Thank you Mr. Chairman for holding this important hearing.
I also want to welcome Senators Kerry, Levin and Grassley, Chairman Oxley and Congressman LaFalce and the other witnesses who have joined us to testify before the committee this morning.
Mr. Chairman, I would be remiss if I did not applaud your stewardship in the process that resulted in the passage of the Title III money laundering provisions that were included in the "PATRIOT Act."
As the President has said on more that one occasion, we must leave no stone unturned in attempting to root out terrorism and the source of terrorist financing. The new authorities granted under this legislation to the Treasury and Justice departments and to other financial regulators and law enforcement communities will do just that.
In light of the September 11th attacks, there is no doubt that the new enemy that we face is not only highly trained and sophisticated in the ways of terrorism - but also very well-financed. We must root out the financial sources of terrorism, including those linked to money laundering and the drug trade, and eliminate them.
Mr. Chairman, while we applauding this effort, we should not consider our work done. What we've seen with Enron is an example of how secrecy and deceit can undermine an entire financial structure. Imagine what that type of offshore anonymity can provide to the terrorist seeking to undermine our democracy.
We must ensure that our laws, in protecting our citizens and are not used to protect the identities of those who would see us harmed.
The veil of offshore secrecy that Enron utilized is analogous to the types of financial activities that Senator Dodd and I sought to have looked at by Treasury, the SEC and the Fed with regards to hedge funds and other unregulated money managers.
The report language included in Section 356 of Title III requires our federal agencies to study the extent to which unregulated financial entities like hedge funds could be used to launder money or finance terrorism.
The very nature of these funds, and the anonymity that many of their investors enjoy, necessitate they undergo this scrutiny.
With demand for these types of funds growing, I find it troubling that we currently lack the ability to ascertain the who, what and where's of many of the individuals who invest in these funds offshore, which is done primarily through private banks and trusts.
The inability to obtain access to beneficial owner information for these types of entities leaves a glaring hole in the security of our financial system, and potentially in our homeland security. That is something that we must not allow to happen.
Thank you Mr. Chairman.