FRANKFURT, 25 June 2005 — Arab bankers said yesterday that they had taken effective steps to choke terror funding. They were responding to a US official’s statement urging Arab bankers to step up the fight against terrorist financing.
“Simply put, if we stop the money from getting to terrorist organizations and operations, we can stop terrorism from happening,” Chip Poncy, senior adviser at the US Treasury, told a conference of Arab and European bankers in Frankfurt.
“I know it’s naive to think that we’re going to be successful 100 percent of the time, but we can and we are making a difference,” he said. Poncy praised efforts by Egypt, Lebanon and Gulf states to tackle money laundering and terrorist finance and called for further steps across the region to improve record-keeping and checks on customers, as well as investigation and prosecution.
Middle Eastern and North African bankers interviewed by Reuters said they were already taking effective measures. Abdallah Alla Elmuhtadi Elwaseila, head of the inspection department at Sudan’s central bank, said his country had passed an anti-money laundering law and issued instructions to its 26 commercial banks on how to tighten their rules, including stringent “know your customer” checks for opening new accounts.
Asked about the effectiveness of the rules, introduced two years ago, he said: “Up to now, we didn’t freeze any money. The system is clean.”
He added: “We have no problem there, I assure you. Maybe those people who do money laundering haven’t discovered Sudan.”
Elwaseila said Sudan had replied in full to US inquiries about suspected Al-Qaeda links to a Sudanese bank, Al-Shamal Islamic Bank, and no such links were found. He said Al-Qaeda leader Osama Bin Laden, who was based in Sudan for part of the 1990s, had no funds in the Sudanese financial system.
Other Arab bankers said they had introduced tighter controls to tackle terrorist finance, though some bridled at suggestions they were doing so under US pressure.
“I don’t believe in pressure. Arab banks are voluntarily introducing and developing a real fight against money laundering,” said Joseph Torbey, chairman of the Union of Arab Banks. “This is the major issue in developing modern banking in the Arab world.”
“We don’t take orders from the United States, we take instructions from the central bank,” said Abdulhadi Shayif, general manager of the National Commercial Bank of Saudi Arabia.
R. Seetharaman, acting general manager of Qatar’s Doha Bank, said anti-money laundering controls were a vital but expensive investment. “We live on reputation and goodwill,” he said.
He said the cost of implementing a “minimum system” of controls, including employing and training staff and purchasing software designed to spot suspicious transaction patterns, was around $500,000.
Poncy told the bankers: “This is a lot of work and represents a significant cost not just to the private sector but also to the government.”
But he argued the investment was necessary in order to prevent and investigate terrorism and other crimes, including by helping to track terrorist cells and operatives.