FROM THE OFFICE OF PUBLIC AFFAIRS

February 5, 2005
JS-2231

Under Secretary Taylor’s Remarks on Combating Terrorist Financing
at the G-7 Meeting of Finance Ministers and Central Bank Governors

- Dr. John Taylor, Treasury's Under Secretary for International Affairs, discussed our efforts in the financial war on terror during dinner with the G-7 Finance Ministers and Central Bank Governors on February 4^th.

"As Secretary Snow has said, hatred fuels terrorism, but money makes their lethal schemes achievable.  By breaking the financial backbone of terrorist groups and insurgents, we can encumber and thwart their short term ambitions while rupturing and dismantling their long-term agendas.  Choking off funds that aid terrorist efforts can lead to the ultimate ruin of terrorist organizations.  A major focus of our efforts moving forward should be the collective use of our financial tools to protect the international financial system from abuse by terrorists or criminals, without disrupting legitimate flows of capital.

"Anti-money laundering and counter-terrorist financing standards are vital pillars in our fight against terrorist financing, and therefore require global compliance.  The G-7 has been at the forefront of these efforts, implementing necessary standards at home, while working with our coalition partners abroad to do the same.

"While we recognize the battle is not over and much work lies ahead, we also know we can build on our past successes to further tighten the financial noose around al Qaida, Hamas and other like-minded terrorist groups.  Our efforts have brought to fruition the freezing of millions of dollars worldwide in terrorist-related assets.  More importantly, we have closed down channels and sources of funding that were being relied upon to bankroll terrorist agendas.

"In addition, our collective work with the International Financial Institutions (IFIs), the Financial Action Task Force (FATF) and with other organizations plays a central role in our progress in this common fight.  We look forward to continuing this productive and collaborative effort.

"As last year's G-7 chair, the United States would especially like to thank the United Kingdom for aggressively carrying the torch forward and putting together the outline of a well-structured thematic Draft Action Plan that builds on our past work.

"The Action Plan echoes the themes of the UK Presidency: engagement and effectiveness.  Clearly, to improve engagement, we will need to promote global compliance with the FATF 40 Recommendations and the nine Special Recommendations on terrorist financing.  To improve the effectiveness of our efforts, we need to ensure that we are aggressively implementing our financial sanctions regimes to ensnare terrorists and applying them broadly to the financial underpinnings of all crime.  We should focus in particular not just on banks, but also on non-bank financial services, charities and other high risk sectors.

"We should continue to use financial sanctions that are targeted or pinpointed to specific institutions or entities, and refine the methods we use to identify and isolate terrorist support networks under relevant UN obligations (UNSCR 1267 and 1373).

"The G7 should refine and develop what has become the tool of choice internationally in dealing with terrorist financing: aggressive targeting mechanisms and the implementation of targeted financial sanctions.

"In moving forward, I also believe we should use the full range of financial tools available to us collectively to identify and isolate corrupt foreign financial institutions that are facilitating illicit financial activity.

"Indeed, the U.S. Treasury Department has already used its authority under Section 311 of the USA PATRIOT Act to identify and cut off from the U.S. financial sector several foreign financial institutions that we found to be of primary money laundering concern and therefore a threat to our financial system.

"Though we have found this tool to be highly effective, it would clearly be most effective if employed multilaterally.

"We have seen impressive successes in our collective efforts to target and halt terrorist financing, and we have learned much about the mechanisms that provide the channels for illicit international activity.

"The United States believes we should apply these lessons and deploy the full array of financial tools at our disposal to attack the financial underpinnings of all illicit activity, including organized crime, kleptocracy, narcotics trafficking and the proliferation of weapons of mass destruction.

"The stakes are high, and we need to demand of ourselves and of the financial leaders around the world continued creative thinking and effectiveness in these efforts.  Terrorists and their sympathizers have proved to be crafty and unrelenting in their efforts to bankroll hatred - we must always stay one step ahead of their antics.  Our challenge is difficult, but our resolution is steadfast," said Taylor.