CATF Reports Oct. 31, 2016, 10:38am


Under Secretary for Terrorism and Financial Intelligence Adam Szubin was at John Hopkin’s School of Advanced International Studies (SAIS) last week to discuss the status of the U.S. Treasury fight against terrorism finance. In his remarks, Szubin defined the central role of money in terrorism operations, described the tools the Treasury uses to combat terrorism finance, and demonstrated Treasury advances and challenges in the department’s efforts to counter ISIS and Hezbollah’s access to money. While international allies have often worked alongside the U.S. Treasury in combating terrorism finance, Szubin concluded by highlighting the need for further international action and cooperation in stifling terrorists’ access to finances.    

While conceding that “turning off the spigot” of money flow to terrorist groups is not a realistic goal, Under Secretary Szubin discussed Treasury’s “defensive” and “offensive” tools used to constrain a group’s ability to recruit members, pay salaries and bribes, and buy arms. These tools include a defensive push to expand transparency in the international financial system through FATF in order to increase the likelihood of detecting terrorists and facilitators using the financial system. On the offensive side, the U.S. Treasury draws on targeted sanctions, the authority to require all U.S. financial institutions to act against those identified as foreign money laundering sources, and close coordination with law enforcement and, in the case of ISIS, the U.S. military.

Treasury’s top counterrorism target is undoubtedly ISIS. Since the terrorist group earns a significant portion of its revenue from returns on oil sales and tax payments, both of which are internally derived, the Treasury’s mission has been boosted by the Coalition’s recent progress, particularly by targeting the group’s oil and gas supply chain. Aside from the Coalition’s campaign, Treasury has worked alongside the Government of Iraq to reduce liquidity in ISIS territories and thus decrease the amount of taxable money available, cut off banks’ access to the international financial system in ISIS territories, and suspend the payment of government salaries into ISIS-held areas. Szubin pointed to the terrorist group’s move to cut fighter salaries by 50 percent, suspend the “death benefit” payments to the families of ISIS fighters who died in combat, and its increased difficulty in attracting recruits as indications of a financially weakened ISIS.

In restricting Hezbollah’s global access to money, Under Secretary Szubin emphasized Treasury’s partnership with Gulf allies. The U.S. and Saudi Arabia have issued joint designations targeting Hezbollah operatives and financial supporters (the U.S. has designated more than 100 Hezbollah-related individuals) and the GCC has mobilized to designate Hezbollah as a terrorist organization. Also, the recently established “Hizballah International Financing Prevention Act of 2015 (HIFPA)” adds additional sanction authorities to target foreign financial supporters of Hezbollah.

Yet, the Under Secretary’s most revealing comments were centered on the challenges that lie ahead in the Treasury’s fight against terrorism financing. Szubin claimed that Kuwait and Qatar lack the “necessary political will and capacity” to effectively enforce counterterrorism finance laws, and that Turkey is vulnerable to serving as a financial and logistical hub for ISIS. Lastly, Szubin referenced Pakistan’s, and particularly ISI’s, mixed record on combating terrorism finance and asserted that the U.S. will act alone to “disrupt and destroy” terrorism networks within Pakistan if necessary.

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