Policy & Research Forum
October 7, 2008
Moderated by:
Frank Cilluffo
Director, HSPI
Featuring:
Douglas Farah
co-editor, The Counterterrorism Blog Investigative Consultant
Nine/Eleven Finding Answers Foundation
former Investigative Reporter, Washington Post
Stephen Kroll
Scholar-In-Residence, School of International Service, American University
former Chief Counsel
Financial Crimes Enforcement Network Department of the Treasury
Dr. Matthew Levitt
Director, Stein Program on Counterterrorism and Intelligence
The Washington Institute for Near East Policy
Jonathan Winer
Senior Vice President, APCO Worldwide
former Deputy Assistant Secretary of State for International Law Enforcement
Targeting of terrorist and their supporters’ financial assets has proved to be one of the most effective non-kinetic actions undertaken by the U.S. government and international community to counter terrorism. With a new administration entering office in January, important questions must be asked: What should its counterterrorism priorities be? How can countering terrorist financing as an instrument be better integrated into an overall campaign against terrorist organizations? How do we better engage the international community and organizations regarding terror financing? Our distinguished panel answered these and other questions regarding targeting global terrorism finances, and its role in a broader counterterrorism strategy for the incoming administration.
On October 7, 2008, the Homeland Security Policy Institute hosted a forum discussing terrorist finances. The event included Douglas Farah, a consultant and writer on terrorist finance and national security issues; Stephen Kroll, former Chief Counsel of the Financial Crimes Enforcement Network of the Department of the Treasury; Matthew Levitt, senior fellow at The Washington Institute for Near East Policy; and Jonathan Winer, Senior Vice President in the Washington office of APCO Worldwide. The event was moderated by Frank Cilluffo, Director of the Homeland Security Policy Institute.
In his opening remarks, Mr. Cilluffo outlined the importance of understanding terrorist finances, and how to use them against terrorists. The goal of the forum: to trigger a dialogue and debate on a subject that has been almost completely overlooked.
Douglas Farah began with a discussion about failed states. Some failed states actually run effectively, but in a way closer to organized crime than a functioning state. They get their money in a similar fashion. One example of this is the Taliban using opium in Afghanistan for funding terrorist activities. Jonathan Winer also explored this point, saying that “every failed state is a blind area” and this makes money transfers in this area harder to see and seize. He recommended a universal marking and labeling system so that financial institutions in the United States and other countries can easily identify bad money.
Steven Kroll further discussed the importance of terrorist finances by revealing aspects of which do not immediately jump to mind. Although some would think that the cost of organizing a terrorist attack like 9/11 are small, estimates are that the Taliban uses $100 million to support “running the madrassas, the training camps, and the families of martyrs.” He also pointed out that although tracking wire transfers could lead to disrupting terrorist financing networks, government agencies are not organized enough to do this effectively.
Matthew Levitt reminded the forum that although interrupting terrorism financial networks is an important facet of counter terrorism, “we must use combating terror financing as one tool among many.” The United Nations, for example, has a hard time looking past the threat of Al-Qaeda to similar terrorist groups that are funded by the same Islamic radicals. Also, there are very few countries besides the United States and the United Kingdom that take financial intelligence seriously. What the United States needs to do is get the United Nations and more countries in Europe to improve their financial intelligence. Even if small amounts of money can be seized from terrorist organizations, it “shows them you’re on their tail, and that is still a victory.”
The discussion that followed emphasized the points of marking checks and bills, a policy that has been implemented in Iraq with success, and becoming more familiar with Sharia Banking (banking that follows Islamic law). The forum closed with a short discussion on how tracing terrorist financing could lead to prosecution by the International Criminal Court.
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Event Resources
As part of the October 7, 2008 HSPI Policy & Research Forum, “Targeting Terrorist Finances,” the Homeland Security Policy Institute prepared a resource page where you will find some useful links to recent reports, government agencies and other relevant information. Speakers featured at this event include: Douglas Farah of the Nine/Eleven Finding Answers Foundation, Professor Stephen Kroll of American University, Dr. Matthew Levitt of the Washington Institute for Near East Policy, and Jonathan Winer of APCO Worldwide.
Reports & Remarks
The Money Trail: Finding, Following, and Freezing Terrorist Finance, by Matthew Levitt and Michael Jacobson, The Washington Institute for Near East Policy (November 2008)
“U.S. and international efforts to combat the financing of terrorism are an underappreciated and little-understood aspect of the global counterterrorism campaign. But since terrorist attacks are often inexpensive to mount -- the September 11 attacks were staged for less than $500,000 -- why should governments devote so much attention to tracking and severing the money trail for terrorism? In this...Washington Institute Policy Focus, senior fellows Matthew Levitt and Michael Jacobson...explore the critical role that money plays in the success of terrorist organizations, and why countering financial flows must be an integral part of the U.S. government's counterterrorism strategy.”
Extremism’s Deep Pockets: The Growing Challenge of Fighting Terrorist Financing, by Michael Jacobson, The Politic (17 February 2008).
“The United States and its allies have made considerable progress in tackling terrorist financing since 9/11 -- one of the few areas of success in the global counterterrorism efforts. Serious challenges have emerged, however, which could threaten the record to date. As governments have cracked down on terrorist financing, the growing number of terrorist cells and organizations have found new ways to raise, store, and move funds. Keeping pace with these rapid changes is an uphill struggle for government bureaucracies. International cooperation on these issues also continues to decrease as 9/11 grows more distant. Additionally, in spite of some positive steps taken by the Persian Gulf countries, the region remains a key source of terrorist funds, and European efforts in this area are still uneven. Addressing all of these issues will be essential for continued success in combating terrorist financing.”
Al-Qa’ida’s Finances: Evidence of Organizational Decline?, by Matthew Levit, Counter-Terrorism Sentinel (April 2008).
“Speaking before congress in February, Director of National Intelligence (DNI) Michael McConnell commented that during the previous 12-18 months the intelligence community noticed that "al Qaeda has had difficulty in raising funds and sustaining themselves." ...Despite being short on cash, however, al-Qa'ida and like-minded global jihadist terrorist groups still pose an acute threat. Authorities have foiled recent terrorist plots in Germany, the United Kingdom and Spain; counter-terrorism officials in France neutralized seven operational cells in the past year and officials there stress that France remains "at the top of the list" of al-Qa'ida targets; and the director of the National Counter-Terrorism Center recently warned that "the al Qaeda threat still looms large."”
The Criminal-Terrorist Nexus and its Pipelines, by Douglas Farah, The NEFA Foundation (14 January 2008).
“This report is adapted from a presentation NEFA Senior Investigator Doug Farah delivered to the U.S. Special Operations Command in Tampa, Florida. In March 2000, Farah was named West Africa bureau chief for The Washington Post—traveling and writing extensively about the brutal civil wars in Sierra Leone and Liberia, and the interlocking networks of agents which profited from those conflicts and the diamonds-for-weapons trade.”
What the FARC Papers Show Us about Latin American Terrorism, by Douglas Farah, The NEFA Foundation (1 April 2008).
“In 1990, on contract with The Washington Post, Douglas Farah moved to Bogota, Colombia, to cover the exploding drug war in the Andean region. Working in Colombia, Venezuela, Ecuador, and Bolivia, he chronicled the rise and fall of the Medellin cartel, and its leader, Pablo Escobar. He also wrote extensively about the rise of the Cali cartel, the move by Colombian drug traffickers into heroin, and the growing alliance between Colombian and Mexican drug mafias. He now works as a Senior Investigator for the NEFA Foundation.”
The War on Terrorism: The Financial Front, Council on Foreign Relations (10 January 2007).
This is a transcript of an event hosted by the Council on Foreign Relations in New York, New York, featuring Sue Eckert formerly the assistant secretary of Commerce in the Clinton administration; John Taylor, formerly U.S. undersecretary of the Treasury in charge of international affairs; and David Aufhauser former general counsel to the U.S. Department of Treasury. The project was directed by Lee Wolosky.
The State Department Role in Combating the Financing of Terrorism, E. Anthony Wayne, Assistant Secretary for Economic and Business Affairs, U.S. Department of State, testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, (4 April, 2006).
“In my remarks today, I would like to review in general terms what we have accomplished since 9/11 in the international fight against terrorist financing. I would also like to sketch for you the role of the Department of State in this effort, and to update the committee on recent regional developments as well as those in key multilateral institutions. Finally, I would like to say a few words on what we see as some of the key challenges moving forward.”
Terrorist Financing: U.S. Agency Efforts and Inter-Agency Coordination, Congressional Research Service RL33020 (3 August 2005).
“Stopping the ability of terrorists to finance their operations is a key component of the U.S. counterterrorism strategy. To accomplish this, the Administration has implemented a three-tiered approach based on (1) intelligence and domestic legal and regulatory efforts; (2) technical assistance to provide capacity-building programs for U.S. allies; and (3) global efforts to create international norms and guidelines. Effective implementation of this strategy requires the participation of, and coordination among, several elements of the U.S. Government. This report provides an agency-by-agency survey of U.S. efforts. This report will be updated as events warrant.”
Terrorist Financing: The 9/11 Commission Recommendation, Congressional Research Service RS21902 (25 February 2005).
“Although efforts to seize terrorist funds have met with some success, in July 2004, the 9/11 Commission asserted that the likelihood of being able to continue freezing funds may diminish as terrorists seek increasingly more informal methods of earning and moving money. The financial support of terrorism involves both earning funds, through legal and illegal means, and the illicit movement of money to terrorist groups. The Commission recommended that the U.S. government shift the focus of its efforts to counter terrorist financing from a strategy based on seizing terrorist assets to a strategy based on exploiting intelligence gathered from financial investigations. This report will be updated as events require.”
International Convention for the Suppression of the Financing of Terrorism, United Nations (1999).
This Convention “[r]equires parties to take steps to prevent and counteract the financing of terrorists, whether direct or indirect, through groups claiming to have charitable, social or cultural goals or which also engage in illicit activities such as drug trafficking or gun running; [c]ommits States to hold those who finance terrorism criminally, civilly or administratively liable for such acts; and [p]rovides for the identification, freezing and seizure of funds allocated for terrorist activities, as well as for the sharing of the forfeited funds with other States on a case-by-case basis. Bank secrecy is no longer adequate justification for refusing to cooperate.”
News and Resource Links
Counterterrorism Blog
Founded by Andrew Cochran—and counting Douglas Farah as a co-editor and Jonathan Winer and Matthew Levitt among its contributors— “the Counterterrorism Blog, [is] a unique, multi-expert blog dedicated to providing a one-stop gateway to the counterterrorism community. To our knowledge, there has been no such blog on the internet. We envision the blog’s audience to be the policymakers in Congress and the Executive Branch, as well as serious students elsewhere, who want to visit a single site to access (1) overnight and breaking news, with realtime intel and commentary by operational experts ("Contributing Experts"); (2) discussions of long-term trends in counterterrorism; (3) summaries of and discussions about US and international law; and (4) a calendar of upcoming events, hearings, and seminars featuring the Contributing Experts. We want to highlight those experts who are or have been deeply involved in counterterrorism cases, and thus enable them to expand their opportunities to bring their expertise to the attention of policymakers.”
U.S. Government and Inter-Governmental
Office of Terrorism and Financial Intelligence, U.S. Treasury
Office of Terrorism Finance and Economic Sanctions Policy, U.S. Department of State
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Douglas Farah is a consultant and freelance writer on terror finance and national security issues.
He is the author of Merchant of Death: Money, Guns, Planes, and the Man Who Makes War Possible, and Blood from Stones: the Secret Financial Network of Terror. With more than two decades of reporting experience, Mr. Farah has held numerous positions with the Washington Post, including as a Washington, D.C. investigative reporter, West Africa bureau chief and staff correspondent for Central America and the Caribbean.
Stephen Kroll is Director of the Master's Degree in International Service Program for mid-career professionals at American University. Professor Kroll served for five and a half years as Democratic Special Counsel to the Committee on Banking, Housing, and Urban Affairs of the United States Senate (2001-07), 11 years as Chief Counsel of the Financial Crimes Enforcement Network of the Department of the Treasury (1990-2001) and two and a half years as Assistant to the Commissioner of Internal Revenue (1984-86). In his work for the Senate, Kroll was instrumental in drafting and managing for the Committee majority the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, and he was part of the team that drafted the Sarbanes-Oxley Act of 2002.
Matthew Levitt is a senior fellow at The Washington Institute for Near East Policy and author of
Hamas: Politics, Charity and Terrorism in the Service of Jihad and Negotiating Under Fire: Preserving Peace Talks in the Face of Terror Attacks. He is also a lecturer in International Relations and Strategic Studies at Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies. From 2005 – 2007, Dr. Levitt served as Deputy Assistant Secretary for intelligence and analysis at the U.S. Department of the Treasury. Previously, he provided tactical and strategic analytical support for counterterrorism operations at the FBI, focusing on fundraising and logistical support networks for Middle Eastern terrorist groups.
Jonathan Winer is a Senior Vice President in the Washington office of APCO Worldwide. 
He previously served as U.S. Deputy Assistant Secretary of State for International Law Enforcement, and served for ten years as Chief Counsel and principal legislative assistant to Senator John F. Kerry. Mr. Winer serves on the Steering Committee of the Transnational Threats Initiative of the Center for Strategic and International Studies. Mr. Winer provides strategic advice to clients regarding a range of issues from financial services regulation to foreign investment and trade, consumer regulations, congressional investigations, data protection, foreign corrupt practices, information security, money laundering, national security and sanctions.
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The HSPI Policy & Research Forum series is designed to spotlight cutting-edge policy solutions and innovative strategies to some of the most pressing national and international concerns. The Forum features leading officials, practitioners and thinkers in a systematic way designed to better highlight their work and promote a dialogue on effective solutions to current issues.
