some extent, or at least not turned a blind eye to it, as long as they continue to export extremism then there is trouble. Mr. Factor or Mr. Aufhauser, do you want to add anything to that? Mr. FACTOR. I would like to add that we know very well that, for example, the Muslim World League, IIRO, the International Islamic Relief Organization, and the World Assembly of Muslim Youth, known by the acronym WAMY, still operates. I believe funding to al Qaeda has been stopped to a significant extent. But there is funding to numerous other organizations and other organizations may be picking up what al Qaeda was doing, in terms of operations. Mr. AUFHAUSER. Can I add one thing? I want to put a spotlight on a reservation put at the front of the Committee's report, which is that you can become Saudi-centric when you talk about terrorist financing and it is a grave danger. They have done remarkable things and they should be given credit for it. There remain substantial issues in Saudi Arabia. But all that I learned before I left and what I have learned since I left suggest that terrorist financing is alive and well from Iran and Syria and increasingly local criminal activity, and also substantial amounts flowing into the occupied territories from Western Europe still. I would suggest that the spotlight be shifted, if there is only one spotlight, on what is the more immediate threat right now to homeland security here and to security in the Middle East, which I think is money from other sources. Senator LIEBERMAN. Thank you, very much. You have done a great public service here and I thank you for it. Chairman COLLINS. Thank you, Senator Lieberman, for your leadership on this issue and your participation in the Committee's ongoing work examining the sources of terrorism financing. I want to thank all three of our witnesses today. You have done remarkable work. We appreciate your expertise and your sharing your wisdom and knowledge with the Committee. The hearing record will remain open for 15 days for the submission of any additional questions. We would ask you to return those as quickly as you can. I also want to thank our staff for their work on this important hearing. The hearing is now adjourned. [Whereupon, at 12:29 p.m., the hearing was concluded.] APPENDIX PREPARED STATEMENT OF SENATOR GEORGE V. VOINOVICH Good morning. I would like to thank the Chairman, Senator Collins, for convening this hearing today to examine an issue that is extremely important to our national security-our progress in efforts to deny terrorists the resources they seek to perform deadly attacks against Americans and our allies at home and abroad. The tragic events of September 11, 2001 brought home to all of us the urgent need to cut off funding for terrorist organizations such as al Qaeda. More than 22 years later, it is imperative that we continue to make this a top priority of the U.S. Government. Simply stated, we cannot afford to be complacent in our efforts. Last month, Attorney General John Ashcroft and Secretary of Homeland Security Tom Ridge reminded the American people of al Qaeda's unrelenting desire to again attack Americans on U.S. soil. The potential impact is not limited to those living in our country's largest cities. Just yesterday, Federal officials unsealed an indictment against a Somali man living in Columbus, Ohio. The charges against this man include conspiring with al Qaeda to blow up a shopping mall in Ohio's capital city. This is a chilling reminder of what is possible, and again underscores the need to redouble our efforts to deny terrorists the financial resources that they desire. Today, an Independent Task Force on Terrorist Financing sponsored by the Council on Foreign Relations will release its second report on our progress in this effort. We are glad to have two individuals who serve on this task force, Lee Wolosky and Mallory Factor, with us this morning. I look forward to hearing their thoughts on how we can step up our efforts at home to disrupt and destroy the financial network of al Qaeda and other terrorist organizations. I also look forward to their views on how we can enhance cooperation with other countries to deny terrorists the funding that they seek-particularly Saudi Arabia. I would also like to welcome David Aufhauser, who served as former General Counsel at the U.S. Department of Treasury. I look forward to his candid views on how we are doing in this effort here at home, where the men and women at the Treasury Department and other Federal, State and local agencies serve on the front lines in the effort to disrupt and destroy terrorists' financial networks. As my colleagues are aware, since 1999, I have worked to express the urgency of the Federal Government's human capital challenges and their impact on critically important government functions, such as national security. With strong bi-partisan support from this Committee, I have championed a series of legislative reforms in Congress, which should have a significant impact on the way the Federal Government manages its people in the coming years. In March 2001, the Subcommittee on Oversight of Government Management held a hearing entitled, "National Security Implications of the Human Capital Crisis." Our panel of distinguished witnesses included former Defense Secretary James Schlesinger, member of the U.S. Commission on National Security in the 21st Century. Secretary Schlesinger discussed a comprehensive evaluation on national security strategy and structure that was undertaken by the Commission. Regarding human capital, the Commission's final report concluded: "As it enters the 21st Century, the United States finds itself on the brink of an unprecedented crisis of competence in government. The maintenance of American power in the world depends on the quality of U.S. Government personnel, civil and military, at all levels. We must take immediate action in the personnel area to ensure that the United States can meet future challenges." Secretary Schlesinger added further: "... it is the Commission's view that fixing the personnel problem is a precondition for fixing virtually everything else that needs repair in the institutional edifice of U.S. national security policy." This remains true as our government looks to deny terrorists, whose purpose is to inflict grave harm on the United States, the resources that they seek. I again thank Chairman Collins for convening this hearing, and I look forward to the testimony of our witnesses. (35) Testimony Concerning the Second Report of an Independent Task Force on Of Counsel, Boies, Schiller & Flexner LLP Madame Chairman, Senator Lieberman and Distinguished Members of the Committee: Thank you for your dedicated leadership on these issues. This Committee's sustained attention to terrorist financing issues is critically important to our nation. We are honored to report to you today on the second report of the Independent Task Force Relations on Terrorist Financing sponsored by the Council on Foreign. I have served as co-Director of this bipartisan initiative since its inception in the summer of 2002. Our report is the result of the hard work of a number of dedicated individuals of both political parties who seek to further vital national interests. I wish to thank our Chairman, Maurice Greenberg, for his unwavering support of the Task Force and his broader leadership in assuring continued attention to, and scholarship on, issues at the intersection of global finance and national security. Our Vice-Chairman, Mallory Factor, undertook important efforts to advance the mission of the Task Force. My coDirector and co-author, William F. Wechsler, brought not only a wealth of talent and energy but the wealth of experience that comes from being the first senior U.S. official to focus seriously on these issues, beginning in 1998. I am also grateful to Council President Richard Haass. This Task Force would not have succeeded without his support and assistance. Finally, it is my honor to testify beside David Aufhauser, who served our country with dedication and distinction. Many of the positive developments in this area since 9/11 are the direct fruits of his vision and leadership. I will discuss the background of our second report and its findings. Mallory will then discuss the report's recommendations. Since the report, along with its various appendices, is almost 300 pages in length, we will only be able to highlight core points. We ask that the full report and its appendices be placed into the record, and we look forward to a fuller discussion of various aspects of the report in response to your questions. In our first report, released in October 2002, we concluded: "It is worth stating clearly and unambiguously what official U.S. government spokespersons have not: For years, individuals and charities based in Saudi Arabia have been the most important source of funds for al-Qaeda; and for years, Saudi officials have turned a blind eye to this problem." We recommended the encouragement of the Saudi regime to strengthen significantly its efforts to combat terrorist financing. In this regard, we noted a recent historical record of inattention, denial, and half measures. And we urged the U.S. Government to confront directly the lack of political will in Saudi Arabia and elsewhere through the institution of a declaratory policy that would permit or compel U.S. officials to speak more frankly about the nature of the problem. 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." During 2002 and into the first few months of 2003, U.S. officials quietly 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. Results were mixed. Less transparent methods of curtailing terrorist financing were also stepped up, with significant successes. 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. 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 aspects of its anti-money laundering regime to international scrutiny. 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. 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 |