http://www.intelligence.org.il/eng/ml_gen/ml1_12_03.htm
THE NETWORK OF TERRORIST FINANCING
By Matthew Levitt, a former FBI counterterrorism intelligence analyst,
is senior fellow
in terrorism studies at The Washington Institute for Near East Policy
in Washington D.C .
The following is an edited version of Matthew Levitt's testimony
before the U.S. Senate Subcommittee on International Finance,
Committee on Banking, Housing and Urban Affairs, August 1, 2002. Mr.
Levitt is the Institute's senior fellow in terrorism studies.
www.washingtoninstitute.org/media/levitt/levitt080102.htm .
Cracking down on terrorist financing demands an all-encompassing
approach, targeting not only the full array of terrorist groups, but
also the individuals, businesses, banks, criminal enterprises, and
charitable and humanitarian organizations that finance terrorism.
Charitable and Humanitarian Organizations
Charities and humanitarian organizations play a particularly
disturbing role in terrorist financing. Many present an especially
sensitive challenge to authorities, who must discern between 1)
legitimate organizations, 2) organizations that are unknowingly
hijacked by terrorists who divert funds to finance their activities,
and 3)
organizations that proactively support terrorist groups.
Long before September 11, U.S. officials were aware that the financial
networks of certain charitable organizations were funding terror. For
example, investigators looking into the 1993 World Trade Center attack
traced funding for the operation back to a company that imported holy
water from Mecca to Pakistan. Only now, however, is the trend
receiving the attention it properly deserves. A recent U.S. Treasury
Department report acknowledged that terrorist activity is financed
primarily
through fundraising, more often than not through legal, nonprofit
organizations. Moreover, Ambassador Francis X. Taylor, the State
Department's Coordinator for Counterterrorism, recently noted,
"Ibelieve that terrorist organizations, just like criminal
enterprises, can bore into any legitimate enterprise to try to divert
money for
illegitimate purposes." Although such manipulation is of tremendous
concern, an even more disturbing trend is the effort of some
charitable and humanitarian organizations to knowingly raise funds
for, or facilitate the activities of, terrorist groups.
Financing Terrorism
Charitable and humanitarian organizations have long been a preferred
venue for terrorist financing, with or without the knowledge of the
organizations or their donors. For example, on December 14, 2001,
federal officials raided the offices of the Global Relief Foundation
(GRF) in Chicago and froze its assets. Days later, NATO forces raided
GRF's offices in Kosovo after receiving credible intelligence
information that the foundation was involved in planning attacks
against U.S. and European targets. GRF raised more than $5 million in
the United States last year alone. Although much of this funding
likely went to legitimate causes, investigators maintain that GRF
served as an important front for al-Qaeda. Other examples of terrorist
front organizations include the Hatikva Center (funding Kahane Chai),
the Holy Land Foundation for Relief and Development (funding Hamas),
and the al-Wafa Humanitarian Organization (funding al-Qaeda).
Facilitating Terrorism
Several charitable and humanitarian organizations have not only
financed terrorist groups, but also actively facilitated terrorist
operations. For example, the Mercy International Relief Organization
(MIRO), along with several similar groups, played a central role in
the 1998 U.S. embassy bombings in Africa. At the New York trial of
four men eventually convicted of involvement in the bombings, a former
al-Qaeda
member named several charities as fronts for the terrorist group,
including MIRO. Documents presented at the trial demonstrated that
MIRO smuggled weapons from Somalia into Kenya, and that Abdullah
Mohammad, one of the Nairobi bombers, delivered eight boxes of Wadi
el-Hage's belongings to MIRO's Kenya office; el-Hage is a convicted
al-Qaeda operative, and the boxes included false documents and
passports. Other examples of front organizations include the
International Islamic Relief Organization (along with its parent, the
Muslim World League), the al-Rashid Trust, the Saudi High Commission
for Aid to Bosnia, and the Benevolence International Foundation.
Disrupting the Flow of Terrorist Financing
Halting the flow of terrorist funding from charitable and humanitarian
organizations is difficult, particularly since terrorist front
organizations actively conceal their illegitimate activities under
legitimately funded causes. Disrupting the flow of such funding is not
impossible, however. Since September 11, the Bush administration has
issued a series of financial-blocking orders targeting terrorist
groups, front companies, and individuals. According to U.S. officials,
intelligence information indicates that terrorist operatives are
finding it increasingly difficult to access the funds they need to
conduct further attacks, to escape the international dragnet targeting
them, or to communicate effectively with cells in different parts of
the world.
Despite these gains, the United States must commit to a strategy that
addresses the following key areas.
International Cooperation
A well-coordinated international effort is needed to target the wide
array of organizations that generate and transfer terrorist funds.
Many nations have followed the U.S. lead in this regard, blocking
millions of dollars in terrorist assets. Nevertheless, a more
formalized legal and operational agreement on combating international
terrorist financing is necessary.
Gaining Saudi Support
Saudi officials have exhibited, at a minimum, a clear pattern of
tolerating funds earmarked for extremist purposes. For example, one
Saudi official stated that a Saudi organization created to crack down
on charities that fund terrorism has been ineffective because its
personnel do not want to uncover high-ranking Saudis actively
financing such charities. The Saudis have taken steps to combat money
laundering and freeze accounts related to the September 11
conspirators. Moreover, they
recently passed new regulations governing private fundraising. Saudis
are now encouraged to donate funds only through established groups
operating under the direct patronage of the royal family.
Unfortunately, some of these approved groups feature prominently on
U.S. terrorist lists.
Working with Europe
U.S. officials complain that European allies have contributed few
names to the list of alleged terrorist financiers, that most of these
contributions have been domestic in nature, and that Europe has yet to
act on all of the names that are already on the list. Europeans, in
return, have repeatedly expressed their frustration with U.S. requests
to add people or groups to terrorist lists without sufficient
justification for their inclusion. The European Union (EU) recently
added eleven organizations and seven individuals to its
financial-blocking list. This list marks the first time the EU has
frozen the assets of non-European terrorist groups; unfortunately, it
also draws a fallacious distinction between the nonviolent and violent
activities of terrorist groups. For example, by distinguishing between
the terrorist and welfare wings of Hamas, the EU lends legitimacy to
the activities of charitable organizations that facilitate terrorist
operations.
Streamlining American Bureaucracy
America's financial war on terrorism has been hamstrung by bitter turf
wars between the Treasury and Justice Departments, whose parallel task
forces on terrorist financing reportedly do not share information with
one another. Although such inefficiency and territoriality are
disconcerting, they pale in comparison to the strategic gap seen in
policymaking circles. If they are to bear any fruit, counterterrorism
techniques must be as comprehensive, continuous, and cooperative as
possible. In order to dismantle the logistical and financial support
networks of terrorist groups and prevent terrorist attacks, the
governments and agencies involved must act in concert and, at a
minimum, mirror the resolve displayed by terrorists themselves.