Former Homeland Security Secretary: ISIS a 'hardened, ruthless enemy,' we face the most threatening environment since 9/11

This is a rush transcript from "On the Record," September 5, 2014. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Secretary of Defense Chuck Hagel warned the threat posed by ISIS is beyond anything we have seen. That warning is terrifying.

Former Homeland Security secretary Michael Chertoff joins us. Nice to see you, sir.

MICHAEL CHERTOFF, FORMER HOMELAND SECURITY SECRETARY: Good to be on, Greta.

VAN SUSTEREN: That was chilling when the secretary of defense said that.

CHERTOFF: It's it certainly true that since September 11th, we now face the most threatening environment we have had over the last 11 or 12 years. The way it's going to play out is not going to be the same as what we saw in 2001. What we are facing is a very hardened enemy, a ruthless enemy, a cruel enemy. Most disturbing, an enemy very successful in recruiting Americans and Westerners to go fight over in Syria and in Iraq.

VAN SUSTEREN: Plus, they have so much money, and access, because it isn't hard to get in the United States if you have a Western passport. You get a Western European passport and you just come here. You don't need a visa.

CHERTOFF: That's -- the terrorists understood that, right after 9/11, we put up some very tough measures to keep foreigners out of the country if we were uncertain about whether they were risky or not. So they started to recruit Americans and Westerners who don't go through that same kind of vetting process. That's really the Holy Grail for the terrorists, how do you get an American, who has the right to come back to the U.S., trained, hardened, radicalized and send that person back to carry out a terror mission?

VAN SUSTEREN: It's so easy to do the soft targets. Even to get the power grid, I imagine, is pretty easy. I mean, got big sporting events. There are so many soft targets.

CHERTOFF: Part of the change I think we are going to see in tactics from what we saw back in 2001 is the terrorists are going to be less focused on the one big cataclysmic event and more willing to carry out multiple attacks against smaller targets. We saw that in Mumbai in India in 2008. We have seen it, for example, in the Boston Marathon, which was, I think, intended to be followed with other attacks elsewhere. Now their tactics have changed, and that in some ways makes it more difficult because the more widespread and the smaller-scale the plots, the less of a signature there is and the harder to detect.

VAN SUSTEREN: Of course, you don't need much money. When you talk about the Boston Marathon, they have a pressure cooker, and I don't know what, off the Internet. It isn't difficult to do this. You just have to basically find someone who is so evil.

CHERTOFF: That's right. But the thing that's really changed is, when you have people like the Boston Marathon folks or some of the other people who have tried to carry out attacks here, they've not been very competent in terms of bomb-making or activity. When you bring people over to Syria and Iraq, you train them in to how to make bombs and train them into combat, get them more radicalized by exposing them into violence. If they come back, they are not only evil, but they are capable. That's why everybody is pressing the alarm button in terms of the developments over the last several months.

VAN SUSTEREN: I suspect, when I listen to you, what's the best way to protect ourselves. I suppose sort of citizens is the safest thing. If you have some weird neighbor that has C-4 plastic or something like that, it really is -- because the FBI can't be watching everybody.

CHERTOFF: A couple things. It's always been the case that when the regular, average citizens see something strange and reports it, that's been the best way we have had for finding people in the U.S. plotting things. And that was true even back in the period right after 9/11. So the ordinary citizen engaged and willing, as they say, to say something when they see something is our best line of defense.

But candidly, the other line of defense is our intelligence community. And you know there has been a lot of controversy now about NSA and the fact that focusing on foreign interceptions sometimes we get Americans picked up. There is a reason for that. If Americans are talking to a number that's associated with a foreign terrorist group, you bet we want to know that. Those are the people we want to be looking at. And now more than ever, we need to make sure our capabilities and collecting intelligence overseas are not compromised.

VAN SUSTEREN: What do you about the situation? It's more likely someone comes from Yemen, that the person has been in a training camp or Syria or something, than if the person comes from, I don't know, Bermuda. What about sort of that profile? It's such a sensitive issue.

CHERTOFF: A lot of it is where they have traveled, where their communication and money has come from. For years, we have collected what they call passenger name record data, which is forwarded by airlines to us for all incoming flights. We are able to look and see, is there somebody on the flight who maybe got their ticket paid for by a bank account associated with terrorists. Or come in a round-about way from Pakistan or Afghanistan, where there are training camps. We ran that program retroactively against the 9/11 hijackers and we discovered, if we had that program in 2001, we would have picked up a majority of the hijackers as being connected with terrorists.

VAN SUSTEREN: Mr. Secretary, nice to he so you, sir. Thank you for joining us.

CHERTOFF: Good to be on, Greta.