Staff Report to the Commission

After the 9/11 attacks, the President signed Executive Order 13224 with great fanfare (the

White House described it as the “first strike in the war on terror”), but since OFAC

already had the ability to go after Bin Ladin and Taliban assets from the prior executive

orders, it did little to change OFAC’s authorities to name, block, and freeze assets

associated with Usama Bin Ladin or the Taliban. After the attacks, OFAC accelerated the

search for entities to name by either a presidential declaration (by amending the list

attached to E.O. 13224) or a secondary administrative designation, working off a CIAsupplied

list of entities and persons. OFAC analysts and attorneys, like everyone in the

government engaged in counterterrorism at the time, were working nights and weekends

to evaluate and put together administrative records sufficient to freeze the assets of these

entities. A significant number of these individuals needed access to classified

information, but they had virtually no facilities in which to handle it. As a result, a

number of them crammed into the secure FinCEN facility in Northern Virginia that,

unlike OFAC’s downtown offices, could handle the most highly sensitive materials.

OFAC analysts started working on the designation of al-Barakaat about two weeks after

the attacks. This effort won preliminary approval almost immediately from Treasury

officials, on the basis of a one-page memo. Thereafter, OFAC officials began a twopronged

approach to supporting the designation: gathering information informally

through an OFAC analyst’s contacts with U.S. law enforcement, and conducting research

on classified documents at FinCEN’s secure facility. The informal method for gathering

law enforcement data was necessary because of the weaknesses of the FBI’s data system.

The FBI, unlike the foreign intelligence agencies, wrote very few finished intelligence

reports. The only way to find out what was happening domestically was either to troll the

FBI’s data system, ACS (Automated Case Support), for periodic reports (a hit-or-miss

proposition at best) or call field agents and ask them what was going on (if you knew

whom to call). The analysts’ efforts to survey the foreign intelligence were easier because

the reports were more centralized, but had other frustrations: because of Treasury’s

archaic method of retrieving intelligence, the analysts received only about half of the

relevant intelligence on Jumale and al-Barakaat, and the omitted material included some

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of the best, most useful reports (a fact that was not known to the analysts until after the

designation).

Nevertheless, the OFAC analysts plowed forward and put together a package on al-

Barakaat. They were greatly helped by a list of worldwide al-Barakaat offices seized

during a raid of an al-Barakaat office in Norway and shared with the United States. The

analysts were told that they did not need to have evidence that each al-Barakaat entity

took part in terrorist financing; it was sufficient to show only that the main entity itself

was involved to be able to close all of the branches and freeze all of the money. Thus, the

analysts needed only to refer to the seized telephone lists or a commercial index of

businesses such as Dun & Bradstreet to justify the closing of each al-Barakaat branch

office. The Justice Department, which would have to defend any action should there be a

legal challenge, blessed the sufficiency of this tactic.

More nationwide coordination took place, including meetings at the NSC, the FBI, and

Customs. As people within the law enforcement community came to understand what

OFAC was planning, they asked it to hold off for 60 or 90 days so they could continue

their investigations. A number of field offices made this request, as did the Office of

Naval Intelligence, which was in the midst of a major intelligence operation on al-

Barakaat. OFAC, however, was under substantial pressure to proceed with the

designation as rapidly as possible. The analysts also wanted more time to make their

evidentiary package more complete and robust, but the OFAC management, apparently

reacting to external demands, told them they could not have it. Moreover, the head of the

FBI’s terrorist-financing effort ultimately concurred in the action.

The post-9/11 period at OFAC was “chaos.”  The goal set at the policy levels of the White

House and Treasury was to conduct a public and aggressive series of designations to

show the world community and our allies that the United States was serious about

pursuing the financial targets. It entailed a major designation every four weeks,

accompanied by derivative designations throughout the month. As a result, Treasury

officials acknowledged that some of the evidentiary foundations for the early

designations were quite weak. One participant (and an advocate of the designation

process generally) stated that “we were so forward leaning we almost fell on our face.”

The rush to designate came primarily from the NSC and gave pause to many in the

government. Some believed that the government’s haste in this area, and its preference

for IEEPA sanctions, might result in a high level of false designations that would

ultimately jeopardize the United States’ ability to persuade other countries to designate

groups as terrorist organizations. Ultimately, as we discuss later, this proved to be the

case with the al-Barakaat designations, mainly because they relied on a derivative

designation theory, in which no direct proof of culpability was needed.

A range of key countries were notified several days in advance of the planned U.S.

designation of the al-Barakaat entities, and were urged to freeze related assets pursuant to

the own authorities.

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The November Raids

On November 7, 2001, federal agents entered eight al-Barakaat offices in Minneapolis;

Columbus, Ohio; Alexandria, Virginia; Seattle, Washington; and Boston, Massachusetts.

Using Treasury Department private contractors who handle asset forfeiture, OFAC and

federal agents seized everything with the businesses. In the UAE, about $1 million was

seized from the UAE EBI accounts, four offices were raided and their records seized, and

Jumale was ordered not to leave the UAE. The U.S. actions resulted in the freezing of

approximately $1.1 million, and Treasury claimed that the actions disrupted

approximately $65 million in annual remittances from the United States alone.

The President of the United States traveled to FinCEN’s offices and, with the Secretary

of the Treasury and Attorney General, announced the action in a press event, describing

Jumale as a “friend and supporter of Usama Bin Ladin.” Secretary of the Treasury Paul

O’Neill described al-Barakaat offices as “the money movers, the quartermasters of terror

. . . a principal source of funding, intelligence and money transfers for Bin Ladin.” He

later announced that “we estimate that $25 million was skimmed from the al-Barakaat

network of companies each year, and re-directed toward terrorist operations.”

Abdullahi Farah was the owner of Global Services, one of the Minneapolis wire

remittance companies named in the November 7, 2001 blocking order. He is a naturalized

U.S. citizen, having emigrated from Somalia in 1992. Although there already were

money remitters in Minneapolis at the time, Farah believed that there was still a need for

his services in the Somali community. Farah previously had been a customer of al-

Barakaat and had dealt with the al-Barakaat business representative for North America.

After having applied for a license and after establishing a formal business relationship

with al-Barakaat, Farah opened his operation. He claims that he never met Jumale and

had only an arm’s-length business relationship with al-Barakaat. While the business was

cyclical, with more money being transmitted during Ramadan, Farah generally

transmitted about $200,000 per month. He banked at the local Norwest Bank, where he

would deposit cash from his customers and then wire aggregate amounts to al-Barakaat’s

central office in the UAE. Farah made approximately $1,200 per month from this

business, and paid another employee about the same.

Farah’s first interaction with the federal government with regard to his business occurred

on November 7, 2001, when armed agents entered and seized his business, confiscated all

his records and his office equipment, and put a seal on the door preventing reentry. His

three business accounts, containing approximately $298,000 of his customers’ money,

were frozen, making it impossible for him to send that money forward on their behalf.

The name of his company was placed on the U.S. and UN lists as a supporter of

terrorism.

The money that his customers, primarily Somali immigrants, had entrusted to Farah was

not delivered to the intended recipients; his customers were angry and suspicious and did

not accept his explanations as to what had become of it. Most of his customers simply did

not believe that the U.S. government could do such a thing. For many Somalis, the

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blocked money represented their life savings and an economic lifeline to an impoverished

country. The United Nations estimated that the freeze cut the remittances to Somalia in

half.

Another of the Minneapolis money remitters, Garad Nor (also a U.S. citizen), had a

considerably bigger problem. On November 30, 2001, both Nor and his business were

publicly designated as a supporter of terrorist as a consequence of running a moneyremitting

company. The net effect of that designation was that no one in the United States

could engage in any financial transactions with him. Not only could he not work but, in

the words of his lawyer, “the guy couldn’t buy a cup of coffee” without violating the

OFAC blocking order. On April 26, 2002, after he filed suit against the United States,

OFAC issued a license to Nor to allow him to get sufficient money to live. As a result, for

five months Nor, a U.S. citizen, faced the unenviable choice of starving or being in

criminal violation of the OFAC blocking order.

The Effect of the al-Barakaat Seizures

Al-Barakaat offices were closed in the United States, the UAE, Djibouti, and Ethiopia.

Before the action against al-Barakaat, the CIA surmised that AIAI would easily move to

other financial institutions in the event that al-Barakaat was shut down. It also understood

that the loss of money from al-Barakaat would only temporarily disrupt AIAI, which had

other revenue sources. Early intelligence reporting after the freeze indicated that AIAI

came under financial pressure because of the closure of al-Barakaat, but moved quickly

to develop alternative funding mechanisms. There was no analysis of whether that

pressure was the natural result of the closing of the country’s largest conduit of funds or

was due particularly to al-Barakaat’s alleged complicity in funding AIAI. Al-Barakaat

ultimately moved its offices to other locations in Dubai and Somalia and changed its

name. Moreover, AIAI was able to move money through alternative means. Even as

early as mid-November 2001, the CIA judged the Islamic terrorist-funding networks to

be “robust,” indicating that most Sunni-based Islamic terrorist funding went through

interlocking Islamic NGOs and financial entities in the Gulf region. To this day, the

Commission staff has uncovered no evidence that closing the al-Barakaat network hurt al

Qaeda financially.

U.S. Investigators Travel to the UAE

As OFAC continued to gather support for designations, or designation packages, plans

were made to send a team of investigative agents to the UAE to look at records seized

from the al-Barakaat offices as well as the al-Barakaat bank records at the EBI. The

investigators moved into the main conference room of the UAE’s central bank and were

supplied with thousands of pages of documents culled from ten accounts held by al-

Barakaat. They were able to take back to the United States for further analysis about

7,000 pages of documents from this trip. The investigators obtained unparalleled access

and support (unparalleled even in the United States, where criminal investigators do not

typically work closely with the central bank regulators). However, the size and

complexity of this investigation of a worldwide financial network, responsible for

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moving millions of dollars, required a follow-up trip in March 2002. In the United States,

a financial investigation can take years before investigators understand the intricate

financial transactions involved.

Before the second trip, the agent spearheading the effort for the FBI reviewed the OFAC

designation package for al-Barakaat and noticed some discrepancies between it and the

evidence obtained on the first UAE trip. His review left him with a number of significant

factual questions concerning what he thought to be uncorroborated allegations of al-

Barakaat’s ties to al Qaeda and AIAI. For example, the designation package described

Jumale as an associate of Usama Bin Ladin from the original Afghanistan jihad, who was

expelled from Saudi Arabia and then moved to Sudan, and who currently lives in Kenya.

However, the documentation obtained from the first UAE trip, including Jumale’s

passport, did not support that intelligence. In addition, a number of EBI accounts that had

been frozen did not appear, from the records obtained and analyzed, to be associated with

al-Barakaat at all. Overall, the agent believed that much of the evidence for al-Barakaat’s

terrorist ties rested on unsubstantiated and uncorroborated statements of domestic FBI

sources.

The second U.S. delegation to the UAE enjoyed a level of cooperation similar to that of

the first. The UAE Central Bank placed 15 people at the investigative team’s beck and

call. The UAE government did everything the U.S. team requested, including working all

night at times to make copies of documents. Jumale was interviewed by U.S. federal

agents twice, the first time for ten hours. The U.S. investigative team interviewed 23

individuals (including Jumale), other top al-Barakaat personnel, its outside accountant,

and various UAE banking officials. They also reviewed approximately 2 million pages of

records, including the actual EBI bank records.

To review some records, the U.S. government team worked where the records were

maintained: in un-air-conditioned warehouses in the desert, in stifling 135-degree heat.

The agents found that the bank maintained the same kind of records as one would find in

the United States and that they were relatively complete, well-organized, and wellpreserved.

In fact, it appeared to the agent that the records extended far into the past;

UAE banks apparently did not systematically destroy older records, as U.S. financial

institutions commonly do. Constraints of time and resources prevented the agents from

conducting a comprehensive audit of all the records. Instead, they focused on key persons

and entities, looked for suspicious transactions, and selected certain dates as

representative samples for detailed analysis. On this second trip, the U.S. team brought

copies of about 10,000 pages back to the United States for further analysis. Additionally,

the FBI was able to make mirror images of data from dozens of the al-Barakaat and EBI

computers for further analysis.

No Direct Evidence That al-Barakaat Funded Terrorism

The FBI agent who led the second U.S. delegation said diligent investigation in the UAE

revealed no “smoking gun” evidence—either testimonial or documentary—showing that

al-Barakaat was funding AIAI or al Qaeda. In fact, the U.S. team could find no direct

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evidence at all of any real link between al-Barakaat and terrorism of any type. The two

major claims, that Bin Ladin was an early investor in al-Barakaat and that al-Barakaat

diverted a certain portion of the money through its system to AIAI or al Qaeda, could not

be verified. Jumale and all the al-Barakaat witnesses denied any ties to al Qaeda or AIAI,

and none of the financial evidence the investigators examined directly contradicted these

claims. Moreover, some of the claims made by the early intelligence, such as the

assertion that Jumale and Bin Ladin were in Afghanistan together, proved to be wrong. In

additional, it appeared that the volume of money was significantly overstated. Secretary

O’Neill, in his announcement of the al-Barakaat action, had estimated that al-Barakaat

had skimmed $25 million per year and redirected it toward terrorist operations. The

agents found that the profits for all of al-Barakaat (from which this money would have to

come) totaled only about $700,000 per year, and could not conclude whether any of that

money had been skimmed.

Although the U.S. team could not find evidence of terrorist financing, they did identify

several inexplicable anomalies in the evidence. For example, the team’s review of

documents revealed several suspicious transactions that Jumale could not adequately

explain. Specifically, two NGOs made a number of unusually large deposits into the

account of a Kuwaiti charity official over which Jumale had power of attorney. The funds

were then moved out of the account in cash. When asked to explain the transactions,

Jumale claimed that the money was deposited for use in Somalia. After the deposit, the

charity would direct Jumale to send cash from those accounts to Somalia for charitable or

religious purposes, such as building a mosque. Because the funds were sent as cash, no

other records existed.

The FBI thought this explanation suspicious, as it was inconsistent with Jumale’s normal

business practices. Although the cash nature of the transactions may have been

necessitated by the state of the financial system in Somalia—given the absence of

financial institutions there, sending cash may have been the best way to build a mosque—

al-Barakaat had a bank in Somalia to which the funds for charitable use could have been

sent. However, the agents could draw only suspicions and no conclusions from these

transactions. The money transfers might have involved terrorism, they might have

represented the proceeds of another kind of crime, or they might have been nothing at all.

There was just no way to tell.

At the conclusion of the trip, the agent spearheading the FBI portion of the trip drafted a

memorandum, to be distributed to the UAE officials, describing the conclusion the team

had reached:

It has been alleged that the Barakaat Group of Companies were

assisting, sponsoring, or providing financial, material, or other

services in support of known terrorist organizations. Media and U.S.

law enforcement reports have linked al-Barakaat companies and its

principle manager, Ahmed Nur Ali Jumale, to Usama bin Ladin and

bin Ladin’s efforts to fund terrorist activities. However, this

information is generally not firsthand information or it has not been

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corroborated by documentary or other circumstantial evidence that

supports the allegation. For example, it has been reported that it is

common knowledge in the United States–based Somali community

that Al Barakaat is a money laundering operation backed by bin

Ladin. It has also been reported that bin Ladin provided Mr. Jumale

the initial financing to start the Al Barakaat businesses. At this time,

these items of information have not been substantiated through

investigative means. (emphasis added)

Thus, notwithstanding the unprecedented cooperation by the UAE, significant FBI

interviews of the principal players involved in al-Barakaat (including its founder), and

complete and unfettered access to al-Barakaat’s financial records, the FBI could not

substantiate any links between al-Barakaat and terrorism.

OFAC analysts hotly contest this conclusion, and insist that their designation was based

on solid intelligence. The FBI’s conclusions, they argue, reflect a profound

misunderstanding of the case, and ignore certain pieces of intelligence. 71 At the very

least, the OFAC officials contend, there is credible evidence that al-Barakaat was a

money-laundering group, responsible for millions in U.S. currency being laundered

through the United States, to an account in the UAE, and then out to suspect third-party

countries. Additionally, they point to documents yet to be translated, as well as records

from the hard drives of al-Barakaat, in the FBI’s possession and yet to be analyzed. At

this writing, neither the FBI nor OFAC is attempting to continue to investigate this case.

Delisting Designated Entities and Concluding the Case

Other countries who had joined in the international designation of al-Barakaat were

voicing real concern by early 2002. Their concern stemmed in part from a difference in

how each country set up its terror-financing designation scheme. In the United States, for

example, the power to designate derives from the executive’s power to wage war against

foreign enemies. As a result, the executive may rely on less evidence than is required in a

criminal or even civil trial. The judicial review that is afforded a designation is extremely

deferential to the executive’s judgment. In other countries, a designation is viewed as a

judicial or quasi-judicial act, in which the accused is afforded a right to answer the

charges and the standard of evidence is at least as high as would be needed to sustain a

civil lawsuit.

In January 2002, three Swedish citizens of Somali origin who were listed in the original

al-Barakaat designation petitioned OFAC and the United Nations for removal from the

list. Sweden, although not a member of the UN Security Council, sought to have the

Council adopt a criminal evidentiary standard prior to placing anyone on the sanctions

list. The Canadians, similarly, moved to take one of its own citizens off the UN list. All

71 Intelligence community sources have informed Commission staff that the intelligence sources for much

of the reporting regarding al-Barakaat’s connection to al Qaeda have since been terminated by the relevant

agency as intelligence sources, based on concerns of fabrication.

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of the UN designations to that point had come at the suggestion of the United States, and

the Swedish proposal could have required the removal of either most or all of the names

on the list. The State Department sent demarches to all Security Council member

nations, urging “in the strongest terms”  that they oppose Swedish effort.

Meanwhile, in Minneapolis, Abdullahi Farah and Garad Nor were trying to resolve their