T4 B1 Team 4 Workplan Fdr- Undated Final Submitted- Team 4 Workplan- Funding of Terrorist Activities 126

8/14/2019 T4 B1 Team 4 Workplan Fdr- Undated Final Submitted- Team 4 Workplan- Funding of Terrorist Activities 126

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National Commission on the TerroristAttacks upon the United States

Team #4Funding of Terrorist Activities

Team members: John RothDoug las GreenburgSerena Wille

Workplan: Premise statement, key questions, suggested readings,categories of documents, and interviews


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Premise statementThe effort to deny fund ing to terrorists cuts across a broad spectrum of public andprivate actors: th e in tell igence com mu nity , la w enforcement, th e diplomatic and foreignpolicy sector, fina ncia l regulators, banks, and a broad range of non-b ank f inancialindustries not previously regulated in this area. The current strategy attem pts to stopfunding on two levels: a "systems" approach, using mec hanism s such as lists of terrorist

organizations to freeze assets and controls on financ ial institutions to more tightly controlth e movement of money, and a tactical approach, by disrupting individuals andinstitutions known to fund terrorists or move their money.W e must initially examine the validity of the premise that "money is the lifebloodof terrorists," given the sm all amoun ts of money necessary (the oft-quoted fig ure of$500,000 for the 9/11 attacks, fo r example, or the fact that convicted M illennium bom berAh me d Ressam financed himself through petty crime) to inflict significant harm. A s partof th e premise, our team will examine th e known methods of financ ial support fo rterrorist operations (state or quasi-state sponsorship, general fundraising, diversion offunds from legitimate charities, petty crime, c onflict diamonds, drug trafficking ) and the

methods fo r moving and disguising such funds (banks and other financial institutions,bulk cash or precious metal smuggling, and informal value transfer m echanisms) todetermine if these methods are or were being used, and to what extent, by terroristorganizations. We can also explore th e collateral benefits of the focus on terroristfinancing.W e will then identify th e pre-9/11 efforts to impede terrorist financing and assesstheir effectiveness, in disrupting th e ability of known terrorist groups to receive money.W e will examine some of the failures alleged by the Joint Intelligence Committee andothers: a lack of appreciation of the threat, unclear roles among the institutions involved,a failure to share info rm ation, and a lack of an overall strategy w ith regard to terrorist

financing. Through aggressive investigation of the pre-9/11 efforts, w e expect to drawour ow n conclusions about th e effectiveness and the impact , or lack thereof, ofgovernment and private programs.W e plan to review the data concern ing the actual finan cin g of the 9/11 attacks, todetermine how the attacks were funded, including th e source of the funds, th e method bywhich th e funds were transm itted to the hijackers, and the extent to which th e 9/11hijackers used the U.S. financia l system to support their operation. As part of thisanalysis, we will focus on how the finan cin g of the 9/11 operation wen t undetected. Inparticular, we will learn whether mistakes were made in carrying out the then-existingpolicies an d procedures or whether th e then-existing approach w as simply not designed to

detect the relatively small transactions that apparently fund ed the 9/11 attacks.Since th e 9/11 attacks, th e U.S. government has devoted substantial resources onm a n y different fronts to disrupting and curtailing terrorist financing. W e will identifycurrent U.S. strategy and assess its utility and effectiveness. As part of this effort, we willdetermine whether any identified institution al defects have been remedied. Given th e


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large num ber of governm ental agencies and organizat ions involve d in combating terroristf inancing, our team wi l l focus on the extent of the coordination and information sharingbetw een and among the various actors. W e w ill pursue this at both the policy level,where the policies and strategy are set, as w ell as on the operational level, w here thepolicies and strategies are executed. W e will also exam ine, to the extent possible, th eresponse of terroris t organizat ions to government efforts , and w hether w e have thecapacity to timely anticipate those responses and cha nge o ur strategy accord ingly.Final ly , w e w ill make specific , act ionable recomm endat ions as needed.


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List of key questions^je-^fi^Jc, , f r ?

1) Is the premise that "money is the life blood of terrorism" valid?a) G i v e n th e demonstrated a b i l i t y of terrorists to use t iny a m o u n t s of money tocreate signif icant attacks, ca n efforts to starve terrorists of fund ing b e effect ive?b ) How are funds used by terrorists generated, and how do they move? How is thewo r l dwide terrorist infrastructure funded? How are terrorist cel l s w i t h i n the USfunded? D o different groups use different methods? D o other c r im in a l groupsobta in and m o v e funds in the same manner?c) W i l l reducing funding to international terrorist organizations disrupt the efforts ofU.S.-based terrorists?d) Are there col la te ra l benefi ts to th i s effort, such as iden t i fy ing and t r ackingmembers of terrorist and other organized crime groups?

2) Prior to 9/11, what did the U.S. do to identify and stop money going to terroristgroups?a) W i t h i n the US gove rn me n t?

i) Intelligence(1 ) W h a t was the role of the intel l igence c o m m u n i t y in ga th e r in g in t e l l i gencea b o u t th e f l ow of funds to terrorist organ izat ions? (crosscut with t e am# 2 )(much of this m ay hav e been exp lored in the j o i n t in te l l ig ence report )(2) Did the inte l l igence community collect useful inte l l igence in this area?Ho w wa s that in formation used? Cou ld have it been put to be t te r use?(3 ) W h a t was the in te l l igence com mu nity proposal fo r covert action agains tb in Laden f inancial accounts? W hy wa s the proposal no t approved?

ii) Executive/Administrative(1 ) W h a t was the role of Treasury, part icular ly OFAC, in b l o c k i n g and se iz ingassets associated with te rror is t groups gen era l l y? W a s i t effect ive?(2) W h at ro l e did the State Department p lay in d e s i gn a t i n g Foreign TerroristOrganiza t ions (FTOs)? W a s i t ef fec t ive?(3 ) W hen were a l -Qaida and the Tal ib an des ignated? W hat e f for ts were madein f ind ing and freezing assets after the des ignat ion? W ere they e f fec t ive?H ow cou ld this b e measured? Cou ld an y th in g e lse hav e been done?(4 ) Congress appropria ted m one y for the d e ve lop me n t of the foreign terroristasset t racking center (FTAT) for FY 2000, to be placed in Treasury, butth e Center was not opera t iona l unt i l after 9/11. W h a t w er e th eci rcumstances s u r rou n d in g tha t d e l ay ? W h a t was the imp ac t of that d e lay?W h y did Treasury oppose th e W h i t e H o u s e efforts to fund th i s center?

9/11 Closed by Statute


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(5) What was the level of support from th e intelligence and law enforcementcommunit ies in gathering evidence to support both th e OFAC and FTOdesignations?H i ) Law Enforcement(1) W hat was law enforcemen t's role in investiga ting and prosecuting thefinancing of terrorist operations domestically? H ow effective was it?(Partial crosscut with team 6)(2) The terrorist fun dra ising statutes, 18 USC 2339A an d 2339B, had neverbeen used until after 9/11. What was the level of investigative effortgenerally into terrorist fun ding ? If there had not been an effort, why not?(a) The FBI knew of the Holy Land Foundation's links to Hamas as earlyas 1993. Why no law enforcement or blocking action taken against ituntil 2001?(3) The Financial Crimes Enforcement Network ("FinCEN") is thegovernment's center fo r analysis and distribution of financial crimesinformation. What was the level of effort prior to 9/11? In 1999, therewere specific law enforcement requests to FinCEN, asking for assistancefrom its hawala expert. Those requests were not acted upon. Why?

(4) Besides the FBI, did other law enforcement agencies (either federal ofstate) investigate terrorist fina ncin g? W as there any confu sion as to theroles of the various law enforcement agen cies? W hat was the generallevel of coordination among agencies?iv ) Regulatory and Private(1) What regulatory controls were in place to prevent the U.S. financialsystem from being used by terrorists to move money? Were theyeffective?(a ) There were spec ific legislative proposals to assist in curb ing theunregulated movement of money, and also to assist in getting foreign

banks to open their books to legitimate la w enforcement requests.Why were these proposals not acted on until after 9/11?(2) Ha d there been any efforts to improve the controls? Specifically,Congress had directed FinCEN in 1994 to regulate th e mon ey transmitterbusiness, y et the regulations doing so were not put into place until after9/11. Why?(3 ) Could th e controls h ave detected th e money movements of the 9/11hijackers?

(4) Regulation aside, was the private sector doing anything?v) Overall Government Strategy And Coordination

(1) Was there an overall U.S. interagency strategy fo r combating the financialsupport given to terrorist organizations?(2) How effective was that coordination? W hat was the level of cooperationamong g overnment agencies in this area? Between govern ment and the


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private sector? If there w ere shortcomings in this area, what were th ecauses?(3) Presidential Decision Directive 42 (1995) ordered other agencies toincrease and integrate efforts against terrorist f inancing and moneylaundering. What efforts did the directed agencies m ake in com plyingwith this FDD?(4 ) After the East Africa bombings in 1998, a new interagency team was

created under the auspices of the NSC to look at terrorist financing. Whatdid this group do?(5) The National Commission on Terrorism released a report in 1999, makingspecific reco mm endations in the area of terrorist f inancing. Who wasresponsible fo r assessing and implementing these recommendations?Were they implemented? If not, why not?(6) To wh at extent did any identified failures of coordination contribute to thefailure to detect th e 9/11 hijackers or other Al-Qaeda activity?

b) Worldwide?i) W hat were the U.S. gov ernmen t's diplomatic efforts to ensure that othercoun tries wo uld assist us in the tracking, seizing and freezing terrorist assets?ii) Were there any particular countries w hose lack of effort, or ab ility, impededth e U.S. government's efforts to disrupt terrorist financing? Wh at efforts didthe U.S. governm ent make, if any, to improve the effort or ability of any suchcountries?iii) Specifically, wh at efforts did the US governmen t make in persuading SaudiA rabia to cut off funding to the Taliban and A l Qaeda? W hat were theresults?iv ) What was the level of law enforcement cooperation between cou ntries?v) How effective were these efforts?

3) How were the 9/11 attacks funded? (in conjunction with team 1A)a) W hat was the source of funds of the 9/11 hijackers, and how did those funds getto the hijackers? How mu ch did the operation ac tually cost?b) To what extent was the U.S. financial system used by the hijackers?c) W hy did the financing of the 9/11 operation go undetected? Was it a specificfailure of an individual or group, or was the failure more systemic?d) What do the methods of the 9/11 terrorists tell us about current governmentefforts?

4) What are our current efforts, and are we on the right track?a) Intelligence (with team #2)i) W hat is the current role of the intelligence com mu nity in gatheringintelligence about the flow of funds to terrorist organizations?


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ii) Is inform ation useful? Is it being put to good use?iii) Is the Foreign Terrorist Asset Tracking Group ope rational? W hat does it do?Is it effective?b) Executive and administrativei) Domestically:(1) W hat have we blocked and wh y? Is blocking being used in appropriatecircumstances? What has been the net effect of the blocking?(2) Who have we designated and why ? What has been the net effect of theblocking?ii) Worldwide: What has been the level of cooperation with US generated lists?What are the perceived flaws, if any , in the current approach (crosscut withTeam #3)?iii) Have there been any before and after assessment of money flows that occurredas a result of blocking? What do we think terrorists groups hav e done inreaction to blocking?c) Law Enforcement

i) Prosecution of charities an d other groups. W ho have we prosecuted? Whatdo the inv estigations reveal about the nature of terrorist fina ncing? Howeffective has the use of the terrorist fundraising statutes been? Has FinCENhelped?ii) What is the level of cooperation with intel ligence comm unity? What has beenth e effect of greater inform ation sharing powers contained within the USAPatriot Act? (crosscut with team 6)iii) W h a t is the level of cooperation with in an d among law enforcement agencies?Are they coordinating efforts? Are there an y institutional barriers? What ca nbe improved?d) Regulatory and Private

i) USA PATRIOT Act: What does it do? Is it effective? What are the burdenson th e financial services ind ustry? Are they to o muc h? Should there bemore? A re there privac y issues? Can it be made better? W ill the newregulations of non-bank financial institutions catch m ethods used byterrorists? Wh o is to regulate non-ba nk financial institution s in this area? Dothey have sufficient resources?ii) Is BSA data on terrorist finance being used by law enforcem ent? How ? Doesit result in assisting cases and inv estigations? Does it contribute to ourunderstan ding of terrorist financ ing inve stigations? If not, why not?iii) What have we learned about wha t th e financia l transactions of a U.S.-basedterrorist cell looks like? Are we able to get any predictive data on terroristfinancing?iv ) How do we get information, either concerning general trends or specificindividuals, to financial institutions? How effective is it?


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v) Is there a way to regulate charities to prevent abuse? W hat do other countriesdo?e) Diplomatic

i) How well are other countries cooperating with U.S. regulatory, intelligenceand law enforcement authorities in the area of terrorist financing?(1) W hat has the U.S. requested other countries to do? How has the U.S. triedto influence enforcement in other countries?(2) Who are key allies that need to improve enforcement? Who are non-alliesthat need to improve enforcement?(3) Does the U.S. see the problem the same way as the internationalcommunity? If not, what is the disconnect?ii) Do other countries hav e the technical capacity to regulate and m onitor fortransactions relating to terrorism? What can be done about that?iii) Are there international organizations that address this problem? Howeffective are they?

f) Overall government strategy and coordination.i) Do we have a government-wide strategy on terrorist financ ing? How is thisenforced w ithin the interagency com mu nity?ii ) W hat is the current mechanism for coordinating and e nsuring cooperation?Do gaps (still) exist? Is information being shared? Is there som ething else thatneeds to be done?iii) How effective are the current efforts to disrupt terrorist f inancing inpreventing another 9/11 or making another 9/11 substan tially more difficult toaccomplish?(1) If we conclude is that it is impossible to prevent even low -tech,inexpensive attacks, (like 9/11 or the Ressam attempt), are there are otherbenefits that make our efforts worth doing?


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Briefing plan for commissionersDavid Aufhauser , Treasury General CounselDennis Lormel, Chief of FBI Terrorist F inancing OperationsLee Wolosky, Council on Foreign Relations Task Force

Reading listCouncil on Foreign Relations, Terrorist Financing, 2002 [Relvance: Mostcomplete discu ssion of the issue to date. Staffed an d written by leading experts inth e field. Makes specific policy recommendations worth considering.]Financial Crimes Enforcement Network, SAR Report no. 4 [Relevance: U.S.Government's first efforts at identifying a typology for domestic financialtransactions relating to terrorism. Open to ques tion how useful such a typologyis , given th e innocuous na ture of terrorist-related financial transactions.]Financial Action Task Force, Special Recommendations on Terrorist Financing,October 31, 2001. [R elevance: Bes t efforts to date on international cooperationand standards setting.]National Commission on Terrorism, Final Report, pages 26 to 29. [Relevance:Discus sion of the issue and recommendations to stop non-state financial supportof terrorism worthy of consideration. Failure to implement recommendations alsoworth discussion.]Civil Complaint in Burnett v. Al Bakara Investment an d DevelopmentCorporation, pages 221 to 378 . Law su it by victims families against indi vid ualsand financial institu tions in the Middle East. W hile the ultimate merits of thelawsuit are subject to debate, the excerpted pages give a good description of thecharities, banks and individuals alleged to assist bin Laden and A l-Qaida.Indictment, United States v. Zacarias M ouss aoui [Relevance: good illustrationof the use of a financial inves tigation to determine the scope and natu re of theconspiracy.]


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Essential categories of docum ents1) Select OFAC decision packages - Treasurya) Al-Qaida and bin Laden (8/22/1998)b) Taliban (7/4/1999)c) Al-Barakaat( 11/7/2001)^>4 HolyLand Foundation (Hamas) (12/4/2001)e) Al-Hamati Sweets Bakeries, Al-Shifa' Honey Press For Industry and Commerce,et al., (the hon ey companies) (10/12/2001)

f) Afghan Support Committee and Revival of Islamic Heritage Society (1/9/2002)g) Al-Harimain Islamic Fountation (3/11/2002)2) Policy Coordination Com mittee (PC C) for terrorist finance minutes and agendas -L^ , ,M ,.,__for post 9/11 activities.3) NSC documents relating to terrorist financing, particularly Presidential DecisionDirectives 39 (counter terrorism coordination), 42 (international organized crime) and

63 (critical infrastructure protection), and documents relating to the implementationof those directives.4) Ag enda, minu tes and notes of meetings of Counterterrorism Strategy Group, pre 9/11.5) Lists and summaries of FBI terrorist financing investigations, both p re and post 9/11.6) Lists and summaries of O peration Green Quest or other Customs/IRS/Secret Serviceinvestigations in to terrorist financing pre and post 9/11.7) FinCEN BSA data and other information, including pre and post 9/11 Suspicious

Activity Reports and analytical products resulting from this analysis. Includes 1998report on haw ala prepared by Patrick lost.8) CTC, UBL Task Force materials as it related to terrorist finance (overlap with Team#2)9) Cables to/from State Department to US embassies concerning cooperation on terroristfinancing intelligence gather or law enforcement. L s/,er.*Ac/10) U.S. Customs Service Office of Strategic Trade and Intelligence report, October 2001(re: honey shipments)11 ) Financial analysis of 9/11 attacks, created by F BI's Terrorist F inancial Rev iew G roup(later renamed Terrorist Financing Operations Section)12) Other documents as suggested by the join t committee's report

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Persons to interview (this list is evolving)Informal (background)Kenneth Ka tzma n, Congressional Research ServiceLee WoloskyJo n Winer

NSC:Jody MyersWilliam F. WechslerRichard E. ClarkeCustoms:Marcy Forman, Director, Operation Green Q uest, US CustomsDirector, US Customs Service Office of Strategic Trade and Intelligence

FBI:Dennis Lormel, Terrorist Finan ce Ope rations SectionTreasury:Kenneth Dam, former Deputy SecretaryDavid Aufhauser, General CounselJimmy Gurule' former Undersecretary for EnforcementUndersecretary/Assistant Secretaries for Enforcement, Treasury 1995-2000Juan Zarate, DAA S for terrorismBob McBrien, OFACRichard Newcomb, OFACJim Sloan, FinCENDavid Vogh t, FinCENIRS:Steven Miller, Director, Exempt Organ izations, Tax Exempt/Government EntitiesDivision, IR SMartha Sullivan, Director, Compliance, Small and Medium Sized Businesses, IRS(MSBs)State:Unit head , Office of the Coordinator for Counterterrorism, Counterterrorism Finance an dDesignation UnitJustice:Michael Chertoff, A A GAlice Fischer, DAAG

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Bruce Swartz, DAA GJim Reynolds, former Chief TVCSBary Sabin, Chief TVCSJeff Breinholt, CT section, JusticeGordon Krom berg, AU SA, EDVA

Private Industry:Rick Sm all, Director for Global A nti -Money Laundering, Ci tigroupDirector of compliance, SunTrustExperts in mon ey laundering/terrorist finance/OF AC comp liance issue as i t relates to USfinancial institutions

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Documents

T4 B1 Team 4 Workplan Fdr- Undated Final Submitted- Team 4 Workplan- Funding of Terrorist Activities 126