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USA adopts financial legislation for counter-terrorism
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| 15 July 2004 |
By Paul J Smith
JIR examines how the USA has enlisted a range of bank-secrecy and money-laundering statutes to restrict the flow of money to terrorist groups.
The Saudi Arabian government announced at the beginning of June that they were to dissolve the operations of the Al Haramain Islamic Foundation and to reorganise the entity under the oversight of a national commission.
The move comes after intense pressure from the USA to crack down on the flow of funds to terrorist groups. Since 2002, officials with the US Department of the Treasury have designated branches of Al Haramain in Bosnia, Somalia, Indonesia, Tanzania, Kenya, Pakistan, Afghanistan, Albania, Bangladesh, Ethiopia and the Netherlands as providing financial, material and logistical support for terrorism.
US enforcement actions against Al Haramain are not an isolated effort, but part of a broad and vigorous crackdown by the US government on charities and other organisations that funnel money to terrorist groups. Due to the passage of the Patriot Act 2001, a law that increased the ability of US authorities to track and investigate terrorism activities, the US government has been able to enlist its pre-existing arsenal of tax, bank-secrecy and money-laundering statutes in the crackdown. The US Treasury claims that at the end of 2003, US$140m-worth of terrorist assets worldwide remained blocked since the crackdown began shortly after 11 September 2001.
With the merging of counter-terrorism and the anti-money laundering and bank-secrecy regime, the USA is transforming how banking and other financial activities are conducted in the post-11 September 2001 world. Some of the initiatives are controversial and reach far beyond US borders. Anyone conducting financial transactions in the USA, or outside the country with financial institutions that have ties to the USA, is likely to be affected by the recent legislation.
The section of the Patriot Act most relevant to terrorism financing is Title III, known as the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. Its effects are far reaching. Essentially, the law changes the Bank Secrecy Act of 1970 and the Money Laundering Control Act of 1986, and expands their scope to include activities believed to be linked to terrorist financing.
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