Testimony of Thomas J. Harrington, Deputy Assistant Director,
Counterterrorism Division, FBI
Before the House Committee On International
Relations/Subcommittee on the Middle East and Central Asia
March 24, 2004
"Saudi Arabia and the Fight Against Terrorism
Financing"
Thank
you Mr. Chairman and Members of the Subcommittee for the
opportunity to testify about terrorist financing issues,
and in particular, as they relate
to our joint efforts with the government of the Kingdom of Saudi
Arabia
The
number one priority of the FBI is to identify terrorists’ activity
in sufficient time to disrupt their operations.
To do this, all intelligence and law enforcement
investigative and analytical components must be
strategically utilized in a cohesive manner. This
belief lies at the heart of the FBI’s reliance
on, and commitment to,the interagency partnerships
we have forged through our Joint Terrorism Task
Forces (JTTFs). With intelligence collection and
exploitation as our principal focus, and criminal
investigative authorities as a vital tool, the
JTTFs represent the fusion of skills and authorities
our nation needs to combat terrorism in the United
States. Information sharing and interagency cooperation
are critical parts of this effort; however, partnerships
within the United States will only succeed if they
enjoy the support of our many friends and partners
throughout the world. The FBI is committed to these
international partnerships and recognizes the critical
role they play in our ability to develop actionable
intelligence.
Beginning
shortly after 9/11/2001, the FBI created its Terrorism
Financing Operations Section (TFOS). Its mission
is to identify and disrupt world-wide terrorism
financing activities. Through joint initiatives
and partnerships with other U.S. and foreign intelligence
services, we have realized significant results
which include the prevention of specific acts of
international terrorism. Denying terrorists the
financial means to carry out acts of violence is
an integral part of the FBI’s commitment
to countering terrorism and is an area where we
have realized significant success.
The
FBI’s long history of success in combating
complex financial schemes in the areas of corporate
fraud; financial institution fraud; and illicit
funds transfers/money laundering schemes of drug
traffickers are being successfully applied to the
international terrorism arena.
U.S. - SAUDI COOPERATION
The
Kingdom of Saudi Arabia is an important partner
in this international effort and has taken significant
steps to deter global terrorism. There is more
that can be done to further this relationship;
however, the steps that have been taken thus far
are very encouraging and promising. For example,
since 9-11, Saudi Arabia has questioned thousands
and arrested more than 600 with suspected ties
to terrorism. Cooperative counterterrorism efforts
increased notably after the Riyadh bombings on
May 12th, 2003 when the Kingdom asked the FBI to
send an investigative team to Saudi Arabia to assist
its intelligence and law enforcement services in
conducting evidence collection and post-incident
services in conducting evidence collection and
post-incident investigation. In this effort, Saudi
officials allowed the FBI to directly participate
in crime scene analysis and witness interviews,
including those of Saudi citizens.
The
current state of cooperation between our two countries
is significant, and information sharing continues
to increase in matters pertaining to al-Qa'ida.
Together, we have agreed to focus increased investigative
attention on identifying and eliminating sources
of terrorist funding within the Kingdom and around
the world. In furtherance of this agreement, the
Saudis now host the Joint Task Force on Terrorist
Financing (JTFTF), which is comprised of members
of the intelligence and law enforcement services
of the U.S. and Saudi Arabia. The JTFTF was established
in August 2003, with the mission to identify and
investigate persons and entities suspected of providing
financial support to terrorist groups; and recommending
appropriate criminal and/or regulatory sanctions
to be undertaken to stem the flow of funds to terrorists
or terrorist organizations. Its purpose is to more
effectively utilize the intelligence capabilities
and investigative authorities of its component
members. Working together, we are identifying sources
of terrorist funding and have initiated significant
operations to address them. I cannot over emphasize
the importance of this initiative and the efforts
on the part of both of our countries to make it
work. The FBI is a significant participant in this
project and together with our partnership agencies,
including the Internal Revenue Service-Criminal
Investigative Division, is committed to its success.
As
you will hear from my Department of State
and Treasury colleagues, Saudi Arabia has greatly contributed
to combating terrorist financing by joining
the
U.S. in blocking the assets of several
designated terrorist organizations. In March 2002,
Saudi Arabia
and the U.S. jointly blocked the accounts
of Wa’el
Hamza Julaidan, an associate of Usama
bin Laden who provided financial and logistical support
to
Al-Qa'ida. In addition, accounts of the
Bosnia and Somalia branches of the Al-Haramain Islamic
Foundation were blocked in March 2002,
and in January
2004, the Saudis and the U.S. jointly
blocked four more Al-Haramain branches in Kenya, Tanzania,
Pakistan and Indonesia.
SAUDI FINANCING LEGISLATION
Mr.
Chairman, as this Subcommittee knows, the ability
to prevent terrorist acts largely depends on the
implementation of laws that permit investigative
intervention. Saudi Arabia has taken several steps
that greatly enhance the activities of our joint
efforts to prevent terrorism financing.
Non-Governmental
Organizations (NGOs) and charitable organizations
serve legitimate purposes however, they can be
vulnerable to abuse for use as a source of funding
for terrorist organizations. The Kingdom of Saudi
Arabia has put new laws in place that are designed
to ensure donations to charities aren’t diverted
to entities other than humanitarian organizations.
It also issued instructions to all institutions
prohibiting the transfer of funds by charitable
organizations to recipients outside the Kingdom.
New rules have been codified that impact on the
Opening of Bank Accounts and place new restrictions
on the bank accounts of Saudi charities:
• All accounts must be maintained in one single account for each charity;
sub-accounts are permitted, but such an account is restricted to receiving deposits
only;
• No
ATM or credit cards can be issued for these accounts.
All payments may be made only by checks payable
to the first beneficiary for deposit in a Saudi
bank;
• The
Saudi Arabian Monetary Agency’s (SAMA’s)
approval is necessary to open a bank account, the
account must be opened in Riyals only, and valid
customer identification is required in addition
to providing the organization’s license;
• No
overseas transfers are allowed from these accounts,
and only two individuals who are authorized by
the board of a charitable organization are allowed
to operate the account.
Saudi
Arabia has taken other actions that benefit joint
terrorism financing efforts. The Ministry of Labor
has developed a database containing financial information
relating to all of its charities, and updates the
database on a quarterly basis with information
derived from submitted financial reports. An effort
is underway to integrate the charities licensed
by the Ministry of Islamic Affairs into this database.
In addition, the Ministry of Labor is conducting
an audit of all their licensed charities, and this
requirement will reportedly be extended to their
licensed charities, as well.
The
Saudis have begun to establish official government-operated
money remitters intended to compete directly with
unlicensed money remitters such as Hawalas and
other informal financial systems. These licensed
remitters are called “Speed Cash”’,
and are attached to a commercial bank and therefore,
subject to all requirements of the parent bank.
Saudi private sector representatives report that
the service has been a profitable business, and
officials believe that it has reduced the extent
to which there is reliance on informal systems.
Saudi officials report that they have begun to
crack down on unlicensed money remitters.
Finally,
Saudi Arabia has also strengthened its regulations
on money laundering by requiring financial institutions
to verify customers’ identities and placing
restrictions on non-residents’ ability to
open accounts in the country.
TRAINING
In
September 2003, the FBI and the Internal Revenue
Service-Criminal Investigative Division provided
the first phase of counterterrorist financing and
anti-money laundering training to the Saudi Arabian
Government in Riyadh. The second phase of this
training was held in Washington, DC in December
2003. A third such training program is currently
scheduled to take place in May of this year, in
Riyadh. This training emphasizes the role of a
field investigator in financial crimes investigations
as it relates to investigations of terrorism financing.
The topics include Methods of Terrorism Financing,
Initiating Investigations, Evidence Acquisition,
Computer Forensics, Money Laundering, and Expenditure
Methods of Proof, among others. The training also
includes case scenarios, in which students participate
in practical exercises to increase their understanding
of terrorist-financing investigations. This training
has been completely funded and supported by the
State Department and the interagency Terrorist
Finance, Training and Technical Assistance Working
Group, chaired by the State Department, and it
will directly benefit the JTFTF by focusing on
methods of identifying sources of terrorist financing.
In
addition to U.S. training, in February 2003, the
SAMA implemented a technical program to train judges
and investigators on terrorism financing and money
laundering. The program is focused on training
law enforcement on legal matters including financing
and money laundering methods, international requirements
for financial secrecy, and the methods criminals
use to exchange information. SAMA provides substantial
training to both the private sector and to other
Saudi agencies.
CONCLUSION
While
the Government of the Kingdom of Saudi Arabia has
taken significant steps to combat terrorism, there
are still hurdles they must overcome. In addition,
terrorist-minded extremists are likely to change
tactics and become more sophisticated in their
intelligence collection, communication and financing.
The ability to identify and track terrorism-related
financial transactions will continue to be vital
to our mutual success. Saudi Arabia has contributed
to the successful dismantling of Al-Qa'ida cells,
the arrests of key Al-Qa'ida leaders, and the capture
of Al-Qa'ida members in the Kingdom. I look forward
to our continued partnership with the Kingdom and
hope our past progress is an indication of the
future steps we will jointly take.
I
appreciate the opportunity to appear today and
thank you Mr. Chairman and members of the Subcommittee,
for dedicating your time and effort to this important
issue. I will be happy to address your questions.
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