Gonzales said the two countries are in the process of drafting a joint counter-terrorism cooperation agreement that may be finalized before the end of the year.
He said the idea of a counter-terrorism initiative was first raised during President Arroyo’s state visit to the oil-rich kingdom last May.
He said that in the course of discussions between Philippine and Saudi officials including Prince Bandar bin Sultan bin Abdulaziz in Riyadh, suspicions were raised that financiers of terror groups in the Philippines and other parts of Southeast Asia were now using couriers instead of the banking system in delivering funds.
"We are trying to enhance cooperation, including full cooperation on monitoring and stopping the flow of funds to terrorist groups in the country,’’ Gonzales said in a telephone interview. "We are accelerating discussions on the Philippines and Saudi Arabia’s cooperation in combating terrorism in our part of the world," Gonzales said.
He declined to give details but stressed there would be closer coordination between the two countries finance investigation agencies, including the Philippines’ Anti-Money Laundering Task Force.
He said both sides admitted that it would be difficult to monitor the entry of hand-carried funds in view of the large number of Filipinos working overseas.
He said bombings staged by terror groups in the Philippines and in other parts of Southeast Asia cost only tens of thousands of pesos.
"The flow of funds individually is not that huge and staging attacks need not be expensive," he pointed out.
The US Department of Treasury last August designated the Philippine and Indonesian branch offices of the Saudi Arabia-based International Islamic Relief Organization (IIRO) as entities that helped al-Qaeda and other terrorist groups raise funds.
The department’s Office of Terrorism and Financial Intelligence (OTFI) also tagged Abd Al Hamid Sulaiman Al-Mujil, executive director of the Eastern Province Branch of IIRO, as having donated cash directly to al-Qaeda, Jemaah Islamiyah and even Abu Sayyaf.