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Cash smuggling update: Saudi Arabia taken at its word

March 9, 2010

Hadn’t you heard?  The Saudi assertion that they have cracked down on bulk cash smuggling is a fact.  Media outlets such as Forbes and Deutsche Welle have credited Saudi Arabia with progress in this area.

But according to a serious report from the Government Accountability Office last fall, the Saudis have never provided actual data on the numbers, for example, of cash seizures by authorities.  The report notes that while the U.S. State Department commended Saudi Arabia for its efforts (and State even removed the goal of cash courier reform from its list of objectives), the Department of Homeland Security was skeptical.  This is relevant because DHS takes the lead for the U.S. on cash courier issues.  The GAO sided with DHS and urged the agencies involved to restore Saudi cash courier reform as a U.S. objective.  Also from GAO:

According to U.S. and Saudi officials, some individuals and multilateral charitable organizations have allegedly increased their use of more informal financial transaction methods, such as couriering cash across borders, in response to Saudi Arabia’s adoption of regulations making transactions in the formal financial sector more challenging. Though Saudi Arabia has implemented cash courier regulations, Saudi officials noted that motivated individuals can circumvent such regulations by moving amounts of cash that are below legal declaration limits. U.S. officials concurred, noting circumvention of regulations as an inherent challenge in regulating the use of cash couriers in any country. U.S. and Saudi officials also cited the prevalent use of cash for transactions as a challenge, particularly in Saudi Arabia. According to these officials, because large numbers of people in Saudi Arabia and the Gulf region use cash, an individual traveling with or declaring large amounts of cash may not raise suspicion. Moreover, challenges associated with preventing the circumvention of cash courier regulations increase during hajj, which, despite efforts by the Saudi government, presents logistical enforcement challenges because of the large number of people involved.

But what’s the big deal?

Well, criminals, terrorist financiers, and sadaqa donors are stuffing couriers’ suitcases full of riyals and sending it overseas with no accountability or transparency.  (Even though we all know that it’s funding awfully nasty activities.)  Now Saudi Arabia supposedly forces the couriers to declare how much money they’re taking abroad.  The parties involved admit these requirements are easily circumvented.  And if DHS is right, the records kept by the Kingdom are either insufficient or are missing entirely.

Yet the media continue to report progress as a fact.

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2 comments

  1. Suppose the Saudis seized say $10 million? What then? It’s peanuts.


    • Fair point. Although $10 m would be a large amount for al Qaeda, you’re right that it is a pittance in Saudi or American terms.

      I think the importance of the seizures has more to do with Saudi Arabia demonstrating its commitment and effectiveness at curtailing terrorist finance.

      The bigger question of Saudi regulation of “charities” doesn’t get nearly enough media coverage. With those we’re talking about billions of dollars.



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