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US-India Economic and Financial Partnership – Combating Terrorist Financing

Last month, US Treasury Secretary Jack Lew announced a new bilateral effort with India to implement international anti-money laundering / combating the financing of illicit terrorism (AML/CFT) standards.  The announcement at the fourth annual US-India Economic and Financial Partnership specifically mentioned intentions to target the financial networks of Lashkar-e-Tayyiba (LeT), Jamaat-ud Dawa (JuD), and the Haqqani Network.  LeT and it’s religious front, JuD, are blamed for the 2008 Mumbai Terror Attacks, and the Haqqani Network is blamed for the Indian embassy bombing in Kabul that same year.

Congress first criminalized the provision of material support to terrorists in 1994 when it passed 18 U.S.C. § 2339A and, two years later, when it passed § 2339B, which makes it illegal to provide material support to designated foreign terrorist organizations. Prior to this, U.S. law enforcement had to prosecute these crimes under anti-money laundering statutes.  “Material support” includes “property, tangible or intangible, or service, including currency or monetary instruments or financial securities, financial services ….”  It also holds financial institutions responsible and requires any institution that “becomes aware that it has possession of, or control over, any funds in which a foreign terrorist organization, or its agent, has an interest, shall retain possession of, or maintain control over, such funds; and report to the Secretary the existence of such funds in accordance with regulations issued by the Secretary [of Treasury].”

In the days following the attacks on September 11, 2001, President Bush issued , which froze assets of those who commit, threaten to commit, or support terrorism.  In the same speech, President Bush announced an increased role for the Department of Treasury telling the public, “we have established a foreign terrorist asset tracking center at the Department of Treasury to identify and investigate the financial infrastructure of the international terrorist networks….”  Since then, the U.S. Government has gone on the offensive and significantly increased its efforts at combating terrorism by undermining the groups’ ability to fund their efforts.  According to a West Point study from 2010, the number of convictions for terrorism-related cases involving material support charges increased noticeably from 2006 to 2009.  In 2006, “eight out of 54 convictions in terrorism-related cases involved material support charges” and that number jumped to 28 out of 35 just three years later.

Jurisdiction for prosecution under these statutes require that the individual or the offense have certain contacts with the US as listed under 18 U.S.C. § 2339B(d).  With most international transactions having some connection with New York or U.S. banks, tracking and freezing assets, and subsequently acquiring jurisdiction over foreign actors, should not be difficult.   Players in the region, however, might use a more informal system to transfer money from party to party, such as “Hawalas” or “Hundis,” making this newest partnership even more essential in order to follow the money trail.

Secretary Lew’s announcement last month is just another example of the US Government’s proactive approach in cutting off the financial networks available to terrorists and foreign terrorist organizations.  As America continues its draw down in Afghanistan and curbs the frequency of drone strikes in Pakistan, this is a chance for the administration to maintain a regional presence in order to target known and yet-to-be-known threats.


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