WASHINGTON, 18 October — A report released yesterday by a prominent foreign policy organization in New York says the Bush administration will fail in its efforts to cut off funds for international terrorism until it established closer working relations with Saudi Arabia and other governments in the region.
The report by New York-based Council on Foreign Relations notes that governments in the Gulf region need to keep a closer eye on citizens’ support to terrorism funding.
The report faults the Bush administration for not using the full power of US influence and laws to pressure other governments to combat terror financing.
"Significant funds have come from pockets of wealth in the Arab world, such as the Gulf states, Egypt, and elsewhere. Other funds have been raised in South Asia, Europe, the Americas (including the United States), Africa, and Asia. Recent reports suggest that Al-Qaeda may now be devoting increased resources to its fund-raising activities in Southeast Asia, which would be a cause of significant concern. Additionally, in Asia and elsewhere, Al-Qaeda has focused efforts in recent years on expanding its system of affiliates and surrogate organizations, such as Laskhar-e-Jihad and Jemaah Islamiyah, many of which have independent financial support networks."
Once raised, Al-Qaeda’s money is moved through a similarly diverse set of mechanisms. The first, and most simple, is the highly efficient global financial system, including the interconnected network of banks and other financial institutions that undergird the global economy, says the report. The report says regional banking centers of the Gulf and Middle East — generally ignored repeated calls by the international community to build anti-money laundering regimes consistent with international standards. Similarly, banking systems that have been major recipients of Al-Qaeda’s funds — most notably in Pakistan while the Taleban ruled neighboring Afghanistan — have also had weak or nonexistent anti-money laundering regimes.
The report ignores, however, clampdowns in the area imposed since Sept. 11. In Saudi Arabia, for example, money transfers of over 10,000 riyals ($2,600) must be officially registered by the bank when the transaction is made.
The report states that Al-Qaeda did not limit itself to regional money centers. It took advantage of the globalizing financial system to move its money through banks in virtually every corner of the world, including offshore jurisdictions long known for providing bank secrecy. "Al-Qaeda also abuses the Islamic banking system, an entirely legitimate form of investment and finance that abides by Shariah," notes the report.
"Significantly, Al-Qaeda also makes good use of the ancient hawala (or hundi) underground banking system, which allows money transfers without actual money movement, or any wire transfer. There is nothing inherently illegitimate about the hawala system — it offers critically needed financial services in many remote corners of the globe, and is used extensively by millions of law-abiding persons... But its nature also makes it particularly susceptible to abuse by terrorists and other criminals."
Al-Qaeda also uses its network of businesses and charities as covers to move its funds, says the report.
