Financial Transparency Coalition

Many times when we (and by “we” I mean all of those of us who aren’t involved in the intimate details of U.S.intelligence and counter terrorism efforts)… Many times when we think about terrorism, we imagine events transpiring many miles away. We believe terrorist attacks are brewed in distant countries, financed with drug money and untraceable transactions in cash, and executed by men and women who live in remote villages, towns, and cities, ruled by governments who can’t (or won’t) conduct effective counter terrorism. All of it comes together to make a phenomenon that is difficult, if not nearly impossible, to understand, track, and most importantly, predict.

The image above is excessively simplified. However, there is one part of the picture that is downright false. Which part? The financing.

As it would turn out, terrorists are not only financed by cash in suitcases. They aren’t only financed by accounts in remote banks in uncooperative tax jurisdictions. Yes, terrorists are financed by drugs and cash and accounts in secrecy jurisdictions. But they are also financed by bank accounts right here on U.S. shores. Even those in Manhattan.

Former New York District Attorney Robert Morgenthau has already warned us—and taken significant action on—the access to Manhattan banking Iran uses through clandestine channels. Years ago, leaders in Iran realized that banks in Venezuela are not restricted in their access to the United States in the same way the U.S. government restricts Iranian banks. They further realized those Venezuelan banks are largely responsible for self-regulating to make sure the funds they transfer to the U.S. are for legitimate purposes.  These circumstances have provided Iran with an ideological match and a convenient co-conspirator to gain access to the U.S. financial system. In 2009 Mogenthau discovered Iran opened the Banco Internacional de Desarrollo (International Development Bank or BID) in Caracas to open thick ties with Panama, a notorious secrecy jurisdiction.  Morgenthau noted his office suspected an “ulterior motive,” as BID clearly provides a “sanction busting” method forIran to gain access to the U.S. financial system.

So why would Iran go to these lengths for some bank deposits in Manhattan?  Because to obtain banned missile and nuclear materials in an international market, Iran must make payments through wire transfers in U.S. dollars, which must clear through correspondent accounts in the United States.  In this way, Iran can use Venezuela’s banks as a third party to guarantee its “continued development of nuclear technology and long-range missiles.”

But as it would turn out it’s not only Iran that has allegedly used Manhattan to store its illicit cash. On Thursday, federal prosecutors filed a civil suit in New York seeking nearly half a billion dollars in penalties from three Lebanese financial institutions, thirty used auto dealers, and one U.S. shipping company for laundering money from the proceeds of cocaine sales on behalf of terrorist organization Hezbollah.

Federal investigators believe the auto dealers were shipping used cars from the U.S. to several West African countries at a mark-up and remitting the profits, along with the laundered proceeds of narcotics trafficking from South America, to Hezbollah controlled money laundering channels. Manhattan U.S. Attorney Preet Bharara noted: “Today, we are putting a stranglehold on a major source of that funding by disrupting a vast and far-flung network that spanned three continents.”

It all comes back to money. Money is the life blood of any organization—whether that organization is the Iranian government or Hezbollah.  And to confront the totality of threats we face from terrorism and the proliferation of banned weapons, we must take on the economic ties of those organizations. But even more importantly, we must realize that the keys to success do not only lie in remote places oversees. Many of America’s adversaries use its own financial system to fund their operations. Clearly this should end.