<http://counterterrorismblog.org/2008/07/exposing_terror_financing_who.php>
Exposing Terror Financing: Who is Treasury Protecting Under Its Veil of
Secrecy?

Today, July 28, 2008, 6 hours ago | Andrew Cochran
<http://counterterrorismblog.org/2008/07/exposing_terror_financing_who.php>
Go to full article
http://counterterrorismblog.org/2008/07/exposing_terror_financing_who.php

It has been nearly seven years since the September 11th attacks, but the
U.S. Treasury Department continues to shield critical information from the
public about the financial activities of Specially Designated Global
Terrorists (SDGT). Treasury has evaded demands for improved disclosure of
its investigations. The public has a right and a need to know the factual
findings of these important investigations, such as the names of the
terrorists and important details of their financial records. Such
disclosures will allow the public, specifically financial institutions, to
ensure that terrorists are unable to move money through the banking system.
It will also allow victims of terrorism to obtain the necessary information
to know who is responsible for their injuries and losses. Shielding these
important facts from the public domain allows terrorists to exploit
bureaucratic turf-battles to wage their deadly jihad. To date, Treasury has
not publicly provided a sound reason for this secrecy. The time has come to
change these policies.

One such example of Treasury’s intransigence involves its 2005 investigation
of Arab Bank plc. After receiving a tip from a private citizen, the
Treasury’s Office of the Comptroller of Currency (OCC) led an investigation
with the Financial Crimes Enforcement Network (FinCEN) to determine whether
Arab Bank, a leading Middle Eastern financial institution, adequately
implemented anti-money laundering laws. Their investigation concluded that
the bank failed to comply with the Bank Secrecy Act (see Jonathan Winer's
November
<http://counterterrorismblog.org/2006/11/clarifying_the_status_of_arab.php>
17, 2006 post). A $24 million fine was levied against the bank, resulting in
the second-largest fine ever rendered under the Act (see Victor Comras'
August
<http://counterterrorismblog.org/2005/08/arab_bank_signs_consent_orders.php>
17. 2005 post). 

Despite the publicity of this judgment and repeated calls from Congress, the
Treasury Department has yet to release the factual contents of its report to
the public (see this
<http://counterterrorismblog.org/2005/08/treasury_departments_occ_shoul.php>
August 17, 2005 post by then-Contributing Expert Lee Wolosky). In explaining
the investigation, the OCC’s Acting Comptroller, Julie Williams, testified
before a 2005 House Committee on Financial Services hearing (see page 19 of
<http://financialservices.house.gov/media/pdf/109-36.pdf> the hearing
transcript), that 


"[T]he OCC compiled a list of individuals and entities with the same or
similar names as reputed terrorists or terrorist organizations using
publicly available information sources... We ran that list against the
branch’s system…. [O]ur review disclosed that the branch had handled
hundreds of suspicious wire transactions involving individuals and entities
with the same or similar names as suspected terrorists and terrorist
organizations and that many of the individuals and entities were customers
of Arab Bank or its affiliates.” (emphasis added)

A year later in June 2006, during another hearing by the same committee,
then-Rep. Sue Kelly followed up on this matter and called for a release of
summaries of the Arab Bank investigation. OCC Deputy Comptroller for
Compliance Policy, Ann Jaedicke, responded that such a question was, “a
supervisory matter…we do not intend to release the records” (see pages 27
and 28 of the  <http://financialservices.house.gov/ht062106.pdf> hearing
transcript).

To date, the OCC and FinCen have refused to release the factual findings of
their investigation of Arab Bank to the public, citing the bank examination
privilege. Initially designed to encourage banks to cooperate fully with an
OCC examination, the privilege is now being used by the OCC to hinder
disclosure of important information. Although they are allowed under this
privilege, the OCC has refused to release the factual content of their
reports. The  <http://www.occ.treas.gov/fr/cfrparts/12CFR04.htm#§ 4.31
Purpose and scope> OCC’s own regulations 


"[R]ecognize the public's interest in obtaining access to relevant and
necessary information and the countervailing public interest of maintaining
the effectiveness of the OCC supervisory process and appropriate
confidentiality of OCC supervisory information."

The OCC’s refusal to release information to the public stems from the
agency’s misguided sense of duty which places the OCC’s operational
interests and the confidentiality interests of the banks it supervises above
the public’s safety and the rights of terrorism victims to hold those
responsible for their injuries. 

Financial transactions of Specially Designated Global Terrorists should not
be entitled to any secrecy protections. The findings of this and other
investigations should be open to public scrutiny, particularly the names
that the Treasury Department ran against Arab Bank plc accounts, so that
other institutions can ensure they do not maintain accounts or engage in
wire transfers on behalf of these suspected terrorists. 

Secrecy has the unfortunate side-effect of hiding accountability. Only
through more cooperation and public participation will we be able to fully
eliminate terror-financing. Providing banks and the public with the factual
evidence from these investigations is an essential step in preventing
terrorists from further utilizing our banking system to funnel money for
their operations.

Seven years after the 9/11 attacks, we can only hope that our government
agencies have learned to better engage with the public and understand that
disclosing factual information helps their important work.

Disclosure Note: I have represented the concerns and views of terrorism
victims on this issue to Congress.

 
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