Setbacks Hurt the Fight Against Terrorist Financing

By Matthew Harwood

The U.S. government's efforts to stymie terrorist financing has suffered setbacks as terrorist finance methods have evolved, interagency in-fighting has broken out, and international cooperation has deteriorated, reports Los Angeles Times.

Terrorists now rely on a mixture of the old and the new to move cash secretly. In places like Afghanistan and Pakistan, cash couriers move money on donkeys and camels. In the oil rich Persian Gulf, terrorists use private jets "to move cash, gold, and jewels." Another reliable financial tool terrorists use is the old banking system known as hawala, which leaves little or no trail.

The paper also notes that terrorists have been conducting their operations on the cheap, with many attacks since 9-11 costing less than $10,000 - a sum of money too small to effectively track.

Reports since 9-11 also address another problem in the terrorist financing fight: lack of coordination within the U.S. government.

Last June, the Defense Department issued its first report on financial counter-terrorism, and found many shortcomings first cited by a 2002 independent task force of the Council on Foreign Relations. Both recommended establishment of a czar or agency to coordinate all U.S. agencies and report directly to the White House. Both also called for a U.S.-led international organization dedicated to investigating terrorist financing .... In the absence of such reforms, many say, the U.S. agencies involved remain mired in infighting over who should lead the effort. (Read the Council of Foreign Relations report here.)

Internationally, U.S. partners have either lacked the political will to see through the necessary reforms or do not have the resources to do the difficult work of fighting terrorist financing. According to the Times, Saudi Arabia has continued to function as a source of capital for terrorists, despite pledges to enact terrorist financing reforms.

Saudi Arabia has promised since 2003 to enact major financial reforms, but has yet to implement many of them, several senior U.S. officials said. The Saudis have not established an accredited financial intelligence unit to detect suspicious transactions or an oversight group to prevent donations to extremist causes, current and former officials said.

Other countries simply lack the infrastructure to follow and investigate terrorist financial transactions. The Times talks of one counterterrorism official who learned from an African government official that his government had failed to distribute U.N. financial blocking orders—which deny the access of individuals and organizations suspected of terrorist activity to the international financial system—because various agencies did not have Internet access. When the counterterrorism official asked why the government official had not printed out the orders and distributed them physically, he said because his office is only allowed one ink cartridge a month and he didn't want to waste it.




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