A recently released report into terrorist financing structures by the investigative arm of the United States Congress, the GAO , has concluded that “the Justice and Treasury departments have fallen more than a year behind in developing plans to attack terrorist financial mechanisms, such as the use of diamonds and gold to hide assets.” Global Witness strongly endorses the findings of this report and calls on the US government to take concerted and immediate action to prevent diamonds from funding terrorism.
The report found that ‘terrorists use various alternative financing mechanisms to earn, move, and store their assets.’ The investigation studied five commodities – illicit drugs, weapons, cigarettes, diamonds and gold. Only diamonds were found to have the ability to earn money, move money and store money.
The GAO report specifically criticises the Departments of Treasury and Justice for failing to produce a report on the links between terrorist financing and precious stone and commodity trading, as was required by March 2003 under the 2002 National Money Laundering Strategy. Members of Congress have backed GAOs conclusions citing the problem as a “gaping hole in our preparedness”, and believe that “more needs to be done to track the diamond trade, where many suspected international terrorists may be turning to conceal how they are financing attacks.” Global Witness supports GAO’s call for the Secretary of the Treasury and the Attorney General to issue this report.
The GAO report supports the findings of the Global Witness report released in March 2003 which details how Al Qaeda and Hizbullah utilize corrupt states, illicit diamond networks and the lack of control mechanisms to fundraise and hide assets from financial investigators. Efforts were made by Global Witness to raise awareness of this in the Kimberley Process, an international effort to end the trade in conflict diamonds. However governments and the diamond industry have successfully avoided dealing with the issue citing a lack of evidence for action.
A Treasury Department official stated that the FBI had investigated the issue and found no evidence of a link. However Global Witness understands that the ‘investigation’ consisted of a two-person team from the FBI spending a total of one week in West Africa.
“That is not a credible investigation for an issue that affects US national security interests,” said Alex Yearsley of Global Witness. “The Kimberley Process recently agreed a voluntary system of peer review for its members. Whilst a significant step forward, the Kimberley Process will have to be significantly strengthened in 2004 if terrorist access to this highly attractive commodity is to diminish,” said Yearsley.
Terrorist Financing. U.S. Agencies Should Systematically Assess Terrorists’ Use of Alternative Financing Mechanisms. November 2003 GAO-04-163
Associated Press. December 15 2003 Vickie Chachere.
In response to the GAO request the Department of the Treasury stated that the report would be issued as an appendix to the 2003 National Money Laundering Strategy. This has yet to be released.
See http://www.globalwitness.org/reports/index.php?section=diamonds
Press Release / Dec. 16, 2003