T4 B1 Team 4 Workplan Fdr- Undated Draft- To Commissioners- Team 4 Workplan- Funding Of Terrorist Activities

National Commission on the Terrorist Attacks upon the United States Team #4

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Funding of Terrorist Activities

Team members: John Roth Douglas Greenburg Serena Wille

List of key questions 1. What are, and should be, the goals of government efforts in the area of terrorist financing? •

Government efforts concerning terrorist financing appear to have three goals: (1) obtaining intelligence regarding terrorist activities and operations; (2) disruption of terrorist activities and operations; and (3) depriving terrorists of resources through executive or judicial action. To what degree has the government pursued each of these goals? Have the goals changed over time? How much emphasis should be placed on each of these goals?

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The government has stated that the premise of the effort on terrorist financing is that "money is the lifeblood of terrorism." Given the demonstrated ability of terrorists to use relatively tiny amounts of money to create significant attacks, should this be the most important goal? Are efforts directed at that goal detracting from the other goals?

2. Prior to 9/11, what did the U.S. do to identify and stop terrorist funding? •

The primary public effort within the U.S. was to identify and name specific terrorist groups and then attempt to financially isolate them through the use of executive orders. How successful were these efforts?

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Various government policies were instituted to allow for more effective tracking and attacking of terrorist assets. What were these policies? Did they work? Why or why not?

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There have been a number of the public criticisms about the government's pre9/11 efforts: a failure to appreciate the threat, unclear roles among the institutions involved, a failure to share information, no overall strategy, and an unwillingness or inability to get the necessary cooperation from key foreign governments. How valid are these criticisms?

3. How were the 9/11 terrorists able to generate and move their money? •

What were the identifiable financial transactions of the hijackers? Where did they get their funding, where did they keep their funds in the United States and how did they distribute their funds among the 19 hijackers? Did anyone in the United States itself provide funding to the hijackers?

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What do these transactions say about how organized, planned terrorist operations operate within the United States? Are they different from other terrorist operations, such as ad-hoc terrorist operations or the maintenance of sleeper cells?

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How did Al Qaeda generally raise and move funds to support itself as an institution? For example, how did it raise money to pay for training camps and bring recruits to Afghanistan for training?

4. Does the fact that the 9/11 hijackers were able to evade detection and disruption tell us anything about the system in place at the time? •

Were the various anti-money laundering controls in place sufficient to detect the types of movement of money involved here? Why or why not? Was the existing system simply not designed to detect the type of transactions engaged in by the 9/11 terrorists?

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Was there any concerted effort to track contemporaneously known terrorists cells through their financial transactions? Did the government have the technical ability to do so? What would such a system look like?

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What were the other deficiencies with the pre 9/11 system? For example, were there shortcomings in efforts to prevent the abuse of charities, regulate informal money transmitters, identify illegal trade-based money movements? Did we effectively engage key foreign governments, particularly Saudi Arabia, to assist?

5. What are we currently doing, and have these efforts eliminated the deficiencies present before 9/11? •

The U.S. government has devoted substantial resources since 9/11, including enacting significant new regulations, in an effort to disrupt and curtail the funding of terrorist organizations. What were those changes? Are they effective? Are the deficiencies that may have contributed to the 9/11 failures still present?

6. What specific, actionable policy recommendations can be made to improve the current efforts in light of the lessons of 9/11? 10 • Should the goals of the efforts regarding terrorist financing be changed? If so, how? •

Is the government effectively organized to provide for adequate coordination among the various agencies and actors involved in the effort? If not, how could the structure be improved?

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How has, and how will, the raising and movement of money for terrorist operations change in response to government actions? Is there a move away from formal financial systems into something more difficult to detect? Can the government recognize and quickly adapt to those changes?

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What is the best approach to increase the ability and the willingness of key foreign states to track and disrupt terrorist financing?

Briefing plan for commissioners David Aufhauser, Treasury General Counsel [Head of US government's policy and coordination efforts in terrorist financing] Lee Wolosky, Council on Foreign Relations Task Force [co-author of report on terrorist financing]

Reading list Council on Foreign Relations, Terrorist Financing, 2002 [Relevance: Most complete discussion of the issue to date. Staffed and written by leading experts in the field. Makes specific policy recommendations worth considering.] National Commission on Terrorism, Final Report, pages 26 to 29. [Relevance: Discussion of the issue and recommendations to stop non-state financial support of terrorism worthy of consideration. Failure to implement recommendations also worth discussion.] Financial Crimes Enforcement Network, SAR Report no. 4 [Relevance: U.S. Government's first efforts at identifying a typology for domestic financial transactions relating to terrorism. Open to question how useful such a typology is, given the innocuous nature of terrorist-related financial transactions.] Financial Action Task Force, Special Recommendations on Terrorist Financing, October 31, 2001. [Relevance: Best efforts to date on international cooperation and standards setting.] Indictment. United States v. Zacarias Moussaoui [Relevance: good illustration of the use of a financial investigation to determine the scope and nature of the conspiracy.] National Money Laundering Strategy 2002, Goal 2 [Relevance: U.S. government's published strategy on attacking terrorist financial networks]

Preliminary categories of documents 1) Select OFAC decision packages a) Al-Qaida and bin Laden (8/22/1998) b) Taliban (7/4/1999) c) Other relevant OFAC decision packages 2) Relevant documents from Policy Coordination Committee (PCC) for terrorist finance reflecting policy changes since 9/11. 3) Documents relating to Presidential Decision Directives 39 (counter terrorism coordination), 42 (international organized crime) and 63 (critical infrastructure protection). 4) Relevant documents from NSC's Counterterrorism Strategy Group, pre 9/11. 5) Lists and summaries of pre 9/11 FBI terrorist financing investigations. 6) FinCEN BSA data and analytical products relating to terrorist finance. 7) Relevant State Department documents concerning cooperation by foreign governments on terrorist financing, particularly concerning states through which passed financing for the 9/11 hijackers or Al Qaeda (including relevant communications to/from U.S. embassies in these states) 8) Financial analysis of 9/11 attacks, created by FBI's Terrorist Financial Review Group (later renamed Terrorist Financing Operations Section) 9) Other documents as suggested by the joint inquiry report

Persons to interview NSC Jody Myers William F. Wechsler Richard E. Clarke Customs Marcy Forman, Director, Operation Green Quest, US Customs Director, US Customs Service Office of Strategic Trade and Intelligence FBI Dennis Lormel, Terrorist Finance Operations Section

Treasury Jim Johnson, former Undersecretary for Enforcement Ron Noble, former Undersecretary for Enforcement Elisabeth Bresee, Assistant Secretary for Enforcement Kenneth Dam, former Deputy Secretary David Aufhauser, General Counsel Jimmy Gurule' former Undersecretary for Enforcement, 2001-03 Juan Zarate, DAAS for terrorism Bob McBrien, OFAC Richard Newcomb, OFAC, Director Jim Sloan, FinCEN, Director David Voght, FinCEN, Office of Intelligence Peter Djinis, former FinCEN, Office of Financial Enforcement IRS Steven Miller, Director, Exempt Organizations, Tax Exempt/Government Entities Division, IRS Martha Sullivan, Director, Compliance, Small and Medium Sized Businesses, IRS (MSBs) State Unit head, Office of the Coordinator for Counterterrorism, Counterterrorism Finance and Designation Unit Justice Michael Chertoff, AAG James Robinson, former AAG Alice Fisher, DAAG Bruce Swartz, DAAG Jim Reynolds, former Chief TVCS Barry Sabin, Chief CT (formerly TVCS) Jeff Breinholt, CT section, terrorist financing Gordon Kromberg, AUSA, EDVA Private industry and independent policy analysts John Byrne, American Bankers Association Rick Small, Director for Global Anti-Money Laundering, Citigroup Director of compliance, SunTrust Michael Zeldin, partner, Deloitte and Touche Kenneth Katzman, Congressional Research Service Lee Wolosky, Council on Foreign Relations Jon Winer, former Deputy Assistant Secretary of State Steve Emerson, The Investigative Project

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