- The Washington Times - Sunday, December 14, 2003

Officials from the FBI, the Department of Homeland Security and the Treasury will face tough questioning today about their efforts to track terrorist financing outside the banking system.

A congressional investigation last week found that U.S. law-enforcement agencies had made little progress in uncovering and preventing the use of diamond- and precious-metal trading, bulk-cash smuggling, charitable donations, and informal banking systems — known as hawalas — to fund terrorism.

Two subcommittees of the House Government Reform Committee will hold a field hearing today in Tampa, Fla., about efforts to cut off terrorist financing.

Those efforts are central to the U.S. counterterrorism strategy, said Congress’ investigative arm, the General Accounting Office, in a report Friday.

The GAO found that the FBI, which was made the lead agency for such investigations earlier this year, did not collect information systematically about alternative terrorist financing.

“The lack of such data hinders the FBI from conducting systematic analyses of trends and patterns,” the report said.

The report also pointed out that the Internal Revenue Service had not developed mechanisms for sharing information with state authorities about charities suspected of funneling money to terrorists, despite having agreed to do so more than 18 months ago.

The GAO report also criticized the departments of Justice and the Treasury for not producing a promised report on the use of diamonds and other commodities by terrorist financiers by March 2003.

The GAO found that “few rigorous studies have been conducted” by the U.S. government, and the information that was available often was contradictory.

“There’ll be some tough questions,” said a committee aide about the hearing in Florida. “We need to find out what’s going on.”

One question the aide said likely would come up is the decision to make the FBI the lead agency for terror-financing investigations, given the GAO’s criticism.

Under a memorandum of understanding between Homeland Security Secretary Tom Ridge and Attorney General John Ashcroft signed in May, all agencies that come across evidence of terror financing are required to forward the information to the FBI, but the requirement is not reciprocal.

“People [in the other agencies] are calling it a power grab,” the aide said.

Neither the FBI nor the Justice Department returned phone calls requesting comment.

The GAO acknowledged that law-enforcement agencies faced significant challenges in attempting to track and close off these informal financial channels. The report found that terrorists tended to adapt their methods, based on enforcement efforts.

“Once terrorists know that an industry they use to earn or move assets is being watched, they may switch to an alternative commodity or industry,” according to the report.


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