Financial Systems Key To Fighting Terrorism, Weapons Proliferators

By Peggy B. Hu
Washington File Staff Writer

Washington - Since the terrorist attacks of September 11, 2001, the Treasury Department has come to play a vital role in fighting threats to national security, Under Secretary of the Treasury for Terrorism and Financial Intelligence Stuart Levey says.

"The authorities that the Treasury has at its disposal are among the rare tools short of military force that we can use to exert leverage when traditional diplomatic options are exhausted," Levey said in remarks before the American Enterprise Institute for Public Policy Research September 8. "They allow the U.S. government to bring concentrated pressure to bear on an otherwise unresponsive threat, demonstrating to the world that failure to abide by internationally accepted norms of behavior bears real consequences."

In particular, Levey said, the Treasury Department's Office of Terrorism and Financial Intelligence marshals the department's policy, enforcement, regulatory and intelligence functions "to sever the lines of financial support to international terrorists, WMD proliferators, narcotics traffickers, and other threats to our national security.

"There are financial networks that underlie all of these threats. Those networks are sources of valuable intelligence; they are also vulnerabilities we can exploit," he said.


Levey cited the work done by the Treasury Department's Office of Intelligence and Analysis as a critical component in the fight against terrorists, WMD proliferators and other criminals.

"Money trails don't lie. Financial intelligence is uniquely reliable; it allows us to track threats, as well as to deter and disrupt them," he said.

Another effective tool in the War on Terror is the Terrorist Finance Tracking Program, Levey said.

According to the under secretary, this program has been "instrumental in identifying and capturing terrorists and their financiers, and in attacking terrorist-supporting charities."  As an example, he cited the use of subpoenaed data provided by the Society for Worldwide Interbank Financial Telecommunication in the investigation that culminated in the capture of Hambali, Jemaah Islamiyya's operations chief.


One area in which the Treasury Department has made "dramatic progress" is in combating terrorist abuse of charities, according to Levey.

"Prior to 9/11 and even afterwards, terrorists used charities as safe and easy ways to raise and move large sums of money," he said.

According to Levey, the Treasury Department has designated more than 40 charities worldwide as supporters of terrorism, including several U.S.-based charities such as the Holy Land Foundation, the Global Relief Foundation, the Benevolence International Foundation, the Al Haramain Islamic Foundation and the Islamic African/American Relief Agency.


Although combating terrorism financing is a top priority, Levey said, his office has made progress on other fronts as well.

"Using a wide range of tools, we have helped shut down the networks of Colombian and other foreign drug kingpins; targeted Iranian, Syrian, and North Korean companies involved in WMD [weapons of mass destruction] and missile proliferation; financially isolated key Syrian regime members; and struck a deep blow to the North Korean government's illicit financial network," he said.


The Treasury Department has taken two steps specific to North Korea, according to Levey.

Executive Order 13382 authorizes the Treasury and State departments to target "key nodes" of WMD and missile proliferation networks, including their suppliers and financiers. Under this executive order, the United States in October 2005 cited eight North Korean entities fore their involvement in the proliferation of weapons of mass destruction. The action freezes any assets the entities may have under U.S. jurisdiction and prohibits all transactions between the designated entities and any U.S. citizen. (See related article.)

Using an authority provided in Section 311 of the USA PATRIOT Act, the Treasury Department also designated the Macau-based Banco Delta Asia (BDA) as an entity of "primary money laundering concern." The designation prohibits U.S. financial institutions from directly or indirectly establishing or administering any correspondent account in the United States for Banco Delta Asia. (See related article.)

"BDA was a willing partner, actively helping North Korean agents conduct surreptitious, multimillion dollar cash deposits and withdrawals without questioning the basis of these transactions," Levey said.


With respect to Iran, the Treasury Department also has taken recent steps to combat that country's support for terrorism.

On September 8, the Treasury Department issued an order prohibiting all transactions between the U.S. financial system and Bank Saderat, one of the largest Iranian state-owned banks.

"This bank, which has approximately 3,400 branch offices, is used by the Government of Iran to transfer money to terrorist organizations," including Hezbollah, Hamas, the PFLP-GC and the Palestinian Islamic Jihad, Levey said.

Hezbollah uses Saderat "to send money to other terrorist organizations as well," he said. "We will no longer allow a bank like Saderat to do business in the American financial system, even indirectly."

The United States also has taken action under Executive Order 13382 against two Iran-based financial companies, Bayt al-Mal and the Yousser Company, which function as Hezbollah's "unofficial treasury," Levey said.

"Institutions considering dealing with these two entities are now on notice as to their true character," he said.

For more information on U.S. policies, see Terrorist Financing, Response to Terrorism and Arms Control and Non-Proliferation.

The full text of Levey's remarks, as prepared for delivery, and a press release on Iran's Bank Saderat are available on the Treasury Department's Web site.