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Senate banking panel hears criticisms of war on terror

WASHINGTON -- Dislocations within the executive branch and poor coordination with financial institutions have complicated efforts to track down how terrorists move their money, a former antiterror official in the Clinton and Bush administrations said yesterday.

Richard A. Clarke also told the Senate Banking Committee that the United States should initiate a sanctions system, as it has for narcotics, to punish countries that don't cooperate in the search for terrorism financing.

Clarke, who served as Bush's counterterrorism coordinator until last January, said that while significant progress has been made since the Sept. 11 attacks in pursuing terrorist financing, the government reorganizing that accompanied the creation of the Homeland Security Department had been a setback for the campaign.

"Reorganizing in the middle of the war on terrorism was perhaps not the brightest thing to do," he told the panel.

In particular, he said the decision to give the FBI exclusive lead in the financing investigation was a "recipe for failure." The FBI, he said, "by tradition doesn't cooperate well with other agencies."

Others with considerable expertise in the area, including the Secret Service and the Customs Service, should not be neglected, Clarke said.

He also noted that the reorganization had eliminated the senior position in the Treasury Department for enforcement, although two offices critical to the campaign -- the Office of Foreign Assets Control and the Financial Crimes Enforcement Center -- remain in the department.

He recommended the creation of a single center to coordinate activities among the different agencies.

Clarke also said that the lack of information from the government to financial institutions has hindered anti-terrorism efforts. He suggested a program to increase security clearances for banking officials to ease communication.

On the idea of sanctioning uncooperative countries, Senator Paul Sarbanes, Democrat of Maryland, said that sanctions available in the war on drugs had been "rendered sort of useless" because presidents tended to cite national interests in waiving punishments for most countries.

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