The Money Laundering and Financial Crimes Strategy Act of 1998 (Strategy Act) required the President—acting through the Secretary of the Treasury and in consultation with the Attorney General and other relevant federal, state, and local law enforcement and regulatory officials—to develop and submit an annual NMLS to the Congress by February 1 of each year from 1999 through 2003. The goal of the Strategy Act was to increase coordination and cooperation among the various law enforcement and regulatory agencies and to effectively distribute resources to combat money laundering and related financial crimes. The 1998 Strategy Act required that each NMLS define comprehensive, research-based goals, objectives, and priorities for reducing money laundering and related financial crimes in the United States. The annual NMLS generally has included multiple priorities to combat money laundering to guide federal agencies’ activities. Another provision of the Strategy Act authorized the Secretary of the Treasury to designate High Intensity Money Laundering and Related Financial Crime Areas (HIFCA), in which federal, state, and local law enforcement would work cooperatively to develop a focused and comprehensive approach to targeting money-laundering activity. As envisioned by the Strategy Act, HIFCAs were to represent a major NMLS initiative and were expected to have a flagship role in the U.S. government’s efforts to disrupt and dismantle large-scale money laundering operations. They were intended to improve the coordination and quality of federal money laundering investigations by concentrating the investigative expertise of federal, state, and local agencies in unified task forces, thereby leveraging resources and creating investigative synergies. The former U.S. Customs Service, which is now part of ICE, and the FBI both have a long history of investigating money laundering and other financial crimes. In response to the terrorist attacks of September 11, Treasury and Justice both established multiagency task forces dedicated to combating terrorist financing. Treasury established Operation Green Quest, led by Customs, to augment existing counterterrorist efforts by targeting current terrorist funding sources and identifying possible future sources. In addition to targeting individuals and organizations, Operation Green Quest was designed to attack the financial systems that may be used by terrorists to raise and move funds, such as fraudulent charities and the shipment of bulk currency. In January 2003, Customs expanded Operation Green Quest by doubling the personnel commitment to a total of approximately 300 agents and analysts nationwide to work solely on terrorist financing matters. In March 2003, Operation Green Quest was transferred to ICE, within the Department of Homeland Security. On September 13, 2001, the FBI formed a multiagency task force—which is now known as the Terrorist Financing Operations Section (TFOS)—to combat terrorist financing. The mission of TFOS has evolved into a broad role to identify, investigate, prosecute, disrupt, and dismantle all terrorist- related financial and fundraising activities. The FBI also took action to expand the antiterrorist financing focus of its Joint Terrorism Task Forces (JTTF)—teams of local and state law enforcement officials, FBI agents, and other federal agents and personnel whose mission is to investigate and prevent acts of terrorism. In 2002, the FBI created a national JTTF in Washington, D.C., to collect terrorism information and intelligence and funnel it to the field JTTFs, various terrorism units within the FBI, and partner agencies. The attacks of September 11 emphasized the need for federal agencies to wage a coordinated campaign against sources of terrorist financing. Following September 11, representatives of the FBI and Operation Green Quest met on several occasions to attempt to delineate antiterrorist financing roles and responsibilities. However, such efforts were largely unsuccessful until May 2003, when the Attorney General and the Secretary of Homeland Security signed a Memorandum of Agreement that contained a number of provisions designed to resolve jurisdictional issues and enhance interagency coordination of terrorist financing investigations. According to the Agreement, the FBI is to lead terrorist financing investigations and operations, using the intergovernmental and intra- agency national JTTF at FBI headquarters and the JTTFs in the field. The Agreement also specified that, through TFOS, the FBI is to provide overall operational command to the national JTTF and the field JTTFs. Further, to increase information sharing and coordination of terrorist financing investigations, the Agreement required the FBI and ICE to (1) detail appropriate personnel to each other’s agency and (2) develop specific collaborative procedures to determine whether applicable ICE investigations or financial crimes leads may be related to terrorism or terrorist financing. Also, the Agreement required the FBI and ICE to produce a joint written report on the status of the implementation of the Agreement 4 months from its effective date. In September 2003, we reported that, as a mechanism for guiding the coordination of federal law enforcement agencies’ efforts to combat money laundering and related financial crimes, the NMLS has had mixed results but generally has not been as useful as envisioned by the Strategy Act. For example, we reported that HIFCA task forces were expected to have a central role in coordinating law enforcement agencies’ efforts to combat money laundering but generally had not yet been structured and operating as intended and had not reached their expectations for leveraging investigative resources or creating investigative synergies. The NMLS called for each HIFCA to include participation from all relevant federal, state, and local agencies. However, in some cases, federal law enforcement agencies had not provided the levels of commitment and staffing to the task forces called for by the strategy. We found, for instance, that most of the HIFCAs did not have FBI or Drug Enforcement Administration (DEA) agents assigned full time to the task forces. FBI officials cited resource constraints as the primary reason why the bureau did not fully participate. A DEA official told us that, because of differences in agencies’ guidelines for conducting undercover money laundering investigations, DEA would not dedicate staff to HIFCA task force investigative units but would support intelligence-related activities. Also, we noted that four of the five operating HIFCAs had little or no participation from state and local law enforcement agencies. Various task force officials mentioned lack of funding to compensate or reimburse participating state and local law enforcement agencies as a barrier to their participation in HIFCA operations. While recognizing that law enforcement agencies have resource constraints and competing priorities, we noted that HIFCA task forces were expected to make more effective use of existing resources or of such additional resources as may be available. As called for in the 2002 NMLS, Treasury and Justice are in the process of reviewing the HIFCA task forces to enhance their potential and remove obstacles to their effective operation. The results of this review could provide useful input for an evaluation report on the HIFCA program, which the Strategy Act requires Treasury to submit to the Congress in 2004. We further reported that, while Treasury and Justice had made progress on some NMLS initiatives designed to enhance interagency coordination of money laundering investigations, most had not achieved the expectations called for in the annual strategies, including plans to (1) use a centralized system to coordinate investigations and (2) develop uniform guidelines for undercover investigations. Headquarters officials cited differences in the various agencies’ anti-money laundering priorities as a primary reason why initiatives had not achieved their expectations. In our September 2003 report, we noted that our work in reviewing national strategies for various crosscutting issues has identified several critical components needed for their development and implementation, including effective leadership, clear priorities, and accountability mechanisms. For a variety of reasons, these critical components generally have not been fully reflected in the development and implementation of the annual NMLS. For example, the joint Treasury-Justice leadership structure that was established to oversee NMLS-related activities generally has not resulted in (1) reaching agreement on the appropriate scope of the strategy; (2) ensuring that target dates for completing strategy initiatives were met; and (3) issuing the annual NMLS by February 1 of each year, as required by the Strategy Act. Also, although Treasury generally took the lead role in strategy-related activities, it had no incentives or authority to get other departments and agencies to provide necessary resources or compel their participation. And, the annual strategies have not identified and prioritized issues that required the most immediate attention. Each strategy contained more priorities than could be realistically achieved, the priorities have not been ranked in order of importance, and no priority has been explicitly linked to a threat and risk assessment. Further, although the 2001 and 2002 strategies contained initiatives to measure program performance, none had been used to ensure accountability for results. Officials attributed this to the difficulty in establishing such measures for combating money laundering. In addition, we noted that Treasury had not provided annual reports to the Congress on the effectiveness of policies to combat money laundering and related financial crimes, as required by the Strategy Act. As mentioned previously, unless reauthorized by the Congress, the requirement for an annual NMLS ended with the issuance of the 2003 strategy. To assist in congressional deliberations on whether there is a continuing need for an annual NMLS, we reviewed the development and implementation of the 1999 through 2002 strategies. Our September 2003 report recommended that—if the Congress reauthorizes the requirement for an annual NMLS—the Secretary of the Treasury, working with the Attorney General and the Secretary of Homeland Security, should take appropriate steps to strengthen the leadership structure responsible for strategy development and implementation by establishing a mechanism that would have the ability to marshal resources to ensure that the strategy’s vision is achieved, resolve disputes between agencies, and ensure accountability for strategy implementation; link the strategy to periodic assessments of threats and risks, which would provide a basis for ensuring that clear priorities are established and focused on the areas of greatest need; and establish accountability mechanisms, such as (1) requiring the principal agencies to develop outcome oriented performance measures that must be linked to the NMLS’s goals and objectives and that also must be reflected in the agencies’ annual performance plans and (2) providing the Congress with periodic reports on the strategy’s results.