By Menno Goedman*<\/p>\n
On February 25, 2011 President Barack Obama issued Executive Order (E.O.) 13566<\/a>, thereby authorizing sanctions against the Libyan government and Colonel Muammar Qadhafi.\u00a0 Subsequent reports<\/a> suggest that within hours of E.O. 13566, the Treasury Department \u2013 working through U.S. financial institutions \u2013 froze more than $30 billion in assets controlled by Colonel Qadhafi and his associates.\u00a0 Concurrently, Western sanctions against Iran \u2014 especially those targeting oil exports \u2014 are credited<\/a> with helping to undermine the value of the rial, slowing growth and destabilizing the Iranian economy.\u00a0 Finally, the Treasury Department\u2019s targeted efforts to disrupt al-Qaeda\u2019s funding flows have contributed to a depletion of the organization\u2019s cash reserves and have, by some accounts<\/a>, weakened its operational capacity.<\/p>\n These recent examples illustrate that policies designed to cut off terrorist financing and isolate problematic regimes have become potent tools in the United States\u2019 counterterrorism strategy.\u00a0 Despite this increased prominence, however, the public remains relatively unaware of the process by which these policies are developed and implemented.\u00a0 In the United States, a small cadre of individuals housed in the Treasury Department\u2019s Office of Terrorism and Financial Intelligence (TFI) coordinate these efforts.\u00a0 Created in 2004<\/a>, TFI consists of four sub-groups<\/a>: the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), the Office of Terrorist Financing and Financial Crimes (TFFC), and the Office of Intelligence and Analysis (OIA).\u00a0 With OIA\u2019s creation in 2004, Treasury became the only finance ministry<\/a> in the world with its own in-house intelligence unit.\u00a0 Separately, TFI members chair<\/a> the U.S. delegation to the Financial Action Task Force, an intergovernmental body that develops and promotes policies to combat illicit finance.<\/p>\n In developing and coordinating the United States\u2019 policies to combat terrorist financing, Treasury and TFI rely on a variety of statutes and executive orders.\u00a0 A critical example of the former is the Comprehensive Iran Sanctions Accountability and Divestment Act (CISADA<\/a>), signed into law by President Obama in 2010.\u00a0 In key provisions set forth in \u00a7\u00a7103\u2013105 and subsequently implemented through OFAC regulations<\/a>, CISADA authorizes the Treasury Secretary to require U.S. banks to terminate certain banking relationships with foreign banks that knowingly engage in significant transactions with designated Iranian banks.\u00a0 As explained<\/a> by TFI Under Secretary David Cohen, these provisions are powerful precisely because they leverage the significant role U.S.-based financial firms play in facilitating global financial markets in order to isolate Iranian banks involved in illicit activities.\u00a0 As Under Secretary Cohen succinctly stated<\/a>, \u201cCISADA offered foreign banks a choice: they could do business with banks in the U.S., or they could do business with designated Iranian banks.\u00a0 But they could not do both.\u201d<\/p>\n Recent statements by Iranian leaders suggest CISADA and related policies are having their intended effect: producing a weakened Iranian economy, and thereby destabilizing the current regime. \u00a0For example, faced with growing unrest and popular protest, President Mahmoud Ahmadinejad last September accused the United States of waging<\/a>, \u201can all-out, hidden, heavy war\u201d \u2013 explaining that, \u201c[t]here are barriers in transferring money, there are barriers in selling oil.\u201d\u00a0 Separately, a close advisor to Iran\u2019s Supreme Leader Ayatollah Ali Khamenei recently spoke<\/a> of a \u201cconspiracy that the enemy has brought to the currency and gold market.\u201d<\/p>\n In the midst of these successes, however, some, including United Nations Chief Ban Ki-moon<\/a>, have raised questions about whether sanctions risk inflicting excessive harm on the seventy-eight million<\/a> people of Iran, by, for example, disrupting access to food and medicine, without spurring the Iranian government to halt its nuclear program or otherwise engage in good-faith negotiations.\u00a0 A different set of skeptics, including Israel\u2019s Prime Minister Binyamin Netanyahu, argue<\/a> that sanctions will never succeed in deterring Iran\u2019s nuclear ambitions, irrespective of the economic dislocation the sanctions create.\u00a0 Yet at least this latter criticism appears to miss the mark by failing to view sanctions as one component of a broader counterterrorism strategy.\u00a0 As Treasury Assistant Secretary Daniel Glaser notes<\/a>, \u201cSanctions are not a replacement for policy.\u00a0 Sanctions serve a policy.\u201d<\/p>\n *\u00a0J.D. Candidate, Harvard Law School, 2014. \u00a0From 2009 – 2011, Menno Goedman was an advisor for legislative affairs at the U.S. Treasury Department.<\/p>\n","protected":false},"excerpt":{"rendered":" Menno Goedman explains how one Treasury office has become a potent weapon in fighting terrorism and destabilizing regimes. 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