23 October 2001
Text: Treasury's Dam on Financial Counterterrorism
(Significant progress made, he says) (2750)
The United States and its international partners have significantly
reduced Osama Bin Laden's and al-Qa'ida's ability to finance
terrorism, a senior Treasury official says.
Speaking at the Woodrow Wilson International Center for Scholars
October 22, Kenneth Dam, deputy Treasury secretary, said both U.S. and
foreign financial institutions have been cooperative in the struggle
against terrorism. According to Dam, assets of terrorists and their
supporters have been blocked in 70 countries, and hundreds of
suspected terrorist accounts are being investigated in these and 74
other countries.
Dam also said United Nations members have promptly taken steps to
implement a UN Security Council resolution calling on them to
criminalize actions aimed at supplying funds to terrorists.
Dam said these coordinated worldwide efforts have put terrorists on
notice that their activities are being scrutinized nearly everywhere.
The Treasury official said that another organization, the 31-member
Financial Action Task Force (FATF), was developing a "name and shame"
approach for identifying countries helping to facilitate terrorist
financing.
He also said that the United States has been negotiating international
tax information exchange agreements to reduce the number of countries
that tacitly promote tax evasion schemes and facilitate money
laundering. Those countries create fertile ground for terrorist
financing, he said.
On the domestic front, Dam said, he expects that anti-terrorism and
money laundering bills considered by Congress will help to overcome
some of interagency constraints that have slowed down progress in
combating terrorism financing.
Dam said that launching a financial front in the war on terrorism
required a fresh policy perspective because Bin Laden and al-Qa'ida
have used an innovative strategy operating "as international venture
terrorists" that "raise money from wealthy donors and seed start up
terrorist cells in Europe, Asia, the Middle East and the Americas."
Following is the text of Dam's remarks as prepared for delivery:
(begin text)
TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
October 22, 2001
MONEY THAT KILLS: THE FINANCIAL FRONT OF THE WAR ON TERRORISM
Remarks by Deputy U.S. Treasury Secretary Kenneth W. Dam
I would like to thank the Woodrow Wilson International Center for
Scholars for inviting me to address its Board and Council this
evening. I would also like to thank the Center's distinguished
Director, my long-time friend Lee H. Hamilton, as well as Joe Cari for
his kind introduction.
The subject of tonight's speech, "The Financial Front of the War on
Terrorism," has received a great deal of attention since September
11th. In large part, this attention stems from President Bush's
declaration-days after the tragic attacks against the World Trade
Center-"that starving the terrorists of funding" would be a primary
objective of our war on terrorism.
The President has declared that this new war will be a conflict
"without battlefields and beachheads," in short, an unconventional
war. While the Department of Defense, under Secretary Rumsfeld, has
deployed special forces to Afghanistan and Secretary Powell has
succeeded in bringing on board some new U.S. allies, I submit that
nowhere is this conflict more unconventional than in the
Administration's efforts to cripple the al-Qa'ida financial network.
Launching a financial front in the war on terrorism is a new endeavor,
one that requires a fresh policy perspective. True, tracking
al-Qa'ida's assets is not a "macho" task. But it is a thinking man's
war, and that demands skillful diplomacy, vigilant coordination and
seamless information sharing. Let me explain why, but first let me
explain what we are facing.
At present, our best information tells us that al-Qa'ida has cells in
more than 40 countries. And being a transnational entity means that
al-Qa'ida behaves like one, often merging, absorbing and forging
alliances with other prominent terrorist groups, like the Egyptian
Islamic Jihad and Algeria's Salafist Group for Call and Combat.
Another key fact is that Bin Laden's personal fortune is no longer
al-Qa'ida's most important asset. While Bin Laden's inheritance helped
establish him as a terrorist leader, over the last several years Bin
Laden has built an impressive fundraising operation. Today, al-Qa'ida
receives the bulk of its financial support from a collection of
Islamic charities and relief organizations, the majority of whose
money comes from wealthy individual donors supportive of Bin Laden's
cause.
If, as the State Department noted in its April 2001 report on
"Patterns of Global Terrorism," state-sponsored terrorism is on the
wane, then Bin Laden's borderless al-Qa'ida network is well ahead of
the curve. It is also not altogether clear who is supporting whom
these days in Afghanistan, the Taliban or al-Qa'ida. Al-Qa'ida
provides financial support, the Taliban safe haven.
The real picture that emerges is one of Bin Laden and al-Qa'ida
operating as "international venture terrorists," raising money from
wealthy donors and seeding start-up terrorist cells in Europe, Asia,
the Middle East and the Americas. For these terrorists, money is not
an end. It is simply a means for financing future terrorism.
Since the mid-'90s, Bin Laden and al-Qa'ida also have taken special
care to transfer and hide their finances in a way that avoids
detection by even the most discerning authorities. Suitcases full of
cash, informal Hawala transfers and even everyday money orders have
become regular methods for sending terrorist money abroad. Front
companies are also used to transfer funds. In addition, some banks
help obscure terrorist money by allowing the transfer of funds from
donor to destination. These illegal and unconventional methods
complicate our tracking efforts.
Nevertheless, I believe we have made significant progress in limiting
Bin Laden's and al-Qa'ida's ability to finance terrorism. I'd like to
highlight a few of our recent accomplishments, starting with those on
the domestic front.
In many ways, the President fired the first salvo in the
Administration's war on terrorism by signing an Executive Order on
September 24th, which blocks the U.S. assets of 27 individuals and
organizations affiliated with the September 11th terrorist attacks.
Just ten days ago, we added another 39 names to that list, bringing
our current total to 66. As our global investigation continues to
unfold, I am confident that more names will be added and more assets
will be blocked. We will starve the terrorists of their funding.
Those of you familiar with the mechanics of asset blocking or the
activities of the Treasury's Office of Foreign Asset Control, or OFAC
-- the agency responsible for enforcing these sanctions-might be
asking how these efforts differ from prior actions taken to disrupt
terrorist financing.
One difference is that the President's Executive Order greatly expands
the coverage of previous Executive Orders from "terrorism aimed at
disrupting the Middle East Peace Process" to "global terrorism." The
Executive Order also expands the prohibited class to anyone providing
financial or other support or services to terrorist groups. In
addition to blocking U.S. assets, the order also denies foreign banks
associated with terrorism access to U.S. markets. But the Executive
Order is only a first step.
Another difference is that we are marshaling all of the investigative
resources at our disposal in the fight against terrorist financing.
And to do that, we are having to overcome interagency tensions, turf
battles and differing priorities that have stunted our progress in the
past. Let me mention three of these problems in detail.
First, consider the shackles placed on Treasury's Financial Crimes
Enforcement Network, or "FinCEN," which collects information on
suspicious financial activities from banks, analyzes it and then
reports the results to law enforcement. In the past, FinCEN has
maintained a certain distance from intelligence agencies because our
rules limit the sharing of domestic information with our intelligence
agencies. While an important safeguard, that distance hampered our
efforts in the past to connect suspicious domestic financial behavior
with foreign intelligence leads in fighting terrorism more
effectively. Al-Qa'ida terrorism is, after all, a foreign conspiracy
operating against U.S. targets, and it is impossible to stamp it out
without coupling foreign intelligence and domestic information.
A second problem has been with using intelligence leads to designate
terrorists and terrorist groups under the Executive Order. Doing so
might expose "sources and methods" used to gather foreign intelligence
in the first place, and that could comprise compromise intelligence
operatives in field. In the past, OFAC has been particularly reluctant
to rely solely on intelligence for fear of having to defend its
actions in court.
Third, obtaining information from the FBI {Federal Bureau of
Investigation] -- our nation's lead domestic investigator -- also has
been difficult because the FBI is preoccupied with building the
strongest possible criminal case for conviction. The FBI's primary
interest has been pursuing and protecting evidence, not exchanging
leads with other federal agencies.
Many of you have read about recent anti-terrorism and money laundering
bills now under congressional consideration. Once signed into law,
these bills will help us break down some of these barriers.
This week we expect Congress to pass amendments to the Bank Secrecy
Act, the Fair Credit Reporting Act and the Right to Financial Privacy
Act that will allow the broad sharing of terrorist-related information
between FinCEN and our foreign intelligence agencies. Under these
laws, law enforcement and intelligence agencies will be able to share
grand jury material and electronically intercepted evidence to the
extent such information pertains to foreign intelligence and
counterintelligence.
Moreover, these new laws will authorize judges to consider classified
information in reviewing blocking orders, provided such review is
performed in camera. By removing the judge's review of classified
information from the normal adversarial process, intelligence "sources
and methods" will be protected from disclosure.
As for resolving the inherent conflict between prosecution and
terrorist asset tracking, the President has made it clear that
prevention of terrorism is at least as important as its prosecution.
Still, the tracking of terrorist finances must be carefully balanced
with the tracking of the terrorists themselves, lest we interfere with
the vital mission of the FBI. In these and many other ways, Congress
is giving us the tools we need to win the war on terrorism.
How then are we going about the search for terrorist money? Since
mid-September, we have put together an interagency task force that
includes the Treasury's enforcement and international affairs
components, CIA [Central Intelligence Agency], the Departments of
State and Justice, the FBI and the NSC [National Security Council].
This task force works to identify potential financial intermediaries
of suspected terrorists and their associates. A new Financial
Terrorist Asset Tracking Center is also looking at all terrorist
organizations worldwide so that we can create a big picture profile of
what the financial infrastructure of these groups look like.
In addition, Treasury's Secret Service, IRS [Internal revenue Service]
and Customs investigators have joined the financial front against
terrorism, providing fresh leads and added expertise. Besides working
directly with FinCEN and the FBI, these investigators are forming a
joint venture that leverages their incomparable financial skills to
advance the financial war to a new level of sophistication.
Another feature of our financial front against terrorism has been to
benefit from the expertise of the financial institutions. Without
going into specifics, I can say that U.S., as well as foreign,
financial institutions have been very helpful and cooperative in the
struggle against terrorism. Over the long term, the continued
cooperation of banks and financial institutions is essential.
By the way, both OFAC and FinCEN have established toll-free 1-800
numbers for financial institutions, and this method of instant
communication already is being used extensively.
Nevertheless, even with better interagency cooperation and resource
allocation, we are well aware that Osama Bin Laden and al-Qa'ida are
not stupid enough to park the bulk of their wealth in the United
States. That is why our international coalition building is so
critical. We can send B-2 bombers from Missouri to Afghanistan and
back, and we can launch Tomahawk missiles from the Indian Ocean into
Jalalabad. But we can't just reach into foreign financial institutions
and block terrorist accounts. Local governments must be persuaded to
do that. Allies are important in the physical struggle against
terrorism; they are a sine qua non on the financial front.
Both multilaterally and bilaterally, we have been working hard to
enlist the cooperation of other countries. An important first
accomplishment of newly confirmed U.S. Ambassador to the UN John
Negroponte was the prompt passage UN Security Council Resolution 1373.
This U.S.-sponsored measure calls on members to criminalize the
provision of funds to all terrorists, which effectively denies
terrorists safe financial haven anywhere. UN resolution 1373 drew
heavily from the text of President Bush's Executive Order against
terrorism and expanded an earlier UN Security Council resolution
(1333) that required states to freeze all assets belonging to Osama
Bin Laden and his associates. The UN will update its designations of
terrorist entities as member states, including the U.S., continue to
release additional names.
As with any UN resolution, members must have the political will to
implement these measures. And on this score, I am pleased to report
that members are taking swift action to draft and pass implementing
legislation.
I know this because, almost daily, I spend time on the phone with
other Finance Ministers and Central Bank Governors to discuss their
commitment and their progress in the financial war. Treasury, with the
help of U.S. diplomatic missions, is kept currently informed of asset
blocking and other actions taken in furtherance of our coalition
goals. Since September 11th, 144 countries have joined the effort to
disrupt terrorist assets. 70 have put blocking orders in place. And,
at last count, hundreds of suspected terrorist accounts are under
investigation.
This worldwide effort has an important deterrent effect and little has
been made of this important point in the press. Because of our
coalition efforts, terrorist entities, as well as those who aid and
abet terrorism financially, have been put on notice that their
activities are being scrutinized by investigators in just about
everywhere in the world. This fact was underscored last month by a
joint call of the G-7 Finance Ministers for all countries to establish
functioning Financial Investigative Units (FIUs), similar to FinCEN.
We also that expect a model information exchange process will be
agreed upon when the 58-member Egmont Group, which coordinates such
activities, meets later this month in Washington, D.C.
Another organization playing a key role in the coalition is the
31-member Financial Action Task Force, or FATF. FATF has taken a lead
in the global fight against money laundering. Now, FATF is turning its
attention to the financial war on terrorism. When FATF members meet
later this month, they hope to establish international standards and
issue special guidance for financial institutions on practices
associated with the financing of terrorism. They are working to
develop a process -- similar to their influential money laundering
"name and shame" approach -- for identifying countries helping to
facilitate terrorist financing. This will step up global pressure
being put on countries who fail to crack down on terrorist financing
within their borders.
At the same time, we are pushing forward on our program of negotiating
a network of tax information exchange agreements with countries
throughout the world. Terrorist financing, money laundering and tax
evasion are a trio of closely related phenomena. Countries that
tacitly collaborate in promoting tax evasion schemes and that
facilitate money laundering create fertile ground for terrorist
financing.
Even those countries-many of them among the world's poorest -- who are
not members of the above groupings and may even have been the targets
of censure -- are showing interest in not being left out of the
coalition. But many of these countries need help in becoming effective
coalition members. Many have neglected proper regulation of their
banking sectors in the past. Sometimes legislation has to be passed,
often to the chagrin of self-interested opposition leaders.
Implementation requires new bureaus and new regulators. Already we
have offered and extended technical assistance to many nations. We
need to help them so that they can in turn help in the struggle. We
cannot rest until no place remains for terrorist money to hide.
We welcome public declarations of support from foreign governments. We
welcome new legislation. All of these steps are important in building
momentum. But implementation and enforcement are what is critical. We
are keeping track, account by account, dollar by dollar. We expect all
countries to do the same. The war on terrorism may be an
unconventional war, but it's a real war. We will win if we stay the
course.
(end text)
(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http//usinfo.state.gov)
|
NEWSLETTER
|
|
Join the GlobalSecurity.org mailing list
|
|
|
