Saudi Arabia: Terrorist Financing Issues

Publication Date: September 2007

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Government

Type:

Coverage: Saudi Arabia

Abstract:

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 counterterrorist 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.