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CNN Live At Daybreak

Washington Praising Increasing International Cooperation in Tracking Terrorist Money

Aired November 01, 2001 - 05:37   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: Welcome back at 37 minutes after the hour. Washington is praising increasing international cooperation in tracking terrorist money. So far 152 nations say that they will cooperate and 81 countries including Saudi Arabia have issued orders to block accounts already.

CNN's Allan Dodds Frank says a big question, though, is how much is the Saudi government really able to do.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK: Saudi Arabia has fewer than one dozen banks, so tracking cash flows there should not be difficult, but so far only a few accounts involving small amounts of money have been frozen there, even though Osama bin Laden and 15 of the 19 terrorists involved in the September 11th attacks have been Saudi citizens.

Saudi officials insist their government is cooperating fully.

UNIDENTIFIED MALE: We have a population of six million (INAUDIBLE) living in (INAUDIBLE) that transfers over $16 billion a year. The average transfer is about two to $300 a month, so we're looking at almost 17 million transactions a year that go to an excess of 100 countries - and so that's, we try to get a handle on it.

FRANK: The U.S. Treasury Department says it is pleased with Saudi Arabia's cooperation so far. One visible success, freezing the assets of this wealthy Saudi businessman, Yasser Conti (ph), accused of funding a charity that secretly backed bin Laden's organization.

Conti says he is innocent and plans to fight.

UNIDENTIFIED MALE: If he feels that he has been improperly accused, he has a remedy. He can come to us. He can come and let the Treasury lawyers interview him. He can even send us a letter, but he has not done any of that. He says he is going to, but he hasn't done it.

FRANK: Since September 11th, no U.S. Treasury team has been invited to Saudi Arabia to help track suspicious accounts. The government there says it has investigated thoroughly.

UNIDENTIFIED MALE: We have not found any direct evidence of support by Saudis for terrorist organizations.

FRANK: Direct evidence may be hard to find, but investigators want to know if any charitable donations went astray.

UNIDENTIFIED MALE: I don't think there's any question having studied this and worked with Saudis over the - my last years as ambassador that there is what we would call in this country leakage.

FRANK: The Saudis conceive some money may have slipped unwittingly out of their country to terrorists, but insists no Saudi knowingly has funded Osama bin Laden's organization.

Allan Dodds Frank, CNN Financial News, New York.

(END VIDEOTAPE)

CATHERINE CALLAWAY, CNN ANCHOR: Let's talk now with someone who has spent some time tracking international money laundering. That's Jeffrey Robinson. He's the author of "The Merger" and "The Laundrymen." He's in our London bureau this morning. Thanks for joining us this morning. We just saw Allan's report...

JEFFREY ROBINSON, AUTHOR: Catherine, good morning. Good morning, Leon.

CALLAWAY: Leon, he says good morning.

LEON HARRIS, CNN ANCHOR: Good morning.

CALLAWAY: Let's start off with the report from Allan talking about a good deal has been written about the connections in Saudi Arabia to the al Qaeda network. We're hearing from the Bush administration that the Saudis are - quote - "cooperating fully." But do you agree with that? Do you think that the Saudi government is doing all that it can to follow this money?

ROBINSON: Well, yes and no. I mean, the Saudi relationship, in this particular problem, is a very delicate one, and Washington does not want to upset the Saudis. The Saudis probably don't want to upset Washington. But in order to track money laundering, you have to know what you're looking for. It just doesn't say dirty money under it. It looks real, and I don't think the Saudis have much experience in tracking it.

Furthermore, once this money is in the banking system, it moves around and becomes nothing more than a blip on a computer screen. What the Saudis should be looking for, and what America, I know, is looking for, are the correspondent banking relationships with the Saudi banks. In other words, once the money is on its way out of Saudi Arabia, where is it going, who is handling it, where is it showing up? Those relationships can be tracked, and they should be tracked by American financial investigators.

CALLAWAY: Let's talk a little bit more about that. You know, you mentioned it's a complicated circuitous route that this money takes and goes through a plethora of companies, of banks. How do you follow this, and what could the U.S. government and the Saudi government do, right now, to follow that money?

ROBINSON: Well, one of the things the U.S. government has done, President Bush has just signed this terrorist act, which has a lot of money laundering legislation in it. It was just signed this weekend. One of the things the act does is target shell banks. Now, these are banks in the offshore world called Acme Bank, Ajax Investment Corporation, these sorts of things. And they're nothing more than a piece of paper. They're not actually walls with tellers and drive- through machines. These are pieces of paper, through which dirty money can function.

There's no legitimate reason for these banks. They are all shady. They are all bent. What the act doesn't do is go after these shell companies that you find throughout the offshore world as well: Ajax Trading, Acme Holding Company. What has to happen is the American government has got to go after all of these totally nefarious organizations that have been set up simply to launder money, and you'll find them in the Middle East. You'll find them in our backdoor in the Caribbean. They're all over the place.

For example, it is known that some Saudi money and Middle Eastern money that has funded terrorists have gone through Cypress. Now, Cypress has 48,000 shell companies registered there; 47,000 of the 48,000 have no physical presence whatsoever on the island. They don't even have a phone number on the island. These all have to be looked at very, very closely and shut down.

CALLAWAY: And how significant, do you think it is, the action that was taken against Conti, the Saudi businessman that we just heard about in Allan's report?

ROBINSON: Interestingly enough, some of that money appears to have come through the Channel Islands, just offshore of Britain here. It is very significant. They must have the kind of information that has led them to believe that this money is moving to terrorist organizations. But you have to remember, there is no difference between terrorist money, organized criminal money and drug money. It's all the same thing. It all moves in the same way.

And there's a breaking news story in London this morning, eight people have been arrested by HM Customs for drug money laundering. Now, the customs people have busted five Iranians and three Indian nationals, saying that they've laundered up to 100 million pounds, that's almost $300 million, for terrorist -- well, for criminal organizations around the world.

CALLAWAY: Right.

ROBINSON: Because there's no difference between terrorist money and drug money, you know there's something in this.

CALLAWAY: And isn't it complicated, also, not only just the drug money, but we're seeing some of these businesses masquerading as charities.

ROBINSON: The charity link is a very significant one. Charities in North America, especially in the United States, enjoy certain exclusions from money laundering laws, because they collect cash. It's a very simply thing for a charity in the United States to have a lot of cash available for a terrorist organization in Afghanistan through the Hawala banking system. In other words, the Afghan terrorists, the al Qaeda or the Taliban, pay drugs to some organization in the Middle East. The charity money is given to the terrorists in the United States.

Hawala banking is a very significant part of this. They think it can't be traced, but that bust in London this morning was a 100 million pound Hawala network.

CALLAWAY: All right.

ROBINSON: It can be traced.

CALLAWAY: All right. Thank you very much, Jeffrey Robinson.

ROBINSON: Any time.

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