The House Subcommittee on Terrorism and Illicit Finance held a hearing last week to discuss strategies to disrupt the financing and procurement of weapons by terrorists.
These networks typically use financial mechanisms such as wire transfers, trade finance products, cash, checks, and credit cards to procure weapons. Countering the financing of these weapons are a vital focus of U.S. counter-proliferation efforts.
“On the Terrorism and Illicit Finance (TIF) Subcommittee, we are charged with providing the tools and resources our nation’s intelligence and financial communities needs to succeed and be secure,” Subcommittee Chairman Steve Pearce (R-NM) said. “Part of this essential function is learning how hostile actors work to avoid and counter the sanctions and other regulatory actions our nation imposes. Today’s focus was specific to the financial networks that support weapons proliferation.”
The discussion also examined how financial institutions can best identify proliferation activities.
“If we can identify and cut off these funding streams, we can prevent the proliferation of weapons of mass destruction, and I believe we have come one step closer to these efforts today,” Pearce said. “With the takeaways learned at today’s hearing, TIF and the Financial Services committee can better serve and assist the Treasury Department and Financial Institutions with the rules and authorities needed to combat proliferation financing.”
David Albright, founder and president of the Institute for Science and International Security, said many countries perform poorly on preventing proliferation financing. Countering proliferation financing needs to be more integrated into many more aspects of counterproliferation including export controls.
“To-date, the international community has primarily addressed state-based proliferation activity via controlling certain goods and sanctioning bad actors,” Tom Keating, director, Center for Financial Crime and Securities Studies, Royal United Services Institute, said. “Yet this approach is fragmented, poorly enforced and too narrowly focused… proliferators such as North Korea employ an array of funding operations, such as repairing and servicing military equipment; training police forces; and building statues, and a range of commercial trading activities which involve both a logistical and financial operation… focusing merely on goods, either preventing their sale or interdicting their transfer once purchased, is just one part of establishing an effective response. Proliferators depend on access to financial assets and services, and the international financial system has become a critical lifeline for the regime. Detecting and stopping financial access will complicate and obstruct the wider operations of proliferation network. In sum, the global architecture for disrupting proliferation finance requires improved design and implementation.”
Emanuele Ottolenghi, a senior fellow at the Foundation for Defense of Democracies, said the Treasury Department plays a key role in this effort.
“Its sanctions and designations over the years have helped name and expose Iranian efforts to circumvent sanctions,” Ottolenghi said. “[But] this is a cat-and-mouse game. A constant update of sanctions and rigorous enforcement is, therefore, a key part of Treasury’s ongoing effort.”