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. Opportunities Exist to Improve the National Money Laundering Strategy

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. 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. 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. Most Key Memorandum of Agreement Provisions Have Been Implemented, but Terrorist Financing Investigations Still Present Operational and Organizational Challenges

As mentioned previously, the NMLS was adjusted in 2002 to reflect new  federal priorities in the aftermath of the September 11 attacks, including a  goal to combat terrorist financing. However, due to difficulties in reaching  agreement over which agency should lead investigations, the 2002 NMLS  did not address agency and task force roles and interagency coordination  procedures for investigating terrorist financing. Law enforcement officials  told us that the lack of clearly defined roles and coordination procedures  contributed to duplication of efforts and disagreements over which agency  should lead investigations. Also, the FBI and ICE have developed collaborative procedures to  determine whether appropriate ICE money laundering investigations or  financial crime leads may be related to terrorism or terrorist financing. Another provision in the May 2003 Memorandum of Agreement required  that the FBI and ICE jointly report to the Attorney General, the Secretary  of Homeland Security, and the Assistant to the President for Homeland  Security on the implementation status of the Agreement 4 months from its  effective date. As of May 2, 2004, the FBI and ICE had not yet produced the  required joint report on the implementation status. Also, most of the NMLS  initiatives designed to enhance interagency coordination of money  laundering investigations have not yet achieved their expectations.
Why GAO Did This Study

Money laundering provides the fuel for terrorists, drug dealers, arms traffickers, and other criminals to operate and expand their activities. GAO focused on two issues. The first is whether the nation's annual National Money Laundering Strategy has served as a useful mechanism for guiding federal law enforcement efforts to combat money laundering and terrorist financing. Unless reauthorized by the Congress, the annual requirement ended with the 2003 strategy. The second issue is the implementation status of a May 2003 Memorandum of Agreement, signed by the Attorney General and the Secretary of Homeland Security, that was designed to enhance the coordination of terrorist financing investigations conducted by the Federal Bureau of Investigation (FBI) and the U.S. Immigration and Customs Enforcement (ICE).

What GAO Found

GAO's September 2003 report noted that the annual strategy generally has not served as a useful mechanism for guiding the coordination of federal law enforcement agencies' efforts to combat money laundering and terrorist financing. For example, although expected to have a central role in coordinating law enforcement efforts, interagency task forces created specifically to address money laundering and related financial crimes generally had not yet been structured and operating as intended and had not reached their expectations for leveraging investigative resources or creating investigative synergies. Also, while the Departments of the Treasury and Justice had made progress on some strategy initiatives designed to enhance interagency coordination of money laundering investigations, most initiatives had not met expectations. Moreover, even though adjusted in 2002 to reflect a new federal priority--combating terrorist financing--the strategy did not address agency and task force roles and interagency coordination procedures for investigating terrorist financing, which contributed to duplication of efforts and disagreements over which agency should lead investigations. GAO's February 2004 report noted that the FBI and ICE had implemented or taken concrete steps to implement most of the key provisions in the May 2003 Memorandum of Agreement on terrorist financing investigations. For instance, the agencies had developed collaborative procedures to determine whether applicable ICE investigations or financial crimes leads may be related to terrorism or terrorist financing--and, if so, determine whether these investigations or leads should thereafter be pursued under the auspices of the FBI. However, as of May 2, 2004, the FBI and ICE had not yet issued a joint report on the implementation status of the Agreement, which was required 4 months from its effective date. Also, GAO noted that the FBI and ICE have confronted and will continue to confront a number of operational and organizational challenges, such as ensuring that the financial crimes expertise and other investigative competencies of both agencies are appropriately and effectively utilized.