From the Office of Senator Kerry

Wednesday, October 22, 2003

WASHINGTON, DC – Senator John F. Kerry (D-Mass.) today restated his call for President Bush to declare Syria and Lebanon primary money laundering concerns, thereby imposing financial sanctions on the countries designed to cut off the flow of funding to terrorist organizations in Iraq.

Recent news accounts note that Bush Administration officials have stated that American investigators have evidence that $3 billion that belonged to Saddam Hussein’s government is being held in Syrian-controlled banks in Syria and Lebanon. According to the New York Times, Bush Administration officials said they were concerned that money left in Syrian banks might instead be used to finance attacks on American forces inside Iraq, some of which are being sponsored or carried out by people loyal to Mr. Hussein.

“In May, I called on the President to impose financial sanctions on Syria and Lebanon to stop Saddam Hussein’s regime from using their financial system to support terrorism. However, the Bush Administration has not taken appropriate actions to stop these funds from being used by international terrorist organizations,” said Kerry. “Every American should be deeply concerned by reports that this money may now be used to pay for attacks on our troops in Iraq. The inaction by the Bush Administration to stop the flow of money from Syria and Lebanon continues to threaten the lives of every member of our Armed Forces now serving in Iraq. This is totally unacceptable.

“I again call on the President to impose financial sanctions on Syria and Lebanon to cut off the flow of funding to terrorist organizations in Iraq. As long as international terrorists have access to a financial network, they remain a lethal threat to the United States forces in Iraq and to our interests around the world.”

Background In response to the September 11, 2001, attacks on the United States, Senator Kerry worked with Senate Banking Chairman Sarbanes (D-Md.) and Senator Levin (D-Mich.) to develop a package of anti-money laundering provisions, which included his bill the International Counter-Money Laundering and Foreign Anticorruption Act. These anti-money laundering provisions were included as Section 311 of the USA PATRIOT Act which was signed into law by President Bush in October 2001.

In May 2003, Senator Kerry called on President Bush to identify both Syria and Lebanon as primary money laundering concerns under the authority provided in Section 311 to require that U.S. financial institutions provide enhanced scrutiny of financial transactions from these countries to curb the funding of international terrorism. To date, no such action has been taken by the Bush Administration.

In May 2003, Senator Kerry asked President Bush to name Saudi Arabia as a primary money laundering concern using the authority provided in Section 311 and to impose enhanced due diligence on financial transactions involving Saudi Arabian financial institutions, charities and high net-worth individuals to determine whether any transactions pose an unacceptable risk of being related to the finance of terrorism. To date, no such action has been taken by the Bush Administration.

Attached are the text of Sen. Kerry’s letter to President Bush requesting Syria and Lebanon be declared primary money laundering concerns as well as stories from the New York Times and TIME Magazine regarding this issue.

Text of Letter to President Bush

May 7, 2003

The President The White House Washington, DC 20500

Dear Mr. President:

I am writing to request that you instruct the Secretary of the Treasury to identify both Syria and Lebanon as primary money laundering concerns under the authority provided in Section 311 of the USA PATRIOT Act (P.L. 107-56) and to require that U.S. financial institutions provide enhanced scrutiny of financial transactions from these countries to ensure funds linked to international terrorists do not originate from or pass through financial institutions in those countries on their way to the United States. I strongly believe these actions will help curb the funding of international terrorism and could assist in the return of funds stolen from the Iraqi people.

The Secretary of State has designated Syria as a state whose government has repeatedly provided support for acts of international terrorism and has provided designated foreign terrorist organizations, such as Hamas and Hizballah, with sanctuary. The International Narcotics Control Strategy Report (INCSR), a group of federal agencies with anti-money laundering responsibilities, has classified Syria as a country to be monitored for potential money laundering. There have been a number of published reports stating that individuals from Saddam Hussein’s Iraqi regime have attempted to move to Syria and may be using the its financial system to divert funds which have been stolen from the Iraqi people.

The Government of Lebanon has made some progress in updating its anti-money laundering laws, as the Financial Action Task Force has recognized, and it should be commended for doing so. However, Lebanon remains one of the more sophisticated and well-capitalized banking sectors in the Middle East. Combined with a tradition of bank secrecy, the extensive use of foreign currency, the influx of remittances from expatriated workers, and a lack of financial accountability and enforcement, Lebanon has developed a financial environment conducive to laundering the financial proceeds of international crimes such as narcotics, counterfeiting and smuggling. The INCSR has designated Lebanon as a jurisdiction of primary money laundering concern.

The Financial Crime Enforcement Network (FinCEN) has conducted an analysis of the Suspicious Activity Reporting System (SAR) related to Lebanon for the period of January 2002 through October 2003. The FinCEN analysis has revealed 286 SARs that could be linked to transactions associated with suspicious or fraudulent wire transfer activities between Lebanon and other countries. Many of these transactions were structured in an attempt to avoid reporting requirements. Two of the SARs describe the reason for their filing as directly related to possible terrorist activities.

In May 2002, two men in Charlotte, North Carolina were convicted and seven others pled guilty to providing material support for Hizballah. In Dallas, Texas, a senior leader of Hamas has been indicted for conspiring to violate laws that prohibit dealings in terrorist funds.

I believe the United States must take any and all necessary measures to stop international terrorist organizations -- such as Hamas and Hizballah -- and former members of the Iraqi government who may be residing in Syria, Lebanon, and other countries in the area from supporting terrorism overseas and in the United States with the proceeds of international crime.

The United States has the largest and most accessible economic marketplace in the world. Foreign financial institutions and jurisdictions must have unfettered access to markets to effectively work within the international economic system. In 2000, I introduced legislation that became Section 311 of the USA PATRIOT Act to provide the federal government with the authority to leverage the power of United States financial markets to encourage countries like Syria and Lebanon to reform and enforce their counter-money laundering and counter-terrorist financing laws. As you are aware, it provides measures that are graduated, discretionary, and targeted, focusing on international transactions involving criminal proceeds, while allowing legitimate international commerce to continue unimpeded.

If we are to lead the world in the fight against terror, we must effectively use our own laws to cut off the flow of laundered funds from terrorist groups through the international financial system. The measured use of Section 311 authority against Syria and Lebanon provides the United States an opportunity to demonstrate leadership in the fight against international terrorism and money laundering.

Thank you in advance for your consideration of my request.

Sincerely,

John F. Kerry

News Accounts Copyright 2003 The New York Times Company The New York Times

October 21, 2003, Tuesday, Late Edition - Final SECTION: Section A; Page 12; Column 6; Foreign Desk LENGTH: 573 words HEADLINE: THE STRUGGLE FOR IRAQ: HUSSEIN MONEY; U.S. Believes Syrian Banks Hold $3 Billion In Iraqi Funds BYLINE: By DOUGLAS JEHL

DATELINE: WASHINGTON, Oct. 20 BODY: American investigators have evidence that $3 billion that belonged to Saddam Hussein's government is being held in Syrian-controlled banks in Syria and Lebanon, Bush administration officials say.

A delegation led by the Treasury Department has spent nearly two weeks in Damascus trying to win access to accounts established by the former Iraqi government or its confederates, the officials said last week. Syria has promised to cooperate, but has so far failed to do so, the officials said.

A United Nations resolution passed after the American-led war against Iraq calls on all nations to seize and return to the American-administered Fund for Development in Iraq all assets of the former Baghdad government so they may be used to benefit the Iraqi people.

The officials said the $3 billion, most of it in Syria, was by far the largest American discovery to date of Iraqi money outside Iraq.

Bush administration officials spoke on condition of anonymity, saying that to speak for the record might jeopardize any cooperation with Syria. They said they were concerned that money left in Syrian banks might instead be used to finance attacks on American forces inside Iraq, some of which are being sponsored or carried out by people loyal to Mr. Hussein. The Americans are pressing the Syrians to say who has access to the accounts.

The American belief that $3 billion in Iraqi money is being held in Syrian-controlled banks was first reported in Time magazine. In interviews, administration officials said the belief was based on "very specific evidence," including the names of banks, account numbers and other details that have been supplied to the Syrian government.

The United States is trying to persuade Syria to order the banks to return the money to the Iraqi development fund, or at least to share with the American investigators information about accounts, including details about any recent withdrawals, the administration officials said.

The officials acknowledged that their information was not entirely up to date, and they said the American investigators, including a team from the Internal Revenue Service, did not know for sure whether the $3 billion was still in the banks.

About $495 million of the money is in Syrian-controlled banks in Lebanon, whose government initially expressed a willingness to surrender the funds, the officials said. But they said that commitment had been put in doubt by resistance from Syria, which is the de facto power in Lebanon.

Some $500 million more in Iraqi assets is in banks in Jordan, which is expected to return the money to the Iraq development fund, the American officials said. At least as much money, and perhaps more, may be in banks in Turkey, they said.

About $1.7 billion in money belonging to the former Iraqi government had been held in banks in the United States, where it had been frozen since the Persian Gulf war of 1991. That money has now been returned to Iraq, for use by the American-led occupation authority in paying the salaries of Iraqi workers.

Some $150 million more in Iraqi funds has long been frozen by Japan in accounts there, and about $90 million of that has so far been returned to the Iraqi development fund. About $585 million more has been identified in accounts of the Bank of International Settlements in Switzerland, and $275 million of that has so far been returned to Iraq.

Copyright 2003 Time Inc. Time Magazine October 20, 2003

SECTION: NOTEBOOK; Pg. 19 LENGTH: 364 words HEADLINE: Saddam's Stash BYLINE: Adam Zagorin BODY: Since the fall of Baghdad in April, American officials have scoured the globe in search of Saddam Hussein's legendary fortune. Now they think they have found a big chunk. According to a U.S. estimate, as much as $ 3 billion in Iraqi assets is sitting in Syrian government--controlled banks, a senior U.S. official tells TIME, and Washington is anxious to determine that the money is not funding violence against Americans in Iraq, or being drawn down by regime officials and supporters. For months the U.S. has quietly insisted that Damascus give up the funds. Secretary of State Colin Powell met with Syrian President Bashar Assad in May and made that unpublicized demand. Top Syrian officials have been given the names of at least two suspect banks and provided with account numbers.

Syria's private response -- that unspecified accounts were being frozen -- was judged woefully inadequate. Publicly, Syria denies there is any Iraqi money in the country. But just over two weeks ago, the U.S. sent two American financial experts and two representatives of the Iraqi Central Bank to Syria to comb through records. U.S. officials now assert that Damascus has given them only "limited cooperation."

In the run-up to the war, Syria was among Iraq's principal trading partners, buying more than $ 1 billion worth of cheap oil annually in violation of U.N. sanctions. Since the war, U.S.-Syrian relations have deteriorated sharply. A congressional bill, which President Bush has signaled he won't veto, accuses Syria of sponsoring terrorism, seeking weapons of mass destruction and occupying Lebanon. It was approved by a House committee last week, three days after Israel attacked an alleged Palestinian terrorist camp outside Damascus--an act Bush, notably, did not condemn. Syria may also be courting economic isolation: its banks could face Bush-imposed sanctions under the Patriot Act, which would effectively bar them from world capital markets. Warns the senior official: "We have made it plain that if access to records and cooperation continue to be restricted, we reserve the right to impose economic counter-measures." --By Adam Zagorin