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COMMITTEE ON GOVERNMENTAL AFFAIRS

SUSAN M. COLLINS, Maine, Chairman

TED STEVENS, Alaska
GEORGE V. VOINOVICH, Ohio
NORM COLEMAN, Minnesota
ARLEN SPECTER, Pennsylvania
ROBERT F. BENNETT, Utah
PETER G. FITZGERALD, Illinois
JOHN E. SUNUNU, New Hampshire
RICHARD C. SHELBY, Alabama

JOSEPH I. LIEBERMAN, Connecticut
CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

THOMAS R. CARPER, Delaware

MARK DAYTON, Minnesota

FRANK LAUTENBERG, New Jersey
MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel
DAVID A. KASS, Chief Investigative Counsel

EDWARD W. PRIESTOP, Federal Bureau of Investigations Detailee
JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel
DAVID BARTON, Minority Professional Staff Member
AMY B. NEWHOUSE, Chief Clerk

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AN ASSESSMENT OF CURRENT EFFORTS TO COMBAT TERRORISM FINANCING

TUESDAY, JUNE 15, 2004

U.S. SENATE,

COMMITTEE ON GOVERNMENTAL AFFAIRS,

Washington, DC.

The Committee met, pursuant to notice, at 10:30 a.m., in room SD-342, Dirksen Senate Office Building, Hon. Susan M. Collins, Chairman of the Committee, presiding.

Present: Senators Collins, Coleman, Specter, Lieberman, Levin, Akaka, Lautenberg, and Pryor.

OPENING STATEMENT BY CHAIRMAN COLLINS

Chairman COLLINS. The committee will come to order. Good morning. Today the Governmental Affairs Committee will conduct a review of current efforts underway to combat terrorism financing.

This is the third hearing the Committee has held during the past year on this issue of great global importance. The focus of our hearing today is a new report by the Independent Task Force on Terrorism Financing sponsored by the Council on Foreign Relations. The Council's first report, released in October 2002, begins with these words: "The fog of war has long befuddled military and political leaders. Of all the battle fronts in today's war on terrorism, few are as foggy as efforts to combat terrorist financing."

As both of these reports make clear, however, this fog is no natural phenomenon. It is entirely manmade. Terrorism thrives in the shadows. It prospers by deceit and deliberate confusion. It is a perverted world in which murderers are called freedom fighters and in which building schools and health clinics can excuse the slaughter of innocents.

The answer is relentless scrutiny and then taking forceful and effective action.

This new report focuses primarily upon the actions taken by the Governments of the United States and of the Kingdom of Saudi Arabia. It provides an insightful analysis of the progress that has been made and of the challenges that remain.

As the report observes, Saudi Arabia has, on a comparative basis, taken more legal and regulatory actions to combat terrorism financing than many other Muslim States. However, the size, the reach and the wealth of persons and institutions there with connections to violent terrorist groups put the kingdom on the front lines of this battle.

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There are other engines of terrorism financing, but as David Aufhauser, one of our distinguished witnesses, testified just 1 year ago, Saudi Arabia is, in many ways, the epicenter of terrorism financing. As the Council's first report stated, individuals and charities based in Saudi Arabia have been the most important source of funds for al Qaeda.

A phrase that occurs again and again throughout this new report is political will. In some instances, it is evident and growing. In others it is still woefully lacking. This mixed result characterizes Saudi Arabia. The Saudi government deserves credit for undertaking considerable legislative and regulatory reforms. Questions remain, however, about whether these reforms are being consistently, effectively, and vigorously implemented.

For example, the kingdom recently dissolved the notorious Al Haramain charity and it has created a new organization to coordinate and oversee private Saudi charitable giving abroad. This is a very positive step that should significantly diminish the ability of al Qaeda and other terrorist groups to raise and move funds using charities as conduits. There remain, however, serious questions. Most important, what are the Saudi's doing to crack down on the International Islamic Relief Organization, the World Assembly of Muslim Youth, and the Muslim World League, three of the charities alleged to have the most troubling terrorism connections.

Terrorists attacking Saudi Arabia from within the country have been killed and many Saudi law enforcement personnel have given their lives. Yet this report also notes that since September 11, 2001 we know of not a single Saudi donor of funds to terrorist groups who has been publicly punished.

Perhaps most troubling is the continued gap between what Saudi leaders say to the world and what some of them have to say to their own people. Following the al Qaeda attacks in early May, Crown Prince Abdullah said on Saudi TV that "Zionism is behind the terrorist attacks in the kingdom. . . I am 95 percent sure of that." That astonishing and inflammatory remark was reiterated a few days later by the Saudi Foreign Minister. The Saudi Interior Minister then left no doubt as to the meaning when he bluntly stated that al Qaeda is backed by Israel.

This is not just a lack of political will. This is political blindness. To say that the Kingdom of Saudi Arabia is a full partner in the war against terrorism while such inflammatory and anti-Semitic statements are being made would certainly be vastly premature.

On an encouraging note, the report details significant progress by the U.S. Government in combating terrorism financing. A key recommendation of the first task force report in 2002 was for the Administration to centralize the coordination of efforts to combat terrorism financing. This has been accomplished to a significant degree.

The Administration also deserves credit for prompting the Saudis to begin to undertake serious reforms and to extend meaningful cooperation to American terrorism investigations. The progress represented by the enactment of the Saudi legal reforms, the Saudi actions against al Qaeda cells in the kingdom, and the creation of the Joint Terrorism Financing Task Force should not be understated. These are indeed important achievements.

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