Restarting the Fight Against Terror-Funding Charities

Busting terrorist charities here in the United States was a low priority for the last eight years under Barack Obama. It's time for the Trump administration to instruct the bureaucracy to get back into this important fight.
In the aftermath of the 9/11 attacks, the George W. Bush administration conducted multiple high-profile takedowns of terrorist charities. Federal authorities in 2001 targeted the Holy Land Foundationfor funneling more than $12 million to the Palestinian terrorist group Hamas. The following year, Treasury took down the Benevolence International Foundation in Illinois for "providing material support to organizations, including al-Qaida." The Global Relief Foundation, also shuttered in 2002, "provided assistance to Usama Bin Ladin, the al-Qaida Network, and other known terrorist groups." Another charity that supported al Qaeda and Hamas, the Islamic Africa Relief Agency, met a similar fate in 2004, and its president was sentenced to 63 months in prison.
For the last eight years, however, the Obama administration dismantled just one terror-funding charity operating inside the United States (a Tamil Tigers front in 2009). It's unclear what kind of risks, if any, this lapse posed to the homeland or our troops overseas. But it is nevertheless disconcerting, given the sustained concerns about the threat of terrorism worldwide.
The eight-year lapse was confirmed in an official report issued in December 2016 by the Financial Action Task Force, an international body dedicated to promoting policies to combat money laundering and terrorism finance.
"The U.S. has not designated a domestic U.S.-based charity since … 2009," the report said. Issued in coordination with the U.S. government, the report noted that the "decrease is consistent with the growing trend of fundraising under false pretenses and outside of any charitable organization."
It is certainly true that there has been a decrease. The U.S. government's efforts to protect the integrity of the U.S. financial system and freeze funds destined for terrorist organizations have deterred many bad charities from operating on American soil. But it is hard to believe that not one charity has run afoul of our laws.
A more likely explanation is that Obama's "Countering Violent Extremism" initiative, despite claims of community successes, sidelined law enforcement by working to co-opt rather than confront bad actors. This approach called upon nonprofits to renounce extremism and financing terrorism, even when officials strongly suspected them of engaging in that activity. This appears to be what the Financial Action Task Force report refers to as "targeted outreach."
The bureaucratic shift away from active prosecution of terrorist charities took place over several years. In the early years, Treasury and the FBI worked together to score some of the bigger successes. In 2006 the Department of Justice's National Security and Tax Divisions, working with the IRS and FBI, formed a task force to target tax-exempt charities suspected of funding international terrorist organizations. It also included representatives from Treasury and the Pentagon's Central Command, which covers the Middle East. The task force, among other things, tracked former employees and donors of charities that were previously involved in financing terrorism—a crucial undertaking given that terror funders constantly reorganize their corporate structure, sometimes their names, to evade law enforcement.
In 2007, this task force's strategy became part of a proposed national plan to fight terrorism financing. The task force provided support for a number of successful prosecutions of abusive charities. But it all came to an abrupt halt shortly after President Barack Obama took office.
Meanwhile, Treasury's domestic investigations withered, primarily due to mounting legal challenges over the constitutionality of these actions. Indeed, the risk of drawn-out litigation over every designation appeared to outweigh the rewards. Eventually, as one senior Treasury terrorism finance official told me, "We really stopped doing domestic designations." The likelihood of Treasury resuming domestic designations is now somewhere between slim and none.
Of course, counter-terrorism finance work inside the United States hasn't stopped. It is just now squarely in the purview of the Department of Justice. Select cases against individuals have gained traction and plots have been disrupted. But domestic charities, whether because of a dearth of targets or a political decision, have remained off the table.
Treasury, meanwhile, continues to aggressively sanction entities abroad, and that helps curb terrorism finance worldwide. But it's hard to understand how our international partners will take us seriously if this glaring gap remains. Indeed, why should they feel compelled to crack down on their terrorist finance problems if we don't address our own?
The ball is now in the court of the White House and the Department of Justice. Amidst the many competing demands of the presidential transition, this issue may not be on the administration's radar. But it should be. Indeed, it would be surprising if terrorist groups have not exploited this window of opportunity. It's time to put our national-security professionals back to work on this crucial portfolio.

Jonathan Schanzer, a former terrorism finance analyst at the U.S. Department of the Treasury, is vice president for research at Foundation for Defense of Democracies.



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