The last time the Treasury designated a charity as a front for terrorist funding was in February 2009, when it designated the Tamil Foundation.
The U.S. administration stopped blacklisting charities for funding terrorism under President Barack Obama, Bloomberg columnist Eli Lake reported.
Lake analyzed the change in policy since Obama became president in 2008. The last time the treasury designated a charity as a front for terrorist funding was in February 2009, when it designated the Tamil Foundation, which had allegedly been raising money for the Tamil Tigers.
Between September 2001 and February 2009, eight charities were designated as fronts for terror funding. One of those was the Holy Land Foundation, in what became the largest terror-financing trial in American history.
Lake proffers two possible explanations for the change.
The first is interdepartmental squabbling within the government. Former terrorism finance analyst at the Treasury Jonathan Schanzer told Lake “My understanding, based on conversations with several senior Treasury officials, is that this is no longer a Treasury function.”
He added the FBI, which might be expected to do the job instead of the Treasury, “may be overwhelmed with direct threats to the homeland, thereby relegating domestic terrorism-finance cases to a third- or fourth-tier priority.”
The other explanation is that terrorist organizations have stopped using U.S. charities to launder money. This may be because high profile trials such as that of the Holy Land Foundation convinced terrorist groups that it is not practical to funnel money through U.S.-registered NGOs anymore.
It also may be because terrorist groups today control territory and therefore have other revenue streams. The Islamic State, al-Shabaab, al-Qaeda in the Arabian Peninsula, Boko Haram, the Taliban and Hamas all control territory which they can use to raise money.
“ISIS doesn’t have to create a U.S. NGO, they run a war economy,” Juan Zarate, a deputy national security adviser for counter-terrorism under George W. Bush, told Lake. “Al-Shabaab, they are taxing people, they are engaged in other kinds of illicit trade.”
A Treasury spokesman told Lake in a written statement “there is no change in policy regarding designating U.S. persons that violate sanctions, and it is incorrect to claim that Treasury principals or staff have said otherwise.”