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58–051 PDF 2010

ANTI-MONEY LAUNDERING: BLOCKING 

TERRORIST FINANCING AND ITS 

IMPACT ON LAWFUL CHARITIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MAY 26, 2010 

Printed for the use of the Committee on Financial Services 

Serial No. 111–141 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

DENNIS MOORE, Kansas, Chairman 

STEPHEN F. LYNCH, Massachusetts 

RON KLEIN, Florida 

JACKIE SPEIER, California 

GWEN MOORE, Wisconsin 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

ALAN GRAYSON, Florida 

JUDY BIGGERT, Illinois 

PATRICK T. MCHENRY, North Carolina 

RON PAUL, Texas 

MICHELE BACHMANN, Minnesota 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

May 26, 2010 ..................................................................................................... 1 

Appendix: 

May 26, 2010 ..................................................................................................... 37 

WITNESSES 

WEDNESDAY, MAY 26, 2010 

German, Michael, Policy Counsel, American Civil Liberties Union .................... 23 

Glaser, Daniel L., Deputy Assistant Secretary for Terrorist Financing and 

Financial Crimes, U.S. Department of the Treasury ........................................ 5 

Guinane, Kay, Program Manager, Charity and Security Network ..................... 21 

Levitt, Matthew, Director, Stein Program on Counterterrorism and Intelligence, The Washington Institute for Near East Policy .................................. 24 

APPENDIX 

Prepared statements: 

Moore, Hon. Dennis .......................................................................................... 38 

German, Michael .............................................................................................. 39 

Glaser, Daniel ................................................................................................... 51 

Guinane, Kay .................................................................................................... 65 

Levitt, Matthew ................................................................................................ 93 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Moore, Hon. Dennis: 

ACLU’s June 2009 report entitled, ‘‘Blocking Faith, Freezing Charity’’ ...... 103 

Report of The Constitution Project entitled, ‘‘Reforming the Material Support Laws: Constitutional Concerns Presented by Prohibitions on Material Support to ‘Terrorist Organizations’’’ ................................................... 186 

Ellison, Hon. Keith: 

Written responses to questions submitted to Michael German .................... 200 

Written responses to questions submitted to Kay Guinane .......................... 207 

Written responses to questions submitted to Matthew Levitt ...................... 237 

(1) 

ANTI-MONEY LAUNDERING: BLOCKING 

TERRORIST FINANCING AND ITS 

IMPACT ON LAWFUL CHARITIES 

Wednesday, May 26, 2010 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:03 a.m., in room 

2128, Rayburn House Office Building, Hon. Dennis Moore [chairman of the subcommittee] presiding. 

Members present: Representatives Moore of Kansas, Lynch, 

Klein, Adler, Kilroy, Driehaus; Biggert and Paulsen. 

Also present: Representatives Ellison, Al Green of Texas; Castle 

and Royce. 

Chairman MOORE OF KANSAS. This hearing of the Subcommittee 

on Oversight and Investigations of the House Financial Services 

Committee will come to order. 

Our hearing this morning is entitled, ‘‘Anti-Money Laundering: 

Blocking Terrorist Financing and Its Impact on Lawful Charities.’’ 

This is our 13th O&I hearing of the 111th Congress. 

We will begin this hearing with members’ opening statements, 

up to 10 minutes per side, and then we will hear testimony from 

our witnesses for each witness panel. Members will have up to 5 

minutes to question our witnesses. 

The chairman advises our witnesses to please keep your opening 

statements to 5 minutes to keep things moving, so we can get to 

members’ questions. Also, any unanswered questions can be followed up in writing for the record. And I understand Mrs. Biggert 

has a request. 

Mrs. BIGGERT. Yes, Mr. Chairman. I would like to ask unanimous consent that the gentleman from Delaware, Mr. Castle, and 

the gentleman from California, Mr. Royce, be—participate in the 

subcommittee there on the Financial Services, but not— 

Chairman MOORE OF KANSAS. No objections on this side. If there 

are no objections on your side, it is so ordered. 

Without objection, all Members’ opening statements will be made 

a part of the record. And I will recognize myself for up to 3 minutes 

on an opening statement. 

Today’s hearing is the second in a series of hearings we are having focusing on oversight efforts to combat money laundering and 

terrorist financing. Last month, our subcommittee held a hearing 

2 

reviewing several FinCEN oversight reports examining how 

FinCEN could better interact with law enforcement agencies, as 

well as improving the data quality collected from suspicious activity reports. 

While the May 1st Times Square bomb attempt is not the subject 

of today’s hearing, and is currently being investigated by Federal 

authorities, the incident is a valid reminder that, despite nearly 9 

years passing since the tragic September 11, 2001, terrorist attacks, there continue to be those who wish to do us harm. 

Our government must use every tool available to shut those terrorist groups down, including cutting off the financing that supports them. Today, we are examining the Treasury Department’s 

efforts to block all financing that goes to terrorist organizations 

that seek to do us harm, and how these efforts impact lawful, lawabiding charities who only want to use contributions for legitimate 

and good purposes. 

Even if 1 percent of charity funds are going to a terrorist organization, our government is required by law to shut that source of 

funding down, as we should. But there are many good organizations who want to fully abide by the law, and ensure that 100 percent of their money is used only for good efforts. 

So, I look forward to learning what steps Treasury has taken 

with respect to those lawful charities, and encouraging charity organizations to fully abide by the law. I am pleased the Treasury 

Department was able to provide Deputy Assistant Secretary Glaser 

to testify on these important issues, and I look forward to hearing 

the views of our second panel of witnesses, as well. 

I now recognize for 5 minutes the ranking member of the subcommittee, my colleague and friend from Illinois, Ranking Member 

Judy Biggert. Mrs. Biggert? 

Mrs. BIGGERT. Thank you, Chairman Moore, and thank you for 

holding this important hearing. As we have learned, terrorists will 

stop at nothing to carry out their plots to kill innocent citizens, and 

terrorists have financed their attacks through the formal banking 

system. They have also used informal systems, for example. Terrorists sometimes use the hawala system, an ancient method of underground banking, in which couriers transfer money through networks. 

Terrorists also have used charities to finance their schemes, 

which is the focus of today’s hearing. Charitable contributions in 

the United States are vital to both domestic and international humanitarian aid. They range from organizations that help homeless 

children in our local communities to families abroad who seek basic 

access to water, shelter, and education, or are victims of tsunamis, 

earthquakes, and other natural disasters. 

It is important that while our intelligence, military, and law enforcement communities work to free terrorist funds and prevent 

terrorism, we also allow for the legitimate and important philanthropical functions of charities to continue. There must be a balance. 

I commend our government officials, some of whom we will hear 

from today, for their work to stop the flow of funds to terrorist organizations. Please know that, while criticized heavily by some, 

3 

your work has saved, and could, in the future, save many American 

lives. Thank you for your service. 

At the same time, I ask that you continue to work with the more 

than 1.5 million legitimate U.S. charities that are clearly not involved in funding terrorists, but provide important services to people in need, both here at home and abroad. 

Treasury officials should continuously work to improve communications with charities, as well as guidelines or best practices, so 

that charitable organizations have a clear understanding of the 

rules of the road. Front groups masquerading as charities can 

never be allowed to compromise national security. National security must be everyone’s top priority. 

With that, I look forward to hearing from today’s witnesses, and 

I yield back. 

Chairman MOORE OF KANSAS. Thank you. The chairman next 

recognizes for 3 minutes Mr. Lynch of Massachusetts. 

Mr. LYNCH. Thank you, Mr. Chairman. Good morning. Mr. 

Chairman, I want to thank you and Ranking Member Biggert for 

holding this hearing today. I would like to welcome our first panel 

witness, Mr. Glaser, and thank him and the other panelists for 

helping the committee with its work. 

This hearing is particularly timely, in light of the recent Times 

Square bombing plot. As law enforcement investigates the financing behind this act of terrorism, which involves my own district 

and the State of Massachusetts, the issue of terrorist financing has 

again raised to the surface. 

In the recent past, the law enforcement community has applied 

increasing pressure on investment networks and various types of 

funding vehicles. The result of this escalated enforcement has 

forced financing to enter informal channels, be it a hawala or a 

hundi, as may have been the case in the Times Square bombing, 

or others like informal charitable networks. 

Charities have raised concerns, legitimate concerns, that actions 

have been taken against associations for engaging groups that were 

not explicitly designated by the Treasury as terrorist organizations. 

Treasury has worked to engage charitable organizations with good 

intentions. We must not allow punitive measures to force charitable activity underground. 

There is a delicate balance and a reasonable zone of operations 

in allowing charitable donations to continue, and to prevent the financing of groups or individuals who plan to attack the United 

States, or our colleagues and allies overseas. I appreciate the difficulty in finding this delicate balance. 

I want to comment the Treasury, especially FinCEN and OFAC. 

I have worked with them in a number of countries in the Middle 

East, and they do tremendous work, often unappreciated, but certainly highly valued in my eyes. 

I look forward to hearing the testimony of our potential policy solutions, and to help address this important issue. I thank you, Mr. 

Chairman, and I yield back. 

Chairman MOORE OF KANSAS. Thank you to the gentleman from 

Massachusetts. The chairman next recognizes the gentleman from 

California, Mr. Royce, for 3 minutes. 

4 

Mr. ROYCE. Let me, Mr. Chairman, start with the observation 

that the starting premise of this is all wrong. The title of this hearing is, ‘‘Blocking Terrorist Financing and Its Impact on Lawful 

Charities.’’ I wish we were more concerned about blocking terrorist 

financing and its impact on terrorist organizations. 

We have sanctioned less than a dozen charities in the many 

years since 9/11. Mr. Chairman, the fact of the matter is that there 

are many, many individuals who have a cold, calculating, and brutal resolve to kill as many Americans as possible by whatever 

means possible. And charities have been a proven resource for 

these individuals. 

Technocrats at the Multilateral Financial Action Task Force 

agree. As one witness will point out, this is not some reflexive 

equation of Islamic charities with terrorism. Dr. Levitt goes on to 

note that this critique flies in the face of extensive available evidence, and simply falls flat. 

We have to balance freedom to give with the freedom to live and 

breathe. In this country, the Holy Land Foundation was found 

guilty of 108 counts, including support of terrorism, money laundering, and tax fraud. Millions went to Hamas. That some lawful 

charities face extra burdens is an unfortunate but needed response. 

No apology is needed. 

In March, Youssef Nada, the self-described foreign minister of 

the Muslim Brotherhood, was quietly removed from the UN Security Council’s terrorist financier list. Of course, this individual has 

been involved with al-Qaeda. He’s been involved with Hamas. And 

the Brotherhood seeks the worldwide creation of an Islamic caliphate. All of these listings and delisting decisions have to be unanimous, meaning the Obama Administration okayed this. This is of 

concern to me, and it should be of concern to many Americans. 

I yield back the balance of my time, Mr. Chairman. 

Chairman MOORE OF KANSAS. Thank you. Mr. Castle from Delaware is recognized next for 2 minutes. 

Mr. CASTLE. Thank you, Mr. Chairman. And thank you, Mrs. 

Biggert, and thank you for allowing me to sit in on this. I am 

pleased to be here for this hearing, whether it’s under its original 

name, or the new name that Mr. Royce has given it. I think it’s 

an important subject matter. 

I believe strongly we must continue to examine current efforts to 

combat terrorist financing. And I recently joined Representative 

Lynch, who is here, in requesting a hearing to determine whether 

our efforts here in the United States are keeping pace with evolving trends terrorists are using to fund their activities. 

This issue needs greater scrutiny, particularly in light of reports 

that the attempted Times Square bomber used an informal banking system—used hawala networks to fund his operations. Today’s 

hearing will focus on the impact on charitable organizations of 

blocking funds to terrorist organizations overseas. 

Regardless of whether money is being funneled to other countries 

or coming into the United States, we must have the proper systems 

in place to detect and prevent money from reaching the hands of 

terrorists. Without the compliance of organizations in the business 

of collecting and transferring money, our efforts to keep extremists 

from doing harm to innocent civilians would surely be futile. 

5 

I look forward to hearing from today’s witnesses, and whatever 

fruit we can garner from that to prevent these problems in the future. I yield back, Mr. Chairman. 

Chairman MOORE OF KANSAS. Thank you. I am pleased to introduce our first witness this morning, Mr. Daniel Glaser, who currently serves as the Deputy Assistant Secretary for Terrorist Financing and Financial Crimes at the Treasury Department. 

Without objection, sir, your written statement will be made a 

part of the record. Mr. Glaser, you are now recognized for 5 minutes. 

STATEMENT OF DANIEL L. GLASER, DEPUTY ASSISTANT SECRETARY FOR TERRORIST FINANCING AND FINANCIAL 

CRIMES, U.S. DEPARTMENT OF THE TREASURY 

Mr. GLASER. Thank you, Chairman Moore, Ranking Member 

Biggert, and distinguished members of the committee. I thank you 

for the opportunity to appear before you today to discuss the Treasury Department’s efforts to protect charities from abuse by terrorists, and our outreach efforts to the charitable in Muslim-American 

communities. 

Treasury recognizes and values the importance of charitable giving. Charitable giving and volunteerism have a long tradition in 

the United States, and our country is a leader in the world year 

after year in charitable donations. Our generosity unites Americans 

of all backgrounds and religious traditions. 

However, the sad truth is that terrorist organizations such as alQaeda, Hamas, and Hezbollah have established and used charities, 

and have exploited well-intentioned donors. Terrorist groups such 

as these use charities not just to raise funds, but as an integral 

component of their organizations and networks. 

The Treasury Department has been given the responsibility by 

Congress and the President to protect American lives and security 

by using all lawful means to disrupt and dismantle terrorist support networks wherever we find them. Our primary tool in meeting 

this responsibility is through the application of targeted financial 

sanctions under the International Emergency Economic Powers 

Act, or IEEPA. 

More than 30 years old, IEEPA forms the legal framework of 

most of our targeted financial sanctions programs. As I explained 

in great detail in my written testimony, we have developed a wellestablished process for implementing IEEPA designations that contains procedural safeguards, including licensing provisions and 

delisting procedures. 

All final agency actions taken under IEEPA are subject to judicial review. And over the years, the courts have a strong record of 

upholding the statute’s constitutionality and our application of it. 

The collective efforts of the law enforcement community over the 

past decade have been successful in making it more difficult for 

terrorist organizations to raise funds in the United States. 

Treasury has contributed to this effort, including by applying targeted financial sanctions to a total of eight U.S. charities. These 

charities were not unwitting victims. We believe that our actions 

contributed to disrupting the terrorist networks that those charities 

6 

supported, and protected well-intentioned donors who had no desire 

to support terrorist groups. 

That said, we understand that the ongoing terrorist threat and 

U.S. enforcement actions, including Treasury designations, have 

had an unfortunate and unintended chilling effect on the charitable 

giving of Muslim-American communities, particularly as it relates 

to the legitimate desire to provide support to needy communities in 

risky areas. 

We take this problem seriously, and we regard it as our responsibility to work with the charitable and Muslim-American communities to mitigate the chilling effect, and help create what we call 

a safe giving space for well-intentioned donors. These efforts have 

included attempts to provide the charitable sector with relevant information and guidance, and also to create alternative mechanisms 

for charitable giving to populations in need in high-risk areas. 

It is important to remember, however, that Treasury does not 

have, nor do we seek, anti-money laundering or counterterrorist financing supervisory authority over the charitable sector. For that 

reason, it is vital that we form a strong partnership with the charitable sector to address this issue of mutual concern. We are confident that such a partnership, based on mutual respect and an understanding of the various perspectives and complexities relating to 

this issue, can succeed in demonstrating that the choice between 

charity and counterterrorism efforts is a false one. 

Thank you for the opportunity to speak with you today. I would 

be happy to answer any questions that you have. 

[The prepared statement of Mr. Glaser can be found on page 51 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. Glaser, for your 

testimony. I recognize myself for 5 minutes for questions. 

Mr. Glaser, so everyone is clear, in a situation where a charity 

organization uses 99 percent of its money for legitimate, lawful, 

charitable purposes, and even just 1 percent is going to al-Qaeda 

or some other terrorist organization, the Treasury Department still 

makes every effort to shut that financing down. Is that correct, sir? 

Mr. GLASER. Absolutely, Mr. Chairman. The question is not what 

percentage of funds are going to a terrorist organization. The question is whether the charity or whatever the designated entity might 

be is owned or controlled by or acting for or on behalf of a terrorist 

organization. And that’s the test we would put to it, not what percentage of the funds are traveling to the organization. 

Chairman MOORE OF KANSAS. Would you elaborate on—I guess 

you already have. I was going to—the second question, I think you 

have already answered that. 

Mr. Glaser, how has Treasury’s voluntary best practices for U.S.- 

based charities—a document that is on your Web site—been received by the charity organizations you communicate with—are 

they useful to these lawful charities? 

Are there other proactive steps Treasury can take to ensure lawabiding charities have every opportunity to fully understand how 

best to follow the law? 

Talk about that, if you would, please, sir. 

Mr. GLASER. Thank you, Mr. Chairman, for that question. I think 

that our voluntary best practices, or voluntary guidelines, have 

7 

been a work in progress. We released them many years ago. And 

since that time, we have had an ongoing dialogue with the charitable community on making sure they are as useful as possible to 

that community. We have updated them twice since they were initially released. And, in fact, we are working now to update them 

again and to continually improve them. 

As I said in my oral remarks, we don’t have supervisory authority over the charitable community. So it’s important that we find 

other ways to communicate with them and to work with them, and 

we try very hard in that regard. And we think that the guidelines 

are a good way of doing that. 

We do understand that there are some people in the charitable 

community who have problems with some aspects of them, and 

that’s something that we want to talk to them about, and that’s 

something that we want to continue to engage with them on, and 

continue to improve, because they are going to be most useful if 

and when they are perceived as a joint effort from Treasury and 

from the charitable community. 

That’s not the only tool that we have. It’s not the only mechanism that we have to try to achieve the sorts of goals that you’re 

talking about, Mr. Chairman. We also try to provide information in 

other ways, in terms of typologies, in terms of information, in 

terms of dialogue. 

There is another important whole set of initiatives that we are 

trying to establish regarding alternative relief so that as certain 

channels close down for all the right reasons, we can work with the 

charitable community to make sure that there are legitimate channels that remain open. And I think that’s an idea that frankly, not 

enough time has been spent on, and something that we really want 

to kick up to the next level. 

Chairman MOORE OF KANSAS. Thank you, sir. And last question, 

when it comes to shutting down terrorist financing, I imagine there 

is a lot of—I would hope there is a lot of coordination between 

other government agencies that the Treasury Department deals 

with. 

Mr. Glaser, would you describe briefly, sir, how Treasury interacts with other agencies when it comes to blocking terrorist financing? Are there barriers that should be removed, or any improvements that could be made, with respect to interagency communications, from Treasury’s perspective? 

Mr. GLASER. Thank you, Mr. Chairman. I think it’s a good question, because we sometimes speak—and even in my testimony I 

probably used the term ‘‘Treasury designations.’’ But these really 

are U.S. Government actions in the larger sense of the term. 

There is a—particularly as it relates to foreign designations, but 

even with respect to U.S. designations, as well, there is a vibrant 

interagency process, where, as a target is examined, we ask ourselves collectively, ‘‘What is the right tool to use? What is the right 

action to take?’’ And there is a joint decision taken from all interested relevant U.S. agencies. 

Once a decision is made to proceed along the lines of targeted financial sanctions, there is a well-established process that includes, 

in particular, the Treasury Department, the Justice Department, 

and the State Department. The collection—the assembly of the adVerDate Nov 24 2008 19:07 Sep 24, 2010 Jkt 058051 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\58051.TXT TERRIE
8 

ministrative record is reviewed by lawyers from all three of those 

Departments. And then, obviously, there is a lot of talk about timing, and making sure that everything is coordinated as well as possible. 

So, I do think we have very good coordination and interagency— 

well, very good interagency coordination as regards this process. 

Chairman MOORE OF KANSAS. Thank you, sir. Next, the chairman will recognize for up to 5 minutes for questions the ranking 

member, Mrs. Biggert. 

Mrs. BIGGERT. Thank you, Mr. Chairman. Mr. Glaser, does the 

Treasury believe that terrorist financing is a big problem within 

the charitable sector? 

Mr. GLASER. That’s a good question. I think that we have—within the United States, I think we have done a really good job, frankly, of substantially reducing the ability of charities within the 

United States to support terrorist organizations. I don’t think we 

want to rest on our laurels, but I think when you look at the situation today compared to the situation before 9/11, I think it has become much harder for terrorist organizations to raise funds in the 

United States. 

With respect to the world as a whole, I do think charities are an 

integral part of terrorist organizations, particularly when you look 

at charities—a lot of charities in the Gulf, even some charities in 

Europe. I think it is a problem that we continue to face and continue to work with our partners on. But if you’re— 

Mrs. BIGGERT. Yes. Then what level of coordination takes place 

between the United States and other nations on the issue? Do the 

bulk of other nations have adequate infrastructure in place to help 

combat the illegal moneyflows through charitable channels? 

Mr. GLASER. There is quite a bit of international coordination 

that happens on a variety of levels. Mr. Royce made reference to 

the Financial Action Task Force, and that is the premier standardsetting body in the world for anti-money laundering and counterterrorist financing standards, and we have done a lot of work in 

the FATF, both on typologies and on establishing international 

standards. I am the head of the U.S. delegation— 

Mrs. BIGGERT. Okay. 

Mr. GLASER. —to the FATF, so I have been personally involved 

in that. 

In addition—and I think this is really important and often overlooked—there is a considerable amount of work that has been done 

in the Middle East/North Africa region. There is an organization 

called MENAFATF, the Middle East North Africa Financial Action 

Task Force. I was just at a meeting of the MENAFATF in Tunisia 

3 or 4 weeks ago, and MENAFATF has issued its own best practices and guidelines with respect to charities. 

So, there is quite a bit of work that’s done on that level. There 

is also, obviously, a lot of work that’s done bilaterally. I am a part 

of a lot of it. I have traveled throughout the Middle East, throughout Europe. We work with the EU on this. We work directly with 

partners such as the Brits and the Saudis. 

There is—it’s not a particularly controversial proposition to say 

that these charities are involved in this type of activity, so it’s realVerDate Nov 24 2008 19:07 Sep 24, 2010 Jkt 058051 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\58051.TXT TERRIE
9 

ly just about working with our partners to find solutions, and it’s 

something we spend a lot of time on. 

Mrs. BIGGERT. Great. Then some in the nonprofit community say 

that there has been a negative effect on charitable giving. Do you 

agree? And what has Treasury done, if there has been any chilling 

effect? 

Mr. GLASER. I have no doubt that there has—I don’t have numbers, but I have no doubt that there has been a chilling effect. And, 

as I said in my testimony, it’s something that troubles us, and it’s 

something that we feel we have a responsibility to work with the 

charitable community to mitigate. 

And we are trying to do everything we can in that regard. We 

try to do it through guidance, we try to do it through best practices. 

We try to do it through providing as much information as we can. 

Frankly, we try to do it through shutting down charities that we 

think are involved with terrorist organizations, to take those off of 

the table. 

We also—again, we have in the past worked with the charitable 

community on establishing alternative relief systems, alternative 

relief mechanisms. There was something back in the summer of 

2008 that we started called, ‘‘The American Charities for Palestine.’’ That was sort of a pilot project. 

We would like to build on that concept so that we could work 

with the charitable community to make sure that Americans, Muslim-Americans and any American who wants to give to places like 

the Palestinian territories or earthquake relief in Pakistan or anywhere, has the opportunity to do so. We regard that as a responsibility of ours, and we work very hard to try to achieve that. 

Mrs. BIGGERT. Do you see that the charities are still being 

abused by terrorists and other illicit actors? Has it slowed down, 

or— 

Mr. GLASER. Again, globally, I don’t think it has slowed down. I 

think that there are charities throughout the world that continue 

to operate as integral parts of terrorist organizations. 

Domestically, as has been pointed out, we have designated 8 

charities since 9/11. We have not designated a Muslim charity in 

almost 3 years. So I think that we have had success, and I think 

it has become a lot harder to raise funds within the United States 

for terrorist organizations. 

Mrs. BIGGERT. Thank you. I yield back. 

Chairman MOORE OF KANSAS. Thanks to the gentlelady. And 

next, the chairman recognizes for 5 minutes Mr. Lynch for questions. 

Mr. LYNCH. Thank you, Mr. Chairman. Mr. Glaser, one of the 

other hats that I wear, along with Mr. Royce of California, I cochair the Task Force on Terrorist Financing and Non-Proliferation. 

The initial goal of our group, working with Treasury, was really 

to look at the formal, established finance system, and to try to encourage countries—and we spent a lot of time in Jordan, Morocco, 

Tunisia, Afghanistan, and India—to adopt anti-money laundering 

statutes that would hopefully drive terrorist financing out of the legitimate financing system. And I think that you have had some 

good success. FATF has had some great success, I think, considering where we started before 9/11. 

10 

Now, I think what has happened is we have seen, since the official banking system has been closed off in larger respects, now we 

have seen this migration to these informal value transfer systems. 

I’m talking about the hawalas and the hundis that—in some countries they’re registered, in some countries they’re not. It’s sort of a 

mish-mash. 

What complicates things is there is a religious dimension to the 

use of hawalas in fulfilling Zakat by good Muslims. So, I guess my 

question is, how do we take that next step? 

Now that we have the formal banking system going in the right 

direction with know-your-customer protocols, and you have a pretty 

solid matrix, a risk matrix for these charities, how do we—I guess 

how do we drive whatever is left of that terrorist financing in those 

informal transfer systems and these other charities, how do we 

drive the money out of that system? 

It seems to be more insidious, more pernicious, tougher to get at. 

But, that’s really what we would have to do. 

Mr. GLASER. Thank you, Mr. Lynch, and thank you for your and 

Mr. Royce’s leadership on this issue. We are very well aware of all 

the work that you have done in this area, and we do appreciate it. 

When you think about how terrorists—terrorist organizations 

could move money, could transfer money around the world, when 

you think about how anyone could move or transfer money around 

the world, there are really only four ways that it could be done, 

when you think about it: it could be done through a formal financial institution; it could be done through an informal financial institution; it could be done through trade; or it could be done 

through the physical movement of cash. Those are the only four 

ways to transfer value that I could even imagine. 

Now, there are enormous amounts of variety within each of 

those. But we need to focus on each of those four to make sure that 

we have the systems in place to detect and deter money laundering 

and terrorist financing through the formal sector, the informal sector, through cash couriers, and through trade. And we try to focus 

on all of them. 

With respect to your specific question on the informal sector, we 

have tried to take a sort of a three-category approach to it. The 

first is to regulate with what we call a light touch. There are approximately 40,000 registered money service businesses in the 

United States. Not all of them would meet the definition of hawala. 

Hawala is is an Arab word for a particular style of money transfer. 

And you said ‘‘hundi.’’ There are other words for it in other parts 

of the world. But what we try to do is register them, educate them, 

and bring them up to the surface. 

A lot of these service providers—most of these service providers—are performing perfectly legitimate, legal transactions. But 

what we want to do is reach them so that we can communicate 

with them, explain to them what the laws are, and try to get them 

to be more a part of the system. 

Frankly, the broader solution to the issue is more of a systemic, 

almost generational solution of making sure that there is affordable financial services provided to all communities throughout the 

world. Because the reason why these types of services actually 

exist is because they are more convenient for, say, a Pakistani imVerDate Nov 24 2008 19:07 Sep 24, 2010 Jkt 058051 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\58051.TXT TERRIE
11 

migrant who wants to send money to his family in a village in 

Pakistan. It’s oftentimes going to be easier to do that through some 

sort of form of alternate remittance. 

Mr. LYNCH. Right. 

Mr. GLASER. So we try to do all that. We have tried to set international standards. But I completely recognize that this is an issue 

that we have not, by any stretch of the imagination, solved. And 

it is something that we really do look forward to working with you 

and other Members of Congress on devising solutions for. 

Mr. LYNCH. Thank you. I yield back. 

Chairman MOORE OF KANSAS. Thank you, sir. The chairman will 

next recognize the gentleman from Minnesota, Mr. Paulsen, for 5 

minutes. 

Mr. PAULSEN. Thank you, Mr. Chairman. And, Mr. Glaser, knowing that we have to have an effective regime to monitor terrorist 

financing, and knowing that funding for the attacks for September 

11th came through so-called nonprofit or so-called charitable organizations, that that’s the case, and you talked about the four different access points to move resources for funding terrorism, how 

much more do we really know about terrorist financing today than 

we did 10 years ago, before these laws took effect? 

And I just want to set the table for you, just to sort of explain. 

Have the current laws in place now really helped us gain the 

knowledge necessary to combat some of the challenges that we 

have been facing? 

Mr. GLASER. Thank you for the question, Mr. Paulsen. I think we 

do know quite a bit more about the way terrorist organizations finance themselves. I think we know a lot more about the subject of 

terrorism and counterterrorism broadly than we did before 9/11. 

There has certainly been a lot more attention and resources devoted to it, and I think we have learned a lot of lessons. 

Charities are by no means the only way that terrorist organizations raise funds. They raise them through individual donors, they 

raise them through state sponsors. They raise them through legitimate business, they raise them through crime. They raise them 

through taxing populations. There are all sorts of ways that terrorist organizations raise funds. And we need to focus on all of 

them. 

But I do think we understand these issues better, and I think we 

have had success. I think that terrorist organizations such as 

Hamas and al-Qaeda are in far worse financial shape today than 

they have ever been in the past. And I think that’s due to the efforts not just of the United States Government, but of the entire 

international community that has been working very hard on this. 

Mr. PAULSEN. And would you go so far as to say that the information that has been provided by these laws now has given us 

enough information to help prevent another attack, to certainly 

prevent the resources from going forward to prevent another attack 

from occurring, or at least made it much more difficult? 

Mr. GLASER. I think they have made it more difficult. I wish I 

could say that I promise you that these laws could prevent another 

attack. Unfortunately, that’s not a promise anybody could make. 

But I—in particular, we do our part at the Treasury Department, 

but in particular, people like the FBI and other parts of the law 

12 

enforcement and national security community work every day to do 

everything they can to prevent a next attack. 

Mr. PAULSEN. I appreciate that. And, Mr. Glaser, there is testimony this committee will hear from in the next panel that’s coming 

up that suggests that the Treasury Department is not set up to effectively monitor the charitable sector. And I just wanted to see if 

you agreed with that. 

Between FinCEN and the OFAC, the OIA, and the other numerous intelligence agencies that you just mentioned, too, I just want 

to—do you think you lack the resources to effectively combat terrorist financing right now? And how do you feel about that? 

Mr. GLASER. Thank you, Mr. Paulsen. We are not set up to monitor the charitable community. That’s not our responsibility. That’s 

not what we do. That’s not what we seek to do. 

We are set up—and in 2004, Congress, working with the Administration, created the component of the Treasury Department that 

I am a part of, the Office of Terrorism and Financial Intelligence, 

and I think it was a revolutionary decision—we are the only finance ministry in the world that has an office like TFI, and that 

has allowed us to be a real leader throughout the world in addressing issues like this. 

So, I do think we are well set up to address issues related to terrorist financing as best as we can, and we work very hard on that. 

I appreciate the support that we have gotten, and I think we are 

appropriately set up. But I do agree that we are not set up to monitor charities, nor do we seek to monitor charities. 

Mr. PAULSEN. Thank you, Mr. Chairman. I yield back. 

Chairman MOORE OF KANSAS. Thank you, sir. The chairman will 

next recognize the gentleman from New Jersey, Mr. Adler, for 5 

minutes. 

Mr. ADLER. Thank you, Mr. Chairman. I want to follow up on 

Mr. Paulsen’s question about resources, maybe shift it a little bit 

to whether there are legislative needs that you would seek from us 

to empower you to do a better job with your limited role. I understand your point that it’s a limited role. Are there things you need 

from us to give you more power or more direction to achieve our 

national security interests, as it has been laid out in the discussion 

this morning? 

Mr. GLASER. Thank you for the question, Mr. Adler. No, I think 

what we need from Congress is what we’re getting from Congress, 

which is a close attention to this problem. Hearings like this, I 

think, are important and helpful in bringing out these issues and 

stimulating public discussion and stimulating debate. I think it is 

all very important and healthy. 

And I think Congress is playing an absolutely vital role in its 

oversight function. But I don’t—there are no particular pieces of 

legislation that I would have to offer to enable us to do our role 

better. I think we have what we need right now. 

Mr. ADLER. Is that a consensus opinion of the Department, or is 

it—I want to make sure it’s beyond just your opinion, as much as 

I respect your opinion, that we—I want to have the comfort that 

we are doing what we should do to empower you to do what you 

need to do to keep our country safe. 

Mr. GLASER. Yes, I am speaking for the Department. 

13 

Mr. ADLER. Thank you. I yield back. 

Chairman MOORE OF KANSAS. The chairman thanks the gentleman. And next, the chairman will recognize Mr. Royce of California for 5 minutes. 

Mr. ROYCE. Mr. Glaser, Doug Farah is the former Washington 

Post bureau chief who has dug pretty deep on these issues. And, 

as a matter of fact, not just on terror finance, on the issue of conflict diamonds he helped bring President Charles Taylor of Liberia 

to the bar of justice for war crimes. 

But he wrote recently, ‘‘So far, the Muslim Brotherhood is winning every battle, and rapidly recapturing the ground lost in the 

dark days after 9/11 when their role in radicalization and financing 

of radical Islam was recognized and confronted, at least briefly.’’ 

I want to go back to my opening remarks, where I brought up 

the case of Youssef Nada, foreign minister of the Muslim Brotherhood, as he calls himself, who says that—as we know, he was removed rather quietly from the UN Security Council’s terrorist financier list. He was involved with al-Qaeda. He was involved with 

Hamas. And to be removed from that list, it has to be unanimous. 

So, that would mean that the Obama Administration okayed this. 

And I wanted to ask you why, or if you knew why. 

Mr. GLASER. Thank you, Mr. Royce. To the first part of your 

question, and then to the second part of your question. I do agree 

with you, radicalization is a really important issue. I think it’s, 

frankly, one of the next big issues that we, as a government—we 

are focusing on it, but I think it’s something that we really, as we 

make progress in other areas, I think it’s an issue for us to pay 

even closer attention to. 

When we talk about the role that charities and other groups play 

in terrorism, one of the reasons why I made some of the points that 

I make—and I try to make them all the time—is we’re not just 

talking about fundraising when we talk about these terrorist networks. We are talking about radicalization. We are talking about 

providing logistical support. We are talking about being an integral 

component of a radical extremist violent network. And those are 

the networks that we are seeking to disrupt. 

With respect to Mr. Nada, you are correct. He was delisted at the 

UN, and then we subsequently delisted him in the United States. 

Mr. Royce, I don’t have any further information for you on that, 

but we would be happy to get back to you with information on Mr. 

Nada. 

Mr. ROYCE. I will just repeat what I said in my opening statement on that same front. The Brotherhood, according to their charter, seeks the worldwide creation of an Islamic caliphate. And to 

delist somebody who was involved with al-Qaeda and Hamas gives 

me some concern. 

I also want to point out that back in 2006, the Treasury Department designated the Philippine and Indonesian offices of the International Islamic Relief Organization, a Saudi-based charity, as terrorist-designated entities. And I think that was a welcome move, 

given its facilitating of funds for al-Qaeda. One individual involved 

in that operation was dubbed ‘‘The Million Dollar Man’’ by fellow 

jihadists, who depended upon him for the transfer of those sums 

of money. 

14 

But there are now reports that the International Islamic Relief 

Organization has reopened a U.S. chapter, this time in Florida. 

And its articles of incorporation says that it’s intended to be the 

U.S. chapter of the International Islamic Relief Organization. Are 

you concerned about this development? 

Mr. GLASER. There are a number of charities in the Gulf that we 

have worked very closely with governments in the Gulf on, some 

of which we have actually designated, like the Revival of Islamic— 

RIHS, Revival of Islamic Heritage Society. 

With respect to IRO, we have designated certain branches of the 

IRO, and we have also worked very, very closely with the Saudi 

Government on issues relating to terrorist financing, Mr. Royce. I 

have testified before Congress previously on our efforts— 

Mr. ROYCE. Whoa, whoa. You might be working closely with the 

Saudis. But last year the State Department, in its report on money 

laundering, concluded that Saudi Arabia continues to be a significant jurisdictional source for terrorist financing worldwide, and 

notes that the Saudi Government could do more to target Saudibased support for extremism outside of Saudi’s borders. And that’s 

what we’re talking about. 

Mr. GLASER. Yes, I agree with that. They are still a source, their 

country is still a source of terrorist financing. And, like all of us, 

they could do more. I think they have done a lot more. 

And I think that since we at the Treasury Department have been 

very open about identifying our concerns about Saudi Arabia, I 

think it’s also incumbent upon us to say when we think they are 

doing a good job, and I think that they have greatly improved their 

efforts in this area. 

Sure, there is a lot more they could do. And when I was in Tunisia, Mr. Royce, just a few weeks ago, the MENAFATF was discussing Saudi Arabia’s evaluation report, which is a several-hundred page in-depth analysis of Saudi Arabia’s legal structure and 

efforts in this area. I think it points out the good things and I think 

it points out the areas in which they still need to improve. 

Mr. ROYCE. A lot of concerns. Thank you, sir. 

Chairman MOORE OF KANSAS. The gentleman’s time has expired. 

The chairman will next recognize the gentleman from Delaware, 

Mr. Castle, for 5 minutes. 

Mr. CASTLE. Thank you, Mr. Chairman. Mr. Glaser, are you familiar with the terrorist financing report which was authorized in 

section 6303 of the Intelligence Reform and Prevention Act back in 

2004? 

Mr. GLASER. Yes. 

Mr. CASTLE. We have never received that report. I have written 

letters to the President, and we mentioned it again—I and others 

have mentioned it in various intelligence activities on the Floor, 

etc. 

Can you—what has happened to that report? That was due in 

2005. Is it going to be forthcoming? Is there some reason why we 

are not seeing this? 

Mr. GLASER. Thank you, Mr. Castle. We are aware of the requirement issue of this report, and our plan is to issue a terrorist 

financing report to meet the statutory requirement. There has been 

15 

a lot of internal discussion about what form this report should 

take. There are different aspects of it that we have struggled with. 

But it is something that we know there is—we understand there 

is an expectation that we are going to do this, and we do plan to 

meet that expectation. 

Mr. CASTLE. Needless to say, the date has long since passed that 

it was due. I would hope that these discussions could come up with 

a resolution, we could get that report, which may answer some of 

the questions which we are posing here today. 

In my—another question I have is—and you mentioned it a little 

bit with Saudi Arabia—but in—and you also indicated that we may 

be the only country which has an office dedicated to this particular 

problem. I assume you’re talking about terrorism financing when 

you say that. But what is our relationship with the bulk of other 

countries? Do they have any kind of an infrastructure or anything 

else in place that you can actually work with, with respect to financing issues that we are discussing here today? 

I realize that’s a pretty broad question, but can you give us a 

quick synopsis of what you see in these other countries? 

Mr. GLASER. Thank you for the question. I am happy to. 

To clarify what I said earlier, we are the only country with an 

office within a finance ministry like the one we have at the U.S. 

Treasury Department, in terms of being able to focus not just on 

terrorist financing, but on all financial components of national security issues—in particular, terrorist financing. And it has, I think, 

allowed us to approach issues in a more sophisticated, more aggressive way than any other finance ministry in the world, and we are 

very proud of that. 

But there certainly are offices throughout the world—governments throughout the world—dealing with this issue in different 

ways, and there are offices and governments that focus on terrorist 

financing. 

As far as our—the way we work with and cooperate with those 

governments, again, it happens on all—on a variety of levels. On 

the broadest level, on the multilateral level, there are a number of 

international bodies, I think most particularly the Financial Action 

Task Force, which I have mentioned a couple of times, which is the 

international standard-setting body for money laundering and terrorist financing. It is headquartered at the OACD in Paris, and it 

has 34 members, to include most of the largest countries in the 

world. 

That network, then, is extended through what are called FATFstyle regional bodies, which are regional FATFs that exist in every 

region. There is one in the Middle East, there is one in Central 

Asia, there is one for Asia, for South America, the Caribbean, eastern and southern Africa, west Africa, and central Africa. So, there 

are these FATF-style regional bodies, and those are intended to 

provide regional solutions to regional issues relating to this. Obviously, there is then work done at the UN. There is work done at 

so many different bodies on this area. 

And equally as importantly is our bilateral outreach. I spend an 

awful lot of my time traveling throughout the world, not just on 

this issue, but on issues—on all national security issues the Treasury is related to, be it North Korea, be it Iran, be it counterterVerDate Nov 24 2008 19:07 Sep 24, 2010 Jkt 058051 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\58051.TXT TERRIE
16 

rorism, be it other issues, trying to coordinate actions, passing information to governments, trying to persuade them to take action, 

working with them throughout the world, doing this. 

Last month, I was in the Palestinian territories working with the 

government of the Palestinian Authority on precisely these types of 

issues, and they are very, very good partners of ours. 

So, there is not one forum and there is not one way of doing this. 

It is a full-time job to coordinate internationally and to work on all 

these subjects. But I think we have made good progress. 

Mr. CASTLE. Thank you, Mr. Glaser. My time is up. 

Chairman MOORE OF KANSAS. Thank you. I ask unanimous consent that Mr. Ellison from Minnesota, a member of the full committee, be allowed to participate and ask questions. Without objection, it is so ordered. Mr. Ellison, do you have any questions, sir? 

Mr. ELLISON. Yes, Mr. Chairman, thank you. 

Chairman MOORE OF KANSAS. Yes, sir. You are recognized. 

Mr. ELLISON. Mr. Chairman, thank you for holding this hearing, 

and thank you for inviting me to attend. I am hopeful that we can 

improve the rules on charitable giving so that all Americans, including Muslims, can give to charity without inadvertently running 

afoul of the law. 

Currently, the net of suspicion is simply cast too broadly. While 

it is crucial that we disrupt and destroy terrorist financing networks, President Obama himself acknowledged, ‘‘Rules on charitable giving have made it harder for Muslims to fulfill their religious obligation.’’ That’s why I am committed to working with 

Members of Congress and members in the community to ensure 

that everyone can fulfill their religious obligations, including Muslims, who have a duty to fulfill Zakat, which is charity. 

Rules must also change so that charities can make contributions 

to fight poverty around the world, including in Muslim majority 

countries. Humanitarian aid in the Middle East, Africa, South Asia 

and elsewhere is crucial, so that it can—it’s also an effective tool 

to combat terrorism. 

My question is, will the Treasury Department consider implementing new rules and procedures to assist Muslim-Americans to 

contribute to charities? 

Mr. GLASER. Thank you. Thank you, Mr. Ellison, and I certainly 

do agree with you that our efforts to fight terrorism over these past 

10 years have made it more difficult for people to give, particularly 

to high-risk areas. And they should have the opportunity to do so. 

I completely agree with that. I think our charities do a phenomenal 

job, and an extremely important job in providing relief to these 

needy communities. 

On a humanitarian level, it’s important. And, frankly, on a national security level, I think it’s important, as well. So there is absolutely no disagreement on that issue. 

We take—as I have said before, we take our responsibility very, 

very seriously in this area, and we have—we are continually thinking about and trying to solve the problems that go along with this. 

And they are a very complicated and difficult set of problems. 

The ideas that we have come up with have been to try to provide 

guidance to the charitable community, in terms of best practices, 

to try to provide information to the charitable community, in terms 

17 

of risk matrixes and typologies, and things like that. We want to— 

we welcome, we invite a vibrant dialogue with— 

Mr. ELLISON. Let me ask you another question in that same vein. 

Mr. GLASER. Okay. 

Mr. ELLISON. Could Treasury direct the creation of a single, userfriendly publicly-accessible database consolidating each of the government’s prohibited lists, so that donors, mosques, and 501(c)3 organizations can easily determine if a charity to which they want 

to donate is on a prohibited list? 

Mr. GLASER. We do—Mr. Ellison, we do have on our Web site the 

list of designated entities. Unfortunately, the problem goes beyond 

that. It’s not really just a question of not donating to a prohibited 

entity. As far as a donor is concerned, if a charity is operating in 

the United States, it’s not on a prohibited list. 

The problem—and we have never, for that reason, we have never 

targeted donors—the complexity and the difficulty come with charities in the United States who are trying to provide needed legitimate services in these high-risk areas, and the complexities that go 

along with who they may be working with, and whom they may be 

dealing with. And it’s a very difficult issue. 

Because certainly all aspects of these organizations—like Hamas, 

like Hezbollah—are not publicly identified as designated charities. 

This is why I think it’s important that we do provide guidance on 

how to—how they should—how they can protect themselves, and 

provide them information on how these organizations operate. 

Mr. ELLISON. Okay. With any time I have remaining, let me ask 

you this: Could Treasury provide a rebuttable presumption of innocence to donors—individuals, mosques, 501(c)3 organizations—who 

can show that at the time of the contribution, they checked the 

combined list and did their due diligence and did not have reason 

to know that the organization was connected to terrorists, or otherwise fraudulent? 

Mr. GLASER. Thank you, Mr. Ellison. Again, we have never targeted donors. So the issue is not really one of providing rebuttal 

of presumptions with respect to donors. The issue— 

Mr. ELLISON. If I may intervene, good citizens don’t want to donate to organizations that are prohibited. So, to a certain extent, 

a donor could be concerned about being targeted, him or herself, or 

the entity’s self. 

But, on the other hand, they might just not want to donate to 

an organization that the government believes is a prohibited organization, whether or not they are targeted themselves. Do you understand my point? 

Mr. GLASER. I do understand your point. I do understand that 

the actions that we have taken have created a chilling effect within 

the—particularly within the Muslim-American community. I do understand that. And it’s a concern. It’s something that we are trying 

to work with. 

I don’t think establishing a rebuttal—the standard that we are 

dealing with is whether an entity is owned or controlled by, operating for or on behalf of a terrorist organization. That’s the standard that we are working with, and that is the standard that we 

should continue to work with. 

18 

But we need to supplement that with a strong partnership with 

the charitable community, so that we could get to starting to improve a lot of the very legitimate concerns that you have raised. 

Mr. ELLISON. Thank you, Mr. Chairman. 

Chairman MOORE OF KANSAS. The gentleman’s time has expired. 

The chairman will next recognize Mr. Klein from Florida for up to 

5 minutes. 

Mr. KLEIN. Thank you, Mr. Chairman. And thank you for being 

here today. This is obviously a very important issue around the 

country. I would like to yield to my colleague, Mr. Lynch, who has 

some follow-up questions. 

Mr. LYNCH. Thank you. I thank the gentleman. Mr. Glaser, I 

want to push back a little bit on Mr. Adler’s question, when he 

asked you if you thought that your agency had sufficient resources 

to do its job. I think you’re trying to be a team player, and I understand taking that position. 

But looking at the responsibilities that you have, let’s just start 

with the greater need for, let’s say, FinCEN to interface now, and 

especially within the Financial Fraud Task Force, to now interface 

with 3,000 local law enforcement agencies inside the United States, 

doing all the things that you have already talked about in all these 

different countries, what the different, MENAFATF task force, all 

the responsibilities you have there, the tremendous need we have 

in the Middle East and in north Africa for you to help that situation, the cross-border transfer of funds issue that you’re trying to 

address, I think you are way over—I think the demands on your 

agency, especially on FinCEN and OFAC are far exceeding—the demands are far exceeding what your capabilities are. 

And what troubles me greatly is, when I look at the—next year’s 

budget, you basically have been level-funded—a little bit of an increase—and, I see the agencies that you serve, the FBI, a huge increase on their part, and greater need for you to spread yourself 

even thinner than what you are doing right now. 

I just don’t see how—and I appreciate your being a team player 

and saying, ‘‘We’re fine,’’ but that’s not what I see. I see greater 

demand on your agency, especially the financial crimes enforcement network, globally, as well as domestically, and I just don’t see 

any way near you filling your obligations, given what they are right 

now, and the expectations, I think, of Congress for you to meet 

these further demands. So, I would just like to hear what you have 

to say about that. I hate to put you on the spot, but you’re the only 

one here. 

Mr. GLASER. No, I understand, Representative Lynch. It’s a fair 

question. I don’t really know how to respond, though. I appreciate 

your support. I suppose on some level, more money is better than 

less money. But we—this is part of a broader conversation, with respect to the Treasury budget, and I am not the right person to respond to that. 

We feel that we are meeting our mission with the resources that 

we have. And we do the best that we can. 

Mr. LYNCH. Let me ask you: On the formal banking side, we 

have the ability to do suspicious transaction reports and CTRs, 

where—those are the sort of little red flags sometimes that give us 

19 

reason for concern and further investigation. Do we have anything 

on the charity side that remotely compares to that? 

Because I think on the next panel, we are going to hear about 

the great amount of data that we gather through the BSA, the 

Bank Secrecy Act, and that some feel we aren’t really utilizing. So 

there is going to be pushback on that by my friends from the 

ACLU, who think that on an individual secrecy and privacy standpoint, it’s not worth the intrusion. 

Mr. GLASER. I am not familiar with the ACLU’s position with respect to the Bank Secrecy Act. But the Bank Secrecy Act doesn’t 

apply to charities. There is not a supervisory framework. The 

money laundering laws—the Bank Secrecy Act, which is the basic 

regulatory framework that we have for anti-money laundering— 

Mr. LYNCH. I understand. I am asking if there is anything comparable. 

Mr. GLASER. No. 

Mr. LYNCH. To what we do on the bank side? 

Mr. GLASER. No. 

Mr. LYNCH. To charities? No? Okay. Thank you. I appreciate 

your indulgence, Mr. Chairman, and I yield back. 

Chairman MOORE OF KANSAS. I thank the gentleman. The chairman will next recognize the gentlelady from Ohio, Ms. Kilroy, for 

5 minutes. 

Ms. KILROY. Thank you, Mr. Chairman. And I would yield to my 

colleague from Minnesota, Mr. Ellison. 

Mr. ELLISON. And let me thank the gentlelady and the chairman. 

Just a few more questions. 

Has the Obama Administration applied the current rules to close 

charities and freeze charitable assets that the Bush Administration 

has been applying? I guess my question is, it looks like the activity 

has been significantly less, but do you feel that the same principles 

are still at work? Or how have they changed? 

As you know, the Bush Administration closed down about seven 

charities and prosecuted one. 

Mr. GLASER. Yes, there have been a total of 8 charities designated under our basic Executive Order since 9/11. There has 

not—six of the eight could be identified as Muslim charities. There 

have been no Muslim charities designated in the United States for 

almost 3 years. There have been recently two charities designated 

that are related to the Tamil Tigers that had their assets blocked. 

Mr. ELLISON. But I guess my question is, is this a policy change 

from the Obama Administration, or is it the fact that the activity 

just isn’t going on? 

Mr. GLASER. I think we certainly remain committed to shutting 

down terrorist networks wherever we find them. And there 

hasn’t—there has not been a change in policy in that regard. If 

there is a terrorist network that we identify in the United States, 

we are going to take whatever lawful means that we have— 

Mr. ELLISON. So the answer is you just haven’t discovered that 

kind of activity. 

Mr. GLASER. The answer is that we haven’t found that to be appropriate authority in any case— 

Mr. ELLISON. Okay. 

Mr. GLASER. —of any Muslim— 

20 

Mr. ELLISON. Okay, okay, okay, yes. Since we have limited time, 

you know how it is. 

Under current law, the Treasury does have the ability to freeze 

assets, but does not have the authority to bring a formal charge. 

Is that right? Do you refer that over to the attorney general for 

prosecution? 

Mr. GLASER. They are two completely different processes. 

Mr. ELLISON. Okay. 

Mr. GLASER. We don’t—the Justice Department would take care 

of criminal prosecution, but the decision to designate a charity does 

not imply that there will be a criminal prosecution. 

Mr. ELLISON. Do you feel that there are sufficient due process 

safeguards in place for a charity to come and sort of show that, 

‘‘Hey, in fact we didn’t do this, or, if we did, it was in good faith 

and we will clean it up?’’ 

Mr. GLASER. Yes. Again, I do think we have sufficient due process. As I tried to explain in my written testimony, there are procedures that we go through on the front end. And then, on the back 

end, we do have a licensing system so that any designated—not 

just a charity, any designated entity could come in and say, ‘‘We 

need access to our funds to pay for legal fees or pay for basic expenses,’’ and we regularly permit that to happen. 

And then we do have a delisting procedure, and we have delisted 

34—34 listed entities have been delisted, none of them charities. So 

we do have a delisting process that we have demonstrated works. 

This is a process that has been reviewed by the courts many times, 

and I think we have a strong— 

Mr. ELLISON. Can I ask you, is there a process, an interim process—there is freezing, on the one hand, and there is not taking any 

action on the other. Is there a process to say, ‘‘Look, you have some 

questionable donations from some questionable sources, or to some 

questionable sources, and we’re not sure that you know that, but 

we’re going to work with you to make sure you get things cleaned 

up?’’ Do you have a process like that? 

Mr. GLASER. There is not a formal process like that, Mr. Ellison. 

But I think it’s important to remember that the entities that we 

have designated have not—we have not regarded them to be unwitting victims in all of this. We regard them as being part of these 

terrorist networks. And we have found it to be our obligation to 

take the action that we took. 

Mr. ELLISON. Yes. I yield back. 

Chairman MOORE OF KANSAS. I thank the gentleman. 

Ms. KILROY. Mr. Chairman? I think we had maybe half-a-second 

there left. 

So, I just want to understand, if a charity is having difficulty, experienced difficulty with banking or with being able to wire, they’re 

not on your list, but they’re still experiencing that difficulty, they’re 

following your best practices, do you have some kind of process or 

open door that would allow that charity—that would help that 

charity to understand what the problem was, so that they could 

make sure that they were in compliance, and be able to fulfill the 

charitable function, the humanitarian relief, or whatever it was 

that they were engaged in? 

21 

Mr. GLASER. Certainly, we do have a number of outreach processes to try to have precisely this type of discussion with charities, 

and we are happy to do even more of it. 

I am not aware of charities having a problem obtaining—nondesignated charities having a problem of obtaining financial services. But if that is a problem, it’s something that we would be interested in learning about, and it’s something that we would be 

happy to work with the charitable sector on. 

Ms. KILROY. Thank you. 

Chairman MOORE OF KANSAS. Thank you, Mr. Glaser, for your 

service and your testimony today. You are now excused. 

And I will invite the second panel of witnesses to please take 

your seats. Thank you, Mr. Glaser. 

Mr. GLASER. Thank you, Mr. Chairman. Thank you. 

Chairman MOORE OF KANSAS. I am pleased to introduce our second panel of witnesses. First, we will hear from Ms. Kay Guinane, 

who is the program manager of the Charity and Security Network. 

Next, we will hear from Mr. Michael German, policy counsel at 

the American Civil Liberties Union. 

And finally, we will hear from Mr. Matthew Levitt, director, 

Stein Program on Counterterrorism and Intelligence at the Washington Institute for Near East Policy. 

Without objection, your written statements will be made a part 

of the record. Ms. Guinane, you are recognized, ma’am, for 5 minutes. 

STATEMENT OF KAY GUINANE, PROGRAM MANAGER, CHARITY 

AND SECURITY NETWORK 

Ms. GUINANE. Thank you. I would like to begin by expressing my 

thanks to you, Chairman Moore, Ranking Member Biggert, and the 

members of the subcommittee, for holding this very important 

hearing, and inviting me to testify. This is the first opportunity 

U.S. charities have had to tell their story about the impact of national security laws since 9/11, and we very much appreciate that. 

It’s a critical first step, then, in calling attention to a serious and 

overlooked problem: the barriers that current national security 

laws create for legitimate U.S. charitable organizations. The Charity and Security Network, where I am program manager, is a broad 

cross-section of U.S. organizations that are working to provide solutions to the problems that are being addressed today. 

First, I want to strongly state and emphasize that the U.S. charitable sector condemns violence and terrorism. We share the Department of Treasury’s goal of stopping the flow of financing to terrorist organizations, whether directly or indirectly. But, unlike 

many foreign organizations, the U.S. charitable sector is highly 

regulated, primarily by the IRS. In addition, we are subject to ethical standards that demand non-discrimination in development and 

aid programs. 

These standards were described in a May 12th letter to President 

Obama from a group of 30 charities. These groups said, ‘‘Since the 

Reagan Administration’s declaration in 1984 that ‘a hungry child 

knows no politics,’ U.S. policy has been to provide humanitarian assistance on the basis of need, without regard to political affiliation, 

creed, race, or the international status of the country or territory 

22 

to which a person belongs. It is the Golden Rule of the American 

nonprofit sector, and it provides humanitarian assistance all over 

the world.’’ 

We urge you to assess the testimony today by this standard, with 

the view that charity and security are mutually reinforcing, not 

competing goals. We feel our work directly confronts terrorism. 

Despite some statements from the Department of the Treasury, 

charities are not a major source of terrorist financing. U.S.-based 

charities comprise only 1.68 percent of designated entities on the 

specially designated global terrorist list. And the 9/11 staff monograph made it clear that they were not a source of domestic support for the attacks of 9/11. Instead, the work of charitable organizations confronts the conditions that may be conducive to terrorism. This has been recognized by Ambassador Benjamin, Coordinator of Counterterrorism at the Department of State, who said, 

‘‘There is probably no success in this area that can happen without 

civil society.’’ 

Since 9/11, the U.S. charitable sector has proactively taken steps 

to enhance transparency and accountability to protect the charitable sector from bad actors. These efforts include guides and programs such as the Principles of International Philanthropy, or a 

handbook, ‘‘Counterterrorism Measures: What U.S. Nonprofits and 

Grant Makers Need to Know.’’ In addition, Muslim Advocates operates a charities accreditation program. 

But the impact of U.S. Treasury enforcement on legitimate charitable organization has been largely negative. First, Treasury’s 

Antiterrorist Financing Guidelines demonstrated a lack of understanding of how charities operate, and the charitable sector has 

uniformly called for their withdrawal, to no avail. 

Perhaps the biggest problem with the Guidelines is that complete 

compliance with every suggested practice provides no legal protection to a charity, not even a presumption of good faith. A charity 

could still be shut down and have all its assets frozen and seized, 

all without notice, opportunity to see the evidence against it, or 

present evidence on its own behalf. There is no independent review, 

and upon appeal to Federal court, no opportunity to present evidence. 

The situation with frozen funds is also problematic. There is no 

timeline or process for the long-term disposition of these funds. 

Treasury can grant licenses that would allow funds to go to legitimate charities for charitable purposes, but they have refused every 

request to do so. 

Using UNICEF data, I calculated that, if we know at least $7 

million in U.S. charitable funds have been frozen, that could provide 11,480,000 children with basic health supplies, or 12,180,000 

children could be vaccinated against polio. But the lack of transparency and these Draconian sanctions have discouraged many 

U.S. charities from pursuing international humanitarian work. And 

charities that do so complain of long delays with licensing applications, and have lost funding as a result. 

In the end, what we need from Treasury is transparency, accountability, proportionality, and humanity in their approach to enforcement in the charitable sector. 

Thank you for the opportunity to bring our story to you today. 

23 

[The prepared statement of Ms. Guinane can be found on page 

65 of the appendix.] 

Chairman MOORE OF KANSAS. I thank the lady for her testimony. 

Mr. German, you are recognized, sir, for 5 minutes. 

STATEMENT OF MICHAEL GERMAN, POLICY COUNSEL, 

AMERICAN CIVIL LIBERTIES UNION 

Mr. GERMAN. Chairman Moore, Ranking Member Biggert, and 

members of the subcommittee, thank you for inviting me to testify 

on behalf of the American Civil Liberties Union about the need for 

greater transparency and due process in the Treasury Department’s enforcement of antiterrorism financing laws, particularly as 

it affects charitable organizations working to foster peace, promote 

human rights, and alleviate human suffering around the world. 

Congress serves an essential constitutional role in overseeing Executive Branch activities, and we commend you for scheduling this 

important hearing. 

The ACLU has long been concerned about the over-broad authorities conveyed through the International Emergency Economic 

Procedures Act and Executive Order 13224, which give the Treasury Department practically unfettered authority to declare individuals or organizations specially designated global terrorists using 

secret evidence, without independent oversight, probable cause, or 

effective due process, procedures to protect against error and 

abuse. 

The serious consequences of such designations include the seizure and freezing of all financial and tangible assets without any 

notice, hearing, or judicial review. Where entities have tried to 

challenge their designations, courts have generally applied a highly 

deferential standard of review, which requires finding the Agency 

acted in an arbitrary and capricious manner in order to overturn 

a designation. 

If a court does review Treasury’s evidence, it may do so in camera and ex parte, which denies the designated entity the opportunity to challenge the evidence against it. Treasury can even 

freeze assets pending an investigation. 

Moreover, as mentioned in my written testimony and documented in even greater detail in the ACLU report, ‘‘Blocking Faith, 

Freezing Charity,’’ the Treasury Department’s unequaled enforcement of these over-broad laws has a disproportionate impact on 

Muslim charities, implicating First Amendment rights in addition 

to the Fourth and Fifth Amendment due process concerns. 

In Cairo, Egypt, last year, President Barack Obama acknowledged that, ‘‘in the United States, rules on charitable giving have 

made it harder for Muslims to fulfill their religious obligation.’’ 

Such discriminatory practices alienate American Muslims, undermine U.S. standing in the Muslim world, and provide fuel for extremists’ inflammatory allegations that the United States is antiMuslim. 

But it isn’t just Muslim charities that are unconstitutionally 

chilled from engaging in legitimate religious, humanitarian, and 

advocacy activities. The Carter Center, Christian Peacemaker 

Teams, Grass Roots International, Human Rights Watch, the International Crisis Group, the Institute for Conflict Analysis and ResoVerDate Nov 24 2008 19:07 Sep 24, 2010 Jkt 058051 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\58051.TXT TERRIE
24 

lution at George Mason University, the Kroc Institute for International Peace Studies at Notre Dame University, Operation USA, 

and the Peace Appeal Foundation joined in an amicus brief filed by 

the ACLU in support of a challenge to the criminal statute prohibiting material support for terrorism. 

They argued that a result of the breadth and vagueness of the 

statute’s terms—it was unclear whether legitimate activities such 

as peacemaking, conflict resolution, human rights advocacy, and 

the provision of aid to needy civilians could expose them to the risk 

of criminal penalties if they involved a group that the U.S. Government has designated or may in the future designate as foreign terrorist organizations. 

Such a chilling effect on legitimate aid is counterproductive to 

U.S. counterterrorism goals. The generosity of the American people 

toward those in need around the world is an asset to U.S. counterterrorism efforts. Our government should not squander it by unfairly castigating the charitable sector as a primary source of terrorist financing, particularly when the available evidence belies 

this notion, as the government has actually designated and successfully prosecuted relatively few U.S. charities for terrorism-related activities. 

Indeed, a 2004 report on terrorist financing by the 9/11 Commission staff found that the evidentiary basis for many of Treasury’s 

designation decisions were ‘‘quite weak’’ in the post 9/11 period, 

which led to questionable designations that made other nations 

‘‘unwilling to freeze assets, or otherwise act merely on the basis of 

U.S. action.’’ 

Similarly, a 2005 Government Accountability Office study suggested that the shroud of secrecy under which the Treasury Department exercises its authorities raises questions about the effectiveness of these important programs. GAO called for greater oversight of these authorities, but found that in 2009 follow-up, the 

Treasury’s Terrorism and Financial Intelligence Office continues to 

face deficiencies in interagency cooperation and strategic workforce 

planning, and has yet to develop appropriate performance measures to effectively assess its core programs. 

Congress must address these deficiencies that risk both our liberties and our security, by bringing needed transparency to the 

Treasury Department’s procedures through vigorous public oversight and the establishment of effective due process mechanisms 

that give entities impacted by these broad authorities a meaningful 

opportunity to defend themselves before a neutral arbiter. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. German can be found on page 39 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. German. 

Mr. Levitt, sir, you are recognized for 5 minutes. 

STATEMENT OF MATTHEW LEVITT, DIRECTOR, STEIN PROGRAM ON COUNTERTERRORISM AND INTELLIGENCE, THE 

WASHINGTON INSTITUTE FOR NEAR EAST POLICY 

Mr. LEVITT. Thank you. Chairman Moore, Ranking Member 

Biggert, and distinguished members of the subcommittee, I thank 

25 

you for the opportunity to appear before you today at this important hearing on this critical topic. 

Nonprofit organizations are especially susceptible to abuse by 

terrorists and their supporters for whom charitable or humanitarian organizations are particularly attractive fronts. The Financial Action Task Force, the multilateral body that aims to set global 

standards for anti-money laundering and counterterror financing 

has found that, ‘‘Terror networks often use compromised or 

complicit charities and businesses to support their objectives.’’ 

In fact, FATF warned that, ‘‘The misuse of nonprofit organizations for the financing of terrorism is coming to be recognized as 

a crucial weak point in the global struggle to stop such funding at 

its source.’’ 

According to the Justice Department, intelligence indicates that 

terrorists continue to use charities as sources of both financial and 

logistical support. British officials concur. According to a joint UK 

Treasury/Home Office report, a significant proportion of terror finance investigations in the UK in the year 2006 included analysis 

of links to charities. The report found that, ‘‘The risk of exploitation 

of charities is a significant aspect of the terrorist finance threat.’’ 

Indeed, terrorist groups have long exploited charities for a variety of purposes, as we document in the Washington Institute study 

of ‘‘the Money Trail’’ in some detail. Illicit charities offer available 

legitimacy for terrorist fundraising, attracting unwitting donors 

who are unaware that the monies they donate for humanitarian 

purposes fund terror. 

Charities are vulnerable to abuse as money laundering mechanisms, and can be abused to provide terrorist operatives with day 

jobs, salaries, meeting places, and more. Through charities, transnational terrorist groups have been able to move personnel, funds, 

and material to and from high-risk areas under cover of humanitarian charity work. 

Charities tend to operate in zones of conflict, and traditionally involve the flow of money in only one direction, both of which are 

characteristics that would arouse money laundering suspicions in 

other organizations. 

Most charities are completely law abiding, praiseworthy organizations. But among the minority of charities engaged in supporting 

terrorism, some are founded with the express purpose of financing 

terror, while others are infiltrated by terrorist operatives and supporters, and co-opted from within. 

Treasury designations of an entire charity, as have been the case 

in only a few instances here in the United States, focus only on the 

former. Never has the government targeted unwitting donors. Recognizing that analysis of this particular preferred means of terror 

financing demands a discerning and discriminating level of analysis, Ambassador Francis Taylor, then the State Department’s coordinator for counterterrorism, noted in 2002 that, ‘‘Any money can 

be diverted if you don’t pay attention to it, and I believe that terrorist organizations, just like criminal enterprises, can bore into 

any legitimate enterprise to try and divert money for illicit purposes.’’ 

Consider the example referenced earlier of Abd Al Hamid AlMujil, executive director of the eastern province of the InterVerDate Nov 24 2008 19:07 Sep 24, 2010 Jkt 058051 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\58051.TXT TERRIE
26 

national Islamic Relief Organization, designated by Treasury in 

2006. According to the public statement announcing his designation, and to declassified intelligence included therein, Mujil was described by fellow jihadists as the ‘‘Million Dollar Man’’ for his support of terrorist groups, including al-Qaeda, through his charity. 

One reason the charitable sector remains vulnerable to terrorist 

financing, according to the Financial Action Task Force, is that 

charities are subjected to lesser regulatory requirements than other 

entities, such as financial institutions or private companies. The 

United States has been largely alone in cracking down on the 

abuse of charities and NGOs by militant groups. Many other countries have been reluctant to take any steps to tackle this problem, 

often out of concern that they will appear to be targeting humanitarian efforts. 

Despite some criticism, the U.S. Government has been consistent 

in its effort to protect the donor public and stem the flow of funds 

to terrorists by cracking down on the abuse of the charitable sector 

by terrorist organizations. The Treasury Department has designated around 60 charities with ties to terrorist groups, a few with 

branches in the United States. The United States has also prosecuted charities and their leaders, such as in the case of the Holy 

Land Foundation for Relief and Development, which was found 

guilty on all counts in November 2008. 

In none of these cases was U.S. Government action capricious or 

based on sparse, dated, or unreliable information. In none of these 

cases was the charity suspected of engaging in one or two bad 

transactions. The designation process, in particular—I know, from 

firsthand experience—is appropriately robust, vigorous, and errs on 

the side of caution. Designated entities can and do appeal their 

designations, and the Treasury Department has a record of lifting 

designations when warranted. 

But it should be clear that charities and international aid organizations come to this problem set from a noble and well-intentioned 

perspective, focused on the need to highlight opportunities to facilitate quick, efficient, and timely aid. Thankfully, promoting opportunities for charitable giving, and reducing the risk that those opportunities are abused for illicit purposes are in no way mutually 

exclusive goals. 

The problem is not enforcement of U.S. laws banning material 

support to terrorist organizations, but rather the unintended impact this has had on charitable giving. Greater due diligence on the 

part of the nonprofit sector, combined with government outreach, 

would go a long way toward resolving this problem. Thank you. 

[The prepared statement of Mr. Levitt can be found on page 93 

of the appendix.] 

Chairman MOORE OF KANSAS. I thank the gentleman for his testimony, and all of the witnesses for their testimony. I recognize myself for up to 5 minutes for questions. 

Mr. German, since the ACLU issued its report last summer, are 

there any new observations or ongoing concerns you may have with 

respect to blocking terrorist financing and its impact on law-abiding charities? 

Mr. GERMAN. As I— 

27 

Chairman MOORE OF KANSAS. Let me just ask this, too. How 

would you evaluate Treasury’s performance on these issues? 

Mr. GERMAN. As I detail in my written statement, we have had 

a decision in the Kind Hearts case. So, that was very welcome. 

And, obviously, the court turned it to Congress to try to develop 

a process by which the Fourth Amendment rights of charities 

whose property is seized, either pending investigation or through 

designation, have an opportunity to defend themselves—understand the charges, have necessary notice, and defend themselves. 

So we are looking forward to working with this committee to help 

address responding to the court’s decision. 

In regard to the Treasury Department’s response to President 

Obama’s acknowledgment of the problem and the impact on Muslim charities, we have not seen a significant effort to address that 

issue. And certainly, the community still has concerns that are impacting its ability to pay Zakat. 

Chairman MOORE OF KANSAS. Thank you, sir. Ms. Guinane, are 

the Treasury’s voluntary best practices for U.S.-based charities document useful for charities who are trying to fully abide by U.S. 

law? Do you have any suggestions in terms of how they may be improved, or how Treasury can do a better job in this area? 

Ms. GUINANE. I’m sorry, I was unable to hear the second part of 

your question. 

Chairman MOORE OF KANSAS. I said with regard to the Treasury’s voluntary best practices, a document useful for charities, is it 

useful for those charities who are trying to abide by law? 

And do you have any suggestions, in terms of how they may be 

improved or how Treasury can do a better job in this area? 

Ms. GUINANE. Yes, we do. In 2005, the Treasury Guidelines 

Working Group, which was a broadly representative collection of 

charitable organizations and experts, developed the Principles of 

International Charity, and submitted that to Treasury as a suggested replacement for the Guidelines. Treasury adopted some of 

those suggestions, but not all. And in 2006, when it released the 

current version of its guidelines, it retained a lot of the problematic 

provisions. 

Since then, the Charity and Security Network has coordinated an 

effort to develop specific procedures that we think make sense for 

charitable due diligence and for due process, and we would be 

happy to share those with the committee and with Treasury, as 

well. 

Chairman MOORE OF KANSAS. Thank you. Mr. Levitt or Mr. German, do you have any comments? 

Mr. GERMAN. I would just like to add a little pushback on the 

issue that—or the argument that donors aren’t impacted, and donors aren’t targeted. We document in the report that there is a 

substantial effort by the FBI to contact donors and ask them about 

their charitable donations, which creates this chilling effect that 

puts fear into them, where even donating to an organization that 

may not be designated today would not protect them from prosecution later. 

Chairman MOORE OF KANSAS. Thank you. Mr. Levitt? 

Mr. LEVITT. In which case the ACLU should have an issue with 

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28 

ing. If that happens, that is in no way a function of the designation 

process. 

If I may add one last thing, if I have the number right that you 

cited—it was only 1.68 percent of designated entities that are U.S.- 

based charities means there is an inherent flaw in measuring a lot 

of this by how many designations are done. Or, for that matter, 

how much money is seized. 

I think it’s really important to understand designation is a very 

powerful tool, in part because it should not be done capriciously, 

and because you err on the side of caution. There are many, many 

cases, domestically and abroad, where charities hit the threshold 

for designation, but in this robust interagency review are rejected 

for designation. And other tools—law enforcement, or regulation, or 

outreach to the charity—lots of other tools are used. 

That doesn’t mean that only 1.68 percent of charities in the 

United States have ever been of concern. It might be that the 

whole charity wasn’t bad, there was just one person. You don’t 

want to shut down that charity. We’re all in agreement that—on 

this panel—you want to facilitate charity to the greatest extent 

possible, period. 

It’s a very flawed metric to measure this just by how many charities have been designated, in part because Treasury is so careful 

about only designating the worst cases where they are absolutely 

knowingly engaged in this activity. Only those are designated. 

Chairman MOORE OF KANSAS. Thank you. My time has expired. 

The chairman next recognizes Mrs. Biggert for 5 minutes for questions. 

Mrs. BIGGERT. Thank you, Mr. Chairman, Mr. Levitt. How can 

Treasury address the problem of a designated entity shutting 

down, only to open up some time later, perhaps under a new name? 

Mr. LEVITT. As you heard earlier, there is a really good interagency process on this, not only leading up to the designation or 

to whatever other action is decided upon for a charity or an entity 

of any kind that is deemed to be knowingly engaged in supporting 

terror financing, but also in terms of the follow-up, to see what the 

entity is doing. 

So, sometimes you will have charities that open up under a new 

name, and they are engaging in the same terror finance activity. 

And you then need to decide if you’re going to designate or take 

some other law enforcement action against those. 

In other cases, you might have people who are involved with the 

original designated charity who are not knowingly involved in illegal activity. They were in the minority and they open up some legitimate charity, and that’s to be applauded. It really has to be a 

careful investigation. 

Mrs. BIGGERT. Should there be some database of individuals 

working for organizations, similar to the relatively recent database 

on mortgage brokers? 

In other words, if there was a list of people or individuals who 

were involved in this, and their name pops up again in another organization, is that part of the designation, or is that—would that 

be something new, or would that be helpful? 

Mr. LEVITT. That would be new, and I don’t know that it would 

be helpful. You really do need to conduct a very thorough investigaVerDate Nov 24 2008 19:07 Sep 24, 2010 Jkt 058051 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\58051.TXT TERRIE
29 

tion. I wouldn’t want to create a list like that, which would basically tar-and-feather, name-and-shame them, unless you really 

knew that those individuals, particular individuals, were involved. 

There were people involved in the Holy Land Foundation that 

were not indicted and were not designated because they were some 

accountant or some secretary and they weren’t aware of the stuff 

that was going on behind closed doors, or all the activities. So you 

want to be very careful about that. 

Mrs. BIGGERT. Okay. And then you know the difference of charities established for the express purpose of financing terror and 

those charities that were infiltrated by terrorist operatives. Should 

Treasury’s approach differ when policing these types—different 

types of abuses? And should the enforcement outcome differ? 

Mr. LEVITT. It has to be done on a case-by-case basis. Often, people describe the U.S. designation system as a sledgehammer approach, just shutting down charities. Compare it, for example, to 

the UK charity commission, which can be described as a scalpel approach, where they tend to try and carve out the bad entity from 

the good, or if there is a little good entity, from the larger bad. 

My feeling is this is not an either/or. This has to be a case-bycase study. Because in the United States, the Treasury was so 

careful only to designate the most egregious offenders, they have 

not designated a domestic case where there was a good part to be 

cut out of the otherwise bad charity—short of, for example, in the 

case I just cited of some low-level employee. 

When you have such an example, I think it would be useful to 

consider. If the charity itself is good, and it’s being abused by one 

or two bad actors, and it is possible to remove the tumor and keep 

the rest of the patient alive, that would be a very useful thing to 

do. 

To date, the Treasury has only tried this approach—designating 

parts of an organization, as opposed to all of it—with charities 

abroad. And in each of these, al-Haramain, Revival of Islamic Heritage Society, it has failed, and ultimately had to designate all of 

it. But that’s because, I think, in those charities abroad, the United 

States doesn’t have regulatory and law enforcement oversight capability. 

If we were to find such a target in this country, I think that 

would be a useful approach. But it would have to be case-by-case, 

based on the nature of the precise evidence and intelligence available. 

Mrs. BIGGERT. Could you elaborate on the global partner vetting 

system, PVS, and how that would work in practice? 

Mr. LEVITT. The partner vetting system, which was applied to 

entities largely working with USAID in the Palestinian territories, 

is based on the finding that, unknowingly, USAID and others were 

partnering with entities—in the West Bank and Gaza, in particular—that were tied to Hamas or other terrorist groups. And it 

comes down to how extensive the due diligence is that’s being done 

by these charities, not only in terms of who they’re partnering with 

here, but really who they are partnering with abroad. 

You could be a legitimate charity here, trying to do the right 

thing, let alone have legitimate donors trying to do the right thing. 

If you’re not careful about who you partner with abroad, you’re 

30 

handing money on a silver platter to some very bad actors. The 

partner vetting system, in a nutshell, was set in place to require 

charities to do some vetting of the local partners they were working 

with. 

Let’s be clear. This is not easy to do. It is a burden, and it’s costly. I think that the charitable, nonprofit sector has a responsibility 

for due diligence, and that due diligence goes way beyond looking 

at the various U.S. Government lists, way beyond that. The government also has a responsibility, I think, to try and do more, through 

transparency and working with the public sector, to enable that, 

because vetting your partners is hard. 

But the premise, for example, of coming up with a best practices 

list which, if you do that and nothing else, will protect you from 

any prosecution, is never going to happen, because we all have responsibilities in our daily lives, our personal lives, our business 

lives, our charitable lives, to make sure that we are doing as much 

as we can to partner with the right people and not the wrong people. If you make a mistake, government is not going to target you. 

Mrs. BIGGERT. Thank you. I yield back. 

Chairman MOORE OF KANSAS. Thank you. The chairman will 

next recognize for up to 5 minutes, Mr. Lynch from Massachusetts. 

Mr. LYNCH. Thank you, Mr. Chairman. Mr. Levitt, you had an 

opportunity to look at Treasury’s response and how they are trying 

to interface with different law enforcement organizations, and trying to really deal with the banking side of this, as well as the charity side of this. 

Do you think we are asking too much of Treasury right now, 

given the resources that we’re allocating to them for their job? 

Mr. LEVITT. As a former colleague of Danny Glaser’s, I am wary 

of placing him on the hot seat. But enjoying the prospect of not 

being the former Treasury DAS, and being able to speak my mind, 

I actually do agree with him. For the moment, Treasury seems to 

have enough resources, and there may be a question of— 

Mr. LYNCH. Even the financial crimes network? 

Mr. LEVITT. FinCEN is its own entity and agency within TFI. 

And I would strongly recommend—and I assume the subcommittee 

has—reaching out directly to the director, Jim Freis, and others on 

this issue. I don’t claim to be an expert on the internal workings 

of FinCEN. 

My sense when I was there—I left in early 2007—and my sense 

observing as an academic from the outside is that Treasury is 

doing a remarkable job, and that Treasury’s mission hasn’t 

changed since the Bush Administration or during the Obama Administration, because this is a simple, nonpartisan, bipartisan law 

enforcement issue, where there is complete consensus. This is not 

a political decision. 

Mr. LYNCH. The problem, though, is that we are now asking 

them to operate on a more granular level in dealing with 3,000 

local law enforcement agencies. 

We have the situation, such as in Boston, where you have either 

a hundi or a hawala provides resources, modest resources, to a 

group that is connected to the Times Square bombing attempt. And 

it just seems to me that we’re asking a tremendous amount from 

31 

some very brave individuals who are stretched very thin in meeting 

those obligations. 

And I am trying to, on my own part, as one Member, trying to 

get more resources to that organization, because I feel that everyone will agree after we have an intelligence failure that we should 

have increased the resources of that agency. But it’s tough to convince people in the meantime. 

Let me ask, I know that there is a pretty solid matrix that Treasury has laid out for charities to operate in a responsible manner, 

which is to try to identify their customers, to make sure that the 

funding is somehow funneled through a legitimate banking institution so we have that screen, and also to monitor the activity of that 

charity to basically see what they are doing. 

Those seem like rather reasonable expectations that we should 

have of our charities. And I am just wondering if I am missing 

something? 

Mr. LEVITT. I don’t think you are, sir. I think they are reasonable, but they are also baseline. They are meant to be the baseline 

for discussion and for interaction with the charitable sector. 

There is a lot the charitable sector has done in this regard to improve that is laudable. Some of it you have heard about it at this 

panel. Danny mentioned charity in the American Palestinian context that has been done, I think, trend-setting work, trying to 

bridge the divide between the need—and it is a national security 

need, I would argue—for humanitarian support, and it’s important 

well beyond its national security implications on its own right. 

They are not supposed to be an answer to everything. They are 

supposed to be giving direction. And so they’re a baseline. 

Mr. LYNCH. Mr. German and Ms. Guinane, there seems to be a— 

on the one hand, I have been into Gaza a few times, and I have 

to admit I am impressed with the Palestinian Monetary Authority 

and how they are really trying to work within BSA and trying to 

conform with those anti-money laundering statutes. 

However, you have to acknowledge, not too long ago, we caught Mr. Hania coming in through the Rafah Gate with $30 million in 

cash in some suitcases. So we have success in the formal sense. But 

in the informal sense we are concerned about money getting to 

Hamas and to Hezbollah. 

And I am just curious what the overlay that I just talked about 

with Mr. Levitt on the risk matrices, how do you find that? Reasonable? Unreasonable? Or—how does it create difficulties for you to 

operate, or charities to operate? 

Mr. GERMAN. The problem is multi-faceted. Part of the problem 

is that following all the rules that Treasury puts out doesn’t protect 

a charity. So it’s impossible to know whether they are actually complying with the law. It’s very burdensome, and there is not much 

evidence that it is actually effective in preventing terrorism. And 

that’s really the problem with the lack of transparency. 

Our constitutional system is built so that we don’t have to take 

the Treasury Department’s word for whether their actions are effective. Part of our system is what you’re doing today, which is 

wonderful, is digging into these questions to find out both whether 

it’s effective and whether it’s complying with the law and protecting people’s individual rights. 

32 

So, that transparency is something that actually will force more 

efficiency and more effectiveness, and make them actually prove 

that they have the right people caught in this—and also encourage 

the public to understand the problem, so that they can better curb 

their activities where they see other people getting in trouble. 

But where this is all happening behind closed doors, it’s impossible for the public to know why an agency was designated, or why 

it was not taken off the list. When there is that secrecy, it’s impossible to know how to react. 

Chairman MOORE OF KANSAS. The gentleman’s time has expired. 

Mr. Royce, you are recognized, sir, for 5 minutes. 

Mr. ROYCE. Thank you, Mr. Chairman. I was going to ask Mr. 

Levitt a question. 

You mentioned that only the most egregious cases have come forward—no cases in the last 3 years. But I guess there is a handful 

of cases here that have been brought up today and I wanted to 

speak to those three, the three that were mentioned. 

There are perhaps 1.5 million charities, I guess, and this handful 

of charities, since we’re speaking about their attempts to get 

delisted, we should probably reference them. 

The ACLU, in its report, defends the Holy Land Foundation, 

even though a jury trial convicted the defendants of every one of 

the 108 charges. 

And then we go to the testimony of Ms. Guinane. She mentions 

the Benevolence International Foundation and the Islamic African 

Relief Agency. Now, in terms of the Benevolent International Foundation, the CEO was indicted by the Justice Department for operating that organization as a racketeering enterprise and providing 

material support to terrorist organizations, including al-Qaeda. 

The Islamic African Relief Agency, that was designated for providing direct financial support for Osama bin Laden and al-Qaeda’s 

precursor, and also for commingling funds, engaging in a joint program with an institute controlled by Osama bin Laden, and was responsible for moving funds to the Palestinian territories for use in 

terrorist activities, notably serving as a conduit to Hamas. By the 

way, the assistance to Osama bin Laden was providing assistance 

to Taliban fighters. 

And then, lastly, it’s headquartered in Khartoum, Sudan. So the 

point was made that they have made repeated requests over a 2- 

year period for a release of funds to assist in Pakistan. I am just 

back from Pakistan. And up in northwest Pakistan, there are a lot 

of activities up there by dibhindi schools. And right now, they are 

supporting the Taliban, and—the dibhindi schools—are graduating 

young students who are ending up in the Taliban who are carrying 

out activities against the Pakistani government. And also over the 

border in Afghanistan, I was also up in Kabul. Same problem. 

Graduates out of these schools are going out and, with the support 

of the dibhindi movement, are carrying out attacks in Afghanistan. 

Perhaps, given the past history of this organization, the reason 

the government doesn’t want to release the funds when they say 

they’re going to send those funds to spend them in Pakistan, is because these funds might end up being spent the way other funds 

are being spent right now in Pakistan, in order to fuel the war to 

try to overturn the state and turn it into an Islamic Republic. 

33 

I would just like Mr. Levitt’s opinion on that. 

Mr. LEVITT. When the United States designates an entity, it produces a fact sheet for use in the press release based on at least 

some declassified intelligence. This is important so we can have 

this conversation with the public sector, with the charitable sector, 

so that people can’t sit before Congress and say, ‘‘Nobody knows 

why these charities are designated.’’ They may not have the whole 

picture, but they get at least a certain amount of the evidence put 

before them, even if it’s only a little bit. 

And it can only be a little bit, because much of it has to come 

from intelligence, because you’re dealing with entities—in those 

very few examples where charities are engaged as terrorist fronts— 

and let’s stress that most are not—where they’re engaged in covert 

activity, and they are doing one thing publicly, and a very, very different thing, as you laid out, privately. 

When a charity has been so designated, its trust is gone. And if 

there is to be some type of program whereby the funds that it collected from donors who wanted to do the right thing, is to be dispersed to facilitate aid, it seems to me that decision, should there 

be a mechanism to facilitate it, should be made by someone other 

than an individual tied to that original charity. 

But it doesn’t seem to me like that’s something that could not 

happen. I, not in or out of government, have been party to this discussion as to under what circumstances those funds, frozen from an 

illicit charity involved in terror financing, can ultimately be dispersed for truly humanitarian purposes. But it doesn’t strike me, 

if it can be done in a trustworthy way, as a bad idea. In fact, it 

might be sticking a finger in the eye of the terrorists. But it would 

have to be done appropriately. 

Mr. ROYCE. It also strikes me that this doesn’t exactly limit people’s freedom of action, given the number of charities that exist in 

the world, and given this very small list, it doesn’t seem to me that 

would preclude people from doing charitable work. 

Mr. LEVITT. I don’t think so. As someone who gives to charity, 

it has never stopped me. I think that there is a need, there is a 

gap that can be filled by people who are expert in nonprofit operations to do things like this charity that I discussed in my written 

testimony has done in the context of facilitating charitable giving 

from Americans, including Muslim-Americans, to needy Palestinians, which is a laudable, praiseworthy, wonderful thing, so long as 

it’s done in such a way that the donors and the charity and the 

government here and the government in the Palestinian Authority, 

for that matter, have a level of comfort that it’s not going to illicit 

actors. 

Mr. ROYCE. Thank you. 

Chairman MOORE OF KANSAS. The gentleman’s time has expired. 

The chairman next recognizes Mr. Ellison for 5 minutes. Sir? 

Mr. ELLISON. Thank you, Mr. Chairman. I think it’s fair to point 

out that the Holy Land Foundation defendants were convicted. I 

think it’s also fair to point out that their appeal is not completed, 

and that the first time they were tried, I think that on nearly all 

counts, there was a hung jury. And I think it’s also fair to say that 

there were some novel uses of evidence in the case that resulted 

in a conviction. So, I don’t know what’s going to happen, and I’m 

34 

not here to retry the case, but I just think those facts are important, as well. 

Let me ask the panel, what happens after assets are frozen? 

Once they are frozen, essentially, what happens next? 

Ms. GUINANE. When the charitable assets are frozen, their banks 

receive a notice that the assets are blocked. The charity receives 

such a notice. Government agents come and seize all their files and 

equipment, and any goods they have, such as—I understand there 

is a warehouse in Missouri full of blankets that belong to one of 

the U.S. charities that was shut down. 

After that, there is very little public information about what happens to that money. Right now, as far as we know, it’s just sitting 

there with no plan for its disposition. 

What could happen, and what we feel should happen is that 

these funds belong to the charitable mission of the organization. 

And even if there are bad actors in the organization, the funds 

should be spent by an able and legitimate charity to further that 

charitable mission. If it’s to assist children, if it’s to promote 

health, whatever that is, that’s what should happen to those funds. 

But right now, there is no provision for that to happen. And Treasury has declined every request, as noted from charities, to transfer 

those funds. 

Treasury has plenty of authority under their licensing regulations to oversee and regulate any release of frozen funds. They 

don’t automatically go back to the designated organization or to the 

same people to spend— 

Mr. ELLISON. But at least at this time, there is no clear procedure as to what happens after—with the frozen assets, how 

they’re—are they sent to other organizations that are legitimately 

serving the mission, or— 

Ms. GUINANE. There is no provision. And I think that’s because 

this is occurring under IEEPA, which is an economic embargo law 

that was originally meant as a Trading-With-the-Enemy Act is 

where— 

Mr. ELLISON. So you think at least Congress or at least the 

Agency needs to promulgate either statutes or rules to deal with 

the disposition of these assets? 

Ms. GUINANE. There are none, and that’s something we need. 

Mr. ELLISON. Also, is there any appeal process, once assets are 

frozen? And, if there is, could you describe it? 

Mr. GERMAN. In my written testimony, I go through the case of 

Kind Hearts, where they were actually frozen pending investigation. They weren’t actually designated. In February of 2006, their 

assets were seized and frozen, pending investigation. And more 

than a year later, in May of 2007, they were given a notice that 

they were provisionally designated. When they tried to find out 

why this had happened, the Treasury Department was unresponsive. And their attempts to defend themselves against unknown 

charges were—Treasury was also unresponsive, so— 

Mr. ELLISON. So they weren’t given a hearing date, they weren’t 

given a— 

Mr. GERMAN. No, there is no hearing, no notice, no hearing, no 

due process at all. 

35 

Mr. ELLISON. Do you have any reason to believe that Treasury 

has changed its approach on this issue under the Obama Administration? 

Mr. LEVITT. No, and that’s because this is a nonpartisan, bipartisan, law enforcement issue. It’s not a policy issue. 

Mr. ELLISON. Thank you very much, sir. Do you, either one of the 

two of you, have any reason to believe that there has been any 

change? 

Ms. GUINANE. I see more openness to dialogue under the Obama 

Administration, and an acknowledgment that there is a problem, 

which is a big step forward. 

However, there hasn’t been a change in the actual procedures. 

There is still no proportionality, so that a small organization that 

makes a mistake can correct its problem. We still just have the 

freeze-and-seize kind of instant death sanction, and that’s pretty 

much it. 

Mr. ELLISON. And do you have any accurate data on what portion 

of the terrorist financing comes from American charities worldwide? 

Ms. GUINANE. There is not enough transparency in the process 

for me to be able to answer that question. I just know from news 

reports and reports from attorneys for some of the designated organizations that there is at least $7 million in U.S. charitable funds 

that are frozen. 

Mr. ELLISON. Thank you. 

Mr. LEVITT. But, of course, the amount of frozen funds is an immaterial number, given the fact that designation is only one tool. 

And so, there may be many other entities out there, because the 

designation— 

Mr. ELLISON. I don’t have a question before this witness, sir, Mr. 

Chairman. 

Chairman MOORE OF KANSAS. The gentleman’s time has expired, 

and we have completed the hearing. Again, thanks to our witnesses 

for your testimony today. 

Today’s hearing gave us another opportunity to review efforts to 

stop money laundering and terrorist financing in an aggressive 

manner that makes the most sense. We will continue reviewing 

these issues in the weeks and months ahead. 

I ask unanimous consent that the following item be entered into 

the record: ACLU’s June 2009 report entitled, ‘‘Blocking Faith, 

Freezing Charity.’’ 

The Chair notes that some members may have additional questions for our witnesses, which they may submit in writing. Without 

objection, the hearing record will remain open for 30 days for members to submit written questions to these witnesses, and to place 

their responses in the record. 

The hearing is adjourned, and again, thanks to our witnesses 

and our members. 

[Whereupon, at 11:54 a.m., the hearing was adjourned.] 

(37) 

A P P E N D I X 

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