Buono Wants State To Address Gaps In Financial Institution Security

Says ‘New Jersey Banks and Financial Institutions Cannot be Used to Funnel Terrorism Funds’

TRENTON – At a Senate hearing on the Department of Banking and Insurance (DOBI) FY 2006 budget, State Senator Barbara Buono said today that she was concerned that New Jersey wasn’t going far enough to address holes in the State’s financial security which allow terrorists to funnel funds through the Garden State.

“Right now, the State is extremely lax in our oversight of financial transactions, and as one of the top 10 states in the nation for monetary transfers, we need to strengthen that oversight,” said Senator Buono, D-Middlesex, a member of the Senate Budget and Appropriations Committee. “The concern is that terrorists, and those supporting terrorism, are using our banks and other financial institutions to launder funds to terrorist organizations. And according to the testimony we heard today, the only reason our State lags behind others in our oversight is the lack of adequate funding.”

“The Department of Banking and Insurance is seeking to provide greater scrutiny of suspicious transfers of money, and given the importance in terms of our homeland security, the State must give DOBI all the support it can,” said Senator Buono. “We cannot allow inadequate resources to be exploited to direct cash right into the hands of those who would seek to do us harm.”

Senator Buono cited New Jersey’s substantial history of financial transfers to other countries — 1.9 billion in 2003 — as a main reason for increased scrutiny of transactions. She noted that despite the State’s strong banking industry, we are among the lowest in terms of employees designated to tracking and catching illicit financial transfers.

“In New Jersey, we have 91 employees devoted to making sure that our banks are not acting as fronts for terrorism cells around the world,” said Senator Buono. “In comparison, Massachusetts, which ranks below us in terms of the size of their banking industry, has 142. I’m afraid that our lax attitude towards oversight may make us an easy mark for exploitation.”

The senator added that she supports Acting Commissioner of Banking and Insurance Donald Bryan’s suggestion to establish a dedicated revenue stream to tighten the safety net around our financial transactions and ensure that terrorists cannot use the State’s banking system against us. Under the proposal, the dedicated revenue would be made up from a surcharge on banks and financial organizations, with no cost to the taxpayer.

“Currently, when DOBI conducts an audit on a State banking institution, the cost is borne by the institution, but without a consistent, dedicated revenue stream, the safety net to ensure the integrity of our banks and financial organizations is piecemeal at best,” said Senator Buono. “We must have full-time oversight to ensure that nothing slips through the cracks.”

The senator also added that many banks support a dedicated revenue stream because it introduces, “stability into the cost of State audits, something that was lacking before.” She said she would continue to work with DOBI to come up with a balanced solution to the issue of financial oversight.