[House Document 107-264]
[From the U.S. Government Publishing Office]

107th Congress, 2d Session - - - - - - - - - - - - House Document 107-264







                  U.S.C. 1641(c) AND 50 U.S.C. 1703(c)

    September 24, 2002.--Referred to the Committee on International 
                  Relations and ordered to be printed
To the Congress of the United States:
    As required by section 401(c) of the National Emergencies 
Act, 50 U.S.C. 1641(c), and section 204(c) of the International 
Emergency Economic Powers Act, 50 U.S.C. 1703(c), I transmit 
herewith the 6-month periodic report prepared by my 
Administration on the national emergency with respect to 
persons who commit, threaten to commit, or support terrorism 
that was declared in Executive Order 13224 of September 23, 

                                                    George W. Bush.
    The White House, September 19, 2002.
 Periodic Report on the National Emergency With Respect to Persons Who 
            Commit, Threaten To Commit, or Support Terrorism

    This report to the Congress covers developments over the 
course of the past 6 months concerning the national emergency 
declared in Executive Order 13224 of September 23, 2001, 
``Blocking Property and Prohibiting Transactions With Persons 
Who Commit, Threaten to Commit, or Support Terrorism'' (66 Fed. 
Reg. 49079, September 25, 2001) (the ``Order''). This report is 
submitted pursuant to section 401(c) of the National 
Emergencies Act, 50 U.S.C. 1641(c), and section 204(c) of the 
International Emergency Economic Powers Act (``IEEPA''), 50 
U.S.C. 1703(c).
    1. On July 2, 2002, Executive Order 13268, ``Termination of 
Emergency With Respect to the Taliban and Amendment or 
Executive Order 13224 of September 23, 2001'' (67 Fed. Reg. 
44751, July 3, 2002) amended the Order, to add Mohammed Omar 
and the Taliban to the list of blocked persons contained in the 
Annex to the Order.
    2. As of September 13, 2002, 236 individuals and entities 
are listed as blocked persons pursuant to the Order and have 
been designated as Specially Designated Global Terrorists 
(SDGTs). Some of these individuals and entities were also 
previously designated as persons whose property and interests 
in property are blocked in or pursuant to Executive Order 12947 
of January 23, 1995 (60 Fed. Reg. 5079, January 25, 1995), 
``Prohibiting Transactions with Terrorists who Threaten to 
Disrupt the Middle East Peace Process,'' and Executive Order 
13099 of August 22, 1998, in which the President took 
additional steps by amending the Annex of Executive Order 12947 
to add four individuals or entities, including Usama bin Laden 
and al-Qaida.
    Also included as SDGTs pursuant to the Order are 34 Foreign 
Terrorist Organizations (FTO), also designated by the Secretary 
of State under section 219 of the Immigration and Nationality 
Act, 8 U.S.C. 1189, as amended by the Antiterrorism and 
Effective Death Penalty Act of 1996, Pub. L. 104-132, 110 Stat. 
    3. The international community has recognized the need to 
take action against terrorism and has condemned such acts of 
terrorism in U.N. Security Council resolutions 1368 of 
September 12, 2001; 1373 of September 28, 2001; and 1390 of 
January 16, 2002. These resolutions, taken together, obligate 
U.N. member states, among other things, to take necessary steps 
to prevent the financing of terrorism, to deny safe haven to 
terrorists, and to restrict the transfer of arms and arms-
related material to terrorists. In particular, these 
resolutions impose sanctions against the Taliban, Usama bin 
Laden, and al-Qaida, and obligate all U.N. member states to 
``Freeze without delay the funds and other financial assets or 
economic resources'' of those entities and individuals 
designated by the U.N. Executive Order 13224 is a fundamental 
tool in the U.S. effort to work closely with governments around 
the world in identifying and freezing the assets of terrorists 
and their supporters.
    4. During the current reporting period, the United States 
designated a number of individuals and entities pursuant to the 
Order, including 44 individuals and entities whose designation 
resulted from joint efforts with international partners. On 
April 19, 2002, as a result of cooperation with other G-7 
countries, the United States designated nine individuals and 
one organization based on links to al-Qaida, and referred these 
names to the U.N. jointly with the other G-7. Similarly, 
working with Italy, the United States designated another 25 
individuals and entities on August 29, 2002, based on al-Qaida 
ties, and with Italy referred these names to the U.N. Likewise, 
the United States on September 6, 2002, designated Wa'el Hamza 
Julaidan as an al-Qaida supporter and, together with Saudi 
Arabia, referred his name to the U.N. Additionally, in 
collaboration with our European allies, the United States and 
the European Union undertook a coordinated blocking action on 
May 3, 2002, with respect to seven individuals and one 
organization based on their ties to the FTO Euzkadi Ta 
Askatasuna (ETA).
    5. There have also been a series of developments with 
respect to entities designated in the previous reporting 
period. The Holy Land Foundation for Relief and Development 
(HLF), headquartered in Richardson, Texas, was designated as an 
SDGT on December 4, 2001, pursuant to the Order and Executive 
Order 12947 based on its support for Hamas. On May 31, 2002, 
the Treasury Department made a superseding designation of HLF 
under the Order and Executive Order 12947 based on additional 
information concerning the connection between HLF and Hamas. 
HLF filed suit in Federal district court in the District of 
Columbia raising statutory and constitutional issues and 
challenging its designation. On July 18, 2002, the court heard 
arguments on the parties' motion. On August 8, 2002, the court 
denied HLF's motion for preliminary injunctive relief, by which 
it sought to overturn the designation, and granted the 
Government's motion to dismiss and/or for summary judgment as 
to all but one of the statutory and constitutional claims. The 
ruling is being appealed.
    Funds, accounts, and business records of Global Relief 
Foundation, Inc. (GRF), and Benevolence International 
Foundation, Inc. (BIF), both headquartered in Chicago, were 
blocked by the Department of the Treasury's Office of Foreign 
Assets Control (OFAC) pending investigation on December 14, 
2001. On May 24, 2002, and June 14, 2002, OFAC notified GRF and 
BIF, respectively, that OFAC intended to designate them as 
blocked entities pursuant to the Order. Prior to OFAC's 
notification of intent to designate, GRF and BIF filed separate 
lawsuits in the Northern District of Illinois raising 
constitutional and statutory issues and seeking the unblocking 
of their assets. GRF's motion for preliminary injunction 
against the Government defendants was denied by the district 
court and is now on appeal to the Seventh Circuit. Civil 
proceedings in the BIF case have been stayed pending certain 
criminal proceedings.
    On November 7, 2001, OFAC blocked, pursuant to the Order, 
persons and entities that are part of the ``Barakaat network,'' 
including nine entities and two individuals based in the United 
States. In addition, four U.S.-based entities were blocked in 
aid of investigation (``BIA entities''). One of the 
individuals, Liban Hussein, was delisted on July 15, 2002, and 
his property was unblocked. Aaran Money Wire, Mr. Garad Nor, 
and Global Service International, all located in Minneapolis, 
and one other U.S.-based entity, Barakaat Enterprises, Inc., 
located in Columbus, Ohio, and two Swedish individuals, 
Abdirisak Aden and Abdi Abdulaziz Ali, all designated on 
November 7, 2001, based on their affiliations with the 
``Barakaat network,'' were removed from the list of blocked 
entities on August 27, 2002, and their assets unblocked. The 
removal of these entities and individuals from the list of 
blocked persons is based on the actions taken by these 
individuals and entities to sufficiently eliminate the basis 
for their designations, which were premised on the parties' now 
severed affiliations with the ``Barakaat network.''
    6. OFAC has responded to numerous license applications 
under this program. Most of these requests were made in the 
context of litigation by U.S.-based entities challenging 
designations or the blocking of assets in aid of investigation. 
Licenses were issued authorizing payment from offshore sources 
that are not blocked for legal services provided to designated 
offshore entities, and the payment from blocked funds for the 
legal representation of U.S.-based designated entities and 
entities whose assets are blocked in aid of investigation. 
Licenses were also issued authorizing the release of blocked 
funds to pay debts that the designated entities and BIA 
entities incurred prior to the designation or blocking; to pay 
certain limited operating expenses of BIA entities while the 
investigation of these entities continues; to pay living 
expenses of a designated U.S. person; to release assets to the 
participants of a retirement savings plan sponsored by a 
designated entity, provided that any plan assets in which the 
sponsor has a property interest remain blocked; and to return 
blocked funds transfers after OFAC determined that no 
designated entity had a property interest in the funds.
    A license was issued authorizing a bank to release blocked 
funds pursuant to a seizure warrant issued to another 
governmental entity. Licenses were also issued authorizing the 
release of, or access to, blocked property (other than funds), 
particularly records and computers.
    A number of license requests were denied, including 
requests for the release of an entity's blocked funds to pay 
the legal expenses of individuals whose personal assets are not 
blocked, and requests to pay offshore creditors or to fund an 
entity's offshore operations.
    7. Since the effective date of the Order, OFAC has 
emphasized to the financial community the importance of 
identifying and blocking payments and accounts in which 
interests of persons designated under the Order are implicated. 
OFAC has worked very closely with banks, broker-dealers, and 
others to assure the effectiveness of interdiction software 
systems to identify payments, other transactions, and accounts, 
and has fielded thousands of phone calls from the financial 
community regarding suspect activities. As of September 13, 
2002, OFAC has also blocked an additional $75,000 in terrorist-
related assets beyond the approximately $7.6 million reported 
in my last report. Our international partners have taken 
parallel blocking actions in their own financial sectors. Each 
of the accounts frozen had the potential to be a pipeline for 
far more money than what was in the account on the day that 
account was frozen. In addition to closing off these identified 
pipelines, blocking actions have a larger deterrent effect on 
those who would otherwise consider assisting the financing of 
terrorism. Between February 15 and July 24, 2002, OFAC updated 
its website no less than 28 times to keep the public informed 
of the latest sanctions developments. This included adding new 
names to its list of Specially Designated Nationals and Blocked 
Persons and posting special alerts and bulletins.
    8. The expenses incurred by the Federal Government in the 
six-month period beginning March 24, 2002, that are directly 
attributable to the exercise of powers and authorities 
conferred by the declaration of the national emergency with 
respect to persons who commit, threaten to commit, or support 
terrorism are estimated at approximately $8.8 million. These 
data do not reflect costs of operations by the intelligence and 
certain law enforcement communities. Reported costs were 
predominantly related to salary and expenses for personnel in 
the Department of the Treasury (particularly in the Office of 
Foreign Assets Control, the Office of the General Counsel, and 
the U.S. Customs Service), the Department of State, and 
components of the Department of Justice.
    9. The United States continues to be concerned by the grave 
acts of terrorism committed or threatened by foreign 
terrorists, including the heinous attacks committed in New York 
and Pennsylvania, and against the Pentagon, on September 11, 
2001. Available information confirms that terrorist 
organizations seek to acquire weapons of mass destruction, 
including chemical, biological, and nuclear weapons. In 
addition, global financial networks continue to support and 
fund terrorists and their ability to engage in terrorist acts 
through a variety of financial mechanisms. For these reasons, 
persons who commit, threaten to commit, or support terrorism 
continue to pose an unusual and extraordinary threat to 
international security.