Adminstration to cut off alternative financing for terrorists

Friday, July 26, 2002

WASHINGTON -- The Bush administration's efforts to cut terrorists off from their sources of financing will focus on alternative means of moving or hiding money, such as diamond trafficking, bulk-cash smuggling, and informal money networks known as hawalas.

That was among the priorities in the administration's 2002 anti-money laundering strategy, an annual report released by the Treasury Department Thursday.

The fight against money laundering gained new urgency after the Sept. 11 attacks and charges that the al-Qaida network uses money from charities, hawalas and front companies to finance its terrorist activities.

With hawalas, money is deposited with a broker in one place and recipients get a code or token that lets them collect the same amount somewhere else. The cash doesn't go anywhere. Reimbursement is based on a system of trust among the network of hawala brokers, often blood relatives.

Jimmy Gurule, Treasury's under secretary for enforcement, said that a sweeping anti- terrorism and money-laundering law enacted last year has made it more difficult for terrorists to use this traditional banking system to move money.

Following the money trail

The report calls on the Treasury and Justice departments to produce a report by March 2003 exploring the extent to which terrorists groups use trade in diamonds, tanzanite, gold and other precious stones and metals to launder money and to finance terrorist activities. The information will be used to come up with a strategy to limit this financing.

`Money laundering involves the movement of profits from drug or arms trafficking, political corruption, prostitution or other illegal activities through a series of accounts or businesses to disguise them as proceeds of legitimate business.

Treasury and Justice also will create and oversee an interagency team to focus the government's efforts and resources against the most significant money-laundering methods, such as people who smuggle bulk cash, Gurule said.

Under the government's Operation Oasis, more than $13 million in bulk cash has been seized since Sept. 11, the report said.

The government also said it would pay closer attention to terrorist groups' use of non-governmental organizations, including charities, to raise funds.

It also plans to examine the extent to which terrorists use the Internet to raise funds. Treasury and Justice will conduct a study on the matter by April 2003.

"There are indications that terrorist groups use the Internet to communicate, to recruit and to raise money for their respective causes," the report said. "As terrorist groups recruit young people, including students, engineers and computer specialists, their use of the Internet to raise funds is likely to increase."


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