• Event: Interview of Gary Novis

Memorandum

Type of Event: On-the-Record Interview

Date of interview: 1011 0103
for the Record

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)

•
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, g
particularly the flow of financial information from one FlU to another. CU)

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.

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

Novis stated that there was a broad consensus in develo in the list of 19 countries with

9/11 Classified Information

e ner two coun nes

consist of [name here~.] /"
CStN'F

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- 2
 .sECRET ..-

•
,:/:'9/11 Classi fied Information

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)

•
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

SE€RET 3
 • country's status, the following is Navis' thumbnail recollection of each of the tier one
countries .

• 9/11 Classified Information

Inter- and intra-agency coordination

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

--sECRET 4
 -SECRET

• 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)

• 9/11 Agency Internal Matters

I 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
pushed, Novis stated that the matter gets "booted up" to the political level for guidance.
needs to be

(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 resource-
intensive 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)

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.

•
TFWG works 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

. SECRET 5
 9/11 Classified Information

I t
e· 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.
outside

Multilateral efforts

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

e
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)

9/11 Classified Information

•
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

8ECRE-T- 6
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

_~S.....
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