updated 6/15/2004 3:21:25 PM ET 2004-06-15T19:21:25

Saudi Arabia has enacted new laws and regulations to block flow of money to terrorist organizations but stopped short of publicly punishing individuals and groups that have funded terrorism, according to a report by an independent group.

The Saudi Embassy took issue with the report, however, calling it “politically motivated.”

The Senate Governmental Affairs Committee studied the report in a Tuesday hearing, questioning members of the task force sponsored by the Council on Foreign Relations that assembled the findings.

Chairwoman Susan Collins, R-Maine, said the number, reach and wealth of Saudi Arabian individuals with connections to terrorist organizations puts Saudi Arabia “on the front lines of this battle.”

“This struggle is not easily won, and money remains the lifeblood of many terrorist operations,” she said.

New laws noted
The report states that Saudi Arabia became more cooperative in efforts to cut off sources of terrorism funding after the May 2003 bombing of housing compounds in Riyadh. New laws, regulations and institutions dealing with money laundering, charitable donations and financial operations followed.

Those new measures have not been fully implemented, leaving open opportunities for the knowing or unknowing financing of terrorism, said task force co-director and former National Security Council official Lee S. Wolosky.

“We find it regrettable and unacceptable that since Sept. 11, 2001, we know of not a single Saudi donor of funds to terrorist groups who has been publicly punished,” Wolosky said.

The Saudi Embassy said in a statement that Council on Foreign Relations report is “politically motivated, ill-informed and factually incorrect.”

Crown prince challenges assertions
“Charges that Saudi Arabia has not fulfilled its obligations to fight terror financing are incorrect and fly in the face of determinations by legitimate and financial experts who have examined Saudi Arabia’s laws, regulations and financial control mechanisms closely,” said a written statement by Adel Al-Jubeir, foreign affairs adviser to Crown Prince Abdullah.

The report also recommended ways to better block terrorist funding through Saudi Arabia:

  • U.S. policy-makers should not ignore Saudi domestic issues when they affect terrorist financing and the “global export of Islamic extremism.”
  • The U.S. government should share more information with financial services companies under a provision in the Patriot Act, while also educating private companies to look for evidence of terrorist funding.
  • The U.N. Security Council should broaden sanctions on groups and individuals designated terrorists.
  • The U.S. government should examine and consolidate its own work combating terrorism financing.
  • Government agencies, private foundations, universities and think tanks should step up efforts to understand the strategic threat posed by radical Islamic terrorists, including their methods of financing and global growth.

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