August 10, 2006
HP-55

Assistant Secretary for Terrorist Financing
Pat O’Brien
Prepared Remarks
--The President’s New International Initiative
to Combat Kleptocracy--

One of the key missions of the U.S. Treasury Department is to safeguard the U.S. and international financial systems against financial crime. A critical component of this charge is ensuring that the international financial system is not available to kleptocrats seeking to transfer their ill-gotten gains.

The importance of this mission is not only recognized by the United States, but also our partners around the globe. Indeed, the G8 Leaders just last month underscored this importance by committing "to prosecute acts of corruption and to prevent(ing) corrupt holders of public office from gaining access to the fruits of their kleptocratic activities in our financial systems."

Treasury, together with the Departments of Justice and State, actively assist countries seeking to recover official assets looted by kleptocrats. At the request of foreign governments, or pursuant to UN Security Council Resolutions and U.S. laws and executive orders, Treasury financial investigators can provide key support in identifying and tracing looted assets belonging to foreign countries. In certain cases Treasury can also be granted specific authority to freeze kleptocrats and their networks out of the US financial system.

For example, on June 19, 2006, President Bush issued Executive Order 13405 – Blocking the Property of Certain Persons Undermining Democratic Processes or Institutions in Belarus – which explicitly incorporated kleptocratic behavior in Belarus as a basis for designation.  

This targeted measure serves as an example of the means available to the U.S. Government to deter other public officials from using the international financial system to move the proceeds of grand scale corruption.

A large part of the Treasury Department's anti-kleptocracy efforts involve working to close the vulnerabilities in the financial system. Treasury continues to forge a coalition of international financial centers to strengthen our ability to detect illicit use of the financial system by kleptocrats and other illicit actors.

Treasury does this through such means as bilateral technical assistance, as well as coordination with international financial institutions, the Financial Action Task Force, and the UN and other international organizations. Indeed, playing a critical role is the FATF, which is the premier international inter-governmental organization for the development and promotion of national and international policies, standards, and norms to combat money laundering and terrorist financing. The FATF standards recognize and reflect the close nexus between money laundering and corruption, as kleptocrats moving their corruption proceeds routinely need to launder funds in order to hide the true origins of their funds and move monies from their home country.

The FATF, along with the International Monetary Fund and the World Bank, assesses countries' compliance with the anti-money laundering and counter-terrorist financing standards (AML/CFT). These standards include recommendations requiring enhanced due diligence for politically exposed persons in order to identify and prevent the transfer of the illicit proceeds of kleptocrats. Ensuring international compliance with these standards is an important step in ensuring that kleptocrats do not profit from their criminally derived proceeds.

With Treasury leadership, the IMF and World Bank endorsed the inclusion of comprehensive AML/CFT assessments as a regular part of all financial sector assessments and ongoing surveillance. Treasury also supports World Bank and IMF efforts to provide technical assistance to strengthen AML/CFT regimes worldwide. The frequency of technical assistance programs has increased in recent years, in part due to U.S. leadership within the G-7 and the international financial institutions.

Treasury – through the FinCEN, the U.S. financial intelligence unit (FIU) – also improves countries' capacity through conducting assessments of, providing training programs and briefings for, and engaging in personnel exchanges with foreign FIUs. FinCEN also provides AML/CFT financing training and other support to partner international policymakers and regulators.

Finally, Treasury recognizes that an important final piece to our national strategy against kleptocrats is establishing an appropriate mechanism for the return of assets. The Treasury applauds the World Bank Group's efforts to explore its role in the restitution of looted assets and the responsible management of these recovered assets.

Treasury understands that protecting the financial system from abuse by kleptocrats – among other illicit financiers – is integral to international financial stability and global security and to this end, we continue to work for closer bilateral and international cooperation. Preventing kleptocrats, terrorists, proliferators, and other rogue actors from using the financial system to bankroll their agendas is truly a critical component of our national and economic security.