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 branches— located 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. However, there have been important exceptions to this rule.

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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

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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.

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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.

joint congressional report that reportedly detailed the role of Saudi persons or organizations in the 9/11 attacks.

At the end of 2003, two reports concluded that U.S. efforts to combat terrorist financing had yet to accomplish the basic mission of stopping the flow of money to terror groups. The U.S. General Accounting Office, the investigative arm of Congress, concluded that federal authorities still did not have a clear understanding of how terrorists move their financial assets and continue to struggle to halt terrorist funding. The United Nations Monitoring Group, in its second required report to the UN's al-Qaeda and Taliban Sanctions Committee, also found that “al-Qaeda continues to receive funds it needs from charities, deep-pocket donors, and business and criminal activities, including the drug trade. Extensive use is still being made of alternative remittance systems, and al-Qaeda has shifted much of its financial activity to areas in Africa, the Middle East and South-East Asia where the authorities lack the resources or the resolve to closely regulate such activity."

The views expressed in the Task Force's first report are now widely held, at home and abroad. Combating terrorist financing must remain a central and integrated element of the broader war on terrorism, and Saudi Arabia should be-and is-taking important efforts in this regard. Effective international efforts will continue to require both strong U.S. leadership and sustained political will in the source and transit countries for the funds that continue to support international terrorist organizations such as al-Qaeda. As a senior Treasury Department official told Congress on March 24, 2004, "we have found that our success is also dependent on the political will and resources of other governments."

It is with these thoughts in mind that we offer the findings and recommendations that follow. We note at the outset that much of the discussion in the text of this report and in the appendixes concerns Saudi Arabia. That is certainly not because we believe that Saudi Arabia is alone in the need to take effective and sustained action to combat terrorist financing. Indeed, on a comparative basis Saudi Arabia has recently taken more decisive legal and regulatory action to combat terrorist financing than many other Muslim states. Nor is it to minimize the potential significance of new modalities of terrorist financing that have nothing to do with individuals and organizations based in Saudi Arabia. Al-Qaeda financing has almost certainly become more diffuse since the dispersal of its leadership from Afghanistan; whereas once al-Qaeda's funds were managed centrally, communication and logistical difficulties have forced local operatives in

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many cases to improvise and fend for themselves. Rather, it is because of the fundamental centrality that persons and organizations based in Saudi Arabia have had in financing militant Islamist groups on a global basis—a fact that officials of the U.S. government have now joined this Task Force in publicly affirming.

The Madrid bombing investigation, for example, indicates that the cell responsible for the March 2004 train bombing in that city relied significantly on self-help and drug trafficking to fund its operations.

FINDINGS

As a general matter, we wish to reaffirm the principal "findings” of our initial report, reproduced here in Appendix A. Although progress has been made on several important fronts, al-Qaeda and other terrorist organizations, as demonstrated by recent attacks and related investigations, still have ready access to financial resources, and that fact constitutes an ongoing threat to the United States (among other states). The problem has not been solved and, as we noted in our initial report, there is no single “silver bullet” to end the financing of terror. With those thoughts in mind, we wish to make the following additional findings regarding the state of efforts to combat terrorist financing since the issuance of our last report.

1. Various international fora are engaged in a wide array of multilateral activities that collectively constitute a new international regime for combating terrorist financing. In our initial report, we recommended the creation of a new international organization dedicated solely to issues involving terrorist financing. We find that many of the activities we envisioned such an organization undertaking are now underway under the leadership of existing international institutions and regimes, mitigating the need for a new specialized international organization. Specifically, we note that:

In September 2001, only four countries had ratified the International Convention for the Suppression of the Financing of Terrorism; by the end of April 2004, that number had increased to 117 states.

The United Nations Counter-Terrorism Committee (CTC), established by Security Council Resolution 1373, requires all member states to criminalize the provision of financial support to terrorists and to freeze terrorist assets. Significant progress has been achieved in focusing states' attention on implementation measures—all 191 countries have submitted first-round reports to the CTC, and many are engaged in the CTC's initiative to enhance compliance. The greatest impact of the UN's efforts has been in the adoption of national terrorist financing legislation, formation of domestic institutions such as Financial Intelligence Units (FIUS), and the identification of technical assistance needs of states. While the CTC's momentum slowed in late 2003, the Security Council, with strong U.S. support, adopted new measures in March to