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Saudis agree to block terrorist assets

Global money-laundering group issues new standards

By Matt Andrejczak,

Last Update: 5:31 PM ET Oct. 31, 2001

WASHINGTON (CBS.MW) - Saudi Arabia agreed to block the assets of individuals and charity groups named on a U.S. list of groups suspected of funding terrorist networks, a senior Bush administration official acknowledged for the first time on Wednesday.

Treasury Under Secretary Jimmy Gurule said Saudi Arabia is one of 81 countries that have put blocking orders in place to freeze the assets of 66 organizations designated by the U.S. government. More than 150 countries have pledged to cooperate.

It was the first public acknowledgement by the Bush administration that Saudi Arabia, a pivotal U.S. ally in the Middle East, had joined the international coalition.

Since the Sept. 11 terrorist attacks, the U.S. government has ordered the assets of a few Saudi-backed charities and six Saudi citizens, five of whom later appeared on the FBI's most wanted terrorist list, to be frozen.

Reports had surfaced in recent weeks that Saudi Arabia was resisting efforts to join the growing international crackdown on terrorists. The Bush administration repeatedly denied the accusations, saying it was pleased with the Saudi cooperation.

Apparently, the Saudi government jumped on board in mid-October when the Gulf Cooperation Council -- a group of six Middle East nations, of which Saudi Arabia is a member - announced it would join the asset-blocking initiative.

However, at the moment, it is not known if the Saudi government has in fact frozen any assets - a point surprisingly downplayed by Treasury Department officials Wednesday.

"I don't think we should become so fixated on blocking of assets," Gurule said. "Simply because any account has not been blocked should not be interpreted or construed that it is not the subject of scrutiny by the United States."

He further explained that particular accounts might not be blocked in order to develop additional evidence and investigative information.

At a recent news conference, Saudi Interior Minister Prince Nayef told reporters that the Saudi government and its banks have yet to establish any accounts linked to al-Qaida and bin Laden.

According to the Treasury Department, $24 million of assets tied to charity groups and individuals connected to Osama bin Laden's al-Qaida terrorist network have been frozen since Sept. 11.

In a related development, the Swiss government said Wednesday it blocked 24 bank accounts connected to the U.S. list of suspects believed to be funneling money to the al-Qaida terrorist organization. A Swiss official declined to cite the amount of funds in the accounts, which have been frozen indefinitely.

The Indonesia government is also investigating several bank accounts suspected to have links to terrorists and plans to issue a decree to freeze the assets, the Associated Press reported, citing a high-ranking government official.

Task Force recommends laundering standards

The Financial Action Task Force -- an anti-money laundering body comprised of 29 member countries -- laid out a new international standard to combat the funding of terrorist organizations on Wednesday.

Following a two-day meeting this week in Washington D.C., FATF said its set of eight recommendations includes new requirements to crack down on alternative banking systems such as hawalas and measures to ensure that non-profit organizations cannot be illegally to finance terrorist activities.

The hawala system is an informal, paperless banking network widely used throughout the Middle East to transfer money.

FATF, formed by the world's seven leading industrialized nations, said its member countries agreed to become compliant with the new action plan by June 2002.

Although FATF has no statutory powers, it has effectively encouraged countries to strengthen their anti-money laundering laws by publishing a "name and shame" list of countries with lax money laundering laws.

The 11 countries still on its black list include Egypt, Indonesia, Israel, Russia and a handful of Caribbean nations.

After next June, FATF plans to identify countries and jurisdictions that lack appropriate measures to prevent terrorist financing.

Countries that don't comply could face "some economic consequences," Treasury Under Secretary Gurule said.

Internet Gambling

The House Financial Services Committee voted 34-18 Wednesday to pass Internet gambling legislation aimed to cut down on money laundering.

The bill, authored by Iowa Republican Jim Leach, was approved after it was recently deleted from the new set of money laundering laws recently passed by Congress.

The legislation will ban individuals from settling illegal Web gaming transactions with credit cards, debit cards or electronic transfers.

The FBI has told lawmakers that Internet gambling is being used to launder money into the United States. It is currently investigating two such cases.

Matt Andrejczak is a reporter for in Washington.

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-- Jackson Brown (, October 31, 2001

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