Bipartisan Panel Commends U.S. and Saudi Efforts to Disrupt Terrorist Financing, But Says More Progress Needed

June 15, 2004 - Citing recent efforts on the part of the United States and Saudi Arabia to halt terrorist financing, a Council-sponsored independent task force report released today concludes that, despite progress, much more needs to be done. The report finds that while “al-Qaeda’s current and prospective ability to raise and move funds with impunity has been significantly diminished… al-Qaeda and other terrorist organizations still have ready access to financial resources, and that fact constitutes an ongoing threat to the United States.”

The bipartisan commission was chaired by Maurice R. Greenberg, Chairman and CEO of AIG. “This report is realistic and fair,” said Greenberg. “We give credit where credit is due, but we also detail further changes that are needed to stop the funding of terrorism.”

Mallory Factor, Chairman of Mallory Factor Inc., served as vice chair. It was directed by Lee S. Wolosky and William F. Wechsler, two former National Security Council officials. The report, Update on the Global Campaign Against Terrorist Financing, is a follow-on to the Council’s 2002 report which concluded that persons and organizations based in Saudi Arabia were the most important source of funds for al-Qaeda.

The task force update describes minimal progress until May 2003, when al-Qaeda began a string of attacks inside Saudi Arabia, prompting more comprehensive Saudi action against terrorism. At that time, Saudi Arabia announced new laws, regulations, and institutions regarding money laundering, charitable oversight, and oversight of the financial services sector, and the government began subjecting its anti-money laundering regime to international scrutiny.

The Bush administration also acted quickly to take advantage of the newfound political will in Saudi Arabia to reinvigorate its own efforts to combat terrorist financing. The two countries announced the creation of a joint terrorist financing task force, and have moved to close branches of international charities known to finance terror.

Specifically, the task force reports several positive findings:

• International agencies are now engaged in a variety of multilateral activities that collectively constitute a new international regime for combating terrorist financing.
• Saudi Arabia has taken important actions to disrupt domestic al-Qaeda cells and has improved and increased tactical law enforcement and intelligence cooperation with the United States. “Saudi law enforcement and intelligence officials are now regularly killing al-Qaeda members and sympathizers in violent confrontations.”
• Saudi Arabia has made significant improvements to its anti-money laundering and counterterrorist financing regime.

Despite these improvements, the task force finds that important open issues remain:

• Saudi Arabia has not fully implemented its new laws and regulations, and because of that, opportunities for the witting or unwitting financing of terrorism persist.
• There is no evidence that Saudi Arabia has taken public punitive actions against any individual for financing terror. As a result, Saudi Arabia has yet to demand personal accountability in its efforts to combat terrorist financing and, more broadly and fundamentally, to de-legitimize these activities.
• Saudi Arabia continues to export radical extremism. “Saudi Arabia funds the global propagation of Wahabism, a brand of Islam that, in some instances, supports militancy… We are concerned that this massive spending is helping to create the next generation of terrorists.”
• The Bush administration has not widely used the authorities given to it in the USA PATRIOT Act to crack down on foreign jurisdictions and foreign financial institutions suspected of abetting terrorist financing.
• Global coordination to curtail the financing of Hamas is inadequate.

The task force recommends that:

1. U.S. policymakers build a new framework for U.S.-Saudi relations.
2. Saudi Arabia fully implement its new laws and regulations and take additional steps to further improve its efforts to combat terrorist financing.
3. Multilateral initiatives be better coordinated, appropriately funded, and invested with clear punitive authorities.
4. The executive branch formalize its efforts to centralize the coordination of U.S. measures to combat terrorist financing.
5. Congress enact a Treasury-led certification regime specifically on terrorist financing terrorism.
6. The U.N. Security Council broaden the scope of the U.N.’s al-Qaeda and Taliban Sanctions Committee.
7. The U.S. government increase sharing of information with the financial services sector, so it can cooperate more effectively in identifying incidences of terror financing.
8. The National Security Council and the White House Office of Management and Budget conduct a cross-cutting analysis of the budgets of all U.S. government agencies as they relate to terrorist financing.
9. The U.S. government and private foundations, universities, and think tanks increase efforts to understand the strategic threat posed to the United States by radical Islamic militancy, including the methods and modalities of its financing and global propagation.

The task force is solely responsible for its report. The Council on Foreign Relations takes no institutional position on policy issues. All statements of fact and expressions of opinion contained in all its publications are the sole responsibility of the author or authors.

Full text of Update on the Global Campaign Against Terrorist Financing is at cfr.org.

Founded in 1921, the Council on Foreign Relations is an independent, national membership organization and a nonpartisan center for scholars dedicated to producing and disseminating ideas so that individual and corporate members, as well as policymakers, journalists, students, and interested citizens in the United States and other countries, can better understand the world and the foreign policy choices facing the United States and other governments.

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