This paper examines the legal framework the United States employs to combat terrorist financing, presented as a memo to the Department of Homeland Security. Drawing on federal statutes, executive orders, and Congressional Research Service reports, the paper explains how laws such as 18 U.S.C. § 2339B, the Bank Secrecy Act, and the USA PATRIOT Act authorize authorities to track, intercept, and prosecute those who fund terrorist organizations. The paper also discusses the Treasury Department's use of the SWIFT international banking network, the role of FinCEN in identifying uncooperative jurisdictions, and the importance of federal–local law enforcement partnerships in preventing terrorist attacks.
This memo to the Department of Homeland Security addresses the federal statutes available to help disrupt the way terrorists finance their operations. Specifically, it examines how financing can be cut off — or at least substantially disrupted — in order to impede terrorist movements that depend on a steady flow of money to function.
Jeff Breinholt coordinated the Department of Justice Terrorist Financing Task Force in 2003 and published an article explaining U.S. law as it relates to terrorist financing. He observed that "terrorist financing enforcement has emerged as a powerful means of disrupting" terrorist supporters operating inside the United States, as well as "those who use our financial system and generosity against us" (Breinholt, 2003, p. 1).
Breinholt defines terrorist financing as "the act of knowingly providing something of value to persons and groups engaged in terrorist activity." This crime has been on the books since 1994. Money laundering can be one vehicle through which terrorists receive funds, but it does not matter whether those funds are "dirty" — that is, laundered — or derived from an apparently legitimate source. All such transfers are subject to interception by U.S. authorities. In fact, Breinholt notes that funds frequently reach terrorists through apparently legal channels; typically, legitimate-looking dollars are donated to charities in the United States that "are actually fronts for terrorist organizations" (Breinholt, p. 7).
Title 18 of the U.S.C. § 1956(a)(2)(A) criminalizes the act of "transmitting funds internationally with the intent to promote some specified unlawful activity" (Breinholt, p. 8). In order to intercept money before it reaches terrorist hands — or to recover funds from a bogus charity fronting for a terrorist group — several government initiatives have been launched. Following the September 11 attacks, the FBI established an ongoing financial analysis program to track the financial movements of potential and known terrorist groups. The statutes pertaining to terrorist financing (as of 2006) include: 18 U.S. Code § 956; 18 U.S. Code § 2339A; 18 U.S. Code § 2339B; and 50 U.S. Code §§ 1701–1702 (Breinholt, p. 8).
With respect to 18 U.S. Code § 2339B, "Providing material support or resources to designated foreign terrorist organizations," the statute prescribes punishment of up to fifteen years in prison and/or a fine for knowingly providing material support or resources to a known terrorist group.
The Congressional Research Service (CRS) published a report (Order Code RS22469) outlining the authority of the U.S. Treasury to access information pertaining to international financial transactions that may involve terrorist activity. The impetus for the report was coverage in the Los Angeles Times, the Wall Street Journal, and The New York Times detailing Treasury Department efforts to trace international banking movements connected to terrorist organizations (Elsea et al., 2006, CRS-1). This published information was deemed an "unauthorized disclosure of classified information," prompting the House of Representatives to pass House Resolution 895, which condemned the release of classified intelligence.
The United States uses the resources of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), headquartered in Brussels, which serves as a hub for international funds transfers (Elsea, CRS-1). The authority for the Treasury Department to access banking information from SWIFT derives from Executive Order 13224 — "Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism" — signed by President George W. Bush on September 23, 2001, just days after the attacks on the Pentagon and the World Trade Center (Elsea, CRS-2). President Bush issued that executive order under the International Emergency Economic Powers Act (IEEPA), codified at 50 U.S. Code §§ 1701–1706 (Elsea, CRS-2).
"Patriot Act, Bank Secrecy Act, and related laws"
"FinCEN, DHS partnerships, and policy outcomes"
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