The United States Senate Committee on Banking, Housing and Urban Affairs held a hearing April 4, 2006 to question government officials about the threats posed by terrorist financing and money laundering. Testimony was given by E. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, and Stuart Levey, Under Secretary, Office of Terrorism and Financial Intelligence, U.S. Department of the Treasury and included discussion of Saudi Arabia's efforts in stemming the flow of money to terrorist organizations. 

Mr. Wayne provided a detailed assessment of Saudi Arabia's activities to combat terrorist financing such as establishment of a commission to regulate charitable contributions abroad, stricter regulations for cross border transactions and strengthening of its Financial Investigations Unit. He also pointed to the creation of the US-Saudi Strategic Dialogue, one result of last year's meeting between President Bush and King Abdullah in Crawford, as a positive development in coordination. Mr. Wayne also talked about areas where US officials have emphasized stronger enforcement such as oversight of charitable organizations headquartered in the Kingdom.

Mr. Levey in his opening remarks noted progress in the "risk calculus" of private donors to terrorist organizations. He said, "Wealthy donors who sympathize with an extremist cause may well be unwilling to support it at risk of losing their reputation, their assets and potentially their freedom." Investigators are making progress tracking support back to private donors and holding them to account. Yet, under questioning by committee members, Levey noted that he was concerned about some "deep pocket donors" in Saudi Arabia who continued to fund terrorists, some in Iraq, and said that Riyadh needed to do more to stop them. Levey said, "In that regard, I was heartened by a recent statement from Saudi Arabian Foreign Minister Prince Saud al-Faisal, who said that 'the extremists who condone, support, incite, or legitimize terrorism should be held accountable for the criminal consequences of their message of hatred and intolerance.'" Levey continued, "If Saudi Arabia and others in the region see this commitment through, it will send a powerful message of deterrence to would-be terrorist financiers."

This week the Council on Foreign Relations posted an analysis of the terrorism money trail on their website. A link to this useful item and other related materials are provided below as well as excerpts from the Senate hearings and news reports.

Testimony of E. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, U.S. Department of State
Before the Senate Committee on Banking, Housing, and Urban Affairs - April 4, 2006
"The State Department Role in Combating the Financing of Terrorism"

Excerpt

Saudi Arabia

We continue to engage Saudi Arabia through regular, high-level diplomatic meetings to urge enhanced emphasis on combating terrorist finance. I want to highlight for you a number of cooperative activities we are currently engaged in with Saudi counterparts:

This past year, we established the U.S.-Saudi Strategic Dialogue, which Secretary Rice inaugurated during her November 2005 visit to Riyadh. The Dialogue includes a number of working groups, including one dedicated to counterterrorism, which will creatively address terrorist finance, among other key issues. A second round of the Dialogue is scheduled to take place in the U.S. later this year.

Saudi Arabia is working to establish a charities commission to regulate all charitable donations leaving the kingdom. We continue to stress the need for appropriate regulatory oversight of all charitable organizations headquartered there, such as the World Muslim League, the International Islamic Relief Organization (IIRO) and the World Assembly of Muslim Youth (WAMY). Senior Saudi officials have reiterated, as recently as last week, that existing regulations prevent unauthorized bank money transfers by charities from leaving Saudi Arabia.

In late 2005, the Government of Saudi Arabia enacted stricter regulations on the cross-border movement of funds. Money in excess of $16,000 must be declared upon entry and exit from the country. While the regulations were effective immediately, Customs staff training is continuing, as highlighted by recent discussions with senior Saudi officials. A cash declaration process is also now in place.

The Saudi government is also working to strengthen its nascent Financial Investigations Unit (FIU), established in 2005 and now up and running and receiving reports from Saudi financial institutions. We have consistently urged the Saudis to accelerate the FIU's membership in the Egmont Group of financial intelligence units in order to facilitate the international sharing of financial information. The Financial Crimes Enforcement Network (FinCEN), the U.S. financial intelligence unit, is working with the Saudi unit on the Egmont application process and plans to sponsor it when it qualifies.

U.S. Gains International Support in Blocking Terrorist Funds

The State Department Role in Combating the Financing of Terrorism - E. Anthony Wayne - Assistant Secretary of State for Economic and Business Affairs - Testimony Before the Senate Committee on Banking, Housing, and Urban Affairs - April 4, 2006

US Official: Saudis Must do More to Curb Terror Financing (VOA)
"In testimony before the Senate Banking Committee, undersecretary for terrorism and financial intelligence at the Treasury Department, Stuart Levey, said the United States remains concerned that Saudi money is funding terrorism abroad. "Undoubtedly some of that money is going to Iraq, and it is going to Southeast Asia, and it is going to any other place where there are terrorists," he said. Levey said private Saudi donors are a significant source of terrorism financing, and he said the Riyadh government needs to do more to crackdown on them. <more>

US says Saudi individuals still funding terrorism (Reuters)
"..Stuart Levey, the Treasury's undersecretary for terrorism and financial intelligence, said Saudi Arabia had made significant strides in counterterrorism efforts in recent years and that the kingdom was "doing an excellent job" fighting operatives of Osama bin Laden's al Qaeda network at home. But he told a hearing of the Senate Banking Committee that concerns remained, including the existence of so-called "deep-pocket donors" and the abuse of charities to fund militants. "Is money leaving Saudi Arabia to fund terrorism abroad? Yes," said Levey, who has traveled to Saudi Arabia twice in the last two months. "Undoubtedly, some of that money is going to Iraq. And it's going to Southeast Asia and it's going to any other place where there are terrorists.""  <more>

• Testimony of E. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, U.S. Department of State - Before the Senate Committee on Banking, Housing, and Urban Affairs - April 4, 2006
  "The State Department Role in Combating the Financing of Terrorism"

• Testimony of Stuart Levey, Under Secretary, Office of Terrorism and Financial Intelligence, U.S. Department of the Treasury - Before the Senate Committee on Banking, Housing, and Urban Affairs - April 4, 2006
  "A Current Assessment of Money Laundering and Terrorist Financing Threats and Countermeasures"

• The Global Scourge of Terrorism: Ambassador Prince Turki al Faisal Shares His Outlook - SUSRIS IOI - Nov. 8, 2005

• Testimony of E. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, U.S. Department of State - Before the Senate Committee on Banking, Housing, and Urban Affairs - July 13, 2005

• Testimony of Stuart Levey, Under Secretary, Office of Terrorism and Financial Intelligence, U.S. Department of the Treasury - Before the Senate Committee on Banking, Housing, and Urban Affairs - July 13, 2005

• Campaign in the War on Terrorism Announced - SUSRIS NID - Mar. 8, 2005

• Saudi Government's National Campaign Against Extremism - SUSRIS Factsheet

• US-Saudi Cooperation in War on Terrorism Lauded in State Department Annual Report - SUSRIS IOI - Apr. 30, 2004

• Terrorist Financing: U.S. AGency Efforts and Inter-Agency Coordination (Congressional Research Service)

• Terror's Twisted Money Trail (CFR)

• Why terror financing is so tough to track down

• Tracking Down Terrorist Financing - Q and A (CFR)

• The Fight Against Money Laundering

• The Global War Against Terrorist Financing

• Financial Action Task Force on Money Laundering (FATF)