Rachel Ehrenfeld and Ken Jensen
American Center for Democracy, 23 February 2013
On the eve of the Arab Spring, Rachel Ehrenfeld published a lengthy and important study titled, “Their Oil Is Thicker Than Our Blood“*on Saudi support for Islamist terrorism and the global expansion of the radical Islamic base, as well as the inadequacies of the Kingdom’s purported anti-terrorist efforts. While much has happened since, very little has changed regarding the patterns of Saudi behavior in this regard.
Despite continued public statements of support for U.S. and Western counterterrorism efforts, sporadic enforcement of new laws in the Kingdom regarding such things as money laundering, money transfers to dubious foreign recipients, and the occasional rousting of terrorist cells (al Qaeda- and Iran-affiliated), Saudi Arabia remains one of the most important sources of terrorist funding worldwide-if not THE most important source.
The U.S., while knowing this full well, has for many years doled out nothing but praise for the Saudis when it comes to fighting Islamist terrorism. This is as true now as it was after September 11. In this, the U.S. government has seemingly accepted the principal underpinning of the Saudi regime: buying off its would-be Islamist adversaries at home. The leading principle has been all along – not in our backyard. Thus the Kingdom’s support of Osama bin-Laden and al Qaeda in Afghanistan.
But Saudi funding to globally spread their Sunni radical version of Islam-Wahhabism–began in earnest in 1962 with the establishment of the Muslim World League (MWL), which expanded into at least to one hundred branches in more than thirty countries, and served as the main body for other international Saudi charities. Since then, the Kingdom’s charities have been estimated to spend between $1.5 and $2 trillion to build many thousand of mosques, madrassas and Islamic centers equipped with Saudi books and Imams, preaching the Wahhabi doctrine.
Here we offer our readers Dr. Ehrenfeld’s 2011 study to reinforce lessons that should have been learned long since. We also include the study’s original set of recommendations, as few if any have been taken to heart. —KDMJ
Overview: Saudi Arabia-as an Ally in the War on Terrorist Financing
For decades US officials publicly heaped praise on Saudi counterterrorism efforts, while the Saudis continued to fund terrorism.
In a 2003 interview, then-Secretary of State, Colin Powell, said that the American government had expressed its appreciation to the Saudi government for its actions in support of the global war on terrorism. In 2005, during her confirmation hearing to the position of Secretary of State, Condoleezza Rice commented that the United States previously “didn’t understand, really, the structure of terrorist financing very well.
We didn’t understand the role of non-governmental organizations that sounded like they were for good purposes but were, in fact, carrying out or funding terrorist activities. Others didn’t understand that, in the Muslim world, like the Saudis. And we have made, I think, great strides in doing that.”
In 2007 US President George Bush certified the Saudi cooperation “with efforts to combat international terrorism.” The Obama Administration followed suit. In July 2009, on a visit to Saudi Arabia, Secretary of the Treasury Timothy Geithner lauded the Saudi government for having “taken important steps to combat financing for terrorist groups” and “to deter and disrupt those who support violent extremism.”
However, some dared to disagree. In September 2007, US Under Secretary of the Treasury for Terrorism and Financial Intelligence Stuart Levey told ABC News, “If I could somehow snap my fingers and cut off the funding from one country, it would be Saudi Arabia.”
While Mrs. Clinton’s leaked memo did not directly accuse the Saudi government of supporting radical Muslim groups, it noted, “Riyadh has taken only limited action” to interrupt money transfers to Taliban- and LeT-affiliated groups that have been carrying out attacks in Afghanistan, Pakistan, and India.
Americans started targeting Saudi Arabian terrorist financing after the 9/11 attacks, when it was established that 15 of the 19 plane hijackers were Saudi and that Saudis had provided substantial financial support for the worst terrorist attack in American history. The Kingdom was persuaded to cooperate on some counterterrorism efforts only in 2003, and a combined task force was established. After the terrorist attack in Khobar, which the Saudis attributed to a local al-Qaeda cell in May 2004, new legislation and harsh domestic anti-terrorist financing measures were put in place.
Saudi Arabia criminalized money laundering and terrorist financing in 2003 and enforces it to prevent domestic terrorism. It also banned some Saudi-based charitable organizations from transferring money internationally until additional regulations could ensure that the transferred funds would not be funneled to terrorist groups. According to the new banking regulations, all international transaction over $15,000 need the approval of the Saudi Arabian Monetary Agency (SAMA) - the Kingdom’s central bank. In addition, new regulations were enacted to control cash courier. As part of their US-coordinated counterterrorism strategy, the Saudi authorities also agreed to publicly condemn terrorism.
Since 2005, the Saudi king, government officials, and the Saudi grand mufti have publicly condemned violence and extremism, promoted international cooperation in the fight against terrorism, and extolled the virtues of moderation. However, the Saudis directed their counterterrorism campaign mostly to squelch domestic opposition.
The Saudis created its Financial Intelligence Unit (FIU) in 2003, and despite its legendary lack of transparency it was welcomed into the international Egmont Group (an international informal organization of FIUs) The Saudis participate in the Financial Action Task Force (FATF), and is the leading country of the GCC (Gulf Cooperation Council, with Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates (UAE)), which participates in MENAFATF, which is an associate member of FATAF.
In 2007 Saudi Arabia became a signatory to the United Nation’s’ International Convention for the Suppression of the Financing of Terrorism. Still, a September 2007 Congressional Research (CRS) Report addressed “Saudi laxity in acting against terrorist groups” and in the Act implementing the recommendations of the 9/11 Commission, the 110th US Congress noted that “Saudi Arabia has an uneven record in the fight against terrorism, especially with respect to terrorist financing.” According to the 2009 State Department International Narcotics Control Strategy Report on money laundering, Saudi Arabia “continues to be a significant jurisdictional source for terrorist financing worldwide.” Indeed, as Mrs. Clinton’s leaked cable pointed out, al-Qaeda, Hamas, and other jihadist groups continue to “raise millions of dollars annually from Saudi sources, often during Hajj and Ramadan.”
In April 2010 the top council of Saudi clerics issued a fatwa (Islamic religious ruling) declaring terrorist financing a violation of Islamic law, and General David H. Petraeus, then Commander of the United State Central Command
(USCENTCOM) was quick to praise the issuing council for its “courageous decision” to issue the fatwa against terrorist-financing.
While the Saudis’ new counterterrorist financing and new financial monitoring regulations looked good on paper, Mrs. Clinton’s leaked cable noted that “Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide.” Her cable also stated it an “ongoing challenge to persuade Saudi officials to treat terrorist financing emanating from Saudi Arabia as a strategic priority.” Although the new cash courier regulation implementation continues to be inconsistent, the more Saudis, including terrorism financiers, seem to increase their use of hawala, a system of monetary transfers through anonymous intermediaries that leaves no paper trail.
A 2009 General Accounting Office (GAO) report on Saudi efforts to stop terror financing noted that Saudi donors are the major funders of radical Muslim organizations. The report further stated that Saudi financial institutions demonstrated a continued unwillingness to freely share information with Western authorities. Clearly, when it comes to Saudi international counterterrorism measures, plus ça change, plus c’est la même chose. Indeed, little has changed since Under Secretary Levey stated before Congress in July 2006, “On terrorist financing …there has been a real lag between what [the Saudis] say they were going to do and what they do.”
As mentioned earlier, the Saudi royal family fears domestic terrorist groups, especially the Yemen-based branches of the al-Qaeda in the Arabian Peninsula (AQAP) group. Most of AQAP members are Saudi whose aim is to topple the royal family. The March 2011 Congressional Research Service (CRS) report on Saudi Arabia details the Kingdom’s progress on its domestic al-Qaeda terrorists cells,  confirming the 2009 GAO’s finding that “U.S. and Saudi officials report progress on countering terrorism and its financing within Saudi Arabia.” However, the GAO report noted that there was hardly any efforts to prevent “funding for terrorism and violent extremism outside of Saudi Arabia” (Emphasis added). Again, little has changed since Under Secretary Levey testimony before the Senate Finance Committee in 2008 that Saudi Arabia is “serious about fighting Al Qaeda in the kingdom…[but] the seriousness of purpose with respect to the money going out of the kingdom is not as high.”
In 2010 the Saudis dismantled 19 AQAP cells in the Kingdom. The operation included the seizure of 2.24 million riyals (over $600K) and the detention of 149 cell members-including 25 from other Arab, African, and South Asian countries. The arrests foiled at least ten attacks by AQAP on government and military targets, and officials, according to the Saudis.  In June 2010 after exposing a 60-person fundraising cell for AQAP, the Saudis announced that they were reviewing their terrorism strategy.
With self-preservation in mind, the Saudi intelligence services tipped off the American, British, and German governments of AQAP planned terror attacks in late 2010. In October after the burqa ban was enforced in France, the Saudis warned of a possible al-Qaeda attack on the country. In November the Saudis scored political points and public recognition for revealing that AQAP had planted explosives on European cargo planes bound for the United States.
However, the State Department’s leaked cables confirmed the GAO’s 2009 conclusion that the Saudis showed “progress on countering terrorism and its financing within Saudi Arabia, but noted challenges, particularly in preventing alleged funding for terrorism and violent extremism outside of Saudi Arabia.”
Ongoing Saudi Support for Terrorism by Direct Means
”The angry form of Islamism and Wahhabism in Saudi Arabia today is the soil in which anti-Western and anti-American terrorism grows.”
-Former CIA director R. James Woolsey
Saudi efforts to bring Wahhabi Islam to global dominance began in earnest in 1962, with the establishment of the first international Saudi charity, the Muslim World League (MWL). Influenced by exiled Egyptian Muslim Brotherhood members, then-Crown Prince Faisal bin Abdul Aziz used the growing oil revenues to fund MWL, which in turn established many other Islamic charities and nonprofits that helped create the global jihadist movement we are facing today.
According to a report submitted to the president of the UN Security Council in December 2002, “One must question the real ability and willingness of the [Saudi] Kingdom to exercise any control over the use of religious money in and outside the country.” In the year 2000 alone, Saudi citizens’ contributions to various Islamist groups amounted to $500 million. Most of the money went to cover expenses such as salaries, pensions, and “terrorcare” services that included hospitals and schools-especially (religious teachers) and madrasas.
Saudi Arabia is a theocracy dominated by Wahhabi power figures that (despite Saudi protestations to the contrary) control both governmental and non-governmental sectors of the country. The government/ruling family makes or breaks the wealth of all its subjects. Moreover, successive Saudi kings have created “charitable” organizations to fund the worldwide spread of Wahhabbism and have on occasion organized several national campaigns encouraging citizens to support Sunni terror organizations outside the country. Thus it would be wrong to distinguish between contributions to radical Sunni organizations by the ruling family, the Saudi government, and wealthy Saudi subjects.
Afghanistan’s financial intelligence unit FinTraca reported in May 2010 that Saudi contributors have funneled over $1.5 billion to Afghanistan through Pakistan since 2006. Most of the money has entered Afghanistan through Pakistani tribal areas, especially through North Waziristan, which is known as “al-Qaeda’s heartland.” Mohammed Mustafa Massoudi, the director general of US-trained Afghan intelligence in Kabul, said, “We can trace it back as far as an entry point in Waziristan” the uncontrolled tribal border area between Pakistan and Afghanistan. Then went on, “Why would anyone want to put such money into Waziristan? [for] Only one reason: terrorism.” The likely destination of the money was thought to be the Taliban and al-Qaeda.
Since 2006, these groups have killed at least 1,525 American soldiers in Afghanistan and maimed thousands more. As former Under Secretary Levey declared in his April 2008 testimony before the Senate Finance Committee, “Saudi Arabia today remains the location from which more money is going to terror groups and the Taliban-Sunni terror groups and the Taliban-than from any other place in the world.”
The Saudis also support Pakistan’s Laskhar-e Taiba (LET), a terrorist group most known in the West for perpetrating the Mumbai attacks in 2008, which killed over 200 people and injured over 300 more. Pakistani police reported in 2009 that the Saudi al-Haramain Foundation-a charitable organization designated as a terrorist sponsor by both the US and Saudi governments-gave $15 million to jihadists, including those responsible for suicide attacks in Pakistan and the assassination of former Pakistani Prime Minister Benazir Bhutto.
The Saudi-based International Islamic Relief Organization’s (IIRO) Philippines branch, which was run until his death in 2007 by Muhammad Jamal Khalifa, Osama bin Laden’s brother-in-law until his death in 2007, was designated a terrorist sponsor by the US Treasury in August 2006 “for facilitating fundraising for al Qaida and affiliated terrorist groups.”
This apparently did not stop Saudi support for the al-Qaeda-affiliated Abu Sayyaf Group. A Wikileaks-released cable from the US Embassy in Riyadh described the US Government’s concerns with the IIRO’s continuing Saudi funding of al-Qaeda-affiliated group in the Philippines. Dated February 24, 2007, and classified as “secret,” the cable detailed a February 6, 2007 private meeting between US assistant to the president for Homeland Security and Counterterrorism Francis Fragos Townsend and Saudi Foreign Minister Prince Saud al-Faisal. Townsend asked the foreign minister to stop the “involvement of the Saudi ambassador to the Philippines Muhammad Amin Waly in terrorism facilitation,” noting “his intervention to get two members of IIRO out of prison.” Prince Saud declared a belief that Waly’s actions “may have involved bad judgment rather than intentional support for terrorism” and Waly remained in his position until October 2009.
Despite evidence of IIRO funding to radical Muslim groups the world over, the US Government has refrained from designating the IIRO in its entirety as a terrorist organization. As a result, the IIRO obtained membership in the United Nations’ Department of Public Information (DPI) in August 2010. This membership provides the IIRO the perfect cover from which to expand its reach.
Saudi funding to the US-designated Muslim Brotherhood Palestinian branch, the terrorist organization Hamas, has never stopped. In March 2007 Israel notified the US that Hamas leader Ismail Haniyeh transferred a $1 million contribution he received in Saudi Arabia to Hamas’ “armed wing,” the Izz el-Deen al-Qassam Brigades. On December 16, 2009, while Hamas was shelling Israeli civilians from the Gaza Strip, Haniyeh told Al-Jazeera that he passed $1 million in funding from a Saudi donor to Hamas’ “armed wing.”
In January 20, 2009, even before Israel concluded Operation Cast Lead, its defensive operations to stop terrorist attacks from the Gaza Strip, Saudi Arabia pledged $1 billion for the reconstruction of Gaza.
As documented in my book Funding Evil: How Terrorism is Financed-and How to Stop It, several Saudi financial institutions openly funded terrorist groups throughout the 1990s and early 2000s. In September 2000, Saudi Arabia conducted two telethons for the specified purpose of raising funds for the families of Palestinian homicide bombers, including members of Hamas and the al-Aqsa Martyr Brigades. Saudi Arabia also created the Saudi Committee for the Support of the al-Quds Uprising, based in Riyadh and run by interior minister Prince Nayef. This committee “reported the transfer of $55.7 million mostly to the families of suicide bombers and to the families of imprisoned or injured Palestinian militants.” Records found in the offices of the Tulkarm Charity Committee detail the payments to 102 Hamas terrorists who were killed in “martyr operation[s].” In 2002 the Saudi Arabian International Islamic Relief Organization donated $280,000 to Palestinian organizations that the US has linked to Hamas.
Non-Compliance with Counterterrorism Treaty Obligations
In 2007 Saudi Arabia ratified the 1999 International Convention for the Suppression of the Financing of Terrorism. The treaty requires that signatories cooperate “with one another in conducting inquiries,” including those on “the movement of funds relating to the commission of [terrorist financing].”
Yet in January 2010, the Al Rajhi Bank, the largest Islamic bank in the Gulf Cooperation Council and the third largest commercial bank in Saudi Arabia, refused to comply with a subpoena issued in the terror financing trial of US operative of the Saudi based international al-Haramain Foundation (AHF), Dr. Peter Seda. The evidence provided by the prosecution showed that a Saudi bank branch accepted $151,000 in traveler’s checks deposited in March 2000 in the name of the AFH. The US Treasury Department designated the AHF in 2008 as sponsors of terrorism, stating: “Today’s action targets the entirety of the AHF organization, including its headquarters in Saudi Arabia. Evidence demonstrates that the AHF organization was involved in providing financial and logistical support to the al Qaida network and other terrorist organizations designated by the United States and the United Nations.” The Saudis claim they have shut it down. But in 2009 the GAO reported it as still active.
After the bank converted the dollars into Saudi riyals, the money was smuggled out of Saudi Arabia, possibly to Chechen mujahedeen (Muslims engaged in jihad (holy-war) against the infields).
In addition to refusing to cooperate with an ongoing criminal investigation in the United States, Al Rajhi took the unorthodox step of suing to dismiss the administrative subpoena it received from the US Attorney’s office for the District of Oregon in July 2009. The bank is insisting that the office had no authority to issue the subpoena, that providing the records would violate Saudi law, and that the information was not requested using “appropriate diplomatic channels.”
The Saudis blatant violation of the 1999 International Convention for the Suppression of the Financing of Terrorism did not stop the conviction of AHF’s US operative. However, the US Government did not openly challenge the Saudi government and no known sanctions have been taken against the bank.
Saudis Funding of and Fighting in the Iraqi Insurgency
Saudis have had a major hand in providing funds and fighters to the Iraqi insurgency. In February 2009, Abu Ahmed, one of the founders of the Iraqi insurgency who now works with American forces, revealed to Newsweek that he had been bankrolled by Saudi donations. In 2006, it was reported that millions of Saudi riyals, often collected in the form of zakat (compulsory charity), were smuggled to Iraq to pay for missiles and other weapons. The Associated Press revealed that in 2006, one Sunni cleric alone had received $25
– See more at: http://acdemocracy.org/saudi-arabias-efforts-to-expand-radical-islam-and-support-terrorism/#sthash.FiGWNnRl.dpuf