Treasury Seeks More Resources in Terror Fight

Hezbollah murderers swearing allegiance to the group's secretary general with chants of "Death to America, death to Israel" and other scenes from a Hezbollah training video would seemingly be found in a far-off land.

But the never-before-seen video -- recorded four years ago -- was seized from Charlotte, N.C., residents, arrested more than a year before the Sept. 11 terror attacks.

And the video was shown to shocked Senate lawmakers Wednesday, one day after three more Islamic charity groups were put on a terror financing list and their U.S.-based assets frozen.

"You wouldn't ordinarily expect Charlotte to be the focal point of Hezbollah activities, would you?" said Sen. Arlen Specter, R-Pa., during Wednesday's Senate Judiciary Committee hearing on methods of combating terror financing.

"You would not. We were very surprised to find that out," responded witness Robert Conrad Jr., a U.S. attorney from North Carolina who testified that the North Carolina men were caught smuggling cigarettes to Michigan, cheating that state's per-carton tax to the tune of millions of dollars.

"All told they purchased approximately 8 million dollars worth of cigarettes and made a profit of between 1.5 and 2 million dollars," Conrad told the committee.

Authorities believe the money was funneled to Hezbollah, the Syrian-based terrorist group bent on destroying Israel and responsible for the deaths of more Americans than any group other than Al Qaeda.

Treasury officials say that as terrorist financiers look for more creative money-funneling schemes -- including smuggling cash and cigarettes, trafficking diamonds, gold and drugs, and siphoning money from charitable donations to Islamic-based charities -- law enforcement officials need to come up with more creative ways to put a stop to them.

"We recognize the dynamic nature of terrorist financing and the need to maintain a comprehensive and flexible long-term strategy to combat this threat," said Jimmy Gurule, Treasury's undersecretary for enforcement.

Gurule said that so far, the United States and its allies have frozen $113 million intended for terrorist organizations. The latest organizations designated as terror-sponsors for their financial assistance include the Benevolence International Foundation, whose funds were frozen last year, and two of its sister organizations in Canada and Bosnia.

Gurule said that the United States continues to work with other countries to renew the momentum in the global campaign to fight terror funding. Already on board for an international training program to help foreign officials spot terror money are groups in the United Arab Emirates and Europe. Programs are planned for Qatar, Kuwait, Pakistan and India.

Regional seminars in the United States are scheduled to start next month in Los Angeles, Gurule said.

"New powers granted to Treasury by the president and Congress have enabled us to scour the global financial system for suspicious activities with greater precision than ever," Gurule said.

Since September of last year, the U.S. Customs Service has made 650 seizures of bulk cash totaling $21 million -- $12.9 million of which had a Middle East connection. Gurule said that's more than twice the Mideast money seized from the year prior to Sept. 11.

Gurule offered faint praise to the Saudi government, seven months after a Saudi telethon helped raise more than $100 million for Palestinian families, including those of homicide bombers.

"The Saudi government is moving forward ... They may be first steps, and they may be baby steps, but they are steps to address the problem," he said. 

Beyond trumpeting their successes, the Bush money-monitoring team offered a message for Muslims around the world: "We are not at war with Islamic charities, only with counterfeit charities."

Fox News' James Rosen and The Associated Press contributed to this report.