THE POLITICAL ECONOMY OF MIDDLE EAST TERRORISM
Middle East Review of International Affairs
Volume 6, No. 4 - December 2002
By Matthew A. Levitt
Political terrorism has long been a key feature of Middle Eastern politics given the high degree of conflict, relative ineffectiveness of direct military means, ideological rationalizations, and willingness of states to sponsor such activities. The aftermath of the September 11, 2001 attacks on the United States and the subsequent American war against terrorism have focused attention on the financing of such movements and operations. The lines of political influence follow those of economic assistance. This article analyzes the state of knowledge regarding this issue.
Political terrorism, often sponsored by states, has long been a major factor in Middle East politics. Terrorist groups' ability to act more frequently and effectively is closely linked to financing. Such patronage today, however, is proportionately less in the hands of state sponsors. While Iran and Syria continue to back international terrorism, groups increasingly finance their own activities through a network of charitable and humanitarian organizations, criminal enterprises, front companies, illicit and unregulated banking systems, and the personal wealth of individual militant Islamists. This article highlights the network of sub-state actors that, on their own and in concert with state and other sponsors, finance such movements and activities.(1)
The synchronized suicide attacks of September 11 highlighted the critical role financial and logistical support networks play in the operations of international terrorist organizations. According to the FBI, the attacks cost between $303,672 and $500,000.(2) In contrast, after his capture in 1995, Ramzi Yusif, the convicted mastermind behind the 1993 bombing of the World Trade Center and other attacks, admitted that the terrorists were unable to purchase sufficient material to build as large a bomb as they had intended because they lacked cash. In fact, the operation itself was rushed and carried out earlier than planned because the cell simply ran out of money. In the end, the terrorists' attempt to reclaim the deposit fee on the rental truck used to transport the bomb provided a key break in the case.(3)
The al-Qa'ida suicide hijackings underscored the post-blast, investigative utility of tracking the money trail, but they also drove home the critical need to preemptively deny terrorists the funds they need to conduct their attacks. Early financial leads in the September 11 investigation established direct links between the hijackers of the four flights and identified co-conspirators, leading investigators to logistical and financial support cells in Germany and elsewhere in Europe as well as in the Gulf. Financial leads led investigators to key al-Qa'ida operatives and moneymen such as Ramzi Bin al-Shibh in Germany and Mustafa Ahmed al-Hasnawi in the United Arab Emirates. Financial analysis provided some of the earliest evidence proving the synchronized suicide hijackings were an al-Qa'ida operation, and linked the German cell, the hijackers, and Zakarias Mussawi. Wire transfers between Mussawi and Bin al-Shibh played a crucial role leading to Mussawi's indictment for his role in the attacks. Financial investigation also established links between Mussawi and members of the al-Qa’ida associated cell of Jama'a al-Islamiyya terrorists arrested in Malaysia.(4)
Effective though it may be, stemming the flow of terrorist financing will not stamp out terrorism. In fact, unlike Polio or Small Pox, terrorism cannot be eradicated. There will always be grievances, causes, conditions that, coupled with a healthy dose of evil, will lead people to target civilian noncombatants for political purposes or even as a means in itself. The primary responsibility of all states, however, is to protect their citizenry, and to that end it is incumbent upon all states to employ the full range of protective, deterrent, and preventive counter-terrorism measures available in an effort to provide for the security of its populace. The fact that terrorism cannot be eliminated does not absolve states of the responsibility to fight it as much as possible.
In this regard, tackling terrorist financing represents a critical and effective tool both in reacting to terrorist attacks and engaging in preemptive disruption efforts to prevent future attacks. Often, as was the case in the investigation of the September 11 attacks, financial transactions provide the first and most concrete leads for investigators seeking to flush out the full scope of a terrorist attack, including the identities of the perpetrators, their logistical and financial support networks, and al-Qa'ida links to other terrorists, groups and accomplices. Since September, the U.S. government has spearheaded a groundbreaking and comprehensive disruption operation to stem the flow of funds to and among terrorist groups. Combined with the unprecedented law enforcement and intelligence effort to apprehend terrorist operatives worldwide, which constricts the space in which terrorists can operate, cracking down on terrorist financing denies terrorists the means to travel, communicate, procure equipment, and conduct attacks.
THE MATRIX OF INTERNATIONAL TERRORISM
Contrary to conventional wisdom--which pigeon-holes al-Qa'ida in one box and Hizballah, Hamas, Iran and Syria in boxes of their own--militant Islamic groups from al-Qa'ida to Hamas interact and support one another in a matrix of international logistical, financial and sometimes operational terrorist activity. State sponsors of terrorism, particularly Iran and Syria, are similarly woven into the fabric of militant Islamist terrorism. For example, many of the patrons of al-Qa'ida fund the suicide bombings and Qassam rockets of Hamas as well. International terrorist groups do not operate in solitude.
A task force on terrorist financing, sponsored by the Council on Foreign Relations, recently highlighted this interaction, noting: "Other Islamic terrorist organizations, Hamas and Hizballah specifically, often use the very same methods-and even the same institutions-[as al-Qa'ida] to raise and move their money. And more recently, published reports suggest that al-Qa'ida has formed additional tactical, ad-hoc alliances with these terrorist organizations to cooperate on money laundering and other unlawful activities."(5) In fact, while there is no shortage of examples of operational and logistical links between disparate militant Islamist groups, these interactions are most pervasive in the realm of financing.
THE NETWORK OF TERRORIST FINANCING
Terrorism in the Middle East is financed by an array of states, groups, fronts, individuals, businesses, banks, criminal enterprises and nominally humanitarian organizations.
Terrorist Groups. Realistically, terrorist groups tend not to open bank accounts under their organization's name, especially in the West. Nonetheless, there are in fact cases, such as Hizballah in Lebanon, where groups operate openly and have accounts in their own or other known names. Other groups may boast of their links to such groups. The Islamic Action Front (IAF) in Jordan and the Muslim Brotherhood in Egypt openly state their support for Hamas, and the IAF called for Arabs and Muslims to donate funds to finance Hamas suicide operations.(6) As such, they could be subject to U.S. financial penalties themselves despite the fact that they are not listed in any of the terrorist lists published by the United States or others.
Individuals. A few wealthy individuals are able to sponsor much terror. For example, Mustafa Ahmad al-Hasnawi, a Saudi national and Bin Ladin moneyman, sent the September 11 hijackers operational funds and received at least $15,000 in unspent funds before leaving the UAE for Pakistan on September 11. U.S. officials say that Yasin al-Qadi, a prominent Jidda businessman and head of the Muwafaq Foundation, has supported a variety of terrorist groups from al-Qa'ida to Hamas. According to U.S. court documents, in 1992 al-Qadi provided $27,000 to U.S.-based Hamas leader Muhammad Salah and lent $820,000 to a Hamas front organization in Chicago, the Quranic Literacy Institute (QLI). Based on their connection to Hamas, the U.S. government has frozen the assets of both Salah and QLI. Similarly, U.S. officials maintain that the Muwafaq Foundation is a front organization through which wealthy Saudis send millions of dollars to al-Qa'ida.
In another example, Israeli authorities arrested Usama Zuhadi Hamid Karika, a Hamas operative, as he attempted to leave Gaza via the Rafah border crossing in December 2001. Karika was found with documents detailing the development of the Qassam rockets, and admitted that he was on his way to Saudi Arabia to brief people on the development of the rockets and to obtain their funding for the project. Before his arrest, Karika had already made one successful trip to Saudi Arabia where he secured initial funding for Hamas' Qassam rocket program.(7) In an indication of the significant role played by individual wealthy financiers in sponsoring terrorist operations, Treasury Department Undersecretary for Enforcement Jimmy Gurule traveled to Europe in October 2002 with a list of about a dozen of al-Qa'ida's principal financial backers, mostly wealthy Saudis, to persuade European counterparts to designate them financiers of terrorism and block their assets."(8)
Legitimate Business. Investigation into al-Qa'ida sleeper cells in Europe in the wake of September 11 revealed the widespread use of legitimate businesses and employment by al-Qa'ida operatives to derive income to support both themselves and their activities. According to congressional testimony by a senior FBI official, a construction and plumbing company run by members of an al-Qa'ida cell in Europe hired mujahadin (holy warriors) arriving from places like Bosnia where they had fought what they considered a Jihad (holy war). Cell members ran another business buying, fixing and reselling used cars, and in these and other examples cell members deposited their legitimate salaries, government subsidies, supplemental income from family members, and terrorist funds received by cash or wire transfer into the same one or two accounts.(9) According to the Lebanese state prosecutor, members of an al-Qa'ida cell broken up there had funded their activities by buying and selling cars in Germany and discussed establishing other business interests to cover the cell's activities.(10)
Legitimate employment offers terrorists cover, livelihood, and, sometimes, useful international contacts. Muhammad Haydar Zammar, the Syrian-born German national who recruited a number of the September 11 hijackers, worked at Tatex Trading. Tatex's director, Abd al-Matin Tatari, was reportedly a member of the Syrian Muslim Brotherhood and one of its principal shareholders is Muhammad Majid Said, director of Syria's General Intelligence Directorate from 1987 to 1994."(11)
Banking Systems. International and unofficial banking systems have also played a role in terrorist financing. The Arab Bank was a special favorite for funneling money used by Iran, Syria, and the Damascus headquarters of Hamas and PIJ to transfer funds for attacks to operatives in the West Bank.(12) For example, Thabet Mardawi and Ali Saffuri, two captured PIJ activists from the Jenin area, revealed that they opened several bank accounts, some in their names and others in the name of an elderly woman, and that PIJ leaders in Damascus transferred funds into these accounts via the Arab Bank.(13) According to Palestinian documents seized by Israel in the West Bank, Saudi organizations transfer money for organizations linked to Hamas and the families of killed Palestinians-including suicide bombers-through branches of the Arab Bank in the West Bank.(14)
In another example, Colonel Munir al-Maqda, also known as Abu Hasan, used the Arab Bank to funnel Iranian funds to Fatah's al-Aqsa Martyrs Brigades.(15) Beginning in mid-2001, al-Maqda transferred between $40,000 and $50,000 for weapons, expenses, and bomb-making materials to the Arab Bank account of Nasser Aweis, a senior Fatah figure. In return, al-Maqda instructed Aweis to report back by telephone on the success of his attacks, such as the assault on the Hadera banquet hall that resulted in the deaths of six Israeli civilians.(16)
The Arab Bank's links to terrorist financing, however, extend beyond the Middle East. According to court documents filed in Spain, an al-Qa'ida cell charged with helping prepare the September 11 attacks and serving as a logistics hub and recruitment center used the Arab Bank to wire money from Spain to associates in Pakistan and Yemen.(17) The cell includes Imad Eddin al-Yarkas (Abu Dahdah), who discussed terrorist attacks on a telephone line tapped by Spanish intelligence.(18)
Beyond the official international banking system, unofficial banking systems and hawala are of particular concern. The Treasury Department froze the assets of 62 organizations and individuals associated with the al-Barakat and al-Taqwa financial networks in November 2001. Federal agents raided these groups' offices across the United States, and subsequently in Europe and the Bahamas as well. President Bush stated that the two institutions provided fundraising, financial, communications, weapons-procurement, and shipping services for al-Qa'ida. A few months later, Deputy Assistant Secretary of Treasury Juan C. Zarate told Congress that in 1997 $60 million collected for Hamas was moved to accounts with Bank al-Taqwa.(19) Al-Taqwa shareholders reportedly include known Hamas members and individuals associated with a variety of organizations linked to al-Qa'ida. A 1996 Italian intelligence report linked al-Taqwa to Palestinian groups, the Algerian Armed Islamic Group (GIA) and the Egyptian Jama'at al- Islamiyya.(20)
In August 2002, the United States and Italy, in cooperation with the Bahamas and Luxembourg, designated 25 individuals and institutions-including fourteen businesses owned or controlled by Ahmed Idris Nasraddin or Yusif Nada and linked to al-Taqwa-as terrorist entities and blocked their assets.(21) The Treasury Department announced that Bank al-Taqwa "was established in 1988 with significant backing from the Muslim Brotherhood" and financed groups such as Hamas, Algeria's Islamic Salvation Front and Armed Islamic Group, Tunisia's An-Nahda, and Usama Bin Ladin and his al-Qa'ida organization.(22)
Criminal Activity. Criminal enterprises have also serviced the spread of terrorism financing. Ahmad Omar Sayid al-Shaykh, convicted of the abduction and murder of Wall Street Journal Reporter Daniel Pearl, linked up with Aftab Ansari, a prominent figure in the Indian mafia, to provide al-Qa'ida with recruits, false documents, safe-houses and proceeds from kidnappings, drug trafficking, prostitution and other crime.(23) Authorities in Belgium issued an arrest warrant for Victor Bout, a notorious arms trafficker suspected of supplying weapons to the Taliban and al-Qa'ida as well as warring factions throughout Africa in an elaborate guns-for-diamonds scheme.(24)
Al-Qa'ida and Hizballah also raise millions of dollars in drug money to support their operations. By one account, al-Qa'ida raised as much as 35 percent of its operating funds from the drug trade.(25) Hizballah benefits from the drug business in Lebanon, much as al-Qa'ida did from the drug business in Afghanistan. Hizballah not only used the Biqa’a Valley's poppy crop for funds, but also to buy support from Israeli Arabs ready to carry out operations.(26)
Hizballah and other terrorist groups also traffic narcotics in North America to fund their activities back in the Middle East. A Drug Enforcement Agency (DEA) investigation into a pseudoephedrine smuggling scam in the American Midwest led investigators as far as Jordan, Yemen, Lebanon, and other Middle Eastern countries, including bank accounts tied to Hizballah and Hamas. DEA chief Asa Hutchinson confirmed, "a significant portion of some of the sales are sent to the Middle East to benefit terrorist organizations."(27) A senior U.S. law enforcement official added, "There is a significant amount of money moved out of the United States attributed to fraud that goes to terrorism." Groups like al-Qa'ida and Hizballah also capitalize on black market gold and diamond markets. One official noted the "influx of hard-core Islamist extremists" in the Congo, including those from Hizballah and other groups, involved in diamond smuggling.(28)
Smuggling, kidnapping and extortion are also well-established techniques employed by terrorist groups. For example, in June 2002, Muhammad and Chawki Hamud, two brothers involved in a Hizballah support cell in Charlotte, North Carolina, were found guilty of a variety of charges including funding Hizballah activities from the proceeds of an interstate cigarette smuggling ring. Seven other defendants pled guilty to a variety of charges stemming from this case, including conspiracy to provide material support to terrorists, cigarette smuggling, money laundering and immigration violations. In South America, Hizballah operatives engage in a wide range of criminal enterprises to raise, transfer and launder funds in support of their terrorist activity. These activities include small-scale businesses that engage in a few thousand dollars worth of business but transfer tens of thousands of dollars around the globe, mafia-style shakedowns of local Arab communities, and sophisticated import-export scams involving traders from India and Hong Kong, to name just a few.(29)
Taking a page from Hizballah operatives in the Tri-border area (where Paraguay, Brazil and Argentina meet), Hamas and others fund themselves with the proceeds of pirated multimedia. Copying intellectual property brings in millions of dollars a year from "royalties" that terrorist groups collect from criminals engaged in the counterfeit multimedia business. Hamas, Fatah, and even senior members of the Palestinian Authority may participate in such activities.(30)
In the United States, law enforcement officials are investigating a variety of criminal enterprises suspected of funding Middle East terrorist groups including the stealing and reselling of baby formula, food stamp fraud, and scams involving grocery coupons, welfare claims, credit cards and even unlicensed T-Shirts.(31) U.S. officials believe "a substantial portion" of the estimated many millions of dollars raised by Middle Eastern terrorist groups come from the $20 million to $30 million annual illicit scam industry in the U.S.(32) Recent examples of such activity include an Arab-American in Detroit caught smuggling $12 million in fraudulent cashiers' checks into the United States, and a fitness trainer in Boston accused of providing customers' social security and credit card numbers to Abd al-Ghani Meskini, an associate of Ahmad Ressam, the Algerian convicted of plotting to blow up Los Angeles international airport in 2000.(33)
CHARITABLE AND HUMANITARIAN ORGANIZATIONS
Humanitarian organizations present an especially sensitive challenge, as authorities must discern between legitimate charity organizations, those unknowingly hijacked by terrorists who divert funds, and others deliberately engaged in supporting terrorist groups. Leaders of the latter organizations raise funds both from individuals purposely seeking to fund terrorist groups as well as from innocent contributors unwitting of the groups' links to terrorists.
Financing Terrorism
Long before September 11, officials were aware that financial networks of charitable and humanitarian organizations were financing terror. Investigators looking into the 1993 World Trade Center attack traced funding for the operation back to a company that imported holy water from Mecca to Pakistan.(34) In 1997, Canada cut all government funding to Human Concern International, a Canada-based charity then under investigation in both Canada and the United States for terrorist connections.(35) Only afterward, however, did the trend receive major attention.(36)
On December 14, 2001, federal officials raided the offices of the Global Relief Foundation in Chicago and froze its assets. NATO forces raided the group's offices in Kosovo a few days later after NATO was provided credible intelligence information regarding the group's alleged involvement in planning attacks.(37) In 2001 alone, Global Relief raised more than $5 million in the United States. While much--perhaps most--of these funds likely went to legitimate causes, investigators maintain the organization served as an important front for al-Qa'ida. International terrorism investigations have raised further reason for concern. For example, according to information provided by the Spanish Interior Ministry, a senior Bin Ladin financier arrested in Spain, Muhammad Ghalib Kalaje Zuaydi, transferred funds to several individuals linked to the Bin Ladon network, including $205,853 to the head of the Global Relief office in Belgium, Nabil Sayadi (Abu Zaynab).(38)
U.S. officials have described the al-Wafa Humanitarian Organization-a major Saudi Arabian charitable organization-as a key component of Bin Ladin's organization. One official said al-Wafa is among those charitable groups that "do a small amount of legitimate humanitarian work and raise a lot of money for equipment and weapons."(39) For example, Afghan police discovered an explosives' laboratory in a building occupied by al-Wafa's Kabul office prior to the city's liberation from the Taliban.(40) Abd al-Aziz, a Saudi citizen and senior al-Qa'ida official who was captured by U.S. forces in Afghanistan, also allegedly financed al-Qa’ida activities through al-Wafa.(41)
The U.S. offices of a number of Saudi organizations were also raided in Virginia in March 2002, including the offices of the SAAR Foundation, the Safa Trust, and the International Institute for Islamic Thought (IIIT), most of which shared office space. The SAAR Foundation had recently closed but was of particular concern because of the close links between the Saudi royal family and its founder, Saudi banker Shaykh Sulayman Abd al- Aziz al-Rajhi (initials SAAR). Tarik Hamdi, an IIIT employee, personally provided Bin Ladin with the battery for the satellite phone prosecutors at the New York trial of the East Africa Embassy bombers described as "the phone bin Laden and others will use to carry out their war against the United States."(42) Both SAAR and IIIT are also suspected of financing Hamas and Palestinian Islamic Jihad through the World and Islamic Studies Enterprise (WISE) and the Islamic Committee for Palestine (ICP), once PIJ fronts in Florida but since closed.(43)
The assets of Ghalib Himmat have also been frozen for links to terrorism. Himmat, reported in a German intelligence report to have expressed "pleasure" over the news of the September 11 attacks, is a board member of the Geneva section of the Kuwait-based International Islamic Charitable Organization (IICO).(44) The IICO's Palestine Charity Committee (PCC), headed by Nadir al-Nuri, sends its funds through local committees, many of which are linked to Hamas.(45) Himmat is also an executive of the al-Taqwa banking network.
On December 4, 2001, the Bush administration exposed the Holy Land Foundation for Relief and Development as a front organization for Hamas. Five days before the September 11 attacks, the FBI raided the offices and froze the assets of Infocom, an Internet company that shares personnel, office space, and board members with the Holy Land Foundation. The two organizations were formed in California around the same time, and both received seed money from Hamas leader Musa Abu Marzuk. According to its 2000 tax return, Holy Land Foundation's (HLF) total revenue exceeded $13 million. In a detailed 49-page memorandum, the U.S. government established that these funds were used by Hamas to support schools and indoctrinate children to grow up into suicide bombers. Money raised by the Holy Land Foundation was also used by Hamas to recruit suicide bombers and to support their families. The HLF relied heavily on local zakat (charity) committees in the West Bank and Gaza to funnel funds to Hamas. The FBI memorandum establishes that known Hamas activists ran the zakat committees. For example, the memorandum reported that a financial analysis of HLF bank records indicated the foundation donated over $70,000 to the Tulkarm zakat committee from 1997 through 1999. Among the senior Hamas members affiliated with the Tulkarm zakat committee are Muhammad Hamid Qa'adan, head of the Tulkarm zakat committee, and Ibrahim Muhammad Salim Salim Nir al-Shams, a member of both the Tulkarm zakat committee and the Supreme Hamas leadership.(46)
Militant Islamist organizations like the Tulkarm zakat committee are funded by a wide array of international organizations, which frequently mask their support for Hamas as generic support for Palestinians. For example, in July 2002, the "Islam-on-line" portal featured a special page stressing the need to support Palestinian armed struggle and glorifying suicide attacks but also the need to support youth education, social activity and economic assistance (which it defined as "economic Jihad").(47) The site provided a long list of European, American, South African and Arabic social organizations, which serve, according to the site, as a channel to transfer funds to recommended Palestinian associations, many of which are directly linked to Hamas.(48)
Facilitating Terrorism
Several charitable and humanitarian organizations have not only financed terrorist groups, but actively facilitated operations. According to a U.S. Defense Department official, interrogators in Afghanistan quickly realized that if captured suspects say, "'I'm a humanitarian aid worker caught up in the fighting,' they likely have been through [military] training." The official continued, "That's the answer they were told to give [if captured]."(49)
Several humanitarian organizations, such as the Mercy International Relief Organization (Mercy), played central roles in the 1998 U.S. embassy bombings in Africa. At the New York trial of four men convicted of involvement in the embassy attacks, a former al-Qa'ida member named several charities as fronts for the terrorist group, including Mercy. Documents presented at the trial demonstrated that Mercy smuggled weapons from Somalia into Kenya, and Abdullah Muhammad, one of the Nairobi bombers, delivered eight boxes of convicted al-Qa'ida operative Wadi al-Haji's belongings--including false documents and passports--to Mercy's Kenya office.
Along with Mercy, the Kenyan government also banned the International Islamic Relief Organization (IIRO) after the embassy bombings.(50) From 1986 to 1994, Bin Ladin's brother-in-law, Muhammad Jamal Khalifa, headed the IIRO's Philippine office, through which he channeled funds to terrorist groups affiliated with al-Qa'ida, including Abu Sayyaf. In November and December 2001, Philippine police arrested four Arabs associated with the Moro Islamic Liberation Front (MILF) and described them as an al-Qa'ida "sleeper cell." Mohammad Sabri, one of the four men arrested, is a Palestinian who, according to Philippine police, worked closely with Khalifa in running the IIRO office.(51) In January 1999, Indian police foiled a plot to bomb the U.S. consulates in Calcutta and Madras. The mastermind behind the plot was Sayid Abu Nasir, an IIRO employee who received terrorist training in Afghanistan.(52) In 2001, Canadian authorities detained Mahmud Jaballah based on an Interpol warrant charging him with being an Egyptian Islamic Jihad terrorist. In 1999, Canadian officials attempted to deport Jaballah based on his work for IIRO and what they described as IIRO's involvement in terrorism and fraud.(53) The IIRO came up in the investigation into the September 11 attacks as well: hijacker Fayez Ahmed reportedly told his father he was going abroad to work for IIRO when he left for the suicide mission. Furthermore, documents seized by Israeli forces during recent operations in the West Bank include records from the Tulkarm zakat committee, the same Hamas-controlled committee noted above, indicating that the IIRO donated at least $280,000 to the Tulkarm zakat committee and other Palestinian organizations linked to Hamas.(54)
Like many other Saudi humanitarian organizations, IIRO is part of the Muslim World League, which is funded and supported by the Saudi government (in fact, the Muslim World League and IIRO share offices in many locations worldwide).(55) A senior League official in Pakistan, Wael Hamza al-Jlaidan, is listed on the Treasury's terrorist financial blocking order list.(56) In March 2002 the northern Virginia offices of both the IIRO and Muslim World League were raided by a Treasury Department task force searching for evidence they were raising or laundering funds for al-Qa'ida, Hamas or PIJ.(57) Attempting to mask the League's radical agenda, League officials recently completed a U.S.-tour aimed at "improving the image of Muslims among Americans," an admirable objective if not for the group's established links to terrorist organizations and proactive terrorist financing.(58)
The Treasury Department has frozen the assets of other Muslim World League member organizations suspected of funding terrorism, including the Rabita Trust. Rabita, which U.S. officials say changed its name to the Aid Organization of the Ulama, is based in Pakistan and actively raised funds for the Taliban from 1999 to 2001.(59)
The al-Rashid Trust, another group that funded al-Qa'ida and the Taliban, is closely linked to the Jaish Muhammad terrorist group (an organization also associated with al-Qa'ida). Al-Rashid has been directly linked to the January 23, 2002, abduction and subsequent murder of Wall Street Journal reporter Daniel Pearl in Pakistan. The attackers, linked to domestic Pakistani radical Islamic fundamentalist groups (including Jaish) operating in cooperation with, and on behalf of, al-Qa'ida, held Pearl in a two-room hut in the compound of a commercial nursery owned by al-Rashid. Several madrassas, or Islamic schools, under construction dominate the immediate area around the nursery, the largest and closest of which is owned by al-Rashid.(60) Pakistani investigators uncovered twelve telephone calls placed by one of the kidnappers, a rogue policeman named Shaykh Adil, to an unidentified al-Rashid Trust employee.(61) In addition, a British Internet site called the Global Jihad Fund, which openly associates itself with Bin Ladin, provided bank account information for al-Rashid and other fronts and groups to "facilitate the growth of various Jihad movements around the world by supplying them with funds to purchase their weapons."(62)
Last October, NATO forces raided the Saudi High Commission for Aid to Bosnia, founded by Prince Selman bin Abd al-Aziz and supported by King Fahd. Among the items found at the Saudi charity were before-and-after photographs of the World Trade Center, U.S. embassies in Kenya and Tanzania, and the U.S.S. Cole; maps of government buildings in Washington; materials for forging U.S. State Department badges; files on the use of crop duster aircraft; and anti-Semitic and anti-American material geared toward children. Currently, an employee of the Saudi High Commission for Aid to Bosnia and another cell member who was in telephone contact with Usama Bin Ladin aide and al-Qa'ida operational commander Abu Zubayda, as well as four other Algerians are incarcerated at Guantanamo Bay's Camp X-Ray for plotting an attack on the U.S. embassy in Sarajevo. Authorities are now trying to track down $41 million, which are missing from the commission's operating funds.
In December, U.S. authorities raided the Chicago offices of another Saudi-based charity, the Benevolence International Foundation. The foundation's videos and literature glorify martyrdom, and, according to the charity's newsletter, seven of its officers were killed in battle last year in Chechnya and Bosnia. In March 2002, Bosnian officials investigating foreign humanitarian organizations reported funds were missing from the Bosnian office of Benevolence International.(63) Also in March, Bosnian police raided the offices of an Islamic charity called Bosnian Ideal Future, which is the local name under which Benevolence International operated in Bosnia. Officials seized weapons, plans for making bombs, booby-traps and false passports.(64) This search also yielded an al-Qa’ida organizational chart; notes on the formation of al-Qa’ida by bin Ladin, Azzam, and others; and "a list of wealthy sponsors from Saudi Arabia,' including references to bin Ladin.(65) A day later, the U.S. Embassy in Bosnia was shut down for four days, from March 20-24, after Bosnian officials informed the embassy of a possible threat. According to a Bosnian official, Al-Qa'ida terrorists reportedly met in Sofia, Bulgaria, where they decided that "in Sarajevo something will happen to Americans similar to New York last September."(66) Two days before the Embassy reopened, Bosnian police arrested Munib Zahiragic, the head of the local Benevolence office and a former officer in the Bosnian Muslim secret police.
In January 2002, BIF's bank accounts were blocked by the U.S. Treasury Department. Then, on April 30, 2002, the foundation's executive director, Enaam M. Arnaout, was arrested on perjury charges for making false statements in a lawsuit against the U.S. government. Although this charge was later dismissed on technical grounds, Arnaout was subsequently charged in October 2002 with conspiracy to provide material support to terrorists, among other charges.(67) Contrary to his statements and those of the foundation, documents and cooperating witnesses have indicated that Arnaout facilitated money and weapons transfers for bin Ladin through the foundation and had a personal relationship with both bin Ladin "and many of [bin Ladin's] key associates dating back more than a decade."(68) In fact, Bin Ladin trusted Arnaout enough to allow him to host one of Bin Ladin's wives at Arnaout's apartment in Pakistan where Bin Ladin later picked her up. The foundation was established by a wealthy Saudi and Bin Ladin associate, Shaykh Adil Abdul Galil Betargy, who later transferred control to Arnaout.(69) According to the government's affidavit, senior al-Qa'ida operative Mamduh Salim (Abu Hajir) traveled to Bosnia on documents signed by Arnaout listing Salim as a director of the foundation.(70) Muhammad Bayazid, a bin Ladin operative involved in efforts to obtain nuclear and chemical weapons for al-Qa'ida, listed the foundation's address as his residence in his application for a driver's license.
DISRUPTING THE FLOW OF TERRORIST FINANCING
Since September 11, 2001, the Bush administration has issued a series of financial blocking orders targeting terrorist groups, including terrorist organizations, front companies, and individuals. In total, the U.S. government has designated some 191 individuals, organizations, and financial supporters of terrorism from around the world, including over $34 million in terrorist assets. Other nations have followed the U.S. lead. The Secretary of the Treasury reported that 150 "countries and jurisdictions" have blocking orders in force, and have blocked more than $70 million in assets.(71) According to U.S. officials, intelligence information indicates that terrorist operatives are finding it increasingly difficult to gain access to funds needed to escape the international dragnet targeting them, communicate effectively between cells in different parts of the world, and conduct further operations.
International Cooperation
Targeting a wide array of groups and organizations funding and transferring terrorist funds is critical, but must be conducted as part of a well-coordinated international effort. This is a particularly sensitive issue, especially in the Middle East. In November 2001, for example, a senior U.S. delegation went to Saudi Arabia to solicit greater cooperation in the arena of tackling terrorist financing. Secretary of the Treasury Paul O'Neill visited again three months later, agreeing to broach concerns regarding specific humanitarian organizations with Saudi officials before putting them on U.S. terrorist lists. The new tactic fits the mold of traditional U.S.-Saudi diplomacy and quickly bore fruit. The U.S. and Saudi governments jointly froze the accounts of the Bosnian and Somali offices of the Saudi-based al-Haramain Humanitarian Organization just days later.(72) Following the closure of the Bosnian offices, Bosnian investigators found that all of the foundation's records since 1994 were missing.(73) Nevertheless, in August 2002, Saudi pressure led Bosnian authorities to release the assets and renew the operating license of those offices.(74) Al-Haramain's questionable activities are not limited to its Bosnian and Somali offices. The foundation is also reported to have financed al-Qa’ida associated Chechen fighters.(75) Moreover, after his arrest in Indonesia, on June 5, 2002, Umar al-Faruq, al-Qa’ida's operational point man in Southeast Asia, told his interrogators that al-Qa’ida operations in the region were funded through a branch of al-Haramain. According to al-Faruq, "money was laundered through the foundation by donors from the Middle East."(76) Subsequent reports, however, indicate that U.S. authorities are concerned that Saudi authorities are glossing over the terrorist connections of other humanitarian organizations, including the al-Wafa Humanitarian Organization, the International Islamic Relief Organization (IIRO) and its parent, the Muslim World League.(77)
Skirting Saudi Noncooperation
Saudi officials have, at minimum, a clear pattern of looking the other way when funds are known to support extremist purposes. One Saudi official was quoted as saying that an organization created to crack down on charities funding terrorism does little because "it doesn't want to discover top people giving to charities."(78) Prince Bandar bin Sultan, the Saudi ambassador to the United States, acknowledged the problem of tracking the money trail, stating that Saudi officials "found money leaves Saudi Arabia, goes to Europe and we can follow it, goes to the United States and we lose contact with it."(79)
On the one hand, the Saudis have taken some small steps to battle money laundering and freeze accounts related to the September 11 conspirators and passed new regulations governing private fundraising. Saudis are now encouraged to donate funds in fulfillment of their zakat obligations only through established groups operating under the direct patronage of a member of the royal family. However, on the other hand, as the case in Bosnia attests, many of these groups are themselves suspected of financing terrorism. Moreover, documents show not only that the Saudi Ministry of the Interior funded Hamas, but that it specifically highlighted the funding of families of "martyrs" who conducted "quality attacks" against Israeli civilians.(80)
More than a year into the war on terrorism, Saudi officials continue to support organizations that finance international terrorism. For example, several reports trace continued funding of al-Qa'ida to Saudi Arabia. A Canadian intelligence report concluded that Saudi charities funnel $1 to 2 million per month to the organization,(81) while a Council on Foreign Relations task force described Saudi individuals and charities as "the most important source of funds for al-Qa'ida" and decried the fact that the Saudi government turned "a blind eye" to this activity.(82) Meanwhile, the UN has reported that al-Qa'ida finances are "fit and well" and that "the prime targets of the organization are likely to be persons and property of the United States of America and its allies."(83)
In the wake of attacks like those in Bali and Moscow, and in light of Saudi noncooperation in curbing terrorist financing, the United States and its allies must develop joint measures to make the global economy less hospitable to terrorist financing, with or without Saudi cooperation. An example of what is needed is the ongoing U.S. effort to secure European cooperation in freezing the assets of several principal financial backers of al-Qa'ida, most of them wealthy Saudis described as "the check writers."(84)
Working with Europe
Nor are divisions over terrorist financing exclusive to the Middle East. U.S. officials complain that European allies have contributed few names to the list of alleged terrorist financiers subject to financial blocking orders, that they have yet to act on all the names already on the list, and that those names European allies have added to the list are primarily domestic groups such as Basque and Irish groups. Europeans, in return, have repeatedly expressed their frustration with U.S. requests to add people or groups to terrorist lists while supplying insufficient evidence, if any.
On May 3, 2002, the European Union (EU) added eleven organizations and seven individuals to its financial-blocking list of "persons, groups, and entities involved in terrorist acts." Unfortunately, while the list marks the first time the EU has frozen the assets of non-European terrorist groups, it adopts the fallacy of drawing a distinction between the nonviolent activities of terrorist groups and the terror attacks that they carry out. By distinguishing between the terrorist and welfare "wings" of Hamas, for example, the EU lent legitimacy to the activities of charitable organizations that fund and facilitate terrorist groups' activities and operations.
The American Bureaucracy
Even within the U.S. intelligence and law enforcement community, the financial war on terrorism has been hamstrung by bitter turf wars between the Departments of Treasury and Justice. The Departments have reportedly launched parallel task forces that do not communicate or share information.
While disconcerting, operational inefficiency and territorialism between agencies pales in comparison to the more strategic gap in policymaking circles. Cracking down on terrorist financing, especially in the case of charitable and humanitarian organizations that camouflage their funding of terrorism by funding legitimate groups and causes as well, requires a political will that was markedly absent until September 11. Terrorist financing through charitable organizations is not unique to Islamic charities, per se, but the fact is that the majority of terrorist groups operating in the world today and targeting the United States are of the radical Islamic variety, and it therefore stands to reason that the majority of charitable organizations engaged in terrorist financing are Islamic organizations. While these investigations should be conducted in a careful and judicious fashion, sensitive to the fact that some organizations are front organizations for terrorist groups and rogue individuals unwittingly hijack others, they should not be confused with "Muslim bashing."
NOTES
1. For a detailed discussion of state sponsors and others, like Saudi Arabia, that are not on the U.S. State Department's list of state sponsors but fund and facilitate international terrorism nonetheless, see Matthew Levitt, Targeting Terror: U.S. Policy Toward Middle Eastern State Sponsors and Terrorist Organizations, Post-September 11 (The Washington Institute, 2002).
2. Paul Beckett, "Sept. 11 Attacks Cost $303,672; Plot Papers Lacking, FBI Says," Wall Street Journal, May 15, 2002.
3..
4..
5. Maurice R. Greenberg, Chair, "Terrorist Financing: Report of an Independent Task Force Sponsored by the Council on Foreign Relations," The Council on Foreign Relations, October 2002. Available online at.
6. See Matthew Levitt, "Diplomacy Run Amuck," The Jerusalem Post, October 8, 2002.
7. Amos Harel, "Saudis Help Hamas with Rocket Project," Haaretz Daily, January 3, 2002.
8. Douglas Farah, "U.S. Pinpoints Top Al-Qa'ida Financiers; Treasury Official Heads to Europe to Seek Help in Freezing Backers' Assets," The Washington Post, October 18, 2002.
9..
10. Youssef Diab, "Al-Qaeda Suspects 'Planned to Set up Local Cell'," Daily Star (Beirut), October 11, 2002.
11. "Intelligence Briefs: Syria - Syrian Intelligence Linked to Al-Qaida Cell in Hamburg," Middle East Intelligence Bulletin, Vol. 4, Number 9, September 2002.
12. "Iran and Syria as Strategic Support for Palestinian Terrorism (Based on Interrogations of Arrested Palestinian Terrorists and Captured Palestinian Authority Documents)," Document number TR6-548-02, Israel Defense Forces, Military Intelligence, September 2002.
13. Ibid.
14. Ibid.
15. Hugh Dellios, "Six Get Death in Jordan Terrorism Plot," Chicago Tribune, September 19, 2000.
16. "Senior Fatah Militant in Lebanon Directed and Financed Serious Terror Attacks in Territories and Israel," statement released by the Israeli prime minister's media advisor, May 26, 2002. Available online. .
17. Brooke Nelson and Paul Tighe, "Spain-Based al-Qaeda Cell Wired Cash to Extremists, Judge Says," Bloomberg News, November 19, 2001.
18. Ibid.
19. Testimony of Juan C. Zarate, Deputy Assistant Secretary, Terrorism and Violent Crime, U.S. Department of the Treasury, House Financial Subcommittee Oversight and Investigations, February 12, 2002.
20. Lucy Komisar, "Shareholders in the Bank of Terror?" Salon.com, March 15, 2002; and Mark Hosenball, "Terror's Cash Flow," Newsweek, March 25, 2002.
21. "The United States and Italy Designate Twenty-Five New Financiers of Terror," Department of the Treasury Office of Public Affairs, PO-3380, August 29, 2002, at.
22. Ibid.
23. Paul Watson and Sidhartha Barua, "Worlds of Extremism and Crime Collide in Indian Jail," Los Angeles Times, February 8, 2002.
24. Donald G. McNeil Jr, "Belgium Seeks Arms Dealer with Suspected Qaeda Ties," The New York Times February 27, 2002.
25. Hugh Williamson, "Al-Qaeda 'May Turn to Organized Crime'," The Financial Times, June 14, 2002.
26. Dina Kraft, "Seven Israeli Arabs Charged with Spying for Lebanese Guerillas," Associated Press Worldstream, November 29, 2000; James Bennet, "Israeli Bedouin Colonel Is Formally Charged With Spying," The New York Times, October 25, 2002.
27. "U.S. Drug Ring Tied to Aid for Hezbolah," The New York Times, September 3, 2002.
28. Douglas Farah, "Digging Up Congo's Dirty Gems; Officials Say Diamond Trade Funds Radical Islamic Groups," The Washington Post, December 30, 2001.
29. Jeffrey Goldberg, "? The Party of God: Hezbollah Sets Up Operations in South America and the United States," The New Yorker Magazine, October 28, 2002.
30. Amir Buchbot, "Forgeries in the Service of Terror," Ma'ariv (Tel Aviv), August 14, 2002.
31. John Mintz and Douglas Farah, "Small Scams Probed for Terror Ties; Muslim, Arab Stores Monitored as Part of post-Sept. 11 Inquiry," The Washington Post, August 12, 2002.
32. Ibid.
33. John Solomon, "U.S. Builds Terror Funding Cases," The Associated Press, August 28, 2002.
34. Mark Huband, "Bankrolling bin Laden," Financial Times, November 29, 2002.
35. Judith Miller, "Some Charities Suspected of Terrorist Role; U.S. Officials See Muslim Groups Linked to bin Laden and Others," The New York Times, February 9, 2000.
36. "State's Taylor Summarizes Annual Global Terrorism Report," Washington File, U.S. Department of State, International Information Programs, May 21, 2002, at.
37. Philip Shenon, "U.S.-Based Muslim Charity Raided by NATO in Kosovo," The New York Times December 18, 2001.
38. Carlta Vitzthum and Keith Johnson, "Spain Detains al-Qa'ida Financier in Flurry of Europe Terror Arrests," The Wall Street Journal, April 25, 2002.
39. Laurie P. Cohen, Glenn Simpson, Mark Maremont, and Peter Fritsch, "Bush's Financial War on Terrorism Includes Strikes at Islamic Charities," The Wall Street Journal, September 25, 2001.
40. "'Terror Lab' Found in Kabul: Peacekeepers: Discovery Included 36 Types of Chemicals, Explosives, 'Terroristic Guide Books,'" Reuters, August 26, 2002.
41. John Mintz, "From Veil of Secrecy, Portraits of U.S. Prisoners Emerge," The Washington Post, March 15, 2002, p. A3.
42. Judith Miller, "Raids Seek Evidence of Money-Laundering," The New York Times, March 21, 2002.
43. Christopher H. Schmitt, Joshua Kurlantzick and Philip Smucker, "When Charity Goes Awry," U.S. News & World Report, October 29, 2001.
44. Mark Huband, "Bankrolling bin Laden," Financial Times (November 29, 2002)
45. "All Forms of Suppression Rejected: Firm Support for Uprising," Kuwait Times, November 6, 2000.
46. "Holy Land Foundation for Relief and Development, International Emergency Economic Powers Acts, Action Memorandum," FBI Memorandum from Mr. Dale L Watson, Assistant Director for Counterterrorism, FBI, to Mr. R. Richard Newcomb, Director of the Office of Foreign Assets Control, Department of Treasury, November 15, 2001.
47. "Hamas-Related Associations Raising Funds throughout Europe, the US and the Arab World," Israel Defense Forces Spokesperson's Unit, available online at.
48. Ibid.
49. Walter Pincus and Dan Eggen, "Probe Spawns Unparalleled Intelligence-Sharing," The Washington Post, March 12, 2002.
50. "Kenya bans six Islamic aid agencies after U.S. Embassy bombing" AP Worldstream, September 9, 1998.
51. Jay Solomon, "Manila Suspends Talks with Rebels After Allegations of al-Qa'ida Links," The Wall Street Journal, March 12, 2002.
52. Dexter Filkins, "Attacks on U.S. Missions Foiled, Indian Police Say," Los Angeles Times, January 21, 1999.
53. Laurie P. Cohen, Glenn Simpson, Mark Maremont, and Peter Fritsch, "Bush's Financial War on Terrorism Includes Strikes at Islamic Charities," The Wall Street Journal, September 25, 2001.
54. Israeli report provided to the U.S. Government entitled "Large Sums of Money Transferred by Saudi Arabia to the Palestinians are Used for Financing Terror Organizations (particularly the Hamas) and Terrorist Activities (including Suicide Attacks inside Israel)," dated May 3, 2002.
55. Laurie P. Cohen, Glenn Simpson, Mark Maremont, and Peter Fritsch, "Bush's Financial War on Terrorism Includes Strikes at Islamic Charities," The Wall Street Journal, September 25, 2001 and Stewart Bell, "Quebec Group tied to al-Qaeda money web: Virginia Office Raided," National Post (Toronto), March 21, 2002, P. A1.
56. http://www.treasury.gov/offices/enforcement/ofac/sanctions/terrorism.html
57. Judith Miller, "Raids Seek Evidence of Money-Laundering," The New York Times (March 21, 2002).
58. "Saudi Group Claims Success in U.S. Tour," Middle East News Line / MENL, July 19, 2002.
59. "Freeze Ordered by U.S. on Assets of Pakistan-based Group, 9 People," The Associated Press, April 20, 2002.
60. Karl Vick and Kamran Khan, "Officials Say Body Probably is Pearl's; New Suspect Claims he Killed Reporter," The Washington Post (May 18, 2002).
61. "Karl Vick and Kamran Khan, "Al-Qa'ida Tied to Attacks in Pakistan Cities; Militants Joining Forces Against Western Targets," The Washington Post (May 30, 2002).
62. Chris Hastings and David Bamber, "British Cash and Fighters Still Flow to bin Laden," London Sunday Telegraph, January 27, 2001.
63. "Al-Qa'ida Terrorists Planned Bosnia Attack, Official Says," Associated Press, March 23, 2002.
64. Alexandar S. Dragicevic, "U.S. Embassy in Bosnia Reopens," Associated Press, March 25, 2002.
65. United States of America v. Enaam M. Arnaout, a/k/a 'Abu Mahmoud,' a/k/a 'Abu Mahmoud al Suri,' a/k/a 'Abu Mahmoud al Hamawi,' a/k/a 'Abdel Samia,' case no. 02CR892, Northern District of Illinois, Eastern Division (October 2002).
66. "Al-Qa'ida Terrorists Planned Bosnia Attack, Official Says," Associated Press, March 23, 2002.
67. "Judge Dismisses Islamic Charity Case," Associated Press, September 14, 2002.
68. United States of America v. Enaam M. Arnaout, a/k/a 'Abu Mahmoud,' a/k/a 'Abu Mahmoud al Suri,' a/k/a 'Abu Mahmoud al Hamawi,' a/k/a 'Abdel Samia,' case no. 02CR892, Northern District of Illinois, Eastern Division (October 2002).
69. "United States of American V. Benevolence International Foundation, INC, and Enaam M. Arnaout, a/k/a "Abu Mahmoud," a/k/a "Abd al- Samia" Case number 02CR0414, Northern District of Illinois, Eastern Division.
70. Salim severely wounded a prison guard while awaiting trial at the Metropolitan Correctional Center in New York for his role in the East Africa embassy bombings. He pled guilty to attempted murder in April 2002.
71..
72.
73. "Saudi Charity linked to al Qaida Renews Operations," Middle East Newsline/MENL, August 13, 2002.
74. "Saudi Charity linked to al Qaida Renews Operations," Middle East Newsline/MENL, August 13, 2002.
75. Ibid. See also Office of International Information Programs, U.S. Department of State, "U.S., Saudi Arabia Act Jointly To Block Terror Funds (Al Haramain's Branches in Bosnia and Somalia Targeted)," press release, march 11, 2002; available online
76. Romesh Ratnesar, "Confessions of an Al-Qaeda Terrorist," Time.com, September 15, 2002. Available online.
77. Eli J. Lake, "U.S. Demands Data on Islamic Charities," UPI, March 22, 2002.
78. Christopher H. Schmitt, Joshua Kurlantzick and Philip Smucker, "When Charity Goes Awry," U.S. News & World Report, October 29, 2001.
79. PBS/Frontline interview with Prince Bandar bin Sultan, at.
80. Israeli report provided to the U.S. Government entitled "Large Sums of Money Transferred by Saudi Arabia to the Palestinians are Used for Financing Terror Organizations (particularly the Hamas) and Terrorist Activities (including Suicide Attacks inside Israel), dated May 3, 2002.
81. Edward Alden, "The Money Trail: How a Crackdown on Suspect Charities is Failing to Stem the Flow of Funds to al-Qaeda," The Financial Times, October 18, 2002.
82. "Terrorist Financing: Report of an Independent Task Force Sponsored by the Council on Foreign Relations," The Council on Foreign Relations, October 2002, available online at
83. Oliver Burkeman, "Al-Qaeda Rich and Ready to Strike, Says UN: Europe's Lax Border Controls Fail to Stem Funding," The Guardian (London), August 30, 2002.
84. Douglas Farah, "U.S. Pinpoints Top al-Qaeda Financiers; Treasury Official Heads to Europe to Seek Help in Freezing Backers' Assets," The Washington Post, October 18, 2002.
Matthew A. Levitt is the Senior Fellow in Terrorism Studies at the Washington Institute for Near East Policy and the author of Targeting Terror: U.S. Policy Toward Middle Eastern State Sponsors and Terrorist Organizations, Post-September 11 (The Washington Institute: 2002).
Volume 6, No. 4 - December 2002
By Matthew A. Levitt
Political terrorism has long been a key feature of Middle Eastern politics given the high degree of conflict, relative ineffectiveness of direct military means, ideological rationalizations, and willingness of states to sponsor such activities. The aftermath of the September 11, 2001 attacks on the United States and the subsequent American war against terrorism have focused attention on the financing of such movements and operations. The lines of political influence follow those of economic assistance. This article analyzes the state of knowledge regarding this issue.
Political terrorism, often sponsored by states, has long been a major factor in Middle East politics. Terrorist groups' ability to act more frequently and effectively is closely linked to financing. Such patronage today, however, is proportionately less in the hands of state sponsors. While Iran and Syria continue to back international terrorism, groups increasingly finance their own activities through a network of charitable and humanitarian organizations, criminal enterprises, front companies, illicit and unregulated banking systems, and the personal wealth of individual militant Islamists. This article highlights the network of sub-state actors that, on their own and in concert with state and other sponsors, finance such movements and activities.(1)
The synchronized suicide attacks of September 11 highlighted the critical role financial and logistical support networks play in the operations of international terrorist organizations. According to the FBI, the attacks cost between $303,672 and $500,000.(2) In contrast, after his capture in 1995, Ramzi Yusif, the convicted mastermind behind the 1993 bombing of the World Trade Center and other attacks, admitted that the terrorists were unable to purchase sufficient material to build as large a bomb as they had intended because they lacked cash. In fact, the operation itself was rushed and carried out earlier than planned because the cell simply ran out of money. In the end, the terrorists' attempt to reclaim the deposit fee on the rental truck used to transport the bomb provided a key break in the case.(3)
The al-Qa'ida suicide hijackings underscored the post-blast, investigative utility of tracking the money trail, but they also drove home the critical need to preemptively deny terrorists the funds they need to conduct their attacks. Early financial leads in the September 11 investigation established direct links between the hijackers of the four flights and identified co-conspirators, leading investigators to logistical and financial support cells in Germany and elsewhere in Europe as well as in the Gulf. Financial leads led investigators to key al-Qa'ida operatives and moneymen such as Ramzi Bin al-Shibh in Germany and Mustafa Ahmed al-Hasnawi in the United Arab Emirates. Financial analysis provided some of the earliest evidence proving the synchronized suicide hijackings were an al-Qa'ida operation, and linked the German cell, the hijackers, and Zakarias Mussawi. Wire transfers between Mussawi and Bin al-Shibh played a crucial role leading to Mussawi's indictment for his role in the attacks. Financial investigation also established links between Mussawi and members of the al-Qa’ida associated cell of Jama'a al-Islamiyya terrorists arrested in Malaysia.(4)
Effective though it may be, stemming the flow of terrorist financing will not stamp out terrorism. In fact, unlike Polio or Small Pox, terrorism cannot be eradicated. There will always be grievances, causes, conditions that, coupled with a healthy dose of evil, will lead people to target civilian noncombatants for political purposes or even as a means in itself. The primary responsibility of all states, however, is to protect their citizenry, and to that end it is incumbent upon all states to employ the full range of protective, deterrent, and preventive counter-terrorism measures available in an effort to provide for the security of its populace. The fact that terrorism cannot be eliminated does not absolve states of the responsibility to fight it as much as possible.
In this regard, tackling terrorist financing represents a critical and effective tool both in reacting to terrorist attacks and engaging in preemptive disruption efforts to prevent future attacks. Often, as was the case in the investigation of the September 11 attacks, financial transactions provide the first and most concrete leads for investigators seeking to flush out the full scope of a terrorist attack, including the identities of the perpetrators, their logistical and financial support networks, and al-Qa'ida links to other terrorists, groups and accomplices. Since September, the U.S. government has spearheaded a groundbreaking and comprehensive disruption operation to stem the flow of funds to and among terrorist groups. Combined with the unprecedented law enforcement and intelligence effort to apprehend terrorist operatives worldwide, which constricts the space in which terrorists can operate, cracking down on terrorist financing denies terrorists the means to travel, communicate, procure equipment, and conduct attacks.
THE MATRIX OF INTERNATIONAL TERRORISM
Contrary to conventional wisdom--which pigeon-holes al-Qa'ida in one box and Hizballah, Hamas, Iran and Syria in boxes of their own--militant Islamic groups from al-Qa'ida to Hamas interact and support one another in a matrix of international logistical, financial and sometimes operational terrorist activity. State sponsors of terrorism, particularly Iran and Syria, are similarly woven into the fabric of militant Islamist terrorism. For example, many of the patrons of al-Qa'ida fund the suicide bombings and Qassam rockets of Hamas as well. International terrorist groups do not operate in solitude.
A task force on terrorist financing, sponsored by the Council on Foreign Relations, recently highlighted this interaction, noting: "Other Islamic terrorist organizations, Hamas and Hizballah specifically, often use the very same methods-and even the same institutions-[as al-Qa'ida] to raise and move their money. And more recently, published reports suggest that al-Qa'ida has formed additional tactical, ad-hoc alliances with these terrorist organizations to cooperate on money laundering and other unlawful activities."(5) In fact, while there is no shortage of examples of operational and logistical links between disparate militant Islamist groups, these interactions are most pervasive in the realm of financing.
THE NETWORK OF TERRORIST FINANCING
Terrorism in the Middle East is financed by an array of states, groups, fronts, individuals, businesses, banks, criminal enterprises and nominally humanitarian organizations.
Terrorist Groups. Realistically, terrorist groups tend not to open bank accounts under their organization's name, especially in the West. Nonetheless, there are in fact cases, such as Hizballah in Lebanon, where groups operate openly and have accounts in their own or other known names. Other groups may boast of their links to such groups. The Islamic Action Front (IAF) in Jordan and the Muslim Brotherhood in Egypt openly state their support for Hamas, and the IAF called for Arabs and Muslims to donate funds to finance Hamas suicide operations.(6) As such, they could be subject to U.S. financial penalties themselves despite the fact that they are not listed in any of the terrorist lists published by the United States or others.
Individuals. A few wealthy individuals are able to sponsor much terror. For example, Mustafa Ahmad al-Hasnawi, a Saudi national and Bin Ladin moneyman, sent the September 11 hijackers operational funds and received at least $15,000 in unspent funds before leaving the UAE for Pakistan on September 11. U.S. officials say that Yasin al-Qadi, a prominent Jidda businessman and head of the Muwafaq Foundation, has supported a variety of terrorist groups from al-Qa'ida to Hamas. According to U.S. court documents, in 1992 al-Qadi provided $27,000 to U.S.-based Hamas leader Muhammad Salah and lent $820,000 to a Hamas front organization in Chicago, the Quranic Literacy Institute (QLI). Based on their connection to Hamas, the U.S. government has frozen the assets of both Salah and QLI. Similarly, U.S. officials maintain that the Muwafaq Foundation is a front organization through which wealthy Saudis send millions of dollars to al-Qa'ida.
In another example, Israeli authorities arrested Usama Zuhadi Hamid Karika, a Hamas operative, as he attempted to leave Gaza via the Rafah border crossing in December 2001. Karika was found with documents detailing the development of the Qassam rockets, and admitted that he was on his way to Saudi Arabia to brief people on the development of the rockets and to obtain their funding for the project. Before his arrest, Karika had already made one successful trip to Saudi Arabia where he secured initial funding for Hamas' Qassam rocket program.(7) In an indication of the significant role played by individual wealthy financiers in sponsoring terrorist operations, Treasury Department Undersecretary for Enforcement Jimmy Gurule traveled to Europe in October 2002 with a list of about a dozen of al-Qa'ida's principal financial backers, mostly wealthy Saudis, to persuade European counterparts to designate them financiers of terrorism and block their assets."(8)
Legitimate Business. Investigation into al-Qa'ida sleeper cells in Europe in the wake of September 11 revealed the widespread use of legitimate businesses and employment by al-Qa'ida operatives to derive income to support both themselves and their activities. According to congressional testimony by a senior FBI official, a construction and plumbing company run by members of an al-Qa'ida cell in Europe hired mujahadin (holy warriors) arriving from places like Bosnia where they had fought what they considered a Jihad (holy war). Cell members ran another business buying, fixing and reselling used cars, and in these and other examples cell members deposited their legitimate salaries, government subsidies, supplemental income from family members, and terrorist funds received by cash or wire transfer into the same one or two accounts.(9) According to the Lebanese state prosecutor, members of an al-Qa'ida cell broken up there had funded their activities by buying and selling cars in Germany and discussed establishing other business interests to cover the cell's activities.(10)
Legitimate employment offers terrorists cover, livelihood, and, sometimes, useful international contacts. Muhammad Haydar Zammar, the Syrian-born German national who recruited a number of the September 11 hijackers, worked at Tatex Trading. Tatex's director, Abd al-Matin Tatari, was reportedly a member of the Syrian Muslim Brotherhood and one of its principal shareholders is Muhammad Majid Said, director of Syria's General Intelligence Directorate from 1987 to 1994."(11)
Banking Systems. International and unofficial banking systems have also played a role in terrorist financing. The Arab Bank was a special favorite for funneling money used by Iran, Syria, and the Damascus headquarters of Hamas and PIJ to transfer funds for attacks to operatives in the West Bank.(12) For example, Thabet Mardawi and Ali Saffuri, two captured PIJ activists from the Jenin area, revealed that they opened several bank accounts, some in their names and others in the name of an elderly woman, and that PIJ leaders in Damascus transferred funds into these accounts via the Arab Bank.(13) According to Palestinian documents seized by Israel in the West Bank, Saudi organizations transfer money for organizations linked to Hamas and the families of killed Palestinians-including suicide bombers-through branches of the Arab Bank in the West Bank.(14)
In another example, Colonel Munir al-Maqda, also known as Abu Hasan, used the Arab Bank to funnel Iranian funds to Fatah's al-Aqsa Martyrs Brigades.(15) Beginning in mid-2001, al-Maqda transferred between $40,000 and $50,000 for weapons, expenses, and bomb-making materials to the Arab Bank account of Nasser Aweis, a senior Fatah figure. In return, al-Maqda instructed Aweis to report back by telephone on the success of his attacks, such as the assault on the Hadera banquet hall that resulted in the deaths of six Israeli civilians.(16)
The Arab Bank's links to terrorist financing, however, extend beyond the Middle East. According to court documents filed in Spain, an al-Qa'ida cell charged with helping prepare the September 11 attacks and serving as a logistics hub and recruitment center used the Arab Bank to wire money from Spain to associates in Pakistan and Yemen.(17) The cell includes Imad Eddin al-Yarkas (Abu Dahdah), who discussed terrorist attacks on a telephone line tapped by Spanish intelligence.(18)
Beyond the official international banking system, unofficial banking systems and hawala are of particular concern. The Treasury Department froze the assets of 62 organizations and individuals associated with the al-Barakat and al-Taqwa financial networks in November 2001. Federal agents raided these groups' offices across the United States, and subsequently in Europe and the Bahamas as well. President Bush stated that the two institutions provided fundraising, financial, communications, weapons-procurement, and shipping services for al-Qa'ida. A few months later, Deputy Assistant Secretary of Treasury Juan C. Zarate told Congress that in 1997 $60 million collected for Hamas was moved to accounts with Bank al-Taqwa.(19) Al-Taqwa shareholders reportedly include known Hamas members and individuals associated with a variety of organizations linked to al-Qa'ida. A 1996 Italian intelligence report linked al-Taqwa to Palestinian groups, the Algerian Armed Islamic Group (GIA) and the Egyptian Jama'at al- Islamiyya.(20)
In August 2002, the United States and Italy, in cooperation with the Bahamas and Luxembourg, designated 25 individuals and institutions-including fourteen businesses owned or controlled by Ahmed Idris Nasraddin or Yusif Nada and linked to al-Taqwa-as terrorist entities and blocked their assets.(21) The Treasury Department announced that Bank al-Taqwa "was established in 1988 with significant backing from the Muslim Brotherhood" and financed groups such as Hamas, Algeria's Islamic Salvation Front and Armed Islamic Group, Tunisia's An-Nahda, and Usama Bin Ladin and his al-Qa'ida organization.(22)
Criminal Activity. Criminal enterprises have also serviced the spread of terrorism financing. Ahmad Omar Sayid al-Shaykh, convicted of the abduction and murder of Wall Street Journal Reporter Daniel Pearl, linked up with Aftab Ansari, a prominent figure in the Indian mafia, to provide al-Qa'ida with recruits, false documents, safe-houses and proceeds from kidnappings, drug trafficking, prostitution and other crime.(23) Authorities in Belgium issued an arrest warrant for Victor Bout, a notorious arms trafficker suspected of supplying weapons to the Taliban and al-Qa'ida as well as warring factions throughout Africa in an elaborate guns-for-diamonds scheme.(24)
Al-Qa'ida and Hizballah also raise millions of dollars in drug money to support their operations. By one account, al-Qa'ida raised as much as 35 percent of its operating funds from the drug trade.(25) Hizballah benefits from the drug business in Lebanon, much as al-Qa'ida did from the drug business in Afghanistan. Hizballah not only used the Biqa’a Valley's poppy crop for funds, but also to buy support from Israeli Arabs ready to carry out operations.(26)
Hizballah and other terrorist groups also traffic narcotics in North America to fund their activities back in the Middle East. A Drug Enforcement Agency (DEA) investigation into a pseudoephedrine smuggling scam in the American Midwest led investigators as far as Jordan, Yemen, Lebanon, and other Middle Eastern countries, including bank accounts tied to Hizballah and Hamas. DEA chief Asa Hutchinson confirmed, "a significant portion of some of the sales are sent to the Middle East to benefit terrorist organizations."(27) A senior U.S. law enforcement official added, "There is a significant amount of money moved out of the United States attributed to fraud that goes to terrorism." Groups like al-Qa'ida and Hizballah also capitalize on black market gold and diamond markets. One official noted the "influx of hard-core Islamist extremists" in the Congo, including those from Hizballah and other groups, involved in diamond smuggling.(28)
Smuggling, kidnapping and extortion are also well-established techniques employed by terrorist groups. For example, in June 2002, Muhammad and Chawki Hamud, two brothers involved in a Hizballah support cell in Charlotte, North Carolina, were found guilty of a variety of charges including funding Hizballah activities from the proceeds of an interstate cigarette smuggling ring. Seven other defendants pled guilty to a variety of charges stemming from this case, including conspiracy to provide material support to terrorists, cigarette smuggling, money laundering and immigration violations. In South America, Hizballah operatives engage in a wide range of criminal enterprises to raise, transfer and launder funds in support of their terrorist activity. These activities include small-scale businesses that engage in a few thousand dollars worth of business but transfer tens of thousands of dollars around the globe, mafia-style shakedowns of local Arab communities, and sophisticated import-export scams involving traders from India and Hong Kong, to name just a few.(29)
Taking a page from Hizballah operatives in the Tri-border area (where Paraguay, Brazil and Argentina meet), Hamas and others fund themselves with the proceeds of pirated multimedia. Copying intellectual property brings in millions of dollars a year from "royalties" that terrorist groups collect from criminals engaged in the counterfeit multimedia business. Hamas, Fatah, and even senior members of the Palestinian Authority may participate in such activities.(30)
In the United States, law enforcement officials are investigating a variety of criminal enterprises suspected of funding Middle East terrorist groups including the stealing and reselling of baby formula, food stamp fraud, and scams involving grocery coupons, welfare claims, credit cards and even unlicensed T-Shirts.(31) U.S. officials believe "a substantial portion" of the estimated many millions of dollars raised by Middle Eastern terrorist groups come from the $20 million to $30 million annual illicit scam industry in the U.S.(32) Recent examples of such activity include an Arab-American in Detroit caught smuggling $12 million in fraudulent cashiers' checks into the United States, and a fitness trainer in Boston accused of providing customers' social security and credit card numbers to Abd al-Ghani Meskini, an associate of Ahmad Ressam, the Algerian convicted of plotting to blow up Los Angeles international airport in 2000.(33)
CHARITABLE AND HUMANITARIAN ORGANIZATIONS
Humanitarian organizations present an especially sensitive challenge, as authorities must discern between legitimate charity organizations, those unknowingly hijacked by terrorists who divert funds, and others deliberately engaged in supporting terrorist groups. Leaders of the latter organizations raise funds both from individuals purposely seeking to fund terrorist groups as well as from innocent contributors unwitting of the groups' links to terrorists.
Financing Terrorism
Long before September 11, officials were aware that financial networks of charitable and humanitarian organizations were financing terror. Investigators looking into the 1993 World Trade Center attack traced funding for the operation back to a company that imported holy water from Mecca to Pakistan.(34) In 1997, Canada cut all government funding to Human Concern International, a Canada-based charity then under investigation in both Canada and the United States for terrorist connections.(35) Only afterward, however, did the trend receive major attention.(36)
On December 14, 2001, federal officials raided the offices of the Global Relief Foundation in Chicago and froze its assets. NATO forces raided the group's offices in Kosovo a few days later after NATO was provided credible intelligence information regarding the group's alleged involvement in planning attacks.(37) In 2001 alone, Global Relief raised more than $5 million in the United States. While much--perhaps most--of these funds likely went to legitimate causes, investigators maintain the organization served as an important front for al-Qa'ida. International terrorism investigations have raised further reason for concern. For example, according to information provided by the Spanish Interior Ministry, a senior Bin Ladin financier arrested in Spain, Muhammad Ghalib Kalaje Zuaydi, transferred funds to several individuals linked to the Bin Ladon network, including $205,853 to the head of the Global Relief office in Belgium, Nabil Sayadi (Abu Zaynab).(38)
U.S. officials have described the al-Wafa Humanitarian Organization-a major Saudi Arabian charitable organization-as a key component of Bin Ladin's organization. One official said al-Wafa is among those charitable groups that "do a small amount of legitimate humanitarian work and raise a lot of money for equipment and weapons."(39) For example, Afghan police discovered an explosives' laboratory in a building occupied by al-Wafa's Kabul office prior to the city's liberation from the Taliban.(40) Abd al-Aziz, a Saudi citizen and senior al-Qa'ida official who was captured by U.S. forces in Afghanistan, also allegedly financed al-Qa’ida activities through al-Wafa.(41)
The U.S. offices of a number of Saudi organizations were also raided in Virginia in March 2002, including the offices of the SAAR Foundation, the Safa Trust, and the International Institute for Islamic Thought (IIIT), most of which shared office space. The SAAR Foundation had recently closed but was of particular concern because of the close links between the Saudi royal family and its founder, Saudi banker Shaykh Sulayman Abd al- Aziz al-Rajhi (initials SAAR). Tarik Hamdi, an IIIT employee, personally provided Bin Ladin with the battery for the satellite phone prosecutors at the New York trial of the East Africa Embassy bombers described as "the phone bin Laden and others will use to carry out their war against the United States."(42) Both SAAR and IIIT are also suspected of financing Hamas and Palestinian Islamic Jihad through the World and Islamic Studies Enterprise (WISE) and the Islamic Committee for Palestine (ICP), once PIJ fronts in Florida but since closed.(43)
The assets of Ghalib Himmat have also been frozen for links to terrorism. Himmat, reported in a German intelligence report to have expressed "pleasure" over the news of the September 11 attacks, is a board member of the Geneva section of the Kuwait-based International Islamic Charitable Organization (IICO).(44) The IICO's Palestine Charity Committee (PCC), headed by Nadir al-Nuri, sends its funds through local committees, many of which are linked to Hamas.(45) Himmat is also an executive of the al-Taqwa banking network.
On December 4, 2001, the Bush administration exposed the Holy Land Foundation for Relief and Development as a front organization for Hamas. Five days before the September 11 attacks, the FBI raided the offices and froze the assets of Infocom, an Internet company that shares personnel, office space, and board members with the Holy Land Foundation. The two organizations were formed in California around the same time, and both received seed money from Hamas leader Musa Abu Marzuk. According to its 2000 tax return, Holy Land Foundation's (HLF) total revenue exceeded $13 million. In a detailed 49-page memorandum, the U.S. government established that these funds were used by Hamas to support schools and indoctrinate children to grow up into suicide bombers. Money raised by the Holy Land Foundation was also used by Hamas to recruit suicide bombers and to support their families. The HLF relied heavily on local zakat (charity) committees in the West Bank and Gaza to funnel funds to Hamas. The FBI memorandum establishes that known Hamas activists ran the zakat committees. For example, the memorandum reported that a financial analysis of HLF bank records indicated the foundation donated over $70,000 to the Tulkarm zakat committee from 1997 through 1999. Among the senior Hamas members affiliated with the Tulkarm zakat committee are Muhammad Hamid Qa'adan, head of the Tulkarm zakat committee, and Ibrahim Muhammad Salim Salim Nir al-Shams, a member of both the Tulkarm zakat committee and the Supreme Hamas leadership.(46)
Militant Islamist organizations like the Tulkarm zakat committee are funded by a wide array of international organizations, which frequently mask their support for Hamas as generic support for Palestinians. For example, in July 2002, the "Islam-on-line" portal featured a special page stressing the need to support Palestinian armed struggle and glorifying suicide attacks but also the need to support youth education, social activity and economic assistance (which it defined as "economic Jihad").(47) The site provided a long list of European, American, South African and Arabic social organizations, which serve, according to the site, as a channel to transfer funds to recommended Palestinian associations, many of which are directly linked to Hamas.(48)
Facilitating Terrorism
Several charitable and humanitarian organizations have not only financed terrorist groups, but actively facilitated operations. According to a U.S. Defense Department official, interrogators in Afghanistan quickly realized that if captured suspects say, "'I'm a humanitarian aid worker caught up in the fighting,' they likely have been through [military] training." The official continued, "That's the answer they were told to give [if captured]."(49)
Several humanitarian organizations, such as the Mercy International Relief Organization (Mercy), played central roles in the 1998 U.S. embassy bombings in Africa. At the New York trial of four men convicted of involvement in the embassy attacks, a former al-Qa'ida member named several charities as fronts for the terrorist group, including Mercy. Documents presented at the trial demonstrated that Mercy smuggled weapons from Somalia into Kenya, and Abdullah Muhammad, one of the Nairobi bombers, delivered eight boxes of convicted al-Qa'ida operative Wadi al-Haji's belongings--including false documents and passports--to Mercy's Kenya office.
Along with Mercy, the Kenyan government also banned the International Islamic Relief Organization (IIRO) after the embassy bombings.(50) From 1986 to 1994, Bin Ladin's brother-in-law, Muhammad Jamal Khalifa, headed the IIRO's Philippine office, through which he channeled funds to terrorist groups affiliated with al-Qa'ida, including Abu Sayyaf. In November and December 2001, Philippine police arrested four Arabs associated with the Moro Islamic Liberation Front (MILF) and described them as an al-Qa'ida "sleeper cell." Mohammad Sabri, one of the four men arrested, is a Palestinian who, according to Philippine police, worked closely with Khalifa in running the IIRO office.(51) In January 1999, Indian police foiled a plot to bomb the U.S. consulates in Calcutta and Madras. The mastermind behind the plot was Sayid Abu Nasir, an IIRO employee who received terrorist training in Afghanistan.(52) In 2001, Canadian authorities detained Mahmud Jaballah based on an Interpol warrant charging him with being an Egyptian Islamic Jihad terrorist. In 1999, Canadian officials attempted to deport Jaballah based on his work for IIRO and what they described as IIRO's involvement in terrorism and fraud.(53) The IIRO came up in the investigation into the September 11 attacks as well: hijacker Fayez Ahmed reportedly told his father he was going abroad to work for IIRO when he left for the suicide mission. Furthermore, documents seized by Israeli forces during recent operations in the West Bank include records from the Tulkarm zakat committee, the same Hamas-controlled committee noted above, indicating that the IIRO donated at least $280,000 to the Tulkarm zakat committee and other Palestinian organizations linked to Hamas.(54)
Like many other Saudi humanitarian organizations, IIRO is part of the Muslim World League, which is funded and supported by the Saudi government (in fact, the Muslim World League and IIRO share offices in many locations worldwide).(55) A senior League official in Pakistan, Wael Hamza al-Jlaidan, is listed on the Treasury's terrorist financial blocking order list.(56) In March 2002 the northern Virginia offices of both the IIRO and Muslim World League were raided by a Treasury Department task force searching for evidence they were raising or laundering funds for al-Qa'ida, Hamas or PIJ.(57) Attempting to mask the League's radical agenda, League officials recently completed a U.S.-tour aimed at "improving the image of Muslims among Americans," an admirable objective if not for the group's established links to terrorist organizations and proactive terrorist financing.(58)
The Treasury Department has frozen the assets of other Muslim World League member organizations suspected of funding terrorism, including the Rabita Trust. Rabita, which U.S. officials say changed its name to the Aid Organization of the Ulama, is based in Pakistan and actively raised funds for the Taliban from 1999 to 2001.(59)
The al-Rashid Trust, another group that funded al-Qa'ida and the Taliban, is closely linked to the Jaish Muhammad terrorist group (an organization also associated with al-Qa'ida). Al-Rashid has been directly linked to the January 23, 2002, abduction and subsequent murder of Wall Street Journal reporter Daniel Pearl in Pakistan. The attackers, linked to domestic Pakistani radical Islamic fundamentalist groups (including Jaish) operating in cooperation with, and on behalf of, al-Qa'ida, held Pearl in a two-room hut in the compound of a commercial nursery owned by al-Rashid. Several madrassas, or Islamic schools, under construction dominate the immediate area around the nursery, the largest and closest of which is owned by al-Rashid.(60) Pakistani investigators uncovered twelve telephone calls placed by one of the kidnappers, a rogue policeman named Shaykh Adil, to an unidentified al-Rashid Trust employee.(61) In addition, a British Internet site called the Global Jihad Fund, which openly associates itself with Bin Ladin, provided bank account information for al-Rashid and other fronts and groups to "facilitate the growth of various Jihad movements around the world by supplying them with funds to purchase their weapons."(62)
Last October, NATO forces raided the Saudi High Commission for Aid to Bosnia, founded by Prince Selman bin Abd al-Aziz and supported by King Fahd. Among the items found at the Saudi charity were before-and-after photographs of the World Trade Center, U.S. embassies in Kenya and Tanzania, and the U.S.S. Cole; maps of government buildings in Washington; materials for forging U.S. State Department badges; files on the use of crop duster aircraft; and anti-Semitic and anti-American material geared toward children. Currently, an employee of the Saudi High Commission for Aid to Bosnia and another cell member who was in telephone contact with Usama Bin Ladin aide and al-Qa'ida operational commander Abu Zubayda, as well as four other Algerians are incarcerated at Guantanamo Bay's Camp X-Ray for plotting an attack on the U.S. embassy in Sarajevo. Authorities are now trying to track down $41 million, which are missing from the commission's operating funds.
In December, U.S. authorities raided the Chicago offices of another Saudi-based charity, the Benevolence International Foundation. The foundation's videos and literature glorify martyrdom, and, according to the charity's newsletter, seven of its officers were killed in battle last year in Chechnya and Bosnia. In March 2002, Bosnian officials investigating foreign humanitarian organizations reported funds were missing from the Bosnian office of Benevolence International.(63) Also in March, Bosnian police raided the offices of an Islamic charity called Bosnian Ideal Future, which is the local name under which Benevolence International operated in Bosnia. Officials seized weapons, plans for making bombs, booby-traps and false passports.(64) This search also yielded an al-Qa’ida organizational chart; notes on the formation of al-Qa’ida by bin Ladin, Azzam, and others; and "a list of wealthy sponsors from Saudi Arabia,' including references to bin Ladin.(65) A day later, the U.S. Embassy in Bosnia was shut down for four days, from March 20-24, after Bosnian officials informed the embassy of a possible threat. According to a Bosnian official, Al-Qa'ida terrorists reportedly met in Sofia, Bulgaria, where they decided that "in Sarajevo something will happen to Americans similar to New York last September."(66) Two days before the Embassy reopened, Bosnian police arrested Munib Zahiragic, the head of the local Benevolence office and a former officer in the Bosnian Muslim secret police.
In January 2002, BIF's bank accounts were blocked by the U.S. Treasury Department. Then, on April 30, 2002, the foundation's executive director, Enaam M. Arnaout, was arrested on perjury charges for making false statements in a lawsuit against the U.S. government. Although this charge was later dismissed on technical grounds, Arnaout was subsequently charged in October 2002 with conspiracy to provide material support to terrorists, among other charges.(67) Contrary to his statements and those of the foundation, documents and cooperating witnesses have indicated that Arnaout facilitated money and weapons transfers for bin Ladin through the foundation and had a personal relationship with both bin Ladin "and many of [bin Ladin's] key associates dating back more than a decade."(68) In fact, Bin Ladin trusted Arnaout enough to allow him to host one of Bin Ladin's wives at Arnaout's apartment in Pakistan where Bin Ladin later picked her up. The foundation was established by a wealthy Saudi and Bin Ladin associate, Shaykh Adil Abdul Galil Betargy, who later transferred control to Arnaout.(69) According to the government's affidavit, senior al-Qa'ida operative Mamduh Salim (Abu Hajir) traveled to Bosnia on documents signed by Arnaout listing Salim as a director of the foundation.(70) Muhammad Bayazid, a bin Ladin operative involved in efforts to obtain nuclear and chemical weapons for al-Qa'ida, listed the foundation's address as his residence in his application for a driver's license.
DISRUPTING THE FLOW OF TERRORIST FINANCING
Since September 11, 2001, the Bush administration has issued a series of financial blocking orders targeting terrorist groups, including terrorist organizations, front companies, and individuals. In total, the U.S. government has designated some 191 individuals, organizations, and financial supporters of terrorism from around the world, including over $34 million in terrorist assets. Other nations have followed the U.S. lead. The Secretary of the Treasury reported that 150 "countries and jurisdictions" have blocking orders in force, and have blocked more than $70 million in assets.(71) According to U.S. officials, intelligence information indicates that terrorist operatives are finding it increasingly difficult to gain access to funds needed to escape the international dragnet targeting them, communicate effectively between cells in different parts of the world, and conduct further operations.
International Cooperation
Targeting a wide array of groups and organizations funding and transferring terrorist funds is critical, but must be conducted as part of a well-coordinated international effort. This is a particularly sensitive issue, especially in the Middle East. In November 2001, for example, a senior U.S. delegation went to Saudi Arabia to solicit greater cooperation in the arena of tackling terrorist financing. Secretary of the Treasury Paul O'Neill visited again three months later, agreeing to broach concerns regarding specific humanitarian organizations with Saudi officials before putting them on U.S. terrorist lists. The new tactic fits the mold of traditional U.S.-Saudi diplomacy and quickly bore fruit. The U.S. and Saudi governments jointly froze the accounts of the Bosnian and Somali offices of the Saudi-based al-Haramain Humanitarian Organization just days later.(72) Following the closure of the Bosnian offices, Bosnian investigators found that all of the foundation's records since 1994 were missing.(73) Nevertheless, in August 2002, Saudi pressure led Bosnian authorities to release the assets and renew the operating license of those offices.(74) Al-Haramain's questionable activities are not limited to its Bosnian and Somali offices. The foundation is also reported to have financed al-Qa’ida associated Chechen fighters.(75) Moreover, after his arrest in Indonesia, on June 5, 2002, Umar al-Faruq, al-Qa’ida's operational point man in Southeast Asia, told his interrogators that al-Qa’ida operations in the region were funded through a branch of al-Haramain. According to al-Faruq, "money was laundered through the foundation by donors from the Middle East."(76) Subsequent reports, however, indicate that U.S. authorities are concerned that Saudi authorities are glossing over the terrorist connections of other humanitarian organizations, including the al-Wafa Humanitarian Organization, the International Islamic Relief Organization (IIRO) and its parent, the Muslim World League.(77)
Skirting Saudi Noncooperation
Saudi officials have, at minimum, a clear pattern of looking the other way when funds are known to support extremist purposes. One Saudi official was quoted as saying that an organization created to crack down on charities funding terrorism does little because "it doesn't want to discover top people giving to charities."(78) Prince Bandar bin Sultan, the Saudi ambassador to the United States, acknowledged the problem of tracking the money trail, stating that Saudi officials "found money leaves Saudi Arabia, goes to Europe and we can follow it, goes to the United States and we lose contact with it."(79)
On the one hand, the Saudis have taken some small steps to battle money laundering and freeze accounts related to the September 11 conspirators and passed new regulations governing private fundraising. Saudis are now encouraged to donate funds in fulfillment of their zakat obligations only through established groups operating under the direct patronage of a member of the royal family. However, on the other hand, as the case in Bosnia attests, many of these groups are themselves suspected of financing terrorism. Moreover, documents show not only that the Saudi Ministry of the Interior funded Hamas, but that it specifically highlighted the funding of families of "martyrs" who conducted "quality attacks" against Israeli civilians.(80)
More than a year into the war on terrorism, Saudi officials continue to support organizations that finance international terrorism. For example, several reports trace continued funding of al-Qa'ida to Saudi Arabia. A Canadian intelligence report concluded that Saudi charities funnel $1 to 2 million per month to the organization,(81) while a Council on Foreign Relations task force described Saudi individuals and charities as "the most important source of funds for al-Qa'ida" and decried the fact that the Saudi government turned "a blind eye" to this activity.(82) Meanwhile, the UN has reported that al-Qa'ida finances are "fit and well" and that "the prime targets of the organization are likely to be persons and property of the United States of America and its allies."(83)
In the wake of attacks like those in Bali and Moscow, and in light of Saudi noncooperation in curbing terrorist financing, the United States and its allies must develop joint measures to make the global economy less hospitable to terrorist financing, with or without Saudi cooperation. An example of what is needed is the ongoing U.S. effort to secure European cooperation in freezing the assets of several principal financial backers of al-Qa'ida, most of them wealthy Saudis described as "the check writers."(84)
Working with Europe
Nor are divisions over terrorist financing exclusive to the Middle East. U.S. officials complain that European allies have contributed few names to the list of alleged terrorist financiers subject to financial blocking orders, that they have yet to act on all the names already on the list, and that those names European allies have added to the list are primarily domestic groups such as Basque and Irish groups. Europeans, in return, have repeatedly expressed their frustration with U.S. requests to add people or groups to terrorist lists while supplying insufficient evidence, if any.
On May 3, 2002, the European Union (EU) added eleven organizations and seven individuals to its financial-blocking list of "persons, groups, and entities involved in terrorist acts." Unfortunately, while the list marks the first time the EU has frozen the assets of non-European terrorist groups, it adopts the fallacy of drawing a distinction between the nonviolent activities of terrorist groups and the terror attacks that they carry out. By distinguishing between the terrorist and welfare "wings" of Hamas, for example, the EU lent legitimacy to the activities of charitable organizations that fund and facilitate terrorist groups' activities and operations.
The American Bureaucracy
Even within the U.S. intelligence and law enforcement community, the financial war on terrorism has been hamstrung by bitter turf wars between the Departments of Treasury and Justice. The Departments have reportedly launched parallel task forces that do not communicate or share information.
While disconcerting, operational inefficiency and territorialism between agencies pales in comparison to the more strategic gap in policymaking circles. Cracking down on terrorist financing, especially in the case of charitable and humanitarian organizations that camouflage their funding of terrorism by funding legitimate groups and causes as well, requires a political will that was markedly absent until September 11. Terrorist financing through charitable organizations is not unique to Islamic charities, per se, but the fact is that the majority of terrorist groups operating in the world today and targeting the United States are of the radical Islamic variety, and it therefore stands to reason that the majority of charitable organizations engaged in terrorist financing are Islamic organizations. While these investigations should be conducted in a careful and judicious fashion, sensitive to the fact that some organizations are front organizations for terrorist groups and rogue individuals unwittingly hijack others, they should not be confused with "Muslim bashing."
NOTES
1. For a detailed discussion of state sponsors and others, like Saudi Arabia, that are not on the U.S. State Department's list of state sponsors but fund and facilitate international terrorism nonetheless, see Matthew Levitt, Targeting Terror: U.S. Policy Toward Middle Eastern State Sponsors and Terrorist Organizations, Post-September 11 (The Washington Institute, 2002).
2. Paul Beckett, "Sept. 11 Attacks Cost $303,672; Plot Papers Lacking, FBI Says," Wall Street Journal, May 15, 2002.
3.
4.
5. Maurice R. Greenberg, Chair, "Terrorist Financing: Report of an Independent Task Force Sponsored by the Council on Foreign Relations," The Council on Foreign Relations, October 2002. Available online at
6. See Matthew Levitt, "Diplomacy Run Amuck," The Jerusalem Post, October 8, 2002.
7. Amos Harel, "Saudis Help Hamas with Rocket Project," Haaretz Daily, January 3, 2002.
8. Douglas Farah, "U.S. Pinpoints Top Al-Qa'ida Financiers; Treasury Official Heads to Europe to Seek Help in Freezing Backers' Assets," The Washington Post, October 18, 2002.
9.
10. Youssef Diab, "Al-Qaeda Suspects 'Planned to Set up Local Cell'," Daily Star (Beirut), October 11, 2002.
11. "Intelligence Briefs: Syria - Syrian Intelligence Linked to Al-Qaida Cell in Hamburg," Middle East Intelligence Bulletin, Vol. 4, Number 9, September 2002.
12. "Iran and Syria as Strategic Support for Palestinian Terrorism (Based on Interrogations of Arrested Palestinian Terrorists and Captured Palestinian Authority Documents)," Document number TR6-548-02, Israel Defense Forces, Military Intelligence, September 2002.
13. Ibid.
14. Ibid.
15. Hugh Dellios, "Six Get Death in Jordan Terrorism Plot," Chicago Tribune, September 19, 2000.
16. "Senior Fatah Militant in Lebanon Directed and Financed Serious Terror Attacks in Territories and Israel," statement released by the Israeli prime minister's media advisor, May 26, 2002. Available online.
17. Brooke Nelson and Paul Tighe, "Spain-Based al-Qaeda Cell Wired Cash to Extremists, Judge Says," Bloomberg News, November 19, 2001.
18. Ibid.
19. Testimony of Juan C. Zarate, Deputy Assistant Secretary, Terrorism and Violent Crime, U.S. Department of the Treasury, House Financial Subcommittee Oversight and Investigations, February 12, 2002.
20. Lucy Komisar, "Shareholders in the Bank of Terror?" Salon.com, March 15, 2002; and Mark Hosenball, "Terror's Cash Flow," Newsweek, March 25, 2002.
21. "The United States and Italy Designate Twenty-Five New Financiers of Terror," Department of the Treasury Office of Public Affairs, PO-3380, August 29, 2002, at
22. Ibid.
23. Paul Watson and Sidhartha Barua, "Worlds of Extremism and Crime Collide in Indian Jail," Los Angeles Times, February 8, 2002.
24. Donald G. McNeil Jr, "Belgium Seeks Arms Dealer with Suspected Qaeda Ties," The New York Times February 27, 2002.
25. Hugh Williamson, "Al-Qaeda 'May Turn to Organized Crime'," The Financial Times, June 14, 2002.
26. Dina Kraft, "Seven Israeli Arabs Charged with Spying for Lebanese Guerillas," Associated Press Worldstream, November 29, 2000; James Bennet, "Israeli Bedouin Colonel Is Formally Charged With Spying," The New York Times, October 25, 2002.
27. "U.S. Drug Ring Tied to Aid for Hezbolah," The New York Times, September 3, 2002.
28. Douglas Farah, "Digging Up Congo's Dirty Gems; Officials Say Diamond Trade Funds Radical Islamic Groups," The Washington Post, December 30, 2001.
29. Jeffrey Goldberg, "? The Party of God: Hezbollah Sets Up Operations in South America and the United States," The New Yorker Magazine, October 28, 2002.
30. Amir Buchbot, "Forgeries in the Service of Terror," Ma'ariv (Tel Aviv), August 14, 2002.
31. John Mintz and Douglas Farah, "Small Scams Probed for Terror Ties; Muslim, Arab Stores Monitored as Part of post-Sept. 11 Inquiry," The Washington Post, August 12, 2002.
32. Ibid.
33. John Solomon, "U.S. Builds Terror Funding Cases," The Associated Press, August 28, 2002.
34. Mark Huband, "Bankrolling bin Laden," Financial Times, November 29, 2002.
35. Judith Miller, "Some Charities Suspected of Terrorist Role; U.S. Officials See Muslim Groups Linked to bin Laden and Others," The New York Times, February 9, 2000.
36. "State's Taylor Summarizes Annual Global Terrorism Report," Washington File, U.S. Department of State, International Information Programs, May 21, 2002, at
37. Philip Shenon, "U.S.-Based Muslim Charity Raided by NATO in Kosovo," The New York Times December 18, 2001.
38. Carlta Vitzthum and Keith Johnson, "Spain Detains al-Qa'ida Financier in Flurry of Europe Terror Arrests," The Wall Street Journal, April 25, 2002.
39. Laurie P. Cohen, Glenn Simpson, Mark Maremont, and Peter Fritsch, "Bush's Financial War on Terrorism Includes Strikes at Islamic Charities," The Wall Street Journal, September 25, 2001.
40. "'Terror Lab' Found in Kabul: Peacekeepers: Discovery Included 36 Types of Chemicals, Explosives, 'Terroristic Guide Books,'" Reuters, August 26, 2002.
41. John Mintz, "From Veil of Secrecy, Portraits of U.S. Prisoners Emerge," The Washington Post, March 15, 2002, p. A3.
42. Judith Miller, "Raids Seek Evidence of Money-Laundering," The New York Times, March 21, 2002.
43. Christopher H. Schmitt, Joshua Kurlantzick and Philip Smucker, "When Charity Goes Awry," U.S. News & World Report, October 29, 2001.
44. Mark Huband, "Bankrolling bin Laden," Financial Times (November 29, 2002)
45. "All Forms of Suppression Rejected: Firm Support for Uprising," Kuwait Times, November 6, 2000.
46. "Holy Land Foundation for Relief and Development, International Emergency Economic Powers Acts, Action Memorandum," FBI Memorandum from Mr. Dale L Watson, Assistant Director for Counterterrorism, FBI, to Mr. R. Richard Newcomb, Director of the Office of Foreign Assets Control, Department of Treasury, November 15, 2001.
47. "Hamas-Related Associations Raising Funds throughout Europe, the US and the Arab World," Israel Defense Forces Spokesperson's Unit, available online at
48. Ibid.
49. Walter Pincus and Dan Eggen, "Probe Spawns Unparalleled Intelligence-Sharing," The Washington Post, March 12, 2002.
50. "Kenya bans six Islamic aid agencies after U.S. Embassy bombing" AP Worldstream, September 9, 1998.
51. Jay Solomon, "Manila Suspends Talks with Rebels After Allegations of al-Qa'ida Links," The Wall Street Journal, March 12, 2002.
52. Dexter Filkins, "Attacks on U.S. Missions Foiled, Indian Police Say," Los Angeles Times, January 21, 1999.
53. Laurie P. Cohen, Glenn Simpson, Mark Maremont, and Peter Fritsch, "Bush's Financial War on Terrorism Includes Strikes at Islamic Charities," The Wall Street Journal, September 25, 2001.
54. Israeli report provided to the U.S. Government entitled "Large Sums of Money Transferred by Saudi Arabia to the Palestinians are Used for Financing Terror Organizations (particularly the Hamas) and Terrorist Activities (including Suicide Attacks inside Israel)," dated May 3, 2002.
55. Laurie P. Cohen, Glenn Simpson, Mark Maremont, and Peter Fritsch, "Bush's Financial War on Terrorism Includes Strikes at Islamic Charities," The Wall Street Journal, September 25, 2001 and Stewart Bell, "Quebec Group tied to al-Qaeda money web: Virginia Office Raided," National Post (Toronto), March 21, 2002, P. A1.
56. http://www.treasury.gov/offices/enforcement/ofac/sanctions/terrorism.html
57. Judith Miller, "Raids Seek Evidence of Money-Laundering," The New York Times (March 21, 2002).
58. "Saudi Group Claims Success in U.S. Tour," Middle East News Line / MENL, July 19, 2002.
59. "Freeze Ordered by U.S. on Assets of Pakistan-based Group, 9 People," The Associated Press, April 20, 2002.
60. Karl Vick and Kamran Khan, "Officials Say Body Probably is Pearl's; New Suspect Claims he Killed Reporter," The Washington Post (May 18, 2002).
61. "Karl Vick and Kamran Khan, "Al-Qa'ida Tied to Attacks in Pakistan Cities; Militants Joining Forces Against Western Targets," The Washington Post (May 30, 2002).
62. Chris Hastings and David Bamber, "British Cash and Fighters Still Flow to bin Laden," London Sunday Telegraph, January 27, 2001.
63. "Al-Qa'ida Terrorists Planned Bosnia Attack, Official Says," Associated Press, March 23, 2002.
64. Alexandar S. Dragicevic, "U.S. Embassy in Bosnia Reopens," Associated Press, March 25, 2002.
65. United States of America v. Enaam M. Arnaout, a/k/a 'Abu Mahmoud,' a/k/a 'Abu Mahmoud al Suri,' a/k/a 'Abu Mahmoud al Hamawi,' a/k/a 'Abdel Samia,' case no. 02CR892, Northern District of Illinois, Eastern Division (October 2002).
66. "Al-Qa'ida Terrorists Planned Bosnia Attack, Official Says," Associated Press, March 23, 2002.
67. "Judge Dismisses Islamic Charity Case," Associated Press, September 14, 2002.
68. United States of America v. Enaam M. Arnaout, a/k/a 'Abu Mahmoud,' a/k/a 'Abu Mahmoud al Suri,' a/k/a 'Abu Mahmoud al Hamawi,' a/k/a 'Abdel Samia,' case no. 02CR892, Northern District of Illinois, Eastern Division (October 2002).
69. "United States of American V. Benevolence International Foundation, INC, and Enaam M. Arnaout, a/k/a "Abu Mahmoud," a/k/a "Abd al- Samia" Case number 02CR0414, Northern District of Illinois, Eastern Division.
70. Salim severely wounded a prison guard while awaiting trial at the Metropolitan Correctional Center in New York for his role in the East Africa embassy bombings. He pled guilty to attempted murder in April 2002.
71.
72.
73. "Saudi Charity linked to al Qaida Renews Operations," Middle East Newsline/MENL, August 13, 2002.
74. "Saudi Charity linked to al Qaida Renews Operations," Middle East Newsline/MENL, August 13, 2002.
75. Ibid. See also Office of International Information Programs, U.S. Department of State, "U.S., Saudi Arabia Act Jointly To Block Terror Funds (Al Haramain's Branches in Bosnia and Somalia Targeted)," press release, march 11, 2002; available online
76. Romesh Ratnesar, "Confessions of an Al-Qaeda Terrorist," Time.com, September 15, 2002. Available online.
77. Eli J. Lake, "U.S. Demands Data on Islamic Charities," UPI, March 22, 2002.
78. Christopher H. Schmitt, Joshua Kurlantzick and Philip Smucker, "When Charity Goes Awry," U.S. News & World Report, October 29, 2001.
79. PBS/Frontline interview with Prince Bandar bin Sultan, at
80. Israeli report provided to the U.S. Government entitled "Large Sums of Money Transferred by Saudi Arabia to the Palestinians are Used for Financing Terror Organizations (particularly the Hamas) and Terrorist Activities (including Suicide Attacks inside Israel), dated May 3, 2002.
81. Edward Alden, "The Money Trail: How a Crackdown on Suspect Charities is Failing to Stem the Flow of Funds to al-Qaeda," The Financial Times, October 18, 2002.
82. "Terrorist Financing: Report of an Independent Task Force Sponsored by the Council on Foreign Relations," The Council on Foreign Relations, October 2002, available online at
83. Oliver Burkeman, "Al-Qaeda Rich and Ready to Strike, Says UN: Europe's Lax Border Controls Fail to Stem Funding," The Guardian (London), August 30, 2002.
84. Douglas Farah, "U.S. Pinpoints Top al-Qaeda Financiers; Treasury Official Heads to Europe to Seek Help in Freezing Backers' Assets," The Washington Post, October 18, 2002.
Matthew A. Levitt is the Senior Fellow in Terrorism Studies at the Washington Institute for Near East Policy and the author of Targeting Terror: U.S. Policy Toward Middle Eastern State Sponsors and Terrorist Organizations, Post-September 11 (The Washington Institute: 2002).
posted by Marko at 12/15/2005 09:18:00 PM
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