[Yardstick]

I googled up a couple of on-line translators, plugged in the phrase, and this is what they spit out.

BabbleFish:

"la amenaza de terrorismo ha sido exagerada"

Prompt-Online:

"la amenaza del terrorismo se ha exagerado"

So it looks like you're both right. Interesting that two versions would come up. I guess there's some leeway in how our "has X'ed" tense can be constructed in Spanish.

I picked up a little Spanish from a landscaping job I had a few years back. I can be fairly conversational, but only in the present tense, and only if the conversation revolves around shrubs and mulch and that sort of thing.

[Salman]

ha sido == has been
se ha == itself has

Both are correct.

[Salman]

ha sido == has been
se ha == itself has

Both are correct.

[David1]

I would write it either of 2 ways:

la amenaza del terrorismo se ha exagerado

or

la amenaza del terrorismo se ha sido exagerado

I have a preference for option 2 because to my ears it sounds a bit better. But both ways are fine.