Major Executive Speeches

Remarks by
Charles S. Phalen Jr.
Assistant Director, Security Division
Federal Bureau of Investigation
GovSec Asia
Hong Kong, China
March 29, 2006

Thank you very much for that kind introduction. I am pleased to be able to join you today here in Hong Kong.

This morning you will hear echoes of Richard Clark’s message to you yesterday. Not his discussion of whether we can change the heart of al Qaeda, but a look at meeting strategic and tactical needs for intelligence. To borrow from Mr. Clark, success requires good police work, good intelligence, and a willingness to look into the future. To get there, let’s take a short step backwards.

It is a bright and peaceful morning here in Hong Kong. On such a spring morning in 1995, terrorists used a truck bomb to destroy the federal government building and kill 168 men, women, and young children in Oklahoma City. In response, we erected concrete barriers around our existing buildings and set our new buildings farther away from the street so that car or truck bombs could not get close enough to cause massive destruction. Six years later, none of these measures played any role in protecting the World Trade Center or the Pentagon from terrorists using airplanes as bombs.

Does what happened in 2001 mean our response to the events of 1995 was wrong? No, but the September 11 terrorist attacks do illustrate the peril of looking only at the past to prepare for the future.

Absolute security for those we protect, whether they are nations, corporations, or our fellow citizens, simply is not possible. But if we are to achieve a more secure world, it is not just yesterday’s threats that we must be concerned with—it is tomorrow’s.

At the FBI, we spend a great deal of time thinking not only about the current threats, but also about what the threats of five or 10 years from now will look like, and how they will affect all of us. While we could spend days talking about what the future holds, I want to mention three global trends that will strongly influence our society in the coming years and which will in turn drive the measures you and I will have to take to deal with those consequences.

First, around the world, demographic and economic changes will likely lead to growing numbers of restless and unemployed people. This, combined with shortfalls in food, fuel, and even water may result in a more hostile world where violence escalates both in number and impact of events.

Second, technology advances will continue, and the transfer of data and information will become even easier. While this will be good for commerce, criminal and terrorist elements will find endless opportunities—or create opportunities on their own—to exploit this infrastructure. Some will use it for covert communication, others for sophisticated larceny, and still others to promote their violent message—such as the constant stream of Internet video from Iraq.

And third, the role of the nation-state will take on less importance. An American government commission, two years before September 11 suggested that an individual’s self-identification with a state may become less important than his association with ethnic, ideological, or tribal-based organizations. The commission suggested that criminals or terrorists with such affiliations will find an advantage through hidden networks that easily cross national and other jurisdictional boundaries—boundaries that confine us unless we are able to overcome them.

What does this emerging reality mean for us?

Today I want to look a little closer at each trend, examine the implications, and give you an idea of how the FBI is preparing—today—to meet tomorrow’s threats.

Escalating Violence >

The list of sensational acts of violence in recent years is long. Whether it targets people at work in New York and Washington; commuters in Madrid and London; vacationers in Bali; or children at school in Beslan, the scope and sensational nature of violence against innocents by terrorists is undoubtedly growing.

And we must anticipate that this trend will continue. Terrorists use these attacks to gain notice. The more sensational the attack, the more likely it will receive broad news coverage, giving them the attention they crave. We already know that our adversaries have the will to carry out appalling violence—they are merely waiting for the means and opportunity to strike again. Given the certainty of escalating violence, prevention becomes paramount.

The FBI’s reputation has been built on its ability to solve crimes and to identify and capture criminals. It is a well-deserved reputation. If I ever commit a serious crime, the FBI is the last organization on Earth I would want looking for me.

But the September 11 attacks demonstrated—and subsequent terrorist events worldwide have confirmed—that investigating after the fact leaves us at risk. So, we have shifted much of our resources to predictive efforts in order to interdict an attack before it occurs. This has been a sea change for us.

Since 2001, the FBI has focused on developing an intelligence capability—from collection to analysis to dissemination—so that we have the critical information that leads us to a cell or predicts an attack.

This has involved more than just training our special agents to develop more and better sources of information, though we have done that. It involves what we do with the intelligence once we have it.

In the last four years, we have doubled the number of intelligence and language analysts at the Bureau to help bring together all the bits of information, to establish relationships, and to identify threats.

To spread the intelligence function throughout our organization, we have established field intelligence groups in each of our 56 field offices throughout the United States. These groups of special agents, intelligence analysts, language analysts, and surveillance specialists focus exclusively on the intelligence needs of that region. As a result, both raw and finished intelligence reporting—the information that decision-makers act on—has dramatically increased.

Has it worked? In fact, there have been a number of FBI operations that we believe have disrupted and dismantled terrorist actions before they could take place.

And I believe those whose operations are being disrupted recognize this focus and approach. In 2004, a convicted member of the so-called Virginia Jihad, a cell just outside of Washington, told the Washington Post: “I came to realize that the government is no longer interested in catching people after the fact, but would rather prevent it before it happens.”

He was right, and the FBI will remain on this path. This past week, I spent three days with a group of about 50 of these analysts, specialists, and agents as they discussed their strategy, their future, and their commitment to the direction we need to follow in order to safeguard our society. It was an impressive group, and any lingering doubts I had about the FBI’s ability to make this transformation were erased in those three days.

They understand the lessons of New York, Washington, Madrid, London, Bali, and elsewhere, and they know that we cannot wait for an attack to occur to begin our work. In an age of escalating violence, prevention cannot just be a hope, it must be our plan.


Turning to another trend, technology has made the world smaller, but, in some ways, it has made the world more dangerous.

The powerful information technologies that have done so much to improve the quality of our lives are also being used by some of the worst elements of our society. We see, in particular, a number of traditional crimes that have migrated online: common frauds, identity theft, copyright infringement, child pornography, and child exploitation. It even strikes close to home. Just a few weeks ago we discovered an Internet phishing scam that focused on the U.S. government employees’ financial investment program.

All indications are that Internet-enabled crime will increase radically over the next few years, with the unchecked potential for driving down consumer confidence in Internet security and stunting the growth of e-commerce.

But we are also seeing a new category of crime that did not exist in the days before computers, including computer intrusions, denial-of-service attacks, worms, viruses, and the like. These attacks often focus on a nation’s or corporation’s internal data. The corruption or destruction of that data or those networks is the equivalent of cutting off the blood supply, with consequences that are just as catastrophic. There is some logic to the prediction that the first notice of a major attack in the future will not be the bright flash of an explosion but instead simply a blank screen.

To address these threats, we all are going to need the capability to investigate cyber crime. We must be as agile and adaptive as the global organizations that threaten us today. And we need the tools to harness the power of technology to protect our citizens from those who would exploit technology to harm them.

The FBI has dedicated an entire division—our Cyber Division—to address this growing set of threats. We have specially trained cyber squads at FBI Headquarters and in each of our field offices. These agents and analysts protect against and investigate computer intrusions, theft of intellectual property and personal information, child pornography and exploitation, and online fraud.

On top of this, our 93 computer crimes task forces around the country combine state-of-the-art technology and the resources of our federal, state, and local counterparts.

We also have an Internet Crime Complaint Center, which serves as a clearinghouse for internet-related consumer complaints. On average, the center receives more than 18,000 consumer complaints each month. We use the information we receive from consumers and from our private-sector partners to assess trends, identify current online scams and to find those responsible.

The growth in technology shows no sign of slowing. How we manage our responsibility in the cyber arena will play a large role in determining whether technology remains a benefit to the world or becomes an affliction.

While on the topic of information technology, it might be useful to note that the FBI is adapting emerging information technology, not only to investigate cyber crimes, but also to provide the information infrastructure to support our entire mission. A couple of efforts have not been as successful as we had hoped and that has generated some widespread publicity, but there are success stories as well. Among them:

The FBI’s Terrorist Screening Center database is the master repository for all terrorist identification data known to the U.S. government.

And our Information Data Warehouse holds more than 100 million pages of terrorist-related documents in a database accessible to our analysts and agents around the world.

Nation-State and Boundaries >

Finally, when we look at the role of nation-states, it is clear that they are already taking on less importance for criminals and terrorists alike. Al Qaeda, Eastern European cyber criminals, organized crime—they all operate without regard for any of our collective borders, and, in fact, often use these borders to their advantage.

Our challenge, in an environment like this, is that we must respect the very boundaries and jurisdictions that they do not. Our ability to work together across those boundaries, whether they are bureaucratic, domestic, or international, will define whether our efforts are successful—or not.

The key to success is building partnerships now that we can rely upon in the future.

It is, of course, easier to say that we are going to work together, than to actually do it. Historically, the FBI has been seen as not working well with others, particularly with other federal agencies, such as the CIA. And in some cases, the FBI has not been allowed to work with others.

For decades prior to September 11, the FBI and the CIA were legally prohibited from sharing information between criminal and terrorism cases. Even FBI agents working terrorism and intelligence matters could not compare notes with FBI agents working on criminal cases, even when those cases concerned the very same terrorist subjects. The Patriot Act has changed all that. Removing those legal walls has given us an indispensable tool in the war against terror.

But the culture of cooperation, which in truth was always stronger than most thought, has blossomed since September 11. Today, the FBI, CIA, NSA, and the rest of the federal government not only share information on a regular basis, we are exchanging employees and working together every day. Intelligence officers working on terrorism cases see the same data and work side-by-side with agents developing criminal cases.

Today, we work with state and local law enforcement in a variety of ways. One of the most important are the Joint Terrorism Task Forces we have established around the country where the intelligence community and law enforcement community work to track down each and every terrorism lead. Since 2001, we have increased the number of these task forces from 35 to 101.

But it is not just inside the United States that we work to build partnerships. Today, cases with an international nexus have become the rule rather than the exception. Our Legal Attaché offices in 54 locations around the world have become increasingly important to our operations. What began primarily as liaison offices now assist our counterparts overseas on joint investigations, intelligence-sharing, and the development of new methods to prevent attacks.

Further, these collaborative efforts are not limited to our international government partners or to law enforcement and intelligence agencies. We also work closely with members of the private sector and have developed a viable information exchange.

Many of those partnerships begin at forums like this. Here we have an opportunity to build the personal networks, to learn from what others have to say on topics with which we all struggle, and get a sense of what solutions are out there to help you and me get our jobs done more effectively. Together, we can overcome our adversaries, no matter where they are.


On September 11, 2005, a group of men planned to enter a military recruiting center on a busy street in Santa Monica, California, and kill everyone inside. They planned to go underground for a month, and then, on Yom Kippur, re-emerge and open fire on the families gathered outside a temple in West Los Angeles.

The case was broken when the terrorists committed a series of gas station robberies to raise money to finance the attacks. Police in Torrance, California, arrested two of them and discovered documents that listed religious locations and military posts.

A few years ago this bit of information might not have registered, but the Torrance Police had an officer assigned to the FBI’s Joint Terrorist Task Force. They asked him to take a look. He called in the rest of the task force. Hundreds of investigators worked around-the-clock at an FBI command post to identify other members of the cell. Thousands of phone records were analyzed. Thousands of man-hours were spent backtracking until the entire cell was uncovered.

They had raised money, obtained weapons, set the dates, and chosen their victims. They were poised to strike.

What stopped it? Our tighter links to local law enforcement, our improved ability to gather and analyze intelligence, and our improved computer databases.

Partnerships, prevention, technology.

The future, and the threats it contains, can be frightening to consider. But the steps we are taking today—to prevent attacks, to harness technology, and to build partnerships—will help us meet the threats of today and prepare us for the threats of tomorrow.

Thank you again for inviting me to speak with you today, and I would be happy to take your questions.