Testimony — Dam Page 1 of 14

U.S. SENATE COMMITTEE ON

BANKING, HOUSING, AND URBAN AFFAII

Hearing on "The Financial War on Terrorism and the Administration's

Implementation
of the Anti-Money Laundering Provisions of the USA Patriot Act."

Prepared Statement of the Honorable Kenneth W. Dam

Deputy Secretary
Department of the Treasury
10:00 a.m., Tuesday, January 29, 2002 - Dirksen 538

Chairman Sarbanes and distinguished members of the Senate Banking Committee, thank
you for inviting me to testify about the Treasury Department's efforts to disrupt terrorist
financing and, in particular, the steps we are taking to implement the provisions of the
International Counter-Money Laundering and Financial Anti-Terrorism Act of 2001.1
have asked Under Secretary for Enforcement Jimmy Gurule to join me today.

On September 24, 2001, President Bush stated, "we will direct every resource at our
command to win the war against terrorists, every means of diplomacy, every tool of
intelligence, every instrument of law enforcement, every financial influence. We will
starve the terrorists of funding." The Treasury Department is determined to help make
good on this promise. I am here today to tell you about the progress we have made and
some of the complexities we still face.

Much of our progress is directly attributable to the Congress and this Committee. The
swift passage of the USA PATRIOT Act and, in particular, Title HI of that Act - the
International Counter-Money Laundering and Financial Anti-Terrorism Act of 2001,
have given us important new tools in the financial front of the war on terrorism. To
highlight just two aspects of the Act:

• The Act requires financial institutions to terminate correspondent accounts

maintained for foreign shell banks and to take reasonable steps to ensure that they
do not indirectly provide banking services to foreign shell banks. Treasury provided
immediate, interim guidance to financial institutions, suggesting that they obtain
certification from all foreign banks with correspondent accounts that they were not
shells and that the foreign banks did not themselves maintain correspondent
accounts for shell banks.
• The Act requires all financial institutions to have an anti-money laundering program

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