U.S. Senate Finance Hearing Reveals New Initiatives on Counter-terrorism Financial Enforcement

On October 9, 2002, a Senate Finance Committee heard a progress report on efforts by the Bush Administration to achieve progress on counter-terrorism financial enforcement. Jimmy Gurulé, Under Secretary for Enforcement, U.S. Department of the Treasury, testified that, while the U.S. Government has blocked more than $112 million globally and had disrupted the financing of terrorist organizations, the U.S. still has a lot of work to do before it reaches it goal. Mr. Gurulé emphasized the importance of vigorous interagency consultation and cooperation in combating terrorist financing and thanked the other agencies and departments in the U.S. Government with which Treasury has cooperated. The Treasury Department has focused on seven areas: targeted intelligence gathering, freezing of suspect assets, law enforcement actions, diplomatic efforts and outreach, smarter regulatory scrutiny, outreach to the financial sector, and capacity for other governments and the financial sector. Mr. Gurulé also outlined the actions taken against terrorist financing. In addition to freezing the assets of terrorists and persons associated with them, the U.S. and international community have taken the following actions: (i) closing the pipeline by which designed parties moved money and operated financially in the normal financial sectors; (ii) informing third parties who may be unwittingly financing terrorist activity of their association with supporters of terrorism; (iii) deterring undesignated parties that might otherwise by willing to finance terrorist activity; (iv) exposing terrorist financing “money trails” that may produce leads to previously unknown terrorist cells and financiers; (v) making terrorists use more costly informal means of financing their activities; and (vi) supporting the diplomatic effort to strengthen other countries’ capacities to combat terrorist financing. Treasury is working to protect charities from terrorist financing through: (1) identifying those charities that are nothing more than fronts for terrorist organizations; and (2) preventing legitimate charities from abuse by terrorist financiers without chilling legitimate charitable donations and charitable works. The U.S. has also engaged in joint designations of terrorists with the Saudi Arabian Government on March 11, 2002, the G7 on April 19 2002, the Italian Government on August 29, 2002, and with the Central Asian Sanctions Committee (composed of Afghanistan, Kyrgyzstan, and the Peoples Republic of China participate) on September 6, 2002. The Financial Action Task Force and the Egmont Group of Financial Intelligence Units (FIUs) have assisted. On October 31, 2002, FATF issued eight special recommendations on terrorist financing and established a Terrorist Financing Working Group, which the U.S. is co-chairing with Spain. It is devoted specifically to developing and strengthening FATF’s efforts in this field.