highest. Where sufficient progress is not forthcoming, speak out bluntly, The reaction to the release of the Task Force's initial report was reflective of thenprevailing mindsets. The Saudi Arabian Foreign Minister, Prince Saud al-Faisal, told CNN that the report was "long on accusation and short on documented proof." The Saudi ambassador to the United States, Prince Bandar bin Sultan, said the Task Force report was based on "false and inconclusive information" and "clearly out of touch with current activities." He also maintained that "Saudi Arabia has put into place the tools, resources, laws, and regulations to combat terrorism and terrorist financing" and promised to "prosecute the guilty to the fullest extent of the law." The U.S. Treasury Department's spokesperson called the report "seriously flawed." Meanwhile, the executive branch continued to grapple throughout the fall of 2002 and thereafter with how best to address the problem of Saudi individuals and organizations that it believed to be financing al-Qaeda and other terrorist organizations. In November 2002, a National Security Council Task Force was reportedly prepared to recommend to President George W. Bush an action plan designed to force Saudi Arabia to crack down on terrorist financiers within ninety days or face unilateral U.S. action. During 2002 and into the first few months of 2003, U.S. officials engaged their Saudi counterparts on a sustained basis in Washington and Riyadh—at increasingly high levels, with more intelligence they were prepared to share, and with more aggressive demands. 1 Elsewhere, the reaction to the report was more positive. Members of Congress, for example, broadly endorsed the report and sought to implement certain of its recommendations. On July 30, 2003, a bipartisan group of 111 members of the House of Representatives led by Rep. Jim Davis (D-FL) and including the chair of the International Relations Committee, chair of the Financial Services Committee, chair of the Appropriations Committee, and the vice chair of the Intelligence Committee, wrote to the president to ask that he accept a key recommendation of the Task Force and centralize authority for this issue in the White House. Earlier, on July 16, Rep. Nita Lowey (D-NY) led efforts to increase funding for the Treasury's Office of Technical Assistance, citing a recommendation of our initial report. On November 18, 2003, Senator Arlen Specter (R-PA) cited the findings of our report when introducing the Saudi Arabia Accountability Act of 2003, a bill that would impose certain sanctions on Saudi Arabia unless the president certifies that it is cooperating with U.S. efforts to combat terrorism. Less transparent methods of curtailing terrorist financing were also stepped up, with significant successes. Although these activities are clearly relevant to the subject matter of this report, for obvious reasons they cannot be addressed in a report such as this one, which must necessarily cite only public information and public statements. Perhaps out of concern that more direct public statements would have negatively affected increasingly aggressive private demands, the U.S. executive branch's public statements regarding terrorist financing largely remained unchanged. In public, White House and State Department spokespersons continued to refuse to criticize the job Saudi Arabia was doing to combat terrorist financing; indeed, the same week of public reports concerning the possible imposition by the president of unilateral sanctions, the White House spokesperson maintained that Saudi Arabia was a "good partner in the war on terrorism." For their part, Saudi officials continued to maintain that they were taking all necessary and possible steps to combat terrorism and terrorist financing. The status quo changed on May 12, 2003, when al-Qaeda bombed housing compounds in Riyadh used by U.S. and other foreign residents, prompting more comprehensive Saudi action against terrorism. The need for this action was demonstrated again on November 9, 2003, when a similar al-Qaeda-directed attack took place at another Riyadh housing compound, and on April 21, 2004, when another attack took place in Riyadh, this time against the General Security building. Most recently, at the beginning and end of May 2004, two attacks targeted the Saudi oil industry. They took place in Yanbu and Khobar, respectively, with the latter attack and hostagetaking resulting in twenty-two fatalities.2 2 The strategic decision to launch attacks within Saudi Arabia was apparently controversial within the al-Qaeda movement, in part because of the possible negative impact on fundraising within the Kingdom. The second issue of "The Voice of Jihad," a biweekly online magazine identified with al-Qaeda, contains an October 2003 interview with Abd Al-'Aziz bin ‘Issa bin Abd Al-Mohsen, also known as Abu Hajjer, an al-Qaeda member ranking high on Saudi Arabia's most-wanted list. Abu Hajjer remarked: “Jihad members and lovers of Mujahideen were split: There were those who said we must attack the invading forces that defile the land of the two holy places, and that we must turn the Americans' concerns to themselves and their bases, so they would not take off from there to crush Muslim lands and countries, one by one. There were others who said we had to preserve the security of this base and this country [i.e., Saudi Arabia], from which we recruit the armies, from which we take the youth, from which we get the [financial] backing. It must therefore remain safe. My opinion is midway between the two... It is also true that we must use this country [Saudi Arabia] because it is the primary source of funds for most Jihad movements, and it has some degree of security and freedom of movement. However, we must strike a balance between this and the American invasion of the Islamic world and its [strangling of] the Jihad movement and even other Islamic Public statements and actions by both the United States and Saudi Arabia since May 2003 have evidenced in many respects a more urgent approach to terrorist financing, one that is broadly consistent with our initial report's conclusions, findings, and recommendations. For example, Saudi Arabia has announced a profusion of new laws, regulations, and institutions regarding money laundering, charitable oversight, and the supervision of the formal and informal financial services sector. Significantly, the government also took steps to remove donation boxes from mosques and shopping malls. And, for the first time, Saudi Arabia has subjected its antimoney laundering regime to international scrutiny. Recently, the Financial Action Task Force (FATF)—a thirty-three-member international body dedicated to promulgating international antimoney laundering and counterterrorist financing (AML/CTF) standards-conducted an in-depth review of Saudi Arabia's overall AML/CTF regime. FATF is in the process of completing its assessment and is expected to issue a “summary report" shortly. Early indications suggest that the new Saudi laws and regulations meet or exceed international standards in many respects and will receive a passing grade. While Saudi officials were previously unwilling to acknowledge or address the role government-sanctioned religious messages play in supporting militant Islamic groups, following the May terrorist attacks Saudi officials began to take steps to address the mindset that foments and justifies acts of terrorism. This has included educational reform and steps intended to discipline (or "re-educate") certain extremist Islamic clerics—at least those operating in Saudi Arabia. Several such clerics have publicly dissociated themselves from extremism on statecontrolled television. Most critically, for the first time, the Saudi government decided to use force to hunt-and kill-members of domestic al-Qaeda cells, including, in one case, a financier named Yousif Salih Fahad Al-Ayeeri (aka “Swift Sword”). Actions on this scale were not in evidence prior to the 2003 bombings. The Bush administration acted quickly to take advantage of newfound political will in Saudi Arabia to renew and reinvigorate its own efforts to combat terrorist financing. In August 2003, the United States and Saudi Arabia announced the creation of the Joint Terrorist Financing Task Force, based in Riyadh. Through this Task Force, investigators from the FBI and from the Internal Revenue Service Criminal Investigation Division (IRS-CID) have developed "agent-to agent" working relationships with their Saudi counterparts and, for the first time, have gained direct access to Saudi accounts, witnesses, and other evidence. The pace of joint U.S.-Saudi designations quickened, specifically in respect to efforts to close problematic overseas branches of the sprawling, Saudi-based Al Haramain Islamic Foundation, which Saudi officials estimate was, at its height, raising between forty and fifty million dollars per year. On December 22, 2003, for example, the United States and Saudi Arabia jointly designated Vazir-a nongovernmental organization located in Travnik, Bosniaafter it was determined that it was the reincarnation of the previously designated Al HaramainBosnia. Bosnian authorities then raided and closed this organization. The two governments also designated Safet Durguti, the representative of Vazir. On January 22, 2004, the United States and Saudi Arabia announced a joint decision to refer four additional branches of Al Haramain to the UN's al-Qaeda and Taliban Sanctions Committee (the 1267 Committee). These brancheslocated in Indonesia, Kenya, Tanzania, and Pakistan-had, according to the two governments, provided financial, material, and logistical support to the al-Qaeda network and other terrorist organizations. The United States and Saudi Arabia announced on June 2, 2004 the designation of five additional branches of Al Haramain located in Afghanistan, Albania, Bangladesh, Ethiopia, and the Netherlands. The United States also announced the designation of Al Haramain's founder and former leader, Aqil Abdulaziz Al-Aqil. Even more significantly, the government of Saudi Arabia announced the dissolution of Al Haramain and other charitable entities and the creation of a nongovernmental organization to coordinate private Saudi charitable giving abroad. As a result of the foregoing activities, al-Qaeda's current and prospective ability to raise and move funds with impunity has been significantly diminished. These efforts have likely made a real impact on al-Qaeda's financial picture, and it is undoubtedly a weaker organization as a result. Much of the impact has been through deterrence-i.e., past or prospective donors are now less willing to support organizations that might be complicit in terrorism. Key agencies in our government have also grown more accustomed to working with one another in new ways and become better at accommodating one another's interests. The CIA and the FBI, in particular, cooperate closely up and down the chain of command, on both a tactical and strategic level. The record is more mixed when it comes to the implementation of our recommendation that U.S. officials speak clearly, openly, and unambiguously about the problems of terrorist financing. Official reports, such as the State Department's latest Patterns of Global Terrorism report, continue to give praise where praise is due but too often go to lengths to avoid explicit statements about the steps yet to be taken.3 However, there have been important exceptions to this rule. On June 26, 2003, for example, at the annual U.S.-EU Summit, President Bush took the important step of publicly urging European leaders to criminalize all fundraising by Hamas, another recommendation of our Task Force report. Extensive work by the State and Treasury Departments preceded and followed up the president's strong remarks. On September 6, 2003, despite longstanding European insistence that Hamas's "political wing" is distinct from its "military wing," the European Union officially added Hamas to its list of banned terrorist groups. Even more significantly, the same day that President Bush met with his European counterparts, David Aufhauser, the then-general counsel of the Treasury and chairman of the National Security Council's Policy Coordination Committee on Terrorist Financing, testified before Congress that "in many ways, [Saudi Arabia] is the epicenter" of the financing of alQaeda and other terrorist movements. This statement of fact-clear to U.S. officials of two administrations since the late 1990s-mirrored a core conclusion of our initial report. It also reflected an implementation of our core recommendation that senior U.S. officials move toward a more frank declaratory policy on these issues. At the same time, during the summer of 2003, the Treasury Department declined to provide to Congress a list of Saudi persons and individuals recommended for unilateral enforcement action, and the Bush administration declined to declassify twenty-eight pages of a 4 3 Among other things, Patterns states: "Saudi Arabia has launched an aggressive, comprehensive, and unprecedented campaign to hunt down terrorists, uncover their plots, and cut off their sources of funding" and "Riyadh has aggressively attacked al-Qaida's operational and support network in Saudi Arabia and detained or killed a number of prominent operatives and financial facilitators... Senior Saudi government and religious officials espouse a consistent message of moderation and tolerance, explaining that Islam and terrorism are incompatible." While we largely concur with these statements, we also believe that official statements and reports should set forth with particularity shortcomings as well as praise, to serve as a benchmark for future progress. For these and other reasons, we have recommended not only a more declaratory U.S. policy but also the imposition of a comprehensive certification regime that would include detailed findings of fact, as set forth on pages 31 and 32 infra. 4 Relevant committees of the Congress were provided with a classified listing of the number of Saudi entities and individuals considered for designation, as well as a number of classified briefings regarding this issue. |