATF adopted “Eight Special Recommendations on Terrorist Financing.” Among other actions, these recommendations committed members to criminalize the financing of terrorism and to freeze and confiscate terrorist assets. In October 2004, FATF published a ninth special recommendation on terrorist financing to target cross-border movements of currency and monetary instruments (“cash couriers”). Collectively, FATF’s “40 plus 9” recommendations are widely recognized as the international standards for combating money laundering and terrorist financing (see app. II). In monitoring nations’ progress in implementing the recommendations, FATF collaborates with other multilateral organizations, particularly the FATF-style regional bodies that represent nations in seven geographic areas. These regional groups are to help nations in the region to implement the international standards developed by FATF. Also, these standards have been recognized and endorsed by the World Bank and IMF for use in conducting evaluations and assessments of nations’ progress in implementing measures to counter money laundering and terrorist financing. To be compliant with FATF recommendations, a nation must, among other measures, establish an effective FIU. The United States’ FIU is FinCEN, which was administratively established in 1990 as a Treasury Department component. FinCEN was 1 of the 14 charter members of the Egmont Group, which was formed in 1995 to enhance information sharing among FIUs (see app. III). In 2001, section 361 of the USA PATRIOT Act established FinCEN as a statutory bureau in the Treasury Department. Organizationally, FinCEN is part of Treasury’s Office of Terrorism and Financial Intelligence, which is the department’s policy and enforcement entity regarding terrorist financing, money laundering, financial crime, and sanctions issues. Treasury’s budget request for fiscal year 2007 included $91.3 million (and 352 full-time- equivalent personnel) to support FinCEN’s mission of safeguarding the financial system from abuses of money laundering, terrorist financing, and other financial crime. FinCEN carries out this broad mission by, among other means, administering the Bank Secrecy Act (BSA) and networking with domestic regulatory, law enforcement, and intelligence agencies as well as with foreign counterparts. Section 330 of the USA PATRIOT Act expresses the sense of the Congress that the President should direct the Secretary of State, the Attorney General, or the Secretary of the Treasury to enter into negotiations with foreign jurisdictions to facilitate cooperative efforts to combat money laundering and terrorist financing. State Department, Justice Department, and Federal Reserve Board officials told us that the Treasury Department plays a lead role in addressing these efforts. According to Treasury Department officials, the U.S. interagency community has been acting to accomplish the goals articulated in section 330 through its interactions with FATF and the FATF-style regional bodies to ensure global compliance with international standards for combating money laundering and terrorist financing. Treasury officials also told us that enactment of section 330 provided a welcomed congressional endorsement of long- standing U.S. government policy to actively engage and negotiate with foreign jurisdictions through the medium of FATF and the related FATF- style regional bodies. Further, in conjunction with foreign negotiations, Treasury considers another provision of the USA PATRIOT Act—section 311—to be a useful mechanism for helping to promote compliance with standards. “the President should direct the Secretary of State, the Attorney General, or the Secretary of the Treasury, as appropriate, to seek to enter into and further cooperative efforts, voluntary exchanges, the use of letters rogatory, mutual legal assistance treaties, and international agreements to (1) ensure that foreign banks and other financial institutions maintain adequate records of transaction and account information relating to any foreign terrorist organization (as designated under section 219 of the Immigration and Nationality Act), any person who is a member or representative of any such organization, or any person engaged in money laundering or financial or other crimes; and (2) establish a mechanism whereby such records may be made available to United States law enforcement officials and domestic financial institution supervisors, when appropriate.” Section 330 does not constitute an express mandate—that is, section 330 does not impose an affirmative obligation on any agency or official to enter into negotiations. Nonetheless, the language of section 330 does suggest that efforts should be undertaken to engage in appropriate negotiations. State Department, Justice Department, and Federal Reserve Board officials told us that the lead role regarding the efforts encouraged by section 330 of the USA PATRIOT Act is held by the Treasury Department. According to the Treasury Department, the U.S. interagency community is fulfilling section 330 by actively engaging and negotiating with foreign jurisdictions through the medium of FATF and the related FATF-style regional bodies. The U.S. delegation to FATF, which is headed by the Deputy Assistant Secretary of the Treasury’s Office of Terrorist Finance and Financial Crime, includes representatives of the Departments of Homeland Security, Justice, and State; the federal financial regulators; and the National Security Council. Regarding efforts encouraged by section 330, Treasury’s Office of Terrorist Finance and Financial Crime said that the United States—working through FATF, the FATF-style regional bodies, the International Monetary Fund, and the World Bank—has led efforts to develop a global system to ensure that all countries adopt and are assessed against international standards for protecting financial systems and jurisdictions from money laundering and terrorist financing. As mentioned previously, these international standards consist of the FATF “Forty Recommendations on Money Laundering” and “Nine Special Recommendations on Terrorist Financing” (see app. II). Treasury testimony at a congressional hearing in July 2005 before the Senate Committee on Banking, Housing, and Urban Affairs also cited the benefits of international standard-setting bodies. Regarding U.S. efforts and participation in these bodies, the Treasury Under Secretary’s prepared statement included the following points:“The Financial Action Task Force (FATF) sets the global standards for anti-money laundering and counter terrorist financing, and it is also through this venue that we promote results. Treasury, along with our counterparts at State, Justice, and Homeland Security, has taken an active role in this 33-member body which articulates international standards in the form of recommendations, guidelines, and best practices to aid countries in developing their own specific anti-money laundering and counter-terrorist financing laws and regulations. … The success and force of FATF lie not only in the mutual evaluation process to which it holds its own members, but also in the emergence of FATF- style regional bodies … that agree to adopt FATF standards and model themselves accordingly on a regional level.” “Hawala, a relationship-based system of money remittances, plays a prominent role in the financial systems of the Middle East. … Internationally, Treasury leadership in the FATF has brought the issue of hawala to the forefront, resulting in implementation of FATF Special Recommendation VI, which requires all FATF countries to ensure that individuals and entities providing money transmission services must be licensed and registered, and subjected to the international standards set out by FATF.” “As governments apply stricter oversight and controls to banks, wire transmitters, and other traditional methods of moving money, we are witnessing terrorists and criminals resorting to bulk cash smuggling. FATF Special Recommendation IX was issued in late 2004 to address this problem and it calls upon countries to monitor cross-border transportation of currency and to make sanctions available against those who make false declarations or disclosures in this regard. This recommendation has already prompted changes in legislation abroad.” Further, on July 29, 2005, the United Nations Security Council unanimously adopted a U.S.-sponsored resolution (Resolution 1617) that, among other matters, “strongly urges” all member states to “implement the comprehensive, international standards” embodied in the FATF 40 plus 9 recommendations. Subsequently, at its most recent plenary meeting (October 12 to 14, 2005), FATF noted that “formal endorsement of the FATF standards by the U.N. Security Council is a major step toward effective implementation of the Recommendations throughout the world.” Regarding the U.S. government’s continuing efforts to actively engage and negotiate with foreign jurisdictions as encouraged by section 330, Treasury’s Office of Terrorist Finance and Financial Crime said that outreach to the international community to enhance global best practices to combat money laundering and terrorist financing involves various challenges. These challenges include ensuring that the international standards are current in reference to emerging trends and technology and are balanced and flexible enough to be relevant and applicable to all countries and situations, as well as ensuring that evaluations or assessments of countries are conducted on a consistent basis and manner.