Testimony
of John P. Clark, Interim Director, Office of Investigations, Bureau of
Immigration and Customs Enforcement, Department of Homeland Security,
Hearing of the Senate Judiciary Committee, May 13, 2003
Testimony
United States Senate Committee on the Judiciary
Narco-Terrorism: International Drug Trafficking and Terrorism –
A Dangerous Mix
May 20, 2003
Mr. John
P. Clark
Interim Director, Office of Investigations, Bureau of Immigration and
Customs Enforcement , Department of Homeland Security
--------------------------------------------------------------------------------
Good Morning, Chairman Hatch, Senator Leahy, and distinguished members
of the committee. It is a pleasure and a privilege to be here today
to discuss the efforts undertaken by the Bureau of Immigration and Customs
Enforcement (BICE) in its role in investigating international drug smuggling
and money laundering as it relates to narco-terrorism. Prior to beginning
my specific testimony, I would like to provide some background on our
new Bureau. With the creation of the new Department of Homeland Security,
the investigative and intelligence functions of the former U.S. Customs
Service and the Immigration and Naturalization Service have been merged
to form the Bureau of Immigration and Customs Enforcement under the
Department of Homeland Security. In addition, the Bureau includes the
Air and Marine Interdiction Division, the Detention and Removal Program,
and the Federal Protective Service. In part, the mission of BICE is
to protect the United States and its citizens by deterring, interdicting,
and investigating threats arising from the movement of people and goods
into and out of the United States.
BICE utilizes the broad legal authorities of its legacy components to
investigate and enforce violations of law as they had previously, and
under BICE, will continue, to protect the United States and its citizens
from the dangers posed by criminal organizations, including those linked
to narcotics trafficking and terrorism. BICE has the authority to investigate
numerous violations, including violations of Immigration laws, export
laws, money laundering, smuggling, fraud, and cyber crimes -including
child pornography.
BICE investigations have led to the identification, penetration, and
prosecution of individuals and groups who were identified as being members
of, or are linked to, designated terrorist organizations such as the
FARC (Revolutionary Armed Forces of Colombia) and the AUC (United Self-Defenses
of Colombia). Furthermore, BICE, with its formidable money laundering
and counter narcotics programs and initiatives, has disrupted and dismantled
narcotics smuggling organizations and the financial mechanisms utilized
to launder their criminal proceeds.
Background
It is one of our top priorities to identify, investigate, and dismantle
the criminal organizations that specialize in the transportation and
smuggling of contraband and illegal aliens. The title of this hearing
today, “Narco-Terrorism: International Drug Trafficking and Terrorism-A
Dangerous Mix” is in essence the challenge faced by BICE special
agents on a daily basis. The transportation organization that is paid
to smuggle cocaine today may very well be contracted to smuggle instruments
of terror or terrorists tomorrow. Historically these smuggling organizations
have easily adapted to law enforcement efforts to detect their activity.
As a result, BICE investigations have become increasingly complex.
It is clearly evident that the illicit narcotics trade generates enormous
profits for criminal organizations. These organizations thrive on their
ability to amass huge sums of money. BICE utilizes a multi-pronged approach
to investigate these organizations. In an effort to disrupt and dismantle
these organizations, BICE focuses not only on the inbound smuggling
of contraband but also the outbound flow of criminal proceeds.
BICE’s authority to conduct financial investigations has been derived
from a variety of laws that include the 1970 Bank Secrecy Act, 1986
Money Laundering Control Act, the Anti-Drug Abuse Act of 1988 and the
2001 USA PATRIOT Act. In addition, various Memorandums of Understanding
(MOU’s) between the Secretary of the Treasury, the Attorney General
and the Postmaster General have been executed regarding the conduct
of money laundering investigations. These MOU’s delineate the specified
unlawful activities and investigative authorities in which BICE has
jurisdiction.
BICE began conducting financial investigations after the enactment of
the Bank Secrecy Act (BSA) in 1970. With border search authority, BICE
was well suited for investigative activity pursuant to Title II of the
BSA, the “Currency and Foreign Transactions Reporting Act”
under Title 31 of the U.S. Criminal Code. After the events of 9/11,
Congress gave BICE additional tools to combat the movement of money
into and out of the United States. Title III of the USA PATRIOT Act,
“The International Money Laundering Abatement and Financial Anti-Terrorism
Act”, added bulk cash smuggling, 31 U.S.C. 5332, to the BICE arsenal.
In addition, the USA PATRIOT Act expanded the application of the prohibition
on unlicensed money transmitting businesses, 18 U.S.C. 1960.
Since its inception, BICE has had the authority to enforce anti-smuggling
statutes to include 18 U.S.C. 545. This authority allows BICE the ability
to investigate the unlawful importation of any form of contraband. With
Title 21 cross designation, BICE has been authorized by the Department
of Justice, and more specifically, the Drug Enforcement Administration,
to investigate narcotics smuggling organizations. Enforcement of Title
8 of the U.S. Code allows BICE to target individuals or groups of individuals
who are attempting to or have entered the United States for illicit
purposes. These authorities, combined with our broad border search authority,
place BICE in a ideal position to fully investigate smuggling of contraband
and humans by sophisticated smuggling organizations while also targeting
the financial mechanisms utilized by these elements to launder their
illegal proceeds.
One such laundering mechanism is the Black Market Peso Exchange (BMPE),
a trade-based money laundering system. The exchange allows drug traffickers
to transfer their U.S. profits from dollars to pesos without moving
cash across borders. Typically, peso exchange brokers in Colombia deposit
pesos into the Colombian accounts of narcotics traffickers doing business
in the United States. The pesos are profitably exchanged for the tainted
U.S. dollars. The brokers have U.S. based operatives deposit the U.S.
money into U.S. accounts that the brokers then use to purchase U.S.
goods for Colombian importers in exchange for pesos. The products are
then smuggled into Colombia, often through Panama, Aruba, and Venezuela,
to avoid paying taxes in Colombia.
BICE has an ongoing aggressive investigative approach concerning the
BMPE, which includes utilizing investigative techniques such as undercover
investigations, Title III wire intercepts, intelligence gathering, international
coordination and training of our international law enforcement counterparts.
BICE undercover operations directed at the peso brokering system have
resulted in the seizure of more then $800 million in cash and monetary
instruments in the last eight years. Undercover investigations conducted
by BICE have targeted hundreds of Colombian brokers, accounts, and domestic
money laundering and drug trafficking cells operating in several U.S.
cities, Central and South America, as well as Europe and Asia.
Case Examples
Operation Wire Cutter was a major joint money laundering investigation
conducted by BICE, the Drug Enforcement Administration, personnel assigned
to the U.S. Embassy in Bogotá, Colombia and Colombian law enforcement
authorities that targeted high level Colombian drug trafficking organizations
and their cells.
Operation Wire Cutter began in September 1999 when BICE agents in New
York developed information about suspected money brokers, who were using
the BMPE scheme to launder millions of drug dollars. The primary defendants
were eight senior money brokers, located in Bogotá, Colombia.
Each of these money brokers headed distinct organizations that provided
money-laundering services to several drug cartels on a contract basis.
Subsequently, undercover BICE agents picked up drug money from operatives
of the money brokers in New York, Miami, Chicago, Los Angeles and San
Juan, Puerto Rico. At the same time, the Colombian authorities conducted
a parallel investigation on the BMPE money brokers and their associates
in Colombia. Operation Wire Cutter marked the first time that U.S. authorities
were able to combine undercover pick-ups of drug proceeds in this country
with investigative efforts by Colombian authorities to target BMPE money
brokers. Operation Wire Cutter resulted in the arrest of 37 individuals
(29 in the United States and 8 in Colombia). U.S. authorities also seized
more than $8 million, as well as 400 kilograms of cocaine, 100 kilograms
of marijuana and 6.5 kilograms of heroin. To date, five money brokers
in Colombia have been extradited to the United States. This represents
the first time that a money broker has been extradited from Colombia
to the United States.
As I mentioned previously, the transportation organization that is paid
to smuggle cocaine today may very well be contracted to smuggle instruments
of terror tomorrow. By using internal conspiracies, criminals utilize
corrupt personnel within the seaport and airport environment to introduce
contraband or implements of terrorism into otherwise legitimate cargo
or conveyances and to remove it prior to examination by the Bureau of
Customs and Border Protection.
In an ongoing investigation targeting internal conspiracies at a major
U.S. seaport, BICE Special Agents have uncovered the endemic practice
of contraband being removed from international cargo prior to the entry
process. Utilizing a variety of investigative techniques including undercover
operations and controlled deliveries to successfully infiltrate the
internal conspirators, hundreds of individuals have been arrested and
convicted, thousands of pounds of cocaine and hundreds of pounds of
heroin have been seized.
Another significant internal conspiracy investigation conducted by BICE
Special Agents, in conjunction with the Drug Enforcement Administration,
was Operation "Ramp Rats". Operation “Ramp Rats”
targeted corrupt employees working at Miami International Airport and
resulted in more than 70 indictments and arrests. Thirty of those arrested
were employees of a major domestic airline. Those arrested in this investigation
were charged with varied violations of the federal narcotics laws such
as conspiracy to import cocaine into the United States and conspiracy
to possess cocaine.
Both of these investigations have targeted corrupt employees in the
transportation industry, resulting in the facilitation of smuggling
schemes used by criminal organizations. BICE is aggressively implementing
programs to address these weaknesses that include the assignment of
additional investigative personnel, the utilization of technology and
the combination of various law enforcement and security components to
counter these threats.
Recently, BICE drug trafficking and money-laundering investigations
have highlighted the link between drug trafficking and terrorist organizations.
An adjunct of these investigations is the link between the Drug Trafficking
Organizations and Colombia’s illegal armies. In October 2002, BICE
arrested Libardo Ernesto FLOREZ GOMEZ after he arrived at Miami International
Airport. Upon arrival he declared over $180,000 in U.S. currency. A
subsequent secondary examination revealed multiple financial records,
blank pre-signed checks, a DEA seizure letter and a document that alleged
his link to the FARC (Colombian Revolutionary Armed Forces). FLOREZ
GOMEZ admitted that the funds declared were not his. On April 4, 2003,
FLOREZ GOMEZ pled guilty to one count of 18 USC 1960 for his involvement
in operating an unlicensed money transmitting businesses and is currently
awaiting sentencing.
Currently, BICE is participating in a highly successful joint Organized
Crime Drug Enforcement Task Force investigation with the Drug Enforcement
Administration and the Federal Bureau of Investigation that is targeting
the maritime transportation of multi-ton shipments of cocaine belonging
to the Colombian drug cartels. This investigation has led to indictments
against several ostensibly high-ranking members of the AUC. These individuals
were indicted for involvement in the maritime transportation of over
of 12 tons of cocaine. As a result of the investigation, a direct link
between drug trafficking and known terrorist organizations has been
established. Narco-Terrorism will continue to be a top priority of BICE.
Closing
In conclusion, I would like to thank the distinguished members of this
committee for the opportunity to speak before you today, and will be
glad to address any questions you may have.
As of May 29, 2003, this document was also available online at http://judiciary.senate.gov/testimony.cfm?id=764&wit_id=2112
