Counterterror finance bureaucracy useless

May 12, 2011

Terrorism expert Jean Charles Brisard calls the modern system of combating terrorist financing “basically useless”.  Mr. Brisard points out that in the wake of the vast Western bureaucracies and international agreements that cropped up to freeze terrorist assets, the terrorists have simply found other ways to move about their money.

This analysis comes at the end of a Wall Street Journal blog post about the supposedly stronger controls against terrorist financing that were created after 9/11.

Bin Laden may have temporarily caused the collapse of his own financial network after the 9/11 attacks, but he also tangled up the West and its banks in more red tape, and continued to raise funds through zakat and transfer them through hawala.

Here are both sides, although Brisdard only gets two paragraphs at the end:

Though Osama Bin Laden evaded military forces for nearly 10 years, the capability for the U.S. to track, freeze and seize the finances of terrorists increased considerably in that time.

Prior to the Sept. 11, 2001, terror attacks, Bin Laden’s financial empire was described as “elusive and impenetrable.” Since then, international cooperation, a recognition in governments around the world of how terrorism gets its operating funds, and a heavy dose of U.S. legislation and structural changes at the agency level have all contributed to major progress on curbing terrorism financing, experts said.

“Post 9/11, we’ve learned an awful lot about how terror organizations finance themselves, how they select their targets, the importance financial institutions have for them as a target or for growing their enterprises,” said Jack Williams, who is a professor at Georgia State University College of Law/Middle East Institute and a senior managing director at Mesirow Financial Consulting.

For example, there was no office in the Treasury Department that handled financial intelligence before the attacks. Today, the U.S. Treasury’s Office of Terrorism and Financial Intelligence, or TFI, is the only full-fledged intelligence office in a finance ministry in the world.

The office, which pursues a comprehensive approach to combat terrorism financing through intelligence gathering, sanctions enforcement and regulatory action, was created in 2004 under that fiscal year’s intelligence authorization.

“It integrated financial intelligence into Treasury functions,” said Stuart Levey, the former undersecretary of the Treasury for terrorism and financial intelligence who was the office’s first boss. He now is a senior fellow for National Security and Financial Integrity at the Council of Foreign Relations.

“I think that’s a big turning point,” Levey said. An appointee of George W. Bush who was asked to stay on by President Barack Obama, Levey is the architect of the Iran sanctions program, and has been credited by Republicans and Democrats with revolutionizing financial warfare after the Sept. 11, 2001, terrorist attacks.

A Treasury Department fact sheet said the TFI has played a “critical role in U.S. counter-terrorism efforts.”

Source: Treasury DepartmentUnderneath the umbrella of the undersecretary are the four main components: sanctions enforcement through the Office of Foreign Assets Control, intelligence integration at the Office of Intelligence and Analysis, a specific terrorism finance deputy, and the Financial Crimes Enforcement network, which polices money laundering via the Bank Secrecy Act and through provisions of the Patriot Act, which passed Congress post-9/11.

Sanctions enforcement is considered a major success story in fighting the flow of terrorist assets. Using executive orders, legislation and the Kingpin Act, the Treasury has frozen billions of dollars in assets tied to entities it designates as terrorists or drug traffickers, known as “Specially Designated Nationals.” OFAC maintains a list that updates as new names surface, though it has been criticized for how long it takes to remove a name.

The anti-money laundering and counter-terrorism finance provisions of the Patriot Act comprised 46 pages of the 132-page law, and gave regulators a plethora of new tools to track money laundered by terrorists. These included enhanced due-diligence rules that required financial institutions to obtain and disclose key identification details of their customers, report suspicious transactions and bring new industries such as insurance companies and broker-dealers under regulatory scrutiny.

Also after Sept. 11, the U.S. secretly tracked suspected terrorist financing by tapping into a network that handles financial-message traffic run by a Belgian firm known by its acronym, Swift, that contains records of nearly all international transactions.

However, Jean Charles Brisard, an international expert on terrorism finance who wrote one of the first and most exhaustive investigations of the Bin Laden financial network, said terrorism organizations like al Qaeda no longer frequently use the traditional financial system, instead relying on couriers to bring money to operatives. He said the initial moves after 9/11 froze 80% -90% of their funds.

“The terrorist groups do not rely on the system any more. It’s basically useless,” Brisard said.

One comment

  1. […] Jean Charles Brisard has written about counterterror finance bureaucracy, which he considers “basically useless.”  And recent revelations about the federal government’s domestic monitoring policies only […]

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