President Bush yesterday signed an executive order freezing the US assets of a list of 27 proscribed organisations it says are involved with terrorism and called on foreign governments and financial institutions to do the same, saying: "If you do business with terrorists, if you support or sponsor them, you will not do business with the United States of America." The administration said it expected to add a further 90 names to the list in coming days.
Issuing the Order through executive agency the Office of Foreign Assets Control (OFAC), Treasury Secretary Paul O'Neill said: 'With the signing of this Executive Order, we have the President's explicit directive to block the US assets of any domestic or foreign financial institution that refuses to cooperate with us in blocking assets of terrorist organizations. This order is a wake up call to financial institutions around the world - if you have any involvement in the financing of the al-Queda organization, you have two choices. Cooperate in this fight, or we will freeze your US assets. We will punish you for providing the resources that make these evil acts possible. . . . . the Foreign Terrorist Asset Tracking Center that we announced last week is up and running, coordinating information among government agencies with the express purpose of identifying and stamping out the financial network that funds terrorism. And we are working with the G7 nations and many others to attack all parts of the global infrastructure that finances these acts of evil. Together we will succeed in starving the terrorists of funding and shutting down the institutions that support or facilitate terrorism.'
The individuals and organisations on the list (given in full below in OFAC's announcement) include Osama bin Laden's al Qaeda network, the Armed Islamic Group, which has provided foot soldiers for bin Laden, and al-Jihad, an Egyptian extremist group active since the 1970s.
As Mr O'Neill said, any respectable banker would not want to do business with terrorists, and would support the administration's goal of rooting out terrorism and its funding. But the problem for bankers, starting with the 5,000 US institutions who were sent yesterday's Order, is to know which accounts to freeze. Bankers are easily able to check client lists for the proscribed names, but they find it difficult or impossible to know which accounts might be indirectly connected to those identified. "That's one of the real thorny problems," Ed Yingling, chief lobbyist for the American Bankers Association, told the Wall Street Journal: "How many veils have been put out? At some point, we cannot tell who's linked to whom." As of Monday afternoon, the association had received no reports of any seizures.
Despite reports that the US Treasury is reconsidering its attitude towards the OECD's 'unfair tax competition' initiative (see Tax-News.com's article lower down the page) it's quite unclear at this stage whether this US action constitutes a change in the administration's position. Jeremiahs such as London's Financial Times, which seems to regard itself as a flag-carrier for the FATF and OECD, immediately assumed the worst for offshore: 'The broad sanction powers represent a sea-change in the administration's approach to financial regulation and multilateral agreements,' gloated the pink paper, 'Before the terrorist attacks, the Bush administration opposed international threats to impose sanctions on tax havens that refused to share information with US officials. Any action against countries that are unable to comply with the US demands will boost the movement of private banking away from secretive offshore financial centres to mainstream onshore centres with higher regulatory standards.'
The FT is being premature, and what it says is not even correct - neither George Bush nor Paul O'Neill was ever against the imposition of sanctions on jurisdictions which knowingly sheltered crime-related beneficiaries. Yesterday's Order can be complied with just as easily by offshore banks as by onshore banks, and with the same problems of identifying related accounts. Virtually all offshore jurisdictions agree that exchange of information in named cases is normal and unproblematic, and are in course of entering appropriate agreements where these don't exist already. The FATF list of non-co-operative jurisdictions over money-laundering is by now dominated by non-offshore countries, and among the countries whose banking secrecy laws prevent 'fishing expeditions' are the US and the UK.
Attempts to track down Nigerian dictator Sani Abacha's corrupt funds ground to a halt in London, where the government said it could do nothing to force banks to divulge details of accounts without prima facie evidence of crime. And the US administration said yesterday that it had found no assets belonging directly to Mr. bin Laden.
The US is indeed cranking up its demands on other countries, with Mr Bush saying yesterday that he expected "civilised nations" to change financial laws and regulations to pursue terrorist funds in line with the US; but at present the US hasn't changed its own banking laws and hasn't introduced any legislation into Congress that would significantly alter the current banking secrecy regime. The UK Treasury announced this morning that a bank account in West London linked to Osama bin Laden had been closed, and promised co-operation with the US Order. Switzerland has also emphasized that it will co-operate.
At this stage, US action against the financial underpinnings of terrorism are a question of stricter adherence to existing international norms of exchange of information and mutual assistance. It remains to be seen whether any offshore jurisdictions will tempt providence by trying to defy the US - they would certainly be foolish to do so. But there is not yet any evidence that the OECD will be able to return to its original anti-offshore agenda.
The US is expecting co-operation, and will no doubt get it. "No one is Pollyannish enough to believe there won't be concerns or objections voiced,' said Treasury General Counsel David Aufhauser, 'but we have a high degree of confidence after talking with our friends and allies that they will assist in this effort to track down the assets of foreign terrorists, because no responsible banker would ever be an enemy to the purposes of this order."
Here is the text of the President's Executive Order as issued through the Office of Foreign Assets Control:
The President has issued a new Executive Order targeting terrorists and a number of new names have been added to OFAC's SDN List under the Order. Their assets need to be blocked and immediate notice given to OFAC. Banks should call OFAC's Hotline if they have any hits or questions. All of OFAC's informational material will be updated as soon as possible.
EXECUTIVE ORDER
- - - - - - -
BLOCKING PROPERTY AND PROHIBITING TRANSACTIONS WITH PERSONS WHO COMMIT, THREATEN TO COMMIT, OR SUPPORT TERRORISM
By the authority vested in me as President by the Constitution and the
laws of the United States of America, including the International Emergency
Economic Powers Act (50 U.S.C. 1701 et seq.)(IEEPA), the National Emergencies
Act (50 U.S.C. 1601 et seq.), section 5 of the United Nations Participation
Act of 1945, as amended (22 U.S.C. 287c) (UNPA), and section 301 of title
3, United States Code, and in view
of United Nations Security Council Resolution (UNSCR) 1214 of December
8, 1998, UNSCR 1267 of October 15, 1999, UNSCR 1333 of December 19, 2000,
and the multilateral sanctions contained therein, and UNSCR 1363 of July
30, 2001, establishing a mechanism to monitor the implementation of UNSCR
1333,I, GEORGE
W. BUSH, President of the United States of America, find that grave acts
of terrorism and threats of terrorism committed by foreign terrorists,
including the terrorist attacks in New York, Pennsylvania, and the Pentagon
committed on September 11, 2001, acts recognized and condemned in UNSCR
1368 of September 12, 2001, and UNSCR 1269 of October 19, 1999, and the
continuing and immediate threat of further attacks on United States nationals
or the United States constitute an unusual and extraordinary threat to
the national
security, foreign policy, and economy of the United States, and in furtherance
of my proclamation of September 14, 2001, Declaration of National Emergency
by Reason of Certain Terrorist Attacks, hereby declare a national emergency
to deal with that threat. I also find that because of the pervasiveness
and expansiveness of the financial foundation of foreign terrorists, financial
sanctions may be appropriate for those foreign persons that support or
otherwise associate with these foreign terrorists. I also find that a
need exists for further consultation and cooperation with, and sharing
of information by, United States and foreign financial institutions as
an additional tool to enable the United States to combat the financing
of terrorism.
I hereby order:
Section 1. Except to the extent required by section 203(b) of IEEPA (50 U.S.C. 1702(b)), or provided in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the effective date of this order, all property and interests in property of the following persons that are in the United States or that hereafter come within the United States, or that hereafter come within the possession or control of United States persons are blocked:
(a) foreign persons listed in the Annex to this order;
(b) foreign persons
determined by the Secretary of State, in consultation with the Secretary
of the Treasury and the Attorney General, to have committed, or to pose
a significant risk of committing, acts of terrorism that threaten the
security of U.S.
nationals or the national security, foreign policy, or economy of the
United States;
(c) persons determined
by the Secretary of the Treasury, in consultation with the Secretary of
State and the Attorney General, to be owned or controlled by, or to act
for or on behalf of those persons listed in the Annex to this order or
those persons
determined to be subject to subsection 1(b), 1(c), or 1(d)(i) of
this order;
(d) except as provided
in section 5 of this order and after such consultation, if any, with foreign
authorities as the Secretary of State, in consultation with the Secretary
of the Treasury and the Attorney General, deems appropriate in the exercise
of his
discretion, persons determined by the Secretary of the Treasury, in consultation
with the Secretary of State and the Attorney General;
(i) to assist in, sponsor, or provide financial, material, or technological
support for, or financial or other services to or in support of, such
acts of terrorism or those persons listed in the Annex to this order or
determined to be subject to this
order; or
(ii) to be otherwise associated with those persons listed in the Annex
to this order or those persons determined to be subject to subsection
1(b), 1(c), or 1(d)(i) of this order.
Sec. 2. Except to the extent required by section 203(b) of IEEPA (50 U.S.C. 1702(b)), or provided in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the effective date:
(a) any transaction or dealing by United States persons or within the United States in property or interests in property blocked pursuant to this order is prohibited, including but not limited to the making or receiving of any contribution of funds, goods, or services to or for the benefit of those persons listed in the Annex to this order or determined to be subject to this order;
(b) any transaction by any United States person or within the United States that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in this order is prohibited; and
(c) any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.
Sec. 3. For purposes
of this order: (a) the term "person" means an individual or
entity;(b) the
term "entity" means a partnership, association, corporation,
or other organization, group, or subgroup;(c)
the term "United States person" means any United States citizen,
permanent resident alien, entity organized under the laws of the
United States (including foreign branches), or any person in the United
States; and(d)
the term "terrorism" means an activity that -- (i) involves
a violent act or an act dangerous to human life, property, or infrastructure;
and (ii) appears to be intended --
(A) to intimidate or coerce a civilian population;
(B) to influence the policy of a government by intimidation or coercion;
or
(C) to affect the conduct of a government by mass destruction, assassination,
kidnapping, or hostage-taking.
Sec. 4. I hereby determine
that the making of donations of the type specified in section 203(b)(2)
of IEEPA (50 U.S.C. 1702(b)(2)) by United States persons to persons determined
to be subject to this order would seriously impair my ability to deal
with the national emergency declared in this order, and would endanger
Armed Forces of
the United States that are in a situation where imminent involvement in
hostilities is clearly indicated by the circumstances, and hereby prohibit
such donations as provided by section 1 of this order. Furthermore, I
hereby determine that the Trade Sanctions Reform and Export Enhancement
Act of 2000 (title IX, Public Law 106-387) shall not affect the imposition
or the continuation of the imposition of any unilateral agricultural sanction
or unilateral medical sanction on any person determined to be subject
to this order because imminent involvement of the Armed Forces of the
United States in hostilities is clearly indicated by the circumstances.
Sec. 5. With respect
to those persons designated pursuant to subsection 1(d) of this order,
the Secretary of the Treasury, in the exercise of his discretion and in
consultation with the Secretary of State and the Attorney General, may
take such other actions than the complete blocking of property or interests
in property as the
President is authorized to take under IEEPA and UNPA if the Secretary
of the Treasury, in consultation with the Secretary of State and the Attorney
General, deems such other actions to be consistent with the national interests
of the United States, considering such factors as he deems appropriate.
Sec. 6. The Secretary
of State, the Secretary of the Treasury, and other appropriate agencies
shall make all relevant efforts to cooperate and coordinate with other
countries, including through technical assistance, as well as bilateral
and multilateral agreements and arrangements, to achieve the objectives
of this order, including the prevention and suppression of acts of terrorism,
the denial of financing and financial services to terrorists and terrorist
organizations, and the sharing of
intelligence about funding activities in support of terrorism.
Sec. 7. The Secretary of the Treasury, in consultation with the Secretary of State and the Attorney General, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA and UNPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government. All agencies of the United States Government are hereby directed to take all appropriate measures within their authority to carry out the provisions of this order.
Sec. 8. Nothing in this order is intended to affect the continued effectiveness of any rules, regulations, orders, licenses, or other forms of administrative action issued, taken, or continued in effect heretofore or hereafter under 31 C.F.R. chapter V, except as expressly terminated, modified, or suspended by or pursuant to this order.
Sec. 9. Nothing contained in this order is intended to create, nor does it create, any right, benefit, or privilege, substantive or procedural, enforceable at law by a party against the United States, its agencies, officers, employees or any other person.
Sec. 10. For those persons
listed in the Annex to this order or determined to be subject to this
order who might have a constitutional presence in the United States, I
find that because of the ability to transfer funds or assets instantaneously,
prior
notice to such persons of measures to be taken pursuant to this order
would render these measures ineffectual. I therefore determine that for
these measures to be effective in addressing the national emergency declared
in this order, there need be no prior notice of a listing or determination
made pursuant to this order.
Sec. 11. (a) This order is effective at 12:01 a.m. eastern daylight time on September 24, 2001. (b) This order shall be transmitted to the Congress and published in the Federal Register.
THE WHITE HOUSE,
September 23, 2001.
ANNEX
Al Qaida/Islamic Army
Abu Sayyaf Group
Armed Islamic Group (GIA)
Harakat ul-Mujahidin (HUM)
Al-Jihad (Egyptian Islamic Jihad)
Islamic Movement of Uzbekistan (IMU)
Asbat al-Ansar
Salafist Group for Call and Combat (GSPC)
Libyan Islamic Fighting Group
Al-Itihaad al-Islamiya (AIAI)
Islamic Army of Aden
Usama bin Laden
Muhammad Atif (aka, Subhi Abu Sitta, Abu Hafs Al Masri)
Sayf al-Adl
Shaykh Sai'id (aka, Mustafa Muhammad Ahmad)
Abu Hafs the Mauritanian (aka, Mahfouz Ould al-Walid, Khalid Al-Shanqiti)
Ibn Al-Shaykh al-Libi
Abu Zubaydah (aka, Zayn al-Abidin Muhammad Husayn, Tariq)
Abd al-Hadi al-Iraqi (aka, Abu Abdallah)
Ayman al-Zawahiri
Thirwat Salah Shihata
Tariq Anwar al-Sayyid Ahmad (aka, Fathi, Amr al-Fatih)
Muhammad Salah (aka, Nasr Fahmi Nasr Hasanayn)
Makhtab Al-Khidamat/Al Kifah
Wafa Humanitarian Organization
Al Rashid Trust
Mamoun Darkazanli Import-Export Company
OFAC'S FAX-ON-DEMAND SERVICE
OFAC's automated fax-on-demand service is free and is available 24 hours a day, seven days a week, by dialing 202/622-0077 from any touchtone phone and following voice prompts. OFAC documents kept up to date on the system include all those available at this Web site as well as notices, licensing guidelines, and copies of Federal Register notices (often including notices filed, but not yet printed in the Federal Register). The "Index of Available Documents" is date-specific.
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