Update on Tracking the Financial Assets of Terrorists: One Year Later

Real Audio of Briefing

       MR. GURULE:  Thank you, Paul.

       Paul, first I'd like to thank you for the invitation extended me by the Foreign Press Center to briefly comment on the U.S. government strategy to starve terrorists of funds, a strategy that was announced by the president immediately after the terrorist attacks on the U.S. homeland that took place on September 11th.

       One year ago, terrorists struck our nation with unforeseen guile and unprecedented consequences, unprecedented consequences for Americans and our American way of life. In turn, we have taken unprecedented actions to dismantle terrorist networks, specifically the terrorist networks that were responsible for the heinous attacks that took place on September 11th.

       Under the leadership of President Bush, Americans have rallied to the war on terror, and we have struck back on every front. The president announced on September 11th he declared war against terrorism. He said that this would be an unconventional war fought on multiple fronts. In addition to the military campaign, we would fight the war against terrorism on the diplomatic front, on the law enforcement front and on the financial front, seeking to starve terrorists of financing.

       He directed the United States Department of the Treasury, under the leadership of Secretary Paul O'Neill, to lead the war on terrorist financing, to disrupt and dismantle terrorist financial networks. No less than the military campaign, the financial war has required careful planning, domestic and international coalition building, and I'm going to speak in a moment about the international coalition that we have developed, that we've worked towards developing, again in close working relationship with our allies, to dismantle terrorist financial networks. And, as with the military campaign that we witnessed in Afghanistan, the campaign against terrorist financing has achieved results, and impressive results.

       Let me give you a quick overview of the strategy.

       We have developed a comprehensive strategy to identify, disrupt and dismantle terrorist financial networks. The strategy is threefold.

       First, we are applying technology, intelligence -- we're using the full capabilities of our intelligence communities, criminal investigative resources, and regulations against financial institutions to locate and freeze the assets of terrorists wherever they may hide; that means both domestically and internationally.

       Second, we are attacking the terrorist financial infrastructure, their formal and informal underground methods for transferring funds across borders and between terrorist cells, whether through banks, businesses, hawalas, diverted charities, or innumerable other means.

       Third, we are using our diplomatic resources and regional and multilateral engagements to ensure international cooperation, collaboration, and capability in dismantling terrorist financial networks.

       Immediately after September 11th, we took six principal steps to pursue financial -- to disrupt and dismantle the financial networks of terrorism.

       First, the United States implemented Executive Order 13224, giving the president and the secretary of the Treasury greater powers to designate terrorist-related individuals and entities, and then to freeze their bank accounts domestically. Of course, while we would realize some good in freezing terrorist-related bank accounts domestically, that effort would be undermined as these terrorists can move their money through foreign bank accounts. Therefore, it was imperative that we work closely with our international allies so that we could work in close collaboration so that we could actually freeze bank accounts simultaneously, both domestically and internationally. And in order to do so, we worked very closely with the U.N. Security Council. We have won the adoption of U.N. Security Council Resolutions 1373 and 1390, which require member states to act without delay to block and freeze the accounts of terrorist financiers and those that support terror.

       Third, we engage other multilateral institutions, such as the Financial Action Task Force and the international financial institutions to focus on terrorist financing.

       Fourth, we are implementing the USA Patriot Act. This is the most significant anti-money-laundering legislation since the passage of the 1986 Anti-Money Laundering Act that made money-laundering a crime here in the United States. The USA Patriot Act broadens and deepens information sharing and the regulatory net for our financial systems.

       Fifth, on the law enforcement front, we established Operation Green Quest. Operation Green Quest is an interagency financial-crimes task force. It brings to bear on the issue of terrorist financing extensive money-laundering expertise that exists within the Department of the Treasury -- specifically, the Internal Revenue Service Criminal Investigations Division, the Customs Service, the Financial Crimes Enforcement Network and the Office of Foreign Assets Control, as well as the United States Secret Service. This is an interagency task force because not only does it rely upon coordination and cooperation between Treasury law enforcement agencies but also Department of Justice law enforcement agencies, including, of course, the Federal Bureau of Investigation.

       Sixth, we are sharing information across the federal government and with the private sector. I think it's fair to say that the information sharing that is taking place presently is unprecedented. We are working in close collaboration not only with federal law enforcement agencies in sharing information, breaking down stovepipes, if you will, but also sharing information with the intelligence community in the United States and working very closely with the financial sector in developing strong partnerships with the financial sector.

       I want to comment just briefly on a couple of the initiatives that I just highlighted. First, I would like to comment on the international alliances, the international coordination. As I stated, in order for the U.S. government strategy against terrorist financing to be successful, it depends largely upon the cooperation of our international allies. And I'm here to say that the cooperation to date has been strong and, I believe, unprecedented, certainly in the area of financial crimes, financial investigations.

       Let me give you a couple of examples on point.

       In October of last year -- again, shortly after the terrorist attacks of September 11th -- the U.S., along with the Financial Action Task Force, FATF, sponsored an extra plenary -- a special plenary session of FATF. It was held here in Washington, D.C. It was the objective at that time to take FATF -- which, as you know, is focused on money laundering and is intended to strengthen the money laundering regulatory regime of its member states and non-member states to combat money laundering -- and it was intended to take that structure, that infrastructure, that multilateral organization, and see if we could direct it, expand its efforts to combat terrorist financing.

       As a result of the plenary session that took place here in Washington in October, eight new international standards against terrorist financing were adopted by FATF. And since that time, the members of FATF, as well as non-member states, have been working aggressively to implement those eight international standards -- substantial effort and, I think, a true success.

       At the same time, the U.S. efforts with respect to designations and blocking and freezing of bank accounts -- as I stated, for that effort to be successful, it must be conducted both domestically -- must be domestic action as well as international action -- involving our efforts to date, the United States government has designated -- currently has on its list of terrorist financiers 236 individuals and entities. The U.S. and our allies have frozen, have blocked $112 million in assets. That's 38 -- approximately $38 million domestically, and $74 million -- a larger sum, of course, then -- has been blocked by our allies abroad.

       Over 160 countries have issued blocking orders against some or all of the names on the U.S. list of terrorist financiers.

       And most recently, in fact last week, the United States -- U.S. government officials and Swiss government officials signed a memorandum of understanding to enhance our working relationship with the Swiss to investigate, criminally, terrorist financing. We agreed at that signing ceremony, that involved Attorney General Ashcroft, involved Deputy Secretary Ken Dam from the Treasury Department, and involved Swiss Attorney General Valentin Roschacher -- the memorandum of understanding authorizes the United States, the Treasury Department, to send agents, criminal investigators from its Operation Green Quest to Bern, Switzerland, to work shoulder to shoulder with Swiss criminal investigators investigating al Qaeda and those responsible for the heinous attacks of September 11th. It also authorizes the FBI's Financial Review Group to send agents to work with Bern Swiss law enforcement officials. And likewise, in turn, it authorizes the Swiss to send investigators here to the United States to work hand in hand in a very close, coordinated way with Treasury and FBI financial criminal investigators.

       This is unprecedented; this type of working relationship between foreign and U.S. law enforcement agencies is unprecedented. And I believe that the success that is going to be realized from this relationship will be tremendous, and I believe that this agreement will serve as a model for other countries so that we can do the same. It will allow us to share information with our foreign counterparts on a real-time basis, to receive information in a very timely, expedited way. And of course, this will enable us to develop leads against members of al Qaeda and other terrorist groups that threaten the security of the United States.

       Let me speak for a moment -- for a couple of minutes on our successes. The big question is now, over the last year, what success or successes have resulted from the U.S. government strategy, what can we point to? Well, as I just stated, we have blocked, domestically and internationally, $112 million in terrorist-related funds. That's significant. But again, the U.S. government strategy has never been a numbers game strategy; it's not driven by numbers.

       I mean, there isn't some magic number that we have in mind and, boy, once we get to that number, we can declare victory against terrorism and go home. Instead, this is a strategy that's intended to disrupt the ability of al Qaeda to raise funds, to raise money to finance terror. And we believe that our efforts have been successful in dismantling major financial networks. And let me give you a couple of examples, specific examples on that point.

       The first is al Barakat. In November of last year, on November 7th, the U.S. government designated al Barakat as a financier of terror. Al Barakat is an organization that has offices in as many as 40 countries worldwide. The principal owner of al Barakat is a close personal friend and associate of Osama bin Laden. And we have compelling evidence that al Barakat -- monies raised by al Barakat are being used to support al Qaeda to fund terrorist training camps and to purchase arms for al Qaeda terrorists

       Our actions with respect to al Barakat resulted in -- well, first of all, al Barakat was channeling as much as 15 to $20 million a year to al Qaeda. Treasury agents ended up shutting down eight al Barakat offices in the United States and took possession of evidence that is being investigated and has been used to develop additional leads against al Barakat and al Qaeda.

       Second, we have taken action against some Islamic charities that have been corrupted by terrorist organizations, that have been used to support and raise money to support terror. In December of last year, the U.S. took action against the Holy Land Foundation for Relief and Development, headquartered in Richardson, Texas. This organization raises millions of dollars annually, not for al Qaeda -- I shouldn't say for al Qaeda exclusively, but for Hamas. I mean, the principal focus here is on Hamas.

       In the year 2000, the Holy Land raised over $13 million. Holy Land supports Hamas activities through direct fund transfers to its offices on the West Bank and Gaza. As a result of the efforts that we've taken against Hamas, efforts that we've taken against Global Relief Foundation in Chicago and Benevolence International Foundation -- these are two other Islamic charities, both located in Chicago -- we have a much better understanding of how these Islamic charities are used as a front for raising money and transferring money globally to support terrorism.

       Finally, let me just close by saying that the U.S. government's strategy against terrorist financing is a long-term effort.

       Certainly, no one in the U.S. government is prepared to declare victory against terrorism or to suggest that we have dried up all sources of funds for terrorist financing. But certainly, our efforts have been significant. They have been successful. They have been on target. They've had a disrupting effect. And clearly, al Qaeda is having difficulty. It's more difficult for them to raise money today than, let's say, a year ago, prior to 9/11.

       Our efforts have had an important deterrent effect on those that are sympathizers of al Qaeda and terror. They are more reluctant today to donate money, to support al Qaeda. They are fearful that if they do, their account -- bank accounts will be frozen by the U.S. government or by members of the international community. And they're fearful that they, themselves, will be added to the list of terrorist financiers, added to the list of 236 names of terrorist financiers on the U.S. list, and their names will be submitted to the U.N. Security Council Sanctions Committee for addition to the U.N. list of terrorist financiers.

       So with that relatively short summary of our strategy -- the U.S. government strategy on terrorist financing, I'd be happy to respond to any questions that you might have.

       MODERATOR: Let me remind you to please use the microphone and also state your name and your news organization. We'll try to -- (off mike).

       Q My name's Andrei Sitov, with the Russian News Agency, ITAR- TASS. I have a few questions on cooperation with Russia. First of all, the Russian officials were hoping to put an end to Chechen fund- raising -- what they consider Chechen terrorist fund raising in the world, including in the U.S. They suggested that they had been promised help in this regard by the U.S. To the best of your knowledge, sir, has such help been offered? Has it been given?

       MR. GURULE: As I've stated, we have been working closely with our allies in the war against terrorist financing, and that includes working closely with the Russian Federation. With respect to your specific question, involving Chechnya, that is a question that I think would be more properly directed at officials from the State Department to answer with respect to that specific issue. But I'd be happy to forward that question. Perhaps we could have one of our State Department officials get back and provide a you more specific response to that.

       Q (Off mike) -- by FATF, as you know.

       MR. GURULE: Yes.

       Q In your personal experience, again, is it really the fault of the Russian officials? How willing are they, how cooperative are they, in your personal experience?

       MR. GURULE: Well, first of all, with respect to FATF, as you know, this is a multilateral organization. And the listing that you referred to is the Non-Cooperating Countries and Territories listing. And in order for a country to be added to the list requires the vote and recommendation of FATF. I mean, this is a multi-agency organization that votes on the specific, you know, country.

       The country, as you know, a country, including Russia, in order to get on the list, its efforts with respect to money-laundering are measured against the 40 recommendations that have been articulated by FATF that are international standards. And as you know, it wasn't until September of last year that Russia had an anti-money laundering law. And I believe that was, you know, certainly one of the concerns that FATF had with respect to Russia and being added to the FATF list.

       Now, of course, it's not enough to simply have a law condemning money-laundering on the books. It's more important that the law be implemented, that it be enforced, and that it be enforced aggressively. And I believe currently FATF is reviewing the progress that the Russian government is making to enforce its money-laundering law.

       I believe that another issue has been the FIU, the Financial Intelligence Unit. And I believe that the FinCEN, one of the offices that I have supervisory responsibility for, has been working very closely with Russian government officials to implement, to establish a Financial Intelligence Unit. Some substantial progress is being made on that front.

       And so I think that there are a couple of points that deserve some recognition with respect to the Russian government: the passage of its anti-money (laundering) law, the establishment of its FIU. But, of course, the ultimate determination of when and whether Russia will be removed from the NCCT is one that FATF will have to make.

       Q I have a very technical question. You mentioned your cooperation with the Swiss. I understand it also includes the confiscated asset sharing, one of the planks in your platform. Do you see the possibility of doing similar things with Russia? Maybe you have already done such things.

       MR. GURULE: Well, certainly we would encourage countries to take action against individuals that we designate, and we would ask them and encourage them to issue blocking orders against any of the names on the U.S. list.

       We would certainly encourage that of Russia and every country. We think it's important that avenues of fundraising for terrorists, avenues of moving funds globally be shut off within every country. We think that that is the most effective way to disrupt the ability of al Qaeda to finance future terrorist attacks.

       Q Ted Alden from the Financial Times. A question about Saudi Arabia. By most accounts, the Saudi-based Islamic charities are the single most important source of funds for al Qaeda. In light of what I understand is the Saudis' recent refusal to cooperate in the designation of Mr. Julaidan, what sort of steps can you point to that the Saudis have taken that have actually been effective in cutting off this most important pipeline for al Qaeda finances?

       MR. GURULE: Well, let me step back, first of all, and correct your first conclusion, your first statement. The Saudi government has not refused to cooperate with respect to designating Julaidan. First, the U.S. has worked closely with the Saudi Ministry of Foreign Affairs regarding Julaidan and freezing his assets. Second, a special documentation formalizing our part of the joint designation has been transmitted to Riyadh with respect to Julaidan. And the Saudi government has submitted Julaidan's name to the United Nations to request that his funds be frozen under the United Nations Security Council Resolution 1267.

       Now with respect to some reports that I've also seen in recent newspaper accounts, I believe that any confusion with respect to that should be taken up with Saudi government officials. But it's our position that they have cooperated, that they have taken action against Julaidan.

       Now with respect to Islamic charities, the kind of broader issue that you've raised, recall that in March the Saudi government, along with the United States, took joint action against a Saudi-based charity, Al-Haramain. They took action against two branches of Al- Haramain, the Bosnia-Hercegovina and the Somalia branch. And they were jointly -- those branches of Al-Haramain were jointly designated with the Saudis, and action was taken to freeze and block those accounts.

       Additionally, Secretary O'Neill has traveled to Saudi Arabia, traveled to the Gulf, has met with top Saudi government officials on the specific issue of terrorist financing and looking for ways in which we can cooperate even more effectively, even more productively. And one of those is certainly with respect to charity.

       And we are working together with the Saudi government and other Gulf states to develop best practices for regulating charities so that they are less vulnerable to abuse by terrorists and terrorist organizations. And so we have a good track record with the Saudi government with respect to terrorist financing.

       Q My name is Meredith Buel (sp). I'm with the Voice of America. In a report you undoubtedly are familiar with, The Washington Post, back in late August, quoting the draft of a United Nations report --

       MR. GURULE: I've never heard of that report.

       Q -- (laughs) -- suggested that the efforts to identify financers of terror and their bank accounts had stalled, saying after an initial burst of success, things had slowed down, mostly because there was difficulty in tracking these funds because they had been converted to gold, to diamonds and other things that are more difficult to trace, they were being transferred through unconventional means, and also suggested some European countries were having difficulty cooperating because their own local laws made it difficult for them to do so.

       Can you comment on that, please, and explain what appears to be somewhat of a disconnect, providing that report was correct, between this optimistic outlook at how things are going and what the U.N. apparently will report?

       MR. GURULE: Well, first of all, I disagree with the characterization that the U.S. government's efforts against terrorist financing have stalled. First, the U.N. report -- and this is a draft report -- is very limited in scope. It focuses only on one aspect of the U.S. government's strategy against terrorist financing, and that's the public designation and the blocking, the freezing of terrorist- related funds.

       What it doesn't incorporate is the U.S. law enforcement activities, including the activities that have been undertaken by the members of Operation Greenquest, the Treasury-led interagency task force that was established back in October of last year. And that law enforcement -- that financial crimes task force is responsible for freezing, seizing upwards of $60 million in terrorist-related funds. It is also responsible for executing, I believe, over 70 search warrants, arresting over 30 individuals, indicting over 20 individuals and, then again, seizing tens of millions of dollars of terrorist- related funds.

       Second, the report is incomplete because, of course, the drafters of the report did not have and do not have access to important intelligence information and classified information with respect to U.S. targets on terrorist financing.

       So there are certainly some aspects of the report that we would agree with. I mean, there is some discussion in the report, as you know, about Islamic charities and the difficulty of determining, investigating these charities and determining whether they're being used to funnel money. But even there I think we're making some important progress. So my view with respect to the strategy is a very pragmatic one. As I stated before, we're making progress. But this is a long-term effort and we have a long ways to go. I believe that the U.N. report is very narrowly focused and based upon incomplete information.

       Q If I could follow on, maybe you could just tell us what are some of the difficulties that you're running into. Are you finding that terrorist organizations or individuals that are supporting them are changing the way they do business because you're after them and, therefore, making it more difficult to track them down?

       MR. GURULE: Well, I think that's a good point. You know, there's been some discussion, and I certainly read the same newspaper accounts that you've read, or certainly alluded to, with respect to gold and gems, and so on, being used to move money globally.

       I would say first, that with respect to any credible evidence involving any method or device or raising any transferring money globally, if we have credible evidence, we're pursuing it and we're pursuing it aggressively.

       Let me hypothesize that if it's true, that -- if -- and this is just a hypothesis on my part, a hypothetical -- if it's true that al Qaeda is moving money into gold and diamonds and other gems, what that suggests to me, what I would interpret from that is that our efforts with respect to financial institutions and shutting down the ability of al Qaeda to use financial institutions to move money is being successful; has been successful, is successful. And therefore, I think it's taking them out of their comfort zone. It's requiring them to use other means and methods to move money. And it's our view that that, therefore, is having a disruptive effect on their ability to raise and move money.

       And if we can continue to do that, we believe that it will result in the prevention of future terrorist attacks and actually save innocent lives, and ultimately, that's the goal of the -- the ultimate objective and goal of U.S. strategy -- not to block funds, not to seize money, but to save innocent lives.

       Q Thank you. My name is Kwang Chao (ph) with Korea Economic Daily. Let me ask one more question about the report in The Washington Post. The Washington Post reported a couple of days ago that U.S. financial private banks are nervous about the new regulation. I'm not well aware of the new regulation. The report said that new regulation was proposed by U.S. Treasury to ban the money laundering through opening accounts in U.S. by 14 financial institutions. It seems to me the report implies that federal government is not getting strong support from private banks, private financial institutions. Could you comment on that?

       MR. GURULE: Yes. I would disagree with that conclusion -- and the conclusion that I'm alluding to that -- you say that the U.S. is not receiving strong support from financial institutions in the war against terrorist financing. In fact, I think it's just the opposite. You're referring to -- and I alluded to just a little earlier -- one of the important aspects of the U.S. strategy against terrorist financing is the enactment of the USA Patriot Act, which was signed into law by the president in October of last year. It is true that it imposes new regulations, duties and responsibilities on the financial community. One of those duties, if you will, or obligations is for U.S. banks. U.S. banks are prohibited from doing business with "shell" banks, for example -- banks that have no physical structure anywhere in the world -- you know, perhaps just a P.O. box mailing address.

       And we've been working very closely with the financial community, financial institutions to implement these new regulations. We've been working very closely with them with respect to receiving their comments on draft regulation. You know, Congress passed the USA Patriot Act, but to take these provisions -- we've had to convert those into regulations, and the regulations we have published for comment. We receive comments from the members of the financial community. Very often we've taken the comments that they have submitted, and we've used those to shape the final regulations that have been implemented into law.

       So I think it has resulted in a very close working relationship with the financial community. It's been a very cooperative relationship. And I believe that we've developed a strong partnership with the financial community. And keep in mind -- I mean, the members of the financial community -- these are patriots. You know, they don't want to see their banks and financial institutions used for evil purposes, for raising and moving money to finance terror against U.S. citizens. And they are working with us in partnership, and it's a good relationship.

       MODERATOR: Please turn off your cellphones.

       Gentleman way in the back.

       Q Yu Jin Li (ph) from China Radio International. During his recent visit to Beijing, Deputy Secretary Armitage declared the Eastern Turkistan Islamic Movement a terrorist organization.

       Is there any progress made in blocking its funds in the U.S. and elsewhere?

       And my second question is, what support has China provided to the U.S. in tracing and chocking terror money?

       MR. GURULE: Well, you're correct; the ETIM, the Eastern Turkistan Islamic Movement, was designated by the State Department as a terrorist organization, actually last Tuesday. And we've been working with Chinese government officials with respect to this particular group. And of course they have been added to the U.S. list of terrorist organizations, terrorist financiers. And U.S. banks, by virtue of that designation, are prohibited from doing business with this organization. So it has been designated now on our list, and as a result, the legal effect is that ETIM has been denied access to the U.S. financial market, U.S. financial institutions. And we are working with the Chinese government on this particular group.

       With respect to specifics, you know, what information has been disclosed, what information has been shared, what have we learned, where are we going with respect to this group, I think it would be inappropriate to disclose that type of specific information. The last thing that we want to do is tip off ETIM with respect to our strategy and with respect to the information that we have against their members.

       MODERATOR: And a final question?

       Q Andrei Sitov again. Since several people referred to earlier reports in the press, can you also comment on the report that you had to actually take some people out of your list, out of the list of the people and organizations that are under sanctions from the U.N.? And do you regard those cases as instances where you couldn't prove the guilt of these individuals or organizations, or were you mistaken in the first place?

       MR. GURULE: That's a good point. Let me respond. Approximately two weeks ago, maybe now a little over two weeks ago, I had the opportunity to visit the United Nations, the U.N. Sanctions Committee, for Resolution 1267, to present to the members of the Sanctions Committee the U.S. protocol, procedures that have been developed for removing individuals from the U.S. list of terrorist financiers.

       MORE And we have used that list, in fact, to remove two individuals -- I believe the individuals that you're alluding to -- Swedish citizens of Somali descent, two individuals. Those individuals, however -- and by the way, those individuals were associated with al Barakat, and that's why they were added to the U.S. list back in November of last year when al Barakat was designated.

       However, they were not removed because they were listed in error. The U.S. maintains that the evidence against al Barakat is compelling that al Barakat is being used to raise money to support al Qaeda and Osama bin Laden. Instead, it is what happened, steps and action that was taken after the designation, after November of last year, that justified the de-listing of the Somali Swedes.

       And with respect to each of these two individuals, they submitted information, evidence, sworn statements first that they had no knowledge that the al Barakat businesses that they were associated with were being used, either directly or indirectly, to finance terror. And second, they submitted evidence, documents and sworn certification that they had severed all ties with al Barakat, that they had disassociated themselves fully and completely with al Barakat.

       So, because of the change of conduct with respect to these individuals, we determined -- the U.S. government determined, the Treasury Department determined that it was the proper thing to do to remove their names, but again, not because they were listed in error, but because they established after the fact that they had no knowledge, and further, that they had severed all ties with the al Barakat businesses in Sweden.

       Thank you.

       MODERATOR: Thank you very much, Mr. Gurule.