Feds Order U.S. Banks to Sever Syria Ties

Chron.com | Feds Order U.S. Banks to Sever Syria Ties

Feds Order U.S. Banks to Sever Syria Ties

By MARTIN CRUTSINGER AP Economics Writer
© 2006 The Associated Press

WASHINGTON — Acting to crack down on terrorist financing, the Treasury Department on Thursday ordered all commercial banks in the United States to end their relationships with two Syrian banks.

The order covers the state-owned Commercial Bank of Syria and its subsidiary, the Syrian Lebanese Commercial Bank.

The department said that all U.S. banks must close any accounts they have with the two banks.

"Today's action is aimed at protecting our financial system against abuse by this arm of a state-sponsor of terrorism," said Stuart Levy, Treasury's undersecretary for terrorism and financial intelligence.

"The Commercial Bank of Syria has been used by terrorists to move their money and it continues to afford direct opportunities for the Syrian government to facilitate international terrorist activity and money laundering," Levy said.

A message left Thursday with a spokesman for the Syrian Embassy was not immediately returned.

The order makes final a preliminary order against the two banks that Treasury issued last May.

At that time, Treasury issued a finding that the Commercial Bank of Syria was a "primary money laundering concern" under provisions of the Patriot Act that allow the department to cut off dealings of U.S. banks with foreign banks that receive such a designation.

"As a state-owned entity with inadequate money laundering and terrorist financing controls, the Commercial Bank of Syria poses a significant risk of being used to further the Syrian government's continuing support for international terrorist groups," Levy said.

He said that the serious risks posed by the Syrian bank "have not been adequately mitigated" by the Syrian government's limited efforts to address problems in its financial system.

With the announcement, the Treasury has moved to shut down U.S. activities of nine foreign banks under provisions of the Patriot Act.

The action against the banks does not freeze their funds in the United States. It prohibits U.S. banks from holding accounts of those banks. Such accounts are used by foreign banks to do business in the United States if they do not have subsidiaries in this country.