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Internal Memo

Re: FBI Terrorist Financing Operations Section Briefing

Date: July 7, 2003
Time: 1:00 p.m.
Location: FBI HQ
Attendees: Dennis Lormel, Chief TFOS
Jan Pettigor (ph), Deputy Chief, TFOS
Gurvais Grigg TFOS
Greg Brettzing (ph), TFOS
FBI Attorneys: Pat O'Brien, Bob Sinton, Mary Incontro,
John Roth, Doug Greenburg, Serena Wille, Dieter Snell
Duration: 3 hours
Nature: Overview of TFOS and Related Issues
Classification: Law Enforcement Sensitive
Write-up: Prepared July 7-8 by D. Greenburg

The FBI proposed this informal briefing as a preliminary response to item 10 of

Commission Document Request Number 5. There was no discussion of ground rules up
front, but we have deemed the briefing "off the record," consistent with other background
briefings the FBI has provided.

At the outset, the FBI handed out two powerpoint presentations: Terrorist
Financing Operations Section, Financing of Terrorism & Terrorist Acts and Related Acts
of Money Laundering (a 35 page black and white presentation, dated 7/07/2003) and
Terrorist Financing and Proactive FBI Efforts (an undated 74-page color presentation).
Dennis Lormel began the briefing with an overview of TFOS. Gurvais Grigg then
provided a briefing on TFOS's data mining efforts. The format was informal, with
substantial Q & A throughout; other attendees also participated.

This memorandum includes what we considered to be the most significant points

from the briefing but is not a comprehensive or verbatim account. It generally does not
repeat information provided in the handouts. The memorandum is organized by subject
matter and does not necessarily follow the order of the briefing.

TFOS Structure

Lormel said that pre-9/11 he served as Chief, Financial Crimes. He joined the
predecessor of TFOS when it formed as part of the 9/11 investigation. It is now a
permanent section focusing exclusively on terrorist financing. Lormel said TFOS
consists of 5 units, four of which are located at FBIHQ. The five sections are (1) a
section supporting the ITOS UBL unit, (2) a section supporting the ITOS Hamas-
Hizbollah unit, (3) a section working globally on the terrorist financing, including NGOs,

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(4) a.financial intelligence unit, arid (5J

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International Outreach

Lormel emphasized the TFOS international outreach program. As an example, he

| . jvere at FBIHQ that very day, collaborating on a project.
He also said the FBI has helped a number of other countries set up their own terrorist
financing units, based on the TFOS model. Among others, he said TFOS is working
closely with thd . I As part of the international
outreach program, TFOS, in conjunction with the. IRS, has developed a two-week course
on terrorist financing and money-laundering, which it has provided to a number of
countries. Separately, TFOS has made a number of trips] jwhere it has built a
constructive relationship with the central bank.

Lormel said the FBI's ability to get information and cooperation from foreign
countries has increased dramatically since 9/1 1 . He said he believes the improvement
results most significantly from President Bush's "you are with us or against us" speech,
which immediately changed attitudes and substantially reduced impediments to
international cooperation. Lormel also credited foreign countries' greater appreciation of
the severity of the threat after 9/1 1, as well as TFOS's establishing credibility and
visibility overseas by providing accurate information to foreign law enforcement
agencies. He cited Germany and Spain as countries to whom TFOS provided such
information. He said he has made it a priority for TFOS to deliver substance early and
often to its foreign counterparts, and he believes these efforts have generated reciprocal
cooperation.

Lormel said that TFOS made its initial international trips with the
Counterterrrorism Section. Now, TFOS travels alone, although it coordinates its travels
with the appropriate ITOS or Legat personnel. TFOS has started including P.O.
representatives in these foreign travels.

When asked whic countries are not cooperating sufficiently on terrorist financing
issues, Lormel stated the FBI has been frustrated at times by[

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::o . Lormel and Griggs saiffffia^..,..,^ jias not been cooperative on terrorist financing
issues, as/a.cesuLUxLiis laws. Griggs als'o sai'd| \iap not been cooperative.
Lormel saiq ''"'••-.. |was in denial it had a proWem un'ti'li I and is still not
, fully cooperative on financing issues. He said that TFOSis working closely with
1 [\s still very sensitive to domes'tiq |issues,
but generally cooperative.

Griggs said the Legal program built up in the 1990s paid substantial dividends
after 9/11. Specifically, the relationships forged by the Legats helped lay the groundwork
for the close cooperation with many countries that exists today.

24/7 Financial Tracking Capability

Lormel said that one of the key TFOS initiatives is "24/7 financial
monitoring/contacts."[

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J He said the existence

of this network is one of the key improvements since 9/11. It allows the FBI to access
information very quickly, which pre-9/11 may have taken weeks or months to obtain.
TFOS is careful to tap the network only in terrorist financing cases, where time is
potentially of the essence and not in routine historical investigations. This network has
been tapped successfully a number of times in response to threats. On at least one
occasion an attack was stopped, according to Grigg.

Griggs said that if asked to find a terrorist in the U.S. today by name, e.g., Al-
Mihdhar, the FBI would tap the 24/7 network. Griggs and Lormel said they would
expect to find any bank accounts held by the suspect very quickly using this network.
Griggs noted that the first investigative step would be to check Choicepoint or some other
commercial database to determine whether accounts exist. He acknowledged that that
this investigative technique would have been available before 9/11 as well.

They said their ability to do so has been greatly enhanced since 9/11 by their
development of this network. Pre-9/11, the process would have been very slow and
unreliable. When asked what allowed the increased speed, Griggs and Lormel said it was
a combination off
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When asked about a suspect using in the U.S. a credit card issued by a foreign
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Griggs also said the FBI would search for the suspect by pinging all its other
databases for any relevant information. Incontro interjected that, in fact, the FBI would
make an all out effort beyond the financial arena, including questioning detainees, to find
the suspect.

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Other TFOS Initatives

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Lormel said TFOS has a number of current investigations of extremists operating

in the U.S. in connection with certain mosques. He walked through a model of an
extremist cell revolving around a Mosque, which appears in the prepared materials. In
this regard, he cited the recent Casablanca attacks as an example of such a cell taking
terrorist action. When asked about cross-over between funding of different terrorist
groups, Lormel said TFOS has seen some cross-over between Hamas and Al-Qaeda
funding, but not a great deal. (There also is some cross-over between Hamas and
Hizbollah, he said).

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TFOS Relationship with Field Offices

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Lormel said one of TFOS's roles is to assist field offices in handling terrorist
financing investigations, which frequently are document intensive. In this regard, TFOS
helps F.O.s develop operational plans for conducting such investigations. TFOS also can
provide resources for helping with imaging and maintaining documents etc.

Lormel said each P.O. has a Terrorist Financing Coordinator, who is also
supposed to be working with the JTTFs. Eventually, LormePs hope is that the TFCs will
be full-time in that position, which is currently not the case. Lormel was not initially
satisfied with the F.O.s response to the directive to establish TFCs. Many did not have
financial experience. Lormel said the situation has improved.

TFOS also has a goal of bringing the TFCs into the 24/7 networks discussed
above. TFOS has assessment teams that assess F.O.s and their ability to handle Terrorist
Financing investigations. Lormel said the Director and Pat Dimuro have been pretty
clear with the SACs that terrorist financing is a priority and should be addressed
consistently with TFOS's goals.

Lormel said there is no formal mechanism by which F.O.s report to TFOS that
they are working on a terrorist financing investigation. Instead, TFOS put the word out
informally and usually hear about relevant investigations. Although Lormel stated TFOS
was not aware of every investigation related to terrorist financing, he said TFOS is aware
of most of them. He said the process needs to be improved, although he is reluctant to
impose any type of strict reporting requirements. He said the reporting may be done
through the TFCs, once they become full time. The situation regarding knowledge will
improve once the FBI institutes a new series of file codes, since one relates specifically to
terrorist financing. Griggs stated the relationship between TFOS and the F.O.s is not
adversarial. Instead, the F.O.s seek TFOS out for guidance.

Lormel said TFOS bears the responsibility of tracking the terrorist financing cases
and making sure they are progressing, as well as identifying who is working on what and
tying things together. HQ agents have responsibility for monitoring specific cases, and
the Director expects them to know what is going on in those cases. Lormel said that
TFOS has leverage because HQ is the office of origin for all terrorism cases, including
terrorist financing, and TFOS can go up the chain of command if necessary to get the
F.O.s to respond. Additionally, TFOS has leverage as a result of its inspection teams.

Lormel said that if a major terrorist financing investigation came in today, the
appropriate P.O. would take the lead in running the investigation, and TFOS would likely
play a major role as well. The TFOS assessment team would assess their abilities and
needs. Also, TFOS could provide assistance in document management, and could
potentially dispense a team to help image and bates-stamp documents.

Lormel said that pre 9-11 there was little, if any, specific focus on financing in
terrorist cases [as opposed to distinct terrorist fund-raising cases]. He also that prior to
9/11, there was no consistent response by the F.O.s to terrorist financing, and the F.O.s
had a very difficult time getting access to any records outside of the U.S.
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State Regulators

Lormel said TFOS has coordinated substantially with State banking regulators but
has not substantially engaged State Attorneys General, or other charities regulators -with
a couple of exceptions. He said doing so would be a good idea in the future.

Document Request

Pat O'Brien initiated a discussion of item 9 of our document request, concerning

investigations of various entities. The agents present agreed that pre-9/11 there was no
centralized tracking of terrorist financing investigations. We had a brief discussion of
which documents exist that would summarize the investigations. SA Brettzing agreed
with our suggestion that the periodic FFI or FISA renewals would provide a summary of
that particular investigation to that date. He said the summaries tended to be cumulative,
so the later ones would be best. These would have to be obtained on a P.O. basis, since
multiple F.O.s were investigating the subject entities.

Database, Data Mining and Computer Issues

Griggs explained that TFOS has created a National Terrorist Financing Database,
known as RAID. Data from many, although not all, terrorist financing investigations is
currently being put into RAID. Resource limitations prevent all terrorist financing
information from being included, although what TFOS deems most the most significant
cases are included. Information from RAID is provided to various agencies. For
example, IRS, which has just started a new counter-terrorism initiative, will have access
to RAID information. Eventually, the RAID database will be rolled into the FBI
network.

Lormel candidly admitted the extreme weakness of the FBI's computer

capabilities. He said TFOS is trying to make optimum use of what the FBI has and doing
what it can to enhance the existing capabilities, while waiting for the FBI's overall
computer capabilities to be improved. In this regard, Griggs suggested we attend the July
15 briefing on the FBI's total IT program.

According to Griggs, an IG review of a smaller F.O. determined that there was a

backlog of information to be put into the ACS database.

Griggs took over the briefing to address data mining. A former white collar
investigator, he appears to be taking the lead for TFOS in this area. He described the
FBI's substantial progress since 9/11 in moving to computerized records. TFOS is now
making great effort to scan financial records so that the raw data can be searched for
things like addresses, SSNs, account numbers etc. Previously, the FBI would keep the
data in hard copy, an agent or analyst would review it, and post a summary on the FBI
system. The process was slow and the end result was only the summary could be
searched electronically. By scanning the source documents, TFOS can access them
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immediately and make full use of all the data in the documents. As a result, TFOS is
finding links that never would have been found pre-9/11. Griggs said he hopes the entire
FBI will move to this electronic approach. Right now, however, the FBI is devoting its
resources to the terrorism financing area, where speed is most critical.

Griggs said he likes what he has seen of FinCEN's AI system and thinks they are
, on the right track. He believes, however, FinCEN is stretched too thin and lacks
\s for its mission. I I
\ He said he does not know why the FBI is
\t getting this other data; as far as he knows, they have not asked for it. If they had it,
\e FBI could do everything FinCEN does in the area of terrorist financing. Lormel said
\e plans to discuss data access with Jim Sloan at FinCEN.

Griggs described various of the FBI's specific data mining projects (as set forth in
\e presentation) and its efforts to develop predictive models. On the latter point, he said
TFOS is making progress, but is not where it wants to be. He said, however, TFOS is in
a position to give financial institutions some useful data about what a terrorist cell or a
'• terrorist financing operation looks like.j^

Lormel and Griggs were reasonably optimistic about the chances the FBI will
address its severe computing shortcomings. Griggs said the FBI is in the final stages in
laying the hardware pipeline that will allow substantial data transmissions between
offices. He also is optimistic about the prospects for the new Virtual Case File system
and the SCOPE tools for manipulating data, which the FBI plans to roll out.

Private Sector

Overall, Griggs said the banking and financial services industry, in NY and
elsewhere, has been tremendously helpful and cooperative since 9/11. No bank wants to
unwittingly be used to facilitate a terrorist attack, and banks are trying to ensure this does
not occur. That said, Griggs stated there has been a diminution in urgency since 9/11.
Lormel said that only continued bombings, like recently seen overseas, can keep the
sense of urgency the same.

Other Potential Witnesses

Lormel suggested we talk to John Byrne or Rick Small about the private sector's
efforts. He suggested we talk to Ezra Levine in DC about the efforts of Western Union
and similar companies, most of whom Levine represents. Griggs said we could go to
companies like Choicepoint, Lexis/Nexis or Dun and Bradstreet to understand their
capabilities.

Lormel said Doug Bricker will be running the IRS's new counter-terrorism
initiative.

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Lormel said TFOS is involved in the FTTTF, based in Crystal City. He identified
Mark Tanan (ph) as a POC we could call there.

Wish List

When asked what legislative or regulatory tools they need, Griggs said it is
critical that banks move to electronic filing of SARS, CTRs, and CMlRs. He also said it
would be enormously beneficial if the banking industry, through the ABA or some other
entity - not necessarily government regulation, moved to a uniform system of storing
financial records electronically. Ideally, Griggs wants the FBI to be able to obtain
financial records (through legal process) electronically, rather than have to undertake the
process of scanning. (Other legislative wishes are referenced at slide 146 of the color
presentation).

Griggs said in a perfect world the FBI would be able to access bank data on a
secure database, as contemplated by Section 314(a) of the Patriot Act. Such a system is
not yet available, however. Griggs also said the PACs will be a huge boon to TFOS,
when it is fully up and running.

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