President Barack Obama delivered these remarks in Washington, DC

President Obama. It has now been more than a week since the attempted act of terrorism aboard that flight to Detroit on Christmas Day. On Thursday, I received the preliminary findings of the reviews that I ordered into our terrorist watchlist system and air travel screening. I've directed my counterterrorism and homeland security advisor at the White House, John Brennan, to lead these reviews going forward and to present the final results and recommendations to me in the days to come.

As I said this week, I will do everything in my power to make sure our hard-working men and women in our intelligence, law enforcement and homeland security communities have the tools and resources they need to keep America safe. This includes making sure these communities—and the people in them—are coordinating effectively and are held accountable at every level. And as President, that is what I will do.

Meanwhile, the investigation into the Christmas Day incident continues, and we're learning more about the suspect. We know that he traveled to Yemen, a country grappling with crushing poverty and deadly insurgencies. It appears that he joined an affiliate of al Qaeda, and that this group—al Qaeda in the Arabian Peninsula—trained him, equipped him with those explosives and directed him to attack that plane headed for America.

This is not the first time this group has targeted us. In recent years, they have bombed Yemeni government facilities and Western hotels, restaurants and embassies—including our embassy in 2008, killing one American. So, as President, I've made it a priority to strengthen our partnership with the Yemeni government—training and equipping their security forces, sharing intelligence and working with them to strike al Qaeda terrorists.

And even before Christmas Day, we had seen the results. Training camps have been struck; leaders eliminated; plots disrupted. And all those involved in the attempted act of terrorism on Christmas must know—you too will be held to account.

But these efforts are only part of a wider cause. It's been nearly a year since I stood on the steps of the U.S. Capitol and took the oath of office as your President. And with that oath came the solemn responsibility that I carry with me every moment of every day—the responsibility to protect the safety and security of the American people.

On that day I also made it very clear—our nation is at war against a far-reaching network of violence and hatred, and that we will do whatever it takes to defeat them and defend our country, even as we uphold the values that have always distinguished America among nations.

And make no mistake, that's exactly what we've been doing. It's why I refocused the fight—bringing to a responsible end the war in Iraq, which had nothing to do with the 9/11 attacks, and dramatically increasing our resources in the region where al Qaeda is actually based, in Afghanistan and Pakistan. It's why I've set a clear and achievable mission—to disrupt, dismantle and defeat al Qaeda and its extremist allies and prevent their return to either country.

And it's why we've forged new partnerships, as in Yemen, and put unrelenting pressure on these extremists wherever they plot and train—from East Africa to Southeast Asia, from Europe to the Persian Gulf. And though often out of sight, our progress has been unmistakable. Along with our partners, we've disrupted terrorist financing, cut off recruiting chains, inflicted major losses on al Qaeda's leadership, thwarted plots here in the United States, and saved countless American lives.

Yet as the Christmas Day attempt illustrates, and as we were reminded this week by the sacrifices of more brave Americans in Afghanistan—including those seven dedicated men and women of the CIA—the hard work of protecting our nation is never done. So as our reviews continue, let us ask the questions that need to be asked. Let us make the changes that need to be made. Let us debate the best way to protect the country we all love. That is the right and responsibility of every American and every elected official.

But as we go forward, let us remember this—our adversaries are those who would attack our country, not our fellow Americans, not each other. Let's never forget what has always carried us through times of trial, including those attacks eight Septembers ago.

Instead of giving in to fear and cynicism, let's renew that timeless American spirit of resolve and confidence and optimism. Instead of succumbing to partisanship and division, let's summon the unity that this moment demands. Let's work together, with a seriousness of purpose, to do what must be done to keep our country safe.

As we begin this New Year, I cannot imagine a more fitting resolution to guide us—as a people and as a nation.

President Barack Obama delivered these remarks in Washington, DC

President Obama. Good afternoon, everybody. I just concluded a meeting with members of my national security team, including those from our intelligence, homeland security and law enforcement agencies involved in the security reviews that I ordered after the failed attack on Christmas Day.

I called these leaders to the White House because we face a challenge of the utmost urgency. As we saw on Christmas, al Qaeda and its extremist allies will stop at nothing in their efforts to kill Americans. And we are determined not only to thwart those plans, but to disrupt, dismantle and defeat their networks once and for all.

Indeed, over the past year, we've taken the fight to al Qaeda and its allies wherever they plot and train, be it in Afghanistan and Pakistan, in Yemen and Somalia, or in other countries around the world.

Here at home, our intelligence, homeland security and law enforcement agencies have worked together with considerable success: gathering intelligence, stitching it together, and making arrests—from Denver to Texas, from Illinois to New York—disrupting plots and saving American lives. And these successes have not come without a price, as we saw last week in the loss of our courageous CIA officers in Afghanistan.

But when a suspected terrorist is able to board a plane with explosives on Christmas Day the system has failed in a potentially disastrous way. And it's my responsibility to find out why, and to correct that failure so that we can prevent such attacks in the future.

And that's why, shortly after the attempted bombing over Detroit, I ordered two reviews. I directed Secretary of Homeland Security Janet Napolitano to review aviation screening, technology and procedures. She briefed me on her initial findings today, and I'm pleased that this review is drawing on the best science and technology, including the expertise of Secretary of Energy Steven Chu and his department.

I also directed my counterterrorism and homeland security advisor John Brennan to lead a thorough review into our terrorist watch-listing system so we can fix what went wrong. As we discussed today, this ongoing review continues to reveal more about the human and systemic failures that almost cost nearly 300 lives. We will make a summary of this preliminary report public within the next few days, but let me share some of what we know so far.

As I described over the weekend, elements of our intelligence community knew that Umar Farouk Abdulmutallab had traveled to Yemen and joined up with extremists there. It now turns out that our intelligence community knew of other red flags—that al Qaeda in the Arabian Peninsula sought to strike not only American targets in Yemen, but the United States itself. And we had information that this group was working with an individual who was known—who we now know was in fact the individual involved in the Christmas attack.

The bottom line is this: The U.S. government had sufficient information to have uncovered this plot and potentially disrupt the Christmas Day attack. But our intelligence community failed to connect those dots, which would have placed the suspect on the “no fly” list.

In other words, this was not a failure to collect intelligence; it was a failure to integrate and understand the intelligence that we already had. The information was there. Agencies and analysts who needed it had access to it. And our professionals were trained to look for it and to bring it all together.

Now, I will accept that intelligence, by its nature, is imperfect, but it is increasingly clear that intelligence was not fully analyzed or fully leveraged. That's not acceptable, and I will not tolerate it. Time and again, we've learned that quickly piecing together information and taking swift action is critical to staying one step ahead of a nimble adversary.

So we have to do better—and we will do better. And we have to do it quickly. American lives are on the line. So I made it clear today to my team: I want our initial reviews completed this week. I want specific recommendations for corrective actions to fix what went wrong. I want those reforms implemented immediately, so that this doesn't happen again and so we can prevent future attacks. And I know that every member of my team that I met with today understands the urgency of getting this right. And I appreciate that each of them took responsibility for the shortfalls within their own agencies.

Immediately after the attack, I ordered concrete steps to protect the American people: new screening and security for all flights, domestic and international; more explosive detection teams at airports; more air marshals on flights; and deepening cooperation with international partners.

In recent days, we've taken additional steps to improve security. Counterterrorism officials have reviewed and updated our terrorist watch list system, including adding more individuals to the “no fly” list. And while our review has found that our watch-listing system is not broken, the failure to add Abdulmutallab to the “no fly” list shows that this system needs to be strengthened.

The State Department is now requiring embassies and consulates to include current visa information in their warning on individuals with terrorist or suspected terrorist connections. As of yesterday, the Transportation Security Administration, or TSA, is requiring enhanced screening for passengers flying into the United States from, or flying through, nations on our list of state sponsors of terrorism, or other countries of interest. And in the days ahead, I will announce further steps to disrupt attacks, including better integration of information and enhanced passenger screening for air travel.

Finally, some have suggested that the events on Christmas Day should cause us to revisit the decision to close the prison at Guantanamo Bay. So let me be clear. It was always our intent to transfer detainees to other countries only under conditions that provide assurances that our security is being protected.

With respect to Yemen in particular, there's an ongoing security situation which we have been confronting for some time, along with our Yemeni partner. Given the unsettled situation, I've spoken to the Attorney General and we've agreed that we will not be transferring additional detainees back to Yemen at this time.

But make no mistake: We will close Guantanamo prison, which has damaged our national security interests and become a tremendous recruiting tool for al Qaeda. In fact, that was an explicit rationale for the formation of al Qaeda in the Arabian Peninsula. And, as I've always said, we will do so—we will close the prison in a manner that keeps the American people safe and secure.

Our reviews—and the steps that we've taken and will continue to take—go to the heart of the kind of intelligence and homeland security we need in the 21st century. Just as al Qaeda and its allies are constantly evolving and adapting their efforts to strike us, we have to constantly adapt and evolve to defeat them, because as we saw on Christmas, the margin for error is slim and the consequences of failure can be catastrophic.

As these violent extremists pursue new havens, we intend to target al Qaeda wherever they take root, forging new partnerships to deny them sanctuary, as we are doing currently with the government in Yemen. As our adversaries seek new recruits, we'll constantly review and rapidly update our intelligence and our institutions. As they refine our tactics, we'll enhance our defenses, including smarter screening and security at airports, and investing in the technologies that might have detected the kind of explosives used on Christmas.

In short, we need our intelligence, homeland security and law enforcement systems—and the people in them—to be accountable and to work as intended: collecting, sharing, integrating, analyzing, and acting on intelligence as quickly and effectively as possible to save innocent lives—not just most of the time, but all the time. That's what the American people deserve. As President, that's exactly what I will demand.

Thank you very much.

President Barack Obama delivered these remarks in Washington, DC

President Obama. Good afternoon, everybody. The immediate reviews that I ordered after the failed Christmas terrorist attack are now complete. I was just briefed on the findings and recommendations for reform, and I believe it's important that the American people understand the new steps that we're taking to prevent attacks and keep our country safe.

This afternoon, my Counterterrorism and Homeland Security Advisor, John Brennan, will discuss his review into our terrorist watchlist system—how our government failed to connect the dots in a way that would have prevented a known terrorist from boarding a plane for America, and the steps we're going to take to prevent that from happening again.

Secretary of Homeland Security Janet Napolitano will discuss her review of aviation screening, technology and procedures—how that terrorist boarded a plane with explosives that could have killed nearly 300 innocent people, and how we'll strengthen aviation security going forward.

So today I want to just briefly summarize their conclusions and the steps that I've ordered to address them.

In our ever-changing world, America's first line of defense is timely, accurate intelligence that is shared, integrated, analyzed, and acted upon quickly and effectively. That's what the intelligence reforms after the 9/11 attacks largely achieved. That's what our intelligence community does every day. But, unfortunately, that's not what happened in the lead-up to Christmas Day. It's now clear that shortcomings occurred in three broad and compounding ways.

First, although our intelligence community had learned a great deal about the al Qaeda affiliate in Yemen—called al Qaeda in the Arabian Peninsula—that we knew that they sought to strike the United States and that they were recruiting operatives to do so—the intelligence community did not aggressively follow up on and prioritize particular streams of intelligence related to a possible attack against the homeland.

Second, this contributed to a larger failure of analysis—a failure to connect the dots of intelligence that existed across our intelligence community and which, together, could have revealed that Abdulmutallab was planning an attack.

Third, this, in turn, fed into shortcomings in the watch-listing system which resulted in this person not being placed on the “no fly” list, thereby allowing him to board that plane in Amsterdam for Detroit.

In sum, the U.S. government had the information—scattered throughout the system—to potentially uncover this plot and disrupt the attack. Rather than a failure to collect or share intelligence, this was a failure to connect and understand the intelligence that we already had.

That's why we took swift action in the immediate days following Christmas, including reviewing and updating the terrorist watchlist system and adding more individuals to the “no fly” list, and directing our embassies and consulates to include current visa information in their warnings of individuals with terrorist or suspected terrorist ties.

Today, I'm directing a series of additional corrective steps across multiple agencies. Broadly speaking, they fall into four areas.

First, I'm directing that our intelligence community immediately begin assigning specific responsibility for investigating all leads on high-priority threats so that these leads are pursued and -sively—not just most of the time, but all of the time. We must follow the leads that we get. And we must pursue them until plots are disrupted. And that mean assigning clear lines of responsibility.

Second, I'm directing that intelligence reports, especially those involving potential threats to the United States, be distributed more rapidly and more widely. We can't sit on information that could protect the American people.

Third, I'm directing that we strengthen the analytical process, how our analysis—how our analysts process and integrate the intelligence that they receive. My Director of National Intelligence, Denny Blair, will take the lead in improving our day-to-day efforts. My Intelligence Advisory Board will examine the longer-term challenge of sifting through vast universes of intelligence and data in our Information Age.

And finally, I'm ordering an immediate effort to strengthen the criteria used to add individuals to our terrorist watchlists, especially the “no fly” list. We must do better in keeping dangerous people off airplanes, while still facilitating air travel.

So taken together, these reforms will improve the intelligence community's ability to collect, share, integrate, analyze, and act on intelligence swiftly and effectively. In short, they will help our intelligence community do its job even better and protect American lives.

But even the best intelligence can't identify in advance every individual who would do us harm. So we need the security —at our airports, ports, and borders, and through our partnerships with other nations—to prevent terrorists from entering America.

At the Amsterdam airport, Abdulmutallab was subjected to the same screening as other passengers. He was required to show his documents—including a valid U.S. visa. His carry-on bag was X-rayed. He passed through a metal detector. But a metal detector can't detect the kind of explosives that were sewn into his clothes.

As Secretary Napolitano will explain, the screening technologies that might have detected these explosives are in use at the Amsterdam airport, but not at the specific checkpoints that he passed through. Indeed, most airports in the world—and in the United States—do not yet have these technologies. Now, there's no silver bullet to securing the thousands of flights into America each day, domestic and international. It will require significant investments in many areas. And that's why, even before the Christmas attack, we increased investments in homeland security and aviation security. This includes an additional $1 billion in new systems and technologies that we need to protect our airports—more baggage screening, more passenger screening and more advanced explosive detection capabilities, including those that can improve our ability to detect the kind of explosive used on Christmas. These are major investments and they'll make our skies safer and more secure.

As I announced this week, we've taken a whole range of steps to improve aviation screening and security since Christmas, including new rules for how we handle visas within the government and enhanced screening for passengers flying from, or through, certain countries.

And today, I'm directing that the Department of Homeland Security take additional steps, including: strengthening our international partnerships to improve aviation screening and security around the world; greater use of the advanced explosive detection technologies that we already have, including imaging technology; and working aggressively, in cooperation with the Department of Energy and our National Labs, to develop and deploy the next generation of screening technologies.

Now, there is, of course, no foolproof solution. As we develop new screening technologies and procedures, our adversaries will seek new ways to evade them, as was shown by the Christmas attack. In the never-ending race to protect our country, we have to stay one step ahead of a nimble adversary. That's what these steps are designed to do. And we will continue to work with Congress to ensure that our intelligence, homeland security, and law enforcement communities have the resources they need to keep the American people safe.

I ordered these two immediate reviews so that we could take immediate action to secure our country. But in the weeks and months ahead, we will continue a sustained and intensive effort of analysis and assessment, so that we leave no stone unturned in seeking better ways to protect the American people.

I have repeatedly made it clear—in public with the American people, and in private with my national security team—that I will hold my staff, our agencies and the people in them accountable when they fail to perform their responsibilities at the highest levels.

Now, at this stage in the review process it appears that this incident was not the fault of a single individual or organization, but rather a systemic failure across organizations and agencies. That's why, in addition to the corrective efforts that I've ordered, I've directed agency heads to establish internal accountability reviews, and directed my national security staff to monitor their efforts. We will measure progress. And John Brennan will report back to me within 30 days and on a regular basis after that. All of these agencies—and their leaders—are responsible for implementing these reforms. And all will be held accountable if they don't.

Moreover, I am less interested in passing out blame than I am in learning from and correcting these mistakes to make us safer. For ultimately, the buck stops with me. As President, I have a solemn responsibility to protect our nation and our people. And when the system fails, it is my responsibility.

Over the past two weeks, we've been reminded again of the challenge we face in protecting our country against a foe that is bent on our destruction. And while passions and politics can often obscure the hard work before us, let's be clear about what this moment demands. We are at war. We are at war against al Qaeda, a farreaching network of violence and hatred that attacked us on 9/11, that killed nearly 3,000 innocent people, and that is plotting to strike us again. And we will do whatever it takes to defeat them.

And we've made progress. Al Qaeda's leadership is hunkered down. We have worked closely with partners, including Yemen, to inflict major blows against al Qaeda leaders. And we have disrupted plots at home and abroad, and saved American lives.

And we know that the vast majority of Muslims reject al Qaeda. But it is clear that al Qaeda increasingly seeks to recruit individuals without known terrorist affiliations not just in the Middle East, but in Africa and other places, to do their bidding. That's why I've directed my national security team to develop a strategy that addresses the unique challenges posed by lone recruits. And that's why we must communicate clearly to Muslims around the world that al Qaeda offers nothing except a bankrupt vision of misery and death — including the murder of fellow Muslims — while the United States stands with those who seek justice and progress.

To advance that progress, we've sought new beginnings with Muslim communities around the world, one in which we engage on the basis of mutual interest and mutual respect, and work together to fulfill the aspirations that all people share—to get an education, to work with dignity, to live in peace and security. That's what America believes in. That's the vision that is far more powerful than the hatred of these violent extremists.

Here at home, we will strengthen our defenses, but we will not succumb to a siege mentality that sacrifices the open society and liberties and values that we cherish as Americans, because great and proud nations don't hunker down and hide behind walls of suspicion and mistrust. That is exactly what our adversaries want, and so long as I am President, we will never hand them that victory. We will define the character of our country, not some band of small men intent on killing innocent men, women and children.

And in this cause, every one of us—every American, every elected official—can do our part. Instead of giving into cynicism and division, let's move forward with the confidence and optimism and unity that defines us as a people. For now is not a time for partisanship, it's a time for citizenship—a time to come together and work together with the seriousness of purpose that our national security demands.

That's what it means to be strong in the face of violent extremism. That's how we will prevail in this fight. And that's how we will protect our country and pass it—safer and stronger—to the next generation.

Thanks very much.

Secretary Janet Napolitano delivered this testimony in Washington, DC before the Senate Committee on Homeland Security and Governmental Affairs

Secretary Napolitano. Chairman Lieberman, Senator Collins, and members of the Committee: Thank you for this opportunity to testify on the attempted terrorist attack on Northwest Flight 253.

The attempted attack on December 25 was a powerful illustration that terrorists will go to great lengths to defeat the security measures that have been put in place since September 11, 2001. This Administration is determined to thwart those plans and disrupt, dismantle and defeat terrorist networks by employing multiple layers of defense that work in concert with one another to secure our country. This is an effort that involves not just DHS, but many other federal agencies and the international community as well.

As our part in this effort, DHS is a consumer of the U.S. Government's consolidated terrorist watchlist, which we use to help keep potential terrorists off flights within, over or bound for the United States and to identify travelers that require additional screening. We work with foreign governments, Interpol, and air carriers to strengthen global air travel security by advising them on security measures and on which passengers may prove a threat. We also work with air carriers and airport authorities to perform physical screening at TSA checkpoints and to provide security measures in flight.

Immediately following the December 25 attack, DHS took swift action at airports across the country and around the world. These steps included enhancing screening for individuals flying to the United States; increasing the presence of law enforcement and explosives detection canine teams at air ports, and of air marshals in flight; and directing the FAA to notify the 128 flights already inbound from Europe about the situation. Nonetheless, Umar Farouk Abdulmutallab should never have been able to board a U.S.-bound plane with the explosive PETN on his person. As President Obama has made clear, this Administration is determined to find and fix the vulnerabilities in our systems that allowed this breach to occur.

Agencies across the federal government have worked quickly to address what went wrong in the Abdulmutallab case. The effort to solve these problems is well underway, with cooperation among DHS, the Department of State, the Department of Justice, the Intelligence Community, and our international allies, among others. As a consumer of terrorist watchlist information, the Department of Homeland Security welcomes the opportunity to contribute to the dialogue on improving the federal government's ability to connect and assimilate intelligence. We are also focused on improving aviation screening and expanding our international partnerships to guard against a similar type of attack occurring again. To those ends, today I want to describe the role that DHS currently performs in aviation security, how DHS responded in the immediate aftermath of the attempted Christmas Day attack, and how we are moving forward to further bolster aviation security.

DHS' Role in Multiple Layers of Defense

Since 9/11, the U.S. government has employed multiple layers of defense across several departments to secure the aviation sector and ensure the safety of the traveling public. Different federal agencies bear different responsibilities, while other countries and the private sector—especially the air carriers themselves—also

have important roles to play.

DHS oversees several programs to prevent individuals with terrorist ties from boarding flights that are headed to, within, or traveling over the United States or, in appropriate cases, to identify them for additional screening. Specifically, DHS uses information held in the Terrorist Screening Database (TSDB), a resource managed by the Terrorist Screening Center (TSC), as well as other information provided through the Intelligence Community to screen individuals; operates the travel authorization program for people who are traveling to the United States under the Visa Waiver Program (VWP) [1]; and works with foreign governments, international and regional organizations, and airlines to design and implement improved security standards worldwide. This includes routine checks against Interpol databases on wanted persons and lost or stolen passports on all international travelers arriving in the United States. The Department also performs checkpoint screenings at airports in the United States.

To provide a sense of the scale of our operations, every day, U.S. Customs and Border Protection (CBP) processes 1.2 million travelers seeking to enter the United States by land, air or sea; the Transportation Security Administration (TSA) screens 1.8 million travelers at domestic airports; and DHS receives advanced passenger information from carriers operating in 245 international airports that are the last point of departure for flights to the United States, accounting for about 1,600 to 1,800 flights per day. Ensuring that DHS employees and all relevant federal officials are armed with intelligence and information is critical to the success of these efforts.

Safeguards for Visas and Travel One of the first layers of defense in securing air travel consists of safeguards to prevent dangerous people from obtaining visas, travel authorizations and boarding passes. To apply for entry to the United States prior to boarding flights bound for the U.S. or arriving at a U.S. port of entry, most foreign nationals need visas—issued by a U.S. embassy or consulate—or, if traveling under a Visa Waiver Program country, travel authorizations issued through the Electronic System for Travel Authorization (ESTA) [2].

Issuing visas is the responsibility of the Department of State. At embassies and consulates where it is operational, the Visa Security Program positions personnel of U.S. Immigration and Customs Enforcement (ICE) to assist State Department personnel in identifying visa applicants who may present a security threat. For individuals traveling under the VWP, DHS operates ESTA, a web-based system through which individuals must apply for travel authorization prior to traveling to the United States. These systems examine an individual's information to assess whether he or she could pose a risk to the United States or its citizens, including possible links to terrorism. Without presenting a valid authorization to travel to the United States at the airport of departure, a foreign national is not able to board a U.S.-bound flight.

The Department also works with other federal agencies and our foreign partners to try to prevent possible terrorists from obtaining boarding passes. These include the application of the No-Fly List and the implementation of Secure Flight program, which I explain below.

Pre-departure screening

As another layer of defense, DHS conducts pre-departure passenger screening in partnership with the airline industry and foreign governments in order to prevent known or suspected terrorists from boarding a plane bound for the United States or, as appropriate, to identify them for additional screening. DHS uses TSDB data, managed by the Terrorist Screening Center that is administered by the FBI, to determine who may board, who requires further screening and investigation, who should not be admitted, or who should be referred to appropriate law enforcement personnel.

Specifically, to help make these determinations, DHS uses the No-Fly List and the Selectee List, two important subsets within the TSDB. Individuals on the No-Fly List should not receive a boarding pass for a flight to, from, over, or within the United States. Individuals on the Selectee List must go through additional security measures, including a full-body pat-down and a full physical examination of personal effects.

Through the Secure Flight Program, the Department is making an important change to the process of matching passenger identities against the No-Fly List and Selectee List, and fulfilling an important recommendation of the 9/11 Commission. Previously, responsibility for checking passenger manifests against these lists rested with the air carriers themselves. Under the Secure Flight program, DHS began to transfer this responsibility to TSA in 2009, and the transition is targeted for completion by the end of this year. In addition to creating a more consistent matching process for all domestic and international travel to the United States and strengthening the effectiveness of redress in preventing misidentifications, Secure Flight will flag potential watchlist matches and immediately trigger law enforcement notification and coordination.

As an additional layer of security, DHS also uses the Passenger Name Record (PNR), the Advanced Passenger Information System (APIS), and the Immigration Advisory Program (IAP) to assess a passenger's level of risk and, when necessary, flag them for further inspection. PNR data, obtained from the airline reservations systems, contains various elements, which may include optional information on itinerary, co-travelers, changes to the reservation, and payment information. PNR data is evaluated against “targeting rules” that are based on law enforcement data, intelligence and past case experience. APIS data, which carriers are required to provide to DHS at least 30 minutes before a flight, contains important identifying information that may not be included in PNR data, including verified identity and travel document information such as a traveler's date of birth, citizenship, and travel document number. DHS screens APIS information on international flights to or from the United States against the TSDB, as well as against criminal history information, records of lost or stolen passports, and prior immigration or customs violations. APIS is also connected to Interpol's lost and stolen passport database for routine queries on all inbound international travelers.

Another layer in the screening process is the Immigration Advisory Program (IAP). The CBP officers stationed overseas under the IAP program at nine airports in seven countries receive referrals from CBP screening against the TSDB, of which the No Fly list is a subset. IAP officers can make “no board” recommendations to carriers and host governments regarding passengers bound for the United States who may constitute security risks, but do not have the authority to arrest, detain, or prevent passengers from boarding planes.

Checkpoint screenings and in-flight security

The third layer of defense for air travel in which DHS plays a role is the screening of passengers and their baggage. TSA screens passengers and baggage at airports in the United States, but not in other countries. When a traveler at a foreign airport is physically screened, that screening is conducted by the foreign government, air carriers, or the respective airport authority.

Domestically, TSA employs a layered approach to security, which includes measures both seen and unseen by travelers. The 48,000 Transportation Security Officers at hundreds of airports across the country screen passengers and their baggage using advanced technology x-ray systems, walk-through metal detectors, explosive trace detection equipment, trained canines, vapor trace machines that detect liquid explosives, Advanced Imaging Technology, full-body pat-downs, explosives detection systems, Bomb Appraisal Officers, and Behavior Detection Officers—both at the checkpoint and throughout the airport. Through programs such as the Aviation Direct Access Screening Program, TSA also uses random and unpredictable measures to enhance security throughout the airport perimeter and in limited access areas of airports. The $1 billion in Recovery Act funds provided to TSA for checkpoint and checked baggage screening technology have enabled TSA to greatly accelerate deployment of these critical tools to keep passengers safe.

In an effort to enhance international screening standards, TSA conducts security assessments in accordance with security standards established by the International Civil Aviation Organization (ICAO) at more than 300 foreign airports, which include foreign airports from which flights operate directly to the United States and all airports from which U.S. air carriers operate. If an airport does not meet these standards, TSA works with the host government to rectify the deficiencies and raise airport security to an acceptable level. Ultimately, it is the foreign government that must work to address these security issues. In long-term circumstances of non-compliance with international standards, TSA may recommend suspension of flight service from these airports to the United States. In addition, TSA inspects all U.S. and foreign air carriers that fly to the United States from each airport to ensure compliance with TSA standards and directives. Should air carrier security deficiencies exist, TSA works with the air carrier to raise compliance to an acceptable level. If an airport is located within one of the 35 VWP countries, DHS conducts additional audits and inspections as part of the statutorily mandated VWP designation and review process.

In terms of in-flight security, Federal Air Marshals (FAM) are deployed on high-risk domestic and international flights where international partners allow FAMs to enter their country on U.S.-flagged carriers. Thousands more volunteer pilots serve as armed, deputized Federal Flight Deck Officers. Additionally, armed law enforcement officers from federal, state, local, and tribal law enforcement agencies that have a need to fly armed provide a force multiplier on many flights.

DHS Response to the Christmas Day Attack

The facts of the Christmas Day attempted bombing are well established and were relayed in the report on the incident that the President released on January 7, 2010. On December 16, 2009, Umar Farouk Abdulmutallab, a Nigerian national, purchased a round-trip ticket from Lagos, Nigeria to Detroit. Abdulmutallab went through physical security screening conducted by foreign airport personnel at Murtala Muhammed International Airport in Lagos on December 24 prior to boarding a flight to Amsterdam Airport Schiphol. This physical screening included an x-ray of his carry-on luggage and his passing through a walk-through metal detector. Abdulmutallab went through additional physical screening, conducted by Dutch authorities, when transiting through Amsterdam to Northwest Flight 253 to Detroit, and presented a valid U.S. visa. Abdulmutallab was not on the No Fly or Selectee Lists. Accordingly, the carrier was not alerted to prevent him from boarding the flight or additional physical screening, nor did the IAP officer advise Dutch authorities of any concerns. As with all passengers traveling on that flight, and similar to all other international flights arriving in the United States, CBP evaluated Abdulmutallab's information while the flight was en route to conduct a preliminary assessment of his admissibility and to determine whether there were requirements for additional inspection. During this assessment, CBP noted that there was a record that had been received from the Department of State, which indicated possible extremist ties. It did not indicate that he had been found to be a threat, or that his visa had been revoked. CBP officers in Detroit were prepared to meet Abdulmutallab upon his arrival for further interview and inspection. The attack on board the flight failed in no small part due to the brave actions of the crew and passengers aboard the plane. Immediate DHS response Following the first reports of an attempted terrorist attack on Northwest Flight 253 on December 25, DHS immediately put in place additional security measures. TSA directed the Federal Aviation Administration to apprise 128 U.S.-bound international flights from Europe of the attempted attack and to ask them to maintain heightened vigilance on their flights. Increased security measures were put in place at domestic airports, including additional explosive detection canine teams, state and local law enforcement, expanded presence of Behavior Detection Officers, and enhanced screening. That evening, DHS issued a security directive for all international flights to the U.S., which mandated enhanced screening prior to departure and additional security measures during flight.

From the first hours following the attempted attack, I worked closely with the President, Assistant to the President for Homeland Security and Counterterrorism John Brennan, senior Department leadership, and agencies across the federal government. I communicated with international partners, members of Congress, state and local leadership and the aviation industry and met with national security experts on counterterrorism and aviation security. The results of these communications culminated in two reports to the President: one on New Year's Eve and the second on January 2, 2010.

One of our most important conclusions was that it is now clearer than ever that air travel security is an international responsibility. Indeed, passengers from 17 countries were aboard Flight 253. Accordingly, DHS has embarked upon an aggressive international program designed to raise international standards for airports and air safety. On January 3, 2010, I dispatched Deputy Secretary Jane Holl Lute and Assistant Secretary for Policy David Heyman to Africa, Asia, Europe, the Middle East, Australia, and South America to meet with international leadership on aviation security. In these meetings, they reviewed security procedures and technology being used to screen passengers on U.S.-bound flights and worked on ways to bolster our collective tactics for defeating terrorists. This afternoon, I am traveling to Spain to meet with my European Union counterparts in the first of a series of global meetings intended to bring about broad consensus on new, stronger, and more consistent international aviation security standards and procedures.

In addition to these efforts, the Department has been in close contact with Congress, our international partners, the aviation industry and state and local officials across the country since the afternoon of the attempted attack. On December 25, the Department issued a joint bulletin with the FBI to state and local law enforcement throughout the nation; conducted calls with major airlines and the Air Transport Association; distributed the FBI-DHS joint bulletin to all Homeland Security Advisors, regional fusion center directors and Major City Homeland Security Points of Contact in the country; and notified foreign air carriers with flights to and from the United States of the additional security requirements. DHS has maintained close contact with all of these partners since the attempted attack, and will continue to do so.

On January 3, TSA issued a new Security Directive, effective on January 4, which includes long-term, sustainable security measures developed in consultation with law enforcement officials and our domestic and international partners. Because effective aviation security must begin beyond our borders, this Security Directive mandates that every individual flying into the U.S. from anywhere in the world traveling from or through nations that are state sponsors of terrorism[3] or other countries of interest will be required to go through enhanced screening. The directive also increases the use of enhanced screening technologies and mandates threatbased and random additional screening for passengers on U.S. bound international flights. These measures are being implemented with extraordinary cooperation from our global aviation partners.

Steps Forward to Improve Aviation Security

While these immediate steps helped strengthen our security posture to face current threats to our country, as President Obama has made clear, we need to take additional actions to address the systemic vulnerabilities highlighted by this failed attack. On January 7, I joined Assistant to the President for Counterterrorism and Homeland Security John Brennan to announce five recommendations DHS made to the President as a result of the security reviews ordered by President Obama. At the President's direction, DHS will pursue these five objectives to enhance the protection of air travel from acts of terrorism.

First, DHS will work with our interagency partners to re-evaluate and modify the criteria and process used to create terrorist watchlist, including adjusting the process by which names are added to the No-Fly and Selectee Lists. The Department's ability to prevent terrorists from boarding flights to the United States depends upon these lists and the criteria used to create them. As an entity that is primarily a consumer of this intelligence and the operator of programs that rely on these lists, the Department will work closely with our partners in the Intelligence Community to make clear the kind of information DHS needs from the watchlist system.

Second, DHS will establish a partnership on aviation security with the Department of Energy and its National Laboratories in order to use their expertise to bolster our security. This new partnership will work to develop new and more effective technologies that deter and disrupt known threats, as well as anticipate and protect against new ways that terrorists could seek to board an aircraft with dangerous materials.

Third, DHS will accelerate deployment of Advanced Imaging Technology to provide capabilities to identify materials such as those used in the attempted December 25 attack, and we will encourage foreign aviation security authorities to do the same. TSA currently has 40 machines deployed at nineteen airports throughout the United States, and plans to deploy at least 450 additional units in 2010. DHS will also seek to increase our assets in the area of explosives-trained canines, explosives detection equipment, and other security personnel.

Fourth, DHS will strengthen the presence and capacity of aviation law enforcement. As an interim measure, we will deploy law enforcement officers from across DHS to serve as Federal Air Marshals to increase security aboard U.S.-flag carriers' international flights. At the same time, we will maintain the current tempo of operations to support high-risk domestic flights, as we look to longer-term solutions to enhance the training and workforce of the Federal Air Marshal Service.

Fifth, as mentioned earlier, DHS will work with international partners to strengthen international security measures and standards for aviation security. Much of our success in ensuring that terrorists do not board flights to the United States is dependent on what happens in foreign airports and the commitments of our foreign partners to enhance security—not just for Americans, but also for their nationals traveling to this country.

In all of these action areas to bolster aviation security, we are moving forward with a dedication to safeguard the privacy and rights of travelers.

Conclusion

The attempted attack on Christmas Day serves as a stark reminder that terrorists motivated by violent extremist beliefs are determined to attack the United States. President Obama has made clear that we will be unrelenting in using every element of our national power in our efforts around the world to disrupt, dismantle, and defeat al-Qaeda and other violent extremists.

While we address the circumstances behind this specific incident, we must also recognize the evolving threats posed by terrorists, and take action to ensure that our defenses continue to evolve in order to defeat them. We live in a world of everchanging risks, and we must move as aggressively as possible both to find and fix security flaws and anticipate future vulnerabilities in all sectors. President Obama has clearly communicated the urgency of this task, and the American people rightfully expect swift action. DHS and our federal partners are moving quickly to provide just that.

I wish I could close by giving you a 100 percent guarantee that no terrorist, ever, will try to take down a plane or attack us in some other fashion. I cannot give you such a guarantee; that is not the nature of the world we live in, nor of the threats that we face. What I can give you, however, is the 100 percent commitment of myself, DHS leadership, and the entire DHS enterprise to do everything we can to minimize the risk of terrorist attacks.

Chairman Lieberman, Senator Collins, and members of the Committee: Thank you for this opportunity to testify. I can now answer your questions.

[1] The 35 countries in the Visa Waiver Program are: Andorra, Australia, Austria, Belgium, Brunei, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, and the United Kingdom (for the U.K., only citizens with an unrestricted right of permanent abode in the U.K. are eligible for VWP travel authorizations).

[2] Exceptions would be citizens of countries under other visa waiver authority such as the Western Hemisphere Travel Initiative or the separate visa waiver program for Guam and the Commonwealth of the Northern Mariana Islands, or those granted individual waivers of the visa requirement under the immigration laws.[3] The State Department currently lists Cuba, Iran, Sudan, and Syria as state sponsors of terrorism.

President Barack Obama delivered the State of the Union Address in Washington, DC

President Obama. Madam Speaker, Vice President Biden, members of Congress, distinguished guests, and fellow Americans:

[W]e need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.

We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. But realizing those benefits also means enforcing those agreements so our trading partners play by the rules. And that's why we'll continue to shape a Doha trade agreement that opens global markets, and why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia.

Since the day I took office, we've renewed our focus on the terrorists who threaten our nation. We've made substantial investments in our homeland security and disrupted plots that threatened to take American lives. We are filling unacceptable gaps revealed by the failed Christmas attack, with better airline security and swifter action on our intelligence. We've prohibited torture and strengthened partnerships from the Pacific to South Asia to the Arabian Peninsula. And in the last year, hundreds of al Qaeda's fighters and affiliates, including many senior leaders, have been captured or killed—far more than in 2008.

And in Afghanistan, we're increasing our troops and training Afghan security forces so they can begin to take the lead in July of 2011, and our troops can begin to come home. We will reward good governance, work to reduce corruption, and support the rights of all Afghans—men and women alike. We're joined by allies and partners who have increased their own commitments, and who will come together tomorrow in London to reaffirm our common purpose. There will be difficult days ahead. But I am absolutely confident we will succeed.

As we take the fight to al Qaeda, we are responsibly leaving Iraq to its people. As a candidate, I promised that I would end this war, and that is what I am doing as President. We will have all of our combat troops out of Iraq by the end of this August. We will support the Iraqi government—we will support the Iraqi government as they hold elections, and we will continue to partner with the Iraqi people to promote regional peace and prosperity. But make no mistake: This war is ending, and all of our troops are coming home.

Tonight, all of our men and women in uniform—in Iraq, in Afghanistan, and around the world—they have to know that we—that they have our respect, our gratitude, our full support. And just as they must have the resources they need in war, we all have a responsibility to support them when they come home. That's why we made the largest increase in investments for veterans in decades—last year. That's why we're building a 21st century VA. And that's why Michelle has joined with Jill Biden to forge a national commitment to support military families.

Now, even as we prosecute two wars, we're also confronting perhaps the greatest danger to the American people—the threat of nuclear weapons. I've embraced the vision of John F. Kennedy and Ronald Reagan through a strategy that reverses the spread of these weapons and seeks a world without them. To reduce our stockpiles and launchers, while ensuring our deterrent, the United States and Russia are completing negotiations on the farthestreaching arms control treaty in nearly two decades. And at April's Nuclear Security Summit, we will bring 44 nations together here in Washington, D.C. behind a clear goal: securing all vulnerable nuclear materials around the world in four years, so that they never fall into the hands of terrorists.

Now, these diplomatic efforts have also strengthened our hand in dealing with those nations that insist on violating international agreements in pursuit of nuclear weapons. That's why North Korea now faces increased isolation, and stronger sanctions—sanctions that are being vigorously enforced. That's why the international community is more united, and the Islamic Republic of Iran is more isolated. And as Iran's leaders continue to ignore their obligations, there should be no doubt: They, too, will face growing consequences. That is a promise.

That's the leadership that we are providing—engagement that advances the common security and prosperity of all people. We're working through the G20 to sustain a lasting global recovery. We're working with Muslim communities around the world to promote science and education and innovation. We have gone from a bystander to a leader in the fight against climate change. We're helping developing countries to feed themselves, and continuing the fight against HIV/AIDS. And we are launching a new initiative that will give us the capacity to respond faster and more effectively to bioterrorism or an infectious disease—a plan that will counter threats at home and strengthen public health abroad.

As we have for over 60 years, America takes these actions because our destiny is connected to those beyond our shores. But we also do it because it is right. That's why, as we meet here tonight, over 10,000 Americans are working with many nations to help the people of Haiti recover and rebuild. That's why we stand with the girl who yearns to go to school in Afghanistan; why we support the human rights of the women marching through the streets of Iran; why we advocate for the young man denied a job by corruption in Guinea. For America must always stand on the side of freedom and human dignity. Always.

Abroad, America's greatest source of strength has always been our ideals. The same is true at home. We find unity in our incredible diversity, drawing on the promise enshrined in our Constitution: the notion that we're all created equal; that no matter who you are or what you look like, if you abide by the law you should be protected by it; if you adhere to our common values you should be treated no different than anyone else.

Assistant Secretary David Cohen delivered these remarks in Washington, DC before the Council on Foreign Relations

Assistant Secretary Cohen. Good morning ladies and gentleman. It is a great privilege to speak before the Council on Foreign Relations. This organization has long been at the forefront of serious and informed discussion of our nation's most significant foreign policy and national security challenges. And so let me begin by thanking you for the invitation to speak today.

A little over one week ago in Kabul, the Taliban, reportedly working with al Qaeda, staged one of the most brazen attacks in recent memory. At about 9:30 in the morning, a suicide bomber attempted to break through the gates of a key ministry building. Security guards shot the attacker, who then detonated his suicide belt on the street, steps from the President's palace and the Ministry of Justice. A six-hour gun battle ensued. In the end, at least seven Taliban militants were killed, along with three members of the Afghan security force and two civilians.

You may assume the target that day was the President's palace or the Ministry of Justice. It wasn't. The target was the Afghan Central Bank—the country's key financial regulator.

Why would the Taliban and al Qaeda target the Central Bank? What about a financial regulator so threatens them that they would dispatch a suicide squad to attack it?

My belief is that the Taliban and al Qaeda understand the critical role that a strong, sound and transparent financial system plays in a safeguarding a nation's security. A strong Afghan Central Bank promotes economic growth and enables the Afghan government, rather than the Taliban, to provide services to the Afghan people. Crucially, it also promotes the financial transparency and regulatory structure necessary to prevent illicit finance—the very kind of financial activity the Taliban relies upon to support its violent and destabilizing campaign in Afghanistan.

We deplore this cowardly attack on a civilian target, and extend our condolences to the Afghan police officers and innocent civilians who were killed. Nonetheless, I think we can see in the attack on the Central Bank some evidence of success in our efforts, and the Afghan government's efforts, to tackle terrorist financing in Afghanistan.

What I would like to do this morning is to, first, take a step back and provide a brief overview of the Treasury Department's Office of Terrorism and Financial Intelligence—how we are organized and what we do to advance national security by combating financial support networks for violent extremist groups. Next, I will describe some of what we are doing to attack the finances of the Taliban, al Qaeda and other terrorist groups operating in Afghanistan and Pakistan. And finally, I will touch on some of the counter-threat finance challenges and priorities in that region in the months and years ahead.

First, a little background: For many years, The Treasury Department had an Office of Enforcement, headed by an Under Secretary and Assistant Secretary for Enforcement. Its principal mission was to oversee the law enforcement agencies that were part of the Treasury Department.

When the Department of Homeland Security (DHS) was created in 2002, most of Treasury's law enforcement agencies were redistributed to DHS and the Justice

Department. What was left behind was a much smaller Office of Enforcement.

At the same time, there was a growing recognition that the Treasury Department could leverage its position as gatekeeper to the world's most important financial sector, its responsibility to help safeguard the worldwide financial system, and its unique legal authorities to advance our nation's most critical national security objectives.

Against this backdrop, the Department of the Treasury's Office of Terrorism and Financial Intelligence (TFI) was created in 2004. TFI is headed by an Under Secretary, and supported by two Assistant Secretaries. One Assistant Secretary, the Assistant Secretary for Terrorist Financing, is responsible for developing antimoney laundering and counter-terrorist financing policy. That is my job. The other Assistant Secretary, the Assistant Secretary for Intelligence and Analysis, oversees the production and analysis of financial intelligence for use by policymakers in combating illicit financial activities.

TFI's Under Secretary also oversees the efforts of the Office of Foreign Assets Control (OFAC), which administers our sanctions programs, and the Financial Crimes Enforcement Network (FinCEN), which administers the Bank Secrecy Act and serves as the financial intelligence unit for the United States Government.

It is now well-understood that many of our most persistent and pernicious national security threats—including terrorists who threaten to strike our country and insurgents fighting our friends and allies—rely heavily on financial support networks. Money is an essential ingredient in their operations, every bit as important as fighters, weaponry and extremist ideology.

The financial support these groups require goes far beyond the sums spent on a specific attack. These groups need sustained and substantial funding to pay operatives, support their families, indoctrinate and recruit new members, train, travel, and bribe officials.

The key idea underlying TFI's work is this: If we can deter those who would donate money to violent extremist groups, disrupt the means and mechanisms through which they transmit money, and degrade their financial support networks, we can make an extraordinarily valuable contribution to our national security.

TFI employs a variety of tools to do this work.

The foundation, of course, is solid financial intelligence—so we know where the money comes from, how it moves and where it winds up. Treasury's Office of Intelligence and Analysis, which is the only dedicated intelligence office in any finance ministry, works with its sister agencies in the U.S. intelligence community to map out terrorists' financial networks. FinCEN, which receives and analyzes financial reports from a wide variety of domestic financial institutions, also contributes to our understanding of terrorists' financial networks.

With this financial intelligence in hand, we can take a variety of actions to combat the financing of terrorist activity.

We can use Executive Order 13224 to block the assets of terrorists and their supporters, and forbid Americans—including U.S. financial institutions operating here and through branches abroad—from engaging in transactions with a designated person. We can also seek complementary action by the United Nations under UN Security Council Resolution 1267, by the European Union under its Common Positions and Community Regulations addressing terrorist financing, and by individual nations exercising autonomous authorities. Domestically, we can issue rules under Section 311 of the USA PATRIOT Act, as well as other provisions of the Bank Secrecy Act, to protect our domestic financial institutions from illicit transactions tied to the financing of terrorism.

We have several non-prescriptive tools to combat terrorist financing as well. We issue FinCEN advisories about foreign financial institutions, or methods of moving money, that we believe may be facilitating the transmission of funds for illicit purposes. We pass downgraded intelligence and other information to foreign governments' finance ministries, central banks and interior ministries, urging them to take action against those in their jurisdictions involved in terrorist financing. And we share information with both domestic and foreign financial institutions to alert them to specific risks they may be incurring.

Whichever tools we deploy, we know that our actions, and those of our international partners, are much more effective when there are strong systemic safeguards built into the international financial system. This means having in place laws and policies to foster financial transparency and to enable swift and sure action against terrorist financing.

We promote this goal by working closely with the Financial Action Task Force (FATF), an inter-governmental body that articulates standards to combat both money laundering and terrorist financing. In part through the dogged efforts of the Treasury Department, these standards have been recognized by more than 175 jurisdictions around the world, as well as by key international institutions such as the United Nations, the World Bank and the IMF.

In response to public assessments against the FATF's standards, many nations have summoned the political will to enhance their systemic safeguards against money laundering and terrorist financing. And because the implementation of strong safeguards is often hampered by a lack of capacity, we also work closely with Treasury's Office of Technical Assistance to provide support to foreign governments interested in developing robust counter-illicit finance capabilities.

Today, Treasury's multi-pronged and innovative approach to counter-terrorist financing is perhaps most clearly evident in our work in Afghanistan and Pakistan. Let me give you some specifics on the tools we are using.

As is the case elsewhere, targeted financial measures are the foundation of our efforts to disrupt and dismantle our enemies' financial networks in Afghanistan. To combat illicit financial activity in Afghanistan and Pakistan, we actively use both E.O. 13224, which allows us to designate terrorists, and the Foreign Narcotics Kingpin Designation Act, which allows us to designate narcotics traffickers.

For example, on July 1, 2009, Treasury designated Mohammed Yahya Mujahid and Nasir Javaid, members of Lashkar e-Tayyiba (LT), the Pakistan-based group behind the December 2008 terrorist attack in Mumbai, India. We also designated Arif Qasmani, an LT facilitator. On the narcotics front, we have recently taken action against two of the world's most notorious drug kingpins, the Haji Juma Khan Organization in Afghanistan and Imam Bheel in Pakistan.

These actions freeze the assets of those designated and cut them off from the US financial system. They also often result in the voluntary severing of financial ties with designees by much of the world's formal financial system. Moreover, the public nature of these designations serves as a strong deterrent to would-be funders, facilitators and enablers of extremist groups.

We have also been hard at work sharing financial intelligence with our partners in the Gulf, a major source of support to terrorist organizations in Afghanistan and Pakistan. Doing so has helped some Gulf countries build cases and take action to prosecute financial facilitators operating within their borders. This public manifestation of political will and, importantly, official condemnation of terror financing, also acts as a powerful deterrent.

Within Afghanistan, Treasury helped establish the Afghan Threat Finance Cell (ATFC) in 2009, a fusion center headed by the DEA, with the Treasury and Defense Departments as the co-deputies. Building on a similar, highly successful, effort in Iraq, and working in close coordination with Afghan counterparts, the ATFC uses the full spectrum of U.S. tools and authorities—including diplomacy, law enforcement actions, military operations and targeted financial measures—to go after threat finance in Afghanistan.

Over the past two years, we also have worked to enhance our engagement on illicit finance with the Afghan and Pakistani governments and private sector. At the working level we have bolstered our presence in the region and established Treasury attaché offices in both Kabul and Islamabad. Our Treasury attachés help facilitate the adoption and implementation of sound financial oversight and regulatory laws and practices, and build strong technical relationships with key in-country interlocutors.

We have also enhanced interaction between more senior Treasury officials and the Afghan and Pakistani governments. I, along with Deputy Secretary Neal Wolin, will travel in the near future to Afghanistan and Pakistan, meeting with senior officials and leaders of private financial institutions to discuss, among other things, strategies to combat illicit finance and increase financial transparency.

Treasury is also actively engaged in helping to build Afghan and Pakistani capacity to combat illicit finance. The Department has a resident advisor in the Afghan Central Bank's financial intelligence unit, FinTRACA, who helps them develop the systems and expertise to receive, analyze and disseminate reports of suspicious financial activity. This advisor has also assisted with the Central Bank's initiative to license hawalas, the informal financial networks that are prevalent throughout Afghanistan. Next week, an additional advisor will deploy to help the Central Bank improve its ability to regulate the Afghan financial sector.

In addition, we have plans to deploy advisors to Pakistan to help build the capacity of the State Bank of Pakistan's financial intelligence unit and to help improve Pakistani law enforcement's ability to conduct financial investigations.

And we are working closely with FATF, the World Bank and the IMF to encourage Afghanistan and Pakistan to implement the appropriate legal framework to prevent terrorist financing and money laundering. Staff from my office participated in a recent mutual evaluation of Pakistan's AML/CFT regime, and will soon participate in a mutual evaluation of Afghanistan's. We are committed to working with these countries to help them bring their systems up to the FATF's standards. To take one example, we have been directly engaged with the highest levels of Pakistan's government to encourage the passage by the Pakistani legislature of a new anti-money laundering law to replace, and improve upon, an interim ordinance that is currently in place.

Back here in Washington, Treasury is leading a whole-of-government process to develop new initiatives aimed at disrupting the financing for violent extremist groups operating in Afghanistan and Pakistan.

At the request of Ambassador Richard Holbrooke, the Special Representative for Afghanistan and Pakistan, last summer I established the Illicit Finance Task Force (IFTF). The IFTF pulls together expertise from civilian and law enforcement agencies, the intelligence community and the military, to devise more effective ways to disrupt extremist financial networks and support the development of well-regulated and transparent financial sectors in Afghanistan and Pakistan. Some IFTF working groups are focused on spurring the growth of banking services in rural areas of Afghanistan and Pakistan; a joint US-Russia initiative to target narcoticsrelated financial networks in Afghanistan; and customs and border oversight in South Asia and the Gulf. Others are sharpening our targeting tools, including through expanded law enforcement collaboration with our foreign partners, and enhancing our diplomatic engagement with our allies in the region.

And through the IFTF, Treasury and USAID are working with regulatory authorities, banks and mobile communications service providers in Afghanistan and Pakistan to bring mobile banking and payment card services to the Afghan and Pakistani people. Expanding the reach of the formal financial sector in this way has significant development benefits. It can facilitate the distribution of micro-finance loans in the Afghan agricultural sector, a top development focus of the U.S. government. At the same time it can help displace cash transactions, a move that will make Afghanistan less hospitable to illicit finance.

Let me now turn to the way forward and how I see Treasury's national security role evolving in the future, especially in Afghanistan and Pakistan.

In his December 1, 2009, speech at West Point, President Obama reiterated that:

“Our overarching goal remains…to disrupt, dismantle and defeat al Qaeda in Afghanistan and Pakistan, and to prevent its capacity to threaten America and our allies in the future. To meet that goal…we must deny al Qaeda a safe haven. We must reverse the Taliban's momentum and deny it the ability to overthrow the government.”

For the Treasury Department the message is clear: We need to redouble our efforts to combat the financial support networks of al Qaeda and the Taliban. A financially weakened al Qaeda is less capable of sending fighters into Afghanistan, training operatives to strike American and allied interests overseas, and organizing to attack us here at home. Likewise, a financially weakened Taliban will be a less capable fighting force, more vulnerable to ISAF military maneuvers, and less able to threaten the stability of the Afghan government.

The challenge, of course, is to continue to tighten our grip on the Taliban's and al Qaeda's financial networks. To some extent, this means sticking to our knitting—mapping the networks, particularly Gulf-based donors and facilitators; sharing information about risk; taking targeted action singly or in concert with others; sharing intelligence so others can take action through their legal systems; and building partner will and capacity.

And as their financial networks react and adapt to the actions we have taken, it means focusing even more intensively on interdicting cash smuggled out of the Gulf into Pakistan and Afghanistan. It also means more actively combating the use of hawalas for illicit purposes. Neither of these are new challenges; we have been focused on bulk cash smuggling and informal financial networks for years. But as we have become more successful in preventing the abuse of the formal financial system, illicit finance has increasingly migrated to these other transmission techniques.

We are also focused on the significant problem of official corruption in Afghanistan. Pervasive corruption in Afghanistan—in 2009 Transparency International rated Afghanistan the second most corrupt nation—hinders the development of legitimate government at all levels, and directly threatens our goal of ensuring that Afghanistan never again provides safe haven for al Qaeda. The Treasury Department is currently examining ways that we can apply our authorities to combat corruption.

Going forward, we will be increasingly focused on helping to build Afghan regulatory and law enforcement capacity. This will aid in the fight against illicit finance. But equally important, by helping to build capable and responsive governmental institutions, we will assist the Afghan government in countering extremist ideology. A well-functioning government that supervises a transparent, well-regulated financial sector, delivers justice and security, and meets the needs of its citizens can more effectively compete with the extremists' “shadow” government.

Before I conclude, I'd like to emphasize one final point: Our efforts to tackle terrorist financing are designed to stop every last penny from going to those who mean to do us harm. But we have no illusions that we can entirely prevent the flow of funds to terrorist groups. Some funds will find a way to flow.

But that does not mean the effort is futile—far from it. What we have learned is that by deterring would-be funders and disrupting the financial facilitation networks, we significantly impede terrorists' ability to operate. We may not be able to bankrupt al Qaeda, the Taliban, or even some of the lesser-known groups operating in the border region between Afghanistan and Pakistan. But through the coordinated, creative and relentless effort to attack their financial networks, we appreciably enhance our national security.

I want to close with a final note about your role, as thought leaders, in the effort to combat illicit financing. When intellectuals, academics and journalists focused on national security have the chance to explore our strategies in detail, and have the chance to discuss these strategies with Treasury officials—such as in this forum today—the community of people who understand how we use financial authorities to combat illicit finance expands. And this expansion generates greater effectiveness, for several reasons. Most directly, greater understanding of our authorities facilitates better compliance with laws and guidelines by U.S. persons. It also leads to the adoption of laws by foreign governments, and best practices by foreign financial institutions, which learn how to protect themselves from the risk of doing business with illicit actors. And it sparks innovative thinking in the policy community about how to use all tools of national power—not merely the traditional diplomatic and military tools—to address national security concerns.

So having the opportunity to speak with you, as individuals actively involved in the conversation about national security, is tremendously important as we hone our thinking about how to combat some of the most insidious and persistent threats we face. Thank you for being here, and I look forward to your questions.