Speaking at a money laundering conference in Washington, DC on Oct. 12, 2009, David S. Cohen, the Treasury Department’s Assistant Secretary for Terrorist Financing said, “terrorist organizations’ reliance on crime to finance their operations appears to be expanding.” Recent reports from RAND and IPSA International provide several examples of “criminal activities,” such as film piracy, illegal drug sales, and organized crime as being a major source of terrorist financing.
Someone needs to tell Avi Jorisch.
In his book, Tainted Money: Are We Losing the War on Money Laundering and terrorism Financing, Jorisch describes charities as “uniquely potent targets for abuse” and claims that [i]n recent years, terrorists and their supporters have also perfected the abuse of charities.” He also claims the “number of charities designated by the United States in recent years reflects the degree to which terrorist groups have exploited the sector.” One would expect a former Treasury employee like Jorisch to know that’s not the case.
According to Treasury’s Office of Foreign Asset Control (OFAC), of the approximately 533 entities listed on the September 2009 designated terrorist list, less than 40 are international charities and only nine are U.S. based charities. In fact, from 2006 to 2009, the overall percentage of entities designated by OFAC that are related to charities shrunk by nearly 33 percent. Additionally, less than five percent of the assets “blocked” (seized) by Treasury come from charitable sources. The other 95 percent comes from state sponsors of terror (e.g. Cuba) and other criminal groups or individuals.
That’s not the only thing Jorisch gets wrong. For instance, he says Treasury’s outreach to the nonprofit sector led to the publication of the “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for US Based Charities” (Guidelines) in 2002. He even maintains that the Guidelines were updated in “2005” (it was actually updated in 2006) “after the government formed a working group with members of the NPO (Nonprofit organization) community to ensure that proper input was taken into consideration.”
That is news to me.
As a member of that working group (Treasury Guidelines Working Group), I can verify that it was not “formed” or even warmly received by Treasury. More importantly, leading organizations in the nonprofit sector have repeatedly called for the complete withdrawal of the Guidelines, which provide no legal protection to any charity, even when strictly adhered to. Instead, the Treasury Guidelines Working Group developed an alternative, the Principles of International Charity (Principles). Unlike the Guidelines, the Principles provide an effective self- monitoring framework for nonprofits to minimize “the risk of diversion of charitable assets.”
To be fair, I praise Jorisch for acknowledging that “American charities play a vital role in providing global comfort and support to people in need” and that “governments cannot protect the charitable sector from terrorist abuse without the active support of the charities themselves.” He also does a good job of raising awareness about Chiquita Brand International’s support for a designated terrorist group and its subsequent $25 million penalty levied by the government. (For more information about the different standards for sanctions between charities and private sector entities, see Double Standard: Chiquita Banana Fined, Not Shut Down, for Transactions with Designated Terrorists)
Jorisch’s book is full of quotes and figures from his old bosses at Treasury. I think it’s time he joins Assistant Secretary Cohen and others in today’s fight against terror financing.