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
  1990s
• Led by the Department of Treasury Office of
  Finance Control (OFAC)
• Nearly 1.5 billion has been blocked due to trade
  sanctions

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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

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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

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OrganizationPolicy 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 Programs information access
• Condemn unauthorized disclosure of classified
  information

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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

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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 governments financial
  investigation

21
Sources

• President Freezes Terrorist Assets, Remarks by
  the President, Secretary of the Treasury ONeil
  and Secretary of State Powel on Executive Order,
  The Rose Garden, September 24, 2001,
  http//www.whitehouse.gov/news/releases/2001/09/20
  010924-4.html
• Terrorist Assets Report http//www.treas.gov/off
  ices/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/r
  eleases/docs/nmls.pdf
• Elsea, Jennifer K. and M. Maureen Murphy. 2006.
  Treasurys Terrorist Finance Programs 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, Treasurys Terrorist Finance
  Programs 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