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Officials Explain Terrorist Financing System to Lawmakers

By Sgt. Sara Wood, USA
American Forces Press Service

WASHINGTON, July 29, 2005 – Disrupting financial support for the insurgency is a key element in the overall strategy to defeat terrorists in Iraq, and the U.S. government is pursuing several initiatives to track and limit the flow of funds, Defense Department officials told two congressional subcommittees here July 28.

Daniel Glaser, assistant secretary for terrorist financing and financial crimes; James Roberts, acting deputy assistant secretary for special operations and combating terrorism; and Caleb Temple, operations director for the Defense Intelligence Agency's Joint Intelligence Task Force for Combating Terrorism, outlined the sources of insurgency funding sources and efforts being made to stop that funding.

The main external sources of funding for the insurgency are former regime elements, including senior officials of the former regime, and Sunni jihadists, Glaser said. Temple told lawmakers that corrupt members of some transnational charities and nongovernmental organizations siphon and embezzle money for insurgents.

Internally, insurgents raise money through low-level crime and extortion, kidnapping, smuggling and drug trafficking, Temple said. Roberts explained that once funds are generated, insurgents have a wide, quickly evolving series of tactics to transfer money throughout their network, including high-tech means such as sophisticated bank transfers and low-tech means such as couriers, he said.

The DIA believes terrorist expenses in Iraq are only moderate, Temple said, so if the funding continues at high levels from diverse sources, some insurgent groups could continue their activities indefinitely.

To prevent this from happening, Glaser said, the Treasury Department is pursuing efforts in three areas: targeted action against the specific elements of insurgent financing, systemic efforts to improve financial transparency in Iraq and throughout the region, and engagement with Iraq's neighbors to cut off financial flow to the insurgency.

To address the first area, the department has been designating people and groups known to provide insurgent support, and is working with the State and Justice departments and the FBI to cut them off from the financial system, Glaser said. To improve financial transparency, the Justice Department is developing a payment system for Iraq to eliminate the country's reliance on cash, he said. Additionally, the U.S. government helped create the Middle East North Africa Financial Action Task Force, which is a group of 14 different countries working to bring the Middle East-Northeast region into compliance with international financial standards.

Concern about Iraq's neighbors is not limited to Syria, although Syria does pose a particular problem, Glaser said. All countries in the region have an obligation under the United Nations Security Council resolutions to freeze former regime assets and return them to the people of Iraq, he said.

Denying terrorists the resources they need for operation is one of the six strategic objectives outlined in DoD's national defense strategy, Roberts said. The U.S. Pacific Command has been working with partner nations to identify financial support networks for terrorists, help those nations develop legal expertise in money laundering and terrorist financing, and encourage the nations with strong expertise in this area to provide assistance to less capable nations, he said.

U.S. Central Command's Threat Finance Exploitation Unit, he said, which works with DoD and non-DoD intelligence, law enforcement and regulatory agencies responsible for taking action against terrorist financial networks also has been successful.

Disrupting financial support for insurgents is a difficult objective, but one that the government has been making progress on, the officials agreed. There is still much work to do, but all the agencies involved are committed to do their part to defeat the insurgency in Iraq, they said.

"Much remains to be done, but we are learning more about the insurgency and its funding mechanisms every day, and we will continue to do all we can to support our military and coalitions partners who are in harm's way and to contribute to our collective efforts to bring peace and security to the people of Iraq," Glaser said.

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