Testimony before the Senate Judiciary Subcommittee on Terrorism, Technology, and Homeland Security
Well into the war on terrorism, Saudi Arabia continues to serve as the capital of international terrorist financing. Through groups like the Muslim World League (MWL), the International Islamic Relief Organization (IIRO), the al Haramain Islamic Foundation, as well as the Islamic Affairs Bureaus located at Saudi embassies and consulates worldwide, the Saudis continue to fund radical Islamic groups supportive of, or engaged in, international terrorism.
TIER 1: FINANCING TERRORISM
Some cases are both clearcut and extreme. For example, after his arrest in Indonesia on June 5, 2002, Omar al-Farouq, al-Qaeda's operational point man in Southeast Asia, told his interrogators that al-Qaeda operations in the region were funded through a branch of al-Haramain. According to al-Farouq, "money was laundered through the foundation by donors from the Middle East."
In another case, Italian prosecutors revealed that "Syria has functioned as a hub for an al-Qaeda network" run out of Europe and linked to prominent al-Qaeda operative Abu Musab al-Zarqawi. Transcripts of operatives' conversations -- first revealed in the Los Angeles Times -- "paint a detailed picture of overseers in Syria coordinating the movement of recruits and money" between cells in Europe and Ansar al-Islam training camps in northern Iraq. Moreover, one of the al Qaeda cell members arrested in Italy -- a Somali -- is suspected of funding the November 2002 al-Qaeda attack on Israeli tourists in Mombassa, Kenya, while another associate -- a Moroccan -- is an accused forger and admitted associate of members of the Hamburg cell connected with the September 11 attacks. In one intercepted phone conversation, a senior al Qaeda operative is overheard assuring his subordinate about funding, saying, "Don't ever worry about money, because Saudi Arabia's money is your money."
Several charities definitively tied to international terrorism were either based or maintained branch offices in the United States, including the Muslim World League (MWL), the International Islamic Relief Organization (IIRO), the Benevolence International Foundation (BIF), the Global Relief Foundation (GRF), the Holy Land Foundation for Relief and Development (HLF), and others.
TIER 2: FINANCING TERROR SUPPORTERS
Other cases, like the activities of a host of purportedly political or social-activist groups operating in the United States, are far more subtle.
For example, the Council on American-Islamic Relations (CAIR), which says it was "established to promote a positive image of Islam and Muslims in America," was co-founded by Omar Ahmed, the same person who co-founded the Islamic Association for Palestine (IAP) -- the Hamas front organization which first published the Hamas charter in English -- together with Hamas leader and Specially Designated Terrorist Mousa Abu Marzouk. CAIR's pro-Hamas and pro-Hezbollah positions should not surprise, given that it regularly rises to the defense of terrorism suspects and openly supports designated terrorist groups. For example, CAIR is led by Nihad Awad, a former IAP employee who went on the record in 1994 as saying, "I am supporter of Hamas Movement." Most recently, CAIR employee Randall "Ismail" Royer, was indicted for his role in a local Jihad network in Northern Virginia that trained in terrorist training camps in Pakistan affiliated with Lashkar-e-Taibah and conspired to fight Indian forces in Kashmir. Royer is one of three CAIR officials who has been arrested and or indicted since September 11, 2001. On December 18, 2002, Ghassan Elashi, founding board member, CAIR-Texas, was arrested by US federal authorities on a number of charges including illegal exports, making false statements on export declarations, dealing in the property of designated terrorist, conspiracy and money laundering. Mr. Elashi served as the chairman of the Holy Land Foundation, a Hamas front group that was shut down by US federal authorities in December 2001, and as vice president of Infocom, whose offices were raided one week before 9/11 by US investigators. Bassem K. Khafagi, was arrested in New York, in late January 2003 for his alleged role in the terrorist funding group Islamic Assembly of North America, while serving as Community Affairs Director for CAIR.
Mr. Awad's proud declaration of support for a designated Foreign Terrorist Organization (FTO) and Specially Designated Global Terrorist (SDGT) entity responsible for the deaths of American citizens and set on undermining any prospect of Arab-Israeli peace, is reminiscent of similar remarks by another prominent Muslim-American "activist." In 2000, American Muslim Council founder and former Executive Director Abdurahman Alamoodi announced at a rally outside the White House: "We are all supporters of Hamas. Allahu Akhbar! ... I am also a supporter of Hezbollah." After the President announced the closure of the HLF, which raised $13 million for Hamas in its last year of operation, the AMC condemned the action as "particularly disturbing ... unjust and counterproductive." AMC's position was predictable, given that Alamoudi attended a conference of major Islamic terrorist groups in Beirut in January 2001.
AMC's former director, Eric Efran Vickers, previously served as an incorporator and board member of the Islamic African Relief Agency (IARA), another suspected terrorist front organization. At the State Department's request, the U.S. Agency for International Development (USAID) revoked two grants totaling $4.2 million to the IARA because of the group's ties to Sudan, a designated state sponsor of terrorism.
Groups such has these are often invited to White House functions or receive other significant attention from US government officials. FBI Director Mueller addressed the AMC's convention, while Muzammil Siddiqi, then head of the Saudi-funded Islamic Society of North America (ISNA) and before that an official of Saudi Arabia's psuedo-governmental MWL, appeared with the President both in the White House and at an interfaith service at the National Cathedral. 
Saudi diplomatic personnel stationed abroad play a critical role in the financing of radical Islamic organizations in the West, particularly the United States and Europe. A long list of Islamic extremists have been linked to the Saudi-funded al Nur Mosque in Berlin. One of them, Tunisian al Qaeda associate Ihsan Garnoaui, was believed to have been plotting an attack in Berlin. Muhammad Fakihi, chief of the Saudi embassy's Islamic Affairs Section in Berlin, confessed to doling out embassy funds according to the instructions of "close friends" of bin Laden. Similarly, in May, Saudi diplomat Fahad al Thumairy was denied reentry into the United States for his links to terrorism. Like Fakihi in Berlin, Thumairy worked in the Islamic and Cultural Affairs section, this time at the Saudi consulate in Los Angeles.
Indeed, while most disturbing in the Western societies that should be better prepared to defend against such subversion, foreign funded radical Islamic elements are found in all corners of the globe. To be sure, international investigations continue to tie Saudi charities to terrorist activity the world over. Around the same time Thumairy was denied reentry into the United States, Mauritanian officials carried out a series of arrests of Islamists. One group, which included religious leaders, was accused of "recruitment" and "subversive scheming." On May 27, at least 10 teachers at the Saudi-funded Arab and Saudi Islamic Institute in the capital, Nouakchott, were arrested. A total of 36 people were charged with "plotting against the constitutional order" and other offenses.
A day later, on May 28, Cambodia charged 3 men -- 2 Thais and an Egyptian - with being members of the Jemaah Islamiyah and having links to al Qaeda, and prepared to deport another 50 Arab and African Islamists. Twenty-eight of the suspects were Islamic teachers associated with a Saudi-funded school. Prime Minister Hun Sen presided at a press conference announcing that his government's "investigation proves this group has received financial support from international terrorist groups. The funding mainly came out of Saudi Arabia." A few days later, 4 more Jemaah Islamiyah terrorists tied to the Cambodian network were arrested in Thailand, where they were reportedly plotting to bomb the American, British, Australian, and Singaporean embassies. 
Perhaps most shockingly, while the U.S. intelligence community has been aware of such activity for some time no U.S. administration has taken decisive action to counter this subversive activity. A recently disclosed 1996 CIA document shows that as early as 1994 Washington was warning that in 1992 Saudi nationals gave some $150 million to Islamic charities active in Bosnia and implicated in terrorism. Similarly, computer files uncovered in the March 2002 raids on the Benevolence International Foundation in Bosnia revealed a 1988 al Qaeda memorandum listing 20 Saudi financial backers described by bin Laden as "the Golden Chain."
THE PERIODIC PR BLITZ
Since Washington has failed to take Saudi Arabia and others to task for financing Islamic extremist organizations in the United States, it should not surprise that Riyadh has not taken American concerns about such developments seriously. Instead of taking measures to address these problems, the Saudis periodically enlist public relations experts like Qorvis Communications or Adel al-Jubeir (foreign policy advisor to Crown Prince Abdullah) to engage in a PR blitz.
In December 2002, for example, Jubeir presided over a Washington press conference and the release of a report announcing the "Initiatives and Actions Taken by the Kingdom of Saudi Arabia in the Financial Area to Combat Terrorism." The majority of both the report and press conference echoed familiar sound bites ("Saudi Arabia has been a victim of terrorism"), while glossing over both the scope and severity of the problem of Saudi money financing international terrorism. While such smoke and mirrors were not new even then -- Interior Minister Prince Nayef had only recently asserted the 9-11 attacks were the work of "Zionists," not "19 youths, including 15 Saudis"  -- they do not instill confidence in the Saudi's stated commitment to combating terrorist financing within the Kingdom.
Still, the announcement marked the first time Saudi Arabia publicly pledged to formally cooperate with international bodies fighting terrorist financing and money laundering. The report gave hope to the possibility of increased Saudi cooperation in combating the frenetic financing of the full range of international terrorist groups, from Hamas to al Qaeda, emanating from within the Kingdom of Saudi Arabia and, more often than not, linked to official or semi-official government agencies and/or the royal family.
Unfortunately, this hope was short-lived. To be sure, a close look at the Saudi announcement should have indicated to observers that it was little more than a public relations maneuver, not a counterterror initiative. The Saudi announcement asserted the Kingdom has been at the forefront of "chok[ing] the financing of al-Qaeda," a spurious claim coming shortly after a Canadian intelligence report -- among many other studies -- which concluded that Saudi charities continue to funnel $1 to $2 million per month to al-Qaeda. Recent congressional testimonies by high-ranking U.S. federal officials have confirmed Saudi Arabia's role in financing terrorism and its failure to stop it. On June 26, 2003, David Aufhauser, General Counsel to DOT, testified in front of the Senate Judiciary Subcommittee on Terrorism, Technology and Homeland Security. Senator Jon Kyl asked Aufhauser whether the "trail of money" in terrorist financing points to Saudi Arabia. Aufhauser replied: "In many cases it is the epicenter." When asked "Is the money from Saudi Arabia a significant source of funding for terrorism generally?" Aufhauser answered, "Yes. Principally al-Qaeda, but many other recipients as well." As recently as July 31, 2003, John Pistole, Acting FBI Director for Counterterrorism, testified in front of the Senate Government Affairs Committee. On Saudi efforts to stop terrorist financing, Pistole commented, "From our position the jury's still out on the effectiveness of what they (Saudis) have done. We simply have not seen the results of those initiatives from a terrorism financing perspective."
Despite such blue-ribbon studies as the Council on Foreign Relations' report on "Terrorist Financing" -- which described Saudi individuals and charities as "the most important source of funds for al-Qaeda" -- the Saudi public relations blitz stuck to the empty theme of being "wrongly accused of being uncooperative or ineffective in combating terrorism." In fact, the Saudis' lack of cooperation is well documented. For example, this particular Saudi PR blitz came on the heels of the Saudi's refusal to cooperate with German authorities investigating links between a Saudi diplomat in Berlin and Mounir Motassadeq, charged with more than 3,000 counts of accessory to murder in the 9-11 plot.
Among the report's other half truths:
• In spite of all the public evidence to the contrary, al-Jubeir asserted, "we have not found a direct link or support from the Saudi charities to terrorist groups." In fact, the U.S. and other governments have shared information on several Saudi charities and financiers with Saudi officials, including the International Islamic Relief Organization (IIRO), the Saudi High Commission for Aid to Bosnia, the Benevolence International Foundation, and many others.
• Al-Jubeir claimed that only three large non-governmental organizations based in Saudi Arabia operate internationally, but experts assess there are approximately 200 private charities in the Kingdom, "including 20 established by Saudi intelligence to fund the Mujiheddin that send some $250 million a year to Islamic causes abroad." Saudi official sources report that 241 charities operate in the kingdom.
• Al-Jubeir stressed the joint U.S.-Saudi designations of (1) the Somali and Bosnian offices of the al-Haramain Islamic Foundation, (2) and Saudi businessman and bin-Laden financier Wael Jalaidan, citing these as examples of Saudi cooperation in the war on terror. In fact, not only is the Bosnian office of al-Haramain reported to have since reopened, but the Saudis continue to turn a blind eye to al-Haramain's other links to international terrorism -- such as its funding of the Southeast Asian Jamaah al-Islamiya cells behind the Bali and other attacks. In the case of Wael Jalaidan, Prince Nayef disavowed the joint designation almost immediately after the White House announced it, prompting a senior U.S. official to say, "The Saudi public statements in [the Jalaidan] case were nothing short of schizophrenic. Saudi Arabia is one of the epicenters of terrorist financing." Moreover, in a Saudi Embassy Press Release on July 17, 2003, the Saudis "asked," rather than ordered, al-Haramain to "suspend activities outside Saudi Arabia until a security clearance mechanism to screen all personnel is implemented."
• The Saudi announcement touted the seizure of $5 million and the designation of 2 organizations and 3 individuals as terrorist financiers -- woefully small figures in light of FBI and Treasury estimates that "as much as $100 million has flowed from Saudi Arabia to terrorist organizations in recent yeaars."
The Saudi announcement was careful to focus only on the possibility that, as a consequence of being "nave in our giving," Saudis may have enabled "some" to "take advantage of our charity and generosity." While an improvement over statements like those Prince Nayef, who just a week earlier characterized allegations of Saudi officials financing terrorism "baseless fabrications,"  the statement completely ignored the not uncommon scenario in which funds are donated with the premeditated intention of financing terrorist groups. Take, for example, the cases of the Muwafaq and Benevolence International Foundations:
• The now defunct Muwafaq Foundation was run by Yassin al-Qadi, designated by both the U.S. and Saudi Arabia as a terrorist financier. According to U.S. court documents, al-Qadi not only intentionally financed Hamas attacks through a U.S.-based front organization, he also established Muwafaq as a front organization through which wealthy Saudis forwarded millions of dollars to al-Qaeda. Muwafaq was endowed by Khalid bin Mahfouz, a former chief of the National Commercial Bank of Saudi Arabia and, like al-Qadi, a member of the Saudi elite close to the royal family. A Boston area computer services company, Ptech, with sensitive U.S. government contracts was raided on December 6, 2002 after it was determined the firm was financed in large part by al-Qadi.
• Benevolence International was originally named Lajnat al-Birr al-Islamiah when founded by Saudi Shaykh Adil Abdul Galil Betargy with offices in Saudi Arabia and Pakistan. According to the U.S. government, "one of the purposes of LBI was to raise funds in Saudi Arabia to provide support to the mujahideen then fighting in Afghanistan" and to provide "cover for fighters to travel in and out of Pakistan and obtain immigration status." When the foundation's Sarajevo offices were raided in March, officials seized weapons, booby traps, false passports, plans for making bombs, and a list of the foundation's Saudi Arabian sponsors.
In these cases, as in others, the organizations were not -- per Jubeir's verbiage -- infiltrated by "evil-doers," nor were innocently donated funds hijacked at some point along the way. If the Saudis are truly committed to combating terrorist financing from within the Kingdom, they need to acknowledge -- and take steps to prevent -- the intentional funding of radical and terrorist causes and organizations.
The Saudi pledge to curb money laundering through a "Permanent Committee" and to regulate charities through a "High Commission," both newly established entities, should be welcomed -- albeit apprehensively. Despite official relationships with many of these charities, the Saudi regime has failed to date to curb their financial support for terrorism. The Saudi Minister of Islamic Affairs traditionally serves either as President or Secretary General of many of the most egregious examples of charities financing terrorism. In many countries (including the U.S.) funding for the IIRO ran through the Islamic Affairs Department of the local Saudi Embassy. Testifying in his own deportation hearing, IIRO employee Mahmoud Jaballah described the Muslim World League as "the mother of IIRO," and "a fully government funded organization." "In other words," he continued, "I work for the Government of Saudi Arabia. I am an employee of that government."
Beyond the more peripheral steps lauded in the Saudi announcement, like "plans to re-invigorate the joint Counter-Terrorism Committee with the United State (more of a relationship than an operational mechanism), the Saudi announcement included three tangible commitments which, if implemented in full, would have signal a welcome and marked departure from past practices. They are:
• Inviting the Financial Action Task Force on Money Laundering (FATF) -- especially its Working Group on Terrorist Financing -- into the Kingdom to conduct a "Mutual Evaluation" in April 2003;
• Establishing a Financial Intelligence Unit (FIU) to collect real-time financial intelligence on suspicious financial activity and share such information with local authorities and the 69 other FIU's operating internationally;
• Passing new "Know Your Customer" and suspicious activity reporting banking regulations.
While version of "know your customer" regulations have reportedly been set in place, it is not clear whether these include full-fledged suspicious activity reporting. Moreover, the Saudis have neither formed an FIU nor facilitated an outside evaluation by the FATF.
OTHER OBSTACLES TO COMBATTING FOREIGN FUNDED EXTREMISM
Though the Patriot Act provided U.S. authorities with long overdue tools and powers critical to countering this kind of threat, plenty of domestic problems persist and hamper our ability to address this threat to national security. Law enforcement and intelligence organizations, for example, remain short on experienced analysts (especially those with critical language skills such as Arabic, Farsi, Pashtu and more), lack technologically advanced databases and other computer tools frequently available on the open market, are still trying to establish smooth and seamless means of interagency communication that overcome the barriers of institutional culture, and often labor under management that is risk averse and often disinterested in strategic analysis.
America also suffers from a distinct lack of foreign cooperation from critical countries that are nominal allies, most critically the Gulf States, including not only Saudi Arabia but also Qatar, Kuwait, and the United Arab Emirates. Moreover, Europe's failure to date to list groups like Hezbollah as terrorist organizations does a tremendous service to the very radical Islamic groups and front organizations that are the targets of the war on terrorism. The EU only decided to add Hamas to its terrorist list week (until then only the Qassam Brigades, the group's military "wing," had been listed) in the wake of severe U.S. pressure after Hamas suicide bombings and Qassam missile attacks violated the supposed ceasefire.
These problems in domestic and foreign policy are a continuum of one larger issue. Namely, two years after the horrific events of September 11, 2001, our rhetoric still does not match our actions.
• On June 25, shortly after the initiation of the Palestinian-Israeli Road Map peace plan, President Bush urged European Union leaders to take "swift, decisive action against [Palestinian] terror groups such as Hamas, to cut off their funding and support...." Only now, after a new series of Palestinian terror attacks undermined the ceasefire, was the EU willing to consider taking action against Hamas.
• Syria continues to be one of the world's chief state sponsors of international terrorism despite President Bush's June 24, 2002, demand that Syria "choose the right side in the war on terror." Failure to hold Syria accountable for its support of international terrorism after repeatedly articulating this message has further diluted America's already diminished credibility in the eyes of men like Bashar al Assad.
• On September 24, 2001, shortly after the al-Qaeda attacks on New York City and Washington, DC, President Bush announced his administration's intention to combat terrorist financing worldwide, saying "if you support or sponsor [terrorists], you will not do business with the United States of America." Yet despite the continuing evidence of Saudi complicity in financing terrorist groups, Department of State spokesman Philip Reeker told reporters on December 3, 2002, that "the United States is pleased with the continued cooperation we have received from the Government of Saudi Arabia in the Global War on Terrorism," and that "the United States is encouraged by Saudi efforts...in monitoring and countering the financing of terror."
The foreign funding of subversive domestic organizations linked to designated terrorist groups poses immediate dangers to the national security of the United States. This much is clear: should the U.S. fail to adapt the culture of our law enforcement and intelligence community, to enact appropriate laws and procedures, and to commit the necessary resources and resolve, we will find the war on terror that much harder to fight, lasting that much longer in duration, and exacting that much higher and tragic a cost in human life.
1 Romesh Ratnesar, "Confessions of an Al-Qaeda Terrorist," Time.com, September 15, 2002. Available online at www.time.com/time/magazine/printout/0,8816,351194,00.html 2 Sebastian Rotella, "A Road to Ansar Began in Italy: Wiretaps are Said to Show how al-Qaeda Sought to Create in Northern Iraq a Substitute for Training Camps in Afghanistan," The Los Angeles Times, 28 April 2003. 3 Ibid. 4 For a detailed discussion of this phenomenon, see Matthew Levitt, "Charitable and Humanitarian Organizations in the Network of International Terrorist Financing," Testimony before the Subcommittee on International Trade and Finance, Committee on Banking, Housing, and Urban Affairs, United States Senate (August 1, 2002), available online at https://www.washingtoninstitute.org/media/levitt/levitt080102.htm 5 https://www.cair-net.org/asp/aboutcair.asp 6 The Weekly Standard, June 3, 2002 7 Washington Post, August 8, 2003; Washington Post, August 28, 2003 8 CAIR-Texas, Articles of Incorporation, September 15, 1998 obtained from the office of the Texas Secretary of State. See also US Department of Commerce, Bureau of Industry and Security, News Release, December 18, 2002 "Senior Leader of Hamas and Texas Computer Company Indicted for Conspiracy to Violate US Ban on Financial Dealings with Terrorists." 9 "Decision to freeze assets upheld," Fort Worth Star-Telegram, 21 June 2003 10 Bill Morlin, "Egyptian with UI Ties Held in Probe," Spokesman Review, 14 March 2003, A1 11 Associated Press, January 9, 2002 12 American Muslim Council et al, "Freeze on Group's Assets Questioned by US Muslims," December 4, 2001 13 https://www.minaret.org/beirutconference.htm 14 Islamic African Relief Agency, Articles of Incorporation, State of Missouriv 15 New York Times, August 25, 2000 16 Islamic Society of North American Unaudited Consolidated Statement of Revenue and Expenses as of December 31, 1991. Saudi Arabia was the largest source of donations according to the document 17 September 26, 2001, see picture at https://www.rfcnet.org/wjmreport/october2001.htm 18 Wall Street Journal, April 22, 2003; Newsweek, May 5, 2003 19 Los Angeles Times, May 10, 2003 20 AFP, May 27, 2003; AFP, June 4, 2003 21 AFP, May 28, 2003 22 https://saudiembassy.net/publications/pubs.html 23 Middle East Media Research Institute (MEMRI), Special Dispatch Series-No.446(https://memri.org/bin/articles.cgi?Page=archives&Area=sd&ID=SP44602) 24 Hudson Morgan, "Laundry Bag: Treasury's Kid Gloves," The New Republic, April 14, 2003 25 https://www.cfr.org/pdf/Terrorist_Financing_TF.pdf 26 Maurice R. Greenberg, Chair, "Terrorist Financing: Report of an Independent Task Force Sponsored by the Council on Foreign Relations," The Council on Foreign Relations, October 2002. Available online at https://www.cfr.org/pdf/Terrorist_Financing_TF.pdf 27 Peter Finn, "Hamburg Suspect Linked to Saudi Diplomat, Washington Post, December 4, 2002 28 Unpublished paper by Professor Zachary Abuza, Simmons College, Boston 29 https://www.saudinf.com/main/y4897.htm 30 Douglas Farah, "Saudis Face U.S. Demand On Terrorism; Halting Financiers May Be Urged," Washington Post, Nov 26, 2002 31 https://www.saudiembassy.net/press_release/releases/03-PR-0717-WOT-progress.htm 32 "The Road To Riyadh," US News and World Report, December 9, 2002 33 Douglas Farah, "Saudis Face U.S. Demand On Terrorism; Halting Financiers May Be Urged," Washington Post, Nov 26, 2002 34 Matthew Levitt, Targeting Terror: U.S. Policy Toward Middle Eastern State Sponsors and Terrorist Organizations, Post-September 11, The Washington Institute for Near East Policy, 2002 35 John Mintz, "Terrorism Investigators Search Company in Mass.; Probe Focused on Possible Link Between Software Firm and Accused Al Qaeda Financier," Washington Post, December 7, 2002 36 Matthew Levitt, "Combating Terrorist Financing, Despite the Saudis," Policywatch, The Washington Institute for Near East Policy, November 1, 2002, No. 673 37 "Charity and Terror," Newsweek, December 9, 2002 38 Canadian deportation hearing of Mahmoud Jaballah. See Dore Gold, Hatred's Kingdom, Regnery Publishing, Inc., 2003. (p. 243) 39 AFP, June 25, 2003 40 See Matthew Levitt, "Blood Money," Wall Street Journal, June 4, 2003. See also Jeff Cary and Matthew Levitt, "Ban Hamas in Europe," Peacewatch, The Washington Institute for Near East Policy, No. 430, September 4, 2003 41 "President Bush Calls for New Palestinian Leadership," at https://www.whitehouse.gov/news/releases/2002/06/20020624-3.html 42 "President Freezes Terrorists' Assets," at https://www.whitehouse.gov/news/releases/2001/09/20010924-4.html 43 https://www.state.gov/r/pa/prs/ps/2002/15641.htm