U.S. Commends Saudi Arabia for Combating Terrorist Financing 

EDITOR'S NOTE:

Juan Carlos Zarate, Assistant Secretary for Terrorist Financing and Financial Crimes, U.S. Department of Treasury, testified before the House Financial Services Subcommittees on Domestic & International Monetary Policy, Trade & Technology and Oversight & Investigations on September 30, 2004. This item of interest provides an excerpt of his remarks. Mr. Zarate's comments about joint US-Saudi efforts in combatting terrorism, from June 2, 2004 were previously distributed by the Saudi-US Relations Information Service.

U.S. Commends Saudi Arabia for Combating Terrorist Financing 
Treasury's Juan C. Zarate outlines global efforts to disrupt money flows

Juan C. Zarate, U.S. Treasury Assistant Secretary for Terrorist Financing and Financial Crimes: As I have testified previously before the House of Representatives, we have engaged the Saudi Arabian government aggressively on the need to take real actions to address the threat of terrorist financing. Our engagement, combined with the Saudi realization of the real al Qaida threat to the Kingdom, has produced important results and changes.

For example, we have worked with Saudi Arabia to ensure that key terrorist financiers and facilitators have had their assets frozen and/or have been arrested or otherwise addressed through the international community's concerted law enforcement efforts. Included in this category are Saudi millionaires Yasin al-Qadi and Wa'el Hamza Julaidan, as well as the terrorist financing facilitator known as Swift Sword. 

We have jointly designated thirteen branches of the Al Haramain Islamic Foundation because of that organization's use of charity to support al Qaida and its regional activities. This engagement has resulted in a wholesale re-evaluation and restructuring of the charitable sector in Saudi Arabia. Because of this abuse of zakhat or charity within and outside of the Kingdom, the Saudi government has taken concrete steps to deal with this identified risk.

Saudi Arabia has issued comprehensive new restrictions on the financial activities of Saudi charities, including the following:

• Charitable accounts can only be opened in Saudi Riyals;

• Enhanced customer identification requirements apply to charitable accounts;

• Each charity must consolidate its banking activity in one principal account. Although sub-accounts are permitted for branches, they are restricted to receiving deposits - all withdrawals and transfers must be serviced through the main account;

• No cash disbursements are permitted from charitable accounts; payments are only allowed by check payable to the first beneficiary and must be deposited in a Saudi bank;

• No ATM or credit cards may be issued against a charitable account (all outstanding ATM and credit cards for such accounts have been canceled);

• No transfers from charitable accounts are permitted outside of Saudi Arabia.

Moreover, the Kingdom has banned cash contributions in local mosques and removed cash collection boxes for charities from shopping malls.

In some respects, these restrictions go further than those of any country in the world. We commend Saudi Arabia for taking these important steps and urge its officials to ensure that these new rules are rapidly implemented and enforced fully and vigorously. That being said, we will continue to work directly with the Saudi government on the concerns we have about the vulnerability of their charity -- often sent to crisis regions -- being abused by terrorists, and will continue to press to see the implementation of the new structure within the Kingdom.

Beyond these actions, the U.S. Government has created a close agent-to-agent working relationship with the Saudis to deal with terrorist financing specifically. The Joint Terrorist Financing Task Force, based in Riyadh, began operations last fall. Through this Task Force, investigators from the FBI and from the IRS Criminal Investigation Division (IRS-CID) have gained unprecedented access to Saudi accounts, witnesses, and other information. The Task Force agents both provide and receive investigative lead information on various terrorist financing matters. In addition, U.S. agents seek assistance from Saudi investigators in following terrorist financing, and in using that information to identify or attack terrorist cells and operations. Information received by the U.S. agents is passed through FBI's Terrorist Financing Operations Section in Washington to the interagency Joint Terrorist Task Forces (JTTFs) nationwide.

Consistent attention and frank discussion with our Saudi partners has been an important part of our campaign to de-legitimize and disrupt terrorist support and financing in the Persian Gulf. This is why I, along with others in the U.S. government, spend a considerable amount of time focusing with Saudi Arabia, often in the Kingdom, on particular areas of concern. This constructive engagement which has produced real results must and will continue.

Related Material:

• Joint U.S. and Saudi Action in the Financial War on Terror -- Remarks of Treasury Deputy Assistant Secretary Juan Zarate

• Adel Al-Jubeir on fight against terror financing - Transcript of remarks made on June 2, 2004

• Webcast of June 2, press conference on developments in the war on terrorism at Washington DC Embassy

• SUSRIS Terrorism Timeline