Mfr Nara- T4- Dos- Novis Gary- 10-10-03- 00794

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Memorandum

for the Record

Event: Interview of Gary Novis Type of Event: On-the-Record Interview Date of interview: 1011 0103 Date memo prepared: 10115/03 Special Access Issues: None Prepared by: John Roth Team Number: 4 Location: 9-11 conference room Classification: Secret Present, non-Commission: Gary Novis Participants-Commission: John Roth and Serena Wille This memorandum provides a summary of the most important points covered in the above-entitled interview, but is not a verbatim account. The memorandum is organized by subject and does not necessarily follow the order of the interview. The witness provided all of the information in this memorandum during the interview, except where noted by square brackets. (U)

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Background Gary Novis works in Capacity Building unit of the Office of Policy, Plans & Programs in the Office of the Coordinator for Counterterrorism (S'CF) at State. He started working on related subject matter when he was hired b FinCEN in 1992, focusin primarily on strategic issues related to monev launderinz . ....-.-.:~-------9/1l Law Enforcement Sensitive itiona y, e was t e In rep to anum er 0 10 eragency groups 00 mg a emoney laundering issue. He moved to Caribbean issues within FinCEN after that, particularly the issue of offshore financial centers. He also assisted in international case mana ement, particularly the flow of financial information from one FlU to another. CU)

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With regard to terrorist finance during this time period, Novis worked with DOJ (Roger Weiner) to develop a terrorist financing "typology," focusing mostly on alternate remittance and hawala. Novis stated that it was not especially well received in the international arena (especially by FA TF) due to the lower priority of terrorist financing internationally. Novis left FinCEN in September of 2000 and was working in INL at State on Caribbean/offshore financial issues until September 11, 2001 when he was transferred to his current position at S/CT.

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I Novis believes FinCEN is "one deep" in IT specialists, which causes significant problems in attempting to get FinCEN to do training. Additionally, FinCEN has not really changed its strategic direction and many of

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who were in place 10 years ago are still there, which breeds a certain complacency.

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Coordinating and delivering counter terrorist finance training Immediately after 9/11, INL, which administers money for training and technical assistance regarding international law enforcement, decided to do two things: First, they decided to reprogram their training and technical assistance money away from other areas to address terrorist finance issues. Second, INL decided to assist in persuading FA TF .to broaden its policy remit to include terrorist finance. This was ultimately successful with the issuance of FA TF' s eight special recommendations on terrorist finance. CU) A problem arose relatively soon after 9/11 regarding training, when the Secretary and. Deputy Secretary of the Treasury started making broad promises to other countries that the US Government would send technical assistance teams to a variety of different countries, apparently without regard to priority or limited resources, both in terms of money and technical expertise, available. Thus, INL and S/CT were getting cables from a number of posts, each requesting that its country receive counter terrorism finance technical assistance and training. Fulfilling each of these requests would have quickly outstrip the usa resources, both in terms of funding, but most importantly in terms of individuals who had the expertise and would have be wil1ing to go on these trips. State realized that the types of training that would be necessary was extremely broad developing FlUs, drafting of laws, investigator and prosecutor training, and bank compliance training - and thus would have to be delivered by a broad range of usa entities. (U) As a result, State set up a series of interagency meetings to rationalize the training assessment process, starting around the first of October 2001. These meetings involved State, Treasury, Justice and the intelligence community, and their purpose was to develop· a list of priority countries·to receive training and technical assistance] 9/11 Classified

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Novis stated that there was a broad consensus in develo in the list of 19 countries 9/11 Classified

with

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e ner two coun nes consist of [name here~.]

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The process culminated in a letter by Secretary of State Powell to the Secretary of Treasury and the Attorney General, listing the priority countries and asking for interagency cooperation in assessing and delivering training and technical assistance. By early 2002, the interagency effort had focused on traveling to specific countries to assess

vulnerabilities and determine what the USG could do to correct the deficiencies. [The ..8ECRJEF-

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interagency assessment teams were known as ,FSATs and the interagency working group as TFWG, which is discussed below in moredetail.] It was decided that State would lead the FSA Ts because they have people 0-0 the ground in various embassies and are non-operational and therefore viewed a~.:best able to represent all the equities. (U) The assessment oft b'ccurred in January 2002 and was representative of the process. The team spoke with host nation officials as well as individuals in the private sector. Ultimately the team wrote a report and made recommendations, which was available to the host nation, but which the USG did not distribute further, although the host government might chose to distribute the report to solicit donors. Novis stressed that the process is completely transparent, which allows for frank discussions and gives the process credibility. Recommendations might include that the host nationreceive assistance on legal development, such as writing- a money laundering or terrorist financing law, or on setting up an FlU, or the usa could conduct financial institution or regulatory training, such as training tellers or central bank employees. Novis stressed that the training had to be sequenced - starting with passing new laws, either concerning. general investigative techniques, such as electronic surveillance, undercover operations or conspiracy laws, or concerning terrorist financing specifically, such as a terrorist financing law. Only after there was a proper legal base could the USG then turn to developing FlUs and training the financial industry and the central bank Novis stated that TFWG wants to ensure that the legal issues are addressed first, because it is impractical to set up an FlU, for example, before a country has a money laundering law. Novis stated that TFWG is careful to include experts in the field, such as 001' s Asset Forfeiture and Money Laundering Section, in writing legislation that complies with applicable UN and FA TF standards. The TFWG is responsible for delegating training roles and trip logistics to the appropriate USG agency. The process involves meeting and determining which agency and individuals could best deliver training and technical assistance. [from John: see' rdos03004329L] A member ofTFWO accompanies the training trips. Conceptually, a country's needs are divided up into short, medium and long term needs, with the goal always to deliver institutional training that will sustain itself over time. (U) The US government post in- country is involved in the process by assessing the political will for the training, handling the logistics, and ensuring that the right people get to the training. Post representatives also attend the assessment and subsequent training. meetings and provide input on the ultimate report, although the input is mostly related to political sensitivities. Ultimately, S/CT relies on the posts to look at the host government's follow through, although S/CT can measure progress through identifiable benchmarks like laws passed and FlUs established. S/CT and TFWG do not have any formal assessment measures in place, which might be difficult to establish in any event, because the program is still relatively new. (U)

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Most of the assessments have been completed. About three countries on tier two have yet to be assessed. While the reports generated by these trips are the best evidence of each

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country's status, the following is Navis' thumbnail recollection of each of the tier one countries .

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Inter- and intra-agency •

coordination

The terrorist financing working group (TFWG) is an interagency process driven by the

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9/11 Agency Internal Matters

S/CT and fNL generally get along, although there have been instances of disagreement on. tactical issues. The disagreement stems in part from the fact that INL provides more generalized training (described as a "101 level " course) while S/CT focuses on more specialized money laundering or terrorist finance training (described as at the" 102 . level"). S/CT is also more focused on making sure the right people receive the training, since the training is so specific. INL has responsibility for the budget and management operations of TFWG because S/CT has no back office to handle the fund distribution and other administrative details involved in the project. (U)

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9/11 Agency Internal Matters

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When there are. "'s-p-e-c""'tt"lc-I"s-su-e-s~tT-.h:at~r-e-q-u-lr-e-p-o"'JI~tl-ca"'Ll~g-u-i"'d,a-n-c-e-, -su-c"'~h-a-s-w-r"'-hen-a"'h-,o-st"c....lountry needs to be pushed, Novis stated that the matter gets "booted up" to the political level for guidance. (U) Novis stated that his group works closely with Cofer Black and the S/CT front office. They recognize training it as a good "carrot" that can be given to countries. This type of training is seen as important within State. While everyone is struggling with resources, and some constraints have caused a reprioritization, S/CT has always been able to go on the critical trips .. On resources generally, Novis said that TFWG's work is resourceintensive and especially requires individuals with the requisite experience, who are being recruited by a host of organizations. In addition, Congressional caps on uses of funds can create difficulties. (U)

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Novis' group at S/CT also works with EB. EB had active participation in the development process and, while EB is less integral now because they do not have the requisite skill set to provide training, now is focused on the diplomatic aspects of training.

to prevent logistical overlap with OFAC. For the most part they have been successful in avoiding visits by both entities at the same time in the same country. Early

TFWG works

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on, there was one set of overlapping trips to due mostly to circumstances of the control the USG) but Novis did not mention any other such incidence. Multilateral

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Some of the training logistics can get problematic, particularly where the training is offered in conjunction with FA TF or the World Bank. Novis had some concerns about some of the international financial institutions like the IMF and World Bank. Part of the . difficulty is that they have limited their role to cataloging and assessing the level of anti- . money laundering/anti-terrorist financing regulation in various countries. They db a good job of compiling data, but they have. to move from assessments to a "boots on the ground" approach to training. The World Bank holds huge, 500 person conferences, but these do not substitute for training, in that the knowledge does not get down to the level of the teller or bank examiner. The other difficulty with multilateral institutions is that they do not get to the level of detail that is typically done in an FSA T. Other multilateral . coordination issues involve FATF, which may put a country on its NCCT "blacklist," thereby invoking sanctions by member countries. These same countries, however, might be a priority for the US to deliver counterterrorist financing training. The US sends a "mini" team to such a country as part of the "carrot" approach to dealing with those countries at risk in the FA TF process. There is little multilateral coordination outside SE. Asia, where the US, Australia, the UK and New Zealand work together to deliver training. Almost no coordination occurs in Africa, where the US is doing 950/0 of the training. (U) Office of Technical

Assistance

Issues

Novis stated that the genera) guidance decided upon by the Deputies - that all foreign .assistance in the area of terrorist financing had to be coordinated through the TFWG - is generally followed, although occasionally agencies will forget to coordinate. Novis noted that OT A was an exception in that it appeared to be consistently trying to circumvent the process. OT A has made no secret that is feels constrained by TFWG. The problem is that OTA has an incentive system that rewards the quantity of trips, regardless: '. of whether the training is effective or whether the training goes to the right countries. (U)

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Novis stated that OTA-based training involves a strategic disconnect. The FBI has the lead in terrorism investigations, and per Congressional mandate there is no real role for Treasury enforcement efforts. When doing law enforcement training, it is important to

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have experienced investigators doing the training. Because it has no enforcement role and cannot draw on such agents, O'TA relies in large part on private contractors to conduct the training, which can be problematic if they are holding themselves out as representatives of the United States Government. There have been examples of aTA failing to coordinate, making promises to host governments without clearing the issues first with other agencies, and sending individuals unskilled in law enforcement to conduct law enforcement training. N ovis cited examples of where O'TA would go out and "pitch" ambassadors or host government officials that OTA could provide specific training, and then the ambassadors or the host government officials would then request the training from headquarters. The difficulty is that many of those countries may not be a priority for the USG as a whole. Novis cited an anti-money laundering training proposal from OT A that was going through an INL-approval process that had no work plan attached. Novis could not understand how anything could be approved without a work plan. Additionally, OTA is very well funded with connections in OMB and Capitol. Hill, and their budget is separate from the other components conducting training. Novis claims that OT A has even managed to convince Congress to shift allocations from INL to itself. As a result, if aTA chooses not to coordinate its operations, there is very little that anyone can do about it. (U)

Documents to review: RDOS 03005935; proposed guidelines for the interagency counter terrorist financial assistance working group; initially guidelines only for FSA Ts, but resulted in creation of FINAPC Coalition Building Working Group and the CSG sub-group on CT training and technical assistance; resistance from O'TA; attached document includes assessments and prioritization of Tier 2 countries

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