JS-624: Statement of R. Richard Newcomb, Before The Committee on Governmental Aff...

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PRESS ROOM

FROM THE OFFICE OF PUBLIC AFFAIRS

July 31, 2003

JS-624

Written Statement of R. Richard Newcomb, Director Office of Foreign Assets

Control U.S. Department of the Treasury Before The Committee on
Governmental Affairs United States Senate Hearings on Terrorism Financing:
Origination, Organization and Prevention
July 31, 2003

Madam Chairman, members of the Committee, thank you for the opportunity to
testify on OFAC's efforts to combat terrorist support networks that threaten United
States citizens and property worldwide. It's a pleasure to be here. Please allow me
to begin with a brief general overview of the problem, as I see it.

Foundations of Terrorist Financing and Support

The threat of terrorist support networks and financing is real, and it has been our
mission to help identify and disrupt those networks. The vast majority of the world's
Muslims are peaceful, though a committed, vocal, and well-organized minority is
competing to mobilize a new generation in the tools and trade of Jihad.

There is much we know about how such radical Islamic terrorist networks were
established and still thrive. Wealthy and influential individuals and families based in
the Middle East have provided seed money and support to build a transnational
support infrastructure that terrorists have used for their purposes. This network,
fueled by deep-pocket donors and often controlled by terrorist organizations, their
supporters or those willing to look the other way, includes or implicates banks,
businesses, NGOs, charities, social services organizations, schools, mosques,
madrassas, and affiliated terrorist training camps and safe houses throughout the
world.

The terrorist networks are well-entrenched and self-sustaining, though vulnerable to

U.S., allied and international efforts applying all tools at our disposal. Looking
forward, please allow me to explain how we have come to this view and present the
strategy, being implemented in coordination with other Federal agencies including
the Departments of Defense, State, Justice, Homeland Security, the FBI, the
intelligence community and other agencies, to choke off the key nodes in the
transnational terrorist support infrastructure.

OFAC Mission and Experience on Counter-terrorism

The primary mission of the Office of Foreign Assets Control ("OFAC") of the U.S.
Department of the Treasury is to administer and enforce economic sanctions
against targeted foreign countries and foreign groups and individuals, such as
terrorists and terrorist organizations and narcotic traffickers, which pose a threat to
the national security, foreign policy or economy of the U.S. OFAC acts under
general Presidential wartime and national emergency powers, as well as specific
legislation, to prohibit transactions and freeze (or "block") assets subject to U.S.
jurisdiction. Economic sanctions are intended to deprive the target of the use of its
assets and deny the target access to the U.S. financial system and the benefits of
trade, transactions and services involving U.S. markets, businesses and individuals.
These same authorities have also been used to protect assets within the U.S.
jurisdiction of countries subject to foreign occupation and to further important U.S.
nonproliferation goals.

OFAC currently administers and enforces 26 economic sanctions programs

pursuant to Presidential and Congressional mandates. Active enforcement of these

http://www.treas.gov/press/releases/js624.htm 8/1/03
PO-370: "Statement of R. Richard Newcomb, Director..." Page 1 of 5

FROM THE OFFICE OF PUBLIC AFFAIRS

May 10, 2001

PO-370

"Statement of R. Richard Newcomb, Director of the Office of Foreign Assets

Control
U.S. Department of the Treasury before the Senate Appropriations Committee
Subcommittee on Treasury and General Government"

Attached is Economic Sanctions Programs, Attached is OFAC Enforcement Cases

Chairman Campbell, Senator Dorgan, and Members of the Subcommittee, I am

pleased to have the opportunity to speak to you today about the work of the
Treasury Department's Office of Foreign Assets Control, or "OFAC," as we are
commonly called. OFAC administers economic sanctions against foreign countries,
entities and individuals to further U.S. foreign policy and national security
objectives. These sanctions programs are normally imposed pursuant to a
declaration of national emergency by the President under specific statutory
authority, but may also be imposed directly by the Congress, as in the case of
legislation pertaining to foreign terrorist organizations and narcotics kingpins.

OFAC currently administers twenty-one economic sanctions programs involving

assets freezes and/or trade embargoes, including programs directed against
Angola (UNITA), Burma, Cuba, Iran, Iraq, Libya, North Korea, Sierra Leone, Sudan,
the Taliban in Afghanistan, foreign terrorists and foreign narcotics traffickers. (See
the attached chart for a complete list of OFAC programs.) In performing its mission,
OFAC relies principally on the President's broad powers under the Trading With the
Enemy Act ("TWEA"), the International Emergency Economic Powers Act
("IEEPA"), and on occasion, the United Nations Participation Act ("UNPA"), to
prohibit or regulate commercial or financial transactions involving specific foreign
countries, entities and individuals. These powers are employed to freeze, or block,
foreign assets by prohibiting transfers of those assets which are located in the
United States or in the possession or control of U.S. persons, as well as to prohibit
financial transactions (such as bank lending), imports, exports and related
transactions. These sanctions programs may be either selective, prohibiting a
specific class of economic transactions (such as transactions with the government
of the target country), or comprehensive, prohibiting all unlicensed economic
transactions involving the designated country or its nationals. OFAC's blocking
authority has also been employed to protect classes of assets, as in the case of the
1990 freeze of Kuwaiti assets after Iraq's invasion of Kuwait, or in the case of
assets pertaining to the implementation of agreements between the United States
and the Russian Federation relating to the disposition of highly enriched uranium.
vt

Organizationally, OFAC is composed of the following components: l«*0

O '"

1) Licensing Division - Makes determinations on requests for specific licsrises --

processing more than 18,000 such requests during the past twelve-month period-
and provides guidance to the public with respect to interpretive rulings and
transactions authorized by general license. The influx of requests for licenses and
interpretive rulings under the twenty-one separate programs OFAC administers has
increased dramatically. In an effort to meet this demand and provide responsive
and thorough customer service, OFAC is instituting measures to: process licenses
within two weeks absent the need for interagency consultation; hire additional
personnel to respond to phone inquiries; promote transparency of agency action by

http://www.ustreas.gov/press/releases/po370.htm 5/28/03