Increased Scrutiny of Charitable Donations

March 16, 2010

Saudi Arabia’s counter terrorism efforts have focused on interruption of financial support siphoned from charitable giving and now there’s a new warning from the Interior Ministry to organizations that they verify their legitimacy before making collections. Those acting without prior official permission will have their bank accounts closed according to Maj. Gen Mansour Al-Turki, Interior Ministry spokesman, who noted an uptick in donation appeals.

Al Turki asked the public to identify bank accounts that violated the regulatoins, according to Muhammad Humaidan writing in Arab News. He reported the Shoura Council was discussing a draft law to further regulate charitable organizations that would require them to spend funds only for the purpose for which they were collected.

Last May the U.S. State Department, in its annual “Report on Terrorism” addressed the measures undertaken by the Kingdom to combat terrorism, including their steps to stem the flow of money:

Saudi Arabia continued to make progress in combating money laundering and terrorism finance. The Saudi Capital Authority Market stressed that financial brokerage companies be bound to the same law combating money laundering and terrorism financing when designing swap agreements with foreign investors. Banks must report suspicious transactions to the Financial Investigations Unit (FIU), which is part of the Ministry of Interior, and provide the Saudi Arabia Monetary Agency’s Department of Banking Inspection and the Anti-Money Laundering Unit with a copy of the report.

In September, the Ministry of Social Affairs announced the enforcement of rules and regulations on charitable organizations aimed at preventing terrorist finance. During Ramadan in September, the Ministry of Islamic Affairs tightened controls on charitable contributions. This was in response to a 2007 incident, where seven terrorist cells were apprehended after raising 20 million Saudi Riyals from donors who thought the money was for legitimate charitable uses. The Government has stated its intent to establish a Charities Commission to ensure rigorous implementation of existing terrorist financing regulations.

The United States continued to urge the Government of Saudi Arabia to pursue and prosecute terrorist financiers more vigorously. Last year’s new cash courier regulations resulted in several individuals being investigated.

A detailed history of this issue was provided by Christoper Blanchard and Alfred Prados of the Congressional Research Service, writing in September 2007, “Saudi Arabia: Terrorist Financing Issues,” a CRS Report for Congress.

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