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CONTENTS:

NEWS HIGHLIGHTS OF THE WEEK:

1. World
2. Africa
3. Americas
4. Asia Pacific
5. Europe
6. Middle East
7. South Asia
8. Cyberterrorism and Information Warfare
9. Finance
10 Human Rights
11. Law and Legal Issues
12. Transportation
13. Weapons of Mass Destruction
14. Recently Published

FEATURE ARTICLE:
Saudi Arabia and Terrorist Financing

NEWS HIGHLIGHTS OF THE WEEK

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1. World

North Korea and Japan reached an agreement to exchange aid for the return of children of Japanese citizens who had been abducted by North Korea. The New York Times reports on "Evidence is Cited Linking Koreans to Libya Uranium" and the possibility nuclear fuel was sold to others as well. (David Sanger and William Broad, May 23) IAEA is investigating the reports. http://www.nytimes.com/2004/05/23/international/asia/23NUKE.html (registration). Meanwhile, some 3,600 US troops stationed near the North Korean border are being moved to Iraq.

The World Health Organization has formally declared that the latest cluster of Severe Acute Respiratory Syndrome (SARS) cases has been broken. http://www.who.int/csr/don/2004_05_18a/en/

The UN Commission on Crime Prevention and Criminal Justice completed its annual session. The main theme was on the rule of law and development, with discussions focusing on transnational organized crime, standard norms in crime prevention and criminal justice, and terrorism. http://www.unis.unvienna.org/unis/pressrels/2004/uniscp490.html

The Special Committee on de-colonization completed its regional seminar in the Pacific with 51 conclusions and recommendations regarding the 16 colonies remaining in the world. http://www.un.org/Depts/dpi/decolonization/main.htm

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2. Africa

The Economic Commission for Africa (ECA) reports that poverty levels on the continent increased 43 percent over the last decade. Women make up to 80 percent of the people who live on less than one dollar a day. ActionAid International reports that the GDP of southern African countries has dropped by 2.6 percent because of HIV/AIDS.

In Burundi, a UN force of up to 5,600 will replace African Union peacekeepers currently on the ground. The initial 6-month deployment will help secure the agreements that ended the 10-year civil war. It will ensure the ceasefire, carry out demobilization and monitor weapons in advance of scheduled autumn elections. Fresh fighting between government forces and rebels of the National Liberation Forces (FNL) in the western Bujumbura Rural province has displaced some 20,000 people.

In Chad, forces loyal to President Idriss Deby defeated a short-lived army mutiny, brought on by a potential reduction in ranks, without violence. Meanwhile, resources in the east have been greatly strained by the massive influx of refugees from Sudan.

Democratic Republic of Congo rebels from seven militia groups in Ituri District agreed to disarm and reintegrate.

Ethiopian forced killed 20 alleged bandits allegedly behind the recent ethnic violence in Gambela that left hundreds dead.

Ivory Coast's President Gbagbo replaced three former rebel ministers with his own party loyalists and suspended other parliamentarians, further risking the tenuous government of national reconciliation. The opposition alliance is criticizing his actions and refuses to participate until the three are reinstated.

Liberian ex-combatants rioted in the capital Monrovia to demand full payment of their resettlement grant. One person was killed and several injured.

Malawi's election commission declared Bingu wa Mutharika president but opposition candidate Gwanda Chakuamba of the Mgwirizano coalition has also declared victory. Election observers cited serious inadequacies and there have been opposition demonstrations.

Nigerian President Obasanjo declared a state of emergency in Plateau State following communal clashes between Christians and Muslims that have killed hundreds. The declaration did not stop the violence. Armed Muslims attacked several Christian villages, killing more than 20, in apparent reprisal for an earlier attack.

Sudan's government, reacting to the massive humanitarian crisis in Darfur province, has agreed to ease travel restrictions to allow humanitarian aid to reach an estimated 20,000 people displaced by the Janjawid militias allied with the government.

Ugandan rebels of the Lord's Resistance Army attacked a displaced persons camp, killing 39, and later a northern village, killing more than forty people.

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3. Americas

Foreign direct investment in Latin America and the Caribbean fell by nearly 20 percent last year. It is the only region in the world that saw a decline. http://www.eclac.org

Bolivia will hold a referendum on how best to exploit natural gas reserves on July 18. The issue has been highly controversial and led to weeks of violent protests that left 80 people dead and forced the resignation of the former president, Gonzalo Sanchez de Lozada.

Brazilian police freed more than 140 people who worked as slaves on a sugar plantation.

Colombian rebels of the Revolutionary Armed Forces of Colombia (FARC) marked the 40th anniversary of their founding. Several attacks were carried out, in which four people were killed and 17 injured, but police intercepted a large truck bomb, defeating a larger tragedy.

Dominican Republic is making a peaceful transition to a new president. Leonel Fernandez will replace Hipolito Mejia in August. The presidential elections mark exemplary progress towards democracy.

In the US, more details emerged over the prison and torture scandals in Iraq. The deaths of 37 detainees held in Iraq and Afghanistan are under investigation, including at least eight unsolved murders. President Bush is launching a series of public presentations to explain plans for the handover of Iraqi sovereignty scheduled for June 30.

The 9-11 Commission held its 11th public hearing on Emergency Response in which communications and organization were discussed in depth.
http://www.9-11commission.gov/hearings/hearing11.htm
The Senate Judiciary Committee held hearings on "Animal Rights: Activism vs. Criminality". http://judiciary.senate.gov/hearing.cfm?id=1196

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4. Asia Pacific

Australia held a series of workshops to review emergency management using the lessons learned from the September 11 and Bali attacks. Their findings have been published in "Mapping the Way Forward for large-scale urban disaster management in Australia" by Emergency Management Australia. http://www.ema.gov.au

Burma opened constitution talks that are being boycotted by the National League for Democracy because its leader Aung San Suu Kyi remains under house arrest. Some ethnic minorities are also boycotting the talks. The US has extended economic sanctions against the military junta for another year.

East Timor marked the second anniversary of its independence. It has taken over policing and defense from the UN.

Indonesia has formally moved Aceh province to a state or emergency, replacing martial law a year after the military offensive against separatist GAM rebels was launched.

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5. Europe

Abkhazia separatists and Georgian representatives met under the auspices of the UN to discuss ways to resolve the conflict and peacefully settle their dispute.

Irish President Mary McAleese dedicated a memorial to the victims of the Monaghan bombing of May 17, 174, in which seven people were killed, just 90 minutes after a bombing in Dublin that killed 26.
Italian police defused two homemade bombs outside a McDonald's in Rome. They carried Red Brigade slogans.

Russian Tatars in Central Asia marked the 60th anniversary of their forced expulsion by Josef Stalin. Russia is featured in an Economist survey, "Having it both ways", of May 22.

In Chechnya, Russia, separatist rebels ambushed Russian troops, killing at least eight. Chechen warlord Shamil Basayev claimed responsibility for the bomb attack that killed Chechen President Kadyrov.

Turkey saw four small percussion bombs detonated against British bank HSBC branches in Ankara and Istanbul shortly before UK Prime Minister Blair arrived for a brief summit. There were no casualties and only minor damage. Another bomb went off outside a McDonald's, causing property damage but no casualties.

The British Parliament was evacuated after two Fathers4Justice protesters hit Prime Minister Blair with a ball of purple flour. Pointing to the possibility that it could have been a chemical or biological agent, investigations into how the incident was handled and into overall security are under way.

Northern Ireland has seen a spate of bomb attacks apparently related to feuding between loyalists of the Ulster Volunteer Force and Loyalist Volunteer force in which there have been a number of injuries. The shooting death of Brian Stewart, who was linked to the LVF, was also associated with the feuding.

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6. Middle East

In the Gaza Strip, the Israeli offensive "Operation Rainbow" continued throughout the week. It has pulled back from two neighborhoods but is continuing demolitions elsewhere. Dozens more homes have been destroyed and many people injured. A 3-year-old girl died when shot through the neck, bringing the number of children killed in the last week to 11 for a total death toll of 43. The Gaza zoo was also demolished and left the animals dead or missing. It is reported that Israel will offer compensation to those who owned the hundreds of homes destroyed during these operations. The UN Security Council passed a resolution condemning the killing of civilians and home demolitions. The US allowed this to pass by abstaining rather than vetoing the measure.

Iranian students and other protestors marched in the thousands to protest UK and UK Iraq policies. Gasoline bombs were thrown at the British embassy.

After a brief withdrawal, Iraq's holy city of Najaf and a mosque in Kufa are under renewed attack as the US military fight militiamen loyal to cleric Moqtada Sadr. Earlier in the week, there was a raid against Iraqi National Congress leader Ahmad Chalabi, whose funding from the US has been discontinued. (Note General Accounting Office study of this funding at http://www.gao.gov/cgi-bin/getrpt?GAO-04-559.) The US denied reports that it bombed a wedding party, killing dozens. (The civilian death toll is heading towards 12,000.)

Meanwhile, the Abu Ghraib prison scandal (with the first military trials underway) continues to eclipse the escalating violence. US President Bush is launching a public relations effort to outline plans for Iraq after the occupation ends. In this connection, the UK and US are asking for immunity after Iraq regains sovereignty, governing troops under their own jurisdiction and exempt from international laws.

At the Bekaot roadblock in the Jordan Valley a suicide bomber with the Popular Front for the Liberation of Palestine killed himself and injured five.

Kuwait's Council of Ministers approved a bill to allow women to vote and stand for election. The bill now goes before parliament.

Lebanese security forces reportedly cracked a spy ring that was planning to assassinate Hassan Nasrallah, the head of Hezbollah.

Qatar has announced that in six months a new labor law will come into force. It allows trade unions, gives workers the right to strike, establishes an 8-hour working day, and bans child labor (under 16). It also provides for maternity leave and equal rights for women.

In Saudi Arabia four suspected militants and two police were killed in a gun battle in Buraida. In Riyadh a German contractor was shot dead by suspected militants.

In the West Bank, a vehicle exploded, killing two Palestinians who were apparently carrying explosives.

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7. South Asia

Afghanistan is now part of the ongoing investigations into abuse of detainees by UK and US soldiers. It has been reported that the rules of Afghani and Guantanamo Bay detention were replicated in Iraq. Meanwhile, insurgents continue to threaten security throughout the country as US and NATO forces continue their military operations, with several casualties including civilians. Disarmament has gotten off to a slow start. NATO's secretary general has asked that member states ensure the personnel and equipment promised is delivered at this critical juncture of the mission.

In northern Bangladesh, a Muslim shrine was bombed, killing three and injuring up to 100, including the British High Commissioner. Nine suspects have been detained for the attack that is blamed on Islamic extremists.

India's new Prime Minister, Manmohan Singh, has been sworn in. He is the country's first Sikh and his appointment is seen as a good sign for freedom of religion in the Hindu-majority democracy. Singh has promised no tolerance for sectarian riots.

Andhra Pradesh state is introducing a debt relief package for families of farmers who have committed suicide. There have been nearly 3,000 such cases in the last six years and 14 cases in the last week.

In the northeastern state Tripura separatist rebels of the National Liberation Front of Tripura attacked an Indian security patrol and killed six soldiers. Discussions between King Gyanendra and opposition leaders ended in deadlock.

Indian-administered Kashmir suffered a deadly landmine attack in which at least 33 Indian soldiers and their relatives were killed and 15 injured. Hizbul Mujahideen says the attack was in revenge for the recent killings of their senior commanders.

Nepal's Maoist rebels abducted more than a thousand people from several northern villages and says they will be free when their campaign ends.

Pakistan has been re-admitted as a full member of the Commonwealth after a report found it had made steps towards restoring democracy since the military coup four years ago that brought President Musharraf to power.

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8. Cyberterrorism and Information Warfare

Deloitte's 2004 Global Security Survey finds that 83 percent of global financial institutions had information technology compromised, compared to 39 percent in 2002. Forty percent of these breaches resulted in financial loss. Other key findings:
"* While the majority of respondents (59%) indicated security is a key part of their solution, only 10 percent of respondents reported that their general management perceives security as a business enabler.
* While 91 percent of respondents indicated they have a comprehensive IT disaster recovery plan in place, only half (51 percent) of respondents took into account personnel within their business continuity plans.
* One third (32 percent) of respondents felt that security technologies acquired by their organizations were not being utilized effectively.
* Only one quarter (26 percent) of respondents felt that their strategic and security technology initiatives were well aligned.
* Identity management and vulnerability management are the two most common technologies that financial services are piloting or intend to deploy over the coming 18 months.
http://www.deloitte.com/dtt/research/0,2310,sid%253D1013%2526cid%253D48978,00.html

The Business Roundtable called for software developers and end users to share responsibility for cybersecurity. They provided a framework in which this could take place, including:
"Information security requires CEO attention in their individual companies and as business leaders seeking collectively to promote the development of standards for secure technology.
* Boards of directors should consider information security an essential element of corporate governance and a top priority for board review.
* IT suppliers and end-users of these products and services have a shared responsibility for improving cyberspace security.
* The Federal government plays an important collaborative role in information security by sharing information about threats and vulnerabilities, helping companies overcome legal barriers and encouraging appropriate corporate actions.
* Public policy initiatives on cyber security should take a balanced and comprehensive approach that reflects the shared responsibility of end-users and IT suppliers.
* Market solutions to cyber security are preferred over statutory and regulatory mandates.
* Public disclosure of corporate information security practices should be voluntary. "
http://www.businessroundtable.org/newsroom/Document.aspx?qs=55E6BF807822B0F12D0469167F75A70478252

The European Information Society Group studied the need for investigation and enforcement skills in law enforcement, citing the automation of old crimes. http://www.eurim.org.uk/activities/ecrime/e_crime.htm also http://www.ippr.org.uk/

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9. Finance

The US Treasury designated six individuals and two associated companies that acted for or on behalf of Saddam Hussein's son Uday. They are Asil Sami Mohammad Madhi Tabrah, Adib Shaban Al-Ani, Dr. Sahir Berhan, General Maki Mustafa Hamudat, Roodi Slewa, Nabil Victor Karam, Trading and Transport Services Company, Ltd, and Alfa Company Limited For International Trading and Marketing. http://www.treas.gov/press/releases/js1600.htm

Switzerland and the EU reached agreement on a series of treaties that will implement a tax deal that provides for a savings account withholding tax transferred in lump sums to the EU while maintaining Switzerland's strict bank secrecy laws. The agreements will also enhance cooperation against fraud and in other areas.

The Washington Post reports "US Raids 17 Businesses That Send Cash Abroad: Effort to Curb Terrorism Hurts Immigrants, Some Critics Say" by Mary Beth Sheridan, May 18. http://www.washingtonpost.com/ac2/wp-dyn/A34538-2004May17?language=printer

Note the Feature Article below for a review of Saudi Arabia and terrorist financing.

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10. Human Rights

The US government issues two reports last week. The Department of Justice issued its first annual "Report to Congress on US Efforts to Combat Trafficking in Persons" and Department of State released "Supporting Human Rights and Democracy". The latter report covers US actions in improving human rights around the world. Its release had been delayed following the Iraqi prison abuse scandal. http://www.usdoj.gov/trafficking.htm http://www.state.gov/g/drl/rls/shrd/2003/

The Permanent Forum on Indigenous Issues is drafting an international instrument to insure fundamental rights and freedoms for indigenous peoples. http://www.un.org/esa/socdev/unpfii/

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11. Law and Legal Issues

Kamran Atif has been arrested in Pakistan after a shootout with police where he was wounded. He is suspected of membership in al-Alami and of attempting to assassinate President Musharraf in 2002 with a car bomb.

Mohamed Ayat, Samir Mahdjoub ("Sami Menardo"), Redouane Zenimi, ("Bachir") and Francisco Garcia Gomez were arrested in Spain, accused of links to al Qaeda.

Marwan Barghouti, a prominent Palestinian politician and leader of Fatah, was found guilty of five murders of Israeli civilians during the intifada. Sentencing will be on June 6. http://www.haaretz.com/hasen/pages/ShArt.jhtml?itemNo=429965&contrassID=1

Manuel Contreras, former head of Chile's secret police, has been sentenced to 15 years prison for the disappearance and death of journalist Diana Aaron in 1974. He had previously been convicted of killing a former foreign minister.

The Dublin and Monaghan bombings inquest reached a verdict of unlawful killing. The incidents occurred on May 17, 1994, when four car bombs killed 34 people. http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/3733111.stm

The case against environmental group Greenpeace for boarding a ship to protest illegally cur Amazonian mahogany was dismissed by a US federal judge. The US attorney general had used an 1872 "sailor mongering" law, last enforced in 1890, to bring the prosecution. http://ibb7.ibb.gov/newswire/389da964.html, http://www.greenpeace.org/international_en/news/details?item_id=479599

Zachary Keith Hill was sentenced in US court to 46 months in prison for a phishing scheme. http://www.usdoj.gov/opa/pr/2004/May/04_crm_336.htm

Anis Jaradat ("The Engineer"), an Islamic Jihad commander, was sentenced in an Israeli military court to 35 life terms for recruiting suicide bombers.

Brandon Mayfield, arrested in the US in connection with the Madrid bombings, has been released but is still continued a material witness. http://www.ord.uscourts.gov/Mayfield/mayfield.htm

Mohammed Rais was sentenced to seven years prison by an Indonesian court for transporting chemicals used in the Marriott hotel bombing last August.

Ammari Saifi ("Abdrrezak al Para") was arrested in Chad in connection with kidnapping 32 Europeans travelling in southern Algeria in May 2003.

Tarek al-Zomor has been ordered released by Egyptian court after he served his 22-year sentence for conspiracy, membership of Islamic Jihad and the planning of the murder of President Anwar Sadat. The interior ministry may appeal this release.

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12. Transportation

The Department of Homeland Security (DHS) today issued Security Directives (SD) to all passenger rail owners/operators require rail operators:
"1. Rail owners/operators must designate coordinators to enhance security-related communications with the TSA.
2. Passengers and employees will be asked to report unattended property or suspicious behavior.
3. At certain locations, operators will be required to remove trash receptacles, except clear plastic or bomb-resistant trash containers.
4. When needed, canine explosive teams may be utilized to screen passenger baggage, terminals and trains.
5. Facility inspections will be conducted by rail operators for suspicious or unattended items.
6. Rail operators will ensure that security is at appropriate levels consistent with the DHS established threat level." http://www.dhs.gov/dhspublic/display?content=3572

The EU has approved a controversial airline passenger information sharing program with the US. http://europa.eu.int/comm/internal_market/privacy/docs/wpdocs/2004/wp87_en.pdf
http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/04/648&format=HTML&aged=0&language=EN&guiLanguage=en

The US General Accounting Office testified on "Aviation Security: Challenges in Using Biometric Technologies" raiding concerns of how the technology will be used, cost-benefit analysis, and the trade-offs between security and its impact on privacy and convenience. http://www/.gao.gov/cgi-bin/getrpt?GAO-04-785T

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13. Weapons of Mass Destruction

Iran has delivered the initial declaration under the Additional Protocol to its Nuclear Proliferation Treaty safeguards agreement to the International Atomic Energy Agency. http://www.iaea.org/NewsCenter/MediaAdvisories/2004/medadvise200408.html

"Guidance for HIV/AIDS Interventions in Emergency Settings" addresses effective interventions in conflict situations and natural disasters. http://www.unfpa.org

Research from the University of Liverpool suggests that the Black Death was an emergent viral disease that could be lying dormant and re-emerge at any time. http://www.liv.ac.uk/newsroom/press_releases/2004/05/black_death.htm

The May issue of The Scientist focuses on biosecurity, including handing and detection of agents, high-risk toxins, and related areas.
http://www.the-scientist.com/yr2004/may/index_040524.html (registration required)

A UK Commons committee on defense exports found that certificates meant to prevent misuse are worthless. http://www.publications.parliament.uk/pa/cm200304/cmselect/cmdfence/390/39002.htm

The US Senate approved funding of $5.6 billion over ten years for "Project Bioshield" to help develop drugs and vaccines to combat possible attacks using unconventional weapons. http://www.congress.gov/cgi-bin/bdquery/z?d108:S.15:

US Customs and Border Protection delayed programming changes for the Prior Notice Bioterrorism requirements in order to continue testing. This may not delay the final enforcement deadline of August 12. These changes will make the failure to submit all mandatory data elements a cause for Automated Broker Interface rejection. http://www.cbp.gov/xp/cgov/import/commercial_enforcement/bioterrorism/BTAdelayed.xml

The US General Accounting Office found that Army internal controls over foreign military sales are inadequate and can permit unauthorized shipments of classified items. http://www/.gao.gov/cgi-bin/getrpt?GAO-04-327
In another report they found that "NRC [Nuclear Regulatory Commission] Needs to More Aggressively and Comprehensively Resolve Issues Related to the Davis-Besse Nuclear Power Plant's Shutdown". http://www/.gao.gov/cgi-bin/getrpt?GAO-04-415

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14. Recently Published

Maria Hsia Chang "Falun Gong: The End of Days" Yale University Press

Richard Ben Cramer "How Israel Lost: The Four Questions" Simon and Schuster

Alexandra Fuller, "Scribbling the Cat: Travels With an African Soldier" Penguin Press

Erich Krauss with Alex Pacheco, "On the Line: Inside the US Border Patrol" Kensington Books

James Lilley with Jeffrey Lilley, "China Hands: Nine Decades of Adventure, Espionage and Diplomacy in Asia" Public Affairs

Andrew Lockhart, "Network Security Hacks: 100 Industrial-Strength Tips and Tools" O'Reilly

Christopher Reuter, "My Life is a Weapon: A Modern History of Suicide Bombing" Princeton University Press

Peter Robb, "A Death in Brazil: A Book of Omissions" Henry Holt, Bloomsbury

Susan Scott and Christopher Duncan, "Return of the Black Death", Wiley

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FEATURE ARTICLE: Saudi Arabia and Terrorist Financing

Saudi Arabia borders the Persian Gulf and the Red Sea, north of Yemen. The modern kingdom was founded when Abd Al-Aziz bin Abd al-Rahman Al Saud captured Riyadh in 1902 and subsequently unified the Arabian Peninsula. Oil was discovered in the 1930s and transformed the economy.

Today the royal House of Saud controls the largest volume of petroleum in the world, more than a quarter of the proven reserves, and is the largest exporter with a leading role in the Organization for Petroleum Exporting Countries (OPEC). It accounts for about three-quarters of budget revenues, 45 percent of GDP, and 90 percent of export earnings.

Socially, one of the significant side effects of the oil industry has been the presence of roughly 4 million foreign workers, in a total population of just over 24 million. The presence of foreign corporations and foreign troops, supporting a shared desire for stability, is controversial and has been one of the motivations behind terrorist activities including foreign embassy and residential bombings. Foreign ownership has lessened and the US, with a dominant military presence since 1991, is withdrawing almost all its troops.

In common with other governments of the Middle East and those highly dependent on natural resources, the government closely controls all economic and social sectors. In the face of economic realities and emerging public dissent, these controls have slowly begun to ease. The government has privatized or is in the process of privatizing the telecommunications and electricity industries, has somewhat moderated strict media controls, and has put into place a new criminal justice system that bans torture and provides some other human rights. These actions help improve governance which, according to the World Bank's "Better Governance for Development in the Middle East and North Africa" report, could one percentage point per year in economic growth.

Another area of good governance that Saudi Arabia has implemented involved more control: control of financial institutions. The International Monetary Fund (IMF) Article IV review of 2003 found great improvements:
"Directors commended the authorities for their effective supervision of the banking system, which has resulted in the development of well-managed, profitable, and financially sound institutions. The ongoing Financial Sector Assessment Program (FSAP) will help identify a framework for any further needed reform. The improved legal framework, the development of new instruments, and the opening of the market to foreign banks should help to deepen the financial market and stimulate financial sector growth. Directors welcomed the establishment under the supervision of the Saudi Arabian Monetary Agency of a framework for combating money laundering, and the commissioning of a Financial Intelligence Unit in the Ministry of Interior and an inter-ministerial committee to coordinate anti-money laundering measures."

Such financial controls were put in place not least because 15 of the 19 hijackers involved in the September 11 attacks were Saudi nationals and significant sources of funding for the attacks came from individuals connected with Saudi Arabia. To combat terrorist financing and money laundering, Saudi Arabia passed an Anti-Money Laundering Law, issued new Rules Governing the Opening of Bank Accounts and General Operational Guidelines, instituted training and international cooperation programs, and updated other banking rules in accordance with the FATF recommendations. These affect the ten commercial banks operating inside the country, all as conventional not Islamic institutions. Hawala transactions outside banks or licensed money exchange vendors are illegal.

One of the most important initiatives Saudi Arabia has taken is control of charitable organizations. They put in place strict new licensing procedures. New requirements in place force all transactions to be in the form of checks payable by the first beneficiary and deposited in a Saudi bank so there can be a complete audit trail. Even ATM and credit card transactions are forbidden. In addition, charitable organizations must open accounts in Saudi Riyals and are not allowed to transfer overseas funds from these accounts.

The Saudi Arabian Monetary Agency (SAMA) oversees this and must approve new accounts. SAMA rules for opening new accounts follow standard international procedures and oversight, including customer identification and reporting requirements. These measures are still being implemented and some significant issues remain. For instance, the definition of a charity is not finalized, pending FATF guidance. Similarly, the ability of a suspect institution (and affiliated individuals) to simply stop calling itself charitable remains a potential loophole. In addition to SAMA, a royal decree established the National Saudi Society for Relief and Charitable Works Abroad. This organization takes over all overseas relief work in a move intended to end accusations that Saudi donations end up in the hands of Islamic militants.

A number of cases in which Saudi Arabians have been connected to terrorist financing are under investigation, including those associated with Riggs Bank discussed last week. In this connection, Al-Haramain Islamic Foundation offers a useful case study.

Al-Haramain is a major Islamic charity with headquarters in Riyadh. It was founded by a Saudi government religious official and managed by the Ministry of Islamic Affairs. An audit of headquarters did not reveal ties to terrorist financing but this was not the case with four (of as many as fifty). Saudi and US officials took joint action against the Indonesian, Kenyan, Tanzanian and Pakistani in January this year.

In describing the basis for designating these four branches as providing financial, material and logistical support to terrorism, the US Treasury found that money donated to Al-Haramain in Indonesia "has provided financial support to al-Qaida operatives in Indonesia and to Jemaah Islamiyah (JI). According to a senior al-Qaida official apprehended in Southeast Asia, Omar al-Faruq, AHF was one of the primary sources of funding for al-Qaida network activities in the region."

In Kenya, it was reported that "As early as 1997, U.S. and other friendly authorities were informed that the Kenyan branch of AHF was involved in plotting terrorist attacks against Americans. As a result, a number of individuals connected to AHF in Kenya were arrested and later deported by Kenyan authorities". And further, "In August 1997, an AHF employee indicated that the planned attack against the U.S. Embassy in Nairobi would be a suicide bombing carried out by crashing a vehicle into the gate at the Embassy. A wealthy AHF official outside East Africa agreed to provide the necessary funds. Information available to the U.S. shows that AHF was used as a cover for another organization whose priorities include dislike for the U.S. Government?s alleged anti-Muslim stance and purposed U.S. support for Christian movements fighting Islamic countries". Other plans related to assassinations were also detected as well as connections with Wadih el-Hage, a leader of the East African al-Qaida cell and personal secretary to Usama Bin Laden.

In Tanzania, " a former AHF official in Tanzania met with another conspirator to the [embassy bombing] attacks and cautioned the individual against disclosing knowledge of preparations for the attacks. Around the same time, four individuals led by an AHF official were arrested in Europe. At that time, they admitted maintaining close ties with EIJ and Gamma Islamiyah." Furthermore, "In early 2003, individuals affiliated with AHF in Tanzania discussed the status of plans for an attack against several hotels in Zanzibar. The scheduled attacks did not take place due to increased security by local authorities, but planning for the attacks remained active".

In Pakistan, they report that "Sometime in 2000, an AHF representative in Karachi, Pakistan met with Zelinkhan Yandarbiev. The U.S. has designated Yandarbiev, and the 1267 Committee has included him on its list because of his connections to al-Qaida. The AHF representative and Yandarbiev reportedly resolved the issue of delivery to Chechnya of Zenit missiles, Sting anti-aircraft missiles, and hand-held anti-tank weapons." In addition to Chechen separatists they were linked with the Taliban, Makhtab al-Khidemat (MK), and Lashkar E-Taibah (LET). Ties with al-Qaida reportedly include a former employee detained at Guantanamo Bay , another identified as an alleged al- Qaida member planning to carry out operations in the United States, and others connected to smuggling operations.

With measures now in place in Saudi Arabia and continued international cooperation, it is less likely that such activities will continue to such an extent.

Further Reading:

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