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Saudi king calls for charity fund-raising reforms

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(CNN) -- Amid accusations that a Saudi-based Islamic charity has financed terrorist groups, including al Qaeda, Saudi Arabia's King Fahd said the kingdom is moving to change the way it raises charity funds abroad.

In a royal decree issued Saturday, the king announced the formation of a new institution for organizing and restructuring overseas charities run by Saudi Arabia.

The decision came "as a response to the Sharia" or Islamic law, that "the Saudi people continue their efforts in assisting and helping their Muslim brothers everywhere," the statement said.

Since the September 11, 2001, attacks on the United States, Saudi Arabia has instituted a number of financial controls on charities to curb terrorist financing.

Saudi charities are subject to audits and no longer permitted to send money outside the country. The country has also banned the collection of cash in mosques and public places.

The Saudi government initiated a crackdown on terrorists inside the country after deadly terrorist attacks in Riyadh in May and November.

The United States and Saudi Arabia have set up a joint counterterrorism task force in the Saudi capital, composed of law enforcement officials and officials from various agencies in both countries.

Last month, the United States and Saudi Arabia called on the United Nations to freeze the assets of four branches of the Saudi-based Al-Haramain Islamic Foundation, accused of financing terrorist groups, including Osama bin Laden's al Qaeda network, which masterminded and carried out the September 11 attacks.

Branches in Indonesia, Kenya, Tanzania and Pakistan were added to a U.S. list of groups and individuals suspected of bankrolling terrorism, effectively freezing any assets they hold in the United States.

Last year, Saudi Arabia ordered Al-Haramain to close all of its overseas branches, but the U.S. Department of Treasury said the branches in the four countries continued to operate.

"The four branches have cloaked themselves in the virtue of charity," Treasury Secretary John Snow said. "And have done so only to fund and support terrorist organizations around the world, organizations like Al Qaeda."

In March 2002, the United States and Saudi Arabia jointly froze the assets of Al-Haramain's branches in Somalia and Bosnia-Herzegovina, accusing them of diverting charitable donations to fund terrorist activity.

In December, U.S. officials moved to freeze the assets of a nonprofit organization headquartered in Bosnia-Herzegovina believed to have been continuing the work of the Al-Haramain branch after its closing. Arabic's Caroline Faraj and CNN's Elise Labott contributed to this report.

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