Testimony of John S. Pistole, Assistant Director, Counterterrorism
Division, FBI
Before
the House Committee on Firnancial Services
Subcommittee on Oversight and Investigations
September 24, 2003
"The Terrorist Financing Operations Section"
Good
morning Madam Chairman and members of the Subcommittee on
Oversight and Investigations. On behalf of the Federal Bureau
of Investigation (FBI), I would like to express my gratitude
to the Subcommittee for affording us the opportunity to participate
in this forum and to provide comment to the Subcommittee on
the FBI's efforts, in conjunction with other United States
Government agencies, to stop terrorist financing and, in particular,
how the FBI is contributing to those efforts to disrupt the
financial support to the terrorist organization, Hamas.
Since
September 11, 2001, the FBI has reallocated substantial resources
to protect the American people from another terrorist attack.
The FBI's Counterterrorism Division has made significant strides
during its reorganization to provide a more centralized, comprehensive
and pro-active approach to investigating terrorism-related
matters to effectively disrupt and dismantle terrorist organizations
before they are able to conduct attacks against citizens of
the United States and/or her allies. With the changing nature
of terrorism and recent technological innovations, the FBI
has been called upon to implement new ways and techniques
to identify, prosecute and most importantly prevent future
crimes and attacks. The FBI has recognized that terrorists,
their networks and support structures require funding in some
form to exist and operate. Whether the funding and financial
support is minimal or substantial, it leaves a financial trail
that can be traced, tracked, and exploited for pro-active
and reactive purposes. Being able to identify and track financial
transactions and links after a terrorist act has occurred
or terrorist activity has been identified represents only
a small portion of the mission; the key lies in exploiting
financial information in efforts to identify previously unknown
terrorist cells, recognize potential terrorist activity/planning,
and predict and prevent potential terrorist acts. The FBI
bolstered its ability to effectively combat terrorism through
the formation of the Terrorist Financing Operations Section
(TFOS).
TFOS
has developed tactical and strategic, time sensitive, financial
investigative methodologies enabling the FBI to be recognized
worldwide as the leader in this area. TFOS has evolved into
a broader strategy to identify, investigate, prosecute, disrupt
and dismantle incrementally all terrorist related financial
and fund?raising activities. TFOS was created to take advantage
of the FBI's traditional expertise in conducting complex criminal
financial investigations in conjunction with advanced technologies
and the powerful legislative tools provided in the USA PATRIOT
Act. TFOS built upon these established mechanisms by developing
a strong support network within the private financial sector,
as well as, furthering cooperation and coordination among
law enforcement and intelligence agencies, both domestic and
foreign, to form the preeminent terrorist financing investigative
operation. In the past several months, TFOS capitalized on
its capabilities by conducting real-time financial tracking
of a terrorist cell and providing specific and identifiable
information to a foreign intelligence agency, which resulted
in the prevention of four, potential deadly terrorist attacks.
The TFOS
mission includes: conducting full financial analysis of terrorist
suspects and their financial support structures in the U.S.
and abroad; coordinating joint participation, liaison, and
outreach efforts to exploit financial resources of private,
government, and foreign entities; utilizing FBI and Legal
Attache expertise and relationships to fully develop financial
information from foreign law enforcement and private agencies,
including the deployment of TFOS personnel abroad; working
jointly with the intelligence community to fully exploit intelligence
information to further terrorist investigations; working jointly
with the law enforcement and regulatory communities; developing
predictive models and conducting data mining analysis to allow
a proactive approach in identifying previously unknown or
"sleeper" terrorist suspects; and providing the
financial component to classified counterterrorism investigations
in support of the FBI's counterterrorism responsibilities.
The purpose
of today's hearing is to address issues regarding the financing
of the terrorist organization, Hamas. By way of background,
Hamas is one of the Specially Designated Terrorist Organizations
listed in the Annex to Executive Order12947 as a foreign terrorist
group engaged in grave acts of violence that disrupt the Middle
East Peace Process and constitute an unusual and extraordinary
threat to the national security, foreign policy, and economy
of the United States.
Hamas
is a terrorist organization that espouses an extremist Islamic
fundamentalist ideology. Hamas was founded in 1987 in the
Gaza Strip and is dedicated to the establishment of an Islamic
Palestinian State that encompasses Israel, the West Bank and
Gaza. Hamas is a militant Palestinian offshoot of the Muslim
Brotherhood which was founded in 1928 to replace secular rulers
with an Islamic society.
In late
1987, activist members of the Muslim Brotherhood opted to
play a more direct role in the popular uprising, known as
the Intifada, than the Muslim Brotherhood leadership would
allow. As a result, Sheikh Ahmad Yassin, then head of the
Muslim Brotherhood in the Gaza Strip, formed Hamas. In May
1989, Yassin was arrested and in October 1991, he was tried
and sentenced to life imprisonment by an Israeli court for
Hamas terrorist activities.
In October
1997, following a failed Israeli attempt to kill Khalid Misha'al,
another Hamas leader in Amman, Jordan, Yassin was released
to the Jordanians and subsequently returned to Gaza. On October
29, 1998, Yassin was placed under house arrest by the Palestinian
Authority (PA) following an unsuccessful Hamas suicide attack
to blow up a bus full of school children in Kfar Darom, which
resulted in the death of an Israeli soldier. Yassin was released
from house arrest two months later, in December 1998.
Hamas
is primarily based in the West Bank and Gaza. When Hamas was
declared an illegal organization by the Government of Israel
(GOI) in 1989, Hamas leaders moved its support
structures outside Israel.
Hamas has publicly rejected Yasir Arafat and the PA as the
representatives of the Palestinian people. Hamas also announced
that it opposes the Palestine National Council's 1988 decision
to establish an independent Palestinian state in the West
Bank. Since the group's inception, Hamas has forged significant
inroads into acceptance by mainstream Palestinians.
The ideology of Hamas is codified in the Hamas covenant. This
covenant establishes Hamas' primary goal as the creation of
an Islamic State in all of Palestine through "Jihad"
(Holy War). Hamas' covenant emphasizes Jihad as the immediate
and sole solution to Palestinian problems and regards participation
in the armed struggle as the duty of every Muslim. Hamas absolutely
rejects any political solution entailing the concession of
any part of historic "Palestine."
The primary tenets of Hamas philosophy are opposition to compromise
with Israel over creation of a Palestinian State and replacement
of the PA as the sole representative of the Palestinian people.
To these ends, Hamas pursues a combined program of violence
and terror on one hand, and educational, charitable, and social
functions on the other. The principal purpose of its armed
attacks is to intimidate and coerce the GOI and its civilian
population. Its benevolent programs are used to enhance its
image and earn goodwill in the Palestinian community.
An interview
with a senior Hamas spokesman identifies the influence the
political wing of Hamas has over the military wing. In a July
31, 2001, Reuters article, Abdel-Aziz al-Rantissi, a senior
Hamas official and spokesman stated, "The (Hamas) political
leadership has freed the hand of the brigades to do whatever
they want against the brothers of monkeys and pigs."
The term "brigades" refers to the group's military
wing, Izz el-Din al-Qassam brigades. Rantissi further stated,
"I urge all the brigades to chase and target the Israeli
political leaders and members of parliament, the killer (Prime
Minister Ariel Sharon) and the criminal (Foreign Minister)
Shimon Peres." This was believed to be the first public
call by Hamas to target Israeli leaders. According to the
article, "Hamas' political wing determines overall policy
for the movement."
Even
after the September 11, 2001 terrorist attacks against the
World Trade Center and Pentagon, Hamas' public statements
urge support for continued violence against Israel and the
United States. In a September 2001 public statement published
by Reuters, Rantissi echoed calls by Taliban clerics in Afghanistan,
urging "Muslims on Friday to unite against any U.S. retaliation
for the terror attacks in New York and Washington." He
went on to say, "It is impossible for Muslims to stand
handcuffed and blindfolded while other Muslims, their brothers,
are being attacked. The Muslim world should stand up against
the American threats which are fed by the Jews. To the best
of our knowledge, Hamas has thus far refrained from intentionally
attacking U.S. persons or installations.
Through its acts of violence, Hamas has established itself
as one of the primary Palestinian terrorist organizations
continuing the "armed struggle" against Israel.
These terrorist attacks target not only military targets,
but civilian ones as well. According to the State Department,
during 2002 alone, more than 370 persons, including 10 U.S.
citizens, were killed in Israel, the West Bank and the Gaza
Strip by acts of terrorism. These casualties have continued
to mount, including during the past two weeks, when a Hamas
terrorist attack killed two U.S. citizens and wounded one.
The United
States designated Hamas a specially designated terrorist organization
on January 25, 1995. This designation made it a violation
of the International Emergency Economic Powers Act (IEEPA)
to conduct any financial or business transaction with Hamas.
On August 22, 2003, in the wake of Hamas' claim of responsibility
for the August 19, 2003 suicide bombing attack in Jerusalem,
which killed twenty persons, including four U.S. citizens,
the U. S. Department of Treasury's Office of Foreign Asset
Control, designated the following Hamas leaders as "specially
designated global terrorists"; Sheikh Ahmad Yassin, Khalid
Misha'al, Abd Al-Aziz al-Rantissi, Imad Khalil Al-Alami, Usama
Hamdan and Mousa Abu Marzouk. Mousa Abu Marzouk, a senior
Hamas political leader had been previously designated as a
terrorist by the Department of Treasury in August, 1995 and
was subsequently deported from the United States. These designations
make it illegal to conduct any transactions with these individuals.
Furthermore, based on the designations, the United States
government will seek to freeze all U.S. assets of these Hamas
leaders. The following four organizations, based mainly in
Europe and the West Bank, were similarly designated as supporters
of terrorism; Comite de Bienfaisance et de Secours aux Palestinians,
Palestinian Association of Austria (PVOE), Palestinian Relief
and Development Fund (Interpal) and Sanibil Association for
Relief and Development.
The U.S.
Government estimates that Hamas' annual budget is at least
$50 million. The majority of these funds are generated by
the contributions of Non Government Organizations (NGOs),
state sponsors and wealthy individuals. While most of these
funds may be used to support the social programs espoused
by Hamas, any contribution to Hamas, for any purpose, frees
up other funds for its planned violence. The leaders of Hamas
have taken advantage of donations made to NGOs and charities,
which may appeal for the need to support orphans and widows,
as well as, build schools and hospitals, but are actually
"fronts" for Hamas and use a portion of these contributions
to support the terrorist organization's military wing. Many
donors believe that their charitable contributions were fulfilling
one of their tenets of Islam (Zakat), but have unwittingly
supported terrorist attacks through payments made to the NGOs
and charities, which are actually Hamas "front"
companies. Others have contributed financial assistance because
they sympathized with the Palestinian people, who have suffered
socio-economic hardships, as a result of the past three years
increased violent conflict. These charities are an easy target
for fraud, as certain funds, which were originally provided
for charitable purposes find their way to supporting Hamas'
military wing and ultimately are the source for terrorist
attacks.
The United
States Government designated all facets of Hamas as a terrorist
organization, since it was impossible to differentiate between
money Hamas was utilizing for social reform and funds which
supported terrorist attacks. The European Union (EU) had until
recently only designated Hamas' military wing as a terrorist
organization. However, through evidence and intelligence provided
by the U.S. government, the EU has taken steps to restrict
all branches of Hamas and may move to block funding to its
political bureau, fund-raising charities and other social
welfare programs. The EU's recent decision has the potential
to further disrupt Hamas' funding methods by eliminating its
prior strategy of using NGOs and charities as "front"
companies to generate financing for its terrorist attacks.
The FBI's
program on attacking Hamas elements in the United States has
been to focus on disrupting and dismantling the funding networks
which support Hamas. In the United States, the majority of
Hamas' financial support is generated through the fund-raising
efforts of various NGOs. In December, 2001, based on the initiative
of an FBI investigation, the Department of Treasury designated
the Holy Land Foundation for Relief and Development (HLFRD)
as a Specially Designated Terrorist Organization, freezing
the assets of HLFRD and making it illegal to conduct transactions
with the organization. The FBI was an intricate contributor
to the evidence which identified HLFRD as the lead fund-raising
source for Hamas in the United States. In 2000, HLFRD had
raised approximately $13 million dollars. The results of the
Department of Treasury's designation of HLFRD and the subsequent
freezing of its assets delivered a significant blow to the
fund-raising efforts of Hamas in the United States. Presently,
the FBI is focused on identifying NGOs, which seek to replace
HLFRD's position as the major financier of Hamas in the U.S.
To date, no NGOs exist which compare with the fund-raising
capabilities exhibited by HLFRD. The FBI is also investigating
smaller Hamas financing efforts being conducted by criminal
enterprises in the U.S., which have shown either associations
with known Hamas members or sympathies toward its ideology.
These investigations have uncovered a myriad of criminal activities
used to generate funds, a portion of which is then forwarded
to NGOs associated with Hamas. Some of the suggested criminal
activity include, but are not limited to, drug trafficking,
credit card fraud, counterfeit products, fraudulent documents,
cigarette tax fraud and stolen infant formula.
Although
the majority of these matters are on-going investigations,
I would like to point out some of the successes that the FBI
has enjoyed recently regarding Hamas and other terrorist organizations
investigations, as well as, update the status of cases alluded
to during former Deputy Assistant Attorney General Alice Fisher's
March 11, 2003 testimony to this Subcommittee.
- On
four separate occasions, the FBI has received financial
information, from a foreign intelligence agency, which was
related to the funding of a pending terrorist attack. The
FBI exploited an established source in the private financial
sector to conduct real-time tracking of the subject financial
transactions. The FBI provided the foreign intelligence
agency with specific and identifiable information regarding
the parties involved in the financial transactions, as well
as, the locations and times where the transactions occurred.
Based on this information, the foreign intelligence agency
was able to locate the members of terrorist cells and prevent
them from conducting their intended terrorist attacks.
- In
January, 2003, German law enforcement authorities, who had
been working closely with the FBI, arrested Mohammed Al
Hasan Al-Moayad, a Yemeni national, for purposes of his
extradition to the U.S. to face charges of conspiring to
provide material support to Al Qaeda and Hamas and to have
boasted that he had provided over $20 million to Usama Bin
Laden. The U.S. investigation indicates that Al-Moayad had
participated in several fund-raising events at the Al Farouq
Mosque in Brooklyn, NY. Al-Moayad was arrested during a
meeting in Germany, where he believed that he was to receive
a large financial contribution, which he advised a source
would be used to support mujahideen fighters of Al Qaeda
and Hamas. One of Al-Moayad's associates, also wanted in
the U.S., was arrested at the same time. In addition, other
associates in New York were arrested on charges of violating
bank reporting requirements by structuring over $300,000.00
in several bank accounts in the United States. The extradition
proceedings against Al-Moayad are pending in Germany.
- In
December, 2002, a federal grand jury in Dallas returned
an indictment against a senior leader of Hamas, Mousa Abu
Marzouk, for conspiring to violate U.S. laws that prohibit
dealing in terrorist funds. Also charged and arrested by
the FBI were Ghassan Elashi, the chairman of the Holy Land
Foundation for Relief and Development. Elashi and four of
his brothers, all of whom are employees of the Richardson,
Texas, based InfoCom Corporation, were charged with selling
computers and computer parts to Libya and Syria, both designated
state sponsors of terrorism. The indictment alleged that
the Elashi brothers disguised capital investment from Marzouk,
a specially designated terrorist for his admitted leadership
role with Hamas, for their telecommunications company, InfoCom.
The indictment and subsequent arrests have disrupted a U.S.-based
business, which was conducting its activities with a known
Hamas leader and state sponsors of terrorism in violation
of U.S. laws.
- In
October, 2002, the FBI and other U.S. government agencies
assisted German authorities in identifying and taking legal
action against Hamas in Germany. Through the efforts of
the FBI, including TFOS, exchanges with Germany led to the
closure of the Al-Aqsa Foundation in Germany, a suspected
Hamas fund-raising organization.
- The
FBI coordinated with the Office of Foreign Asset Control
(OFAC) to justify the blocking of Holy Land Foundation for
Relief and Development (HLFRD) assets and the closing of
its U.S. offices, shutting down Hamas' largest fund-raising
entity in the U.S. The HLFRD had been linked to the funding
of Hamas terrorist activities, and in 2000, HLFRD raised
$13 million dollars.
- The
offices of the Benevolence International Foundation (BIF),
a U.S.-based charity, were shut down and its assets and
records blocked following an investigation which determined
that the charity was being used to funnel money to Al Qaeda.
In February 2003, Enaam Arnaout, the head of BIF, pled guilty
to racketeering conspiracy, admitting he fraudulently obtained
charitable donations in order to provide financial assistance
to persons engaged in violent activities overseas. Arnaout
was recently sentenced to eleven years in prison.
- A
criminal case against Sami Al Arian, the alleged U.S. leader
of the Palestinian Islamic Jihad (PIJ), and the World Islamic
Studies Enterprise has forced the closure of several front
companies suspected of funneling money to support PIJ operations
against Israel. In August 2002, the investigation led to
the deportation of Mazen Al-Najjar, the brother-in-law of
Sami Al Arian and a known PIJ member. In February, 2003,
following a 50-count indictment for RICO and Material Support
of terrorism violations, the FBI arrested Al-Arian and three
other U.S.-based members of PIJ, including Sameeh Hammoudeh,
Hatim Naji Fariz, and Ghassan Ballout. The FBI also executed
seven search warrants associated with this action.
The
FBI has utilized the legislative tools provided in the USA
PATRIOT Act to further its terrorist financing investigations.
Some examples of how TFOS has used the provisions in the USA
PATRIOT Act are: to obtain foreign bank account information
by issuing an administrative subpoena on a foreign bank's
U.S. correspondent bank; corroborated financial data obtained
through criminal investigative techniques with intelligence
sources; and provided grand jury material to a foreign intelligence
agency. All of these techniques have significantly assisted
ongoing terrorism investigations and would not have been possible,
but for the enactment of the USA PATRIOT Act.
These successes were the result of coordination, cooperation
and intelligence sharing between both U.S. and foreign law
enforcement and intelligence agencies. The critical importance
of domestic and international inter-agency cooperation, coordination
and information sharing cannot be understated. Terrorism represents
a global problem. The solution is grounded in what would have
been considered prior to 9/11, unprecedented international
cooperation and coordination. The threat it poses must always
be considered imminent. In addition to considerable financial
investigative expertise, addressing terrorism and the finances
that support and propagate it requires the ability to both
implement proactive and preventive approaches to disrupt and
dismantle as well as the ability to conduct highly reactive
immediate response financial investigations to address potential
imminent threats. The FBI understands that combating terrorist
financing is a mission, which it can not accomplish on its
own. Through TFOS, the FBI has succeeded in building strong
working relationships with all U.S. government law enforcement
and intelligence agencies who are fighting the war on terror.
TFOS is both an operational and coordinating entity with pro-active
and reactive responsibilities. As a coordinating entity, TFOS
is responsible for ensuring that a unified approach is pursued
in investigating terrorist financing networks. TFOS achieves
this directive by: 1) coordinating the financial aspects of
FBI Field Office and Legat terrorism investigations; 2) establishing
overall initiatives, policy and guidance on terrorist financing
matters; 3) participating in the National Security Council's
Policy Coordinating Committee (PCC) on Terrorist Financing;
4) coordinating national liaison with the financial services
sector; 5) cooperating in and coordinating criminal terrorist
financing investigations with the Department of Justice; and
6) providing support and training to Field Offices to include
the designated Terrorism Financing Coordinator (TFC).
Recently,
the Department of Justice (DOJ) and the Department of Homeland
Security (DHS), executed a Memorandum of Agreement (MOA),
which provided for a centralized coordination among U.S. governmental
agencies investigating terrorist financing matters. The MOA
addresses the importance of waging a seamless, coordinated
campaign against terrorist sources of financing. It was signed
by Attorney General Ashcroft and Homeland Security Secretary
Ridge on May 13, 2003. Prior to this agreement, both the DOJ
and DHS had separate terrorist financing task forces. Under
DOJ, the FBI had the TFOS, which was discussed earlier. The
DHS had the Bureau of Immigration and Customs Enforcement
(ICE) led Operation Green Quest (OGQ).
Pursuant
to the MOA, OGQ ceased to exist as a program name as of June
30, 2003. Accordingly, the FBI was designated to lead terrorist
financing investigations and operations. It was agreed that
DHS would focus its activities on protecting the integrity
of U.S. financial infrastructures. To that extent, the DHS
implemented the ICE led Operation Cornerstone. Operation Cornerstone
will identify vulnerabilities in financial systems through
which criminals launder their illicit proceeds, bring the
criminals to justice and work to eliminate the vulnerabilities.
The majority of the former OGQ case inventory was criminal
cases, with no nexus to terrorism. These cases were converted
from OGQ to Operation Cornerstone. Those cases that had a
nexus to terrorism that were investigated by the former OGQ
are currently being assessed for transition to the appropriate
FBI Joint Terrorism Task Force (JTTF). Ongoing and future
Operation Cornerstone investigations that develop links to
terrorism will be referred to the FBI through TFOS. ICE and
TFOS have created a joint-vetting process to coordinate investigative
initiatives that will enable ICE to identify financial systemic
vulnerabilities and which will enable TFOS to identify ties
to terrorism and terrorist financing. In addition, an ICE
agent was assigned to TFOS as a Deputy Section Chief, and
investigators from ICE will be represented on the JTTFs.
In addition
to the cooperation amongst U.S. law enforcement and intelligence
agencies, TFOS has enjoyed unprecedented successes with its
foreign counterparts. The FBI recognized the vital necessity
for cooperation with its foreign counterparts and has taken
a leadership role within the international community to coordinate
efforts to combat terrorist financing. For the past year,
members of TFOS have traveled to countries in the Middle East,
South America, Asia, Africa and Europe and provided training
for our foreign partners as part of an outreach initiative.
Because of TFOS' recognized expertise, both domestically and
internationally, in the area of terrorist financing investigations,
many of our international partners have patterned similar
investigative units based on the methodologies and mechanisms
successfully used by TFOS.
The National
Security Council formalized the Policy Coordinating Committee
(PCC) on Terrorist Financing at the end of 2001. Treasury
chairs the PCC and representatives from the Central Intelligence
Agency, the Department of Defense, the Department of Justice,
the Federal Bureau of Investigation, the Department of Homeland
Security, the National Security Council and the State Department
attend meetings. An element of the PCC is the State Department-led
coalition building initiative.
The
PCC meets on a regular basis to coordinate the United States
government's campaign against terrorist financing. The meeting
generally focuses on ensuring that all relevant components
of the federal government are acting in a coordinated and
effective manner to combat terrorist financing.
Since
September 11, 2001, TFOS has received consistent cooperation
with the private financial sector. TFOS recognized the immediacy
of the threats that terrorist attacks present and through
its liaison efforts, developed a 24/7 contact list within
the financial community. This allows TFOS to respond to emergency
situations when a time urgent response is required to receive
information. TFOS has sponsored and participated in a series
of conferences and roundtable discussions with representatives
from the financial services industry. These outreach efforts
have allowed the FBI to educate the private financial sector
on our investigative methods and establish data sharing and
acquisition protocols necessary to combat terrorist financing
and prevent future attacks. This initiative has allowed the
FBI to take into consideration constitutional privacy concerns
while continuing to build a strong support network from the
financial sector.
The amount
of funds generated and laundered both domestically and internationally
in support of terrorist activities is difficult to determine.
Currently, no verifiable or hard numbers exist which adequately
quantify these funds. Intelligence and evidence derived from
past and current investigations and seizures give us some
idea of the situation, but the full scope of this problem
is still unknown. However, many agencies and governments are
coming to realize the critical need to cut off and deny terrorists
and their support networks access to the funds necessary to
carry out acts of aggression.
The FBI
fully recognizes the fact that terrorist financing, including
that of Hamas, cannot be completely eradicated. However, the
importance of terrorist financing investigations must not
be minimized. These investigations have disrupted, diminished
and prevented terrorist attacks by cutting off the financial
lifeblood of these organizations. The FBI has taken a methodical
and incremental approach in developing financial investigative
techniques. By exploiting vulnerabilities to funding flows
of terrorist networks and operatives all levels of terrorist
operations have been adversely impacted. One needs to look
no further than the fact that the methodologies and mechanisms
employed by TFOS have recently prevented four separate terrorist
attacks from occurring to demonstrate the significance of
these types of investigations. The FBI appreciates the opportunity
to work with this Subcommittee to ensure that law enforcement
efforts can be most effective. I thank you for inviting the
FBI to appear today and welcome any questions you may have.
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