US Treasury Secretary Henry Paulson on Thursday said some allies lack political will to follow the US example of using the financial system to clamp down on countries that sponsor terror or seek nuclear weapons.
"Several of our key allies who support the global effort against terrorism have yet to take such basic steps as adequately criminalising money laundering and terrorist financing," Paulson told the Council on Foreign Relations in New York.
He detailed steps the Bush administration has taken since the September 11, 2001, attacks to track terror groups through their use of the global financial system, and said finance ministries around the globe should broaden their role to take on greater responsibility for security.
Paulson was critical of some countries - without specifying any by name - for not enacting laws like the Bush administration has done so they can also make it harder for terrorism groups to move money through banks without being detected. "We have a shared responsibility for our mutual security, and our allies, who confront risks at least as great as those confronting the United States, must find the political will to enact the authorities they need to join in effective multilateral action," Paulson said.
Questions from audience members afterward indicated some concern whether governments respect the privacy of citizens' financial information but Paulson dismissed it and said the knowledge that financial flows are monitored was powerful.
Even if such measures don't deliver "a knock-out punch ... they can and will produce results and change behaviour," he said. But he said multilateral support was critical to use financial measures effectively. He said the Bush administration aims to use financial measures to "change North Korean behavior" and said Treasury and the State Department were working together "to bring about a de-nuclearized Korean Peninsula."
"I was surprised to learn the extent to which Iran was exploiting global financial ties to pursue and finance its dangerous behaviour, and the extent to which reputable financial institutions were being drawn into these schemes," he said.
Paulson, who led Wall Street firm Goldman Sachs before he went to Treasury last July, said he knew the leaders of most financial intubations would be "shocked and disturbed" if they realised how groups involved in terror and the spread of nuclear weapons exploited the financial system. He said that Treasury, through a combination of education and targeted measures, had made financial institutions more sensitive to the risk of dealing with Iran but said the US was "increasingly focused on the role of Iran's Revolutionary Guard Corps" as a potential weapons proliferator.
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