One of the largest banks in Saudi Arabia is refusing to assist the United States in its investigation of an organization believed to have been supporting a designated Foreign Terrorist Organization. The case al Rajhi Banking and Investment v. Holder, is an offshoot of the pending criminal prosecution of Al Haramain Islamic Foundation, in Oregon.
Al Rajhi Bank, a Riyadh-based financial institution was served with a subpoena back in July, 2009. Pursuant to the subpoena, the Justice Department sought all records relating to a March 2000 deposit of $151,000 in checks by the now defunct al Haramain Islamic Foundation (al Haramain).
Al Haramain is long thought to have provided material support to a number of designated terrorist organizations. Following an extensive investigation, the organization itself was designated by the U.S. Treasury in 2008 for its financial and logistical support of al Qaida and related terrorist organizations. Even before that designation, however, the group was under suspicion.
Al Haramain was indicted on February 17, 2005 for a variety of charges related to fraud and tax evasion. In summary, the government alleges that al Haramain received a "donation" of $151,000, that the money was then funneled out of the United States and into accounts held at al Rajhi Bank, and finally, that the money was provided to Chechen rebels—all without declaring or paying taxes for the funds.
Upon receiving the subpoena, al Rajhi Bank refused to comply. The bank argued that to do so would not only violate Saudi law, but that the subpoena was issued without resort to the proper diplomatic channels. In response, the Justice Department explained that it had made every effort to seek a good faith resolution of the impasse, but failure to cooperate would result in the bank being designated a "primary money laundering concern" under another provision of the USA Patriot Act. This step would have the effect of preventing al Rajhi Bank from maintaining its correspondent bank accounts in the United States. Such a move would be particularly debilitating to al Rajhi because, while the bank does not have any U.S. offices or branches, it does maintain correspondent accounts with several U.S. banks including JP Morgan Chase, Wachovia, and Deutsche Bank.
In response to this apparent stalemate, the bank has taken the unusual step of challenging the subpoena and the government's subsequent threat to designate al Rajhi under the Patriot Act. The Bank begins by arguing that the subpoena is "unconstitutional" and that the threat of designation "permits the government to punish noncompliance by depriving the [foreign bank] of valuable correspondent relationships with U.S. banks."
What the bank fails to mention is that Saudi Arabia is a party to the International Convention for the Suppression of the Financing of Terrorism, a treaty that requires parties to cooperate in investigations into terrorist financing. While Saudi Arabia and one of its largest banks may wish to continue hiding behind technical defenses, they should, pursuant to their international treaty obligations, provide the U.S. Department of Justice with the evidence needed to prosecute an organization directly linked to al Qaida and other terrorist groups.