August 15, 2008
HP-1117

Opening Remarks of Assistant Secretary for Terrorist Financing
Patrick O’Brien at Treasury’s Charity Roundtable

Washington DC--Good Morning.  I would like to welcome you all to the Treasury Department for today's Charity Roundtable.  It is our hope that today's discussion will build upon the regular dialogue we have had over the years both here in Washington and in community events around the country.   Before I go further, I would like to extend my special thanks to Mr. Kareem Shora, National Executive Director of the American-Arab Anti-Discrimination Committee (ADC), and his capable staff for their assistance and leadership in organizing this event.

The United States government is committed to strengthening our relationship with Arab and Muslim-American communities.  For our part, the Treasury Department continues to engage with both the charitable sector and affected communities to advance our shared interests in a free, open, tolerant, and charitable society.  One that encourages charitable and humanitarian activities, while at the same time protecting those efforts from abuse.    

Over the last several years, the Treasury Department has established an important relationship and dialogue with the Arab and Muslim-American communities as we work together to address the threat of terrorist financing in the United States and the Muslim and Arab worlds.  This relationship is necessary as we work to protect and preserve the sanctity of charitable giving and zakat from terrorist groups like al Qaida, Hamas, Hizbollah, and others who have purposely usurped the goodwill and donations of Muslims around the world to fuel their terrorist agenda.  It is also critical to advancing our collective mission of promoting charitable relief and development around the world to those most in need of our assistance.  Although we may not agree on all points, an honest and frank exchange between the federal government and Arab and Muslim-American communities fosters mutual understanding and also serves as a basis for continued cooperation.

The Arab and Muslim-American communities are uniquely situated to advance our common interests in both promoting and protecting charitable activities.  Your engagement and leadership has the potential to affect global practices and perceptions that are essential to these interests and winning the long term battle against terrorism.

We anticipate that today will provide an open and informal forum to exchange thoughts and mutual concerns.  It is fair to say that our agenda is ambitious and engaging.  There is a diversity of interests and concerns that are reflected by speakers from Treasury, the Internal Revenue Service, the FBI, USAID as well as a number of charitable and advocacy groups, civil rights organizations and concerned individuals. 

Today's dialogue will be wide-ranging and focused on the following topi

• The nature of the threat of terrorist abuse of charities;
• Basic governance, accountability, and transparency issues which affect charities as well as hearing how the private sector implements such principles;
• Concerns of charities that operate in high-risk areas and measures they may voluntarily implement to minimize risks of abuse;
• Providing guidance to donors on charitable giving;  and
• Identifying ongoing and future challenges.

I would like to make a few general observations about the first topic on the agenda – the nature of the threat.  Absent a baseline understanding of this matter, the United States and the international community's response would not be well understood.  As has been noted on many occasions, the nature of terrorist financing is dynamic, evolving, and it often varies by the particular region.  However, the Treasury Department, working with its domestic partners and international organizations such as the Financial Action Task Force, has made a concerted effort to document the risks and typologies of terrorist exploitation through a number of publications.

Some believe that the terrorist financing threat in the charitable sector is limited to cases of diversion of funds or materials.  Diversion occurs when a charity ostensibly raises money for a legitimate goal, but then uses the funds for an illicit purpose.  In the broadest sense, this is fraud.  However, it is not the only problem we confront in the sector.  In addition to raising and moving funds as well as providing operational cover, it is well known that foreign terrorist organizations such as al Qaida, Hamas, and Hizbollah purposefully establish or exploit charities to gain support, recruit new members, and radicalize vulnerable populations.  Terrorist groups often supplant a weakened central government and in effect, develop social welfare arms.  They run the hospitals, schools, and clinics for these populations.  This gives terrorist organizations a seemingly reputable foundation for recruiting new members.

Many of these charities do provide actual services, as well as support terrorism.  It is this aspect of the threat the underlines our voluntary guidance covering the vetting of key employees and grantees of charities working in high-risk areas against lists of designated terrorist organizations, entities and individuals. This fact is supported by a number of different sources including law enforcement investigations, academic studies, media reports, and publicly available information that support Treasury Department designations.  In this regard, the public information concerning Treasury's designations of specific U.S.-based charities revealed that many of the charitable organizations engaged in actual charitable services.  However, they were unfortunately owned or controlled by, or acted for or on behalf of; or provided financial, material, or technological support. This is a violation of U.S. law, namely Executive Order 13224.  Organizations such as Benevolence International Foundation and Global Relief Foundation are prime examples of this type of illicit activity.  Furthermore, Treasury's recent designation of the Tamil Rehabilitation Organization (TRO) in Sri Lanka and a similar action taken by the Government of Canada illustrates that a wide range of foreign terrorist organizations that exploit charitable services.  In fact, almost all of the foreign terrorist organizations maintained by the federal government have some charitable component or function.   

The broader exploitation of charities operating in high-risk regions raises serious questions and challenges for the United States, the international community, and charities operating in high-risk areas.  Going forward, some key challenges include: adoption of best practices, utilizing alternative relief measures, and improving private sector relief efforts.  Let me just take a minute to briefly outline these areas.  

Adoption of Anti-Terrorist Best Practices

All charities working in high-risk areas should consider adopting specific anti-terrorist measures.  As guidance, Treasury published the Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.- Based Charities in consultation with a number of charitable groups.  In light of the risk of exploitation in certain regions and the need to comply with U.S law, these measures, among other things, recommend that a charity collect information on its grantees as well as key employees and then check such information against lists maintained by the Department of the Treasury.  It is important to note that such measures are risk-sensitive and recognize that charities may sometimes operate under exigent circumstances.  However, we understand that there has been significant discussion both within the charitable sector and affected communities regarding the feasibility, potential burden, and the effect of such measures, and hope we can examine these concerns during today's roundtable.  Going forward, Treasury will continue to work with interested parties to further refine its guidance in this area, including through the Treasury Guidelines Working Group forum.

Alternative Relief  

In some circumstances, effectively and safely operating in regions where there are known terrorist activities may require creating alternative distribution means.  Essentially, this type of partnership allows individual U.S. donors to tap into the government resources and distribution networks, thereby leveraging counterterrorism mechanisms only available to the government.  The aim is straightforward – to provide a safe and effective way for individuals to contribute to critical regions where aid is desperately needed, such as the West Bank and Gaza.  Such partnerships also have the potential to weaken the hold that foreign terrorist organizations have on vulnerable populations by harnessing a competitive force – the generosity of the American people.  Dr. Ziad Asali, the American Charities for Palestine, and other government partners who work with USAID are doing just that.  It is our hope that this type of collaboration will take root and serve as a model for other areas of concern as well as encompass other funding streams including that of the international community.

Private Sector Efforts 

Of course, the first line of defense against terrorist exploitation of the charitable sector lies with charities themselves.  On its own initiative, a Muslim-American advocacy group has started to educate its constituency and bolster the capacity of member charities.  Muslim Advocates has taken an important first step by partnering with the Better Business Bureau Wise Giving Alliance to develop a training and certification program encompassing transparency, accountability, and governance related issues.  We strongly support this effort and it is our hope that this type of program will be embraced by other groups and that the original scope will be expanded to also cover terrorist financing issues and preventive measures for charities working in high-risk regions. 

Conclusion

In closing, I hope today's Charity Roundtable discussion helps us all better understand how we can work together to advance our common interests in promoting and protecting charity.  The continued dialogue and work between the federal government and Arab and Muslim-American communities is a critical element in our collective effort to combat those aiming to corrupt our charitable institutions and destroy the liberties we enjoy every day as Americans.  We look forward to continuing our work together on these issues, and I thank you for your participation, concern, and leadership in moving this dialogue forward.

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