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U.S. says Mideast must crack down on terror finance

Posted on: Wednesday, 13 July 2005, 15:47 CDT

By Caroline Drees, Security Correspondent

WASHINGTON (Reuters) - Middle Eastern countries must do much more to fight terrorism financing, and Washington will push these states to take action if they fail to do it on their own, a senior U.S. Treasury official said on Wednesday.

Stuart Levey, the U.S. Treasury's undersecretary for terrorism and financial intelligence, said some progress had been made in the region, such as passing anti-money laundering laws and cracking down on the abuse of charities. But he called for more evidence that the steps were actually bearing fruit.

"We have a long way to go in the battle against terrorist financing in the Middle East," Levey said in testimony to the Senate banking committee.

"Where the threat of terrorism does not generate the will to take effective action ... my office, working in close cooperation with all of our interagency counterparts, will push for action," he said.

In the past, U.S. steps have included diplomatic pressure, as well as economic sanctions such as freezing funds.

Levey said some Middle Eastern countries had still not passed adequate anti-money laundering laws, ensured laws were actually enforced, established controls over informal cash transfers, or set up financial intelligence units to help fight dirty money.

Levey specifically cited long-standing shortcomings in Saudi Arabia and Syria. He said the United States was using a combination of pressure and cooperation to get the kingdom -- birthplace of most of the Sept. 11 hijackers -- to comply.

"Even today, we believe that private Saudi donors may still be a significant source of terrorist financing, including for the insurgency in Iraq," he said.

The undersecretary said Syria continued to "meddle" in the affairs of its neighbor Lebanon, was a source and conduit for funds to Iraqi insurgents, and allowed terrorist groups to flourish on its soil.

The United States has already slapped a series of sanctions on Syria and has blocked the assets of some of its nationals -- including its interior minister -- to press for change.

Levey also said cash couriers presented a particularly serious danger, in part because they were being used to fund militants in Iraq.

"It is critical that Gulf countries and countries throughout the Middle East lower their reporting thresholds for cross-border transfers of cash and enforce these provisions aggressively," he said.

Levey said the United States wanted to see proof -- such as arrests, cash seizures and blocking of accounts -- that policies against dirty money were not only being adopted, but implemented and enforced.

"Some countries, eager to curry favor with their neighbors or the international community, may believe that adopting an anti-money laundering and counter-terrorist financing law will keep observers at bay. Such half-steps will neither fool nor satisfy the United States and the international community."

Source: REUTERS

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