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American ShipperFinanceNewsTrucking RegulationTrucking Risk & Compliance

‘Tip of the spear’ against terrorism financing

The head of Treasury’s Office of Terrorism and Financial Intelligence points to “network sanctions” as meaningful tool to curtail Iran’s ability to fund terrorist groups.

A small enforcement agency within the U.S. Treasury Department has found itself increasingly at the center of the country’s efforts to counter national security and terrorism financing threats.

“Our tools have been so effective that we frequently find ourselves at the tip of the spear as new security threats and challenges emerge around the globe,” said Sigal P. Mandelker, Treasury undersecretary who heads the Office of Terrorism and Financial Intelligence (TFI), in a speech at the Center for Strategic and International Studies on Wednesday.

TFI builds its programs by working with other Treasury agencies, such as the Office of Foreign Assets Control (OFAC)Financial Crimes Enforcement Network (FinCEN)Office of Intelligence and Analysis (OIA), and Office of Terrorist Financing and Financial Crimes (TFFC).

“This organizational structure integrates unparalleled insight into the financing of emerging global threats with powerful economic authorities to counter them,” Mandelker said.

Since the Sept. 11, 2001, terrorist attacks in the United States, Treasury’s financial sanctions increasingly have taken aim at terrorist organizations and their state sponsors, mostly located in the Middle East. 

Mandelker said sanctions are “very powerful tools” to achieve broader U.S. national security objectives and cut off both financial and material support to terrorist groups and pariah regimes.

“Sanctions alone will rarely, if ever, comprise the entire solution to a national security threat or human rights or corruption crisis,” she said. “We are constantly thinking through which complement of tools — sanctions, anti-money laundering measures, enforcement actions, foreign engagement, intelligence and analysis, and private-sector partnerships among others — are most impactful when countering specific challenges.

“We then carefully orchestrate and sequence the application of these tools to build off of each other and nest them in a broader strategic approach,” she added.

Mandelker said Treasury has especially embraced the concept of “network sanctions” against U.S. foreign adversaries.

“Network sanctions recognize that a bad actor rarely acts alone,” she said. “Instead, they frequently rely upon complicated structures that include shell companies, business partners, facilitators, enablers and middlemen to disguise the nature of their activity and launder their money.

“When we focus on these broader networks and their assets, we can more effectively block a bad actor’s ability to access their ill-gotten gains, making it more difficult for them to use the global marketplace or continue in their business arrangements,” Mandelker said.

Treasury has used this approach against the Iranian regime, which allegedly has funneled hundreds of millions of dollars to terrorist organizations, such as the Quds Force, Hizballah and Hamas.

Mandelker said the Trump administration also uses other Treasury policy tools against Iran. Since exiting the multinational nuclear treaty with Iran in 2018, the administration has reimposed sanctions against the country that cover its energy, financing, aviation and maritime industries

More than 1,000 individuals, entities, aircraft and vessels with business ties to Iran have been added to OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List during the past two years, Mandelker said. 

In addition, Treasury has published several private-sector industry advisories, including alerting the maritime industry about the compliance and penalty risks associated with transporting Iranian oil. 

“This multipronged maximum economic pressure campaign is working,” Mandelker said. “Iran’s military spending has decreased significantly. … In fact, the Iranian president has declared that the economy is the worst it’s been in 40 years. All of this means the regime has far less revenue to divert towards terrorism and malign activities.”

Mandelker was confirmed as Treasury undersecretary for terrorism and financial intelligence on June 21, 2017. From 2006 to 2009, she served as deputy assistant attorney general with the Justice Department’s Criminal Division, and before that was a counselor to the Department of Homeland Security secretary and clerked at the U.S. Supreme Court and U.S. Court of Appeals. Prior to her confirmation, she was a partner at law firm Proskauer Rose.

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Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.
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