Order Code RL32499
CRS Report for Congress
Received through the CRS Web
Saudi Arabia: Terrorist Financing Issues
Updated February 8, 2006
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, 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 official Saudi support goes to any terrorist organizations,
such as Hamas. The U.S. State Department in its most recent annual report on
international terrorism states that Hamas receives some funds from individuals in
Saudi Arabia and other Arab states. A U.S. Treasury Department official told the
Senate Committee on the Judiciary in November 2005 that “wealthy donors in Saudi
Arabia are still funding violent extremists around the world, from Europe to North
Africa, from Iraq to Southeast Asia.”
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 some
charities; closed unlicenced money exchanges; and scrutinized clerics involved in
charitable collections. The Intelligence Reform and Terrorism Prevention Act (P.L.
108-458) required the President to submit a strategy for U.S.-Saudi collaboration to
Congress, 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 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
Arab Bank Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Scrutiny of Riggs Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Joint Congressional Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Brisard “U.N.” Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Allegations of Support for Iraqi Insurgents . . . . . . . . . . . . . . . . . . . . . . 8
Funding for Palestinian Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Officially Sanctioned Relief Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Saudi Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Relief Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Unified Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Delivery Mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Allegations of Support for Palestinian Terrorists . . . . . . . . . . . . . . . . . . . . 14
Allegations of Support for the Families of Suicide Attackers . . . . . . . 14
Saudi Committee Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Support to Hamas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Charitable Giving and Madrasas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Charity Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Action Against Questionable Charity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Saudi Support to Religious Schools (Madrasas) . . . . . . . . . . . . . . . . . . . . . 20
Saudi Counter-Terrorism Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Post-September 11 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Joint Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Legal and Oversight Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Financial Intelligence Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The FATF-GCC Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Continuing Uncertainties and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Dilatory Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Private Donors and Accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Currency Controls and Cash Couriers . . . . . . . . . . . . . . . . . . . . . . . . . 26
Palestinian Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
International Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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 Palestinian
organizations and 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,

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and senior Saudi officials have stated publicly that the Saudi regime is as much a
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,
U.S. government officials have welcomed “undeniable progress” in the Saudi
Arabian government’s efforts to combat terrorist financing,2 while maintaining
concern that “wealthy donors in Saudi Arabia are still funding violent extremists
around the world, from Europe to North Africa, from Iraq to Southeast Asia.”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
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,”
Sept. 17, 2003.
3 Testimony of Stuart Levey, Under Secretary, Office of Terrorism and Financial
Intelligence, U.S. Department of the Treasury, Before the Oversight and Investigations
Subcommittee of the House Financial Services Committee and the International Terrorism
and Nonproliferation Subcommittee of the House International Relations Committee, May
4, 2005; and Testimony of Daniel Glaser, Deputy Assistant Secretary, Office of Terrorist
Financing and Financial Crime, U.S. Department of the Treasury, Before the Senate
Committee on the Judiciary, Nov. 8, 2005.
4 National Commission on Terrorist Attacks Upon the United States, “The 9/11 Commission
Report,” July 22, 2004.

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organizations.5 According to the Commission’s report, Saudi individuals and other
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
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
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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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].
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 to combat terrorist financing adequately.8
The task force’s second report, released in June 2004, updates the first report
and chronicles the steps the Saudi Arabian government had taken to strengthen its
financial, legal, and regulatory systems and to combat terrorist financing since late
2002. The report acknowledged the Saudi government’s announcement of “the
enactment or promulgation of a profusion of new laws and regulations and the
creation of new institutional arrangements... intended to tighten controls over the
principal modalities of terrorist financing.” The report welcomed the steps and
concluded that “on a comparative basis” Saudi Arabia had taken “more decisive legal
and regulatory action to combat terrorist financing than many other Muslim states.”
The second report also identified several areas in which its authors argued that
Saudi authorities could have done more to combat terrorist financing. It argued that
additional action was 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 cited 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 criticized 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
7 Royal Embassy of the Kingdom of Saudi Arabia, “Response to CFR Report,” Oct. 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,
Oct. 16, 2002.
9 Adel Al Jubeir, Interview Transcript: CNN Late Edition, June 15, 2004.

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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
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 and current Saudi ambassador to the United States Prince Turki Al
Faisal, 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
Arab Bank Lawsuits. Families of victims killed or injured in terrorist attacks
in Israel have filed two civil lawsuits against Arab Bank PLC of Jordan in the U.S.
District Court of New York seeking approximately $2 billion in damages [Linde et
al. v. Arab Bank, 04 CV 02799 (E.D.N.Y. filed July 2, 2004) and Almog et al. V.
Arab Bank, 04 CV 05564 (E.D.N.Y. filed December 21, 2004)]. Although the Saudi
government is not a party to the lawsuit, the complaints allege 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 complaints also allege 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 court documents filed with the U.S. District Court in response to the lawsuits,
Shukri Bishara, the chief banking officer for Arab Bank PLC, states that “beginning
in December 2000, the Saudi Committee made approximately 200,000 payments into
Palestine through Arab Bank branches totaling over US$90,000,000.”13 According
to the documents, these funds were primarily used to support “unemployed
Palestinians, persons in hospitals, Palestinians that were wounded or injured in the
violence, persons whose houses were destroyed as well as payments to Palestinian
schools hospitals and infrastructure in general.” Bishara contends that the lawsuits’
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.
12 See also Carol D. Leonnig, “Judge Rejects Saudi Terrorist Link,” Washington Post, Nov.
15, 2003.
13 Declaration of Shukry Bishara in Support of Defendant’s Motion to Dismiss, Nov. 11,
2004. Linde et al. v. Arab Bank, 04 CV 02799, E.D.N.Y.

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allegations of Arab Bank’s involvement in a conspiracy with Saudi officials to
promote Palestinian suicide terrorism are “completely false and untrue.” Press
reports quote Bishara as stating that Arab Bank “did not have prior knowledge of
payments to the families of suicide bombers.”14 In 2003, the Central Bank of
Jordan (CBJ) ordered all Jordanian banks “to freeze any dealing” with six Hamas
figures and associated charities. In response to the lawsuits’ allegations, a Saudi
Committee official stated that the Committee “didn’t know that some of the people
we were sending money to were relatives of suicide bombers.”15 In the past,
however, Committee officials have indicated that the Committee supported “the
families of Palestinian martyrs, without differentiating between whether the
Palestinian was a bomber or was killed by Israeli troops.”16
In a February 25 announcement, the U.S. Office of the Comptroller of the
Currency (OCC) ordered the New York branch of Arab Bank PLC to halt its
traditional banking activities, including the transfer of funds and the opening of
accounts. The OCC order characterized “the inadequacy of the branch’s controls
over its funds transfer business”as “especially serious.” On August 17, 2005, the
OCC announced a $24 million civil fine against the New York branch of Arab Bank
PLC because of “deficiencies in the Branch’s internal controls, particularly in the
area of Bank Secrecy Act and Anti-Money Laundering compliance.”17 On September
2, 2005, U.S. District Judge Nina Gershon dismissed two of the eight counts in
lawsuits filed against Arab Bank PLC but allowed the rest to proceed to trial. A
statement from Arab Bank declared, “Arab Bank remains confident that it will
prevail at trial. The bank abhors terrorism.”18
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.”19 In 2003, Riggs began filing “suspicious activity reports” (SARs) of
unusual or unexplained transactions involving the Saudi Embassy’s bank accounts.
Saudi accounts at Riggs were closed in early March 2004 at the bank’s initiative,
14 Bloomberg, “Arab Bank Says it Didn’t Know of Payments to Bombers’ Families,” Feb.
10, 2005.
15 Ibid.
16 In May 2002, Mubarak Al Biker, the “executive manager” of the Saudi Committee to
Support the Al Quds Intifada, 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 [http://www.arabnews.com/?page=1&section=0
&article=15591&d=27&m=5&y=2002].
17 Office of the Comptroller of the Currency, Civil Money Penalty 2005-101, Aug. 17, 2005.
18 Associated Press, “Federal Judge Allows Terror Lawsuits Against Arab Bank to Proceed,”
Sept. 2, 2005.
19 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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according to some sources, but Saudi sources say it was a Saudi decision to end the
relationship.20 On May 13, 2004, federal regulators fined Riggs $25 million for
failing to actively monitor financial transfers through Saudi Arabian and other bank
accounts.21
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.22 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.23
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.24 Although most public allegations of Saudi support for
terrorist activities have not quantified the amounts of money involved, Brisard’s
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.”25 Brisard described Saudi donors
20 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).
21 Timothy L. O’Brien, “Regulators Fine Riggs $25 Million,” New York Times, May 14,
2003.
22 James Risen and David Johnston, “Report on September 11 Suggests a Role by Saudi
Spies,” New York Times, Aug. 2, 2003.
23 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.
24 An Apr. 29, 2004 correction appended to Joel Mowbray, “Saudis Behaving Badly,”
National Review Online, Dec. 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].
25 Jean-Charles Brisard, Terrorism Financing: Roots and Trends of Saudi Terrorism
Financing.
JCB Consulting, Dec. 19, 2003. Available at [http://www.nationalreview.com/
(continued...)

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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.”26
[Mahfouz v. Brisard & Others, High Court of Justice, Queen’s Bench Division,
United Kingdom - [2004] EWHC 1735 (QB)]
Allegations of Support for Iraqi Insurgents. In October 2004, an
unidentified Defense Department official told the press that private Saudi individuals
and charities were channeling funds to insurgent groups in Iraq.27 Saudi officials
vigorously denied the claims and appealed for U.S. officials to provide concrete
information in support of the charges so that Saudi authorities could investigate and
prosecute any individuals or entities that may have been involved.28 In December
2004, press reports cited intelligence gathered following U.S. military operations,
including the November 2004 assault on Fallujah, which indicated that “a handful of
senior Iraqi Baathists operating in Syria are collecting money from private sources
in Saudi Arabia and Europe” and are channeling it to insurgent groups.29 In addition,
news accounts have quoted insurgent facilitators stating that Saudi young men are
particularly valuable to insurgent groups because Saudis provide for their own
expenses and often personally finance insurgent operations.30 As noted above, a
senior U.S. Treasury Department official testified in July 2005 that Saudi individuals
may be “a significant source” of financing for the Iraq insurgency.31 Iraqi officials
have called on Saudi Arabia and other neighboring countries to do more to restrict
financial networks operating in their countries from supporting insurgents in Iraq.32
Saudi Arabia has pledged $1 billion in loans and credits to reconstruction efforts
in Iraq, and U.S. officials have engaged Saudi authorities regarding forgiveness of
Iraqi debt.33 The Saudi government administers official aid programs in Iraq under
25 (...continued)
document/ document-un122002.pdf].
26 The full text of the Court’s judgment is available at [http://www.binmahfouz.info/pdf/
faq_4_judgment.pdf].
27 John Lumpkin, “Insurgents Infiltrating Iraq Have Cash,” Associated Press, Oct. 22, 2004.
28 Royal Embassy of Saudi Arabia, “Saudi Official Refutes Allegation that the Kingdom is
Neglecting Issue of Funding to the Iraqi Insurgency,” Oct. 23, 2004.
29 Thomas E. Ricks, “Rebels Aided By Allies in Syria, U.S. Says,” Washington Post, Dec.
8, 2004.
30 “Our brothers in Iraq are asking for Saudis. The Saudis go with enough money to support
themselves and their Iraqi brothers. A week ago we sent a Saudi to the jihad; he went with
100,000 Saudi riyals ($27,000). There was a celebration among his brothers there!” See
Ghaith Abdul-Ahad, “Outside Iraq but Deep in the Fight,” Washington Post, June 8, 2005.
31 Testimony of Stuart Levey, Before the Senate Committee on Banking, Housing, and
Urban Affairs, July 13, 2005.
32 Tarek El Tablawy, “Iraq Minister Urges Neighbors on Militants,” Associated Press, May
11, 2005.
33 Paul Richter, “Nations Slow to Deliver Iraq Aid,” Los Angeles Times, July 12, 2004. See
(continued...)

CRS-9
the supervision of the Saudi Committee for the Relief of the Iraqi People and the
Saudi Red Crescent Society. Prince Nayef bin Abd Al Aziz, the Saudi Minister of
Interior, directs the Committee’s operations. The Committee held a fundraising
telethon in April 2003, which reportedly raised $11.5 million for relief efforts in
Iraq.34 In May 2003, the Saudi government established an official government bank
account, Unified Account Number 111, to consolidate public and private donations
in support of the Iraqi people.35 Saudi press reports describing the operations of the
Committee and the Red Crescent Society indicate that numerous shipments of food
aid and medical supplies have been delivered across Iraq since April 2003, including
shipments to the former-insurgent stronghold of Fallujah during the summer of
2004.36 Other Saudi based charities, including the International Islamic Relief
Organization (IIRO) have also delivered aid to Iraq, including to Fallujah and other
areas of fluctuating insurgent activity. According to press reports, the IIRO
maintained collection accounts in two Saudi banks where donations could be made
as recently as December 2004.37 U.S. officials have expressed general concerns
about the IIRO’s operations and questioned its exclusion from Saudi charitable
account regulations (see below).
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
33 (...continued)
also CRS Report RL32105, Post-War Iraq: Foreign Contributions to Training,
Peacekeeping, and Reconstruction
, by Jeremy M. Sharp and Christopher M. Blanchard.
34 Agence France Presse, “Saudi Telethon Raises $11.5 Million for Iraqis,” Apr. 28, 2003.
35 See Royal Embassy of the Kingdom of Saudi Arabia, “Bank Account Ready to Receive
Donations for Iraqi Aid,” Apr. 24, 2003. Available at [http://www.saudiembassy.net/
2003News/News/RelDetail.asp?cIndex=737].
36 Agence France Presse, “Saudi Arabia Sends Aid to Residents of Iraqi Rebel Bastion,”
June 10, 2004; and BBC Monitoring International Reports, “Saudi Arabia Sends Relief to
Iraq’s Al-Fallujah,” Saudi TV1 (Riyadh), Aug. 8, 2004.
37 The accounts reportedly are held in Al Rajhi Bank (Account Number 31900010777023)
and National Commercial Bank (Account Number 10477702000102). International Islamic
News Agency
(Jeddah), “IIRO Distributes Aid to Falluja War Victims,” Dec. 21, 2004.

CRS-10
Palestinians had reached $2.61 billion.38 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.39
Following the January 25, 2006, elections for the Palestinian Legislative
Council in which Hamas won a majority of the votes, it seems likely that Hamas will
be represented in a new Palestinian Authority structure, but the full implications of
the elections are not clear yet.40 So far Saudi officials have indicated that funding
support for the Palestinian Authority will continue. According to press reports, Saudi
officials have promised $20 million to cover immediate needs on the part of the
Palestinian Authority (Qatar has reportedly promised $13 million); there are also
reports that Saudi officials will discuss a $1.2 billion aid package with Palestinian
Authority officials to cover the Authority’s widening deficit.

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 (now known as the Saudi Committee for the
Relief of the Palestinian People). 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.41 The Popular Committee’s periodic
public reports indicate that it provided approximately $8.8 million to the PLO from
October 2000 to April 2003.42
38 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 embassy website at
[http://www.saudiembassy.net/2000News/Statements/StateDetail.asp?cIndex=357].
39 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.
40 In a joint statement on Feb. 2, 2006, at the end of a visit by King Abdullah to Pakistan, the
two leaders “urged the acceptance of the results of these elections, as they reflect the free
will of the Palestinian people.” They called on all parties to “avoid premature judgements
and hasty conclusions.”
41 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
Oct. 2000. See Arab News (Jedda) “Salman Rejects Terrorism Charges Against Charities,”
Nov. 3, 2002.
42 Data compiled from official and non-official Saudi press reports spanning the period from
Oct. 2000 to Apr. 2003. See Saudi Press Agency, “PLO gets more than SR 1.8 million from
(continued...)

CRS-11
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. 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].43
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 violence and house
demolitions. 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.44 As
of January 2006, the National Commission was not operational; however, Saudi
officials reportedly continue to work to resolve legal and financial hurdles to the
integration of the international operations of Saudi Arabian charities.45 The Al Quds
Intifada Committee continues to operate independently under the name — “the Saudi
Committee for the Relief of the Palestinian People.” The Committee now provides
humanitarian relief and assistance via a number of partnerships with U.N. agencies.
42 (...continued)
the Popular Committee for Assisting the Palestinian Mujahideen,” Apr. 22, 2003, and
Foreign Broadcast Information Service (FBIS) reports: “Press Summary — Saudi
Leadership Report,”Oct. 1-15, 2000 through June 16-30, 2004.
43 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].
44 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 Feb. 2004.
45 Josh Meyer, “The World; U.S. Faults Saudi Efforts on Terrorism,” Los Angeles Times,
Jan. 15, 2006.

CRS-12
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.46 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.47 “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, or if one superseded the
other.48 Saudi officials have repeatedly assured their U.S. counterparts that Account
98 no longer exists, most recently in a meeting with a U.S. Treasury delegation that
visited Saudi Arabia in January 2006; however numerous Saudi press reports
describe Saudi officials urging Saudi citizens to make donations to the account at
their local banks, including a television advertisement that solicited donations to
Account 98 in August 2005.49
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
46 Royal Embassy of the Kingdom of Saudi Arabia, “Telethon for Palestinian Victims
Highly Successful,” Apr. 14, 2002. See [http://www.saudiembassy.net/2002News/News/
ForDetail.asp?cIndex=1132].
47 Saudi Press Agency, “Prince Urges Donations for Jerusalem,” Oct. 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, Oct. 18, 2004.
48 Later, in an Apr. 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.
49 See Testimony of Daniel Glaser, Deputy Assistant Secretary for Terrorist Financing and
Financial Crimes, U.S. Department of the Treasury, Before the Senate Judiciary Committee,
Nov. 8, 2005; and Middle East Media Research Institute (MEMRI), “Saudi Government
Official on Iqra TV: All Muslims Must Support Jihad — Send Money to the Saudi
Committee for Support of the Al-Quds Intifada, Account No. 98,” Special Dispatch Series
- No. 990, Sept. 21, 2005.

CRS-13
(UNRWA). The Committee also developed a special process to transfer financial aid
to Palestinian individuals in cooperation with Jordan’s Arab Bank PLC.50
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:51
! 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).52
! 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.”
! Once the information had been confirmed and approved, the
Committee, in coordination with “the National Arab Bank,”53
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
50 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
throughout the West Bank and Gaza Strip. The Committee’s website, available at
[http://www.alquds-saudi.org], discusses the use of Arab Bank PLC branches as conduits
to transfer funds to beneficiaries.
51 “Saudi Al Aqsa Intifadah Committee Chief on Delivering Donations to Palestinians,”
Jedda Ukaz, Apr. 2002. FBIS Translation - GMP20020419000070.
52 According to an official Saudi government statement: “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/2002
News/Statements/StateDetail.asp?cIndex=146].
53 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.

CRS-14
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.”54 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.”55 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.56 Saudi
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.57
54 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.’”
55 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].
56 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
[http://www.arabnews.com/ ?page=1&section=0&article=15591&d=27&m=5&y=2002].
57 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://www.saudiembassy.net/2002News/Statements/TransDetail.asp?cIndex=149].
“Palestinians Said to Get Iraq Millions,” Boston Globe, May 30, 2002.

CRS-15
Saudi Committee Website. The now deactivated Al Quds Intifada
Committee website, maintained in the name of “the Saudi Committee for Relief of
the Palestinian People,”58 contained over 40,000 transaction records that featured the
names individuals who received humanitarian aid and financial support from the
Committee. The Committee website was deactivated in March 2005. The website
stated 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.”59 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. Online records
for this program contained 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 indicated 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 matched or closely resembled the names of known Palestinian
militants who carried out attacks on Israeli military personnel and civilians from
October 2000 to March 2002.60 These individuals included suicide bombers and
gunmen who were killed during actual and attempted attacks inside Israel and the
Palestinian territories. Most of the Committee records assigned to individuals whose
names matched or closely resembled those of suicide attackers listed “assassination”
as the cause of death — however other records credited “martyrdom.” A handful of
these records indicated that the individuals they referred to were killed during a
“martyrdom operation.”61 The Committee removed all records from its website in
early 2005 and closed the website down soon thereafter.
58 Archived versions of the Committee website are available at [http://web.archive.org/web/
*/[http://www.alquds-saudi.org]]. The website cited Royal Decree 8636 as the basis for the
establishment of the “Relief Committee.”
59 In archive, see [http://www.alquds-saudi.org/programs/programsDetails.asp?id=1].
60 The Palestinian Human Rights Monitoring Group maintains comprehensive English and
Arabic language lists of suicide attackers. These lists contain names that also appeared on
the Saudi Committee website. Further information provided in these and other Committee
records such as individuals’ home towns and dates of death matched information provided
in public press accounts of attacks. In some instances, date and name data reflect slight
variations and inconsistencies. Transcriptions of Arabic names often differ in Western
media reporting and there is considerable uniformity in Arabic names. Mohammed and
Ahmed, for example, are very common Arabic names often found among Palestinians. The
PHRMG lists are available online at [http://www.phrmg.org/PHRMG%20Documents/
Suicide%20bombers/Tables/].
61 The Arabic text in the “Details” field of these Committee records read “amaliyah
istishadiyah,” a commonly used euphemism for a suicide attack that translates literally to
“martyrdom operation.” In archive see, for example, [http://www.alquds-saudi.org/
programs/beneficiaryDetails.asp?id=96940] and [http://www.alquds-saudi.org/programs/
beneficiaryDetails.asp?id=97139].

CRS-16
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.62 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
received funding from “private benefactors in Saudi Arabia and other moderate Arab
states.” The 2002 and most 2003 editions of the report did not mention Saudi Arabia
as a specific source of funding for Hamas. The State Department’s 2004 Country
Reports for Terrorism (released in April 2005) indicates that “private benefactors in
Saudi Arabia and other Arab states” remain a primary source of funding for Hamas.63
Previous reports have estimated varying amounts of aid to Hamas from private
Saudi donations. According to one report, individuals in Saudi Arabia contributed
approximately $5 million to Hamas each year, or approximately half of its annual
operating budget.64 Saudi spokesman Adel Al Jubeir rejoins that “no Saudi
government money goes to Hamas, directly or indirectly.”65 Al Jubeir has been
quoted as saying that he considers it “very likely” that “some Saudi individuals” have
provided financial support to Hamas.66 As noted in a previous section, the situation
may be further complicated by the possible inclusion of Hamas representatives in a
future Palestinian Authority structure after Hamas won a majority of seats in the
Palestinian legislative elections on January 25, 2006.
In mid-2004, reports citing unidentified U.S. and Israeli intelligence officials
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.”67 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.”68
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
62 Some individuals and groups in Europe, North America, and the Middle East have argued
that financial support for 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.
63 Department of State, Country Reports on Terrorism, Apr. 27, 2005. Hamas entry
available at [http://www.state.gov/s/ct/rls/45394.htm].
64 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.
65 Ibid.
66 AFP, “Saudi Official Condemns Terrorism, But Not Hamas,” June 12, 2003.
67 David Aufhauser, testimony before the U.S. Senate Committee on Governmental Affairs,
June 15, 2004, transcript provided by Federal Document Clearing House.
68 Ibid.

CRS-17
Saudis have begun to reduce the flow of funds to Hamas and to the Gaza Strip.”69
This unidentified source attributed the change largely to U.S. pressure on Saudi
Arabia to stem the flow of funding to Hamas and other terrorist organizations. In
September 2005, Israeli authorities announced they had arrested an alleged Hamas
operative who reportedly served as a financial courier between Hamas figures in
Saudi Arabia and the group’s operatives in the West Bank and Gaza.70
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.71 Saudi officials estimate that $100 million
in charitable donations are directed abroad each year.72 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.73 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.74 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.
69 Amir Buhbut, “Saudis Cutting Back Hamas Funding,” Maariv, June 23, 2004.
70 Matthew Levitt, “A Hamas Headquarters in Saudi Arabia?” Washington Institute for Near
East Policy, PeaceWatch #521, Sept. 28, 2005.
71 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.
72 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.
73 John J. Miller, “On the House...of Saud, That Is: The Kingdom’s Spending in America,”
National Review, 54, no. 6: 2002, p. 19.
74 Adel al-Jubeir, “Saudi Plans to Fight Terrorism,” Federal News Service, Dec. 3, 2002.

CRS-18
In May 2003, the Saudi government introduced new banking regulations that
prohibited private charities75 and relief groups from transmitting funds overseas until
further regulations could be instituted to ensure that the money would not be
channeled to terrorist organizations.76 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.77 Saudi officials have stated
that in spite of the regulatory exclusion, in practice these charities are being subjected
to identical levels of scrutiny as all Saudi charities.78 Officials from the Defense
Department and Treasury Department have stated that the IIRO, WAMY, and the
MWL “continue to cause us concern” and that the charities “need to be included” in
the oversight of new Saudi charity regulations and regulatory bodies.79
In February 2004, King Fahd issued a royal decree establishing the Saudi
Nongovernmental Commission on Relief and Charity Work Abroad.80 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.81 In June 2005, the Saudi press reported that the
75 It is estimated that there are 267 charities operating in Saudi Arabia. See Jamil al-Dhiyabi,
“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), Oct. 6, 2003, translation by Foreign Broadcast Information Service (FBIS).
76 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].
77 See Saudi Arabian Monetary Authority, “Rules Governing the Opening of Bank Accounts
in Saudi Arabia and General Operational Guidelines,” Apr. 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.
78 According to Deputy Assistant Treasury Secretary Daniel Glaser, “It is not clear to us that
this de facto prohibition is having true effect and we remain deeply concerned about this
issue. Furthermore, these restrictions do not apply to foreign branches of Saudi-based NGOs
and charities, which can transfer money among themselves throughout the world with little
accountability to the Kingdom. It is possible, for example, for an IIRO official in Saudi
Arabia to advise IIRO branches in country X and country Y to transfer money to each other,
outside of Saudi regulatory reach.” Glaser, Testimony Before the Senate Committee on the
Judiciary, Nov. 8, 2005.
79 Testimony of Stuart Levey, Before the Senate Committee on Banking, Housing, and
Urban Affairs, July 13, 2005; and Testimony of Caleb Temple, Director of Operations, Joint
Intelligence Task Force for Combating Terrorism Before the Terrorism, Unconventional
Threats and Capabilities of the House Armed Services Committee and the Oversight and
Investigations Subcommittee of the House Financial Services Committee, July 28, 2005.
80 Agence France Presse, “Saudi Arabia to Create Body for All Charity Abroad after Terror
Charges,” Feb. 28, 2004.
81 Adel al-Jubeir, “U.S. and Saudi Officials Hold a News Conference on a Major
(continued...)

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Council of Ministers had decided that all future overseas charitable contributions
must be channeled through the Commission.82 As noted above, the Commission was
not operational as of January 2006; Saudi authorities reportedly are working to
resolve remaining legal and financial obstacles to the consolidation of the
international operations of Saudi Arabian charities under its authority. Once the
Commission is operational, Saudi charities with overseas operations reportedly will
either be dissolved or have their assets consolidated under the control of the new
Commission. The U.S. Treasury Department has urged the Saudi government to
include the MWL, IIRO, and WAMY under the Commission’s jurisdiction. The
extent to which further oversight of Saudi charities will prevent their abuse by
terrorist financiers remains to be seen.
Action Against Questionable Charity
In late-2004, the Saudi government 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,83 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 militant Islamic doctrine worldwide.”84 Since March 2002, the United
States and Saudi Arabia have jointly designated 12 branches of Al Haramain as front
organizations for terrorist activities, including its U.S. chapter. 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.85
In the United States, prosecutors recently dropped charges against Al
Haramain’s U.S. branch, based in Oregon. Prosecutors are continuing to pursue
charges against the branch’s founders and corporate officers, including Suliman Al
Buthe, a U.S. designated terrorist financier and Saudi national believed currently to
81 (...continued)
Development in the War on Terrorism,” Federal Document Clearing House Transcript,
June 2, 2004.
82 P.K. Abdul Ghafour, “Kingdom Streamlines Flow of Funds to Charities Abroad,” Arab
News
(Jeddah), June 14, 2005.
83 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,”
Jan. 22, 2004. Available at [http://www.treasury.gov/press/releases/js1108.htm].
84 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].
85 The designated branches are Indonesia, Pakistan, the Netherlands, Afghanistan, Albania,
Kenya, Tanzania, Bangladesh, Ethiopia, Bosnia, Comoros Islands, Somalia, and the United
States.

CRS-20
be in Saudi Arabia.86 U.S. authorities also designated Al Haramain’s founder and
director, Aqeel Abdulaziz Al Aqil, as a supporter of terrorism in June 2004.87 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.”88 Saudi officials have indicated
that Al Haramain’s international operations were to be absorbed by the new
Nongovernmental Commission for Relief and Charity Work Abroad, which is not yet
operational.
Saudi Support to Religious Schools (Madrasas)89
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
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.”90 To date, there are no
86 Les Zaitz, “Tax Case Ends Against Charity,” The Oregonian (Portland), Aug. 5, 2005;
and U.S. Department of the Treasury, JS-1895:U.S.-Based Branch of Al Haramain
Foundation Linked to Terror, Sept. 9, 2004.
87 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.
88 Majid Al-Kanani, “Al-Haramain Director Resigns,” Arab News (Jeddah), July 15, 2004.
89 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.
90 Royal Embassy of the Kingdom of Saudi Arabia, “Statement by Adel Al Jubeir, Foreign
Affairs Advisor to the Crown Prince,” Nov. 14, 2003, Available at [http://www.saudi
embassy.net/ press_release/releases/03-PR-1114-terrorism.htm].

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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. An update, issued in April 2004, addresses various steps
including adopted legislation, implemented regulations and resolutions, and
cooperation with the United States.91
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.92 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 2003 Patterns of Global Terrorism
report stated 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.”
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
91 Available at [http://www.saudiembassy.net/ReportLink/SAMA%20INITIATIVES%20
BY%20 KSA%20UP%20DATED%20APRIL%202004.pdf].
92 Patrick E. Tyler, “Stability Itself Is the Enemy,” New York Times, Nov. 10, 2003.

CRS-22
rganizations.93 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 to focus on bank accounts,
computer records, and other financial data. In addition, the FBI and the Internal
Revenue Service Criminal Investigative Division have carried out a program of
terrorism financing training for the Saudi government and have held sessions in
Riyadh and Washington, D.C.94
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 terrorism leads.
The financing side shares information related to terrorist financing, including sharing
financial leads, requests for bank records, and information on accounts.95 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.96 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.97 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.98 In March 2005, Saudi Ministry of Interior officials reported that
U.S.-Saudi Joint Task Force on Terrorist Financing operations have led to the
investigation of 1,098 Saudi bank accounts for suspicion of involvement in terrorism
financing since September 11, 2001.99
Legal and Oversight Measures. Prior to 2003, Saudi Arabia lacked
legislation specifically criminalizing money laundering and terrorist financing.
93 Susan Schmidt, “U.S. Officials Press Saudis on Aiding Terror,” Washington Post, Aug.
6, 2003, p. A12.
94 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, Mar. 24, 2004; testimony of Mr. Thomas Harrington, Deputy Assistant director of the
FBI Counterrorism Operational Support Branch, Federal News Service transcript, p. 7.
95 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, Mar. 24, 2004; Federal News Service transcript, pp. 9-10.
96 Ibid., Harrington, p. 10.
97 Douglas Farah, “U.S.-Saudi Anti-Terror Operation Planned; Task Force Will Target
Funding,” Washington Post, Aug. 26, 2003.
98 “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.
99 Author meeting with Ministry of Interior officials, Riyadh, Saudi Arabia, Mar. 2005.

CRS-23
Following Al Qaeda attacks within Saudi Arabia in May 2003, Saudi authorities
moved forward with a number of draft laws and regulations, including a law adopted
in August 2003 making money laundering and terrorist financing criminal offenses.100
That month, the Saudi Arabian government also introduced new banking regulations
that prohibited private charities and relief groups from transmitting funds overseas
until further regulations could be instituted to ensure that the money would not be
channeled to terrorist organizations. New financial regulations also created a
requirement for charitable organizations to have single disbursement bank accounts
and an approved official with signatory authority to facilitate tighter controls over
charity accounts and transactions.101 The Saudi Arabian Monetary Agency (SAMA)
continues to serve as the chief regulatory body for Saudi Arabia’s banks and financial
institutions.
A number of other oversight and regulatory mechanisms were also created,
including a ban on cash collections at mosques and new rules governing the
insurance sector and capital markets. All unlicensed money exchange houses were
ordered closed, and authorities put in place close supervision mechanisms on
traditional money transfer mechanisms used to send funds abroad, such as the hawala
system.102 The kingdom’s religious authorities also have engaged in closer vetting
of religious clerics and supervision of money given to them by their congregations.
The government suspended more than 1,000 clerics during 2003 and another 900 in
February 2004 reportedly “on the grounds of negligence,” which may include
negligent financial accounting procedures.103
Financial Intelligence Unit. According to the Financial Action Task Force
(FATF),104 Saudi Arabia has established a Permanent Committee on Combating the
Financing of Terrorism to coordinate its counter-terrorist financing policy efforts.
An Anti-Financial Crime Unit (SAFCU) has been designated to serve as Saudi
Arabia’s financial intelligence unit (FIU). The SAFCU began operations in
September 2005.105 Treasury Department officials have welcomed the SAFCU’s
100 The implementing regulations for the Saudi anti-money laundering and terrorist financing
law that was introduced in Aug. 2003 had not been issued as of Sept. 2005.
101 Again, “multilateral organizations” based in Saudi Arabia like the IIRO, WAMY, and
MWL are not subject to these restrictions.
102 For background information on hawala transactions see, Patrick M. Jost and Harjit Singh
Sandhu, “The Hawala Alternative Remittance System and its Role in Money Laundering,”
Interpol General Secretariat, Jan. 2000. Available online at [http://www.interpol.int/Public/
FinancialCrime/MoneyLaundering/hawala/default.asp].
103 “Show of Force,” Middle East Economic Digest, 26 Mar.-1 Apr. 2004, p. 30.-
104 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 information, see the FATF website at
[http://www1.oecd.org/fatf/].
105 Prior to September 2005, investigations and prosecutions of financial crimes were being
administered by elements of the Ministry of Interior in conjunction with specially seconded
SAMA personnel. For a full description of Saudi Arabia’s current financial regulatory
(continued...)

CRS-24
establishment, and the U.S. Financial Crimes Enforcement Network (FinCEN) has
indicated its willingness to sponsor the SAFCU for membership in the Egmont
Group.106
The FATF-GCC Assessment. In September 2003, members of the
Financial Action Task Force (FATF) and representatives of the Gulf Cooperation
Council (GCC) 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.107 The FATF review dealt only with the
adequacy of legal and regulatory provisions and did not assess the degree to which
the laws and regulations were being effectively implemented. 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.”108
In November 2004, the Saudi Arabian government announced its participation
in the newly established Middle East and North Africa Financial Action Task Force
(MENAFATF). Membership in the regional body commits Saudi Arabia to
implementing the internationally recognized anti-money laundering and counter-
terrorist financing standards designed by FATF.
Enforcement. According to the State Department’s 2005 International
Narcotics Control Strategy Report, “there is little known money laundering in Saudi
Arabia related to traditional predicate offenses” such as narcotics trafficking or
smuggling. Since 2003, however, the Saudi government has undertaken a number
of enforcement actions in response to international concerns about terrorist financing,
including freezing some suspect accounts and jointly designating a number of
individuals and organizations as Specially Designated Global Terrorists along with
U.S. authorities. Saudi Interior Ministry officials reported in March 2005 that
105 (...continued)
structure see the State Department’s 2005 International Narcotics Control Strategy Report.
Saudi Arabia entry available at [http://www.state.gov/p/inl/rls/nrcrpt/
2005/vol2/html/42395.htm].
106 The Egmont Group is the international membership organization that formally links
financial intelligence units and facilitates information sharing for money laundering and
terrorist financing investigations.
107 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.
108 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.

CRS-25
security forces had seized $4.5 million through raids on terrorist safe houses and
operatives, along with $6.5 million in 11 separate bank accounts since early 2003.109
The U.S. Department of the Treasury also reports that Saudi security forces have
killed a number of Al Qaeda financiers, including Yousif Salih Fahad Al Ayeeri
(a.k.a. “Swift Sword”) and Khaled Ali Al Hajj, who reportedly were key financial
facilitators for terrorist operatives in the Persian Gulf region.110
Continuing Uncertainties and Questions
Saudi Arabia has undertaken significant administrative reforms in its efforts to
curtail terrorist financing. A FATF official involved in the 2003-2004 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.”111 As noted
above, however, the effectiveness of many of these steps will depend on their
implementation. Several uncertainties and unresolved questions remain.
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 the 9/11 Commission Monograph on Terrorist
Financing, “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.” 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.
Private Donors and Accountability. U.S. officials have said that the Saudi
government should give more emphasis to demanding personal responsibility for
terrorist financiers and act against those who tolerate or promote financing of terrorist
activity. The U.S. Treasury Department has observed that, “while current regulations
take account of the financial activities of charitable concerns, they do not apply to
direct donations made by private donors.”112 The 9/11 Commission terrorist
financing monograph states that “the Saudis have failed to impose criminal
punishment on any high-profile donor.” Some individuals have had their assets
frozen by Saudi authorities and have been forbidden from traveling outside Saudi
Arabia. However, several prominent Saudi individuals suspected by U.S. authorities
of involvement in terrorist financing have not been charged or prosecuted in the
United States, Saudi Arabia, or other jurisdictions. These individuals are believed
to be in Saudi Arabia. The U.S. State Department has stated that “Saudi Arabia
should demonstrate its willingness to hold elites accountable” for money laundering
and terrorist financing related offenses.
109 Author meeting with Ministry of Interior officials, Riyadh, Saudi Arabia, Mar. 2005.
110 Ibid., testimony by (then) Deputy Assistant Secretary of the Treasury Juan Zarate, p. 8.
111 Robin Allen, “Saudis meet anti-terror finance benchmarks,” Financial Times (London),
Mar. 8, 2004.
112 Glaser, Testimony Before Senate Committee on the Judiciary, Nov. 8, 2005.

CRS-26
Currency Controls and Cash Couriers. Although Saudi Arabia’s
financial customer information requirements are more stringent for international
transfers under newly 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). The use of cash couriers has
been identified as “primary mechanism for the transfer of insurgency funds into Iraq”
and U.S. Treasury Department officials have stated that Iraq’s neighbors have a
responsibility to act to prevent the transfer of large amounts of cash to insurgent
organizations in Iraq. The extent to which couriers may be ferrying cash from Saudi
Arabia into Iraq is unclear. However, press reports have described insurgent groups’
preferences for Saudi recruits because of the large amounts of personal funding,
usually in cash, that some Saudi nationals have brought with them to Iraq.113
Palestinian Funding. Saudi leaders have said that Saudi government
contributions to Palestinian causes go exclusively to the Palestinian Authority114 and
not to Hamas. The possibility remains that private donors in Saudi Arabia may
circumvent Saudi regulatory controls. The State Department notes that Hamas
receives funds from benefactors in various locations, including Saudi Arabia, but
does not identify the donors as government officials.
International Efforts. The U.S. State Department notes that Saudi Arabia has
signed but not ratified the International Convention for the Suppression of the
Financing of Terrorism, adopted by the U.N. General Assembly in December 1999.
The State Department has urged Saudi Arabia to become a party to the convention.
Outlook
It seems clear that challenges to internal security and terrorist incidents in Saudi
Arabia have impelled the Saudi leadership to devote heightened attention to
countering the financing of 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.
113 Ghaith Abdul-Ahad, “Outside Iraq but Deep in the Fight,” Washington Post, June 8,
2005.
114 It is unclear how donations from the Saudi Popular Committee for Assisting the
Palestinian Mujahideen to the PLO were considered in this regard.

CRS-27
Issues for Congress
Several Committees and Members in the 108th Congress expressed interest in
these issues and held hearings and introduced legislation relating to U.S.-Saudi
cooperation in the fight against terrorism and terrorist financing. Section 575 of the
FY2005 Omnibus Appropriations Bill (P.L. 108-447) prohibited Saudi Arabia from
receiving aid or any direct assistance from the United States unless the President
exercises waiver authority and certifies that “Saudi Arabia is cooperating with efforts
to combat international terrorism and that the proposed assistance will help facilitate
that effort.” The President exercised this waiver by Presidential Determination 2005-
38 on September 26, 2005. Saudi Arabia has been receiving $25,000 in annual U.S.
aid under the International Military Education and Training (IMET) program.
Similarly, the Intelligence Reform and Terrorism Prevention Act (P.L. 108-458)
required the President to submit to Congress within 180 days a strategy for
collaboration with the people and government of Saudi Arabia, including a
framework for cooperation on efforts to combat terrorist financing.
This interest has continued in the 109th Congress. The “Targeting Terrorists
More Effectively Act of 2005” (S. 12) states that “the Kingdom of Saudi Arabia has
an uneven record in the fight against terrorism, especially with respect to terrorist
financing.” The bill also calls on the Bush Administration to use diplomacy,
intelligence, and law enforcement in order to work with the Saudi government to
further curtail terrorist financing activities. The bill would require the President to
submit a report to specified congressional committees, classified if necessary, that
would describe the long term strategy of the United States to “effectively prevent the
financing of terrorists in Saudi Arabia.” H.R. 505, the “Prohibit Aid to Saudi Arabia
Act of 2005,” would prohibit any future U.S. aid or foreign assistance to Saudi
Arabia based on a number of findings, including allegations of Saudi financial
support for Hamas and Al Qaeda. The bills have been referred to committees of
jurisdiction.
Companion legislation entitled the “Saudi Arabia Accountability Act of 2005”
(H.R. 2037 and S. 1171) would restrict the export of defense items to Saudi Arabia
and restrict the movement of Saudi diplomats in the United States unless the
President certifies that, among other things, the Saudi government has ended “any
funding or other support” for terrorism and “has exercised maximum efforts to block
all funding from private Saudi citizens and entities to offshore terrorist
organizations.” The bills provide for a national security waiver of the certification
requirement. The bills also would require an annual report from the State
Department on the Saudi government’s “progress” toward the criteria described in
the legislation, which could include, if necessary, a classified annex. Each bill has
been read and referred to a committee of jurisdiction.
Section 582 of the FY2006 Foreign Operations, Export Financing, and Related
Programs Appropriations Act (P.L.109-102) prohibits U.S. assistance to Saudi
Arabia and provides for a presidential waiver for national security purposes that must
be submitted to Congress 15 days prior to the obligation of any assistance funds.