Order Code RL32499
CRS Report for Congress
Received through the CRS Web
Saudi Arabia: Terrorist Financing Issues
Updated October 4, 2004
Alfred B. Prados
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
Christopher M. Blanchard
Analyst in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Saudi Arabia: Terrorist Financing Issues
Summary
The September 11, 2001 attacks fueled criticisms within the United States of
alleged Saudi involvement in terrorism or of Saudi laxity in acting against terrorist
groups. Of particular concern have been reports that funds may be flowing from
Saudi Arabia and other Middle East countries to terrorist groups, largely under the
guise of charitable contributions. Critics of Saudi policies have cited a number of
reports that the Saudi government has permitted or encouraged fund raising in Saudi
Arabia by charitable Islamic groups and foundations linked to Osama bin Laden’s Al
Qaeda organization or like-minded entities.
The final report released by the bipartisan National Commission on Terrorist
Attacks Upon the United States (the 9/11 Commission) indicates that the
Commission “found no evidence that the Saudi government as an institution or senior
Saudi officials individually funded [Al Qaeda].” The report also states, however, that
Saudi Arabia “was a place where Al Qaeda raised money directly from individuals
and through charities,” and indicates that “charities with significant Saudi
government sponsorship” may have diverted funding to Al Qaeda.
In numerous official statements and position papers, Saudi leaders have said
they are committed to cooperating with the United States in fighting terrorist
financing, pointing out that Saudi Arabia itself is a victim of terrorism and shares the
U.S. interest in combating it. Saudi leaders acknowledge providing financial support
for Islamic and Palestinian causes, but maintain that no Saudi support goes to any
terrorist organizations, such as the Hamas organization. The U.S. State Department
in its most recent annual report on international terrorism states that Hamas receives
some funds from individuals in the Persian Gulf states but does not specifically
mention Saudi Arabia.
Since the September 11 attacks, Saudi Arabia has issued numerous decrees and
created new institutions designed to tighten controls over the flow of funds in or
through the kingdom, with particular emphasis on increasing the effectiveness of
governmental supervision over charitable donations and collections. A rash of
terrorist attacks on residential and office compounds in Saudi Arabia in 2003-2004
appears to have given added impetus to the Saudi leadership in expanding counter-
terrorist efforts. Since mid-2003, the Saudi government has: set up a joint task force
with the United States to investigate terrorist financing in Saudi Arabia; shuttered
charitable organizations suspected of terrorist ties; passed anti-money laundering
legislation; banned cash collections at mosques; centralized control over charitable
collections; closed unlicenced money exchanges; and scrutinized clerics involved in
charitable collections. H.R. 10, introduced on September 24, 2004, would require
the President to submit to designated congressional committees a strategy for U.S.-
Saudi collaboration, with special reference to combating terrorist financing.
For more information about Saudi Arabia, see CRS Issue Brief IB93113, Saudi
Arabia: Current Issues and U.S. Relations, by Alfred Prados. Audrey Kurth Cronin
and Febe Armanios contributed to this report. This report will be updated
periodically.

Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Saudi Arabia: Allegations of Terrorist Financing . . . . . . . . . . . . . . . . . . . . . . . . . 1
General Allegations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The 9/11 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Council on Foreign Relations Studies . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The September 11 Lawsuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Linde v. Arab Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Scrutiny of Riggs Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Joint Congressional Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Brisard “U.N.” Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Funding for Palestinian Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officially Sanctioned Relief Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Saudi Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Relief Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Unified Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Delivery Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Allegations of Support for Palestinian Terrorists . . . . . . . . . . . . . . . . . . . . 11
Allegations of Support for the Families of Suicide Attackers . . . . . . . 11
Saudi Committee Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Support to Hamas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Charitable Giving and Madrasas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Charity Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Action Against Questionable Charity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Saudi Support to Religious Schools (Madrasas) . . . . . . . . . . . . . . . . . . . . . 17
Saudi Counter-Terrorism Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Post-September 11 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Joint Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The FATF-GCC Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Other Recent Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Continuing Uncertainties and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Khobar Towers Bombing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Dilatory Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Palestinian Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Currency Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
International Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Saudi Arabia: Terrorist Financing Issues
Overview
The attacks of September 11, 2001 fueled criticism within the United States of
alleged Saudi involvement in terrorism or of Saudi laxity in acting against terrorist
groups. One area of particular concern is the suspicion that public or private funds
may be flowing from Saudi Arabia and other Middle East countries to finance
international terrorist activity.
Reliable figures on the amount of money originating in or passing through Saudi
Arabia and ending up in terrorist hands generally are difficult to obtain, for several
reasons. First, the relatively small amounts of money required for terrorist acts can
easily pass unnoticed. Second, the structure of the Saudi financial system makes
financial transfers difficult to trace. Personal income records are not kept for tax
purposes in Saudi Arabia and many citizens prefer cash transactions. Third, Muslim
charitable contributions (zakat) are a religious obligation, constituting one of the five
“pillars of Islam.” Contributions are often given anonymously, and donated funds
may be diverted from otherwise legitimate charities. Moreover, Saudi funding of
international Islamic charities is reportedly derived from both public and private
sources which in some cases appear to overlap, further complicating efforts to
estimate the amounts involved and to identify the sources and end recipients of these
donations.
This report reviews allegations of Saudi involvement in terrorist financing
together with Saudi rebuttals, discusses the question of Saudi support for religious
charities and schools (madrasas) abroad, discusses recent steps taken by Saudi
Arabia to counter terrorist financing (many in conjunction with the United States),
and suggests some implications of recent Saudi actions for the war on terrorism.
Saudi Arabia: Allegations of Terrorist Financing
In the aftermath of the September 11 attacks, numerous allegations have been
leveled against the Saudi Arabian government and prominent Saudi citizens
regarding financial support for international terrorist groups. Although many of the
allegations fault the Saudi government for failing to act decisively to close down
channels of financial support, some critics go so far as to accuse Saudi government
officials of responsibility for the September 11 attacks through design or negligence
and for the continuing threat posed by the perpetrators or by like-minded terrorist
groups. Some of the allegations also deal with possible ties between Saudi officials,
private citizens, and the exiled Saudi terrorist Osama bin Laden and his Al Qaeda
organization. However, Saudi authorities revoked bin Laden’s citizenship in 1994,
and senior Saudi officials have stated publicly that the Saudi regime is as much a

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target of Al Qaeda as is the United States.1 There also have been suggestions that
members of the large and sometimes fractious Saud family, numbering 5,000 or
more, have acted independently of the country’s senior leadership in providing
support to Islamic fundamentalist groups prone to violence. Since September 11,
some U.S. government officials have described Saudi Arabia as “a strong ally to the
United States in [the fight against terrorist financing];”2 however, others have
qualified this viewpoint, and at least one has described Saudi Arabia as “the
epicenter” of financing for Al Qaeda and other terrorist organizations.3 The
following are summaries of the more publicized post-September 11 reports of alleged
Saudi involvement in terrorist financing.
General Allegations
The 9/11 Commission.4 The final report released by the bipartisan National
Commission on Terrorist Attacks Upon the United States indicates that the
Commission “found no evidence that the Saudi government as an institution or senior
Saudi officials individually funded [Al Qaeda].” The report also states, however, that
Saudi Arabia “was a place where Al Qaeda raised money directly from individuals
and through charities,” and indicates that “charities with significant Saudi
government sponsorship,” such as the Al Haramain Islamic Foundation, may have
diverted funding to Al Qaeda (For more on this subject see ‘Action Against
Questionable Charity’ below).
Specifically, the report describes bin Laden’s use of “the Golden Chain,” an
informal financial network of prominent Saudi and Gulf individuals originally
established to support the anti-Soviet Afghan resistance movement in the 1980s.
U.S. officials state that this network collected funds and funneled it to Arab fighters
in Afghanistan, and later to Al Qaeda, using charities and other non-governmental
organizations.5 According to the Commission’s report, Saudi individuals and other
1 Foreign policy advisor to Saudi Crown Prince Abdullah, Mr. Adel Al Jubeir, said on Meet
the Press
, that “we are targeted by Al Qaeda .... Their objective is to change and topple the
government in Saudi Arabia.” Available at [http://saudiembassy.net/2003News/Statements/
StateDetail.asp?cIndex=190]. In June 2004, Saudi Ambassador to the U.S. Prince Bandar
bin Sultan called in the Saudi press for “jihad” against Al Qaeda militants in Saudi Arabia.
(Prince Bandar bin Sultan,”A Diplomat’s Call for War,” Washington Post, June 6, 2004.)
2 U.S. Treasury Secretary John W. Snow, “Statement following Visit to Saudi Arabia,”
September 17, 2003.
3 David D. Aufhauser, General Counsel, Department of Treasury, Testimony to Senate
Judiciary Committee, June 26, 2003.
4 National Commission on Terrorist Attacks Upon the United States, “The 9/11 Commission
Report,” July 22, 2004.
5 FBI agents discovered a handwritten list of 20 alleged Al Qaeda financiers during a March
2002 raid on a Saudi-based charity in Sarajevo, Bosnia. Bin Laden apparently referred to
the group as “the Golden Chain.” Further details were submitted to the U.S. District Court
for the Northern District of Illinois by federal prosecutors in January 2003. The 9/11
Commission Report cites the following document: “Government’s Evidentiary Proffer
(continued...)

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financiers associated with the Golden Chain enabled bin Laden and Al Qaeda to
replace lost financial assets and establish a base in Afghanistan following their abrupt
departure from Sudan in 1996. These activities were facilitated in part, the report
argues, by the “extreme religious views” that exist within Saudi Arabia and the fact
that “until recently” Saudi charities were “subject to very limited oversight.”
Although the report highlights a series of unsuccessful U.S. government efforts
to gain access to a senior Al Qaeda financial operative who had been detained by
Saudi Arabia in 1997, the report credits the Saudi government with assisting U.S.
officials in interviewing members of the bin Laden family in 1999 and 2000. The
report argues that these meetings were integral to U.S. efforts to understand the role
of bin Laden’s personal wealth in the financing of Al Qaeda. As a result of this
assistance, U.S. officials learned that Saudi government actions in the early 1990s
had in effect divested bin Laden of his share of the bin Laden family fortune, leading
Al Qaeda to rely thereafter on a “a core group of financial facilitators” based in the
Persian Gulf “and particularly in Saudi Arabia” for funding. The report also credits
Saudi government actions following the May 2003 bombings in Riyadh which
“apparently reduced the funds available to Al Qaeda — perhaps drastically.”
Council on Foreign Relations Studies.6 An independent task force
sponsored by the Council on Foreign Relations has issued two reports that address
terrorist financing and Saudi Arabia’s alleged financial support for terrorism. The
task force’s October 2002 report strongly criticized what it asserted was Saudi
financial support for international terrorist groups. For example, the report stated
both in its summary and in the main body: “For years, individuals and charities
based in Saudi Arabia have been the most important source of funds for Al Qaeda.
And for years, Saudi officials have turned a blind eye to this problem.” The authors
argued that a connection between Saudi donors and Al Qaeda is logical for several
reasons:
Saudi Arabia possesses the greatest concentration of wealth in the region; Saudi
nationals and charities were previously the most important sources of funds for
the mujahideen [fighters against the Soviet occupation in Afghanistan]; Saudi
nationals have always constituted a disproportionate percentage of Al Qaeda’s
own membership; and Al Qaeda’s political message has long focused on issues
of particular interest to Saudi nationals, especially those who are disenchanted
with their own government
[emphasis added].
5 (...continued)
Supporting the Admissibility of Co-Conspirator Statements, United States v. Enaam
Arnaout, No. 02-CR-892 (N.D. Ill. filed Jan. 6, 2003).”
6 Terrorist Financing. Report of an Independent Task Force Sponsored by the Council on
Foreign Relations, October 2002. Available at [http://www.cfr.org/pdf/Terrorist_Financing
_TF.pdf] and Update on the Global Campaign Against Terrorist Financing. Second Report
of an Independent Task Force on Terrorist Financing Sponsored by the Council on Foreign
Relations, June 15, 2004. See [http://www.cfr.org/pdf/Revised_Terrorist_Financing.pdf].
The Council on Foreign Relations does not institutionally endorse the studies produced by
its independent task forces, and notes that task force members are solely responsible for the
content of their respective reports.

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The report grouped Saudi Arabia with Pakistan, Egypt, and other Gulf states and
regional financial centers as “source and transit countries,” implying that donations
to terrorist causes not only originate in these countries but also that donations from
other countries pass through them en route to terrorist organizations. The Saudi
government responded by charging that the report’s allegations were based on “false
and inconclusive information.”7 A Treasury Department spokesperson reportedly
described the report as “seriously flawed” because in the Department’s opinion it did
not describe new initiatives adequately.8
The task force’s second report, released in June 2004, updates the first report
and chronicles the steps the Saudi Arabian government has taken to strengthen its
financial, legal, and regulatory systems and to combat terrorist financing since late
2002. According to the report, the Saudi government has “announced the enactment
or promulgation of a profusion of new laws and regulations and the creation of new
institutional arrangements that are intended to tighten controls over the principal
modalities of terrorist financing.” The report welcomes these steps and concludes
that “on a comparative basis Saudi Arabia has recently taken more decisive legal and
regulatory action to combat terrorist financing than many other Muslim states.”
The second report also identifies several areas in which its authors argue Saudi
authorities can do more to combat terrorist financing. It argues that additional action
is essential “because of the fundamental centrality that persons and organizations
based in Saudi Arabia have had in financing militant Islamist groups on a global
basis.” The report cites a lack of publicly available enforcement information as the
basis for its questions about the Saudi government’s commitment to implement its
new terrorist financing laws and regulations. For example, the report specifically
criticizes the Saudi government’s “failure to punish, in a demonstrable manner,
specific and identified leaders of charities found to be funneling money to militant
Islamist organizations.” Saudi authorities claim to have prosecuted five individuals
“for terror financing” and frozen the assets “of number of other individuals.”9
In response to the second report’s release, Adel Al Jubeir, foreign policy advisor
to Saudi Crown Prince Abdullah and chief Saudi spokesman, charged that the task
force’s conclusions were “politically motivated, ill-informed, and factually
incorrect.”10 A Treasury Department spokesperson reportedly agreed with the
report’s assertion that Saudi Arabia should take further steps to combat terrorist
financing.11
7 Royal Embassy of the Kingdom of Saudi Arabia, “Response to CFR Report,” October 17,
2002. Available at [http://www.saudiembassy.net/2002News/Press/PressDetail.asp?cYear=
2002&cIndex=54].
8 Douglas Farah, “Report: Terror Funds Flow Through Saudi Arabia,” Washington Post,
October 16, 2002.
9 Adel Al Jubeir, Interview Transcript: CNN Late Edition, June 15, 2004.
10 Adel Al Jubeir, “Saudi Arabia Blasts CFR Task Force Report,” June 15, 2004. Available
at [http://www.saudiembassy.net/2004News/Press/PressDetail.asp?cIndex=223].
11 Reuters, “Saudis Doing Better Battling Terror Funding-Report,” June 15, 2004.

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The September 11 Lawsuit. In mid-August 2002, the families of more than
600 victims of the September 11 attacks filed a suit for approximately $1 trillion
against three members of the Saudi royal family, a number of financial institutions
and individuals, and the government of Sudan. The suit, which the Saudi media have
described as an attempt to extort Saudi deposits in the United States, alleges that the
defendants enabled the September 11 attacks to occur by making financial resources
available to the perpetrators. On November 14, 2003, however, Judge James
Robertson of the U.S. District Court of the District of Columbia ruled that two of the
leading defendants, Defense Minister Prince Sultan and former Director of
Intelligence Prince Turki, were entitled to foreign sovereign immunity for their
official acts. [Burnett v. Al Baraka Inv. and Development Corp., 292 F.Supp.2d 9
(D.D.C. 2003)]12
Linde v. Arab Bank. On July 2, 2004, six families of victims killed or
injured in terrorist attacks in Israel filed a civil lawsuit against Arab Bank PLC of
Jordan in the U.S. District Court of New York seeking $875 million in damages.
Although the Saudi government is not a party to the lawsuit, the complaint alleges
that the Saudi Committee for the Support of the Al Quds Intifada used accounts
established at Arab Bank as conduits for funds to charities and individuals in the
West Bank and Gaza Strip associated with the Islamic Resistance Movement
(Hamas), Islamic Jihad, and other terrorist entities (for a full description of the
Committee, see ‘Funding for Palestinian Organizations’ below). The complaint also
alleges that the Saudi Committee used accounts in Arab Bank and Arab Bank
branches in the Palestinian territories to provide “insurance benefits” to the families
of suicide bombers and others killed or detained in confrontations with Israeli
security forces. In 2003, the Central Bank of Jordan ordered all Jordanian banks “to
freeze any dealing” with six Hamas figures and associated charities. In response to
the lawsuit Shukri Bishara, a senior executive at Arab Bank, reportedly said that “the
accusations are completely false and baseless and Arab Bank never participated in
any activity knowingly that could lead to violence.”13 A Saudi embassy official also
reaffirmed that the Saudi government has not provided financial support for
terrorism.14 [Linde et al. v. Arab Bank, 04 CV 02799 (E.D.N.Y. filed July 2, 2004)]
Scrutiny of Riggs Bank. The Riggs National Bank, which for two decades
had been the chief banker for the Royal Embassy of the Kingdom of Saudi Arabia in
Washington, has come under scrutiny from U.S. Treasury and law enforcement
officials and has been fined $25 million “for numerous violations of the Bank
Secrecy Act.”15 In 2003, Riggs began filing “suspicious activity reports” (SARs) of
unusual or unexplained transactions involving the Saudi Embassy’s bank accounts.
12 See also Carol D. Leonnig, “Judge Rejects Saudi Terrorist Link,” Washington Post, Nov.
15, 2003.
13 Agence France Presse, “Arab Bank Denies Allegations it Funded Terrorists,” July 7,
2004.
14 Personal communication with CRS analyst, July 13, 2004.
15 See Office of the Comptroller of the Currency, “OCC Assesses $25 Million Penalty
Against Riggs Bank N.A.,” May 13, 2004. Available at [http://www.occ.treas.gov/scripts/
newsrelease.aspx?Doc=5AOFP8K.xml].

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Saudi accounts at Riggs were closed in early March 2004 at the bank’s initiative,
according to some sources, but Saudi sources say it was a Saudi decision to end the
relationship.16 On May 13, 2004, federal regulators fined Riggs $25 million for
failing to actively monitor financial transfers through Saudi Arabian and other bank
accounts.17 The FBI is currently investigating the activities of the former chief
federal bank examiner for Riggs from 1998 to 2002, the period in which alleged
money laundering violations occurred. In 2002, the official left the Treasury
Department to become a vice president at Riggs.18
Joint Congressional Report. The declassification and release in mid-2003
of the report of the Joint Inquiry into Intelligence Community Activities before and
after the Terrorist Attacks of September 11, 2001 also brought attention to the alleged
role of Saudi Arabia in supporting terrorism. In the 900-page report, a crucial chapter
on foreign support for the hijackers is virtually all blanked out — 28 pages in all —
because the Administration refused on national security grounds to release the
chapter in a public forum. There has been speculation about the degree to which the
deleted pages might reveal Saudi complicity in the September 11 attacks. According
to the press, persons who claim to have read the still-classified section of the report
say it covers Saudi links with individuals involved in the attacks.19 The Saudi foreign
minister appealed to President Bush to publish the censored pages so as to enable
Saudi Arabia to rebut these suspicions, but the President refused on the grounds that
an ongoing investigation of the September 11 attacks might be compromised.20
The Brisard “U.N.” Report. A controversial private report issued by French
investigator Jean-Charles Brisard in December 2002 made several detailed
allegations about the involvement of prominent Saudi nationals in the financing of
international terrorist organizations. The United Nations Security Council did not
solicit or endorse Brisard’s report, although it has been mischaracterized as a U.N.
report in the public record.21 Although most public allegations of Saudi support for
terrorist activities have not quantified the amounts of money involved, Brisard’s
16 Timothy O’Brien, “A Washington Bank In a Global Mess,” New York Times, Apr. 11,
2004; Kathleen Day and Terence O’Hara, “U.S. Ready To Fine Riggs Bank; Saudi Embassy
Money Reports Scrutinized,” Washington Post, Apr. 18, 2004 (corrected Apr. 27).
17 Timothy L. O’Brien, “Regulators Fine Riggs $25 Million,” New York Times, May 14,
2003.
18 Kathleen Day, “Treasury D. Probing Former Riggs Examiner,” Washington Post, June 17,
2004.
19 James Risen and David Johnston, “Report on September 11 Suggests a Role by Saudi
Spies,” New York Times, Aug. 2, 2003.
20 Mike Allen, “Bush Won’t Release Classified September 11 Report,” Washington Post,
July 30, 2003, p. A1; David Johnson and Douglas Jehl, “Bush Refuses to Declassify Saudi
Section of Report,” New York Times, July 30, 2003.
21 An April 29, 2004 correction appended to Joel Mowbray, “Saudis Behaving Badly,”
National Review Online, December 20, 2002, reads, “The Brisard Report was an unsolicited
document submitted to the U.N. by its author.” See also a private letter written by former
U.N. Security Council President Alfonso Valdivieso that disassociates the U.N. from
Brisard’s report. Available at [http://www.binmahfouz.info/pdf/faqs_5_jsb_12march.pdf].

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report asserted that Al Qaeda received between $300 million and $500 million during
the decade prior to 2002, by “abusing this pillar of Islam [charitable donations] and
taking advantage of the Saudi regulatory vacuum.”22 Brisard described Saudi donors
as “wealthy businessmen and bankers.” The report has been the subject of a lawsuit
in the United Kingdom regarding defamation of character, and a British High Court
ruled in July 2004 that allegations contained within the report were “untrue.”23
[Mahfouz v. Brisard & Others, High Court of Justice, Queen’s Bench Division,
United Kingdom - [2004] EWHC 1735 (QB)]
Funding for Palestinian Organizations
Support for Palestinian causes and the provision of humanitarian aid to
Palestinians has long been an important component of Saudi foreign policy, and
many Saudis identify strongly with the Palestinian people and view support for
Palestinian causes as a religious, cultural, or, in some cases, political obligation.
Repeated allegations made by Israeli and Western sources have contended that Saudi
support for Palestinian institutions and individuals has directly or indirectly
supported Palestinian terrorist groups, although public reporting has not conclusively
linked official Saudi government support to Palestinian terrorist organizations.
Saudi Arabia, like other Arab states, recognizes the Palestine Liberation
Organization (PLO) as the legitimate representative of the Palestinian people and
provides some financial support to Palestinian institutions sponsored by the PLO.
A 2002 Saudi government report stated that overall government and private aid to the
Palestinians had reached $2.61 billion.24 Currently, Saudi officials say that
government support to Palestinian causes, approximately $80 million to $100 million
per year, goes solely to the Palestinian Authority, which was established pursuant to
the Israeli-Palestinian agreement of September 13, 1993, known as the first Oslo
Accord.25
22 Jean-Charles Brisard, Terrorism Financing: Roots and Trends of Saudi Terrorism
Financing.
JCB Consulting, Dec. 19, 2003. Available at [http://www.nationalreview.com/
document/ document-un122002.pdf].
23 The full text of the Court’s judgment is available at [http://www.binmahfouz.info/pdf/
faq_4_judgment.pdf].
24 Royal Embassy of the Kingdom of Saudi Arabia, “Kingdom’s Aid to Palestenians (sic.)
Nears Ten Billion Saudi Riyals,” May 2, 2002. Available at [http://www.saudiembassy.net/
2002 News/News/ForDetail.asp?cIndex=1122]. It is unclear if this figure included
contributions to the Saudi-sponsored, multilateral Al Aqsa and Al Quds Intifada (Jerusalem
uprising) funds established by 22 Arab leaders in October 2000. See
[http://www.saudiembassy.net/ 2000News/Statements/StateDetail.asp?cIndex=357].
25 Don Van Natta, Jr, with Timothy L. O’Brien, “Flow of Saudi’s Cash to Hamas Is
Scrutinized,” New York Times, Sept. 17, 2003, pp. A1, A10.

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Officially Sanctioned Relief Efforts
Saudi Committees. Within Saudi Arabia, two official charitable committees
have solicited and delivered aid to Palestinian institutions, individuals, and causes
since the onset of the second Palestinian intifada in October 2000: the Saudi Popular
Committee for Assisting the Palestinian Mujahideen and the Saudi Committee for
the Support of the Al Quds Intifada. According to Saudi press reports, Prince Salman
bin Abd Al Aziz, the governor of Riyadh Province, established the Popular
Committee and has directed its operations.26 The Popular Committee’s periodic
public reports indicate that it provided approximately $8.8 million to the PLO from
October 2000 to April 2003.27
The Saudi Committee for the Support of the Al Quds Intifada has served as the
main conduit for Saudi financial and material aid to the Palestinian territories since
its establishment under Royal Decree 8636 on October 16, 2000. Prince Nayef bin
Abd Al Aziz, the Saudi Minister of Interior, has directed the Committee’s operations
since its establishment. A December 31, 2003 report issued by the Saudi Embassy
in Washington stated that the costs of the Al Quds Intifada Committee’s 31 relief
programs amounted to 524,265,283 Saudi riyals (SR) [$139,804,075], in addition to
the costs of then-current projects, which amounted to a further 203,699,433 SR
[$54,302,249]. The report also stated that “the value of the services provided by the
Committee to the Palestinian people” through December 2003 was equal to an
additional 727,964,716 SR [$194,123,924].28
The Al Quds Intifada Committee’s periodic public reports describe millions of
riyals in monetary aid that its programs have provided to the Palestinian people in the
form of financial transfers to the Palestinian Authority (PA), donations to charitable
organizations in the West Bank and Gaza Strip, and by means of direct assistance to
over 35,000 needy Palestinian individuals. In addition to financial assistance, the Al
Quds Intifada Committee also has provided food, blankets, medicine, ambulances,
and other aid in kind through programs aimed at supporting health care, education,
and the provision of basic social services in the Palestinian territories that have been
disrupted during the current uprising. The Committee has also constructed hundreds
of homes for Palestinians that have been left homeless due to the ongoing violence.
26 In one press report, Prince Salman asserted that the Popular Committee had been
established after the 1967 Arab-Israeli War “with the aim of assisting the Palestinians.” It
is unclear if the Popular Committee operated over a thirty year period or was reactivated in
October 2000. See Arab News (Jedda) “Salman Rejects Terrorism Charges Against
Charities,” November 3, 2002.
27 Data compiled from official and non-official Saudi press reports spanning the period from
October 2000 to April 2003. See Saudi Press Agency, “PLO gets more than SR 1.8 million
from the Popular Committee for Assisting the Palestinian Mujahideen,” April 22, 2003, and
Foreign Broadcast Information Service (FBIS) reports: “Press Summary — Saudi
Leadership Report,”Oct. 1-15, 2000 through June 16-30, 2004.
28 Royal Embassy of the Kingdom of Saudi Arabia, “Humanitarian Relief Handed Over to
Palestinian Officials in Kingdom,” Dec. 31, 2003. See [http://www.saudiembassy.net/2003
News/News/ ForDetail.asp?cIndex=1189].

CRS-9
Palestinian officials have reportedly praised the Committee’s support for the
Palestinian people.
In June 2004, the Saudi government announced that the future activities of all
Saudi charitable committees and organizations that send aid abroad (including “the
Palestinian committees”) will be monitored and directed by the Saudi
Nongovernmental National Commission for Relief and Charity Work Abroad.29 As
of September 2004 it was unclear if this National Commission was operational or if
either of the two Committees described above continued to operate.
Relief Coordination. Since 2000, both Committees have issued public
solicitations encouraging Saudi citizens to make donations to support the welfare of
the Palestinian people. In one often cited instance, the Al Quds Intifada Committee
organized a telethon sponsored by King Fahd in April 2002 that raised over $110
million for families of Palestinians killed or injured in the uprising.30 Saudi officials
told their U.S. counterparts that the proceeds of this telethon were funneled through
non-governmental organizations to provide humanitarian support to needy
Palestinian families.
Unified Accounts. Saudi press reports indicate that the Al Quds Intifada
Committee consolidated the proceeds of its fund-raising efforts along with public and
private donations in support of Palestinian causes in national, government-sponsored
unified accounts established in a number of Saudi banks.31 “Unified Account
Number 98" and “Unified Account Number 90" are referred to in Saudi press reports
describing the Al Quds Intifada Committee’s activities, although it is unclear if both
accounts existed simultaneously, if they are synonymous, if one superceded the other,
or if either still exists.32 According to Saudi press reports, Saudi citizens were
encouraged to make donations to these accounts at their local banks. In May 2003,
the Saudi government established a similar account, Unified Account Number 111,
to consolidate public and private donations in support of the Iraqi people.33
29 Adel Al Jubeir, “U.S. and Saudi Officials Hold a News Conference on a Major
Development in the War on Terrorism,” Federal Document Clearing House Transcript, June
2, 2004. The Commission’s creation was originally announced in late February 2004.
30 Royal Embassy of the Kingdom of Saudi Arabia, “Telethon for Palestinian Victims
Highly Successful,” April 14, 2002. See [http://www.saudiembassy.net/2002News/News/
ForDetail.asp?cIndex=1132].
31 Saudi Press Agency, “Prince Urges Donations for Jerusalem,” October 10, 2000. The
press report lists “the National Commercial Bank, the Saudi-American Bank, Al Rajhi
Banking and Investment Corporation, the Saudi-British bank, the Saudi-Dutch Bank, the
Arab National Bank, the Saudi-French Bank, and Al Riyadh Bank” as sponsors of Unified
Account 98. FBIS Translations GMP20001006001246 and GMP20001021000192. See also
Robert Lenzner and Nathan Vardi, “Terror Inc.,” Forbes, October 18, 2004.
32 Later, in an April 2002 interview, high-ranking Committee official Dr. Sa’id Al Urabi Al
Harithi stated that “All relief agencies that collect funds in support of the Palestinians
deposit the funds in the Committee’s Account Number 90.” FBIS Translations
GMP20001006001246 and GMP20020419000070.
33 The Saudi Committee for the Relief of the Iraqi People held a fundraising telethon in
(continued...)

CRS-10
Delivery Mechanisms. Once collected, the proceeds of the Al Quds Intifada
Committee’s fundraising efforts were delivered to Palestinian beneficiaries in a
variety of ways. Material aid collected by the Committee, such as food, clothing,
blankets, and vehicles, was delivered in cooperation with third parties such as the
Jordanian Red Crescent Society and the United Nations Relief and Works Agency
(UNRWA). The Committee also developed a special process to transfer financial aid
to Palestinian individuals in cooperation with Jordan’s Arab Bank PLC.34
In an April 2002 interview Dr. Sa’id Al Urabi Al Harithi, the “chairman of the
Executive Committee in Support of the Al Aqsa Intifada” and an advisor to Prince
Nayef, provided details about the process used to identify beneficiaries and deliver
financial aid to them:35
! Using information provided by “welfare societies” and “official
sources” in the Palestinian territories, the Al Quds Intifada
Committee prepared lists of potential beneficiaries drawn from the
ranks of “the wounded, the families of martyrs, the families of
prisoners and disabled persons,” and families that had been affected
by the uprising. The word “martyr” is used to refer to those killed
as a result of violence (usually Israeli actions).36
! Then, a “central committee” conducted a “general study” of the lists
and verified “the names of the beneficiaries, their telephone
numbers, social conditions, addresses, and the date and type of
injury.” According to Al Harithi, the Committee would “coordinate
with the Palestinian Authority and the [Palestinian] ambassador on
the information in [the lists]” to confirm that it was “precise, correct,
and clear.”
33 (...continued)
April 2003. Prince Nayef directs the Committee’s operations. See Royal Embassy of the
Kingdom of Saudi Arabia, “Bank Account Ready to Receive Donations for Iraqi Aid,” April
2 4 , 2 0 0 3 , A v a i l a b l e a t [ h t t p : / / w w w . s a u d i e m b a s s y . n e t / 2 0 0 3 N e w s /
News/RelDetail.asp?cIndex=737]
34 The Committee’s website and Committee officials (see below) state that the Al Quds
Intifada Committee opened accounts in Arab Bank PLC, which operates 22 local branches
t h r o u g h o u t t h e W e s t B a n k a n d G a za S t r i p . T h e C o m m i t t e e ’ s
website,[http://www.alquds-saudi.org], discusses the use of Arab Bank PLC branches as
conduits to transfer funds to beneficiaries.
35 “Saudi Al Aqsa Intifadah Committee Chief on Delivering Donations to Palestinians,”
Jedda Ukaz, April 2002. FBIS Translation - GMP20020419000070.
36 “The Saudi government offers assistance to the families of those killed, and these, the
victims of the violence, are often referred to as martyrs. Nevertheless, the Saudi government
does not condone the act of killing oneself and killing others by means of suicide bombings,
and Saudi religious leaders have condemned the taking of innocent lives.” See
[http://www.saudiembassy.net/2002News /Statements/StateDetail.asp?cIndex=146]

CRS-11
! Once the information had been confirmed and approved, the
Committee, in coordination with “the National Arab Bank,”37
opened a bank account in the beneficiary’s name, into which a
standard amount of riyals or dollars were transferred based on the
individual’s circumstances and the criteria set by the Committee for
each of its different programs. For example, “the committee
allocated 20,000 riyals [$5,333] for the family of each martyr,”and
“the sum of 10,000 Saudi riyals [$2,666] for every prisoner.”
! After the deposit had been made, a team in the Palestinian territories
followed up “on the process of delivering aid directly to the
beneficiaries” and filed “regular reports to the Saudi Committee in
Support of the Al Quds Intifada.”
Allegations of Support for Palestinian Terrorists
Allegations of Support for the Families of Suicide Attackers. In May
2002, Israeli officials released a report that alleged that the Saudi Committee for the
Support of the Al Quds Intifada had “transferred large sums of money to families of
Palestinians who died in violent events, including notorious terrorists.”38 The report
argued that this alleged financial support encouraged Palestinian terrorism by easing
the potential burden on the families of attackers. Saudi officials called the allegations
“baseless and false,” and stated “unequivocally that Saudi Arabia does not provide
financial support to suicide bombers or their families.”39 Saudi officials also
questioned the claim that Palestinian suicide attacks were financially rather than
politically motivated. Statements made by Committee figures in response to specific
claims that the Al Quds Intifada Committee provided support to the families of
suicide bombers or otherwise supported terrorism have been less consistent.40 Saudi
37 Jordan’s Arab Bank PLC owns a 40% stake of Saudi Arabia’s Arab National Bank.
Although the Committee clearly states that funds were delivered via Arab Bank PLC
branches it is unclear what role, if any, Saudi Arabia’s Arab National Bank played in the
process.
38 Ben Barber, “Saudi Millions Finance Terror Against Israel,” Washington Times, May 7,
2002. Israel also released allegedly seized documents that featured “the letterhead of the
‘Saudi Arabian Committee for Support of the Al Quds Intifada.’”
39 See Royal Embassy of the Kingdom of Saudi Arabia, “The Kingdom of Saudi Arabia
Responds to False Israeli Charges,” May 6, 2002. Available at [http://www.saudiembassy.
net/2002News /Press/PressDetail.asp?cYear=2002&cIndex=36] and Royal Embassy of the
Kingdom of Saudi Arabia, “Saudi Arabia Doesn’t Reward Terrorism,” May 11, 2002.
Available at [http://saudiembassy.net/2002News/News/ TerDetail.asp?cIndex=45]
40 Dr. Sa’id Al Urabi Al Harithi stated in April 2002 that the Al Quds Intifada Committee
had “nothing to do with terrorism” and “nothing to do with politics,” and added that Saudi
Arabia “rejects and fights terrorism.” [FBIS Translation GMP20020419000070] In May
2002, Mubarak Al Biker, the “executive manager” of the Al Quds Intifada Committee, stated
“we support the families of Palestinian martyrs, without differentiating between whether the
Palestinian was a bomber or was killed by Israeli troops.” Ra’id Qusti, “Saudi Telethon
Funds Go Direct to Palestinian Victims,” Arab News (Jedda), May 27, 2002. Available at
(continued...)

CRS-12
government spokesman Adel Al Jubeir has discussed the possibility that money from
the Committee may have gone to the families of suicide bombers, but has
categorically ruled out the existence of any quid pro quo arrangement or reward
system similar to that sponsored by former Iraqi President Saddam Hussein.41
Saudi Committee Website. The Al Quds Intifada Committee website,
currently maintained in the name of “the Saudi Committee for Relief of the
Palestinian People,”42 contains over 40,000 transaction records that feature the names
individuals who received humanitarian aid and financial support from the
Committee. The website states that “many accounts were opened for the harmed
persons at the Arab [B]ank branches in the Palestinian territory, and fixed aids [i.e.
donations] were transferred to the harmed people in their respective accounts.”43 One
of the Committee’s programs supported Palestinian families whose primary
breadwinners were killed by Israeli forces or under other violent circumstances
during the uprising. Records for this program contain the names of deceased
individuals, transaction numbers, the date of their deaths, their home towns, and the
circumstances in which they were killed. The Committee’s description of the
program indicates that payments of 20,000 SR [$5,300] were transmitted to the
family members of these individuals in their names following their death.
Of the 1,300 names contained in the records for this specific Committee
program, over 60 match or closely resemble the names of known Palestinian militants
who carried out attacks on Israeli military personnel and civilians from October 2000
to March 2002.44 These individuals include suicide bombers and gunmen who were
killed during actual and attempted attacks inside Israel and the Palestinian territories.
The following is a sample of five names of beneficiaries featured on the Committee
website which match those of individuals associated with attacks:45
40 (...continued)
[http://www.arabnews.com/ ?page=1&section=0&article=15591&d=27&m=5&y=2002].
41 See Royal Embassy of the Kingdom of Saudi Arabia, “Saudi Arabia Does Not Support
Terrorism,” Interview Published in National Journal, May 11, 2002. Available at [http://
[http://www.saudiembassy.net/2002News/Statements/TransDetail]s Said to Get Iraq
Millions,” Boston Globe, May 30, 2002.
42 The website [http://www.alquds-saudi.org/] cites Royal Decree 8636 as the basis for the
establishment of the “Relief Committee.”
43 See [http://www.alquds-saudi.org/programs/programsDetails.asp?id=1].
44 The Palestinian Human Rights Monitoring Group maintains comprehensive English and
Arabic language lists of suicide attackers. These lists contain names that also appear on the
Saudi Committee website. Further information provided in these and other Committee
records such as individuals’ home towns and dates of death matches information provided
in public press accounts of attacks. In some instances, date and name data reflect slight
variations and inconsistencies. The PHRMG lists are available at [http://www.
phrmg.org/PHRMG%20Documents/Suicide%20bombers/Tables/]
45 The names listed are transcriptions of a sample of five names that appear on the
referenced links to the Committee website. Transcriptions of Arabic names often differ in
Western media reporting and there is considerable uniformity in Arabic names. Mohammed
(continued...)

CRS-13
! Said Hassan Hussein Hotari - identified as suicide bomber in June
1, 2001, attack on Dolphinarium nightclub in Tel Aviv. Hamas
claimed responsibility.46
! Izzedin Shahil Ahmed Masri - identified as suicide bomber in
August 9, 2001 attack on Sbarro pizza restaurant in Jerusalem.
Hamas claimed responsibility.47
! Maher Muhiaddin Kamel Habeishi - identified as suicide bomber in
December 2, 2001, attack on Haifa bus. Hamas claimed
responsibility.48
! Wa’fa Ali Khalil Idris - female, identified as suicide bomber in
January 27, 2002 street attack in Jerusalem. The Al Aqsa Martyrs
Brigade claimed responsibility.49
! Mohammed Ahmed Abdel-Rahman Daraghmeh - identified as
suicide bomber in March 2, 2002 attack on Orthodox Jewish
neighborhood in Jerusalem. The Al Aqsa Martyrs Brigade claimed
responsibility.50
Most of the Committee records assigned to individuals whose names match or
closely resemble those of suicide attackers list “assassination” as the cause of death
— however other records credit “martyrdom.” A handful of these records indicate
that the individuals they refer to were killed during a “martyrdom operation.”51
45 (...continued)
and Ahmed, for example, are very common Arabic names often found among Palestinians.
46 See [http://www.alquds-saudi.org/programs/beneficiaryDetails.asp?id=96908] and Jamal
Halaby, “Tel Aviv Suicide Bomber Was Muslim,” Associated Press, June 3, 2001. Hamas
record available at [http://www.palestine-info.info/arabic/hamas/shuhda/alhotri/alhotri.htm]
47 See [http://www.alquds-saudi.org/programs/beneficiaryDetails.asp?id=96909] and Greg
Myre, “Jerusalem Suicide Bomber Kills 15,” Associated Press, August 10, 2001. Hamas
record available at [http://www.palestine-info.info/arabic/hamas/shuhda/
ezaldenalmasre/almasre.htm]
48 See [http://www.alquds-saudi.org/programs/beneficiaryDetails.asp?id=96972] and Karin
Laub, “Islamic Militants Unleash Wave of Terror Against Israel,” Associated Press,
December 2, 2001. Hamas record available at [http://www.palestine-info.info/arabic/hamas
/shuhda/maherhobashe/maher.htm]
49 See [http://www.alquds-saudi.org/programs/beneficiaryDetails.asp?id=97020] and Hadeel
Wahdan, “Family Describes Palestinian Bomber,” Assoc. Press, January 30, 2002.
50 See [http://www.alquds-saudi.org/programs/beneficiaryDetails.asp?id=96140] and Greg
Myre, “Suicide Bomber Kills Nine in Jerusalem,” Associated Press, March 2, 2002.
51 The Arabic text in the “Details” field of these Committee records reads “amaliyah
istishadiyah,” a commonly used euphemism for a suicide attack that translates literally to
“martyrdom operation.” See, for example, [http://www.alquds-saudi.org/programs/
beneficiaryDetails.asp?id=96940] and [http://www.alquds-saudi.org/programs/

CRS-14
Support to Hamas. Since the early 1990s, there have been unsubstantiated
reports of Saudi public and private assistance to the fundamentalist Islamic
Resistance Movement (Hamas), which the U.S. government has designated as a
foreign terrorist organization.52 The Saudi government has not officially described
Hamas as a terrorist organization.
In its annual report on terrorism for the year 2001 (Patterns of Global
Terrorism, 2001), the State Department noted that Hamas receives funding from
“private benefactors in Saudi Arabia and other moderate Arab states.” The 2002 and
most recent 2003 editions of the report do not mention Saudi Arabia as a specific
source of funding for Hamas. Other reports have estimated varying amounts of aid
to Hamas from private donations. According to one report, individuals in Saudi
Arabia have contributed approximately $5 million to Hamas each year, or
approximately half of its annual operating budget.53 Saudi spokesman Adel Al Jubeir
rejoins that “no Saudi government money goes to Hamas, directly or indirectly.”54
Al Jubeir has been quoted as saying that he considers it “very likely” that “some
Saudi individuals” have provided financial support to Hamas.55
Recently, reports citing unidentified U.S. and Israeli intelligence officials have
indicated that Saudi funding for Hamas has been curtailed and replaced by other
regional sponsors. In June 2004 testimony before the Senate Governmental Affairs
Committee, former Treasury Department General Counsel David Aufhauser quoted
“informed intelligence sources” as saying that “for whatever reason, the money going
to Hamas from Saudi Arabia has substantially dried up.”56 Aufhauser indicated that
Saudi financial support “has been supplemented by money from Iran and Syria
flowing through even more dangerous rejectionist groups in the West Bank.”57
Similarly, a report in the June 23, 2004 edition of the Israeli daily Maariv quoted an
unidentified Israeli military official as saying that “for the first time in years the
Saudis have begun to reduce the flow of funds to Hamas and to the Gaza Strip.”58
51 (...continued)
beneficiaryDetails.asp?id=97139].
52 Some individuals and groups in Europe, North America, and the Middle East have argued
that the provision of financial support to Hamas is legitimate because of the social services
the organization provides to Palestinians, which they argue are separate from the group’s
military wing, the Izzedine Al Qassam Brigades, and its role in conducting terrorist
operations.
53 Don Van Natta, Jr, with Timothy L. O’Brien, “Flow of Saudi’s Cash to Hamas Is
Scrutinized,” New York Times, Sept. 17, 2003, pp. A1, A10.
54 Ibid.
55 Agence France Presse, “Saudi Official Condemns Terrorism, But Not Hamas,” June 12,
2003.
56 David Aufhauser, testimony before the U.S. Senate Committee on Governmental Affairs,
June 15, 2004, transcript provided by Federal Document Clearing House.
57 Ibid.
58 Amir Buhbut, “Saudis Cutting Back Hamas Funding,” Maariv, June 23, 2004. Available
(continued...)

CRS-15
This unidentified source attributes this change largely to U.S. pressure on Saudi
Arabia to stem the flow of funding to Hamas and other terrorist organizations.
Charitable Giving and Madrasas
Charitable giving (zakat) is a religious obligation for Muslims, constituting one
of the five “pillars of Islam.” Many wealthy Saudis contribute approximately 2.5
percent of their annual income to charitable causes and relief organizations that fund
religious education programs, orphanages, hospitals, and other development projects
both within Saudi Arabia and around the world. One expert estimates Saudi
charitable donations, in general, to be about $3 billion to $4 billion annually, of
which 10-20% is disseminated abroad.59 Saudi officials estimate that $100 million
in charitable donations are directed abroad each year.60 It is unclear how much
money is channeled from Saudi Arabian donations towards charitable endeavors in
the United States, but some estimates suggest that $100 million has been donated
over the last decade.61 To what extent these donations have stemmed from the Saudi
government or from private individuals is unknown.
Charity Oversight
In response to criticism and allegations of involvement in terrorist financing
directed at Saudi Arabian charitable organizations, the Saudi government has taken
a series of steps to provide greater oversight to charitable giving in the Kingdom. In
December 2002, the government announced the creation of the High Commission for
Oversight of Charities to provide assistance to Saudi Arabian charities in reforming
their operations and improving their transparency.62 At that time, Saudi officials also
indicated that all Saudi charities had been audited; however, the results of those
audits have not been made publicly available.
In May 2003, the Saudi government introduced new banking regulations that
prohibited private charities63 and relief groups from transmitting funds overseas, until
58 (...continued)
at [http://www.maarivintl.com/index.cfm?fuseaction=article&xCache={ts%20'2004-06-29
%20 21:43:06'}&articleID=8940].
59 Jonathan M. Winer, Congressional testimony before the Committee on Senate
Governmental Affairs, July 31, 2003. Mr. Winer, a former State Department official, is an
independent consultant.
60 Adel al-Jubeir, “U.S. and Saudi Officials Hold a News Conference on a Major
Development in the War on Terrorism,” Federal Document Clearing House Transcript, June
2, 2004.
61 John J. Miller, “On the House...of Saud, that is: the Kingdom’s Spending in America,”
National Review, 54, no. 6: 2002, p. 19.
62 Adel al-Jubeir, “Saudi Plans to Fight Terrorism,” Federal News Service, Dec. 3, 2002.
63 It is estimated that there are 267 charities operating in Saudi Arabia. See Jamil al-Dhiyabi,
(continued...)

CRS-16
further regulations could be instituted to ensure that the money would not be
channeled to terrorist organizations.64 The new banking regulations do not place
similar restrictions on the operations of “multilateral” charitable organizations based
in Saudi Arabia, such as the Muslim World League (MWL), the International Islamic
Relief Organization (IIRO), or the World Assembly of Muslim Youth (WAMY),
which actively raise funds among the Saudi population.65
In February 2004, King Fahd issued a royal decree establishing the Saudi
Nongovernmental Commission on Relief and Charity Work Abroad.66 The
Commission was publicly reintroduced in June 2004, and described as “the sole
vehicle” through which all private Saudi donations marked for international
distribution will flow in the future.67 Once the Commission is operational, Saudi
charities with overseas operations will either be dissolved or have their assets
consolidated under the control of the new Commission. The extent to which these
government steps will be effective remains to be seen.
Action Against Questionable Charity
The Saudi government recently dissolved the Al Haramain Islamic Foundation,
a large charity with links to the royal family, after years of sustained criticism and a
series of joint U.S.-Saudi actions relating to its alleged involvement in terrorist
financing. U.S. investigators have linked a former Al Haramain employee to the
1998 U.S. embassy bombing in Tanzania,68 and a June 2, 2004 Treasury Department
statement called Al Haramain “one of the principal Islamic NGOs providing support
for the Al Qaida [variant transcription of Arabic word] network and promoting
63 (...continued)
“Supervisor of Saudi Charities to al-Hayat: There Are No Deception or Illegal Remittances
in Our Work; Ministry To Apply New Measures Starting Next Year,” Al-Hayat (London,
in Arabic), October 6, 2003, translation by Foreign Broadcast Information Service (FBIS)
online.
64 Royal Embassy of the Kingdom of Saudi Arabia, “Saudi Arabian Monetary Agency
Implements New Regulations Regarding Charities,” June 12, 2003. Available at
[http://www.saudiembassy. net/2003News/Press/PressDetail.asp?cYear=2003&cIndex=99].
65 See Saudi Arabian Monetary Authority, “Rules Governing the Opening of Bank Accounts
in Saudi Arabia and General Operational Guidelines,” April 2003, Section 300-1-6-5. In
June 2004, the Northern Virginia offices of the WAMY were raided by FBI and Customs
officials in relation to a terrorism investigation. WAMY spokesmen have repeatedly denied
the group is linked to terrorist organizations.
66 Agence France Presse, “Saudi Arabia to Create Body for All Charity Abroad after Terror
Charges,” Feb. 28, 2004.
67 Adel al-Jubeir, “U.S. and Saudi Officials Hold a News Conference on a Major
Development in the War on Terrorism,” Federal Document Clearing House Transcript, June
2, 2004.
68 U.S. Department of the Treasury, “JS-1108: Treasury Announces Joint Action with Saudi
Arabia Against Four Branches of al-Haramain In The Fight Against Terrorist Financing,”
January 22, 2004. Available at [http://www.treasury.gov/press/releases/js1108.htm].

CRS-17
militant Islamic doctrine worldwide.”69 Since March 2002, the United States and
Saudi Arabia have jointly designated 11 overseas branches of Al Haramain as front
organizations for terrorist activities. The two countries have asked the U.N. Al
Qaeda and Taliban Sanctions Committee (which monitors sanctions pursuant to U.N.
Security Council Resolution 1267) to add the branches to the Committee’s
consolidated list of terrorists tied to Al Qaeda and the Taliban.70 U.S. authorities also
designated Al Haramain’s founder and director, Aqeel Abdulaziz Al Aqil, as a
supporter of terrorism in June 2004.71 In early January 2004, Al Aqil had stepped
down from his position and remains in Saudi Arabia. Al Aqil’s successor, Dabbas
Al Dabbasi, resigned as director of the organization on July 14, 2004 because of “the
freezing of the establishment’s internal accounts and the inability to give charitable
support.”72 Saudi officials indicate that Al Haramain’s international operations will
be absorbed by the new Nongovernmental Commission for Relief and Charity Work
Abroad.
Saudi Support to Religious Schools (Madrasas)73
Madrasas are religious schools that have historically existed throughout the
Muslim world. Their curricula varies regionally and culturally; however for the most
part these schools provide a religiously-based education, focusing on the Quran and
other Islamic texts, usually to students at the primary or secondary school age.
Madrasas offer a free education, room, and board to their students, and thus they
appeal to impoverished families and individuals. On the whole, these religious
schools are supported by private donations from Muslim believers through zakat.
On a global front, concern has been expressed over the spread of radical Islam
through Saudi-funded schools, universities, and mosques, which exist in many
countries including Bangladesh, Bosnia-Herzegovina, Indonesia, Pakistan,
Uzbekistan, Spain, and even in the United States. Some view the teaching of Saudi
Wahhabism, an Islamic movement that encourages a return to the pure and orthodox
practice of the “fundamentals” of Islam, as threatening the existence of more
moderate beliefs and practices in other parts of the Muslim world. In November
69 U.S. Department of the Treasury, “JS-1703: Additional al-Haramain Branches, Former
Leader Designated by Treasury as Al Qaida Supporters,” June 2, 2004. Available at
[http://www.ustreas.gov/press/releases/js1703.htm].
70 The designated branches are: Indonesia, Pakistan, the Netherlands, Afghanistan, Albania,
Kenya, Tanzania, Bangladesh, Ethiopia, Bosnia, and Somalia.
71 The designation of individuals and organizations under the regulations blocking or
freezing terrorist assets requires an administrative determination by the Secretary of State
or the Secretary of the Treasury, in consultation with one another and with the Attorney
General. The initial determination is conducted without input from the subject of the
determination and, thus, at this stage, the rigorous standards applicable to adversarial legal
procedures such as criminal or civil trials are inapplicable.
72 Majid Al-Kanani, “Al-Haramain Director Resigns,” Arab News (Jeddah), July 15, 2004.
73 This section of the report was prepared by Febe Armanios. For more details on madrasas,
see CRS Report RS21654, Islamic Religious Schools, Madrasas: Background. See also
pages 1 and 10 of this report.

CRS-18
2003, a Saudi Embassy spokesman indicated in a press release that “we do not fund
the so-called radical madrassas [variant transcription of Arabic word] that people
accuse us of funding, because that goes against our policy.”74 To date, there are no
published reports on the aggregate amount of funding which has been donated from
inside Saudi Arabia to specifically support the building of madrasas worldwide.
Saudi Counter-Terrorism Efforts
Post-September 11 Actions
Saudi officials maintain that they are working closely with the United States to
combat terrorism, which they say is aimed as much at the Saudi regime as it is at the
United States. A month after the September 11 attacks, the Saudi Government
announced that it would implement U.N. Security Council Resolution1373, which
called for freezing terrorist-related funds. The Saudi Arabian Monetary Agency has
issued a number of “white papers” detailing actions taken by Saudi Arabia to combat
terrorist financing. The most recent update, issued in April 2004, addresses various
steps including adopted legislation, implemented regulations and resolutions, and
cooperation with the United States.75
In the past, U.S. officials, while acknowledging Saudi efforts, have expressed
frustration with Saudi reluctance to share information gleaned from Saudi
investigations of terrorist incidents and to move against organizations and individuals
suspected of involvement in terrorism. Since mid-2003, however, the Saudi
government seems to have become increasingly convinced of the seriousness of the
terrorist threat and its attendant financing. Many commentators attribute this
increased Saudi concern to terrorist bombings of compounds in the Saudi capital of
Riyadh in May and November 2003, both linked by U.S. and Saudi officials to Al
Qaeda.76 Two more attacks in the spring of 2004 in which most victims were non-
U.S. support the theory that the continuing attacks are aimed primarily at
destabilizing Saudi Arabia. At a hearing before the Senate Select Committee on
Intelligence on February 24, 2004, then-Director of Central Intelligence George Tenet
stated that “since the May 12th bombings, the Saudi government has shown an
important commitment to fighting Al Qaida in the kingdom, and Saudi officers have
paid with their lives.” The State Department’s most recent issue of Patterns of
Global Terrorism
states that the May and November 2003 attacks “galvanized
Riyadh into launching a sustained crackdown against Al Qa’ida’s presence in the
Kingdom and spurred an unprecedented level of cooperation with the United States.”
74 Royal Embassy of the Kingdom of Saudi Arabia, “Statement by Adel Al Jubeir, Foreign
Affairs Advisor to the Crown Prince,” November 14, 2003, Available at [http://www.saudi
embassy.net/ press_release/releases/03-PR-1114-terrorism.htm].
75 Available at [http://www.saudiembassy.net/ReportLink/SAMA%20INITIATIVES%20
BY%20 KSA%20UP%20DATED%20APRIL%202004.pdf].
76 Patrick E. Tyler, “Stability Itself Is the Enemy,” New York Times, Nov. 10, 2003.

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Joint Task Force. Shortly after the May 2003 attacks in Riyadh, a joint U.S.-
Saudi intelligence task force was set up to help identify the perpetrators. This set the
stage for a more permanent bilateral group with a broader mission. During the first
week in August 2003, a delegation of senior U.S. counter-terrorism officials from the
National Security Council, the State Department, the Treasury Department, and the
Federal Bureau of Investigation met with Saudi leaders reportedly to urge them to do
more to cut off the funneling of money to terrorists through Saudi businesses and
organizations.77 U.S. officials traveled to Riyadh later that month to set up a joint
task force to investigate terrorist financing in Saudi Arabia. Subsequently, agents
from U.S. organizations including the Federal Bureau of Investigation and the
Internal Revenue Service joined Saudi officials to set up a center that will focus on
bank accounts, computer records, and other financial data.
The U.S.-Saudi task force apparently has two components: one focused mainly
on intelligence and the other on financing. The intelligence side shares intelligence
information related to threats to the United States, especially general criminal
terrorism leads. The financing side shares information related to terrorist funding,
including sharing financial leads, requests for bank records, information on accounts,
and so on.78 The overall task force is composed of a small groups of FBI agents, FBI
employees, analysts, IRS agents and intelligence agents. Among other capabilities,
it is apparently able to receive real time information on potential leads in the United
States and then request Saudi assistance to pursue them in Saudi Arabia.79
According to press articles, this is the first time that U.S. law enforcement
officials have been stationed in Saudi Arabia to pursue intelligence and financing
issues.80 Many observers see this joint effort as a test of how responsive Saudi
Arabia may prove to be in dealing with the issue of terrorism and blocking the flow
of money from its citizens to terrorist organizations.81
The FATF-GCC Assessment. In September 2003, members of the
Financial Action Task Force (FATF)82 and the Gulf Cooperation Council (GCC)
77 Susan Schmidt, “U.S. Officials Press Saudis on Aiding Terror,” Washington Post, Aug.
6, 2003, p. A12.
78 Testimony of Deputy Assistant Secretary of the Treasury Juan Zarate and Deputy
Assistant Director of the FBI Counter-terrorism Operational Support Branch Thomas
Harrington, Hearing of the Subcommittee on the Middle East and Central Asia of the House
Committee on International Relations on Saudi Arabia and the Fight Against Terrorism
Financing, March 24, 2004; Federal News Service transcript, pp. 9-10.
79 Ibid., Harrington, p. 10.
80 Douglas Farah, “U.S.-Saudi Anti-Terror Operation Planned; Task Force Will Target
Funding,” Washington Post, Aug. 26, 2003.
81 “U.S. and Saudis Join in Antiterror Effort,” New York Times, Aug. 25, 2003; and Matthew
Clark, “There’s a New Task Force in Town,” The Christian Science Monitor, Aug. 26, 2003.
82 The Financial Action Task Force is “an inter-governmental body whose purpose is the
development and promotion of policies, both at national and international levels, to combat
money laundering and terrorist financing.” For more see the FATF website at
(continued...)

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visited Saudi Arabia to examine Saudi financial practices. The FATF 2004 annual
report, released on July 2, 2004, states that Saudi Arabia’s legal and regulatory
system is “compliant or largely compliant with most of the FATF 40+8
Recommendations” on terrorist financing.83 According to the report, Saudi Arabia
has established a Permanent Committee on Combating the Financing of Terrorism
to coordinate its policy response and the Saudi Anti-Financial Crime Unit (SAFCU)
to serve as a clearinghouse for investigative information and international
cooperation. The SAFCU was not operational at the time of the FATF review.
The FATF report concludes that the Saudi government’s legal definition of
terrorist financing “does not conform to the international standards as expressed in
the UN International Convention on the Suppression of Terrorist Financing.”84 The
FATF review dealt only with the adequacy of legal and regulatory provisions, and did
not assess the degree to which these laws and regulations are being effectively
implemented.
Other Recent Measures. Press reports, the State Department’s Patterns of
Global Terrorism: 2003, and statements by knowledgeable observers including a
former Department of the Treasury official85 have listed various recent measures
taken by Saudi Arabia to put a stop to terrorist financing. Most of these measures
have been designed to improve oversight of charitable collections, and include:
! A law adopted in August 2003 making money laundering and
terrorist financing criminal offenses.86
! A ban on cash collections at mosques and on transfers abroad of
charitable funds collected in Saudi Arabia, except with Foreign
Ministry approval and subject to stringent reporting requirements.
82 (...continued)
[http://www1.oecd.org/fatf/].
83 See “Kingdom of Saudi Arabia: Executive Summary - FATF Recommendations for
Anti-Money Laundering and Combating the Financing of Terrorism” in Annex C of the
report Available at [http://www1.oecd.org/fatf/pdf/AR2004-Annexes_en.PDF]. The
FATF’s “40+8" Recommendations on terrorist financing and money laundering are
internationally recognized regulatory and legal benchmarks.
84 Saudi officials maintain that the wider body of Islamic sharia law that underlies the Saudi
legal system adequately criminalizes material support for terrorism. U.S. and FATF
officials argue that the language of Saudi Arabia’s criminal statutes on terrorist financing
should explicitly reflect international standards.
85 Statement of David Aufhauser, Former General Counsel, Dept. of the Treasury, Middle
East Policy Council forum, “Saudi Arabia: Enemy or Friend,” Jan. 23, 2004. Available at
[http://www.mepc.org/public_asp/forums_chcs/35.html].
86 The implementing regulations for the Saudi anti-money laundering and terrorist financing
law that was introduced in August 2003 have not been issued as of July 2004.

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! A requirement for charitable organizations to have single
disbursement bank accounts and an approved official with signatory
authority to facilitate tighter controls over such accounts.87
! Closure of unlicenced money exchange houses and closer
supervision of informal money transfer houses used to send funds
abroad, known as hawalas.
! New rules governing the insurance sector and capital markets, and
establishment of a financial intelligence unit (the SAFCU) to collect
and share information on suspicious financial transactions.88
! Vetting of religious clerics and supervision of money given to them
by their congregations. The government suspended more than 1,000
clerics in 2003 and 900 clerics so far in 2004 supposedly “on the
grounds of negligence.”89
! Announcement in early December 2003 of a rewards program,
ranging from $270,000 to $1.87 million, for information leading to
the arrest of suspects or disruption of terrorist attacks.
There have also been specific developments in bilateral U.S.-Saudi cooperation in
criminal investigations and procedures:
! In September 2003, the FBI and the Internal Revenue Service
Criminal Investigative Division began a program of terrorism
financing training for the Saudi government and has had sessions in
Riyadh and Washington, D.C. A third session was scheduled for
Riyadh in May 2004.90
! According to the U.S. Department of the Treasury, the Saudis have
killed several known operatives, financial facilitators, and financiers
for Al Qaeda, including Yousif Salih Fahad Al Ayeeri (a.k.a. “Swift
87 Again, “multilateral organizations” based in Saudi Arabia like the IIRO, WAMY, and
MWL are not subject to these restrictions.
88 According to sources in the Treasury Department, Saudi Arabia is not yet a member of
the Egmont Group, an international organization that links financial intelligence units (FIU)
and facilitates information sharing. The Saudi Arabian FIU therefore does not yet have a
formal relationship with the U.S. Financial Crimes Enforcement Network (FinCEN).
89 “Show of Force,” Middle East Economic Digest, 26 Mar.-1 Apr. 2004.
90 U.S. Congress, House of Representatives, Hearing of the Subcommittee on the Middle
East and Central Asia of the House Committee on International Relations on Saudi Arabia
and the Fight Against Terrorism Financing, Rayburn House Office Building, Washington,
DC, March 24, 2004; testimony of Mr. Thomas Harrington, Deputy Assistant director of the
FBI Counterrorism Operational Support Branch, Federal News Service transcript, p. 7.

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Sword”) and Khaled Ali Al Hajj, reportedly key financial facilitators
for Al Qaeda in the Persian Gulf region.91
Continuing Uncertainties and Questions
Saudi Arabia has undertaken significant administrative reforms in its efforts to
curtail terrorist financing. A FATF official involved in the recent assessment of
Saudi practices was quoted as saying that the new regulations to control Saudi-based
charities “probably go further than any country in the world.”92 As noted above,
however, the effectiveness of many of these steps will depend on their
implementation. Several uncertainties and unresolved questions remain.
The Khobar Towers Bombing. The bombing of a U.S. Air Force billeting
facility in June 1996 has never been resolved. The reluctance of Saudi investigative
officials to share evidence with their U.S. counterparts was a long-standing source
of friction between the two governments; both issued their own separate indictments.
Although the Saudi Hezbollah group and the Iranian government are suspected of
involvement, recent reports indicate that Al Qaeda may also have played a role in the
attack. Some observers believe that more and better U.S. access to Saudi files on this
case might reveal money trails that could shed further light on the intricacies of
terrorist funding and collaboration.
Dilatory Action. U.S. officials have complained in the past that Saudi
officials have been slow to take action against organizations and entities implicated
in terrorist financing. According to a monograph released by the 9/11 Commission,
“the Saudi government turned a blind eye to the financing of al Qaeda” before
September 11, 2001, and “the Saudis did not begin to crack down hard on Al Qaeda
financing in the Kingdom until after the May 2003 Al Qaeda attacks in Riyadh.”93
The report recognized the “significantly higher levels of cooperation” that U.S.
officials have received from their Saudi counterparts since May 2003. Securing
timely cooperation remains an important component of U.S. efforts to curb the flow
of funds to terrorist groups.
Accountability. U.S. officials have also said that the Saudi Government
should give more emphasis to personal responsibility in reporting and act against
those who tolerate or promote financing of terrorist activity. According to the 9/11
Commission Monograph on Terrorist Financing, “the Saudis have failed to impose
criminal punishment on any high-profile donor.”94 The recent FATF review found
that Saudi Arabia has initiated five criminal cases involving terrorist financing
activities, with one successful conviction. Several prominent Saudi individuals
suspected by U.S. authorities of involvement in terrorist financing have not been
91 Ibid., testimony by (then) Deputy Assistant Secretary of the Treasury Juan Zarate, p. 8.
92 Robin Allen, “Saudis meet anti-terror finance benchmarks,” Financial Times (London),
March 8, 2004.
93 Available at [http://www.9-11commission.gov/staff_statements/911_TerrFin_Monogr
aph.pdf]
94 Ibid.

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charged or prosecuted in the United States, Saudi Arabia, or other jurisdictions.
These individuals are believed to be in Saudi Arabia.
Palestinian Funding. Saudi leaders have said that Saudi government
contributions to Palestinian causes go exclusively to the Palestinian Authority95 and
not to Hamas. The State Department notes that Hamas receives funds from
benefactors in various locations including the Persian Gulf, although it does not
specifically mention Saudi Arabia. The possibility remains that private donors in
Saudi Arabia may circumvent Saudi regulatory controls.
Currency Controls. Although Saudi Arabia’s customer information
requirements are more stringent for international transfers under recently adopted
regulations, some loopholes may remain. The FATF report calls on Saudi officials
to increase the amount of information required for foreign currency conversion
transactions at money remittance centers in the Kingdom. Saudi law permits the
undeclared transport of currency across its borders for all amounts under 100,000
Saudi riyals ($26,666).
International Efforts. The FATF review notes that Saudi Arabia has not
ratified the International Convention for the Suppression of the Financing of
Terrorism, adopted by the U.N. General Assembly in December 1999. The FATF
report urges Saudi Arabia to do so “as soon as possible.”
Outlook
It seems clear that growing challenges to internal security and an increase in
terrorist incidents in Saudi Arabia have impelled the Saudi leadership to devote
heightened attention to countering sources of financing terrorism. This has been
particularly true since mid-2003, when terrorists began mounting a series of attacks
on residential and office compounds, apparently in an effort to target the Saudi
government as well as the western presence in Saudi Arabia. Both U.S. officials and
independent observers have welcomed the mechanisms that Saudi authorities have
put in place with the aim of stemming the flow of funds destined for terrorist groups.
They point out, however, that the effectiveness of these measures will be tested by
the degree to which Saudi authorities succeed in implementing the various
institutions and regulations that have been established in recent years.
Issues for Congress
Several Committees and Members have expressed interest in these issues and
have held hearings and introduced legislation relating to U.S.-Saudi cooperation in
the fight against terrorism and terrorist financing. In the 108th Congress, H.R. 3137,
introduced on September 17, 2003, would ban direct aid to Saudi Arabia along with
five other named countries. In this regard, Saudi Arabia only receives $25,000 in
annual U.S. aid under the International Military Education and Training (IMET)
95 It is unclear how donations from the Saudi Popular Committee for Assisting the
Palestinian Mujahideen to the PLO were considered in this regard.

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program. Section 582 of the Foreign Operations, Export Financing, and Related
Programs Appropriations Act of 2005 (H.R. 4818) — as passed by the House on July
15, 2004 — prohibits Saudi Arabia from receiving this aid or any other direct
assistance from the United States. The Senate version of H.R. 4818 does not include
a ban on IMET aid for Saudi Arabia. Companion bills entitled the Saudi Arabia
Accountability Act, introduced in the House and Senate on November 21 (H.R. 3643)
and November 18, 2003 (S. 1888), respectively, would require the President to
prohibit export of arms or dual use items to Saudi Arabia and to restrict the travel of
Saudi diplomats in the United States, unless the President certifies that Saudi Arabia
is fully cooperating with the United States in investigating and preventing terrorist
attacks and taking other specified counter-terrorist measures.
Following the release of the final report of the National Commission on
Terrorist Attacks Upon the United States (the 9/11 Commission), Members of
Congress have introduced several bills to implement recommendations of the
Commission with regard to the organization of the intelligence community and other
foreign policy mechanisms. H.R. 10, for example, would require the President to
submit to designated congressional committees a strategy for collaboration with the
people and government of Saudi Arabia including a framework for security
cooperation [Section 4081(b)]. This strategy would include special reference to
efforts to combat terrorist financing.