Strategies Against Terrorist Financing

1. Strategies Against Terrorist Financing Ha Vu Alexis Zeiden PUBP 710 April 14, 2008

2. Agenda • History and Context • Overview: The Importance of Finances to Terrorism • Issue Statement • Proposal  • Pros and cons • Summary and conclusion

3. History • A lot terrorist financing comes from legal means • Pre September 11 • Most money laundering legislation was ineffective on terrorist networks • Terrorist networks (including their financing) was a priority of President Clinton • Foreign Terrorist Asset Tracking Center (FTATC)

4. Legislative History • Bank Secrecy Act of 1970 • International Emergency Economic Powers Act (1977) • Money Laundering and Control Act of 1986 • Annunzio-Wylie Anti-Money Laundering Act (1992) • The Money Laundering Suppression Act (1994) • The Money Laundering and Financial Crimes Strategy Act (1998) • USA PATRIOT Act (2001) • Suppression of the Financing of Terrorism Convention Implementation Act (2002) • Intelligence Reform Terrorism Prevention Act of 2004

5. USA PATRIOT Act: Title III • Addresses terrorist financing • Amends the Money Laundering and Control Act of 1986 and the Bank Secrecy Act of 1970 • Makes providing support to a foreign terrorist organization an offense under money laundering legislation (prosecution under section 1956 of Title 18 of the U.S. Code.38) • Requires domestic financial institutions to undertake necessary measures if the Treasury Secretary believes and actor is laundering money • Allows for judicial review of assets seized under the speculation of terrorist activity

6. Suppression of the Financing of Terrorism Convention Implementation Act (2002) • Implements the International Convention for the Suppression of the Financing of Terrorism (signed by the United States on January 10, 2000) • The Convention obligates participants to prosecute or extradite those who knowingly and unlawfully provide or collects funds to be used to support terrorist activities.

7. Overview: The Importance of Finances to Terrorism • 9/11 Commission – “expect less from trying to dry up terrorist money and more from following the money for intelligence, as a tool to hunt terrorists, understand their networks, and disrupt their operations.” • Adequate and successful financing is the key to terrorist activities • In order to stop terrorism, the ability for the terrorist networks to fund their efforts must be stopped

8. Overview: The Importance of Finance to Terrorism • Financing is at the basis of all terrorist networks, especially Al Qaeda • Numerous Acts have been passed to attempt to stop terrorist financing • No single US official how the power to coordinate all the various efforts that go into a sustained effort to halt terrorist financing

9. Methods to Disrupt Terrorist Financing • Protecting legitimate charities • There has been consistent terrorist abuse of the charitable sector through the diversion of charitable funds and services to terrorist organizations such as al Qaeda and Hamas • Prosecution of money laundering • Following money laundering allows the US to infiltrate terrorist networks • Prosecution cuts off sources of funding • Trade Sanctions • Used as a tool against terrorist since the early 1990’s • Led by the Department of Treasury Office of Finance Control (OFAC) • Nearly $1.5 billion has been blocked due to trade sanctions

10. Issue Statement: Which Method is Best to Disrupt Terrorist Financing: • Freeze? • Immediately seizing assets suspected of being targeted for use of terrorists • Follow? • Tracking suspicious funds in hopes they will lead officials to the terrorist cells • Recommendation of the 9/11 Commission

11. Proposal Strategy Combine freezing assets and tracking terrorists’ money trails Organization Policy Coordination Committee: attached more importance and more comprehensive approach Information management More access More sharing Less disclosure

12. Freezing Assets vs. Tracking Money Trails Cost - less vs. more Time Money Human capacity: skills, experience, cooperation Immigrants and foreign relations Benefit - less vs. more, short-term vs. long term Use of information Intelligence lead Opportunity to capture terrorists Opportunity to eliminate terrorist network

13. Freezing Assets: Dry Out Terrorists’ Funding to Eliminate Them? Dry out terrorist money? Feasibility - Not all terrorists’ assets because limited information availability Impact - Terrorist network help them survive by providing money from untouched resources. Scope - Formal financial transaction is only one of many channels in terrorist financing

14. Freezing Assets: Dry Out Terrorists’ Funding to Eliminate Them? Eliminate terrorists? Assumption - Money is everything to terrorists: terrorists will die because of starving Facts Money matters, but is not everything to terrorists Freezing assets indirectly affect terrorist survival

15. Tracking All Terrorists’ Money Trails? Too demanding with many constraints Resources Human capacity Technique/technology Information management Interest: to tackle terrorists in West Africa, Sahara Africa, Latin America and Asia

16. Organization:Policy Coordination Committee Current status: freezing leaning Head: General Counsel of the Treasury Department - biased The Proposal: freezing and following Head: A non-departmental National Security Council staff non-biased, better judgment terrorist financing attached more importance

17. Information Management Financial institutions - financial record keeping and reporting Financial privacy vs. national security Information access when there is national emergency Foreign Investment affected Freedom of press vs. national security Disclosure of classified information

18. Information Management More access, more sharing and less disclosure - facilitates tracking terrorist money trails Treasury Department: in front Information shared broadly among intelligence community Less disclosure of classified information House Resolution H.Res.895 Support the Treasury Program’s information access Condemn unauthorized disclosure of classified information

19. Summary and Conclusion Should not freeze all assets because of limited benefit Cannot track all terrorist money trails because of limited resources Strategy - combine freezing assets and tracking terrorists’ money trails with specific application on case by case approach

20. Summary and Conclusion Organization Policy Coordination Committee Head: a non-departmental National Security Council staff Team: analysts from all relevant departments Information Management reports and sharing with other agencies within Policy Coordination Committee Limit disclosure of government’s financial investigation

21. Sources “President Freezes Terrorist Assets”, Remarks by the President, Secretary of the Treasury O’Neil and Secretary of State Powel on Executive Order, The Rose Garden, September 24, 2001, http://www.whitehouse.gov/news/releases/2001/09/20010924-4.html “Terrorist Assets Report” http://www.treas.gov/offices/enforcement/ofac/reports/tar2004.pdf Blanchard, Christopher, Saudi Arabia: Terrorist Financing Issues, Congressional Research Service Report Center for Defense Information. 2002. “Financial War Against Terrorism,” Terrorism Project, March 5. Department of Treasury, “2003 National Money Laundering Strategy,” http://www.treas.gov/offices/enforcement/publications/ml2003.pdf Department of Treasury, “2007 National Money Laundering Strategy,” http://www.treas.gov/press/releases/docs/nmls.pdf Elsea, Jennifer K. and M. Maureen Murphy. 2006. “Treasury’s Terrorist Finance Program’s Access to Information Held by the Society for Worldwide Interbank Financial Telecommunication (SWIFT),” CRS Report for Congress, Order Code RS22469, July 7.

22. Sources • Elsea, Jennifer, “Treasury’s Terrorist Finance Program’s Access to Information Held by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), Congressional Research Service Report • National Commission on Terrorist Attacks upon the United States. 2004. The 9/11 Commission Report, July 22. • Office of Foreign Assets Control, U.S. Department of the Treasury • Weiss, Martin A. 2004. “Terrorist Financing: Current Efforts and Policy Issues for Congress,” CRS Report, Order Code RL32539, August 20. • Weiss, Martin A. 2005. “Terrorist Financing: The 9/11 Commission Recommendation,” CRS Report RS21902, February 25. • Weiss, Martin, “Terrorist Financing: Current Efforts and Policy Issues for Congress”, Congressional Research Service Report • Weiss, Martin, “Terrorist Financing: U.S. Agency Efforts and Inter-Agency Coordination”, Congressional Research Service Report