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TerrorismCentral Newsletter
-- For the week ending January 20, 2002 --

AUTHOR:
TerrorismCentral Editorial Staff

TITLE:
TerrorismCentral Newsletter - January 20, 2002

SOURCE:
TerrorismCentral, January 20, 2002

TEXT:

Last week we featured a brief historical context of the financing of terrorism. This week, Part 2 describes current activities to undermine the financial resources and strengthen the security of financial institutions. Next week, the final part of this series reviews technologies related to these efforts.

The second half of the newsletter provides a review of events that occurred in the past week.

For more background on the material covered in this newsletter, click on the links herein. All linked additional information is from the TerrorismCentral Library.



Financing of Terrorism Part Two: Current Activities

The coordination and planning involved in the September 11 attacks quickly drew attention to the financing al Qaeda. Such an attack could not have been carried out without an extensive financial network. While the Bush administration laid plans for its global response, the first strikes against the organization were actually launched against its financing.

Weakening terrorist organizations by attacking their money is a highly effective way to slow them down. For example, without money, members can't be paid, the organization can't be armed, and travel and operation in other countries become difficult. However, in the world of global financial exchanges, reaching terrorist money is an extraordinarily thorny task.

The difficulties arise from a number of factors, not the least of which is the sheer volume of transactions made. Under money-laundering laws at the time of the attacks, banks were required to notify the government of payments in excess of $10,000. US banks alone report over 12 million of these transactions, and hundreds of thousands of these are considered suspicious.

Following investigations into the finances of the September 11 hijackers, it was found that most of their payments were below this amount. The reporting trigger has since been lowered to $5,000, greatly increasing the number of transactions subject to government scrutiny.

The investigation into the attacks is now focused on identifying the sources of the funding. Banks have been issued hundreds of subpoenas, from many different agencies, ordering them to turn over account information on people and groups listed by the government. In some cases, agents have been placed inside the financial institution to conduct direct investigations.

These efforts are not occurring only within the US. The UK has also vigorously attacked the problem, focusing on cross-border money transfers, including those intersecting with informal financial institutions such the hawal of South Asia, (that have provided money transfers among themselves for thousands of years), and storefront foreign exchange operations that will transfer thousands of dollars on little identification.

Orders to freeze terrorist assets have now been issued in 142 countries. The assets of over 150 individuals have also been frozen. Internationally, it is estimated that over $60 million has been blocked in this manner.

International support has come from many sources. The United Nations Security Council passed Resolution 1373. Members of the International Monetary Fund and the G-20 have agreed to make public the names and amounts of frozen assets. In the US, this information is available from several sources, including the White House and the US Treasury. In-country legislation has also supported these efforts.

In fact, one of the problems with identifying terrorist funds is that they are often generated by legitimate commercial and charitable activities. A mixture of legal and illegal funds is hard to identify and difficult to sequester. Both where the money came from and where it goes must be tracked. Uncovering layers of ownership and usage can be a monumental task.

Even in cases where associations with terrorist groups can be proven, their efforts cannot be discontinued at will without risking dramatic humanitarian disasters. For example, groups like Hizballah and Hamas have become the largest charitable aid providers in their regions.

In addition, the closure of the Al Barakaat hawala network shut off funding for not only terrorists, but also for people in countries like Somalia who may depend on foreign remittances to feed themselves. There, border areas exist that have no alternative banking system.

Another complication with combating terrorist funding is that much of the technology to analyze suspicious transactions was developed to combat money laundering as a result of trade in narcotics. Both the technology and the policies that determine its use must be modified to be effective against the somewhat different techniques used by terrorist organizations. (More on this next week.)

Even names present a challenge. There are no standard equivalents for Arabic names, so spelling is irregular. Often, people use other names, sometimes to simplify the exchange and sometimes to support multiple identities. With common names, confusion with other people is fairly widespread.

The level of international cooperation among financial organizations and governments creates another major trial.

The Financial Action Task Force (FATF) is an international organization that develops policies to combat money laundering. It has adapted its standards to provide staunch financial controls that can be used to restrict terrorist access to funding. In addition to their existing Forty Recommendations, FATF suggests that stronger government powers freeze terrorist assets, create a blacklist of countries that handle terrorist funds, and expand reporting capabilities of suspect transactions.

Interagency cooperation within each country is equally formidable. In the US, three new government organizations alone, the Foreign Terrorist Access Tracking Center, the Terrorist Financing Task Force, and Operation Green Quest, were created to focus on these efforts. These groups are chartered with cross-agency and cross-country information coordination.

Regulators have not focused only on large transactions. Money orders and wire transfers are also now under scrutiny. The State of New York Banking Department has taken the lead in this area by developing a proposal that requires positive identification for any transfer over $1,000, lowering the amount from the current level of $3,000.

In short, the activities underway are unprecedented in their scale and impact. Government organizations internationally, and also at the national and local levels, continue to pursue regulatory and investigative measures. Financial institutions of all sorts, not just banks, have been recruited in the service of law enforcement.

Given the scale of effort, much has been achieved, but there are landmines of conflicting interests among all these groups. Will countries really be prepared to waive bank secrecy laws and lawyer-client confidentiality? Will interagency collaboration be realized? Will the expertise -- and the funding necessary to support it -- be available for the analysis and investigations? Watch this space.

Note: Bibliographic citations for this article can be found in the Finance section of the TerrorismCentral Library.



News Highlights of the Week



Africa

Sierra Leone's President Ahmad Tejan Kabbah has declared an end of the war that killed 50,000 people and witnessed widespread civilian atrocities. With the aid of UN peace keepers, government militia and 47,000 rebels have turned in their weapons over the past year and have now joined together in a peace ceremony, which includes a symbolic bonfire of some of these weapons.

In Sudan, the leader of the rebel Sudan People's Liberation Army, John Garang, is preparing to negotiate with the government in Khartoum to reach an end to Africa's longest-running civil war. A cease-fire has been signed.

Zimbabwe faces international scrutiny over increasing violence and widespread abrogation of civil rights. Unable to guarantee their safety, the UK has halted deportations of failed asylum seekers. British and US governments are beginning to trace President Mugabi's funds in preparation for possible personal sanctions imposed on the President and his inner circle, suspected of widespread financial malfeasance.



The Americas

Colombia narrowly avoided a return to conflict, following President Pastrana's ultimatum to the rebel Revolutionary Armed Forces of Colombia (FARC) last week. A last-ditch deal brokered by the UN and international diplomats reached a new agreement less than 5 hours before Mr. Pastrana's deadline. Development of a structure and timetable for peace talks is underway, amid low levels of continued violence.

US military forces recovered photos and videotapes from the Afghanistan home of Mohammed Atef. Portions of the material have been released to the public, with an appeal for information from the US Justice Department.

All 50 US states agreed to upgrade driver's licenses to improve security features, including checking that licenses are issued to valid recipients.

There were minor confrontations in York, Pennsylvania during a demonstration by white supremacists of the World Church of the Creator.


Asia

Afghanistan's interim government has been bolstered with resources from the United Nations which this week lifted a ban on Airana Airlines and released assets that had been frozen under the Taliban. Sanctions are expected to end soon as well. Additional funding is urgently needed, with an immediate infusion of $100 million required.

A joint report prepared by the World Bank, the Asian Development Bank and the UN Development Program estimates that Afghanistan will need between $4.9-6.1 Billion over the next two years.

US Secretary of State Colin Powell visited Afghanistan and pledged continuing support, but U.S. financial aid has not yet been forthcoming, following government statements that they expect the lead on aid to come from the international community.

Hamid Karzai, Afghanistan's interim leader, has signed a decree banning narcotics in the face of renewed planting and production.

In Peru, Aguavara Indians attacked settlers, killing at least 14, in a land dispute.

Also in Afghanistan, an American aid worker was taken hostage was briefly held for ransom. He has now been released.

India has reacted cautiously to Musharraf's historic speech in which he announced sweeping measures against Islamic militants. Indian and Pakistani armies remain on high alert as India insists that Musharraf must turn his words into actions.

Following the speech, Pakistan has arrested thousands of suspected militants and closed the offices of 615 organizations alleged to be affiliated with banned militant groups. India also arrested militants alleged to have links with al Qaeda.

In an unrelated attack, armed militants from the outlawed National Liberation Front of Tripura (a state in northeast India) fired into a crowded market, killing 16.

Powell continued his regional visit with meetings in Pakistan and India, pressing for negotiation over the disputed Jammu Kashmir region.

The Chinese Prime Minister, Zhu Rongji, also visited India this week, a mark of their increasing cooperation.

President Megawati Sukarnoputri of Indonesia maintains a tentative control over the country. The US is considering offering anti-terrorism training and has begun to resume discussions between the countries' militaries.

South Korea's President, Kim Dae-jung, has asked the US to help break the stalemate in talks with North Korea, one of the "rogue states" suspected of developing nuclear and biological weapons.

In the Philippines, US troops put forward to help with their anti-terrorism efforts have met with political resistance. A large deployment of US troops is expected to be in place in coming weeks, helping to train the Filipinos to fight rebels. A cache of weapons and explosives was discovered by Philippine authorities in the south of the country. The stockpile is suspected of belonging to an al Qaeda cell. Abu Sayyaf, the Islamic militant group with alleged ties to al Qaeda, continues to hold two US citizens hostage on the island of Basilan. The situation is under investigation by US military forces.

Singaporean police have arrested 13 alleged members of Jamaah Islamiyah. In the course of the investigation, they discovered documents and a videotape describing planned attacks. Despite recent arrests, Singapore suspects additional cells may remain. As their efforts continue, the racial harmony which has been a source of pride for Singapore, may be threatened.



Europe

Cyprus has come to the attention of US authorities, investigating possible al Qaeda connections.

In Norway, three neo-Nazis were convicted for their roles in a racial murder thanhad sparked protests across Scandanavia.

The conflict between Russia and Chechnya continues. Russia has conducted aerial bombardment following the death of 6 Russian troops.

The United Kingdom continues its investigation of terrorist links. Ten members of a suspected al Qaeda cell were arrested amidst fears that strikes against UK targets could still occur.

For the first time since 1956, reservists were called up for the Territorial Army, to support the intelligence efforts against terrorism.

In Belfast, a Catholic postman was shot dead by Protestant militants.



Middle East

Islamic scholars associated with the Muslim World League met for six days to discuss terrorism. They agreed on the definition of terrorism as "all acts of aggression committed by individuals, groups or states against human beings, including attacks on their religion, life, intellect or property."

In Iran, Ayatollah Ali Khamenei, the country's supreme commander, pardoned Hossein Loqmanian, a lawmaker who had been jailed for speaking out against Islamic hard-liners, averting a Parliamentary walkout. Iran, long opposed to bin Laden's brand of Islam, has offered some support to efforts against them, and has flatly denied accusations that they have aided al Qaeda fugitives.

Iraq has made overtures to Kuwait and Saudi Arabia, responding to mounting pressure to allow UN weapons inspectors back.

Israel began the week with continued reprisals for the weapons-smuggling operations intercepted last week. Missiles were directed against a naval base, Israeli divers blew up a Palestinian patrol boat, numerous Palestinian houses were demolished in the Gaza Strip, and Raed Karmi, a Palestinian militia leader, was killed with a bomb.

The Israeli reprisals led to increased tensions in the region, criticism from within the government, and concern within the international community.

Yasser Arafat, the Palestinian leader, angered his security services with the arrest of Ahmed Saadat, the secretary-general of the Popular Front for the Liberation of Palestine (PFLP).

Palestinian militants responded to the death of Karmi with additional attacks, including mistakenly shooting a Palestinian in a car with Israeli license plates. This round of attacks culminated in an attack by a gunman armed with grenades who killed six in a banquet hall during a bar mitzvah celebration. The gunman was also killed.

Israel retaliated immediately by destroying Palestinian government headquarters with warplanes and reinforcing the presence of other forces. The retaliation continues with attacks on Palestinian headquarters and the broadcast station.

Recent reports suggest that the government of Saudi Arabia may be preparing to ask that US troops leave the country.



Aviation

Baggage matching and selected screening have now been implemented in all US airports.

The Federal Aviation Association (FAA) has ordered airlines to install cockpit doors that are more secure and says that airlines must train crews to resist hijackers.



Human Rights

International outrage is growing at the treatment of detainees at Guantanamo Bay, Cuba, by the US military. Defense Secretary Donald Rumsfeld continues to assert that the prisoners are exempted from international covenants, including the Geneva Convention, and that the US may continue to hold foreign nationals indefinitely without charge.

Mary Robinson, of the United Nations has stated that the international legal consensus is that these are prisoners of war, a position with which the International Committee of the Red Cross (ICRC) agrees. Particularly harsh criticism has come from Jack Straw, foreign secretary of the UK and others in the British parliament and legal community, who are particularly concerned about the detention of British nationals. Possible areas of human rights violations include hooding the prisoners, forced shaving of beards worn for religious observance, and forced interrogation.

Members of the ICRC have arrived to observe the situation and will prepare a confidential report for the "detaining authority."

Human Rights Watch reports that Egypt, Russia and Uzbekistan are among countries using the "war against terror" as an excuse to step up military controls on political opponents, leading to civil rights abuses. Amnesty International cites Egyptian military courts and Syria's state of emergency. Restrictions on press freedom in Jordan and Zimbabwe have also drawn severe criticism.



Law and Legal Issues

Four members of the Symbionese Liberation Army (SLA), Sara Jane Olson, Emily Harris, William Harris and James Kilgrove, were charged with the murder of Myrna Opsahl during a bank robbery in 1975. The SLA was a radical leftist group active in California from 1987 - 1975. Separately, Sara Jane Olson was sentenced to 20 years - life in prison for her role in a 1975 attempted bombing.

John Walker Lindh, the "American Taliban" was indicted in the US for supporting terrorists and conspiring to kill US nationals.

An indictment was also issued in US federal court against Richard Colvin Reid, a British national accused of attempting to bomb an American Airlines flight by igniting his shoes. He has pleaded not guilty.

Mokhtar Haouari was sentenced to 24 years in prison for his role in the "millennium bomb" plot to detonate a suitcase at the Los Angeles airport.

Lofti Raissi, an Algerian pilot, will have another bail hearing in February, as the British court continues to wait for the US to provide evidence of his connection to the hijackers who flew a plane into the Pentagon on September 11

The high court in Bosnia Herzegovina released 6 Algerians suspected of links to al Qaeda for insufficient evidence.


Weapons of Mass Destruction

Investigations of more than 40 sites used by al Qaeda in Afghanistan have failed to uncover any evidence that the organization was able to produce chemical or biological weapons.

BioPort Corporation, the only producer of anthrax vaccine in the US, received federal approval for a new facility but still need to complete additional quality assurance tests.

The World Health Organization, acting on fears of bioterrorism, has retracted its order to kill smallpox stocks.


Newly Published:

Philip Dray. At the Hands of Persons Unknown. Random House

Ellen Joan Pollock. The Pretender: How Martin Frankel Fooled the Financial World and Led the Feds on One of the Most Publicized Man Hunts in History. Wall Street Journal Books. Simon and Schuster.


Next week

The Financing of Terror Part 3: Technology and watch for news on the TerrorismCentral subscription service

Please contact us with your questions or comments by sending email to . We look forward to hearing from you.

Editorial Team
TerrorismCentral

PUBLICATION DATE:
January 20, 2002

DATE:
20020120