How we're tying up terrorists' cash
Almost all illegal activity relies on access to the financial system. By blocking that, we block them.
President Bush spoke last week at the Army War College about the reshaping of our national security strategy to prevent new attacks and keep our country safe. Indeed, the threats we face today are different from the conventional enemies of the cold-war era. Many of them are not neatly confined within borders, but rather are transnational and asymmetric and therefore not necessarily susceptible to traditional means of deterrence. [Editor's Note: Due to an editing error, the original version mischaracterized the nature of the threats.]
To address these emerging dangers, we have had to revolutionize our national security architecture to deter and defeat this new form of enemy. The most obvious changes are the creation of the Department of Homeland Security, the National Counterterrorism Center, and the position of director of National Intelligence to oversee the Intelligence Community.
A significant, but less-well-known, change has been the reorientation of the Treasury Department to play an important role in national security. As part of the strategy developed after Sept. 11, President Bush and Congress established a new office and intelligence unit at the Treasury to utilize financial intelligence and targeted financial measures aimed at illicit actors and their support networks.
Terrorist financiers, weapons proliferators, narcotics traffickers, and even rogue regimes have one thing in common: They all rely on access to the financial system.
We share the information gleaned from financial intelligence with foreign governments and the private sector to alert them to a particular threat and persuade them to act. We also use sanctions or regulatory authorities to freeze assets and bar further access to the US financial system.
The benefits of this strategy are twofold. Offensively, we are taking important steps to combat national security threats. When we designate a terrorist, it becomes far more difficult for that individual to efficiently move funds. Beyond that, the action helps deter other would-be financiers. Defensively, we help to exclude dirty money from the international financial system. Preserving the integrity of that system is central to maintaining confidence in it.
Being excluded from the financial system is much more painful than many might imagine, and this new strategy is producing real results.
•Terrorist groups like Al Qaeda and Hamas are finding it more difficult to move and store money and appear anxious for financing, as our actions have helped to scare off would-be donors. We have information that indicates the core leadership of Al Qaeda is having difficulty raising funds and sustaining itself.
•North Korea agreed to come back to the table in the six-party talks on their nuclear program when the regime found itself almost completely isolated from the international financial system after the United States designated the bank they were using to launder illegal proceeds as a proliferator.
•Financial measures targeted at Iran's nuclear and missile entities and the banks complicitous in their misconduct have left Iran financially and politically isolated. International banks have largely scaled back or cut off business with Iran, and Iranian banks are now largely viewed as pariahs in the international financial system. This has intensified a debate in Iran on whether the country's best interests lie in continued defiance and isolation.
A key advantage to this approach is that it has made the private sector our ally, in contrast to traditional country sanctions, which often put the government and the business community at odds. Members of the international banking community go beyond their legal requirements and voluntarily cut off business with certain individuals, entities, or regimes because they do not want to risk handling illegitimate business. These are good corporate citizens who care about protecting their institutions' credibility and doing their part to make the world a safer place. Together we have built a coalition where private sector actions ultimately amplify the effectiveness of government-imposed measures.
Other countries are joining this effort. Britain, for instance, has a newly passed counterterrorism law that will expand its ability to take action against terrorists and proliferators utilizing London banks to finance their activities.
Today, countries recognize that increasing transparency in the financial system and implementing standards to address money laundering along with counterterrorist and counterproliferation financing is a competitive advantage in the global marketplace. Countries want to be viewed as trusted partners with a strong reputation for a safe financial sector.
Analyzing financial intelligence and imposing targeted financial measures have become valuable components of the president's overall national security strategy. They not only increase the transparency and integrity of our financial system but also help to keep us safe.