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SAUDI ARABIA AND THE FIGHT AGAINST

TERRORISM FINANCING

HEARING

BEFORE THE

SUBCOMMITTEE ON THE MIDDLE EAST 

AND CENTRAL ASIA

OF THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MARCH 24, 2004

Serial No. 108–109

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations 

(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

DOUG BEREUTER, Nebraska 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

CASS BALLENGER, North Carolina 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

AMO HOUGHTON, New York 

JOHN M. MCHUGH, New York 

ROY BLUNT, Missouri 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

NICK SMITH, Michigan 

JOSEPH R. PITTS, Pennsylvania 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

ROBERT MENENDEZ, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

JOSEPH M. HOEFFEL, Pennsylvania 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

CHRIS BELL, Texas 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA

ILEANA ROS-LEHTINEN, Florida, Chairwoman 

STEVE CHABOT, Ohio 

JOHN M. MCHUGH, New York 

NICK SMITH, Michigan 

JO ANN DAVIS, Virginia 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

ROY BLUNT, Missouri 

JOSEPH R. PITTS, Pennsylvania 

KATHERINE HARRIS, Florida 

GARY L. ACKERMAN, New York 

HOWARD L. BERMAN, California 

ELIOT L. ENGEL, New York 

JOSEPH CROWLEY, New York 

JOSEPH M. HOEFFEL, Pennsylvania 

SHELLEY BERKLEY, Nevada 

ADAM B. SCHIFF, California 

BEN CHANDLER, Kentucky 

YLEEM POBLETE, Subcommittee Staff Director 

GREGG RICKMAN, Senior Professional Staff Member 

DAVID ADAMS, Democratic Professional Staff Member 

MATT ZWEIG, Staff Associate 

AMY SERCK, Staff Associate 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable J. Cofer Black, Coordinator, Office of the Coordinator for 

Counterterrorism, U.S. Department of State .................................................... 8

Thomas J. Harrington, Deputy Assistant Director, Counterterrorism Division, 

Federal Bureau of Investigation ......................................................................... 14

Juan C. Zarate, Deputy Assistant Secretary, Executive Office for Terrorist 

Financing & Financial Crimes, U.S. Department of the Treasury .................. 18

Steven Simon, Senior Analyst, Rand Corporation ................................................ 41

Robert Baer, former CIA Middle East Intelligence Officer .................................. 50

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Ileana Ros-Lehtinen, a Representative in Congress from the 

State of Florida, and Chairwoman, Subcommittee on the Middle East and 

Central Asia: Prepared statement ...................................................................... 2

The Honorable J. Cofer Black: Prepared statement ............................................. 11

Thomas J. Harrington: Prepared statement ......................................................... 15

Juan C. Zarate: Prepared statement ...................................................................... 20

The Honorable Steve Chabot, a Representative in Congress from the State 

of Ohio: Articles and press release submitted for the record ........................... 45

APPENDIX 

Responses from the Honorable J. Cofer Black to questions submitted for 

the record by the Honorable Ileana Ros-Lehtinen ............................................ 60

Questions submitted for the record by the Honorable Ileana Ros-Lehtinen 

to Juan C. Zarate [responses not received prior to printing] ........................... 68

The Honorable Nick Smith, a Representative in Congress from the State 

of Michigan: Prepared statement ........................................................................ 68

Testimony from the hearing before the Subcommittee on Terrorism, Technology and Homeland Security of the Committee on the Judiciary, United 

States Senate, September 3, 2003 ...................................................................... 69

(1)

SAUDI ARABIA AND THE FIGHT AGAINST 

TERRORISM FINANCING 

WEDNESDAY, MARCH 24, 2004

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON THE MIDDLE EAST

AND CENTRAL ASIA, 

COMMITTEE ON INTERNATIONAL RELATIONS, 

Washington, DC. 

The Committee met, pursuant to call, at 1:35 p.m. in Room 2360, 

Rayburn House Office Building, Hon. Ileana Ros-Lehtinen, (Chairwoman of the Subcommittee) presiding. 

Ms. ROS-LEHTINEN. Thank you. The Subcommittee will come to 

order. 

Since the horrific events of September 11th, we have been confronted with the undeniable fact that 15 of the 19 terrorists who 

caused this act of mass murder were from Saudi Arabia. Because 

of this, it is our duty to examine what the Saudis have done, are 

doing now, and what they will do in the future to prevent this kind 

of tragedy from ever repeating. 

We want to gain an understanding of how Saudi Arabia is working to repair a system that many say was broken or at the very 

least had grown out of control. Moreover, we want to understand 

what our own government is doing to help the Saudis close down 

the network that facilitated the implementation of the September 

11th terrorist plot. 

I must say, however, that there are grave concerns on this Subcommittee, and I would say in Congress in general, over the extent 

of Saudi cooperation in this fight and, specifically, the Saudi role 

in the financing and abetting of terrorist groups in general. 

Having said this, I am pleased that the United States and the 

Saudi government have set up two task forces, one to counter terrorism overall and the other to counter terrorism financing specifically. I am also pleased that the Saudi government is closing down 

charities and controlling the collection of Zakat, or the charitable 

donation, that is so important in Islam. Yet I am concerned that 

there are some red lines beyond which it might be impractical or 

even impossible for Saudi officials to cross. 

Moreover, I fear that the sheer size of the financing effort and 

the extent of the financial enterprises have created a self-sustaining enterprise for many of these groups. It is quite possible 

that this aid from the connections in Saudi Arabia have set them 

upon the path of financial independence, irrespective of any future 

Saudi help. 

2

Terrorist connections through businesses, social service institutions, schools, mosques, and charities, in some cases opened in the 

West, allow them to continue their terrorist operations against us 

on multiple fronts. 

The mixing of charitable work with terrorism is a cowardly and 

cynical misuse of trust dedicated to destruction. This combination 

only complicates the search for the assets that fund terrorism, blurring the target for U.S. and allied investigations. 

I realize that this fight is ongoing and difficult. I also realize the 

sensitivities involved. Americans, however, are worried that while 

their government is telling them that Saudi Arabia is a great 

friend, they see Saudi-originated charities still operating around 

the world supplying the seed money for attacks against the United 

States and our allies. 

There are also charities like the Al-Haramain foundation, that 

act as umbrella groups for other charities and have overseas offices. Only recently, the United States closed down one branch of 

this group in Oregon. 

These charities must be shut down and their infrastructure 

purged to prevent re-emergence in a different form. 

Americans also are rightly concerned about the proliferation of 

anti-American statements coming from Saudi and other Imams encouraging terrorism. 

It will be important for us to learn of Saudi actions regarding the 

reforms being undertaken in the mosques, both in the education of 

the Imams, as well as the ban on the collection of the Zakat. 

It is important too, that Saudi Arabia stop the flow of funds to 

Hamas. This violent terrorist group has killed almost 300 Israelis 

in more than 50 homicide bombings over the past several years. If 

the money is not provided officially, as is claimed, I believe it is 

necessary to stop it on the private level as well. It is in our common interest to prevent this violent group from getting the funds 

to commit murder. 

I want to believe that the Saudi government is sincere when it 

says that it is intent on stopping al-Qaeda. I also want to believe 

that they are sincere in stopping the money flow to them, but I 

want to see the results of these actions. Simply put, Saudi Arabia 

must be part of the solution to this vast problem, not a participant. 

I hope that the witnesses today will fully speak to the concerns 

of this Subcommittee. I believe that we have a great number of 

questions to bring to your attention and I appreciate your willingness to testify today, especially to Ambassador Black, whom I understand canceled a trip to Athens to be with us today. 

Thank you, Ambassador. 

With that, I would like to yield to our Ranking Member, my good 

friend from New York who had a wonderful event last night, Mr. 

Ackerman. 

[The prepared statement of Ms. Ros-Lehtinen follows:]

PREPARED STATEMENT OF THE HONORABLE ILEANA ROS-LEHTINEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND CHAIRWOMAN, SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA

Since the horrific events of September 11th, we have been confronted by the undeniable fact that fifteen of the nineteen terrorists who caused this act of mass murder, were from Saudi Arabia. Because of this, it is our duty to examine what the 

3

Saudis have done, are doing now and what they will do in the future to prevent 

this kind of tragedy from ever repeating. 

We want to gain an understanding of how Saudi Arabia is working to repair a 

system that many say was broken or at the very least had grown out of control. 

Moreover, we want to understand what our own government is doing to help the 

Saudis close down the network that facilitated the implementation of the September 

11th terrorist plot. 

I must say, however, that there are great concerns on this Subcommittee, and I 

would say in Congress in general, over the extent of Saudi cooperation in this fight 

and, specifically, the Saudi role in the financing and abetting of terrorist groups in 

general. 

Having said this, I am pleased that the United States and the Saudi Government 

have set up two task forces, one to counter terrorism and the other to counter terrorism financing. I am also pleased that the Saudi Government is closing down 

charities and controlling the collection of the Zakat, or charitable donation, that is 

so important in Islam. Yet, I am concerned that there are some red lines beyond 

which it might be impractical or even impossible for Saudi officials to cross. 

Moreover, I fear that the sheer size of the financing effort and the extent of the 

financial enterprises have created a self-sustaining enterprise for many of these 

groups. It is quite possible that this aid from the connections in Saudi Arabia have 

set them upon the path to financial independence, irrespective of any future Saudi 

help. 

Terrorist connections through businesses, social service institutions, schools, 

mosques, and charities, in some cases opened in the West, allow them to continue 

their terrorist operations against us on multiple fronts. 

The mixing of charitable work with terrorism is a cowardly and cynical misuse 

of trust dedicated to destruction. This combination only complicates the search for 

the assets that fund terrorism, blurring the target for U.S. and allied investigators. 

I realize that this fight is ongoing and difficult. I also realize the sensitivity involved. Americans, however, are worried that while their government is telling them 

that Saudi Arabia is a great friend, they see Saudi-originated charities still operating around the world supplying the seed money for attacks against the U.S. and 

our allies. There are also charities like the Al-Haramain foundation, that act as umbrella groups for other charities and have overseas offices. Only recently, the United 

States closed down one branch of this group in Oregon. 

These charities must be shut down and their infrastructure purged to prevent reemergence in a different form. 

Americans also are rightly concerned about the proliferation of anti-American 

statements coming from Saudi and other imams encouraging terrorism. 

It will be important for us to learn of Saudi actions regarding the reforms being 

undertaken in the Mosques, both in the education of the Imams, as well as the ban 

on the collection of the Zakat. 

It is important too, that Saudi Arabia stop the flow of funds to Hamas. This violent terrorist group has killed almost three hundred Israelis in more than 50 homicide bombings over the past several years. If the money is not provided officially, 

as is claimed, I believe it is necessary to stop it on the private level as well. It is 

in our common interest to prevent this violent group from getting the funds to commit murder. 

I want to believe that the Saudi government is sincere when it says it is intent 

on stopping Al-Qaeda. I also want to believe that they are sincere in stopping the 

money flow to them. I do, however, want to see the results of their actions. Simply 

put, Saudi Arabia must be a part of the solution to this vast problem, not a participant. 

I hope the witnesses today will fully speak to the concerns of this Subcommittee. 

I believe that we will have a great number of questions to bring to your attention.

Mr. ACKERMAN. Thank you, Madam Chair, and thank you for 

participating. Thank you especially for scheduling this hearing this 

morning and for your statement. 

The devastating attacks of September 11th and the fact that 15 

of the 19 hijackers were from Saudi Arabia caused a significant reevaluation and examination of a relationship to which most Americans had previously given little thought. 

An initial conclusion of that examination, I think, is that the 

United States needs from Saudi Arabia both stability and change 

4

and how we thread that needle presents us with one of the most 

difficult medium term foreign policy problems. 

Up until May of last year, I think it is fair to describe Saudi Arabia’s counterterrorism cooperation as limited to terrorist groups 

and threats outside of Saudi Arabia, but since the attacks in Riyadh in May and November of last year, United States-Saudi cooperation on all aspects of terrorism has taken a qualitative turn 

for the better. Most commentators argue that the Saudis now get 

it and see that al-Qaeda is out to eliminate them as well as us. 

I am reasonably sure that the Saudi leadership always saw alQaeda this way, but the attacks inside the Kingdom and against 

them have given the government a new sense of urgency. 

The steps that the Saudis have taken on terrorism financing are 

far reaching and welcome. They include a new law making money 

laundering and terrorist financing criminal offenses; a ban on collecting cash at mosques; a prohibition on transferring charitable 

funds collected in Saudi Arabia outside of the country without foreign ministry approval; a requirement for charitable organizations 

in Saudi Arabia to have single disbursement bank accounts; and 

closure of unlicensed money exchange houses, as well as closer supervision of hawalas. 

Bilaterally, the Saudis have joined with us to set up a joint task 

force to investigate terrorist financing in Saudi Arabia and earlier 

this year Saudi Arabia joined the United States Government in 

asking the U.N. Sanctions Committee to designate four branches of 

al-Haramain as financial supporters of terrorism. 

But for all the positive steps that the Saudis have taken, there 

are still questions of political will. For example, while the formation of both the High Commission for Charities and the Financial 

Intelligence Unit have been announced, it is not clear that either 

of these organizations has had an adequate staff or budget. 

Similarly, it is not yet clear that Saudi officials are willing to 

prosecute Saudis for involvement in terrorism financing. For instance, while Saudi officials have removed Sheikh Akil al-Akil, the 

former director of al-Haramain, for allegedly moving millions of 

dollars out of the country via couriers, they have yet to announce 

any criminal proceedings against him. 

Additionally, the Saudis seem reluctant to take action against 

international charities that are headquartered in Saudi Arabia, 

such as the World Muslim League, the International Islamic Relief 

Organization, or the World Assembly of Muslim Youth, claiming 

that they cannot exert legal control of these organizations because 

they are international in nature. 

Saudi officials have likened this situation to the U.N. presence 

in New York, but surely the Saudi government at a minimum could 

require all charities operating in Saudi Arabia to abide by Saudi 

law. 

While today we focus on one aspect of our relationship with 

Saudi Arabia, I think a word needs to be said about the context in 

which the changes in Saudi Arabia’s attitude on terrorism financing are occurring. 

These changes are, I believe, part of the larger national dialogue 

that is occurring in Saudi Arabia. Crown Prince Abdullah deserves 

credit for sanctioning a very broad conversation among Saudis over 

5

the future of Saudi society, including education reform, the role of 

women in Saudi society, and even the announcement of municipal 

elections, but while the dialogue is a positive step, it is tempered 

by several points. 

First, I do not think anyone should be fooled into thinking that 

the end result of these changes will be anything less than the continued control of the country by the House of Saud. 

Second, the limits of the discussion were on full display last week 

with the arrest of several prominent academics who, dissatisfied 

with the government’s sponsored Human Rights Commission, 

wanted to form an independent human rights organization. 

Third, much has been made of the announcement of elections, 

but little has been seen in terms of follow-up. As with all things 

Saudi, much has been done and much remains to be done. 

I do not think anyone will dispute that even after September 

11th Saudi Arabia remains central to United States interests in the 

Persian Gulf. One need only look at the projected global demand 

for oil over the next decade to see that a stable, reasonably friendly 

Saudi Arabia is essential to the world economy, so the foundation 

of the United States-Saudi relationship will remain largely the 

same: United States security cooperation in exchange for a steady 

flow of Saudi oil to global markets. 

Yet our requirements in the global war on terror and our desire 

to press for democratization across the region argue for change. 

How we balance these conflicting requirements over the next several years forms the medium term dilemma that I previously mentioned. 

I hope today that our witnesses will be able to help us find at 

least part of that balance. 

I thank you, Madam Chair, and I do look forward to hearing 

from our witnesses. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Ackerman. 

Mr. Berman? 

Mr. BERMAN. Madam Chair, I think I will wait to ask questions 

after the witnesses testify. Thank you. 

Ms. ROS-LEHTINEN. Thank you. 

Ms. Berkley? 

Ms. BERKLEY. Thank you, Madam Chairman. 

I am in the middle of a Transportation mark-up across the hall, 

so I would like to give an opening statement and if I could possibly 

be here for the testimony, I am very anxious to hear that as well. 

Ms. ROS-LEHTINEN. Absolutely. 

Ms. BERKLEY. In his speech to Congress following the September 

11th attacks, President Bush said nations would either be with us 

or with the terrorists. Two and a half years since the war on terrorism was launched, real questions exist as to whether or not 

Saudi Arabia has been working as an ally. Is it with us or is it with 

the terrorists? 

Shortly after 9/11, NATO forces raided the Saudi High Commission for Aid to Bosnia. This so-called charity was founded by Prince 

Salam bin Abdul Azia, supported by King Fahd. On this raid, authorities discovered plans for further terrorist attacks, pictures of 

the U.S.S. Cole and the World Trade Center, and anti-semitic and 

anti-American material. 

6

An employee of the high commission is currently incarcerated at 

Guantanamo Bay and authorities are attempting to trace millions 

of dollars in unaccounted funds. 

Tragically, this is not an isolated incident. So-called charitable 

organizations with connections to the Saudi government including 

the Mercy International Relief Organization, the Islamic Relief Organization and others have been connected with deadly acts of terrorism, both before and after 9/11. 

Even more alarming is the Saudi government’s support of Palestinian suicide bombers. In 2001, the Israeli Defense Ministry recovered Palestinian authority records detailing Saudi financing of terrorism. These records show that a charity controlled by the Saudi 

foreign minister transferred $55 million to the Palestinians. Of 

that, $545,000 was distributed to 102 families of Palestinian martyrs, including eight suicide bombers. 

The government has also managed charities—including helping to organize a $100 million telethon to raise money for families of 

Palestinians killed fighting Israelis. 

The Saudi government is currently engaged in a multi-million 

dollar PR campaign to draw attention to their cooperation and antiterrorism efforts. They extol the shared values between the United 

States and the Kingdom, dubbing themselves our partners in 

peace. 

However, Saudi Arabia has not acted to eliminate support for 

terrorist organizations, including those opposed to the United 

States or to Israel. This refusal to act and continued reluctance to 

police their own people all but equates to government support of 

terrorism. 

In testimony before the Senate last year, the general counsel for 

the Treasury Department described Saudi Arabia as the epicenter 

of the world’s terrorist money trail. At the same time, the Under 

Secretary of Enforcement stated that a dozen of al-Qaeda’s principal financial backers, most of them wealthy Saudis, also fund the 

terrorist group Hamas. 

Ambassador Dore Gold, President of the Jerusalem Center for 

Public Affairs and former Israeli Ambassador to the United Nations, has reported that Hamas received $12 million to $14 million 

annually from sources inside Saudi Arabia. 

This represents more than 50 percent of its annual budget and 

these funds come from both official and non-governmental sources. 

After the attacks of September 11th, this proportion grew even 

larger as donations from the United States, Europe and other Persian Gulf countries dried up. 

Supporters of Saudi Arabia have claimed that these accusations 

are misleading and inaccurate. However, when The New York 

Times quotes a senior leader of Hamas thanking the Saudi people 

for continuing to send aid to the people through the civilian and 

popular channels despite all American pressures exerted on them, 

the international community must take notice and, more importantly, it must act to increase accountability on the part of our socalled allies. 

With friends like the Saudis, this nation hardly needs any more 

enemies. 

Thank you. 

7

Thank you, Madam Chairman. 

Ms. ROS-LEHTINEN. Thank you very much, Ms. Berkley. 

We would like to have Congressman Joe Crowley of New York 

for his opening statement. 

Joe? 

Mr. CROWLEY. Thank you, Chairwoman Ros-Lehtinen, and Ranking Member Gary Ackerman for holding this important hearing on 

Saudi Arabia and the fight against terrorism financing. 

I would also like to thank our esteemed guests for testifying before this Committee this afternoon. 

After the September 11th terrorist attacks, Saudi Arabia made 

no attempt to stop the funding of terrorist groups or the madrassas 

that sill breed hate throughout the world today. 

The Saudi royal family can no longer live the fairy tale life they 

have had since the Kingdom was created some 72 years ago. The 

United States needs to tell the royal family that it is time to stop 

the funding of terrorism. Terrorism is not just a problem of the 

west, but also a problem for the Kingdom as well. 

The religious schools the Saudis fund preach extreme forms of 

Islam and advocate violence against non-muslims in the west. It is 

time for the Saudis to stop funding directly or indirectly terrorist 

groups and organizations. 

While the royal family finally decided to join the U.S. on a task 

force to monitor terrorist financing, this task force was not created 

until 2 years after the attack upon our country on 9/11. Many have 

speculated the royal family only agreed to this after 34 people were 

killed last May in Riyadh. 

Even after the two terrorist bombings in May and November of 

last year, the Saudis still do not seem willing to change their ways. 

I hope that we can bring Saudi Arabia’s lack of cooperation in 

the war on terrorism to light and bring some change to that country as well. 

I thank you and yield back. 

Ms. ROS-LEHTINEN. Thank you, Mr. Crowley. 

I will introduce both panels, although obviously we will hear 

from the Administration panel first. 

We will have Ambassador J. Cofer Black, the State Department’s 

Coordinator for Counter-Terrorism. 

I thank you again for being with us. 

Ambassador Black has had a distinguished 28-year career in the 

Directorate of Operations at the Central Intelligence Agency. Prior 

to joining the State Dept, Ambassador Black was the Director of 

the CIA Counter-Terrorism Center. In this capacity, he served as 

the Special Assistant for Counter-Terrorism to the CIA Director, as 

well as the National Intelligence Officer for Counter-Terrorism. 

Also, we have testifying Mr. Thomas Harrington, the Deputy Assistant Director of Counter-Terrorism Operational Support Branch 

at the Federal Bureau of Investigation. 

In November 2002, Mr. Harrington was selected by the FBI Director for his current position in which he has national program 

management responsibility for the Foreign Terrorist Tracking Task 

Force of the Counterterrorism Operation Response Section and the 

National Threat Center. 

8

He has served in the FBI field offices in Philadelphia and Denver, as well as in the headquarters in Washington. 

We thank Mr. Harrington for his appearance today. 

And, finally, we will hear from Juan Zarate, Deputy Assistant 

Secretary in the Executive Office for Terrorist Financing and the 

Financial Crime at the Department of Treasury. 

Mr. Zarate is responsible for formulating and coordinating the 

department’s counterterrorism financing and anti-money laundering efforts. In this capacity, he is responsible for policy guidance 

and oversight of the Financial Crimes Enforcement Network and 

the Office of Foreign Asset Control and policy guidance for the IRS 

Criminal Investigation Division. 

On our second panel which we will hear from shortly we will be 

hearing from Mr. Robert Baer, a former Middle East intelligence 

officer with the Central Intelligence Agency, who has served in 

places such as Iraq, Tajikistan, Morocco, Lebanon, Sudan and 

India. When Mr. Baer left the Agency in 1997, he was awarded the 

Career Intelligence Medal. 

And, finally, we will hear from Mr. Steven Simon, Senior Analyst 

with the RAND Corporation. Before this position, Mr. Simon was 

the Assistant Director and Carol Deane Senior Fellow for U.S. Security Studies at the International Institute for Strategic Studies 

in London. 

Before this, he served as the Senior Director for trans-national 

threats on the U.S. National Security Council. Also at the National 

Security Council, he served as the Director for Global Issues and 

Multi-Lateral Affairs. He also worked in the Bureau of Political 

Military Affairs in the Department of State as Acting Principal 

Deputy Assistant Secretary and as the Director of the Office of Policy Analysis. 

We look forward to our second panel’s insight as well. 

With that, I would like to have Ambassador Black begin his testimony. 

Thank you. 

STATEMENT OF THE HONORABLE J. COFER BLACK, COORDINATOR, OFFICE OF THE COORDINATOR FOR COUNTERTERRORISM, U.S. DEPARTMENT OF STATE 

Ambassador BLACK. Madame Chairperson and distinguished 

Members of the Committee, thank you very much for this opportunity to testify on United States counterterrorism efforts, especially as they relate to our efforts to staunch terrorist financing 

with the assistance of the government of the Kingdom of Saudi 

Arabia. 

I am particularly pleased to be able to testify in front of you with 

Mr. Harrington from the FBI and Mr. Juan Zarate from the Treasury Department. 

We are continuing our global campaign to root out terrorists and 

those who support them, building on the coalition formed in the 

aftermath of the September 11th attacks. There can be no sanctuary, no refuge for terrorists, and we are working closely with our 

friends and allies in a global coalition to marshal all of our collective strength in this effort. 

9

While we have made progress in our global efforts, there is much 

that remains to be done and much that remains unknown. Recent 

attacks in Spain, Israel, Turkey and elsewhere clearly show us that 

our work remains unfinished. We must remove these terrorists 

‘‘root and branch,’’ and we will need help from like-minded nations 

to make this happen. 

We have such a like-minded ally in the Kingdom of Saudi Arabia. It is clear that the Saudi government ‘‘gets it’’ when it comes 

to terrorism. The Saudis have been confronted with the horror of 

suicide attacks on their own soil, and have seen how the virtuous 

intentions of charity can be corrupted for the support of terrorism 

and terrorists 

Our dialogue with the Saudis on counterterrorism issues has 

grown closer over the past year and took on a renewed urgency following the May 12, 2003, bombings in Riyadh. This latest outrageous murder in the global war on terrorism, which resulted in 

the death of nine Americans and 20 others, including five children, 

shocked the Saudis and our cooperation has grown closer every day 

since. 

The Saudis are a key ally in the global war on terror. Their performance has not been flawless. They have a large task before 

them, but we see clear evidence of the seriousness of purpose and 

the commitment of the leadership of the Kingdom to this fight. 

They must combat the terrorists who have taken root in their 

own backyard and simultaneously address those issues, whether 

social, cultural or economic, which have allowed extremism to take 

root in the Kingdom. 

With our colleagues from across the interagency, we have worked 

closely with Saudi officials in the Kingdom to enhance our cooperation. This effort has included a number of initiatives to staunch terrorist financing and to increase law enforcement and intelligence 

cooperation. We expect that they will continue to seek U.S. assistance as they act to address this threat. 

As a part of this continuing effort to engage with the Saudi government on counterterrorism issues, I have traveled to the Kingdom on five times since January 2003 in the company of interagency colleagues and more recently with Deputy National Security 

Advisor Fran Townsend, who now leads this dialogue. This has 

been a labor-intensive effort, but it is bearing fruit. 

Counterterrorism finance has been the central focus of this engagement. The Saudis have responded with an impressive array of 

new institutional, legal and regulatory changes aimed at combating 

terrorist finance. In fact, some of these steps are among the most 

restrictive measures to be found anywhere in the world, particularly their new regulations related to charities. 

Saudi officials are beginning to make the kind of fundamental 

and necessary changes to their financial and charity systems which 

will choke off the flow of funds that keep al-Qaeda and other terrorists in business. They have also taken a number of very public 

steps in the area of terrorist finance. Let me highlight some recent 

accomplishments in these areas. 

On January 22 of this year, we jointly submitted with the Saudi 

government the names of four branches of the Riyadh-based alVerDate Mar 21 2002 11:10 Jul 22, 2004 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6601 F:\WORK\MECA\032404\92744.000 HINTREL1 PsN: SHIRL
10

Haramain Foundation charity to the U.N. 1267 Sanctions Committee for world-wide sanctions, including asset freezing. 

The addition of these four entities made for a total of 10 joint 

United States-Saudi submissions to the U.N. 1267 Sanctions Committee since December 2002, the largest number of joint designations with any country over that span. 

We continue to work together to look for additional entities and 

individuals providing support to al-Qaeda, and hope to have additional successes in this arena. 

On February 29, the Saudis announced the formation of the National Saudi Society for Relief and Charitable Works Abroad. We 

are still awaiting the full details on the form and function of this 

new body, but this is a welcome development, as it should allow 

the government to exert more stringent oversight of Saudi charitable activities abroad. 

The Saudis have already instituted a variety of new laws and 

regulations that have the potential to fundamentally alter their 

banking and charity systems. 

Saudi banks have implemented strict ‘‘know your customer’’ rules 

which require additional due diligence on the part of banks to ensure the transparency of all account holders. 

Charitable organizations are now required to use only a single 

bank account and they are prohibited from making or receiving 

cash payments. This obviously allows much greater Saudi government oversight over the ability of Saudi charities to operate outside 

of the Kingdom. 

The Saudis have taken fundamental steps to increase accountability and prevent misuse of the fundamental Islamic tenet of 

zakat, or charity, including the removal of all cash collection boxes 

from mosques and shopping centers. 

The government has reigned-in the activities of hawalas, which 

are the informal money transfer systems commonly used throughout the Arabian Gulf region, particularly by foreign workers. Independent hawalas are being closed down in the Kingdom and replaced with government-regulated establishments which perform 

essentially the same function, but with far greater oversight. 

In September 2003, a team of assessors from the Financial Action Task Force (FATF) and the Gulf Cooperation Council (GCC) 

visited the Kingdom. FATF is a multilateral organization of 33 

members individually and collectively devoted to combating money 

laundering. The FATF/GCC team conducted a formal assessment of 

Saudi Arabia’s system of anti-money laundering and counterterrorism finance laws and regulations, and the overarching supervisory and regulatory framework. 

Their February 2004 report documents that the Kingdom is in 

compliance or near-compliance with international standards in almost every indicator of effective instruments to combat money 

laundering and terrorist financing. 

While significant work remains, particularly in the area of implementation, this FATF/GCC report is a testament to the advances 

the Saudi government has made in shoring up its controls over its 

banking system and charities. 

A new Joint Task Force on Terrorism Finance, which my colleague from the FBI will describe in greater detail, is in its initial 

11

stages. This will necessarily move much of our day-to-day and caseby-case efforts in the war on terror away from the interactions of 

diplomats and put it on an expedited, real-time, law enforcement 

basis. 

The Saudis have established a Financial Intelligence Unit (FIU), 

which is responsible for analyzing and exchanging information related to suspicious financial transactions with Saudi regulatory and 

law enforcement entities. 

These efforts have begun to make a real difference. Saudi improvements in the oversight and accountability of charitable funds 

have made it more difficult for terrorists to get their hands on such 

funding. 

We are seeking to upgrade Saudi counterterrorism capacity by 

providing training in a number of fields, particularly in the area 

of terrorist financing. 

For example, we will continue to provide financial investigative 

training to the Saudis to enhance their capacity to monitor their 

banking system and charities for terrorist financing and moneylaundering activities. 

The Saudis are a strong ally and are taking unprecedented steps 

to address an al-Qaeda menace that threatens us both. We believe 

that they are headed in the right direction, are committed to countering the threat of al-Qaeda, and are giving us extremely strong 

cooperation in the war on terrorism. There remains, of course, 

much work still to be done, both singly and jointly, but we are optimistic that these efforts are paying off, which is the reason why I 

canceled my trip to Athens to review the Olympics and the possible 

threats that could occur. 

The work of this Committee is very important. It is very important, I think, for you to understand what we have been working on, 

our perceptions of the Saudi government. I think there has been a 

fundamental change. We all know the past. I have lived the past, 

I have been there. If it was not in my view a fundamental change 

I would not be here and I would not be addressing you in this vein. 

I would also point out that there really is not much of an alternative. Having been a counterterrorism practitioner, without the 

cooperation of the Saudi government, I wonder at the resources required on the part of the U.S. Government to be able to replicate 

that capability to identify and root out terrorists in Saudi Arabia, 

to identify and terminate financial links of terrorism, so I think it 

is a strategy that is beginning to show real momentum and I hope, 

Madam Chairperson, that it is something that my colleagues and 

I can reflect for your consideration. 

Thank you very much. 

Madame Chairwoman, distinguished Members of the Committee, 

I thank you for this opportunity to appear before you. 

[The prepared statement of Ambassador Black follows:]

PREPARED STATEMENT OF THE HONORABLE J. COFER BLACK, COORDINATOR, OFFICE

OF THE COORDINATOR FOR COUNTERTERRORISM, U.S. DEPARTMENT OF STATE

INTRODUCTION

Madame Chairwoman and distinguished members of the Committee: thank you 

for the opportunity to testify on U.S. counterterrorism efforts, especially as they relate to our efforts to staunch terrorist financing with the assistance of the government of the Kingdom of Saudi Arabia. 

12

We are continuing our global campaign to root out terrorists and those who support them, building on the coalition formed in the aftermath of the September 11th 

attacks. There can be no sanctuary, no refuge for terrorists, and we are working 

closely with our friends and allies in a global coalition to marshal all of our collective strength in this effort. 

While we have made progress in our global efforts, there is much that remains 

to be done, and much that remains unknown. Recent terrorist attacks in Spain, 

Israel, Turkey and elsewhere clearly show us that our work remains unfinished. We 

must remove these terrorists ‘‘root and branch,’’ and we will need help from likeminded nations to make this happen. 

We have such a like-minded ally in the Kingdom of Saudi Arabia. It is clear that 

the Saudi government ‘‘gets it’’ when it comes to terrorism. The Saudis have been 

confronted with the horror of suicide attacks on their own soil, and have seen how 

the virtuous intentions of charity can be corrupted for the support of terrorism and 

terrorists. 

COOPERATION GROWING CLOSER

Our dialogue with the Saudis on counterterrorism issues has grown closer over 

the past year, and took on a renewed urgency following the May 12, 2003 bombings 

in Riyadh. This latest outrageous murder in the global war on terrorism, which resulted in the death of nine Americans and twenty others, including five children, 

shocked the Saudis, and our cooperation has grown closer every day since. 

The Saudis are a key ally in the Global War On Terror. Their performance has 

not been flawless, and they have a large task before them, but we see clear evidence 

of the seriousness of purpose and the commitment of the leadership of the Kingdom 

to this fight. They must combat the terrorists who have taken root in their own 

backyard and simultaneously address those issues—whether social, cultural or economic—which have allowed extremism to take root in the Kingdom. 

With our colleagues from across the interagency, we have worked closely with 

Saudi officials in the Kingdom to enhance our cooperation. This effort has included 

a number of initiatives to staunch terrorist financing and bolster law enforcement 

and intelligence cooperation. We expect that they will continue to seek U.S. assistance as they act to address this threat. 

As a part of this continuing effort to engage with the Saudi government on counterterrorism issues, I have traveled to the Kingdom five times since January 2003, 

in the company of interagency colleagues, and more recently with Deputy National 

Security Advisor Fran Townsend, who now leads this dialogue. This has been a 

labor-intensive effort, but it is bearing fruit. 

PROGRESS AGAINST TERRORIST FINANCING

Counterterrorism finance has been the central focus of this engagement. The 

Saudis have responded with an impressive array of new institutional, legal and regulatory changes aimed at combating terrorist finance. In fact, some of these steps 

are among the most restrictive measures to be found anywhere in the world, particularly their new regulations related to charities. 

Saudi officials are beginning to make the kind of fundamental and necessary 

changes to their financial and charity systems which will choke off the flow of funds 

that keep al-Qaida and other terrorists in business. They have also taken a number 

of very public steps in the area of terrorist finance. Let me highlight some recent 

accomplishments in these areas. 

Accomplishments 

• On January 22 of this year, we jointly submitted with the Saudi government 

the names of four branches of the Riyadh-based al-Haramain Foundation 

charity to the UN 1267 Sanctions Committee for world-wide sanctions, including asset freezing.

• The addition of these four entities made for a total of ten joint U.S.-Saudi 

submissions to the UN 1267 Sanctions Committee since December 2002, the 

largest number of joint designations with any country over that span.

• We continue to work together to look for additional entities and individuals 

providing support to al-Qaida, and hope to have additional success in this 

arena;

• On February 29 the Saudis announced the formation of the National Saudi 

Society for Relief and Charitable Works Abroad. We are still awaiting full details on the form and function of this new body, but this is a welcome development, as it should allow the government to exert more stringent oversight of 

Saudi charitable activities abroad;

13

• The Saudis have already instituted a variety of new laws and regulations that 

have the potential to fundamentally alter their banking and charity systems;

• Saudi banks have implemented strict ‘‘know your customer’’ rules which require additional due diligence on the part of banks to ensure the transparency 

of all account holders;

• Charitable organizations are now required to use only a single bank account, 

and they are prohibited from making or receiving payments in cash. This obviously allows much greater Saudi Government oversight over the ability of 

Saudi charities to operate outside of the Kingdom;

• The Saudis have taken fundamental steps to increase accountability and prevent misuse of the fundamental Islamic tenet of zakat, or charity, including 

the removal of all cash collection boxes from mosques and shopping centers;

• The government has reigned-in the activities of hawalas, which are the informal money transfer services commonly used throughout the Arabian Gulf region, particularly by foreign workers. Independent hawalas are being closed 

down in the Kingdom and replaced with government-regulated establishments which perform essentially the same function, but with far greater oversight;

• In September 2003, a team of assessors from the Financial Action Task Force 

(FATF) and the Gulf Cooperation Council (GCC) visited the Kingdom. FATF 

is a multilateral organization of thirty-three members individually and collectively devoted to combating money laundering. The FATF/GCC team conducted a formal assessment of Saudi Arabia’s system of anti-money laundering and counter-terrorism finance laws and regulations, and the overarching supervisory and regulatory framework.

• Their February 2004 report documents that the Kingdom is in compliance or 

near-compliance with international standards in almost every indicator of effective instruments to combat money laundering and terrorist financing.

• While significant work remains, particularly in the area of implementation, 

this FATF/GCC report is a testament to the advances the Saudi government 

has made in shoring up its controls over its banking system and charities.

• A new Joint Task Force on Terrorism Finance, which my colleagues from the 

FBI describe in greater detail, is in its initial stages; this will necessarily 

move much of our day to day and case by case efforts in the War On Terror 

away from the interactions of diplomats and put it on an expedited, real-time, 

law enforcement basis;

• The Saudis have established a Financial Intelligence Unit (FIU), which is responsible for analyzing and exchanging information related to suspicious financial transactions with Saudi regulatory and law enforcement entities.

These efforts have begun to make a real difference. Saudi improvements in the 

oversight and accountability of charitable funds have made it more difficult for terrorists to get their hands on such funding. 

We are seeking to upgrade Saudi counterterrorism capacity by providing training 

in a number of fields, particularly in the area of terrorist financing. 

For example, we will continue to provide financial investigative training to the 

Saudis to enhance their capabilities to monitor their banking system and charities 

for terrorist financing and money-laundering activities. 

CONCLUSION

The Saudis are a strong ally and are taking unprecedented steps to address an 

al-Qaida menace that threatens us both. We believe that they are headed in the 

right direction, are committed to countering the threat of al-Qaida, and are giving 

us extremely strong cooperation in the War On Terrorism. There remains, of course, 

much work still to be done, both singly and jointly, but we are optimistic that our 

efforts are paying off. 

Madame Chairwoman, distinguished Members of the Committee, I thank you for 

this opportunity to appear before you.

Ms. ROS-LEHTINEN. Thank you so much, Mr. Ambassador. We 

appreciate your presence and your testimony. 

Mr. Harrington? 

14

STATEMENT OF THOMAS J. HARRINGTON, DEPUTY ASSISTANT 

DIRECTOR, COUNTERTERRORISM DIVISION, FEDERAL BUREAU OF INVESTIGATION 

Mr. HARRINGTON. Madam Chair and Members of the Committee, 

thank you very much for this opportunity to testify about terrorism 

financing issues and, in particular, as they relate to our joint efforts with the government of the Kingdom of Saudi Arabia. 

The number one priority for the FBI is to identify terrorists’ activities in sufficient time to disrupt these operations. To do this, all 

intelligence and law enforcement investigative and analytical components must be strategically utilized in a cohesive manner. 

Our mission can only be achieved through close coordination and 

cooperation with our intelligence community and law enforcement 

partners. 

This belief lies at the heart of the FBI’s reliance on, and commitment to,the interagency partnerships we have forged through our 

national Joint Terrorism Task Force and our local level Joint Terrorism Task Forces. With intelligence collection and exploitation as 

our principal focus, coupled with our criminal investigative authorities as a vital tool, the JTTFs around the country represent the fusion of skills and authorities our nation needs to combat terrorism 

in the United States. 

Information sharing, coordination and interagency cooperation 

are critical parts of this effort; however, partnerships within the 

United States will only succeed if they enjoy the support of our 

many friends and partners throughout the world. The FBI is committed to these international partnerships and recognizes the critical role they play in our ability to develop actionable intelligence. 

The Kingdom of Saudi Arabia is an important partner in this 

international effort and has taken significant steps to deter global 

terrorism. There is more that can be done to further this relationship; however, the steps that have been taken thus far are very encouraging and promising. For example, cooperative counterterrorism efforts increased notably after the Riyadh bombings on May 

12, 2003, when the Kingdom asked the FBI to send an investigative team to Saudi Arabia to assist in intelligence and law enforcement services in conducting evidence collection and the post-incident investigation. 

In this effort, Saudi officials allowed FBI agents to directly participate in crime scene analysis and witness interviews, including 

interviews of Saudi citizens never done before. 

The current state of cooperation between our two countries is significant and information sharing continues to increase pertaining 

to areas like al-Qaeda. Together, we have agreed to focus increased 

investigative attention on identifying and eliminating sources of 

terrorist funding within the Kingdom and around the world. In furtherance of this agreement, the Saudis now host the Joint Task 

Force on Terrorist Financing which is comprised of members of the 

intelligence and law enforcement services of the United States and 

Saudi Arabia. 

Established in August 2003, the mission is to identify and investigate persons and entities suspected of providing financial support 

to terrorist groups. Also, they are required as part of their mission 

to recommend appropriate criminal or regulatory sanctions to be 

15

undertaken to stem the flow of funds to terrorists or terrorist organizations. The sole purpose is to raise the priority of financial investigations to a new all-time level. 

Working together, we are identifying sources of terrorism funding and have initiated significant operations to address them. I 

cannot over emphasize the importance of this initiative and the efforts on the part of both of our countries to make it work. 

As you will hear from my colleagues at the State Department 

and Treasury, Saudi Arabia has greatly contributed to combating 

terrorist financing by joining the United States in blocking the assets of several designated terrorist organizations. My prepared remarks go into greater detail. 

Madam Chair, as this Committee knows, the ability to prevent 

the financing of terrorist acts centers large on the implementation—and I want to emphasize the enforcement—of laws that permit regulatory and investigative intervention. Saudi Arabia has 

taken several steps which greatly enhance the activities of our joint 

efforts to prevent terrorism financing. I think Ambassador Black 

eloquently stated some of these and I will skip over this in my 

statement to save some time, if possible. 

Finally, Saudi Arabia has strengthened its regulations on money 

laundering by requiring financial institutions to verify customers’ 

identities and placing restrictions on non-residents’ ability to open 

accounts, which we find to be very, very significant. 

With regards to training, as you may know, in September 2003, 

the FBI and the Internal Revenue Service-Criminal Investigative 

Division began a series of terrorism financing training for the 

Saudi Arabian government in Riyadh. The second training session 

was held in Washington, DC in December 2003 and a third is currently scheduled to take place in Riyadh in May of this year. 

The topics include Methods of Terrorism Financing, Initiating Investigations, Major Case Management, Evidence Acquisition, Computer Forensics, Money Laundering, and Expenditure Methods of 

Proof, just some of the topics that are covered in this comprehensive training program. 

The training also includes case scenarios, in which students participate in practical exercises to increase their understanding of 

terrorist-financing investigations. This training will directly benefit 

our task force efforts in the Kingdom by focusing on methods of 

identifying sources of terrorist funding. 

While the government of the Kingdom of Saudi Arabia has taken 

significant steps to combat terrorism, there are still hurdles that 

need to be overcome. 

I look forward to our continued partnership with the Kingdom 

and hope our past progress is an indication of the future steps we 

will take jointly. 

I appreciate the opportunity to be here today and I will be happy 

to answer any questions at the appropriate time. 

[The prepared statement of Mr. Harrington follows:]

PREPARED STATEMENT OF THOMAS J. HARRINGTON, DEPUTY ASSISTANT DIRECTOR, 

COUNTERTERRORISM DIVISION, FEDERAL BUREAU OF INVESTIGATION

Thank you Mr. Chairman and Members of the Subcommittee for the opportunity 

to testify about terrorist financing issues, and in particular, as they relate to our 

joint efforts with the government of the Kingdom of Saudi Arabia 

16

The number one priority of the FBI is to identify terrorists’ activity in sufficient 

time to disrupt their operations. To do this, all intelligence and law enforcement investigative and analytical components must be strategically utilized in a cohesive 

manner. This belief lies at the heart of the FBI’s reliance on, and commitment to,the 

interagency partnerships we have forged through our Joint Terrorism Task Forces 

(JTTFs). With intelligence collection and exploitation as our principal focus, and 

criminal investigative authorities as a vital tool, the JTTFs represent the fusion of 

skills and authorities our nation needs to combat terrorism in the United States. 

Information sharing and interagency cooperation are critical parts of this effort; 

however, partnerships within the United States will only succeed if they enjoy the 

support of our many friends and partners throughout the world. The FBI is committed to these international partnerships and recognizes the critical role they play 

in our ability to develop actionable intelligence. 

Beginning shortly after 9/11/2001, the FBI created its Terrorism Financing Operations Section (TFOS). Its mission is to identify and disrupt world-wide terrorism 

financing activities. Through joint initiatives and partnerships with other U.S. and 

foreign intelligence services, we have realized significant results which include the 

prevention of specific acts of international terrorism. Denying terrorists the financial 

means to carry out acts of violence is an integral part of the FBI’s commitment to 

countering terrorism and is an area where we have realized significant success. 

The FBI’s long history of success in combating complex financial schemes in the 

areas of corporate fraud; financial institution fraud; and illicit funds transfers/

money laundering schemes of drug traffickers are being successfully applied to the 

international terrorism arena. 

U.S.–SAUDI COOPERATION

The Kingdom of Saudi Arabia is an important partner in this international effort 

and has taken significant steps to deter global terrorism. There is more that can 

be done to further this relationship; however, the steps that have been taken thus 

far are very encouraging and promising. For example, since 9–11, Saudi Arabia has 

questioned thousands and arrested more than 600 with suspected ties to terrorism. 

Cooperative counterterrorism efforts increased notably after the Riyadh bombings 

on May 12th, 2003 when the Kingdom asked the FBI to send an investigative team 

to Saudi Arabia to assist its intelligence and law enforcement services in conducting 

evidence collection and post-incident services in conducting evidence collection and 

post-incident investigation. In this effort, Saudi officials allowed the FBI to directly 

participate in crime scene analysis and witness interviews, including those of Saudi 

citizens. 

The current state of cooperation between our two countries is significant, and information sharing continues to increase in matters pertaining to al-Qa’ida. Together, 

we have agreed to focus increased investigative attention on identifying and eliminating sources of terrorist funding within the Kingdom and around the world. In 

furtherance of this agreement, the Saudis now host the Joint Task Force on Terrorist Financing (JTFTF), which is comprised of members of the intelligence and law 

enforcement services of the U.S. and Saudi Arabia. The JTFTF was established in 

August 2003, with the mission to identify and investigate persons and entities suspected of providing financial support to terrorist groups; and recommending appropriate criminal and/or regulatory sanctions to be undertaken to stem the flow of 

funds to terrorists or terrorist organizations. Its purpose is to more effectively utilize 

the intelligence capabilities and investigative authorities of its component members. 

Working together, we are identifying sources of terrorist funding and have initiated 

significant operations to address them. I cannot over emphasize the importance of 

this initiative and the efforts on the part of both of our countries to make it work. 

The FBI is a significant participant in this project and together with our partnership agencies, including the Internal Revenue Service-Criminal Investigative Division, is committed to its success. 

As you will hear from my Department of State and Treasury colleagues, Saudi 

Arabia has greatly contributed to combating terrorist financing by joining the U.S. 

in blocking the assets of several designated terrorist organizations. In March 2002, 

Saudi Arabia and the U.S. jointly blocked the accounts of Wa’el Hamza Julaidan, 

an associate of Usama bin Laden who provided financial and logistical support to 

Al-Qa’ida. In addition, accounts of the Bosnia and Somalia branches of the AlHaramain Islamic Foundation were blocked in March 2002, and in January 2004, 

the Saudis and the U.S. jointly blocked four more Al-Haramain branches in Kenya, 

Tanzania, ,Pakistan and Indonesia. 

17

SAUDI FINANCING LEGISLATION

Mr. Chairman, as this Subcommittee knows, the ability to prevent terrorist acts 

largely depends on the implementation of laws that permit investigative intervention. Saudi Arabia has taken several steps that greatly enhance the activities of our 

joint efforts to prevent terrorism financing. 

Non-Governmental Organizations (NGOs) and charitable organizations serve legitimate purposes however, they can be vulnerable to abuse for use as a source of 

funding for terrorist organizations. The Kingdom of Saudi Arabia has put new laws 

in place that are designed to ensure donations to charities aren’t diverted to entities 

other than humanitarian organizations. It also issued instructions to all institutions 

prohibiting the transfer of funds by charitable organizations to recipients outside 

the Kingdom. New rules have been codified that impact on the Opening of Bank Accounts and place new restrictions on the bank accounts of Saudi charities:

• All accounts must be maintained in one single account for each charity; subaccounts are permitted, but such an account is restricted to receiving deposits 

only;

• No ATM or credit cards can be issued for these accounts. All payments may 

be made only by checks payable to the first beneficiary for deposit in a Saudi 

bank;

• The Saudi Arabian Monetary Agency’s (SAMA’s) approval is necessary to 

open a bank account, the account must be opened in Riyals only, and valid 

customer identification is required in addition to providing the organization’s 

license;

• No overseas transfers are allowed from these accounts, and only two individuals who are authorized by the board of a charitable organization are allowed 

to operate the account.

Saudi Arabia has taken other actions that benefit joint terrorism financing efforts. 

The Ministry of Labor has developed a database containing financial information relating to all of its charities, and updates the database on a quarterly basis with information derived from submitted financial reports. An effort is underway to integrate the charities licensed by the Ministry of Islamic Affairs into this database. In 

addition, the Ministry of Labor is conducting an audit of all their licensed charities, 

and this requirement will reportedly be extended to their licensed charities, as well. 

The Saudis have begun to establish official government-operated money remitters 

intended to compete directly with unlicensed money remitters such as Hawalas and 

other informal financial systems. These licensed remitters are called ‘‘Speed Cash’’’, 

and are attached to a commercial bank and therefore, subject to all requirements 

of the parent bank. Saudi private sector representatives report that the service has 

been a profitable business, and officials believe that it has reduced the extent to 

which there is reliance on informal systems. Saudi officials report that they have 

begun to crack down on unlicensed money remitters. 

Finally, Saudi Arabia has also strengthened its regulations on money laundering 

by requiring financial institutions to verify customers’ identities and placing restrictions on non-residents’ ability to open accounts in the country. 

TRAINING

In September 2003, the FBI and the Internal Revenue Service-Criminal Investigative Division provided the first phase of counterterrorist financing and anti-money 

laundering training to the Saudi Arabian Government in Riyadh. The second phase 

of this training was held in Washington, DC in December 2003. A third such training program is currently scheduled to take place in May of this year, in Riyadh. 

This training emphasizes the role of a field investigator in financial crimes investigations as it relates to investigations of terrorism financing. The topics include 

Methods of Terrorism Financing, Initiating Investigations, Evidence Acquisition, 

Computer Forensics, Money Laundering, and Expenditure Methods of Proof, among 

others. The training also includes case scenarios, in which students participate in 

practical exercises to increase their understanding of terrorist-financing investigations. This training has been completely funded and supported by the State Department and the interagency Terrorist Finance, Training and Technical Assistance 

Working Group, chaired by the State Department, and it will directly benefit the 

JTFTF by focusing on methods of identifying sources of terrorist financing. 

In addition to U.S. training, in February 2003, the SAMA implemented a technical program to train judges and investigators on terrorism financing and money 

laundering. The program is focused on training law enforcement on legal matters 

including financing and money laundering methods, international requirements for 

18

financial secrecy, and the methods criminals use to exchange information. SAMA 

provides substantial training to both the private sector and to other Saudi agencies. 

CONCLUSION

While the Government of the Kingdom of Saudi Arabia has taken significant steps 

to combat terrorism, there are still hurdles they must overcome. In addition, terrorist-minded extremists are likely to change tactics and become more sophisticated 

in their intelligence collection, communication and financing. The ability to identify 

and track terrorism-related financial transactions will continue to be vital to our 

mutual success. Saudi Arabia has contributed to the successful dismantling of AlQa’ida cells, the arrests of key Al-Qa’ida leaders, and the capture of Al-Qa’ida members in the Kingdom. I look forward to our continued partnership with the Kingdom 

and hope our past progress is an indication of the future steps we will jointly take. 

I appreciate the opportunity to appear today and thank you Mr. Chairman and 

members of the Subcommittee, for dedicating your time and effort to this important 

issue. I will be happy to address your questions.

Ms. ROS-LEHTINEN. Thank you, Mr. Harrington. 

Mr. Zarate? 

STATEMENT OF JUAN C. ZARATE, DEPUTY ASSISTANT SECRETARY, EXECUTIVE OFFICE FOR TERRORIST FINANCING & 

FINANCIAL CRIMES, U.S. DEPARTMENT OF THE TREASURY 

Mr. ZARATE. Thank you, Madam Chair. I would like to make 

some brief remarks and ask that my statement be made part of the 

record. 

Ms. ROS-LEHTINEN. Without objection. 

Mr. ZARATE. Thank you. Chairwoman Ros-Lehtinen, Congressman Ackerman and distinguished Members of the Subcommittee, 

thank you for this opportunity to discuss how the Treasury Department and our government are working with the Kingdom of Saudi 

Arabia to combat terrorist financing. 

I am very pleased to be here today with Ambassador Black and 

Deputy Assistant Director Harrington, with whom we work on a 

daily basis to combat terrorist financing at home and abroad. 

Madam Chair, we are still deep in the midst of our war against 

terror. This is a global menace fed by the frenzy of misguided ideology and fueled by funds dedicated to the commission of horrendous acts. 

We have witnessed such acts not just on the streets of New York 

and Washington, but on the railways of Madrid and Moscow, the 

housing compounds in Riyadh, and the commercial zones of 

Istanbul, Bali and Casablanca. 

A critical part of our strategy is to deprive al-Qaeda and like 

minded terrorist groups of the money that allows them not only to 

kill, but to recruit, create alliances and to sustain a global terrorist 

network. 

Our investigations and actions against terrorist financing have 

revealed the global and sophisticated nature of terrorist financing 

networks. The abuse of charitable organizations, reliance on deep 

deep-pocket donors, and the use of informal methods of moving 

money, like hawala and courier networks, present challenges for 

ferreting out tainted capital used to finance a global network of terror. Attacking these networks requires critical support from our allies. 

In our open global economy, capital flows freely and funds intended to underwrite attacks on the homeland can be generated in 

and traverse foreign financial centers. 

19

Since September 11th, we have built an international coalition to 

attack the sources of terrorist financing. The international community has frozen and seized approximately $200 million of terroristrelated funds. Over 170 jurisdictions have issued blocking orders, 

and we have built a tighter international financial net through 

which suspect funds may be captured. 

Governments around the world have arrested, financially isolated, or otherwise deterred key financial facilitators and conduits. 

The efforts of the Kingdom of Saudi Arabia fall in line with this 

international cooperation and continue to improve in substantively 

important ways. 

The al-Qaeda-directed attacks of May and November last year in 

Riyadh and the uncovering of virulent cells of operatives within 

Saudi Arabia have awakened the Saudi government to the harsh 

reality that this threat must be dealt with aggressively. 

I have directly witnessed the evolution of the Saudi attitude and 

approach on my series of visits to the Kingdom. The Saudi government has taken important steps independently and along with us 

to attack al-Qaeda’s finances and to prevent the continued support 

for those who would attack the United States and Saudi Arabia. 

Madam Chair, allow me to share some important highlights, 

some of which Ambassador Black has already mentioned, but I 

think these are worth reiterating. 

The Saudis have captured or otherwise dealt with known 

operatives, financial facilitators and financiers for al-Qaeda. For 

example, Saudi actions against an al-Qaeda leader and key financial facilitator known as Swift Sword as well as Khaled Ali Haj, the 

suspected al-Qaeda chief in the Gulf, were important steps in disrupting the financial network of al-Qaeda. 

Along with Saudi Arabia, as the Ambassador mentioned, we have 

frozen the assets of organizations and individuals suspected of providing support to al-Qaeda. In this regard, the United States and 

Saudi Arabia have jointly proposed 10 names to the United Nations 

1267 Sanctions Committee since December 2002, requiring thereby 

the world to freeze any assets belonging to those entities. 

Most recently, in late January, the United States and Saudi Arabia jointly designated four branches of the Saudi-based AlHaramain Islamic Foundation located in Indonesia, Kenya, Tanzania, and Pakistan, because these branches were providing financial, material, and logistical support to the al-Qaeda network and 

other terrorist organizations. 

As my FBI colleague has mentioned, we have created a joint task 

force with the Saudis with FBI and IRS criminal agents on the 

ground in Riyadh to investigate terrorist financing. This is where 

sharing of information such as bank accounts and records happens 

in a real-time manner. That was unthinkable years ago. 

To deal with the abuse of charities in a systemic way, Saudi Arabia has issued comprehensive new restrictions on the financial activities of Saudi charities, to include, as the Members have mentioned, a ban on transfers outside of the Kingdom and cash contributions in local mosques and public collection boxes for charities. 

The Kingdom of Saudi Arabia has also taken comprehensive action to reduce the threat of terrorist financing through alternative 

remittance systems, such as the hawala system through enforceVerDate Mar 21 2002 11:10 Jul 22, 2004 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 F:\WORK\MECA\032404\92744.000 HINTREL1 PsN: SHIRL
20

ment actions and the creation of market alternatives known as 

speed cash. 

The Kingdom has recently amended the legislative and regulatory framework governing its formal financial sector to improve 

its ability to combat terrorist financing and other financial crimes. 

Among these steps is the enactment of the Anti-Money Laundering 

Law of 2003 last autumn, resulting in improved reporting and 

record keeping requirements, and the establishment of a financial 

intelligence unit. 

Importantly, the Saudis have subjected their newly reformed 

anti-money laundering regime to the technical scrutiny of international experts from the Financial Action Task Force. The willingness to undergo this assessment represents a new commitment to 

openness by Saudi authorities, but like all countries, the Kingdom 

faces several ongoing challenges and we are asking them to do 

more. 

Madam Chair, the most fundamental challenge facing the Kingdom is defusing the religious extremism that facilitates support 

and recruitment for radical Islamist terrorist organizations like alQaeda. 

Ms. ROS-LEHTINEN. I am sorry. That is a former colleague of 

ours, Congressman Mel Levine. We have to stop and say hello. 

Mr. ZARATE. Not a problem. 

Ms. ROS-LEHTINEN. Go right ahead. 

I apologize. Go right ahead. 

Mr. ZARATE. Not a problem, Madam Chair. 

As I was saying, the Saudi efforts to deal with the issue of radical extremism is important to ensure that militant religious extremism cannot provide a platform for terrorists, either to justify or 

to launch their terrible actions. 

The Saudi government must also fully implement and enforce 

the comprehensive measures it has enacted to ensure charities, 

hawalas and their formal financial system are not abused for terrorist purposes. 

The Kingdom must also continue to publicize and promote its actions against terrorists as necessary measures to deter al-Qaeda’s 

support and to signal their commitment in this war. 

Madam Chair, the ongoing threat of terrorist financing demands 

a sustained and comprehensive commitment from all governments 

of the world. The actions, measures, and initiatives adopted by the 

Kingdom of Saudi Arabia have achieved real results and we anticipate and will demand continued progress in the months ahead. 

We look forward to working with Congress on this issue, as well 

as with the Saudis. 

[The prepared statement of Mr. Zarate follows:]

PREPARED STATEMENT OF JUAN C. ZARATE, DEPUTY ASSISTANT SECRETARY, EXECUTIVE OFFICE FOR TERRORIST FINANCING & FINANCIAL CRIMES, U.S. DEPARTMENT

OF THE TREASURY

INTRODUCTION

Chairwoman Ros-Lehtinen, Congressman Ackerman and distinguished members 

of the Subcommittee, thank you for this opportunity to discuss how the Treasury 

Department and our government are working with the Kingdom of Saudi Arabia to 

combat terrorist financing. 

21

The ongoing threat of terrorist financing demands a sustained and comprehensive 

commitment from all governments of the world. I thank the Congress for providing 

the U.S. government with powerful resources, authorities, and support to assist us 

in our efforts to attack terrorist financing networks. Of particular importance to 

these efforts, the USA PATRIOT Act expanded the law enforcement and intelligence 

community’s ability to access and share critical financial information regarding terrorist investigations, while Title III of that Act enhances our joint abilities to obtain, 

analyze and apply financial information to attack the financing of terrorist activities. At Treasury, we are committed to utilizing, aggressively but judiciously, the enhanced powers you have provided us to ensure that relevant financial information 

is used to both initiate and support actions against terrorist organizations. 

But we have found that our success is also dependent on the political will and 

resources of other governments. As we have discussed on many occasions with you 

and your colleagues in the Congress, our investigations and actions against terrorist 

financing have revealed the global and sophisticated nature of terrorist financing 

networks. The abuse of charitable organizations, reliance on deep-pocket donors, 

and the use of informal methods of moving money—like hawala networks—present 

challenges for ferreting out tainted capital used to finance a global network of terror. Attacking these networks requires critical support from our allies as part of a 

comprehensive and sophisticated strategy. Indeed, our mission to dismantle the financial infrastructure of al Qaida and like-minded terrorist groups can only be 

achieved with international cooperation and support. 

Since September 11th, we have built an international coalition to attack the 

sources of terrorist financing and have sustained the momentum in taking the fight 

to the facilitators of terror. The international community has frozen and seized approximately $200 million of terrorist-related funds, over 170 jurisdictions have 

issued blocking orders, and we have built a tighter international financial net 

through which suspect funds may be captured. Governments around the world have 

arrested, financially isolated, or otherwise deterred key financial facilitators. The efforts of the Kingdom of Saudi Arabia fall directly in line with this international cooperation and continue to improve in substantively important ways. 

The threat of terrorist financing and the need to attack and prevent the flow of 

funds to terrorists is now an accepted principle around the world and in Saudi Arabia. The al Qaida-directed attacks of May and November 2003 in Riyadh and the 

uncovering of virulent cells of al Qaida operatives within Saudi Arabia have awakened the Saudi government to the harsh reality that this threat must be dealt with 

aggressively. The Kingdom has taken important steps, independently and along 

with us, to attack al Qaida’s finances and to prevent the continued support for those 

who would attack the United States and Saudi Arabia. 

Our progress in working with the Kingdom of Saudi Arabia to attack terrorist financing networks is best understood in the context of the complementary targeted 

and systemic approaches described in our 2003 National Money Laundering Strategy. In the short term, we have engaged the Saudis on a number of terrorist financing targets to eliminate key sources and conduits of terrorist support and have established direct mechanisms to work together on the real threat posed to both of 

our countries. Over the longer term, we have worked with the Saudis to enhance 

the transparency and accountability of formal and informal financial systems, particularly those that have been abused by terrorists to raise and move money in the 

past. These efforts are ongoing, and much work remains to be done. Yet the targeting actions and systemic reforms undertaken by the Kingdom of Saudi Arabia 

clearly demonstrate its commitment to work with us and the international community to combat the global threat of terrorist financing. 

INCREASED SAUDI UNDERSTANDING, COOPERATION AND ACTION AGAINST TERRORIST

FINANCING

Our dialogue, engagement and cooperation with the Saudis on terrorist financing 

issues have developed progressively—and often quietly—over the past two years as 

the Kingdom of Saudi Arabia, like much of the world, has grown to understand and 

appreciate its vulnerability to global terrorism. I have witnessed this evolution firsthand in my trips to the Kingdom, first in December 2002, then with Secretary Snow 

in September 2003, and most recently, with Deputy National Security Advisor 

Frances Fragos Townsend in December 2003. 

In particular, the bombing attacks in Riyadh in May and November of last year 

sparked a series of Saudi actions to confront aggressively the threat posed by al 

Qaida and its global terrorist network. Targeted actions against specific and identifiable sources and conduits of terrorist support have made an immediate impact on 

the ability of terrorist cells and organizations to operate. The systemic actions unVerDate Mar 21 2002 11:10 Jul 22, 2004 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 F:\WORK\MECA\032404\92744.000 HINTREL1 PsN: SHIRL
22

dertaken by the Saudis will take more time to produce results, but these changes 

could have a substantial long-term effect on the ability of terrorists to use financing 

mechanisms previously abused to advance terrorist causes and operations. 

Targeted Actions 

The Saudis have taken direct and important actions to attack the financial 

underpinnings of al Qaida’s terrorist infrastructure, not just in Saudi Arabia but 

around the world. 

First, the Saudis have taken action on their own to capture or otherwise deal with 

known operatives, financial facilitators and financiers for al Qaida. For example, 

Saudi action against an al Qaida leader and key financial facilitator known as Swift 

Sword was an important step in disrupting the financial network of al Qaida in the 

Gulf region. Just last week, a raid by Saudi agents eliminated Khaled Ali Haj, the 

suspected al Qaida chief on the Arabian Peninsula, and one of his associates. Aggressive, proactive steps by the Saudi government against key financiers and 

facilitators are continuing and serve as an important disruptive element of the war 

against al Qaida. 

The Saudi government has also taken steps to isolate and freeze the assets of individuals and entities designated as terrorist supporters—including the freezing of 

over five million dollars and seizure of terrorist-related assets. We have worked 

closely with Saudi Arabia to freeze the assets of organizations and individuals suspected of providing support to al Qaida. In this regard, the U.S. and Saudi Arabia 

have jointly proposed ten names to the United Nations 1267 Sanctions Committee 

since December 2002. The Committee included these names on its consolidated list, 

resulting in a binding obligation on all UN member states to freeze the assets of 

the underlying individuals and entities. Most recently, on January 22, 2004, the US 

and Saudi Arabia jointly proposed the names of four branches of the Saudi-based 

Al-Haramain Islamic Foundation to the UN Sanctions Committee. These branches—

located in Indonesia, Kenya, Tanzania and Pakistan—provided financial, material 

and logistical support to the al Qaida network and other terrorist organizations. 

Other joint US-Saudi designations include the following actions:

• On March 11, 2002, the US and Saudi Arabia jointly designated the Somalia 

and Bosnia branches of the Al-Haramain Islamic Foundation. These branches 

were engaged in supporting terrorist activities and terrorist organizations, 

such as al Qaida and AIAI (al-Itihaad al-Islamiya).

• On September 6, 2002, the US and Saudi Arabia jointly designated Wa’el 

Hamza Julaidan as an associate of Usama bin Laden and a supporter of alQa’ida. Saudi Arabia also forwarded this name to the UN 1267 Sanctions 

Committee.

• On December 22, 2003, the US and Saudi Arabia jointly designated Vazir—

a non-governmental organization located in Travnik, Bosnia—after it was determined that Vazir was simply another name for the previously-designated 

Al Haramain-Bosnia. The two governments also designated Safet Durguti, the 

representative of Vazir.

Beyond these designations, we have created a close agent-to-agent working relationship with the Saudis to deal with terrorist financing specifically. Last fall, we 

created the Joint Terrorist Financing Task Force, based in Riyadh. Through this 

Task Force, investigators from the FBI and from the IRS Criminal Investigation Division (IRS–CID) have gained unprecedented access to Saudi accounts, witnesses, 

and other information. The Task Force agents both provide and receive investigative 

lead information on various terrorist financing matters. In addition, U.S. agents 

seek assistance from Saudi investigators in following terrorist financing, and in 

using that information to identify or attack terrorist cells and operations. Information received by the U.S. agents is passed through FBI’s Terrorist Financing Operations Section in Washington to the interagency Joint Terrorist Task Forces (JTTFs) 

nationwide. 

As part of this initiative, IRS–CID participated in the FBI’s two week-long classes 

of financial investigation training to Saudi Arabian criminal investigators, pursuant 

to the State Department’s sponsorship. These courses included the following topics: 

charitable entities, money laundering, net worth method of proof, expenditures 

method, documenting financial crimes, and computer sources of financial information. IRS–CID anticipates participating in a third class that will be presented in the 

spring of this year, possibly in Riyadh. These combined efforts of capacity-building 

and working hand-in-hand on the ground in Riyadh have already produced substantial results as we continue to unearth leads and unravel the financial support for 

al Qaida in Saudi Arabia. 

23

1 Alternative remittance systems represent informal or unregulated means of transferring 

value between or among multiple locations. Often these systems are comprised of geographic 

networks and are described by a variety of specific terms depending on the region or community 

they serve. Hawala is the term often used to describe alternative remittance systems or services 

in the Middle East. 

Systemic Actions 

In addition to taking action against targeted terrorist financing networks, the 

Kingdom of Saudi Arabia has introduced numerous systemic changes in its formal 

and informal financial sectors to address vulnerabilities exploited by terrorist organizations in the past. These reforms should enhance the transparency and accountability of these sectors, allowing investigators to more readily identify and interdict 

terrorists and their supporters who continue to rely upon these sectors to raise and 

move funds and other elements of support. 

Charities 

Abuse of the charitable sector by terrorist supporters in Saudi Arabia remains an 

ongoing concern. Given the generous contributions from Saudi Arabia and the Islamic requirement of zakhat (or charity), there is a deep need for the Saudi government to ensure that money intended for good purposes is not diverted to al Qaida 

or other terrorist groups. Saudi Arabia has acknowledged this vulnerability and is 

taking action to safeguard the integrity of its charitable sector. The protection of the 

charitable sector and the goodwill of donors are not only important for our national 

security interests but are also essential to preserving the sanctity and faith in charitable giving. For both reasons, the Saudi government has taken concrete steps to 

deal with this identified risk. 

On May 24th of last year, Saudi Arabia issued comprehensive new restrictions on 

the financial activities of Saudi charities, including the following:

• Charitable accounts can only be opened in Saudi Riyals;

• Enhanced customer identification requirements apply to charitable accounts;

• Each charity must consolidate its banking activity in one principal account. 

Although sub-accounts are permitted for branches, they are restricted to receiving deposits—all withdrawals and transfers must be serviced through the 

main account;

• No cash disbursements are permitted from charitable accounts; payments are 

only allowed by check payable to the first beneficiary and must be deposited 

in a Saudi bank;

• No ATM or credit cards may be issued against a charitable account (all outstanding ATM and credit cards for such accounts have been canceled);

• No transfers from charitable accounts are permitted outside of Saudi Arabia.

Moreover, the Kingdom has banned cash contributions in local mosques and removed cash collection boxes for charities from shopping malls. 

In some respects, these restrictions go further than those of any country in the 

world. We commend Saudi Arabia for taking these important steps and urge its officials to ensure that these new rules are rapidly implemented and enforced fully and 

vigorously. We will continue to work directly with the Saudi government on the concerns we have about the vulnerability of their charity—often sent to crisis regions 

—being abused by terrorists. 

Alternative remittance systems—Hawala 

The Kingdom of Saudi Arabia has also taken comprehensive action to reduce the 

threat of terrorist financing through alternative remittance systems, such as 

hawala.1 There are more than seven million locally-paid expatriate workers living 

in Saudi Arabia. These workers support their families living in their home countries, thereby creating a strong and economically legitimate demand for remittance 

services in the Kingdom. The Kingdom has sought to service this demand and protect remittance systems from terrorist abuse through a mandatory licensing requirement and additional legal, economic, and supervisory measures. Only licensed banks 

and money-exchangers are allowed to provide remittance services. Licenses are 

issued by the Saudi Arabian Monetary Agency (SAMA), which controls and supervises Saudi financial sectors. 

The Saudi government targets unlicensed remittance systems for prosecution. The 

Kingdom has reported that over the past 15 years, 204 cases have been filed against 

437 individuals for engaging in unlicensed remittance activities, and more than US 

$9.6 million in financial penalties have been assessed against these individuals. 

24

Nonetheless, the Kingdom has acknowledged that criminalization alone is insufficient as long as there is a demand for these services, prompting a complementary 

economic approach to attack unlicensed remittances. The Kingdom has encouraged 

banks to open special remittance centers to provide secure, inexpensive, and rapid 

money transfer services. As a result of this policy, a majority of Saudi banks now 

offer such services—known as ‘‘Speed Cash’’—which are available after traditional 

banking hours for the convenience of expatriates employed during normal working 

hours. These banks, as well as money-exchange providers licensed to provide remittance services, are regulated and supervised by SAMA to ensure adequate implementation of client identification, reporting and recordkeeping requirements. These 

steps represent a sophisticated, multilayered response to the terrorist financing 

risks presented by alternative remittance systems. 

Formal financial sector 

The Kingdom has recently amended the legislative and regulatory framework governing its formal financial sector to improve its ability to combat terrorist financing 

and other financial crimes. These changes attack terrorist financing on a systemic 

level by promoting greater transparency and accountability. Among the most important legislative and regulatory reforms in this area are the enactment of the AntiMoney Laundering Law of 2003 last autumn, and the issuance of Anti-Money Laundering Implementation Rules just last month. Specific measures include improved 

reporting and record-keeping requirements, new inter-agency coordination mechanisms, and the establishment of a financial intelligence unit. 

The Saudis have subjected their newly reformed anti-money laundering regime to 

intense international scrutiny. The Financial Action Task Force (FATF)—a 33-member international body dedicated to promoting international compliance with antimoney laundering and counter-terrorist financing (AML/CFT) standards—has recently conducted an in-depth review of Saudi Arabia’s overall AML/CFT regime, 

which included an extensive on-site examination. The willingness to undergo this 

assessment represents a new commitment to openness by Saudi authorities and an 

opportunity to benefit from the insight of international AML/CFT experts. FATF is 

in the process of completing the assessment, and we look forward to FATF’s 

issuance of a summary report in June. 

ONGOING CHALLENGES

The measures and initiatives described above demonstrate considerable progress 

and commitment by the Kingdom of Saudi Arabia in combating terrorist financing. 

But like all countries, the Kingdom faces several ongoing challenges in the global 

campaign against terrorist financing. Many of these challenges involve the implementation of the measures and initiatives described above. Other challenges are 

more fundamental. 

The most fundamental challenge facing the Kingdom is defusing the religious extremism that facilitates support and recruitment for radical Islamist terrorist organizations like al Qaida. The Kingdom of Saudi Arabia has begun to take action to 

deal with this problem. These efforts are important to ensure that militant religious 

extremism cannot provide a platform for terrorists to justify and launch their terrible actions. The Kingdom is working with clerics, and has also launched a public 

campaign against terrorism, including publishing a hotline and offering rewards to 

those who have information on identified or suspected terrorist individuals or operations. These efforts must be sustained to overcome the threat of terrorism engendered by militant religious extremism, which has no scruples in attacking innocent 

civilians—including Muslims. 

Another critical challenge for the Kingdom is fully implementing and enforcing 

the comprehensive measures it has enacted to ensure charities are not abused for 

terrorist purposes. In a cultural environment committed to charitable giving, the 

Kingdom must move forward to clarify and empower an oversight authority that 

will administer effective control over the sector and ensure compliance with obligations under the new regulatory measures that I have described. This authority must 

also coordinate its efforts with other elements of the regulatory and criminal justice 

system. 

In addition to these primary challenges, the Kingdom faces a number of secondary 

challenges in combating terrorist financing. These challenges include ensuring that 

originator information is recorded on all cross-border wire transfers, protecting its 

borders from illicit cash couriers, and sharing critical information on terrorist financing investigations with all relevant investigatory authorities, both domestically 

and internationally. These types of challenges are common to all countries, and we 

will be working together with the Kingdom to improve global performance on these 

issues. 

25

Finally, the Kingdom must continue to publicize and promote its actions against 

terrorists as necessary measures to protect the safety of the Saudi and global populace. My sitting here and discussing these measures with you not only sends a message to the Saudi people regarding the commitment of their government, but also 

to other Islamic countries regarding their need and ability to undertake similar initiatives. 

We work in close partnership with the Saudis on these issues on a daily basis 

to protect the American and Saudi people from the scourge of terrorism. 

CONCLUSION

As I stated earlier, the ongoing threat of terrorist financing demands a sustained 

and comprehensive commitment from all governments of the world. The measures 

and initiatives adopted by the Kingdom of Saudi Arabia indicate that the Kingdom 

stands committed with us to defeating this threat. The targeted actions undertaken 

by the Kingdom have already produced tangible results, and the systemic changes 

made by the Kingdom could prove even more effective in defeating terrorist financing over the long term. 

We look forward to continuing to work with the Kingdom as it begins to implement the systemic changes discussed above. The terrorist financing challenges we 

all face are considerable, but the progress we have achieved provides a solid basis 

from which to move forward. We appreciate the efforts of the Kingdom to date—

as they put the lives of their agents and people on the line to fight this battle. We 

anticipate continued progress in the months ahead. 

Thank you again for the opportunity to testify before you today on these matters 

of great importance. We look forward to our continued work with Congress to combat the threat of terrorist financing.

Ms. ROS-LEHTINEN. Thank you so much. Thank you, all of you 

gentlemen, for your excellent testimony. 

I am going to begin with some questions and we will move to the 

other Members as well. 

Thank you. 

Mr. Ambassador, with this new task force that you were discussing, the U.S.-Saudi Terrorism Financing Task Force, what are 

the operational rules regarding the sharing of intelligence information? Do we grant full and unfettered access to the Saudis? Do 

Saudi officials see all of the information we possess on the various 

targets of our investigation? 

Regarding other details of the agreement for this task force, if 

you could explain the precautions to prevent the Saudis learning 

how to evade our methods, the security level, who will have access 

to the information, what types of information they will seek, what 

are the terms of United States access and freedom to operate in 

Saudi Arabia and is this an open-ended operation or will this task 

force be time limited? 

Ambassador BLACK. Madam Chairperson, if I might, I would like 

to turn Mr. Zarate, who can give you a comprehensive answer on 

that. 

Mr. ZARATE. Madam Chairwoman, in coordination with the 

Saudis, as you know, there are two task forces in essence set up. 

One is a task force to share intelligence information on a real time 

basis given the ongoing and real threats faced in the Kingdom for 

attacks as well as to share information related to threats to the 

United States. 

Ms. ROS-LEHTINEN. I was talking about the financing. 

Mr. ZARATE. The financing. The financing was set up this past 

summer and, as Mr. Harrington can probably discuss as well, that 

is a system set up with intelligence agents as well as financial investigators from the FBI and IRS. 

26

The sharing of information entails a sharing of leads, actual 

leads, requests for bank records and information on accounts. It 

also involves requests for access to individuals for interviews and 

interrogation. 

In terms of the protocols for vetting what information is shared 

with the Saudis, that is something that is largely done both here 

at headquarters from the FBI, but also done on the ground through 

our representatives on the intelligence side, as well as the investigatory side, to ensure that the relevant information being shared 

is the type that we want the Saudis to be seeing. 

Ms. ROS-LEHTINEN. We run the risk of sharing the information 

and then what happens is they make an end run and they learn 

how to evade our tactics, and I am sure there are going to be some 

follow-up questions on that. 

What actions have been taken by the Saudi government against 

the Saudi financial sponsors of al-Qaeda that are listed in the 

‘‘Golden Chain’’? According to written testimony provided to the 

Senate Committee on Banking, Housing and Urban Affairs in October of last year, the list included six bankers, 12 businessmen, two 

former Saudi ministers and their cumulative corporate net worth 

totals more than $85 billion. What can you tell us about what is 

new with that investigation? 

Mr. ZARATE. Madam Chairwoman, first, in terms of what the 

Saudis have done, one of the significant designations that we have 

nominated to the U.N., this is back in September of last year, was 

the designation of Wa’el Hamza Julaidan, a Saudi citizen, a key 

financier whose assets have been frozen in Saudi Arabia. 

In addition, the Saudis have taken actions to investigate other 

individuals, including Yasin al-Qadi, who is a Saudi citizen who we 

designated back in 2001, and they continue to investigate those individuals who we identify to them as being suspect. 

I think part of the answer may be better answered in a closed 

session because of the sensitivity of ongoing investigations. 

That being said, the Saudis take very seriously the information 

that we, the FBI, the intelligence services, share with them with 

respect to suspect individuals. 

I would like to mention, Madam Chair, one of the challenges of 

the terrorist financing campaign writ large is our ability to compile 

and ferret the information that is relevant to foreign governments 

like Saudi Arabia to help prompt them to take relevant actions. 

I will tell you that when we have been able to do that, when we 

have been able to provide the Saudis with relevant information, 

they have taken action, whether it has been taken publicly or 

quietly. 

Ms. ROS-LEHTINEN. Thank you. 

Mr. Harrington, you mentioned in your written testimony that 

the Saudi Labor Ministry is creating a database of charities. How 

many charities are listed on that database so far? What other ministries will it be merged with? What authority and what access will 

the U.S. have as part of our joint task forces or will they be separate functions? 

Mr. HARRINGTON. I do not know how many charities, I do not 

know if my colleagues can point to that list at this point and tell 

27

you how many charities are on the list. Clearly, the Saudis have 

been very, very open with us. 

To try to answer a couple of your earlier questions, on the task 

force itself, it is a relatively small group of FBI agents, FBI employees, analysts, IRS agents and intelligence folks. Their focus is 

clearly on just financial issues. There are two sets of FBI employees in Saudi right now. We have the Legat that is there that handles the general criminal terrorism leads. There is a Legat and two 

Assistant Legats, so three agents total, a translator and several office assistants. 

By creating this financial task force, we took the burden off the 

Legat so that this group specializes and focuses solely on the financial leg of terrorism. As a result, the turn around time on our leads 

has been significantly improved. We get real time information on 

potential leads here in the United States, as well as covering leads 

that are generated by our investigations and that require Saudi assistance to pursue them. And, again, in an open hearing, it is difficult to go into more details on that, but I would be happy to do 

that at some later date. 

Ms. ROS-LEHTINEN. Well, we are going to try to schedule that. 

Thank you. 

Just one last question for Mr. Zarate. 

What is Treasury doing to get a handle on the European and 

Middle Eastern fiduciaries and the shell companies and banks that 

operate outside the scope of conventional banking activities? Have 

they acted against correspondent accounts, secret accounts, Saudi 

sovereign accounts? What actions have the Europeans and particularly the Lebanese authorities taken in these directions? 

Mr. ZARATE. Madam Chairwoman, we have worked very closely 

with our European allies and with other countries, including Lebanon, to deal with multiple problems, the problem of the use of 

front companies by al-Qaeda and other groups, the use of charities 

as we have mentioned here extensively, the use of the hawala network, the informal system, the money exchange operations as well. 

What we have done in the past, Madam Chairwoman, has been 

to identify those that we have sufficient information about to the 

U.N. for designation. For example, early in the campaign against 

terrorist financing, we identified certain bakeries and honey shops 

in the Gulf that were being used by al-Qaeda to raise and move 

money. We identified an extensive network, the al-Taqwa network, 

which had banking operations in the Caribbean as well as in Europe, which formed part of a financial network not only for alQaeda, but for Hamas and other terrorist groups. 

So we have continued to try to search for information with respect to how to handle these efforts. 

I would like to emphasize that part of the efforts are handled in 

quiet ways with intelligence resources and otherwise. Some of this 

is handled publicly through the designations and the freezing of assets and part of this, and this is the long-term effort, is handled 

through systemic changes, where we have frankly driven and quarterbacked the international movement toward greater regulatory 

oversight over some of these networks which frankly had never 

been regulated before. 

28

And, again, I think that is where you see greater regulation in 

Europe over charities, you see greater regulation in the Gulf and 

South Asia over the Hawala network, so all of that is part of the 

comprehensive campaign. 

Ms. ROS-LEHTINEN. Thank you so much. 

Mr. Ackerman? 

Mr. ACKERMAN. Thank you, Madam Chair. 

I want to get back to the charitable organizations, if I might, 

and, in particular the ones that have been termed international 

charitable organizations, particularly the ones I cited in my opening comments, as well as others such as the Islamic Relief Organization and the World Assembly of Muslim Youth. Are they subject 

to Saudi law and what is their current status? 

Mr. ZARATE. Congressman, if I could, I would like to answer that 

question. 

We have addressed this issue directly with the Saudi government 

and they realize the importance of it to us. 

There are two key elements to our engagement: First, trying to 

determine to what extent these organizations, which are global organizations, have been infiltrated by al-Qaeda, have been used either in the past or are currently being used to funnel money. So 

part of our effort is to work very closely with the Saudis to get as 

much information as possible about ongoing operations. 

The second part of this is to get a handle over what regulatory 

steps the Saudi government can take over these organizations. 

As you have mentioned, Congressman, under Saudi law, these 

three organizations fall under the umbrella or the rubric of a multilateral organization, so they do not technically fall under the charitable regulations. 

Mr. ACKERMAN. How are they treated in our country, before you 

proceed? 

Mr. ZARATE. In our country? 

Mr. ACKERMAN. Yes. 

Mr. ZARATE. If they are a 501(c)(3) organization, they would be 

treated as a charitable organization and would be subject to the reporting requirements, including Form 990s and other relevant 

forms subject to oversight by the IRS. 

Mr. ACKERMAN. Are they operating in the United States? 

Mr. ZARATE. That is something I think is better handled in a 

closed session, Congressman, in part because as I mentioned part 

of our efforts have to do with investigations. 

Mr. ACKERMAN. Let me ask you question you can answer in an 

open session. Have any of them filed to be 501(c)(3)s? 

Mr. ZARATE. I would have to go back to check, Congressman, to 

make sure I have accurate information for you on that. 

Mr. ACKERMAN. Okay. Please continue. 

Mr. ZARATE. So in essence, you have identified a very important 

point, this is a point that was identify by the FATF experts team. 

One of the members on that team is the director of my office. That 

is something that we are engaging with the Saudis with directly. 

In discussions with the Saudis on our last trip with Ambassador 

Black and Fran Fragos Townsend, we raised this issue again with 

the Saudis and it is at the top of the agenda in terms of how they 

29

are going to handle this from a regulatory standpoint. Again, part 

of this has to do with a legal definition as to how they are treated. 

Mr. ACKERMAN. Have they done anything to regulate them or do 

they just operate freely there? 

Mr. ZARATE. Well, in discussions with SAMA, which is the central financial regulator for the government of Saudi Arabia, they 

have indicated that they have in fact looked at the operations of 

these organizations and have started to treat them if not de jure, 

then de facto as charitable organizations. So that is a good sign because that means that there is continued scrutiny with respect to 

their actions, continued scrutiny with respect to who is involved 

and who the directors are. 

Mr. ACKERMAN. Are the Saudis cooperating with us as far as the 

suggestions that we are making? Are we making suggestions to the 

Saudis as to how to treat them? 

Mr. ZARATE. Yes, we are. And I think the international financial 

experts have as well and we have certainly engaged in this dialogue with them. 

Part of this, Congressman, is also understanding and being sensitive with respect to their laws and their legal regime and trying 

to figure out the best way and the most effective way of dealing 

with the identified risks. 

Mr. ACKERMAN. The non-international charities, the ones that 

are controlled by members of the ruling family, are they subject to 

Saudi law? 

Mr. ZARATE. Yes. All Saudi charities are subject to and the new 

charities are subject to the new charities regulations. 

Mr. ACKERMAN. Even the personal ones of the ruling family? 

Mr. ZARATE. All of the Saudi charities that are registered Saudi 

charities. 

Mr. ACKERMAN. Let me ask it a different way. Are the ones controlled by the ruling family registered Saudi charities? 

Mr. ZARATE. We believe so. Congressman, I think it bears mentioning, and this is an important point of fact, that many of the 

charities established in the Kingdom had as sort of honorary 

boards many of the members of the royal family, so in many instances——

Mr. ACKERMAN. You are talking in the past tense? 

Mr. ZARATE. Yes. Because as the Saudi regime has realized and 

the royal family has realized, the open sort of unchecked support 

of charitable operations without realizing how these charities are 

operating or how they are moving money is not a wise thing. 

Mr. ACKERMAN. But there are separate charities—I mean, a lot 

of us have our names, whether we know it or not, on honorary 

boards or things, but the ones that are actually controlled by the 

family, are they subject to Saudi law and are they registered? 

Mr. ZARATE. Congressman, I believe so and I believe it is also 

part of an ongoing effort, something that was announced in late 

February by the Saudi government to consolidate all of the charities, including those charities that you are mentioning. 

As Ambassador Black mentions in his written testimony, we are 

still waiting for further details with respect to the contours of that 

plan, but that is an important first step. 

30

Mr. ACKERMAN. Could we hear further from you on that when 

you have that together? 

One further thing on this, if I may Madam Chair. 

The Saudi authorities are obviously very interested in preventing 

money from flowing to al-Qaeda which affects them directly, but 

they seem to have a different attitude when it comes to stopping 

funding that goes to other organizations, for example, Hamas. 

Two years ago, we know that Crown Prince Abdullah withdrew 

his support for Hamas, but it is also my understanding that special 

accounts for funnelling assistance to Palestinian organizations continued to exist. 

First, do charitable contributions from Saudi Arabia continue to 

flow to Hamas? Are these special accounts for Palestinians subject 

to any of the new laws that are governing charities? 

Ambassador BLACK. Why don’t I try and answer that for you? 

We do know that the Saudi government does provide significant 

funding for the Palestinian Authority. It has stated to us that it 

does not provide funding to Hamas, so the Saudi government does 

not provide this funding. So what we are talking about here is private Saudi citizens. It is something that we are looking at with 

them. 

We have made it clear to them that they need to clamp down on 

these funds making their way to Hamas from the Kingdom. We are 

exploring who is involved, seeking to identify them. It is an ongoing 

process. 

I would also add that this is not just related to Saudi Arabia, but 

our efforts in the European Union and in other areas, in fact, as 

I speak today, the British have identified five individuals of Hamas 

whose funds are to be frozen. This is something that is important 

to us, it is not something that is readily apparent, and we need to 

identify the individuals and work with the Saudis to shut it down. 

Mr. ACKERMAN. Are there Hamas representatives that travel to 

Saudi Arabia to raise money? And also what about affiliates of alQaeda? Do they come to Saudi Arabia to raise money? 

Ambassador BLACK. Well, I am sure they do. I suspect they do 

clandestinely, at the very least. As you know, there are al-Qaeda 

operatives in Saudi Arabia that we are looking to identify and engage to render to law enforcement. It would be reasonable to expect 

that Hamas does clandestinely. I would have to look and check in 

terms of the overt posture. 

Mr. ACKERMAN. And would you also report back to us, if you 

would, Ambassador? 

Ambassador BLACK. I would be happy to, sir. 

Mr. ACKERMAN. What the Saudis authorities have done, if anything, to stop this kind of activity. 

Ambassador BLACK. Yes, sir. 

Mr. ACKERMAN. Thank you. 

Ms. ROS-LEHTINEN. Thank you. 

Our Vice Chair of the Subcommittee, Mr. Chabot. 

Mr. CHABOT. Thank you, Madam Chair. 

Let me ask you first of all, and Mr. Harrington or any of you 

could respond, there was a recent report that in the days immediately following September 11th that former White House Counterterrorism Director Richard Clarke authorized that nearly 140 

31

Saudis be allowed to be flown out of the United States out of fear 

of retribution. 

What kind of investigation was each of these Saudis put through 

by the FBI and can you comment on what the retribution might 

have been that they were concerned about? 

We would also like to get a list of the 140 people, if at all possible. 

Anyone could—Mr. Harrington or whoever would like to respond. 

Mr. HARRINGTON. Yes. I would be happy to try to answer that 

to some degree. 

Mr. CHABOT. Thank you. 

Mr. HARRINGTON. Obviously, that is part of the 9/11 investigation, which I think some of the details have come out. I do not have 

that list. We will try to put it together for you and I will try to get 

that for you at a later date. 

The retribution, clearly there was concern after 9/11 about backlash against Middle Eastern groups and the Saudis were quick to 

try to remove some of their folks from the country. My understanding is, and, again, I was not in the counterterrorism program 

at that time, was that each of these folks were screened and interviewed by FBI agents prior to their departure and I would have to, 

for the record, go back and verify that for you, though. But we did 

look at them and we did try to validate who they were, what their 

purpose was in the United States. 

Mr. CHABOT. Would either of the other gentlemen like to respond 

in any way? 

[No response.] 

Mr. CHABOT. All right. Next, in November 2002, the Wall Street 

Journal reported that as part of the government’s case against the 

International Relief Organization of Virginia on charges of financing terrorist causes information surfaced that the Saudi Embassy 

in Washington had supplied at least $400,000 to the charity. 

What can you tell us about this and other kinds of funding for 

these so-called charities that has been funneled through the Saudi 

Embassy and who knew about these transfers? 

Whoever would like to respond. 

Mr. HARRINGTON. Again, in an open hearing like this, I am not 

comfortable that I would be able to give you the answers you probably would like to hear. We certainly have taken a look at that. Obviously, there is a pending case, there are court filings in northern 

Virginia on that particular issue. 

The Saudi Embassy has been very cooperative with us. There are 

lines of communication that have been open. They have provided 

the FBI directly information over the last year. The results of some 

of that information has been the genesis of new investigations for 

us. So there is cooperation there, there are discussions, and, again, 

in a more private session I think we could probably provide you 

with some further details. 

Mr. CHABOT. There are numerous reports of vast Saudi funding 

of educational and religious institutions here in the United States. 

There is some worry that the network could be serving as a support base for potential future attacks. 

32

How cooperative are the Saudis being in revealing information 

on their funding of schools and mosques and other religious centers 

here in the United States? 

Mr. HARRINGTON. Again, the Saudis have been very open with 

us, they have provided information directly to the FBI. Again, the 

lines of communication are open, they are willing to answer any 

questions we have and, again, other than that, I really cannot go 

any further than that right at the moment. 

Mr. CHABOT. Finally, I have 1 minute left, so could you comment 

on how extensively United States banks may be unwittingly used 

to transfer funds between Saudi donors and al-Qaeda through corporate, private or other types of accounts? 

Mr. ZARATE. Congressman, it is always a risk that financial institutions, whether in the U.S. or worldwide, can be used as a conduit 

for the financing of terrorism or other financial crimes. That is in 

part why, given the powers granted to us in the Patriot Act, thanks 

to the Congress, we have increased the measures we have taken 

with the formal financial system and expanded the regulatory 

scope and deepened the regulatory scope of the anti-money laundering system here in the U.S., putting us on the cutting edge 

worldwide. 

I would dare say we have some of the finest compliance systems 

in the world with respect to our banks. There are certainly certain 

banks that need to improve their efforts and we are engaged with 

our functional regulators on a daily basis to make sure that the 

banks are compliant with relevant anti-money laundering systems 

and laws. 

Mr. CHABOT. Thank you. 

Thank you, Madam Chair. 

Ms. ROS-LEHTINEN. Thank you, Mr. Chabot and Mr. Ackerman. 

We will try to schedule that classified briefing so we can get 

those questions answered. 

Mr. Berman? 

Mr. BERMAN. Thank you, Madam Chair. 

So leaving out there hanging the notion that Richard Clarke presumably, unbeknownst to the President, Dr. Rice, other people in 

the White House, the Department of Transportation, decided to 

sneak the family members of Osama bin Laden out, Mr. Harrington responds to the question without referencing the assumption and Ambassador Black has nothing to add, are you by your silence or by your failure to direct yourself to the unsubstantiated 

character smear indicating that this is why Osama bin Laden’s 

family was let out of the United States and a special waiver allowing aircraft to take the family back to Saudi Arabia, are you attempting to confirm by accepting that assumption that that is what 

happened? 

Ambassador BLACK. What I will tell you, sir, is that the Department of State was not involved in this process, so I will tell you 

that. 

Mr. BERMAN. So you have no reason to know whether what Mr. 

Chabot has said has any truth whatsoever? 

Ambassador BLACK. I do not know. 

Mr. BERMAN. And you, Mr. Harrington? 

33

Mr. HARRINGTON. All I can add is I have no knowledge of Mr. 

Clarke’s role in any of that effort. Again, I was not present at the 

time in the counterterrorism division and I would have to go back 

and review our findings on that. I am not prepared to go any further than that. 

Mr. BERMAN. Well, one would think that high minded public 

servants when asked a question prefaced by that kind of a smear 

would make it clear that in no sense were they accepting the validity of that if they had no reason to know the validity of it. 

Back to the subject of the hearing. 

A leader in the security forces, one of the many security forces, 

of the Palestinians told me last May at the time that Abu Mazen 

was the prime minister and we were trying very much to enable 

the Palestinian security forces to deal with terrorist, that at that 

very moment significant support was coming from Saudi Arabia for 

Hamas’ military operations and terrorist operations. 

At this particular point, what is the status of that situation? To 

your knowledge, was that a false statement, an inaccurate statement? If it was accurate, has it stopped? 

Ambassador BLACK. I will start and perhaps Mr. Zarate would 

like to finish. 

The government is not facilitating the passage of funds to 

Hamas. As I indicated earlier in my testimony, we are working 

with them to identify private individuals who are moving funds 

and that is the operational course that we are involved in now. I 

cannot speculate on the accuracy, whether it is or it is not, we assume that monies still continue to go to Hamas from private individuals. We are in the process of trying to identify these people and 

working with the Saudi government to do something about it. 

Let me turn to Mr. Zarate and see if he has anything to add. 

Mr. ZARATE. Congressman, I think we are still concerned about 

funding for Hamas coming out of the Gulf generally and certainly 

out of Europe, as Ambassador Black mentioned. It is an ongoing 

concern for us that we have raised directly with our European partners, it is something that we raise with our Saudi partners, it is 

something we raise with our Gulf partners. 

Certainly we think there are still private sources of funding to 

Hamas from a variety of countries and sources, from private individuals. 

Mr. BERMAN. All of you have described what you believe to be a 

serious effort by at least elements of the Saudi government to work 

with you and cooperate with you in dealing with terrorist financing 

and stopping that from emanating from Saudi Arabia. Prince Nayef 

was the Saudi Interior Minister and apparently the anti-terror czar 

who was knowingly setting up the funding for many of the 

Wahhabi madrassa schools throughout the Middle East and accused Zionists of responsibility for September 11th, denied any involvement by any Saudi citizens in that attack, notwithstanding 

the Crown Prince’s statements in regard to that and plays a role 

in all of this. 

To what extend do you feel you have the entire cooperation of the 

Saudi government, particularly of Prince Nayef, in your efforts? 

Ambassador BLACK. I think it is clear to indicate, as I hope I did 

in my testimony, that we are not at the end of this fight against 

34

terrorism in the Kingdom of Saudi Arabia. We are trying to give 

an indication that I think we are making good progress, certainly 

over the last year, certainly accelerated by the May and November 

attacks. 

We have very effective contacts within the government that have 

the authority that has been passed to them to cooperate with us, 

to work with us faithfully. 

I would certainly agree with you that it is not everybody and I 

am sure there are individuals not only that are not neutral but 

that are hostile to not only the United States but effective cooperation with security officials in the government of Saudi Arabia. 

I would say the answer to your question would be I think we 

have made very good progress. We have a long way to go. There 

are individuals that are not cooperating, I am sure, but we do have 

ones that are and they have the authority to work with us and proceed and I am encouraged and I think in the time certainly those 

of us here at the table have been working on this I think we have 

made good progress. 

Mr. HARRINGTON. I would agree with that. We have had tremendous cooperation both at the mid-level and low-level and I believe 

the Director of the FBI has had some outstanding meetings at his 

level, all with pledges of cooperation. Any time we have had a problem, we have been able to go to them. 

Mr. BERMAN. Does that include the Interior Ministry and the 

czar for anti-terrorism? 

Mr. HARRINGTON. Yes, sir. At the appropriate levels we have had 

discussions with them, we have had commitments from them, and, 

again, those have equated into case specific examples that we can 

give you of cases moving forward, intelligence being passed in a 

timely fashion now. That did not exist, though, several years ago. 

Ambassador BLACK. I think to answer to his question, again, this 

is an open session. That makes me a little circumspect in answering. I would be happy to meet with you privately, if you would prefer that, but I would say the essence of your question is are we 

working effectively and cooperatively with the people that count in 

the Saudi security administration, my answer to that is you bet. 

Mr. BERMAN. Okay. I think my time has more than expired, 

Madam Chair. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Berman. 

Mr. Pitts? 

Mr. PITTS. Thank you, Madam Chairman. 

Mr. Ambassador, what can you tell us about Saudi Arabia’s funding of madrassas? These schools preach anti-Semitism and terrorism, and they serve as a real breeding ground for terrorism. 

While the Saudis maintain they are fighting terrorism, how can 

they justify funding these schools that are indoctrinating countless 

thousands to hate, commit terrorism and murder? 

Ambassador BLACK. We have an ongoing program to press the 

Saudis to do more to control private fund raising and charitable organizations that purport to work abroad. 

We have encouraged them to monitor closely and look at mosque 

building madrassas that could be used for subversive activities. 

You asked exactly the right question. This is a real challenge and 

having been previously a counterterrorism practitioner, this system 

35

has quite the head start on us. It also is from our perspective exacerbated by there are a goodly number of madrassas that do good 

religious teachings, that are, I think, from our perspective, okay. 

There are a number that are not. We try and identify these. We 

are working with the Saudi government as well as others to identify and cut funding that goes to madrassas that we believe are encouraging hate, anti-Semitism and the like. 

We also work with local governments in foreign countries to 

present a counterweight to these type of facilities. One example 

would be in Pakistan. The Pakistani government has taken a good 

lead in trying to set up parallel schools and systems and so this 

is to the good. 

My words are good, but I would say that we are at just at the 

beginning of this. It is an issue that we will continue to address. 

This will see me out. We will be at this for years. 

We also have to make differentiation between what is religious 

teachings and activities and those that are associated with the education and provision of potential recruits for terrorist organizations. 

I would say to you that it is still early days in this. We are very 

mindful of it. It is big, it is huge. As the President says, this is 

going to be a long-term struggle. 

And where, on the one hand, we need to move aggressively and 

quickly against the terrorists, the key to counterterrorism, of 

course, is countering terrorists and not countering everybody else 

and encouraging those people to feed young recruits into terrorist 

organizations. 

So the key here is to work with the Saudi government, which we 

are. As we do these other things, we are increasingly going into 

this and that is sort of where we are. It is not very eloquent, I 

apologize, but that is where it is. 

Mr. PITTS. Is the Saudi government working with other governments like Pakistan or Indonesia or Malaysia to disrupt existing 

networks outside of Saudi Arabia? Are they being proactive, not 

just reactive? And how can we encourage the Saudis to cooperate 

in this way, to be proactive in rolling up some of these terrorist 

networks? 

Ambassador BLACK. The answer to your question is yes, but the 

corollary to that is that the government of Saudi Arabia and the 

Saudi people are in quite a fight right now in their own country. 

Their security forces are engaged against terrorists, they have lost 

many lives, young policemen and soldiers, in firefights with alQaeda cells, so I would say their primary focus, as ours would be 

in a similar situation, is the internal terrorist threat and they are 

in contact with foreign leaders and working this issue. 

We encourage them to do more. I think Saudi Arabia the government would tell you that these issues are connected and interrelated and so we are making progress on that. We, of course, need 

to do much more. 

Mr. PITTS. Since they have their hands full, perhaps they could 

find some appropriate actions by others. They seem to have plenty 

of money. 

Ambassador BLACK. Yes, sir. We are looking at that. As an example, in the Saudi government there is also humanitarian need that 

they can fulfil. Saudis as a people are compassionate. In other 

36

words, those individuals say in Iraq per se that need help, that 

need support and that we encourage, are allowing the provision of 

goods in kind, tractors and the like, and not cash. So the government has interposed themselves. They have their hands on the 

choke point. The good Saudi people that want to contribute for a 

good cause have a way to do that. 

Mr. PITTS. Have they cooperated with U.S. intelligence or U.S. 

personnel on the Khobar Towers bombing, the Air Force billeting 

facility that was struck in June 1996? Is their investigative arm 

willing to share evidence with U.S. counterparts? 

Ambassador BLACK. If I can turn that over to my FBI colleague? 

I am not so sure on that. 

Mr. HARRINGTON. Again, in an open hearing, this is somewhat 

difficult, but certainly we waited over 4 years for direct access to 

individuals we believe that were involved in Khobar Towers. Certainly the environment is completely different from that time compared to today. I think there is still room for us to have further 

discussions on that, but they are more actively involved in trying 

to provide that assistance. We are building relationships now one 

on one between investigators at both the working level, mid level 

and, as I stated earlier, the executive levels. We are making 

progress. 

Mr. PITTS. Thank you, Madam Chair. My time is up. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Pitts. 

Congressman Crowley was sweet enough to let us skip his turn 

so that Congresswoman Berkley can ask her question and get back 

to her other hearing and then we will hear from Congressman 

Crowley. 

Shelley? 

Ms. BERKLEY. Thank you very much, Madam Chairman. 

Thank you all for being here, I appreciate the information, but 

with all due respect, I am not overly impressed with our Saudi 

partners. 

The Saudis have been exporting terrorists and funding terrorism 

throughout the world for the last 20 years under the mistaken belief that they would not be the victims of their own creation and 

now that they are the victims all of a sudden they have become our 

partners against terrorism. I think it is too little too late and while 

you have spoken of some improvements, the reality is you are 

touching the tip of the iceberg and we do not have a clue what the 

Saudis are doing or what the Saudi royal family is funding. But 

there is certainly enough evidence to believe that they continue, if 

not at the same pace, to fund al-Qaeda, to fund Hamas, and other 

terrorist organizations throughout the world. 

There are a number of questions that I have, but I have to get 

back to the other hearing, but what I would like to do is leave a 

list and have you answer in writing. 

One issue that I would like to bring up is the Saudi support for 

the Qassam rockets. There have been reports that Saudi Arabia 

may be playing a role in Hamas’ development of the Qassam rockets. Apparently, Hamas operative Osama Karika was recently 

caught en route from Gaza to Saudi Arabia carrying documents detailing the Qassam rocket program. 

37

Karika told Israeli interrogators that he had received financial 

backing for the Hamas rocket program in Saudi Arabia and was returning to brief people on progress and secure more funding. 

Can you confirm this cooperation? 

Mr. Ambassador? 

Ambassador BLACK. Yes, Ma’am. Thank you very much for that. 

We certainly look forward to your questions and we will try and 

answer them. 

It sounds like it is in the preserve of intelligence. I cannot rule 

out something like this could be possible certainly without the support of the Saudi government. It would need to be checked out and 

looked into and we would need to have the intelligence and security 

people look at it. I do not know what the state of play on that is. 

There are people moving around the Middle East with money involved in nefarious activities, it is a fact of life, it has been going 

on for a long time. It is our mission to identify them and stop them. 

Ms. BERKLEY. And funded by the Saudi government? 

Ambassador BLACK. Ma’am, we have been told at a very senior 

levels and we do everything to confirm this that there is no official 

Saudi government support for Hamas. 

Ms. BERKLEY. What is the definition of official? 

Ambassador BLACK. Well, a government entity would be like the 

U.S. Government vis-a-vis perhaps—it is a bad analogy, but yourself. You acting in your private capacity would be seen as different 

than being a representative of the government. As we understand 

now, representatives of the government would be in contrast to private individuals. 

Ms. BERKLEY. Do you consider members of the Saudi royal family 

members of the government or private individuals? And if you have 

a prince writing a million dollar check to Hamas so that they can 

develop these rockets, are they doing it as citizens of Saudi Arabia 

or as members of the Saudi royal family? 

Ambassador BLACK. I do not mean to be cute, but there are a lot 

of princes of various levels. Some of them are unemployed and sort 

have no jobs and live off of wealth. One’s affiliation to the royal 

family does not make them a part of the government. It is possible 

that a junior prince or someone well removed from the government 

could be involved with something like this, but it would be speculation. 

Ms. BERKLEY. How we do we rein that in? 

Ambassador BLACK. The problem is we have to identify these 

people. 

Ms. BERKLEY. And who does that? 

Ambassador BLACK. Well, we do that through, one, cooperation 

with the Saudi government; two, by security and intelligence activities outside the Kingdom and those people would look at the problem from both ends. 

Ms. BERKLEY. I would submit to you if we are relying on the 

Saudi government to turn over information about their Saudi 

princes, no matter how low ranking they are, we are going to be 

waiting an awfully long time. 

I am going to prepare a list of questions, if you do not mind answering them, and I thank you very much for your courtesy. 

38

I have to say and I know this is not the subject of this hearing, 

but when I go on a Saudi Web site, when they are encouraging 

tourists to come to Saudi Arabia and I hear you speak of them 

glowingly and say that they are really cooperating and they are 

good friends and allies, when they list people that need not apply 

for visas and they talk about Jews, I am Jewish, does that mean 

that I could not get a visa to go to Saudi Arabia? And what type 

of friendly country is that that we would wish to be associated or 

allied with? 

Ambassador BLACK. Yes, Ma’am. I certainly agree with you. I am 

speaking from a standpoint of counterterrorism, as a partner with 

the government of Saudi Arabia in the field of counterterrorism, 

and I would submit that that is reprehensible. Our government is 

against it. We work with them to change it, yet in this process you 

have to work with what you have and we are attempting to save 

lives in the process. 

Ms. BERKLEY. I would submit to you that there are hundreds of 

dead Israelis that have been omitted from this process that we are 

working on with the Saudis and if this nation wants to get serious 

about terrorists and terrorism and eradicating the threat worldwide, the first country we ought to look to are the Saudis and stop 

pretending that they are allies and friends of ours. They are not. 

Ms. ROS-LEHTINEN. Thank you, Congressman Berkley. 

Congressman Crowley? 

Mr. CROWLEY. Thank you, Madam Chair. Thank you for holding 

this hearing today. 

I just want to make an observation. I do not want to get too far 

afield from the subject matter at hand and I was not in the room 

when the statement was made pertaining to Mr. Clarke, but I feel 

that more needs to be said about the statement alleging the actions 

by Mr. Clarke while in the White House. 

It appears as though to me that character assassination has 

trickled up to the legislative branch and is not solely owned by the 

White House at this time. In other words, if you do not like what 

the person is saying, attack at every opportunity that makes itself 

available, even if the opportunity comes at a Subcommittee hearing 

that was conceived, I understand, months in advance and before we 

knew that Mr. Clarke would be releasing his book this week. 

I do not know if there is anyone here from the White House, but 

I am sure if they are here they must have been cringing when that 

question was being asked. That is just an observation I would 

make. I do not think the White House would actually ask Mr. 

Chabot or any other Member of this Committee to ask such a question before such an impressive panel when we are dealing with the 

issue of international terrorism and the sponsorship thereof and 

what role the Saudi government is playing in that. 

Having said that, Ambassador Black, I just want to come back 

to your statement. The line where it says: ‘‘We have such a likeminded ally in the Kingdom of Saudi Arabia,’’ I understand that 

you are probably making reference to a like mindedness in terms 

of fighting the war against terrorism. That is correct, am I not? 

Ambassador BLACK. Yes, sir. I apologize if that is not clear. I do 

counterterrorism, perhaps I overly focus on that and I would say, 

sir, just having worked on this for years, there has been a signifiVerDate Mar 21 2002 11:10 Jul 22, 2004 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6601 F:\WORK\MECA\032404\92744.000 HINTREL1 PsN: SHIRL
39

cant change and they very much see this issue, gratefully and 

thankfully, very much the way we do, that we have to identify 

these people and we have to have them arrested or detained or otherwise taken care of so they do not hurt innocent men, women and 

children. 

Mr. CROWLEY. See, I agree with you, I think they probably do get 

it now that they have had the same acts committed against their 

government, their own people in essence, but I think it is interesting that like mindedness, in my opinion, ought to extend beyond 

the war of international terrorism. 

When you look within the country itself and way in which it 

treats half of its own population, I think one could describe that 

as state sponsored terrorism within its own borders, the way in 

which it treats women, not being given the right to vote, not being 

able to drive, not being able to leave the building without a man 

with that person, the religious police that are on the streets that 

beat people for wearing inappropriate clothing, etc. 

A country that has that set of standards, that set of rules within 

its own borders and then somehow is going to be working with us 

to undo international terrorism or go after international terrorism 

and at the same time with the other hand not necessarily with the 

government but members of the government who are then funnelling money to madrassas all around the world, including countries 

like Pakistan, Indonesia, to Bangladesh, for instance, and certainly 

even here to the United States, it is just an interesting—and I do 

not mean to come on you, Ambassador, too much, but it is an interesting choice of language to use within your statement and I just 

want to make a point of that. 

What are we doing in terms of bringing the pressure to bear 

upon the Saudis? And if you have already answered this, I apologize. If you have, I will make reference to your notes, but one of 

the U.S. counterterrorism policies is to isolate and to apply pressure on states that sponsor terrorism to force them to change their 

behavior. 

I, for one, I would agree and want to be associated with Ms. 

Berkley in terms of her observation of Saudi Arabia. Whether it is 

Saudi Arabia or other countries, but specifically, Saudi Arabia, 

what is the United States doing to force them to change their behavior or their past behavior? 

Ambassador BLACK. I certainly agree with you. Their behavior in 

the past left considerable room for improvement. 

Beginning in my experience in this job, beginning in January of 

last year, diplomatically, the United States Government began 

working very closely with the leadership of Saudi Arabia. Our desires were made very clear. There was responsiveness on their 

part. It was adopted and operationalized among the key individuals 

and their legal and security establishments. We have seen measurable evidence of this cooperation in terms of terrorists killed, joint 

entities established. 

I certainly agree with the Congresswoman just speaking from a 

standpoint of counterterrorism. Young police officers in Saudi Arabia are locking and loading and having shootouts in the Kingdom 

and people are dying. 

40

A large number of al-Qaeda terrorists have been killed or detained. They have lost a lot of their young men in these struggles. 

This is counterterrorism. This is what happens in this kind of war. 

Mr. CROWLEY. And some would argue that they are actually responsible for the terrorism that was created in their own country 

by the policies they put forward. 

Ambassador BLACK. Well, I am not going to——

Mr. CROWLEY. I know you are not. I understand that. 

Ambassador BLACK. Again, I guess the key point I am saying is 

it is very difficult for me to speak to the sort of history of the relationship. I would say to you I have been a counterterrorism practitioner; before, it was not as good as it is now and before it was not 

very good at all, but I think we have really made significant 

progress because of the reality of the threat. They are working with 

us closely. 

In fact, the last time I was in the Kingdom, sometimes I look at 

the evidence of this cooperation and I think how long ago would it 

have been where one would think something like this was possible. 

There are full-page advertisements in the newspapers with pictures 

of al-Qaeda terrorists asking the population if you know anything 

about these people turn them in and they are doing it. So you have 

that going. 

They are engaging terrorists, they are working closely with us. 

So we are not all the way there yet, there are other aspects of their 

society absolutely that we would encourage them to think about 

changing, but in counterterrorism alone, that is all I can speak to, 

I think we are making some real progress there. 

Mr. CROWLEY. Thank you, Ambassador. 

Mr. SMITH. The reports that Saudi Arabia is funding the PLO 

and Hamas, is accurate? Is it still happening? 

Ambassador BLACK. In part. The Palestinian Authority receives 

sort of a bimonthly stipend from the government of Saudi Arabia 

for support costs and infrastructure support and administration. As 

I commented earlier, sir, the government of Saudi Arabia claims, 

and we have no evidence to contradict them, that the government 

is not providing support to Hamas. 

Mr. SMITH. And the World Muslim Fund? 

Mr. ZARATE. Congressman, you may be referring to the Muslim 

World League or the World Assembly of Muslim Youth. These are 

two of the multi-lateral organizations we were referring to earlier 

that are charities that operate, certainly, within Saudi Arabia and 

around the world. That is something that we are addressing directly with the Saudis, trying to both ferret out those operatives 

that are using those organizations worldwide to continue to funnel 

money to al-Qaeda and like-minded groups, but as well looking for 

opportunities to change the regulatory oversight of those organizations within Saudi Arabia. 

Mr. SMITH. So do I understand your testimony, and I apologize 

for coming in late, we have several Committees, as you know, that 

you are optimistic, positive about the increase in cooperation over 

the last couple of years and you are optimistic about the continuing 

cooperation in the Saudis’ help to fight terrorism? 

Ambassador BLACK. I would say that I have been increasingly 

optimistic in the last year and a half. It has matured greatly. Our 

41

cooperation now is productive in terms of measurable achievements, number of terrorists arrested, detained, the work we are 

doing in IDing and cutting financial links to terrorism. So I think 

the recent past is very good and I am here to tell you that we have 

a reason to be optimistic because of the results achieved and this 

has been directly related to the leadership shown by senior officials 

in the Kingdom in making a fundamental and strategic choice to 

cooperate with us and to allow us to work with them on some aspects of counterterrorism inside the Kingdom of Saudi Arabia. 

Mr. SMITH. And help me understand the effort of sanctions on individual firms or individual Saudis. 

Mr. ZARATE. Congressman, what we have done with the Saudis, 

as Ambassador Black mentioned earlier, is to identify 10 entities 

to the United Nations for the application of sanctions by the international community. Those sanctions include asset freezes that require the international community to not only freeze the assets 

that may exist for those entities, which in this case involve Saudibased charities and branches around the world as well as a Saudi 

citizen, but as well commits the international community to a travel ban as well as other measures. 

Mr. SMITH. Gentleman, on behalf of the Chairman and the Ranking Member, thank you all very much. We will ask the second 

panel——

Are there any other short statements that you would like to put 

on the record? 

Ambassador BLACK. No, sir. Thank you. It was an honor to be 

here. 

Mr. SMITH. Gentlemen, Thank you very much. 

Mr. ZARATE. Thank you, Congressman. 

Mr. SMITH. The second panel, as I understand it, has been introduced, Mr. Robert Baer, the former CIA Middle East intelligence 

officer, and Mr. Steven Simon, the senior analyst with RAND Corporation. 

Gentlemen, again, thank you very much. Your total testimony 

will be made part of the Committee’s record. We would ask you to 

come close to the 5 minutes, starting with you, Mr. Simon. 

STATEMENT OF STEVEN SIMON, SENIOR ANALYST, RAND 

CORPORATION 

Mr. SIMON. Thank you, Mr. Chairman, and Members of the Committee. 

Fundraising is a key issue. Groups who commit terrorist acts 

need cash to do that. Having said that, these groups are, to a degree, self-sufficient. They are self-sufficient in part as a matter of 

necessity, both in terms of the uncertainty of supply of cash from 

elsewhere and, in the interests of operational security, they are to 

some extent self-sufficient for doctrinal reasons. 

The lure of Muslim warfare justifies or calls for the taking of 

booty, fay or hanima are the words, and terrorist groups are doctrinally motivated to secure funds on their own by stealing from 

the societies in which they live. Of course, we know that terrorist 

groups do this with alacrity, especially on the Islamist side. Credit 

card fraud and so on are important ways of gaining funds. 

42

The other thing to bear in mind is that without a big infrastructure as al-Qaeda required before September 11th and its expulsion 

from Afghanistan, they have a lesser need for funds, although a 

surge capability for fund raising is a useful thing to have for establishing new networks, consolidating networks, and setting into motion high impact or large scale operations. 

A third thing to bear in mind is that the very metastasis of this 

group, the way it has spread and dispersed and become in effect 

a global jihad. This means that funds are being raised in many different locations and there is very good scholarly work going on concerning fund raising that has been dispersed well beyond what was 

called earlier the epicenter of Saudi Arabia and Southeast Asia is 

a particularly important area for this kind of activity. The tri-border area in Latin America is as well. 

This is not to say that tracking funds is unimportant. It is important not only for the purposes of interdicting the funds that are in 

motion or stanching the flow at the base in order to starve operators, it is important, too, for the purposes of locating operators 

themselves. This is a very useful string for intelligence agencies on 

the right side of the fence to pull on. 

It is also true that the emergence or maybe a better way to put 

it is the unavoidable recognition at this point by the Saudi leadership that there is an intifada going on in their own country against 

them has moved them to acknowledge the urgency of long-standing 

United States demands that they get a grip on the significant flow 

of funds from the Kingdom to a variety of charitable and missionary organizations that have been linked to terrorist acts. 

We have talked in this chamber in the past few minutes about 

Hamas. We know that money is going to Hamas in significant 

sums from Saudi Arabia, at least viewed against the scale of 

Hamas requirements, maybe 12 to 14 million a year, and we know 

this because the Palestinian Authority is very upset about it and 

they talk to us about it. They are contesting political control of a 

future Palestinian state with Hamas and Saudi support of their 

competitor is not a very good thing from their perspective and 

probably not a good thing from ours either. 

A number of initiatives were discussed earlier in this presentation. They are very impressive. The FATF review process, the 

joint task force, the Saudi Arabian Monetary Agency’s regulatory 

process for monitoring money laundering and terrorist financing, 

the establishment of a financial intelligence unit, the Saudi Royal 

Commission on Charities and so forth, all of these are very impressive. Thus far, their appears at least to the outside scholar very little follow-through. 

The very ambiguity with which the representatives of the Administration expressed in discussing the degree of follow-through, the 

confusion that one could see in this testimony, is just evidence that 

the situation remains in flux, so you have a regulatory framework 

being established, but it is very difficult actually to launch as a 

practical matter. 

But I am not going to focus on these things for the simple reason 

that I am not involved in the implementation. What I would like 

to do is just take 2 or 3 minutes to underline the huge difficulty 

43

that the Saudis are going to have in implementing these arrangements and explaining why it will be so difficult for them to do so. 

In the first instance, most Saudis, I think, believe that the Muslim world is under lethal attack by a vigorous, robust and maybe 

an all powerful enemy. Under such circumstances, it is the personal obligation of every able bodied Muslim to come to the defense 

of the Muslim community, of his fellow Muslims. 

Now, of course, as a practical matter, most people cannot do this. 

You have a family, you have a business, you live in a particular 

country, unless you are young and relatively unencumbered, you 

cannot run off to Chechnya or to Palestine or to Kashmir or to any 

number of other places where Muslims are perceived to be under 

attack and join the war. So you do the next best thing, you write 

a check or you give cash. 

And this impulse within Saudi society is deeply seated. It is hard 

wired, if you will. It is a passionate need. Public opinion survey 

data that has been collected within the Kingdom tends to confirm 

this fact. The bin Laden worldview, if I can put it that way, is 

widely shared. And when important Muslim leaders like Sheikh 

Amed Yasin in Gaza or the former Chechan leader Yadarbaev are 

assassinated, the long arm, the tentacles of a hostile power are 

seen as operating within the Muslim world in a pernicious way and 

this tends to reinforce the perception of beleaguerment, of being besieged. 

It is also true, unfortunately, that polling data within the Kingdom shows that bin Laden himself remains a revered figure by 

many people, perhaps most people, in that country, so support for 

a jihad against the enemies of Islam that bin Laden embodies is 

a very important element of societal values. 

Now, when you have a situation like this, you can build a dam 

in the form of interlocking regulatory and law enforcement structures, but tributaries will develop around that dam, flows of money 

that this dam will not stop. 

Now, this is not to say that one should not build the dam. The 

dam must be built and the Saudis must have their feet held to the 

fire and so forth. It is absolutely essential. 

My point, rather, is that the money will leak out anyway and 

probably in significant numbers. 

Now, let me just conclude by saying that the Saudi leadership is 

engaged now in a very delicate process of transition. It is extremely 

fraught, the outcome at this point is unknowable. In the course of 

this transition, they have to negotiate two long-standing contracts, 

one with society and one with a clerical establishment whose approval is indispensable to the legitimacy of the Saudi rulers themselves. 

The bargaining process in this renegotiation is a very delicate 

one and there will be horse trading, especially with the clerical establishment. Things will have to be offered up by the Saudi leadership in return for concessions it expects to get from a clerical establishment on whom it relies for its legitimacy. 

Thus, you will see continuing, just as an example, you will see 

continuing oppression of women in Saudi Arabia because that is 

something that at this point in time the Kingdom will have to surrender to the clerics in return for other forms of support. 

44

Reform in the education system is perhaps another example in 

which concessions will have to be made. The education system emphasizes a curriculum known to specialists as tawhid. It is very 

xenophobic, it is very hostile toward the Shiites as well as Jews 

and Christians, and it does not exactly favor an open view of the 

world, yet that element of the curriculum may have to remain as 

a concession by the Kingdom to the clerics. 

Many of these tradeoffs, it seems to me, will have to be made in 

the process of winning both clerical and societal support for the 

kinds of changes we are looking for in broad Saudi support for 

jihad. 

The clerical leadership, which embodies, as we know by now, a 

Wahhabi doctrine, believes that it is incumbent upon the ruler, 

upon the political ruler, if you will, to wage jihad where it is necessary on behalf of the Muslim community and there is no question 

in the minds of many that such a jihad is necessary. 

Any walking back from that obligation or, even worse, any impediment that the political leadership may put in the way of the 

exercise of that obligation will be strongly resisted by the clerical 

leadership. So this combination of a strong, broad societal commitment to jihad as well as the commitment of a clerical establishment 

whose support is crucial to the regime are going to be very powerful structural impediments to the kinds of reforms we would like 

to see in Saudi Arabia. 

And, again, to conclude, this is not to say that we should not 

press for such reforms, we absolutely must. It is essential, but we 

should not expect miracles. 

Thank you. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Simon. 

Before I recognize Mr. Baer, I would like to point out that in the 

audience we have our esteemed colleague, the former Chair of the 

International Relations Committee, Mr. Ben Gilman of New York. 

Ben, it is always a delight to see you and I congratulate for the 

wonderful work you are doing on United States interests in the 

United Nations. We thank you for all of your efforts. 

Mr. Baer, if you could just bear with us for 1 minute, there was 

a question that had arisen regarding Mr. Chabot’s line of questioning and I think a lot was read into the way he phrased the 

question and I would like to recognize him now so he could cite the 

source upon which his question related to Mr. Clarke was based. 

Mr. CHABOT. Thank you, Madam Chair, and I will be relatively 

brief here. 

I had asked a question, I wish Mr. Berman was here right now, 

but I had asked a question early on, and I will quote what I said:

‘‘There was a recent report that in the days immediately following 9/11 that former White House Counterterrorism Director Richard Clarke authorized that nearly 140 Saudis be allowed to be flown out of the United States, out of fear of retribution.’’

So that is what I said. 

Ms. ROS-LEHTINEN. So you were referring to an article? 

Mr. CHABOT. Yes. 

Ms. ROS-LEHTINEN. You did not say——

45

Mr. CHABOT. I said there was a report. 

Ms. ROS-LEHTINEN [continuing]. That you had knowledge of it, 

but you had a report of an article. 

I had asked Mr. Chabot to share with us the source of that questioning. 

Mr. CHABOT. Well, there was indeed a report and I would ask 

unanimous consent——

Ms. ROS-LEHTINEN. Without objection. 

Mr. CHABOT [continuing]. That the International Herald Tribune

dated September 4, 2003 be included in the record. 

If I could just read two paragraphs here:

‘‘Top White House officials personally approved the evacuation 

of dozens of influential special agents, including relatives of 

Osama bin Laden, from the United States in the days after the 

September 11, 2001 attacks when most flights were still 

grounded, according to a former White House advisor. Richard 

Clarke, who ran the White House crisis team after the attacks 

but has since left the Bush Administration, said he agreed to 

the extraordinary plan because the Federal Bureau of Investigation assured him that the departing Saudis were not linked 

to terrorism. The White House feared that the Saudis could 

face retribution for the hijackings, Clarke said.’’

And the article goes on. 

There is also a second article in National Review which goes into 

even more detail along the same lines. There is also a reference to 

a Vanity Fair Magazine article again along those same lines. So I 

would ask that these articles be included in the record. 

Ms. ROS-LEHTINEN. Thank you. Without objection. 

[The information referred to follows:]

WHITE HOUSE AGREED TO WHISK SAUDIS AWAY AFTER 9/11

Eric Lichtblau, NYT 

Thursday, September 4, 2003

SENATOR CRITICIZES AIRLIFT

WASHINGTON—Top White House officials personally approved the evacuation of 

dozens of influential Saudis, including relatives of Osama bin Laden, from the 

United States in the days after the Sept. 11, 2001, attacks when most flights were 

still grounded, according to a former White House adviser. 

Richard Clarke, who ran the White House crisis team after the attacks but has 

since left the Bush administration, said he agreed to the extraordinary plan because 

the Federal Bureau of Investigation assured him that the departing Saudis were not 

linked to terrorism. The White House feared that the Saudis could face ‘‘retribution’’ 

for the hijackings, Clarke said. 

The fact that relatives of bin Laden and other Saudis had been rushed out of the 

country became public soon after the Sept. 11 attacks. But questions have lingered 

about the circumstances of their departure, and Clarke’s statements provided the 

first acknowledgment that the White House had any direct involvement in the plan 

and that senior administration officials had personally signed off on it. 

Clarke made his remarks in an article in Vanity Fair magazine published Thursday, and amplified them Wednesday in an interview and congressional testimony. 

The White House had no comment on his statements. 

The disclosure came just weeks after the classified portion of a congressional report on the Sept. 11 attacks suggested that Saudi Arabia had financial links to the 

hijackers. Clarke’s comments are likely to fuel accusations that the United States 

has gone soft on the Saudis because of diplomatic concerns. 

46

Senator Charles Schumer, a New York Democrat, seized on Clarke’s comments to 

call on the White House to conduct an investigation into the hasty departures of 

about 140 Saudis in the days after the attacks. 

Schumer said in an interview that he suspected some of the Saudis who were allowed to leave, particularly two relatives of bin Laden who he said had links to terrorist groups themselves, could have shed light on the events of Sept. 11. 

‘‘This is just another example of our country coddling the Saudis,’’’ Schumer said. 

‘‘It’s almost as if we didn’t want to find out what links existed.’’

While FBI officials would not discuss details of the case, they said that in the 

days immediately after the Sept. 11 attacks bureau agents interviewed the adult 

relatives of bin Laden, members of a rich Saudi family, before the White House 

cleared them to leave. Bin Laden is said to be estranged from his family. 

‘‘We did everything that needed to be done,’’ said John Iannarelli, a bureau 

spokesman. ‘‘There’s nothing to indicate that any of these people had any information that could have assisted us, and no one was accorded any additional courtesies 

that wouldn’t have been accorded anyone else.’’

But Vanity Fair quotes Dale Watson, the former head of counterterrorism at the 

FBI, as saying that the departing Saudis ‘‘were not subject to serious interviews or 

interrogations.’’ Watson could not be reached for comment. 

The article depicts an elaborate but hurried evacuation, with private planes picking up Saudis from 10 U.S. cities. Some aviation and bureau officials said they had 

been upset by the operation because the government had not yet lifted flight restrictions for the general public, but said they had not had the power to stop it, the article says. 

Clarke, who left the White House in February, said in an interview that he was 

driven by concern for the safety of the Saudis after the hijackings. ‘‘We were concerned, just as the Saudis were concerned, that the Saudis and other Middle Easterners would be targeted for retribution,’’ he said. He called the current criticism 

of the evacuation ‘‘a tempest in a teapot,’’ adding that he had told the bureau to 

hold anyone it had suspicions about, and that the FBI had said it had not held anyone. Schumer said in a letter to the White House Wednesday that the Saudis appeared 

to have had ‘‘a free pass’’ despite possible knowledge about the attacks. 

‘‘I find it hard to believe that two days after 9/11, the FBI would even know what 

questions to ask and who to ask it of,’’ Schumer said in an interview. The New York 

Times 

THE GREAT ESCAPE: HOW DID ASSORTED BIN LADENS GET OUT OF AMERICA AFTER

SEPTEMBER 11? 

National Review, Sept 29, 2003

by Byron York

Last year, on the first anniversary of September 11, there were serious, unanswered questions about the Bush administration’s decision to allow members of the 

bin Laden family living in the United States to leave the country in the days after 

the terrorist attacks. Now, on the second anniversary of September 11, there are 

still serious, unanswered questions. But ever so slowly, new information is emerging. 

The basic story has been known for quite a while. Not long after the attacks, the 

Saudi government, saying it feared retribution against Saudi citizens, worked with 

the bin Laden family to gather up more than 100 family members and other prominent Saudis for a flight to Jeddah. A chartered jet made pickups in Los Angeles, 

Orlando, and Washington, D.C., before making a final stop at Boston’s Logan Airport, from which it departed for Saudi Arabia. 

But the Saudis required permission to leave the country, and it has never been 

clear who in the U.S. government gave it to them. In interviews with National Review last year (see ‘‘The Great Escape,’’ Sept. 30, 2002), a State Department source 

said Foggy Bottom ‘‘played no role’’ in the matter; an FBI spokesman said the Bureau did not have the authority to make that decision; and the White House declined to answer questions. 

Recently, however, Richard Clarke, the former head of anti-terrorism at the National Security Council, gave some answers while testifying before the Senate Judiciary Committee’s subcommittee on terrorism. ‘‘I do recall the State Department 

coming to us that week [after September 11],’’ Clarke testified, 

saying that the Saudi Embassy felt that in the wake of the terrorist attacks, 

Arabs in this country, particularly Saudis, might be victims of retribution attacks, 

and they wanted therefore to take some Saudi students and the Saudi citizens back 

47

to their kingdom for safety, and could they be given permission to fly, even though 

we had grounded all flights. Now, what I recall is that I asked for flight manifests 

of everyone on board and all of those names need to be directly and individually 

vetted by the FBI before they were allowed to leave the country. And I also wanted 

the FBI to sign off even on the concept of Saudis being allowed to leave the country. 

And as I recall, all of that was done. It is true that members of the bin Laden family 

were among those who left. We knew that at the time. I can’t say much more in 

open session, but it was a conscious decision with complete review at the highest 

levels of the State Department and the FBI and the White House. 

What Clarke could not testify to was the thoroughness with which the FBI questioned the departing Saudis. Last year, National Review reported that the FBI conducted brief, day-of-departure interviews with the Saudis—in the words of an FBI 

spokesman, ‘‘at the airport, as they were about to leave.’’ Experts interviewed by 

National Review called the FBI’s actions ‘‘highly unusual’’ given the fact that those 

departing were actually members of Osama bin Laden’s family. ‘‘They [the FBI] 

could not have done a thorough and complete interview,’’ said John L. Martin, the 

former head of internal security at the Justice Department. 

At the Judiciary subcommittee hearing, New York Democratic senator Charles 

Schumer asked Clarke how closely the Saudis were questioned. ‘‘Sir, all I can tell 

you is that I asked the FBI to do that,’’ Clarke replied. ‘‘I asked the director and 

the assistant director of the FBI to do that. They told me they did it.’’ End of story. 

Clarke’s statement—and Schumer’s questions—came as a result of an article in 

Vanity Fair that questioned some aspects of the Saudi exodus. Author Craig Unger 

reported that the Saudis made an additional pickup flight, on an eight-passenger 

Learjet that flew from Tampa to Lexington, Ky., on the afternoon of September 13, 

2001. That flight, Unger said, occurred at a time when the Federal Aviation Administration had banned all private flights (commercial planes had just resumed flying). 

‘‘Three private planes violated the ban that day, and in each case a pair of jet fighters quickly forced the aircraft down,’’ writes Unger. Yet the Saudi flight, he says, 

was allowed to travel undisturbed. 

Vanity Fair suggests that that was the result of some sort of intervention by the 

Bush White House. But administration sources tell National Review they have 

looked into the matter and found no record of such a flight receiving any special 

permission to fly. The sources also say that charter aviation was allowed to resume 

on the morning of September 13, several hours before the Tampa-to-Lexington flight 

is said to have departed, which would mean that the plane, which Vanity Fair says 

was chartered, did not need any clearance to fly. Overall, it appears that all 

flights—the ones gathering up Saudis domestically and the one from Boston to 

Jedda—took place after the government allowed aviation to resume. 

Yet the big question—Who decided to allow the bin Ladens to leave the country 

and why?—remains. 

Vanity Fair quotes Nail al-Jubeir, the Saudi director of information, as saying 

that the Saudi flights were approved ‘‘at the highest level of the U.S. government’’—

just as Clarke said. So far, however, those highest levels are saying very little. The 

FBI’s account remains the same—‘‘We didn’t clear them to leave the country, we 

don’t have that power,’’ a spokesman tells National Review . As for the State Department, Secretary Colin Powell, when asked about the subject on Meet the Press 

, said, ‘‘I don’t know the details of what happened, but my understanding is that 

there was no sneaking out of the country; that the flights were well known, and 

it was coordinated within the government.’’ For its part, the White House remains 

silent. 

All of which has led to growing curiosity. ‘‘I think people need to know the facts,’’ 

says Arizona Republican senator Jon Kyl, who chaired the Judiciary subcommittee 

hearing the day Richard Clarke testified. ‘‘It’s a perfectly legitimate subject. Clarke 

very candidly testified that he had run it past the State Department.’’

The official silence has also led observers to wonder whether there is some information about the bin Laden flights in the 28 blacked-out pages of the House and 

Senate intelligence committees’ September 11 report. Those pages are apparently 

devoted to Saudi involvement in the terrorist attacks, but it seems they do not cover 

the Saudi departures. Sen. Kyl has read the material, and while he will not say 

what is in it—not even whether it discusses the Saudis—he says he is ‘‘unaware 

of any information in the intelligence reports that I have read that specifically goes 

into that.’’

Finally, the administration’s silence on the Saudi question is having one more effect: It is allowing some Democrats to turn the issue into a political football. 

The day after he questioned Clarke, Sen. Schumer participated in a news conference with the Senate Democratic leadership. ‘‘On September 12th and 13th 

[2001], hundreds of Saudis were able to take flights home back to Saudi Arabia 

48

when no one else could fly,’’ Schumer said. ‘‘I couldn’t fly. Senator Boxer couldn’t 

fly. Senator Durbin couldn’t fly. But relatives of the royal family, including two 

members of the bin Laden family, were allowed to get on airplanes and go back to 

Saudi Arabia.’’

According to all available evidence, that is simply not true. Perhaps Schumer was 

unaware of the facts; at the hearing the day before, he confessed that he had not 

even read the Vanity Fair article, relying instead on a summary the magazine had 

released. In any event, he leveled an incendiary charge based on faulty premises. 

Schumer has also written a letter to the president calling for an investigation of 

the Saudi flights. ‘‘For whatever reason, it appears as if these particular Saudis 

were given a free pass by the U.S. government despite their potential knowledge 

about 9–11,’’ Schumer wrote. ‘‘Allowing approximately 140 Saudi citizens with potential links to the 9–11 attacks to leave the United States without FBI interrogation in the days after September 11th is clearly a glaring investigative failure.’’

Now, it’s possible that other Democrats will pick up the story as well. Presidential 

candidates Howard Dean and Richard Gephardt have both been highly critical of 

the administration’s dealings with the Saudis, and asking why George W. Bush let 

the family of the mastermind of September 11 leave the country shortly after the 

terrorist attacks might work very well in a campaign speech. In the end, the Bush 

White House might end up paying a political price for its refusal to answer a few 

simple questions.

COPYRIGHT 2003 National Review, Inc. 

COPYRIGHT 2003 Gale Group 

PRESS RELEASE FROM VANITY FAIR

FORMER COUNTERTERRORISM CZAR TELLS VANITY FAIR HOW BIN LADENS AND OTHER

SAUDIS WERE CLEARED TO FLY OUT OF U.S. AFTER SEPTEMBER 11; GOVERNMENT OFFICIALS DENY FLIGHTS EVER TOOK PLACE

NEW YORK, N.Y.—Former White House counterterrorism czar Richard Clarke 

tells Vanity Fair that the Bush administration decided to allow a group of Saudis 

to fly out of the U.S. just after September 11—at a time when access to U.S. airspace was still restricted and required special government approval. According to 

other sources, at least four flights with about 140 Saudis, including roughly two 

dozen members of the bin Laden family, flew to Saudi Arabia that week—without 

even being interviewed or interrogated by the F.B.I. 

Officially, the White House has declined to comment. But a source inside the 

White House says that the administration is confident that no secret flights took 

place and that there is no evidence to suggest that the White House ever authorized 

such flights. An F.A.A. spokesman, Chris White, told the Tampa Tribune that a 

flight on September 13 did not even take place. ‘‘It’s not in our logs. It didn’t occur.’’ 

In addition, the F.B.I. denies that it played any role in the repatriation. 

But Vanity Fair writer Craig Unger interviewed Dan Grossi, a private eye and 

former Tampa Police Department officer who received a call two days after 9/11 asking him to escort Saudi students on a flight from Tampa to Lexington, Kentucky, 

even though private planes were still grounded nationwide. ‘‘I was told it would take 

White House approval,’’ Grossi tells Unger. But when the plane’s pilot showed up, 

they took off. 

At the time, Richard Clarke chaired an ongoing crisis group in the 18-by-18-foot 

Situation Room in the West Wing of the White House. Vice President Dick Cheney 

and National-Security Adviser Condoleezza Rice were hunkered down managing the 

crisis, and Colin Powell, C.I.A. director George Tenet, and Defense Secretary Donald 

Rumsfeld came and went. ‘‘Somebody brought to us for approval the decision to let 

an airplane filled with Saudis, including members of the bin Laden family, leave 

the country,’’ Clarke tells Unger. ‘‘My role was to say that it can’t happen until the 

F.B.I. approves it. And so the F.B.I. was asked—we had a live connection to the 

F.B.I—and we asked the F.B.I. to make sure that they were satisfied that everybody 

getting on that plane was someone . . . O.K. to leave. And they came back and said 

yes, it was fine with them. So we said, ’Fine, let it happen. . . . I asked them if 

they had any objection to the entire event—to Saudis leaving the country at a time 

when aircraft were banned from flying.’’

Clarke, who headed the Counterterrorism Security Group of the National Security 

Council, now runs a consulting firm in Virginia and does not recall who initiated 

the request for approval. He says it was probably either the F.B.I. or the State Department, both of which have denied playing any such role. 

49

‘‘It did not come out of this place,’’ says a State Department source. ‘‘The likes 

of Prince Bandar does not need the State Department to get this done.’’

‘‘I can say unequivocally that the F.B.I. had no role in facilitating these flights 

one way or another,’’ Special Agent John Iannarelli, the F.B.I.’s spokesman on counterterrorism activities, tells Unger. 

However, Saudi Arabia’s director of information, Nail al-Jubeir, said that the 

flights had been requested by the Saudis and were authorized ‘‘at the highest level 

of the U.S. government.’’

After the September 11 attacks, Prince Bandar bin Sultan, the Saudi ambassador 

to the United States, was in Washington orchestrating the exodus of about 140 

Saudis scattered throughout the country who were members of, or close to, the 

House of Saud, which rules Saudi Arabia, and the bin Laden family. By coincidence, 

even before the attacks, Bandar had been scheduled to meet President Bush in the 

White House on September 13, 2001, to discuss the Middle East peace process. The 

meeting took place as planned. Nail al-Jubeir tells Unger that he does not know if 

Bandar and the president discussed getting the bin Ladens and other Saudis back 

to Saudi Arabia. 

Some Saudis tried to get their planes to leave before the F.B.I. had even identified 

who was on them, Unger reports. ‘‘I recall getting into a big flap with Bandar’s office about whether they would leave without us knowing who was on the plane,’’ 

an F.B.I. agent says. ‘‘Bandar wanted the plane to take off, and we were stressing 

that the plane was not leaving until we knew exactly who was on it.’’ Dale Watson, 

the F.B.I.’s former head of counterterrorism, tells Unger that while the Saudis were 

identified, ‘‘they were not subject to serious interviews or interrogations.’’ The bureau has declined to release the Saudis’ identities. 

The wealthy bin Laden family long ago broke with their terrorist brother, Osama, 

but Unger reports that some members of the family have had links to militant 

Islam. Abdullah and Omar bin Laden had been under F.B.I. investigation for their 

involvement with the American branch of the World Assembly of Muslim Youth 

(WAMY), which has published writings by one of Osama bin Laden’s principal intellectual influences. According to documents obtained by the Public Education Center 

in Washington, the file on Abdullah and Omar was reopened on September 19, 

2001, while the Saudi repatriation was under way. A security official who served 

under George W. Bush tells Unger, ‘‘WAMY was involved in terrorist-support activity. There’s no doubt about it.’’

The Saudis’ planes took off from or landed in Los Angeles, Washington, D.C., 

Houston, Cleveland, Orlando, Tampa, Lexington, Kentucky—and Newark and Boston, both of which had been points of origin for the September 11 attacks. ‘‘We were 

in the midst of the worst terrorist act in history,’’ Tom Kinton, director of aviation 

at Boston’s Logan airport, tells Unger, ‘‘and here we were seeing an evacuation of 

the bin Ladens! . . . I wanted to go to the highest authorities in Washington. This 

was a call for them. But this was not just some mystery flight dropping into Logan. 

It had been to three major airports already, and we were the last stop. It was 

known. The federal authorities knew what it was doing. And we were told to let 

it come.’’

‘‘I asked [the F.B.I.] to make sure that no one inappropriate was leaving,’’ Clarke 

tells Unger. Clarke assumed the F.B.I. had vetted the bin Ladens prior to September 11. ‘‘I have no idea if they did a good job. I’m not in any position to secondguess the F.B.I.’’

Prince Bandar has had a 20-year friendship with former president George H. W. 

Bush. Unger questions whether the long-standing Bush-Saudi relationship could 

have influenced the administration. The latest in a line of business links between 

the Bush family and the Saudis involves the Carlyle Group, a private-equity firm 

for which George H. W. Bush is a senior advisor and former secretary of state 

James Baker III is a senior counselor. The Carlyle Group has received $80 million 

in Saudi investment, Unger reports, including $2 million from the bin Ladens which 

was returned to them after September 11. In 1995, Abdulrahman and Sultan bin 

Mahfouz invested ‘‘in the neighborhood of $30 million’’ in the Carlyle Group, according to family attorney Cherif Sedky. Abdulrahman bin Mafouz was a director of the 

Muwafaq Foundation, which has been designated by the U.S. Treasury Department 

as ‘‘an al-Qaeda front.’’ (Carlyle categorically denies that the bin Mahfouzes are now 

or have ever been investors.) 

Clarke believes the decision to let the Saudis go was made because ‘‘there’s a realization that we have to work with the government we’ve got in Saudi Arabia. The 

alternatives could be far worse. The most likely replacement to the House of Saud 

is likely to be more hostile—in fact, extremely hostile—to the U.S.’’

The October issue of Vanity Fair hits newsstands in New York on September 3 

and nationally on September 9.

50

Ms. ROS-LEHTINEN. And, once again, as Mr. Chabot has pointed 

out, he is not saying that he has any knowledge himself of this, but 

just was pointing out that there were some reports. We know that 

Mr. Clarke has denied that and said that he had not approved the 

request but that other agencies had. 

Mr. CHABOT. Thank you, Madam Chair. 

Ms. ROS-LEHTINEN. We thank you so much, Mr. Chabot, for sharing that with us. 

Mr. CHABOT. Thank you. 

Ms. ROS-LEHTINEN. Mr. Baer? 

STATEMENT OF ROBERT BAER, FORMER CIA MIDDLE EAST 

INTELLIGENCE OFFICER 

Mr. BAER. Madam Chair and this honorable Committee, thank 

you very much for having me. 

I would like to start with the comments of my co-panelist, Mr. 

Simon, with which I fully agree. We have to keep in mind that 

many people in Saudi Arabia and the rest of the Middle East consider that they are at war with us, and yet try to remain our allies 

in a very difficult time. 

Many of these societies have medieval banking systems, private 

banks and accounting procedures which do not match our standards and they in fact have ways to get around funding terrorism, 

funding jihad, supporting Hamas, supporting the Islamic jihad, and 

supporting Hezbollah in Lebanon. 

What I would like to do is get down to the specifics right away 

to let you know what I am talking about. I was just out in Dubai 

where I talked with police officials and they say, yes, we understand, we understand that you have a problem with the charities 

and that money is getting into bin Laden’s movement and to other 

movements, but the problem is that we very much have a cash 

economy in Dubai. 

They told me every day there is somebody flying out of Dubai, 

20, 30 people, with $250,000 apiece. They are going to Pakistan, 

some are going to Afghanistan, they do not know where the money 

is going, they are not prepared to clamp down on this transfer of 

cash right now. It would destroy their economy. They are not even 

sure they could do it if they wanted to. 

More than that, you have to take a look at other banking systems around the Middle East. One is Lebanon. It has traditionally 

been a major center in the Middle East, and as of today you can 

still open a passbook account in Lebanon and put as much money 

as you want in this account. All it consists of is a piece of paper 

signed by the bank manager, it is typed out. I have seen examples 

where the full name is not used, so you can use a partial name, 

you can put several million dollars in it. 

There is also in Europe a problem with banking as well which 

we cannot address in spite of our best efforts from Treasury and 

that is nominee accounts. In many places in Europe, you can open 

an account, a lawyer opens the account and gives management of 

the money to another individual, so theoretically Osama bin Laden 

could open a bank account in Monte Carlo, put it in the name of 

a lawyer who is at least not publicly associated with him, and draw 

51

money off that account, he could even use credit cards, and his 

name would never appear on that bank account. 

This is something that we need to consider as a tributary to this 

dam that we have put up and it is quite effective and it is quite 

effective in Saudi Arabia, but more than that, we have in the Middle East, I think we need to look at this, a process of—let us say 

they are going through a crisis. Some people call it disintegration. 

There is a lot of loose money that is not controlled. 

One case I ran into this fall was Al-Madina Bank. I was able to 

talk to the manager of the bank. The bank president was in jail, 

his brother was in jail. His brother is one of the chief advisors to 

King Fahd. They gave me accounts adding up to $2.8 billion of 

money that was transferred from Saudi Arabia to the UBS Bank 

in Switzerland to the bank in Lebanon. Subsequently, this money 

has disappeared and the way it disappeared was that someone 

transferred it around the world to numerous nominee accounts and 

then destroyed the hard drives for the Swift accounts. 

So if we are talking about stemming 200 or 300 million dollars 

going to bin Laden through the charities and through private donors, what can we do about something like this where you have serious management of accounts in the Middle East? 

Another thing we have to consider, we seem to step around this 

question, is that the 9/11 attacks were largely funded through cash. 

As I understand, people came from Saudi Arabia, deposited the 

money in a bank in Dubai and it was transferred to the United 

States. 

We still until today do not know who that money belonged to. 

Two of the people that transferred the money are under arrest. 

Was it their money? Was it somebody else’s? There are numerous 

front companies in Germany that supported the Hamburg cell and 

a lot of that money came from Saudi Arabia. We still do not have 

arrests on that, we still do not have disclosure where that money 

came from. 

Finally, what I would like to point out is that there were 15 

Saudis on those airplanes and, as a former case officer with the 

Central Intelligence Agency, they were recruited by somebody and 

we know it was not bin Laden. 

I would like to know who in Saudi Arabia recruited those people 

and if they are in jail, that is fine; if they are not, why not? We 

are not getting any disclosure on Saudi Arabia. We are being assured that they are cooperating with terrorism and that they are 

scared and, yes, they are indeed scared. And, no, the Saudi government did not sponsor 9/11, but it is still very much an opaque country and there are still a lot of answers we need to get. 

Thank you very much, Madam Chair. 

Ms. ROS-LEHTINEN. Well put. Thank you so much, Mr. Baer. 

I would like to recognize Mr. Royce to start our line of questioning. 

Mr. ROYCE. I thank the gentlelady. I have a couple of questions, 

but I wanted to start with Mr. Baer. 

Just recently, one of our colleagues made some observations 

about Afghanistan and Pakistan after he returned. He said that 

they are shifting in al-Qaeda from traditional charity-based financVerDate Mar 21 2002 11:10 Jul 22, 2004 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6601 F:\WORK\MECA\032404\92744.000 HINTREL1 PsN: SHIRL
52

ing over to financing through heroin trade, basically narco-terrorism. 

Now, even if that is true, you still have these other networks of 

terrorist that are using charity, I just wanted your view on that 

question. 

I chair the Africa Subcommittee and whenever I travel on the 

continent, I hear from local leaders about what is happening in 

their sufi communities in North Africa, West Africa, East Africa, 

with the radical new Wahhabi madrassas. 

As one local governor said to me in Nigeria,

‘‘My old mosque is across from a new mosque which is 10 times 

the size with 100 times the budget and only one condition 

came with it and that was a Gulf State mullah who preaches 

a very different education than the one I got in the old 

madrassa. The students I see them wearing Osama bin Laden 

T-shirts and they are teaching jihad.’’

He says,

‘‘They are teaching nothing but hate for the west.’’

It is being funded by Gulf States, how do we cut off those funds? 

Some observations from you on how we could do that. 

Mr. BAER. Well, for a start, on narco-terrorism, I think it is an 

extremely important point. I was assigned to Lebanon in the 1980s 

and we noticed that the Islamic jihad in Lebanon that were hijacking airplanes, TWA, blowing up our Embassy, blowing up the Marines, were using the heroin trade and the hashish trade to raise 

money and, not only that, they were using the financing mechanisms of narcotics and I think we are seeing that in Afghanistan 

again. 

Those channels of raising money are extremely efficient. They 

are well tried, they are hard to close down, as DEA found out. 

Today in Washington—I can deposit money in Dubai, hundreds of 

thousands of dollars, and collect in Washington through facilities. 

There is no reason why these people cannot. 

Keep in mind that I did work for the CIA, I was a case officer, 

and we spent our lives hiding money so we could pay agents. It is 

efficient, it is hard to close down, and we were up against some of 

the best, the KGB. 

Mr. ROYCE. But let me ask you this question. The example you 

just gave us was 2.8 billion transferred out of Saudi Arabia, ends 

up in Lebanon. Funds of that magnitude—clearly, if we could figure out a way to get cooperation—in your book, you said the Saudi 

government seemed to be adopting the same see no evil, the same 

blinders that we had adopted with respect to this. 

What if we were to really focus on a high level position in the 

United States Government that was solely devoted to going after 

money laundering after getting support in Europe and especially in 

the Middle East for a new regimen of banking laws which would 

allow us greater transparency? 

Do you think things like this 2.8 billion, which really is a frightening number when you think about what that could finance, that 

we could go after and crack some of that if we had that type of concerted effort? 

53

Mr. BAER. Oh, absolutely. We have to start in some of these 

banking centers. It is not just Lebanon, Liechtenstein has become 

a major conduit of illegal funds, money laundering. We have to go 

to Lebanon and ask what happened to this $2.8 billion. 

I have provided the transfers to this Committee, which you can 

find to look at this. This is public information now. I would like to 

know where that money went. 

Mr. ROYCE. And your request to us on the Committee is to follow 

up and get an answer to some of these questions that you are asking in your testimony and I think without objection, if I could ask, 

Madam Chair——

Ms. ROS-LEHTINEN. Of course. 

Mr. ROYCE [continuing]. If we could do that and get back to you 

on that question. 

Also, in your book, See No Evil, there is one particular paragraph 

that really stood out for me and I just want to go through this. You 

say,

‘‘Whether it was Osama bin Laden, Yassir Arafat, Iranian terrorism, Saddam Hussein, or any of the other evils that so 

threaten the world, the Clinton Administration seemed determined to sweep them all under the carpet. Ronald Reagan and 

George Bush before Clinton were not much better. The mantra 

at 1600 Pennsylvania Avenue seemed to be get through the 

term, keep the bad news from the newspapers, dump the nay 

sayers, gather money for the next election, gobs and gobs of it, 

and let some other Administration down the line deal with it 

all. Worst of all, my CIA had decided to go along for the ride. 

Now that such horrendous neglect has come home to roost in 

such misery provoking ways, I take no pleasure whatsoever in 

having been right.’’

There is a lot of finger pointing going on these days, it is an election year. We have the 9/11 commission working as we speak, but 

I am going to ask, and I understand that you are out of government, has this situation improved? 

Mr. BAER. The situation has definitely improved. We are aware 

today, as we were not before 9/11, that we are the target of war. 

You can call it Suni fundamentalism, militant Islam, anything you 

want. These people believe they are at war with us. They want us 

out of the Middle East, they want to destroy Israel. 

The problem is what do we do because we ignored this in the 

1980s and the 1990s. And, by the way, I will point the finger at 

myself, too. My last job was group chief for Central Asia and we 

had no systematic program to go after bin Laden and I take responsibility there. I did not realize that bin Laden was a threat. 

This is completely bipartisan. I do not think that today we as 

Americans really understand the transition the Middle East is 

going through and the fact that it is going to come home to roost 

again. We have a hard time penetrating these groups because they 

are believers. I mean, after all, if you are going to have suicide 

bombers, what is the CIA, DIA or the FBI going to offer them? A 

trip to Disneyland? You cannot get inside these groups. They do 

not want money, they are indoctrinated to martyrdom and it is 

something completely alien to us. 

54

Our attitude is fine, you know, go buy some MIG jets and start 

a war, do anything but do not kill civilians. We just cannot compare our cultures. We have a long way to go. 

The CIA has got to change its recruiting. We are going to need 

a lot of foreigners, we are going to need a lot of people that believe 

there is a moderate way in Islam. We are going to need Muslim 

agents that are going to need to penetrate this. This is all going 

to be a long war, as Ambassador Black said. 

And starting with the banking and the charities is a good start, 

but that is just the tip of the iceberg. 

Mr. ROYCE. Mr. Baer, I just want to conclude by thanking you 

for speaking out and getting on the record things that we need to 

know and I would like to follow up later with you. Thank you. 

Mr. BAER. Thank you, Congressman. 

Mr. ROYCE. Thank you, Madam Chair. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Royce. 

Mr. Ackerman? 

Mr. ACKERMAN. Thank you, Madam Chair. I would like to get a 

few things on the record myself. 

I find the statements that Mr. Chabot has popped in and out 

making to be very troubling, that somebody on the Committee 

would continue the harangue of joining with a political campaign 

and using the forum of this Committee to constantly try to discredit a former member of the Administration much in the news 

today and, by inference and innuendo, accuse him of various 

things. 

It is indeed a sad moment for this Subcommittee, but if this Subcommittee is going to be used as a platform to discredit one political party or another, I find that both sad, it may improve the attendance here at our sessions, but it certainly demeans the process 

considerably. 

To expand on the selective record that Mr. Chabot tried to establish, he put certain things by unanimous consent in the record. Mr. 

Berman asked several questions of the first panel that was before 

us at that time and Ambassador Black said that the State Department had no knowledge of Mr. Clarke’s activity vis-a-vis putting 

the Saudis on the plane after September 11th and cited an article 

in Vanity Fair and placed an article in the record from the Herald 

Tribune. 

Mr. Clarke said that he signed off on the plan. He did not say 

that this was his plan. In fact, he said it was higher ups in the 

White House. 

Now, I do not think that the Vice President and the President 

of the United States can have it both ways, first to say that this 

guy was out of the loop, not in a real decision making position after 

appointment him the terrorism czar for the United States, and 

then claim, well, he was out of the loop, just ignore him because 

that is not an important position, someone who served four Administrations in a non-partisan fashion. 

But indeed in his testimony before the Senate Judiciary Committee, Mr. Clarke said, and I would ask unanimous consent to put 

his remarks in the record——

Ms. ROS-LEHTINEN. Without objection. 

Mr. ACKERMAN [continuing]. From that session. 

55

Thank you, Madam Chair. 

He said that he could not cite the specifics at the open hearing, 

but assured the Senate Judiciary Committee that the decision to 

send those Saudis out of the country on the plane was sent down 

to him by the highest levels in the State Department, the FBI and 

the White House and that what he did was what any prudent person in that position would do, he asked for the names of the people 

that were being put on the plane and to have them vetted, which 

he believed the FBI did in a cursory fashion. 

That is the record as we know it, but to try to use this Committee to further a campaign to shaft this guy, to discredit him and 

his credibility, is something that is beneath the dignity of this 

Committee, Madam Chair, and the way that you have always respectfully handled the Committee. 

Ms. ROS-LEHTINEN. If the gentleman would yield? 

Mr. ACKERMAN. I would be delighted to yield to the Chair. 

Ms. ROS-LEHTINEN. I think that if we would read back Mr. 

Chabot’s words, I do not think that there would be any insinuation 

that he was saying anything disparaging of the character. This was 

literally what he said, there was a recent report, which is true, it 

is right here. That does not mean the report is true, but listen to 

what it said, and he read it just like that. There was a recent report in the days immediately following 9/11 that former White 

House——

So he did not say that he was an evil man, he did not say that 

he is personally responsible, and he alluded to the article, as you 

had pointed out, in Vanity Fair and I will read just this quote, and 

this is Mr. Clarke’s quote, I am not saying he did not use any characterization of it:

‘‘My role was to say that it can’t happen until the FBI approves it and so the FBI was asked, we had a live connection 

to the FBI, we asked the FBI to make sure that they were satisfied that everybody getting on that plane was someone okay 

to leave. And they came back and said yes, it was fine with 

them, so we said fine, let it happen.’’

Mr. ACKERMAN. Right. So Mr. Clarke did everything——

Ms. ROS-LEHTINEN. So if you read back Mr. Chabot’s words, I do 

not think he was doing any character assassination or anything of 

that type. He wanted to ask the witnesses what they knew of that 

and I think that that is something that this Subcommittee is directly asking about, Saudi involvement in this problem. 

Mr. ACKERMAN. I happen to be very fond of Mr. Chabot. I do not 

agree with a lot of things he says and he certainly says then in a 

rather laid back kind of way, but I know that he has said a lot of 

things that he deeply regrets. The fact that he said it in a kind and 

offering way, brought it up here at this hearing at a time that was 

intended, I believe, to just lay it out in a matter of a perfunctory 

way until Mr. Berman called him on it, to try to be discrediting of 

somebody’s reputation, which is very much a part of a campaign on 

the national level right now. 

The Vice President was very soft spoken, too, when he tried to 

roast the guy on national T.V. and said, well, you know, we do not 

even know who this guy is, he is only our national terrorism czar, 

56

he is not in the loop, but he did not say it with all the undertones 

that I am saying it with, but that is how the American people read 

it. 

Despite the fact that Mr. Chabot’s tone might be a lot warmer 

than mine at the moment, still there is no doubt in the minds of 

anybody who was listening carefully to what he said and, more importantly, what he was doing, that this was intended to be damage 

control for the Administration and roughing up Mr. Clarke a bit 

further in yet another forum and you can turn any dial and you 

will see the spinmeisters doing this all over the lot. And that is 

what I am sad about, that it would be done here, but if he chooses 

to do that in even the kind and gentlemanly way that he does it, 

he should expect that this side will be ready for the fight. 

Ms. ROS-LEHTINEN. Thank you. And just to either continue or 

end this, I think that if we would read back without any tone what 

Mr. Chabot’s actual words were, it was asking a legitimate question of the State Department, FBI, Department of Treasury officials who might have also had a hand in allowing these flights to 

take off and there were those press reports and I literally read 

what Mr. Chabot said and we could read back his comments after 

that and I do not think that there was any character classification, 

positive/negative, it was neutral: What about these reports, are 

they true? 

Mr. ACKERMAN. Did he ask that of anybody? Or did he just lay 

that out there? 

Ms. ROS-LEHTINEN. He asked——

Mr. ACKERMAN. It was Mr. Berman that asked the question. 

Ms. ROS-LEHTINEN. He said what kind of investigation was each 

of these Saudis put through by the FBI, he wanted a list of the 

folks who were allowed to travel and the folks indicated that they 

had no knowledge of it. I think in the 9/11 investigation, the State 

Department——

Mr. ACKERMAN. The State Department guy did not know anything, the FBI did not know anything, and yet this guy is running 

the country, Mr. Baker, he is deciding to send 140 Saudis out on 

a special flight when all the airports are closed and no flight could 

get in and out and you and I were taking the railroad to get to 

Washington because we could not get airborne, but this guy was 

running the country and the air control system and everything, despite the fact that the Vice President said he is out of the loop. 

It is just a matter of his putting it out there, Madam Chair, that 

was offensive. 

Ms. ROS-LEHTINEN. I know, but I think it was a legitimate question. 

Mr. ACKERMAN. He did not say it in an offending way, but, you 

know——

Ms. ROS-LEHTINEN. When the reports were cited, his name was 

linked and I think it was a legitimate question on Mr. Chabot’s 

part. 

Mr. ACKERMAN. I am sure it was and I am legitimately trying to 

de-link it. 

Ms. ROS-LEHTINEN. Okay. Good deal. 

Mr. ROYCE. Madam Chair? Excuse me. 

Ms. ROS-LEHTINEN. Thank you. 

57

Mr. Royce? 

Mr. ROYCE. If I could, there was another question I wanted to 

ask, if I could. 

Ms. ROS-LEHTINEN. Yes, please go ahead. 

Mr. ROYCE. It had to do with a question of a special envoy for 

money laundering, actually setting up a position in our government 

of having a special envoy who would be held responsible. I think 

there is a lot of responsibility to go around on all of these questions. 

The question now is how do you give somebody the power and 

the authority and a high enough position in an administration that 

they can actually go after the money laundering and stay on it day 

in, day out. Get answers and be at the table with the international 

institutions. For example, when the World Bank meets they can 

exert their influence from the top and say if the United States is 

going to go along with these international institutions, we are 

going to have reforms that allow for more transparency, specifically 

so that we can look at the laundering of money that ends up financing terror. 

I would like to ask the two witnesses if they think that if we 

could push for such an agenda, such an elevation of responsibility 

and authority into a special envoy that would be given that authority and power, whether that comes out of Treasury or however, 

what they feel. 

Would that make a discernable difference or not? 

Ms. ROS-LEHTINEN. And dovetailing, if I could, Mr. Royce, on 

your question, the role of banks in Europe also. How would you see 

this envoy if he would have some sort of capability in overseeing 

or looking at some of the transfer of funds, that we have had reports of banks in Europe, the Middle East perhaps, having a role 

in transferring the funds for these groups and expanding on that 

if you could tell us the role of private fiduciaries in Switzerland 

and Lebanon that we have heard may have had a role in these 

transfer of funds. 

Mr. BAER. If I could answer first, I think it is a brilliant idea, 

Congressman. First of all, this government has an enormous 

amount of resources to trace money: The Central Intelligence Agency, the State Department, the IRS, but more than that the National Security Agency, which has a responsibility for following 

this, has an incredible database that if a czar for money laundering 

overlooked this—and also getting to the point where you are looking at really what the Department of Justice is doing in a country 

like Switzerland and, as far as I can tell, the Swiss are more concerned about keeping American money out because of all the pressure we put on them than they are of keeping Arab money out. It 

is the way it works, I think the Swiss are being very vindictive 

about it. 

And also you have the question of the fiduciary accounts. All you 

do is you find a nominee, trusted, you can either carry cash to him 

or you can make a transfer and the money essentially disappears 

in another man’s name. 

You have to regulate these fiduciary accounts. They are all over 

Europe. Some countries are better than others. I think the Swiss 

58

are the worst. These people are untouchable. France, they watch it 

very closely and they put pressure on the nominee. 

We have to get some sort of unity in Europe, as well as the prime 

banking centers in the Middle East and East Asia, you have the 

same problems. 

What I have found is that the people who deal in money are very 

clever and they are very concerned about keeping their money 

away from the tax authorities and everybody else and they seem 

to be just a step ahead of us and a more concerted effort to go after 

these people and throw some of our best bankers at it under a czar, 

I think it would be very effective. It would also be very effective 

in finding where you have strange transfers of money which would 

give leads to the FBI and the CIA to follow people, in particular 

in this country, ATM transfers and things like that. 

Thank you. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Royce. 

And thank you, Mr. Ackerman. 

Thank you to this excellent panel of witnesses for your testimony 

today and for all the audience members as well who participated. 

This Subcommittee is now adjourned. 

[The Subcommittee was adjourned at 4:02 p.m.] 

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RESPONSES FROM THE HONORABLE J. COFER BLACK, COORDINATOR, OFFICE OF THE

COORDINATOR FOR COUNTERTERRORISM, U.S. DEPARTMENT OF STATE TO QUESTIONS SUBMITTED FOR THE RECORD BY THE HONORABLE ILEANA ROS-LEHTINEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND CHAIRWOMAN, 

SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA


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QUESTIONS SUBMITTED FOR THE RECORD BY THE HONORABLE ILEANA ROS-LEHTINEN, 

A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND CHAIRWOMAN, 

SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA, TO JUAN C. ZARATE, 

DEPUTY ASSISTANT SECRETARY, EXECUTIVE OFFICE FOR TERRORIST FINANCING & 

FINANCIAL CRIMES, U.S. DEPARTMENT OF THE TREASURY

[NOTE: At the time of the printing of this hearing, Mr. Zarate’s responses to these 

questions had not been received by the Committee on International Relations.] 

Question 1: 

Are the majority of payments from Saudi Arabia to Al-Qaeda and other terrorist 

groups made through conventional banking methods such as wire transfers, or are 

you noticing a shift to gold transfers or other in forms of assets such as diamonds 

and of course drugs? 

Question 2: 

With this new U.S.-Saudi terrorism financing task force, what are the operational 

rules regarding the sharing of intelligence information? Do we grant full and unfettered access? Do Saudi officials see all the information we possess on the various 

targets of our investigations? 

Question 3: 

Regarding other details of the agreement for this task force, can you explain

• the precautions to prevent Saudis learning how to evade our methods

• the security level

• who will have access to information and what types of information will they 

see

• what are the terms of U.S. access and freedom to operate in Saudi Arabia

• is this an open-ended operation or will it be time-limited 

Question 4: 

Are numbered or secret accounts as well as correspondent accounts part of Saudi 

bank reforms that would tighten ‘‘know your customer rules?’’

Question 5: 

Are U.S. banks being unwittingly used to transfer funds between Saudi donors 

and Al-Qaeda, through corporate, private, or other types of accounts? 

Question 6: 

Al-Haramain of Oregon, whose assets were recently blocked by Treasury pending 

an OFAC determination, was described by the Treasury as a ‘‘branch’’ of AlHaramain in Saudi Arabia. What made it a ‘‘branch’’? Who were the Oregon organization’s directors and officers at the time of its closure by the USG? Who appointed 

them? When? How much control was exerted by Saudi authorities throughout the 

time of the group’s operations? Had any orders been given to transfer its assets elsewhere? How much? By whom? To what end? 

Question 7: 

There had been earlier reports that the Saudi government had ordered all of AlHaramain’s foreign branches closed. Did such an order go out from the Saudis? And 

when? To whom was it directed? Was it carried out and to what effect? What happened to the assets of the foreign branches? 

PREPARED STATEMENT OF THE HONORABLE NICK SMITH, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MICHIGAN

I want to thank Chairwoman Ros-Lehtinen for holding this hearing today on 

Saudi terrorist financing. 

Since September 11th, we have heard much about the significance of Saudi Arabia in Middle Eastern and Islamic terrorism. Osama bin Laden and 15 of the 19 

September 11th terrorists were Saudis. More fundamentally, Saudi Arabia has been 

an important part of the infrastructure of terror. Many Saudi charities have been 

linked to terrorist organizations. People with Saudi diplomatic credentials have been 

linked to terrorist organizations, even near us in Washington. And the Kingdom 

itself has funded religious institutions throughout Central Asia, the Middle East, 

and Europe that have formed a core of the recruiting network that turns young 

Muslims into terrorists. 

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Saudi Arabia has, in some ways, recognized its own culpability in terrorism. The 

Kingdom has cooperated significantly with the United States, our allies, and the 

United Nations in reforming some of its financing system. New regulations make 

it significantly harder for funds from Saudi Arabia to find their way into terrorist 

coffers without the knowledge of the government. For example, charities must now 

be registered with the government, and they cannot wire money out of the Kingdom. 

This has restricted the flow of terrorist funds to some extent. 

Saudi Arabia has responded as it has, in part, because its own interests are very 

much at stake. The attacks last year in Riyadh and the subsequent discoveries 

about the depth of support for al-Qaeda in Saudi society have shocked the royal 

family into taking genuine steps. No leader in the Middle East missed the lesson 

of Sadat that terrorists undermine the state itself. Osama bin Laden has explicitly 

targeted the government of Saudi Arabia and its royal family as al-Qaeda’s primary 

target. In a number of less-publicized attacks, al-Qaeda has targeted the Saudi oil 

infrastructure, the financial life-blood of the monarchy. 

However, it appears that the Saudi government’s response to al-Qaeda is somewhat of a special case. There is clear evidence that Saudi Arabia funds the PLO, 

and there is suggestive evidence that it funds Hamas. The Saudi government also 

has not been as helpful as they could be in addressing al-Haramayn and the World 

Muslim Fund. There is clearly work to be done more broadly in fighting terrorism. 

It is important to continue to work with Saudi Arabia and others to expose and 

destroy terrorist financial networks. We must also recognize that the terrorists are 

changing how they get and use money in response to our actions, and we must update our techniques to address these new methods. We have found al-Qaeda sleeper 

cells in Europe that fund themselves through legitimate businesses such as car dealerships. This committee has already spoken about the link between narcotics and 

terrorism. Kidnapping and extortion have been a significant source of funds for Abu 

Sayyaf in the Philippines. 

Shutting down terrorists financial networks is an important step, but it is not 

enough. We must work with the Saudis, the Pakistanis, and others to shut down 

logistical and information networks. Terrorist organizations are evolving from topdown structures where commands flow down to much more diffuse bottom-up structures where recruiting, financing, and operational planning is all being done at the 

cell level. Our pressure in the financial realm may have accelerated this process because it is harder to track. We must focus on the implications of this shift if we 

are to continue to be effective in our fight against terror. 

Again, I would like to thank the Chairwoman for holding this hearing today. 

Saudi Arabia has served a dangerous role in the international terrorist infrastructure. We should applaud them for the progress that they have made, but we should 

also make sure that they realize that there is more progress to be made. Finally, 

we should also be aware of how the terrorist threat is evolving. 

TESTIMONY FROM THE HEARING BEFORE THE SUBCOMMITTEE ON TERRORISM, TECHNOLOGY AND HOMELAND SECURITY OF THE COMMITTEE ON THE JUDICIARY, UNITED

STATES SENATE, SEPTEMBER 3, 2003

Senator SCHUMER. No, but it is an issue you and I have been working on. Senator 

Kyl has been very, very out front in chairing hearings on Wahabi-ism and what it 

means and how we have ignored it. We hope to have more hearings on this issue. 

We even wrote an op ed together, which I heard while we were away got published 

in the Washington Post. 

There is a report out today about an article that is going to—or is, I think, being 

made public today or tomorrow in Vanity Fair, which has done pretty serious journalism, where you are quoted, Mr. Clarke, and I just wanted to talk a little bit 

about it. 

The basic thrust of the article is that right after 9/11, when no one was allowed 

to fly, some special planes were able to spirit Saudis out of the country; that it had 

top clearance, that some of the members on that plane were members of the bin 

Laden family. 

Now, let me posit that much of the bin Laden family is not allied with the terrorist bin Laden and, in fact, are part of the Saudi rulers or, you know, upper class, 

ruling class, whatever you want to call it. But two, at least, of those bin Ladens 

had been under some suspicion for other kinds of terrorist activities or supporting 

terrorism in the past. 

This reporter seemed to do a pretty good job. He interviewed some private investigators who received a call 2 days after 9/11 asking them to escort Saudi students 

on a flight from Tampa to Lexington, Kentucky. He interviewed some airport offiVerDate Mar 21 2002 11:10 Jul 22, 2004 Jkt 000000 PO 00000 Frm 00073 Fmt 6601 Sfmt 6621 F:\WORK\MECA\032404\92744.000 HINTREL1 PsN: SHIRL
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cials who knew that the planes had gotten top, top, top clearance when no one else 

could fly, and a bunch of other people. 

Can you tell us what you know about this? You are quoted in the article, and 

again I think you are doing a service because one of the things the Chairman and 

I have felt is that we haven’t gone deeply enough and looked into enough the relationship between some in the Saudi leadership and terrorism. 

Mr. CLARKE. Senator, as I recall the event—as you know, I was the national crisis 

coordinator on 9/11 and 9/12, making a lot of decisions, or implementing a lot of 

decisions. I do recall the State Department coming to us that week, and I don’t remember what day, and saying that the Saudi embassy felt that, in the wake of the 

terrorism attacks, Arabs in this country, particularly Saudis, might be victims of 

retribution attacks. And they wanted, therefore, to take some Saudi students and 

other Saudi citizens back to the Kingdom for safety, and could they be given permission to fly even though we had grounded all flights? 

What I recall is that I asked for flight manifests of everyone on board, and all 

of those names to be directly and individually vetted by the FBI before they were 

allowed to leave the country. I also wanted the FBI to sign off even on the concept 

of Saudis being allowed to leave the country. As I recall, all of that was done. It 

is true that members of the bin Laden family were among those who left. We knew 

that at the time. 

I can’t say much more in open session, but it was a conscious decision with complete review at the highest levels of the State Department and the FBI and the 

White House. 

Senator SCHUMER. Now, in this article—and I don’t want to tear into the Chairman’s time here—he has a source, so who knows? But he says that the State Department did not—‘‘It did not come out of this place,’’ says a State Department 

source. ‘‘The likes of Prince Bandar do not need the State Department to get this 

done.’’ Then he quotes Special Agent John Ianorelli, of the FBI, saying ‘‘I can say 

unequivocally that the FBI had no role in facilitating these flights one way or the 

other.’’

Let me ask you, I guess, two questions. Are you confident, given your vast knowledge, that every person who was on—how many flights were there? The article is 

unclear. 

Mr. CLARKE. I believe there was one. 

Senator SCHUMER. Just one that stopped in all these places, because he names 

four or five cities. ‘‘The Saudi planes’’—he says plural; he uses ‘‘planes’’—‘‘took off 

or landed in Los Angeles, Washington, Houston, Cleveland, Orlando, Tampa, Lexington, Kentucky, and Newark and Boston.’’

How thoroughly were these people on this plane or these planes vetted? 

Mr. CLARKE. Senator, all I can tell you is that I asked the FBI to do that. I asked 

the director and the assistant director to do that. They told me they did it. I think 

the key thing here is that no one on those aircraft manifests has ever been subsequently wanted by the FBI for an interrogation. 

So the notion which this author perhaps is trying to paint that people who were 

involved in 9/11 or in planning terrorism somehow were allowed to escape, I think, 

is wrong. No one on those flight manifests has ever been designated by the FBI as 

having been involved in 9/11. 

Senator SCHUMER. But let me ask you this question. This is just a summary, so 

I haven’t read the article. It is what Vanity Fair puts out. My impression, or at least 

my assumption of why this was important was not necessarily that those connected 

with terrorism might have escaped, although who knows—but your word means a 

whole lot to me; I have such huge respect for you, and we knew each other even 

back in the Clinton days when we were talking about some of these issues—but 

rather that many of them might have been able to shed some light, particularly in 

the time thereafter, about what happened, what went on, et cetera. 

Do you know if we have made any efforts to question any of these people subsequent to their being in Saudi Arabia, given something you have acknowledged and 

we have all acknowledged, the lack of complete Saudi cooperation when we wished 

to question some people there? Have we tried, have we been successful? Do you have 

any knowledge of that? 

Mr. CLARKE. I do not know the answer to that, Senator. I would be guessing and 

I would rather not do that. But I would stress that, despite what the article may 

say, this decision was reviewed by the State Department and was reviewed by the 

FBI and signed off on by the FBI. All of the names on all of the flight manifests 

were checked before anyone was allowed to leave the country. And my specific question to the FBI was, if there is anybody you want to hold, hold them. 

Senator SCHUMER. And was anyone—sorry. I wouldn’t mind if you have your 

question and I could just continue for 4 or 5 minutes myself. 

71

Chairman KYL. Yes. Here is what I would like to do and see if it is okay with 

you, Senator Schumer. Obviously, we are deviating in this line of questioning from 

what the hearing was all about. 

Senator SCHUMER. It just was so officious. 

Chairman KYL. I understand, and I am fascinated by the pursuit of the issue as 

well, but Mr. Clarke wasn’t advised beforehand that we were going to get into this. 

Senator SCHUMER. Right. 

Chairman KYL. Here is what I would like to suggest. Since I have to get down 

to the White House and my car is leaving in just a second, I would like to just make 

a concluding comment and, with your permission, bring the hearing to a close, with 

the understanding that we will continue to converse with Mr. Clarke and, as events 

call for it—we are going to have a hearing a week from today, September 10, that 

is going to get back to the question of Saudi involvement and other related issues. 

Senator SCHUMER. That is just fine with me. 

Chairman KYL. We have plenty of time to pursue this, but I think, under the circumstances, if it is all right with you, that is the way I would like to deal with it. 

Senator SCHUMER. Well, I read this 2 hours ago. 

Chairman KYL. I have got it here and I think it is worth pursuing, but let’s give 

Mr. Clarke a little more time just to———

Senator SCHUMER. Would you be available tomorrow or the next day to talk about 

this? 

Mr. CLARKE. Yes.

Æ