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Interrupting the Money Flow

U.S. EFFORTS TO combat terrorist financing (CTF) have yielded positive results, but the program could be improved through more international cooperation, greater public awareness, and more adequate funding, according to Matthew Levitt, director of the Stein Program on Counterterrorism and Intelligence at the Washington Institute for Near East Policy.

Levitt, who served as the deputy assistant secretary for intelligence and analysis at the Treasury Department from 2005 to 2007, made his remarks at a House subcommittee hearing; he discussed policy recommendations presented in a Washington Institute study he co-authored called The Money Trail: Finding, Following, and Freezing Terrorist Finances.

The study offers 12 steps to enhance efforts to combat terrorist financing.

“There’s a lot that we can do in our bilateral and multilateral diplomacy to get more countries on board, not only publicly, but—I’d argue more importantly—in terms of the intelligence angle of this to get them on board as well,” Levitt said.

For example, he advised working with partners like the United Nations (UN) to strengthen the list of suspected terrorists by removing those who have died, adding those who should be on the list, and “removing entries too vague to be useful.”

Currently the members of the UN Security Council nominate changes to the list, which study co-author, Michael Jacobson, says can be a political process. “You do something and then it becomes a political kind of trading,” Jacobson told Security Management. “You want to take this person off because they’re dead and then another member state says, ‘Okay we’ll agree to that but only if you let this person go that we want to nominate.’”

For this reason, Jacobson says, the study recommends allowing the nonpolitical monitoring team attached to the United Nations Security Council Committee 1267, which is also known as the Al Qaeda and Taliban Sanctions Committee, to nominate changes to the UN list.

In suggesting ways in which the U.S. government may be able to gain cooperation with regard to groups that it may not agree are terrorists, Levitt raised the issue of drug trafficking. “The EU doesn’t consider Hezbollah a terrorist group and may not be as eager to work with us on Hezbollah issues as a terrorist target,” Levitt explained, “but they’re very concerned about the flow of drugs and working with them on targets that are related to Hezbollah that are also involved with drugs is an opportunity.”

Not everyone has agreed that U.S. efforts are a success. The Los Angeles Times reported last year that the CTF strategy may have been oversold by the Bush administration and that interagency fighting, deteriorating international relationships, and innovative terrorists were reducing the effectiveness of U.S. efforts to thwart terrorist financing.

Levitt addressed those concerns at the hearing by countering that the metrics often used to measure success—the total amount of money seized or the overall number of terrorist designations—are misleading. He asserted that the most effective target is not at the fundraising end but at the “choke points” critical to laundering and transferring funds. These choke points might include the big financiers or the terrorist organization’s head of finance. Jacobson adds, however, that success in this area is difficult to measure, and there still is no readily agreed upon metric.

Some of the evidence is anecdotal. The study cites correspondence between terrorists, such as a 2005 letter from al Qaeda’s second-in-command, Ayman al-Zawahiri, to the now deceased leader of al Qaeda in Iraq, Abu Musab al-Zarqawi, asking if he could spare $100,000 because “many of the lines have been cut off.”

An example of interagency success cited by Levitt and other panelists is the Iraq Threat Finance Cell (ITFC), a joint Department of Defense (DoD)-Treasury Department counterthreat financing initiative based in Baghdad that one DoD officer called “a remarkable success,” but few details have been released about the effort. In remarks at the Virginia Military Institute last year, Robert Kimmitt, who was then the deputy secretary at the Treasury Department, said, “ITFC analysts and agents assist Coalition Forces in exploiting financial data captured on persons in raids in Iraq and identifying trends and patterns in insurgency financing.”

Jacobson says that while there are not a lot of unclassified examples of the ITFC’s success, the support of legislators, who have access to classified material, is one indication of the group’s effectiveness. Another is that the concept is now being transferred to Afghanistan. And a DoD memorandum issued late last year formally recognized the need to work with other U.S. government agencies and partner nations on CTF.

Levitt noted that while there have been a lot of improvements in cooperation with Arab governments, it is still not at the level where terrorism financing has been effectively cut off in these countries. Saudi Arabia, for example, passed legislation prohibiting Saudi charities from sending funds outside of the kingdom, but it only applies to some charities and not to others.

“The Muslim World League and some of the other large entities based in Saudi Arabia are considered by the Saudi government to be multinational organizations, not Saudi organizations, and are, therefore, not subject to the law,” Levitt said. Jacobson adds that Saudi Arabia is reluctant to take responsibility for these organizations because, while they may be headquartered in the country, they have branches throughout the world.

Kuwait, however, is the Middle Eastern country of greatest concern to Levitt. “There is a counterterror finance piece of legislation pending that I understand the government is wary of putting forth to the parliament for fear that it will not only be instantly rejected but used as a two-by-four with which to hit [the palace] over the head,” he says.

The international financial crisis raises additional concerns for the future of CTF initiatives. “While the financial crisis may dry up some resources of funds for terrorists, proliferators, and insurgents, it will also impact governments’ ability to counter terror finance,” Levitt warned. “We need to make sure successful programs receive the necessary funding to fulfill their critical missions in those respective theaters.”