Investigators trying to track dollars in Iraq

WASHINGTON -- Piles of U.S. currency, hundreds of millions of dollars so far, are being found in Iraq, even though the country has been under economic sanctions for nearly 13 years.

Investigators -- on the ground in Iraq and in the United States -- are trying to track the money back to where it came from, a herculean task, both officials and outside experts say.

The experts say there are plenty of possibilities, including oil and cash smuggling schemes, illegal trade deals, sham businesses and a web of middlemen located outside the country to conceal the true destination of the funds.

"Identifying a money trail can be very difficult to do," said Jimmy Gurule, a law professor at the University of Notre Dame. "That's why it is so essential that some documentation of financial records is discovered. Then investigators can go backward and trace the movements of the funds."

Gurule recently served as the Treasury Department's undersecretary for enforcement in charge of the government's efforts to catch terrorists' financiers. He left the job in early February.

Investigators also are looking into whether any of the cash found in Iraq was counterfeited.

"We are working with the military to authenticate the seized currency," said John Gill, a spokesman for the Secret Service, which handles counterfeiting investigations.

$600 million found

In Baghdad, U.S. soldiers -- trying to stop looting -- discovered more than $600 million in tightly wrapped packets of new $100 dollar bills hidden behind a false wall, U.S. military officials said Tuesday. The $100 bill is the most counterfeited U.S. note outside the United States.

In a neighborhood along the Tigris River, where senior Baath Party and Republican Guard officials lived, U.S. forces found some $656 million in U.S. currency, the Los Angeles Times reported last week.

It was not clear if the find described by the military officials was the same as the one reported by the Times.

"When you discover such a huge amount of U.S. currency, you know you are not dealing with Boy Scouts," said Robert Bonner, commissioner of the Bureau of Customs and Border Protection.

The Bush administration wants any genuine, U.S. currency found in Iraq to be used to help the people of the country, Treasury Department officials said.

Tracing the movement of cash is difficult. Serial numbers on U.S. currency are sometimes useful, but their help is limited, experts said. Information is kept allowing people to track bills' movements from the Federal Reserve to their first destination point, but not beyond that, a Treasury official explained.

Separately, roughly $1.2 billion in illicit Iraqi assets have been recently uncovered abroad, said Treasury Department officials, who wouldn't disclose details.

U.S. officials believe there is more Iraqi money that hasn't been found, a major focus of investigators.

A General Accounting Office report last year said that Iraq generated $6.6 billion in illegal revenue from oil smuggling and other schemes from 1997 to 2001.

Following Iraq's invasion of Kuwait, former President Bush in August 1990 imposed an embargo on Iraq, essentially banning business and trade with the country and ordering banks to block any assets belonging to the Iraqi government that were found in the United States.

The embargo, among other things, also forbade U.S. banks to transfer funds to Iraq.

Around the same time, the United Nations put economic sanctions on Iraq. But in 1995, the United Nations approved an "oil-for-food" program in which a certain amount of Iraqi oil was allowed to be sold and the proceeds were to be used to buy food, medicine and other humanitarian supplies.

Gurule said a close look at this program might be one way of trying to figure out how the U.S. currency that was found stashed in Iraq got there.

"I would want to look at the records that pertain to this particular program. What the U.N. authorized and when, and see if I could match that up with Iraqi records and see if there are some glaring discrepancies," Gurule said. "For instance, a good is extraordinarily overpriced or the quantity of the product seems to be way out of line," he added.

There also is the possibility that some of the U.S. currency found in Iraq may have come from legitimate means of some sort, said experts.

Operation Green Quest, a multi-agency financial crimes task force in charge of identifying ways terrorists are bankrolled and how they move their money, has seized roughly $21 million in smuggled U.S. currency, some of which had a Middle East connection, since the task force was set up in October 2001.

As terrorist financiers are forced out of the traditional banking system, they are turning to riskier ways to move money, including smuggling cash and cigarettes and trafficking in diamonds and gold.