8 July 2003
Source: http://usinfo.state.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=03070801.clt&t=/products/washfile/newsitem.shtml


US Department of State
International Information Programs

Washington File
_________________________________

08 July 2003

U.S. Boosts Money Laundering Investigation Capabilities

(Homeland Security Dept. also to help private sector eliminate
vulnerabilities) (920)

The U.S. Department of Homeland Security has launched a new initiative
intended to intensify investigations of money laundering crimes and
help the private sector shore up weaknesses in financial systems.

In July 8 remarks at the New York Federal Reserve, Homeland Security
Secretary Tom Ridge said that the department has taken action in
response to criminal organizations' attempts to seek new ways to
finance their operations.

Operation Cornerstone, as the initiative is known, aims at identifying
ways in which criminals launder their illegal profits, bringing them
to justice and eliminating vulnerabilities in financial systems,
according to a July 8 department news release.

The department also announced a new program to share with the private
sector data on security gaps discovered during investigations to help
private companies improve defenses against money laundering and other
financial crimes. In addition, the department said, it is expanding a
task force that investigates computer-based crimes.

Following is the text of the news release:

(begin text)

U.S. DEPARTMENT OF HOMELAND SECURITY
Office of the Press Secretary
July 8, 2003

SECRETARY RIDGE ANNOUNCES NEW FINANCIAL INVESTIGATIONS INITIATIVES

Unveils Comprehensive New Programs to Protect U.S. Financial Systems
from Criminal Exploitation

NEW YORK, NY -- In a speech at the New York Federal Reserve, the
Secretary of Homeland Security, Tom Ridge, today announced programs to
safeguard the nation's financial systems against criminal
exploitation. Two of the many actions being taken by the Department of
Homeland Security (DHS) include the creation of a new financial crimes
investigative initiative and an expansion of already successful
electronics crime task forces. Secretary Ridge also announced a
groundbreaking initiative designed to share specific information with
the nation's top financial institutions, about financial systems
weaknesses discovered through the Department's criminal
investigations.

Secretary Ridge announced Operation Cornerstone, a new financial
investigations initiative that will not only prosecute money
laundering crimes but will initiate a new approach of working with the
private sector to shore up potential weaknesses in financial systems.

In short, Operation Cornerstone, run by the Bureau of Immigration and
Customs Enforcement (ICE), is a new financial investigations program
that will identify vulnerabilities in financial systems through which
criminals launder their illicit proceeds, bring the criminals to
justice and work to eliminate the vulnerabilities. Through a working
partnership with industry representatives, ICE will share information
learned from these investigations to eliminate industry-wide security
gaps that could be exploited by money launderers and other criminal
organizations.

Secretary Ridge also announced that the Secret Service is expanding
its highly successful Electronic Crimes Task Forces to four additional
cities. The Secret Service currently runs task forces in 9 cities. The
four new cities are Cleveland, Houston, Dallas and Columbia, South
Carolina. The 9 existing task forces are operating in New York, Los
Angeles, Miami, Charlotte, San Francisco, Las Vegas, Boston, Chicago,
and Washington, D.C.

These task forces investigate a wide range of computer-based criminal
activity. Examples include e-commerce [electronic commerce] frauds,
identity crimes, telecommunications fraud, and a wide variety of
computer intrusion crimes that affect a variety of infrastructures.
Since its inception in 1995, the New York Electronic Crimes Task Force
alone has charged over 800 people with electronic crimes valued at
more than $500 million.

Earlier in the day Secretary Ridge toured the Secret Service's
Electronic Crimes Task Force in New York, as well as ICE's El Dorado
Task Force. The El Dorado Task Force has investigated numerous money
laundering and other financial crimes since its inception in 1992. In
eleven years El Dorado Task Force agents have arrested 1,753
individuals and seized nearly $560 million in criminal proceeds.

"Safeguarding the integrity of America's financial systems is a key
part of homeland security," said Secretary Ridge. "Criminal
organizations are seeking new ways to finance their operations, and
the Department of Homeland Security is moving aggressively to identify
vulnerabilities within U.S. financial systems that could be exploited
to those ends."

To aid the financial industry in its own efforts to shore up
vulnerabilities in its systems, Secretary Ridge announced a new
program jointly run by ICE and the Secret Service. Under this new
program called SHARE (Systematic Homeland Approach to Reducing
Exploitation), officials from the Secret Service and ICE will jointly
conduct semi-annual meetings with executive members of the financial
and trade communities impacted by money laundering, identity theft,
and other financial crimes. In these meetings special agents and
analysts from the two Homeland Security agencies will share data on
specific investigative outcomes from investigations into money
laundering, identity theft, and other financial crimes.

By taking the Secret Service's long experience with investigating
crimes like counterfeiting, identity theft and credit card fraud, and
ICE's long experience with investigating illegal efforts to launder or
mask the true source of criminal proceeds -- and sharing that
experience with the financial community, American pocketbooks and bank
accounts will be far safer, Secretary Ridge explained in his remarks.

Before his speech, Secretary Ridge met with leaders from the top
financial institutions to brief them on the new initiative. "It's
critical we work in partnership with the financial community,"
Secretary Ridge told the financial leaders. "Unless we share the
specific findings of our investigations, we run the risk that our
nation's financial systems will remain vulnerable to exploitation. We
can't let that happen."

Secretary Ridge announced that the first meeting under the SHARE
program will take place by mid-October.

(end text)

(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)




08 July 2003 Homeland Security Department Fact Sheet on Financial Initiatives (New, expanded programs to safeguard U.S. financial infrastructure) (1770) The U.S. Department of Homeland Security has announced new initiatives and the expansion of existing programs aimed at protecting U.S. financial systems against money laundering and other financial crimes. Following is the department's July 8 fact sheet providing details of those programs: (Note: In the fact sheet "billion" equals 1,000 million.) (begin fact sheet) U.S. DEPARTMENT OF HOMELAND SECURITY Office of the Press Secretary July 2003 Fact Sheet Financial Investigations and Financial Infrastructure Protection The Department of Homeland Security plays a critical role in the government's efforts to investigate financial crimes and to help the financial community identify and eliminate potential weaknesses in our nation's financial infrastructure. DHS is drawing on the expertise of the Bureau of Immigration and Customs Enforcement (ICE) -- a part of the Border and Transportation Security Directorate -- and the U.S. Secret Service -- to expand their existing capabilities in an effort to better protect America's financial service systems from illegal money laundering, insurance schemes, identity theft, bulk cash smuggling, counterfeiting, credit card fraud and similar financial crimes. Initiatives: Expanding Electronic Crimes Task Forces from 9 to 13: Under the USA Patriot Act of 2001, the U.S. Secret Service was authorized to establish a nationwide network of electronic crimes task forces, drawing on its successful New York task force. Thus far, the Secret Service has established nine task forces in New York, Los Angeles, Miami, Charlotte, San Francisco, Las Vegas, Boston, Chicago, and Washington, D.C. Four additional electronic crimes task forces are being established in Cleveland, Houston, Dallas and Columbia, South Carolina The Thirteen Electronic Crimes Task Forces will: -- Focus primarily on computer-based crimes involving the theft of funds, credit information, identities, and network intrusions. -- Investigate identity crimes, telecommunications fraud, and computer intrusion crimes (such as credit card fraud). -- Identify weaknesses in key systems through which criminals could steal funds, credit card information or individual identities. -- Partner with federal, state and local law enforcement agencies, as well as key segments of the private sector (e.g., the telecommunications industry) and academic community to understand and eliminate systemic weaknesses. Launching Operation Cornerstone, A New Financial Investigations Program: The Bureau of Immigration and Customs Enforcement (ICE) is launching Operation Cornerstone -- a new financial investigations program to identify vulnerabilities in financial systems through which criminals launder their illicit proceeds, bring the criminals to justice, eliminate the vulnerabilities, and develop a working partnership with industry representatives to share information and close industry-wide security gaps that could be exploited by money launderers and other criminal organizations. Cornerstone will: -- Identity and assess the means and methods used by criminals to exploit financial systems in order to transfer, launder and otherwise mask the true source of criminal proceeds. -- Work with specific private sector industries to gather new information and reduce vulnerabilities found within existing financial systems. -- Assign a dedicated special agent to each of the 25 ICE field offices to liaison with the private sector. -- Investigate and prosecute criminal organizations exploiting emerging traditional and non-traditional financial systems. -- Work with financial institution security teams to help them understand how criminal organizations exploited financial systems in their industry. -- Provide the private sector with a quarterly report that details specific examples of how certain U.S. financial systems are being exploited by criminal organizations to transfer, launder or mask the true source of criminal proceeds. The report will provide recommendations to industry on how to detect and prevent such exploitation. Launching the SHARE program: Under the SHARE (Systematic Homeland Approach to Reducing Exploitation) program, officials from the Secret Service and ICE will jointly conduct semi-annual meetings with executive members of the financial and trade communities impacted by money laundering, identity theft, and other financial crimes, to share data on specific investigative outcomes from investigations into money laundering, identity theft, and other financial crimes. The first meeting under the SHARE program will take place by mid-October. Historic Expertise Protecting Against Computer-based Crime: -- Since 1984, the Secret Service has been the primary authority for the investigation of access device fraud, including credit and debit card fraud. -- Today, the vast majority of financial transactions are electronic. Billions of dollars are moved through financial payment systems each day. -- Identity crime includes identity theft, credit card fraud, bank fraud, check fraud, false identification fraud, and passport/visa fraud (See Appendix A for case examples). -- Identity crimes are almost always associated with other crimes such as narcotics and weapons trafficking, organized crime, mail theft and fraud, money laundering, immigration fraud, and terrorism. -- Last year the Secret Service arrested 1143 people for violations involving credit card or access device fraud. -- In FY 2002, the Secret Service opened 1833 new cases involving credit card fraud, with a potential dollar loss totaling $565 million. Protecting Against Money Laundering: -- Agents from the former U.S. Customs Service have investigated money laundering and similar financial crimes since the 1970's. This expertise is now vested in the Department's Border and Transportation Security Directorate, within ICE. -- Drug organizations and other criminal groups have used many methods to launder their illegal proceeds. ICE agents have investigated thousands of cases that used these various schemes. They are now using that expertise to not only investigate criminal organizations, but through the newly announced SHARE program, to also alert financial institutions about the methods - or typologies - they uncovered. -- ICE agents have become expert at investigating the complete range of systems exploited by money launderers and other criminals to cleanse or mask the source of their illicit proceeds, including banking systems, money services businesses, bulk cash smuggling systems, trade-based money laundering systems, illicit insurance schemes, and illicit charity schemes. (See Appendix A for case examples.) -- Billions of dollars in criminal proceeds each year flow through the nation's financial systems. In one case alone in the mid-1990's, ICE agents discovered a scheme that funneled more than $1 billion in drug proceeds from New York to Colombia through wire remitters. Protecting Against Counterfeiting: The U.S. Secret Service was founded in 1865 expressly to fight the counterfeiting that had become rampant during the Civil War -- nearly one third of all currency was fake. For 138 years, the Secret Service has worked to protect the integrity of our nation's currency. Today the Secret Service fights counterfeiting in new ways. -- New Color of Money -- On May 13, 2003, the new design for the latest $20 Federal Reserve Note was unveiled. The Secret Service worked closely with Treasury officials to develop features that make the bill more difficult to counterfeit. It's the first time that the U.S. dollar has been printed with colors other than green and black since the early 1900s, and the first time that offset printing -- for the background colors -- will appear on U.S. currency (See Graphic). -- New Features -- The new design also contains improved features to deter counterfeit notes produced using home computers, office copiers, and similar technology. These include: - Watermark -- the faint image similar to the large portrait, which is part of the paper itself and is visible from both sides when held up to the light. - Security thread -- also visible from both sides when held up to the light, this vertical strip of plastic is embedded in the paper. "USA TWENTY" and a small flag are visible along the thread. - Color-shifting ink -- the numeral "20" in the lower-right corner on the face of the note changes from copper to green when the note is tilted. The color shift is more dramatic and easier to see on the new-design notes. Partnering With the Law Enforcement and the Financial Community The Department of Homeland Security is launching the SHARE (Systematic Homeland Approach to Reducing Exploitation) program to provide private sector executives with progress updates on its financial investigations and information on new trends and vulnerabilities discovered during these investigations. The SHARE program is a joint ICE/Secret Service initiative that provides data on specific investigative outcomes to executive members of the financial and trade communities impacted by money laundering, identity theft, and other financial crimes. The first meeting will be convened by mid-October. DHS is also conducting joint studies and training programs for members of the financial and trade communities: -- As part of the Cornerstone Program, ICE has created a unit solely dedicated to providing training to the private sector on how to identify and prevent exploitation by criminal organizations. -- The Secret Service and the Computer Emergency Response Team Coordinating Center (CERT/CC) of Carnegie Mellon University have embarked on an analysis of network, system and database compromises committed by malicious insiders. The results of the "Insider Threat Study" will help the partnering agencies develop accurate information about insider intrusions that can help efforts to identity and prevent future intrusions before they occur. Leading Task Forces El Dorado Task Force: -- The El Dorado Task Force (EDTF) was started in 1992 as a joint initiative between the former Customs Service and the Internal Revenue Service. The mission of the El Dorado Task Force is to dismantle and disrupt money-laundering and criminal financing organizations operating in the New York/New Jersey area utilizing the tools and resources of all participating agencies. The EDTF, the largest money-laundering task force in the nation, has seized over $557 million dollars and arrested 1,753 individuals since its inception. -- The EDTF is made up of two components, an operational component and intelligence component. The operational component is housed in 7 offices and consists of 263 members from 37 agencies. The EDTF intelligence unit consists of 39 members from 12 agencies with participating liaisons from 5 agencies. -- The EDTF is comprised of representatives from the IRS, NYPD, New York State Police, FBI, Manhattan and Queens District Attorney Office. Electronic Crimes Task Forces: -- Since its inception in 1995, the New York Electronic Crimes Task Force has charged over 800 people with electronic crimes valued at more than $500 million. The task force has also trained over 13,000 law enforcement personnel and private representatives in the criminal abuses of technology and how to prevent them. -- With the passage in October 2001 of the USA PATRIOT Act, a direct response to the September 11th terrorist attacks, the U.S. Secret Service was authorized by Congress to expand beyond the New York City task force, and establish a nationwide network of similar electronic crimes task forces. -- The types of investigations handled by the task forces encompass a wide range of computer-based criminal activity. Examples include e-commerce frauds, identity crimes, telecommunications fraud, and a wide variety of computer intrusion crimes that affect a variety of infrastructures. (end fact sheet) (Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)