GAO: US Lacks plan to curb Terrorism financing

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U.S. Lacks Plan to Curb Terror Funds, Agency Says

By ERIC LICHTBLAU

WASHINGTON, Nov. 28 - The government's efforts to help foreign nations cut off the supply of money to terrorists, a critical goal for the Bush administration, have been stymied by infighting among American agencies, leadership problems and insufficient financing, a new Congressional report says.

More than four years after the Sept. 11 attacks, "the U.S. government lacks an integrated strategy" to train foreign countries and provide them with technical assistance to shore up their financial and law enforcement systems against terrorist financing, according to the report prepared by the Government Accountability Office, an investigative arm of Congress.

The findings expand on earlier concerns raised by that agency and others in the past few years about the government's ability to cut off money to terrorists. The report is to be released Wednesday, and an advance copy was provided to The New York Times.

The findings produced sharp dissent from American government officials, who said Congressional auditors overstated the bureaucratic problems in curbing terrorist financing overseas and the level of dissension between agencies. They described the intergovernmental effort to cut off the flow of terrorist money as one of the hallmarks of the Bush administration's campaign to fight terrorism since the Sept. 11 attacks.

"No interagency process is without flaws," the State Department said in its official response. But it said "there is much evidence" that the working group set up by the administration to combat terrorist financing "is one of the most successful examples of interagency cooperation."

The government has identified 26 "priority" countries that it considered particularly vulnerable to exploitation by terrorist financiers, who may take advantage of lax financial controls and loosely regulated or nonexistent laws to launder money in support of terrorist attacks, officials said.

But officials at the State and Treasury Departments cannot even agree on who is supposed to be in charge of the effort to shore up defenses in vulnerable countries, the accountability office report concluded.

In at least one case, the State Department refused to allow a Treasury official to enter an unidentified foreign country last year to help with strategies to fight terrorist financing because of turf battles, investigators found. Because the country had recently been upgraded to a priority, State Department officials wanted to do their own assessment first before allowing the Treasury Department to conduct its work, causing a delay of several months.

Investigators found clear tensions between officials at State, Treasury, Justice and other departments.

One unidentified Treasury official quoted anonymously in the report said that the intergovernmental process for deterring terrorist financing abroad is "broken" and that the State Department "creates obstacles rather than coordinates effort." A State Department official countered that the real problem lies in the Treasury Department's reluctance to accept the State Department's leadership in the process.

In another problem area, private contractors used by the Treasury Department and other agencies have been allowed to draft proposed laws in foreign countries for curbing terrorist financing, even though Justice Department officials voiced strong concerns that contractors should not be allowed to play such an active role in the legislative process.

The contractors' work at times produced legislative proposals that had "substantial deficiencies," the report said.

The administration has made cutting off money to terrorists one of the main prongs in its attack against Al Qaeda and other terrorist groups. It has seized tens of millions of dollars in American accounts and assets linked to terrorist groups, prodded other countries to do the same, and is now developing a program to gain access to and track potentially hundreds of millions of international bank transfers into the United States.

But experts in the field say the results have been spotty, with few clear dents in Al Qaeda's ability to move money and finance terrorist attacks. The Congressional report- a follow-up to a 2003 report that offered a similarly bleak assessment - buttresses those concerns.

Senator Charles E. Grassley, the Iowa Republican who leads the Senate Finance Committee and was one of the lawmakers who requested the study, said he was disappointed to learn that in an area as critical as countering terrorist financing, "they haven't gotten very far yet."

In an interview, Mr. Grassley said: "It's as simple as learning to stop the infighting and turf protection and get on with the job. What's happening is just inexplicable in light of the war on terrorism."

The State Department said in the report that it has begun technical assistance and training to 20 of the 26 priority countries. The list is classified, and the countries were not disclosed. Officials say that letting terrorists know which countries are considered vulnerable would prompt them to move more money there and that publicizing such assessments would discourage cooperation from the countries on the list.

As part of their review, Congressional investigators conducted field work in Pakistan, Indonesia and Paraguay to assess American efforts to deter terrorist financing. But officials would not say whether those countries were on the government's classified list of 26 "vulnerable" nations.

Middle Eastern countries like Saudi Arabia and the United Arab Emirates have been the focus of intense scrutiny and diplomatic efforts since Sept. 11 because of concerns that charities, state-sponsored organizations and informal money-exchange systems known as hawalas are routinely used to funnel large amounts of money to Al Qaeda.

http://www.nytimes.com/2005/11/29/national/nationalspecial3/29terror.html

http://www.gao.gov/new.items/d0619.pdf