tv Discussion on Terrorism Financing CSPAN July 9, 2017 2:35pm-4:12pm EDT
day with news and policy issues that affect year. monday morning, dr. margaret flowers with the vision for national health program and our guest from the cato institute will discuss the feasibility of healthnment funded insurance program. the trumpon of administration request for voter information and the reaction nationwide. this is live at 7 a.m. eastern monday morning. join the discussion. >> now, former george w. bush and obama administration officials on terrorism financing and ongoing efforts to disrupt and prevent those funding networks' operations. posted by the arab gulf states institute in washington, this is about 90 minutes. ok, good afternoon, everyone.
i would like to welcome all of you to today's program on financing terrorism. of the many aspects of the fight against terrorism, cutting off the financial flow is most critical. it is the oxygen that keeps these groups alive and allows them to recruit, control plan operations on the global level. it remains a top seekity for the u.s. as we to defeat the islamic state and other terrorist groups. arab.s. and its gulf partners have taken significant steps to stem the flow of funds to terrorist groups over the years, a robust effort since 9/11. however, despite the measures put in place, those organizations continue to
generate income from the region to finance their activities. what more can be done regionally and globally to stem the flow of money to violent extremists? we have a very distinguished to answer the question and explore the issues related to. i am pleased to welcome our speakers --juan carlos zarate, kate ba and and steveu, who wille introduce ther panel and moderate, the program. welcome. i look forward to a good discussion today. marcelle.you, ou i am delighted to introduce my colleagues to talk about this subject, a very timely one at the moment. my introductions will be short.
you can look for detail in your programs that were under your chair when you walked in. let me briefly institute kate at thea fellow washington institute for near east policy and former treasury official who served as the department attaché in the gulf region. to her right is david, a former director of the intelligence agency and better known to me in his role the treasury before he joined the cia where he was under the under secretary for terrorism and financial intelligence. a left, the for chairman and cofounder of the financial integrity network, and i knew juan for some time when he worked as the national security adviser from 2005 until 2009. other details here. for the sake of time, we will get on with our conversation. what i would like to do is give
each of our guests the chance to of the largersue sense and i will ask a question, they can all respond to it and focus on whatever issues, whatever angles they find most useful. i am hoping we can get at this from a number of different angles and develop a full picture of what we see out in the gulf. we're going to do this in reverse of a medical order. has to gos zarate first, which he never got to do in grade school -- [laughter] mr. seche: so, the question is, isthe extent that the u.s. lf, arabing with gu states -- to what extent are they fish during? thank you for the invitation to be here.
i count myself incredibly fortunate to have learned and bening government when you both were serving and to have learned at your feet was a great honor and to have learned with dave and and kate as well. i am probably the least of the experts here. but i am happy to contribute as i can. i think that there has been a natural evolution to the counterterrorist financing between the u.s. and our gulf allies and it obviously started post-9/11 with a dramatic focus on a much more preventative framework for dealing with illicit funds and support to terrorist organizations. ways, the early days of that cooperation was remedying or dealing with the pre-9/11 framework for how the gulf was dealing with groups tied to al qaeda or supporting them. it is no secret and certainly has been the subject of lots of
conferences and reports as to how we dealt with saudi arabia in those early days, dealing with the reality of the pocket donors, network supportive of al qaeda prior to 9/11. charities and nonprofit organizations which became a major subject of attention for the u.s. and our gulf allies, and then putting in place the tools and strategies to allow us to prevent groups like al qaeda from gaining support and financing from the gulf. a story with many chapters to it, but the bottom rely verye u.s. has heavily on that cooperation over time, one that has matured both in terms of how we get financial intelligence, which david can speak to better than anybody, what we have done in preventative terms to create systems that do not allow low system -- enter the at least theoretically, dealing
with state sponsorship questions, making sure there is clarity that states should not find or create mechanisms to support terrorist groups, and then trying to find ways of targetsacting against supporting terrorist groups. in the early days post-9/11 we had a number of these designations with the kingdom of saudi arabia. we have had continuous efforts in that same vein, including with carter. an evolution to actually focus on this in a fundamental way. one thing i would say, and this goes to marcelle's point at the introduction -- these issues are more fundamental than they ever were before. because the issues of how groups like al qaeda, groups like daes
h, successor groups are raising funds, running war economies and developing global networks is more critical now than ever before. there has been much in the literature about the folly of .ollowing the money i think it is critical to think about how these types of groups are able to gain support, sustain themselves and build their networks and global ambition because of the support that they have. these issues are so important today. in terms of the rift, it is clear to me from an american standpoint, the rift is a burden and a barrier to cooperation. we have built our counterterrorist financing, our playbook around the idea we need allies onoperative the ground. not just in a bilateral context, but a regional context.
and where we have had the most success in this regard and you know this from your work in yemen and elsewhere, where we have had the most success has been where light commanded allies are working together to gather information, gather around a common strategy and mission, and then figuring out where there is a division of labor around the kinds of actions needed to deter and support terrorist financing networks. to the extent that it creates levels of mistrust, to the extent that it ruptures elements of information sharing, that is all not good from an american perspective and everything we can do to repair the relationship, to focus on preventing terrorist financing is critical. there are lots of complications, definese as to how you
terrorism, what we mean by terrorist financing. all of those are implicated. but fundamentally from an american perspective, there is a need to have global, regional, and in the case of the gulf states, gcc level cooperation to deal with what is still a critical national and international security issue. >> thank you so much. you raised a couple of really interesting points. let's get back to the financial model the organizations are collective gcc as well as bilateral and how that breaks down on the ground. for that, we will go to david and ask you for your view on this. mr. cohen: sure. thank you, steve, thank you marcelle, for asking me to be here. i think it is worth at the outset noting how important it that we have a strong and
fully functioning and fully staffed state department. although this is an advertisement for the treasury department, we are all former treasury officials -- the work we have been able to do countering terrorist financing, not to mention many, many other empowered and functioning. you can applaud. so, just a couple quick thoughts picking up on what juan was saying. terrorists to combat financing, i came to the treasury in 2009. that was at a point where juan and his team had made an inrmous amount of progress
combating the principal problem, which was funding coming out of saudi arabia. stewart famously said if he could snap his fingers and into the terrorist financing out of saudi arabia, that would make a big difference. that did not make him that popular with ambassador in saudi arabia at the time. by the time i got there in 2009 the saudi's had shifted quite theiricantly in perception of this issue and their willingness to work with the u.s.. i then had the opportunity to try to build on those efforts. the we did in my tenure at treasury, which spanned from 2009 until 2015 was principally to work i laterally, and i think this bears the question of how -- bilaterally, and i think this
bears on the question of how important it is to be on a gcc. i am large olive the efforts that we undertook were bilateral, with the saudi's, with the varieties. emirates.e the sharing of intelligence information, which is critical to identify who the terrorist financiers are, how they are raising money, moving money, that also tended to be, i think, exclusively is probably the right word. exclusively bilateral. the only exception in my recollection was we made some sfforts to enlist the saudi to work with us in a trilateral fashion with kuwait and qatar. i remember a couple of occasions where we would be in saudi,
the folks who were most important in the interior we would trye and to get them to essentially to put pressure with us on qatar and kuwait. that did not work so well. too fine a point on it. i think it was for a variety of reasons. working in a trilateral fashion and working in a gcc more broadly was not something we really tried to, try to pursue. situation in the , if right now where you see think, a real potential for the gcc to splinter and for qatar to go its way in the saudi's and -- and the saudis and the emirates
to go their way with the other states following in line, i think that it itself is not the problem. i think the bigger problem is you have qatar, which had been making progress in recent years prosecuting terrorist financiers, being a little bit more forward leaning in its efforts, no longer feeling that it is in the club inside the tent. the,e lose a little bit of sort of the moral suasion that comes from a combined effort of folks in the gulf. that is to i am worried about in the current situation. the progress we have seen with the -- with qatar in the last couple of years, which has been hard one, lots of efforts from treasury and state and others to move qatar along, that that will begin to receive. and i will make one final point. we can pick up on it later. the other thing that you all know happened recently in the
gulf, i think, has significant implications for the future of counterterrorism financing is the switch and the crown prince in saudi arabia. the crown prince ousted and also ousted from his position as the minister of the interior. he was a stalwart partner of the united states in combating terrorist financing and really bringing saudi arabia to a point where it was doing a quite good job across the board in combating terrorist financing. with him no longer in the position in the interior ministry and no longer in position in the government, the united states has lost a key partner in this effort, and i think that is something we need to watch very carefully. it was obviously not him by but his position in that family, and that government
was in norma/import. hand, the crown prince does not have a -- was ous in norma's -- of enorm import. on the other hand, the conference does not have experience. it is the harcourt -- hard-core what hobby -- hard-core approach that saudi arabia has been promulgating around the world. that could have a beneficial impact on terrorist financing. , but around saudis the arab world. why don't i stop there? thank you. we will get back to this question, dynamics in states, even within states. kate, over to you. you can assess the risks and
opportunities, if there are not any we have recognized. ms. bauer: great. thank you for inviting me to join. i'm really honored to be here with these men who have been great friends and mentors over many years. and i have to say after speaking with the two of them, i have to agree with what -- with a lot of what they said, but i think i will find a couple points to push on a little bit. thatnk i agree with david have arabia and the uae galvanized action against terrorist financiers that were operating and continue to operate in qatar, and they felt that there is a sense that qatar does not share the same threat and the uae. saudi
this allows them to pursue at different times multilateral attempts, whether they are the trilateral attempts that david mentioned or another iteration efforts to designate has blocked as a terrorist organization and the mechanisms that go along with that, commitments that were made at the camp david summits under the obama administration to pursue andilateral efforts activity in the region. these desires to bring the gulf get attogether to try to a more common threat perception --ociated with this activity the repeated kind of inability to do that is reflected in the current risk, i think. that is how it is a part of this current risk as well. some actions -- the of
taking action against individuals. listedve said to you and individuals their assets of been frozen, there are travel bans in place and there have been prosecutions. and also systematically. they pass legislation to better regulate charities, better activities, to criminalize certain types of fundraising or expression on social media. but that -- there are few signs of what specific actions they have taken under this legislation or really a lot of details about what prosecutions or other law enforcement efforts there have been. i think that is wherein lies an opportunity out of this risk and the role that saudi and the uae -- they published a list the couple weeks ago i think of 49 individuals and the number of entities, and herein, i think, lies an opportunity to press
-- first of all, against the human individuals, to make sure they are no longer able to actively finance or qatar.ate in i think one good thing would be qatar would implement or adopt a national anti-terrorism committee and number of years ago and its place within the ministry of the interior, although it is an interagency -- this group has the ability to designate terrorist financiers beyond what is at the u.n. and the propagation of such a list could help clarify some of the actions or some of the unclear signals that you see to, for really dig in example, what the state department has said. on one hand, qatar shut down a charity located to al qaeda in march,but then just this
in a designation release, designation of a kuwaiti individual, that he was working with the individual who had run that qatari charity. so, despite the fact that the charity has been shut down, the individual continues to finance or facilitate terrorist financing activities. i think there's a lot of unclear signals and this is an opportunity to get some clarity on that. mr. seche: thank you very much, kate. let me just for a moment open this up more probably. there is at least one other -- there's a lot of interest of the white house on counterterrorist financing. it was interesting, the readout issued after presence of spoke to leaders july 2, there were
two defendants as an two mentions of his decisive focus on counterterrorist finances. it's clearly on his mind. we see the rhetoric. we hear the rhetoric. do we need to focus on a change of policies on the grounds that will distinguish this white house approach to counterterrorist financing from, you know, his predecessor or others? and to what extent do we see this targeting iran, since iran is largely on the present's mind when he looks out at the arab gulf? -- on the president mind when he looks out at the arab elf? do we detect any shifts? juan, if you want to start on that? mr. zarate: to me, it's incredibly refreshing. i started at the treasury and get ahere it was hard to seat at the table. to see the centrality of terrorist financing -- for those of us who are true believers in
the imports of these issues, it is very heartening and the fact that it was such a centerpiece of the present's visit to saudi arabia seeks to the importance of these things and issues. this is such a principle issued from a regional perspective. that is perhaps not altogether different from the obama administration and the bush administration, but the fact come out of the box so strong and full throated around the issue of terrorist financing is significant. it does put a marker down that this will be an issue that the administration, even if they do not have an articulated strategy yet will have to contend with in complicated ways. the other thing that is interesting and i have argued this for a long time -- the hass on terrorist financing often very thorny and strategic diplomatic issues.
things that are focused -- that are forced to the surface because of terrorist financing. how do we look at the muslim brotherhood? one as aignate terrorist supporter as we look at his support of the families of suicide bombers? the decision of the bush administration was we will look at the muslim brotherhood through a variety of lenses and see where they were actually said wording militant and thatrist causes and where occurred, we were not going to turn a blind eye. we were not going to go after it . the same thing with wahabi proselytization outside the borders of the kingdom, places asia, southeast asia. these are things that emerged not because we wanted to create
-- how do you think of charity in places of extreme me? places like east africa where we haveterrorist groups exploited those funds, but we know that charities have hit the ground to help people in dire need. how do we think about state sponsorship? what does that mean? seeope, steve, is what you emerging out of this is not just dealing with the tactical money dimensions of who is a terrorist financier,, that is important, but how do you deal with these more fundamental issues. i think with the serious people that we have on the inside, secretary mattis, ms. powell --
we worked with her on these issues at the state department -- i hope that will be a focus on these more fundamental issues that are tied to the issue of terrorist financing. mr. seche: great. david, any changes that you see shaping up at all? no obligation. ms. bauer: i think it sends a signal in the rollout of this threat financing, one of the key deliverables that this was signals theat importance to the gulf states, but also the administration. with that, you have seen a pretty cool -- pretty smooth thation in the division david had -- david headed previously. you have a team in the treasury building ready to work with the
white house, ready to use these sorts of tools. in an lot of fronts, where , it isns can be used important to have the policy framework in place as well. these are tactical measures that need to be enacted in support of a broader policy. when you look at how they might applied, there needs to be a focus on the policy framework as well. >> i will be somewhat less optimistic on this score. what we have seen has been a little bit of a victim of our own success. the administration came in. they saw terrorist financing. , a broadlynctions
successful, easy to use tool and they have embraced it. they understand it. have established a lot of fanfare. it is a big move. -- i think there is that whatbe concerned we have seen thus far with the administration is without the policy thought that goes without it. having a policy framework is critically important and addressing terrorist financing issues should force you to address things like the role of
wahabism around the world. i think we have seen the administration giving an embrace of theg saudis, without nuance of how that embrace may implicate issues that are potentially undermining our broader effort. i think it very much remains to be seen whether the thenistration's embrace of terrorist financing issue is one that speaks to a broader policy framework that is going to be a effective or is just grabbing onto something that was low hanging fruit. mr. zarate: can i just -- david raises a really important point. there are scars that are g.
if trust is destroyed, there is a real problem. there is a silver lining and it is about how washington relates to this issue. to the extent that the gulf are grappling with these issues on their own, this is messy and problematic, but to the extent that they are setting out demands for themselves, there is a reflection back. these are serious questions for them to answer. cattery --en as the the qatari nationals were subject to these. the institutions were problematic. questions about the trade with iran are put in play. there is a dimension of silver lining here in that the , and thispositions
has been consistent in each of these organizations. if there is not an immediate issue, they have largely been reactive. they waited for the u.s. to come with information. ,hey waited for an indictment for the information to be shared their request has been, show us the information and then we will act. this may be a moment that we all hope for, which is at some point, countries around the world have to take ownership and not only discover these on their own, but work on them locally and regionally in a proactive way. i think this is going to be a serious issue for all gcc countries. how are saudi arabia, the uae, kuwait, bahrain all doing with the reality that they have challenges with respect to
terrorist financing, illicit financing, their structure, their financial intelligence. that is going to be a serious question. they have set a bar. not just for qatar, but for themselves. ms. bauer: can i respond to that? >> you will make my job really easy if you just keep going. ms. bauer: when i spent time in the gulf -- i will speak more probably than just terrorist financing, but there were so many dynamics that came into play at the same time. on one hand, there was the recognition of the value of this tool. there were arab league sanctions on syria. there was also the tail end of global financial crisis. you had the consolidation of foreign policy in the upper dobby government that was more security minded.
the uae benefited a lot from inflows after the financial theis, some as a result of arab spring, but coupled with that, the amount of security flowing through the uae was an awareness -- it was great to have it, but if you did not know where it was coming from, it could be the proceeds of trafficking or has the law front companies. more broadly in the region, the other dynamic that, i think, was really important is de-risking and what you saw was the idea a numberal banks, for of reasons after the financial crisis because of enforcement fromns were pulling back transactions that were considered to be higher risk.
this is another big one that is another really important aspect of many financial aspects. centersthe financial and there is a little bit of competition between bill hot in dubai and others to be the regional financial center. to maintaineed these relationships. at the same time, the security my goodness of governments came around as well. i think that you do see, as juajn said, there is a real ownership of illicit finance that needs to be owned by these countries. mr. seche: thank you, kate. thee is one other aspect -- financial task force. david, you have had a lot of
experience in the treasury. you have had a lot of engagement with the gulf states. this is all bilateral. there is a regional aspect to it. how does it shape up and what does it look like. mr. cohen: for those of you who are not deep in the weeds in the finance world, i will do a quick look at the financial action task force -- it has come howther to establish governments ought to regulate and howncial sector they come together to combat money laundering and terrorist financing. it is a mutual process. the organization get together and say, next year we are going to evaluate the uae or the saudis -- the u.s. went through
in a valuation recently. their enforcement structure, their political structure, against these recommendations. it works essentially through embarrassment. and they report the end of the evaluation and gives you a score on how well you have done. very well, they will do recommendations on what you can do better and will even recommends in extreme cases that countermeasures be enacted by other countries to protect themselves against the risk from that financial jurisdiction. it has been an and or mostly effective tool for raising ofund the world the quality the effort against illicit .inance
in the gulf, their regional , including one in north africa. they do mutual evaluations in the gulf region and north africa. it has, you know, these saudi's, if you were in the gulf, and this was before your time, the saudi's went through -- the went through one relatively recently. it has the effect of spotlighting the weaknesses and encouraging improvements. one of the things we have tried to do outside of mutual evaluation episodes is to go to these countries and say, here is where your deficiencies are. you need to do better.
particular, part of what we used to do at the treasury -- i'm sure they are still doing it at the treasury, we would go to the regulator jurisdictions and say here is where you are deficient. you need to up your game. , it has had middling success would say in getting kuwait and get better. a slight digression here. ,fter a lot of internal debate i gave a speech on terrorist calledng in which we them out as being permissive jurisdictions for terrorist financing. that was done in part as the judgment that our private engagement, including this is
how you measure up against the that outside of the normal evaluation process, we are calling them out in a bilateral fashion, a public fashion that would spur them to act. not -- it's hard to say what that has accomplished apart from now being welcome there. they would welcome me. way that weanother use the recommendations, as a way to try to encourage better efforts. mr. seche: great. juan, please. mr. zarate: i was fortunate atugh to lead our delegation
the regional body that david mentioned. been that we spoke to the syrians directly in bahrain. you had a group of like-minded jurisdictions that have been committed to, at least in theory applying these laws and recommendations and then being willing to be submitted to these evaluations by foreign next kurtz. countries big and small, the u.s. all the way to macau are being evaluated and to david's points -- it is the shaming dimension, but also the market effects. you look at the integrity of
these jurisdictions. how serious are they dealing with terrorist financing? do they have institutions to handle these risks? it is a process that has been the norm asleep effective and it gets the attention of david'snts which, to point, that is why they have been able to push governments to improve. it's also why they have looked at countries like north korea and iran and put them on, in essence, the blacklist, for deficiencies in their anti-money and terrorist financing systems. that is why it one in particular is so dead set on getting off that list in dealing with those market-based and jurisdictional thetermeasures against country and their reintegration into the financial system until the take these steps -- until they take the steps. a final note on this -- i think
it will be more important, not less. systemve started the new of evaluations around effectiveness. the assessments of the fast have largely been around -- can you tell me that you have a financial system in place? do you have a law against terrorist financing? file suspicious activity reports? we have graduated to a point where they are asking the court question -- that's good. you have to have those systems systeme, but is your actually working? do your institutions work. that is leading to a lot of soul-searching. it's leading to a lot of improvements. moret is also leading to enforcement actions. you are seeing more countries, not prompted by the u.s., but on
their own, beginning to hold financial institutions accountable, bring prosecution, theisely to demonstrate system can work and here is the evidence. again, the gulf countries have principles inhese these rules and they are global rules. mr. seche: great, thank you, juan. >> more than you ever wanted to know. mr. seche: other than that is a terrible acronym. with cooperation with the gulf states, you were there. you were on the ground. does it make sense in terms of the u.s. engagement -- how many countries are there? band?ou a one-woman yeah, thank you for
the question. it's a great question because, i think, what we do at the treasury, not just as an actor officials,s senior the kind of sanctioned diplomacy and engagement on a technical -- -- withthanks banks is kind of unknown. so, as the treasury department has a very small core of attaches -- i think it's usually 10 or 12 in the world. it is very small. where the attaches are placed really is determined by what their priorities are. they are not necessarily seen as permanent positions. it is so small and so zero-sum. in 2008.t up i believe
it was sent out with an abu dhabi, with a deputy in riyadh shortly after. it was augmented, i think, around 2010. there was the full attaché and the position in of a dotty took and -- the kuwait position in bob dudley took on covering kuwait as well. i was responsible for the gcc minus saudis. an at thet, there was shea placed in delhi responsible for qatar and kuwait, which was -- there was an active shea ha, responsible for qatar and kuwait, which was something that i pushed for. it was a lot of travel over a couple of years. i always -- the one doha i always liked because
you land technically before you took off. [laughter] a 45 minutet is flight. the ability to visit counterparts and to concentrate on very technical issues. and i would say throughout the gulf we have had very good relationships with our counterparts in finance ministries and central banks. those really connect on technical levels. the attaches work on policy matters, implementation, promoting best practices, standards. in the gulf, there is a little technical assistance as well, though that is done more so elsewhere where you have more resource countries where the treasury would commit more resources than technical assistance, the idea that they can find technical assistance
through commercial means or on their own. it is an important job, i think, in terms of having that ongoing engagement and being able to find this facilities as well. i saw david a lot in the gulf. hasink it is something that facilitated the number of joint designations over the years, which i think, is a very clear demonstration of where interests are. it's a very public demonstration they can coincide and work together. but there's a lot more never made public. one thing, you cannot necessarily judge the effectiveness of counterterrorism and financing -- counterterrorism financing by designations. the treasury department, the
government is able to work quietly with counterparts to have counterparts take actions that would disrupt whatever activity at is we would want to see. mr. seche: there was one point in the conversation with the gcc, i think the state department suggested the treasury embed officials within the entire -- the qatari central-bank. that seems like a great idea to me, but is there a flight in the norm at that would suggest to you it's not workable or something we should not consider? ms. bauer: as i said, there's already a treasury presence on the ground. i'm not sure it's necessary to have someone in the central bank of qatar. is of the important things it is in all of government
effort. the state department has said in their reports that one of the problematic rings is the individual's ability to but -- problematic things is the individual's ability to bypass the financial sector. various elements to identify. a lot of times what the big challenges in kind of operationalizing counterterrorism financing is taking what is an intelligence susceptible,g it especially if it is a domestic issue, into a law enforcement action. exclusively or primarily a central-bank responsibility. what the central bank does what houses the intelligence unit, as
it does in qatar, that's an important element. informationg the from banks about suspicious activity, and that can be very important lead information. there is a role, but i don't think it is the most important. that person needs to be, but there is already a person on the ground. mr. seche: i want to go back to alluded tohat juan earlier on. that's terrorist financial organizations around the world, daesh and isil. they have been using smuggling of oil and oil products and kidnapping to generate money. now that seems to be drying up. they are looking externally, i would expect -- how big a threat is that as a conduit to which they will look most usefully?
of theen: what particular dangers of the syrian conflict is the external sources of funding for internal causes in proxy wars. and the use of charities that was such a focus post-9/11 was so managed and handled, and has now been resurrected. the idea of deep pocket donors fighting forces against a side. that is a problem. but the terrorist and militant groups we worry about, the ones with regional and global likeations have accordion financial models. right? they will take whatever opportunities they are given. in the 1990's, you had a much more hierarchical donor base, externally-based, driven financing model for al qaeda.
it then used that to build franchises and to support them. what you had in the post-9/11 , thegiven the pressure fracturing, the metastasizing of the movement is a much more localized set of economies and industries. maghreb and the islamic has made a fortune out of kidnap for ransom, something david talked a lot about when he was at treasury. al-shabab and used africa has run an economy out of importing sugar. they have sanctions out ofexport of coal east africa. they have always used remittances and taxes to their damage. and of course, daesh has used its access to oil, antiquities, massive populations to their damage to tax, extort, actually
run economies, not to mention the whole oil industry, from production to delivery. so, these organizations will take whatever opportunities we give them in terms of resources and space, and i think one of the dangers, to your point, steve, is as that space shrinks, they are going to what to need and what other sources. there will be elements of criminality attached to it. there will be smuggling still of oil in the case of middle east -based organizations. they will use resources at their command. you see this with other terrorist groups. rightse mining interests, , to their damage question mark you saw this with the farc, with drug groups in the past. they have grown more sophisticated. to the extent that they have
networks, they are able to adapt. that is why constricting their support networks become so important. constructing their -- constricting their ability, cutting off their access to capital and resources is critical. again, as i said at the start, that is why these issues are even more important now, because as you try to constrict daesh, you do not what them to have external donors or local sources. that is why you need the gulf countries to be focused on these issues. we need our allies in the world to be on our side in terms of disrupting terrorist finances. david?he: mr. cohen: again, i agree with juan. isis grew out of a group whose financing model was the traditional ical the -- model, and al qaeda
when they took over territory, it had an easier way of raising funds, which was to extort the population that it had taken over and to sell oil through smuggling routes that had been in existence previously, but as their territory is now shrinking, their control of the population is being lost, there is every reason to expect it is going to return to what had worked in the past, which is the donor-financed approach, particularly because when it is no longer governing vast amount of territory, it needs less money in order to fund its particular terrorist activity. the one other point that i would make, when people talk about terrorist financing, they often focus in on a very sort of their understanding on what terrorist financing is, which is the traditional donor model, where
you raise money, you put it into the bank, and then you move it. we have done, working with partners around the world, a pretty good job of stymieing that. this gets back to the discussion. of the means by which money is raised, whether it is from donors, whether it is from state sponsors, whether it is , sellingrtion something ivory, whatever it is, there are common elements in a terrorist organization's use of money that we need to keep focus on and continue to attack, and that is what they need. they need to move the money and store the money in order to be it sort ofand so does not matter a heck of a lot .ow the money is raised
those sort of three elements are common across the landscape, and so, you sure they cannot use the formal financial system makes the difference, regardless of raised -- andis so, making sure they cannot use the formal financial system makes the difference, regardless of how the money is raised. bank system, using virtual currencies, forcing them -- what was a super efficient way to store and move money is going to be effective, regardless of the model that the terrorist organization uses to raise its funds. i think at this point, i am going to open up the conversation to these folks who have been very patient. i will ask you to identify yourself and also to keep your
questions and comments as the sink as possible, so we can accommodate as many people as possible. keep your questions and comments as the synced -- as succint as possible, so we can accommodate as many people as possible. >> i want to ask all three of you. 's record is that much worse than others in the gcc -- problem,u mentioned a and is this really why we are seeing the rift in the gcc? thank you. mr. cohen: i think the answer is no and no. much worset that than kuwait. i think it is markedly worse but others in the gulf,
kuwait, itar and -- what is in burlington golf is not fundamentally about terrorist financing. is not is in the gulf fundamentally about terrorist financing. it is not qatar and kuwait. it is these support coming out ies by groups that challenge the stability of the governing entities in the uae and saudi and bahrain and egypt. be sure, ao legitimate concern with terrorist financing in qatar, and i am not saying it is pretext, but it is not the full text of what is going on in the gulf right now.
thank you, david. we will get a microphone to you. >> so i wanted to ask about another dimension of the gulf , which is kidnapping for ransom, something which i think all of you have worked on, but, david, you have been very public about. i understand there is a report under the state authorization ,ct being produced for congress which would be a public report on which countries in the last year the u.s. government knows provided ransom to terrorist groups. there have been a number of press reports citing either government officials or private sources, alleging that qatar has paid numerous ransoms to terrorist groups. course, denies doing so. i am wondering if you're in a position today to either give qatar a clean bill of health or
speak about whether there is any truth to these allegations. i would be happy to answer the question. billnot give them a clean of health, but that is only because i am not up on the progress, and i could not talk about it if i was up on it. to go to the, question, there is no question that there are countries that to free theiroms citizens who have been kidnapped. the long-standing policy of the united states not to pay ransom. the u.s. government will not pay .ansom to free hostages we went through in the obama a very detailed, careful, and, frankly, heartrending process of trying to reconcile that policy, which is a policy that long predated
the obama administration, with the fact that there are americans who are held around the world who we want to get day,and at the end of the there is more new ones than this, but the resolution was that we were going to do -- there is more nuance than this, but the resolution that -- was that we were going to do all we could short of paying ransom, to not encourage the organization and ultimately to the detriment of americans everywhere. we work with other countries around the world to adopt a similar policy, and it is pretty much just the u.k. who has a similar policy. communiqué years ago, trying to spur others to
adopt a similar approach. it is a difficult issue. sound,hink the policy is and the report that apparently is due, calling out countries , i think is an important step. mr. seche: second row. >> from bloomberg news. a couple of you have talked interest ofs in the the u.s. when it comes to terror financing. about the role of secretary tillerson -- gulf diplomats, any dialogue between saudis and others, and whether you think escalation would be
too far or even on the table with respect to these gcc countries? take this one. certainly, the rhetoric suggests that all of the parties involved don't want to escalate this to the point where we are talking about military action. it is obviously in everyone's best interest, and if there were any suggestions where we were seeing signals of that or moving towards that, you would see a much heavier u.s. the waters, and i think virtually by the fact that we have troops on both sides and interests will it terribly on and interestso -- militarily on both sides. on both sides of this equation to move towards military escalation -- in terms of the
u.s. line, one of the criticisms you have heard is there have been mixed messages coming out of washington. you have had the state department, calling for a calming of the waters, a what seems to be from the white house a firmer embrace of the saudi's -- is as, so i think there danger of mixed signals coming out of washington, and i think the role of peacemaker, not because we want to be the moral giant here, although i think we do, but because we have got real fundamental interests in play, short and long-term, and that means having the countries resolve these issues, and, frankly, if we are smart about it, as i said earlier, having ownership by these countries -- if the countries are serious about dealing with terrorist financing, there is a number of fundamental things they should be doing.
if they are serious about curtailing trade with iran, then there are things they need to be doing. if they are worried about payment of ransom to terrorist groups that continue to fuel their operations, then there is a lot that can be done with all of the countries, so i think if we work smart about this, we would not only be speaking with a than five boys, but we be taking proactive measures to think forward of how does this actually improve things are inherent in our own national security interest. i do not know if that is happening, but i think certainly, there is a lot of discussion in washington around these issues, not to attention by all of the health partners, and i am sure that the institute here is sort of the fall from of a lot of these, -- here is sort of a fulcrum of a lot of these issues. got a questionve
right here, and then we will go to joyce and you, sir. there is no distinction between the government and individuals doing this financing, so how can they make this a sanction, and how can you hold governments accountable or responsible for the actions of individuals or their citizens, in that sense? mr. seche: david, do you want to? yes, a level of distinction is important between state sponsorship and individual sponsorship. those are two different problems, and it is important to draw the distinction between them. setting aside the state sponsorship for the time being, i think governments have a responsibility to govern their citizens, andeir those who reside in their country, and that does not mean that you -- the government is
responsible for everybody at the end of the day, but at the same time, if there is a conscious decision taken by a government to be lax in the application of existing laws or not to enact the that criminalize behavior that is contrary to international norms, that, i think, is fairly -- the criticism is fairly put at the feet of the government in terms and enabling terrorism, even if the government is not the source of the money. they are allowing that to occur. that his -- has historically been the situation in kuwait, and as we mentioned, there has been progress in both
jurisdictions, both in in acting laws and enforcing laws so that -- both in enacting laws and enforcing laws. ms. bauer: can i just touch on this? there is the question of the it is anotherhood, and important point, but to david's point, the whole spectrum -- the challenges we have either said there is state sponsorship, or there isn't, a binary, and there .s quite a bit of gradation individuals doing things on their own, and the government is trying to promulgate it. u.s., we prosecute them. you have got that end of the spectrum. spectrum isd of the
states that have in their budget support of terrorist groups, like iran. it is a line item in their budget. is everything in between. there is everything from to softence to neglect support, so i think we have to be careful in the debate do not create sort of a binary and not allow actors to kind of fall of sort of theld vagaries of these definitions and the spectrum, because i think it is important to have a clear discussion of who we are talking about. who is that we are talking about? to what extent can the government actually affect this? this issue is really important, because it is often seen as a binary question, to the point of your question, that it is often more complicated than that.
greg and part of the spectrum to, -- >>uan alluded and part of the spectrum here, alluded to, clearly, the view of the muslim roddy'sood -- the emma -- emiraties do not. the distancey between the muslim brotherhood and terrorists is vanishingly thin. ies do not.-- qatar you could have the state saying, supporting --are
others may agree. as you look at what is happening in the gulf right now, another one of the dimensions that is really important to bear in mind is that this is, i think, fundamentally a question about sort of the role of political what and how do you define is a legitimate political organization from what is a, you p's clothing, shee portraying itself as a political organization. yes, hi. thanks, steve. i actually have two questions. which was brought up, the 49 individuals and entities which were identified, do you overlapping with lists that you might have seen or names you might have seen it while you were at treasury?
and to say that it is better for doha -- -- to be in else --rouble summer how do respond to that -- or somewhere else, how do respond to that? ms. bauer: i will answer that. there is some overlap, a fair amount of overlap with u.s.-designated individuals and u.n.-designated individuals. i think there are six u.n. -designated individuals on the list, and there are those that are not designated by the u.s. or u.n., and the uae and saudi
have their lists. countriesou know, have to have the ability, and it is not the requirement under the standards to develop the capability to have these sorts of lists so they can identify and send clear messages to their domestic population about who is off-limits to deal with in terms of financial transactions and think,of this sort, so i as i said earlier, that is something that qatar can do. they can develop their own list to provide some clarity on who they see as fitting that definition within their own jurisdiction, and one of the things that these lists do in a domestic sense if they could reaction.itate we can say this was prohibited, and you did it. the u.n.-level designation member states have obligations
to let travel bans and create obligations to have travel bans and create funds. ok. >> it is a really important question. the challenge for qatar is the taliban office. it is u.n.-designated individuals, so don't call through that lens begins -- so a throughl -- so doh that lens begins to look different. you can where perhaps control them, monitor them, comedic it with them, have a channel to those organizations have a channel, to those organizations.
qatar, are doing this in and they are doing this and a way that is advantageous to the international community, there is kind of an understanding that, look, we want a lace where maybe there is a negotiation look,ing with taliban -- we want a place where maybe there is a negotiation happening .ith taliban maybe with their neighbors as well as partners, like the afghan government. i think it is an important question but one that qatar should not necessarily be trying to resolve on its own. this is actually a regional and international set of issues as to how we want to do with these groups and, frankly, how you want to deal with things like funding for managerial abysses fouraces like the -- humanitarian-- for
places, like the gaza strip. one thing that comes out of this is how we solve some of these looks a, and maybe doha lot like it does now, but it is with international approval and checks and balances which makes it more comfortable for its neighbors. i am alwaysut searching for a constructive way forward, and that is one way of looking at it. >> yes. ping-pong -- the qatar ies, it is an interesting model, particularly in the illicit finance world, because for a long time, switzerland was the playground for all manner of people who had illicit funds in
banks there, and sort of two internationalthe community got together and said, "enough. you have an important role, switzerland, being neutral, being a financial center, but not to the expense of the breast -- the rest of the world." it could be applied in a certainly different context. different context. with anyot affiliated organization. i have a question for mr. cohen and mr. zarate. you talked about looking at the muslim brotherhood through a lens.ent
a worldwide consortium of businesses and lens companies, n organization channeling money everywhere, including qatar and youey, and for mr. cohen, said earlier that in the last two years, there has been good work done with qatar in combating financing terrorists. expand on this good work, given the fact that qatar is the only arab country that never, ever suffered a terrorist attack? greathen: yes, it is a question. i think, again, as we look at the world through the lens of illicit financing, terrorist financing, you begin to see ties and networks you would not see, and i think in looking at a muslim brotherhood, there was a withrn and is a concern the business, financial and even
the nationals, and manifestation of the group as a result, so we very much were focused on that, and, in fact, a couple of the designations which were controversial post-9/11 implicated individuals supporting al qaeda or were designated muslim brotherhood and sat in switzerland and were subject to the international sanction, as a result, so the answer to your question is yes. we worry about it. not to try toas isolate the entirety of the organization with all of its identifytions but to where there were problematic connections and a this -- and a to attack the group for ideological reasons and not to identify all of their members under terrorist provisions.
that was a decision of the bush administration that followed in the obama administration, and the premise is not all elements of the muslim brotherhood are should be handled in the same way with the same tools, and i think that creates both new wants and complication ce andt creates both nuan complication in the current debate. kate totart off and ask add on here. in the last several years, qatar has prosecuted a few individuals finance and has, juan's point- to -- to combat terrorist financing.
there is still a way to go. there are still people in doha who are there in awareness of government. after the march 2014 speech they gave, calling out cutter and qatar andcalling out kuwait, i traveled and met with security and others to encourage them to improve their performance. it was abundantly clear to me that they knew exactly who was raising funds in their jurisdictions, where they were, what they were doing, how they were doing it, how the money was being moved, and, nonetheless, were not by a large prepared to do anything about it -- by in -- by and large prepared
to do anything about it. i think there remains more progress, more fruit that can be harvested. so i can just add a little bit on specifics, although there is not many specifics. hasnow about what qatar died. it has come primarily from u.s. , andnment reports from it it has been pursued, using language that leaves it not quite clear, even though there has been some clarity in recent weeks. ies -- that has been
one of the problems. it is not clear if this is a reflection of an incomplete commitment to doing it, i think, what i haveis -- heard before about publicizing this or security concerns, because there is information used, things like that, but there has not been a lot of public information, and what we have learned in the last couple of weeks is that there are five individuals that have been prosecuted. one of them was prosecuted not ,n qatar but in bahrain -- by ad by a bahrainicou bahraini court.
some others. essentially, there were a couple of acquittal's, ultimately, none of them were imprisoned -- there were a couple of acquittals, but, ultimately, none of them were imprisoned. there has been rescinded as a -- recidivism. underactions have come significant pressure from the an., and the signal, emerging theme here, is kind of ownership of these issues rather than responding to significant pressure from the u.s.. what i think is in the u.s. inerest is to see qatar act a way that they are acting of their own volition to do with something that is problematic. mr. seche: well, we are approaching the end of our
allotted time, so i will ask each of the panelists if you have any dots you would like to you wouldny thoughts like to share. you are welcome too. i want to thank our hosts. i have learned a lot. i hope you have, as well. i will come back to this theme that i started with, which is the issues of terrorist financing, i think, will continue to be strategically relevant. it will play out in the context gulf, but itn the will be a fundament to issue when you look at u.s. policy in the middle east, how we think about the definition of terrorism and terrorist groups, how we deal with the underlying ideologies that animate terrorist organizations, what happens post daesh, because i think we are going to see the defeat of daesh on the battlefield, but that is not the end of this story, and how this context ofed in the
this rift is critical, but i think the u.s. has a leading role to play in resolving these and setting strategy in the international community as to how to deal with more and more complicated issues as terrorism evolves over time, and i think that is the enduring challenge for the counterterrorism committee and certainly for this administration, so thank you for your time. mr. cohen: i will just echo thanks for hosting this, and i will hold back for a second, away from terrorist financing, which is a hugely important issue, one that we need to continue to work on, that i think we need to recognize two fundamental facts. is what is the underlying causes of instability and terrorist activity is something
that we need to address, not just the terrorist financing issue, which fuels it, but there are issues in the middle east and elsewhere that require long-term, serious strategy. we cannot ignore that part of the world. we cannot cut them off or put them in submission, so we need to find a way to deal with those issues. think there is in increasingly and weakening link between terrorist financing and terrorist acts, and i think we need to be cognizant of the fact that even as we do a better job, and, hopefully, we will continue to do a better job in cutting off tale tong, there is a the terrorist organizations' to conduct terrorist
attacks and an increasing movement towards the not centralized, direct attack, and need to country, recognize that and be resilient in the face of what is, as everybody who has been in this business has said time and again, the virtual certainty that we are going to face additional attacks of some form. we need to be strong as a country. we need to not overreact. we need to be sensible in how we address this problem, but as we think about terrorism, i think those two poles, that there is work to be done in the long term, and that there is sort of resilience and strength and address whatw we is -- and sobriety in how we address what is going forward is important. i think david just
introduced idea that we could spend another hour and a half discussing, some interesting and important things, but i think i would echo what david and juan said in that i think the need to follow the money is more acute than ever because of the instability that david mentioned and the adaptability of terrorist groups to fund themselves, but also, because of the role of financial you're talkingen about even attacks that are not expensive, even the attacks that or directed, at least, in any way, mapping out relationships between actors can be very important, but i think, getting back to the question of isis, iity, and post think it is a question of think --e that i
something we have come to understand better is how an important part of that is regulation of the financial sector and partnering between those regulators and law enforcement and intelligence services to be able to have -- when you have these post-conflict areas, have been that they can attract the investment and help with development but also keep the bad actors out of that realm, and i think if we can move beyond the trend right now of the exploitation -- that is what we need to be thinking in the future. and thank you again to the arab gulf states for hosting the panel. greatche: you have been to thank us, and now we thank you. [applause] really, thank you
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